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 margin
33.8
%
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
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 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 June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Net revenues
$
134,094
$
75,896
$
234,244
$
145,868
Cost of revenues
88,775
53,195
155,586
104,851
Gross profit
45,319
22,701
78,658
41,017
Operating expenses:
Research and development
9,604
9,462
18,128
17,082
Sales and marketing
9,054
6,828
16,487
13,055
General and administrative
8,583
6,969
18,463
13,913
Restructuring charges
631
—
999
—
Total operating expenses
27,872
23,259
54,077
44,050
Income (loss) from operations
17,447
(558
)
24,581
(3,033
)
Other expense, net
Interest income
593
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 taxes
11,209
(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:
Basic
113,677
97,321
110,951
94,026
Diluted
130,737
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, net
97,537
78,938
Inventory
20,094
16,267
Prepaid expenses and other assets
26,261
20,860
Total current assets
349,851
222,302
Property and equipment, net
21,532
20,998
Operating lease, right of use asset
12,304
—
Intangible assets, net
32,943
35,306
Goodwill
24,783
24,783
Other assets
40,105
36,548
Total assets
$
481,518
$
339,937
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
65,989
$
48,794
Accrued liabilities
33,536
29,010
Deferred revenues, current
33,577
33,119
Warranty obligations, current
7,468
8,083
Debt, current
3,043
28,155
Total current liabilities
143,613
147,161
Long-term liabilities:
Deferred revenues, noncurrent
82,288
76,911
Warranty obligations, noncurrent
25,526
23,211
Other liabilities
12,930
3,250
Debt, noncurrent
99,890
81,628
Total liabilities
364,247
332,161
Total stockholders’ equity
117,271
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 amortization
7,694
4,469
Provision for doubtful accounts
207
753
Non-cash interest expense
2,266
1,133
Financing fees on extinguishment of debt
2,152
—
Fees paid for repurchase and exchange of convertible notes due 2023
6,000
—
Stock-based compensation
8,224
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 liabilities
16,805
(3,817
)
Warranty obligations
1,699
1,826
Deferred revenues
5,904
(6,791
)
Net cash provided by operating activities
31,835
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 costs
128,040
—
Purchase of convertible note hedges
(36,313
)
—
Sale of warrants
29,819
—
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, net
532
1,370
Net cash provided by financing activities
70,956
23,744
Effect of exchange rate changes on cash
107
(383
)
Net increase in cash and cash equivalents
99,722
29,327
Cash and cash equivalents—Beginning of period
106,237
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 compensation
386
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 compensation
0.3
%
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 marketing
1,360
999
997
2,359
1,358
General and administrative
1,729
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 compensation
4,603
3,234
4,288
7,837
5,860
Restructuring
631
368
—
999
—
Reserve for non-recurring legal matter
—
—
—
—
1,765
Acquisition related expenses and amortization
546
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 compensation
4,603
3,234
4,288
7,837
5,860
Restructuring
631
368
—
999
—
Reserve for non-recurring legal matter
—
—
—
—
1,765
Acquisition related expenses and amortization
546
546
403
1,092
403
Non-recurring debt prepayment fees and non-cash interest
6,775
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 compensation
0.04
0.03
0.04
0.07
0.06
Restructuring
0.01
—
—
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 interest
0.06
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-GAAP
113,677
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 compensation
0.04
0.03
0.04
0.06
0.06
Restructuring
0.01
—
—
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 interest
0.05
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 GAAP
130,737
115,863
97,321
129,400
94,026
Shares used in diluted per share calculation Non-GAAP
130,737
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.
