Thank you for standing by. My name is Kate and I'll be your conference operator today. At this time, I would like to welcome everyone to the TOYO Co., Ltd first quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Crocker Coulson, investor relations for Toyo. Please go ahead.
Thanks, Kate. Hello everyone, thanks for joining us to review Toyo's first quarter 2026 results. This morning, Toyo posted both the earnings release and a related investor presentation to our website, which you can find at investors.toyo-solar.com. With me on the call today are Takahiko Onozuka, Toyo's Chairman and Chief Executive Officer, Raymond Chung, Toyo's Chief Financial Officer, and Rhone Resch, Toyo's Chief Strategy Officer. We also have Simon Shi, senior board advisor, who will be available during the Q&A portion of this call. After their prepared remarks are concluded, we're gonna open up this call for your questions. Before we begin, the financial results discussed on this call are for the first quarter of 2026 and 2025 are unaudited. Some statements in this teleconference are forward-looking within the meaning of federal securities laws.
Although we believe these statements are reasonable, we can give no assurance that they will prove to be accurate because they are perspective in nature. During this call, we will also discuss certain non-GAAP financial measures such as adjusted net income and adjusted EBITDA. We believe these measures provide meaningful supplemental information regarding our operational performance by excluding non-cash items and one-time charges that may not be indicative of our core business. Actual results could differ materially from those we discussed today, and we encourage you to review the most recent annual report on Form 20-F and other SEC filings for risk factors that could materially impact our results. With those formalities out of the way, it's now my great pleasure to turn the call over to Takahiko Onozuka, TOYO's Chairman and CEO. Takahiko Onozuka, please go ahead.
Thank you, Crocker. I'm very pleased to report that Toyo delivered a strong first quarter over 2026, one that I believe marks a true inflection point in the company's trajectory. We achieved record revenue, record gross profit, and record net income for the company, all in a single quarter. This is a result of years of deliberate investment in our technology, manufacturing capabilities, and our people. It is gratifying to see that work translate into these kind of financial results. Let me walk you through the headline numbers at the high level. Revenue for Q1 2026 was approximately $142.8 million. 177% increase year-over-year from $51.5 million in Q1 2025.
This growth was broad-based , driven by significant higher solar cell and module shipment volumes as our expanded manufacturing footprint came fully online. Gross margin expanded to 33.5%, up from 9.3% in the prior year quarter. This reflects the structural improvement in our business model as we have scaled production and improved our cost structure across the board. Net income for the quarter was approximately $28.4 million compared to a net loss of $3.7 million in quarter Q1 2025. Diluted earnings per share was $0.75 versus a loss of $0.10 per share in Q1 2025. This swing to profitability is something we are very proud of, and we believe it reflects a sustainable change in the earning power of this business.
Demand for our high efficiency solar solution across the U.S. remains strong, as driven by the accelerating energy transition. We believe that the market is coming to recognize that solar paired with battery energy storage is the fastest and most cost-effective way to add large amount of new power to the grid to meet AI-driven demand while keeping costs manageable for customers. Based on our Q1 performance and our visibility into the remainder over the year, we are reaffirming our full year 2026 guidance of solar cell shipment of between 5.5 GW and 5.8 GW, solar module shipment of between 1.0 GW and 1.3 GW. Full year adjusted net income in the range of $90 million- $100 million. We are confident in these targets.
I will now turn the call over to our CSO, Rhone Resch, to review our strategy for 2026.
Thank you, Onozuka-san, and good morning, everyone. I'd like to take a few minutes to discuss our near-term expansion plans and what they mean for TOYO's long-term manufacturing footprint in the United States. Our first priority is the expansion of our U.S. module facility in Houston, Texas. We currently operate approximately 1 GW of annual module production and remain on track to increase that to 2 GW by the third quarter of 2026. We are building that out right now as we speak, and it's on track. This expansion is in progress and with additional production capacity expected to come online in phases over the next couple of months. Based on progress we're seeing today, we remain confident in our Q3 2026 timeline.
We believe this expanded footprint positions Toyo to support continued customer demand and provides a strong foundation for growth in 2027 and beyond. Demand for domestically manufactured FEOC-compliant modules continues to accelerate, and this expansion positions us to serve that market at a meaningful scale. Our second initiative is to establish a domestic solar cell manufacturing capacity. We are in the final stages of planning our U.S. solar cell manufacturing facility, which is currently being designed for approximately 1.5 GW of annual production. This will also take place at our Houston facility. We expect to complete the planning process in the near term and begin transitioning from development and site preparation into execution during the second half of this year, 2026.
