Enphase Energy, Inc. (NASDAQ: ENPH), a global energy technology company, delivers smart, easy-to-use solutions that connect solar generation, storage, and management on one intelligent platform. The Company revolutionized solar with its microinverter technology and produces the world’s only truly integrated solar plus storage solution. Enphase has shipped more than 19 million micro inverters, and over 855,000 Enphase systems have been deployed in more than 125 countries.
The company reported a solid fourth quarter for 2018, Enphase reported revenue of $92.3 million. The company had a strong customer demand as its financial strength and robust balance sheet reaffirmed customer confidence. ENPH’ most significant challenge in Q4 was meetings this additional demand due to component shortages that constrained its revenue. Enphase continues to remain fully booked for Q1 2019 and beyond, just as it saw in Q4 2018.
From a liquidity and financial flexibility standpoint, ENPH exited the fourth quarter with a cash balance of $106.2 million net of a $10 million final payment to SunPower. The strong cash balance also enabled the company to repay on January 28, 2019, completely, its high interest bearing senior secured term loan of approximately $39.5 million plus accrued interest and fees.
Recent achievements and catalysts:
- On April 15th, the company announced that over 2,500 homeowners had joined the Enphase Upgrade Program, a service program that gives homeowners several options for upgrading to the latest, more efficient and reliable microinverters from Enphase. This program is for warranty holders of legacy Enphase microinverters and represents the company’s continued commitment to quality and service. Participation in the Enphase Upgrade Program is entirely voluntary, and Enphase continues to stand by the warranties for products in the field.
- On April 8th, the company announced that it has entered into a multi-year supply agreement with Infineon Technologies AG (FSE: IFX / OTCQX: IFNNY) for its power transistors developed using CoolMOS™ C7 Gold (G7) super junction MOSFET technology. The agreement is expected to provide Enphase with an increased supply of high-voltage power transistors starting in the second half of 2019.
- The high demand for power transistors from the electric vehicle (EV) industry has created industry-wide shortages, impacting Enphase’s revenue and gross margin in the past two quarters. With this agreement, Enphase now has access to a dedicated source for 600 V power transistors, backed by a very efficient supply chain.
- On April 3rd, the company announced that it has released its updated Enphase AC Battery (ACB) with a new battery cell supplier and improved Time-Of-Use (TOU) software for customers in Australia, New Zealand and Europe.
- Now that ENPH is financially stable a large portion of the management’ time is spent on profitable top line growth. The management’ plan to achieve this growth is through differentiated products and services. ENPH’ four levers for profitably top line growth remain IQ7 regional expansion, high power and high-performance products, AC modules and Ensemble Solar and Storage technology.
Upcoming presentation/Catalyst: The Company would host a conference call and webcast on Tuesday, April 30, 2019 at 4:30 p.m. Eastern Time to discuss its first quarter 2019 financial results for the period ended March 31, 2019.
Analyst views and brokerage actions: Per www.marketbeat.com, There are currently one sell rating, two hold ratings and 5 buy ratings for the stock, resulting in a consensus rating of “Buy.”
Below are the excerpts of recent ratings by brokerage house:
Enphase Energy Management System
4th Quarter Financial Summary: (In thousands, except per share data and percentage)
Revenue and Profitability: The company’ fourth quarter revenue was $92.3 million, an increase of 18% sequentially and an increase of 16% year-over year. Enphase shipped 257 megawatts DC, or approximately 820,000 microinverters.
Its non-GAAP gross margin was 30.7%, a decrease of 210 basis points from 32.8% in the third quarter. The non-GAAP gross margin was negatively impacted by 4.3%, due to expediting fees related to component shortages. The expedite fees were in the form of air shipments that the company chose to make in order to service its customers. Non-GAAP operating expenses were $19.7 million, compared to $18.6 million in the prior quarter.
Liquidity and financial flexibility: The company exited the fourth quarter with $106.2 million in cash, net of a $10 million final payment to SunPower. Inventory was $16.3 million in the fourth quarter, compared to $17.9 million in the third quarter and $26.0 million in the fourth quarter of 2017.
Outlook: For the first quarter of 2019, Enphase Energy estimates both GAAP and non-GAAP financial results as follows:
- Revenue to be within a range of $90.0 million to $95.0 million
- GAAP and non-GAAP gross margin to be within a range of 31% to 34%
- GAAP operating expenses to be within a range of $25.0 million to $26.0 million, including a total of approximately $4.5 million estimated for stock-based compensation expenses, additional restructuring expenses and acquisition related expenses and amortization
- Non-GAAP operating expenses to be within a range of $20.5 million to $21.5 million, excluding a total of approximately $4.5 million estimated for stock-based compensation expenses, additional restructuring expenses and acquisition related expenses and amortization
Upcoming results: The Company would host a conference call and webcast on Tuesday, April 30, 2019 at 4:30 p.m. Eastern Time to discuss its first quarter 2019 financial results for the period ended March 31, 2019.
Key risk factors and potential stock drivers:
- The upcoming results (to be announced on 30th April 2019) would be a significant near-term catalyst for the company.
- The company’ business risk profile would continue to remain constrained due to the competition and regulated nature of the industry which could restrict its growth and margins to a certain extent.
- Company’ ability to grow its market share and or enter new geographies, expand product offerings and or extend technological innovations would continue to remain a key catalyst over the medium to longer term.
- The stock performance can improve significantly if substantial growth in revenue and profitability strengthen the financial risk profile and overall debt metrics of the company.
- The company’ revenue and operating results for solar energy solutions are difficult to predict and have, in the past, and may, in the future, fluctuate from quarter to quarter as a result of changes in state, federal, or private utility company subsidies, as well as weather, economic trends, shortage of inputs and other factors.
- The markets for the company’ products are highly competitive, and Enphase competes with several traditional inverter manufacturers and new technology start-ups.
- On Friday, April 26th, 2019, ENPH closed at $10.43 (Up by 5.25%), with a substantial volume of 4.4 million shares exchanging hands. Market capitalization is $1.151 billion. The current RSI is trending at 65.06
- In the past 52 weeks, shares of ENPH have traded as low as $3.70 and as high as $10.47
- At $10.43, shares of ENPH are trading above its 50-day moving average (MA) at $9.07 and above its 200-day moving average (MA) at $6.36.
- The present support and resistance levels for the stock are at $9.70 & $10.84 respectively.
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