SolarEdge Technologies, Inc. (Nasdaq: SEDG), a global leader in
smart energy technology, today announced its financial results for
the second quarter ended June 30, 2020.
Second Quarter 2020 Highlights
- Revenues of $331.9 million
- Revenues from solar products of $310.1 million
- GAAP gross margin of 31.0%
- GAAP gross margin from sale of solar products of 33.1%
- Non-GAAP gross margin from sale of solar products of 33.8%
- GAAP net income of $36.7 million
- Non-GAAP net income of $52.1 million
- GAAP net diluted earnings per share (“EPS”) of $0.70
- Non-GAAP net diluted EPS of $0.97
- 1.44 Gigawatts (AC) of inverters shipped
“This quarter, despite the challenges caused by COVID 19, we
maintained healthy profitability while generating cash from
operating activity,” said Zivi Lando, CEO of SolarEdge. “Our global
strength, and in particular our loyal customer base in the
Netherlands, Germany, Italy and Australia, softened the decline in
U.S. demand this past quarter. While the pandemic has created many
operational challenges, I am confident in our financial strength
and grateful for the trust of our customers and dedication of our
employees which enable us to continue to focus on product
innovation and execution of our long term plans even in these
challenging times.”
Second Quarter 2020 Summary
The Company reported revenues of $331.9 million, down 23% from
$431.2 million in the prior quarter and up 2% from $325.0 million
in the same quarter last year.
Revenues related to the solar business were $310.1 million, down
24% from $407.6 million in the prior quarter and up 1% from $306.7
million in the same quarter last year.
GAAP gross margin was 31.0%, down from 32.5% in the prior
quarter and down from 34.1% year over year.
Non-GAAP gross margin was 32.4%, down from 33.6% in the prior
quarter and down from 35.7% year over year.
GAAP gross margin for the solar business was 33.1%, down from
34.6% in the prior quarter and down from 36.4% year over year.
Non-GAAP gross margin for the solar business was 33.8%, down
from 35.0% in the prior quarter and down from 36.9% year over
year.
GAAP operating expenses were $73.0 million, up 1% from $72.2
million in the prior quarter and up 12% from $65.3 million in the
same quarter last year.
Non-GAAP operating expenses were $61.1 million, down 8% from
$66.3 million in the prior quarter and up 11% from $54.9 million in
the same quarter last year.
GAAP operating income was $30.0 million, down 56% from $67.8
million in the prior quarter and down 34% from $45.4 million in the
same quarter last year.
Non-GAAP operating income was $46.6 million, down 41% from $78.6
million in the prior quarter and down 24% from $61.0 million in the
same quarter last year.
GAAP net income was $36.7 million, down 13% from $42.2 million
in the prior quarter and up 11% from $33.1 million in the same
quarter last year.
Non-GAAP net income was $52.1 million, up 3% from $50.7 million
in the prior quarter and up 6% from $49.3 million in the same
quarter last year.
GAAP net diluted EPS was $0.70, down from $0.81 in the prior
quarter and up from $0.66 in the same quarter last year.
Non-GAAP net diluted EPS was $0.97, up from $0.95 in the prior
quarter and up from $0.94 in the same quarter last year.
Cash flow from operating activities was $59.3 million, down from
$107.7 million in the prior quarter and up from $50.8 million in
the same quarter last year.
As of June 30, 2020, cash, cash equivalents, bank deposits,
restricted bank deposits and marketable securities totaled $592.7
million, compared to $467.5 million on December 31, 2019.
Outlook for the Third Quarter 2020
The Company also provides guidance for the third quarter ending
September 30, 2020 as follows:
- Revenues to be within the range of $325 million to $350
million
- Non-GAAP Gross margin expected to be within the range of 32% to
34%
- Revenues from solar products to be within the range of $305
million to $325 million
- Non-GAAP Gross margin from sale of solar products expected to
be within the range of 33% to 35%
Conference Call
The Company will host a conference call to discuss these results
at 4:30 P.M. ET on Monday, August 3, 2020. The call will be
available, live, to interested parties by dialing 800-256-1007. For
international callers, please dial +1 323-994-2093. The Conference
ID number is 7031770. 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 technology. 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 the PV system.
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,
Current Reports on Form 8-K and other reports filed with the SEC.
