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
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version on businesswire.com: https://www.businesswire.com/news/home/20200506005895/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
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