Enphase Energy Reports Financial Results for the Third Quarter of 2016
A global energy technology company, announced today financial results for the third quarter ended September 30, 2016.
Enphase Energy reported total revenue for the third quarter of 2016 of $88.7 million, an increase of 12 percent compared to the second quarter of 2016. During the third quarter of 2016, Enphase sold 204MW (AC) or 869,000 microinverters, an increase in MW of 10 percent compared to the second quarter of 2016. GAAP gross margin for the third quarter of 2016 was 17.9 percent and non-GAAP gross margin was 18.2 percent.
GAAP operating expense for the third quarter of 2016 was $33.6 million and non-GAAP operating expense was $28.6 million. GAAP operating loss for the third quarter of 2016 was $17.7 million and non-GAAP operating loss was $12.4 million. GAAP net loss for the third quarter of 2016 was $18.8 million, or a net loss of $0.40 per share. On a non-GAAP basis, net loss was $13.4 million, or a net loss of $0.28 per share.
The Company exited the quarter with a total cash balance of $24.1 million.
“Our solid sequential growth in revenue and megawatt shipments reflects continued global demand for our solar energy systems,” said Paul Nahi, president and CEO of Enphase Energy. “We began shipping our AC Battery storage solution in Australia and New Zealand during the third quarter and are very pleased with the demand we have seen. We also unveiled our Enphase Home Energy Solution with IQ™, our next-generation integrated solar, storage and energy management offering. The solution, available in the first quarter of 2017, features our sixth-generation Enphase IQ™ Microinverter System. The Enphase IQ 6 series microinverter will also be used in the upcoming AC modules developed with our partners, including LG, SolarWorld and Jinko Solar.”
“During the third quarter, we announced restructuring initiatives that are expected to result in approximately $20 million of annualized operating expense savings,” said Bert Garcia, CFO of Enphase Energy. “Additionally, during the quarter we entered into a $25.0 million term loan agreement and raised approximately $14.0 million in net proceeds from our equity offering. These actions, along with our product cost reduction plan, strengthen our financial position and will enable us to execute on our key initiatives and grow our business.”
Business Outlook
“Reaffirming the guidance we provided on September 22, 2016, we expect our revenue for the fourth quarter of 2016 to be within a range of $90 million to $100 million, and GAAP and non-GAAP gross margin to be within a range of 16% to 20%,” stated Bert Garcia. “Non-GAAP gross margin excludes approximately $0.3 million of stock-based compensation expense. We expect our GAAP operating expense for the fourth quarter to be within a range of $22.5 million to $27.5 million and non-GAAP operating expense to be within a range of $20 million to $25 million, excluding an estimated $2.5 million of stock-based compensation expense.”
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 income (loss) and diluted net income (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 cash-based severance related to workforce reduction actions and asset write-downs of property and equipment 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 third quarter 2016 results and fourth quarter 2016 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 95304741. 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 95304741 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 drive down costs, market demands for its microinverters and future products, competitive position and advantages of its technology. 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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, 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 September 30, 2016, which will be filed with the SEC in the fourth quarter of 2016. All information set forth in this press release and its attachments is as of November 1, 2016. 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.
Source:newsroom
