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Enphase Energy Reports Financial Results for the Second Quarter of 2021

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FREMONT, Calif., July 27, 2021 (GLOBE NEWSWIRE) -- Enphase Energy, Inc. (NASDAQ: ENPH), a global energy management technology company and the world’s leading supplier of microinverter-based solar-plus-storage systems, announced today financial results for the second quarter of 2021, which included the summary below from its President and CEO, Badri Kothandaraman.

We reported quarterly revenue of $316.1 million in the second quarter of 2021, along with 40.8% for non-GAAP gross margin. We shipped approximately 2,362,401 microinverters, or 796 megawatts DC, and 43 megawatt hours of Enphase Storage systems.

Financial highlights for the second quarter of 2021 are listed below.

  • Revenue of $316.1 million

  • GAAP gross margin of 40.4%; non-GAAP gross margin of 40.8%

  • GAAP operating income of $59.4 million; non-GAAP operating income of $77.2 million

  • GAAP net income of $39.4 million, non-GAAP net income of $74.7 million

  • GAAP diluted earnings per share of $0.28; non-GAAP diluted earnings per share of $0.53

  • Cash flow from operations of $65.6 million

  • Ending cash balance of $1.3 billion, net of $200.0 million of common stock repurchases in May 2021

Our revenue and earnings for the second quarter of 2021 are provided below, compared with those of the prior quarter and the year ago quarter:

(In thousands, except per share data and percentages)

GAAP

Non-GAAP

Q2 2021

Q1 2021

Q2 2020

Q2 2021

Q1 2021

Q2 2020

Revenue

$

316,057

$

301,754

$

125,538

$

316,057

$

301,754

$

125,538

Gross margin

40.4

%

40.7

%

38.5

%

40.8

%

41.1

%

39.6

%

Operating expenses

$

68,401

$

61,563

$

37,533

$

51,696

$

43,699

$

26,024

Operating income

$

59,400

$

61,386

$

10,854

$

77,165

$

80,232

$

23,700

Net income (loss)

$

39,351

$

31,698

$

(47,294

)

$

74,676

$

78,702

$

23,549

Basic EPS

$

0.29

$

0.24

$

(0.38

)

$

0.55

$

0.60

$

0.19

Diluted EPS

$

0.28

$

0.22

$

(0.38

)

$

0.53

$

0.56

$

0.17

Total revenue increased 5% compared to the first quarter of 2021. Demand for our microinverter systems remained well ahead of supply in the second quarter of 2021, as component availability continued to be constrained. Our operations team did an excellent job of navigating these component supply constraints to best service our customer demand, while our sales team focused on managing the channel and working closely with our installers and distributors.

Our non-GAAP gross margin was 40.8% in the second quarter of 2021, compared to 41.1% in the first quarter of 2021, as higher logistics and expedite costs were partially offset by disciplined pricing and favorable product mix. Non-GAAP operating expenses increased to $51.7 million in the second quarter of 2021, compared to $43.7 million in the prior quarter, primarily due to additional investment in R&D and marketing programs, the first full quarter of consolidation of our two recent acquisitions, and increased hiring. Non-GAAP operating income was $77.2 million in the second quarter of 2021, compared to $80.2 million in the first quarter of 2021.

We exited the second quarter of 2021 with $1.3 billion in cash and generated $65.6 million in cash flow from operations. We repurchased approximately 1.7 million shares of common stock for a total amount of $200.0 million on the open market in May 2021. Capital expenditures were $16.4 million in the second quarter of 2021, compared to $9.9 million in the first quarter of 2021. The sequential increase was due to the expansion of manufacturing capacity at our Mexico and India facilities, along with investment in IT and cloud infrastructure.

Strong demand for our microinverter systems across all regions continued in the second quarter of 2021. We introduced our Load Control feature for our Enphase Storage systems in late May, which provides homeowners the ability to conserve their energy consumption by shedding non-essential loads during an outage and thereby extending the backup duration. We optimized our storage pricing for installers and continued to improve the installer experience by simplifying the commissioning process and reducing installation times. As a result, since June we have seen accelerating demand for our Enphase Storage systems.

