Press Release Details

SolarEdge Announces First Quarter 2020 Financial Results

May 6, 2020 at 4:10 PM EDT

FREMONT, Calif.--(BUSINESS WIRE)--May 6, 2020-- SolarEdge Technologies, Inc. (Nasdaq: SEDG), a global leader in smart energy, today announced its financial results for the first quarter ended March 31, 2020.

First Quarter 2020 Highlights

  • Record revenues of $431.2 million
  • Record revenues from solar products of $407.6 million
  • GAAP gross margin of 32.5%
  • GAAP gross margin from sale of solar products of 34.6%
  • Non-GAAP gross margin from sale of solar products of 35.0%
  • GAAP net income of $42.2 million
  • Non-GAAP net income of $50.7 million
  • GAAP net diluted earnings per share (“EPS”) of $0.81
  • Non-GAAP net diluted EPS of $0.95
  • Record 1.85 Gigawatts (AC) of inverters shipped

“The first quarter of 2020 was an exceptional one with record revenues of more than $430 million,” said Zvi Lando, CEO of SolarEdge. “Despite the challenges triggered by COVID-19 during the quarter, we were able to get products to our customers and satisfy demand. At present, despite many government enforced shut downs, our employees continue to work and operate our business, without any significant interruptions. We are proud of and thankful to our employees who are working relentlessly in this period and to our customers for their continued loyalty. We are confident that our financial strength, technological leadership and global presence will enable us to come out of this uniquely challenging period even stronger.”

First Quarter 2020 Summary

The Company reported record revenues of $431.2 million, up 3% from $418.2 million in the prior quarter and up 59% from $271.9 million in the same quarter last year.

Record revenues related to the solar business were $407.6 million, up 5% from $389.0 million in the prior quarter and up 61% from $253.1 million in the same quarter last year.

GAAP gross margin was 32.5%, down from 34.3% in the prior quarter and up from 31.7% year over year.

Non-GAAP gross margin was 33.6%, down from 35.5% in the prior quarter and up from 32.8% year over year.

GAAP gross margin for the solar business was 34.6%, down from 37.3% in the prior quarter and up from 33.8% year over year.

Non-GAAP gross margin for the solar business was 35.0%, down from 37.8% in the prior quarter and up from 34.3% year over year.

GAAP operating expenses were $72.2 million, down 22% from $92.7 million in the prior quarter and up 24% from $58.1 million in the same quarter last year.

Non-GAAP operating expenses were $66.3 million, up 5% from $63.1 million in the prior quarter and up 38% from $48.0 million in the same quarter last year.

GAAP operating income was $67.8 million, up 34% from $50.5 million in the prior quarter and up 142% from $28.0 million in the same quarter last year.

Non-GAAP operating income was $78.6 million, down 8% from $85.3 million in the prior quarter and up 91% from $41.2 million in the same quarter last year.

GAAP net income was $42.2 million, down 20% from $52.8 million in the prior quarter and up 122% from $19.0 million in the same quarter last year.

Non-GAAP net income was $50.7 million, down 42% from $87.4 million in the prior quarter and up 54% from $32.9 million in the same quarter last year.

GAAP net diluted earnings per share (“EPS”) was $0.81, down from $1.03 in the prior quarter and up from $0.39 in the same quarter last year.

Non-GAAP net diluted EPS was $0.95, down from $1.65 in the prior quarter and up from $0.64 in the same quarter last year.

Cash flow from operating activities was $107.7 million, up from $83.1 million in the prior quarter and up from $56.5 million in the same quarter last year.

As of March 31, 2020, cash, cash equivalents, bank deposits, restricted bank deposit and marketable securities totaled $558.7 million, compared to $467.5 million on December 31, 2019.

Outlook for the Second Quarter 2020

The evolving impact of, and responses to, the COVID-19 pandemic on economies around the world, including all of the Company’s markets, is unprecedented and makes it difficult to predict with confidence its impact on the Company’s business for the next quarter and the rest of this year. Please note that the below guidance for next quarter includes the anticipated impact of the COVID-19 pandemic and related public health measures on the Company’s business, at the time of publication.

