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 second quarter ended
June 30, 2017.
Enphase Energy reported total revenue for the second quarter of
2017 of $74.7 million, an increase of 36 percent compared to the
first quarter of 2017. During the second quarter of 2017,
Enphase sold approximately 224MW (DC) or 775,000 microinverters, an
increase in MW of 39 percent compared to the first quarter of 2017.
GAAP gross margin for the second quarter of 2017 was 18.1
percent and non-GAAP gross margin was 18.4 percent.
GAAP operating expenses for the second quarter of 2017 were
$22.8 million, a decrease of 22 percent compared to the first
quarter of 2017 and a decrease of 24 percent compared to the second
quarter of 2016. Non-GAAP operating expenses were $17.8 million, a
decrease of 12 percent compared to the first quarter of 2017 and a
decrease of 35 percent compared to the second quarter of 2016.
GAAP net loss for the second quarter of 2017 was $12.1
million, or a net loss of $0.14 per share, compared to a second
quarter of 2016 net loss of $16.7 million, or a net loss of $0.36
per share. On a non-GAAP basis, net loss in the second quarter of
2017 was $6.6 million, or a net loss of $0.08 per share, compared
to a second quarter of 2016 net loss of $13.9 million, or a net
loss of $0.30 per share.
The Company generated $1.0 million of cash in the second quarter
of 2017 and exited the quarter with a total cash balance of $31.0
million.
“The ongoing rollout of our sixth-generation IQ Microinverter
System continued to gain traction during the second quarter, and we
expect to fully transition our U.S. customer base to the IQ
platform by the end of the third quarter of 2017,” said Badri
Kothandaraman, COO of Enphase Energy. “In addition, we are
excited by the recent U.S. launch of our Enphase Energized™ AC
Modules that directly integrate the IQ Microinverter with the
module, creating an even simpler, more consolidated solution.”
“The actions we have taken over the past year to improve our
operational efficiency resulted in a 35 percent year-over-year
decrease in non-GAAP operating expenses,” said Bert Garcia, CFO of
Enphase Energy. “We believe the combination of operating expense
reduction, supply chain optimization and the transition to our
sixth-generation IQ Microinverter System will enable us to achieve
non-GAAP operating income profitability by the fourth quarter of
2017.”
Business Outlook
“We expect our revenue for the third 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 third quarter to
be within a range of 18 percent to 21 percent. Non-GAAP gross
margin excludes approximately $200,000 of stock-based compensation
expense. We expect our GAAP operating expense for the third
quarter to be within a range of $22.5 million to $24.5 million and
non-GAAP operating expense to be within a range of $16.5 million to
$18.5 million, excluding an estimated $1.7 million of stock-based
compensation expense and approximately $4.3 million of additional
restructuring expense.”
Enphase Energy also announced today that Paul Nahi is stepping
down as president and CEO. Nahi’s final day with Enphase is today;
however, he will continue to assist Enphase as it transitions to a
new leader. The Company’s Board of Directors is conducting an
internal and external search for a permanent replacement, with the
intention to name a successor by August 31, 2017. In the interim,
the Board has created an Office of the CEO, consisting of Bert
Garcia, CFO, and Badri Kothandaraman, COO, to oversee and provide
leadership for the Company’s day-to day activities.
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 restructuring-related
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 second quarter 2017 results and third
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 53238137.
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 53238137 beginning
approximately one hour after the call.
Forward-Looking Statements
This press release contains forward-looking statements,
including statements related to Enphase Energy’s: rollout of its
sixth- and seventh-generation IQ Microinverter System and
transition plans; 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 approximately 15 million microinverters, and
more than 661,000 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.
