Toyo Co - Earnings Call - H2 2024

Transcript

Operator (participant)

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. 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 the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the call over to Crocker Coulson, Investor Relations. Please go ahead.

Crocker Coulson (Head of Investor Relations)

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 will also have an 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 assurance that they will prove to be accurate because they are prospective in nature.

Actual results could differ materially from those we discuss 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 toyosolar.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. Sachiko Katori of AUM will be translating for Mr. Ryu. Ryu-san, please go ahead.

Junsei Ryu (CEO)

Thank you. Good morning, everyone. We're glad you joined us. I'm from here. I'm just Japanese. 当社は2024年度売上1億7700万ドルで締めくくり、前年同期比184%増という大幅なトップライン成長を達成いたしました。一方で、米国商務省及び国際貿易委員会による反ダンピング関税及び相殺関税の適用により、納期及び価格設定に影響を生じ、利益率を圧迫されました。

We closed the 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 U.S. International Trade Commission. These regulatory actions disrupted our delivery times and pricing models, resulting in compressed margins.

こうした環境の下において、当社は長期ビジョンに基づき、事業を着実に推進してまいりました。大きな成果として、エチオピアにおける肉価規模の体力セル向上の稼働開始が挙げられます。同工場は一部稼働しており、今後の需要拡大にして2025年8月まで生産能力を4ギガまで倍増させていきたいと考えております。

Nonetheless, we have remained committed to our long-term vision. A key milestone was successful commissioning of our 2-GW 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 GW by the end of August 2025.

また、厳しい業界環境の中にあっても、当社は事業基盤を強化し、成長促進に向けた重要な施策を実行してまいりました。ベトナム工場は工場の非アメリカ市場向けに販売を再編しました。短期間で新市場開拓を進める営業チームの貢献が大きく、現在、ベトナム工場では低額生産能力2ギガのうち約1.5ギガをインド及び台湾を中心とした非アメリカ市場向けに販売する計画です。

Despite industry challenges, we've advanced strategies to strengthen sales and scale growth. We've 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 GW of our 2-GW nameplate capacity to non-U.S. markets, with a primary focus on India and Taiwan.

また、エチオピア工場の拡張は米国関税の影響を緩和し、グローバル競争力の向上にも大きく寄与してまいります。2025年度の生産能力は既に全量割り当て済みです。わずか6月という短期間で、先進的な自動ラインにより太陽光セル工場を立ち上げることにより、Toyoチームの強固な思考力と機動力を示す成果だと考えております。

Our Ethiopia expansion has helped offset tariffs and enhanced global competitiveness, with our 2025 capacity already fully allocated. Bringing our Ethiopia solar cell factory online with advanced automation in just six months is a powerful testament to the strength and agility of Toyo's team.

エチオピアの2ギガ工場を現在順調に稼働しております。2025年4月までは80メガ超の納品を予定しております。さらに、5月から6月にかけて生産能力150から200メガへと本格的に立ち上がる見込みです。本施設は当社のグローバル展開戦略において極めて重要な資産となっており、旺盛な需要への対応力、収益管理、そして長期的な顧客関係の強化に大きく貢献するものと考えております。

Our 2-GW solar cell facility in Ethiopia is operating smoothly with over 80 MW scheduled for customer delivery by the end of April 2025. We are on track to ramp up to a full monthly production capacity of 150-200 MW 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.

加えて、エチオピアの初期フェーズの2ギガ生産能力は既に全て割り当て済みです。現在、強い受注勢いを受けて、通貨の2ギガの拡張を迅速に準備してまいります。この次のフェーズの拡張により、今後の顧客需要に対応するとともに、グローバルサプライチェーンにおける当社の競争優位性をさらに高めることができると見込んでおります。

The initial 2-GW capacity in Ethiopia is already fully allocated. Given the strong order momentum, we're swiftly executing a second 2-GW 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.

