SolarEdge Announces Fourth Quarter and Full Year 2020 Financial Results

FREMONT, Calif.--(BUSINESS WIRE)--Feb. 16, 2021-- SolarEdge Technologies, Inc. (Nasdaq: SEDG), a global leader in smart energy, today announced its financial results for the fourth quarter and year ended December 31, 2020.

Fourth Quarter 2020 Highlights

• Revenues of $358.1 million
• Revenues from solar products of $327.1 million
• GAAP gross margin of 30.8%
• Non-GAAP gross margin of 32.5%
• GAAP gross margin from sale of solar products of 35.3%
• Non-GAAP gross margin from sale of solar products of 36.2%
• GAAP net income of $17.7 million
• Non-GAAP net income of $55.7 million
• GAAP net diluted earnings per share (“EPS”) of $0.33
• Non-GAAP net diluted EPS of $0.98
• 1.36 Gigawatts (AC) of inverters shipped

Full Year 2020 Highlights

• Record revenues of $1.46 billion
• Record revenues from solar products of $1.36 billion
• GAAP gross margin of 31.6%
• GAAP gross margin from sale of solar products of 34.3%
• Non-GAAP gross margin from sale of solar products of 35.0%
• GAAP net income of $140.3 million
• Non-GAAP net income of $224.4 million
• GAAP net diluted earnings per share (“EPS”) of $2.66
• Non-GAAP net diluted EPS of $4.11
• 6.1 Gigawatts (AC) of inverters shipped

“Our fourth quarter results are reflective of strength in the U.S. residential market and record revenues from outside of Europe and the U.S., led by Australia,” said Zvi Lando, CEO of SolarEdge. “The return to growth in installations in the U.S. residential market drove our sequential growth and return to the anticipated solar margins. Despite the global pandemic, we concluded the year with slight growth in revenues, healthy cash generation and are well positioned for 2021 and beyond, having invested significantly in development of new products to be released this year as well as development of our non-solar businesses, with readiness to supply full powertrain kits for the e-Mobility sector in Europe.”

Fourth Quarter 2020 Summary

The Company reported revenues of $358.1 million, up 6% from $338.1 million in the prior quarter and down 14% from $418.2 million in the same quarter last year.

Revenues related to the solar business were $327.1 million, up 5% from $312.5 million in the prior quarter and down 16% from $389.0 million in the same quarter last year.

GAAP gross margin was 30.8%, down from 32.0% in the prior quarter and down from 34.3% year over year.

Non-GAAP gross margin was 32.5%, down from 33.5% in the prior quarter and down from 35.5% year over year.

GAAP gross margin for the solar business was 35.3%, up from 34.1% in the prior quarter and down from 37.3% year over year.

Non-GAAP gross margin for the solar business was 36.2%, up from 34.8% in the prior quarter and down from 37.8% year over year.

GAAP operating expenses were $95.9 million, up 23% from $77.7 million in the prior quarter and up 3% from $92.7 million in the same quarter last year.

Non-GAAP operating expenses were $72.9 million, up 15% from $63.2 million in the prior quarter and up 15% from $63.1 million in the same quarter last year.

GAAP operating income was $14.4 million, down 53% from $30.4 million in the prior quarter and down 71% from $50.5 million in the same quarter last year.

Non-GAAP operating income was $43.5 million, down 13% from $50.0 million in the prior quarter and down 49% from $85.3 million in the same quarter last year.

GAAP net income was $17.7 million, down 60% from $43.8 million in the prior quarter and down 67% from $52.8 million in the same quarter last year.

Non-GAAP net income was $55.7 million, down 15% from $65.9 million in the prior quarter and down 36% from $87.4 million in the same quarter last year.

GAAP net diluted earnings per share (“EPS”) was $0.33, down from $0.83 in the prior quarter and down from $1.03 in the same quarter last year.

Non-GAAP net diluted EPS was $0.98, down from $1.21 in the prior quarter and down from $1.65 in the same quarter last year.

