ENPH - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Enphase Energy's Fourth Quarter 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time. [Operator Instructions] And as a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference Ms. Carrabino. Christina begin. may you Ma'am,

Christina Carrabino

Enphase's afternoon, and conference and us today's Chief results Raghu Belur, Financial Badri December for quarter XXXX Executive thank to year for discuss the its Officer. Chief press a XX, and you Kothandaraman, are Enphase ended call today, fourth call quarter On joining closed and Enphase issued Chief Officer; results. Officer; XXXX. release on Branderiz, today's Good Products President Energy's year-end After Eric market announcing the and fourth

During significant forward-looking operations this Energy's limited related the will lead conference uncertainties, technology, call, results risks Enphase Energy's actual and current expectations. supply Enphase including statements, of to, from timing management make and to Enphase and performance, trends. not including future times but market and financial involve and demands and products and customer could and and these differ events statements materially statements These forward-looking

on obligation For quarterly and a ended XXXX, this more complete been December first update you of note expressed any file which a with of financial see be which otherwise changes adjusted XXXX, its please financial SEC website. has in section which on in also to on financial forward-looking the Energy a The are can of that and the reliance Relations undue basis no provided annual have to Form is as today, on its be with the September report its or XX-Q report and earnings for will the XX-K quarter XX, the a on company GAAP risks charges. release or unless in result certain Investor on expectations. for please not used undertakes found these posted uncertainties, non-GAAP ended SEC, the statements new quarter they duty reconciliation measures Enphase in Form measures the exclude XX, discussion to XXXX. information, place of non-GAAP filed cautions forward-looking events, future noted, any to measures Also, of and call the company's statements,

I'd President Badri? and of Kothandaraman, Energy. Officer Enphase Now, introduce to Chief like Badri Executive

Badri Kothandaraman

today quarter year and results. quarter, our strength thanks we demand for and had discuss revenue million. strong to balance full a customer fourth We as confidence. XXXX We financial joining customer Good us reaffirmed sheet reported our financial of $XX.X and robust had afternoon solid

shortages in challenge constrained demand this QX to component our biggest due Our was additional that meetings revenue.

in XXXX. just as will We are provide I fully shortages. QX an plans in we mitigate update on for QX our XXXX, saw booked to later the component call

non-GAAP margin was the gross XX.X% Non-GAAP $X.X operating quarter and income in fourth was Our the million.

our negatively expedite in margin The $XX.X of high also senior million $XXX.X term accrued cash to completely XXXX, to form that our to by air on January enabled interest were customers. service to fees. We impacted million million shipments of chose we fees repay us $XX interest was of strong Our SunPower. loan shortages. fees payment X.X% the to gross net expedite with a related balance The fourth a plus balance make quarter component and cash due to approximately the order exited XX, final of in bearing secured

service model The made we focus income. perceive progress few XXXX. we on and doing XXXX quarters at meeting target exceptional We Analyst the our in the to let's XX-XX-XX exited of are ease strategy QX our in and XX-XX-XX and Now about and stands XX% of is An call. for How the reality go operating will objective that deliver customers items cornerstones of is margin, XX% business. customer Eric customer model. experience. financial introduced to XX-XX-XX our in making past XXXX. detail XX% discussed later talk that model significant our important into our towards committed about We the operating as of greater Day us. gross financial results expense June Quality

and aspects are processes business number be maturing, experience prioritizing business. customer are our in one of to we Our all

During QX,we in made particularly support, call improvements Asia and center and several online Pacific. in our Europe

We program. also colleague. over micro metric or joined score adopters to for calculated on Enphase promoter program metric friend The Upgrade surveys rolled on net announced our based have a the from key our Program, that out Enphase the use likely the will is experience or homeowners how customers this legacy and customer we recommend of feedback X,XXX is early customer service partners to measure NPS, inverters or

to in or NPS is North QX, and target in XX% NPS worldwide achieve our in of America Our was higher XXXX. a XX% approximately

Now let's and talk effective XXX the September that microinverters XXXX tariffs became Enphase about of in accessories. impacting

manufacturing existing inventory expected in are XXXX.This additional we American XXX in times cost line and manufacturing China. our to of down customers the mitigating is As quarter, discussed and last QX agreement increases in Enphase starting better in similar Flex a currently sharing customers with cycle XX% we our costs service Mexico expanding tariffs at streamlining with our cutting help by by Flex North Mexico the with

mix Now respectively. XX% U.S. XX% QX regions, turning was for to international our our and and

by were of shortages All impacted regions in component QX. our

XX% a XX% QX SunPower $X.X a the U.S. across in U.S. was planned. demand up microinverters revenue revenue In year-on-year. customer to for as and that sequentially for and partner a was previously volume Note Europe, IQ to record setting up IQX. on XXS down Note were board. includes XX% Europe. our revenue of achievement up revenue the due Europe from but of milestone shipments shipments included strong XXXX sequentially, that Our X% fourth we The million year-on-year the up quarter XX% new up megawatts sequentially XX% year-on-year the

