Enphase Energy, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - May 3, 2016

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Exhibit 99.1
 
Enphase Energy Reports Financial Results for the First Quarter of 2016
PETALUMA, Calif., May 3, 2016—Enphase Energy, Inc. (NASDAQ:ENPH), a global energy technology company, announced today financial results for the first quarter ended March 31, 2016.
Enphase Energy reported total revenue for the first quarter of 2016 of $64.1 million. During the first quarter of 2016, Enphase sold 143MW (AC) or 611,000 microinverters. GAAP gross margin for the first quarter of 2016 was 18.3 percent and non-GAAP gross margin was 18.8 percent.
GAAP operating expenses for the first quarter of 2016 were $30.8 million and non-GAAP operating expenses were $28.1 million. GAAP operating loss for the first quarter of 2016 was $19.1 million and non-GAAP operating loss was $16.0 million. GAAP net loss for the first quarter of 2016 was $18.8 million, or a net loss of $0.41 per share. On a non-GAAP basis, net loss was $15.7 million, or a net loss of $0.34 per share.
“We are gaining market share with several new and existing customer wins in both the U.S. and international markets,” said Paul Nahi, president and CEO of Enphase Energy. “We continue to execute on our cost reduction roadmap that will significantly drive down our product costs. Also, we are making solid progress on the expansion of the Enphase Home Energy Solution with the upcoming launch of the AC Battery storage system. Together, these will drive long-term growth with new and existing partners worldwide.”
Business Outlook
“We expect revenue for the second quarter of 2016 to be within a range of 76 to 82 million dollars,” said Kris Sennesael, CFO of Enphase Energy. “At the midpoint of the range, revenue is expected to be up 23 percent sequentially and megawatt shipments are expected to be up 32 percent sequentially, demonstrating further market share gains. We expect gross margin to be within a range of 17 to 20 percent. We also expect non-GAAP operating expenses for the second quarter of 2016 to be within a range of 27 to 29 million dollars.”
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 exclude or include 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 first quarter 2016 results and second quarter 2016 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 82977173. 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 pass code 82977173 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 future financial performance, ability to drive down costs, market demands for its microinverters and future products, competitive position and advantages of its technology. 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 broader 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 and pricing 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, including distribution inventory levels, 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, 2015, which is 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 March 31, 2016, which will be filed with the SEC in the second quarter of 2016. All information set forth in this press release and its attachments is as of May 3, 2016. 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, a global energy technology company, is leading the charge to bring smart, connected solar energy to every home, business and community. The company delivers simple, innovative and reliable energy management solutions that advance the worldwide potential of renewable energy. Enphase has shipped approximately 11 million microinverters, and over 460,000 Enphase residential and commercial systems have been deployed in more than 100 countries. For more information, visit www.enphase.com.

Enphase Energy®, the Enphase logo and other trademarks or service names are the trademarks of Enphase Energy, Inc.

###
Contact
Christina Carrabino
Enphase Energy, Inc.
Investor Relations
ir@enphaseenergy.com
+1-707-763-4784 x7294




ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

 
Three Months Ended
March 31,
 
2016
 
2015
Net revenues
$
64,121

 
$
86,653

Cost of revenues
52,361

 
58,629

Gross profit
11,760

 
28,024

Operating expenses:
 
 
 
Research and development
13,066

 
13,430

Sales and marketing
10,215

 
11,937

General and administrative
7,567

 
8,205

Total operating expenses
30,848

 
33,572

Loss from operations
(19,088
)
 
(5,548
)
Other income (expense), net:
 
 
 
Interest expense
(152
)
 
(78
)
Other income (expense)
681

 
(527
)
Total other income (expense), net
529

 
(605
)
Loss before income taxes
(18,559
)
 
(6,153
)
Provision for income taxes
(236
)
 
(167
)
Net loss
$
(18,795
)
 
$
(6,320
)
Net loss per share, basic and diluted
$
(0.41
)
 
$
(0.14
)
Shares used in computing net loss per share, basic and diluted
46,209

 
43,950





1


ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

 
March 31,
2016
 
December 31,
2015
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
13,016

 
$
28,452

Accounts receivable, net
47,056

 
46,099

Inventory
45,576

 
40,800

Prepaid expenses and other assets
7,237

 
6,417

Total current assets
112,885

 
121,768

Property and equipment, net
32,963

 
32,118

Goodwill
3,745

 
3,745

Intangibles, net
2,036

 
2,220

Other assets
6,891

 
5,677

Total assets
$
158,520

 
$
165,528

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
24,293

 
$
25,569

Accrued liabilities
30,078

 
26,364

Deferred revenues
5,575

 
3,915

Borrowings under revolving credit facility
20,000

 
17,000

Total current liabilities
79,946

 
72,848

Long-term liabilities:
 
