A general view of solar modules
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Enphase Energy shares were rising sharply Wednesday after the solar energy company’s quarterly earnings and first-quarter guidance barreled past expectations.
The stock rose 13% to $162.62.
Other solar stocks also rose because Enphase’s earnings showed signs of strong demand for the industry. Leading solar developer SunRun (RUN) was up 8%.
Enphase (ticker: ENPH), like other solar companies, had struggled at times last year as it dealt with shortages of some parts for the hardware it makes. But the company — which makes battery storage systems and equipment called inverters that affect the electric current — no longer has those problems, because it has expanded its supplier base, among other actions.
“On the supply shortage, we are out of the woods,” said CEO Badri Kothandaraman in an interview with Barron’s. When the company notices components shortages, “many times we solve them simply by brute force. For example, last year, we had two sources for a particular product. Now we have five.”
The company is still dealing with the larger problem of materials inflation. A shipping container that once cost $3,000 to rent, now costs $18,000, Kothandaraman said. He expects that pressure to dissipate throughout this year, however.
“A lot of progress is being made,” he said. “It’s a mess right now, but I’m confident that within within a couple of quarters things will be very different on the global logistics side.”
Enphase reported an adjusted quarterly profit of 73 cents a share, topping expectations for 59 cents a share, on record revenue of $412.7 million, which beat estimates for $400.2 million.
The company also beat expectations for its annual results, posting $1.38 billion and adjusted earnings of $2.41 a share.
Its expectations for the current quarter also came in on the high side of expectations. For the first quarter of 2022, Enphase estimates revenue will be within a range of $420 million to $440 million, and non-GAAP gross margins could be between 38% and 41%. Analysts surveyed by FactSet are expecting revenue of $423.8 million.
Enphase stock has had a wild few years, quintupling since the start of 2020. But the past three months have been tougher, with the stock falling from highs of $282. Kothandaraman attributed the drop to two factors outside of the company’s control — the failure of the federal Build Back Better bill, which would have helped the solar industry, and new proposed rules from California that would make solar more expensive for customers. He expects the Build Back Better bill to return in some form, however, and is optimistic that the California rules will be softened.
The company also announced a change in management. Current Chief Financial Officer Eric Branderiz will retire from his role for personal reasons on Feb. 14, Enphase said. There are no disagreements between Branderiz and Enphase on any matters relating to operations, accounting principles, or policies, the company added in a filing with the Securities and Exchange Commission.
He will remain an adviser to the company through June 30 to train his successor, Mandy Yang, who is currently serving as the company’s vice president and chief accounting officer.
Write to Sabrina Escobar at [email protected] and Avi Salzman at [email protected].