|
ENPHASE ENERGY, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share
data) |
(Unaudited) |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Net revenues |
$ |
74,704 |
|
|
$ |
79,185 |
|
|
$ |
129,455 |
|
|
$ |
143,306 |
|
Cost of revenues |
61,157 |
|
|
65,049 |
|
|
108,861 |
|
|
117,410 |
|
Gross profit |
13,547 |
|
|
14,136 |
|
|
20,594 |
|
|
25,896 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Research
and development |
7,947 |
|
|
13,091 |
|
|
17,552 |
|
|
26,157 |
|
Sales and
marketing |
6,274 |
|
|
9,987 |
|
|
12,732 |
|
|
20,202 |
|
General
and administrative |
4,964 |
|
|
6,846 |
|
|
10,797 |
|
|
14,413 |
|
Restructuring charges |
3,609 |
|
|
— |
|
|
10,856 |
|
|
— |
|
Total
operating expenses |
22,794 |
|
|
29,924 |
|
|
51,937 |
|
|
60,772 |
|
Loss from
operations |
(9,247 |
) |
|
(15,788 |
) |
|
(31,343 |
) |
|
(34,876 |
) |
Other income (expense),
net: |
|
|
|
|
|
|
|
Interest
expense |
(2,080 |
) |
|
(212 |
) |
|
(4,219 |
) |
|
(364 |
) |
Other
income (expense) |
88 |
|
|
(379 |
) |
|
1,148 |
|
|
302 |
|
Total
other income (expense), net |
(1,992 |
) |
|
(591 |
) |
|
(3,071 |
) |
|
(62 |
) |
Loss before income
taxes |
(11,239 |
) |
|
(16,379 |
) |
|
(34,414 |
) |
|
(34,938 |
) |
Provision for income
taxes |
(854 |
) |
|
(344 |
) |
|
(984 |
) |
|
(580 |
) |
Net loss |
$ |
(12,093 |
) |
|
$ |
(16,723 |
) |
|
$ |
(35,398 |
) |
|
$ |
(35,518 |
) |
Net loss per
share: |
|
|
|
|
|
|
|
Basic and
diluted |
$ |
(0.14 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.44 |
) |
|
$ |
(0.77 |
) |
Shares used in per
share calculation: |
|
|
|
|
|
|
|
Basic and
diluted |
84,434 |
|
|
46,620 |
|
|
80,542 |
|
|
46,415 |
|
ENPHASE ENERGY, INC. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In thousands) |
(Unaudited) |
|
|
June 30, 2017 |
|
December 31, 2016 |
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
30,953 |
|
|
$ |
17,764 |
|
Accounts
receivable |
56,403 |
|
|
61,019 |
|
Inventory |
20,839 |
|
|
31,960 |
|
Prepaid
expenses and other |
13,307 |
|
|
7,121 |
|
Total
current assets |
121,502 |
|
|
117,864 |
|
Property and equipment,
net |
29,351 |
|
|
31,440 |
|
Goodwill |
3,664 |
|
|
3,664 |
|
Intangibles, net |
668 |
|
|
945 |
|
Other assets |
8,493 |
|
|
9,663 |
|
Total
assets |
$ |
163,678 |
|
|
$ |
163,576 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
15,425 |
|
|
$ |
31,696 |
|
Accrued
liabilities |
33,827 |
|
|
31,533 |
|
Deferred
revenues |
8,142 |
|
|
6,411 |
|
Borrowings under revolving credit facility |
— |
|
|
10,100 |
|
Current
portion of term loan |
5,951 |
|
|
3,032 |
|
Total
current liabilities |
63,345 |
|
|
82,772 |
|
Long-term
liabilities: |
|
|
|
Deferred
revenues, noncurrent |
35,782 |
|
|
33,893 |
|
Warranty
obligations, non-current |
23,581 |
|
|
22,818 |
|
Other
liabilities |
1,969 |
|
|
2,025 |
|
Term
loans, noncurrent |
41,385 |
|
|
20,768 |
|
Total
liabilities |
166,062 |
|
|
