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(Bloomberg) — Solar equipment giant Enphase Energy Inc. sees the sluggish US rooftop market rebounding this year even as the company forecast disappointing sales for the second quarter.
Enphase shares dipped 5.5% in post-market trading after the company reported first-quarter results that missed analyst expectations as US revenue fell 34% compared to the prior quarter. The weak results dragged down rival SolarEdge Technologies Inc. and home solar providers Sunrun Inc. and Sunnova Energy International Inc. The company’s earnings often are seen as a bellwether for the broader industry.
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Investors have been looking for signs of a recovery in the home solar market that has been hurt by higher interest rates that make it more expensive for people to buy panels. California, the biggest solar market and where Enphase is based, cut payments to homes and businesses that sell excess solar power back to the grid, a move that left the industry reeling. Residential solar installations are projected to decline in the US by 13% this year, according to a report the Solar Energy Industries Association and Wood Mackenzie.
“We believe Q1 was the bottom quarter,” said Enphase Chief Executive Officer Badri Kothandaraman during an investor call. “California is becoming less of a wild card.”
The company sees second quarter revenue between $290 million and $330 million, compared to analyst estimates of $349.3 million.
Enphase should be able to work through the remainder of its inventory backlog in the second quarter, Kothandaraman said in an interview. “In the second half of the year, we expect stronger growth in demand,” he added.
California installers working with Enphase say their businesses are down by half or more, however they were starting to report stronger sales in March compared to the prior two months, Kothandaraman said.
US markets outside of California should recover from a typical winter lull and higher utility rates in Germany and France will result in higher sales in Europe, he said.
“Lower-than-expected 1Q results and issued guidance continue to weigh on the story, steepening the road to recovery,” Sophie Karp, an analyst for KeyBanc Capital Markets Inc., wrote in a research note.
(Updates with CEO, analyst comments starting in the sixth paragraph.)
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