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Enphase Energy Reports Financial Results for the First Quarter of 2019

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FREMONT, Calif., April 30, 2019 (GLOBE NEWSWIRE) -- Enphase Energy, Inc. (ENPH), a global energy technology company and the world’s leading supplier of solar microinverters, announced today financial results for the first quarter of 2019, which included the summary below from its President and CEO, Badri Kothandaraman.

Highlights for the first quarter included:

  • Revenue of $100.2 million; IQ 7 shipments at 94% of all microinverters

  • Cash flows from operating activities of $17.1 million; ending cash balance of $78.1 million

  • GAAP gross margin of 33.3%; non-GAAP gross margin of 33.5%

  • GAAP operating expenses of $26.2 million; non-GAAP operating expenses of $22.3 million

  • GAAP operating income of $7.1 million; non-GAAP operating income of $11.3 million

  • GAAP net income of $2.8 million; non-GAAP net income of $9.5 million

  • GAAP diluted EPS of $0.02; non-GAAP diluted EPS of $0.08

Our revenue and earnings for the first quarter are given below, compared with those of the prior quarter and the year ago quarter:

(In thousands, except per share data and percentages)

GAAP

Non-GAAP

Q1 2019

Q4 2018

Q1 2018

Q1 2019

Q4 2018

Q1 2018

Revenue

$

100,150

$

92,289

$

69,972

$

100,150

$

92,289

$

69,972

Gross margin

33.3

%

30.5

%

26.2

%

33.5

%

30.7

%

26.5

%

Operating income (loss)

$

7,134

$

5,003

$

(2,475

)

$

11,282

$

8,565

$

861

Net income (loss)

$

2,765

$

709

$

(5,128

)

$

9,528

$

5,092

$

(1,255

)

Basic EPS

$

0.03

$

0.01

$

(0.06

)

$

0.09

$

0.05

$

(0.01

)

Diluted EPS

$

0.02

$

0.01

$

(0.06

)

$

0.08

$

0.04

$

(0.01

)

Our first quarter revenue was $100.2 million, an increase of 9% sequentially and an increase of 43% year-over year. We shipped approximately 306 megawatts DC, or 976,410 microinverters. We continued to see strong demand across the board from our customers, overcoming the typical first quarter seasonality in the solar industry.

We experienced component shortages which constrained our revenue in Q1’19. The capacity we paid for in May 2018 came online in Q1’19. We expect to get additional supply from our multi-year agreements for high-voltage power transistors; some of this supply is expected in Q2’19 and most of it is expected in the second half of 2019.

Our non-GAAP gross margin was 33.5%, an increase of 280 basis points from 30.7% in the fourth quarter of 2018. The non-GAAP gross margin was negatively impacted by 280 basis points due to expedite fees related to component shortages. The expedite fees were in the form of air shipments that we chose to make in order to service our customers. Non-GAAP operating expenses were $22.3 million, compared to $19.7 million in the prior quarter.

We exited the first quarter with $78.1 million in cash, net of the loan repayment to Tennenbaum Capital Partners in the principal amount of approximately $39.5 million, plus accrued interest and fees. Inventory was $13.0 million in the first quarter, compared to $16.3 million in the fourth quarter and $18.5 million in the first quarter of 2018.

BUSINESS HIGHLIGHTS

+ On March 18, 2019, Panasonic Solar and Enphase Energy announced that the new Panasonic AC Series Photovoltaic (PV) HIT® N330E AC Module with integrated Enphase IQ 7X Microinverter is available for solar installation as of late March 2019. Panasonic’s N330E HIT® AC Series Modules combine the efficiency of HIT® solar panels with Enphase’s highly reliable seventh-generation IQ microinverters.

+ On April 3, 2018, Enphase Energy announced that the Company released its updated Enphase AC Battery (ACB) with a new battery cell supplier and improved Time-of-Use (TOU) software for customers in Australia, New Zealand and certain parts of Europe. The new ACB system has an enhanced Battery Management Unit (BMU) designed to effectively monitor the health of the battery and increase the safety and reliability of the product. Enphase had previously shipped over 30MWh of residential energy storage systems to customers in Australia, New Zealand and Europe prior to the release of this updated ACB.

+ On April 8, 2019, Enphase Energy announced that the Company entered into a multi-year supply agreement with Infineon Technologies AG for its power transistors developed using CoolMOS C7 Gold (G7) superjunction MOSFET technology. The agreement is expected to provide Enphase with an increased supply of high-voltage power transistors starting in the second half of 2019.

