Press Release
Enphase Energy Reports Financial Results for the Third Quarter of 2019
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
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
We exited the third quarter with
BUSINESS HIGHLIGHTS
On
On
On
On
FOURTH QUARTER 2019 FINANCIAL OUTLOOK
For the fourth quarter of 2019,
- 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
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
A copy of this press release can be found on the investor relations page of Enphase Energy’s website at investor.enphase.com.
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Contact:
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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 | 31,000 | 25,638 | 85,077 | 69,688 | |||||||||||
Income (loss) from operations | 33,706 | (374 | ) | 58,287 | (3,407 | ) | |||||||||
Other expense, net | |||||||||||||||
Interest income | 894 | 321 | 1,698 | 568 | |||||||||||
Interest expense | (2,286 | ) | (2,790 | ) | (7,388 | ) | (7,599 | ) | |||||||
Other expense, net | (943 | ) | (379 | ) | (6,904 | ) | (1,077 | ) | |||||||
Total other expense, net | (2,335 | ) | (2,848 | ) | (12,594 | ) | (8,108 | ) | |||||||
Income (loss) before income taxes | 31,371 | (3,222 | ) | 45,693 | (11,515 | ) | |||||||||
Provision for income taxes | (272 | ) | (248 | ) | (1,211 | ) | (821 | ) | |||||||
Net income (loss) | $ | 31,099 | $ | (3,470 | ) | $ | 44,482 | $ | (12,336 | ) | |||||
Net income (loss) per share: | |||||||||||||||
Basic | $ | 0.25 | $ | (0.03 | ) | $ | 0.39 | $ | (0.13 | ) | |||||
Diluted | $ | 0.23 | $ | (0.03 | ) | $ | 0.35 | $ | (0.13 | ) | |||||
Shares used in per share calculation: | |||||||||||||||
Basic | 122,123 | 102,798 | 114,720 | 97,257 | |||||||||||
Diluted | 133,611 | 102,798 | 131,114 | 97,257 | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, 2019 |
December 31, 2018 |
||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 203,046 | $ | 106,237 | |||
Accounts receivable, net | 133,689 | 78,938 | |||||
Inventory | 30,231 | 16,267 | |||||
Prepaid expenses and other assets | 24,551 | 20,860 | |||||
Total current assets | 391,517 | 222,302 | |||||
Property and equipment, net | 23,532 | 20,998 | |||||
Operating lease, right of use asset | 11,407 | — | |||||
Intangible assets, net | 31,761 | 35,306 | |||||
Goodwill | 24,783 | 24,783 | |||||
Other assets | 40,669 | 36,548 | |||||
Total assets | $ | 523,669 | $ | 339,937 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 60,692 | $ | 48,794 | |||
Accrued liabilities | 39,991 | 29,010 | |||||
Deferred revenues, current | 34,295 | 33,119 | |||||
Warranty obligations, current | 8,757 | 8,083 | |||||
Debt, current | 3,084 | 28,155 | |||||
Total current liabilities | 146,819 | 147,161 | |||||
Long-term liabilities: | |||||||
Deferred revenues, noncurrent | 85,746 | 76,911 | |||||
Warranty obligations, noncurrent | 25,867 | 23,211 | |||||
Other liabilities | 11,970 | 3,250 | |||||
Debt, noncurrent | 100,978 | 81,628 | |||||
Total liabilities | 371,380 | 332,161 | |||||
Total stockholders’ equity | 152,289 | 7,776 | |||||
Total liabilities and stockholders’ equity | $ | 523,669 | $ | 339,937 | |||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, 2019 |
June 30, 2019 |
September 30, 2018 |
September 30, 2019 |
September 30, 2018 |
|||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net income (loss) | $ | 31,099 | $ | 10,618 | $ | (3,470 | ) | $ | 44,482 | $ | (12,336 | ) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 3,857 | 4,122 | 2,481 | 11,551 | 6,950 | ||||||||||||||
Provision for doubtful accounts | 201 | 207 | (85 | ) | 408 | 668 | |||||||||||||
Asset impairment | — | — | 1,636 | — | 1,636 | ||||||||||||||
Non-cash interest expense | 1,907 | 776 | 747 | 4,173 | 1,880 | ||||||||||||||
Financing fees on extinguishment of debt | — | — | — | 2,152 | — | ||||||||||||||
Fees paid for repurchase and exchange of convertible notes due 2023 | — | 6,000 | — | 6,000 | — | ||||||||||||||
Stock-based compensation | 5,776 | 4,934 | 4,051 | 14,000 | 9,911 | ||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Accounts receivable | (37,035 | ) | (15,838 | ) | 4,774 | (56,139 | ) | 10,671 | |||||||||||