All information set forth in this release is as of August 3, 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 June
30,
Six months ended June
30,
2020
2019
2020
2019
Revenues
$
331,851
$
325,010
$
763,069
$
596,881
Cost of revenues
228,888
214,340
520,098
400,101
Gross profit
102,963
110,670
242,971
196,780
Operating expenses:
Research and development
38,098
29,505
74,793
55,704
Sales and marketing
20,936
22,127
45,189
42,299
General and administrative
13,964
13,685
30,149
25,376
Other operating income
-
-
(4,900)
-
Total
operating expenses
72,998
65,317
145,231
123,379
Operating income
29,965
45,353
97,740
73,401
Financial income (expenses), net
11,565
773
(5,040)
(5,378)
Income before income taxes
41,530
46,126
92,700
68,023
Income taxes
4,862
13,213
13,784
17,135
Net income
$
36,668
$
32,913
$
78,916
$
50,888
Net loss attributable to Non-controlling
interests
-
215
-
1,256
Net income attributable to SolarEdge
Technologies, Inc.
$
36,668
$
33,128
$
78,916
$
52,144
SOLAREDGE TECHNOLOGIES INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited)
(In thousands)
June 30,
December 31,
2020
2019
CURRENT ASSETS:
Cash and cash equivalents
$
428,372
$
223,901
Short-term bank deposits
3,432
5,010
Restricted bank deposits
2,135
27,558
Marketable securities
113,032
91,845
Trade receivables, net of allowances of
$6,273 and $2,473, respectively
181,700
298,383
Prepaid expenses and other current
assets
79,867
115,268
Inventories, net
264,460
170,798
Total current
assets
1,072,998
932,763
LONG-TERM ASSETS:
Marketable securities
45,684
119,176
Operating lease right-of-use assets,
net
36,951
35,858
Property, plant and equipment, net
226,416
176,963
Deferred tax assets, net
19,121
16,298
Intangible assets, net
68,211
74,008
Goodwill
128,279
129,654
Other long-term assets
8,166
9,904
Total
long-term assets
532,828
561,861
Total
assets
$
1,605,826
$
1,494,624
CURRENT LIABILITIES:
Trade payables, net
$
158,264
$
157,148
Employees and payroll accruals
48,764
47,390
Current maturities of bank loans and
accrued interest
15,256
15,673
Warranty obligations
68,674
65,112
Deferred revenues and customers
advances
25,625
70,815
Accrued expenses and other current
liabilities
88,482
80,576
Total current liabilities
405,065
436,714
LONG-TERM LIABILITIES:
Bank loans
-
173
Warranty obligations
124,010
107,451
Deferred revenues
103,181
89,982
Operating lease liabilities
29,991
30,213
Deferred tax liabilities, net
1,112
4,461
Other long-term liabilities
17,666
13,960
Total long-term liabilities
275,960
246,240
STOCKHOLDERS’ EQUITY:
Common stock
5
5
Additional paid-in capital
511,640
475,792
Accumulated other comprehensive loss
(3,442)
(1,809)
Retained earnings
416,598
337,682
Total stockholders’ equity
924,801
811,670
Total liabilities and stockholders’
equity
$
1,605,826
$
1,494,624
SOLAREDGE TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS (Unaudited)
(In thousands)
Six months ended June
30,
2020
2019
Cash flows provided
by operating activities:
Net income
$
78,916
$
50,888
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of property, plant and
equipment
10,646
8,147
Amortization of intangible assets
4,615
4,895
Amortization of premium and accretion of
discount on available-for-sale marketable securities, net
373
(12)
Stock-based compensation expenses
26,734
21,076
Deferred income tax benefit, net
(6,424)
(1,960)
Other adjustments, net
(1)
643
Changes in assets and liabilities:
Inventories, net
(94,230)
1,723
Prepaid expenses and other assets
37,066
(2,574)
Trade receivables, net
116,045
(56,562)
Operating lease right-of-use assets and
liabilities, net and effect of exchange rate differences
(451)
1,466
Trade payables, net
(1,823)
5,493
Employees and payroll accruals
1,457
5,151
Warranty obligations
20,198
28,860
Deferred revenues and customers
advances
(31,834)
11,764
Other liabilities
5,768
28,236
Net cash provided by operating
activities
167,055
107,234
Cash flows from
investing activities:
Proceeds from sales and maturities of
available-for-sale marketable securities
89,739
68,407
Purchase of property, plant and
equipment
(53,706)
(22,244)
Investment in available-for-sale
marketable securities
(36,815)
(63,655)
Withdrawal from (investment in) restricted
bank deposits
25,634
(203)
Business combination, net of cash
acquired
-
(38,435)
