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SolarEdge Announces Quarter Ended September 30, 2016 Financial Results
11/09/16

FREMONT, Calif.--(BUSINESS WIRE)--Nov. 9, 2016-- SolarEdge Technologies, Inc. (Nasdaq:SEDG), a global leader in PV inverters, power optimizers, and module-level monitoring services, today announced its financial results for the quarter ended September 30, 2016.

Quarter Ended September 30, 2016 Highlights

  • Revenues for the quarter of $128.5 million
  • GAAP gross margin for the quarter of 32.6%
  • GAAP operating income for the quarter of $18.2 million
  • GAAP net income for the quarter of $15.6 million
  • Non-GAAP net income for the quarter of $20.9 million
  • GAAP net diluted earnings per share for the quarter of $0.35
  • Non-GAAP net diluted earnings per share for the quarter of $0.46
  • 466 Megawatts (AC) of inverters shipped for the quarter

“The solar market is facing challenging times. Despite this, our financial parameters continue to be strong and we are confident in our strategy. We are focused on maintaining and growing our market share by adjusting our plans to the changing environment and continuing to invest in R&D for new innovative products and diligent cost reduction, while improving operational efficiency and increasing geographic diversification,” said Guy Sella, Founder, Chairman and CEO of SolarEdge.

Quarter Ended September 30, 2016 Summary

The Company reported revenues of $128.5 million, an increase of 3% from the prior quarter and an increase of 12% year over year.

GAAP gross margin reached 32.6%, up from 31.4% in the prior quarter and up 29.1% year over year.

GAAP operating expenses were $23.6 million, an increase of 11% from the prior quarter and an increase of 27% year over year.

GAAP operating income was $18.2 million, up from $17.9 million in the prior quarter and form $14.9 million year over year.

GAAP net income was $15.6 million, down from $17.3 million in the prior quarter and up from $14.4 million year over year.

Non-GAAP net income was $20.9 million, up from $19.9 million in the prior quarter and up from $16.3 million year over year.

GAAP net diluted earnings per shares (“EPS”) was $0.35, down from $0.39 in the prior quarter and up from $0.32 year over year.

Non-GAAP net diluted EPS was $0.46, up from $0.44 in the prior quarter and up from $0.36 year over year.

As of September 30, 2016, cash, cash equivalents, restricted cash and marketable securities totaled $206.7 million, compared to $186.6 million on June 30, 2016. As of September 30, 2016, the Company did not have any debt.

Outlook for the Quarter Ending December 31, 2016

The Company also provides guidance for the quarter ending December 31, 2016 as follows:

  • Revenues to be within the range of $110 million to $120 million;
  • Gross margins to be within the range of 30% to 32%.

Conference Call

The Company will host a conference call to discuss these results at 4:30 P.M. ET on Wednesday, November 9, 2016. The call will be available, live, to interested parties by dialing +1 877-852-6581. For international callers, please dial +1 719-325-4800. The Conference ID number is 5288310. 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 website approximately two hours after the conclusion of the call and will 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. SolarEdge is online at http://www.solaredge.com

Use of Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures in this release. 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 Registration Statement on Form S-1 (including the related prospectus), Annual Report on Form 10-K for the fiscal year ended June 30, 2016, filed on August 17, 2016, Current Reports on Form 8-K and other reports filed with the SEC. All information set forth in this release is as of November 9, 2016. 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,

2016   2015
Unaudited
 
Revenues $ 128,484 $ 115,054
Cost of revenues   86,609   81,527  
 
Gross profit   41,875   33,527  
 
Operating expenses:
 
Research and development, net 9,935 6,991
Sales and marketing 10,036 8,244
General and administrative   3,664   3,418  
 

Total operating expenses

  23,635   18,653  
 
Operating income 18,240 14,874
 
Financial income (expenses), net   390   (72 )
 
Income before taxes on income 18,630 14,802
 
Taxes on income   3,014   370  
 
Net income $ 15,616 $ 14,432  
 
 
SOLAREDGE TECHNOLOGIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
  September 30,   June 30,
2016 2016
Unaudited
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 90,014 $ 74,032
Restricted cash 946 928
Marketable Securities 61,786 59,163
Trade receivables, net 84,898 72,737
Prepaid expenses and other accounts receivable 17,276 21,340
Inventories   68,434     81,550  
 

Total current assets

  323,354     309,750  
 
PROPERTY AND EQUIPMENT, NET   30,377     27,831  
 
LONG-TERM ASSETS:
Marketable securities 53,955 52,446
Prepaid expenses and lease deposits 437 399
Deferred tax assets, net 4,127 6,296
Intangible assets, net   695     716  
 

Total assets

$ 412,945   $ 397,438  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables, net $ 40,282 $ 48,481
Employees and payroll accruals 11,975 10,092
Warranty obligations 15,103 14,114
Deferred revenues 2,421 3,859
Accrued expenses and other accounts payable   8,719     10,725  
 

Total current liabilities

  78,500     87,271  
 
LONG-TERM LIABILITIES
Warranty obligations 41,305 37,078
Deferred revenues 16,059 14,684
Lease incentive obligation   2,135     2,297  
 

Total long-term liabilities

  59,499     54,059  
 
COMMITMENTS AND CONTINGENT LIABILITIES
 
STOCKHOLDERS’ EQUITY:
 
Common stock 4 4
Additional paid-in capital 302,587 299,214
Accumulated other comprehensive income 120 271
Accumulated deficit   (27,765 )   (43,381 )
 

