Good morning, everyone. If everyone could take their seats, I would greatly appreciate it. While you are doing so, I want to just give a quick safety announcement. As a manufacturing facility and a manufacturer, TOYO takes safety very seriously. Throughout the day, please be aware of all of the safety practices on the floor if you are doing the tour or within this facility here as we are going through the presentations. If an alarm goes off at any point in time, we ask everybody to go to the immediate exit area. If you cannot find it, there will be a TOYO employee with you at all times to make sure that you are directed in the right position. If you have any questions at any point in time, again, reach out to any of us. We are happy to answer your questions about safety and procedures.
Good morning and welcome to TOYO's Solar Analyst Day. I am Rhone Resch. I am the Chief Strategy Officer of TOYO. On behalf of the entire leadership team, thank you for joining us here in Humble, Texas, and online, of course, for those who are watching us through the webcast. For those who are here in person, we are pleased to welcome you to our new 2-GW U.S. module manufacturing facility. This campus represents an important step in TOYO's growth and in our broader strategy to build a more secure and competitive solar supply chain in the United States. Today, we want to give you a clear understanding of that strategy, the progress we have made, and the work ahead. Before we begin, I need to cover our safe harbor statement.
Today's presentation contains forward-looking statements, including statements about TOYO's strategy, expected growth, manufacturing plans, future production, capital requirements, regulatory developments, and other expectations about our business. These statements reflect management's current views as of today. They involve assumptions, risks, and uncertainties that could cause actual results to differ materially from those discussed. Please review the safe harbor language on this slide, together with the risk factors and other disclosures in TOYO's filings with the Securities and Exchange Commission. TOYO undertakes no obligation to update these statements except as required by law. We may also discuss non-GAAP financial measures. Reconciliations to the most directly comparable GAAP measures appear in the appendix in today's presentation. Okay, got the business out of the way. Here is the agenda for today. It is a fun one for sure.
We are going to start off with our CEO, Takahiko Onozuka, and he is going to talk about the strategic direction and the market forces in the United States and our solar supply chain. Then our CFO, Harada-san, will review our first half financial performance, go through the balance sheets, capital plans, including the funding approach for our proposed HJT facility. Then I am going to come back up here and I will go through some of the changing dynamics in the U.S. policy environment that affects solar. I am going to talk a little bit about our U.S. supply chain strategy and the steps we are taking to expand manufacturing here in the United States. We are then going to cover solar manufacturing and specifically the quality of manufacturing, supply chain issues, and then we are going to talk a little bit about HJT technology.
And for us, this is the long-term growth strategy. It's a technology play, but it's also a manufacturing play here in the United States. So we've reserved time at the end for questions. So we encourage you to use that discussion to explore the issues most important to your analysis of the company. So if you could hold off on questions until the end. And then, of course, after this, we're going to have an open public event, which is a ribbon-cutting ceremony for the 2-GW facility, and that will begin at 11:00 A.M. Okay. Oops. So today's presentation brings together the central elements of TOYO's investment story, our established global manufacturing base, our growing U.S. presence, our financial performance, and our plan to move further upstream into advanced solar technology. Leading that strategy is our Chairman and Chief Executive Officer, Takahiko Onozuka.
Onozuka-san brings more than 40 years of experience in international finance, energy infrastructure, and decarbonization. Since becoming Chairman and CEO in March, he has focused TOYO on disciplined growth, U.S. manufacturing, and the development of a secure, non-FEOC supply chain. Please join me in welcoming TOYO's Chairman and CEO, Takahiko Onozuka.
Good morning, everybody, and welcome to Humble, Texas. Thank you to everybody for traveling here today. In just a few minutes, we'll cut the ribbon on our 2-GW module facility. Our second module line is complete. TOYO now has 2 GW of module capacity right here in Houston. Think about how quickly this has moved. In September 2025, we acquired the VSUN brand, which opened more doors in the U.S. market. A month later, our first Houston module line began operating. Today, a second line is finished. And we are not stopping at the modules here in Humble. We are planning a $357 million HJT cell facility. Design work is complete, and we are now applying for permits. We expect pilot production in the first quarter of 2028. So why Humble and why now? To answer that, let me first tell you who TOYO is.
TOYO is a company with a global footprint. Our headquarters are in Tokyo. We are listed on Nasdaq, and our factories stretch from Hawassa, Ethiopia to Vietnam, and now to Texas. Our core strength is solar cells. A cell is the heart of a solar panel, and making it well takes real know-how. The recipe, the equipment, and the engineering. We learn it every day. We have built 6 GW of cell capacity, 4 GW in Ethiopia, 2 GW in Vietnam. We care just as much about how we build. We are creating a non-FEOC supply chain. FEOC stands for Foreign Entity of Concern. Our customers want products they can trust, so we track our materials batch by batch. And we care about quality. In August, Intertek, an independent auditor, reviewed our Houston module factory. Their audit found no major or no critical issues.
Our first half results show this approach is working. Mr. Harada-san will take you through them in a few minutes. Let me explain the opportunity within the United States. Demand for solar is steady. About 43 GW are installed in the U.S. every year, and they expect similar levels through 2035. On the supply side, the U.S. has done building modules. It has about 75 GW of module capacity. This is more than the market needs each year. But look further up the supply chain. Cell capacity today is only about 3 GW, with more than 30 GW under development. Wafer capacity is only about 5 GW, and that is the tightest point in the chain. Think of the solar supply chain as a chain, literally. America has a strong last link, module, but the middle link, wafer and cell, are thin.
A chain is only as strong as its weakest link. This is a gap. We want to fill it. We have the experience to help. We have designed, built, ramped up the facility across the two countries. We know how difficult it is, and we know how to do it. In Humble, we will use HJT technologies. HJT stands for heterojunction. Picture a sandwich, a silicon wafer in the middle, with [two thin] layers on both sides. The result is higher efficiency and strong performance in hot weather. It also leaves room to add perovskite on the top in the future, which is our path to even higher efficiency. The path is still in development. Step by step, our plan is clear. Module today, HJT cell starting in 2028. Over the long term, we want to help fill the upstream gaps, including wafers.