We are making good progress on digital transformation. Both of our recent acquisitions are fully integrated and exceeded our expectations with record revenue and installer counts in Q2. The Montreal team, which provides design and proposal software, added a significant number of new installers, while the Noida team, which provides proposal and permitting services, also experienced a significant increase in new requests. Both teams plan to release new products that will improve the customer experience and enable our installer base to leverage them as soon as possible.

Our Enphase Storage customers in Connecticut, Massachusetts and Rhode Island can now participate and earn money through the ConnectedSolutions program, a utility-run incentive program to reduce electrical demand during high-use periods. Customers can sign-up, monitor, and control participation in the program using our Enlighten™ mobile app. We are excited to participate in a grid services program for the first time and expect to do more in the future.

BUSINESS HIGHLIGHTS

On April 19, 2021, Enphase Energy announced that Transdev, a multinational transit operator, selected Enphase microinverters for the first public transport depot in Australia to feature a fully solar-powered bus. Transdev plans to electrify the public transport network in Australia to show that it is more economical both financially and environmentally to transition to solar-powered electrical vehicle (EV) buses.

On May 25, 2021, Enphase Energy announced Load Control, a new feature for its Enphase Storage system. Load Control enables a homeowner to designate four loads and prioritize them for what gets power in the event of a grid outage. All of this is done through the Enlighten mobile app, providing homeowners more control over their energy consumption while driving an improved installer experience.

On June 29, 2021, Enphase Energy announced the launch of its Encharge™ storage system in Germany, the product’s first expansion into a market outside of the U.S. The Encharge storage system offers configurations ranging from 3.5kWh to 42kWh, along with the option to upgrade and expand through the lifetime of the system. Homeowners can also use the Enphase Enlighten mobile app to intelligently manage their solar energy in self-consumption mode to minimize the use of electricity from the grid, which saves on energy bills.

THIRD QUARTER 2021 FINANCIAL OUTLOOK

For the third quarter of 2021, Enphase Energy estimates both GAAP and non-GAAP financial results as follows:

  • Revenue to be within a range of $335.0 million to $355.0 million, which includes shipments of 60 to 70 megawatt hours of Enphase Storage systems

  • GAAP gross margin to be within a range of 37.0% to 40.0%; non-GAAP gross margin to be within a range of 38.0% to 41.0%, excluding stock-based compensation expenses

  • GAAP operating expenses to be within a range of $105.0 million to $108.0 million, including $48.0 million estimated for stock-based compensation expenses and acquisition related costs and amortization

  • Non-GAAP operating expenses to be within a range of $57.0 million to $60.0 million, excluding $48.0 million estimated for stock-based compensation expenses and acquisition related costs and amortization. The non-GAAP estimates include increased investments in new products, software, and marketing, and a $3.4 million accrual for post combination expenses from prior acquisition

Follow Enphase Online

Use of Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures in this press release. To view a description of non-GAAP financial measures used and the non-GAAP reconciliation schedule for the periods presented, click here.

Conference Call Information

Enphase Energy will host a conference call for analysts and investors to discuss its second quarter 2021 results and third quarter 2021 business outlook today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). The call is open to the public by dialing (877) 644-1284; participant passcode 5415938. A live webcast of the conference call will also be accessible from the “Investor Relations” section of the Company’s website at investor.enphase.com. Following the webcast, an archived version will be available on the website for approximately one year. In addition, an audio replay of the conference call will be available by calling (855) 859-2056; participant passcode 5415938, beginning approximately one hour after the call.

