TOYO Co., Ltd. (TOYO) Q2 2026 Earnings Report, Transcript and Summary

Thank you for standing by. My name is Carly, and I will be your conference operator today. At this time, I would like to welcome everyone to the TOYO Co., Ltd. Second Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Crocker Coulson, Investor Relations for TOYO. Mr. Coulson, please go ahead.

Thank you, Carly. Hello, everyone. Thank you so much for joining us to review TOYO's second quarter and first half 2026 results. This morning, TOYO posted both the earnings release and a related investor presentation covering those results to our website, which you can find at investors.toyo-solar.com. I'm pleased to say that with us on the call today, we have Mr. Takahiko Onozuka, TOYO's Chairman and Chief Executive Officer; we have Rhone Resch, the company's Chief Strategy Officer; and we also have Mr Yasunari Harada, TOYO's Chief Financial Officer. After their prepared remarks are concluded, we're going to open up the floor for any questions that you have today. But before we begin, I'd like to point out the financial results discussed on this call for the second quarter 2026 and first half of 2026 and the corresponding periods in 2025 are unaudited and some of the statements in this teleconference are forward-looking within the meanings 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. During this call, we're also going to discuss certain non-GAAP financial measures such as EBITDA, adjusted EBITDA and adjusted net income. We believe these measures provide meaningful supplemental information regarding our operational performance by excluding noncash items and onetime charges that may not be indicative of our core business performance. Actual results could differ materially from those we discuss today. We, therefore, encourage you to review our most recent annual report on Form 20-F, 6-K and other SEC filings for risk factors that could materially impact our results. With those formalities now out of the way, it's my great pleasure to turn this call over to Onozuka-san, TOYO's Chairman and CEO. Onozuka-san, please take it away.

Thank you, Crocker. We are very pleased with our first half 2026 results, which reflect the continued strength in our global manufacturing platform and the growing demand we are seeing across our markets. Let me walk you through the headline numbers at a high level. Revenue for the first half of 2026 was approximately $261.0 million, an increase of 87.6% year-over-year from $139.1 million in the first half of 2025. The increase was primarily driven by higher solar cells and high solar module sales, together with the commencement of OEM services. Revenue from end customers in the United States increased 153.9% to approximately $210.5 million and represented 80.7% of first half revenue. Gross margin for the first half of 2026 expanded to 32.5%, up from 16.6% in the prior year period, reflecting expanded production capacity, improved production efficiency and greater mix of higher average selling price U.S. sales. Net income for the first half of 2026 was approximately $45.8 million compared to $2.5 million in the first half of 2025. Earnings per share, basic and diluted of $1.21 and $1.20, respectively, compared to $0.08 in the first half of 2025. For the second quarter of 2026, revenue was $118.2 million, up 35% year-over-year with net income for the second quarter of 2026 of approximately $17.4 million compared to $6.2 million in the second quarter of last year. The recent Section 232 determination by the Trump Administration on polysilicon and its derivatives is, on balance, a positive development for TOYO and, therefore, U.S. solar manufacturing in the U.S. market. We expect it to support strong module pricing and we anticipate that solar cells produced at our Ethiopia facility will be eligible for the relief and the framework is now taking shape. We are engaged with the Department of Commerce as those terms are finalized. So while we are optimistic about the net effect on our second half and year-end 2026 results, we are not yet in a position to quantify it. We will provide further updates as more clarity emerges. As you see in our results, trade policy uncertainty also affected the pace of some shipments from our Ethiopia facility during the quarter. Rhone will speak to that in a moment, but I want to be clear upfront that this reflects a timing issue tied to an active regulatory process and in our view, not a change in the underlying customer demand. At the same time, we are excited to move forward with the expansion of heterojunction or HJT solar cell capacity in Humble, Texas, a project we believe will be crucial not just for TOYO, but for the broader push to build a secure competitive U.S. solar manufacturing base. I will now turn the call over to our CFO, Rhone Resch, to walk through that project in more detail along with our broader strategy and the environment -- policy environment.

