T1 Energy Inc. (TE) Earnings Call Transcript & Summary

Good day, everyone, and thank you for standing by. Welcome to the T1 Energy Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. Now it's my pleasure to hand the conference to Jeff Spittel Executive Vice President of Investor Relations and Corporate Development. Please proceed.

Good morning, and welcome to T1 Energy's Second Quarter 2026 Earnings Conference Call. Before we get started, please turn to Slide 2 for our forward-looking statements disclaimer. During today's call, management may make forward-looking statements about our business. These forward-looking statements involve significant risks and uncertainties and that could cause actual results to differ materially from expectations. Most of these factors are outside T1's control and are difficult to predict. Additional information about risk factors that could materially affect our business are available in our annual report on Form 10-K filed with the Securities and Exchange Commission and our other filings made with the SEC, all of which are available on the Investor Relations section of our website. Turning to Slide 3. With me today on the call are Dan Barcelo, our Chairman and CEO; Evan Calio, our Chief Financial Officer. Jaime Gualy, our Chief Operating Officer; and Andy Munro, our Chief Legal and Policy Officer. I'll now turn the call over to Dan to get us started.

Thanks, Jeff, and welcome, everyone, to our second quarter 2026 earnings call. We'll begin on Slide 4. Our theme for today's call is ambition and execution. When we set out on this journey is T1, our ambition was clear to build the first vertically integrated American silicon-based solar company. Every milestone we have reached and every initiative we have pursued has been a step towards that north star Today, I'm pleased to report that we are executing that mission across every dimension of our business while remaining focused on the most important open items on our to-do list. . As a growth company building out our American supply chain, capital is the lifeblood of our strategy. And through a series of capital market transactions, we have been advancing construction of the 2.1 gigawatt Phase 1 of our G2 Austin, T1's solar cell fab in Rockdale, Texas. As we have noted previously, we have been funding construction of G2 Austin opportunistically with junior capital because the capital markets have signaled an appetite to underwrite our growth with equity and equity-linked instruments at the most favorable terms and conditions. In July, we executed a $120 million private placement of convertible notes, which is intended to bridge us to the comprehensive financing solution that we have been pursuing for several months. We view these financings as a means to an end, and we remain focused on this comprehensive financing based on a significant debt component, which we believe represents the most attractive combination of structure, quantum, cost, duration and counterparty. In the interim, the continued support we have received from our convertible and equity investors has enabled us to keep G2 moving while we advance our other key strategic initiatives. On the policy front, the Trump administration issued a Section 232 proclamation last week. We believe this new framework aligns with T1's commitment to establish the first end-to-end domestic polysilicon solar supply chain built on leading U.S. technology. While we and other industry participants are still working through the details, we believe we are witnessing the beginnings of a major American solar manufacturing industry. Andy will share more about 232 momentarily. Commercially, we announced a significant achievement just last week. T1 has executed a strategic offtake deal with Clearway Energy Group to supply 641 megawatts of G1 Dallas modules built with domestic solar cells from G2 Austin. This agreement augments our existing 900-megawatt Treaty Oaks contract and further validates the demand for what T1 intends to uniquely offer once G2 Austin is online. High domestic content, silicon-based Topcon modules that are not available at a comparable scale from any other American company. We also recently announced a landmark move to strengthen T1's competitive differentiation by acquiring the foundational Topcon intellectual property we had previously licensed. This is an example of how our growing involvement in the solar industry presents us with opportunities unavailable to our competitors. We also recently announced the landmark move to strengthen T1's competitive differentiation by acquiring the foundational Topcon intellectual property we had previously licensed. This is an example of how our growing involvement in the solar industry presents us with opportunities unavailable to our competitors. This acquisition enhances our competitive position, eliminates future licensing costs is value accretive and opens the door to potential partnerships and licensing revenue from third parties. Technology transfer is a multistage process, and we believe that owning the industry's leading intellectual property is a necessary element of T1's plan to build an American Solar Champion. T1's domestic solar manufacturing platform and emergence as a significant player in the sector has unearth several opportunities to expand our partnership network and revenue share with IPPs, developers and hyperscalers. Earlier this summer, we closed on 1 such opportunity with the acquisition of Core Power which we have rebranded as T1 NRI. NRI has a 50-year history of providing system solutions to blue chip customers in the industrial data center and government sectors. We believe this acquisition of a capital-light, high-margin business that provides T1 with a presence in the best and data center support markets an ideal complement to our solar business. NRI also brings world-class engineering talent to organization. I'd like to welcome Jay Bellos and the entire NRI team to the T1 family. We're excited to have you on board, and we look forward to growing the business together. Turning to Europe. We continue to advance our value optimization initiative for our legacy assets. Data center development in the Nordic region has been ramping up, and we believe that our data center asset in Moirana Norway which has been granted a 50-megawatt power allowance from the Norwegian grid operator is an attractive strategic target. We are currently engaged in multiple conversations to explore monetization pathways through a variety of structures and we are excited to share more details about the path forward as it's appropriate. At G2 Austin, our flagship U.S. solar cell fab in Rockdale, Texas construction is progressing steadily. The building is now ready for mechanical, electrical and plumbing installation and all key shipments from our production line equipment vendor are either on the water or already in the U.S. As we indicated in our recent Q2 preliminary results announcement, first cell production is expected in Q1 2027. At Gen Dallas, production volumes moved higher sequentially throughout the second quarter, during which we produced 935 megawatts of solar modules. Based on our continued success in sourcing sales from the non-FC international suppliers and customer demand, we now expect full year 2026 production and sales to fall near the high end of our guidance range of 3.1 to 4.2 gigawatts. Taken together, these achievements represent a company that is moving forward with purpose. Let's now go through each of these in more detail. starting with an overview of the Section 232 ruling and the implications for T1. I'll now hand the call over to our Chief Legal and Policy Officer, Andy Munro, to walk you through it. Andy?