Forward-Looking Statements

This press release contains forward-looking statements, including statements related to Enphase Energy’s expectations as to future financial performance, expense levels, liquidity sources, the capabilities, advantages, features and performance of our technology and products, including the ability to simplify and reduce installation time, our business strategies and anticipated demand for our products, the capabilities and performance of our partners, and the impact to homeowners. These forward-looking statements are based on the Company’s current expectations and inherently involve significant risks and uncertainties. Enphase Energy’s actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of certain risks and uncertainties including those risks described in more detail in the Company’s most recent Annual Report on Form 10-K and other documents on file with the SEC and available on the SEC’s website at www.sec.gov. Enphase Energy undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations, except as required by law.

A copy of this press release can be found on the investor relations page of Enphase Energy’s website at investor.enphase.com.

About Enphase Energy, Inc.

Enphase Energy, a global energy technology company, delivers smart, easy-to-use solutions that manage solar generation, storage and communication on one intelligent platform. The Company revolutionized the solar industry with its microinverter-based technology and produces a fully integrated solar-plus-storage solution. Enphase has shipped more than 36 million microinverters, and over 1.5 million Enphase-based systems have been deployed in more than 130 countries. For more information, visit www.enphase.com.

Enphase Energy, Enphase, the E logo, Enlighten, Encharge, and other trademarks or service names are the trademarks of Enphase Energy, Inc.

Contact:
Adam Hinckley
Enphase Energy, Inc.
Investor Relations
ir@enphaseenergy.com


ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

Three Months Ended

Six Months Ended

June 30,
2021

March 31,
2021

June 30,
2020

June 30,
2021

June 30,
2020

Net revenues

$

316,057

$

301,754

$

125,538

$

617,811

$

331,083

Cost of revenues

188,256

178,805

77,151

367,061

202,021

Gross profit

127,801

122,949

48,387

250,750

129,062

Operating expenses:

Research and development

22,708

21,818

13,192

44,526

25,068

Sales and marketing

25,586

19,622

12,371

45,208

24,143

General and administrative

20,107

20,123

11,970

40,230

24,285

Total operating expenses

68,401

61,563

37,533

129,964

73,496

Income from operations

59,400

61,386

10,854

120,786

55,566

Other income (expense), net

Interest income

98

73

282

171

1,373

Interest expense

(12,506

)

(7,329

)

(5,952

)

(19,835

)

(9,107

)

Other income (expense), net

(633

)

573

653

(60

)

(271

)

Loss on partial settlement of convertible notes (1)

(13

)

(56,369

)

(56,382

)

Change in fair value of derivatives (2)

(59,692

)

(44,348

)

Total other expense, net

(13,054

)

(63,052

)

(64,709

)

(76,106

)

(52,353

)

Income (loss) before income taxes

46,346

(1,666

)

(53,855

)

44,680

3,213

Income tax benefit (provision)

(6,995

)

33,364

6,561

26,369

18,429

Net income (loss)

$

39,351

$

31,698

$

(47,294

)

$

71,049

$

21,642

Net income (loss) per share:

Basic

$

0.29

$

0.24

$

(0.38

)

$

0.53

$

0.17

Diluted

$

0.28

$

0.22

$

(0.38

)

$

0.49

$

0.16

Shares used in per share calculation:

Basic

135,094

131,303

125,603

133,209

124,567

Diluted

141,533

146,442

125,603

144,022

138,910

(1) Loss on partial settlement of convertible notes of less than $0.1 million for the three months ended June 30, 2021, primarily relates to the non-cash loss on partial settlement of $0.1 million aggregate principal amount of the Notes due 2025. Loss on partial settlement of convertible notes of $56.4 million for the six months ended June 30, 2021 primarily relates to the $9.5 million non-cash loss on partial settlement of $87.1 million aggregate principal amount of the Notes due 2024, $9.5 million non-cash loss on partial settlement of $217.8 million aggregate principal amount of the Notes due 2025 and $37.5 million non-cash inducement loss incurred on repurchase of Notes due 2025.

