Enphase Energy Reports 36% Year-over-Year Revenue Growth in Third Quarter 2012 Financial Results

Enphase Energy Reports 36% Year-over-Year Revenue Growth in Third Quarter 2012
Financial Results

PETALUMA, Calif., Nov. 7, 2012 (GLOBE NEWSWIRE) -- Enphase Energy, Inc.
(Nasdaq:ENPH), today announced financial results for the third quarter ended
September 30, 2012.

Third Quarter 2012 Highlights

  *Record quarterly revenue of $60.8 million, up 36% year-over-year
    
  *Record gross margin of 26.8%, up 770 basis points year-over-year
    
  *Continued gains in market share in U.S. and European markets
    
  *First shipments commenced in the United Kingdom

Total revenues for the third quarter of 2012 were $60.8 million, an increase
of 36 percent when compared to the same prior year period, and an increase of
9 percent compared to the second quarter of 2012. Units sold in the third
quarter of 2012 increased to 431,000, compared to 286,000 in the third quarter
of 2011 and 403,000 in the second quarter of 2012.

Gross profit percentage for the third quarter of 2012 was 26.8 percent, an
increase of 770 basis points compared to 19.1 percent in the third quarter of
2011, and an increase of 240 basis points compared to 24.4 percent in the
second quarter of 2012.

Operating expenses for the third quarter of 2012 were $24.5 million and
non-GAAP operating expenses were $23.1 million. Net loss for the third quarter
of 2012 was $8.9 million, or a loss of $0.22 per share, which compares to a
net loss of $7.2 million in the year-ago quarter. On a non-GAAP basis, the net
loss was $7.4 million for the third quarter of 2012, or a loss of $0.18 per
share, which compares to a net loss of $6.2 million in the year-ago quarter.

"Enphase made excellent progress in the third quarter of 2012. We started
shipping our microinverters into the UK market and launched new initiatives
and tools to broaden our reach into the commercial segment," said Paul Nahi,
CEO of Enphase Energy. "I am proud that we received recognition as a
Technology Pioneer from the World Economic Forum. I'm pleased with the revenue
growth and continuous gross margin expansion, despite a difficult
macroeconomic environment and certain challenges in the European markets as
result of a drastic and sudden reduction in Feed-in Tariffs. We are confident
that microinverters remain poised to become the preferred solution for solar
installations, and that Enphase will lead this transition."

Business Highlights

  *Launched the new Limitless Partnership to help commercial installers by
    offering training, technical design resources, on-site field support and
    expert customer service.
    
  *Introduced new installer tools including a new version of Enlighten
    monitoring software, a new ArrayGun iOS mobile application, the Engage
    Coupler and the Enphase Metering and Management Solution. All of these new
    tools allow installers to reduce their installation times and improve
    their productivity.
    
  *Announced Dynamic Solar as the first authorized UK dealer for the Enphase
    Microinverter System. Enphase recently entered into the UK solar energy
    market and established a regional office there in June.
    
  *Launched the online Enphase Energized AC Solutions Marketplace where solar
    installers can explore AC solutions from some of the world's leading PV
    module brands.

Financing

The Company also announced today it has entered into two transactions which
will provide the Company with additional debt capacity and liquidity. The
first is a $50 million asset-based working capital credit facility with Wells
Fargo Capital Finance, Inc., which replaces the Company's pre-existing $33
million undrawn line of credit. The second is a new $23 million credit
facility, whichis intended to replace the Company's pre-existing $7.4 million
of term debt and provide up to $15.6 million of additional borrowing capacity.
Borrowings under each of the new credit facilities are subject to customary
conditions precedent. 

CFO Kris Sennesael commented, "We are pleased to have completed these
financing transactions. Together they will provide the Company with additional
financial flexibility as we continue to execute on our strategy."

Business Outlook

Enphase Energy expects net revenues for the fourth quarter of 2012 to be
within a range of $52 million to $57 million, and for gross margin to be
within a range of 26.5 percent to 28.0 percent.

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 third quarter results 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
+1-877-644-1284, access code 37742541. A live webcast of the conference call
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 approximately one hour after the
conclusion of the call. To access the replay, parties in the United States and
Canada should call +1-855-859-2056 and enter access code 37742541.
International parties can access the replay at +1-404-537-3406 and should
enter access code 37742541.

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's Securities and Exchange Commission filings and
reports, including its most recent report on Form 10-Q filed on August 13,
2012. 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 investor.enphase.com.