162,276 |
|
Stockholders’
equity: |
|
|
|
Preferred
stock |
— |
|
|
— |
|
Common
stock |
1 |
|
|
1 |
|
Additional paid-in capital |
283,717 |
|
|
252,126 |
|
Accumulated deficit |
(285,933 |
) |
|
(250,535 |
) |
Accumulated other comprehensive income (loss) |
(169 |
) |
|
(292 |
) |
Total
stockholders’ equity |
(2,384 |
) |
|
1,300 |
|
Total liabilities and
stockholders’ equity |
$ |
163,678 |
|
|
$ |
163,576 |
|
ENPHASE ENERGY, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands) |
(Unaudited) |
|
|
Six Months Ended June 30, |
|
2017 |
|
2016 |
Cash flows from
operating activities: |
|
|
|
Net
loss |
$ |
(35,398 |
) |
|
$ |
(35,518 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Depreciation and amortization |
4,583 |
|
|
5,388 |
|
Provision
for doubtful accounts |
707 |
|
|
1,331 |
|
Asset
impairment and restructuring |
1,765 |
|
|
28 |
|
Amortization of debt issuance costs |
1,063 |
|
|
56 |
|
Stock-based compensation |
3,550 |
|
|
5,707 |
|
Changes
in operating assets and liabilities: |
|
|
|
Accounts
receivable |
3,910 |
|
|
(4,205 |
) |
Inventory |
11,121 |
|
|
1,505 |
|
Prepaid
expenses and other assets |
(5,338 |
) |
|
(3,697 |
) |
Accounts
payable, accrued and other liabilities |
(13,908 |
) |
|
14,857 |
|
Deferred
revenues |
3,620 |
|
|
6,557 |
|
Net cash
used in operating activities |
(24,325 |
) |
|
(7,991 |
) |
Cash flows from
investing activities: |
|
|
|
Purchases
of property and equipment |
(3,515 |
) |
|
(7,510 |
) |
Purchases
of intangible assets |
— |
|
|
(678 |
) |
Net cash
used in investing activities |
(3,515 |
) |
|
(8,188 |
) |
Cash flows from
financing activities: |
|
|
|
Proceeds
from issuance of common stock, net of issuance costs |
26,425 |
|
|
— |
|
Proceeds
from term loan, net |
24,240 |
|
|
— |
|
Proceeds
from borrowings under revolving credit facility |
— |
|
|
10,000 |
|
Payments
under revolving credit facility |
(10,100 |
) |
|
(14,550 |
) |
Payments
of deferred financing costs |
— |
|
|
(130 |
) |
Contingent consideration payment related to prior acquisition |
— |
|
|
(29 |
) |
Proceeds
from issuance of common stock under employee stock plans |
170 |
|
|
809 |
|
Net cash
provided by (used in) financing activities |
40,735 |
|
|
(3,900 |
) |
Effect of
exchange rate changes on cash |
294 |
|
|
(130 |
) |
Net increase (decrease)
in cash and cash equivalents |
13,189 |
|
|
(20,209 |
) |
Cash and cash
equivalents—Beginning of period |
17,764 |
|
|
28,452 |
|
Cash and cash
equivalents—End of period |
$ |
30,953 |
|
|
$ |
8,243 |
|
ENPHASE ENERGY, INC. |
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES |
(In thousands, except per share
data) |
(Unaudited) |
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Gross profit
(GAAP) |
|
$ |
13,547 |
|
|
$ |
14,136 |
|
|
$ |
20,594 |
|
|
$ |
25,896 |
|
Stock-based compensation |
|
211 |
|
|
305 |
|
|
449 |
|
|
612 |
|
Gross profit
(Non-GAAP) |
|
$ |
13,758 |
|
