Enphase is making money again


From pv magazine USA.

There are a lot of ways to define success, at pv magazine USA it is operating income that is our primary standard when we review quarterly reporting. And by that benchmark, Enphase’s track record – other than in a total of just four quarters since 2007 – has been sub-standard.

In yesterday’s earnings call, the Californian microinverter maker reported operating income of just over $5 million for the final three months of last year to drag the full year figure up to just shy of $1.6 million. Quarterly revenue was $92 million, contributing to $316 million for the year. The company ended 2018 with more than $106 million cash in hand, and Q4 gross margins of 30.5%.

Obviously, the fact Enphase has fundamentally changed the nature of the inverter, has its products on a near-1 million rooftops worldwide, and has stayed in existence for over a decade is an undoubted success. It’s just that success seems to be coming with a stable paycheck these days.

Wall Street was tougher to convince – with Enphase stock down almost 3% in after-hours trading, as the company’s earlier projections of earnings per share proved $0.02 too optimistic. The numbers for this quarter too are showing essentially zero growth due to a component shortage. However, this morning’s market was up more than 8%.

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Enphase shipped 257 MW of inverter capacity – 820,000 units – during the last quarter. The company noted it paid higher costs for certain components – see the aforementioned shortage – that had to be flown rather than shipped. Enphase said that specific expense was a significant driver of quarterly gross margins that were 210 basis points lower in Q4 than in the previous three months, and repeated it is still running 13-15 weeks behind demand and expected the second half of the year to be much more comfortable.

It was noted that Latin American fourth-quarter revenue was down 41% on the previous three months and 14% year-on-year, with the component shortage cited as the largest challenge – seemingly indicating how Enphase rationed product.

On January 28, Enphase repaid in full its high interest bearing senior secured term loan with Tennenbaum Capital Partners. The repayment included a principal amount of approximately $39.5 million plus accrued interest and fees.

The company mentioned high wattage and cell count – 96-cell – products, AC modules and the Ensemble solar line that includes the IQ8 model and energy storage as products to drive future revenue growth. It was noted, however, the Ensemble line is running late and the company now anticipates a “phased” introduction starting in the final quarter, with no significant revenues from the line to be booked in this year.

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