This is a long-term vision, not a commitment, and it depends on securing financing. Our theme for today is simple: manufacturing in Texas, empowering the future. We mean it. We bring Japanese ownership, global cell experience, and a clean supply chain to the American market. Thank you. Mr. Harada-san will walk you through the numbers.
Thank you, Onozuka-san. Good morning, everyone. I'd like to tell you the financial story of the first half in three chapters. Just a moment, please. First, how we grew. Second, how we strengthened our balance sheet. Third, how we plan to pay for what comes next. Chapter 1: Growth. R evenue for the first half was $261.0 million. That is up 87.6% from last year. In other words, revenue nearly doubled. Behind that number are our factories. We delivered 2.61 GW of cells and 191.85 MW module in just six months. Gross profit was $84.7 million at gross margin of 32.5%. GAAP net income was $45.8 million. In the first half of last year, it was at $2.5 million. That is more than 18 times higher. Adjusted net income was $46.0 million.
This is a non-GAAP measure and the reconciliation in the appendix. Diluted earnings per share were $1.20. A year ago, they were $0.08. Next slide is Strengths. Chapter 2: Strengths. Cash at June 30th was $103.5 million. At the end of last year, it was $51.6 million. Cash has doubled. Including restricted cash, the total is $123.4 million. Shareholders' equity nearly doubled from $111.3 million to $209.8 million. Total asset grew to $537.6 million. Total liability were actually a little lower at $327.8 million. We grew without adding to our liabilities. There is another important change. Current assets are now $272.2 million, higher than current liability of $242.4 million. At the end, it was the other way around, $171.8 million of asset against the $295.7 million of liabilities. Our operation produced cash.
Operating cash flow was $61.4 million, up from $40.0 million. Just a moment please. Slide 15, Capital Raised. In the first half, we raised about $52.6 million in the net proceeds. In June, a registered direct offering where the institutional investors raised $50 million before cost, or about $47.1 million after cost. Our at-the-market program added about $5.5 million after cost through June 30th. We are putting this capital to work on early spending for the HJT facility and general corporate needs. Next slide is how we spend on HJT. The plan for Humble. The total planned investment in HJT facility is $357 million. Spending fall into five parts: design, procurement, civil construction, MEP, which means mechanical, electrical, and plumbing, and finally, installation of process equipment. We pay contractors by milestone, so payment for progress.
The largest payment is for the process equipment. Most of that is due after the production line is commissioned, and it is paid over several years. This model, the heaviest cash outflow comes when the factory is starting to produce. Now, the timeline. Design is complete. We are applying for permits under approval now. After the permits are obtained, we plan to begin civil construction MEP construction for while civil work is in progress. Equipment installation comes after MEP is complete. We target ramp-up and pilot production in the first quarter of 2028. This timeline may change. Next slide is how we plan to pay. How do we plan to pay for it? We expect three sources. First is Section 45X. This is a United States tax credit that rewards companies for manufacturing solar products in America. Second, debt financing.
Third, operating cash flow and other non-dilutive financing option for the balance. The expected amounts are shown on the slide. Please take a look. The expected amounts are shown on the slide. Together, the three sources cover the planned investment of about $357 million. I want to be clear, this is a provisional plan. These are preliminary estimate, not commitment. The debt financing is in the planning stage, and no definitive documentation has been signed yet. To summarize, we grew revenue nearly 88%. We turned that into real profit and real cash. Our balance sheet is stronger, and our plan for Humble is staged, with payment that follow progress. Okay, next, Rhone will discuss United States trade policy, an important topic for our business here. Thank you. Rhone. Please welcome.
Hey, everybody, I'm back. I get the chance to talk about policy, which although it usually ends up being a little bit boring, in the solar industry, it ends up being a fairly significant part of what's driving both the demand and the supply in the United States today. What I want to do, very sequentially, is to go through a number of specific policies and give you kind of TOYO's perspective as to how we're working through the policies, how they're benefiting our growth, how we're addressing some of these issues, because they're concerns that people have raised to us directly about some of the policies, as analysts. I want you to understand strategically how we're approaching this, because we're taking a very thoughtful, I would say, coordinated approach towards addressing policy in general.
But then also to look in a larger context with respect to supply chain and providing what we consider really a de-risked product to our customers in the long run. So you're going to see how all of these pieces fit together. So I'm going to start off by talking about the 232 program, kind of the elephant in the room, so to speak. Then I want to talk about circumvention and specifically the case in Ethiopia. Then we're going to talk about CBP detentions. We've had some detentions, so I want to talk very openly about that. Then we're going to talk a little bit about designing the supply chain specifically for our customers, as I mentioned.
So, a lot of these slides have a lot of information in them, and I apologize, but we'll make sure you have copies of them and you can look at the information in detail later. Certainly, obviously, reach out to me and the rest of the team with respect to providing you with more complete answers. But the 232 program was enacted in August of this year, as many of you know. It was really designed as a program intentionally to protect U.S. polysilicon manufacture. So the 232 program established a minimum import price for a number of different products, for polysilicon, for wafers, for cells, and for modules. Then it created also an incentive program in order to encourage onshoring of manufacturing. So when you think about the 232 program as a structure, it's not just intended to protect U.S. polysilicon.
It really is almost industrial policy, right? It's intended to onshore manufacturing of ingots and wafers and of cells, and then certainly to encourage greater use of U.S. polysilicon. We've seen the Department of Commerce from the beginning obviously engage and move this program forward with great speed and great clarity. Just a couple of weeks ago, actually on September 22, they put forth a plan to talk about enforcement and specifically to ensure that people aren't going to cheat on this program, right? That people aren't going to stockpile between now and when the program actually kicks in on December 4th.
There have been 20 companies who have registered as importers of record who have started to bring in significant volumes that CBP has already dinged or already identified that these are problems, that you are bringing in a much greater volume than you ever have in the past, and that is unacceptable into this 232 program. From the beginning, Commerce is taking this very seriously. CBP obviously is a very sophisticated organization, is a big part of what the enforcement is going to be for the 232 program, and we have already seen that take effect. The piece that we are, I think, probably most interested in as TOYO, and when you step back and think about what we are doing as a company, and Harada-san talked about expanding manufacturing into HJT and how we are going to build that here, is the offset program.