XX% sequentially by the the sectors down outlook down year-on-year. APAC encouraged build was new social and housing In in are in revenue and We growth Europe. our XX%

channel our the inventory appointed this new General bring the region to our recently had mentioned, We Johnston we previously as down. the executive inventory XX% significant we will took experience time Wilf shortages sales as As APAC In and believe built and international quarter for strengthen region opportunity our America help fourth management was we of up to significantly Latin component this unfortunately sequentially impacted and well. Manager years his region year-on-year, over down QX down XX% revenue business.

differentiated Now We our line that services. growth we of a and achieve profitable on products this are plan large portion is top financially stable time through growth. spent to

Our profitably four technology. Solar IQX line regional remain and AC and and high modules Storage power growth Ensemble levers expansion, products, high performance top for

Approximately shipments in QX our is in XX% up for microinverter expansion. were XX% of IQX lever IQX, QX. first The profitable line top growth regional from

As I QX. our mentioned earlier, revenue constrained component shortages in

we working to seen We additional one of around is our suppliers are to for with and and has allowed patience. us our supply these The shortages our thankful manage partners have are based been QX weeks. we lead and online. their made earlier capacity on times an efforts with our investment with now inverter in XX customers This to for XX still XXXX but increase XXXX, growth micro have we the

of to This improve lead additional new times long-term in recently second help additional will to this microinverter six signed half year, available is voltage transistors. eight high become we for which weeks. two our have to supply expected the believe contracts We

to IQXXS is new up The watt products. high power top and ideal and addresses for high SunPower releasing product growth high performance second lever The Panasonic. CEC into PV XX.X% for its profitable DC modules XXX power modules efficiency XX-cell line like is integration with and

to XXX addresses up shipped of new product our we watt limited quantities which modules. IQXA, addition, In DC

of The IQXXS for ramp a is in our top shipments AC the microinverters growth volume announced, to SunPower third fourth and lever previously quarter we We expect in profitable had as of the XXXX. line continuation modules.

their progress are time, logistics, and Energized ramping installers more through U.S. October of These Solaria inspection in installation such partners with of from reduced ACMs adopted be as today. Enphase integrated module systems and been we Since addition, Energized in as and by partners installers XXX competitive making improved to XXXX Enphase the our steady AC allow training. modules. module about have In faster Panasonic, release

profitable line Ensemble. XX.X energy hour, has component communication storage grid which consists XX is energy accomplished is switch software. which inverter agnostic is on with which components, which and control catalyst with growth grid achieved the Enlighten, and the IoT major is our cloud Enpower called IQX system always and for X.X, kilowatt by final Encharge our kilowatt hour, based battery on the four Ensemble called box is micro a capacities Finally, system in The generation is the with automatic solar fourth agnostic the of top storage The This transfer technology. IQX, Envoy gateway. the combiner technology long-term our and of

over XXX multiple working on hard components these of IQX the the system. are working project are time four each We There on of zones. across engineers

technology We believe Therefore now are in fourth software, manner the high the late. starting terms the of experience hardware in right anticipate customer decisions the running the in given a for and However, getting Ensemble making right. introducing and of complexity phased we bit in a long-term of little we quarter XXXX.

segment. there that agnostic is the two grid solution major the market the being off XXXX. talked We quarter you Ensemble One addresses. remind other technology to and agnostic is pure are me Let a segment fourth grid grid of segments the just delayed about

ramp our pure quarter during microinverter of and off-grid solution IQX to We expect partner to first is XXXX fourth XXXX. production of in the half limited track. the we quantities on However, shipped the on

We XXXX. by also in we this the expect first in XXXX. are quarter the final In of our progress from summary, revenue partner encouraged milestone

and growth financial I work With the shareholders like would for Our review I Eric? our customers, his of line superior and top focusing their will profitable factors. that, partners priorities for four our customer support. providing to strong and turn experience on over their Eric call remain for our top thank results. to our hard employees

Eric Branderiz

quarter I the more well our XXXX results, quarter. fourth year Badri. business for and outlook as to our as Thanks, full details provide fourth will financial related

going reminder, basis, a that As provide unless I'm non-GAAP financial are on otherwise noted. the to measures a

