News Column

Enphase Energy Improves Financial Performance Driven by Strong Business Momentum

February 18, 2014

PETALUMA, Calif., Feb. 18, 2014 (GLOBE NEWSWIRE) -- Enphase Energy, Inc. (Nasdaq:ENPH) announced today financial results for the fourth quarter and fiscal year ended December 31, 2013.

Fourth Quarter 2013 Highlights

• Record revenue of $67.1 million

 • Shipped a record 107MW (AC) of microinverter systems, up 30 percent year-over-year

 • Record non-GAAP gross margin of 32.3 percent, up 430 basis points year-over-year

 • Non-GAAP operating income of $0.4 million

 • Strong positive cash flow from operations of $7.6 million

Enphase Energy reported total revenues for the fourth quarter of 2013 of $67.1 million, an increase of 8 percent compared to the third quarter of 2013 and an increase of 16 percent compared to the fourth quarter of 2012. During the fourth quarter, Enphase sold 107MW (AC) or 485,000 microinverters. This is an increase in MW of 14 percent compared to the third quarter of 2013 and an increase of 30 percent compared to the fourth quarter of 2012.

GAAP gross margin for the fourth quarter of 2013 was 32.1 percent. Non-GAAP gross margin was 32.3 percent, an increase of 400 basis points compared to the third quarter of 2013, and an increase of 430 basis points compared to the fourth quarter of 2012.

GAAP operating expenses for the fourth quarter were $23.1 million and non-GAAP operating expenses were $21.3 million.

GAAP operating loss for the fourth quarter of 2013 was $1.6 million, and non-GAAP operating income was $0.4 million, resulting in Enphase's first profitable quarter on a non-GAAP operating income basis. This compares to a non-GAAP operating loss of $4.2 million in the fourth quarter of 2012.

Fourth quarter of 2013 GAAP net loss was $2.8 million, or a loss of $0.07 per share. On a non-GAAP basis, the net loss was $0.7 million, or a loss of $0.02 per share.

Cash flow from operations during the fourth quarter was $7.6 million and net cash flow was $6.4 million. As a result, the company exited the year with a total cash balance of $38.2 million.

"We ended 2013 with a breakthrough fourth quarter," commented Paul Nahi, CEO of Enphase. "We posted the highest revenue in our company's history, shipping over 100MW for the first time in any quarter, while our record gross margin marks the first time we have exceeded 30 percent in any quarter. Combined with our ongoing focus on expense management, we were able to post a non-GAAP operating profit for the first time in Enphase's history. We also continue to drive working capital improvements, resulting in strong cash generation during the quarter."

He added, "This quarter's results demonstrate the power of the Enphase business model and our ability to execute on our key initiatives. We are extremely pleased to have achieved several company milestones during the fourth quarter and exited 2013 with strong business momentum. Since inception, we have shipped over 1GW (AC) or approximately 5 million microinverters. We are well positioned for 2014, which by many accounts, is expected to be a very strong year for the solar industry, and we are off to a great start."

For the full year 2013, total revenues were $232.8 million representing 355MW (AC) or 1.6 million microinverters. GAAP gross margin for the year was 29.0 percent, and non-GAAP gross margin was 29.1 percent. GAAP net loss for the year totaled $25.9 million, or a loss of $0.62 per share. Non-GAAP net loss was $18.0 million, or a loss of $0.43 per share.

"2013 was another year of impressive results by Enphase, highlighted by continued gross margin expansion which has improved 350 basis points year-over-year," said Paul Nahi. "We strengthened our industry leadership position and introduced our fourth-generation microinverter. We continue to improve the overall financial performance of the company, and substantially improved the cash flow from operations for the year close to the break-even level." He added, "I am tremendously proud of what we accomplished, which was made possible by the ongoing innovation, hard work and commitment of our entire Enphase family."

Business Outlook

"Looking forward, we expect revenues for the first quarter of 2014 to be within a range of $54 million to $57 million, and for gross margin to be within a range of 30 percent to 33 percent," said Kris Sennesael, CFO of Enphase. "The strong business momentum from the fourth quarter of 2013 is carrying over into the first quarter of 2014. At the midpoint of the revenue outlook range, revenue is up 22 percent compared to the first quarter of 2013. We also expect operating expenses for the first quarter of 2014 to be up approximately 5 to 8 percent compared to the fourth quarter of 2013, as we continue to invest in the growth of the company."

