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SolarEdge Announces Third Quarter 2018 Financial Results
November 1, 2018 at 4:05 PM EDT

FREMONT, Calif.--(BUSINESS WIRE)--Nov. 1, 2018-- SolarEdge Technologies, Inc. (Nasdaq: SEDG), a global leader in smart energy technology, today announced its financial results for the third quarter ended September 30, 2018.

Third Quarter 2018 Highlights

  • Record revenues of $236.6 million, up 42% year-over-year
  • GAAP net income of $45.6 million
  • GAAP net diluted EPS of $0.95
  • Non-GAAP net diluted EPS of $0.86
  • 1,083 Megawatts (AC) of inverters shipped

“This quarter we continued to grow our revenues and market share,” said Guy Sella, Founder, Chairman and CEO of SolarEdge. “We shipped 1.1GW of systems and delivered over three million power optimizers, with record high shipments of commercial products.”

“While continuing to expand our existing business, we closed the asset acquisition of a new UPS division, Gamatronic. In the first weeks of October, we also signed and closed the Kokam acquisition which will expand our smart energy offerings, adding proven battery storage options to our product portfolio. These acquisitions will take us a further step toward offering full solutions that are more comprehensive, smarter and beneficial.”

Third Quarter 2018 Summary

The Company reported record revenues of $236.6 million, up 4% from $227.1 million in the prior quarter and up 42% from $166.6 million year over year.

GAAP gross margin was 33.0%, down from 36.1%, in the prior quarter and down from 34.9% year over year.

GAAP operating expenses were $43.9 million, up 6% from $41.3 million in the prior quarter and up 35% from $32.7 million year over year.

GAAP operating income was $34.0 million, down 16% from $40.7 million in the prior quarter and up 34% from $25.4 million year over year.

GAAP net income was $45.6 million, up 32% from $34.6 million in the prior quarter and up 63% from $28.0 million year over year.

Non-GAAP net income was $42.7 million, up 5% from $40.6 million in the prior quarter and up 35% from $31.5 million year over year.

GAAP net diluted earnings per share (“EPS”) was $0.95, up from $0.72 in the prior quarter and up from $0.61 year over year.

Non-GAAP net diluted EPS was $0.86, up from $0.82 in the prior quarter and up from $0.66 year over year.

Cash flow from operating activities was $ 34.3 million, down from $43.9 million in the prior quarter and up from $33.7 million year over year.

As of September 30, 2018, cash, cash equivalents, restricted cash, bank deposit and marketable securities totaled $453.2 million, compared to $437.6 million on June 30, 2018.

Outlook for the Fourth Quarter 2018

The Company also provides guidance for the fourth quarter ending December 31, 2018 as follows:

  • Revenues to be within the range of $245 million to $255 million;
  • GAAP gross margins expected to be within the range of 30% to 32%, depending on the effects of recent M&A and
  • Non GAAP gross margins expected to be within the range of 32% to 34%.

Conference Call

The Company will host a conference call to discuss these results at 4:30 P.M. ET on Thursday, November 1, 2018. The call will be available, live, to interested parties by dialing 800-682-0995. For international callers, please dial +1 334-323-0505. The Conference ID number is 2786736. A live webcast will also be available in the Investors Relations section of the Company’s website at: http://investors.solaredge.com

A replay of the webcast will be available in the Investor Relations section of the Company’s web site approximately two hours after the conclusion of the call and will remain available for approximately 30 calendar days.

About SolarEdge

SolarEdge is a global leader in smart energy technology. By leveraging world-class engineering capabilities and with a relentless focus on innovation, SolarEdge creates smart energy solutions that power our lives and drive future progress. SolarEdge developed an intelligent inverter solution that changed the way power is harvested and managed in photovoltaic (PV) systems. The SolarEdge DC optimized inverter seeks to maximize power generation while lowering the cost of energy produced by the PV system. Continuing to advance smart energy, SolarEdge addresses a broad range of energy market segments through its PV, storage, EV charging, UPS, and grid services solutions. SolarEdge is online at solaredge.com

Use of Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures in this release, such as non-GAAP net income and non-GAAP net diluted EPS. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States, or GAAP. Reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in the accompanying tables to this release. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated 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.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This release contains forward looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include information, among other things, concerning: our possible or assumed future results of operations; future demands for solar energy solutions; business strategies; technology developments; financing and investment plans; dividend policy; competitive position; industry and regulatory environment; general economic conditions; potential growth opportunities; and the effects of competition. These forward-looking statements are often characterized by the use of words such as “anticipate,” “believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or similar expressions and the negative or plural of those terms and other like terminology.

