SOLAREDGE TECHNOLOGIES, INC. Forward-Looking Statements
Statements contained in this Form 10-Q or statements incorporated by reference from documents we have filed with theSecurities and Exchange Commission may contain forward-looking statements that are based on our management's expectations, estimates, projections, beliefs and assumptions in accordance with information currently available to our management. Forward-looking statements should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part 1, Item 1 of this report. This discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, technology developments, new products and services, financing and investment plans, competitive position, industry and regulatory environment, effects of acquisitions, growth opportunities and the effects of competition. Forward-looking statements include statements that are not historical facts and can be identified by terms such as "anticipate," "believe," "could," "seek," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would" or similar expressions and the negatives of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Given these uncertainties, you should not place undue reliance on forward looking statements. Also, forward-looking statements represent our management's beliefs and assumptions only as of the date of this filing. Important factors that could cause actual results to differ materially from our expectations include:
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the duration, scope and effects of the ongoing COVID-19 pandemic, government and other third party responses to it and the related macroeconomic effects, including to our business and the business of our suppliers and customers;
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future demand for renewable energy including solar energy solutions;
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changes to net metering policies or the reduction, elimination or expiration of government subsidies and economic incentives for ongrid solar energy applications;
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changes in the
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federal, state and local regulations governing the electric utility industry with respect to solar energy;
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the retail price of electricity derived from the utility grid or alternative energy sources;
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interest rates and supply of capital in the global financial markets in general and in the solar market specifically;
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competition, including introductions of power optimizer, inverter and solar photovoltaic ("PV") system monitoring products by our competitors;
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developments in alternative technologies or improvements in distributed solar energy generation;
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historic cyclicality of the solar industry and periodic downturns;
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defects or performance problems in our products;
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our ability to forecast demand for our products accurately and to match production with demand;
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our dependence on ocean transportation to deliver our products in a cost effective manner;
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our dependence upon a small number of outside contract manufacturers and suppliers;
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capacity constraints, delivery schedules, manufacturing yields and costs of our contract manufacturers and availability of components;
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delays, disruptions and quality control problems in manufacturing;
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shortages, delays, price changes or cessation of operations or production affecting our suppliers of key components;
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business practices and regulatory compliance of our raw material suppliers;
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performance of distributors and large installers in selling our products;
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our customers' financial stability, creditworthiness and debt leverage ratio;
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our ability to retain key personnel and attract additional qualified personnel;
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our ability to effectively design, launch, market and sell new generations of our products and services;
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our ability to maintain our brand and to protect and defend our intellectual property;
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our ability to retain, and events affecting, our major customers;
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our ability to manage effectively the growth of our organization and expansion into new markets;
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our ability to integrate acquired businesses;
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fluctuations in global currency exchange rates;
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unrest, terrorism or armed conflict in
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general economic conditions in our domestic and international markets;
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our ability to service our debt; and
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the other factors set forth under "Item 1A. Risk Factors" in "Part II-OTHER INFORMATION" section of this report.
Except as required by law, we assume no obligation to update these forward looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward looking statements, even if new information becomes available in the future.
