Press Release
Enphase Energy Reports Financial Results for the Third Quarter of 2020
We reported revenue of
The financial highlights for the third quarter of 2020 are listed below. The GAAP numbers include an approximate
- Revenue of
$178 .5 million - Cash flow from operations of
$67 .5 million; ending cash balance of$661.8 million - GAAP gross margin of 53.2%; record non-GAAP gross margin of 41.0%
- GAAP operating income of
$51 .8 million; non-GAAP operating income of$43 .7 million - GAAP net income of
$39 .4 million; non-GAAP net income of$41 .8 million - GAAP diluted earnings per share of
$0.28 ; non-GAAP diluted earnings per share of$0.30
Our revenue and earnings for the third quarter of 2020 are provided 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 2020 | Q2 2020 | Q3 2019* | Q3 2020 | Q2 2020 | Q3 2019* | ||||||||||||||||||
Revenue | $ | 178,503 | $ | 125,538 | $ | 180,057 | $ | 178,503 | $ | 125,538 | $ | 180,057 | |||||||||||
Gross margin | 53.2 | % | 38.5 | % | 35.9 | % | 41.0 | % | 39.6 | % | 36.2 | % | |||||||||||
Operating expenses | $ | 43,222 | $ | 37,533 | $ | 31,000 | $ | 29,571 | $ | 26,024 | $ | 25,037 | |||||||||||
Operating income | $ | 51,759 | $ | 10,854 | $ | 33,706 | $ | 43,675 | $ | 23,700 | $ | 40,166 | |||||||||||
Net income (loss) | $ | 39,362 | $ | (47,294 | ) | $ | 31,099 | $ | 41,760 | $ | 23,549 | $ | 39,466 | ||||||||||
Basic EPS | $ | 0.31 | $ | (0.38 | ) | $ | 0.25 | $ | 0.33 | $ | 0.19 | $ | 0.32 | ||||||||||
Diluted EPS | $ | 0.28 | $ | (0.38 | ) | $ | 0.23 | $ | 0.30 | $ | 0.17 | $ | 0.30 |
* Revenue for the third quarter of 2019 of
Our non-GAAP gross margin increased to 41.0% from 39.6% in the second quarter of 2020, driven by disciplined pricing and cost management. Non-GAAP operating expenses increased to
We exited the third quarter with
We started production shipments of our Encharge storage systems to customers in
Demand for our core microinverter products rebounded strongly in the third quarter of 2020. We experienced record sell-through from distribution to installers, resulting in channel inventory slightly below the low end of our typical target range. Sales to distributors improved significantly and was broad-based geographically. We were also pleased to report our first quarter of significant revenue from the sale of Encharge storage systems.
BUSINESS HIGHLIGHTS
On
On
On
On
On
FOURTH QUARTER 2020 FINANCIAL OUTLOOK
For the fourth quarter of 2020, Enphase Energy estimates both GAAP and non-GAAP financial results as follows:
- Revenue to be within a range of
$245.0 million to$260.0 million ; revenue guidance does not include any safe harbor shipments - GAAP gross margin to be within a range of 37.0% to 40.0%, excluding the recovery of the remaining
$16.0 million tariff refund that has not yet been approved; non-GAAP gross margin to be within a range of 38.0% to 41.0%, excluding tariff refund and stock-based compensation expenses - GAAP operating expenses to be within a range of
$51 .0 million to$54 .0 million, including$16 .0 million estimated for stock-based compensation expenses and acquisition related amortization - Non-GAAP operating expenses to be within a range of
$35 .0 million to$38 .0 million, excluding$16 .0 million estimated for stock-based compensation expenses 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 2020 results and fourth quarter 2020 business outlook today at
Forward-Looking Statements
This press release contains forward-looking statements, including statements related to Enphase Energy’s expectations as to future financial performance, expense levels, the capabilities, advantages, and performance of our technology and products, our business strategies and anticipated demand for our products. 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.
About
Enphase Energy, a global energy technology company, delivers smart, easy-to-use solutions that manage solar generation, storage and communication on one intelligent platform. The Company revolutionized the solar industry with its microinverter technology and produces a fully integrated solar-plus-storage solution. Enphase has shipped more than 30 million microinverters, and approximately 1.3 million Enphase systems have been deployed in more than 130 countries. For more information, visit www.enphase.com.