Please turn to Slide 5. As Dan mentioned, following a late investigation, President Trump signed a Section 232 proclamation last week. We believe this framework represents a major step forward in the development of the domestic solar and polysilicon industry, which T1 adamantly supports. The key tenets of the proclamation are the imposition of minimum import prices and ad valorem tariffs on solar modules and subcomponents. These measures are designed to provide tangible economic and strategic incentives to invest in domestic solar capacity and the emerging U.S. polysilicon solar supply chain to support the semiconductor and solar industry, which is precisely with T1 and 2. The framework also provides an opportunity to access tariff offsets for companies who have committed investments to establish domestic manufacturing capacity such as T1's G2 Austin U.S. solar cell path. These benefits are tied to a facilities construction period and are contingent upon making significant progress to the satisfaction of commerce. With G2 Austin's 2.1 gigawatt Phase I currently under construction, and with plans to expand Yet 5 gigawatts or more in the subsequent Phase II, we believe that Q1 strategy is aligned with this framework. We maintain a healthy dialogue with the Commerce Department and we will continue to work with them during and following the 120-day period prior to implementation. In the interim, we applaud the Section 232 preformation and Q1 will continue to champion the purchase of building a robust end-to-end polysilicon-based solar supply chain here in America. And now I'll turn the call back over to Dan.