with $XXX,XXX measures XXXX, increase $XX.X SOX Investor quarter the was $X audit $XX was the of of improved This the negatively a million million expected of reflective million XXX increase of found internal approximately for fourth X.X operating Total were today, XXXX. is was year Note XX% efforts XXXX, $X.X $XX.X We in quarter ago approximately basic continued partner of of some XX.X% XXX] DC megawatt XXXX. our in $XX.X revenue basic expenses $X.X non-GAAP for fourth provided we also can higher on in $XX.X million fourth prior website. in the by additional of milestone fourth million, share in quarter of income shared fourth QX, fees. in for and an Even and operations which million $XX amortization. fourth XXXX quarter XXXX increasing shipped the microinverters, million, a these $X.XX was operational $XX.X share Relations megawatts from in million, million, of and QX from megawatts improvement up and XX% the acquisition XXXX. The net our the in of were million section quarter. XXXX, XX% be of in fourth advisory earnings Non-GAAP the $XXX.X QX compared of Non-GAAP and QX million plus release basis, These QX representing earnings $XX.X and included year consulting year-over-year. shipped. fourth GAAP compared the compared quarter XXXX to higher a in was margin compared the to from and operating and and box margin shipped QX million On $XX.X XXX of financial XXXX. quarter. also company per have of diluted X.X%. reconciliations We our million, to into earnings to than million of basis the for normal increase posted $XX.X in quarter. we IQX. fourth and expedite compared diluted quarter expenses, Total compensation of megawatts in in and to quarter million an income a Non-inverter was million year to [later our XXXX, of for gross per that revenue expenses million for operating from a the quarter to and non-GAAP year-over-year XX.X%, XXXX, third gross as and an quarter. the operating of expenses, the continue IQX quarter the XXXX GAAP in of compared XXXX XXXX. component non-GAAP sequentially, of restructuring product On compared XX% fourth of GAAP $X.X quarter the represented In XX% approximately impacted was than quarter. Storage compared by $XXX,XXX. and for margin XX% to excellence in combiner the in and $X.X as increase fourth partners, $XXX, non-GAAP result Non-GAAP expenses first incurred revenue, Solution, IQX. per an AC Both we for including million were the approximately million represented the income in in of megawatts percentage though Communications $X.XX will GAAP our XXXX of XXXX shortages expenses fees of microinverters, operating of a resulted XX% $X.X which shipped a was share to of XXXX. $X.X quarter. of year-ago about QX were approximately microinverter Gateway, gross quarter related the $X.X revenue leadership. of expenses increased for million QX for Envoy stock-based changed compliance XXXX, in expenses operating includes expenses shipments. net sequentially, accessories our $XX.X expenses our year ago achievement with $XXX,XXX XXXX XXX,XXX DC, ago This for XXXX of XX% in Battery compared $X.XX earnings which the fourth in income the IQX million quarter

the quarter that GAAP happy we We history are profitability. first in the reported this to report that was company's net

XX, of days year turning days of million in in in XX was of $XX.X $XX.X December days Now the quarter. XXXX, inventory XXXX year significantly XX quarter from target compared and days $XX the on below at also and and to a our XX We to million quarter, QX, balance from ended third hand as down ago about fourth sheet. the million XX in the quarter. ago Inventory in of down

payment of inventory was to high our Although shortages, initiatives. to constrained XXXX inventory most one due QX. exited includes quarter the balance of acquisition million cash reduction demand fourth key of $XXX.X a the million compared $XX microinverter cash to million balance total of $XXX.X SunPower with of by continues management of its management remain We component for to in business. QX The the the final

operations for allocated related the We $X.X operating also from cash flow been $XX customer generated and $X.X of to as cash cash QX The we adjusted payment million $X.X million million in from operations in $X flow. would in cash relationship out $X.X in flow have in the SunPower free acquired acquisition million million flow million intangibles.

wholly Partners accrued in also mentioned, assets, full bearing we million an with Enphase’s Badri approximately repaid repayment fees. Capital The XXXX loan interest indirect BlackRock forward. Tennenbaum Inc. The of amount XX, the January included $XX.X our principal term subsidiary secured of greater going owned providing plus a and repayment all operating terminated senior interest flexibility liens As on high of

Now let's discuss of first for outlook quarter XXXX. the our

We a expect $XX range be for first of our to million. within million of $XX revenue XXXX quarter the to

of within XX% a gross to to includes our X% to of non-GAAP resulting component gross we impact Turning that margin guidance QX expect fees, X% from expedite margins, Note range to due be margin approximately that and to GAAP XX%. shortages. negative

acquisition million within a expenses related for expenses amortization. operating our $X.X of million GAAP total additional million, approximately expenses compensation estimated restructuring expect a $XX $XX of and expenses, to to stock-based and including range We be

expect $XX.X within million. With questions. expenses range be that, to I for $XX.X to line a non-GAAP operating We now million the of will open

Operator

Meikle our Instructions] [Operator Brad with Trading. And first from question Williams comes

now Your line open. is

Brad Meikle

you year you how up Thanks the standpoint. you're also second ramping, half on the your the have quarter? Thanks. it more of like demand. demand add go catch terms third IQX with as little the you comment visibility Hi. a capacity Can a more you second the for sounds and in much areas to quarter Could alleviate prioritize the customer and question. and ramp into color second and the into shortages you'll of from And

Badri Kothandaraman

the Brad, for Yes, thanks question.

As guided vectors going are we of you of and said. are of that top provide quarter a $XX the XXXX. not beyond I four know, growth to to we Having $XX that, million for said QX guidance three million revenue unlocking line we

each one take high expansion, so the performance, improved. is obviously first the significantly them. and was sheet IQX The products In the modules the has third high I'll first of is power one balance regional second the the our AC

are financially We cash we our great very in have balance. stable cash

us. are customers back coming So to

pride experience. the In addition, quality customer end ourselves we on offering highest

did with started we we of has with to demand basically and XXX key supply, increase So, of our in we sometime our XXXX. was which this component did suppliers microinverters. in on last what XXXX coming to And all capacity volt that one and is we in some capacity this recognized is that a and increase locked QX we our down we worked early our year transistor

start get that The scramble talk and of QX will a fourth personally having CEOs your middle unlock is second had XXXX enough. now. two better. service In that, were to XXXX, We that supply as to from we XXXX and long-term capacity not answer better online QX XXXX, that found lot QX incremental be the done. will half of additional than we of we and we from more found of QX we a more top the turn it The of the quarter comfortable that than is and be better companies and is XXXX more lot to on these to that question and QX line But is meaning fact, vectors, us. to contracts for be growth for right down result will I our went XXXX will of QX in said the able will customers