(2) Change in fair value of derivatives of $59.7 million and $44.3 million for the three and six months ended June 30, 2020, respectively, represents changes in fair value of the conversion option in the Notes due 2025, as well as the convertible note hedge and warrant transactions. Initially, conversion of the Notes due 2025 would be settled solely in cash as a result of the Company not having the necessary number of authorized but unissued shares of its common stock available to settle the conversion option of the Notes due 2025 in shares; therefore, the conversion option, convertible note hedge and warrant transactions were classified as derivatives that required marked-to-market accounting. On May 20, 2020, at the Company’s annual meeting of stockholders, the stockholders approved an amendment to its certificate of incorporation to increase the number of authorized shares of the Company’s common stock. As a result, the Company will now be able to settle the Notes due 2025, convertible notes hedge and warrants through payment or delivery, as the case may be, of cash, shares of its common stock or a combination thereof, at the Company’s election. Accordingly, on May 20, 2020, the conversion option, convertible note hedge and warrant transactions were remeasured at fair value and were then reclassified to additional paid-in-capital in the condensed consolidated balance sheet in the second quarter of 2020 and are no longer remeasured as long as they continue to meet the conditions for equity classification.


ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

June 30,
2021

December 31,
2020

ASSETS

Current assets:

Cash and cash equivalents

$

1,312,261

$

679,379

Accounts receivable, net

281,154

182,165

Inventory

37,756

41,764

Prepaid expenses and other assets

34,748

29,756

Total current assets

1,665,919

933,064

Property and equipment, net

63,211

42,985

Operating lease, right of use asset, net

15,693

17,683

Intangible assets, net

45,409

28,808

Goodwill

61,321

24,783

Other assets

118,532

59,875

Deferred tax assets, net

130,571

92,904

Total assets

$

2,100,656

$

1,200,102

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

82,141

$

72,609

Accrued liabilities

119,234

76,542

Deferred revenues, current

55,084

47,665

Warranty obligations, current

15,009

11,260

Debt, current

85,125

325,967

Total current liabilities

356,593

534,043

Long-term liabilities:

Deferred revenues, noncurrent

165,645

125,473

Warranty obligations, noncurrent

44,929

34,653

Other liabilities

20,075

17,042

Debt, noncurrent

929,015

4,898

Total liabilities

1,516,257

716,109

Total stockholders’ equity

584,399

483,993

Total liabilities and stockholders’ equity

$

2,100,656

$

1,200,102


ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

Three Months Ended

Six Months Ended

June 30,
2021

March 31,
2021

June 30,
2020

June 30,
2021

June 30,
2020

Cash flows from operating activities:

Net income (loss)

$

39,351

$

31,698

$

(47,294

)

$

71,049

$

21,642

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

7,596

5,558

4,141

13,154

7,985

Provision for doubtful accounts

257

14

81

271

185

Loss on partial settlement of convertibles notes

13

56,369

56,382

Deemed repayment of convertible notes attributable to accreted debt discount

(6

)

(15,579

)

(15,585

)

Non-cash interest expense

12,307

7,156

5,372

19,463

8,094

Change in fair value of debt securities

(932

)

(1,437

)

(2,369

)

Stock-based compensation

15,312

14,844

12,300

30,156

19,815

Change in fair value of derivatives

59,692

44,348

Deferred income taxes

5,240

(35,367

)

(7,067

)

(30,127

)

(19,567

)

Changes in operating assets and liabilities:

Accounts receivable

(44,812

)

(53,719

)

6,529

(98,531

)

56,166

Inventory

(2,880

)

6,888

3,430

4,008

870

Prepaid expenses and other assets

(10,154

)

(5,040

)

(4,525

)

(15,194

)

(9,534

)

Accounts payable, accrued and other liabilities

10,514

36,376

(13,323

)

46,890

(35,389

)

Warranty obligations

5,385

8,640

406

14,025

809

Deferred revenues

28,469

19,440

5,689

47,909

(30,771

)

Net cash provided by operating activities

65,660

75,841

25,431

141,501

64,653

Cash flows from investing activities:

Purchases of property and equipment

(16,428

)

(9,940

)

