Japanese company TOYO Co., Ltd has published its audited financial results for the fiscal year ending December 2024, confirming a net profit of $40.5mn, compared to $9.9mn the previous year, according to a filing with the Securities and Exchange Commission (SEC) on May 12. The result came despite a 180% surge in operating expenses, which reached $13mn.
Sharp increase in administrative and logistics costs
TOYO’s general and administrative expenses totalled $11.4mn in 2024, up from $4.6mn in 2023. The increase was driven mainly by a $3.3mn rise in payroll and welfare costs, $1.9mn in consulting and audit fees, and $0.9mn in depreciation and amortisation. Marketing expenses reached $1.6mn, sharply up from $0.02mn in the prior year, largely due to an additional $1.2mn in freight and handling costs.
TOYO stated that the improvement in its net result was largely attributable to a $35.1mn accounting adjustment related to the revaluation of conditional equity compensation (“earnout shares”). Excluding this factor, the company reported an adjusted net profit of $5.4mn, used to determine the number of shares allocated to initial shareholders.
Share count adjustment and financial stability
Following the cancellation of 11.3 million earnout shares, TOYO’s total ordinary shares in circulation stood at 35.3 million. Earnings per share (basic and diluted) were $1.09, up from $0.24 in 2023.
The company ended 2024 with $17.1mn in cash and restricted cash, down from $19mn a year earlier. Despite generating $46.5mn in positive cash flow from operations, TOYO recorded $44mn in net investment outflows, mainly for equipment purchases.
Increased debt and inventory contraction
Short-term bank borrowings reached $16.1mn as of December 31, 2024, compared to no such debt the previous year. Long-term borrowings also rose to $21mn. The company halved its inventory, reducing it from $40mn to $20mn, reflecting tighter supply management.
“The change in fair value of the earnout shares had a material impact on net profit without affecting cash,” the company stated in its regulatory filing with the SEC.