|
$ |
14,441 |
|
|
$ |
21,043 |
|
|
$ |
26,508 |
|
|
|
|
|
|
|
|
|
|
Gross margin
(GAAP) |
|
18.1 |
% |
|
17.9 |
% |
|
15.9 |
% |
|
18.1 |
% |
Stock-based compensation |
|
0.3 |
% |
|
0.3 |
% |
|
0.4 |
% |
|
0.4 |
% |
Gross margin
(Non-GAAP) |
|
18.4 |
% |
|
18.2 |
% |
|
16.3 |
% |
|
18.5 |
% |
|
|
|
|
|
|
|
|
|
Operating
expenses (GAAP) |
|
$ |
22,794 |
|
|
$ |
29,924 |
|
|
$ |
51,937 |
|
|
$ |
60,772 |
|
Stock-based compensation(1) |
|
(1,410 |
) |
|
(2,403 |
) |
|
(3,101 |
) |
|
(5,095 |
) |
Amortization of acquisition-related intangibles |
|
— |
|
|
(45 |
) |
|
— |
|
|
(90 |
) |
Restructuring charges |
|
(3,609 |
) |
|
— |
|
|
(10,856 |
) |
|
— |
|
Operating
expenses (Non-GAAP) |
|
$ |
17,775 |
|
|
$ |
27,476 |
|
|
$ |
37,980 |
|
|
$ |
55,587 |
|
|
|
|
|
|
|
|
|
|
(1)
Includes stock-based compensation as follows: |
|
|
|
|
|
|
|
|
Research
and development |
|
$ |
636 |
|
|
$ |
980 |
|
|
$ |
1,387 |
|
|
$ |
2,106 |
|
Sales and
marketing |
|
285 |
|
|
588 |
|
|
663 |
|
|
1,200 |
|
General
and administrative |
|
489 |
|
|
835 |
|
|
1,051 |
|
|
1,789 |
|
Total |
|
$ |
1,410 |
|
|
$ |
2,403 |
|
|
$ |
3,101 |
|
|
$ |
5,095 |
|
|
|
|
|
|
|
|
|
|
Loss from
operations (GAAP) |
|
$ |
(9,247 |
) |
|
$ |
(15,788 |
) |
|
$ |
(31,343 |
) |
|
$ |
(34,876 |
) |
Stock-based compensation |
|
1,621 |
|
|
2,708 |
|
|
3,550 |
|
|
5,707 |
|
Amortization of acquisition-related intangibles |
|
— |
|
|
45 |
|
|
— |
|
|
90 |
|
Restructuring charges |
|
3,609 |
|
|
— |
|
|
10,856 |
|
|
— |
|
Loss from
operations (Non-GAAP) |
|
$ |
(4,017 |
) |
|
$ |
(13,035 |
) |
|
$ |
(16,937 |
) |
|
$ |
(29,079 |
) |
|
|
|
|
|
|
|
|
|
Net loss
(GAAP) |
|
$ |
(12,093 |
) |
|
$ |
(16,723 |
) |
|
$ |
(35,398 |
) |
|
$ |
(35,518 |
) |
Stock-based compensation |
|
1,621 |
|
|
2,708 |
|
|
3,550 |
|
|
5,707 |
|
Amortization of acquisition-related intangibles |
|
— |
|
|
45 |
|
|
— |
|
|
90 |
|
Restructuring, asset impairments and other charges |
|
3,609 |
|
|
— |
|
|
10,856 |
|
|
— |
|
Non-cash
interest expense |
|
231 |
|
|
28 |
|
|
743 |
|
|
56 |
|
Net loss
(Non-GAAP) |
|
$ |
(6,632 |
) |
|
$ |
(13,942 |
) |
|
$ |
(20,249 |
) |
|
$ |
(29,665 |
) |
|
|
|
|
|
|
|
|
|
Net loss per
share (GAAP) |
|
$ |
(0.14 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.44 |
) |
|
$ |
(0.77 |
) |
Stock-based compensation |
|
0.02 |
|
|
0.06 |
|
|
0.04 |
|
|
0.13 |
|
Restructuring, asset impairments and other charges |
|
0.04 |
|
|
— |
|
|
0.14 |
|
|
— |
|
Non-cash
interest expense |
|
— |
|
|
— |
|
|
0.01 |
|
|
— |
|
Net loss per
share (Non-GAAP) |
|
$ |
(0.08 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.64 |
) |
|
|
|
|
|
|
|
|
|
Shares used in
per share calculation (Non-GAAP) |
|
84,434 |
|
|
46,620 |
|
|
80,542 |
|
|
46,415 |
|
Contact
Christina Carrabino
Enphase Energy, Inc.
Investor Relations
ir@enphaseenergy.com
+1-707-763-4784 x7294
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