Other investing activities
2,024
3,909
Net cash provided by (used in) in
investing activities
$
26,876
$
(52,221)
Cash flows from
financing activities:
Repayment of bank loans
$
(15,119)
$
(4,891)
Proceeds from bank loans
15,113
216
Proceeds from issuance of shares under
stock purchase plan and upon exercise of stock-based awards
9,114
3,764
Change in Non-controlling interests
-
(66,474)
Other financing activities
(112)
-
Net cash provided by (used in) financing
activities
8,996
(67,385)
Increase (decrease) in cash and cash
equivalents
202,927
(12,372)
Cash and cash equivalents at the beginning
of the period
223,901
187,764
Effect of exchange rate differences on
cash and cash equivalents
1,544
1,183
Cash and cash equivalents at the end of
the period
$
428,372
$
176,575
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 Six months ended June 30,
2020 March 31, 2020 June 30, 2019 June 30,
2020 June 30, 2019 Gross profit (GAAP)
102,963
140,008
110,670
242,971
196,780
Stock-based compensation
2,359
2,273
1,651
4,632
3,005
Cost of product adjustment
----
313
319
313
1,001
Amortization and depreciation of acquired assets
2,325
2,356
3,307
4,681
4,384
Gross profit (Non-GAAP)
107,647
144,950
115,947
252,597
205,170
Reconciliation of GAAP to Non-GAAP Gross Margin
Three months ended Six months ended June 30,
2020 March 31, 2020 June 30, 2019 June 30,
2020 June 30, 2019 Gross margin (GAAP)
31.0%
32.5%
34.1%
31.8%
33.0%
Stock-based compensation
0.7%
0.5%
0.5%
0.6%
0.5%
Cost of product adjustment
----
0.1%
0.1%
----
0.2%
Amortization and depreciation of acquired assets
0.7%
0.5%
1.0%
0.6%
0.7%
Gross margin (Non-GAAP)
32.4%
33.6%
35.7%
33.1%
34.4%
Reconciliation of GAAP to
Non-GAAP Operating expenses
Three months ended
Six months ended
June 30, 2020
March 31, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Operating expenses (GAAP)
72,998
72,233
65,317
145,231
123,379
Stock-based compensation - R&D
(5,847)
(5,378)
(4,176)
(11,225)
(7,666)
Stock-based compensation - S&M
(3,445)
(3,192)
(2,722)
(6,637)
(5,126)
Stock-based compensation - G&A
(2,310)
(1,930)
(2,823)
(4,240)
(5,279)
Amortization and depreciation of acquired assets - R&D
(25)
(26)
(9)
(51)
(45)
Amortization and depreciation of acquired assets - S&M
(292)
(295)
51
(588)
(807)
Amortization and depreciation of acquired assets - G&A
(9)
(8)
(26)
(17)
(26)
Acquisition related expenses
----
----
(151)
----
(949)
Assets disposal
----
----
(552)
----
(552)
Other operating income (expenses)
----
4,900
----
4,900
----
Operating expenses (Non-GAAP)
61,070
66,303
54,909
127,373
102,929
Reconciliation of GAAP to
Non-GAAP Operating income
Three months ended
Six months ended
June 30, 2020
March 31, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Operating income (GAAP)
29,965
67,775
45,353
97,740
73,401
Cost of product adjustment
----
313
319
313
1,001
Stock-based compensation
13,961
12,773
11,372
26,734
21,076
Amortization and depreciation of acquired assets
2,651
2,686
3,291
5,337
5,262
Acquisition related expenses
----
----
151
----
949
Assets disposal
----
----
552
----
552
Other operating ( income) expenses
----
(4,900)
----
(4,900)
----
Operating income (Non-GAAP)
46,577
78,647
61,038
125,224
102,241
Reconciliation of GAAP to
Non-GAAP Financial expenses (income), net
Three months ended
Six months ended
June 30, 2020
March 31, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Financial expenses (income), net (GAAP)
(11,565)
16,605
(773)
5,040
5,378
Non cash interest
(1,200)
(1,128)
(850)
(2,328)
(1,635)
Currency fluctuation related to lease standard
(892)
1,033
(577)
141
(1,525)
Amortization and depreciation of acquired assets
----
(982)
----
(982)
----
Financial expenses (income), net (Non-GAAP)
(13,657)
15,528
(2,200)
1,871
2,218
Reconciliation of GAAP to
Non-GAAP Tax on income
Three months ended
Six months ended
June 30, 2020
March 31, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Tax on income (GAAP)
4,862
8,922
13,213
13,784
17,135
Deferred tax realized (asset)
3,236
3,536
987
6,772
1,960
Tax on income (Non-GAAP)
8,098
12,458
14,200
20,556
19,095
Reconciliation of GAAP to
Non-GAAP Net income
Three months ended
Six months ended
June 30, 2020
March 31, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Net income attributable to SolarEdge Technologies Inc.