Inventory | (10,137 | ) | (7,123 | ) | (416 | ) | (13,964 | ) | 8,112 | ||||||||||
Prepaid expenses and other assets | 934 | (7,155 | ) | (2,444 | ) | (8,634 | ) | (3,995 | ) | ||||||||||
Intangible assets | — | — | (6,000 | ) | — | (6,000 | ) | ||||||||||||
Accounts payable, accrued and other liabilities | 1,851 | 11,954 | 8,489 | 18,656 | 4,672 | ||||||||||||||
Warranty obligations | 1,631 | 1,951 | 542 | 3,330 | 2,368 | ||||||||||||||
Deferred revenues | 4,877 | 4,326 | (3,489 | ) | 10,781 | (10,280 | ) | ||||||||||||
Net cash provided by operating activities | 4,961 | 14,772 | 6,816 | 36,796 | 14,257 | ||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Purchases of property and equipment | (4,192 | ) | (2,518 | ) | (909 | ) | (7,368 | ) | (2,384 | ) | |||||||||
Acquisition | — | — | (9,000 | ) | — | (9,000 | ) | ||||||||||||
Net cash used in investing activities | (4,192 | ) | (2,518 | ) | (9,909 | ) | (7,368 | ) | (11,384 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||||||
Issuance of convertible notes due 2024, net of issuance costs | (559 | ) | 128,040 | — | 127,481 | — | |||||||||||||
Purchase of convertible note hedges | — | (36,313 | ) | — | (36,313 | ) | — | ||||||||||||
Sale of warrants | — | 29,819 | — | 29,819 | — | ||||||||||||||
Fees paid for repurchase and exchange of convertible notes due 2023 | — | (6,000 | ) | — | (6,000 | ) | — | ||||||||||||
Principal payments and financing fees on debt | (536 | ) | (391 | ) | (2,535 | ) | (45,658 | ) | (5,664 | ) | |||||||||
Proceeds from issuance of common stock, net of issuance costs | — | — | (152 | ) | — | 19,771 | |||||||||||||
Proceeds from debt, net of issuance costs | — | — | 62,772 | — | 68,352 | ||||||||||||||
Proceeds from exercise of equity awards | 303 | 958 | 781 | 2,925 | 2,151 | ||||||||||||||
Payment of withholding taxes related to net share settlement of equity awards | (2,348 | ) | (735 | ) | — | (4,438 | ) | — | |||||||||||
Net cash provided by (used in) financing activities | (3,140 | ) | 115,378 | 60,866 | 67,816 | 84,610 | |||||||||||||
Effect of exchange rate changes on cash | (542 | ) | 240 | (80 | ) | (435 | ) | (463 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents | (2,913 | ) | 127,872 | 57,693 | 96,809 | 87,020 | |||||||||||||
Cash and cash equivalents—Beginning of period | 205,959 | 78,087 | 58,471 | 106,237 | 29,144 | ||||||||||||||
Cash and cash equivalents—End of period | $ | 203,046 | $ | 205,959 | $ | 116,164 | $ | 203,046 | $ | 116,164 | |||||||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, 2019 |
June 30, 2019 |
September 30, 2018 |
September 30, 2019 |
September 30, 2018 |
|||||||||||||||
Gross profit (GAAP) | $ | 64,706 | $ | 45,319 | $ | 25,264 | $ | 143,364 | $ | 66,281 | |||||||||
Stock-based compensation | 497 | 386 | 330 | 1,114 | 945 | ||||||||||||||
Gross profit (Non-GAAP) | $ | 65,203 | $ | 45,705 | $ | 25,594 | $ | 144,478 | $ | 67,226 | |||||||||
Gross margin (GAAP) | 35.9 | % | 33.8 | % | 32.4 | % | 34.6 | % | 29.6 | % | |||||||||
Stock-based compensation | 0.3 | % | 0.3 | % | 0.4 | % | 0.3 | % | 0.4 | % | |||||||||
Gross margin (Non-GAAP) | 36.2 | % | 34.1 | % | 32.8 | % | 34.9 | % | 30.0 | % | |||||||||
Operating expenses (GAAP) | $ | 31,000 | $ | 27,872 | $ | 25,638 | $ | 85,077 | $ | 69,688 | |||||||||
Stock-based compensation (1) | (4,948 | ) | (4,217 | ) | (3,721 | ) | (12,168 | ) | (8,966 | ) | |||||||||
Restructuring and asset impairment charges | (469 | ) | (631 | ) | (2,588 | ) | (1,468 | ) | (2,588 | ) | |||||||||
Reserve for non-recurring legal matter | — | — | — | — | (1,765 | ) | |||||||||||||
Acquisition related expenses and amortization | (546 | ) | (546 | ) | (710 | ) | (1,638 | ) | (1,113 | ) | |||||||||
Operating expenses (Non-GAAP) | $ | 25,037 | $ | 22,478 | $ | 18,619 | $ | 69,803 | $ | 55,256 | |||||||||
(1) Includes stock-based compensation as follows: | |||||||||||||||||||
Research and development | $ | 1,411 | $ | 1,128 | $ | 878 | $ | 3,255 | $ | 2,645 | |||||||||
Sales and marketing | 1,541 | 1,360 | 1,151 | 3,900 | 2,509 | ||||||||||||||
General and administrative | 1,996 | 1,729 | 1,692 | 5,013 | 3,812 | ||||||||||||||