The 232 program created an offset program that encourages companies like TOYO to look at how are you going to finance your expansion in the United States. We have a manufacturing facility in Ethiopia. It is a 4 GW TOPCon cell manufacturing facility. We bring those cells into the United States. Ensuring that that source of revenue continues to come into the U.S. is critical for us in order to finance and build the expansion of an HJT plant here, or even other projects.
We have sat down with Commerce and said very specifically, "Here are some of the things that we would like you to consider from an offset program in order to help companies like us finance these projects." We have, at this point, sat down with them and kind of gave them, I would say, a very general perspective of what we are doing, in the sense of what the offsets might look like. Then we have sat down and laid out a very specific plan of what we are planning to do in the next four years. I think what we are still trying to do with Commerce is to get more guidance with respect to what that offset program is going to look like. They are developing that right now.
But in the long run, what we plan to do is to have a term sheet with the Department of Commerce that lays out specifically what we will be doing and what we will be building between now and January 20 of 2029. That term sheet draft has been presented to the staff. We have received some feedback, and we are continuing to, let us just say, discuss back and forth what that looks like. But a big part of our long-term plan is U.S. polysilicon, and you are going to hear this over and over the course of today. In the proclamation, the President's executive order, it states that there is going to be some extra benefit for using U.S. polysilicon, but there is no definition there. Sitting down with the Department of Commerce and saying very specifically, "Hey, we want to support U.S. polysilicon manufacturers.
Here's what an offset might look like." They're open to these ideas. We're having engaged discussions with them, and we're very encouraged as to where they're moving forward in recognizing the importance of U.S. polysilicon in the United States. I think the takeaway here is there's going to be very aggressive enforcement. We've heard that directly from the Under Secretary. In fact, Under Secretary Jeff Kessler will be here this morning at about 11:00 A.M., 11:15 A.M., and he'll be giving us some remarks about the 232 program specifically, and then he'll be taking a tour of the facility. He's excited about what TOYO's doing. He's excited that we're bringing manufacturing. He's excited that we're bringing not just a commodity product, but we're bringing HJT to the United States and advancing technology here in the U.S. Let me jump to the next item, and that is the circumvention issue.
Circumvention is a policy or it's a trade case, an AD/CVD case, that goes all the way back to 2012, where the initial first trade cases from the United States were against China and products that were manufactured in China. What subsequently happened was manufacturers in China, after the decision to apply tariffs occurred, they moved their factories to Taiwan. Then there was this Solar 2.0, which was a trade case against Taiwan. Then factories were moved to Southeast Asia. Then Solar 3.0, another trade case. These are called circumvention, where you're basically circumventing the original tariffs against China by moving your factory to someplace else. There's been a number of circumvention cases in Southeast Asia, in India, now in Ethiopia, et cetera. I think the point here is really to look at what is Commerce trying to understand.
The specific issue for circumvention is, are Ethiopian cells that are made with Chinese wafers going to be subject to the tariffs? Specifically, already, Commerce has drawn the line and said, "If you're using a Chinese wafer, you're going to be considered circumventing the original cases of Solar 1.0." The key comes down really to the Department of Commerce's definition of where they're drawing the line, and that's where the wafer was produced. In 2023, in the case in Southeast Asia, Commerce came back and said very specifically that wafers made outside of China are not treated as Chinese wafers. Even if you're using Chinese polysilicon, you're exempted from this circumvention case if you're using non-Chinese wafers. So they've already made that determination back in 2023. Now let's take a look a little bit at TOYO and what our supply chain looks like.
You can see here we are non-Chinese polysilicon. We get 100% of our polysilicon is non-Chinese. Right now in Ethiopia, 70% comes from the United States. We use no Chinese wafers. All of our wafers come from Indonesia. In the future, as planned, we expect them to come from the United States. Then our cells are manufactured in Ethiopia. What I want to point out here, which is really different from a lot of companies, is it's a full manufacturing cycle for the cell. So we take basically a raw wafer and do the full conversion into a cell at that facility in Ethiopia. It's very sophisticated. The PN junction is created in Ethiopia, which defines the country of origin with respect to where the cell is made. From a company perspective, no Chinese polysilicon, no Chinese wafers, full cell is being produced in Ethiopia.
We think that we are clean with respect to the circumvention case. We've gone to the Department of Commerce and said, "Hey, in the same way that you submitted a letter of clarification in 2023 in Southeast Asia, we'd like for you to do the same thing actually in Ethiopia." Commerce has acted on this before. They've been very clear, if you're not using a Chinese wafer, you're going to be exempt. What we heard last Thursday when we met with the Department of Commerce was that, "Hey, listen, we understand you guys are under some commercial pressures, right? Anytime there's a circumvention case, that creates uncertainty. We don't intend to allow there to be uncertainty if there's a clear distinction that we can make." They were very clear in saying, "We're going to look at this.
We're going to get the team together. We're going to discuss it, and if we can issue a clarification, great." Also, that there's a certification process you could also be considering as a mechanism in order to move forward quicker, in order to address the uncertainty. What we're really looking for, again, is a pathway where Commerce comes out quickly and says, and this is what our requested letter is, "If you're using U.S. polysilicon and a non-Chinese wafer, you should be exempt from the circumvention case in Ethiopia." That is our supply chain. We're not looking for an exemption for TOYO specifically. We're looking for a ruling by Commerce overall as to how they'll treat all companies in Ethiopia. Now I want to jump a little bit to the CBP detentions.
Before I go into this, I want to introduce you guys to somebody who's a really important member of the TOYO team. I've been just incredibly impressed by the work that she's done and the leadership she's provided to not only us, but ultimately, to the future of where we're going as a company, and hopefully, the solar industry overall. That's Ana Hinojosa. Ana is the former Executive Director of the Trade Remedy Law Enforcement. Ana, if you could stand up. Please give Ana a round of applause. Ana has brought just an incredible level of professionalism and expertise to both help us understand and improve our reporting and our transparency, but really take us to the next level as a company with respect to imports, reporting, traceability, et cetera.
