TOYO Co., Ltd. Q2 FY2026 earnings call

• Overall Financial Performance

  • Strong year-over-year growth in revenue, gross margin, and net income for both Q2 2026 and the first half of 2026, driven by expanded production capacity, improved efficiency, and a higher mix of higher ASP US sales.
  • As of June 30 2026, the company held $123.4 million in cash and restricted cash, working capital turned positive at $29.8 million, operating cash flow was $61.4 million, and capital expenditures totaled $27.8 million for the first half.
  • Toyoko was added to the Russell 3000 Index and Russell Microcap Index, improving institutional visibility.

• US Section 232 Policy Alignment

  • The August 2026 Section 232 proclamation on polysilicon and solar product imports validates Toyoko's existing strategy of using US-produced inputs, developing transparent allied supply chains, and investing in US advanced manufacturing.
  • The proclamation creates an investment-linked onshoring program that allows qualified companies to offset new Section 232 duties via company-specific plans, with additional benefits for firms using US-produced polysilicon. 70% of Toyoko's current polysilicon for Ethiopian production is from a US supplier, with the remaining 30% from OCI Malaysia; the company targets 100% US polysilicon for the Ethiopia facility by Q4 2026.
  • The new minimum import prices for cells and modules are above recent market benchmarks, which management expects will support a stronger, more rational US pricing environment.

• US Manufacturing Expansion

  • Toyoko is proceeding with a $357 million advanced HJT solar cell facility in Humboldt, Texas, with an initial 1.5 GW annual production capacity. HJT technology was selected for higher customer-valued efficiency and to support future perovskite silicon tandem cell development.
  • Pilot production for the HJT facility is targeted for Q4 2027 or Q1 2028, with 400 direct jobs expected at full operation; principal equipment is secured, and permitting/development work is progressing.
  • The company's Houston module facility remains on track to reach 2 GW of annual capacity in September 2026, creating an increasingly integrated US manufacturing platform. Toyoko expects to qualify for Section 45 Advanced Manufacturing Production Credits for 2025, and is working on compliance for 2026 tax credits.

• Regulatory Compliance Updates

  • CBP supply chain reviews impacted the timing of some imports from Ethiopia during Q2, but management emphasized this is a timing issue, not a reflection of underlying demand. Toyoko maintains full supply chain traceability, cooperates fully with reviews, and does not use Chinese-origin wafers for Ethiopian production (all wafers come from non-China sources, with 100% of polysilicon sourced outside China).
  • Toyoko is fully cooperating with the US Commerce Department's ongoing anti-circumvention inquiry into Ethiopian-produced solar products, and notes its Ethiopia facility is a substantial full wafer-to-cell manufacturing operation with 1,800 employees.

The transcript does not break out formal financial performance for discrete product segments. Aggregate results for all business segments combined are as follows: Q2 2026 total revenue was $118.2 million (35% YoY growth), gross profit was $37.0 million (102.2% YoY growth), gross margin was 31.3% (up from 20.9% YoY), operating expenses were $14.4 million (up from $7.3 million YoY), and net income was $17.4 million (up from $6.2 million YoY). First half 2026 total revenue was $261.0 million (87.6% YoY growth), gross profit was $84.7 million (267% YoY growth), gross margin was 32.5% (up from 16.6% YoY), operating expenses were $25.9 million (up from $13.4 million YoY), and net income was $45.8 million (up from $2.5 million YoY). US end customer revenue reached $210.5 million for the first half of 2026, representing 80.7% of total first half revenue, growing 153.9% YoY.

• Management did not reaffirm the previously issued full-year 2026 guidance on this call, and has not stated the prior guidance is formally off the table. The company is waiting for clarity on two key near-term uncertainties — the resolution of CBP import reviews and the final terms of the Section 232 onshoring program — before updating guidance.
• Management cannot currently quantify the net positive impact of the Section 232 proclamation on full-year 2026 results, and will provide updates as more regulatory clarity emerges.
• Long-term capital expansion guidance for the Texas HJT project remains unchanged, with pilot production still targeted for Q4 2027 or Q1 2028.

• Uncertainty around the timing and outcome of CBP import detention reviews could impact shipment volumes and revenue timing for Q3 and Q4 2026. The timing of release of detained shipments is controlled by the US government administrative process, and resolution may take longer than the company prefers.
• The ultimate financial benefit of the Section 232 onshoring program depends on US Commerce Department approval of Toyoko's company-specific plan, the approved volume and duration of duty offsets, market conditions, customer contracts, and the company's cost structure, none of which are finalized.
• The ongoing US Commerce Department anti-circumference inquiry into Ethiopian solar product imports creates uncertainty for the company's Ethiopia operations, even though management believes its sourcing and manufacturing structure positions it well for a favorable outcome.
• Minimum import prices under Section 232 may be adjusted by the Commerce Department before the program takes effect in December 2026, creating pricing uncertainty for customers and the company.
• Sequential revenue decline from Q1 2026 to Q2 2026 was driven by lower cell sales volume, creating near-term revenue volatility even as year-over-year growth remains strong.

Q: When did CBP import detentions start, how long will they last, what is their impact on H2 2026 revenue, and is prior full-year guidance still relevant? / A: CBP began detentions in Q2 2026 as part of standard forced labor compliance review. The total volume of detained goods is not significant, and Toyoko has provided all requested supply chain traceability information. Management expects detentions to be resolved in Q3 2026, but timing is controlled by the US government administrative process. The company has not reaffirmed prior guidance and will update investors once it has clarity on CBP and Section 232 outcomes.

Q: When can Toyoko expect approval for Section 232 duty offsets tied to its Texas HJT project? / A: The Section 232 proclamation was issued less than two weeks prior to the call, and Commerce is still finalizing program processes. Toyoko has held multiple preliminary meetings with Commerce, and will begin formal discussions on its company-specific plan after Labor Day. The program does not take effect until December 4 2026, so negotiations are expected to continue through the fall, and all projects must break ground by January 20 2029 to qualify.

Q: How has the Section 232 proclamation affected customer negotiations and pricing? When will the market settle into a clear pricing structure? / A: The program does not take effect until December, so it is too early to identify final pricing changes. The stated minimum import price of $0.28 per watt for modules acts as a likely floor for pure importers, but pricing for manufacturing-focused companies like Toyoko will depend on the final duty offsets negotiated with Commerce. Pricing will likely not settle until December 2026, after Commerce finalizes company-specific plans and any adjustments to minimum import prices.

Q: Will Section 232 change Toyoko's US capex and expansion plans? / A: The Section 232 framework fully validates and even encourages Toyoko's US onshoring strategy. The HJT project in Texas remains on schedule for pilot production in Q4 2027/Q1 2028, and the policy may push the company to consider faster expansion and more upstream investment in the US. Management will share more long-term roadmap details at the October 6 Investor Day in Humboldt, Texas.

Q: Why did Toyoko report a sequential revenue decline from Q1 to Q2 2026, even with the Ethiopia facility expected to be sold out for the year? / A: The sequential decline was driven by a product mix shift: Q1 2026 revenue was heavily concentrated in cell sales, while Q2 2026 had a higher share of lower-revenue module sales. Total cell sales volume declined sequentially, which drove the overall revenue decrease, even as year-over-year growth remained strong.