Overcoming supply chain hurdles and component shortages, Enphase Energy Inc. ramped up production and shipment of microinverters in the second quarter.
By copying what worked in the China facility, Enphase Energy has expanded the production of microinverters in Mexico to overcome supply chain snags. In the second quarter, the company shipped 1.28 million microinverters, compared to 980,000 microinverters in the first quarter. Now Enphase has microinverter production sites in China and Mexico.
Enphase Energy President and CEO Badrinarayanan Kothandaraman said during a July 30 earnings call that production in Mexico had been two months behind schedule due to some process hurdles, but the company expects to complete all the orders in the third quarter, which is fully booked.
"Two of the 230 process steps had issues. We quickly got on it, and the nice thing is we were able to get all of the signals in line in terms of reliability, monitors as well as we were able to do audit. So of course, that total is a little bit behind, that's why we started shipping only on July 1," Kothandaraman said.
Enphase Energy CFO Eric Branderiz said, "We shipped approximately 416 MWdc in the second quarter of 2019, and increasing megawatts of 36% sequentially and an increase of 105% from the year-ago quarter."
Of the 416 MW sold in the second quarter, 74% was in the U.S. and 26% was elsewhere, according to Kothandaraman.
On the pricing front, Kothandaraman said the pricing environment is stable, but the company is already increasing prices for customers due to tariffs, which they are absorbing.
As a long-term strategy, Kothandaraman said Enphase is transforming from a solar microinverter systems company to a home energy management systems company as part of a four-year plan. The four components of the plan are energy generation, energy storage, energy consumption and services.
For the storage component, the company plans to release a new product, Ensemble 1.0, in the fourth quarter, focused on residential storage in North America. "Storage is enabled by the Encharge battery, which is a modular 3.3-kWh solution. The 3.3-kWh modularity allows for ease of installation, flexibility and scalability, while helping to streamline our supply chain," Kothandaraman said.
As Enphase Energy ramped up production in North America, profitability increased year over year. Non-GAAP operating income for the period totaled $23.2 million, compared to $4.1 million a year ago. Non-GAAP gross margin was 34.1%, up from 30.5% a year ago.
Enphase shares surged roughly 30% on July 31, closing at $28.15 on heavy volume.