Enphase Energy®, the Enphase logo, Encharge, Power Start, Enlighten, Enphase Energized, IQ 7+, IQ 7A, Ensemble, and other trademarks or service names are the trademarks of
Contact:
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 | Nine Months Ended | ||||||||||||||||||
2020 |
2020 |
2019 |
2020 |
2019 |
|||||||||||||||
Net revenues | $ | 178,503 | $ | 125,538 | $ | 180,057 | $ | 509,586 | $ | 414,301 | |||||||||
Cost of revenues (1) | 83,522 | 77,151 | 115,351 | 285,543 | 270,937 | ||||||||||||||
Gross profit | 94,981 | 48,387 | 64,706 | 224,043 | 143,364 | ||||||||||||||
Operating expenses: | |||||||||||||||||||
Research and development | 15,052 | 13,192 | 11,085 | 40,120 | 29,213 | ||||||||||||||
Sales and marketing | 14,645 | 12,371 | 9,551 | 38,788 | 26,038 | ||||||||||||||
General and administrative | 13,525 | 11,970 | 9,895 | 37,810 | 28,358 | ||||||||||||||
Restructuring charges | — | — | 469 | — | 1,468 | ||||||||||||||
Total operating expenses | 43,222 | 37,533 | 31,000 | 116,718 | 85,077 | ||||||||||||||
Income from operations | 51,759 | 10,854 | 33,706 | 107,325 | 58,287 | ||||||||||||||
Other expense, net | |||||||||||||||||||
Interest income | 110 | 282 | 894 | 1,483 | 1,698 | ||||||||||||||
Interest expense | (5,993 | ) | (5,952 | ) | (2,286 | ) | (15,100 | ) | (7,388 | ) | |||||||||
Other expense, net | (1,031 | ) | 653 | (943 | ) | (1,302 | ) | (6,904 | ) | ||||||||||
Change in fair value of derivatives (2) | — | (59,692 | ) | — | (44,348 | ) | — | ||||||||||||
Total other expense, net | (6,914 | ) | (64,709 | ) | (2,335 | ) | (59,267 | ) | (12,594 | ) | |||||||||
Income before income taxes | 44,845 | (53,855 | ) | 31,371 | 48,058 | 45,693 | |||||||||||||
Income tax benefit (provision) | (5,483 | ) | 6,561 | (272 | ) | 12,946 | (1,211 | ) | |||||||||||
Net income (loss) | $ | 39,362 | $ | (47,294 | ) | $ | 31,099 | $ | 61,004 | $ | 44,482 | ||||||||
Net income (loss) per share: | |||||||||||||||||||
Basic | $ | 0.31 | $ | (0.38 | ) | $ | 0.25 | $ | 0.49 | $ | 0.39 | ||||||||
Diluted | $ | 0.28 | $ | (0.38 | ) | $ | 0.23 | $ | 0.44 | $ | 0.35 | ||||||||
Shares used in per share calculation: | |||||||||||||||||||
Basic | 126,109 | 125,603 | 122,123 | 125,084 | 114,720 | ||||||||||||||
Diluted | 141,820 | 125,603 | 133,611 | 140,207 | 131,114 |
(1) We sought refunds totaling approximately
(2) Change in fair value of derivatives of
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
2020 |
2019 |
||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 661,792 | $ | 251,409 | |||
Restricted cash | — | 44,700 | |||||
Accounts receivable, net | 122,386 | 145,413 | |||||
Inventory | 37,535 | 32,056 | |||||
Prepaid expenses and other assets | 28,521 | 26,079 | |||||
Total current assets | 850,234 | 499,657 | |||||
Property and equipment, net | 35,187 | 28,936 | |||||
Operating lease, right of use asset, net | 14,487 | 10,117 | |||||
Intangible assets, net | 26,839 | 30,579 | |||||
24,783 | 24,783 | ||||||
Other assets | 51,998 | 44,620 | |||||
Deferred tax assets, net | 88,812 | 74,531 | |||||
Total assets | $ | 1,092,340 | $ | 713,223 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 48,148 | $ | 57,474 | |||
Accrued liabilities | 52,203 | 47,092 | |||||
Deferred revenues, current | 41,738 | 81,783 | |||||
Warranty obligations, current | 10,760 | 10,078 | |||||
