Enphase Energy Reports Financial Results for the First Quarter of 2022
04/26/2022 - 04:05 PM
FREMONT, Calif., April 26, 2022 (GLOBE NEWSWIRE) -- Enphase Energy, Inc. (NASDAQ: ENPH), a global energy technology company and the world’s leading supplier of microinverter-based solar and battery systems, announced today financial results for the first quarter of 2022, which included the summary below from its President and CEO, Badri Kothandaraman.
We reported record quarterly revenue of $441.3 million in the first quarter of 2022, along with 41.0% for non-GAAP gross margin. We shipped approximately 2,838,693 microinverters, or 1,029 megawatts DC, and 120.4 megawatt hours of Enphase IQ™ Batteries.
Financial highlights for the first quarter of 2022 are listed below.
Record quarterly revenue of $441.3 million GAAP gross margin of 40.1% ; non-GAAP gross margin of 41.0% GAAP operating income of $61.8 million ; non-GAAP operating income of $114.5 million GAAP net income of $51.8 million ; non-GAAP net income of $109.7 million GAAP diluted earnings per share of $0.37; non-GAAP diluted earnings per share of $0.79 Cash flow from operations of $102.4 million Ending cash, cash equivalents, and marketable securities balance of $1.1 billion Our revenue and earnings for the first quarter of 2022 are provided below, compared with those of the prior quarter and the year ago quarter:
(In thousands, except per share data and percentages)
GAAP Non-GAAP Q1 2022 Q4 2021 Q1 2021 Q1 2022 Q4 2021 Q1 2021 Revenue $ 441,292 $ 412,719 $ 301,754 $ 441,292 $ 412,719 $ 301,754 Gross margin 40.1 % 39.6 % 40.7 % 41.0 % 40.2 % 41.1 % Operating expenses $ 115,149 $ 105,619 $ 61,563 $ 66,250 $ 68,182 $ 43,699 Operating income $ 61,824 $ 57,695 $ 61,386 $ 114,529 $ 97,725 $ 80,232 Net income $ 51,821 $ 52,591 $ 31,698 $ 109,670 $ 102,779 $ 78,702 Basic EPS $ 0.39 $ 0.39 $ 0.24 $ 0.82 $ 0.76 $ 0.60 Diluted EPS $ 0.37 $ 0.37 $ 0.22 $ 0.79 $ 0.73 $ 0.56
Our total revenue increased 7% compared to the fourth quarter of 2021. Our microinverter unit shipments were down 6% , compared to the fourth quarter of 2021. Our IQ Battery shipments were up 20% , compared to the fourth quarter of 2021. Our non-GAAP gross margin was 41.0% in the first quarter of 2022, compared to 40.2% in the fourth quarter of 2021, driven by reduced expedite costs.
Non-GAAP operating expenses were $66.3 million in the first quarter of 2022, compared to $68.2 million in the fourth quarter of 2021, primarily due to lower marketing spend. Non-GAAP operating income was $114.5 million in the first quarter of 2022, compared to $97.7 million in the fourth quarter of 2021.
We exited the first quarter of 2022 with $1.1 billion in cash, cash equivalents, and marketable securities and generated $102.4 million in cash flow from operations in the first quarter of 2022. Capital expenditures were $12.4 million in the first quarter of 2022, compared to $13.2 million in the fourth quarter of 2021.
Shipments of IQ8™ Microinverters continued to ramp strongly in the first quarter of 2022. IQ8 Microinverters can form a microgrid during a power outage using only sunlight, providing backup power even without a battery. IQ8’s grid-forming technology eliminates traditional ratio requirements between solar system size and battery size. And, with our Sunlight Jump Start™ feature, IQ8 Microinverters can restart a home energy system using sunlight only after prolonged grid outages that may result in a fully depleted battery.
Shipments of IQ™ Batteries increased to 120.4 megawatt hours in the first quarter of 2022, compared to 100.2 megawatt hours in the fourth quarter of 2021. We shipped batteries to the U.S., Germany, and Belgium during the first quarter, and continued to make several updates to improve the installer and homeowner experience. We now have more than 1,300 installers in the U.S. that are certified to install our batteries.
