Enphase Q4: Solid Quarter With Record PV Microinverter Revenue and Margin

Microinverter pioneer Enphase Energy (ENPH) posted its first (non-GAAP) quarterly profit as a company. The firm just announced financial results for the fourth quarter of 2013.

The company posted its first quarterly operating profit of $0.4 million (on a non-GAAP) basis and a GAAP operating loss for the fourth quarter of $1.6 million.

The company also reported record-breaking Q4 revenue of $67.1 million and gross margin of 32.1 percent. The stock is trading at $7.58 (up 4 percent) and starting to show some life. The company shipped 485,000 units (amounting to 107 megawatts) this quarter, up 30 percent year-over-year.
Milestones for Q4
Exceeded 100 megawatts shipped in a single quarter for the first time, up 30 percent year-over-year
Shipped 485,000 microinverters in Q4
Passed 5 million microinverters shipped since 2008
The company exited the year with a total cash balance of $38.2 million

For the full year 2013, total revenues were $232.8 million representing 355 megawatts (AC) or 1.6 million microinverters. GAAP gross margin for the year was 29.0 percent and GAAP net loss for the year totaled $25.9 million.
Guidance for Q1
Enphase expects revenue for the (seasonally soft) first quarter of 2014 to be within the range of $54 million to $57 million
Fourth-quarter margin is expected to be within the range of 30 percent to 33 percent

Enphase CEO Paul Nahi said, "We ended 2013 with a breakthrough fourth quarter. We posted the highest revenue in our company's history, shipping over 100 megawatts for the first time in any quarter, while our record gross margin marks the first time we have exceeded 30 percent in any quarter."

Nahi again suggested that he has not seen "meaningful competition" from SMA or any other microinverter vendor. He views the current competition as string inverters.

Enphase just added Richard Mora, the COO of Landis+Gyr, to its Board of Directors.

GTM Research notes that over half of U.S. home solar systems used microinverters or DC optimizers in 2013. Learn more in the latest GTM Research microinverter and DC optimizer report.

Here's an incomplete list of competitors and aspirants in the microinverter sector:
SMA is still the dominant inverter company in a volatile, consolidating $7 billion market. SMA "is now shipping the [SMA microinverter] to the U.S. market."
SolarBridge is a microinverter maker in the business of AC modules, getting to market in partnership with module makers.
ReneSola is delivering 10,000 units per month in the U.S., according to Brian Armentrout, the firm's marketing director.
Enecsys VP Kevin Bushby claims Enecsys has 160,000 microinverters worldwide through distributors and in cooperation with module makers.
Power-One, acquired by ABB, has a microinverter offering.
Petra Solar has installed over 170,000 AC modules.
Altenergy Power Systems has shipped more than 100,000 microinverters, with the majority going to the Australian residential market, according to a spokesperson from the firm.
Chilicon Power has just started building microinverters for its first large design win of 170 kilowatts (680 modules) in Simi Valley, California, according to a release.
SPARQ Systems is partnering with Solartec Mexico, a solar panel manufacturer, to deploy solar on 1,000 "small homes" with PV modules using SPARQ's microinverters.
CyboEnergy builds a "mini-inverter" with per-module-MPPT for four modules.
The firm iEnergy has been shipping into the U.S. market since late last year.
Involar, LeadSolar, and Samil Power also build microinverters.

Within the greater module-level panel electronics market, Enphase and SolarEdge (SolarCity is a customer) are the dominant players, with Tigo ranking third, according to GTM Research's MJ Shiao.



ENPH data by YCharts



Source: GreenTech Media

Analysis: ABB's Power-One acquisition

Monday's announcement that ABB was to acquire inverter manufacturer Power-One certainly turned heads. But where will it leave the two companies and how will it impact the photovoltaic market? IHS Solar Research Manager Sam Wilkinson assesses the implications.

Were you surprised by the news on Monday of ABB’s acquisition of Power-One?