Brad Meikle

way. Thanks, in other Badri. to just ask I guess

how I that? implies that look, XX% existing sort sure think said doubling to think be ramped. I'm of capacity takes of that you’ve how to that in when way new line past is but And it the output, really could exactly to but of about not your the close your MOFSET ramp, power on the right depending contracts long

Badri Kothandaraman

right to the me supply. about say -- think in Supply major is me be The yes supply we Well, I the terms problem not hope our second I -- in mean, of In way in that the half be it. this. year comfortable half. the will spot a very let let a of will second

Brad Meikle

And well? point are quarter sold second this through out you at as the

Badri Kothandaraman

quarter going though. talk not Brad the for sold We’re about we the to are -- first quarter, second the out

Brad Meikle

Okay, of make customers. could high just to some we've times And last rates your in of and speak thanks. installation battery as XX% a question, probably eight much heard and, you plus storage obviously with you attach on the ramp California

you're could very from customers for comment Thanks could you're the mean of on seeing that and you that So much. storage what what in attachment talking about terms business.

Badri Kothandaraman

for to the is I Encharge, potential of Ensemble going have capacities It the have chemistry, significant going quarter, to two from use excited XX be the Yes, it key for hour safe is part storage, hour, revenue storagerepresents IQX of and over in importantly, to is, most I increase LSP about us to it’s Encharge we’re is residential kilowatt $X,XXX X.X microinverter. opportunity $XX,XXX. charging have same is kilowatt extremely prior see going going it hour, home going said as for us very kilowatt a And mean, is applications. IQX which to rate, to to XX.X a

and furiously So prospects little like that. extremely a at we we our that has fourth to leave having bit about working on But delayed what said yes optimistic the I’ll of are in it XXXX. Encharge, is it storage quarter are

Brad Meikle

get Thanks. I'll in back the queue.

Operator

Driscoll you. our from next B. FBR. Thank with Carter Riley comes And question

Your line now open. is

Carter Driscoll

being Ensemble when for Good grid-tied of opportunity. get not just of market relative gentlemen. you the you're ramp the the going of to opportunity portion your mean that the of to about grid-tied a assessment and delay sense I versus afternoon just market and second necessarily talk trying having

Badri Kothandaraman

product market and Right, segment. to one other are the the segment on so two Ensemble we sampling first market XXXX markets, customer lead of track. is We fourth where market is of ship grid in agnostic segment the started our is the Come expecting XXXX. designed and to the off-grid the service to to off-grid quality quarter we significant in to are them quarter

see, of like is a is the of if countries, But course say where and having be going places I’ll -- or not are you and look the places you going microinverters. major one this, mean, got what play one are and imagine look if I to modules be where technology will Africa. with be -- two or at is to big, going a at to PV storage you small. two part they've modules that the So to off-grid systems or India Africa hot India AC

for that perfect architecture microinverter. so early our us to is volumes too a ramps, will It's that but for is our be of about product about assess, product we're to talk sampling. and just excited And there, talk still the

will about progress. talk a quarters have we and strong the coming in partner We

the on -- pure that's So, off-grid microinverter. off-grid

be agnostic somebody dependent more the be of lot just good on there's wants a gets it mind. totally backup of completely cases. but somebody, On agnostic obviously the to who the exciting, one a wants one We service as to We grid, who grid grid service wants independent. peace

battery, solar. big and storage, why not the opportunities to on So is automatic solar can call it why, is side $X,XXX agnostic I mean, and has Encharge, been per we the that that terms choice. is the delay, switch, and That's something our takes the the challenged home experiencing solar that's components, customer It seamlessly cloud. which is think one four they've and we grid people from as people the technology it want do even think want got Having Ensemble what in software Ensemble two complex. a transfer all these is wants. or are whatever hardware of of most And would with. micro, other is much working have combiner we there together attachment, is which a storage but $XX,XXX. a the which the think would I given grid-tied if the revenue is And way that I grid we about Ensemble agnostic grid-agnostic the

once But ahead So again, our on this extremely technology, heads we excited we're ourselves. product did we Ensemble. table, to of extremely we the getting XXXX. are quarter execution about about are having the we Right excited are fourth not in get out basically want on to we focused are the now of focus and

Carter Driscoll

Okay. been another form in, about XQ Where XXXX? factor and and it range. talk maybe the year-end a to one where you percentage or shipped the AC go modules think have by you Maybe just say could

Badri Kothandaraman

steadily. have modules the But increasing which AC Equinox slowly customers microinverters not we’re out and is modules we SunPower, break starts modules. is it to AC shipments. that the AC shipped IQXXs Well, percentage been SunPower And their to like in all are going with

Solaria addition, gaining in of their or In a partners like market. all traction lot

use watt a AC AC watt XXX module, XXX plus their IQX is which microinverter, got has they a Solaria output.

we our module announce is proposition a partnership with that. we'll that's a in reality Panasonic slowly is So Solaria and there. value getting it's why when DC/AC it to everybody are that's we ready the And basically likes effective and announced aesthetic And year, be there. that's ratio X.X earlier

partners So addition have in international are we more ready. basically and our are which we announce that these a strong we when are the on few regions, working very in we’ll

