November 6, 2018 - 4:05 PM EST
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Enphase Energy Reports Financial Results for the Third Quarter of 2018

FREMONT, Calif., Nov. 06, 2018 (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 third quarter of 2018, which included the summary below from its President and CEO, Badri Kothandaraman.

Highlights for the quarter included:

  • Revenue of $78.0 million, including a $3.3 million milestone achievement from a partner on IQ 8
  • Record ending cash balance of $116.2 million
  • IQ 7 shipments at 78% of all microinverters
  • GAAP gross margin of 32.4%; non-GAAP gross margin of 32.8%
  • GAAP operating expenses of $25.6 million; non-GAAP operating expenses of $18.6 million
  • GAAP operating loss of $(0.4) million; non-GAAP operating income of $7.0 million
  • GAAP diluted EPS of $(0.03); non-GAAP diluted EPS of $0.04

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

(In thousands, except per share data)

 GAAP Non-GAAP
 Q3 2018 Q2 2018 Q3 2017 Q3 2018 Q2 2018 Q3 2017
Revenue$78,002  $75,896  $77,038  $78,002 $75,896 $77,038 
Gross margin 32.4%  29.9%  21.4%  32.8%  30.5%  21.8%
Operating income (loss)$(374) $(558) $(5,901) $6,975 $4,133 $(102)
Net income (loss)$(3,470) $(3,738) $(6,854) $4,626 $1,550 $(964)
Basic EPS$(0.03) $(0.04) $(0.08) $0.05 $0.02 $(0.01)
Diluted EPS$(0.03) $(0.04) $(0.08) $0.04 $0.01 $(0.01)

We shipped 204 megawatts DC, or approximately 665,000 microinverters. Our non-GAAP gross margin was 32.8%, an increase of 230 basis points from 30.5% in the prior quarter. Our non-GAAP operating expenses were $18.6 million, compared to $19.0 million in the prior quarter. Non-GAAP net income was $4.6 million, which resulted in basic non-GAAP earnings per share of $0.05 and diluted non-GAAP earnings per share of $0.04. Inventory was $17.9 million in the third quarter, compared to $17.5 million in the second quarter and $25.3 million in the third quarter of 2017.

Customers continued to appreciate our differentiated products, quality and service initiatives during the third quarter. Our strong balance sheet with a $116.2 million cash position was instrumental in driving increased customer demand. Our biggest challenge in the third quarter was meeting this additional demand as we experienced supply shortages which constrained our revenue by more than $10 million. We expect the supply shortages to continue in the fourth quarter of 2018 and have made appropriate investments to alleviate these constraints by early 2019.

In summary, we are pleased with our cash management and progress towards the achievement of our 30-20-10 target financial model. Our immediate priorities are to optimize our supply chain to meet the incremental demand and continue providing outstanding service to our customers worldwide.

BUSINESS HIGHLIGHTS

+  Enphase completed the acquisition of SunPower's microinverter business for a total of $25 million in cash and 7.5 million shares of Enphase common stock. Enphase is now the exclusive module level power electronics (MLPE) supplier for SunPower’s residential business in the U.S. and expects volume shipments of IQ 7XS microinverters in the fourth quarter of 2018 and an acceleration of the ramp throughout 2019.

+ Enphase announced it has expanded its manufacturing agreement with Flex to include Mexico. Starting in the second quarter of 2019, Flex will begin delivering Enphase products produced in Mexico to the U.S. market to supply our growing demand and as part of a mitigation plan for the USTR Section 301 tariff in the U.S. 

+ Enphase is building on the success of its IQ Combiner™ series by announcing the IQ Combiner 3™ with Enphase IQ Envoy™. The IQ Combiner 3 makes PV and storage installations fast and flexible while offering improved aesthetics, by providing a consistent, pre-wired solution for residential applications.

+ Enphase raised approximately $62.4 million from a convertible debt offering with the settlement date on August 17, 2018. Enphase intends to use the net proceeds for general corporate purposes, which may include the repayment of indebtedness, working capital, and to fund potential acquisitions and strategic transactions.

+ On October 15, 2018, Enphase announced it has expanded its partnership with BayWa r.e. Solar Solutions Co., Ltd., a leading solar photovoltaic (PV) distributor globally, to distribute its seventh-generation Enphase IQ™ microinverters to installers across Southeast Asian countries including Thailand, Vietnam, the Philippines, Singapore, Indonesia, and Malaysia.