In March of 2022, we acquired SolarLeadFactory LLC, which provides high-quality leads to solar installers in the U.S. Our objective is to substantially increase lead volumes and improve conversion rates to drive down the customer acquisition costs for our installers. This was our fourth acquisition to strengthen the installer platform, with the prior acquisitions focused on solar design and proposal software, permitting services, and operations and maintenance (O&M) software. We aim to create an end-to-end installer platform to simplify installers’ lives by reducing soft costs and manual processes.
BUSINESS HIGHLIGHTS
On Feb. 28, 2022, Enphase Energy announced steady growth in its Enphase Installer Network (EIN) in Victoria, Australia due to market-leading partner support, state-run initiatives, and growing homeowner demand for safer, smarter, and more reliable solar systems.
On March 21, 2022, Enphase Energy announced that installers in Spain have seen an increase in deployments of residential solar energy systems, powered by IQ7+™ and IQ7A™ Microinverters. Residential solar deployments in Spain are growing exponentially as favorable regulatory developments and high electricity prices are motivating homeowners to make the switch to a more sustainable clean energy generation.
On March 28, 2022, Enphase Energy announced that Vermont-based utility Green Mountain Power (GMP) will offer Enphase® Energy Systems to its customers in a cutting-edge battery lease grid services pilot program. Homeowners can also enroll in GMP’s “Bring Your Own Device” grid services program, which enables customers with their own Enphase Energy Systems to participate and earn an up-front incentive.
On April 4, 2022, Enphase Energy announced it has expanded its nearly 15-year relationship with global diversified manufacturer Flex® . Starting in the first quarter of 2023, Flex’s factory in Timisoara, Romania will begin manufacturing Enphase microinverters for the European market, addressing the region’s rapid growth and demand for residential solar due to rising energy prices and the increased adoption of electric vehicles and heat pump technology.
On April 11, 2022, Enphase Energy announced the launch of its EIN in France. The EIN is a network of highly experienced installers that have a proven track-record of delivering exceptional homeowner experiences using Enphase products.
Enphase Energy recently announced that installers in South Carolina, Iowa, Nevada, Oklahoma, Wisconsin, Oregon, New Jersey, Ohio, and Utah have seen growing deployments of the Enphase Energy System powered by IQ® Microinverters and IQ Batteries.
SECOND QUARTER 2022 FINANCIAL OUTLOOK
For the second quarter of 2022, Enphase Energy estimates both GAAP and non-GAAP financial results as follows:
Revenue to be within a range of $490 million to $520 million , which includes shipments of 130 to 140 megawatt hours of Enphase IQ™ Batteries GAAP gross margin to be within a range of 37.0% to 40.0% ; non-GAAP gross margin to be within a range of 38.0% to 41.0% , excluding stock-based compensation expenses and acquisition related amortization GAAP operating expenses to be within a range of $127.5 million to $130.5 million , including $57.0 million estimated for stock-based compensation expenses and acquisition related costs and amortization Non-GAAP operating expenses to be within a range of $70.5 million to $73.5 million , excluding $57.0 million estimated for stock-based compensation expenses and acquisition related costs and amortization Follow Enphase Online
Use of Non-GAAP Financial Measures
The Company has presented certain non-GAAP financial measures in this press release. To view a description of non-GAAP financial measures used and the non-GAAP reconciliation schedule for the periods presented, click here
Conference Call Information
Enphase Energy will host a conference call for analysts and investors to discuss its first quarter 2022 results and second quarter 2022 business outlook today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). The call is open to the public by dialing (877) 644-1284; participant passcode 9774335. 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 approximately one year. In addition, an audio replay of the conference call will be available by calling (855) 859-2056; participant passcode 9774335, beginning approximately one hour after the call.