Cash flow from operating activities was $27.0 million, down from $28.4 million in the prior quarter and down from $83.1 million in the same quarter last year.

As of December 31, 2020, cash, cash equivalents, bank deposits, restricted bank deposit and marketable securities totaled $530.2 million, net of debt, compared to $553.8 million on September 30, 2020.

Full Year 2020 Summary

Total revenues of $1.46 billion, up 2% from $1.43 billion in the prior year.

GAAP gross margin was 31.6%, down from 33.6% in the prior year.

Non-GAAP gross margin was 33.0%, down from 34.9% in the prior year.

GAAP operating income was $142.6 million, down 25% from $189.9 million in the prior year.

Non-GAAP operating income was $218.8 million, down 21% from $276.8 million in the prior year.

GAAP net income was $140.3 million, down 4% from $146.5 million in the prior year.

Non-GAAP net income was $224.4 million, down 4% from $233.2 million in the prior year.

GAAP net diluted EPS was $2.66, down from $2.90 in the prior year.

Non-GAAP net diluted EPS was $4.11, down from $4.44 in the prior year.

Cash flow from operating activities of $222.7 million, down from $259.0 million in the prior year.

Outlook for the First Quarter 2021

The Company also provides guidance for the first quarter ending March 31, 2021 as follows:

• Revenues to be within the range of $385 million to $405 million
• Non GAAP gross margin expected to be within the range of 34% to 36%
• Revenues from solar products to be within the range of $360 million to $375 million
• Non GAAP gross margin from sale of solar products expected to be within the range of 36% to 38%

Conference Call

The Company will host a conference call to discuss these results at 4:30 P.M. ET on Tuesday, February 16, 2021. The call will be available, live, to interested parties by dialing 800-347-6311. For international callers, please dial +1 646-828-8143. The Conference ID number is 3276360. 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; 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 and our quarterly reports filed on Form 10-Q, Current Reports on Form 8-K and other reports filed with the SEC. All information set forth in this release is as of February 16, 2021. 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 (In thousands)
		Three months ended December 30,						Year ended December 31,
		2020			2019			2020			2019
		Unaudited
Revenues		$	358,107		$	418,223		$	1,459,271		$	1,425,660
Cost of revenues			247,782			274,974			997,912			946,322
Gross profit			110,325			143,249			461,359			479,338
Operating expenses:
Research and development			47,513			34,900			163,123			121,351
Sales and marketing			28,872			23,659			95,985			87,984
General and administrative			18,042			11,771			63,119			49,361
Other operating expenses (income), net			1,471			22,391			(3,429)			30,696
Total operating expenses			95,898			92,721			318,798			289,392
Operating income			14,427			50,528			142,561			189,946
Financial expenses (income), net			(10,380)			(11,058)			(21,105)			11,343
Income before income taxes			24,807			61,586			163,666			178,603
Income taxes			7,152			9,241			23,344			33,646
Net income		$	17,655		$	52,345		$	140,322		$	144,957
Net loss attributable to Non-controlling interests			-			433			-			1,592
Net income attributable to SolarEdge Technologies, Inc.		$	17,655		$	52,778		$	140,322		$	146,549