We are being deliberate and disciplined in our approach, working with local officials on permitting and environmental issues, evaluating sites, capital requirements, equipment sourcing, and the broader supply chain implications. One of the key points here is that we already have the facility. It's a 567,000 sq ft facility where we manufacture our modules, and we'll be expanding at that site. As many of you know, Toyo has a strong record of developing and ramping manufacturing facilities on schedule once we move into execution. We expect to bring the same disciplined approach to our U.S. solar cell facility. We look forward to providing additional details and outlining our broader development plan as we progress through the next stages of the project.
When both of these initiatives are complete, TOYO will have 2 GW of solar module capacity and 1.5 GW of solar cell capacity, all in the same facility, all in the U.S. This is a meaningful and differentiated manufacturing presence, and it would make TOYO one of the most vertically integrated domestic solar producers in the country. We are also committed to bringing next-generation solar technology to the U.S. in support of American energy independence and energy security objectives. As a company from one of America's closest allies, Japan, we believe TOYO can play an important role in helping revitalize advanced U.S. solar manufacturing. That commitment includes plans for a U.S.-based R&D center focused on solar cell engineering and manufacturing excellence, leveraging the expertise of our CTO and our advanced engineering team.
This integrated manufacturing footprint provides our customers with a transparent, domestically produced product and aligns closely with U.S. onshoring and energy security objectives, and gives TOYO greater control over supply chain reliability, manufacturing quality, and long-term execution. We are building this step by step and look forward to providing further updates as we progress. I will now turn the call over to our CFO, Raymond Chung, to review our financial results. Raymond?
Thank you, Rhone. I would like to go over our financial performance of Q1. Revenue for Q1 were approximately $142.8 million, representing year-over-year growth of 177% from $51.5 million in Q1 2025. This growth was primarily driven by significantly higher solar cells and solar module sales volume, underpinned by full ramp-up of our expanded manufacturing capacity. Cost of revenue was approximately $95 million in Q1 2025, compared to $46.7 million in Q1 2025, reflecting the substantially higher production and shipment volume during the period. Gross profit was approximately $47.8 million, an increase of 894.8% from $4.8 million in Q1 2025.
Gross margin quadrupled to 33.5% from 9.3%. The total operating expenses for Q1 2026 were approximately $11.5 million, an increase of 89.4% compared to $6.1 million in Q1 2025. Selling and marketing expenses were $2 million compared to half a million dollars in prior year period. The increase primarily reflects higher sales commissions in line with revenue growth, plus testing, advertising, and head counts. General and administrative expenses were $9.5 million, up by 69.1% compared to $5.6 million in Q1 2025. This increase was primarily driven by the broader operating scale of the business following the commissioning of our new 4-GW cell line and our Houston module facility over the course of 2025.
Non-GAAP EBITDA for Q1 2026 was $48.1 million compared to EBITDA of $2.4 million in Q1 2025, an increase of $45.7 million. Non-GAAP adjusted EBITDA was $48.3 million compared to adjusted EBITDA of $2.8 million in Q1 2025, an increase of $45.5 million. The improvement was driven by revenue scale-up, gross margin increase from 9.3% to 33.5% compared to the prior year quarter, and disciplined operating cost management and production efficiencies. Net income for Q1 2026 was approximately $28.4 million compared to a net loss of $3.7 million in Q1 2025, a year-over-year improvement of approximately $32.1 million.
Diluted earnings per share for Q1 2026 were $0.75 compared to a loss per share of $0.10 in Q1 2025. As of March 31st, 2026, the company held $72.2 million in cash and restricted cash, including non-current restricted cash. This compares favorably to $58.9 million as of December 31st, 2025, reflecting solid operating cash generation during the quarter. That concludes the financial review.
Great. Thank you, Raymond. Operator, I think we're now ready to open it up for Q&A. Could you please provide instructions as to how listeners can ask questions? Thanks so much.
We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Amit Dayal with H.C. Wainwright. Your line is open.
