SolarEdge Announces Fiscal Second Quarter Financial Results

FREMONT, Calif.--(BUSINESS WIRE)--Feb. 3, 2016-- SolarEdge Technologies, Inc. (NASDAQ: SEDG) today announced its financial results for the fiscal second quarter ended December 31, 2015.

Fiscal Second Quarter 2016 Highlights

• Record revenue of $124.8 million, up 8.5% from last quarter and 70.3% year-over-year
• GAAP gross margin of 30.9%
• GAAP net income of $24.1 million
• Non-GAAP net income of $19.8 million
• 416 Megawatts (AC) of inverters shipped

“Execution of our strategy and related business plan has resulted in another successful quarter,” said Guy Sella, Founder, Chairman and CEO of SolarEdge. “In addition to our revenue growth and increased profitability, this quarter we installed our first HD-wave inverter units and we commenced shipments of our StorEdge solution. We remain committed to introducing innovative technologies to continue to drive down the cost of and broaden the application of renewable energy technologies.”

Revenues

The Company reported revenues of $124.8 million, an increase of $9.8 million, or 8.5% from the prior quarter and an increase of $51.5 million or 70.3% from the second quarter of fiscal 2015.

Gross Margin

GAAP gross margin was 30.9%, up from 29.1% in the prior quarter and up from 21.5% in the second quarter of fiscal 2015. Non-GAAP gross margin was 31.1%, up from 29.3% in the prior quarter and 21.6% in the second quarter of fiscal 2015. See “Reconciliation on Non-GAAP Measures” below.

Operating Expenses

Operating expenses were $19.3 million, or 15.5% of revenue, increasing from $18.7 million, or 16.2% of revenue, in the prior quarter and an increase from $11.5 million, or 15.8% of revenue, when compared to the second quarter of fiscal 2015.

Operating Income

Operating income was $19.3 million, up from $14.9 million in the prior quarter and up from operating income of $4.2 million in the second quarter of fiscal 2015.

Financial Expenses

Financial expenses were $1.0 million compared to $0.1 million in the previous quarter and $0.5 million in the second quarter of fiscal 2015.

Tax Benefit

Tax benefit for the quarter was $5.8 million. Because the Company is profitable, and expects to continue to be profitable, the Company has recorded for the first time a $6.6 million tax asset, representing expected future utilization of its carry forward net operating losses and the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes as well as the amounts used for income tax purposes.

Net Income

GAAP net income was $24.1 million, up from $14.4 million in the prior quarter and up from $3.4 million in the second quarter of fiscal 2015. Non-GAAP net income was $19.8 million, an increase from $16.3 million in the prior quarter and an increase from $4.1 million in the second quarter of fiscal 2015. See “Reconciliation on Non-GAAP Measures” below.

EPS

GAAP net diluted earnings per share (“EPS”) was $0.55, up from $0.32 in the prior quarter and up from $0.00 in the second quarter of fiscal 2015. Non-GAAP net diluted EPS was $0.44, an increase from $0.36 in the prior quarter and an increase from $0.12 in the second quarter of fiscal 2015. See “Reconciliation on Non-GAAP Measures” below.

Cash

At December 31, 2015, cash, cash equivalents, restricted cash and investments totaled $162.0 million compared to $150.3 million on September 30, 2015. During the fiscal second quarter, the Company generated $13.1 million of cash from operating activities.

Outlook for the Third Quarter of Fiscal 2016

The Company provides guidance for the third quarter of fiscal 2016 as follows:

• Revenues expected to be within the range of $121 million to $125 million;
• Gross margins expected to be within the range of 29% to 31%.

Conference Call

The Company will host a conference call to discuss these results at 5:00 P.M. Eastern Time on Wednesday, February 3, 2016. The call will be available, live, to interested parties by dialing +1 877-719-9810. For international callers, please dial +1 719-325-4783. The Conference ID number is 9448208. A live webcast will also be available in the Investor 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 remain available for approximately 30 calendar days.

About SolarEdge

SolarEdge provides an intelligent inverter solution that has changed the way power is harvested and managed in solar photovoltaic systems. The SolarEdge DC optimized inverter system maximizes power generation at the individual PV module-level while lowering the cost of energy produced by the solar PV system. The SolarEdge system consists of power optimizers, inverters, storage solutions and a cloud-based monitoring platform and addresses a broad range of solar market segments, from residential solar installations to commercial and small utility-scale solar installations.

Use of Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures in this release, including non-GAAP gross margin, 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 press 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.

For a reconciliation of non-GAAP measures to their most comparable GAAP measures, please see “Reconciliation on Non-GAAP Measures” below.