+ On October 29, 2018, Enphase and LONGi Solar announced a strategic partnership to develop Enphase Energized™ LONGi AC Modules (ACMs) based on seventh-generation Enphase IQ™ microinverters. The Enphase and LONGi developed ACMs will be available in the U.S. starting in the fourth quarter of 2018.

FOURTH QUARTER 2018 FINANCIAL OUTLOOK

For the fourth quarter of 2018, Enphase estimates both GAAP and non-GAAP financial results as follows:

  • Revenue to be within a range of $80.0 million to $90.0 million
  • GAAP and non-GAAP gross margin to be within a range of 31% to 34%
  • GAAP operating expenses to be within a range of $25.0 million to $28.0 million, including a total of approximately $7.2 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 $18.5 million to $20.5 million, excluding a total of approximately $7.2 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 third quarter 2018 results and fourth quarter 2018 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 2685735.  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 30 days. In addition, an audio replay of the conference call will be available by calling (855) 859-2056; participant pass code 2685735, 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, product shipments, and timing of product introductions. 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 the world’s only truly integrated solar plus storage solution. Enphase has shipped more than 18 million microinverters, and over 820,000 Enphase systems have been deployed in more than 120 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.

Contact:
Christina Carrabino
Enphase Energy, Inc.
Investor Relations
[email protected]
+1-707-763-4784 x7294


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

 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2018 2017 2018 2017
Net revenues$78,002  $77,038  $223,870  $206,492 
Cost of revenues52,738  60,577  157,589  169,438 
Gross profit25,264  16,461  66,281  37,054 
Operating expenses:       
Research and development8,165  7,397  25,247  24,949 
Sales and marketing7,375  5,453  20,430  18,186 
General and administrative7,510  5,441  21,423  16,238 
Restructuring charges2,588  4,071  2,588  14,927 
Total operating expenses25,638  22,362  69,688  74,300 
Loss from operations(374) (5,901) (3,407) (37,246)
Other expense, net:       
Interest expense(2,469) (1,760) (7,031) (5,979)
Other income (expense)(379) 623  (1,077) 1,771 
Total other expense, net(2,848) (1,137) (8,108) (4,208)
Loss before income taxes(3,222) (7,038) (11,515) (41,454)
(Provision) benefit from income tax(248) 184  (821) (798)
Net loss$(3,470) $(6,854) $(12,336) $(42,252)
Net loss per share:       
Basic and diluted$(0.03) $(0.08) $(0.13) $(0.52)
Shares used in per share calculation:       
Basic and diluted102,798  84,862  97,257  81,993 
            
            


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

 September 30,
 2018
 December 31,
 2017
ASSETS   
Current assets:   
Cash and cash equivalents$116,164  $29,144 
Accounts receivable54,117  65,346 
Inventory17,886  25,999 
Prepaid expenses and other21,631  9,957 
Total current assets209,798  130,446 
Property and equipment, net20,331  26,483 
Intangible assets, net36,078  515 
Goodwill24,783  3,664 
Other assets35,520  8,039 
Total assets$326,510  $169,147 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable$28,103  $28,747 
Accrued liabilities50,679  29,874 
Deferred revenues32,015  15,691 
Debt, current24,125  17,429 
Total current liabilities134,922  91,741 
Long-term liabilities:   
Deferred revenues, noncurrent74,065  29,941 
Warranty obligations, noncurrent23,067  22,389 
Other liabilities2,393  1,880 
Debt, noncurrent87,907  32,322 
Total liabilities322,354  178,273 
Total stockholders’ equity (deficit)4,156  (9,126)
Total liabilities and stockholders’ equity$326,510  $169,147 
        
        