What I want to show on this slide is let me just talk a little bit about what's happened. We've had some detentions. We've had four cell shipments detained as they've come into the United States. Those detentions are kind of, I'd say, almost a normal part of the process. CBP routinely reviews solar imports under the UFLPA, so the Uyghur Forced Labor Prevention Act, as well as other trade laws. A detention really is kind of the beginning where they initiate what's called an admissibility review. It's basically, "Hey, we want to have a conversation. We're stopping these orders. We don't understand where they come from." Our detention specifically, they said, "We want to go upstream. We want to see where the polysilicon is coming from." As I mentioned, we use 30% OCI. We use 70% from an American manufacturer.
We are like, "These are not Chinese manufacturers." We then submitted. The first thing we did was to say, "Okay, let's understand more." We had a Zoom call with 10 different members of CBP. It was from their Electronics CEE group, and really to provide an overview of the company and just more transparency into our manufacturing process, and then certainly our supply chain, and ultimately our reporting. During this meeting, we actually invited CBP to come to this facility and to learn more about our facility and actually see it in operation, which was great. What we then did is we submitted all of the documentation to CBP that they requested, and it is a formal process. Companies do this all the time, but you want to make sure you get it right.
What is really interesting about this, just to kind of give you a sense of the level of detail that they are looking at, which is great, and we collect it all, but it obviously has to be collected and reported, is they not only want to know where the polysilicon was manufactured. They want to go upstream. They want to know the exact mine that the quartzite was mined from specifically, and where it was mined from, and then how it was transported in a truck. They want license plate pictures of that truck. They want to show every single record of how it leaves the mine and how it eventually comes to our facility and is converted into solar cells. It is a very complete audit process. The good news is we collect all that information, but it is a lengthy process that you have to go through.
We submitted all of that information. We actually had CBP come out. I think I have. Yes, there is a picture. There is the CBP team right down the hall here, when they came and they visited, which was fantastic. It was a chance for them, again, to spend about six hours with us, going through in great detail all of the information that we are collecting, what our process is, and then ultimately to understand and ask additional questions that we did not answer. What we are trying to do here is establish a relationship, right? We are not trying to hide anything. We are not trying to smooth things over. Instead, this is a long-term relationship between TOYO and CBP, and overall to make sure that we, as a company, are being, I would say, reporting in advance.
Really making sure that they feel comfortable with all of the information that ultimately we are delivering. One of the things that. The bottom line is this back and forth has been really helpful for us. I think it has improved our reporting processes. We have always had the information. We are much more structured now to do so. We have provided everything to CBP, and we hope that we will hear from them sometime in the next week or two. We will have to see. More importantly, what we have done is really engaged in a very constructive dialogue with them, which is important. We do not want to stop there. I think one of the, again, leadership elements that Ana has brought to us is to say, "Hey, we want to be best in class." We want to be world-class as a company, not just responding in the basic minimum amounts.
We are undertaking the process of becoming C-TPAT certified, and C-TPAT stands for Customs-Trade Partnership Against Terrorism. Effectively what it does, it's a fairly rigorous process. I think what did we say this morning? 65 different elements that we need to employ. Some of which we're already well on top of, but 65 different pieces that we go through, and then ultimately we get certified for. Once you achieve that C-TPAT certification, you become a trusted trader. You get this designation as a trusted trader. Basically, you get shifted to a low-risk profile in their targeting system. It's a presumption of good faith, if you will, at that point. You're in the front of the line as a priority for any issues that come up.
You're ultimately treated as somebody who is doing the right thing, and if issues come up, they're going to have a constructive dialogue with you. There's an identified, designated government employee who will coordinate directly with the company, so a lot of benefits in the long run. From TOYO's perspective, yeah, we had some CBP detentions. Yes, they're disruptive. They create some uncertainty. I think we, as a company, have done a very professional job in establishing that relationship with Customs and Border Protection, providing them all of the information, making sure they understand our company's operations. We've invited them to Ethiopia. Hopefully, they'll come to Ethiopia and see the facility there because it is very impressive.
Ultimately, we're going to take it to the next level and become C-TPAT certified as a way to just, I think, really show leadership, both as a company, but also within the industry overall. We're going to look into this. I don't have the number for you, but I don't think there's too many C-TPAT solar manufacturers registered at this point in time. We'll hopefully be one of the first. Again, encouraging everyone else to do so as well. What I want to talk a little bit about now, those are kind of the major policy issues. Of course, you can't talk about solar without talking about the tax code, right? We talk about energy policy driving decisions for people to use different sources. The truth is, it's the tax code that ultimately drives increased demand for solar energy.
One of the things that I think we have really focused on as a company, which is strategic and very distinct in this industry, is to de-risk our supply chain in support of our customers. It's to really make sure that they understand what our supply chain looks like, and as they're evaluating FEOC guidance and the tax credit, if they're looking at domestic content provisions in the tax code, that they understand very specifically what we're doing on Uyghur Forced Labor Prevention Act, what we're doing on FEOC and PFE issues. We're providing them with a very clear understanding of what their options are with our products in order to really build their projects with the maximum use of the tax credits that exist. Again, very basically on this slide, obviously, as I mentioned, we have 70% U.S. polysilicon.
We want to ramp that up to 100% in the future. Our ingots and wafers right now come from Indonesia. We expect those to be primarily U.S. in the near future. We have 6 GW of operating capacity today, 2 GW in Vietnam, which actually do not come into the United States because of the AD/CVD case against Vietnam. 4 GW in Ethiopia, that does come into the United States. Of course, we're adding to that with an additional 1.5 GW of HJT, which I'll talk a little bit more about in a few minutes. Then, of course, we have module manufacturing here in the United States. I'm going to show you a couple of slides that are a little bit hard to read.