Forward-looking statements are only predictions based on our current expectations and our projections about future events. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Given these factors, you should not place undue reliance on these forward-looking statements. These factors include, but are not limited to, the matters discussed in the section entitled “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2017, filed on February 20, 2018, Current Reports on Form 8-K and other reports filed with the SEC. All information set forth in this release is as of August 2, 2018. The Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.

   

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

Three months ended
September 30,

Nine months ended
September 30,

2018   2017 2018   2017
Unaudited Unaudited
 
Revenues $ 236,578 $ 166,552 $ 673,567 $ 417,705
Cost of revenues   158,596     108,498     434,042     273,909  
 
Gross profit   77,982     58,054     239,525     143,796  
 
Operating expenses:
 
Research and development 20,109 14,363 57,535 38,546
Sales and marketing 16,938 13,217 49,097 35,953
General and administrative   6,898     5,078     17,427     12,782  
 

Total operating expenses

  43,945     32,658     124,059     87,281  
 
Operating income   34,037     25,396     115,466     56,515  
 
Financial expenses (income), net   689     (2,666 )   2,585     (7,671 )
 
Income before taxes on income 33,348 28,062 112,881 64,186
 
Taxes on income (tax benefit)   (12,295 )   91     (3,016 )   (484 )
 
Net income $ 45,643   $ 27,971   $ 115,897   $ 64,670  
 
   

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 
September 30, December 31,
2018 2017
Unaudited
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents $ 192,876 $ 163,163
Short-term bank deposits 7,779 -
Restricted cash 2,083 1,516
Marketable Securities 148,252 77,264
Trade receivables, net 151,088 109,528
Inventories 107,179 82,992
Prepaid expenses and other current assets   46,396     42,223  

Total current assets

  655,653     476,686  
 
LONG-TERM ASSETS:
Marketable securities 102,240 103,120
Property and equipment, net 73,415 51,182
Deferred tax assets, net 13,218 8,340
Intangible assets, net 3,762 1,115
Goodwill 2,782 -
Other non-current assets   1,108     862  

Total long term assets

  196,525     164,619  
 

Total assets

$ 852,178   $ 641,305  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Trade payables, net $ 83,459 $ 69,488
Employees and payroll accruals 23,680 22,544
Warranty obligations 21,660 14,785
Deferred revenues 5,795 2,559
Accrued expenses and other current liabilities   31,556     20,378  

Total current liabilities

  166,150     129,754  
 
LONG-TERM LIABILITIES:
Warranty obligations 86,059 64,026
Deferred revenues 53,663 31,453
Other non-current liabilities   7,343     18,605  

Total long-term liabilities

  147,065     114,084  
 
COMMITMENTS AND CONTINGENT LIABILITIES
 
STOCKHOLDERS’ EQUITY:
Common stock 5 4
Additional paid-in capital 361,744 331,902
Accumulated other comprehensive loss (983 ) (611 )
Retained earnings   178,197     66,172  

Total stockholders’ equity

  538,963     397,467  
 

Total liabilities and stockholders’ equity

$ 852,178   $ 641,305  
 
 

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

Nine months ended
September 30,

2018   2017
Unaudited

Cash flows provided by operating activities:

Net income $ 115,897 $ 64,670
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of property and equipment