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 excludes or includes 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 our 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 fourth quarter and full year 2013 results and first quarter 2014 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 47007756. A live webcast of the conference call, along with accompanying presentation slides, will also be accessible from the Investor Relations section of the company's website at 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 passcode 47007756 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 financial performance, market demands for its microinverters, advantages of its technology, market trends 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 broad 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 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 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 detailed in the "Risk Factors" and elsewhere in Enphase Energy'sSecurities and Exchange Commission (SEC) filings and reports, including its most recent report on Form 10-Q filed on November 12, 2013. Additional information will also be set forth in those sections in Enphase Energy's Annual Report on Form 10-K for the year ended December 31, 2013, which will be filed with the SEC in the first quarter of 2014. 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

About Enphase Energy, Inc.

Enphase Energy delivers microinverter technology for the solar industry that increases energy production, simplifies design and installation, improves system uptime and reliability, reduces fire safety risk and provides a platform for intelligent energy management. Our semiconductor-based microinverter system converts energy at the individual module level and brings a system-based, high technology approach to solar energy generation.


(In thousands, except per share data)

 Three Months Ended

December  31,
Twelve Months Ended

December 31,
Net revenues$ 67,056$ 57,568$ 232,846$ 216,678
Cost of revenues 45,560 41,512 165,430 161,390
Gross profit 21,496 16,056 67,416 55,288
Operating expenses:        
Research and development 8,721 8,533 34,524 35,601
Sales and marketing 8,315 7,525 31,080 25,973
General and administrative 6,071 6,177 23,970 24,875
Total operating expenses 23,107 22,235 89,574 86,449
Loss from operations (1,611) (6,179) (22,158) (31,161)
Other expense, net:        
Interest expense (670) (1,025) (2,055) (6,436)
Other (expense) income (113) (233) (837) 30
Total other expense, net (783) (1,258) (2,892) (6,406)
Loss before income taxes (2,394) (7,437) (25,050) (37,567)
Provision for income taxes (416) (305) (863) (651)
Net loss attributable to common stockholders   $ (2,810)$ (7,742)$ (25,913)$ (38,218)
Net loss per share attributable to common stockholders, basic and diluted$ (0.07)$ (0.19)$ (0.62)$ (1.24)
Shares used in computing net loss per share attributable to common stockholders, basic and diluted 42,032 40,819 41,647 30,740



(In thousands)

 As of December 31,
Current assets:    
Cash and cash equivalents$ 38,190$ 45,294
Accounts receivable, net 32,084 27,743
Inventory 16,580 19,843
Prepaid expenses and other 3,655 2,118
Total current assets 90,509 94,998
Property and equipment, net 24,853 25,541
Other assets 1,307 1,752
Total assets$ 116,669$ 122,291
Current liabilities:    
Accounts payable$ 7,363$ 11,272
Accrued liabilities 19,722 19,266
Deferred revenues 2,773 933
Current portion of term loans 3,507 2,384
Total current liabilities 33,365 33,855
Long-term liabilities:    
Deferred revenues 11,284 7,537
Warranty obligations 25,490 15,260
Other liabilities 1,154 307
Term loans 5,170 8,677
Total long-term liabilities 43,098 31,781
Total liabilities 76,463 65,636
Commitments and contingencies    
Stockholders' equity:    
Preferred stock
Common stock
Additional paid-in capital 192,916 183,629
Accumulated deficit (152,939) (127,026)
Accumulated other comprehensive income 229 52
Total stockholders' equity 40,206 56,655
Total liabilities and stockholders' equity$ 116,669$ 122,291



(In thousands)