Thank you very much, Onozuka-san, and good morning, everyone. This morning, I'd like to address the Section 232 proclamation, which, as you know, is less than 2 weeks old and specifically mention how it reinforces our U.S. strategy. I want to talk a little bit about our HJT expansion and our broader U.S. manufacturing platform and then provide an update on CBP and the Ethiopia anti-circumvention inquiry. On August 6, the President issued proclamation 11052, addressing imports of polysilicon and its derivatives. The proclamation establishes minimum import prices for polysilicon, ingots and wafers, solar cells and modules, together with an additional tariff on specified downstream products. These measures take effect on December 4, 2026. We believe the proclamation validates the strategy TOYO has been pursuing, that is increasing our use of U.S. produced inputs, developing a transparent allied nation supply chain and investing directly in U.S. advanced manufacturing. Importantly, the proclamation creates an investment-linked onshoring program that can effectively offset the new Section 232 duties for qualified companies. Under an approved company-specific plan, Commerce may authorize duty-free imports of necessary production equipment and covered products in volumes it determines are commensurate with the company's U.S. investment. The proclamation also recognizes the importance of U.S.-produced polysilicon. Commerce may vary the benefits available under an approved onshoring plan based in part on the use of U.S.-produced polysilicon. That is particularly relevant to TOYO because approximately 70% of our polysilicon currently used for our Ethiopian production is supplied by a U.S. producer. The remaining 30% is produced by OCI in Malaysia, and we are working towards 100% U.S. polysilicon at the Ethiopian facility by the fourth quarter of this year. We intend to pursue an onshoring plan initially centered on our announced $357 million HJT cell facility in Humble, Texas. Our strategy is to use the economic value created by approved duty offsets, including lower import costs and preserved working capital to help fund the construction and expansion of our U.S. manufacturing facilities. In the near term, eligible imports would support our operating U.S. business model. And over time, the resulting economic benefit would help accelerate domestic cell production and potential upstream manufacturing. This structure creates a reinforced investment cycle. First, TOYO imports compliant cells made with U.S.-produced polysilicon to supply our American module operations. Second, if Commerce approves our onshoring plan, the resulting duty offsets would preserve capital that can help fund our U.S. factory expansions. And finally, as those factories come online, TOYO will progressively move more cell and upstream manufacturing into the United States. The minimum import prices established by the proclamation are above recent market benchmarks for cells and modules. And we believe this framework could support a stronger and more rational U.S. pricing environment. TOYO may be particularly well positioned because an approved onshoring plan could offset Section 232 duties on eligible imports and Commerce may provide greater benefits for products incorporating U.S.-produced polysilicon. If approved and implemented as intended, this combination would allow TOYO to benefit from stronger market pricing while mitigating a significant portion of the associated import costs. That could improve our unit economics and support gross margins while preserving additional capital to help fund the construction and expansion of our U.S. facilities. The ultimate financial effect will depend on Commerce's approval, the volume and duration of any offsets, market conditions, customer contracts and our cost structure. But we believe our significant U.S. investment, substantial use of U.S.-produced polysilicon and commitment to additional domestic manufacturing positions TOYO well under the onshoring framework. Approval, eligible products, import volumes, timings and conditions will ultimately be determined by Commerce, but the structure of the program is closely aligned with the strategy TOYO is already executing. I now want to turn to our HJT project that I mentioned, TOYO plans to invest approximately $357 million in an advanced heterojunction solar cell facility in Humble, Texas, which is just outside of Houston. The initial phase is designed for approximately 1.5 gigawatts of annual production capacity. We selected HJT technology because customers increasingly value its higher efficiency, strong energy yield and performance across a range of operating conditions. HJT also provides TOYO with an advanced manufacturing platform that can support the future development and production of perovskite silicon tandem cells, positioning us to serve evolving customer needs and participate in the next generation of high-performance solar technology. We are targeting pilot production in the first -- the last quarter of 2027 or the first quarter of 2028 and expect the facility to support approximately 400 direct jobs at full operation. We have secured the principal equipment and are advancing permitting, contractor selection, engineering and other development work. This facility is intended to bring next-generation cell manufacturing and R&D to the same U.S. campus as our module operations. Our Houston module facility remains on track to reach approximately 2 gigawatts of annual capacity in September of this year, building on the capacity already operating today. Together, these investments are building an increasingly integrated U.S. platform. We are using U.S. polysilicon today, expanding domestic module capacity to approximately 2 gigawatts, developing advanced HJT cell manufacturing and R&D capabilities and building a foundation for future perovskite silicon tandem cell production. This represents a long-term commitment to American solar manufacturing market. Based on the third-party analysis announced on July 21, TOYO Solar Texas expects to qualify for Section 45 advanced manufacturing production credits for tax year 2025, and we are in the process of obtaining a similar third-party tax compliance report covering our 2026 tax credits. We will quantify that potential benefit only after the relevant tax, legal and accounting work is complete. As Onozuka-san mentioned, the timing of certain imports was affected during the quarter by CBP reviews. These documentation and admissibility reviews are part of the trade compliance environment for all solar products entering the United States. We are working closely with CBP and have provided the information requested to verify our supply chain. TOYO maintains detailed records designed to trace materials from the original polysilicon source through wafer conversion, cell production and the applicable U.S. entry. Based on the strength of our sourcing controls and documentation, we remain confident in our compliance approach. Separately, Commerce has initiated a countrywide anti-circumvention inquiry concerning certain solar cells and modules completed in Ethiopia using parts or components manufactured in China. TOYO is participating fully and will provide Commerce with the relevant information concerning our sourcing investment, manufacturing operations and value-added in Ethiopia. I want to be clear about our current production, though. TOYO does not use Chinese origin wafers in its Ethiopian cell manufacturing. Our 2026 wafer supply comes from non-China production, including a designated facility in Indonesia. In addition, 100% of the polysilicon for this production is sourced outside of China, as I mentioned before, with approximately 70% currently coming from U.S. producer and approximately 30% from OCI's Malaysian production. Our Ethiopia facility is a substantial manufacturing platform. It employs approximately 1,800 people and performs the full wafer to cell production process. We believe these facts position TOYO well while recognizing that Commerce's review remains ongoing. We will continue to cooperate and we'll update investors when appropriate. Our objective is to become a trusted U.S. manufacturer built around advanced Japanese technology, verifiable non-China sourcing and increasing the use of American inputs and expanding production in the United States, engineered in Japan, built in America. I will now turn the call over to our CFO, Yasunari Harada, to review our financial results in more detail. Harada-san?

