Enphase Energy Inc. filed SEC Form 8-K: Costs Associated with Exit or Disposal Activities, Regulation FD Disclosure, Financial Statements and Exhibits
$ENPH
Semiconductors
Technology
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 7, 2024
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Item 2.05. Costs Associated with Exit or Disposal Activities.
On November 7, 2024, Enphase Energy, Inc. (the "Company" or "Enphase") notified its employees of a restructuring plan (the “Plan”) designed to better align its workforce and cost structure with the Company’s business needs, strategic priorities and ongoing commitment to profitable growth – all while increasing operational efficiencies and reducing operating costs.
As part of the Plan, the Company will be reducing headcount and moving certain functions to cost efficient regions, affecting approximately 17% of its global workforce - approximately 500 employees and contractors. In addition, the Company will streamline its operations by focusing contract manufacturing in four existing locations: two in the United States, one in India and one in China; and it will cease its contract manufacturing operations in Guadalajara, Mexico. The Company’s global capacity for microinverters will remain steady at approximately 7.25 million microinverter units per quarter, of which approximately 5 million units of capacity is in the United States.
The Company estimates that it will incur approximately $17 million to $20 million in restructuring and asset impairment charges, of which approximately $14 million are expected to be incurred in the fourth quarter of 2024, and approximately $11 million to $12 million will be total cash expenditures. The estimated impact of charges related to the Plan is expected to be approximately $10 million to $13 million in employee severance and benefits, $4 million in asset impairment charges, and $3 million related to contract manufacturing and office closures.
The actions associated with employee restructuring under the Plan are expected to be substantially complete within the first half of 2025, subject to local laws.
Item 7.01. Regulation FD Disclosure.
The financial outlook for the fourth quarter of 2024 furnished in the Company’s third quarter of 2024 earnings release included with its Current Report on Form 8-K on October 22, 2024 remains unchanged except for GAAP operating expenses, which are expected to increase by approximately $14 million of restructuring and asset impairment charges in the fourth quarter in connection with the Plan.
The Company expects to reduce its non-GAAP operating expenses to be in the range of $75 million to $80 million a quarter in 2025 when these restructuring actions are substantially complete by end of the first quarter of 2025.
The Company published a Message from the CEO to Enphase Employees on its website about the implementation of the Plan. A copy of this Message from the CEO is attached as Exhibit 99.1 to this report. Information on the Company’s website is not, and will not be deemed, a part of this report or incorporated into this or any other filings that the Company makes with the Securities and Exchange Commission.
The information in Item 7.01 of this Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and shall not be incorporated by reference in any registration statement or other document filed under the Securities Act or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filings, except as shall be expressly set forth by specific reference in such a filing.
Non-GAAP Financial Measures
The Company reports its financial results in accordance with GAAP; however, the Company presents forward-looking non-GAAP operating expenses in this Current Report on Form 8-K. Non-GAAP financial measures are financial measures that are derived from the condensed consolidated financial statements, but that are not presented in accordance with GAAP. The Company uses these non-GAAP financial measures to analyze its operating performance and future prospects, develop internal budgets and financial goals, and to facilitate period-to-period comparisons. The Company believes that these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business. Investors should consider these non-GAAP financial measures in addition to, and not as a substitute for, its financial measures prepared in accordance with GAAP.
With respect to non-GAAP operating expenses, the Company is not able to provide a reconciliation of forward-looking measures where the quantification of certain excluded items reflected in the measures cannot be calculated or predicted at this time without unreasonable efforts. In these cases, the reconciling information that is unavailable includes a forward-looking range of financial performance measures beyond its control, such as stock-based compensation. For the same reasons, the Company is unable to address the probable significance of the unavailable information, which could have a potentially unpredictable and potentially significant impact on its future GAAP operating expenses. Forward-looking non-GAAP financial measures may vary materially from the corresponding GAAP financial measures.
Forward-looking Statements
This Form 8-K contains forward-looking statements, including, but not limited to, statements related to the expected costs and charges associated with the Plan; the Company’s plans to better align its workforce and cost structure with the Company’s business needs, strategic priorities and ongoing commitment to profitable growth; its expectations about the increase to GAAP operating expenses in the fourth quarter of 2024; and its expectations about non-GAAP operating expense level in 2025. These forward-looking statements are based on the Company’s current expectations and inherently involve significant risks and uncertainties. The Company’s actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, risks related to cost reduction efforts and related key initiatives, in addition to other risks described in more detail in its most recently filed Annual Report on Form 10-K and other documents on file with the SEC from time to time and available on the SEC’s website at www.sec.gov. The Company undertakes no duty or obligation to update any forward-looking statements contained in this Form 8-K as a result of new information, future events or changes in its expectations.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits.
| Exhibit Number | Description | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| By: | November 8, 2024 | ENPHASE ENERGY, INC. | |||||||||
| By: | /s/ Mandy Yang | ||||||||||
| Mandy Yang | |||||||||||
| Executive Vice President and Chief Financial Officer | |||||||||||