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; new products and services; 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 revenues, gross margins, other financial 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 Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2015 and, Quarterly Report on Form 10-Q for the quarter ended December 31, 2015, when it becomes available, Current Reports on Form 8-K and other reports filed with the SEC. All information set forth in this release is as of February 3, 2016. SolarEdge 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 December 31,								Six months ended December 31,
		2015				2014				2015				2014
		Unaudited								Unaudited
Revenues		$	124,832			$	73,290			$	239,886			$	140,259
Cost of revenues			86,250				57,509				167,777				110,448
Gross profit			38,582				15,781				72,109				29,811
Operating expenses:
Research and development, net			8,299				4,768				15,290				9,827
Sales and marketing			8,833				5,658				17,077				11,119
General and administrative			2,188				1,121				5,606				2,280
Total operating expenses			19,320				11,547				37,973				23,226
Operating income			19,262				4,234				34,136				6,585
Financial income (expenses), net			(959	)			(458	)			(1,031	)			58
Income before taxes on income			18,303				3,776				33,105				6,643
Taxes on income (tax benefit)			(5,802	)			401				(5,432	)			748
Net income		$	24,105			$	3,375			$	38,537			$	5,895

SOLAREDGE TECHNOLOGIES INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
		December 31,				June 30,
		2015				2015
		Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	106,150			$	144,750
Restricted cash			3,417				3,639
Marketable Securities			27,137				-
Trade receivables, net			46,685				35,428
Prepaid expenses and other accounts receivable			24,233				32,645
Inventories			87,400				73,950
Total current assets			295,022				290,412
PROPERTY AND EQUIPMENT, NET			21,428				14,717
LONG-TERM ASSETS:
Long-term marketable securities			25,290				-
Long-term prepaid expenses and lease deposits			510				529
Deferred tax assets			6,565				-
Intangible assets, net			758				-
			33,123				529
Total assets		$	349,573			$	305,658
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables		$	61,977			$	80,684
Employees and payroll accruals			12,864				6,814
Warranty obligations			11,862				9,431
Deferred revenues			1,983				1,676
Accrued expenses and other accounts payable			7,169				6,987
Total current liabilities			95,855				105,592
LONG-TERM LIABILITIES
Warranty obligations			29,032				22,448
Deferred revenues			11,427				8,289
Lease incentive obligation			2,320				2,385
Total long-term liabilities			42,779				33,122
STOCKHOLDERS’ EQUITY:
Share capital			4				4
Additional paid-in capital			292,681				287,152
Accumulated other comprehensive loss			(293	)			(222	)
Accumulated deficit			(81,453	)			(119,990	)
Total stockholders’ equity			210,939				166,944
Total liabilities and stockholders’ equity		$	349,573			$	305,658

SOLAREDGE TECHNOLOGIES INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
		Six months ended December 31,
		2015				2014
		Unaudited
Cash flows provided by operating activities:
Net income		$	38,537			$	5,895
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			1,629				1,103
Amortization of intangible assets			42				-
Amortization of premiums on available-for-sale marketable securities			35				-
Stock-based compensation related to employee and non-employee consultants stock options			4,057				780
Realized gains on cash flow hedges			(2	)			-
Financial income, net related to term loan			-				(656	)
Remeasurement of warrants to purchase preferred and common stock			-				265
Changes in assets and liabilities:
Inventories			(13,452	)			(22,128	)
Prepaid expenses and other accounts receivable			6,504				(10,671	)
Trade receivables, net			(11,268	)			(5,919	)
Deferred tax assets, net			(6,527	)			-
Trade payables			(18,701	)			33,429
Employees and payroll accruals			6,073				361
Warranty obligations			9,015				6,116
Deferred revenues			3,446				1,694
Accrued expenses and other accounts payable			(273	)			(860	)
Lease incentive obligation			(65	)			-
Net cash provided by operating activities			19,050				9,409
Cash flows used in investing activities:
Investment in available-for-sale marketable securities			(52,860	)			-
Purchase of property and equipment			(5,636	)			(3,133	)
Purchase of intangible assets			(800	)			-
Decrease (increase) in restricted cash			222				(1,807	)
Decrease (increase) in short and long-term lease deposits			37				(31	)
Net cash used in investing activities			(59,037	)			(4,971	)
Cash flows from financing activities:
Proceeds from short-term bank loans		$	-			$	6,000
Repayments of short term loan			-				(19,326	)
Repayments of term loan			-				(1,578	)
Proceeds from issuance of Series E Convertible Preferred stock			-				24,837
Issuance costs			-				(292	)
Proceeds from exercise of employee stock options			1,472				16
Net cash provided by financing activities			1,472				9,657
Increase (decrease) in cash and cash equivalents			(38,515	)			14,095
Cash and cash equivalents at the beginning of the period			144,750				9,754
Erosion due to exchange rate differences			(85	)			(75	)
Cash and cash equivalents at the end of the period		$	106,150			$	23,774