Yes. Thank you, Rhone-san. Before I begin, I'd like to say that I'm very glad you are joining today's call. This is my first earnings call since joining TOYO as CFO on July 1, and I look forward to getting to know many of you on the line. Let me start with the second quarter of 2026. Revenue for Q2 2026 was approximately $118.2 million, representing year-over-year growth of 35.0% from $87.6 million in Q2 2025. The increase was primarily driven by increased solar module sales and OEM service revenue, partially offset by lower solar sales during the quarter. Cost of revenue was approximately $81.2 million in Q2 2026 compared to $69.3 million in Q2 2025. Gross profit was approximately $37.0 million, an increase of 102.2% from $18.3 million in Q2 2025. Gross margin improved to 31.3% in Q2 2026 from 20.9% in Q2 2025. Total operating expenses for Q2 2026 were approximately $14.4 million compared to $7.3 million in Q2 2025, including $1.6 million in selling and marketing expenses for Q2 2026, compared to $2.1 million for Q2 2025 and $12.8 million in general and administrative expenses for Q2 2026 compared to $5.3 million for Q2 2025. Net income for Q2 2026 was approximately $17.4 million compared to $6.2 million in Q2 2025. Earnings per share basic and diluted for Q2 2026 was $0.46 and $0.45, respectively, compared to $0.16 for both basic and diluted in Q2 2025. Turning to the first half of 2026. Revenue was approximately $261.0 million for the first half of 2026, representing year-over-year growth of 87.6% from [ $139 ] million in the first half of 2025. The increase was primarily driven by higher solar cell sales, solar module sales and OEM service revenue. Cost of revenue was approximately $176.2 million for the first half of 2026 compared to $116.0 million in the first half of 2025. Gross profit was approximately $84.7 million for the first half of 2026, an increase of 267% from $23.1 million in the first half of 2025. Gross margin nearly doubled to 32.5% for the first half of 2026 from 16.6% for the first half of 2025. Total operating expenses for the first half of 2026 were approximately $25.9 million compared to $13.4 million for the first half of 2025, including $3.6 million in selling and marketing expenses and $22.3 million in general and administrative expenses. The increase in general and administrative expenses primarily reflects the scale-up of operations at our Houston, Texas solar module facility and increase in headcount to support growth. Non-GAAP EBITDA for the first half of 2026 was $82.1 million compared to $21.5 million in the first half of 2025. The improvement was driven by our revenue scale up. The gross margin increased from 16.6% to 32.5%. Non-GAAP adjusted EBITDA for the first half of 2026 was $82.3 million compared to $22.8 million for the first half of 2025. Net income for the first half of 2026 was approximately $45.8 million compared to $2.5 million in the first half of 2025. And net income attributable to TOYO shareholders was $45.8 million for the first half of 2026 compared to $3.5 million in the first half of 2025. Non-GAAP adjusted net income for the first half of 2026 was $46 million compared to $3.9 million in the first half of 2025. Earnings per share, basic and diluted, for the first half of year 2026 was $1.21 and $1.20, respectively, compared to $0.08 in the first half of 2025. As of June 30, 2026, the company held $123.4 million in cash and restricted cash, including noncurrent restricted cash. This compares to [ $85.9 ] million as of December 31, 2025. Our working capital turned positive at $29.8 million compared with a deficit of $123.9 million at December 31, 2025, primarily reflecting a loan extension agreed with a related party in June. We generated cash from operations of $61.4 million and incurred capital expenditure of $27.8 million for the first half of 2026. During the first half of 2026, we raised approximately $52.6 million in net proceeds, $47.1 million from registered direct offering that closed on June 25 and approximately $5.5 million from at-the-market offering. Separately, following the June 2026 Russell Index, reconstitution, TOYO was added to the both Russell 3000 Index and the Russell Microcap Index, which we view as a meaningful step toward broader institutional visibility. That concludes our financial review.