The Company also provides guidance for the second quarter ending June 30, 2020 as follows:

  • Revenues to be within the range of $305 million to $335 million
  • Gross margin expected to be within the range of 30% to 32%
  • Revenues from solar products to be within the range of $285 million to $315 million
  • Gross margin from sale of solar products 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 Wednesday, May 6, 2020. The call will be available, live, to interested parties by dialing 800-479-1004. For international callers, please dial +1 323-794-2598. The Conference ID number is 4132956. 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. 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 PV systems. Continuing to advance smart energy, SolarEdge addresses a broad range of energy market segments through its PV, storage, EV charging, batteries, UPS, electric vehicle powertrains, 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, non-GAAP net diluted EPS, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income and non-GAAP gross margin from sale of solar products. 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; the expected impact of the COVID-19 pandemic and related public health measures on our business, results of operations, financial condition and liquidity; 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, 2019, filed on February 27, 2020, Current Reports on Form 8-K, our quarterly reports on Form 10-Q and other reports filed with the SEC, noting that many of the risks, uncertainties and other factors identified therein are, and will be, amplified by the COVID-19 pandemic. All information set forth in this release is as of May 6, 2020. 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 INCOME (Unaudited)

(In thousands, except per share data)

 

 

 

Three months ended
March 31,

 

 

2020

 

2019

 

 

 

 

 

Revenues

 

$

431,218

 

 

$

271,871

Cost of revenues

 

 

291,210

 

 

 

185,761

 

 

 

 

 

Gross profit

 

 

140,008

 

 

 

86,110

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

 

36,695

 

 

 

26,199

Sales and marketing

 

 

24,253

 

 

 

20,172

General and administrative

 

 

16,185

 

 

 

11,691

Other operating income

 

 

(4,900

)

 

 

-

 

 

 

 

 

Total operating expenses

 

 

72,233

 

 

 

58,062

 

 

 

 

 

Operating income

 

 

67,775

 

 

 

28,048

 

 

 

 

 

Financial expenses, net

 

 

16,605

 

 

 

6,151

 

 

 

 

 

Income before income taxes

 

 

51,170

 

 

 

21,897

 

 

 

 

 

Income taxes

 

 

8,922

 

 

 

3,922

 

 

 

 

 

Net income

 

$

42,248

 

 

$

17,975

 

 

 

 

 

Net loss attributable to Non-controlling interests

 

 

-

 

 

 

1,041

 

 

 

 

 

Net income attributable to SolarEdge Technologies, Inc.

 

$

42,248

 

 

$

19,016

 

 

 

 

 

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands)

 

 

 

March 31,

 

December 31,

 

 

2020

 

2019

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

Cash and cash equivalents

 

$

324,072

 

 

$

223,901

 

Short-term bank deposits

 

 

8,085

 

 

 

5,010

 

Restricted bank deposits

 

 

27,515

 

 

 

27,558

 

Marketable securities

 

 

95,143

 

 

 

91,845

 

Trade receivables, net of allowances of $4,509 and $2,473, respectively

 

 

235,673

 

 

 

298,383

 

Prepaid expenses and other current assets

 

 

66,874

 

 

 

115,268

 

Inventories, net

 

 

198,557

 

 

 

170,798

 

Total current assets

 

 

955,919

 

 

 

932,763

 

 

 

 

 

 

LONG-TERM ASSETS:

 

 

 

 

Marketable securities

 

 

103,863

 

 

 

119,176

 

Operating lease right-of-use assets, net

 

 

37,896

 

 

 

35,858

 

Property, plant and equipment, net

 

 

195,982

 

 

 

176,963

 

Deferred tax assets, net

 

 

17,095

 

 

 

16,298

 

Intangible assets, net

 

 

69,111

 

 

 

74,008

 

Goodwill

 

 

125,520

 

 

 

129,654

 

Other long-term assets

 

 

8,454

 

 

 

9,904

 

Total long-term assets

 

 

557,921

 

 

 

561,861

 

 

 

 

 

 

Total assets

 

$

1,513,840

 

 

$

1,494,624

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

Trade payables, net

 

$

139,138

 

 

$

157,148

 

Employees and payroll accruals

 

 