Thanks, Andy. Please turn to Slide 6. The acquisition of Topcon intellectual property from Ever volt Green Energy is 1 of the most consequential steps we have taken to differentiate T1 in the U.S. solar market. Topcon is the world's leading commercialized solar cell technology, and T1 had been licensing this IP since our founding. With this transaction, we have converted an ongoing licensing obligation into owned strategic intellectual property. We estimate the acquisition is NPV positive versus the prior licensing arrangement. And it eliminates projected licensing fees over the life of the previous IP agreement. The financial logic while compelling is only part of the story. -- as an American-owned listed and led company with U.S. ownership of Topcon IP, a distinction that matters to our customers and to policymakers. And with the potential to license this technology to third parties, we have optionality to generate a new revenue stream as the U.S. domestic solar market grows. When you look at the full picture of T1's value proposition to customers, which is based on 5 gigawatts of U.S. module capacity at G1 Dallas, gigawatts of U.S. solar cell fab capacity under construction at G2 Austin, American ownership, access to U.S. polysilicon and wafers through Hemlock and Corning U.S. ownership of Topcon IP and expectations to have available 2027 and 2028 module and cell volumes, we believe that no other American solar manufacturer can bring customers what T1 offers. We are building something genuinely unique in this market and this IT acquisition adds another layer to that differentiation. Now let's turn to Slide 7 for an update on construction progress at G2 Austin. As you can see from the photos in presentation and from our social media channels, G2 Austin is taking shape. The building is ready for mechanical, electrical and plumbing equipment installation and steel topping out is scheduled for August, a meaningful milestone that marks the structural completion of the building. We have already ordered the long lead time clean room equipment, and we expect to commence clean room installation later in Q3. Even more importantly, all key Phase 1 production line equipment is either already in U.S. ports or on the water, and we expect production line equipment installation to begin in Q4 of this year. On the Civil side, we finalized the contract for the Century Utility Plant and wastewater management plan during the quarter. The main production building is expected to be complete in Q4, setting the stage for equipment installation and final commissioning. To allow our team to proceed with an optimized installation and commissioning process of all 3 production lines, we are targeting a start of cell production in Q1 2027. This time line positions T1 to begin ramping up cell production in G2 during the first half of 2027, which is the key to unlocking the step change in T1's earnings power and cash flow that has been the foundation of our investment thesis. Now let's turn to Slide 8 for an update on operations at G1 Dallas. G1 Dallas had a solid second quarter. We produced 935 megawatts of solar modules, which was the second highest quarterly production of the facility. Production volumes moved higher each month during Q2. Our operations team at the factory continues to demonstrate world-class capability and G1 is expected to achieve production and sales near the high end of our 2026 targets. On the commercial front, we recently announced a 641-megawatt strategic offtake with Clearway Energy. This marks the second significant offtake contract for G1 modules with G2 cells that T1 has negotiated and secured directly with an established U.S. utility scale developer. We view these commercial successes as validation of T1's integrated domestic content strategy from the U.S. marketplace. For 2027 and beyond, our strategy and competitive offering are resonating with customers at a time when U.S. electricity demand is growing meaningfully and AI infrastructure development requires power at speed and scale. Domestically produced Topcon cells simply aren't available in the U.S. today at scale, and our available capacity of G1 modules made domestically produced G2 cells is attracting widespread interest at prices above the level at which we have previously secured contracts. While we continue to derisk our business case through our financing and advancing constructions at G2, our 3 gigawatts of contract coverage for 2026 and our growing offtake portfolio for 2027 and beyond provide T1 with solid top line and gross margin visibility. And with that, I'll turn the call over to Evan Calio, our CFO, and for a review of our financials and an update on our capital formation activities. Evan?

