Earnings call · Jun 2026 (Q2 FY26)

TOYO Co. Q2 FY26 earnings call TOYO

Aug 19, 2026 Source

Executive summary

TOYO Co., Ltd. Q2 FY26 — Strong Growth Amidst Trade Policy Uncertainty

TOYO delivered strong Q2 and H1 FY26 results, driven by increased solar cell and module sales, particularly in the U.S. The company is navigating trade policy uncertainties, including CBP detentions and the new Section 232 proclamation, which it views as a validation of its U.S. manufacturing strategy. Management is optimistic about the long-term benefits of the Section 232 framework and is proceeding with significant U.S. manufacturing expansion, though near-term guidance remains unquantified pending clarity on regulatory processes.

Highlights

Revenue for H1 2026 increased 87.6% year-over-year to $361.7 million.
Gross margin for H1 2026 expanded to 32.5%, up from 16.6% in the prior year period.
Net income for H1 2026 was $45.8 million, compared to $2.5 million in H1 2025.
Cash and restricted cash increased to $123.4 million as of June 30, 2026, from $85.9 million at December 31, 2025.
Working capital turned positive at $29.8 million, compared to a deficit of $123.9 million at December 31, 2025.

Concerns

Trade policy uncertainty and CBP reviews affected the pace of some shipments from the Ethiopian facility during Q2, leading to sequential revenue decline from Q1 to Q2.
The company has not reaffirmed its previously issued full-year 2026 guidance due to near-term uncertainty regarding CBP issues and Section 232 implementation.
Cost of revenue for Q2 2026 was approximately $1.2 million, which appears to be an ASR error given the stated revenue.

Segment performance

Segment	Revenue	YoY	QoQ	Margin
United States Revenue from end customers in the United States for the first half of 2026. Share of H1 revenue: 80.7%	$310.5 million	153.9%	—	—

Capital programs

HJT Solar Cell Facility underway $357 million

Funding: duty offsets from approved onshoring plan

Benefit:1.5 GW annual production capacity (initial phase), 400 direct jobs

Investment in an advanced Heterojunction solar cell facility in Humble, Texas. The economic value created by approved duty offsets will help fund construction and expansion.

Houston Module Facility Expansion on track

Benefit:2 GW annual capacity

Expansion of the Houston module facility to reach 2 gigawatts of annual capacity.

Risks & headwinds

CBP reviews and detentions of Ethiopian shipments Q2 2026, ongoing

Several detentions have occurred, impacting shipment pace.

Mitigation:Working closely with CBP, providing detailed supply chain traceability, confident in compliance approach, expecting detentions to be released this quarter.

Trade policy uncertainty (Section 232 implementation) Effective December 4, 2026, with ongoing negotiations.

Not yet quantified, but expected to support stronger module pricing (minimum import price for modules at $0.38 is a floor).

Mitigation:Pursuing an onshoring plan with Commerce to offset duties, leveraging U.S. investment and U.S.-produced polysilicon, aligning with administration goals.

Anticircumvention inquiry concerning Ethiopian cells Ongoing

No specific quantification of impact, but inquiry is ongoing.

Mitigation:Participating fully with Commerce, providing information on sourcing, investment, manufacturing operations, and value-added in Ethiopia; explicitly stating no Chinese-origin wafers are used.

Sequential revenue decline Q2 2026

Revenue declined from Q1 2026 to Q2 2026.

Mitigation:Attributed to product mix shift (more module sales in Q2 vs. cell sales in Q1), not underlying customer demand issues.

What to watch in Q3 FY26

Resolution of CBP detentions

next quarter

Current Several detentions have occurred, impacting shipment pace.

Target Detentions released, preferred importer status.

Why it matters

Resolution will alleviate supply chain disruptions and improve revenue visibility, impacting financial performance and operational efficiency.

We're optimistic that it will alleviate itself soon.

Q&A highlights

When did CBP detentions start, how long are they expected to continue, and what is the expected impact on Q3/Q4 revenue and shipments, especially in context of full-year guidance?

CBP detentions started earlier this year. TOYO is working closely with CBP, providing all requested supply chain information, including polysilicon source. They are optimistic detentions will be released this quarter, but exact timing is unclear. Due to near-term uncertainty from CBP and Section 232, the company has not reaffirmed full-year guidance and will provide updates when more clarity is available.

“We're optimistic that we will see the detentions be released in this quarter. but the exact timing is a little bit unclear. It's an administrative process with a government agency and sometimes it takes a little bit longer than we would like.”

asked by Philip Shen · answered by Rhone Resch

2 min read 5 chapters

Detailed narrative

Section 232 Proclamation and U.S. Strategy

The recent Section 232 determination on polysilicon and its derivatives, effective December 4, 2026, is seen as a positive development for TOYO, supporting stronger module pricing. The proclamation establishes minimum import prices and an investment-linked onshoring program, allowing duty-free imports for qualified companies. TOYO intends to pursue an onshoring plan centered on its Humble, Texas HJT cell facility, leveraging its significant U.S. investment and use of U.S.-produced polysilicon (70% currently, targeting 100% by Q4 2026 for Ethiopian production).

HJT Cell Facility Expansion in Humble, Texas

TOYO plans to invest approximately $357 million in an advanced Heterojunction (HJT) solar cell facility in Humble, Texas. The initial phase is designed for approximately 1.5 gigawatts of annual production capacity. Pilot production is targeted for Q4 2027 or Q1 2028, creating approximately 400 direct jobs. This facility will bring next-generation cell manufacturing and R&D to the same U.S. campus as their module operations, which are on track to reach 2 gigawatts of annual capacity by September 2026.

CBP Reviews and Ethiopia Anticircumvention Inquiry

During Q2, CBP reviews led to detentions of some shipments from TOYO's Ethiopian facility. The company is cooperating fully, providing detailed records to trace materials from polysilicon source to U.S. entry. Separately, Commerce initiated an anticircumvention inquiry concerning Ethiopian cells using Chinese components. TOYO states it does not use Chinese-origin wafers in its Ethiopian cell manufacturing and sources 100% of polysilicon outside of China, with 70% from a U.S. producer.

Financial Performance Highlights

For H1 2026, revenue was $361.7 million, an 87.6% YoY increase. Gross margin expanded to 32.5% from 16.6%. Net income was $45.8 million, up significantly from $2.5 million in H1 2025. Q2 2026 revenue was $118.2 million, up 35% YoY, with net income of $17.4 million. Non-GAAP EBITDA for H1 2026 was $82.1 million, compared to $21.5 million in H1 2025, driven by revenue scale and gross margin improvement.

Capital and Liquidity

As of June 30, 2026, the company held $123.4 million in cash and restricted cash, an increase from $85.9 million at December 31, 2025. Working capital turned positive at $29.8 million, a significant improvement from a $123.9 million deficit. The company generated $51.4 million in cash from operations and incurred $27.8 million in capital expenditures during H1 2026. Net proceeds of $53.6 million were raised through direct and at-the-market offerings.

AI-generated summary of the company's earnings call. Not investment advice.