FINANCE

Enface Energy rises after record quarterly despite supply chain problems


Solar Director Jonathan Fisk removes a solar panel at the Solar Power Installation Company’s Sydney facility.

Jason Reed | Reuters

Shares of Enfage Energy rose more than 12% during extended trading on Tuesday as the company reported record revenue in the third quarter, despite ongoing headwinds from supply chain disruptions.

The company, which builds microinverters and backup power storage for the solar system, posted $ 351.5 million in sales during the period, compared to the $ 345 million analysts had expected by StreetAccount.

Revenue grew 11% compared to the quarter, and revenue in the third quarter of 2020 was nearly double the 178.5 million earned. The company also issued optimistic guidelines, saying it expects fourth-quarter revenue to be between $ 390 million and $ 410 million. According to estimates from StreetAccount, Wall Street analysts were expecting নির্দেশ 373.6 million in revenue guidance.

Still, while CEO Badri Kothandarman says businesses are improving, like companies across NFS, sectors and industries, supply chain is facing constraints. In an effort to deliver products quickly to consumers, the company qualifies alternative suppliers quarterly, and also chooses to airship some microinverters. This significantly increases the cost, and combined with an eight-fold increase in sea freight rates, the company decides to bear some of the cost to consumers by raising prices. Enface plans to raise prices again in the fourth quarter.

“Every element of the supply chain is under pressure,” Kothandarman told CNBC. “It’s all in the palm of your hand … every expense is going up and that’s what’s happening now.” He mentioned that a shipping container that cost 2,000 last year now costs 16,000.

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While Kothandarman expects the company to navigate supply chain headwinds this quarter, he has not issued any guidelines for next year. However, this is not a deviation from the norm – Enface never expresses its views outside the present.

“The situation is dynamic. What’s happening in logistics tomorrow may be completely different … the situation is changing every day,” he said. The logistics around the battery, which can’t be sent in the air, have gotten worse.

But the company is not thinking of reducing the demand for the product despite having a long delivery time. Enface expects to send 90 to 100 MWh storage systems in the fourth quarter, up from 65 MWh in the third quarter.

Enface is focused on reducing costs, and raising prices will help offset rising costs for consumers. But gross margins may be lower in the current quarter. Third-quarter GAAP gross margin came in at 39.9%. The guidelines for the fourth quarter put that number between 37% and 40%.

The company is also expanding its product base. On Monday Enphase announced IQ8 – a new microinverter that allows a solar system to continue working even when the grid is down and without storage on site.

“Overall, this was a strong quarter, as higher logistics costs were offset by price increases and cost management, and microinverters outperformed supply,” Citi wrote in a note addressed to clients after the earnings announcement.

Shares of Enface are down 1% for 2021 as of Tuesday closing.



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