Enphase Energy Reports Strong Gross Margin Expansion in the Fourth Quarter of 2017 

February 27, 2018 at 4:05 PM EST

PETALUMA, Calif., Feb. 27, 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 fourth quarter and year-end 2017, which included the summary below from its President and CEO, Badri Kothandaraman.  Highlights for the quarter included:

  • Revenue of $79.7 million, at the higher end of guidance
  • GAAP gross margin of 23.8%; non-GAAP gross margin of 24.2%
  • GAAP operating loss of $2.1 million; non-GAAP operating income of $1.3 million
  • GAAP EPS of $(0.03); non-GAAP EPS of $0.01
  • Ending cash balance of $29.1 million

Our revenue and earnings for the fourth 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
  Q4 2017   Q3 2017   Q4 2016   Q4 2017   Q3 2017   Q4 2016
Revenue $79,674     $77,038     $90,601     $79,674   $77,038     $90,601  
Gross margin   23.8%       21.4%       17.9%       24.2%     21.8%       18.2%  
Operating income (loss) $(2,133)     $(5,901)     $(10,092)     $1,307   $(102)     $(6,930)  
Net income (loss) $(2,940)     $(6,854)     $(13,188)     $683   $(964)     $(9,329)  
Basic EPS $(0.03)     $(0.08)     $(0.21)     $0.01   $(0.01)     $(0.15)  

Our revenue and earnings for the fiscal year 2017 are given below, compared with those of the prior year:

(In thousands, except per share data)

  GAAP   Non-GAAP
  FY 2017   FY 2016   FY 2017   FY 2016
Revenue $286,166     $322,591     $286,166     $322,591  
Gross margin   19.6%       18.0%       20.0%       18.4%  
Operating income (loss) $(39,378)     $(62,700)     $(15,733)     $(48,447)  
Net income (loss) $(45,192)     $(67,462)     $(20,530)     $(52,411)  
Basic EPS $(0.54)     $(1.34)     $(0.25)     $(1.06)  

Our fourth quarter revenue was $79.7 million, an increase of 3% sequentially from $77.0 million. We shipped 221 megawatts DC and 755,000 microinverters. Our non-GAAP gross margin was 24.2%, an increase of 240 basis points from 21.8% in the prior quarter. The increase was primarily due to the IQ 6 transition in North America, supply chain optimization and pricing management. Our non-GAAP operating expenses were $18.0 million, an increase of 6% compared to the prior quarter, due to investments in IQ 8 platform development. We are very pleased to report non-GAAP operating income of $1.3 million and net income of $683,000, which resulted in basic and diluted earnings per share of $0.01. This return to profitability represents a significant milestone for the company.

We exited the quarter with approximately $29.1 million in cash. Inventory was $26 million in the fourth quarter, compared to $25.3 million in the third quarter, and down from $32 million in the fourth quarter of 2016.

In summary, we are well on track towards achieving our 30-20-10 target operating model by the end of 2018. We are targeting 30% gross margin, 20% operating expenses and 10% operating income, all by the fourth quarter of 2018. 

BUSINESS HIGHLIGHTS

+ Enphase opened an R&D center in Bangalore, India to establish a best-in-class technology development center. India is an important part of Enphase's overall global strategy, as the country is driving the growth in solar with its ambitious targets for clean energy.  Our presence in India enables us to leverage the enormous talent available to grow Enphase worldwide.

+ Enphase announced the availability of its IQ Combiner+™ with the IQ Envoy. The IQ Combiner+ consolidates residential solar interconnection equipment into a single enclosure and streamlines PV and storage installations by providing a consistent, pre-wired solution for residential applications.

+ Enphase completed its transition to IQ 6 in North America in 2017, contributing to gross margin expansion. We began shipping IQ 7 microinverters to customers in the U.S. during the first quarter of 2018.  IQ 7 will be phased into worldwide markets throughout 2018.

+ On February 12, 2018, Enphase announced a strategic partnership with Panasonic Corporation of North America for the development of high efficiency AC modules, using our 320W IQ 7X Microinverter which is compatible with 96-cell DC modules.

+ On February 9, 2018, Enphase sold 9,523,809 million shares of its common stock in a private placement at a price per share of $2.10 for gross proceeds of $20 million.

