Fremont, California-based Enphase Energy, an energy technology company that develops and manufactures solar micro-inverters, battery energy storage, and EV charging stations primarily for residential customers, has announced the company will cease manufacturing operations in two locations, has announced a ten-percent reduction in its workforce, and will continue its cost-cutting initiative.
The reduction in force will impact 350 contractors and employees.
According to President and CEO Badri Kothandaraman, "I am writing to share details about difficult changes that we are making in our company to address the challenging macroeconomic environment while continuing to invest in our strategic priorities. Over the last few months, we have made significant efforts to reduce our operating costs, but we have more work to do to right-size our operations and become leaner and more efficient.
We have decided to reduce our global workforce by approximately 10%, impacting approximately 350 contractors and employees, streamlining our operations by ceasing contract manufacturing operations in two locations—Timisoara, Romania, and Wisconsin, United States—and resizing other contract manufacturing sites. In addition, we will continue our hiring and travel freeze through 2024 and cut discretionary spending on several other fronts.
I take full accountability for these decisions and how we got here. I understand this is difficult for all of us, especially when it impacts our valued colleagues and friends who are departing. We will treat our departing colleagues with the utmost respect and empathy, provide them with severance packages, engage in consultation where required, and support them with their transitions. I want to express my personal appreciation for the meaningful contributions they have made, and I wish them all the best in their future endeavors.
During this challenging phase, we must return to our basics, and become leaner and more efficient. Our overall strategy is still the same—to make best-in-class home energy systems, continue to innovate on new technology and deliver high-quality products and a superior customer experience.
We looked at several other areas to cut our spending and increase our efficiency before making the tough decision to reduce headcount. Keeping our singular focus on delivering high-quality home energy systems, we decided to consolidate our product and engineering operations across business units for efficiency and strategic alignment.
We are looking to cut expenses further by consolidating facilities across our worldwide sites to reduce our real-estate footprint, minimizing capital purchases, and, with limited exceptions, extending the hiring and travel freeze through 2024. We are also incorporating tighter profitability criteria in our employee cash bonus program. While we do not expect to give salary increases in 2024 (with limited exceptions), we will maintain the promotion process, and we expect to award annual stock grants to employees earlier in the year than in prior years.
All of these actions together will result in a one-time restructuring and asset impairment charges of approximately $16 million to $18 million for the company.
It is a tough moment for all of us. Some of our talented colleagues and friends are leaving us. They have helped us build one of the most innovative solar companies in the world. Together, we have made huge advancements toward advancing a sustainable future for all. I thank those of you who are departing for your service to Enphase and wish you well in continuing to do great work at other places.
For those staying, I understand there is worry and uncertainty about the future. What does 2024 have in store for us? Our focus in the first half of 2024 will be on clearing the excess inventory in the channel worldwide. However, we see that there is greater confidence in the U.S. Federal Reserve cutting the interest rate next year, and we hope this leads to growth in the back half of the year.
Our strategy remains unchanged, and our purpose and values are clear. We will continue to focus on delivering the best-in-class home energy systems around the world. Let's continue to innovate, uphold the highest quality, and provide excellent customer experience. I am confident that we will come out of this downturn stronger and more resilient than before.
Change is coming. There will always be a tomorrow, no matter how much you may try to ignore it. There are no guarantees in life or promises for a bright future. We see good people being laid off through no fault of their own. Just because something bad hasn't happened yet doesn't mean it won't. It can happen to anyone, anytime, anywhere. No one is guaranteed to wake up tomorrow and still have a job by evening. Are you now wondering, Am I Next?