July 30, 2019 - 4:05 PM EDT
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Enphase Energy Reports Financial Results for the Second Quarter of 2019

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

Highlights for the second quarter of 2019 included:

  • Revenue of $134.1 million; IQ 7 shipments at 98% of all microinverters
  • Cash flows from operating activities of $14.8 million; ending cash balance of $206.0 million
  • GAAP gross margin of 33.8%; non-GAAP gross margin of 34.1%
  • GAAP operating expenses of $27.9 million; non-GAAP operating expenses of $22.5 million
  • GAAP operating income of $17.4 million; non-GAAP operating income of $23.2 million
  • GAAP net income of $10.6 million; non-GAAP net income of $23.2 million
  • GAAP diluted EPS of $0.08; non-GAAP diluted EPS of $0.18

Our revenue and earnings for the second 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
 Q2 2019 Q1 2019 Q2 2018 Q2 2019 Q1 2019 Q2 2018
Revenue$134,094  $100,150  $75,896  $134,094  $100,150  $75,896 
Gross margin33.8% 33.3% 29.9% 34.1% 33.5% 30.5%
Operating income (loss)$17,447  $7,134  $(558) $23,227  $11,282  $4,133 
Net income (loss)$10,618  $2,765  $(3,738) $23,173  $9,528  $1,550 
Basic EPS$0.09  $0.03  $(0.04) $0.20  $0.09  $0.02 
Diluted EPS$0.08  $0.02  $(0.04) $0.18  $0.08  $0.01 

Our second quarter revenue was $134.1 million, an increase of 34% sequentially and an increase of 77% year-over year. We shipped approximately 416 megawatts DC, or 1,283,680 microinverters. We continued to see strong demand across the board from our customers. While demand continued to outstrip available supply, we were able to increase capacity to better support our customers. As stated before, we are on track to have a supply of approximately two million microinverters in the fourth quarter of 2019.

Our non-GAAP gross margin was 34.1%, an increase of 60 basis points from 33.5% in the first quarter of 2019. The non-GAAP gross margin was negatively impacted by approximately 330 basis points due to expedite fees related to component shortages, compared to approximately 280 basis points in the prior quarter. 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 $22.5 million, compared to $22.3 million in the prior quarter.

We exited the second quarter with $206.0 million in cash and generated $14.8 million in cash flows from operations. The second quarter cash balance included net proceeds of approximately $115.5 million on June 5, 2019 associated with the issuance of $132.0 million aggregate principal amount of convertible senior notes due 2024 and the repurchase of $60.0 million aggregate principal amount of convertible notes due 2023 in exchange for shares of Enphase Energy common stock and separate cash payments. Inventory was $20.1 million in the second quarter, compared to $13.0 million in the first quarter of 2019 and $17.5 million in the second quarter of 2018.

BUSINESS HIGHLIGHTS

On June 10, 2019, Enphase Energy announced that more than 500 solar installation companies in the U.S. have benefitted from significantly reduced solar design complexity and logistics by adopting Enphase Energized™ AC Modules (ACMs). Enphase Energized AC Modules, first released in October 2017, are factory-assembled, tested and sold by Enphase ACM partners, including SunPower, Panasonic and Solaria. Enphase Energized AC Modules are built by strategic module partners who integrate Enphase microinverters with PV modules on the manufacturing line. ACMs are tested for performance, reliability, and quality right on the manufacturing line and allow solar installers to offer premium solutions to homeowners.

On June 17, 2019, Enphase Energy announced that it renewed its low-income solar partnership with GRID Alternatives, a national leader in making renewable energy technology and job training accessible to underserved communities. Through the donation of microinverters, Enphase will help GRID Alternatives meet its goal of installing more than 10 megawatts of solar power in 2019, helping families and affordable housing providers save millions of dollars in energy costs and providing hands-on solar installation training to over 4,000 individuals.

On July 1, 2019, Enphase Energy announced the first shipment of seventh-generation Enphase IQ™ microinverters produced in Mexico as part of its expanded manufacturing agreement with Flex. As previously announced, Enphase plans to sell products produced in Mexico into the U.S. market to mitigate tariffs, increase global capacity and improve customer delivery times.

