Enphase Energy Reports Financial Results for the Third Quarter of 2015

PETALUMA, Calif., Nov. 3, 2015 (GLOBE NEWSWIRE) — Enphase Energy, Inc. (NASDAQ:ENPH), a global energy technology company, today announced financial results for the third quarter ended September 30, 2015.

Third Quarter 2015 Financial Highlights

  • Revenue of $102.9 million
  • Shipped 219MW (AC) of microinverter systems
  • Non-GAAP gross margin of 30.9 percent
  • Non-GAAP operating income of $4.9 million
  • Non-GAAP diluted earnings per share of $0.08

Enphase Energy reported total revenue for the third quarter of 2015 of $102.9 million, an increase of 4 percent, compared to $99.1 million in the third quarter of 2014. During the third quarter of 2015, Enphase sold 219MW (AC) or 950,000 microinverters, an increase in MW of 28 percent compared to the third quarter of 2014.

GAAP gross margin for the third quarter of 2015 was 30.6 percent and non-GAAP gross margin was 30.9 percent.

GAAP operating expenses for the third quarter of 2015 were $29.7 million and non-GAAP operating expenses were $26.9 million, a decrease of 11 percent compared to the second quarter of 2015, and a decrease of 4 percent compared to the third quarter of 2014.

GAAP operating income for the third quarter of 2015 was $1.8 million, compared to GAAP operating income of $1.9 million in the third quarter of 2014. Non-GAAP operating income for the third quarter of 2015 was $4.9 million, compared to $4.8 million in the third quarter of 2014.

GAAP net income for the third quarter of 2015 was $0.6 million, or $0.01 per diluted share, compared to GAAP net income of $0.8 million, or $0.02 per diluted share in the third quarter of 2014. On a non-GAAP basis, net income was $3.8 million, or $0.08 per diluted share, compared to a non-GAAP net income of $3.8 million, or $0.08 per diluted share in the third quarter of 2014.

Business Outlook

“We expect revenue for the fourth quarter of 2015 to be within a range of $62 million to $70 million,” stated Kris Sennesael, CFO of Enphase. “The fourth quarter revenue decline is driven by a correction of higher inventory levels in our distribution channel and softer overall market demand. We expect gross margin to be within a range of 23 percent to 26 percent, as a result of a more aggressive pricing strategy. We also expect non-GAAP operating expenses for the fourth quarter of 2015 to be within a range of $28 million to $30 million, as we adjust our operating expenses to our lower gross margin profile.”

“The fourth quarter of 2015 is more challenging than expected,” said Paul Nahi, president and CEO of Enphase. “In order to accelerate the expansion of our business, we have adopted a more aggressive pricing strategy. However, we are confident in our ability to drive our product costs down significantly over the next 24 months, improving our competitive position. In addition, we expect to drive new revenue streams from our AC Battery storage system, as well as the Enphase Home Energy Solution.”

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. 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. 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.

Conference Call Information

Enphase Energy will host a conference call for analysts and investors to discuss its third quarter 2015 results and fourth quarter 2015 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 59469702. 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 59469702 beginning approximately one hour after the call.

Forward-Looking Statements

This press release contains forward-looking statements, including, but not limited to, statements related to Enphase Energy’s future financial performance, ability to derive new market streams, ability to drive down costs and adjust operating expenses, market demands for its microinverters, competitive position, advantages of its technology, market trends, future products, and 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 these risks and uncertainties, which include, without limitation, risks related to: the future demands for solar energy solutions; the reduction, elimination or expiration of government subsidies and economic incentives for on-grid solar electricity applications; the Company’s ability to achieve broader market acceptance of its microinverter systems and to develop new and enhanced products in response to customer demands and rapid market and technological changes in the solar industry; the success and pricing of competing solar solutions that are or become available; the Company’s ability to effectively manage the growth of its organization and expansion into new markets and to maintain or achieve anticipated product quality, product performance and cost metrics; competition and other factors that may cause potential future price reductions for its products; the Company’s ability to optimally match production with demand, including distribution inventory levels, and dependence on a limited number of outside contract manufacturers and lack of supply contracts with these manufacturers; general economic conditions in domestic and international markets and other risks included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, which is on file with the SEC and available on the SEC’s website at www.sec.gov. Additional information will also be set forth in those sections in Enphase Energy’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, and on Form 10-Q for the quarter ended September 30, 2015, which will be filed with the SEC in the fourth quarter of 2015. All information set forth in this press release and its attachments is as of November 3, 2015. 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.