Debt, current | 103,670 | 2,884 | |||||
Total current liabilities | 256,519 | 199,311 | |||||
Long-term liabilities: | |||||||
Deferred revenues, noncurrent | 115,757 | 100,204 | |||||
Warranty obligations, noncurrent | 33,019 | 27,020 | |||||
Other liabilities | 14,387 | 11,817 | |||||
Debt, noncurrent | 256,452 | 102,659 | |||||
Total liabilities | 676,134 | 441,011 | |||||
Total stockholders’ equity | 416,206 | 272,212 | |||||
Total liabilities and stockholders’ equity | $ | 1,092,340 | $ | 713,223 |
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||||||
2020 |
2020 |
2019 |
2020 |
2019 |
|||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||
Net (loss) income (1) | $ | 39,362 | $ | (47,294 | ) | $ | 31,099 | $ | 61,004 | $ | 44,482 | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||||||
Depreciation and amortization | 4,765 | 4,141 | 3,857 | 12,750 | 11,551 | ||||||||||||||
Provision for doubtful accounts | 69 | 81 | 201 | 254 | 408 | ||||||||||||||
Non-cash interest expense | 5,422 | 5,372 | 1,907 | 13,516 | 4,173 | ||||||||||||||
Financing fees on extinguishment of debt | — | — | — | — | 2,152 | ||||||||||||||
Fees paid for repurchase and exchange of convertible notes due 2023 | — | — | — | — | 6,000 | ||||||||||||||
Stock-based compensation | 14,399 | 12,300 | 5,776 | 34,214 | 14,000 | ||||||||||||||
Change in fair value of derivatives | — | 59,692 | — | 44,348 | — | ||||||||||||||
Deferred income taxes | 5,060 | (7,067 | ) | — | (14,507 | ) | — | ||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Accounts receivable | (32,633 | ) | 6,529 | (37,035 | ) | 23,533 | (56,139 | ) | |||||||||||
Inventory | (6,349 | ) | 3,430 | (10,137 | ) | (5,479 | ) | (13,964 | ) | ||||||||||
Prepaid expenses and other assets | (917 | ) | (4,525 | ) | 934 | (10,451 | ) | (8,634 | ) | ||||||||||
Accounts payable, accrued and other liabilities (1) | 26,189 | (13,323 | ) | 1,851 | (9,200 | ) | 18,656 | ||||||||||||
Warranty obligations | 5,872 | 406 | 1,631 | 6,681 | 3,330 | ||||||||||||||
Deferred revenues | 6,262 | 5,689 | 4,877 | (24,509 | ) | 10,781 | |||||||||||||
Net cash provided by operating activities | 67,501 | 25,431 | 4,961 | 132,154 | 36,796 | ||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Purchases of property and equipment | (3,903 | ) | (4,451 | ) | (4,192 | ) | (11,707 | ) | (7,368 | ) | |||||||||
Net cash used in investing activities | (3,903 | ) | (4,451 | ) | (4,192 | ) | (11,707 | ) | (7,368 | ) | |||||||||
Cash flows from financing activities: | |||||||||||||||||||
Issuance of convertible notes, net of issuance costs | — | (591 | ) | (559 | ) | 312,420 | 127,481 | ||||||||||||
Purchase of convertible note hedges | — | — | — | (89,056 | ) | (36,313 | ) | ||||||||||||
Sale of warrants | — | — | — | 71,552 | 29,819 | ||||||||||||||
Fees paid for repurchase and exchange of convertible notes due 2023 | — | — | — | — | (6,000 | ) | |||||||||||||
Principal payments and financing fees on debt | (636 | ) | (485 | ) | (536 | ) | (2,269 | ) | (45,658 | ) | |||||||||
Proceeds from exercise of equity awards and employee stock purchase plan | (138 | ) | 2,867 | 303 | 4,708 | 2,925 | |||||||||||||
Payment of withholding taxes related to net share settlement of equity awards | (8,390 | ) | (9,385 | ) | (2,348 | ) | (52,042 | ) | (4,438 | ) | |||||||||
