SolarEdge Technologies, Inc. (Nasdaq: SEDG), a global leader in smart energy, today announced its financial results for the second quarter ended June 30, 2018.

Second Quarter 2018 Highlights

  • Total revenues of $227.1 million
  • GAAP gross margin of 36.1%
  • GAAP net diluted EPS of $0.72
  • Non-GAAP net diluted EPS of $0.82
  • 985 Megawatts (AC) of inverters shipped

“We ended the second quarter of 2018 with record revenues, stable operating income and continued strong cash generation while expanding our activities on all fronts,” said Guy Sella, Founder, Chairman and CEO of SolarEdge. “This continued growth in the solar market coupled with the announced acquisition of Gamatronic that paves our way into the UPS market allows us to continue and expand our mid and long term profitability leveraging on our innovative technology and financial strength.”

Second Quarter 2018 Summary

The Company reported record revenues of $227.1 million, up 8% from $209.9 million in the prior quarter and up 67% from $136.1 million year over year.

GAAP gross margin was 36.1%, down from 37.9%, in the prior quarter and up from 34.6% year over year.

GAAP operating expenses was $41.3 million, up 6% from $38.8 million in the prior quarter and up 48% from $28.0 million year over year.

GAAP operating income was $40.7 million, unchanged from $40.8 million in the prior quarter and up 113% from $19.1 million year over year.

GAAP net income was $34.6 million, down 3% from $35.7 million in the prior quarter and up 53% from $22.5 million year over year.

Non-GAAP net income was $40.6 million, down 5% from $42.6 million in the prior quarter and up 57% from $25.8 million year over year.

GAAP net diluted earnings per share (“EPS”) was $0.72, down from $0.75 in the prior quarter and up from $0.50 year over year.

Non-GAAP net diluted EPS was $0.82, down from $0.87 in the prior quarter and up from $0.55 year over year.

Cash flow from operating activities was $43.9 million, down from $64.0 million in the prior quarter and up from $31.6 million year over year.

As of June 30, 2018, cash, cash equivalents, restricted cash and marketable securities totaled $437.6 million, compared to $400.8 million on March 31, 2018.

Outlook for the Third Quarter 2018

The Company also provides guidance for the third quarter ending September 30, 2018 as follows:

  • Revenues to be within the range of $230 million to $240 million;
  • Gross margins expected to remain flat within the range of 36% to 38%.

Conference Call

The Company will host a conference call to discuss these results at 5:00 P.M. ET on Thursday, August 2, 2018. The call will be available, live, to interested parties by dialing 800-667-5617. For international callers, please dial +1 334-323-0505. The Conference ID number is 6405239. 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 maximizes 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, UPS, and grid services solutions. 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 Annual Report on Form 10-K for the year ended December 31, 2017, filed on February 20, 2018, Current Reports on Form 8-K and other reports filed with the SEC. All information set forth in this release is as of August 2, 2018. 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     Six months ended
June 30, June 30,
  2018       2017   2018       2017  
Unaudited Unaudited
 
Revenues $ 227,118 $ 136,099 $ 436,989 $ 251,153
Cost of revenues   145,172     89,033   275,446     165,411  
 
Gross profit   81,946     47,066   161,543     85,742  
 
Operating expenses:
 
Research and development 19,551 12,725 37,426 24,183
Sales and marketing 15,954 11,961 32,159 22,736
General and administrative   5,776     3,265   10,465     7,704  
 

Total operating expenses

  41,281     27,951   80,050     54,623  
 
Operating income   40,665     19,115   81,493     31,119  
 
Financial income (expenses), net (2,480 ) 3,595 (1,896 ) 5,005
 
Other expenses   -     -   64     -  
 
Income before taxes on income 38,185 22,710 79,533 36,124
 
Taxes on income (tax benefit)   3,617     186   9,279     (575 )
 
Net income $ 34,568   $ 22,524 $ 70,254   $ 36,699  
 

SOLAREDGE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 
 

    June 30,    

    

December 31,

2018 2017
Unaudited
ASSETS
 
CURRENT ASSETS:
Cash and cash equivalents $ 214,540 $ 163,163
Restricted cash 2,049 1,516
Marketable Securities 134,821 77,264
Trade receivables, net 118,103 109,528
Prepaid expenses and other accounts receivable 44,520 42,223
Inventories   102,014     82,992  
 