SOLAREDGE TECHNOLOGIES INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (In thousands, except per share data) (unaudited)
Reconciliation of Non-GAAP Financial Measures
		Three months ended						Six months ended
		Dec 31, 2015		Sep 30, 2015		Dec 31, 2014 (1)		Dec 31, 2015		Dec 31, 2014 (1)
Gross profit (GAAP)		38,582		33,527		15,781		72,109		29,811
Stock-based compensation		209		180		74		389		112
Gross profit (Non-GAAP)		38,791		33,707		15,855		72,498		29,923
Gross margin (GAAP)		30.9%		29.1%		21.5%		30.1%		21.3%
Stock-based compensation		0.2%		0.2%		0.1%		0.1%		0.0%
Gross margin (Non-GAAP)		31.1%		29.3%		21.6%		30.2%		21.3%
Operating expenses (GAAP)		19,320		18,653		11,547		37,973		23,226
Stock-based compensation R&D		518		395		155		913		266
Stock-based compensation S&M		749		616		153		1,365		254
Stock-based compensation G&A		750		641		77		1,391		148
Operating expenses (Non-GAAP)		17,303		17,001		11,162		34,304		22,558
Operating income (GAAP)		19,262		14,874		4,234		34,136		6,585
Stock-based compensation		2,226		1,832		459		4,058		780
Operating income (Non-GAAP)		21,488		16,706		4,693		38,194		7,365
Finance expenses (Income) (GAAP)		959		72		458		1,031		(58)
Warrants remeasurement		----		----		280		----		265
Finance expenses (Non-GAAP)		959		72		178		1,031		(323)
Tax on income (Tax benefit) (GAAP)		(5,802)		370		401		(5,432)		748
Tax benefit due to deferred tax asset		6,527		----		----		6,527		----
Tax on income (Tax benefit) (Non-GAAP)		725		370		401		1,095		748
Net income (GAAP)		24,105		14,432		3,375		38,537		5,895
Stock-based compensation		2,226		1,832		459		4,058		780
Warrants remeasurement		----		----		280		----		265
Tax benefit due to deferred tax asset		(6,527)		----		----		(6,527)		----
Net income (Non-GAAP)		19,804		16,264		4,114		36,068		6,940
Net basic earnings per share (GAAP)		0.61		0.37		----		0.98		----
Stock-based compensation		0.06		0.04		0.01		0.10		0.02
Warrants remeasurement		----		----		0.01		----		0.01
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods		----		----		0.11		----		0.20
Tax benefit due to deferred tax asset		(0.17)		----		----		(0.16)		----
Net basic earnings per share (Non-GAAP)		0.50		0.41		0.13		0.92		0.23
Number of shares used in computing net basic earnings per share (GAAP)		39,511,967		39,301,620		2,815,694		39,406,797		2,814,188
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods		----		----		28,202,001		----		26,888,953
Number of shares used in computing net basic earnings per share (Non-GAAP)		39,511,967		39,301,620		31,017,695		39,406,797		29,703,141
Net diluted earnings per share (GAAP)		0.55		0.32		----		0.87		----
Stock-based compensation		0.03		0.04		----		0.07		0.01
Warrants remeasurement		----		----		0.01		----		----
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods		----		----		0.11		----		0.20
Tax benefit due to deferred tax asset		(0.14)		----		----		(0.14)		----
Net diluted earnings per share (Non-GAAP)		0.44		0.36		0.12		0.80		0.21
Number of shares used in computing net diluted earnings per share (GAAP)		44,007,348		44,455,964		2,815,694		44,231,660		2,814,188
Stock-based compensation		1,341,335		686,470		3,173,096		1,013,903		2,620,910
Warrants remeasurement		----		0		6,739		0		10,109
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods		----		----		28,202,001		----		26,888,953
Number of shares used in computing net diluted earnings per share (Non-GAAP)		45,348,683		45,142,434		34,197,530		45,245,563		32,334,160

(1) Assumes shares of common stock outstanding after accounting for the automatic conversion of the shares of preferred stock then outstanding into common stock at the beginning of fiscal year 2015.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160203006365/en/

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