Great. Thank you, Harada-san. So operator, I think we're now ready for Q&A. So if you could provide the listeners with instructions as how they can ask their questions, and we'll be happy to address any questions.

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

I wanted to get some additional color on the CBP situation. Just wanted to see like when do the detention start? How long do you expect them to continue? And then what could the impact be for Q3 and Q4? We're 2/3, halfway through the third quarter at this point. And so I was wondering, should we expect similar type levels of revenue and shipments for Q3? Or do you think they could be meaningfully lower? And if you can, put this all in context of your previously issued full year '26 guidance?

Rhone, do you want to take the first part of that with respect to the status on the CBP?

Yes, absolutely. This is fairly straightforward. As you know, CBP monitors Uyghur Forced Labor Prevention Act compliance for all module manufacturers. We'll go through this. There's kind of a natural process of them getting to know TOYO and our supply chain. So they started earlier this year in Q2 with the first detentions. The total amount is not all that significant, but regardless, our approach as a company is to make sure that we work closely with CBP and that we provide them with all the information requested. And so as we go through the process, they want to know, obviously, where our polysilicon comes from. As I mentioned, it's 70% U.S., it's 30% OCI, but they want to know all the way up to where the quartzite was mined. And so providing that information to them is something that we're able to do and we've done. And it's then going through the process of getting comfortable kind of with our full supply chain. What happens over time is CBP develops a relationship, not just with us, but also with obviously, our suppliers so that they feel comfortable that, okay, you're using a U.S. polysilicon provider, and it's coming out of these mines. We're familiar with those mines. Those are acceptable. And you get to an expedited path, which takes place after about 4 reviews or so. And so we're going through that process, and we've had, again, a very open, constructive conversation and dialogue with CBP. And we're optimistic that we will see the detentions be released in this quarter. But the exact timing is a little bit unclear. It's an administrative process with a government agency and sometimes it takes a little bit longer than we would like. But certainly, we're able to provide them with all the information they are looking for. So we're optimistic that it will alleviate itself soon. And Crocker, I'll let you or Harada-san answer the other question.

