US headquartered solar microinverter manufacturer Enphase Energy, Inc. reported its annual revenues in Q1/2021 to have gone up by 47% to $301.7 million, claiming record quarterly revenue in the US, Europe, and Australia.
On GAAP basis, the gross margin was reported as 40.7%, up from 39.2% a year back, and operating income going up to $61.38 million having increased from $44.7 million in Q1/2020 (see Enphase Energy Reports Healthy Q1/2020).
Management shared the company exited Q1/2021 with $34.9 million inventory, compared to $41.8 million at the end of last quarter explaining the sequential decrease to an increase in customer demand coupled with supply constraints.
The company admitted experiencing constraints on the supply chain of ASICs and AC FET drivers due to stress on semiconductor supply chain, which in turn impacted its shipments during the reporting quarter that totaled 830 MW DC of microinverters and 42 MWh of storage systems.
While its Mexico contract manufacturing facility shipped more than 900,000 microinverters in Q1/2021, the one in located in Salcomp, India shipped close to 500,000 microinverters. Enphase will be further expanding production capacity at both these locations to reach quarterly capacity of 1.5 million microinverters in Mexico, and to 700,000 microinverters in India from 1 manufacturing line.
"We have already purchased equipment for the second manufacturing line and expect to begin ramping in Q3," confirmed company's President and CEO Badi Kothandaraman.
Going forward, Enphase Energy sees semiconductor component constraints to remain for the rest of the year which will constraint its shipment volumes in Q2/2021 when it expects to report revenues of $300 million to $320 million with GAAP gross margin of 37% to 40%. GAAP operating expenses are guided within the range of $70 million to $73 million.
Supply constraints are also likely to impact the launch of its 2 new products, grid agnostic microinverter for residential solar IQ 8, and high power microinverter capable of supporting 2 panels for small commercial installer, IQ 8D.
Philip Shen of Roth Capital Partners pointed out that the company's chip shortage issues may not be resolved anytime soon. "During its Q4'20 call, management expected the situation to improve, but clearly it hasn't and notably has gotten worse. Moreover, management fully conceded that it doesn't "have that much visibility" when the chip shortage will resolve," stated Shen, but added, "With strong fundamental demand and a healthy foundation being built for storage, once the chip supply opens up, we would expect volumes to ramp up quickly for both core microinverters and Encharge batteries along with margin expansion potential as air freight costs mitigate."