Toyo Co., Ltd ((TOYO)) has held its Q2 earnings call. Read on for the main highlights of the call.
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During the recent earnings call, Toyo Co., Ltd. presented a balanced outlook, highlighting strategic advancements alongside financial challenges. The acquisition of the VSUN brand and the expansion of solar manufacturing capacity are seen as significant steps toward future growth. However, these positive moves are tempered by financial hurdles, including decreased gross profit margins, increased operating expenses, and a decline in net income.
Acquisition of VSUN Brand
Toyo Co., Ltd. has acquired the VSUN brand from Vietnam Sun Energy, a strategic move aimed at streamlining operations and accelerating growth. This acquisition is expected to bolster market credibility and enhance customer confidence, positioning Toyo as a more formidable player in the solar energy sector.
Expansion of Solar Manufacturing Capacity
The company has made significant strides in expanding its solar manufacturing capacity, with a new facility in Ethiopia now operating at a full 2 gigawatt capacity. Plans are underway to double this capacity to 4 gigawatts by October 2025, offering a compelling cost structure and access to green power, which is expected to drive future growth.
Increase in Solar Cell Shipments
Solar cell shipments have seen a notable increase, reaching 1.6 gigawatts in the first half of 2025, up from 985 megawatts in the same period last year. This growth underscores Toyo’s expanding footprint in the solar market and its ability to meet rising demand.
Cash Position Improvement
Toyo reported an improved cash position, with approximately $30 million in cash and current restricted cash as of June 2025, compared to $15.1 million in December 2024. This improvement provides the company with greater financial flexibility to pursue strategic initiatives.
Decline in Gross Profit Margin
The company experienced a decline in gross profit margin, which fell to 16.6% in the first half of 2025 from 19.3% in the same period last year. This decrease is attributed to increased unit costs of raw materials, posing a challenge to profitability.
Increase in Operating Expenses
Operating expenses surged by 219.9%, reaching approximately $30 million for the first half of 2025, up from $4.2 million in the same period last year. This increase is primarily due to expenses related to new facilities and the costs associated with being a public company.
Decrease in Net Income
Net income attributable to shareholders declined significantly, amounting to approximately $4 million for the first half of 2025, compared to $19.6 million in the same period last year. This decrease reflects the financial pressures the company is currently facing.
Reduced Non-GAAP Adjusted EBITDA
Non-GAAP adjusted EBITDA decreased to approximately $23 million for the first half of 2025, down from $33 million in the same period last year. This reduction is due to increased operating expenses and reduced sales volume to the U.S. market.
Forward-Looking Guidance
Looking ahead, Toyo Co., Ltd. has provided guidance with a strategic focus on expanding solar cell production, projecting shipments of approximately 4.2 to 4.4 gigawatts for the full year 2025. This expansion is expected to drive revenue to a range of $375 million to $400 million, with net income anticipated between $39 million and $45 million. The company is optimistic about improving gross profit margins as new facilities reach full capacity and is committed to leveraging its manufacturing capabilities and strategic partnerships to overcome tariff-related challenges.
In summary, Toyo Co., Ltd.’s earnings call presented a mixed picture with promising strategic initiatives counterbalanced by financial challenges. The acquisition of the VSUN brand and expansion of solar manufacturing capacity are poised to drive future growth, while the company navigates current financial pressures. Investors will be keenly watching Toyo’s ability to execute its growth strategies and improve profitability in the coming quarters.