米国では出荷しないのソーラーモジュール工場が順調に進み、強い需要を背景に、2025年後半から初年度の計画の部分を出荷開始始まる予定です。米国の堅調な市場で多様化されたサプライチェーンは当社の競争優位を支えています。今後も米国市場への長期的なコミットメントを一層強化すべく、製造体制の拡充を加速してまいります。

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.

直近の米国関税政策の変更により、市場環境の不透明さを増しています。人材、技術、戦略の各方面での競争力を発揮し、米国市場の需要拡大に確実に応じてまいります。それでは、ここでCFOのレイモンド・シェンに引き継ぎます。レイモンド、お願いします。

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.

Raymond Chung (CFO)

Thank you, Ryu-san. I'll review our second half and the full year 2024 financial highlights before we take your question. So, in terms of a Toyo financial update, in the H2 of financial year 2024, we delivered 758 MW of solar cells. In terms of revenues, we generated $38.9 million in the H2 of 2024, a decrease of 37.7% from $62.4 million for the H2 of 2023. The decrease was primarily due to the impact of anti-dumping and countervailing duties and customer adjustment to focus on non-U.S. customers. Our cost of revenue was $43.6 million for the H2 of 2024, which decreased 4.6% compared to $45.7 million for the H2 of 2023. Total operating expenses increased to $8.5 million for the H2 of 2024 from $2.9 million for the H2 of 2023.

Net income was $21.3 million for the H2 of 2024 compared to a net income of $11.8 million for the H2 of 2023. Next, I would like to go through full year 2024 results. Our revenue was $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 accelerated. 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% 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 H2 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 a net income of $9.9 million in the prior year. Net income in fiscal year 2024 included a $35.1 million changes in fair value of contingent consideration payable for 13 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 20% for fiscal year 2023. As of December 31st, 2024, we had $15.5 million in cash and restricted cash in total compared to $19 million as of December 31st, 2023. Okay, in terms of guidance for 2024, with projected total shipment of approximately 3.5 GW 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.

Junsei Ryu (CEO)

世界的に厳しく、変化の激しい事業環境の中にあっても、当社はベトナム、エチオピア、米国といった主要市場において着実な戦略実行を進めております。この結果、事業規模を精密に拡大し、収益性を最適化することとともに、加速する需要に的確に対応する能力を実証してまいりました。受注パイプラインを確保し、事業運営を勢いを増し、生産能力拡大に向けた明確な道筋を描いていることから、当社は持続的な成長を実現し、株主の皆さんへ長期な価値を実現できると考えております。

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're well positioned to deliver sustained growth and long-term value for our shareholders.

結論として、当社Toyoは Q7 Global Product Platform、優れた実績と信頼性、そして米国有数の大手デベロッパーと長年わたって強固な関係性、米国UTV向け対応市場のニーズに極めて高いレベルで対応できるポジションを確立してまいっていることを確認しております。2024年には当社チームの耐久性と柔軟性が試された1年になりましたが、Toyoチームはこの挑戦を見事に乗り越え、大きな成果を上げることができました。

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 multi-year 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.

以上をもちまして、皆様からのご質問を受けたいと思います。よろしくお願いします。

With that, we'll be happy to address your questions.

Operator (participant)

At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We will pause for a moment to compile the Q&A roster. And we have no questions at this time. I will now turn the call back over to Mr. Ryu for closing remarks.

Raymond Chung (CFO)

Operator, let's just give it one more chance for people to see if we're getting any questions.

Operator (participant)

No problem. Again, to ask a question, press star one.

Junsei Ryu (CEO)

一緒に落としたんですけど、これかな、もうちょっと待ってみようかな。

Raymond Chung (CFO)

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

Operator (participant)

There are no questions at this time.

Raymond Chung (CFO)

Okay. So just to let everyone know, the earnings press release, I believe, is out or will be out in the next few minutes. And yeah, it is out. And so if 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.

Operator (participant)

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