Enphase Energy Improves Financial Performance Driven by Strong Business Momentum

Enphase Energy Improves Financial Performance Driven by Strong Business
Momentum

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 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 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's Securities 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 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




ENPHASE ENERGY, INC.
                                                                
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
                                                                
                                  ThreeMonthsEnded    Twelve Months Ended
                                   December 31,         December31,
                                  2013        2012      2013       2012
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     $ (2,810) $ (7,742) $ (25,913) $ (38,218)
stockholders
Net loss per share attributable to
common stockholders, basic and     $ (0.07)    $ (0.19)  $ (0.62)   $ (1.24)
diluted
Shares used in computing net loss
per share attributable to common   42,032      40,819    41,647     30,740
stockholders, basic and diluted

                                      



ENPHASE ENERGY, INC.
                                                   
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                                   
                                          As of December31,
                                          2013      2012
ASSETS                                              
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
LIABILITIES AND STOCKHOLDERS' EQUITY               
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

                                      



ENPHASE ENERGY, INC.
                                                                  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                                                                  
                                                        Year Ended
                                                         December 31,
                                                        2013       2012
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      —          (520)
warrants
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       7,641      16,774
obligations
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    2,429      255
stock plans
Proceeds from issuance of common stock in IPO, net of    —          58,609
underwriting discounts and commissions
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

                                      



ENPHASE ENERGY, INC.
                                                                
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
                                                                
                                 ThreeMonthsEnded     Twelve Months Ended
                                  December 31,          December 31,
                                 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      $ 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      $ (23,107) $ (22,235) $ (89,574) $ (86,449)
basis
Stock-based compensation(1)       1,765       1,531      6,411      4,570
Severance costs                   84          371        662        371
Operating expenses on a non-GAAP  $ (21,258)  $ (20,333) $ (82,501) $ (81,508)
basis
(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    $ (1,611)   $ (6,179)  $ (22,158) $ (31,161)
basis
Stock-based compensation          1,894       1,607      6,849      4,766
Severance costs                   84          371        662        371
Income (loss) from operations on  $ 367       $ (4,201)  $ (14,647) $ (26,024)
a non-GAAP basis
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   107         808        429        4,777
costs
(Gains) losses from convertible
preferred stock warrant liability —           —          —          (520)
revaluation
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    $ (0.07)    $ (0.19)   $ (0.62)   $ (1.24)
share on a GAAP basis
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   —           0.02       0.01       0.16
costs
(Gains) losses from convertible
preferred stock warrant liability —           —          —          (0.02)
revaluation
Basic and diluted net loss per    $ (0.02)    $ (0.12)   $ (0.43)   $ (0.93)
share on a non-GAAP basis

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

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