(4,451

)

(26,368

)

(7,804

)

Investments in private companies

(20,000

)

(25,000

)

(45,000

)

Business acquisitions, net of cash acquired

(55,239

)

(55,239

)

Net cash used in investing activities

(36,428

)

(90,179

)

(4,451

)

(126,607

)

(7,804

)

Cash flows from financing activities:

Issuance of convertible notes, net of issuance costs

(949

)

1,189,388

(591

)

1,188,439

312,420

Purchase of convertible note hedges

(286,235

)

(286,235

)

(89,056

)

Sale of warrants

220,800

220,800

71,552

Principal payments and financing fees on debt

(344

)

(1,078

)

(485

)

(1,422

)

(1,633

)

Partial repurchase of convertible notes

(79

)

(289,233

)

(289,312

)

Repurchase of common stock

(200,000

)

(200,000

)

Proceeds from exercise of equity awards and employee stock purchase plan

3,428

214

2,867

3,642

4,846

Payment of withholding taxes related to net share settlement of equity awards

(7,813

)

(9,185

)

(9,385

)

(16,998

)

(43,652

)

Net cash provided by (used in) financing activities

(205,757

)

824,671

(7,594

)

618,914

254,477

Effect of exchange rate changes on cash and cash equivalents

(224

)

(702

)

24

(926

)

(181

)

Net increase (decrease) in cash, cash equivalents and restricted cash

(176,749

)

809,631

13,410

632,882

311,145

Cash, cash equivalents and restricted cash—Beginning of period

1,489,010

679,379

593,844

679,379

296,109

Cash, cash equivalents and restricted cash—End of period

$

1,312,261

$

1,489,010

$

607,254

$

1,312,261

$

607,254


ENPHASE ENERGY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data and percentages)
(Unaudited)

Three Months Ended

Six Months Ended

June 30,
2021

March 31,
2021

June 30,
2020

June 30,
2021

June 30,
2020

Gross profit (GAAP)

$

127,801

$

122,949

$

48,387

$

250,750

$

129,062

Stock-based compensation

1,060

982

1,337

2,042

1,943

Gross profit (Non-GAAP)

$

128,861

$

123,931

$

49,724

$

252,792

$

131,005

Gross margin (GAAP)

40.4

%

40.7

%

38.5

%

40.6

%

39.0

%

Stock-based compensation

0.4

%

0.4

%

1.1

%

0.3

%

0.6

%

Gross margin (Non-GAAP)

40.8

%

41.1

%

39.6

%

40.9

%

39.6

%

Operating expenses (GAAP)

$

68,401

$

61,563

$

37,533

$

129,964

$

73,496

Stock-based compensation (1)

(14,252

)

(13,862

)

(10,963

)

(28,114

)

(17,872

)

Acquisition related expenses and amortization

(2,453

)

(4,002

)

(546

)

(6,455

)

(1,092

)

Operating expenses (Non-GAAP)

$

51,696

$

43,699

$

26,024

$

95,395

$

54,532

(1) Includes stock-based compensation as follows:

Research and development

$

5,467

$

5,749

$

3,263

$

11,216

$

5,182

Sales and marketing

5,335

3,537

3,610

8,872

5,552

General and administrative

3,450

4,576

4,090

8,026

7,138

Total

$

14,252

$

13,862

$

10,963

$

28,114

$

17,872

Income from operations (GAAP)

$

59,400

$

61,386

$

10,854

$

120,786

$

55,566

Stock-based compensation

15,312

14,844

12,300

30,156

19,815

Acquisition related expenses and amortization

2,453

4,002

546

6,455

1,092

Income from operations (Non-GAAP)

$

77,165

$

80,232

$

23,700

$

157,397

$

76,473

Net income (loss) (GAAP)

$

39,351

$

31,698

$

(47,294

)

