Enphase Energy Reports Record Third Quarter 2013 Financial Results

Enphase Energy Reports Record Third Quarter 2013 Financial Results

PETALUMA, Calif., Nov. 5, 2013 (GLOBE NEWSWIRE) -- Enphase Energy, Inc.
(Nasdaq:ENPH) announced today financial results for the third quarter ended
September 30, 2013.

Third Quarter 2013 Highlights

  *Record revenue of $62.0 million, up 7% sequentially
  *Record non-GAAP gross margin of 28.3%, up 140 basis points year-over-year
  *Non-GAAP operating expenses flat for the fourth consecutive quarter at
    $20.4 million
  *Shipped 60,000 units of the fourth-generation microinverter system

Enphase Energy reported total revenue for the third quarter of $62.0 million,
an increase of 7 percent compared to the second quarter of 2013. Units sold in
the third quarter of 2013 totaled 426,000 or 94MW.

GAAP gross margin for the third quarter of 2013 was 28.1 percent. Non-GAAP
gross margin was 28.3 percent, an increase of 140 basis points when compared
to 26.9 percent in the third quarter of 2012.

GAAP operating expenses for the third quarter were $22.8 million. Non-GAAP
operating expenses were $20.4 million, which is below the $22.9 million of the
third quarter in 2012, and flat compared to the three prior quarters.

GAAP net loss was $6.3 million for the third quarter of 2013, or a loss of
$0.15 per share. On a non-GAAP basis, the net loss was $3.7 million, or a loss
of $0.09 per share.

The Company exited the quarter with a total cash balance of $31.8 million as
cash flow from operations continues to improve.

"We are pleased to announce our third quarter results, which include company
records for revenue and gross margin," commented Paul Nahi, CEO of Enphase.
"Combined with flat operating expense levels and improved cash flow from
operations, this demonstrates our ability to successfully execute our business
strategy and progress towards profitability and sustainable positive cash

Mr. Nahi continued, "In addition to our strong third quarter financial
performance, we have experienced a great response to our new fourth-generation
microinverter system, of which we shipped 60,000 units during the third
quarter. The product is now being shipped throughout North America, and we
continue to ramp production as our customers transition to the
fourth-generation system. The general availability of our most efficient,
rigorously tested and robust Enphase system, along with the shipment of our
four millionth microinverter, mark additional milestones for Enphase as the
world's leading microinverter systems provider."

Business Highlights

  *Announced general availability throughout North America of the
    fourth-generation microinverter system, featuring the M250 microinverter
    and Enlighten software platform enhancements.
  *Enphase microinverters installed in a 3MW distributed solar project for
    the San Diego Unified School District, exemplifying microinverter
    flexibility with 125 individual solar arrays of varying size and
  *Over 9,000 microinverters deployed in a 2.3MW three-phase solar project at
    Vine Fresh Produce, in Ontario, Canada, which is the largest rooftop solar
    PV array as part of the province's Feed-in-Tariff (FIT) program.
  *Announced a Clinton Global Initiative Commitment to Action to provide a
    clean, reliable energy alternative in Abuja, Nigeria, through piloting an
    innovative solar energy microgrid system with Enphase microinverters.

Business Outlook

"Looking forward, we expect revenue for the fourth quarter of 2013 to be
within a range of $62 million to $65 million," said Kris Sennesael, CFO of
Enphase. "We expect fourth quarter gross margin to be within a range of 29
percent to 32 percent, as we continue the transition from our third to
fourth-generation microinverter system and drive further product cost
improvements. We expect non-GAAP operating expenses for the fourth quarter of
2013 to be roughly flat compared to the third quarter of 2013."

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 its 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 and fourth 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
87113926. 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 passcode 871113926 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; changes in warranty costs and
reserves resulting from changes in estimates; 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 included under the captions "Risk
Factors" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's Annual Report on Form 10-K for the
year ended December 31, 2012, and Form 10-Q for the quarter ended June 30,
2013, which are 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, 2013, which will be filed with the SEC in the fourth quarter of
2013. All information set forth in this press release and its attachments is
as of November 5, 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.

(In thousands, except per share data)
                                    Three Months Ended  Nine Months Ended
                                     September 30,       September 30,
                                    2013      2012      2013       2012
Net revenues                         $62,046 $60,813 $165,790 $159,110
Cost of revenues                     44,611    44,489    119,870    119,878
Gross profit                         17,435    16,324    45,920     39,232
Operating expenses:                                              
Research and development             8,293     10,571    25,803     27,068
Sales and marketing                  8,550     7,039     22,765     18,448
General and administrative           5,937     6,911     17,899     18,698
Total operating expenses             22,780    24,521    66,467     64,214
Loss from operations                 (5,345)   (8,197)   (20,547)   (24,982)
Other expense, net:                                              
Interest expense                     (437)     (527)     (1,385)    (5,411)
Other income (expense)               (378)     (53)      (724)      263
Total other expense, net             (815)     (580)     (2,109)    (5,148)
Loss before income taxes             (6,160)   (8,777)   (22,656)   (30,130)
Provision for income taxes           (141)     (130)     (447)      (346)
Net loss attributable to common      $(6,301) $(8,907) $(23,103) $(30,476)
Net loss per share attributable to
common stockholders, basic and       $(0.15)  $(0.22)  $(0.56)   $(1.11)
Shares used in computing net loss
per share attributable to common     41,777    40,755    41,517     27,356
stockholders, basic and diluted

