Enphase Energy
May 9, 2017
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Enphase Energy Reports Financial Results for the First Quarter of 2017

PETALUMA, Calif., May 09, 2017 (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 first quarter ended March 31, 2017.

Enphase Energy reported total revenue for the first quarter of 2017 of $54.8 million. During the first quarter of 2017, Enphase sold approximately 138MW (AC) or 573,000 microinverters. GAAP gross margin for the first quarter of 2017 was 12.9 percent and non-GAAP gross margin was 13.3 percent. Gross margin was lower than expected primarily as a result of cost absorption on decreased revenue volume.

GAAP operating expenses for the first quarter of 2017 were $29.1 million and non-GAAP operating expenses were $20.2 million, a decrease of 14 percent sequentially. GAAP operating loss for the first quarter of 2017 was $22.1 million and non-GAAP operating loss was $12.9 million. GAAP net loss for the first quarter of 2017 was $23.3 million, or a net loss of $0.30 per share. On a non-GAAP basis, net loss was $13.6 million, or a net loss of $0.18 per share.

The Company exited the quarter with a total cash balance of $30.0 million.

"Our revenue for the first quarter was lower than expected due to the extraordinarily wet winter in California, where we have a significant presence," said Paul Nahi, president and CEO of Enphase Energy. "We started shipping our Enphase Home Energy Solution with IQ™, our sixth-generation integrated solar, storage and energy management offering, in the U.S. at the end of the first quarter. We look forward to the U.S. launch of our integrated AC solar modules, developed with our partners, during the second quarter. These modules, which we believe are the future of rooftop solar, will include our sixth-generation microinverters, creating a simpler and more consolidated solution."

"The financing actions and restructuring initiatives we took over the past three quarters have helped to strengthen our cash position and reduce our non-GAAP operating expenses in the first quarter by 14 percent sequentially," said Bert Garcia, CFO of Enphase Energy. "We expect the full effect of our restructuring initiatives will bring our non-GAAP operating expense run-rate to approximately 18 million dollars, starting in the second quarter, as we continue to focus on achieving sustainable profitability in the second half of 2017."

Business Outlook

"We expect our revenue for the second quarter of 2017 to be within a range of $72 million to $80 million," stated Bert Garcia. "We expect GAAP and non-GAAP gross margin for the second quarter to be within a range of 17 percent to 20 percent. Non-GAAP gross margin excludes approximately $300,000 of stock-based compensation expense.  We expect our GAAP operating expense for the second quarter to be within a range of $22 million to $24 million and non-GAAP operating expense to be within a range of $17 million to $19 million, excluding an estimated $1.7 million of stock-based compensation expense and approximately $3.2 million of additional restructuring expense."

Use of Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures in this release. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States of America, or GAAP. Reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in the accompanying tables to this press release. Non-GAAP financial measures presented by the Company include non-GAAP gross profit, gross margin, operating expenses, income (loss) from operations, net loss and net loss per share.

These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company uses these non-GAAP financial measures to analyze its operating performance and future prospects, develop internal budgets and financial goals, and to facilitate period-to-period comparisons. Enphase believes that these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.

As presented in the "Reconciliation of Non-GAAP Financial Measures" tables in the accompanying press release, each of the non-GAAP financial measures excludes one or more of the following items for purposes of calculating non-GAAP financial measures to facilitate an evaluation of the Company's current operating performance and a comparison to its past operating performance:

Stock-based compensation expense. The Company excludes stock-based compensation expense from its non-GAAP measures primarily because they are non-cash in nature. Moreover, the impact of this expense is significantly affected by the Company's stock price at the time of an award over which management has limited to no control.

Acquisition-related net charges (credits). These items include: (1) revaluation of contingent consideration and its income tax effects, which represent accounting adjustments to state contingent consideration liabilities at their estimated fair value, and (2) amortization of acquired intangibles, which consists of customer relationships. These items relate to a specific prior acquisition and are not reflective of the Company's ongoing financial performance.

Restructuring charges. The Company excludes restructuring charges due to the nature of the expenses being unplanned and arising outside the ordinary course of continuing operations. These costs primarily consist of fees paid for management consulting services, cash-based severance costs related to workforce reduction actions, asset write-downs of property and equipment and lease loss reserves, and other contract termination costs resulting from restructuring initiatives.

Amortization of Debt Issuance Costs. The Company excludes amortization of debt issuance costs because the costs do not represent a cash outflow for the Company except in the period the financing was secured and such amortization expense is not reflective of the Company's ongoing financial performance.

Conference Call Information

Enphase Energy will host a conference call for analysts and investors to discuss its first quarter 2017 results and second quarter 2017 business outlook today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). Open to the public, investors may access the call by dialing 877-644-1284; participant passcode 7699348.  A live webcast of the conference call, together with accompanying presentation slides, 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 7699348 beginning approximately one hour after the call.

Forward-Looking Statements

This press release contains forward-looking statements, including statements related to Enphase Energy's: launch of AC solar modules and belief that such modules are the future of rooftop solar; expectations regarding the future financial effect of restructuring initiatives on operating expense run rates; timing of achieving sustainable profitability; and expected future financial performance. 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 14 million microinverters, and more than 620,000 Enphase systems have been deployed in more than 100 countries. Visit www.enphase.com for more information.

Enphase Energy®, the Enphase logo and other trademarks or service names are the trademarks of Enphase Energy, Inc.