Thanks, John. Please turn to Slide 9. T1 delivered strong second quarter financial results and is well positioned to generate improving performance in the second half of 2016. On production, as Dan just mentioned, we produced 935 megawatts of solar modules in 2Q gross margins were 19.5%, an improvement of roughly 300 basis points versus 1Q, reflecting higher throughput and a favorable mix of deliveries under our fixed margin and cost plus offtake contracts. Adjusted EBITDA was $10.7 million, inclusive of a nonrecurring EPA tariff refund of $24 million that were received subsequent to the end of the second quarter. On our quarterly adjusted EBITDA, SG&A to third parties was significantly higher in 2Q versus 1Q. Higher SG&A in 2Q was largely event-driven we executed a convertible offering in April. We've been incurring advisory and legal fees associated with our comprehensive financing and we have 2 ongoing litigation cases as well as other matters that require legal support. Further, we are building an organization for significant growth at G2 and relative to our module facility at G1. Looking at the balance sheet. Cash, cash equivalents and restricted cash was $149 million at the end of the second quarter. Given the current and projected cadence of capital expenditures on Q2 and our continued pursuit of a comprehensive G2 financing solution we elected to raise an additional $120 million of gross proceeds last week through a private placement of convertible notes. On the production and EBITDA outlook, we expect Q3 and Q4 run rates to exceed 2Q as deliveries ramp in the second half. We continue to believe full year 2026 production will fall within the high end of our 3.1 to 4.2 gigawatt guidance range, and we expect adjusted EBITDA to improve for the balance of the year. There are no changes to our run rate guidance for integrated production. We're targeting a run rate of $375 million to $450 million for Phase 1, and we're targeting a run rate of $650 million to $700 million for the matched 5 gigawatts and of G1 and G2 volumes. Turning to capital formation. In August, we closed $120 million private offering of convertible notes due 2031 and the transaction is intended to serve as a bridge to the comprehensive financing solution, we're targeting to fund for the remaining balance of capital expenditures for Phase 1 of G2 Austin, which includes a significant debt component. We believe this bridge puts us in a strong position to finalize the comprehensive solution while keeping G2 construction on schedule. We have a management team with deep capital markets experience, and we've applied that experience throughout this process. sequencing our funding sources carefully to balance the cost, structure, quantum and duration. Our confidence in our ability to close this financing is grounded in the ongoing dialogue and an appreciation of value of what T1 is building. These conversations have yield a preferred financing solution, which remains our target because we believe it continues to offer the most attractive combination of cost, structure and quantum. In our estimation, bridging to this targeted fencing, while not in our initial plans is clearly in the best long-term interest of T1, our shareholders, customers and partners. And now I'll turn it back to Dan for closing remarks.

Thanks, Evan. Let's turn to Slide 10. As we look at the path ahead, our strategic priorities remain clear and consistent: build, fund, operate and engage -- on building, building energy and building America are at the heart of T1's corporate ethos. But there is also a practical commitment to build this company into an industry leader founded on world-class assets and technology. As we have chronicled on social media and through this quarterly update, the G2 team is advancing construction, hitting significant milestones and working through the necessary steps to complete the G2 facility while we ship production line equipment to the U.S. . We also continue to build T1's commercial presence with major utility-scale customers. The Clearway offtake deal this quarter is another proof point that T1's unique value proposition is resonating in the market. And with our ownership of Topcon IP, we have a new tool to leverage our position and enhance our U.S. solar partnership network. On funding, Evan detailed the $120 million convertible notes offering that is intended to serve as our bridge to the comprehensive financing solution for G2 Phase 1 we are targeting. Securing that solution, which is based on a significant dent component remains our #1 priority. And in Europe, our team is advancing discussions with multiple potential counterparties to optimize the value of our asset portfolio, consisting of our data center asset, grid allowance and NOL carryforwards. On operations, T1 is a hyper-growth company with big ambitions. We are in a path to building a much larger business. We are committed to continuously improving our operational capabilities and performance. After a solid first half of 2026 G1 Dallas, we anticipate higher production, sales and profitability in the second half of the year. As the Section 232 proclamation is implemented, we will operate within its framework, which we believe is intended to support advanced American manufacturers committed to building America like T1 is. With the NRI acquisition and our G2 U.S. solar cell fab, our operating footprint is expanding across a growing commercial opportunity set. We intend to capture these opportunities to create value for shareholders by identifying and executing cross-selling opportunities with T1 NRI and by continuing to hire world-class technical and operational talent. On engagement, we continue to position T1 as the U.S. silicon-based solar leader. We have built T1 to win in this environment, and we intend to do exactly that. Our focus is executing at a high level with our existing assets and pursuing new opportunities that fit our mission while we communicate clearly and consistently with our capital providers. We are proud of the progress we have made in the second quarter and excited for what lies ahead in the second half of 2016 and into 2027. The foundation is in place. We are advancing G2 construction, while we expect to ramp production and sales of 1 our commercial momentum is building, and we have the team, the technology and the capital plan to execute. Thank you all for your continued support and interest in T1 Energy. With that, I'll turn it back to Jeff to coordinate our Q&A session.

