Enphase Energy Reports Strong Fourth Quarter 2012 Operating Results

Enphase Energy Reports Strong Fourth Quarter 2012 Operating Results

PETALUMA, Calif., Feb. 26, 2013 (GLOBE NEWSWIRE) -- Enphase Energy, Inc.
(Nasdaq:ENPH) announced today financial results for the fourth quarter and
fiscal year ended December 31, 2012.

Fourth Quarter 2012 Highlights

  *Revenue of $57.6 million
  *Record gross margin of 27.9 percent, up 500 basis points year-over-year
  *First sequential quarterly decline in operating expenses in the Company's
    history
  *Strong positive cash flow from operations of $7.6 million
  *Shipped over 3,000,000 Enphase microinverters since Company's inception

Enphase Energy reported total revenues for the fourth quarter of $57.6
million. This compares to revenue of $57.1 million for the fourth quarter of
2011, which included approximately $6.5 million of revenue associated with
shipments related to the expiring 1603 grant program. Units sold in the fourth
quarter of 2012 totaled 384,000. During the quarter, the Company also shipped
its 3,000,000^th microinverter since its inception.

GAAP gross margin for the fourth quarter of 2012 was 27.9 percent, an increase
of 500 basis points when compared to 22.9 percent in the fourth quarter of
2011, and an increase of 110 basis points compared to 26.8 percent in the
third quarter of 2012. This was mainly driven by the Company's ongoing cost
reduction efforts along with stable pricing.

GAAP operating expenses for the fourth quarter were $22.2 million and non-GAAP
operating expenses were $20.3 million, which is approximately 12 percent down
from the third quarter of 2012, marking the first sequential decline in
quarterly operating expense.

Fourth quarter of 2012 GAAP net loss was $7.7 million, or a loss of $0.19 per
share. On a non-GAAP basis, the net loss was $5.0 million, or a loss of $0.12
per share.

Cash flow from operations during the fourth quarter was $7.6 million and net
cash flow was $3.6 million. As a result, the Company exited the year with a
total cash balance of $45.3 million, up from the third quarter ending cash
balance of $41.7 million.

"Our fourth quarter results are encouraging on several fronts," commented Paul
Nahi, CEO of Enphase. "We had a significant improvement in operating
performance and continued our gross margin expansion to a new record level. In
addition, the fourth quarter is the first time that operating expenses did not
increase sequentially and strict working capital management resulted in a
positive operating cash flow of $7.6 million. This performance gives us
confidence we will begin to realize leverage from the investments we have made
in our business infrastructure."

Full Year 2012 Highlights

  *Record revenue of $216.7 million, up 45% year-over-year
  *Record gross margin of 25.5%, up 610 basis points year-over-year
  *More than 1.5 million microinverters shipped in 2012, up 50%
    year-over-year
  *Ended 2012 as the #1 inverter brand by market share in the California
    residential market
  *Named World Economic Forum 2013 Technology Pioneer

For the fiscal year 2012, total revenues were $216.7 million, an increase of
45 percent compared to last year. Units sold in 2012 increased to 1.5 million
compared to 1.0 million in 2011. GAAP gross margin for the year was 25.5
percent, an increase of 610 basis points year-over-year. GAAP net loss for the
year totaled $38.2 million, or $1.24 per share. Non-GAAP net loss was $28.8
million, or a loss of $0.93 per share.

"We finished fiscal 2012 with impressive results highlighted by continued
gross margin expansion and significant improvements in cash flow. While
European demand softened in the second half of the year, we continue to make
good progress with our geographic market expansion strategy," said Paul Nahi.
"Our fourth quarter capped a year of improving strategic and financial
performance, underscored by the shipment of our 3,000,000^th inverter. This
demonstrates the widespread acceptance of our microinverter system offering.
Together with the strengthening of our balance sheet attributable to last
April's IPO and the additional credit capacity we have put in place, we are
well positioned entering 2013 to execute our balanced profitable growth
strategy. I am tremendously proud of what we accomplished in our first year as
a public company which was made possible by the hard work and commitment of
our entire Enphase family."

Business Outlook

"Looking forward we expect revenues for the first quarter of 2013 to be within
a range of $43 million to $46 million, and for gross margin to be within a
range of 26 percent to 28 percent," said Kris Sennesael, CFO of Enphase. "The
expected sequential decline in revenue during the first quarter is in line
with normal seasonality. We also expect non-GAAP operating expenses for the
first quarter of 2013 to be approximately flat compared to the fourth quarter
of 2012."