FIRST QUARTER 2018 FINANCIAL OUTLOOK

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

  • Revenue to be within a range of $65 million to $70 million
  • GAAP and non-GAAP gross margin to be within a range of 22% to 25%
  • Non-GAAP operating expense to be within a range of $17.5 million to $18.5 million
  • GAAP operating expense to be within a range of $19.5 million to $20.5 million, including an estimated $2.0 million of stock-based compensation expense

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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 fourth quarter and year-end 2017 results and first 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 2992357.  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 2992357, 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, and the expected importance of India to the company's future marketing and employment plans. 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 16 million microinverters, and approximately 739,000 Enphase systems have been deployed in more than 100 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
ir@enphaseenergy.com 
+1-707-763-4784 x7294

ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 
  Three Months Ended
December 31,
  Twelve Months Ended
December 31 ,
  2017   2016   2017   2016
Net revenues $ 79,674     $ 90,601     $ 286,166     $ 322,591  
Cost of revenues 60,685     74,367     230,123     264,583  
Gross profit 18,989     16,234     56,043     58,008  
Operating expenses:              
Research and development 8,208     11,378     33,157     50,703  
Sales and marketing 4,940     7,592     23,126     38,810  
General and administrative 5,983     6,296     22,221     27,418  
Restructuring charges 1,991     1,060     16,917     3,777  
Total operating expenses 21,122     26,326     95,421     120,708  
Loss from operations (2,133 )   (10,092 )   (39,378 )   (62,700 )
Other income (expense), net              
Interest expense (1,957 )   (1,181 )   (7,936 )   (2,773 )
Other income (expense) 202     (1,164 )   1,973     (514 )
Total other expense, net (1,755 )   (2,345 )   (5,963 )   (3,287 )
Loss before income taxes (3,888 )   (12,437 )   (45,341 )   (65,987 )
Income tax benefit (provision) 948     (751 )   149     (1,475 )
Net loss $ (2,940 )   $ (13,188 )   $ (45,192 )   $ (67,462 )
Net loss per share:              
Basic and diluted $ (0.03 )   $ (0.21 )   $ (0.54 )   $ (1.34 )
Shares used in per share calculation:              
Basic and diluted 85,689     61,881     82,939     50,519  
                       

 

ENPHASE ENERGY, INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)
  December 31,
  2017   2016
ASSETS      
Current assets:      
Cash and cash equivalents $ 29,144     $ 17,764  
Accounts receivable, net 65,346     61,019  
Inventory 25,999     31,960  
Prepaid expenses and other 9,957     7,121  
Total current assets 130,446     117,864  
Property and equipment, net 26,483     31,440  
Goodwill 3,664     3,664  
Intangibles, net 515     945  
Other assets 8,039     9,663  
Total assets $ 169,147     $ 163,576  
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable $ 28,747     $ 31,696  
Accrued liabilities 29,874     31,533  
Deferred revenues 15,691     6,411  
Revolving credit facility     10,100  
Debt, current 17,429     3,032  
Total current liabilities 91,741     82,772  
Deferred revenues, non-current 29,941     33,893  
Warranty obligations, non-current 22,389     22,818  
Other liabilities 1,880     2,025  
Debt, less current portion 32,322     20,768  
Total liabilities 178,273     162,276  
Commitments and contingencies      
Stockholders' equity:      
Preferred stock      
Common stock 1     1  
Additional paid-in capital 287,256     252,126  
Accumulated deficit (295,727 )   (250,535 )
Accumulated other comprehensive loss (656 )   (292 )
Total stockholders' (deficit) equity (9,126 )   1,300  
Total liabilities and stockholders' (deficit) equity $ 169,147     $ 163,576  
               

 

ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 (Unaudited)
  Years Ended
December 31,
  2017   2016
Operating activities:      
Net loss $ (45,192 )   $ (67,462 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:      
Depreciation and amortization 9,004     10,638  
Provision for doubtful accounts 476     3,097  
Asset impairment and restructuring 1,681     3,190  
Gain on business divestiture     (640 )
Amortization of debt issuance costs 1,673     145  
Stock-based compensation 6,727     10,326  
Deferred income tax (benefit) expense     651  
Changes in operating assets and liabilities (net of acquisition/divestiture):      
Accounts receivable (4,803 )   (18,017 )
Inventory 5,961     8,840  
Prepaid expenses and other assets (1,227 )   (4,759 )
Accounts payable, accrued and other liabilities (8,070 )   9,764  
Deferred revenues 5,328     11,274  
Net cash used in operating activities (28,442 )   (32,953 )
Investing activities:      
Purchases of property and equipment (4,121 )   (12,167 )
Purchases of intangible assets     (678 )
Business divestitures     1,050  
Net cash used in investing activities (4,121 )   (11,795 )
Financing activities:      
Proceeds from public offering of common stock, net of issuance costs 26,425     16,142  
Proceeds from debt, net of issuance costs 26,442     23,989  
Proceeds from borrowings under revolving credit facility     10,000  
Payments under revolving credit facility (10,100 )   (16,900 )
Proceeds from issuance of common stock under employee stock plans 530     1,144  
Net cash provided by financing activities 43,297     34,375  
Effect of exchange rate changes on cash 646     (315 )
Net increase (decrease) in cash and cash equivalents 11,380     (10,688 )
Cash and cash equivalents — Beginning of year 17,764     28,452  
Cash and cash equivalents — End of year $ 29,144     $ 17,764  
               

 

 

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Source: Enphase Energy, Inc.

 

 

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