7,997 4,824
Amortization of intangible assets 404 108
Amortization of premiums on available-for-sale marketable securities 1,242 1,310
Stock-based compensation 21,927 12,183
Deferred tax assets, net (4,789 ) (3,063 )
Loss on disposals of fixed assets 64 -
Realized gain from cash flow hedge (9 ) -
Changes in assets and liabilities:
Inventories (18,120 ) 5,005
Prepaid expenses and other assets (4,800 ) (17,420 )
Trade receivables, net (42,418 ) (20,168 )
Trade payables, net 14,006 8,667
Employees and payroll accruals 1,200 4,509
Warranty obligations 28,847 13,192
Deferred revenues 21,576 9,699
Accrued expenses and other liabilities   (819 )   7,314  
Net cash provided by operating activities   142,205     90,830  
 

Cash flows used in investing activities:

Purchase of property and equipment (30,051 ) (13,203 )
Acquisitions and purchases of assets (11,223 ) -
Investment in short term bank deposits (7,779 ) -
Investment in available-for-sale marketable securities (143,150 ) (82,469 )
Maturities of available-for-sale marketable securities   71,632     46,513  
Net cash used in investing activities $ (120,571 ) $ (49,159 )
 

Cash flows from financing activities:

Proceeds from issuance of shares under stock purchase plan and upon exercise of stock-based awards $ 7,915   $ 3,795  
Net cash provided by financing activities   7,915     3,795  
 
Net increase in cash, cash equivalents and restricted cash 29,549 45,466
Cash, cash equivalents and restricted cash at the beginning of the period 164,679 105,580
Effect of exchange rate differences on cash, cash equivalents and restricted cash   731     (198 )
 
Cash, cash equivalents and restricted cash at the end of the period $ 194,959   $ 150,848  
 
         

SOLAREDGE TECHNOLOGIES INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands, except gross profit and per share data)

(Unaudited)

 
Reconciliation of Non-GAAP Financial Measures
 
Reconciliation of GAAP to Non-GAAP Gross Profit
Three months ended Nine months ended
September 30, 2018 June 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
 
Gross profit (GAAP) 77,982 81,946 58,054 239,525 143,796
Stock-based compensation 1,127 968 538 3,019 1,548
Cost of product adjustment 208 ---- ---- 208 ----
Intangible Assets Amortization 193 ---- ---- 193 ----
Gross profit (Non-GAAP) 79,510 82,914 58,592 242,945 145,344
 
Reconciliation of GAAP to Non-GAAP Gross Margin
Three months ended Nine months ended
September 30, 2018 June 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
Gross margin (GAAP) 33.0% 36.1% 34.9% 35.6% 34.4%
Stock-based compensation 0.5% 0.4% 0.3% 0.5% 0.4%
Cost of product adjustment 0.1% ---- ---- 0.0% ----
Intangible Assets Amortization 0.1% ---- ---- 0.0% ----
Gross margin (Non-GAAP) 33.6% 36.5% 35.2% 36.1% 34.8%
 
Reconciliation of GAAP to Non-GAAP Operating expenses
Three months ended Nine months ended
September 30, 2018 June 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
Operating expenses (GAAP) 43,945 41,281 32,658 124,059 87,281
Stock-based compensation R&D 2,988 2,605 1,423 7,975 3,908
Stock-based compensation S&M 2,250 2,094 1,439 6,548 3,673
Stock-based compensation G&A 1,585 1,461 1,137 4,385 3,054
Intangible Assets Amortization - R&D 110 ---- ---- 110 ----
Intangible Assets Amortization - S&M 29 ---- ---- 29 ----
Fixed Assets disposal ---- ---- ---- 64 ----
Operating expenses (Non-GAAP) 36,983 35,121 28,659 104,948 76,646
 
Reconciliation of GAAP to Non-GAAP Operating income
Three months ended Nine months ended
September 30, 2018 June 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
Operating income (GAAP) 34,037 40,665 25,396 115,466 56,515
Cost of product adjustment 208 ---- ---- 208 ----
Stock-based compensation 7,950 7,128 4,537 21,927 12,183
Intangible Assets Amortization 332 ---- ---- 332 ----
Fixed Assets disposal ---- ---- ---- 64 ----
Operating income (Non-GAAP) 42,527 47,793 29,933 137,997 68,698
 