Thank you, Dan. Carlos, we can open up the line for questions. .

[Operator Instructions] Our first question is from Philip Shen with ROTH Capital Partners.

Great. Okay. So with the polysilicon 232 out now, I wanted to check in with you guys to see if you're already seeing a change in pricing dynamics with your customers? I know it's only been a couple of days, but can you share any color on how those conversations are going I think the MIP is $0.38 a lot plus this 15% ad valorem tariff. Are you pricing do you think you can price north of $0.42, $0.43. Just provide a little bit of color.

Sure. Thanks, Phil. Look, since 232 dropped, there's been a flurry of calls from both customers, developers, potential developers. And we are aware that there's a lot of scrambling going on in the industry to try to source within this 120-day window. And then also, there's a lot of scrambling for people to see how they can comply with the onshoring plans. We feel really, really comfortable with T1 because it's very simple for us. . We buy all of our polysilicon, and we buy all of our wafers from Corning or Hemlock Semiconductor. So from our standpoint, those are basis by which we feel that this 232 action really, really plays to what we've designed. Secondly, we're actually building and we're building a plant right now. So if you look at what's happening there, we feel that we do fit a lot of the definitions of commerce has here on those parts. For now, we don't really have or want to provide real guidance on pricing. But I'd say in a broad way, there is a lot more confidence now in terms of the types of domestic products we're selling rather than dependency on things that would be imported that may or may not be, we'll say, accepted by commerce, both during the 120-day window or accept it as part of an onshoring plan. So I think overall, I see much more confidence in our cost structure, which is, again, set upon a Hemlock Poly or Corning wafer. Andy, do you want to touch a little bit more on the mechanics of those 2 pieces?

Well, really, I think you perfectly, Dan. I think we're basically the poster child for this 232, right? We've got a fully domestic supply chain in the Polish area with the module 2, the crucial cell component. And we're anchor customers for hemo Holly and Corning wafer. So this 23, we were doing what this 232 incentivized before it even came into play. So we feel really confident in our position to take advantage of it. and also to benefit from the onshoring program and get tariff offsets. And we've been engaged with commerce in very productive discussions before the 232 dropped and we plan to be doing that in order to maximize the benefits of T1.

Okay. Great. Dan and Andy, Continuing on, as it relates to the tariff offset program based on U.S. CapEx. I was wondering if you could share a little bit about how you guys expect to take advantage of that and for example, with the if you use Corning wafer, then you don't need to take advantage of the tariff offset program. But if you import a wafer, I'm guessing you do. And so how much of the tariff offsite program would you expect to tap into in '27? And then mechanically, how would it work would you actually have to pay the difference between the MIP and the import wafer cost to pay and then the 15% a long term? Or would there be kind of a not in change of cash, if that makes sense so that you can actually I mean you don't have to actually deploy any money at all. So thank you for the long question.

Andy, you don't do the mechanics. But first, let me do it at a higher level. we have 5 gigawatts of modules. We're building about 2 gigawatts of solar cell. Those solar cells that we build at G2 Austin, we use Corning wafers, and then we have a delta of 3 gigawatts. We expect that a portion of that will be when we are covered with Hemlock Poly, and we're interested in either expanding our Hemlock Poly relationship or U.S. poly or as you said, fall under the guys of the system where we're importing to cover that coverage. So we feel very, very comfortable that we'll be able to look at to take maximum benefit for the onshoring program, again, because we're planning to build. Andy, do you want to touch on some of the mechanics there?