58,894

 

 

 

47,390

 

Current maturities of bank loans and accrued interest

 

 

15,048

 

 

 

15,673

 

Warranty obligations

 

 

70,158

 

 

 

65,112

 

Deferred revenues and customers advances

 

 

30,706

 

 

 

70,815

 

Accrued expenses and other current liabilities

 

 

75,737

 

 

 

80,576

 

Total current liabilities

 

 

389,681

 

 

 

436,714

 

 

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

 

Bank loans

 

 

-

 

 

 

173

 

Warranty obligations

 

 

116,099

 

 

 

107,451

 

Deferred revenues

 

 

98,134

 

 

 

89,982

 

Operating lease liabilities

 

 

30,336

 

 

 

30,213

 

Deferred tax liabilities, net

 

 

2,202

 

 

 

4,461

 

Other long-term liabilities

 

 

10,970

 

 

 

13,960

 

Total long-term liabilities

 

 

257,741

 

 

 

246,240

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

Common stock

 

 

5

 

 

 

5

 

Additional paid-in capital

 

 

491,873

 

 

 

475,792

 

Accumulated other comprehensive loss

 

 

(5,390

)

 

 

(1,809

)

Retained earnings

 

 

379,930

 

 

 

337,682

 

Total stockholders’ equity

 

 

866,418

 

 

 

811,670

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

1,513,840

 

 

$

1,494,624

 

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

 

 

 

Three months ended
March 31,

 

 

2020

 

2019

 

 

 

 

 

Cash flows provided by operating activities:

 

 

 

 

Net income

 

$

42,248

 

 

$

17,975

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation of property, plant and equipment

 

 

5,004

 

 

 

3,870

 

Amortization of intangible assets

 

 

2,321

 

 

 

1,971

 

Amortization of premium and accretion of discount on available-for-sale marketable securities, net

 

 

120

 

 

 

(59

)

Stock-based compensation expenses

 

 

12,773

 

 

 

9,704

 

Deferred income tax benefit, net

 

 

(2,859

)

 

 

(973

)

Other expenses, net

 

 

235

 

 

 

186

 

Changes in assets and liabilities:

 

 

 

 

Inventories, net

 

 

(29,004

)

 

 

964

 

Prepaid expenses and other assets

 

 

49,888

 

 

 

10,885

 

Trade receivables, net

 

 

59,420

 

 

 

(7,379

)

Operating lease right-of-use assets and liabilities, net and effect of exchange rate differences

 

 

(1,247

)

 

 

828

 

Trade payables, net

 

 

(17,589

)

 

 

(21,720

)

Employees and payroll accruals

 

 

11,821

 

 

 

3,250

 

Warranty obligations

 

 

13,809

 

 

 

14,947

 

Deferred revenues and customers advances

 

 

(31,729

)

 

 

1,730

 

Other liabilities

 

 

(7,466

)

 

 

20,271

 

Net cash provided by operating activities

 

 

107,745

 

 

 

56,450

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Proceeds from sales and maturities of available-for-sale marketable securities

 

 

42,333

 

 

 

44,575

 

Purchase of property, plant and equipment

 

 

(27,053

)

 

 

(10,620

)

Investment in available-for-sale marketable securities

 

 

(31,924

)

 

 

(15,316

)

Withdrawal from (investment in) bank deposits

 

 

(3,316

)

 

 

3,813

 

Withdrawal from (investment in) restricted bank deposits

 

 

36

 

 

 

(182

)

Business combination, net of cash acquired

 

 

-

 

 

 

(39,315

)

Net cash used in investing activities

 

$

(19,924

)

 

$

(17,045

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Repayment of bank loans

 

$

(15,232

)

 

$

(1,003

)

Proceeds from bank loans

 

 

15,295

 

 

 

51

 

Proceeds from issuance of shares under stock purchase plan and upon exercise of stock-based awards

 

 

3,308

 

 

 

309

 

Change in Non-controlling interests

 

 

-

 

 

 

(1,987

)

Other financing activities

 

 

(56

)

 

 

-

 

Net cash provided by (used in) financing activities

 

$

3,315

 

 

$

(2,630

)

 

 

 