Total current assets

  616,047     476,686  
 
LONG-TERM ASSETS:
Marketable securities 86,144 103,120
Property, equipment and intangible assets, net 68,532 52,297
Prepaid expenses and lease deposits 956 862
Deferred tax assets, net   11,551     8,340  
 

Total long term assets

  167,183     164,619  
 

Total assets

$ 783,230   $ 641,305  
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Trade payables, net $ 81,610 $ 69,488
Employees and payroll accruals 23,510 22,544
Warranty obligations 18,964 14,785
Deferred revenues 3,407 2,559
Accrued expenses and other accounts payable   26,480     20,378  
 

Total current liabilities

  153,971     129,754  
 
LONG-TERM LIABILITIES:
Warranty obligations 78,327 64,026
Deferred revenues 47,595 31,453
Lease incentive obligation 1,616 1,765
Non-current tax liabilities   16,830     16,840  
 

Total long-term liabilities

  144,368     114,084  
 
COMMITMENTS AND CONTINGENT LIABILITIES
 
STOCKHOLDERS’ EQUITY:
 
Common stock 5 4
Additional paid-in capital 353,470 331,902
Accumulated other comprehensive loss (1,138 ) (611 )
Retained earnings   132,554     66,172  
 

Total stockholders’ equity

  484,891     397,467  
 

Total liabilities and stockholders’ equity

  $ 783,230   $ 641,305  
 

SOLAREDGE TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
  Six months ended
June 30,
  2018         2017  
Unaudited

Cash flows provided by operating activities:

Net income $ 70,254 $ 36,699
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment and intangible assets 5,053 3,130
Amortization of premiums on available-for-sale marketable securities 1,014 791
Stock-based compensation 13,977 7,646
Deferred tax assets, net (3,018 ) (2,105 )
Loss on disposals of fixed assets 64 -
 
Changes in assets and liabilities:
Inventories (18,952 ) 11,153
Prepaid expenses and other accounts receivable (2,135 ) (12,675 )
Trade receivables, net (9,203 ) (8,399 )
Trade payables, net 12,143 2,007
Employees and payroll accruals 1,028 1,206
Warranty obligations 18,479 6,965
Deferred revenues 13,120 6,935
Accrued expenses and other accounts payable 6,194 3,958
Lease incentive obligation   (148 )   (148 )
 
Net cash provided by operating activities   107,870     57,163  
 

Cash flows used in investing activities:

Purchase of property and equipment (21,385 ) (7,611 )
Investment in available-for-sale marketable securities (89,389 ) (74,106 )
Maturities of available-for-sale marketable securities   46,825     31,674  
 
Net cash used in investing activities   (63,949 )   (50,043 )

Cash flows from financing activities:

Proceeds from issuance of shares under stock purchase plan and upon exercise of stock-based awards   7,591     2,123  
 
Net cash provided by financing activities   7,591     2,123  
 
Net increase in cash, cash equivalents and restricted cash 51,512 9,243
Cash, cash equivalents and restricted cash at the beginning of the period 164,679 105,580
Effect of exchange rate differences on cash, cash equivalents and restricted cash   398     (274 )
 
Cash, cash equivalents and restricted cash at the end of the period $ 216,589   $ 114,549  
 

SOLAREDGE TECHNOLOGIES, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except gross profit and per share data)
(Unaudited)
 
Reconciliation of Non-GAAP Financial Measures
 
  Reconciliation of GAAP to Non-GAAP Gross Profit
Three months ended     Six months ended
June 30, 2018   March 31, 2018   June 30, 2017 June 30, 2018   June 30, 2017
 
Gross profit (GAAP) 81,946 79,597 47,066 161,543 85,742
Stock-based compensation 968 924 517 1,892 1,010
Gross profit (Non-GAAP) 82,914 80,521 47,583 163,435 86,752
 
Reconciliation of GAAP to Non-GAAP Gross Margin
Three months ended Six months ended
June 30, 2018 March 31, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Gross margin (GAAP) 36.1% 37.9% 34.6% 37.0% 34.1%
Stock-based compensation 0.4% 0.5% 0.4% 0.4% 0.4%
Gross margin (Non-GAAP) 36.5% 38.4% 35.0% 37.4% 34.5%
 