THIRD QUARTER 2019 FINANCIAL OUTLOOK

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

  • Revenue to be within a range of $170 million to $180 million, including a range of $6 million to $10 million for ITC safe harbor

  • GAAP and non-GAAP gross margin to be within a range of 33% to 36%

  • GAAP operating expenses to be within a range of $28.5 million to $30.5 million, including a total of approximately $5.0 million estimated for stock-based compensation expenses and acquisition related expenses and amortization

  • Non-GAAP operating expenses to be within a range of $23.5 million to $25.5 million, excluding a total of approximately $5.0 million estimated for stock-based compensation 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 second quarter 2019 results and third 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 1397564. 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 1397564, 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 anticipated market adoption of current and future products; the reduction in design complexity and logistics, and the potential for savings in energy costs; performance in operations, including reducing cycle times, mitigating tariff risks, product availability and 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 the solar industry with its microinverter technology, and we produce a fully-integrated solar plus storage solution. Enphase has shipped more than 21 million microinverters, and over 940,000 Enphase systems have been deployed in 130 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
[email protected]
+1-707-763-4784 x7354


ENPHASE ENERGY, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
(In thousands, except per share data) 
(Unaudited)
    
 Three Months Ended
June 30,
 Six Months Ended
June 30,
 2019 2018 2019 2018
Net revenues$134,094  $75,896  $234,244  $145,868 
Cost of revenues88,775  53,195  155,586  104,851 
Gross profit45,319  22,701  78,658  41,017 
Operating expenses:       
Research and development9,604  9,462  18,128  17,082 
Sales and marketing9,054  6,828  16,487  13,055 
General and administrative8,583  6,969  18,463  13,913 
Restructuring charges631    999   
Total operating expenses27,872  23,259  54,077  44,050 
Income (loss) from operations17,447  (558) 24,581  (3,033)
Other expense, net       
Interest income593  154  804  247 
Interest expense(1,351) (2,423) (5,102) (4,809)
Other expense, net(5,480) (572) (5,961) (698)
Total other expense, net(6,238) (2,841) (10,259) (5,260)
Income (loss) before income taxes11,209  (3,399) 14,322  (8,293)
Provision for income taxes(591) (339) (939) (573)
Net income (loss)$10,618  $(3,738) $13,383  $(8,866)
Net income (loss) per share:       
Basic$0.09  $(0.04) $0.12  $(0.09)
Diluted$0.08  $(0.04) $0.11  $(0.09)
Shares used in per share calculation:       
Basic113,677  97,321  110,951  94,026 
Diluted130,737  97,321  129,400  94,026 


ENPHASE ENERGY, INC. 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(In thousands) 
(Unaudited)
    
 June 30,
2019
 December 31,
2018
ASSETS   
Current assets:   
Cash and cash equivalents$205,959  $106,237 
Accounts receivable, net97,537  78,938 
Inventory20,094  16,267 
Prepaid expenses and other assets26,261  20,860 
Total current assets349,851  222,302 
Property and equipment, net21,532  20,998 
Operating lease, right of use asset12,304   
Intangible assets, net32,943  35,306 
Goodwill24,783  24,783 
Other assets40,105  36,548 
Total assets$481,518  $339,937 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable$65,989  $48,794 
Accrued liabilities33,536  29,010 
Deferred revenues, current33,577  33,119 
Warranty obligations, current7,468  8,083 
Debt, current3,043  28,155 
Total current liabilities143,613  147,161 
Long-term liabilities:   
Deferred revenues, noncurrent82,288  76,911 
Warranty obligations, noncurrent25,526  23,211 
Other liabilities12,930  3,250 
Debt, noncurrent99,890  81,628 
Total liabilities364,247  332,161 
Total stockholders’ equity117,271  7,776 
Total liabilities and stockholders’ equity$481,518  $339,937 


ENPHASE ENERGY, INC. 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(In thousands) 
(Unaudited)
  
 Six Months Ended
June 30,
 2019 2018
Cash flows from operating activities:   
Net income (loss)$13,383  $(8,866)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:   
Depreciation and amortization7,694  4,469 
Provision for doubtful accounts207  753 
Non-cash interest expense2,266  1,133 
Financing fees on extinguishment of debt2,152   
Fees paid for repurchase and exchange of convertible notes due 20236,000   
Stock-based compensation8,224  5,860 
Changes in operating assets and liabilities:   
Accounts receivable(19,104) 5,897 
Inventory(3,827) 8,528 
Prepaid expenses and other assets(9,568) (1,551)
Accounts payable, accrued and other liabilities16,805  (3,817)
Warranty obligations1,699  1,826 
Deferred revenues5,904  (6,791)
Net cash provided by operating activities31,835  7,441 
Cash flows from investing activities:   
Purchases of property and equipment(3,176) (1,475)
Net cash used in investing activities(3,176) (1,475)
Cash flows from financing activities:   
Issuance of convertible notes due 2024, net of issuance costs128,040   
Purchase of convertible note hedges(36,313)  
Sale of warrants29,819   
Fees paid for repurchase and exchange of convertible notes due 2023(6,000)  
Principal payments and financing fees on debt(45,122) (3,129)
Proceeds from issuance of common stock, net of issuance costs  19,923 
Proceeds from debt, net of issuance costs  5,580 
Proceeds from issuance of common stock under employee stock plans, net532  1,370 
Net cash provided by financing activities70,956  23,744 
Effect of exchange rate changes on cash107  (383)
Net increase in cash and cash equivalents99,722  29,327 
Cash and cash equivalents—Beginning of period106,237  29,144 
Cash and cash equivalents—End of period$205,959  $58,471 