Yes, sure. So first, you think about the necessary import cells until we have G2 up and running. So that is 1 area where you could have the offset. And as you've indicated, we have different potential strategies for acquiring the additional wafers that we would need. And also, you have the potential for Phase so we have we're certainly discussing with domestic producers. And if we're not able to obtain, we have flexibility to import. And I think we would be well positioned because of all of our extensive investments in the U.S. supply chain to benefit from the onshoring program and the offset your specific question, I'm not sure I'm following exactly but an offset could potentially it could potentially reduce your tariff burden that delta materially is not completely, right? I think the profumation allows for that, but I think it's going to be on a company-by-company basis what you're able to negotiate with commerce, but we feel that we're in a very good position because like I said, we've been investing in the U.S. supply chain. And we're going to continue to do that, and we have a strong case to make.

And we have our team, which will be working with Commerce to get clarity on some of these mechanics as will the rest of the industry. I think the most important thing post 232 is that the conversation has changed. Before, it was literally how do I get domestic light, how do I get this? How do I I'm talking about competition or others in the industry, how do we bring in imported modules, imported cells, where are they from? What's the QA/QC, where do they come from? Where is the poly was it Weger, that was always the conversation and the pressures were about the lowest cost. With in a post-232 world, the conversation is, okay, there's a minimum price. And it's almost like all of those other conversations are now moot points. It's all about are you building in America? Are you investing in America? Are you doing jobs in America? If so, here's the onshoring plan for you. We believe confidently that we fit that model and we think that, that will give us as we're building and expanding capacity, a lot of room to comply. So we're excited about the conversation moving towards an assumption now that these are the new pricings rather than trying to figure out every which way from Sunday on how to get things into the county that may not fully comply.

Okay. Great. One last one. As it relates to the financing, you guys had talked about end of May and then it was end of June and the end of July. So we're sitting here still kind of mid-August. Just curious if you can give us a little more color on timing and when that financing package that you've envisioned can actually close.

Things take longer than expected. We didn't want that. We didn't expect that. But at this point today, we're extremely confident in this comprehensive financing, which is base significant debt component and that's where we are today. Evan, would you like to give some more color around financing? And I would just add, we're fairly we have the right advisers. We have the right teams. We're working with the right counterparties to achieve this. and it took longer than expected. But right now, we're extremely confident. Evan?

Yes. No, look, I mean, we're obviously balancing -- progressing the optimal financing solution with keeping T2 project on pace and on budget. And as Dan mentioned, we've done what we need to do. It's taking a little bit longer. We chose to go into the capital markets for a bridge amount of financing on a convert that extends the time period in which we're expecting to complete our financing. .

It comes from Sherif Elmaghrabi with BTIG.

Sticking with the conversation on 232, you guys talked about your ability to source that incremental in sort of the medium term, call it. But at what point does domestic demand pull G2 Phase II forward? And thinking about upstream, how do you feel about coding or any supplier's ability to deliver an incremental 2 to 3 gigawatts of domestic wafers..

Thanks for the question. I can't speak. For Corning or Hemlock, as you're aware, but we've had interest in conversations about what capacity is there and indications that it could be there. So we believe that there'll be enough or enough incentives in the right amount of time to get that capacity. That's the first point. The second point in terms of our sourcing strategies, we have not announced Phase II as every Phase I is 2 gig. We've talked about a 5 gigawatt optimum solution. When and if the market's right, the customer is right, the Board approves it, and we sanction it. We'll announce that to the market. but we haven't yet sanctioned that. We also feel a real duty to as the prior question touched on, we want to complete the comprehensive financing based on a significant debt component, and we want to do that ASAP. We want to deliver what we said we would deliver, and that remains the core focus before we look to expansion there.

Okay. That's very helpful. And on NRI, how soon do you think we might start seeing an integrated offtake agreement there? .