$

71,049

$

21,642

Stock-based compensation

15,312

14,844

12,300

30,156

19,815

Acquisition related expenses and amortization

2,453

4,002

546

6,455

1,092

Non-cash interest expense

12,307

7,156

5,372

19,463

8,094

Loss on partial settlement of convertible notes

13

56,369

56,382

Change in fair value of derivatives

59,692

44,348

Non-GAAP income tax adjustment

5,240

(35,367

)

(7,067

)

(30,127

)

(19,567

)

Net income (Non-GAAP)

$

74,676

$

78,702

$

23,549

$

153,378

$

75,424

Net income (loss) per share, basic (GAAP)

$

0.29

$

0.24

$

(0.38

)

$

0.53

$

0.17

Stock-based compensation

0.11

0.11

0.10

0.23

0.16

Acquisition related expenses and amortization

0.02

0.03

0.05

0.01

Non-cash interest expense

0.09

0.05

0.05

0.15

0.07

Loss on partial settlement of convertible notes

0.43

0.42

Change in fair value of derivatives

0.48

0.36

Non-GAAP income tax adjustment

0.04

(0.26

)

(0.06

)

(0.23

)

(0.16

)

Net income per share, basic (Non-GAAP)

$

0.55

$

0.60

$

0.19

$

1.15

$

0.61

Shares used in basic per share calculation GAAP and Non-GAAP

135,094

131,303

125,603

133,209

124,567

Net income (loss) per share, diluted (GAAP)

$

0.28

$

0.22

$

(0.38

)

$

0.49

$

0.16

Stock-based compensation

0.11

0.11

0.09

0.21

0.14

Acquisition related expenses and amortization

0.02

0.03

0.05

0.01

Non-cash interest expense

0.09

0.05

0.04

0.14

0.06

Loss on partial settlement of convertible notes

0.40

0.40

Change in fair value of derivatives

0.48

0.01

$

0.33

Non-GAAP income tax adjustment

0.03

(0.25

)

(0.06

)

(0.21

)

(0.14

)

Net income per share, diluted (Non-GAAP) (2)

$

0.53

$

0.56

$

0.17

$

1.09

$

0.56

Shares used in diluted per share calculation GAAP

141,533

146,442

125,603

144,022

138,910

Shares used in diluted per share calculation Non-GAAP (3)

140,931

141,746

135,770

141,379

135,557

Net cash provided by operating activities (GAAP)

$

65,660

$

75,841

$

25,431

$

141,501

$

64,653

Purchases of property and equipment

(16,428

)

(9,940

)

(4,451

)

(26,368

)

(7,804

)

Deemed repayment of convertible notes due 2024 and notes due 2025 attributable to accreted debt discount

6

15,579

15,585

Free cash flow (Non-GAAP)

$

49,238

$

81,480

$

20,980

$

130,718

$

56,849

(2) Calculation of non-GAAP diluted net income per share for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, as well as the six months ended June 30, 2021 and 2020, excludes convertible notes due 2023 interest expense, net of tax of less than $0.1 million in each period from non-GAAP net income.

(3) Effect of dilutive in-the-money portion of convertible senior notes and warrants are included in the GAAP weighted-average diluted shares in periods where the Company has GAAP net income. The Company excluded the in-the-money portion of convertible notes due 2024 totaling 45 thousand shares, 2,984 thousand shares and 3,677 thousand shares in the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively, and 1,506 thousand and 3,353 thousand shares for the six months ended June 30, 2021, and 2020, respectively from non-GAAP weighted-average diluted shares as the Company entered into convertible note hedge transactions that reduce potential dilution to the Company’s common stock upon any conversion of the notes due 2024. The Company excluded the in-the-money portion of convertible notes due 2025 totaling 557 thousand shares and 1,713 thousand shares in the three months ended June 30, 2021 and March 31, 2021, respectively, and 1,137 thousand shares for the six months ended June 30, 2021, respectively, from non-GAAP weighted-average diluted shares as the Company entered into convertible note hedge transactions that reduce potential dilution to the Company’s common stock upon any conversion of the notes due 2025.