Forward-Looking Statements
This press release contains forward-looking statements, including statements related to Enphase Energy’s expectations as to its second quarter of 2022 financial outlook and expense levels; the capabilities, advantages, features and performance of its technology and products, including the ability to simplify and reduce installation time; its business strategies and anticipated demand for and availability of its products and services; the impact to its installation partners and homeowners; the capabilities and performance of its partners; and the manufacture of microinverters in European market to address rapid growth. These forward-looking statements are based on Enphase Energy’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 certain risks and uncertainties including those risks described in more detail in its most recent Annual Report on Form 10-K for the year ended December 31, 2021 and other documents on file with the SEC from time to time and available on the SEC’s website at www.sec.gov . 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, except as required by law.
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 based in Fremont, CA, is the world's leading supplier of microinverter-based solar and battery systems that enable people to harness the sun to make, use, save, and sell their own power—and control it all with a smart mobile app. The company revolutionized the solar industry with its microinverter-based technology and builds all-in-one solar, battery, and software solutions. Enphase has shipped more than 45 million microinverters, and over 2.0 million Enphase-based systems have been deployed in more than 135 countries. For more information, visit www.enphase.com .
© 2022 Enphase Energy, Inc. All rights reserved. Enphase Energy, Enphase, the “e” logo, IQ, IQ7+, IQ7A, IQ8, Sunlight Jump Start, and certain other names and marks are trademarks of Enphase Energy, Inc. Other names are for informational purposes and may be trademarks of their respective owners.
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ENPHASE ENERGY, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
Three Months Ended March 31, 2022 December 31, 2021 March 31, 2021 Net revenues $ 441,292 $ 412,719 $ 301,754 Cost of revenues 264,319 249,405 178,805 Gross profit 176,973 163,314 122,949 Operating expenses: Research and development 35,719 31,589 21,818 Sales and marketing 41,344 44,470 19,622 General and administrative 38,086 29,560 20,123 Total operating expenses 115,149 105,619 61,563 Income from operations 61,824 57,695 61,386 Other income (expense), net Interest income 460 414 73 Interest expense (2,736 ) (12,689 ) (7,329 ) Other income (expense), net (2,141 ) 5,236 573 Loss on partial settlement of convertible notes (1) — (115 ) (56,369 ) Total other expense, net (4,417 ) (7,154 ) (63,052 ) Income before income taxes 57,407 50,541 (1,666 ) Income tax benefit (provision) (5,586 ) 2,050 33,364 Net income $ 51,821 $ 52,591 $ 31,698 Net income per share: Basic $ 0.39 $ 0.39 $ 0.24 Diluted $ 0.37 $ 0.37 $ 0.22 Shares used in per share calculation: Basic 134,327 134,920 131,303 Diluted 144,617 141,480 146,442
(1) Loss on partial settlement of convertible notes of $0.1 million for the three months ended December 31, 2021, primarily relates to the non-cash loss on settlement of $1.1 million remaining aggregate principal amount of the Notes due 2024. Loss on partial settlement of convertible notes of $56.4 million for the three months ended March 31, 2021 primarily relates to the $9.5 million non-cash loss on partial settlement of $87.1 million aggregate principal amount of the Notes due 2024, $9.4 million non-cash loss on partial settlement of $217.7 million aggregate principal amount of the Notes due 2025 and $37.5 million non-cash inducement loss incurred on repurchase of Notes due 2025.