+ On April 15, 2019, Enphase Energy announced that over 2,500 homeowners have joined the Enphase Upgrade Program, a service program that gives homeowners several options for upgrading to the latest, more efficient and reliable microinverter technology from Enphase. This program is for warranty holders of legacy Enphase microinverters and represents the Company’s commitment to quality and service. Participation is entirely voluntary, and Enphase continues to stand by the warranties for its products in the field.

SECOND QUARTER 2019 FINANCIAL OUTLOOK

For the second quarter of 2019, Enphase Energy estimates both GAAP and non-GAAP financial results as follows:

  • Revenue to be within a range of $115 million to $125 million

  • GAAP and non-GAAP gross margin to be within a range of 32% to 35%

  • GAAP operating expenses to be within a range of $25.0 million to $27.0 million, including a total of approximately $4.0 million estimated for stock-based compensation expenses, additional restructuring expenses and acquisition related expenses and amortization

  • Non-GAAP operating expenses to be within a range of $21.0 million to $23.0 million, excluding a total of approximately $4.0 million estimated for stock-based compensation expenses, additional restructuring expenses and acquisition related expenses and amortization

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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 first quarter 2019 results and second quarter 2019 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 4757619. 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 one year. In addition, an audio replay of the conference call will be available by calling (855) 859-2056; participant passcode 4757619, beginning approximately one hour after the call.

Forward-Looking Statements

This press release contains forward-looking statements, including statements related to Enphase Energy’s expected future financial performance; the capabilities and performance of our technology and products, including the timing of product introductions and the anticipated market adoption of current and future products; performance in operations, including component supply management and product quality and reliability. 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 connect solar generation, storage and management on one intelligent platform. The Company revolutionized solar with its microinverter technology and produces a fully-integrated solar plus storage solution. Enphase has shipped more than 20 million microinverters, and over 895,000 Enphase systems have been deployed in more than 125 countries. For more information, visit www.enphase.com.

Enphase Energy®, the Enphase logo and other trademarks or service names are the trademarks of Enphase Energy, Inc. Other names are for informational purposes and may be trademarks of their respective owners.

Contact:

Christina Carrabino
Enphase Energy, Inc.
Investor Relations
ir@enphaseenergy.com
+1-707-763-4784 x7354

ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)


Three Months Ended
March 31,

2019

2018

Net revenues

$

100,150

$

69,972

Cost of revenues

66,811

51,657

Gross profit

33,339

18,315

Operating expenses:

Research and development

8,524

7,620

Sales and marketing

7,433

6,227

General and administrative

9,880

6,943

Restructuring charges

368

Total operating expenses

26,205

20,790

Income (loss) from operations

7,134

(2,475

)

Other expense, net

Interest expense

(3,540

)

(2,292

)

Other expense

(481

)

(126

)

Total other expense, net

(4,021

)

(2,418

)

Income (loss) before income taxes

3,113

(4,893

)

Provision for income taxes

(348

)

(235

)

Net income (loss)

$

2,765

$

(5,128

)

Net income (loss) per share:

Basic

$

0.03

$

(0.06

)

Diluted

$

0.02

$

(0.06

)

Shares used in per share calculation:

Basic

108,195

91,422

Diluted

115,863

91,422

ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

March 31,
2019

December 31,
2018

ASSETS

Current assets:

Cash and cash equivalents

$

78,087

$

106,237

Accounts receivable, net

81,715

78,938

Inventory

12,971

16,267

Prepaid expenses and other assets

22,669

20,860

Total current assets

195,442

222,302

Property and equipment, net

20,178

20,998

Operating lease, right of use asset

7,963

Intangible assets, net

34,124

35,306

Goodwill

24,783

24,783

Other assets

36,762

36,548

Total assets

$

319,252

$

339,937

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

52,489

$

48,794

Accrued liabilities

32,431

29,010

Deferred revenues, current

32,916

33,119

Warranty obligations

7,925

8,083

Debt, current

2,985

28,155

Total current liabilities

128,746

147,161

Long-term liabilities:

Deferred revenues, noncurrent

78,393

76,911

Warranty obligations, noncurrent

23,117

23,211

Other liabilities

9,466

3,250

Debt, noncurrent

65,406

81,628

Total liabilities

305,128

332,161

Total stockholders’ equity

14,124

7,776

Total liabilities and stockholders’ equity

$

319,252

$

339,937

ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

Three Months Ended
March 31,

2019

2018

Cash flows from operating activities:

Net income (loss)

