Enphase is making money again

Enphase noted $92 million in revenue in Q4’18, and over $106 million in cash on hand as the company reported quarterly and annual positive operating incomes – its first in years. Enphase is completely booked for all of Q1 and seemingly into the late spring months.

February 27, 2019 John Fitzgerald Weaver

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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 standard, Enphase’s existence – other than four quarters in total since 2007 – have been sub-standard.

In yesterday’s earnings call, Enphase reported an positive operating income of just over $5 million for Q4’18, and just under $1.6 million on the year. Quarter revenue was $92 million, totaling just over $316 million on the year. The company ended the year with over $106 million cash on hand, and Q4 gross margins at 30.5%.

Obviously though, the fact that Enphase has fundamentally changed what an inverter is, is approaching being on 1 million rooftops globally, and has actually stayed in existence for over a decade is an absolutely smashing success. Its just that success is coming with a stable paycheck these days.

Wall Street was initially a bit dismayed – down almost 3% – in after hour trading yesterday, as Enphase’s earlier projections of earnings per share were 2¢ higher than were reported. As well, Q1’19 numbers showing essentially zero growth due to a component shortage. However, the morning market is up over 8%, an 11% swing from the after hours group.

Enphase shipped 257 MW of inverters in 820,000 individual units during Q4. The company noted that it paid higher costs for certain components – see aforementioned shortage – that had to be flown, versus shipped. Enphase says this specific expense was a significant driver of the lower quarterly gross margins (210 basis points lower in Q4 vs Q3), and repeated that they were still running 13-15 weeks behind customer demand, and that the second half of the year would be much more comfortable for the company.

It was noted that Latin America fourth quarter revenue was down 41% sequentially and down 14% year-on-year, with the component shortage being cited as the largest challenge – seemingly telling us how Enphase managed to ration product.

Also, and a seeming reason to celebrate as much as any of the other successes, on January 28, 2019, 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, high cell count (96 cells) 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 that the Ensemble line is running late, and they now anticipate a “phased” introduction starting in Q4’19 – and no significant revenues from the line to be booked in 2019.

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