 

 

Increase in cash, cash equivalents and restricted cash

 

 

91,136

 

 

 

36,775

 

Cash, cash equivalents and restricted cash at the beginning of the period

 

 

223,901

 

 

 

187,764

 

Effect of exchange rate differences on cash, cash equivalents and restricted cash

 

 

9,035

 

 

 

1,939

 

Cash, cash equivalents and restricted cash at the end of the period

 

$

324,072

 

 

$

226,478

 

SOLAREDGE TECHNOLOGIES INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

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

(Unaudited)

 

Reconciliation of GAAP to Non-GAAP Gross Profit

Three months ended

March 31, 2020

 

December 31, 2019

 

March 31, 2019

 

 

 

 

 

Gross profit (GAAP)

140,008

 

143,249

 

86,110

Stock-based compensation

2,273

 

2,268

 

1,354

Cost of product adjustment

313

 

448

 

682

Amortization and depreciation of acquired assets

2,356

 

2,489

 

1,077

Gross profit (Non-GAAP)

144,950

 

148,454

 

89,223

 

 

 

 

 

Reconciliation of GAAP to Non-GAAP Gross Margin

Three months ended

March 31, 2020

 

December 31, 2019

 

March 31, 2019

 

 

 

 

 

Gross margin (GAAP)

32.5%

 

34.3%

 

31.7%

Stock-based compensation

0.5%

 

0.5%

 

0.5%

Cost of product adjustment

0.1%

 

0.1%

 

0.2%

Amortization and depreciation of acquired assets

0.5%

 

0.6%

 

0.4%

Gross margin (Non-GAAP)

33.6%

 

35.5%

 

32.8%

 

 

 

 

 

Reconciliation of GAAP to Non-GAAP Operating expenses

Three months ended

March 31, 2020

 

December 31, 2019

 

March 31, 2019

 

 

 

 

 

Operating expenses (GAAP)

72,233

 

92,721

 

58,062

Stock-based compensation - R&D

(5,378)

 

(4,937)

 

(3,490)

Stock-based compensation - S&M

(3,192)

 

(3,157)

 

(2,404)

Stock-based compensation - G&A

(1,930)

 

916

 

(2,456)

Amortization and depreciation of acquired assets - R&D

(26)

 

(30)

 

(36)

Amortization and depreciation of acquired assets - S&M

(295)

 

33

 

(858)

Amortization and depreciation of acquired assets - G&A

(8)

 

45

 

----

Acquisition related expenses

----

 

----

 

(798)

Assets disposal

----

 

(56)

 

----

Other operating income (expenses)

4,900

 

(22,391)

 

----

Operating expenses (Non-GAAP)

66,303

 

63,144

 

48,020

 

 

 

 

 

Reconciliation of GAAP to Non-GAAP Operating income

Three months ended

March 31, 2020

 

December 31, 2019

 

March 31, 2019

 

 

 

 

 

Operating income (GAAP)

67,775

 

50,528

 

28,048

Cost of product adjustment

313

 

448

 

682

Stock-based compensation

12,773

 

9,446

 

9,704

Amortization and depreciation of acquired assets

2,686

 

2,441

 

1,971

Acquisition related expenses

----

 

----

 

798

Assets disposal

----

 

56

 

----

Other operating ( income) expenses

(4,900)

 

22,391

 

----

Operating income (Non-GAAP)

78,647

 

85,310

 

41,203

 

 

 

 

 

Reconciliation of GAAP to Non-GAAP Financial expenses (income), net

Three months ended

March 31, 2020

 

December 31, 2019

 

March 31, 2019

 

 

 

 

 

Financial expenses (income), net (GAAP)

16,605

 

(11,058)

 

6,151

Non cash interest

(1,128)

 

(1,055)

 

(785)

Currency fluctuation related to lease standard

1,033

 

(266)

 

(948)

Amortization and depreciation of acquired assets

(982)

 

348

 

----

Financial expenses (income), net (Non-GAAP)

15,528

 

(12,031)

 

4,418

 

 

 

 

 

Reconciliation of GAAP to Non-GAAP Tax on income (tax benefit)

Three months ended

March 31, 2020

 

December 31, 2019

 

March 31, 2019

 

 

 

 

 

Tax on income (GAAP)

8,922

 

9,241

 

3,922

Deferred tax realized (asset)

3,536

 

1,114

 

973

Tax on income (Non-GAAP)

12,458

 

10,355

 

4,895

 

 

 

 

 

Reconciliation of GAAP to Non-GAAP Net income attributable to SolarEdge Technologies Inc.

