Enphase Energy Reports Financial Results for the Third Quarter of 2021

FREMONT, Calif., Oct. 26, 2021 (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 third quarter of 2021, which included the summary below from its President and CEO, Badri Kothandaraman.

We reported record quarterly revenue of $351.5 million in the third quarter of 2021, along with 40.8% for non-GAAP gross margin. We shipped approximately 2,599,575 microinverters, or 913 megawatts DC, and 65 megawatt hours of Enphase Storage systems.

Financial highlights for the third quarter of 2021 are listed below.

  • Record revenue of $351.5 million
  • GAAP gross margin of 39.9%; non-GAAP gross margin of 40.8%
  • GAAP operating income of $37.4 million; non-GAAP operating income of $85.9 million
  • GAAP net income of $21.8 million, non-GAAP net income of $84.2 million
  • GAAP diluted earnings per share of $0.15; non-GAAP diluted earnings per share of $0.60
  • Cash flow from operations of $113.4 million
  • Ending cash, cash equivalents and marketable securities balance of $1.4 billion

Our revenue and earnings for the third quarter of 2021 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
  Q3 2021   Q2 2021   Q3 2020   Q3 2021   Q2 2021   Q3 2020
Revenue $ 351,519     $ 316,057     $ 178,503     $ 351,519     $ 316,057     $ 178,503  
Gross margin 39.9 %   40.4 %   53.2 %   40.8 %   40.8 %   41.0 %
Operating expenses $ 103,007     $ 68,401     $ 43,222     $ 57,341     $ 51,696     $ 29,571  
Operating income $ 37,351     $ 59,400     $ 51,759     $ 85,932     $ 77,165     $ 43,675  
Net income $ 21,809     $ 39,351     $ 39,362     $ 84,157     $ 74,676     $ 41,760  
Basic EPS $ 0.16     $ 0.29     $ 0.31     $ 0.62     $ 0.55     $ 0.33  
Diluted EPS $ 0.15     $ 0.28     $ 0.28     $ 0.60     $ 0.53     $ 0.30  

Total revenue increased 11% compared to the second quarter of 2021. We worked diligently to meet the surge in customer demand while successfully navigating global component supply constraints and logistics challenges.

Our non-GAAP gross margin was 40.8% in both the third and second quarter of 2021, as higher logistics and expedite costs were partially offset by a price increase on microinverters and cost management. Non-GAAP operating expenses increased to $57.3 million in the third quarter of 2021, compared to $51.7 million in the prior quarter, primarily due to additional investment in R&D and marketing programs, along with increased hiring. Non-GAAP operating income was $85.9 million in the third quarter of 2021, compared to $77.2 million in the second quarter of 2021.

We exited the third quarter of 2021 with $1.4 billion in cash, cash equivalents and marketable securities and generated $113.4 million in cash flow from operations. Capital expenditures were $12.7 million in the third quarter of 2021, compared to $16.4 million in the second quarter of 2021.

Strong demand for our microinverter systems continued in the third quarter of 2021, while shipments of our Enphase Storage systems increased approximately 51%, compared to the second quarter of 2021. Our Load Control feature gained significant adoption during the third quarter. This feature provides homeowners the ability to conserve their energy consumption by shedding non-essential loads during an outage and thereby extending the backup duration. We also made several software and hardware updates to reduce commissioning times.

Product innovation remains at the cornerstone of our growth strategy. Yesterday, we announced our all-new, all-in-one Energy System with IQ8™ solar microinverters for customers in North America. Since the company’s inception, we invested in custom application specific integrated circuit (ASIC) chips for our microinverters, and today we see the payoff with a software-defined microinverter smart enough to form a microgrid. Many homeowners often assume that their solar systems will function if the sun is shining, even during a power outage. This has unfortunately not been true until today. Now, with IQ8 homeowners can realize the true promise of solar — to make and use their own power. IQ8 solar microinverters can provide Sunlight Backup during an outage, even without a battery.