So maybe, [ Sachko, ] do you want to translate the question just so we're clear on the impact on anticipated impact on Q3 and Q4 results and maybe why the company has not explicitly reaffirmed guidance on this call.

[Interpreted] Thank you for your question. Given the near-term uncertainty of the situation, we believe the outlook remains uncertain, and we have not reached the point of an appropriate timing to change our guidance. And so again, although we cannot say that what the effect of the situation will be on our guidance currently, we will provide updates as we know more and is appropriate to do so.

So I think in summary, we have a couple of near-term events. One is resolving the situation with CBP. And then the other is the potentially positive negotiations with respect to 232, and the company wants to get through these issues before providing more clarity on the second half of the year.

Okay. Is it fair to say that the previously issued 2026 guidance is off the table?

Sorry, can you repeat the last word? I couldn't hear you.

Is off the table. So is the previously issued guidance no longer relevant?

Well, I'd say we have not reaffirmed it on the call today, and we're waiting for some clarity before we come back with an update to investors.

Okay. Got it. Moving on to the 232. I wanted to get a feel for when Commerce might approve your ability to access the tariff rebate program based on your anticipated CapEx in Humble, Texas.

Rhone, why don't you take that one kind of without making any promises for the administration, say what you can about where we are in that process.

Yes. Sure, Phil. As you know, the 232 was released less than 2 weeks ago. And so Commerce is still, let's call it, putting together the process by which they are meeting with companies and evaluating kind of our plans. This is a program that they have in place kind of in perpetuity. And they said very clearly in the proclamation that projects need to begin construction by January 20, 2029. So with respect to TOYO's approach, we've clearly met with Commerce multiple times through this whole process. We -- they're very familiar with the company, what our initial plans are. We will have preliminary meetings and conversations with them in the next week. And then we expect to be sitting down with them after kind of the Labor Day time frame and working with them on kind of an individual company-specific plan. Again, this doesn't kick in until December 4 or so. So I would expect companies to be negotiating through this time period, basically the rest of the fall, with Commerce to come up with their own individual programs. I think the key is not that it's a rush to get that plan in place. It will be put in place, but it's to make sure we do it right, right? And we have that -- the vision in place of what we're planning to do out through at least January 20, 2029, as we sit down with Commerce. So I think the way to think about it is companies need to go to the table with Commerce in a way that presents kind of their whole vision of what the company plans to do within that time period.

Great. And then one more for me. As it relates to customer conversations following the 232 signing a couple of weeks ago, can you give us some sense of how those conversations are going, what the dynamics look like? Are customers willing to sign agreements today? Or do they want more clarity on how things will be implemented? And have you seen pricing move higher for modules and cells? And if so, by what amount?

Yes. As I mentioned, Phil, the 232 doesn't take effect until December 4. So there's no kind of direct duties that are being imposed immediately. Clearly, any contracts that were signed before the proclamation was put in place will be retained. But there's a lot of adjustments that are going to be made based on our company-specific discussions with Commerce, with respect to the contracts that we have in place with customers with respect to the timing. So there's still, I think, a lot of work to be done to make sure that everybody has the chance to both digest what the 232 means to them individually and then to make sure that we are kind of providing a solution for our customers that fits kind of their needs. So it's a little bit too early right now to talk about, I think, the pricing structure of what we're going to see out of the 232. It is going to be company dependent. But as you and I have talked about before, the minimum price for modules at $0.38 is probably the floor. But again, we'll have to see as we get closer. And each company, meaning manufacturer as well as customer I think we'll have a different take and a different perspective on how the 232 will affect their customers. So a little too early, but we'll certainly come back with any material information as it develops in the next couple of weeks or months.