It wasn’t completely unexpected, but I probably wouldn’t have named Power-One or ABB, or linked those two companies. Certainly we’ve been saying for a long time that we expected one of those industrial manufacturers to aggressively enter this market. Certainly acquisition is a pretty sensible way to do so. Power-One makes a lot of sense for ABB, it compliments them pretty well. So it wasn’t a surprise, but I hadn’t actually named those two companies as the next pair.


Why do you say that Power-One suits ABB so well?

ABB has a lot of expertise in large industrial inverters and that’s where they’ve begun to make some progress in the market. Power-One, although it does have some large inverters, has a pretty complete portfolio of three-phase and single-phase inverters. Really the combination of Power-One’s expertise, on those products, with ABB’s expertise, in the larger products, combined with ABB’s international footprint, in terms of sales, servicing and manufacturing operations, and its financial strength and reputation really creates a pretty strong offering.

The appearance of Power-One in the photovoltaic market and its growth and progress up the inverter rankings has been impressive. What do you attribute its success to?

It’s important to note that Power-One entered the photovoltaic market with an acquisition itself. They bought an Italian inverter called Magnetek, about five years ago. From there they had a very strong hold on the Italian market, which quickly grew to become the second largest photovoltaic market in the world at that time. And Power-One’s market share in Italy was pretty significant, they were the number one supplier there by quite a long way.

At the same time, Power-One was pretty successful in setting up manufacturing outside of Europe and penetrating the markets as well. They were pretty strong in Germany and other European markets, as well as Asia and North America.

Looking at the financial strength of Power-One, with cash reserves in excess of US$200 million, do you think the price ABB paid for Power-One is about right?

Certainly Power-One’s financial situation was fairly strong, ABB is a very strong industrial company. It seems to make sense without going very deep into the numbers. My first impression was that given the share price ($6.35/share) ABB paid, it does seem high, but I’m sure ABB has thought long and hard about the acquisition and it’s certainly not a decision that’s been taken overnight.

ABB CEO Joe Hogan, in announcing the news, spoke about the risks posed by the acquisition. There are risks in any deal, but what in particular do you think he was talking about?

I would say it’s the photovoltaic market in general. There are risks involved in any move in the photovoltaic market. We’ve seen rapid changes in the market environment occur almost overnight, caused by something as simple as one political opinion. Things like that can really rock the whole photovoltaic industry. When you observe the collapse of the Czech and Italian markets in 2010, that set a decline of photovoltaic module prices going that lasted two years and we’ve seen prices decline almost by 60%.

Those challenges haven’t gone away for the photovoltaic industry yet. We have seen the industry become more diverse and it is becoming more stable and more and more countries account for a more significant proportion of the market. However, the photovoltaic market remains a very volatile environment. While we have seen some consolidation, it remains a highly competitive environment. So ABB’s move is by no means a guaranteed winning move.

How much strength do you think the ABB brand will now bring Power-One’s offerings?

I do think that without a doubt the combination of the two companies is stronger than the two companies were before. ABB’s brand recognition and strength is key to that. Power-One has a fantastic set of products, ABB has a great set of products for one particular market segment. There’s no massive change in market share: ABB’s was only 1%, so there won’t be a major change in rankings. But it’s a very compelling offering when you combine the expertise of both companies and the product portfolio they now have.

To use a word that is thrown around all over the place in the photovoltaic industry, the bankability of ABB on paper is incredibly strong – possibly the strongest in the photovoltaic industry. (ABB ended 2012 with $8.5 billion in cash, equivalents, marketable securities and short-term investments; it has $10 billion in short and long term debt. The company generated full-year revenues of $39.9 billion, which earned a $2.8 billion net profit last year.)

What are the next steps for the companies now and where do you see them being placed in the future?