Net cash provided by (used in) financing activities | (9,164 | ) | (7,594 | ) | (3,140 | ) | 245,313 | 67,816 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | 104 | 24 | (542 | ) | (77 | ) | (435 | ) | |||||||||||
Net increase in cash and cash equivalents | 54,538 | 13,410 | (2,913 | ) | 365,683 | 96,809 | |||||||||||||
Cash, cash equivalents and restricted cash—Beginning of period | 607,254 | 593,844 | 205,959 | 296,109 | 106,237 | ||||||||||||||
Cash and cash equivalents—End of period | $ | 661,792 | $ | 607,254 | $ | 203,046 | $ | 661,792 | $ | 203,046 |
(1) As of
ENPHASE ENERGY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data and percentages)
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||||||
2020 |
2020 |
2019 |
2020 |
2019 |
|||||||||||||||
Gross profit (GAAP) | $ | 94,981 | $ | 48,387 | $ | 64,706 | $ | 224,043 | $ | 143,364 | |||||||||
Stock-based compensation | 1,294 | 1,337 | 497 | 3,237 | 1,114 | ||||||||||||||
Tariff refunds | (23,029 | ) | — | — | (23,029 | ) | — | ||||||||||||
Gross profit (Non-GAAP) | $ | 73,246 | $ | 49,724 | $ | 65,203 | $ | 204,251 | $ | 144,478 | |||||||||
Gross margin (GAAP) | 53.2 | % | 38.5 | % | 35.9 | % | 44.0 | % | 34.6 | % | |||||||||
Stock-based compensation | 0.7 | % | 1.1 | % | 0.3 | % | 0.6 | % | 0.3 | % | |||||||||
Tariff refunds | (12.9 | )% | — | % | — | % | (4.5 | )% | — | % | |||||||||
Gross margin (Non-GAAP) | 41.0 | % | 39.6 | % | 36.2 | % | 40.1 | % | 34.9 | % | |||||||||
Operating expenses (GAAP) | $ | 43,222 | $ | 37,533 | $ | 31,000 | $ | 116,718 | $ | 85,077 | |||||||||
Stock-based compensation (1) | (13,105 | ) | (10,963 | ) | (4,948 | ) | (30,977 | ) | (12,168 | ) | |||||||||
Restructuring and asset impairment charges | — | — | (469 | ) | — | (1,468 | ) | ||||||||||||
Acquisition related expenses and amortization | (546 | ) | (546 | ) | (546 | ) | (1,638 | ) | (1,638 | ) | |||||||||
Operating expenses (Non-GAAP) | $ | 29,571 | $ | 26,024 | $ | 25,037 | $ | 84,103 | $ | 69,803 | |||||||||
(1) Includes stock-based compensation as follows: | |||||||||||||||||||
Research and development | $ | 4,248 | $ | 3,263 | $ | 1,411 | $ | 9,430 | $ | 3,255 | |||||||||
Sales and marketing | 3,952 | 3,610 | 1,541 | 9,504 | 3,900 | ||||||||||||||
General and administrative | 4,905 | 4,090 | 1,996 | 12,043 | 5,013 | ||||||||||||||
Restructuring | — | — | — | $ | — | $ | 718 | ||||||||||||
Total | $ | 13,105 | $ | 10,963 | $ | 4,948 | $ | 30,977 | $ | 12,168 | |||||||||
Income from operations (GAAP) | $ | 51,759 | $ | 10,854 | $ | 33,706 | $ | 107,325 | $ | 58,287 | |||||||||
Stock-based compensation | 14,399 | 12,300 | 5,445 | 34,214 | 13,282 | ||||||||||||||
Tariff refunds | (23,029 | ) | — | — | (23,029 | ) | — | ||||||||||||
Restructuring and asset impairment charges | — | — | 469 | — | 1,468 | ||||||||||||||
Acquisition related expenses and amortization | 546 | 546 | 546 | 1,638 | 1,638 | ||||||||||||||
Income from operations (Non-GAAP) | $ | 43,675 | $ | 23,700 | $ | 40,166 | $ | 120,148 | $ | 74,675 | |||||||||
Net income (loss) (GAAP) | $ | 39,362 | $ | (47,294 | ) | $ | 31,099 | $ | 61,004 | $ | 44,482 | ||||||||
Stock-based compensation | 14,399 | 12,300 | 5,445 | 34,214 | 13,282 | ||||||||||||||
Tariff refunds | (23,029 | ) | — | — | (23,029 | ) | — | ||||||||||||