In addition, we recently announced that our home energy systems will soon integrate with most leading models of home standby AC generators, providing enhanced performance and a glitch-free transition for homeowners during power outages. Homeowners can also monitor real-time power flow, start and stop their generator remotely, set quiet hours to prevent their generator from operating until their batteries fall below a designated threshold, and control it all with the Enphase app. The new feature functions without a generator automatic transfer switch and eliminates the power glitches that reset home electronic appliances when switching to generator power.

We continued to make excellent progress on digital transformation. Both of our recent acquisitions achieved record revenue in the third quarter of 2021. Enphase Montreal, which provides design and proposal software, added a significant number of new installers. We plan to release several new software features next year to improve the installer experience. Enphase Noida, which provides proposal and permitting services, also experienced a significant increase in customer demand and is focused on automating the creation of permit plan sets to further expand the installer base.

BUSINESS HIGHLIGHTS

On Aug. 26, 2021, Enphase Energy announced that it renewed its partnership with Grid Alternatives, a national nonprofit providing access to clean, affordable, renewable energy, transportation, and jobs to economic and environmental justice communities. Enphase will continue donating its industry-leading microinverter technology as part of the partnership to help GRID achieve its mission of accelerating a rapid, equitable transition to a world powered by renewable energy. 

On Sept. 21, 2021, Enphase Energy announced its participation in Hawaiian Electric’s Battery Bonus grid services program. The program offers a new incentive for homeowners on the island of Oahu who install a new home battery. Existing Hawaiian Electric net energy metering (NEM) customers enrolling in the Battery Bonus program are also eligible to add up to 5 kW of new solar capacity to their roofs without losing their existing NEM rate agreement, resulting in even more savings. 

On Sept. 27, 2021, Enphase Energy announced it had entered the Brazilian solar market with the introduction of its IQ7+™ microinverters. Enphase started shipping IQ7+ microinverters for residential and small commercial installers across Brazil starting in Oct. 2021. 

On Sept. 29, 2021 Enphase Energy announced that it further strengthened its presence in the European residential solar market with its expansion into Italy. Enphase is providing the IQ7™ family of microinverters, Q-Relay™ safety devices, and Enphase Envoy™ communications gateways, which connect Enphase systems to the Enphase Enlighten™ monitoring platform to residential installers across Italy.

On Oct. 18, 2021 Enphase Energy announced that it started shipping its Encharge™ battery storage system to customers in Belgium, further expanding the product’s availability in the European solar market. The Encharge battery storage system is also currently available to customers in Germany and North America. The Encharge battery storage system offers configurations ranging from 3.5kWh to 42kWh, along with the option to upgrade and expand through the lifetime of the system.

FOURTH QUARTER 2021 FINANCIAL OUTLOOK

For the fourth quarter of 2021, Enphase Energy estimates both GAAP and non-GAAP financial results as follows:

  • Revenue to be within a range of $390 million to $410 million, which includes shipments of 90 to 100 megawatt hours of Enphase Storage systems
  • 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
  • GAAP operating expenses to be within a range of $119.0 million to $122.0 million, including $52.0 million estimated for stock-based compensation expenses and acquisition related costs and amortization
  • Non-GAAP operating expenses to be within a range of $67.0 million to $70.0 million, excluding $52.0 million estimated for stock-based compensation expenses and acquisition related costs and amortization. The non-GAAP estimates include increased investments in new products, software, and marketing, and a $3.6 million accrual for post combination expenses from prior acquisitions

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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 third quarter 2021 results and fourth quarter 2021 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 1167185. 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 1167185, 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 future financial performance, expense levels, liquidity sources, the capabilities, advantages, features and performance of our technology and products, including the ability to simplify and reduce installation time, our business strategies and anticipated demand for and availability of our products, the impact to homeowners, and the capabilities and performance of our partners. These forward-looking statements are based on the Company’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 the Company’s most recent Annual Report on Form 10-K and other documents on file with the SEC 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 39 million microinverters, and over 1.7 million Enphase-based systems have been deployed in more than 130 countries. For more information, visit www.enphase.com.

Enphase Energy, Enphase, the E logo, IQ8, IQ7+, IQ7, Q-Relay, Envoy, Enlighten, Encharge and other trademarks or service names are the trademarks of Enphase Energy, Inc.