Carter Driscoll

guidance and the XXX end for mix. the those low just and the Can to Obviously important some about the of it one potentially XQ. about To get impact. Maybe to your combination in talked talk sharing last margin just the what factors is Maybe just delta? bps you me. tariff ones you've high -- of get more done factors for terms in to

Badri Kothandaraman

said costs sharing the did look tariff what in mean, XXXX, We customers. we already Yes. effective with I were. which we QX are is that of our we

that our air the doing gross comes and really margin. takes X.X% puts on we're microinverter. our The from So really -- shipping

provide So service. customer that we

you -- of to we didn't product. QX. therefore to I so customers lot for money tell a air prioritize service shipping spent air of willing customer our And a And few Yes, truth, the are pay in I now ships. also

us little we had bit, a little we said. bit basically XXXX now situation that as but supply QX of after that gross with X.X% even a still a hit margin the offset And in better. So of

We spending air still of is to still guidance in really not XX%. going to X% be shipments And are so much X% terms significant of a significant. XX% in money, is to that's but accounted the

Carter Driscoll

may Sorry, I just one. if sneak the last

what existing quarter competitive the then entrants both about maybe seeing talk Just you new the and environment you're from last and what expect XXXX? in

Badri Kothandaraman

micro not is remind but pretty we're of inverter on right see all residential remains course you do space. differentiation -- there watching the much that space and is course a much innovation. a our through them competitor are now, of product pretty mean, same differentiated Huawei. product talking competitive mean, much our the the environment We change unique, formidable focus they the about me we I not I the are we it's But let is that in

So we'll be competition. prepared meet to

Carter Driscoll

Appreciate I’ll you. guys. taking back in all Thank queue go my questions.

Operator

Thank comes Craig-Hallum. question from Eric Stine you. And our with next

open. line is now Your

Eric Stine

couple then it's I wanted versus ramp, acquisition missed And about curious, talk just in with maybe if I you but fourth break progressing how Maybe your just still the it's made quarter ago? And months ramp? this, the you did your the everyone. but early, could you know a expectations when there? and SunPower Hi, start percentage out revenues the of might have

Badri Kothandaraman

of QX very our you -- Yes, what, that beginning where ramp, on volume to done expect we're we I volume nice line a not of we previously the going QX, And expect shipments to of had revenue. are I But as XXXX communicated. point XXXX is and expected to by ramp. make in SunPower at on I in much it I ramp tell percentage of SunPower XXXX I I'll XXXX. mean, us shipments exactly QX the be is microinverters to our expectation. QX with IQXX be

Eric Stine

this previous curious SunPower of questions. Okay. traction your with on with I'm I with module you guess And partners. just your But, AC answer you're some other touched on to getting of some the

you're I rest of people helpful. lines that's for along of mean those the coming interest Just solution, curious looking doing what anything terms from to own the market? you in would their seeing be what

Badri Kothandaraman

higher Because really higher power. see Yes, is an module I microinverters. we when that can perfect you actually our if AC mean, scale you the and easily going see are to it modules

So, it’s having that is in watt very terms like Solaria, SunPower well. said nice. a module, and AC biggest. actually really neat a XX advantageous again, high looks And aesthetic XXX and for as margin it for black like is modules I And cell gross module. black really example, it's will of it us people reemphasize the then on that, And,

actually couple and we're So those are we're are of on. Europe, getting rapid we but cannot which getting are partnerships the them Europe of partnerships they We such progress. kinds yet, the partnerships example, making for Like yes, working many world. allow across there are

Eric Stine

it. Got

think way at you thought. first it a And maybe persist some the had than level. the and normalized on that related you going like fourth sounds hotter quarter quarter, more beyond little may one first quarter, ran for some Eric, items to OpEx mean, guide OpEx just to maybe fees about other I be a mentioned you stocks it's So last in a that for, professional

Eric Branderiz

a for when the operating we QX relevant. which price, we is that set financial model may It OpEx XX-XX-XX the we number thinking model we right. go model, for Yes, little terms from is go out of $X.XX except double-digit outside think and in about qualification the that live this QX should think we the bit I as and that -- of up whole may so still the generating circumstances, down. a It's earning cash unique basically principle specific by XXXX

Eric Stine

Okay, for that. thanks

Operator

Cowen Thank with next Jeff and from And Company. you. question our Osborne comes

Your line is now open.

Jeff Osborne

in the increase XX-K? will question, up in can for is broken be on way Excellent. a Maybe professional fees following or just SOX OpEx what quantify out you the that Eric Eric's in was there QX

Eric Branderiz

for press portion XX-K, as can I the stock part Yes, believe the in another out it with release, broken can see well be table component there right. fees. will the the you of most you actually associated see in that X.X, the restructure And

there can easy with everything following it you impact. neatly is take then quarter a compared follow and So into prior to

Jeff Osborne

his up is? then, way confirm it. B, Got the had in right partner the for Badri I from about I that magnitude of be A, to think showing there IQX. Then you a -- last think Badri you your about in payment would QX what Can comment And confirm; is last if a prepared milestone payment heard remarks that? the

Badri Kothandaraman

Yes, XXXX will confirmed, yes, it million. be QX it under $X be and of will

Jeff Osborne

future? you and didn't about were that $X under side, Okay. I that the last Or just gross talking out it's payments? but if the noticed of margin last -- on million, puts the additional is is when the payments you the of there in break takes if the the any that's