But the intention here is to really show you that we are providing solutions to our customers to help them make decisions about how they're going to be financing and moving forward with their projects. What you see on this slide is one, two, and three. On the left-hand side, we have basically the sourcing configuration, which is focused on non-FEOC. So we're non-FEOC. Across the board as a company, we're non-FEOC. We really minimize any of our exposure to FEOC. We have no licensing agreements. There's nothing in our DNA, if you will, that would trigger a FEOC concern. Using U.S. polysilicon, non-Chinese wafer, Ethiopian cell, and a Houston module here really allows the company to have a comfortable feeling about TOYO, that we are going to be fully compliant with all of the FEOC issues, and it allows them to start to make decisions.
But now we're also looking at optimizing the U.S. content, and I'll show you in the next slide why that's important. But that's U.S. polysilicon with a qualifying wafer, either from another company or in the future from ours, and then, of course, a Houston module. This allows the companies to have a higher U.S. manufactured content. Again, I'll show you why they are concerned about that or why it's important to that in the future. Then ultimately, where we're going as a company is a fully integrated U.S. manufacturing. Okay, so that is U.S. polysilicon, U.S. wafer, U.S. HJT cell, and a Houston module. This is unique, okay? For a company to really be offering a fully integrated manufacturing capacity. We're not going to manufacture the U.S. polysilicon.
We're going to buy it from other manufacturers, but for sure, we're looking at all other options in order to, again, provide a solution to our customers in the long run that allow them to de-risk the supply chain. This slide is a little bit, again, looks a lot like the other one, but it actually has a little bit more information here with respect to the tax credit outcome. So look to the far right, and you look at really what the customer is looking for. Okay? Right off the bat, they're looking for protection on the investment tax credit or the production tax credit. This is about eligibility. This really ends up being non-PFE sourcing.
We can show our customers very clearly that there is no FEOC connection, that we have a very clean supply chain, and that they, as they're putting together their projects, are going to be eligible for the tax credits in order to meet the, it's a 40% this year, 45% next year, thresholds for FEOC containment within the project development. It's kind of the big thing. The second piece, U.S. manufacturing leverage, this really is the 10% adder. I know I'm getting into tax credit weeds, but I see Phil Shen over there, and he loves this stuff, and he's doing the math right now on his phone. This is why it's important. The domestic adder gives you an extra 10% on your total project costs, right?
If your project costs, I don't know, a buck a watt, you're talking about a tax credit that's worth $0.10 a watt. It's significant if you can meet that 50% manufactured product threshold for, in this case, 2026. So clearly what we are providing to our customer is, as much as possible, that manufactured in the U.S. component so they can do their calculations in order to get that extra 10%. The third is really what we provide as a manufacturing company is to allow our customers to adjust a little bit of what their components are in the modules we're producing for them in order to meet that threshold that they need to meet.
For example, we can adjust where the glass is manufactured, we can adjust where the aluminum framing is manufactured, et cetera, in order to keep the price lower for our modules, but still allow our customers to maximize the benefit of either domestic content or the tax code overall. It's not a bespoke product per se, but it allows flexibility in order for companies to get the product that really allows them to finance, ultimately in the long run, what their projects demand. Okay. I know there's a lot of questions about policy, but we're going to get to those at the end. If I could, I'm going to keep moving here just so we can keep us on time. I want to talk a little bit about manufacturing quality and operational excellence.
Our facility here is really, I think, representative of TOYO, broadly speaking, in how we as a company, as a Japanese company, really focus on manufacturing excellence. We have an ability as a company to execute in a way that most of the other U.S. manufacturers are still trying to figure out, in large part because we have manufactured and do manufacture around the world. We have manufacturing in Vietnam, we have manufacturing in Ethiopia, and we've brought that manufacturing expertise to the United States, and that shows. So this facility here, we are constantly trying to make sure we're improving and we're really at the best levels of performance. We've had independent third-party factory audits. It was conducted by Intertek CEA. Paul Wormser is actually here from Intertek. He'll be speaking a little later. Great to see you, Paul. Thank you.
Thank you for holding our feet to the fire and making sure that TOYO is doing everything right. It is really important, right, to get that kind of feedback, and obviously to make improvements where necessary. CEA gave us a top-tier rating. It is an A+. Everybody can remember that from school, which we are very proud of. There are always things to improve, but ultimately, getting an A+ meant a lot, and that was just something that was done and published back in the beginning of August. We feel very good as a company that we are moving, that we are in the right direction, and we want to continue to advance and be a leader with respect to quality manufacturing. You can see our factory and product certifications at the bottom. The Humble facility is interesting. Oops. This is another slide.
This basically talks a little bit about our scalable manufacturing. Obviously world-class. This facility here is and you will see it in a little bit, and it is really fun. It is a 2 GW facility. It is 567,000 square feet. We employ 600 people at the moment, over three shifts. It really is what we consider advanced manufacturing, one of the more sophisticated manufacturing facilities, certainly in the United States today. Let me jump ahead to technology. I think what is important as we talk about technology is to say, "Okay, Rhone, you guys are putting together modules here. That is great. You are going to do some HJT. Great. Where does that really lead you in the future?
What is your vision for what you are trying to achieve?" For a company, what we are looking at is not just the next technology from a solar perspective, but we really want to make sure we are bringing technological advancement here to the United States. I have worked in this industry for over 20 years, and one of my biggest, I guess, regrets was that so much of the technology was developed here in the U.S., but then manufactured overseas. By building manufacturing here, we have a chance not only to manufacture the most advanced solar cells and solar modules that are available, but also to bring technology leadership from Japan, from around the world to the U.S. We also will be building an R&D facility here to continue to push the envelope, if you will, on technology.
I want to talk a little bit about HJT because it is important that people understand the difference, right? Heterojunction technology actually was invented in Japan. It was commercialized by SANYO and Panasonic 20 years ago, Paul? 25? A while ago. Super advanced technology, but what HJT does the current, let us say, most produced, highest efficiency cells today are TOPCon. Right? TOPCon is a great product overall. But when you look at HJT, it has higher efficiency. It is about 25% plus with respect to the levels of efficiency that you get out of a solar cell. The reason why is you use a crystalline silicon layer, and then you have a very thin amorphous layer on both sides. But what that does is it creates the ability it has a much larger band gap in solar, right?