It’s going to take ABB and Power-One some time to figure out their strategy, their combined portfolio and how the company moves, going forward. They will obviously want to sort that out as soon as possible, to ensure there isn’t uncertainty with their customers and to ensure they don’t lose any momentum because of this.

Ultimately I see them taking their new product portfolio and leveraging ABB’s strength in new and emerging markets, such as South America, India and Japan – where ABB already has sales, marketing, servicing, manufacturing – for all its other product lines. So I see the new firms aggressively entering these markets. The global footprint of ABB is a huge strength to the two companies, ABB will be massively well placed to serve those emerging markets.



Source: PV Magazine

ABB Buys Power-One for $1 Billion to Add Solar Inverters

ABB Ltd. (ABBN) agreed to acquire Power- One Inc. (PWER) for about $1 billion, giving the world’s biggest electricity-networks builder inverters that allow solar power to be fed into grids.

Shareholders of the Camarillo, California-based company will get $6.35 a share, Switzerland’s ABB said in a statement today. Power-One shares surged as much as 59 percent to the equivalent of $6.34 in German trading today.




ABB is looking to tap a market forecast to grow by more than ten percent annually, driven by a need for affordable energy and declining costs of producing solar power. The 7.7 times Ebitda that ABB is paying for Power-One is lower than the median multiple of 8.5 paid for alternate energy companies in the last three years, according to data compiled by Bloomberg.

ABB Chief Executive Officer Joe Hogan said there is some risk in buying Power-One amid a “tumultous market” for renewable energies like solar and wind power. He predicts the bet to pay off as the cost of producing solar energy is moving towards the price of purchasing power from the grid.

“If you wait in this industry until it’s very clear what it’s going to look like, you are not going to be paying the multiples that we are paying here today,” Hogan said on a conference call.
‘Smart Move’

Power-One generated earnings before interest, taxes, depreciation and amortization of $120 million last year from sales of its inverters used in commercial and residential photovoltaic or PV systems, ABB said in a statement. The company will be integrated into ABB’s Discrete Automation and Motion unit which produces robots, motors and drives.

“We consider the acquisition of Power-One as a smart strategic move for ABB to broaden its solar product portfolio at the right time,” said Takis Spiliopoulos, an analyst at Bank Vontobel AG in Zurich. The purchase premium is acceptable given Power-One’s net cash position of $266 million, he said.

The boards of both ABB and Power-One approved the transaction.

In U.S. trading, Power-One had dropped 1.7 percent this year before today. ABB rose 1.2 percent to 20.16 francs as of 11:04 a.m. in Zurich, valuing the company at 46.7 billion francs ($50 billion).

Power-One’s inverters this year began operation at a solar power plant installed in the Atacama desert for the Chilean fruit exporter Subsole, which was seeking to escape high energy prices supplied from the nation’s conventional grid.

More Deals

Power-One is the latest bite-sized acquisition by Hogan as he looks to bring new technology to the Swiss company’s portfolio. Solar inverters convert the direct current generated by solar panels into the alternative current needed to run appliances on power grids.

Hogan did not rule out more deals which would build on ABB’s position in solar.

“I can’t say if it’s the last one we will do. You won’t see us ever do a solar panel deal,” he said on the conference call, adding that ABB wouldn’t consider buying into machinery used to maker solar panels as it’s not an area of expertise.

The purchase also contrasts with a retreat from the solar- equipment market by competitor Siemens AG. The Munich-based company is selling its solar-energy unit, expanded by the takeovers of Archimede Solar Energy and Solel Solar Systems, after deteriorating prices for photovoltaic equipment.

ABB is structuring the transaction as a merger and the Zurich-based company has the backing of investment funds affiliated with Silver Lake Sumeru, it said. Credit Suisse Group AG advised ABB, with Cleary Gottlieb Steen & Hamilton LLP providing legal help. Goldman Sachs Group Inc. advised Power- One, along with legal firm Gibson, Dunn & Crutcher LLP.



Source: Bloomberg