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, is leading the charge to bring smart, connected solar energy to every home, business and community. The company delivers simple, innovative and reliable energy management solutions that advance the worldwide potential of renewable energy. Enphase has shipped approximately 10 million microinverters, and over 370,000 Enphase residential and commercial systems have been deployed in more than 95 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.

 

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,
  2015 2014 2015 2014
Net revenues $ 102,874 $ 99,113 $ 291,620 $ 238,697
Cost of revenues 71,408 66,592 199,103 160,689
Gross profit 31,466 32,521 92,517 78,008
Operating expenses:        
Research and development 12,059 12,112 38,275 32,346
Sales and marketing 10,510 9,884 34,955 29,205
General and administrative 7,118 8,632 23,425 22,837
Total operating expenses 29,687 30,628 96,655 84,388
Income (loss) from operations 1,779 1,893 (4,138) (6,380)
Other income (expense), net:        
Interest expense (140) (356) (305) (1,291)
Other income (expense) (704) (597) (1,152) (432)
Total other expense, net (844) (953) (1,457) (1,723)
Income (loss) before income taxes 935 940 (5,595) (8,103)
Provision for income taxes (311) (127) (704) (351)
Net income (loss) $ 624 $ 813 $ (6,299) $ (8,454)
Net income (loss) per share:        
Net loss per share, basic and diluted        
Basic $ 0.01 $ 0.02 $ (0.14) $ (0.20)
Diluted $ 0.01 $ 0.02 $ (0.14) $ (0.20)
Shares used in per share calculation:        
Basic 44,734 43,128 44,339 42,664
Diluted 47,996 48,786 44,339 42,664
 
 
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
 
  September 30,
 2015
December 31,
 2014
ASSETS    
Current assets:    
Cash and cash equivalents $ 22,491 $ 42,032
Accounts receivable, net 75,322 45,119
Inventory 36,717 21,590
Prepaid expenses and other assets 7,080 6,155
Total current assets 141,610 114,896
Property and equipment, net 31,240 30,824
Goodwill 3,745 3,745
Intangibles, net 1,489 1,811
Other assets 4,879 916
Total assets $ 182,963 $ 152,192
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities:    
Accounts payable $ 32,707 $ 22,316
Accrued liabilities 25,598 33,643
Deferred revenues 3,834 2,747
Borrowings under revolving credit facility 17,000
Total current liabilities 79,139 58,706
Long-term liabilities:    
Deferred revenues, noncurrent 22,701 16,612
Warranty obligations, noncurrent 26,194 26,333
Other liabilities 1,963 3,589
Total liabilities 129,997 105,240
Commitments and contingencies    
Stockholders’ equity:    
Preferred stock
Common stock
Additional paid-in capital 220,467 208,022
Accumulated deficit (167,290) (160,991)
Accumulated other comprehensive loss (211) (79)
Total stockholders’ equity 52,966 46,952
Total liabilities and stockholders’ equity $ 182,963 $ 152,192
 