Contact:Karen Sagot
Enphase Energy, Inc.
Investor Relations
ir@enphaseenergy.com

 

ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

  Three Months Ended   Nine Months Ended
  September 30,
2021
  June 30,
2021
  September 30,
2020
    September 30,
2021
  September 30,
2020
Net revenues $ 351,519     $ 316,057     $ 178,503       $ 969,330     $ 509,586  
Cost of revenues (1) 211,161     188,256     83,522       578,222     285,543  
Gross profit 140,358     127,801     94,981       391,108     224,043  
Operating expenses:                    
Research and development 29,411     22,708     15,052       73,937     40,120  
Sales and marketing 39,296     25,586     14,645       84,504     38,788  
General and administrative 34,300     20,107     13,525       74,530     37,810  
Total operating expenses 103,007     68,401     43,222       232,971     116,718  
Income from operations 37,351     59,400     51,759       158,137     107,325  
Other income (expense), net                    
Interest income 110     98     110       281     1,483  
Interest expense (12,628 )   (12,506 )   (5,993 )     (32,463 )   (15,100 )
Other income (expense), net 874     (633 )   (1,031 )     814     (1,302 )
Loss on partial settlement of convertible notes (2)     (13 )         (56,382 )    
Change in fair value of derivatives (3)                   (44,348 )
Total other expense, net (11,644 )   (13,054 )   (6,914 )     (87,750 )   (59,267 )
Income before income taxes 25,707     46,346     44,845       70,387     48,058  
Income tax benefit (provision) (3,898 )   (6,995 )   (5,483 )     22,471     12,946  
Net income $ 21,809     $ 39,351     $ 39,362       $ 92,858     $ 61,004  
Net income per share:                    
Basic $ 0.16     $ 0.29     $ 0.31       $ 0.69     $ 0.49  
Diluted $ 0.15     $ 0.28     $ 0.28       $ 0.65     $ 0.44  
Shares used in per share calculation:                    
Basic 134,721     135,094     126,109       133,719     125,084  
Diluted 141,220     141,533     141,820       143,091     140,207  

(1) We sought refunds totaling approximately $39 million plus accrued interest on tariffs previously paid from September 24, 2018 to March 31, 2020 for certain microinverters that qualify for the tariff exclusion on Chinese imported microinverter products that fit the dimensions and weight limits within a Section 301 Tariff exclusion under U.S. note 20(ss)(40) to subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States. The refund request is subject to review and approval by the U.S. Customs and Border Protection; therefore, we have assessed the probable loss recovery in the three and nine months ended September 30, 2020 is equal to the $23.0 million approved refund requests available to us prior to issuance of the financial statements on October 27, 2020. As of both the three and nine months ended September 30, 2020, we have recorded $23.0 million as a reduction to cost of revenues in our condensed consolidated statements of operations as the approved refunds relate to paid tariffs previously recorded to cost of revenues, therefore, we recorded the corresponding approved tariff refunds as credits to cost of revenues in the three and nine months ended September 30, 2020.

(2) Loss on partial settlement of convertible notes of less than $0.1 million for the three months ended June 30, 2021, primarily relates to the non-cash loss on partial settlement of $0.1 million aggregate principal amount of the Notes due 2025. Loss on partial settlement of convertible notes of $56.4 million for the nine months ended September 30, 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, $9.5 million non-cash loss on partial settlement of $217.8 million aggregate principal amount of the Notes due 2025 and $37.5 million non-cash inducement loss incurred on repurchase of Notes due 2025.