Reconciliation of GAAP to Non-GAAP Financial expenses (income), net
Three months ended Nine months ended
September 30, 2018 June 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
Financial expenses (income), net (GAAP) 689 2,480 ---- 2,585 ----
Non cash interest (640) (568) ---- (1,720) ----
Financial expenses (income), net (Non-GAAP) 49 1,912 ---- 865 ----
 
Reconciliation of GAAP to Non-GAAP Tax on income (Tax benefit)
Three months ended Nine months ended
September 30, 2018 June 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
Tax on income (Tax benefit) (GAAP) (12,295) 3,617 91 (3,016) (484)
Deferred tax realized (asset) (1,771) (1,697) (959) (4,789) (3,064)
Transition tax of foreign earnings (10,305) ---- ---- (9,485) ----
Tax on income (Tax benefit) (Non-GAAP) (219) 5,314 1,050 11,258 2,580
 
Reconciliation of GAAP to Non-GAAP Net income
Three months ended Nine months ended
September 30, 2018 June 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
Net income (GAAP) 45,643 34,568 27,971 115,897 64,670
Cost of product adjustment 208 ---- ---- 208 ----
Stock-based compensation 7,950 7,128 4,537 21,927 12,183
Intangible Assets Amortization 332 ---- ---- 332 ----
Fixed Assets disposal ---- ---- ---- 64 ----
Non cash interest 640 568 ---- 1,720 ----
Deferred tax realized (asset) (1,771) (1,697) (959) (4,789) (3,064)
Transition tax of foreign earnings (10,305) ---- ---- (9,485) ----
Net income (Non-GAAP) 42,697 40,567 31,549 125,874 73,789
 
Reconciliation of GAAP to Non-GAAP Net basic EPS
Three months ended Nine months ended
September 30, 2018 June 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
Net basic earnings per share (GAAP) 1.00 0.76 0.66 2.57 1.55
Cost of product adjustment 0.00

----

----

0.00

----

Stock-based compensation 0.17 0.16 0.11 0.49 0.29
Intangible Assets Amortization 0.01

----

----

0.01

----

Fixed Assets disposal ---- ---- ---- 0.00 ----
Non cash interest 0.01 0.01 ---- 0.04 ----
Deferred tax realized (asset) (0.04) (0.03) (0.03) (0.11) (0.08)
Transition tax of foreign earnings (0.23) ---- ---- (0.21) ----
Net basic earnings per share (Non-GAAP) 0.94 0.90 0.74 2.80 1.76
 
Reconciliation of GAAP to Non-GAAP Net diluted EPS
Three months ended Nine months ended
September 30, 2018 June 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
Net diluted earnings per share (GAAP) 0.95 0.72 0.61 2.41 1.44
Cost of product adjustment ----

----

----

----

----

Stock-based compensation 0.13 0.12 0.07 0.38 0.19
Intangible Assets Amortization 0.01

----

----

----

----

Fixed Assets disposal ----

----

---- ---- ----
Non cash interest 0.01 0.01 ---- 0.04 ----
Deferred tax realized (asset) (0.03) (0.03) (0.02) (0.10) (0.06)
Transition tax of foreign earnings (0.21) ---- ---- (0.19) ----
Net diluted earnings per share (Non-GAAP) 0.86 0.82 0.66 2.54 1.57
 
Reconciliation of GAAP to Non-GAAP No. of shares used in Net diluted EPS
Three months ended Nine months ended
September 30, 2018 June 30, 2018 September 30, 2017 September 30, 2018 September 30, 2017
Number of shares used in computing net diluted earnings per share (GAAP) 48,281,240 48,291,280 46,131,556 48,091,185 44,937,527
Stock-based compensation 1,463,633 1,341,286 1,535,258 1,446,775 2,084,722
Number of shares used in computing net diluted earnings per share (Non-GAAP) 49,744,873 49,632,566 47,666,814 49,537,960 47,022,249
 

Source: SolarEdge Technologies, Inc.

Investor Contacts
SolarEdge Technologies, Inc.
Ronen Faier, +1 510-498-3263
Chief Financial Officer
investors@solaredge.com
or
Sapphire Investor Relations, LLC
Erica Mannion or Michael Funari, +1 617-542-6180
investors@solaredge.com