 
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
  Nine Months Ended
 September 30,
  2015 2014
Cash flows from operating activities:    
Net loss $ (6,299) $ (8,454)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 7,704 6,004
Provision for doubtful accounts 344 711
Net loss on disposal of assets 479 247
Non-cash interest expense 120 256
Stock-based compensation 9,579 7,037
Revaluation of contingent consideration liability (1,600)
Changes in operating assets and liabilities:    
Accounts receivable (30,547) (17,897)
Inventory (15,127) 1,092
Prepaid expenses and other assets (5,008) (1,867)
Accounts payable, accrued and other liabilities 3,870 24,513
Warranty obligations    
Deferred revenues 7,176 3,700
Net cash (used in) provided by operating activities (29,309) 15,342
Cash flows from investing activities:    
Purchases of property and equipment (9,682) (9,836)
Net cash used in investing activities (9,682) (9,836)
Cash flows from financing activities:    
Borrowings under revolving credit facility 34,000
Payments toward revolving credit facility (17,000)
Repayments of term loans (2,847)
Proceeds from issuance of common stock under employee stock plans 2,866 3,958
Net cash provided by financing activities 19,866 1,111
Effect of exchange rate changes on cash (416) (270)
Net (decrease) increase in cash and cash equivalents (19,541) 6,347
Cash and cash equivalents—Beginning of period 42,032 38,190
Cash and cash equivalents—End of period $ 22,491 $ 44,537
 
 
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,
  2015 2014 2015 2014
Gross profit (GAAP) $ 31,466 $ 32,521 $ 92,517 $ 78,008
Stock-based compensation 331 229 913 572
Gross profit (Non-GAAP) $ 31,797 $ 32,750 $ 93,430 $ 78,580
         
Gross margin (GAAP) 30.6% 32.8% 31.7% 32.7%
Stock-based compensation 0.3% 0.2% 0.3% 0.2%
Gross margin (Non-GAAP) 30.9% 33.0% 32.0% 32.9%
         
Operating expenses (GAAP) $ 29,687 $ 30,628 $ 96,655 $ 84,388
Stock-based compensation(1) (2,952) (2,301) (8,666) (6,465)
Secondary offering expenses (365) (365)
Amortization of acquisition-related intangibles (45) (135)
Revaluation of contingent consideration liability 700 1,600
Severance costs (472) (1,480)
Operating expenses (Non-GAAP) $ 26,918 $ 27,962 $ 87,974 $ 77,558
         
(1) Includes stock-based compensation as follows:        
Research and development $ 1,141 $ 824 $ 3,379 $ 2,215
Sales and marketing 803 635 2,510 1,816
General and administrative 1,008 842 2,777 2,434
Total $ 2,952 $ 2,301 $ 8,666 $ 6,465
         
Income (loss) from operations (GAAP) $ 1,779 $ 1,893 $ (4,138) $ (6,380)
Stock-based compensation 3,283 2,530 9,579 7,037
Secondary offering expenses 365 365
Amortization of acquisition-related intangibles 45 135
Revaluation of contingent consideration liability (700) (1,600)
Severance costs 472 1,480
Income from operations (Non-GAAP) $ 4,879 $ 4,788 $ 5,456 $ 1,022
         
Net income (loss) (GAAP) $ 624 $ 813 $ (6,299) $ (8,454)
Stock-based compensation 3,283 2,530 9,579 7,037
Secondary offering expenses 365 365
Amortization of acquisition-related intangibles 45 135
Revaluation of contingent consideration liability (700) (1,600)
Severance costs 472 1,480
Non-cash interest expense 40 65 120 256
Net income (loss) (Non-GAAP) $ 3,764 $ 3,773 $ 3,415 $ (796)
         
Net income (loss) per share, diluted (GAAP) $ 0.01 $ 0.02 $ (0.14) $ (0.20)
Stock-based compensation 0.07 0.06 0.21 0.17
Secondary offering expenses
Amortization of acquisition-related intangibles
Revaluation of contingent consideration liability (0.01) (0.03)
Severance costs 0.01 0.03
Non-cash interest expense 0.01
Net income (loss) per share, diluted (Non-GAAP) $ 0.08 $ 0.08 $ 0.07 $ (0.02)
         
Shares used in per share calculation, diluted (Non-GAAP) 47,996 48,786 48,844 42,664
CONTACT: Christina Carrabino
         Enphase Energy
         Investor Relations
         ir@enphaseenergy.com
         +1-707-763-4784 x7294

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