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 results and first quarter 2013
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 87558671. 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 by calling 855-859-2056; participant
passcode 87558671 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's Securities and Exchange Commission (SEC) filings
and reports, including its most recent report on Form 10-Q filed on November
13, 2012. 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,
2012, which will be filed with the SEC in the first quarter of 2013. 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 Twelve Months Ended
                                        December 31,      December31,
                                       2012      2011     2012      2011
Net revenues                            $57,568   $57,134  $216,678  $149,523
Cost of revenues                        41,512    44,063   161,390   120,454
Gross profit                            16,056    13,071   55,288    29,069
Operating expenses:                                               
Research and development                8,533     7,180    35,601    25,099
Sales and marketing                     7,525     5,612    25,973    17,454
General and administrative              6,177     4,109    24,875    15,228
Total operating expenses                22,235    16,901   86,449    57,781
Loss from operations                    (6,179)   (3,830)  (31,161)  (28,712)
Other expense, net:                                               
Interest income                         —         —        17        4
Interest expense                        (1,025)   (1,380)  (6,436)   (3,006)
Other (expense) income                  (233)     (327)    13        (576)
Total other expense, net                (1,258)   (1,707)  (6,406)   (3,578)
Loss before income taxes                (7,437)   (5,537)  (37,567)  (32,290)
Provision for income taxes              (305)     —        (651)     —
Net loss attributable to common         $(7,742)  $(5,537) $(38,218) $(32,290)
stockholders
Net loss per share attributable to      $(0.19)   $(3.41)  $(1.24)   $(25.73)
common stockholders, basic and diluted
Shares used in computing net loss per
share attributable to common            40,819    1,626    30,740    1,255
stockholders, basic and diluted



ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                             As of December31,
                                             2012       2011
ASSETS                                                  
Current assets:                                         
Cash and cash equivalents                     $45,294    $51,524
Accounts receivable, net                      27,743     17,771
Inventory                                     19,843     11,228
Prepaid expenses and other                    2,118      1,264
Total current assets                          94,998     81,787
Property and equipment, net                   25,541     18,411
Other assets                                  1,752      6,044
Total assets                                  $122,291   $106,242
LIABILITIES AND STOCKHOLDERS' EQUITY                    
Current liabilities:                                    
Accounts payable                              $11,272    $12,928
Accrued liabilities                           19,266     10,100
Deferred revenues                             933        23,414
Current portion of term loans                 2,384      4,529
Convertible preferred stock warrant liability —          1,399
Total current liabilities                     33,855     52,370
Long-term liabilities:                                  
Deferred revenues                             7,537      3,670
Warranty obligations                          15,260     6,733
Other liabilities                             307        145
Term loans                                    8,677      10,148
Convertible notes                             —          19,202
Total long-term liabilities                   31,781     39,898
Total liabilities                             65,636     92,268
Commitments and contingencies                           
Stockholders' equity:                                   
Convertible preferred stock                   —          93,596
Preferred stock                               —          —
Common stock                                  —          —
Additional paid-in capital                    183,629    9,103
Accumulated deficit                           (127,026)  (88,808)
Accumulated other comprehensive income        52         83
Total stockholders' equity                    56,655     13,974
Total liabilities and stockholders' equity    $122,291   $106,242



ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

                                                          Year Ended
                                                           December 31,
                                                          2012      2011
Cash flows from operating activities:                               
Net loss                                                   $(38,218) $(32,290)
Adjustments to reconcile net loss to net cash used in               
operating activities:
Depreciation and amortization                              5,568     3,032
Provision for doubtful accounts                            1,068     127
Net loss on disposal of assets                             120       —
Non-cash interest expense                                  4,777     1,835
Stock-based compensation                                   4,766     2,120
Change in fair value of convertible preferred stock        (520)     321
warrants
Changes in operating assets and liabilities:                        
Accounts receivable                                        (11,040)  (9,874)
Inventory                                                  (8,615)   (6,708)
Prepaid expenses and other assets                          (711)     (1,648)
Accounts payable, accrued and other liabilities            16,774    17,275
Deferred revenues                                          (18,614)  25,443
Net cash used in operating activities                      (44,645)  (367)
Cash flows from investing activities:                               
Purchases of property and equipment                        (12,990)  (14,662)
Net cash used in investing activities                      (12,990)  (14,662)
Cash flows from financing activities:                               
Proceeds from issuance of convertible notes                —         19,726
Proceeds from private placement of common stock            —         1,858
Proceeds from borrowings under term loans                  10,000    9,898
Payments of financing costs                                (1,031)   (573)
Repayments of term loans                                   (14,103)  (1,863)
Principal payments under capital leases                    (96)      (169)
Proceeds from issuance of common stock under employee      255       190
stock plans
Proceeds from issuance of common stock in IPO, net of      58,609    —
underwriting discounts and commissions
Payment of offering costs                                  (2,198)   (2,585)
Net cash provided by financing activities                  51,436    26,482
Effect of exchange rate changes on cash                    (31)      78
Net (decrease) increase in cash and cash equivalents       (6,230)   11,531
Cash and cash equivalents—Beginning of period              51,524    39,993
Cash and cash equivalents—End of period                    $45,294   $51,524