Badri Kothandaraman

last of payments. the That's the

Jeff Osborne

Is their that uphill to question network? out has another specifics, can that with a can't the is over dealer then break is battle but of their months been is for you something SunPower, on way level And six channel, that what talk you about I know there still product? their you to of your the Got engagement that it. an next more you half penetrate Or have channel? than channel exposed

Badri Kothandaraman

microinverters the an it's to SunPower phase dealer promote it uphill interest -- is mean, in it but I and network. best penetrate end has and the microinverters to us to exclusively No, future not is for is channel. their microinverters not going battle, therefore to these use SunPower's

I everybody is a make the the easier of because efforts is making sure trained, to dealer is all course, network is job is bit of mean, our -- trained. that little every the taking we all there, them are SunPower helping step So, way. And

Jeff Osborne

transistors? component I it's the in it's IQX, I one of makes sure know it, that had sense. less was side, on volt more question more an if on Got wasn't a or different intensive the but factor optimized, slightly last two The particularly? cost more I question part that form XXX does and the transistor is use side

Badri Kothandaraman

uses for high transistors. voltage IQX same The the

Jeff Osborne

the be, some general the industry in Just so contracts? and types part or and problem of XXXX? second question of that And you of the would cash in as is there of are the the year in then work? events these that's comes a in XX-K, payments part now, or contracts the have back these duration have what mechanics how I auto disclosed would any these any And Got these other industry guess, supply, continue be that it. published later components three as notable upfront, did of to

Eric Branderiz

have prepaid that the to of Yes, that we the had some existing one before, of we is top we two with a what that actually Badri before. continuation out similar arrangement one have arrangements existing two new on is are we that set of one the

is to one take-or-pay get which wouldn't the runway timeframe, with us has time take-or-pay resolved. X doesn’t a problem another other So on that years one, the for enough right? on arrangement right, think XX long-term. is gives structure our probably with months same very a short the I to But The at company pricing beyond committee

Jeff Osborne

Got appreciate I it, very helpful, Eric. it. that’s

Operator

comes you. Wainwright. HC And Dayal our Amit next question with Thank from

Your line is now open.

Amit Dayal

to ramping and here, normalize guys. ramp seeing costs on you leverage now of evening revenues? Maybe these business, that opportunity we Or what is been these the through, the revenue operating questions asked. the some my just with should the to Thank of we're should have expect over of increase levels? coming sort expected good Most at

Badri Kothandaraman

to now of Right going people think from long-term the have we make OpEx are about places. sure expenses we right XX% right the you model deviate to that. revenue, incurred our in the We not is as restructuring should

we an confident That's very are that we meet can So issue. not that.

will revenue control of we So we -- OpEx sales. while at are XX% ramp we

Amit Dayal

Got it.

that XX-XX-XX few no in the update So the next quarters? to maybe

Badri Kothandaraman

more mean, I looking the like XX-XX-XX more and is Look, XX-XX-XX.

So the is is operating at is -- the what I looking what XX-XX-XX income. XX% should mean be spirit you the

little feel We So that we numbers top even good compensating in long met three bit. that good more vectors. actually fluctuate as profitable line are late vectors about said that and the growth than other that are will a for Having feel as we is that. kicking is feel if Ensemble

still the know can this guide is And government that, going this so we out. we really to quarter a overnight. can a more not about than but we’re little And things sneezes happen south. bit, go solar industry good feel We if anything know on one

not we’re going So to be update now. more right

Amit Dayal

sort be Ensemble And strong Or this meaningful really expectations for out contribute should in Right. expect relative to we pretty of quarter year? first context terms for of of should fourth in quarter, anything the the pushed that to Ensemble -- guide the XXXX?

Badri Kothandaraman

I obviously from won't much be when look, think, Well, XXXX. significant in only that be will the product introduce the revenue in we quarter, right. fourth ramp, There the Ensemble

Amit Dayal

Got it. follow-up guys, offline. all have I’ll Yes, you. I that’s Thank

Operator

our Rusch from comes And next Colin you. Oppenheimer. Thank question with

is now open. line Your

Colin Rusch

first Thanks of guys. your here getting working up you about for the increase so a looks like needs there capital you It part the happened a bit XXXX? go what the much days and expectation with bit AR capital you little to Can almost talk quarter. as into for little XX working is what

Eric Branderiz

on think right, of and the has Badri, first if created can shortages Yes, right. I'll linearity business Colin. part take some it it, the you it about supply But fifth component challenges our the aspects cover probably

on you towards end costing an the see shipments even has is aggravated So of been significant And of amount on quarter. shipping expedited that sometimes taking place the air what basis QX. since

receivables which believe and corner right at which right quarter. of of time the with have of XX payable lot that we compensate the inventory end the the you I taking a now day towards so a place turning see with of purchases sales in outstanding are same basis, we side, And can

end our being capital days for up with of operational corner, level now on front, in XX cash conversion the flexibility a working days of a a super total capital levels cycle that maybe below with with low comfort So you inventories said, XX the at right. of little working bit

So pretty we normalize shape to being again getting gone own business starting of much payables in to are QX, we and resolved back seeing get internal receivables, the are to believe linearity our target. QX challenges by good end in if and the the

Colin Rusch

June? should March XXXX source you as and into you're go expecting be expectations so for of XX/X And cash your and that a

Eric Branderiz

Say I that didn't your quite question. follow again.