(3) Change in fair value of derivatives of $44.3 million for the nine months ended September 30, 2020, represents changes in fair value of the conversion option in the Notes due 2025, as well as the convertible note hedge and warrant transactions. Initially, conversion of the Notes due 2025 would be settled solely in cash as a result of the Company not having the necessary number of authorized but unissued shares of its common stock available to settle the conversion option of the Notes due 2025 in shares; therefore, the conversion option, convertible note hedge and warrant transactions were classified as derivatives that required marked-to-market accounting. On May 20, 2020, at the Company’s annual meeting of stockholders, the stockholders approved an amendment to its certificate of incorporation to increase the number of authorized shares of the Company’s common stock. As a result, the Company will now be able to settle the Notes due 2025, convertible notes hedge and warrants through payment or delivery, as the case may be, of cash, shares of its common stock or a combination thereof, at the Company’s election. Accordingly, on May 20, 2020, the conversion option, convertible note hedge and warrant transactions were remeasured at fair value and were then reclassified to additional paid-in-capital in the condensed consolidated balance sheet in the second quarter of 2020 and are no longer remeasured as long as they continue to meet the conditions for equity classification.

 

ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

  September 30,
2021
  December 31,
2020
ASSETS      
Current assets:      
Cash and cash equivalents $ 885,546     $ 679,379  
Marketable securities 508,577      
Accounts receivable, net 273,012     182,165  
Inventory 65,405     41,764  
Prepaid expenses and other assets 35,541     29,756  
Total current assets 1,768,081     933,064  
Property and equipment, net 73,445     42,985  
Operating lease, right of use asset, net 15,185     17,683  
Intangible assets, net 43,146     28,808  
Goodwill 61,038     24,783  
Other assets 136,111     59,875  
Deferred tax assets, net 133,158     92,904  
Total assets $ 2,230,164     $ 1,200,102  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 92,213     $ 72,609  
Accrued liabilities 139,243     76,542  
Deferred revenues, current 59,232     47,665  
Warranty obligations, current 16,728     11,260  
Debt, current 86,039     325,967  
Total current liabilities 393,455     534,043  
Long-term liabilities:      
Deferred revenues, noncurrent 177,249     125,473  
Warranty obligations, noncurrent 50,784     34,653  
Other liabilities 20,617     17,042  
Debt, noncurrent 940,244     4,898  
Total liabilities 1,582,349     716,109  
Total stockholders’ equity 647,815     483,993  
Total liabilities and stockholders’ equity $ 2,230,164     $ 1,200,102  

 

ENPHASE ENERGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

  Three Months Ended   Nine Months Ended
  September 30,
2021
  June 30,
2021
  September 30,
2020
  September 30,
2021
  September 30,
2020
Cash flows from operating activities:                  
Net income $ 21,809     $ 39,351     $ 39,362     $ 92,858     $ 61,004  
Adjustments to reconcile net income to net cash provided by operating activities:                  
Depreciation and amortization 8,313     7,596     4,765     21,467     12,750  
Provision for doubtful accounts 179     257     69     450     254  
Loss on partial settlement of convertibles notes     13         56,382      
Deemed repayment of convertible notes attributable to accreted debt discount     (6 )       (15,585 )    
Non-cash interest expense 12,430     12,307     5,422     31,893     13,516  
Change in fair value of debt securities (784 )   (932 )       (3,153 )    
Stock-based compensation 46,954     15,312     14,399     77,110     34,214  
Change in fair value of derivatives                 44,348  
Deferred income taxes 1,337     5,240     5,060     (28,790 )   (14,507 )
Changes in operating assets and liabilities:                  
Accounts receivable 5,462     (44,812 )   (32,633 )   (93,069 )   23,533  
Inventory (27,648 )   (2,880 )   (6,349 )   (23,640 )   (5,479 )
Prepaid expenses and other assets (3,568 )   (10,154 )   (917 )   (18,762 )   (10,451 )
Accounts payable, accrued and other liabilities (1) 24,897     10,514     26,189     71,787     (9,200 )
Warranty obligations 7,574     5,385     5,872     21,599     6,681  
Deferred revenues 16,399     28,469     6,262     64,308     (24,509 )
Net cash provided by operating activities 113,354     65,660     67,501     254,855     132,154  
Cash flows from investing activities:                  
Purchases of property and equipment (12,682 )   (16,428 )   (3,903 )   (39,050 )   (11,707 )
Purchases of marketable securities (545,490 )           (545,490 )    
Maturities of marketable securities 35,000             35,000      
Investments in private companies (13,000 )   (20,000 )       (58,000 )    
Business acquisitions, net of cash acquired             (55,239 )    
Purchase of intangible asset (250 )           (250 )    
Net cash used in investing activities (536,422 )   (36,428 )   (3,903 )   (663,029 )   (11,707 )
Cash flows from financing activities:                  
Issuance of convertible notes, net of issuance costs     (949 )       1,188,439     312,420  
Purchase of convertible note hedges             (286,235 )   (89,056 )
Sale of warrants             220,800     71,552  
Principal payments and financing fees on debt     (344 )   (636 )   (1,422 )   (2,269 )
Partial repurchase of convertible notes     (79 )       (289,312 )    
Repurchase of common stock     (200,000 )       (200,000 )    
Proceeds from exercise of equity awards and employee stock purchase plan 42     3,428     (138 )   3,684     4,708  
Payment of withholding taxes related to net share settlement of equity awards (3,313 )   (7,813 )   (8,390 )   (20,311 )   (52,042 )
Net cash provided by (used in) financing activities (3,271 )   (205,757 )   (9,164 )   615,643     245,313  
Effect of exchange rate changes on cash and cash equivalents (376 )   (224 )   104     (1,302 )   (77 )
Net increase (decrease) in cash and cash equivalents (426,715 )   (176,749 )   54,538     206,167     365,683  
Cash, cash equivalents and restricted cash—Beginning of period 1,312,261     1,489,010     607,254     679,379     296,109  
Cash and cash equivalents—End of period $ 885,546     $ 1,312,261     $ 661,792     $ 885,546     $ 661,792  