 Year Ended

December 31,
Cash flows from operating activities:    
Net loss$ (25,913)$ (38,218)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 6,981 5,568
Provision for doubtful accounts 885 1,068
Net loss on disposal of assets 82 120
Non-cash interest expense 429 4,777
Stock-based compensation 6,849 4,766
Change in fair value of convertible preferred stock warrants (520)
Changes in operating assets and liabilities:    
Accounts receivable (5,226) (11,040)
Inventory 3,263 (8,615)
Prepaid expenses and other assets (1,450) (711)
Accounts payable, accrued liabilities and warranty obligations 7,641 16,774
Deferred revenues 5,587 (18,614)
Net cash used in operating activities (872) (44,645)
Cash flows from investing activities:    
Purchases of property and equipment (6,257) (12,990)
Net cash used in investing activities (6,257) (12,990)
Cash flows from financing activities:    
Proceeds from borrowings under term loans 10,000
Payments of financing costs (1,031)
Repayments of term loans (2,447) (14,103)
Principal payments under capital leases (40) (96)
Proceeds from issuance of common stock under employee stock plans 2,429 255
Proceeds from issuance of common stock in IPO, net of underwriting discounts and commissions 58,609
Payment of offering costs (2,198)
Net cash (used in) provided by financing activities (58) 51,436
Effect of exchange rate changes on cash 83 (31)
Net decrease in cash and cash equivalents (7,104) (6,230)
Cash and cash equivalents—Beginning of period 45,294 51,524
Cash and cash equivalents—End of period$ 38,190$ 45,294



(In thousands, except per share data)

 Three Months Ended

December  31,
Twelve Months Ended

December 31,
Reconciliation of Gross Profit and Gross Margin on a GAAP Basis to Gross Profit and Gross Margin on a Non-GAAP Basis:        
Gross profit on a GAAP basis$ 21,496$ 16,056$ 67,416$ 55,288
Stock-based compensation 129 76 438 196
Gross profit on a non-GAAP basis$ 21,625$ 16,132  $ 67,854$ 55,484
Gross margin on a GAAP basis 32.1% 27.9% 29.0% 25.5%
Gross margin on a non-GAAP basis 32.3% 28.0% 29.1% 25.6%
Reconciliation of Operating Expenses on a GAAP Basis to Operating Expenses on a Non-GAAP Basis:        
Operating expenses on a GAAP basis  $ (23,107)$ (22,235)$ (89,574)$ (86,449)
Stock-based compensation(1) 1,765 1,531 6,411 4,570
Severance costs 84 371 662 371
Operating expenses on a non-GAAP basis$ (21,258)$ (20,333)$ (82,501)$ (81,508)
(1) Includes stock-based compensation as follows:        
Research and development$ 569$ 557$ 2,110$ 1,728
Sales and marketing 495 429 1,812 1,254
General and administrative 701 545 2,489 1,588
Total$ 1,765$ 1,531$ 6,411$ 4,570
Reconciliation of Loss from Operations on a GAAP Basis to Income (Loss) from Operations on a Non-GAAP Basis:        
Loss from operations on a GAAP basis$ (1,611)$ (6,179)$ (22,158)$ (31,161)
Stock-based compensation 1,894 1,607 6,849 4,766
Severance costs 84 371 662 371
Income (loss) from operations on a non-GAAP basis$ 367$ (4,201)$ (14,647)$ (26,024)
Reconciliation of Net Loss on a GAAP Basis to Net Loss on a Non-GAAP Basis:        
Net loss on a GAAP basis$ (2,810)$ (7,742)$ (25,913)$ (38,218)
Stock-based compensation 1,894 1,607 6,849 4,766
Severance costs 84 371 662 371
Non-cash interest expense and write-off of deferred financing costs 107 808 429 4,777
(Gains) losses from convertible preferred stock warrant liability revaluation (520)
Net loss on a non-GAAP basis$ (725)$ (4,956)$ (17,973)$ (28,824)
Reconciliation of Basic and Diluted Net Loss per Share on a GAAP Basis to Basic and Diluted Net Loss per Share on a Non-GAAP Basis:        
Basic and diluted net loss per share on a GAAP basis$ (0.07)$ (0.19)$ (0.62)$ (1.24)
Stock-based compensation 0.05 0.04 0.16 0.16
Severance costs 0.01 0.02 0.01
Non-cash interest expense and write-off of deferred financing costs 0.02 0.01 0.16
(Gains) losses from convertible preferred stock warrant liability revaluation (0.02)
Basic and diluted net loss per share on a non-GAAP basis$ (0.02)$ (0.12)$ (0.43)$ (0.93)

CONTACT: Media Relations Christine Bennett, Enphase Energy Corporate Communications +1-707-763-4784

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Source: Enphase Energy, Inc.

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