TOYO Co., Ltd. (TOYO) Earnings Call Transcript & Summary

Thank you for standing by. My name is Tina and I will be your conference operator today. At this time, I would like to welcome everyone to the TOYO Full Year 2024 Fiscal Results Call. [Operator Instructions] I would now like to turn the call over to Crocker Coulson, Investor Relations. Please go ahead.

Thank you, Tina. Hello, everyone and thank you for joining us to review TOYO's second half and full year 2024 results. The earnings press release with those results should be posted on PR Newswire momentarily. And we also have a investor presentation that's been updated that you can find at our investor website at investors.toyo-solar.com. With me on the call today are Mr. Junsei Ryu, TOYO's Founder and Chief Executive Officer; Raymond Chung, TOYO's Chief Financial Officer; and as well Simon Shi, President of TOYO. After the prepared remarks are concluded, we're going to open up this call to your questions. But before we begin, some statements in this teleconference are forward-looking within the meaning of federal securities laws. Although we believe these statements are reasonable, we can provide no insurance that they will prove to be accurate because they are prospective in nature. Actual results could differ materially from those we discussed today. We also encourage you to review the company's annual report on Form 20-F that will be filed and other SEC filings to see risk factors that could materially impact our results. As I mentioned, the earnings release will shortly be available on the IR section of toyo-solar.com. Now with those formalities out of the way, it's my pleasure to turn this call over to Mr. Junsei Ryu, Chief Executive Officer; [ Sajako Katare ] of AUM will be transiting for Mr. Ryu. Ryu-san, please go ahead.

Thank you, Crocker. Good morning, everyone. We're glad you join us, from here, by USA, Japanese. [Foreign Language]

[Interpreted] We closed fiscal year 2024 with $177 million in revenue, representing 184% year-on-year increase. Despite the strong top line growth, our margins were adversely affected by the imposition of anti-dumping and countervailing duties by the U.S. Department of Commerce and the International Trade Commission. These regulatory actions disrupted our delivery times and pricing models, resulting in gross margins. Nonetheless, we have remained committed to our long-term vision. A key milestone was successful commissioning of our 2 gigawatt solar cell facility in Ethiopia, which is now partly operational. Driven by strong customer demand, we have decided to strategically scale operations and double our production capacity to 4 gigawatts by the end of August 2025. Despite industry challenges, we advanced strategies to strengthen resilience and fuel growth. We redirected our Vietnam cell factory to serve high-growth non-U.S. markets. Our sales team has done a great job developing these new markets in short order. In Vietnam, we anticipate selling 1.5 gigawatts over 2 gigawatt nameplate capacity to non-U.S. markets with the primary focus on India and Taiwan. Our Ethiopia expansion has helped offset tariffs and enhance global competitiveness with our 2025 capacity already allocated. Bringing our Ethiopia solar cell factory online with [ automation ] in just 6 months, is a powerful testament to the strength and agility of TOYO's team. Our 2 gigawatt solar cell facility in Ethiopia is operating smoothly with over 80 megawatts scheduled for customer delivery by the end of April 2025. We are on track to ramp up to a full monthly production capacity of 150 to 200 megawatts by May to June 2025. This facility represents a critical asset in our global expansion strategy, strengthening our ability to meet growing demand, maintain margin discipline and build deeper, longer-term customer relationships. The initial 2 gigawatt capacity in Ethiopia is already fully allocated. Given the strong order momentum, we're swiftly executing a second 2 gigawatt expansion at our site. This next phase positions us to capitalize on sustained customer demand and further enhance our competitive positioning in the global solar supply chain. In the U.S., our Houston metropolitan area solar module plant is on track to commence production by mid-2025 with strong customer interest. Our diversified supply chain gives us a strong edge in a robust U.S. utility market. We're accelerating our manufacturing expansion to deepen our long-term commitment to the U.S. market. While recent U.S. tariff shifts have disrupted the market landscape, our confidence remains unwavering. We have the talent, technology and strategy to meet the rising demand of the U.S. solar market head on. I will now turn the call over to our Chief Financial Officer, Raymond Chung.