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

 Nine Months Ended
September 30,
 2018 2017
Cash flows from operating activities:   
Net loss$(12,336) $(42,252)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:   
Depreciation and amortization6,950  6,763 
Provision for doubtful accounts668  911 
Asset impairment charges1,636  1,638 
Amortization of debt issuance costs1,880  1,337 
Stock-based compensation9,911  5,277 
Changes in operating assets and liabilities:   
Accounts receivable10,671  (8,761)
Inventory8,112  6,644 
Prepaid expenses and other assets(3,995) (5,110)
Intangible assets(1)(6,000)  
Accounts payable, accrued and other liabilities4,672  3,051 
Warranty obligations2,368  (1,062)
Deferred revenues(10,280) 5,036 
Net cash provided by (used in) operating activities14,257  (26,528)
Cash flows from investing activities:   
Purchases of property and equipment(2,384) (3,609)
Acquisition(1)(9,000)  
Net cash used in investing activities(11,384) (3,609)
Cash flows from financing activities:   
Proceeds from issuance of common stock, net of issuance costs19,771  26,425 
Proceeds from debt68,352  24,240 
Principal payments on term debt(5,664)  
Payments under revolving credit facility  (10,100)
Proceeds from issuance of common stock under employee stock plans2,151  174 
Net cash provided by financing activities84,610  40,739 
Effect of exchange rate changes on cash(463) 512 
Net increase in cash and cash equivalents87,020  11,114 
Cash and cash equivalents—Beginning of period29,144  17,764 
Cash and cash equivalents—End of period$116,164  $28,878 

                               

(1) We made a payment of $15.0 million for the acquisition of SunPower’s microinverter business, of which $6.0 million was allocated to cash flows from operating activities rather than investing activities. The allocation was for the intangible asset related to the acquired customer relationship, and it was based on the valuation of the customer relationship relative to the total consideration. The remaining $9.0 million was reported as cash flows from investing activities.



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

  Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2018 2017 2018 2017
Gross profit (GAAP) $25,264  $16,461  $66,281  $37,054 
Stock-based compensation 330  347  615  796 
Gross profit (Non-GAAP) $25,594  $16,808  $66,896  $37,850 
         
Gross margin (GAAP) 32.4% 21.4% 29.6% 17.9%
Stock-based compensation 0.4% 0.4% 0.3% 0.4%
Gross margin (Non-GAAP) 32.8% 21.8% 29.9% 18.3%
         
Operating expenses (GAAP) $25,638  $22,362  $69,688  $74,300 
Stock-based compensation(1) (3,721) (1,381) (8,966) (4,481)
Restructuring and asset impairment charges (2,588) (4,071) (2,588) (14,927)
Reserve for non-recurring legal matter     (1,765)  
Acquisition related expenses and amortization (710)   (1,113)  
Operating expenses (Non-GAAP) $18,619  $16,910  $55,256  $54,892 
         
(1) Includes stock-based compensation as follows:        
Research and development $878  $607  $2,645  $1,994 
Sales and marketing 1,151  227  2,509  889 
General and administrative 1,692  547  3,812  1,598 
Total $3,721  $1,381  $8,966  $4,481 
         
Loss from operations (GAAP) $(374) $(5,901) $(3,407) $(37,246)
Stock-based compensation 4,051  1,728  9,911  5,277 
Restructuring and asset impairment charges 2,588  4,071  2,588  14,927 
Reserve for non-recurring legal matter     1,765   
Acquisition related expenses and amortization 710    1,113   
Income (loss) from operations (Non-GAAP) $6,975  $(102) $11,970  $(17,042)
         
Net loss (GAAP) $(3,470) $(6,854) $(12,336) $(42,252)
Stock-based compensation 4,051  1,728  9,911  5,277 
Restructuring and asset impairment charges 2,588  4,071  2,588  14,927 
Reserve for non-recurring legal matter     1,765   
Acquisition related expenses and amortization 710    1,113   
Non-cash interest expense 747  91  1,880  834 
Net income (loss) (Non-GAAP) $4,626  $(964) $4,921  $(21,214)
         
Net loss per share (GAAP) $(0.03) $(0.08) $(0.13) $(0.52)
Stock-based compensation 0.03  0.02  0.10  0.06 
Restructuring and asset impairment charges 0.02  0.05  0.03  0.19 
Reserve for non-recurring legal matter     0.02   
Acquisition related expenses and amortization 0.01    0.01   
Non-cash interest expense 0.01    0.02  0.01 
Net income (loss) per share (Non-GAAP) $0.04  $(0.01) $0.05  $(0.26)
         
Shares used in per share calculation GAAP 102,798  84,862  97,257  81,993 
Shares used in per share calculation Non-GAAP 110,900  84,862  104,746  81,993 

 

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Source: GlobeNewswire (November 6, 2018 - 4:05 PM EST)

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