(1) As of September 30, 2020, we have received $16.0 million of tariff refunds and accrued for $7.0 million tariff refunds that were approved, however, not yet received on or before September 30, 2020. As of both the three and nine months ended September 30, 2020, we have recorded $23.0 million as a reduction to cost of revenues in our condensed consolidated statements of operations as the approved refunds relate to paid tariffs previously recorded to cost of revenues, therefore, we recorded the corresponding approved tariff refunds as credits to cost of revenues in the current period. The tariff refund receivable of $7.0 million is recorded as a reduction of accounts payable to Flex Ltd. and affiliates (“Flex”), our manufacturing partner and the importer of record who will first receive the tariff refunds, on the condensed consolidated balance sheet as of September 30, 2020.

 

ENPHASE ENERGY, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data and percentages)
(Unaudited)

  Three Months Ended   Nine Months Ended
  September 30,
2021
  June 30,
2021
  September 30,
2020
  September 30,
2021
  September 30,
2020
Gross profit (GAAP) $ 140,358     $ 127,801     $ 94,981     $ 391,108     $ 224,043  
Stock-based compensation 2,915     1,060     1,294     4,957     3,237  
Tariff refunds         (23,029 )       (23,029 )
Gross profit (Non-GAAP) $ 143,273     $ 128,861     $ 73,246     $ 396,065     $ 204,251  
                   
Gross margin (GAAP) 39.9 %   40.4 %   53.2 %   40.3 %   44.0 %
Stock-based compensation 0.9 %   0.4 %   0.7 %   0.6 %   0.6 %
Tariff refunds %   %   (12.9 )%   %   (4.5 )%
Gross margin (Non-GAAP) 40.8 %   40.8 %   41.0 %   40.9 %   40.1 %
                   
Operating expenses (GAAP) $ 103,007     $ 68,401     $ 43,222     $ 232,971     $ 116,718  
Stock-based compensation (1) (44,039 )   (14,252 )   (13,105 )   (72,153 )   (30,977 )
Acquisition related expenses and amortization (1,627 )   (2,453 )   (546 )   (8,082 )   (1,638 )
Operating expenses (Non-GAAP) $ 57,341     $ 51,696     $ 29,571     $ 152,736     $ 84,103  
                   
(1) Includes stock-based compensation as follows:                  
Research and development $ 10,999     $ 5,467     $ 4,248     $ 22,215     $ 9,430  
Sales and marketing 15,472     5,335     3,952     24,344     9,504  
General and administrative 17,568     3,450     4,905     25,594     12,043  
Total $ 44,039     $ 14,252     $ 13,105     $ 72,153     $ 30,977  
                   