Crystalline silicon has a very narrow band gap, which is focused on the red light conversion. What happens with a solar cell, like a TOPCon cell, sunlight hits it, the red light is converted to electricity, but the blue light actually turns into heat. It's not converting that blue light to electricity. That band gap for, in this case, TOPCon, is lower. When you add an amorphous layer, the amorphous layer actually is focused. It's got a much higher band gap level, so it's focused on the blue light. Okay? If you combine crystalline silicon with an amorphous layer, you're capturing both the red light and the blue light. A couple things happen. One of which is you're converting more of the photons to electrons, but you're also reducing the heat, right? That blue light isn't turning into heat.
The HJT cells are not overheating. If you think about a solar cell, it's a semiconductor. What do you do when you have a semiconductor in a computer? You put a fan right next to it, right? Because as soon as it starts overheating, it loses its efficiency. In this case, HJT cell has advantages because it doesn't overheat. You end up having superior temperature coefficient, meaning you can put it in very hot climates like Southwest Texas, and it won't overheat, and it won't start to deteriorate. It has better bifaciality. In typical solar panels today, you've got glass on both sides. They sit there like this, and the reflected light actually generates electricity on the underside. You also have, with an HJT cell, lower degradation.
All of these are performance metrics that make HJT superior to what TOPCon is today. Looking forward, I think the greatest opportunity for HJT is really how do we add a tandem layer? How do we add perovskites to what we have on the market today in order to increase efficiency? When we talk about HJT today at about 25% efficiency and TOPCon around 23% efficiency, well, you also have CdTe down here on a good day, 19% efficient. When you take an HJT cell and add perovskites, now you're bumping up to 33% efficient, 34% efficient. Okay? This is a step change with respect to solar technology. Every single person you talk to, every researcher says, "Yeah, we're going to put perovskites on HJT.
We're not going to put it on TOPCon." You can, but you just won't get that same type of performance level that you do when you have that amorphous layer. Once we actually do that and we're at 34% efficient, you're talking about double the efficiency of a CdTe cell or CdTe module, which of course is the majority of utility scale today. Our customers are really the ones who are saying, "What's next? Bring us there. We want HJT today because of its performance and its efficiency, but we also want it in the future because what it can provide in the long run with respect to much higher output for our facilities." There's a couple of other reasons why efficiency wins with respect to manufacturing. I won't get into them.
They are obviously pretty straightforward, but ultimately what you are doing for each solar panel, you are generating a lot more watts than you would otherwise, right? It is just more efficient manufacturing. It is lower cost of materials. For those who are using the panels in the field, it means less trackers, means less wiring, less equipment, less balance of systems. Ultimately it saves our customers money simply because of the efficiency gains. The last couple of slides I just want to talk a little bit about, and we have already done a pretty good job talking about the expansion at this facility.
When you walk around today and you get a tour, make sure you ask a lot of questions and make sure you understand that in this facility here, not only will we have 2 GW of module manufacturing, but we are also going to have a very sophisticated cell line under the same roof, which is very unique with respect to solar manufacturing. If you guys have been to different facilities around the country or around the world, you will know that most often you have a cell facility, which is a clean room type of manufacturing in one area, in one building, and then maybe 20 miles away, you have a module assembly plant. This is all going to be done in the same house, which I think is absolutely fantastic, and it is going to add an additional 400 jobs here in Humble. I mentioned R&D.
We have a fantastic team at TOYO who really specialize in leading research for solar cell technology. Here is our CTO, Dr. Wang, on the far right, and then also Dr. Zhao. These two award-winning researchers have really, I think, focused us to be not only advanced on our cell design, but advanced in our manufacturing in order for us to be even more efficient and more successful in lowering our cost for manufacturing. One of the things that really HJT and perovskite starts to do is it opens up new markets that people haven't considered yet. This is a slide that talks about space solar. If you think about it, every satellite that has been sent into space since 1950 has had a solar cell on it, every single one, right? The reason why is because you have unlimited sun available.
As we start to look at different applications in space, specifically data centers in space, the need for solar becomes even greater than it has been previously. Nobody is going to put a nuclear reactor in space. They are going to talk about it, but it is going to take decades before that ever happens. Instead, every single data center that goes up in space is going to be solar powered. The question is, how do you do that? Here are a couple of different options of the solar cells that are available today or in the near future that shows both their efficiency, basically their radiative resistance, so how stable it is in a space environment, and then the potential cost for manufacturing them.
The typical solar application or solar cell used in space applications today is a triple junction solar cell that ends up being really built for space applications, and it is very expensive. You are talking about $150-$170 per watt to produce those cells. PERC silicon, you can put it up in space, but it is heavy, and the payload of getting it to space is going to be complicated. You are only going to achieve about a 17% efficiency. HJT silicon, you are going to get to 20%. Again, in space applications, you get lower efficiency due to a number of different reasons. Basically, you could put HJT up there, but you are not really optimizing the performance. But when you get to HJT plus perovskites, like I mentioned before, now you are talking about the perfect solution.
You are talking about a solar cell that is, one, very light, so the payload of taking it to space is minimal. They are flexible, so you can create a different type of structure with respect to your solar panel rather than sending up glass and aluminum. Then it is also extremely stable. You are looking at a 31.4% efficiency for the space application of HJT plus perovskites. You are looking at a cost of about $0.40 per watt. Again, compare that to a gallium arsenide cell of $150 a watt, and you are talking about $0.40 a watt. There is a very clear winner as to what the solar technology is going to be in space, and it is HJT and perovskites. As we start thinking about, okay, where is TOYO going? We are going to continue to push the envelope from a technology perspective.
Building on HJT, we are going to obviously work on perovskites. We are looking at new market opportunities like this that really, I think, open up the concept of what we can do and how flexible our production facility here can apply to other markets, broadly speaking. Okay. I want to talk a little bit about where we are going today. This is the exciting vision piece that I really want to make sure everybody kind of understands. This is, I think, really important because we spend a lot of time thinking strategically, where do we want to go? Obviously, sitting down with the Department of Commerce and saying, "Here is where we plan to go" and making sure that we have both the vision and the way of financing it. This is our path towards U.S. vertical integration today, 100% U.S. polysilicon.