SOLAREDGE TECHNOLOGIES INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
		December 31,
		2020			2019
CURRENT ASSETS:
Cash and cash equivalents		$	827,146		$	223,901
Short-term bank deposits			60,096			5,010
Restricted bank deposits			2,611			27,558
Marketable securities			143,687			91,845
Trade receivables, net of allowances of $2,886 and $2,473, respectively			218,706			298,383
Inventories, net			331,696			170,798
Prepaid expenses and other current assets			135,399			115,268
Total current assets			1,719,341			932,763
LONG-TERM ASSETS:
Marketable securities			147,434			119,176
Deferred tax assets, net			11,676			16,298
Property, plant and equipment, net			303,408			176,963
Operating lease right-of-use assets, net			41,600			35,858
Intangible assets, net			67,818			74,008
Goodwill			140,479			129,654
Other long-term assets			5,353			9,904
Total long-term assets			717,768			561,861
Total assets		$	2,437,109		$	1,494,624
CURRENT LIABILITIES:
Trade payables, net		$	162,051		$	157,148
Employees and payroll accruals			63,738			47,390
Current maturities of bank loans and accrued interest			16,894			15,673
Warranty obligations			62,614			65,112
Deferred revenues and customers advances			24,648			70,815
Accrued expenses and other current liabilities			106,154			80,576
Total current liabilities			436,099			436,714
LONG-TERM LIABILITIES:
Convertible senior notes, net			573,350			-
Warranty obligations			142,380			107,451
Deferred revenues			115,372			89,982
Deferred tax liabilities, net			8,593			4,461
Finance lease liabilities			26,173			2,399
Operating lease liabilities			35,194			30,213
Other long-term liabilities			14,191			11,734
Total long-term liabilities			915,253			246,240
STOCKHOLDERS’ EQUITY:
Common stock			5			5
Additional paid-in capital			603,891			475,792
Accumulated other comprehensive income (loss)			3,857			(1,809)
Retained earnings			478,004			337,682
Total stockholders’ equity			1,085,757			811,670
Total liabilities and stockholders’ equity		$	2,4307,109		$	1,494,624

SOLAREDGE TECHNOLOGIES INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
		Year ended December 31,
		2020			2019
Cash flows provided by operating activities:
Net income		$	140,322		$	144,957
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment			22,355			17,261
Amortization of intangible assets			9,479			9,634
Amortization of debt discount and debt issuance costs			3,185			-
Amortization of premium and accretion of discount on available-for-sale marketable securities, net			1,168			92
Stock-based compensation expenses			67,309			60,353
Deferred income taxes, net			(2,738)			(6,037)
Loss from sale of business			-			5,269
Other items			2,451			713
Changes in assets and liabilities:
Inventories, net			(149,661)			(22,544)
Prepaid expenses and other assets			(3,276)			(67,323)
Trade receivables, net			86,538			(124,071)
Operating lease right-of-use assets and liabilities, net and effect of exchange rate differences			1,409			2,192
Trade payables, net			3,333			47,837
Employees and payroll accruals			18,315			18,592
Warranty obligations			32,274			50,780
Deferred revenues and customers advances			(21,438)			83,137
Other liabilities			11,630			38,158
Net cash provided by operating activities			222,655			259,000
Cash flows from investing activities:
Investment in available-for-sale marketable securities			(223,705)			(160,054)
Proceed from sales and maturities of available-for-sale marketable securities			141,839			142,744
Purchase of property, plant and equipment			(126,790)			(72,562)
Withdrawal from (investment in) bank deposits, net			(54,752)			4,860
Withdrawal from (investment in) restricted bank Deposits, net			25,267			(26,145)
Business combinations, net of cash acquired			-			(38,435)
Other investing activities			1,504			(3,261)
Net cash used in investing activities			(236,637)			(152,853)
Cash flows from financing activities:
Proceeds from issuance of convertible senior notes, net			617,869			-
Repayment of bank loans			(15,595)			(9,514)
Proceeds from bank loans			16,944			249
Proceeds from exercise of stock-based awards			21,500			9,066
Change in non-controlling interests			-			(71,468)
Other financing activities			(234)			(1,354)
Net cash provided by (used in) financing activities			640,484			(73,021)
Increase in cash and cash equivalents			626,502			33,126
Cash and cash equivalents at the beginning of the period			223,901			187,764
Effect of exchange rate differences on cash and cash equivalents			(23,257)			3,011
Cash and cash equivalents at the end of the period		$	827,146		$	223,901