ENPHASE ENERGY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
    
 Three Months Ended Six Months Ended
 June 30,
2019
 March 31,
2019
 June 30,
2018
 June 30,
2019
 June 30,
2018
Gross profit (GAAP)$45,319  $33,339  $22,701  $78,658  $41,017 
Stock-based compensation386  231  417  617  615 
Gross profit (Non-GAAP)$45,705  $33,570  $23,118  $79,275  $41,632 
          
Gross margin (GAAP)33.8% 33.3% 29.9% 33.6% 28.1%
Stock-based compensation0.3% 0.2% 0.6% 0.2% 0.4%
Gross margin (Non-GAAP)34.1% 33.5% 30.5% 33.8% 28.5%
          
Operating expenses (GAAP)$27,872  $26,205  $23,259  $54,077  $44,050 
Stock-based compensation (1)(4,217) (3,003) (3,871) (7,220) (5,245)
Restructuring(631) (368)   (999)  
Reserve for non-recurring legal matter        (1,765)
Acquisition related expenses and amortization(546) (546) (403) (1,092) (403)
Operating expenses (Non-GAAP)$22,478  $22,288  $18,985  $44,766  $36,637 
          
(1) Includes stock-based compensation as follows:         
Research and development$1,128  $716  $1,149  $1,844  $1,767 
Sales and marketing1,360  999  997  2,359  1,358 
General and administrative1,729  1,288  1,725  3,017  2,120 
Total$4,217  $3,003  $3,871  $7,220  $5,245 
          
Income (loss) from operations (GAAP)$17,447  $7,134  $(558) $24,581  $(3,033)
Stock-based compensation4,603  3,234  4,288  7,837  5,860 
Restructuring631  368    999   
Reserve for non-recurring legal matter        1,765 
Acquisition related expenses and amortization546  546  403  1,092  403 
Income from operations (Non-GAAP)$23,227  $11,282  $4,133  $34,509  $4,995 
          
Net income (loss) (GAAP)$10,618  $2,765  $(3,738) $13,383  $(8,866)
Stock-based compensation4,603  3,234  4,288  7,837  5,860 
Restructuring631  368    999   
Reserve for non-recurring legal matter        1,765 
Acquisition related expenses and amortization546  546  403  1,092  403 
Non-recurring debt prepayment fees and non-cash interest6,775  2,615  597  9,390  1,132 
Net income (Non-GAAP)$23,173  $9,528  $1,550  $32,701  $294 
          
Net income (loss) per share, basic (GAAP)$0.09  $0.03  $(0.04) $0.12  $(0.09)
Stock-based compensation0.04  0.03  0.04  0.07  0.06 
Restructuring0.01      0.01   
Reserve for non-recurring legal matter        0.02 
Acquisition related expenses and amortization  0.01  0.01  0.01   
Non-recurring debt prepayment fees and non-cash interest0.06  0.02  0.01  0.08  0.01 
Net income per share, basic (Non-GAAP)$0.20  $0.09  $0.02  $0.29  $ 
          
Shares used in basic per share calculation GAAP and Non-GAAP113,677  108,195  97,321  110,951  94,026 
          
Net income (loss) per share, diluted (GAAP)$0.08  $0.02  $(0.04) $0.11  $(0.09)
Stock-based compensation0.04  0.03  0.04  0.06  0.06 
Restructuring0.01      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 interest0.05  0.02  0.01  0.07  0.01 
Net income per share, diluted (Non-GAAP) (2)$0.18  $0.08  $0.01  $0.26  $ 
          
Shares used in diluted per share calculation GAAP130,737  115,863  97,321  129,400  94,026 
Shares used in diluted per share calculation Non-GAAP130,737  127,564  105,169  129,400  100,766 
               


(2)Calculation of non-GAAP diluted net income per share for the three months ended June 30, 2019 and March 31, 2019 excludes convertible notes due 2023 interest expense, net of tax of $0.4 million and $0.5 million, respectively, from non-GAAP net income. Calculation of non-GAAP diluted net income per share for the six months ended June 30, 2019 excludes convertible notes due 2023 interest expense, net of tax of $0.8 million from non-GAAP net income.

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Source: GlobeNewswire (July 30, 2019 - 4:05 PM EDT)

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