(GAAP)
36,668
42,248
33,128
78,916
52,144
Cost of product adjustment
----
313
319
313
1,001
Stock-based compensation
13,961
12,773
11,372
26,734
21,076
Amortization and depreciation of acquired assets
2,651
3,668
3,291
6,319
5,262
Acquisition related expenses
----
----
151
----
949
Assets disposal
----
----
552
----
552
Other operating ( income) expenses
----
(4,900)
----
(4,900)
----
Non cash interest
1,200
1,128
850
2,328
1,635
Currency fluctuation related to lease standard
892
(1,033)
577
(141)
1,525
Deferred tax realized (asset)
(3,236)
(3,536)
(987)
(6,772)
(1,960)
Net income attributable to SolarEdge Technologies Inc.
(Non-GAAP)
52,136
50,661
49,253
102,797
82,184
Reconciliation of GAAP to
Non-GAAP Net basic EPS
Three months ended
Six months ended
June 30, 2020
March 31, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Net basic earnings per share (GAAP)
0.74
0.86
0.69
1.59
1.10
Cost of product adjustment
----
0.01
0.01
0.01
0.02
Stock-based compensation
0.28
0.25
0.24
0.54
0.45
Amortization and depreciation of acquired assets
0.05
0.08
0.07
0.13
0.11
Acquisition related expenses
----
----
----
----
0.02
Other operating ( income) expenses
----
(0.10)
----
(0.10)
----
Assets disposal
----
----
0.01
----
0.01
Non cash interest
0.02
0.02
0.02
0.05
0.03
Currency fluctuation related to lease standard
0.02
(0.02)
0.01
----
0.04
Deferred tax realized (asset)
(0.06)
(0.07)
(0.02)
(0.14)
(0.04)
Net basic earnings per share (Non-GAAP)
1.05
1.03
1.03
2.08
1.74
Reconciliation of GAAP to
Non-GAAP Net diluted EPS
Three months ended
Six months ended
June 30, 2020
March 31, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Net diluted earnings per share (GAAP)
0.70
0.81
0.66
1.51
1.05
Cost of product adjustment
----
0.01
----
----
0.02
Stock-based compensation
0.24
0.21
0.19
0.47
0.35
Amortization and depreciation of acquired assets
0.05
0.07
0.07
0.11
0.11
Acquisition related expenses
----
----
----
----
0.01
Other operating ( income) expenses
----
(0.09)
----
(0.09)
----
Assets disposal
----
----
0.01
----
0.01
Non cash interest
0.02
0.02
0.02
0.05
0.04
Currency fluctuation related to lease standard
0.02
(0.02)
0.01
----
0.03
Deferred tax realized (asset)
(0.06)
(0.06)
(0.02)
(0.13)
(0.04)
Net diluted earnings per share (Non-GAAP)
0.97
0.95
0.94
1.92
1.58
Reconciliation of GAAP to
Non-GAAP No. of shares used in Net diluted EPS
Three months ended
Six months ended
June 30, 2020
March 31, 2020
June 30, 2019
June 30, 2020
June 30, 2019
Number of shares used in computing net diluted earnings per
share (GAAP)
52,536,437
52,172,720
49,940,034
52,357,838
49,358,280
Stock-based compensation
1,154,279
1,399,732
2,130,135
1,277,006
2,448,673
Number of shares used in computing net diluted earnings per
share (Non-GAAP)
53,690,716
53,572,452
52,070,169
53,634,844
51,806,953
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200803005646/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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