Three months ended

March 31, 2020

 

December 31, 2019

 

March 31, 2019

 

 

 

 

 

Net income attributable to SolarEdge Technologies Inc. (GAAP)

42,248

 

52,778

 

19,016

Cost of product adjustment

313

 

448

 

682

Stock-based compensation

12,773

 

9,446

 

9,704

Amortization and depreciation of acquired assets

3,668

 

2,093

 

1,971

Acquisition related expenses

----

 

----

 

798

Assets disposal

----

 

56

 

----

Other operating ( income) expenses

(4,900)

 

22,391

 

----

Non cash interest

1,128

 

1,055

 

785

Currency fluctuation related to lease standard

(1,033)

 

266

 

948

Deferred tax realized (asset)

(3,536)

 

(1,114)

 

(973)

Net income attributable to SolarEdge Technologies Inc. (Non-GAAP)

50,661

 

87,419

 

32,931

 

 

 

 

 

Reconciliation of GAAP to Non-GAAP Net basic earnings per share

Three months ended

March 31, 2020

 

December 31, 2019

 

March 31, 2019

 

 

 

 

 

Net basic earnings per share (GAAP)

0.86

 

1.08

 

0.40

Cost of product adjustment

0.01

 

0.01

 

0.02

Stock-based compensation

0.25

 

0.20

 

0.21

Amortization and depreciation of acquired assets

0.08

 

0.04

 

0.04

Acquisition related expenses

----

 

----

 

0.01

Other operating ( income) expenses

(0.10)

 

0.46

 

----

Non cash interest

0.02

 

0.02

 

0.02

Currency fluctuation related to lease standard

(0.02)

 

----

 

0.02

Deferred tax realized (asset)

(0.07)

 

(0.02)

 

(0.02)

Net basic earnings per share (Non-GAAP)

1.03

 

1.79

 

0.70

 

 

 

 

 

Reconciliation of GAAP to Non-GAAP Net diluted earnings per share

Three months ended

March 31, 2020

 

December 31, 2019

 

March 31, 2019

 

 

 

 

 

Net diluted earnings per share (GAAP)

0.81

 

1.03

 

0.39

Cost of product adjustment

0.01

 

0.01

 

0.01

Nonvested PSUs

----

 

(0.01)

 

----

Stock-based compensation

0.21

 

0.15

 

0.17

Amortization and depreciation of acquired assets

0.07

 

0.04

 

0.04

Acquisition related expenses

----

 

----

 

0.01

Other operating ( income) expenses

(0.09)

 

0.43

 

----

Non cash interest

0.02

 

0.02

 

0.02

Currency fluctuation related to lease standard

(0.02)

 

----

 

0.02

Deferred tax realized (asset)

(0.06)

 

(0.02)

 

(0.02)

Net diluted earnings per share (Non-GAAP)

0.95

 

1.65

 

0.64

 

 

 

Reconciliation of GAAP to Non-GAAP No. of shares used in Net diluted earnings per share

Three months ended

March 31, 2020

 

December 31, 2019

 

March 31, 2019

 

 

 

 

 

Number of shares used in computing net diluted earnings per share (GAAP)

52,172,720

 

50,966,778

 

47,020,218

Stock-based compensation

1,399,732

 

1,774,490

 

4,766,230

Number of shares used in computing net diluted earnings per share (Non-GAAP)

53,572,452

 

52,741,268

 

51,786,448

 

Investor Contacts
SolarEdge Technologies, Inc.
Ronen Faier, Chief Financial Officer
+1 510-498-3263
investors@solaredge.com

Sapphire Investor Relations, LLC
Erica Mannion or Michael Funari
+1 617-542-6180
investors@solaredge.com

Source: SolarEdge Technologies, Inc.