Income from operations (GAAP) $ 37,351     $ 59,400     $ 51,759     $ 158,137     $ 107,325  
Stock-based compensation 46,954     15,312     14,399     77,110     34,214  
Tariff refunds         (23,029 )       (23,029 )
Acquisition related expenses and amortization 1,627     2,453     546     8,082     1,638  
Income from operations (Non-GAAP) $ 85,932     $ 77,165     $ 43,675     $ 243,329     $ 120,148  
                   
Net income (GAAP) $ 21,809     $ 39,351     $ 39,362     $ 92,858     $ 61,004  
Stock-based compensation 46,954     15,312     14,399     77,110     34,214  
Tariff refunds         (23,029 )       (23,029 )
Acquisition related expenses and amortization 1,627     2,453     546     8,082     1,638  
Non-cash interest expense 12,430     12,307     5,422     31,893     13,516  
Loss on partial settlement of convertible notes     13         56,382      
Change in fair value of derivatives                 44,348  
Non-GAAP income tax adjustment 1,337     5,240     5,060     (28,790 )   (14,507 )
Net income (Non-GAAP) $ 84,157     $ 74,676     $ 41,760     $ 237,535     $ 117,184  
                   
Net income per share, basic (GAAP) $ 0.16     $ 0.29     $ 0.31     $ 0.69     $ 0.49  
Stock-based compensation 0.35     0.11     0.12     0.58     0.28  
Tariff refunds         (0.18 )       (0.18 )
Acquisition related expenses and amortization 0.01     0.02         0.06     0.01  
Non-cash interest expense 0.09     0.09     0.04     0.24     0.11  
Loss on partial settlement of convertible notes             0.42      
Change in fair value of derivatives                 0.35  
Non-GAAP income tax adjustment 0.01     0.04     0.04     (0.21 )   (0.12 )
Net income per share, basic (Non-GAAP) $ 0.62     $ 0.55     $ 0.33     $ 1.78     $ 0.94  
                   
Shares used in basic per share calculation GAAP and Non-GAAP 134,721     135,094     126,109     133,719     125,084  
                   
Net income per share, diluted (GAAP) $ 0.15     $ 0.28     $ 0.28     $ 0.65     $ 0.44  
Stock-based compensation 0.34     0.11     0.11     0.55     0.26  
Tariff refunds         (0.17 )       (0.17 )
Acquisition related expenses and amortization 0.01     0.02         0.06     0.01  
Non-cash interest expense 0.09     0.09     0.04     0.23     0.10  
Loss on partial settlement of convertible notes             0.40      
Change in fair value of derivatives                 $ 0.33  
Non-GAAP income tax adjustment 0.01     0.03     0.04     (0.21 )   (0.11 )
Net income per share, diluted (Non-GAAP) (2) $ 0.60     $ 0.53     $ 0.30     $ 1.68     $ 0.86  
                   
Shares used in diluted per share calculation GAAP 141,220     141,533     141,820     143,091     140,207  
Shares used in diluted per share calculation Non-GAAP (3) 140,516     140,931     137,352     141,101     136,359  
                   
Net cash provided by operating activities (GAAP) $ 113,354     $ 65,660     $ 67,501     $ 254,855     $ 132,154  
Purchases of property and equipment (12,682 )   (16,428 )   (3,903 )   (39,050 )   (11,707 )
Deemed repayment of convertible notes due 2024 and notes due 2025 attributable to accreted debt discount     6         15,585      
Free cash flow (Non-GAAP) $ 100,672     $ 49,238     $ 63,598     $ 231,390     $ 120,447  

(2) Calculation of non-GAAP diluted net income per share for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, as well as the nine months ended September 30, 2021 and 2020, 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 46 thousand shares, 45 thousand shares and 4,468 thousand shares in the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively, and 1,014 thousand and 3,849 thousand shares for the nine months ended September 30, 2021, and 2020, 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 658 thousand shares and 557 thousand shares in the three months ended September 30, 2021 and June 30, 2021, respectively, and 976 thousand shares for the nine months ended September 30, 2021, 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.


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Source: Enphase Energy, Inc.

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