Restructuring and asset impairment charges | — | — | 469 | — | 1,468 | ||||||||||||||
Acquisition related expenses and amortization | 546 | 546 | 546 | 1,638 | 1,638 | ||||||||||||||
Non-recurring debt prepayment fees and non-cash interest | 5,422 | 5,372 | 1,907 | 13,516 | 11,297 | ||||||||||||||
Change in fair value of derivatives | — | 59,692 | — | 44,348 | — | ||||||||||||||
Non-GAAP income tax adjustment | 5,060 | (7,067 | ) | — | (14,507 | ) | — | ||||||||||||
Net income (Non-GAAP) | $ | 41,760 | $ | 23,549 | $ | 39,466 | $ | 117,184 | $ | 72,167 | |||||||||
Net income (loss) per share, basic (GAAP) | $ | 0.31 | $ | (0.38 | ) | $ | 0.25 | $ | 0.49 | $ | 0.39 | ||||||||
Stock-based compensation | 0.12 | 0.10 | 0.05 | 0.28 | 0.12 | ||||||||||||||
Tariff refunds | (0.18 | ) | — | — | (0.18 | ) | — | ||||||||||||
Restructuring and asset impairment charges | — | — | — | — | 0.01 | ||||||||||||||
Acquisition related expenses and amortization | — | — | — | 0.01 | 0.01 | ||||||||||||||
Non-recurring debt prepayment fees and non-cash interest | 0.04 | 0.05 | 0.02 | 0.11 | 0.10 | ||||||||||||||
Change in fair value of derivatives | — | 0.48 | — | 0.35 | — | ||||||||||||||
Non-GAAP income tax adjustment | 0.04 | (0.06 | ) | — | (0.12 | ) | — | ||||||||||||
Net income per share, basic (Non-GAAP) | $ | 0.33 | $ | 0.19 | $ | 0.32 | $ | 0.94 | $ | 0.63 | |||||||||
Shares used in basic per share calculation GAAP and Non-GAAP | 126,109 | 125,603 | 122,123 | 125,084 | 114,720 | ||||||||||||||
Net income (loss) per share, diluted (GAAP) | $ | 0.28 | $ | (0.38 | ) | $ | 0.23 | $ | 0.44 | $ | 0.35 | ||||||||
Stock-based compensation | 0.11 | 0.09 | 0.04 | 0.26 | 0.10 | ||||||||||||||
Restructuring and asset impairment charges | — | — | 0.01 | — | 0.01 | ||||||||||||||
Tariff Refunds | (0.17 | ) | — | — | (0.17 | ) | — | ||||||||||||
Acquisition related expenses and amortization | — | — | 0.01 | 0.01 | 0.01 | ||||||||||||||
Non-recurring debt prepayment fees and non-cash interest | 0.04 | 0.04 | 0.01 | 0.10 | 0.09 | ||||||||||||||
Change in fair value of derivatives | — | 0.48 | — | 0.33 | — | ||||||||||||||
Non-GAAP income tax adjustment | 0.04 | (0.06 | ) | — | (0.11 | ) | $ | — | |||||||||||
Net income per share, diluted (Non-GAAP) (2) (4) | $ | 0.30 | $ | 0.17 | $ | 0.30 | $ | 0.86 | $ | 0.56 | |||||||||
Shares used in diluted per share calculation GAAP | 141,820 | 125,603 | 133,611 | 140,207 | 131,114 | ||||||||||||||
Shares used in diluted per share calculation Non-GAAP (3) (4) | 137,352 | 135,770 | 132,323 | 136,359 | 130,729 |
(2) Calculation of non-GAAP diluted net income per share for the three months ended
(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 the Company has GAAP net income. The Company excluded the in-the-money portion of convertible notes due 2024 totaling 4,468 thousand shares, 3677 thousand shares and 1,288 thousand shares in the three months ended
(4) Effect of dilutive in-the-money portion of Stock Options, RSUs, PSUs, shares to be purchased under the Company’s ESPP, the Notes due 2023 and the warrants issued in conjunction with the Notes due 2024 are included in the non-GAAP weighted-average diluted shares in periods where the Company has non-GAAP net income, which totaled 10,167 thousand shares in the three months ended
Source: Enphase Energy, Inc.