Enphase Energy, Inc. (NASDAQ: ENPH), a global energy technology company and the world’s leading supplier of micro inverter-based solar and battery systems, announced today’s financial results for the fourth quarter of 2021.
Enphase, which makes microinverters and backup energy storage for solar systems, said sales jumped 17% quarter over quarter despite ongoing supply constraints and logistical challenges. The company also issued upbeat guidance.
“Our overall customer demand for Q1 is quite robust for both microinverters and batteries,” CEO Badri Kothandaraman said on the company’s earnings call. “The component availability is certainly better than what we experienced last year.”
Kothandaraman said the issues the company continues to face are global, rather than company-specific.
“We are quite optimistic that our supply will catch up to demand during the year,” he said, despite ongoing tight inventory for the company’s energy storage products.
Even in an inflationary environment, the company reported a gross margin of 40.2% during the latest quarter, down slightly from the 40.8% reported during the third quarter.
Shares of Enphase had been down 21% in 2022 through Tuesday’s close. The company and the solar industry broadly have faced a number of headwinds recently, including the stalled Build Back Better plan. A potential cut to California’s solar incentive program and a broad market rotation out of growth names and into value.
Financial Highlights
Total revenue increased 17%, compared to the third quarter of 2021. We were able to meet the surge in customer demand while successfully navigating supply constraints and logistics challenges. Strong demand for our IQ™ Microinverters continued in the fourth quarter of 2021.
While shipments of our IQ Batteries increased approximately 53%, compared to the third quarter of 2021. Our non-GAAP gross margin was 40.2% in the fourth quarter of 2021 as compared to 40.8% in the third quarter of 2021, primarily due to product mix.
Non-GAAP operating expenses increased to $68.2 million in the fourth quarter of 2021, compared to $57.3 million in the prior quarter, primarily due to additional investment in product launches, R&D, and IT infrastructure.
NonGAAP operating income was $97.7 million in the fourth quarter of 2021 as compared to $85.9 million in the third quarter of 2021.
They exited the fourth quarter of 2021 with $1.0 billion in cash, cash equivalents, and marketable securities and generated $97.2 million in cash flow from operations in the fourth quarter of 2021.
Capital expenditures were $13.2 million in the fourth quarter of 2021 as compared to $12.7 million in the third quarter of 2021.
FIRST QUARTER 2022 FINANCIAL OUTLOOK
For the first quarter of 2022, Enphase Energy estimates both GAAP and non-GAAP financial results as follows:
Revenue to be within a range of $420 million to $440 million, which includes shipments of 110 to 120-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
ENPHASE ENERGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
| Three Months Ended | Year Ended | |||||||||||||||||||
| December 31, 2021 |
September 30, 2021 |
December 31, 2020 |
December 31, 2021 |
December 31, 2020 |
||||||||||||||||
| Net revenues | $ | 412,719 | $ | 351,519 | $ | 264,839 | $ | 1,382,049 | $ | 774,425 | ||||||||||
| Cost of revenues (1) | 249,405 | 211,161 | 142,901 | 827,627 | 428,444 | |||||||||||||||
| Gross profit | 163,314 | 140,358 | 121,938 | 554,422 | 345,981 | |||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Research and development | 31,589 | 29,411 | 15,801 | 105,526 | 55,921 | |||||||||||||||
| Sales and marketing | 44,470 | 39,296 | 14,139 | 128,974 | 52,927 | |||||||||||||||
| General and administrative | 29,560 | 34,300 | 12,884 | 104,090 | 50,694 | |||||||||||||||
| Total operating expenses | 105,619 | 103,007 | 42,824 | 338,590 | 159,542 | |||||||||||||||
| Income from operations | 57,695 | 37,351 | 79,114 | 215,832 | 186,439 | |||||||||||||||
| Other income (expense), net | ||||||||||||||||||||
| Interest income | 414 | 110 | 673 | 695 | 2,156 | |||||||||||||||
| Interest expense | (12,689 | ) | (12,628 | ) | (5,901 | ) | (45,152 | ) | (21,001 | ) | ||||||||||
| Other income (expense), net | 5,236 | 874 | 503 | 6,050 | (799 | ) | ||||||||||||||
| Loss on partial settlement of convertible notes (2) | (115 | ) | — | (3,037 | ) | (56,497 | ) | (3,037 | ) | |||||||||||
| Change in fair value of derivatives (3) | — | — | — | — | (44,348 | ) | ||||||||||||||
| Total other expense, net | (7,154 | ) | (11,644 | ) | (7,762 | ) | (94,904 | ) | (67,029 | ) | ||||||||||
| Income before income taxes | 50,541 | 25,707 | 71,352 | 120,928 | 119,410 | |||||||||||||||
| Income tax benefit (provision) | 2,050 | (3,898 | ) | 1,639 | 24,521 | 14,585 | ||||||||||||||
| Net income | $ | 52,591 | $ | 21,809 | $ | 72,991 | $ | 145,449 | $ | 133,995 | ||||||||||
| Net income per share: | ||||||||||||||||||||
| Basic | $ | 0.39 | $ | 0.16 | $ | 0.57 | $ | 1.09 | $ | 1.07 | ||||||||||
| Diluted | $ | 0.37 | $ | 0.15 | $ | 0.50 | $ | 1.02 | $ | 0.95 | ||||||||||
| Shares used in per share calculation: | ||||||||||||||||||||
| Basic | 134,920 | 134,721 | 126,980 | 134,025 | 125,561 | |||||||||||||||
| Diluted | 141,480 | 141,220 | 145,990 | 142,878 | 141,918 | |||||||||||||||