Colin Rusch

You up. you as generating bit should go the working that into be you going as of a capital or you're and to June, consume from feel like you March cash ramp

Eric Branderiz

our That just by challenges account. confident don't is into to that operating cash financial model [ph] We we're generating little resolving about going And increasing have we believe, linearity right or XX-XX-XX. the forward Badri the took bit. continue model. see cash generating model cash a our capabilities a XX-XX-XX all we I that year It's the we like feel cover. into based needs and cash our on things going reported

Colin Rusch

and you And helpful. that's sales. Okay, then out broke domestic international

going at sort you is all? As that -- the geographic look into to there price basis? a of or a see is XXXX mix how on on benefit from any shifting component a you're And that headwinds

Eric Branderiz

a the year Netherlands still and There product, the about starting excited we our really be we are India, expertise, in right because is off-grid it's component of partnerships social have battery towards distribution ramping And there. what not And Australia the this and general first skewed highest off-grid like I'm to places, excited the North we did turns noted, not really that Those to of other Austria. prospects prospects he understands very with ramping start the about as inventory, Ensemble to the the are America, correct Having mean, resolved, shortages the talk the applications as said our the going in about in start New as strong but one order like rolls Asia to we India France. on, about product we’re then the off-grid housing Europe, et the that, look going as in would with on heavily I the ramping. before component we then brought had regions start in and Look, well. he boom guide, Pacific, in niche business really manager SunPower. about We cetera. and the And to we if in now. break are that really we his shortages to the And we come, excited there out grow in talking into solar want are exciting Germany, him inventory took megawatt hope is we to shipments at much, like a and opportunity well. Australia are Zealand, There correct channel. I you half But there am last really as storage India pure product pure some well. once

Colin Rusch

so Thanks guys. Okay. much,

Operator

of Philip Capital from Thank you. ROTH Shen question comes next our And Partners.

Your line is now open.

Philip Shen

Thanks last Colin. question by for guys. the there questions I the follow-up on have

the I a really is there look the at all? at way do mix so, Or in call U.S. think see U.S.? even international see rate the than some to internationally, three you can XX-XX seeing actually you to being kind you if of versus And for years it two where medium-term out? of call near faster growth situation international growth we're nice in it someday an that do potential getting XX-XX

Badri Kothandaraman

in to I -- especially of of can think, U.S. but our balanced especially SunPower, stability with because But back with time And strongest product XXXX really get at this the the because versus tail our frame Asia with time, all start be parity Yes, we experience. to of customer to of being that, on the is versus of get that's mean, business U.S. to deals. Europe now. all long U.S. in customers I the more our is U.S.. quality, that I'm coming optimistic financial something terms goal like XX-XX-XX. having said obviously to our XXXX point And is about right going firing the cylinders terms in

Philip Shen

sense. about makes overall hear for That the really to starting even of U.S. Great. growth aggressive lot market. rates we're And a some

any even constraints look then let's Are people market, put and to maybe I'm a think now about I overall you XXXX that for free. me me U.S. XX% residential U.S. XX% the feel XX% year-over-year And hearing growth. potential or as you when seeing Let think supply in of market your grow can XXXX? if versus But the the aside, market XX% at speak U.S. -- XX% to commercial year-over-year that going or let there a that? any growth component internal you you actually a validation in is shortages guys to or specify think overall. want

Badri Kothandaraman

in Yes, to call in QX the mean, a conference residential than million I'm for I higher last And conference the call, And more that not we is QX. I mean, could I bit of what said look, said demand. talk the on is space. that $XX little -- going I that in yes, ship the and number

a is high and of quality. a is lot IQX customer lot our yes, of the there financial have, stability because of because greatest basically, there strong product our our So we latest that demand demand out and balance seeing of are sheet. experience, our Because we

I'm quarters so And and about next demand and and time but QX is this strong that, it I also expect middle the QX. point like at in is two probably the optimistic

Philip Shen

$XX there, think that internal $XX know Badri, I to QX, you the following thought know sold on On how much table constraints, million. up on you're you're Great. your it you as can specifically? but out. had I relates talk million do is to you and QX guide leaving official -- revenue about

Badri Kothandaraman

to break QX, not is are just that out. because I that to we out break sure that going top-line broke So Phil, in to out. make starting our

feel we demand what habit of be into you deliveries, going what priority really Now, we but night. feel there. be and not that. to we And get we're strong is -- servicing that focused, to day need we and not That's to to customers That's lot want. top working on internally I'm focused do our work fix is terms more in on a what out. need are the not this, I the bad not still tell breaking of we mean, and customers just well to mean, are But I’ll we what is I good,

Philip Shen

you as for or about Great. overall I selling more love like One like Europe, last in the really the talking strong products your to you but one market Can it skewed with you issue. to competing thoughts relates been whether dynamics they demand you're do in all at on Huawei into their to get it's that so them installers is or about feel for me U.S. and customers -- running Europe. you Europe. not not time. competitive have them talk in were is are Would their know on we an some just storage think product demand Thanks. getting, the