Today, as I mentioned, our wafers are Southeast Asia. We are going to move them to the U.S., our solar cells, Ethiopia, Vietnam, as well as here in the near future. Of course, our module is manufactured here. But going forward, and again, this is a vision piece. We are not making any public announcements or statements that anybody should write about other than to say that TOYO has got a big vision. They are going in the right direction. They are thinking about this the right way. What Onozuka-san showed in his slide before was that there is a massive shortage of U.S.-produced wafers in the future. There are a couple companies that made some announcements, but nobody has really ever done it in a meaningful way other than Corning and Qcells at this point. As a company, what we are looking at is not just 1.5 GW of HJT.
We're going to expand that very quickly to 3 GW of HJT. We're going to go beyond that. We have a vision as a company of 8 GW here in the United States. We're also looking at going fully upstream. We want to make sure that we are producing these products in the United States with a supply chain like polysilicon manufactured in the United States. We want to manufacture ingots and wafers here in the U.S. Today, available, there's just a couple of gigawatts. We're not producing anything today, but we plan to have 6 GW of manufacturing capacity in the United States. Again, this is our vision of where we'd like to go. We're not making an announcement. There's definitely a lot of challenges to it.
We have some strong experience working with our partner in Indonesia when we helped them stand up their ingot and wafer facility, and we're excited about bringing that technology here to the United States. I'll just leave you, and before we get into questions, I'll ask Onozuka-san and Harada-san to come up, I'll just leave you with this thought. We are a U.S. manufacturer. We're Japanese headquartered, we're Nasdaq listed, but we're a U.S. manufacturer. We are onshoring our production to ensure that our supply chain is U.S., to ensure that we are manufacturing as much of the components as possible. We're doing it to de-risk our products for our customers, but we're also giving them the advanced technology that they're looking for. As a company, we're not just coming to maximize the tax code and use 45X to put together a module assembly plant.
We're here for the long run. TOYO is going to be a leader in the solar industry in the United States. We're going to be a major manufacturer, and we're going to bring the solution to the U.S. supply chain that hasn't existed before. With that, I'd like to invite Harada-san and Onozuka-san, if you could come back up, and we'll open up the floor to questions. Thank you. As you have questions, just raise your hand. Do we have a microphone we can pass around to the people in the-
Yeah.
in the audience? Okay, if you could just identify yourself and your company. What's that?
You want me to do it?
No, no. I'll let you do it. Yeah, come on up. I was just giving him basic instructions while people were coming up.
So we also have the ability for those of you who are joining us online to ask questions, assuming this technology works. I'll be looking out for those questions. We'll start with first people who are in the room. If you're online, you have a question, feel free to submit it and we'll get to you. So first question is from Phil Shen.
Hi, TOYO team. Thanks for the great presentation. Wanted to check in with you first on the 232. That's very topical, and specifically, you talked about the offset program. There's a lot of names for this, maybe the onshoring program or the tariff rebate program. So was wondering if you could give us your latest sense as to whether or not you expect to be approved for the tariff rebate program or onshoring program. Sounds like yes, but was wondering if you could share any color on timing. We published recently that it sounds like Commerce might be releasing that set of guidelines in October. If you have any thoughts on that'd be great. That's question one, and then-
We'll take one at a time.
Okay.
Rhone, you take the first question.
Sure. All right. 232. No surprise. It is the elephant in the room, but it's also probably the most exciting opportunity. This, as I mentioned, is industrial policy. The administration really wants people to build in the United States. So the Department of Commerce, in every conversation we've had, basically said, "Tell us what you need. What is it going to help you, that big vision that you have for whatever, $2 billion, let's say. How are you going to finance that? What type of offsets make sense? What type of structures make sense?" We have presented to Commerce our term sheet. It's basically a bunch of ideas on the offsets, but also laying out specifically what we plan to do from a manufacturing perspective. The feedback has been extremely positive with respect to anything that would be considered cell, ingots, or wafers, right?
That is the focus that they want to see manufacturing in. Then hopefully that will drive more demand for U.S. polysilicon, and the U.S. polysilicon manufacturers will expand production in the United States as well. More importantly, their focus on Commerce for the onshoring/offset program is ingots and wafers, and cells. With respect to timing, you're right. Trevor and the team are still putting together the guidance. They hope to have it out at the end of September. It probably goes until the middle or late October, but they're having conversations with companies, right? That's going to be the structure for submitting your term sheet, is the term that they're using. Ultimately, it's going to be an individual company by company type of negotiation, very similar to the pharmaceutical industry. Some of the big questions end up being, is it CapEx? Is it OpEx?
As you're starting to look at offsets, how much is going to be volume based on megawatts versus dollars? There's a lot of topics that they're discussing, but they're also getting feedback from companies directly. What does that mean for us specifically? It's impossible to tell you exactly when we're going to have an agreement. December 4th, right, is probably a pretty good number to throw out there because that's when it really gets implemented. But a lot of these agreements probably won't happen until after December 4th. So don't hold it against anybody if they're not done by December 4th. It just means they're having further discussions or maybe Commerce is still working through some of the details, specifically what those offsets will look like. Any other parts to that question, Phil?
I think that's great.
Question number two.
Another question here. As it relates to your recent press release, you announced $240 million of, I think, signed agreements with new customers. With the 232 signing, we've seen, I think, module pricing go up a lot. I wanted to see if you could give us a little bit more color on that press release, as well as how much pricing has actually moved for the different types of modules that are out there. We've published that we think pricing has moved up $0.10-$0.20, depending on the type of product. But can you comment on what you're seeing in the marketplace?
Yeah, sure. Obviously we are not going to talk pricing specifically on those contracts because they are private, but you are exactly right. What we are seeing across the industry is an increase in pricing, depending, again, on what the components and the makeup are. If it is a pure U.S. module, it is obviously getting a price premium compared to those that are using imports, inputs. Clearly, we are bringing Ethiopian cells in to manufacture our modules, so it is not a purely U.S. product. What I will say about that announcement is really it is just the beginning. I think a lot of people were concerned out of the 232 that demand would drop, that because pricing was going up, that PPA pricing was not going to justify a higher module price. We have not seen that at all, Phil. In fact, demand is really strong.
