US headquartered solar microinverter company Enphase Energy, Inc. continued to face component supply chain issues in Q2/2021 despite strong market demand. Management said constrained supply prevented customers from building buffer inventory.
It was majorly constrained regarding components for supplier AC Fed drivers in the reporting quarter which it blamed for a quarterly loss in microinverter shipment when it sold 2,362,401 microinverters or 796 MW DC. It also shipped 43 MWh of Enphase Storage systems in Q2/2021.
Going forward, the company sees supply constraints to remain in Q3/2021, but expects it to be better than in Q2/2021 as its component availability improves in Q3/2021, but not at the 'rate of growth in demand'.
To mitigate the impact on its business from ongoing supply chain constraints, Enphase Energy plans to add 1 more microinverter component supplier, adding to the 3 currently qualified, by the end of Q3/2021. It added a 2nd fully automated line to its microinverter manufacturing capacity in the reporting quarter to its facility in India which expands its total quarterly manufacturing capacity in India to 1.5 million microinverters.
Enphase will also be adding a fully automated manufacturing line in Q4/2021 at its Mexico fab, which would take its quarterly capacity from this fab to 2.2 million microinverters. "With our existing capacity in China, we expect to easily achieve our target capacity of 5 million microinverters per quarter by the end of 2021," said company's President and CEO Badri Kothandaraman.
Q2/2021
During the reporting quarter, it grew quarterly GAAP revenues by 5% to $316 million as its gross margin slid slightly over the same period to 40.4% (see Enphase Shipped 830 MW DC Microinverters In Q1/2021). The company earned operating income of $59.4 million, down from $61.38 million in the previous quarter. Its revenue mix was divided between the US and international market as 81% and 19%, respectively. The US market demand was strong, but it was supply constrained. In Europe where its sequential revenues increased 16%, channel inventory was much tighter than in the US, but it is something the company expects to improve in the next 2 quarters.
Product launch
In Q3/2021, Enphase Energy expects to ship the first shipments of its IQ 8 microinverter which it touts as the world's '1st' grid independent microinverter for residential solar. The other product it plans to launch in Q4/2021 is its IQ 8D microinverter which it calls as the high power 640W AC microinverter, capable of supporting 2 panels for small commercial solar.
Guidance
For Q3/2021, Enphase has guided for its GAAP revenues to fall within the range of $335 million to $355 million and storage shipments to reach 60 MWh to 70 MWh. It expects gross margin for the quarter to range within 37% to 40%, and operating expenses to fall into $105 million to $108 million range. Management said the company is fully booked for Q3/2021 on storage.