SOLAREDGE TECHNOLOGIES INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands, except share and per share data)
		Reconciliation of GAAP to Non-GAAP Gross Profit
		Three months ended						Year ended
		December 31, 2020		September 30, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Gross profit (GAAP)		110,325		108,063		143,249		461,359		479,338
Stock-based compensation		3,720		2,730		2,268		11,082		6,964
Cost of product adjustment		----		----		448		313		1,556
Amortization and depreciation of acquired assets		2,374		2,429		2,489		9,484		9,771
Gross profit (Non-GAAP)		116,419		113,222		148,454		482,238		497,629
		Reconciliation of GAAP to Non-GAAP Gross Margin
		Three months ended						Year ended
		December 31, 2020		September 30, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Gross margin (GAAP)		30.8%		32.0%		34.3%		31.6%		33.6%
Stock-based compensation		1.0%		0.8%		0.5%		0.8%		0.5%
Cost of product adjustment		----		----		0.1%		----		0.1%
Amortization and depreciation of acquired assets		0.7%		0.7%		0.6%		0.6%		0.7%
Gross margin (Non-GAAP)		32.5%		33.5%		35.5%		33.0%		34.9%
		Reconciliation of GAAP to Non-GAAP Operating expenses
		Three months ended						Year ended
		December 31, 2020		September 30, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Operating expenses (GAAP)		95,898		77,669		92,721		318,798		289,392
Stock-based compensation - R&D		(8,919)		(6,904)		(4,937)		(27,048)		(16,872)
Stock-based compensation - S&M		(8,710)		(4,066)		(3,157)		(19,413)		(11,062)
Stock-based compensation - G&A		(2,967)		(2,559)		916		(9,766)		(6,991)
Amortization and depreciation of acquired assets - R&D		(14)		(26)		(30)		(91)		(92)
Amortization and depreciation of acquired assets - S&M		(230)		(370)		33		(1,187)		(1,214)
Amortization and depreciation of acquired assets - G&A		(8)		(8)		45		(33)		(35)
Acquisition related expenses		----		----		----		----		(949)
Assets disposal		(649)		(558)		(56)		(1,207)		(622)
Other operating income (expenses)		(1,471)		----		(22,391)		3,429		(30,696)
Operating expenses (Non-GAAP)		72,930		63,178		63,144		263,482		220,859

SOLAREDGE TECHNOLOGIES INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands, except share and per share data)
		Reconciliation of GAAP to Non-GAAP Operating income
		Three months ended						Year ended
		December 31, 2020		September 30, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Operating income (GAAP)		14,427		30,394		50,528		142,561		189,946
Cost of product adjustment		----		----		448		313		1,556
Stock-based compensation		24,316		16,259		9,446		67,309		41,889
Amortization and depreciation of acquired assets		2,626		2,833		2,441		10,795		11,112
Acquisition related expenses		----		----		----		----		949
Assets disposal		649		558		56		1,207		622
Other operating (income) expenses		1,471		----		22,391		(3,429)		30,696
Operating income (Non-GAAP)		43,489		50,044		85,310		218,756		276,770
		Reconciliation of GAAP to Non-GAAP Financial expenses (income), net
		Three months ended						Year ended
		December 31, 2020		September 30, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Financial expenses (income), net (GAAP)		(10,380)		(15,765)		(11,058)		(21,105)		11,343
Notes due 2025		(3,017)		(168)		----		(3,185)		----
Non cash interest		(1,305)		(1,254)		(1,055)		(4,887)		(3,645)
Currency fluctuation related to lease standard		(2,172)		(243)		(266)		(2,274)		(2,591)
Amortization and depreciation of acquired assets		----		----		348		(982)		348
Financial expenses (income), net (Non-GAAP)		(16,874)		(17,430)		(12,031)		(32,433)		5,455
		Reconciliation of GAAP to Non-GAAP Tax on income
		Three months ended						Year ended
		December 31, 2020		September 30, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Tax on income (GAAP)		7,152		2,408		9,241		23,344		33,646
Deferred taxes		(2,522)		(816)		1,114		3,434		6,037
Tax on income (Non-GAAP)		4,630		1,592		10,355		26,778		39,683