Thank you. Good morning, everyone, and congrats on the execution. Just wanted to clarify, you know, the guide for 2026. Are the Section 45X credits, you know, part of the net income guidance, or that could potentially be some upside to the net income for 2026?
Hi, Amit. This is Rhone. The Section 45X credits are not in our guidance for 2026, but they do provide an upside, and we're going through the review of our 2025 production from the facility in Houston. Clearly, as we're ramping up the facility in Houston, the Section 45X creates a good opportunity for us. I think what's important to point out is the level of auditing and scrutiny we've gone through to ensure that we are fully compliant with Section 45X. That process does take a little time, but we're playing a very conservative role here in order to not count on Section 45X. Certainly it provides an opportunity for us in the future.
Understood. Thank you for that. Just a follow-up. On the CapEx for, you know, your U.S. expansion plans, is majority of that already implemented? You know, it looks like for the cell production, you may have, you know, some costs around equipment, et cetera. Just wondering if you have a sense of how much CapEx will be needed over the next year to get everything completed and ramped up.
The CapEx that we listed this year is really for both the final payments of Ethiopia and then the build-out of our 2nd GW of module production in Houston. We do have some very detailed analysis on the cell plants, obviously, as we've spent the last six months going into great detail in the planning. We're not ready to announce specifically the details of the cell facility. You're right, there will be some expenses this year, but the majority in 2027.
Understood.
I believe for the expansion of modules, they're looking at $30 million in CapEx this year.
That's right.
which can be easily funded through operating cash flow.
Thank you, Crocker, for that. just last one, guys. You know, the revenue output for 2026, is that majority U.S., or if you could just clarify what's the geographic mix of that revenue?
Simon, do you wanna add? Oh, okay. Rhone, go ahead.
I was just gonna say, in 2026, the majority of our customers are in the United States. Obviously, as we're ramping up, remember our module facility really came on in the fourth quarter of 2025, and now we're expanding it, so the majority of our revenue is coming from U.S. customers. Simon , do you have specific details you wanna share?
Yeah. Yeah, actually, that depends on the movement of the pricing. We believe in terms of volume, at least, over 3/4 of our business will be from the U.S. customers. U.S. oriented businesses.
Understood. That's all I have, guys.
I mean, as I think, as you know, the Vietnam cell plant is none of that product comes to the U.S., so that's serving other markets.
Yes, understood. Thank you.
Your next question comes from the line of Colin Rusch with Oppenheimer. Your line is open.
Hey, guys. Can you talk a little bit about the equipment deliveries into Texas and any delays that you might be concerned about or any expediting fees that we might wanna think about as part of the CapEx plan?
Simon, do you wanna take that one?
Yes. Thank you. Yeah, thank you for the question. So far, because we're undergoing both, you know, module production expansion and a potential cell production, you know, implementation in Houston. Neither of the two projects, you know, we're seeing any, you know, material impact, you know, on the equipment, you know, delivery or other things so far. That's how we're taking it at the moment.
Okay, that's super helpful. Then I guess on the marketing side, I just wanna get a sense of the competitive landscape. It seems like you guys have some nice legacy customers in the U.S., and transitioning into the U.S. production should be a pretty compelling sales proposition for them. Just curious about how competitive, you know, your supply agreements are right now and how you see that evolving here over the next couple of years as a couple of folks start to expand capacity in the U.S.
Yeah, since we're moving, you know, towards more, you know, expansion of our production in the U.S. both for module and potentially for cell, actually, we are seeing very strong demand and interest from our existing customer portfolio for the products for the next two years. Even though I don't have any official, you know, information about our cell production plans so far in the U.S., but I will assume there will be a very robust, you know, demand in the U.S. either from our current customer or potential new customer for the products, domestic products.
Perfect. Thanks so much, guys.
Yeah. Just to make it clear, we do expect to have more information on that fairly soon.
I'll now turn the call back over to Crocker Coulson for closing remarks.
Great. Well, we really appreciate the time that everyone took to join us on the call today. I think you can tell that the whole team is very excited about what's ahead for Toyo in the coming years and in 2026 specifically. Feel free to reach out to us with any questions for management that we couldn't cover on today's call, or if you'd like to visit with management on future trips to the U.S., U.K. and Europe to meet with investors. Thanks so much.
Ladies and gentlemen, as that concludes today's call, thank you all for joining. You may now disconnect.