Reconciliation of GAAP to Non-GAAP Operating expenses
Three months ended Six months ended
June 30, 2018 March 31, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Operating expenses (GAAP) 41,281 38,769 27,951 80,050 54,623
Stock-based compensation R&D 2,605 2,382 1,280 4,987 2,485
Stock-based compensation S&M 2,094 2,204 1,204 4,298 2,234
Stock-based compensation G&A 1,461 1,339 1,033 2,800 1,917
Operating expenses (Non-GAAP) 35,121 32,844 24,434 67,965 47,987
 
Reconciliation of GAAP to Non-GAAP Operating income
Three months ended Six months ended
June 30, 2018 March 31, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Operating income (GAAP) 40,665 40,828 19,115 81,493 31,119
Stock-based compensation 7,128 6,849 4,034 13,977 7,646
Operating income (Non-GAAP) 47,793 47,677 23,149 95,470 38,765
 
Reconciliation of GAAP to Non-GAAP Financial income, net
Three months ended Six months ended
June 30, 2018 March 31, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Financial income (expenses), net (GAAP) (2,480) 584 3,595 (1,896) 5,005
Non cash interest 568 512 ---- 1,080 ----
Financial income (expenses), net (Non-GAAP) (1,912) 1,096 3,595 (816) 5,005
 
Reconciliation of GAAP to Non-GAAP Other expenses
Three months ended Six months ended
June 30, 2018 March 31, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Other expenses (GAAP) ---- 64 ---- 64 ----
Fixed Assets disposal ---- 64 ---- 64 ----
Other expenses (Non-GAAP) ---- ---- ---- ---- ----
 
Reconciliation of GAAP to Non-GAAP Tax on income (Tax benefit)
Three months ended Six months ended
June 30, 2018 March 31, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Tax on income (Tax benefit) (GAAP) 3,617 5,662 186 9,279 (575)
Deferred tax realized (asset) (1,697) (1,321) (773) (3,018) (2,105)
Transition tax of foreign earnings ---- 820 ---- 820 ----
Tax on income (Tax benefit) (Non-GAAP) 5,314 6,163 959 11,477 1,530
 
Reconciliation of GAAP to Non-GAAP Net income
Three months ended Six months ended
June 30, 2018 March 31, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Net income (GAAP) 34,568 35,686 22,524 70,254 36,699
Stock-based compensation 7,128 6,849 4,034 13,977 7,646
Non cash interest 568 512 ---- 1,080 ----
Fixed Assets disposal ---- 64 ---- 64 ----
Deferred tax realized (asset) (1,697) (1,321) (773) (3,018) (2,105)
Transition tax of foreign earnings ---- 820 ---- 820 ----
Net income (Non-GAAP) 40,567 42,610 25,785 83,177 42,240
 
Reconciliation of GAAP to Non-GAAP Net basic EPS
Three months ended Six months ended
June 30, 2018 March 31, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Net basic earnings per share (GAAP) 0.76 0.81 0.54 1.57 0.88
Stock-based compensation 0.16 0.15 0.10 0.31 0.19
Non cash interest 0.01 0.01 ---- 0.03 ----
FA disposal ---- ---- ---- ---- ----
Deferred tax realized (asset) (0.03) (0.03) (0.02) (0.07) (0.05)
Transition tax of foreign earnings ---- 0.02 ---- 0.02 ----
Net basic earnings per share (Non-GAAP) 0.90 0.96 0.62 1.86 1.02
 
Reconciliation of GAAP to Non-GAAP Net diluted EPS
Three months ended Six months ended
June 30, 2018 March 31, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Net diluted earnings per share (GAAP) 0.72 0.75 0.50 1.46 0.83
Stock-based compensation 0.12 0.12 0.06 0.24 0.12
Non cash interest 0.01 0.01 ---- 0.03 ----
FA disposal ---- ---- ---- ---- ----
Deferred tax realized (asset) (0.03) (0.03) (0.01) (0.06) (0.05)
Transition tax of foreign earnings ---- 0.02 ---- 0.01 ----
Net diluted earnings per share (Non-GAAP) 0.82 0.87 0.55 1.68 0.90
 
Reconciliation of GAAP to Non-GAAP No. of shares used in Net diluted EPS
Three months ended Six months ended
June 30, 2018 March 31, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Number of shares used in computing net diluted earnings per share (GAAP) 48,291,280 47,673,522 44,831,590 47,984,817 44,335,521
Stock-based compensation 1,341,286 1,535,408 2,228,246 1,438,347 2,359,454
Number of shares used in computing net diluted earnings per share (Non-GAAP) 49,632,566 49,208,930 47,059,836 49,423,164 46,694,975