Microinverter and battery storage supplier Enphase Energy’s profit for the fourth quarter (Q4) of the financial year (FY) 2023 fell 65% from last year as the Nasdaq-listed company faced slowing demand and high inventory levels at its distribution partners.

Enphase reported a net profit of $73.4 million versus $212.4 million last year. Its quarterly revenue also fell by about 58%, from $724.6 million to $302.6 million in Q4 of FY 2023.

The company attributed the decline in its revenue to sequentially lower sales from the U.S. and Europe by about 35% and 70%, respectively.

Owing to reduced demand, the company said it is ceasing operations at its contract manufacturing locations in Romania and Wisconsin. It will instead focus on manufacturing microinverters in the U.S. with its two existing contract manufacturing partners in South Carolina and Texas.

The company now expects to have a global capacity of about 7.25 million microinverter units per quarter, of which 5 million units of capacity will be in the U.S. It shipped about 913,000 U.S.-made microinverters in the quarter.

As for battery storage, Enphase shipped about 80.7 MWh of its IQ Batteries in the fourth quarter of 2023.

“We have been managing through a period of slowdown in demand,” said CEO Badri Kothandaraman during a post-earning investor call. “We think Q1 could be the bottom quarter. Europe is already showing early signs of recovery, and we expect the non-California states to bounce back quickly,” he added.

Full Year 2023

Enphase’s full-year profit was also marginally lower, by about 5%, compared to last year. The company reported FY 2023 profit of $613 million compared to $647 million last year.

Meanwhile, its revenue fell by 1.7% to $2.29 billion from $2.33 billion last year.

In July of 2023, the company approved a share repurchase program of up to $1 billion of shares of its common stock.

Enphase’s net income fell by 19% in the third quarter as well, owing to adverse macroeconomic conditions. Specifically, revenue within the U.S. decreased by about 16%.

Last year, Mercom reported that inverter costs increased by over 10% as manufacturers struggled to meet demand due to the limited availability of semiconductors, crucial components for inverter manufacturing.