While some companies probably are experiencing that, we have not seen that for TOYO specifically. I would imagine there will be a number of other announcements for those types of agreements again in the future.
Okay. One more. This is for Harada-san. As it relates to the financing, you talked about for the Humble. I learned yesterday the correct pronunciation is Umble instead of Humble.
Oh, really? Umble.
Yeah.
That's a local, Humble.
I am humbled by that.
Anyway, Harada-san, for the cell facility here, you're looking to raise $360 million, $120 million from the 45X, $120 million from bank loans. Can you talk to us about the bank loan process? Have you started it? I think the underwriting might be challenging in the sense that the banks likely only give you credit for the existing 45X and the existing ITC. They're not going to count on or give you any extension credit, even though that's what there's a lot of talk about these days. Anyway, the point is, can you talk to us about the underwriting process for the $120 million? Do you expect it to be smooth? Are you fully committed for the $120 million for the banks?
Maybe just to clarify before he answers, we did not say it would be bank loans. We said it would be debt. I think you need to think more broadly. Number two, we did not say we're going to raise $357 million. We said that's the total anticipated CapEx plus additional working capital. We already did raise, as you know, $55 million earlier.
Then just this moment, very preliminary discussion, we have the financial institution in Japan, in United States. But so, they're very early stage discussion. But some financial institution has an interest in the project finance to this HJT cell facility and we are doing effort to reach the conclusion with the financial institution for that financing.
Anyone else have a question?
Oh, maybe I can jump in.
Can we bring the microphone? Oh, Chris, you got it.
Yeah.
Okay, go ahead.
Chris Dendrinos with RBC. I guess maybe just to start, I think early on in the presentation it was mentioned that the timeline could potentially change for the HJT facility from 1Q 2028. Can you just talk about the process for getting that facility going? What are the gating factors and what types of things are we waiting on right now? Thanks.
Sure. HJT is pretty sophisticated manufacturing, right? We have the equipment already contracted. We have a sight line for when that would come to the United States and be installed. But to build a facility like HJT, there are a number of permits that are different than having a module facility, right? We need more power. We need more water. You've got different gases and so air handling and fire code issues with HJT than you do certainly with module manufacturing. So we're going through the permitting process now. It's hard to tell how long the permitting process takes. We've had great progress so far. Texas is certainly a business friendly, manufacturing friendly state. But I think the statement that we're making is it's hard to predict. There's always uncertainty when you're talking about dealing with local and state governments. There's no question there.
On the financing side, Phil, you raised a good point about 45X. Obviously, that market is a little bit stalled at the moment. Does that free up? Does it not free up? If it frees up, great. If it doesn't, there's other financing mechanisms that are, of course, considered. A big part of also what we're looking at as a company is a larger financing approach to what our vision is instead of just knocking off one project here and there. We're very much involved in having conversations as part of the U.S.-Japan investment fund, and specifically it's called the U.S.-American Investment Accelerator. It's now a fund of Japan, Korea, and Taiwan, but we're specifically looking at the Japanese.
Now you are talking about a longer process perhaps for financing but one that provides a lot of benefit if we can be included in that package. Those are the kinds of things that maybe slow it down a little bit but do not cancel the project. They just maybe slow it down.
I guess maybe just as a follow-up here, I think you all talked about HJT tandem perovskite technology. Where are we at in the evolution of that, and when do you think it will be, I guess, call it commercial ready? Thanks.
Perovskites, we are in partnerships with a couple of different companies, or at least discussing partnerships with a couple of different companies who are perovskite manufacturers, some that have commercial production today. But the truth is that is probably still a couple or three years away for real commercial perovskite production. What we anticipate is that we would initially be selling them cells to get familiar with HJT, to have their first products come out on our cells, but ultimately that we would be a manufacturer of HJT and perovskite modules themselves. I think you will see the first ones in probably two and a half to three years, is my expectation. The stability of perovskites has improved dramatically.
One of the benefits of the space application is you do not have oxygen, you do not have moisture, and so any of the degradation elements that are found on Earth are not found in space. So perovskites are much, much more stable. So you may end up seeing a space application before you see a terrestrial application, ironically.
Great. You had a question, too. Can we bring a microphone over?
Thank you. Good morning, guys. You mentioned you are anticipating some type of update from the CBP in the next one or two weeks. Is that related to the four cell shipments or some other topic?
That is related to shipments of Ethiopian cells into the U.S.
Ana, do you want to provide some insight? Since we have you here.
Sure. We have a very good relationship with CBP, as you can imagine. I did check with them as recent as yesterday. I know that they've been meeting, taking in all of the information that we've submitted, and we are very optimistic that the resolution of the detentions is a day to a week away. So we're very, very optimistic about that, and more to come on that. Again, fingers crossed, between 24 hours and hopefully on the back end, just a few days.
Forward-looking statement. We have no control over the U.S. government.
Thank you, Ana.
Any other questions? Okay. We have a lot of listeners online, but I don't see any questions online. So I think with that, we're going to wrap up Analyst Day, and let's have a big round of applause for all of our presenters.
Thank you, Crocker. We're going to take a break for about 10 minutes or so. If you want to use the restroom, easiest way to get to the restroom is right. I see Curtis pointing this way. If you want to use the restroom, follow Curtis. Then we'll have about 40 minutes, 45 minutes or so, where we do a ribbon cutting ceremony here, and then we'll do two separate tours right after the ribbon cutting. Make sure you stay for the tour because it really is fantastic. Then we're going to come back, and we'll have Texas barbecue for lunch. We want to make sure everybody has a nice meal and has a chance to really network and get to know other people in the room, talk to the TOYO employees.
We'll have a number of people, both from the line as well as within the office, who will be available to just chat so you can learn a little bit more about the company and the culture, what we're building. Thanks, everybody. Enjoy that little break.