Got it. Okay. So I know it's early and there's a lot to digest. But I was wondering how long do you think the market -- the market needs to digest this? Is it past December 4? Or do you think things settle out in the next few weeks? Or does it take a few months?

I think it takes -- for manufacturers, it takes a few weeks to months. Again, a lot of it does depend upon the agreements that we develop with Commerce. As I mentioned, we're investing heavily in the United States. The offset program is designed to encourage investment in what Commerce has said clearly, wafers, ingots and cells. And so from TOYO's perspective, a lot of the pricing structure is going to be based upon ultimately what agreement we have with commerce and what offsets can be achieved. If you're just a pure importer into the United States, that minimum import price sticks. And Commerce has been -- and CBP has been very clear that the value of that product that's being imported, they're going to look at very carefully. And so the minimum import price for importers is probably going to be where the market settles, at least for those companies that are importing modules purely. For companies like TOYO who are manufacturing, there's a lot more flexibility and a lot more dynamic that will develop in the next couple of months. So I think you'll see a lot of forecasts, a lot of analysts coming out with numbers, but it's not going to be until December -- early December before we actually see what the pricing is going to be impacted by the 232. I think the other point to make here is that Commerce can still adjust the minimum import price structure they've been very clear about that. There's not been any adjustment yet, but I think there's a lot of comments coming into commerce with respect to what the MIPs are for modules and cells. And so you may see adjustments occur between now and December as well. So just again, a lot of moving parts, Phil. So it's almost impossible to tell. But each company will have their own structure, and I think it's worth asking them after they've -- especially the manufacturers after they've had a chance to sit down with Commerce.

Rhone, do you think it's fair to say that when we saw the proclamation that we were encouraged that the substance of our conversations had been reflected in some of the policies there?

Yes, absolutely, Crocker. I mean, there's no doubt. Again, we've worked closely with Commerce through this process to help them understand what it takes to manufacture in the United States. It gets wafers, cells and modules. And so the structure, we feel is very much aligned with TOYO's manufacturing strategy, which is onshoring. We do have the advantage of manufacturing cells right now that we can import into the United States. So we do have kind of a real product that we can offset. Obviously, the equipment for expanded manufacturing can be offset as well. And the fact that we use U.S. polysilicon does put us in a different category for these discussions with Commerce compared to other manufacturers. And that's -- I can't emphasize that enough because if you just step back a year and change, the 232 is initiated by polysilicon manufacturers. It's intended to support domestic polysilicon manufacturers. So that provision shouldn't be ignored. It should be recognized. And clearly, that is the intent of the overall proclamation to support U.S. polymakers. So by us using U.S. poly, again, for 70% today in Ethiopia going up to 100% later this year, it shows that we're very much aligned with what the administration's goals are out of the 232, and we look forward to working with Commerce.

One last one, guys. As it relates to imports of your Ethiopian cells into the U.S., is it fair to say that you are not importing any product now, meaning shipments are basically kind of on hold until you get through this review process?

No, no, I don't think so, Phil. We have had several detentions, but it's not a full stop of all of our product by any means. And so again, we're going through the process that we're providing CBP with all of the information all the way up to the quartzite mining and everything in between. I mean I think the strength of our application or our response is the fact, again, we don't use Chinese poly. We don't use Chinese wafers. We do a full processing of our cell in Ethiopia, and that's recognized by CBP. So the conversations we've had with them have been very productive. They understand what we're doing as a company. They understand the traceability that we use. So we -- again, hard to predict when it will be resolved, but the detentions that we do have are not -- we do think we'll move forward quickly and that we will be identified as a, let's call it, a good actor or a preferred importer. But again, we have to go through that process.

