Enphase Energy Workforce Reduction

(Reuters) – Enphase Energy will cut its global workforce by about 17%, affecting around 500 employees and contractors, as announced on Friday. This decision comes as the solar inverter maker aims to streamline operations amid declining residential solar demand.

The company has been struggling with a deteriorating market for residential solar in Europe and plans to focus contract manufacturing in four existing locations – two in the US, one in India, and one in China. Additionally, Enphase will cease its contract manufacturing operations in Guadalajara, Mexico.

Enphase's shares have dropped nearly 50% this year due to falling demand for its services, exacerbated by lower electricity prices and heightened competition in crucial markets like the Netherlands and Germany.

The company anticipates incurring about $17 million to $20 million in restructuring and asset impairment charges, with approximately $14 million expected in the fourth quarter of 2024. Total cash expenditures are projected to be around $11 million to $12 million.

This latest move follows previous job cuts announced in December last year, when Enphase revealed it would reduce its global workforce by 10%, impacting about 350 contractors and employees.

CEO Badri Kothandaraman communicated in a message to employees, disclosed in a regulatory filing, that the ongoing challenges in the 2023 solar market continue to affect the company and its partners in 2024. Factors such as decreased U.S. residential solar demand due to high-interest rates and waning demand in Europe, caused by policy changes and utility rate adjustments, have contributed to ongoing unpredictability in the industry.

Enphase stated that its adjusted operating expenses for the fourth quarter are expected to rise as a consequence of the restructuring plan. The company anticipates reducing these adjusted operating expenses to a range of $75 million to $80 million per quarter by 2025 and expects to substantially complete the restructuring initiatives by the end of the first quarter of 2025.