Total stockholders’ equity

  274,946     256,108  
 

Total liabilities and stockholders’ equity

$ 412,945   $ 397,438  
 
 
SOLAREDGE TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
 

Three months ended
September 30,

2016   2015
Unaudited

Cash flows provided by operating activities:

Net income $ 15,616 $ 14,432
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation 1,271 738
Amortization of intangible assets 21 21
Amortization of premiums on available-for-sale marketable securities 332 -
Stock-based compensation 3,100 1,832
Realized losses on Cash Flow Hedges - 1
 
Changes in assets and liabilities:
Inventories 13,120 (5,956 )
Prepaid expenses and other accounts receivable 4,176 11,811
Trade receivables, net (12,102 ) (11,928 )
Deferred tax assets, net 2,180 -
Trade payables (8,200 ) (13,500 )
Employees and payroll accruals 1,879 1,044
Warranty obligations 5,216 4,025
Deferred revenues (63 ) 1,970
Accrued expenses and other accounts payable (2,015 ) 1,467
Lease incentive obligation   (162 )   (11 )
 
Net cash provided by operating activities   24,369     5,946  
 

Cash flows used in investing activities:

Purchase of property and equipment (3,815 ) (3,292 )
Purchase of intangible assets - (800 )
Decrease (increase) in restricted cash (18 ) 51
Decrease (increase) in short and long-term lease deposits (29 ) 73
Investment in available-for-sale marketable securities (19,928 ) -
Maturities of available-for-sale marketable securities   15,304     -  
 
Net cash used in investing activities   (8,486 )   (3,968 )
 

Cash flows from financing activities:

Proceeds from issuance of shares upon exercise of options   273     17  
 
Net cash provided by financing activities   273     17  
 
Increase in cash and cash equivalents 16,156 1,995
Cash and cash equivalents at the beginning of the period 74,032 144,750
Effect of exchange rate differences on cash and cash equivalents   (174 )   (16 )
 
Cash and cash equivalents at the end of the period $ 90,014   $ 146,729  
 
 
SOLAREDGE TECHNOLOGIES INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(unaudited)
 
Reconciliation of GAAP to Non-GAAP Gross Profit
Three months ended
September 30, 2016   June 30, 2016   September 30, 2015
 
Gross profit (GAAP) 41,875 39,113 33,527
Stock-based compensation 385   310   180  
Gross profit (Non-GAAP) 42,260   39,423   33,707  
 
Reconciliation of GAAP to Non-GAAP Gross Margin
Three months ended
September 30, 2016 June 30, 2016 September 30, 2015
Gross margin (GAAP) 32.6 % 31.4 % 29.1 %
Stock-based compensation 0.3 % 0.2 % 0.2 %
Gross margin (Non-GAAP) 32.9 % 31.6 % 29.3 %
 
Reconciliation of GAAP to Non-GAAP Operating expenses
Three months ended
September 30, 2016 June 30, 2016 September 30, 2015
Operating expenses (GAAP) 23,635 21,229 18,653
Stock-based compensation R&D 927 747 395
Stock-based compensation S&M 849 730 616
Stock-based compensation G&A 939   613   641  
Operating expenses (Non-GAAP) 20,920   19,138   17,001  
 
Reconciliation of GAAP to Non-GAAP Operating income
Three months ended
September 30, 2016 June 30, 2016 September 30, 2015
Operating income (GAAP) 18,240 17,884 14,874
Stock-based compensation 3,100   2,401   1,832  
Operating income (Non-GAAP) 21,340   20,285   16,706  
 
Reconciliation of GAAP to Non-GAAP Tax on income (Tax benefit)
Three months ended
September 30, 2016 June 30, 2016 September 30, 2015
Tax on income (Tax benefit) (GAAP) 3,014 84 370
Tax expenses due to utilization of deferred tax asset (2,179 ) (247 ) ----  
Tax on income (Tax benefit) (Non-GAAP) 835   (163 ) 370  
 
Reconciliation of GAAP to Non-GAAP Net income
Three months ended
September 30, 2016 June 30, 2016 September 30, 2015
Net income (GAAP) 15,616 17,273 14,432
Stock-based compensation 3,100 2,401 1,832
Tax expenses due to utilization of deferred tax asset 2,179   247   ----  
Net income (Non-GAAP) 20,895   19,921   16,264  
 
Reconciliation of GAAP to Non-GAAP Net basic EPS
Three months ended
September 30, 2016 June 30, 2016 September 30, 2015
Net basic earnings per share (GAAP) 0.38 0.42 0.37
Stock-based compensation 0.08 0.06 0.04
Tax expenses due to utilization of deferred tax asset 0.05   0.01   ----  
Net basic earnings per share (Non-GAAP) 0.51   0.49   0.41  
 
Reconciliation of GAAP to Non-GAAP Net diluted EPS
Three months ended
September 30, 2016 June 30, 2016 September 30, 2015
Net diluted earnings per share (GAAP) 0.35 0.39 0.32
Stock-based compensation 0.06 0.04 0.04
Tax expenses due to utilization of deferred tax asset 0.05   0.01   ----  
Net diluted earnings per share (Non-GAAP) 0.46   0.44   0.36  
 
Reconciliation of GAAP to Non-GAAP No. of shares used in Net diluted EPS
Three months ended
September 30, 2016 June 30, 2016 September 30, 2015
Number of shares used in computing net diluted earnings per share (GAAP) 43,995,227 44,463,087 44,455,964
Stock-based compensation 1,742,211   1,216,866   686,470  
Number of shares used in computing net diluted earnings per share (Non-GAAP) 45,737,438   45,679,953   45,142,434  

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

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