Total | $ | 4,948 | $ | 4,217 | $ | 3,721 | $ | 12,168 | $ | 8,966 | |||||||||
Income (loss) from operations (GAAP) | $ | 33,706 | $ | 17,447 | $ | (374 | ) | $ | 58,287 | $ | (3,407 | ) | |||||||
Stock-based compensation | 5,445 | 4,603 | 4,051 | 13,282 | 9,911 | ||||||||||||||
Restructuring and asset impairment charges | 469 | 631 | 2,588 | 1,468 | 2,588 | ||||||||||||||
Reserve for non-recurring legal matter | — | — | — | — | 1,765 | ||||||||||||||
Acquisition related expenses and amortization | 546 | 546 | 710 | 1,638 | 1,113 | ||||||||||||||
Income from operations (Non-GAAP) | $ | 40,166 | $ | 23,227 | $ | 6,975 | $ | 74,675 | $ | 11,970 | |||||||||
Net income (loss) (GAAP) | $ | 31,099 | $ | 10,618 | $ | (3,470 | ) | $ | 44,482 | $ | (12,336 | ) | |||||||
Stock-based compensation | 5,445 | 4,603 | 4,051 | 13,282 | 9,911 | ||||||||||||||
Restructuring and asset impairment charges | 469 | 631 | 2,588 | 1,468 | 2,588 | ||||||||||||||
Reserve for non-recurring legal matter | — | — | — | — | 1,765 | ||||||||||||||
Acquisition related expenses and amortization | 546 | 546 | 710 | 1,638 | 1,113 | ||||||||||||||
Non-recurring debt prepayment fees and non-cash interest | 1,907 | 6,775 | 747 | 11,297 | 1,880 | ||||||||||||||
Net income (Non-GAAP) | $ | 39,466 | $ | 23,173 | $ | 4,626 | $ | 72,167 | $ | 4,921 | |||||||||
Net income (loss) per share, basic (GAAP) | $ | 0.25 | $ | 0.09 | $ | (0.03 | ) | $ | 0.39 | $ | (0.13 | ) | |||||||
Stock-based compensation | 0.05 | 0.04 | 0.03 | 0.12 | 0.10 | ||||||||||||||
Restructuring and asset impairment charges | — | 0.01 | 0.02 | 0.01 | 0.03 | ||||||||||||||
Reserve for non-recurring legal matter | — | — | — | — | 0.02 | ||||||||||||||
Acquisition related expenses and amortization | — | — | 0.01 | 0.01 | 0.01 | ||||||||||||||
Non-recurring debt prepayment fees and non-cash interest | 0.02 | 0.06 | 0.01 | 0.10 | 0.02 | ||||||||||||||
Net income per share, basic (Non-GAAP) | $ | 0.32 | $ | 0.20 | $ | 0.04 | $ | 0.63 | $ | 0.05 | |||||||||
Shares used in basic per share calculation GAAP and Non-GAAP | 122,123 | 113,677 | 102,798 | 114,720 | 97,257 | ||||||||||||||
Net income (loss) per share, diluted (GAAP) | $ | 0.23 | $ | 0.08 | $ | (0.03 | ) | $ | 0.35 | $ | (0.13 | ) | |||||||
Stock-based compensation | 0.04 | 0.04 | 0.03 | 0.10 | 0.10 | ||||||||||||||
Restructuring and asset impairment charges | 0.01 | 0.01 | 0.02 | 0.01 | 0.03 | ||||||||||||||
Reserve for non-recurring legal matter | — | — | — | — | 0.02 | ||||||||||||||
Acquisition related expenses and amortization | 0.01 | — | 0.01 | 0.01 | 0.01 | ||||||||||||||
Non-recurring debt prepayment fees and non-cash interest | 0.01 | 0.05 | 0.01 | 0.09 | 0.02 | ||||||||||||||
Net income per share, diluted (Non-GAAP) (2) | $ | 0.30 | $ | 0.18 | $ | 0.04 | $ | 0.56 | $ | 0.05 | |||||||||
Shares used in diluted per share calculation GAAP | 133,611 | 130,737 | 102,798 | 131,114 | 97,257 | ||||||||||||||
Shares used in diluted per share calculation Non-GAAP (3) | 132,323 | 130,737 | 110,900 | 130,729 | 104,746 |
(2) Calculation of non-GAAP diluted net income per share for the three months ended September 30, 2019, June 30, 2019 and September 30, 2018 excludes convertible notes due 2023 interest expense, net of tax of less than $0.1 million, $0.4 million and $0.2 million, respectively, from non-GAAP net income. Calculation of non-GAAP diluted net income per share for the nine months ended September 30, 2019 and September 30, 2018 excludes convertible notes due 2023 interest expense, net of tax of $0.9 million and $0.2 million, respectively, from non-GAAP net income.
(3) Effect of dilutive in-the-money portion of convertible senior notes and warrants are included in the GAAP weighted-average diluted shares in periods where we have GAAP net income. We excluded the in-the-money portion of convertible notes due 2024 totaling 1,288 thousand shares and 385 thousand shares in the three and nine months ended September 30, 2019, respectively, for non-GAAP weighted-average diluted shares as the Company entered into convertible note hedge transactions that reduce potential dilution to the Company’s common stock upon any conversion of the Notes due 2024.
Source: Enphase Energy, Inc.