ENPHASE ENERGY, INC. (In thousands) (Unaudited)
March 31, 2022 December 31, 2021 ASSETS Current assets: Cash and cash equivalents $ 251,850 $ 119,316 Marketable securities 811,621 897,335 Accounts receivable, net 358,310 333,626 Inventory 96,436 74,400 Prepaid expenses and other assets 40,566 37,784 Total current assets 1,558,783 1,462,461 Property and equipment, net 85,073 82,167 Operating lease, right of use asset, net 19,442 14,420 Intangible assets, net 103,173 97,758 Goodwill 195,637 181,254 Other assets 120,878 118,726 Deferred tax assets, net 180,291 122,470 Total assets $ 2,263,277 $ 2,079,256 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 104,738 $ 113,767 Accrued liabilities 169,146 157,912 Deferred revenues, current 68,693 62,670 Warranty obligations, current 23,960 19,395 Debt, current 87,219 86,052 Total current liabilities 453,756 439,796 Long-term liabilities: Deferred revenues, noncurrent 202,711 187,186 Warranty obligations, noncurrent 59,619 53,982 Other liabilities 19,259 16,530 Debt, noncurrent 1,196,950 951,594 Total liabilities 1,932,295 1,649,088 Total stockholders’ equity 330,982 430,168 Total liabilities and stockholders’ equity $ 2,263,277 $ 2,079,256
ENPHASE ENERGY, INC. (In thousands) (Unaudited)
Three Months Ended March 31, 2022 December 31, 2021 March 31, 2021 Cash flows from operating activities: Net income $ 51,821 $ 52,591 $ 31,698 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 15,558 10,972 5,558 Provision for doubtful accounts 147 27 14 Loss on partial settlement of convertibles notes — 115 56,369 Deemed repayment of convertible notes attributable to accreted debt discount — (133 ) (15,579 ) Non-cash interest expense 1,979 12,494 7,156 Gain on settlement of debt securities — (6,569 ) — Change in fair value of debt securities 1,116 111 (1,437 ) Stock-based compensation 47,797 37,176 14,844 Deferred income taxes 3,165 (2,451 ) (35,367 ) Changes in operating assets and liabilities: Accounts receivable (24,224 ) (58,091 ) (53,719 ) Inventory (22,036 ) (5,618 ) 6,888 Prepaid expenses and other assets (3,042 ) (8,123 ) (5,040 ) Accounts payable, accrued and other liabilities (1,805 ) 45,396 36,376 Warranty obligations 9,906 5,417 8,640 Deferred revenues 22,061 13,859 19,440 Net cash provided by operating activities 102,443 97,173 75,841 Cash flows from investing activities: Purchases of property and equipment (12,375 ) (13,208 ) (9,940 ) Purchases of marketable securities — (389,466 ) — Maturities of marketable securities 76,735 — — Investments in private companies — — (25,000 ) Settlement of investment in private companies — 26,569 — Business acquisitions, net of cash acquired (24,625 ) (180,413 ) (55,239 ) Net cash provided by (used in) investing activities 39,735 (556,518 ) (90,179 ) Cash flows from financing activities: Issuance of convertible notes, net of issuance costs — — 1,189,388 Purchase of convertible note hedges — — (286,235 ) Sale of warrants — — 220,800 Principal payments and financing fees on debt — (272 ) (1,078 ) Partial repurchase of convertible notes — (935 ) (289,233 ) Repurchase of common stock — (300,000 ) — Proceeds from exercise of equity awards and employee stock purchase plan 404 3,800 214 Payment of withholding taxes related to net share settlement of equity awards (9,344 ) (8,825 ) (9,185 ) Net cash provided by (used in) financing activities (8,940 ) (306,232 ) 824,671 Effect of exchange rate changes on cash and cash equivalents (704 ) (653 ) (702 ) Net increase (decrease) in cash and cash equivalents 132,534 (766,230 ) 809,631 Cash and cash equivalents—Beginning of period 119,316 885,546 679,379 Cash and cash equivalents —End of period $ 251,850 $ 119,316 $ 1,489,010
ENPHASE ENERGY, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In thousands, except per share data and percentages) (Unaudited)
