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Enphase Cuts Loss, Sales Rise

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Enphase Energy Inc. (ENPH) reported fourth quarter 2012 loss per share of 12 cents compared with a loss of $2.29 per share in the year-ago quarter. Pro forma loss was narrower than the Zacks Consensus Estimate of a loss of 18 cents per share.

GAAP loss during the quarter was 19 cents per share versus a loss of $3.41 per share in the year-ago quarter.

For 2012, the company incurred a pro forma loss of 93 cents per share, much narrower than the prior-year loss of $22.32 per share. The loss was slightly wider than the Zacks Consensus Estimate of a loss of 92 cents.

GAAP loss for 2012 stood at $1.24 per share versus a loss of $25.73 per share in 2011.


Total revenue for the quarter was $57.6 million, increasing marginally from $57.1 million in the year-ago period. Quarterly revenue was in line with the Zacks Consensus Estimate.

Similarly, in 2012, Enphase registered a 45% upswing in revenue to $216.7 million from $149.5 million in 2011. This was due to a rise in microinverters volumes exported during the year.

Revenue for 2012 missed the Zacks Consensus Estimate by 0.6%.

Operating Highlights

Total shipments in the reported quarter stood at 384,000 units, down 1.3% from 389,000 units exported in fourth quarter 2011.

For 2012, aggregate microinverter shipments totaled 1.5 million versus 1.0 million in 2011.

Total operating expenses for the quarter were $22.2 million, up 31.5% from $16.9 million in the corresponding year-ago quarter. A combined increase in research and development, sales and marketing as well as in general and administrative expenses led to the cost escalation.

Operating loss for the quarter was $6.2 million compared with a loss of $3.8 million in the prior-year period. The wider loss in the reported quarter was a fallout of higher costs, partially offset by a nominal rise in revenues.

Interest expense for the quarter was $1.02 million, down 26% from $1.4 million in the fourth quarter of 2011.


Enphase Energy expects revenue in the first quarter 2013 in the range $43 million to $46 million and gross margin in the band 26% to 28%. The company also expects GAAP operating costs to be flat in the first quarter 2013 compared to the fourth quarter of 2012.

Financial Update

Cash and cash equivalents as of Dec 31, 2012 were $45.3 million compared with $51.5 million as of Dec 31, 2011.

Cash flow from operations at year-end 2012 stood at $44.6 million versus $0.4 million at the end of 2011.

Total long-term liabilities as of Dec 31, 2012 were $31.8 million, down 20.3% from $39.9 million as of Dec 31, 2011.

Other Solar Company Releases

FirstSolar Inc. (FSLR - Free Report) posted earnings of $2.04 per share, comfortably beating the Zacks Consensus Estimate of $1.75 per share.

Our View

Enphase Energy‘s fourth quarter performance improved markedly from the prior year quarter with steady revenue and decreasing losses. The company’s microinverter technology is gradually gaining acceptance in the solar industry.

However, we still believe the low cost conventional centralized inverter technologies will continue to provide stiff competition. This will be further compounded by the continued stalemate in the European economy that will likely to affect volume shipments, going forward.

Furthermore, natural gas which is currently leading the race in power generation is likely to create obstacles in the renewables growth trajectory. Currently, Enphase Energy holds a Zacks Rank #5 (Sell).

We prefer Zacks Ranked #2 (Buy) solar operator Yingli Green Energy Holding Co. Ltd. (YGE - Free Report) as well as Zacks Ranked #3 (Hold) Canadian Solar Inc. (CSIQ - Free Report) . These companies financial results are yet to be released.

Based in Petaluma, CA, Enphase Energy along with its subsidiaries engages in the design, development, and sale of microinverter systems for the solar photovoltaic industry. The microinverters increases energy production, streamlines design and installation, upgrades system uptime and reliability, reduces fire safety risk and offers energy management solutions.

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