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

                                       ThreeMonths       Twelve Months Ended
                                      Ended               December 31,
                                       December 31,
                                      2012      2011     2012      2011
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           $16,056   $13,071   $55,288   $29,069
Stock-based compensation               76        14        196       39
Gross profit on a non-GAAP basis       $16,132   $13,085   $55,484   $29,108
Gross margin on a GAAP basis           27.9%     22.9%     25.5%     19.4%
Gross margin on a non-GAAP basis       28.0%     22.9%     25.6%     19.5%
Reconciliation of Operating Expenses
on a GAAP Basis to Operating Expenses                             
on a Non-GAAP Basis:
Operating expenses on a GAAP basis     $(22,235) $(16,901) $(86,449) $(57,781)
Stock-based compensation(1)            1,531     667       4,570     2,081
Severance costs                        371       —         371       —
Operating expenses on a non-GAAP basis $(20,333) $(16,234) $(81,508) $(55,700)
(1) Includes stock-based compensation                             
as follows:
Research and development               $557      $267      $1,728    $795
Sales and marketing                    429       187       1,254     671
General and administrative             545       213       1,588     615
Total                                  $1,531    $667      $4,570    $2,081
Reconciliation of Loss from Operations
on a GAAP Basis to Loss from                                      
Operations on a Non-GAAP Basis:
Loss from operations on a GAAP basis   $(6,179)  $(3,830)  $(31,161) $(28,712)
Stock-based compensation               1,607     681       4,766     2,120
Severance costs                        371       —         371       —
Loss from operations on a non-GAAP     $(4,201)  $(3,149)  $(26,024) $(26,592)
basis
Reconciliation of Net Loss on a GAAP                              
Basis to Net Loss on a Non-GAAP Basis:
Net loss on a GAAP basis               $(7,742)  $(5,537)  $(38,218) $(32,290)
Stock-based compensation               1,607     681       4,766     2,120
Severance costs                        371       —         371       —
Non-cash interest expense and          808       1,090     4,777     1,835
write-off of deferred financing costs
(Gains) losses from convertible
preferred stock warrant liability      —         48        (520)     321
revaluation
Net loss on a non-GAAP basis           $(4,956)  $(3,718)  $(28,824) $(28,014)
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   $(0.19)   $(3.41)   $(1.24)   $(25.73)
on a GAAP basis
Stock-based compensation               0.04      0.42      0.16      1.69
Severance costs                        0.01      0.00      0.01      0.00
Non-cash interest expense and          0.02      0.67      0.16      1.46
write-off of deferred financing costs
(Gains) losses from convertible
preferred stock warrant liability      —         0.03      (0.02)    0.26
revaluation
Basic and diluted net loss per share   $(0.12)   $(2.29)   $(0.93)   $(22.32)
on a non-GAAP basis



ENPHASE ENERGY, INC.
SUPPLEMENTAL OPERATING DATA
(Unaudited)

                                      Quarterly Period
                                      4Q12    3Q12    2Q12    1Q12    4Q11
Net revenues (in thousands)            $57,568 $60,813 $55,697 $42,600 $57,134
Gross profit (in thousands)            16,056  16,324  13,601  9,307   13,071
Gross margin                           27.9%   26.8%   24.4%   21.8%   22.9%
Microinverter units shipped (in        384     431     403     292     389
thousands)
Megawatts shipped(1)                   82.6    92.4    86.0    62.5    82.5

(1) Represents the productive capacity of microinverters shipped.

CONTACT: Media Relations
         Christine Bennett, Enphase Energy
         Global Corporate Communication Manager
         pr@enphaseenergy.com
         +1-707-763-4784

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