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.
www.enphase.com

The Enphase Energy, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=12730

                                      

ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)


                                    ThreeMonthsEnded  Nine Months Ended
                                     September 30,      September30,
                                    2012      2011      2012       2011
Net revenues                         $60,813  $44,728  $159,110  $92,389
Cost of revenues                     44,489   36,185   119,878   76,391
Gross profit                         16,324   8,543    39,232    15,998
Operating expenses:                                              
Research and development             10,571   6,431    27,068    17,919
Sales and marketing                  7,039    4,567    18,448    11,842
General and administrative           6,911    3,980    18,698    11,119
Total operating expenses             24,521   14,978   64,214    40,880
Loss from operations                 (8,197)  (6,435)  (24,982)  (24,882)
Other expense, net:                                              
Interest income                      3        —       17        4
Interest expense                     (527)    (886)    (5,411)   (1,626)
Other (expense) income               (56)     145      246       (249)
Total other expense, net             (580)    (741)    (5,148)   (1,871)
Loss before income taxes             (8,777)  (7,176)  (30,130)  (26,753)
Provision for income taxes           (130)    —       (346)     —
Net loss attributable to common      $(8,907) $(7,176) $(30,476) $(26,753)
stockholders
Net loss per share attributable to
common stockholders, basic and       $(0.22)  $(4.77)  $(1.11)   $(23.68)
diluted
Shares used in computing net loss
per share attributable to common     40,755   1,503    27,356    1,130
stockholders, basic and diluted

                                      

ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)

                                                          
                                             September30, December31,
                                              2012          2011
ASSETS                                                     
Current assets:                                            
Cash and cash equivalents                     $41,717      $51,524
Accounts receivable, net                      32,734       17,771
Inventory                                     16,650       11,228
Prepaid expenses and other                    7,030        1,264
Total current assets                          98,131       81,787
Property and equipment, net                   24,926       18,411
Other assets                                  1,042        6,044
Total assets                                  $124,099     $106,242
                                                          
LIABILITIES AND STOCKHOLDERS' EQUITY                       
Current liabilities:                                       
Accounts payable                              $15,197      $12,928
Accrued liabilities                           15,331       10,100
Deferred revenues                             769          23,414
Current portion of term loans                 6,844        4,529
Convertible preferred stock warrant liability —           1,399
Total current liabilities                     38,141       52,370
Long-term liabilities:                                     
Deferred revenues                             6,151        3,670
Warranty obligations                          11,904       6,733
Other liabilities                             272          145
Term loans                                    5,103        10,148
Convertible notes                             —           19,202
Total long-term liabilities                   23,430       39,898
Total liabilities                             61,571       92,268
Commitments and contingencies                              
Stockholders' equity:                                      
Convertible preferred stock                   —           93,596
Preferred stock                               —           —
Common stock                                  —           —
Additional paid-in capital                    181,814      9,103
Accumulated deficit                           (119,284)    (88,808)
Accumulated other comprehensive income (loss) (2)          83
Total stockholders' equity                    62,528       13,974
Total liabilities and stockholders' equity    $124,099     $106,242

                                      

ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)


                                                        Nine Months Ended
                                                         September 30,
                                                        2012       2011
Cash flows from operating activities:                              
Net loss                                                 $(30,476) $(26,753)
Adjustments to reconcile net loss to net cash used in              
operating activities:
Depreciation and amortization                            3,938     2,020
Provision for doubtful accounts                          60        64
Net loss on disposal of assets                           110       —
Non-cash interest expense                                3,969     745
Stock-based compensation                                 3,159     1,439
Change in fair value of convertible preferred stock      (520)     273
warrants
Changes in operating assets and liabilities:                       
Accounts receivable                                      (15,023)  (9,609)
Inventory                                                (5,422)   (5,739)
Prepaid expenses and other assets                        (5,448)   (2,005)
Accounts payable, accrued and other liabilities          13,543    14,685
Deferred revenues                                        (20,164)  1,651
Net cash used in operating activities                    (52,274)  (23,229)
Cash flows from investing activities:                              
Purchases of property and equipment                      (11,054)  (9,589)
Net cash used in investing activities                    (11,054)  (9,589)
Cash flows from financing activities:                              
Proceeds from issuance of convertible notes              —        12,500
Proceeds from private placement of common stock          —        1,097
Proceeds from term loans and debt                        2,600     9,248
Term loan and debt issuance costs                        —        (189)
Repayments of term loans                                 (5,522)   (1,381)
Principal payments under capital leases                  (96)      (130)
Proceeds from the exercise of stock options              47        182
Proceeds from issuance of common stock in IPO, net of    58,609    —
underwriting discounts and commissions
Payment of offering costs                                (2,032)   (1,886)
Net cash provided by financing activities                53,606    19,441
Effect of exchange rate changes on cash                  (85)      (94)
Net decrease in cash and cash equivalents                (9,807)   (13,471)
Cash and cash equivalents—Beginning of period            51,524    39,993
Cash and cash equivalents—End of period                  $41,717   $26,522