Your next question comes from Amit Dayal with H.C. Wainwright.

Not much left, I guess, to ask on our side. The 232 decision, could this impact your CapEx plans and expansion plans for the U.S.? Or are you pressing ahead regardless?

Well, we're definitely -- go ahead.

Yes, Rhone, why don't you go ahead on where we are today on HJT and maybe some other things that are under consideration, although early stage.

Yes, Amit, thanks for the question. I think this fully validates our manufacturing strategy in the United States and in fact, encourages us as a company to maybe think bigger and move forward faster. So our HJT plant is on schedule. It's a 20-month build-out. We will have a pilot operation either at the end of Q4 2027 or the beginning of 2028, which again is quick, but in large part because we have the experience as a company of designing, building and ramping cell facilities around the world. We're unique in that capacity in the United States. There's very few companies who've done this before, and we've had great success in, again, building and ramping cell facilities. So the HJT plant is moving forward on schedule, on time. And it is our primary announcement that we've made. In our conversations with Commerce, they've been very clear. They view the full supply chain in the United States as critical. And again, the 232 is a national security initiative and the proclamation from the President does identify ingots, wafers and cells as key components of the supply chain. So I think what -- the takeaway is that the 232 encourages companies like TOYO to be thinking bigger, to be thinking upstream and to be bringing a, let's call it, a kind of a fully integrated manufacturing strategy to the table when discussing any types of offsets. So I'll leave it at that unless you have anything to add, Crocker.

Yes. I think for now, we leave it at that. And of course, we encourage everyone to come to our Investor Day, October 6, in Humble, Texas. And I think we'll provide a little bit more thoughts on our long-term road map there.

Understood. And then with how everything is set up right now, the positioning relative to your available capacity, all of the, I guess, 232 related decision coming through. Do you think the second half could be better or similar to the first half? Like I know you're not providing guidance, but just trying to see what the setup looks like and credits potentially coming to play to support some cash flow improvements in the second half?

I think we're just going to have to fall back on what Harada-san said earlier, which is we have two areas of uncertainty. One is how fast the issues with CBP get resolved and then the timing to finalize the 232 agreement with Commerce. And I think those are -- there are two things that are kind of timing dependent. And for that reason, we will provide updates when we have a little bit more clarity on both those items.

Your next question is from [ Paul Swing,] private investor.

So my question is why there was a sequential decline in Q2 even after the Ethiopian facility was set to be sold out for the year. So why is the company lacking execution? And is it like a demand issue because the facility started 8 months ago and Q2 was very unexpected, to be honest.

So, Rhone, do you want to take that one? Or do you want me to have it Harada-san take it?

Yes, why don't you have Harada-san. Okay...

Okay. [ Sachko, ] can you translate for Harada-san? And the question is, what was the reason for the sequential -- even though we had strong year-over-year growth, what was the reason for sequential decline in Q2 and this year?

[Interpreted] The sequential decline in first half, second half?

Yes. So there was a sequential decline in revenues from the Q1 of 2026 to Q2 of 2026. That's the investor wants to know the reason for that.

[Interpreted] So this is Onozuka, CEO, answering your question. In Q1, the revenues were more on the cell side. And in Q2, we had more module sales and cells and modules have different margins. So our overall margin shifts with the mix between them and the revenues as well.

I don't think that was exactly the question. The question was the reason for a decline in revenues in Q2 versus Q1. That's what the -- he wasn't asking about margins.

[Interpreted] So although sales increased compared to the previous period, sales from cells decreased, which is what contributed to the sequential decline.

Okay. So operator, I think we've reached the end of the time for the call. So first of all, thank you to everyone for listening. Thank you for your questions. As you can tell, despite some near-term uncertainties, the team is very excited about what's ahead for TOYO. Again, we encourage everyone who's interested to come to our Analyst Day, October 6 in Humble, Texas. And feel free to reach out to us with any questions for management that we couldn't cover on today's call. Thank you very much.

Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]