(In thousands)
                                          September30, December31,
                                           2013          2012
Current assets:                                         
Cash and cash equivalents                  $31,778     $45,294
Accounts receivable, net                   34,744        27,743
Inventory                                  24,392        19,843
Prepaid expenses and other                 3,153         2,118
Total current assets                       94,067        94,998
Property and equipment, net                24,823        25,541
Other assets                               1,420         1,752
Total assets                               $120,310    $122,291
Current liabilities:                                    
Accounts payable                           $15,103     $11,272
Accrued liabilities                        20,909        19,266
Deferred revenues                          2,980         933
Current portion of term loans              3,432         2,384
Total current liabilities                  42,424        33,855
Long-term liabilities:                                  
Deferred revenues                          10,325        7,537
Warranty obligations                       20,932        15,260
Other liabilities                          435           307
Term loans                                 5,861         8,677
Total liabilities                          79,977        65,636
Commitments and contingencies                           
Stockholders' equity:                                   
Preferred stock                            —             —
Common stock                               —             —
Additional paid-in capital                 190,265       183,629
Accumulated deficit                        (150,129)     (127,026)
Accumulated other comprehensive income     197           52
Total stockholders' equity                 40,333        56,655
Total liabilities and stockholders' equity $120,310    $122,291

(In thousands)
                                                        Nine Months Ended
                                                         September 30,
                                                        2013       2012
Cash flows from operating activities:                              
Net loss                                                 $(23,103) $(30,476)
Adjustments to reconcile net loss to net cash used in              
operating activities:
Depreciation and amortization                            5,122      3,938
Provision for doubtful accounts                          665        60
Net loss on disposal of assets                           82         110
Non-cash interest expense                                322        3,969
Stock-based compensation                                 4,955      3,159
Change in fair value of convertible preferred stock      —          (520)
Changes in operating assets and liabilities:                       
Accounts receivable                                      (7,666)    (15,023)
Inventory                                                (4,549)    (5,422)
Prepayment to supplier                                   —          (5,000)
Prepaid expenses and other assets                        (969)      (448)
Accounts payable, accrued and other liabilities          11,855     13,543
Deferred revenues                                        4,835      (20,164)
Net cash used in operating activities                    (8,451)    (52,274)
Cash flows from investing activities:                              
Purchases of property and equipment                      (4,886)    (11,054)
Net cash used in investing activities                    (4,886)    (11,054)
Cash flows from financing activities:                              
Proceeds from term loans and debt                        —          2,600
Repayments of term loans                                 (1,815)    (5,522)
Principal payments under capital leases                  (40)       (96)
Proceeds from issuance of common stock under employee    1,672      47
stock plans
Proceeds from issuance of common stock in IPO, net of    —          58,609
underwriting discounts and commissions
Payment of offering costs                                —          (2,032)
Net cash (used in) provided by financing activities      (183)      53,606
Effect of exchange rate changes on cash                  4          (85)
Net (decrease) increase in cash and cash equivalents     (13,516)   (9,807)
Cash and cash equivalents—Beginning of period            45,294     51,524
Cash and cash equivalents—End of period                  $31,778  $41,717

(In thousands, except per share data)
                                    Three Months Ended  Nine Months Ended
                                     September 30,       September 30,
                                    2013      2012      2013       2012
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         $17,435 $16,324 $45,920  $39,232
Stock-based compensation             137       62        309        119
Gross profit on a non-GAAP basis     $17,572  $16,386  $46,229   $39,351
Gross margin on a GAAP basis         28.1 %    26.8 %    27.7 %     24.7 %
Gross margin on a non-GAAP basis     28.3 %    26.9 %    27.9 %     24.7 %
Reconciliation of Operating Expenses
on a GAAP Basis to Operating                                     
Expenses on a Non-GAAP Basis:
Operating expenses on a GAAP basis   $22,780 $24,521 $66,467  $64,214
Stock-based compensation(1)          (1,908)   (1,389)   (4,646)    (3,040)
Severance costs                      (422)     —         (578)      —
Operating expenses on a non-GAAP     $20,450  $23,132  $61,243   $61,174
(1) Includes stock-based                                         
compensation as follows:
Research and development             $625    $514    $1,541   $1,171
Sales and marketing                  542       362       1,317      826
General and administrative           741       513       1,788      1,043
Total                                $1,908   $1,389   $4,646    $3,040
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 $(5,345) $(8,197) $(20,547) $(24,982)
Stock-based compensation             2,045     1,451     4,955      3,159
Severance costs                      422       —         578        —
Loss from operations on a non-GAAP   $(2,878) $(6,746) $(15,014) $(21,823)
Reconciliation of Net Loss on a GAAP
Basis to Net Loss on a Non-GAAP                                  
Net loss on a GAAP basis             $(6,301) $(8,907) $(23,103) $(30,476)
Stock-based compensation             2,045     1,451     4,955      3,159
Severance costs                      422       —         578        —
Non-cash interest expense            108       66        322        3,969
(Gains) losses from convertible
preferred stock warrant liability    —         —         —          (520)
Net loss on a non-GAAP basis         $(3,726) $(7,390) $(17,248) $(23,868)
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 $(0.15)  $(0.22)  $(0.56)   $(1.11)
on a GAAP basis
Stock-based compensation             0.05      0.04      0.12       0.11
Severance costs                      0.01      —         0.01       —
Non-cash interest expense            —         —         0.01       0.15
(Gains) losses from convertible
preferred stock warrant liability    —         —         —          (0.02)
Basic and diluted net loss per share $(0.09)  $(0.18)  $(0.42)   $(0.87)
on a non-GAAP basis

CONTACT: Christine Bennett, Enphase Energy
         Global Corporate Communication Manager

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