 
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
 Three Months Ended
March 31,
 2017 2016
Net revenues$54,751  $64,121 
Cost of revenues47,703  52,361 
Gross profit7,048  11,760 
Operating expenses:   
Research and development9,605  13,066 
Sales and marketing6,458  10,215 
General and administrative5,833  7,567 
Restructuring charges7,247   
Total operating expenses29,143  30,848 
Loss from operations(22,095) (19,088)
Other income (expense), net:   
Interest expense(2,139) (152)
Other income1,060   681 
Total other income (expense), net(1,079) 529 
Loss before income taxes(23,174) (18,559)
Provision for income taxes(131) (236)
Net loss$(23,305) $(18,795)
Net loss per share:   
Basic and diluted$(0.30) $(0.41)
Shares used in per share calculation:   
Basic and diluted76,651   46,209 


ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
 March 31,
 2017
 December 31,
 2016
ASSETS   
Current assets:   
Cash and cash equivalents$29,955  $17,764 
Accounts receivable, net48,903   61,019 
Inventory33,808  31,960 
Prepaid expenses and other assets10,133  7,121 
Total current assets122,799  117,864 
Property and equipment, net30,905   31,440 
Goodwill3,664  3,664 
Intangibles, net806  945 
Other assets9,333  9,663 
Total assets$167,507  $163,576 
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$15,858  $31,696 
Accrued liabilities30,074  31,533 
Deferred revenues7,200  6,411 
Borrowings under revolving credit facility  10,100 
Current portion of term loan1,497  3,032 
Total current liabilities54,629  82,772 
Long-term liabilities:   
Deferred revenues, noncurrent34,499  33,893 
Warranty obligations, noncurrent23,619  22,818 
Other liabilities1,905  2,025 
Term loans, noncurrent45,384   20,768 
Total liabilities160,036  162,276 
Commitments and contingencies   
Stockholders' equity:   
Preferred stock   
Common stock1  1  
Additional paid-in capital281,941  252,126 
Accumulated deficit(273,840) (250,535)
Accumulated other comprehensive loss(631) (292)
Total stockholders' equity7,471  1,300 
Total liabilities and stockholders' equity$167,507  $163,576 
        


ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 Three Months Ended
March 31,
 2017 2016
Cash flows from operating activities:   
Net loss$(23,305) $(18,795)
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation and amortization2,328  2,680 
Provision for doubtful accounts142   537 
Asset impairment and restructuring1,920  25 
Amortization of debt issuance costs945  28 
Stock-based compensation1,929  2,999 
Changes in operating assets and liabilities:   
Accounts receivable11,975  (1,494)
Inventory(1,848) (4,776)
Prepaid expenses and other assets(3,114) (2,062)
Accounts payable, accrued and other liabilities(17,458) 2,229 
Warranty obligations580  (888)
Deferred revenues1,395  4,268 
Net cash used in operating activities(24,511) (15,249)
Cash flows from investing activities:   
Purchases of property and equipment(3,466) (3,348)
Net cash used in investing activities(3,466) (3,348)
Cash flows from financing activities:   
Proceeds from issuance of common stock, net of issuance costs26,522   
Proceeds from term loan, net24,162   
Proceeds from borrowings under revolving credit facility  10,000 
Payments under revolving credit facility(10,100) (7,000)
Payments of deferred financing costs  (55)
Proceeds from issuance of common stock under employee stock plans2  101 
Net cash provided by financing activities40,586  3,046 
Effect of exchange rate changes on cash(418) 115 
Net increase (decrease) in cash and cash equivalents12,191  (15,436)
Cash and cash equivalents—Beginning of period17,764  28,452 
Cash and cash equivalents—End of period$29,955  $13,016 
        


ENPHASE ENERGY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
 
  Three Months Ended
March 31,
  2017 2016
Gross profit (GAAP) $7,048  $11,760 
Stock-based compensation 239  307 
Gross profit (Non-GAAP) $7,287  $12,067 
     
Gross margin (GAAP) 12.9% 18.3%
Stock-based compensation 0.4% 0.5%
Gross margin (Non-GAAP) 13.3% 18.8%
     
Operating expenses (GAAP) $29,143  $30,848 
Stock-based compensation(1) (1,691) (2,692)
Amortization of acquisition-related intangibles   (45)
Restructuring charges (7,247)  
Operating expenses (Non-GAAP) $20,205  $28,111 
     
(1) Includes stock-based compensation as follows:    
Research and development $752  $1,126 
Sales and marketing 378  612 
General and administrative 561  954 
Total $1,691  $2,692 
     
Loss from operations (GAAP) $(22,095) $ (19,088)
Stock-based compensation 1,930  2,999 
Amortization of acquisition-related intangibles   45 
Restructuring charges 7,247   
Loss from operations (Non-GAAP) $(12,918) $(16,044)
     
Net loss (GAAP) $(23,305) $(18,795)
Stock-based compensation 1,930  2,999 
Amortization of acquisition-related intangibles   45 
Restructuring, asset impairments and other charges 7,247   
Non-cash interest expense 513  28 
Net loss (Non-GAAP) $(13,615) $(15,723)
     
Net loss per share (GAAP) $(0.30) $(0.41)
Stock-based compensation 0.02  0.07 
Restructuring, asset impairments and other charges 0.09   
Non-cash interest expense 0.01   
Net loss per share (Non-GAAP) $(0.18) $(0.34)
     
Shares used in per share calculation (Non-GAAP) 76,651  46,209 


Contact



Christina Carrabino

Enphase Energy, Inc.

Investor Relations

ir@enphaseenergy.com

+1-707-763-4784 x7294

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Source: Enphase Energy, Inc.

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