Three Months Ended March 31, 2022 December 31, 2021 March 31, 2021 Gross profit (GAAP) $ 176,973 $ 163,314 $ 122,949 Stock-based compensation 2,507 2,409 982 Acquisition related amortization 1,299 184 — Gross profit (Non-GAAP) $ 180,779 $ 165,907 $ 123,931 Gross margin (GAAP) 40.1 % 39.6 % 40.7 % Stock-based compensation 0.6 % 0.6 % 0.4 % Acquisition related amortization 0.3 % — % — % Gross margin (Non-GAAP) 41.0 % 40.2 % 41.1 % Operating expenses (GAAP) $ 115,149 $ 105,619 $ 61,563 Stock-based compensation (1) (45,290 ) (34,767 ) (13,862 ) Acquisition related expenses and amortization (3,609 ) (2,670 ) (4,002 ) Operating expenses (Non-GAAP) $ 66,250 $ 68,182 $ 43,699 (1) Includes stock-based compensation as follows: Research and development $ 13,729 $ 11,712 $ 5,749 Sales and marketing 13,057 13,090 3,537 General and administrative 18,504 9,965 4,576 Total $ 45,290 $ 34,767 $ 13,862 Income from operations (GAAP) $ 61,824 $ 57,695 $ 61,386 Stock-based compensation 47,797 37,176 14,844 Acquisition related expenses and amortization 4,908 2,854 4,002 Income from operations (Non-GAAP) $ 114,529 $ 97,725 $ 80,232 Net income (GAAP) $ 51,821 $ 52,591 $ 31,698 Stock-based compensation 47,797 37,176 14,844 Acquisition related expenses and amortization 4,908 2,854 4,002 Non-cash interest expense 1,979 12,494 7,156 Loss on partial settlement of convertible notes — 115 56,369 Non-GAAP income tax adjustment 3,165 (2,451 ) (35,367 ) Net income (Non-GAAP) $ 109,670 $ 102,779 $ 78,702 Net income per share, basic (GAAP) $ 0.39 $ 0.39 $ 0.24 Stock-based compensation 0.36 0.28 0.11 Acquisition related expenses and amortization 0.04 0.02 0.03 Non-cash interest expense 0.01 0.09 0.05 Loss on partial settlement of convertible notes — — 0.43 Non-GAAP income tax adjustment 0.02 (0.02 ) (0.26 ) Net income per share, basic (Non-GAAP) $ 0.82 $ 0.76 $ 0.60 Shares used in basic per share calculation GAAP and Non-GAAP 134,327 134,920 131,303 Net income per share, diluted (GAAP) $ 0.37 $ 0.37 $ 0.22 Stock-based compensation 0.34 0.27 0.11 Acquisition related expenses and amortization 0.04 0.02 0.03 Non-cash interest expense 0.02 0.09 0.05 Loss on partial settlement of convertible notes — — 0.40 Non-GAAP income tax adjustment 0.02 (0.02 ) (0.25 ) Net income per share, diluted (Non-GAAP) (2) $ 0.79 $ 0.73 $ 0.56 Shares used in diluted per share calculation GAAP 144,617 141,480 146,442 Shares used in diluted per share calculation Non-GAAP (3) 139,289 140,680 141,746 Net cash provided by operating activities (GAAP) $ 102,443 $ 97,173 $ 75,841 Purchases of property and equipment (12,375 ) (13,208 ) (9,940 ) Deemed repayment of convertible notes due 2024 and notes due 2025 attributable to accreted debt discount — 133 15,579 Free cash flow (Non-GAAP) $ 90,068 $ 84,098 $ 81,480
(2) Calculation of non-GAAP diluted net income per share for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021, excludes convertible notes due 2023 interest expense, net of tax of less than $0.1 million in each period from non-GAAP net income.
(3) Effect of dilutive in-the-money portion of convertible senior notes and warrants are included in the GAAP weighted-average diluted shares in periods where the Company has GAAP net income. The Company excluded the in-the-money portion of convertible notes due 2024 totaling 38 thousand shares and 2,984 thousand shares in the three months ended December 31, 2021 and March 31, 2021, respectively, from non-GAAP weighted-average diluted shares as the Company entered into convertible note hedge transactions that reduce potential dilution to the Company’s common stock upon any conversion of the notes due 2024. The Company excluded the in-the-money portion of convertible notes due 2025 totaling 1,253 thousand shares, 763 thousand shares and 1,713 thousand shares in the three months ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively, from non-GAAP weighted-average diluted shares as the Company entered into convertible note hedge transactions that reduce potential dilution to the Company’s common stock upon any conversion of the notes due 2025.