$

2,765

$

(5,128

)

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

Depreciation and amortization

3,572

2,276

Provision for doubtful accounts

600

Amortization of debt issuance costs

1,490

537

Financing fees on extinguishment of debt

2,152

Stock-based compensation

3,290

1,571

Changes in operating assets and liabilities:

Accounts receivable

(3,266

)

9,125

Inventory

3,296

7,457

Prepaid expenses and other assets

(2,413

)

(1,039

)

Accounts payable, accrued and other liabilities

4,851

(11,667

)

Warranty obligations

(252

)

809

Deferred revenues

1,578

(1,180

)

Net cash provided by operating activities

17,063

3,361

Cash flows from investing activities:

Purchases of property and equipment

(658

)

(1,043

)

Net cash used in investing activities

(658

)

(1,043

)

Cash flows from financing activities:

Proceeds from issuance of common stock, net of issuance costs

19,923

Proceeds from debt, net of issuance costs

2,309

Principal payments and financing fees on debt

(44,731

)

(771

)

Proceeds from issuance of common stock under employee stock plans, net

309

269

Net cash provided by (used in) financing activities

(44,422

)

21,730

Effect of exchange rate changes on cash

(133

)

63

Net increase (decrease) in cash and cash equivalents

(28,150

)

24,111

Cash and cash equivalents—Beginning of period

106,237

29,144

Cash and cash equivalents—End of period

$

78,087

$

53,255

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

Three Months Ended

March 31,
2019

December 31,
2018

March 31,
2018

Gross profit (GAAP)

$

33,339

$

28,165

$

18,315

Stock-based compensation

231

126

198

Gross profit (Non-GAAP)

$

33,570

$

28,291

$

18,513

Gross margin (GAAP)

33.3

%

30.5

%

26.2

%

Stock-based compensation

0.2

%

0.2

%

0.3

%

Gross margin (Non-GAAP)

33.5

%

30.7

%

26.5

%

Operating expenses (GAAP)

$

26,205

$

23,162

$

20,790

Stock-based compensation (1)

(3,003

)

(1,395

)

(1,373

)

Restructuring

(368

)

(1,540

)

Reserve for non-recurring legal matter

(1,765

)

Acquisition related expenses and amortization

(546

)

(501

)

Operating expenses (Non-GAAP)

$

22,288

$

19,726

$

17,652

(1) Includes stock-based compensation as follows:

Research and development

$

716

$

295

$

618

Sales and marketing

999

565

361

General and administrative

1,288

535

394

Total

$

3,003

$

1,395

$

1,373

Income (loss) from operations (GAAP)

$

7,134

$

5,003

$

(2,475

)

Stock-based compensation

3,234

1,521

1,571

Restructuring

368

1,540

Reserve for non-recurring legal matter

1,765

Acquisition related expenses and amortization

546

501

Income from operations (Non-GAAP)

$

11,282

$

8,565

$

861

Net income (loss) (GAAP)

$

2,765

$

709

$

(5,128

)

Stock-based compensation

3,234

1,521

1,571

Restructuring

368

1,540

Reserve for non-recurring legal matter

1,765

Acquisition related expenses and amortization

546

501

Non-recurring debt prepayment fees and non-cash interest

2,615

821

537

Net income (loss) (Non-GAAP)

$

9,528

$

5,092

$

(1,255

)

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

$

0.03

$

0.01

$

(0.06

)

Stock-based compensation

0.03

0.01

0.02

Restructuring

0.01

Reserve for non-recurring legal matter

0.02

Acquisition related expenses and amortization

0.01

0.01

Non-recurring debt prepayment fees and non-cash interest

0.02

0.01

0.01

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

$

0.09

$

0.05

$

(0.01

)

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

108,195

106,638

91,422

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

$

0.02

$

0.01

$

(0.06

)

Stock-based compensation

0.03

0.01

0.02

Restructuring

0.01

Reserve for non-recurring legal matter

0.02

Acquisition related expenses and amortization

0.01

Non-recurring debt prepayment fees and non-cash interest

0.02

0.01

0.01

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

$

0.08

$

0.04

$

(0.01

)

Shares used in diluted per share calculation GAAP

115,863

113,888

91,422

Shares used in diluted per share calculation Non-GAAP

127,564

125,589

91,422


(2)

Calculation of non-GAAP diluted net income per share for the three months ended March 31, 2019 and December 31, 2018 excludes convertible note interest expense, net of tax of $0.5 million and $0.5 million, respectively, from non-GAAP net income.