SOLAREDGE TECHNOLOGIES INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands, except share and per share data)
		Reconciliation of GAAP to Non-GAAP Net income
		Three months ended						Year ended
		December 31, 2020		September 30, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Net income attributable to SolarEdge Technologies Inc. (GAAP)		17,655		43,751		52,778		140,322		146,549
Cost of product adjustment		----		----		448		313		1,556
Stock-based compensation		24,316		16,259		9,446		67,309		41,889
Amortization and depreciation of acquired assets		2,626		2,833		2,093		11,777		10,764
Acquisition related expenses		----		----		----		----		949
Assets disposal		649		558		56		1,207		622
Other operating (income) expenses		1,471		----		22,391		(3,429)		30,696
Notes due 2025		3,017		168		----		3,185		----
Non cash interest		1,305		1,254		1,055		4,887		3,645
Currency fluctuation related to lease standard		2,172		243		266		2,274		2,591
Deferred taxes		2,522		816		(1,114)		(3,434)		(6,037)
Net income attributable to SolarEdge Technologies Inc. (Non-GAAP)		55,733		65,882		87,419		224,411		233,224
		Reconciliation of GAAP to Non-GAAP Net basic EPS
		Three months ended						Year ended
		December 31, 2020		September 30, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Net basic earnings per share (GAAP)		0.34		0.87		1.08		2.79		3.06
Cost of product adjustment		----		----		0.01		0.01		0.03
Stock-based compensation		0.48		0.32		0.20		1.34		0.87
Amortization and depreciation of acquired assets		0.05		0.05		0.04		0.24		0.23
Acquisition related expenses		----		----		----		----		0.02
Assets disposal		0.01		0.01		----		0.02		0.01
Other operating (income) expenses		0.03		----		0.46		(0.07)		0.64
Notes due 2025		0.06		----		----		0.06		----
Non cash interest		0.02		0.03		0.02		0.10		0.08
Currency fluctuation related to lease standard		0.05		----		----		0.05		0.06
Deferred taxes		0.05		0.02		(0.02)		(0.07)		(0.13)
Net basic earnings per share (Non-GAAP)		1.09		1.30		1.79		4.47		4.87

SOLAREDGE TECHNOLOGIES INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands, except share and per share data)
		Reconciliation of GAAP to Non-GAAP Net diluted EPS
		Three months ended						Year ended
		December 31, 2020		September 30, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Net diluted earnings per share (GAAP)		0.33		0.83		1.03		2.66		2.90
Cost of product adjustment		----		----		0.01		----		0.02
Nonvested PSUs		----		----		(0.01)		----		----
Stock-based compensation		0.44		0.28		0.15		1.20		0.68
Amortization and depreciation of acquired assets		0.05		0.05		0.04		0.21		0.22
Acquisition related expenses		----		----		----		----		0.02
Assets disposal		0.01		0.01		----		0.03		0.01
Other operating (income) expenses		0.03		----		0.43		(0.07)		0.59
Notes due 2025		0.02		----		----		0.02		----
Non cash interest		0.02		0.02		0.02		0.08		0.07
Currency fluctuation related to lease standard		0.04		----		----		0.05		0.05
Deferred taxes		0.04		0.02		(0.02)		(0.07)		(0.12)
Net diluted earnings per share (Non-GAAP)		0.98		1.21		1.65		4.11		4.44
		Reconciliation of GAAP to Non-GAAP No. of shares used in Net diluted EPS
		Three months ended						Year ended
		December 31, 2020		September 30, 2020		December 31, 2019		December 31, 2020		December 31, 2019
Number of shares used in computing net diluted earnings per share (GAAP)		53,496,384		53,144,188		50,966,778		52,795,475		50,195,661
Stock-based compensation		865,179		1,134,877		1,774,490		1,138,517		2,011,807
Notes due 2025		2,276,818		----		----		618,701		----
Number of shares used in computing net diluted earnings per share (Non-GAAP)		56,638,381		54,279,065		52,741,268		54,552,693		52,207,468

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210216006102/en/

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.