Thank you, Ryu-san. I will review our second half and full year 2024 financial highlights before we take your questions. So in terms of TOYO's financial update, in the second half of financial year 2024, we delivered 758 megawatts of solar cells. In terms of revenues, we generated $38.9 million in the second half of 2024, a decrease of 37.7% from $62.4 million for the second half of 2023. The decrease was primarily due to the impact of antidumping and countervailing duties and customer adjustments to focus on non-U.S. customers. Our cost of revenue was $43.6 million for the second half of 2024, which decreased 4.6% compared to $45.7 million for the second half of 2023. Total operating expenses increased to $8.5 million for the second half of 2024 from $2.9 million for the second half of 2023. Net income was $21.3 million for the second half of 2024 compared to a net income of $11.8 million for the second half of 2023. Next, I would like to go through full year 2024 results. Our revenue were $177 million in fiscal year 2024 compared to $62.4 million in 2023. The increase was primarily driven by the completion of the pilot production phase in the second half of 2023 and the ramp-up of sales order as commercial production accelerate. Our cost of revenue was $155.1 million in fiscal year 2024 compared to $45.7 million in fiscal year 2023. Gross profit was $21.9 million in fiscal year 2024 compared to $16.6 million in fiscal year 2023. Gross profit margin was 12.1% (sic) [ 12.4% ] in fiscal year 2024 compared to 26.7% in 2023. The decrease in gross profit margin was related to the customer adjustment made in the second half of 2024 to mitigate risk from AD/CVD to non-U.S. end customers with lower average selling price as well as the impact of reduced capacity utilization in Vietnam in the period of market adjustment. Operating expenses were $12.7 million in fiscal year 2024 compared to $4.7 million in fiscal year 2023, representing an increase of 172.7% year-over-year due to expenses related to listing and land and plant lease expenses in the U.S. and Ethiopia. Net income was $40.9 million in fiscal year 2024 compared to our net income of $9.9 million in the prior year. Net income in fiscal year 2024 included a $35.1 million change in fair value of contingent consideration payable for [ 30 million ] earn-out shares. Earnings per share basic and diluted was $0.13 for fiscal year 2024 compared to earnings per share, basic and diluted of $0.24 for fiscal year 2023. As of December 31, 2024, we had $15.5 million in cash and restricted cash in total compared to $19 million as of December 31, 2023. Okay. In terms of guidance for 2024, with projected total shipment of approximately 3.5 gigawatts in 2025, we expect to generate $33 million in net income, driven by improved operational efficiency and our strong positioning as a market leader in the global solar industry. Now I will turn it back to Ryu-san.

[Foreign Language]

[Interpreted] As we navigate a challenging and dynamic global landscape, our strategic execution across key markets, Vietnam, Ethiopia and the U.S. underscores our ability to scale with precision, optimize profitability and meet accelerating demand. With a fully committed order pipeline, operational momentum and a clear path to expand capacity, we are well positioned to deliver sustained growth and long-term value for our shareholders. In conclusion, we believe that TOYO is well positioned to serve the needs of the U.S. utility scale solar market. Given our flexible global sourcing platform, track record of excellent performance and reliability and deep multiyear relationships with some of the most significant developers in the U.S. market. 2024 tested the resilience and flexibility of our team and they came through with flying colors. With that, we'll be happy to address your questions.

[Operator Instructions] And we have no questions at this time. I will now turn the call back over to Mr. Ryu for closing remarks.

Operator, let's just give it 1 more chance for people to -- to see if we get any questions.

No problem. [Operator Instructions]

Okay. Operator, do we still have any questions or none?

There are no questions at this time.

Okay. Just to let everyone know, the earnings press release, I believe, is out or will be out in the next few minutes. And we -- yes, it is out. And so people want to have any follow-up calls with management after reviewing the earnings, please feel free to contact us and we'll be happy to arrange a follow-up call. Thank you. So at this point, operator, I think that concludes the call and we want to thank everybody for their time.

Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.

Thank you. Thank you, everyone.