                                      

ENPHASE ENERGY, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)


                                  ThreeMonthsEnded    Nine Months Ended
                                   September 30,        September30,
                                  2012       2011       2012       2011
Reconciliation of Gross Profit and
Gross Profit Percentage on a GAAP
Basis to Gross Profit and Gross                                  
Profit Percentage on a Non-GAAP
Basis:
Gross profit on a GAAP basis       $16,324   $8,543    $39,232   $15,998
Stock-based compensation           62        11        119       25
Gross profit on a non-GAAP basis   $16,386   $8,554    $39,351   $16,023
                                                                
Net revenues asis                  $60,813   $44,728   $159,110  $92,389
Gross profit on a GAAP basis       26.8%     19.1%     24.7%     17.3%
Gross profit percentage on a       26.9%     19.1%     24.7%     17.3%
non-GAAP basis
                                                                
Reconciliation of Operating
Expenses on a GAAP Basis to                                      
Operating Expenses on a Non-GAAP
Basis:
Operating expenses on a GAAP basis $(24,521) $(14,978) $(64,214) $(40,880)
Stock-based compensation(1)        1,389     572       3,040     1,414
Operating expenses on a non-GAAP   $(23,132) $(14,406) $(61,174) $(39,466)
basis
                                                                
(1) Includes stock-based                                         
compensation as follows:
Research and development           $514      $215      $1,171    $528
Sales and marketing                362       183       826       484
General and administrative         513       174       1,043     402
Total                              $1,389    $572      $3,040    $1,414
                                                                
Reconciliation of Loss from
Operations on a GAAP Basis to Loss                               
from Operations on a Non-GAAP
Basis:
Loss from operations on a GAAP     $(8,197)  $(6,435)  $(24,982) $(24,882)
basis
Stock-based compensation           1,451     583       3,159     1,439
Loss from operations on a non-GAAP $(6,746)  $(5,852)  $(21,823) $(23,443)
basis
                                                                
                                                                
Reconciliation of Net Loss on a
GAAP Basis to Net Loss on a                                      
Non-GAAP Basis:
Net loss on a GAAP basis revenues  $(8,907)  $(7,176)  $(30,476) $(26,753)
Stock-based compensation           1,451     583       3,159     1,439
Non-cash interest expense          66        529       3,969     745
(Gains) losses from convertible
preferred stock warrant liability  —        (108)     (520)     273
revaluation
Net loss on a non-GAAP basis       $(7,390)  $(6,172)  $(23,868) $(24,296)
                                                                
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     $(0.22)   $(4.77)   $(1.11)   $(23.68)
share on a GAAP basis asis
Stock-based compensation           0.04      0.38      0.11      1.28
Non-cash interest expense          —        0.35      0.15      0.66
(Gains) losses from convertible
preferred stock warrant liability  —        (0.07)    (0.02)    0.24
revaluation
Basic and diluted net loss per     $(0.18)   $(4.11)   $(0.87)   $(21.50)
share on a non-GAAP basis

                                      

ENPHASE ENERGY, INC.

SUPPLEMENTAL OPERATING DATA
                                 
                                 Quarterly Period
                                 3Q12     2Q12     1Q12     4Q11     3Q11
Net revenues (in thousands)       $ 60,813 $ 55,697 $ 42,600 $ 57,134 $ 44,728
Gross profit (in thousands)       16,324  13,601  9,307   13,071  8,543
Gross profit percentage           26.8%  24.4%  21.8%   22.9%   19.1%
Microinverter units shipped (in   431    403    292     389     286
thousands)
Megawatts shipped(1)              92.4   86.0   62.5    82.5    60.6
(1)Represents the productive capacity of microinverters shipped.


CONTACT: Media Relations
         Christine Bennett, Enphase Energy
         Global Corporate Communications Manager
         pr@enphaseenergy.com
         +1-707-763-4784
        
         Or
        
         Investor Relations
         David Niederman, The Blueshirt Group
         +1-415-217-7722

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