 
 
Deferred revenues, noncurrent
27,723

 
25,115

Warranty obligations, noncurrent
23,008

 
23,475

Other liabilities
2,283

 
2,641

Total liabilities
132,960

 
124,079

Commitments and contingencies
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock
—

 
—

Common stock
—

 
—

Additional paid-in capital
227,832

 
224,732

Accumulated deficit
(201,868
)
 
(183,073
)
Accumulated other comprehensive loss
(404
)
 
(210
)
Total stockholders’ equity
25,560

 
41,449

Total liabilities and stockholders’ equity
$
158,520

 
$
165,528





2


ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Three Months Ended
March 31,
 
2016
 
2015
Cash flows from operating activities:
 
 
 
Net loss
$
(18,795
)
 
$
(6,320
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
2,680

 
2,532

Provision for doubtful accounts
537

 
—

Net loss on disposal of assets
25

 
191

Non-cash interest expense
28

 
39

Stock-based compensation
2,999

 
2,988

Revaluation of contingent consideration liability
—

 
104

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(1,494
)
 
(751
)
Inventory
(4,776
)
 
(13,156
)
Prepaid expenses and other assets
(2,062
)
 
(2,069
)
Accounts payable, accrued and other liabilities
1,341

 
2,528

Deferred revenues
4,268

 
2,416

Net cash used in operating activities
(15,249
)
 
(11,498
)
Cash flows from investing activities:
 
 
 
Purchases of property and equipment
(3,348
)
 
(3,611
)
Net cash used in investing activities
(3,348
)
 
(3,611
)
Cash flows from financing activities:
 
 
 
Proceeds from borrowings under revolving credit facility
10,000

 
—

Payments under revolving credit facility
(7,000
)
 
—

Payments for deferred financing costs
(55
)
 
—

Proceeds from issuance of common stock under employee stock plans
101

 
677

Net cash provided by financing activities
3,046

 
677

Effect of exchange rate changes on cash
115

 
(473
)
Net decrease in cash and cash equivalents
(15,436
)
 
(14,905
)
Cash and cash equivalents—Beginning of period
28,452

 
42,032

Cash and cash equivalents—End of period
$
13,016

 
$
27,127




3


ENPHASE ENERGY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(Unaudited)
 
 
Three Months Ended
March 31,
 
 
2016
 
2015
Gross profit (GAAP)
 
$
11,760

 
$
28,024

Stock-based compensation
 
307

 
264

Gross profit (Non-GAAP)
 
$
12,067

 
$
28,288

 
 
 
 
 
Gross margin (GAAP)
 
18.3
%
 
32.3
%
Stock-based compensation
 
0.5
%

0.3
%
Gross margin (Non-GAAP)
 
18.8
%
 
32.6
%
 
 
 
 
 
Operating expenses (GAAP)
 
$
30,848

 
$
33,572

Stock-based compensation(1)
 
(2,692
)
 
(2,724
)
Amortization of acquisition-related intangibles
 
(45
)
 
—

Revaluation of contingent consideration liability
 
—

 
(104
)
Operating expenses (Non-GAAP)
 
$
28,111

 
$
30,744

 
 
 
 
 
(1) Includes stock-based compensation as follows:
 
 
 
 
Research and development
 
$
1,126

 
$
1,079

Sales and marketing
 
612

 
765

General and administrative
 
954

 
880

Total
 
$
2,692

 
$
2,724

 
 
 
 
 
Loss from operations (GAAP)
 
$
(19,088
)
 
$
(5,548
)
Stock-based compensation
 
2,999

 
2,988

Amortization of acquisition-related intangibles
 
45

 
—

Revaluation of contingent consideration liability
 
—

 
104

Loss from operations (Non-GAAP)
 
$
(16,044
)
 
$
(2,456
)
 
 
 
 
 
Net loss (GAAP)
 
$
(18,795
)
 
$
(6,320
)
Stock-based compensation
 
2,999

 
2,988

Amortization of acquisition-related intangibles
 
45

 
—

Revaluation of contingent consideration liability
 
—

 
104

Non-cash interest expense
 
28

 
39

Net loss (Non-GAAP)
 
$
(15,723
)
 
$
(3,189
)
 
 
 
 
 
Net loss per share, basic and diluted (GAAP)
 
$
(0.41
)
 
$
(0.14
)
Stock-based compensation
 
0.07

 
0.07

Net loss per share, basic and diluted (Non-GAAP)
 
$
(0.34
)
 
$
(0.07
)

4

Enphase Energy, Inc. Reports