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Enphase Energy Reports Financial Results for the Third Quarter of 2019

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FREMONT, Calif., Oct. 29, 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 third quarter of 2019, which included the summary below from its President and CEO, Badri Kothandaraman.

Highlights for the third quarter of 2019 included:

  • Revenue of $180.1 million, including approximately $8.0 million of safe harbor revenue

  • Cash flows from operating activities of $5.0 million; ending cash balance of $203.0 million 
     
  • GAAP gross margin of 35.9%; non-GAAP gross margin of 36.2% 

  • GAAP operating expenses of $31.0 million; non-GAAP operating expenses of $25.0 million 

  • GAAP operating income of $33.7 million; non-GAAP operating income of $40.2 million 

  • GAAP net income of $31.1 million; non-GAAP net income of $39.5 million 

  • GAAP diluted EPS of $0.23; non-GAAP diluted EPS of $0.30

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 and percentages)

  GAAP   Non-GAAP
  Q3 2019   Q2 2019   Q3 2018   Q3 2019   Q2 2019   Q3 2018
Revenue $ 180,057     $ 134,094     $ 78,002     $ 180,057     $ 134,094     $ 78,002  
Gross margin 35.9 %   33.8 %   32.4 %   36.2 %   34.1 %   32.8 %
Operating income (loss) $ 33,706     $ 17,447     $ (374 )   $ 40,166     $ 23,227     $ 6,975  
Net income (loss) $ 31,099     $ 10,618     $ (3,470 )   $ 39,466     $ 23,173     $ 4,626  
Basic EPS $ 0.25     $ 0.09     $ (0.03 )   $ 0.32     $ 0.20     $ 0.04  
Diluted EPS $ 0.23     $ 0.08     $ (0.03 )   $ 0.30     $ 0.18     $ 0.04  

Our third quarter revenue was $180.1 million, including approximately $8.0 million of safe harbor revenue. Third quarter revenue increased 34% sequentially and 131% year-over year. We shipped approximately 584 megawatts DC, or 1,795,653 microinverters. Demand was strong as our customers continued to appreciate our differentiated products, services and quality. We effectively stabilized our component supply in the third quarter of 2019.

Our non-GAAP gross margin was 36.2%, an increase of 210 basis points from 34.1% in the second quarter of 2019. The non-GAAP gross margin was negatively impacted by approximately 220 basis points due to expedite fees related to component shortages, compared to approximately 330 basis points in the prior quarter. Non-GAAP operating expenses were $25.0 million, compared to $22.5 million in the prior quarter. Non-GAAP operating income was $40.2 million compared to $23.2 million in the prior quarter.

We exited the third quarter with $203.0 million in cash and generated $5.0 million in cash flows from operations. Inventory was $30.2 million at the end of the third quarter of 2019, compared to $20.1 million at the end of the second quarter of 2019, and $17.9 million at the end of the third quarter of 2018. We increased inventory on hand in the third quarter to better serve our customers.

BUSINESS HIGHLIGHTS

On August 5, 2019, Enphase Energy announced that more than 5,300 homeowners have joined the Enphase Upgrade Program, a service program that gives homeowners several options for upgrading to the latest, more efficient and reliable microinverters from Enphase. This program is for warranty holders of legacy Enphase microinverters and represents the Company's continued commitment to quality and service. Participation in the Enphase Upgrade Program is entirely voluntary, and Enphase continues to stand by its warranties for existing products in the field.

On September 3, 2019, Enphase Energy announced that it has shipped more than one million microinverters to Australia and New Zealand. Enphase has experienced steady growth in the two countries since entering their solar markets in 2013, as the Company's technology is an ideal fit for Australia and New Zealand's evolving distributed landscape.

On September 25, 2019, Enphase Energy announced that the Enphase Home Energy Solution with IQ™ makes solar simple to design, install and manage for small and midsized solar installation companies. Installers can now also leverage a more efficient way to help ensure that Enphase-based solar systems are always connected by using the Enphase IQ Combiner 3C™, which includes an integrated Enphase CELLMODEM-M1. The IQ Combiner 3C is designed to provide uninterrupted connectivity to the Enphase Enlighten™ monitoring and service platform.

On October 28, 2019, Enphase Energy announced the general availability of its Enphase IQ™ 7A microinverters for solar modules up to 450 W, targeting high-power residential and commercial applications. Enphase customers should be able to pair the IQ 7A microinverter with monofacial or bifacial solar modules, up to 450 W, from solar module manufacturers who are expected to introduce high-power variants of their products in the next three years. Enphase plans to begin shipping the IQ 7A microinverters to customers in North America in November 2019.

FOURTH QUARTER 2019 FINANCIAL OUTLOOK

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

  • Revenue to be within a range of $200 million to $210 million, including approximately $35 million of shipments for ITC safe harbor to a new customer

  • GAAP and non-GAAP gross margin to be within a range of 34% to 37%

  • GAAP operating expenses to be within a range of $31.5 million to $33.5 million, including a total of approximately $7 million estimated for stock-based compensation expenses, restructuring and acquisition related amortization

  • Non-GAAP operating expenses to be within a range of $24.5 million to $26.5 million, excluding a total of approximately $7 million estimated for stock-based compensation expenses, restructuring and acquisition related 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 2019 results and fourth 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 3497849. 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 3497849, 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, advantages, and performance of our technology and products, including the anticipated market adoption of current and future products; the simplicity and efficiency in design, installation and management of PV systems with our products and the ability for PV systems to always be connected; our performance in operations, including 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 23 million microinverters, and over 997,000 Enphase systems have been deployed in 130 countries. For more information, visit www.enphase.com.

Enphase Energy®, the Enphase logo, Enphase IQ, Enphase IQ Combiner 3C, Enphase Enlighten, 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
September 30,
  Nine Months Ended
September 30,
  2019   2018   2019   2018
Net revenues $ 180,057     $ 78,002     $ 414,301     $ 223,870  
Cost of revenues 115,351     52,738     270,937     157,589  
Gross profit 64,706     25,264     143,364     66,281  
Operating expenses:              
Research and development 11,085     8,165     29,213     25,247  
Sales and marketing 9,551     7,375     26,038     20,430  
General and administrative 9,895     7,510     28,358     21,423  
Restructuring charges 469     2,588     1,468     2,588  
Total operating expenses
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