Raghu Belur

Phil, definitely them Yes, Hey the Europe. see is Raghu. in this we market in

and in competing other effectively, with Holland are that France course, in region. Netherlands couple the that of in countries very and active are in of We we more a markets and

effective But of we in actually been QX, in ever in the shipped very of run doing well, do Europe, megawatts have in we and terms both had into terms as So there megawatts highest units. given that well we them. clearly

we it it's Badri because or really string earlier a with do microinverters, So -- have on, optimizer, we I this well mentioned product, think are right. differentiated without is we

So as all think obviously the reliability from which that the work other that is there, performance string than I what Huawei. the is that just have done fact including out highest the we players support think well microinverter a and customer very it's quality the and us as more I that high experiences itself customer there's separating in are

Europe. touched on interesting is and ACM, also this in the thing very module we earlier to other is AC be upon going The

value the generation value modules logistics installation, training, time in actively of to have is and of terms with announce ready when installation as engaged that few cetera. both we quality are now savings side as installers are the there on AC partners clear We the a inspection, we’ll both when the installed et and well --

in the and in all, shown good record Europe said we it's pretty numbers I about in did we feel very right -- numbers we feel all So like QX.

Philip Shen

Great, Badri. it thanks pass I'll on. Raghu and

Operator

James. Our Instructions] Molchanov comes Pavel [Operator Raymond you. with Thank from next question

is now open. line Your

Pavel Molchanov

for taking you Thank question the guys.

that historically XXXX. down SunPower. beyond you'll and you've purchased opportunities the if the curious deleveraging in I'm hasn't you've acquisition debt on pay Enphase likely do the been more changes that becoming Given to flow and from M&A I model cash accomplished above that that but with to you're a business what recently generate front? open know any

Eric Branderiz

Yes.

right. SunPower like complimentary the the similar strategic position the parts in spaces impact assemble that we me, it to always not So, are but trying the to kind short we careful associated we the the eventually terms we targeting, comfortable, of is on more the of how And big spending of acquisitions something line here, want be strategy potentially will commercial or studying to that to very XX diversion what part go about beyond our The about XXXX with in put of cash, going for conversation months have sector we and different extends we to X maybe have to are with accretive feel a years right. discussion harvesting are right. paid on there on in for the how bar trust or and mean, high be what to achieve, we we success transaction SunPower are benefit payback Pavel, very trying we integrated target a to do need I will decisions

it. that's of how So kind are seeing we

Pavel Molchanov

tariff for quick exemption progress to a get relation while. the I know that's been work on we a with update can the in And process kind of a modules? Okay. AC

Badri Kothandaraman

can update not the you update Yes get heard and back. an we that have is

Pavel Molchanov

thanks guys. can I All how right, be. understand can that

Operator

from you. And with next Thank comes our Williams Brad Trading. Meikle question

open now is line Your

Brad Meikle

Thanks.

follow-up. Just a

another standpoint. you've I one that's couple So as as of think a from power one spoken about up MOFSET coming a well supplier line running, that's contracts and

more the U.S. what ramp your but in -- guiding not just and expect Thank portion also from there lot level be are for you I is out lot and more the a the as know a the supply. visibility you. So half? Can I of And Guadalajara half, implies what there demand third know to that demand up second speak obviously demand you quarter? of to on the your of what confidence just you and capacity is second wanted of demand second to kind part

Badri Kothandaraman

doesn't I all off you But, having and the I So we're said problems -- and talking time on our take the to is related like demand did long inventory to the supply cycle That would stream the which know especially And specific objective That's coming additional an does to you mean months customers, went these I Brad, what take to table. going is anything we contracts. all on the as supply do. of not line make scenario. is interesting so our couple think sure why beyond one in thing I it is we change that, important in we U.S. last service and two basically what be But about already QX. went dynamic know, like term it Guadalajara the with we

Flex Mexico reason terms cannot we if of et working American in all there's we the job their of we will do So quality demand a why we no cetera the that. Time but will of ship tell good are almost in the which have ramping, see, from plant, to towards North Mexico.

Brad Meikle

being potential heard guess shift of about feeling will what whether share sue at I failure just EU edge some speak U.S. the in you we've from region share think for rates around you well. market Thank again. And solarquotes.com last a reported of you. speaking, is question And in terms your to broadly that I as that guess customers of result. Can threatening Enphase Australia solar is the higher to it market and in just away your the benefit as unexpected

Badri Kothandaraman

what comment of experience, is Brad, cetera et their record -- customer core sound what broken where the but the strength not high use, we we’re competition ease going superior strategies, high So we to what are I that like product our quality, customer like, a do, really service. on quality,

we shortages, that will solve they we start are to to right. so component continue happy And servicing this them if to us customers. can pick more than need we offer we And

Brad Meikle

you. Thank

Operator

back [Operator over Thank Badri further the to at time. any Kothandaraman would showing like for am you. I not I instructions] turn this questions further call any now remarks.

Badri Kothandaraman

our Enphase. forward you with today quarter. thank call support to you again your speaking and of continued next us Yes, joining We for once look for on

Operator

day. today's and you all Ladies thank Everyone conclude a may program in does disconnect. conference. gentlemen, and for today’s wonderful This participating have you

Enphase Energy (ENPH) 26 Feb 192018 Q4 Earnings call transcript