Overview
We are a leading provider of an optimized inverter solution that has changed the way power is harvested and managed in a solar photovoltaic, known as PV systems. Our direct current or DC optimized inverter system maximizes power generation at the individual PV module level while lowering the cost of energy produced by the solar PV system, for improved return on investment, or RoI. Additional benefits of the DC optimized inverter system include comprehensive and advanced safety features, improved design flexibility, and improved operating and maintenance, or O&M with module-level and remote monitoring. The typicalSolarEdge optimized inverter system consists of power optimizers, inverters, a communication device which enables access to a cloud-based monitoring platform and in many cases, additional smart energy management solutions. Our solutions address a broad range of solar market segments, from residential solar installations to commercial and small utility-scale solar installations. 5
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Since introducing the optimized inverter solution in 2010,SolarEdge has expanded its activity to other areas of smart energy technology, both through organic growth and through acquisitions.SolarEdge now offers energy solutions which include not only residential, commercial and small utility scale PV systems but also product offerings in the areas of energy storage systems or ESS and backup, electric vehicle, or EV components and charging capabilities, home energy management, grid services and virtual power plants, lithium-ion batteries and uninterrupted power supply, known asUPS solutions. In the third quarter of 2020 we began commercial shipments to theU.S. from our manufacturing facility in the North ofIsrael , "Sella 1". The proximity of Sella 1 to our R&D team and labs, enables us to accelerate new product development cycles as well as define equipment and manufacturing processes of newly developed products which can then be adopted by our contract manufacturers world-wide. During the second quarter of 2021, Sella 1 reached full manufacturing capacity. In 2020, we began construction of "Sella 2", a 2GWh Li-Ion cell factory inKorea . The new factory is being constructed to meet the growing global demand for Li-Ion cells and batteries, specifically in the energy storage system ("ESS") and e-mobility markets. Sella 2 is expected to initiate ramp-up of manufacturing in the first half of 2022. We are a leader in the global module-level power electronics ("MLPE") market. As ofJune 30, 2021 , we have shipped approximately 74.1 million power optimizers and 3.1 million inverters. Over 2.15 million installations, many of which may include multiple inverters, are currently connected to, and monitored through, our cloudbased monitoring platform. As ofJune 30, 2021 , we have shipped approximately 25.7 GW of our DC optimized inverter systems. Our revenues for the three months endedJune 30, 2021 and 2020 were$480.1 million and$331.9 million , respectively. Gross margin was 32.5% and 31.0% for the three months endedJune 30, 2021 and 2020, respectively. Net income was$45.1 million and$36.7 million for the three months endedJune 30, 2021 and 2020, respectively. Our revenues for the six months endedJune 30, 2021 and 2020 were$885.5 million and$763.1 million , respectively. Gross margin was 33.5% and 31.8% for the six months endedJune 30, 2021 and 2020, respectively. Net income was$75.2 million and$78.9 million for the six months endedJune 30, 2021 and 2020, respectively.
COVID-19 Impact
We continue to monitor the evolving impact of COVID-19 on our operations and business. Our first priority continues to be protecting and supporting our employees while maintaining company operations and support of our customers with as few disruptions as possible. We follow the guidance issued by applicable local authorities and health officials in each region in which we do business, including in our headquarters located inIsrael , and have been able to continue our operations remotely or from our offices. We have maintained a flexible attendance policy that has allowed our employees to work remotely, where possible, in order to reduce the number of people who are in our offices while our labs and manufacturing facilities remain fully operational. Our manufacturing facilities inKorea ,Italy andIsrael and our contract manufacturers' facilities inChina ,Vietnam andHungary have remained operational and at almost full capacity, with some interruptions on a case-by-case basis in compliance with local laws and in order to minimize the spread of the COVID-19 virus. Specifically, inVietnam , there have been and continue to be government enforced lockdowns that have led to the temporary shutdown of our manufacturing lines. Our customer support centers are working at full capacity, partially from home. Continued travel restrictions however continue to have an impact on our operations. 6
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While our operations and operating expenses have not been significantly impacted by COVID-19, in the second quarter of 2021 we experienced and continue to experience an increase in the cost of goods sold due to an increase in shipping rates that resulted from a reduction in ocean freight capacity, the accumulation of containers inthe United States andEurope that were not returned toAsia and the reduction in the availability of air freight that increased the demand for ocean freight. Our second quarter revenues of$480.1 million reflect a healthy recovery from the impacts of the global pandemic, with an increase of 18.4% from the$405.5 million of revenues in the first quarter of 2021. This increase reflects a significant increase in demand for our products in all geographies in which we operate following the negative impacts on demand experienced in 2020 as a result of the COVID-19 pandemic. Key Operating Metrics In managing our business and assessing financial performance, we supplement the information provided by the financial statements with other operating metrics. These operating metrics are utilized by our management to evaluate our business, measure our performance, identify trends affecting our business and formulate projections. We use metrics relating to shipments (inverters, power optimizers and megawatts shipped) to evaluate our sales performance and to track market acceptance of our products. We use metrics relating to monitoring (systems monitored) to evaluate market acceptance of our products and usage of our solution. We provide the "megawatts shipped" metric, which is calculated based on nameplate capacity shipped, to show adoption of our system on a nameplate capacity basis. Nameplate capacity shipped is the maximum rated power output capacity of an inverter and corresponds to our financial results in that higher total nameplate capacities shipped are generally associated with higher total revenues. However, revenues increase with each additional unit, not necessarily each additional MW of capacity sold. Accordingly, we also provide the "inverters shipped" and "power optimizers shipped" operating metrics. Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Inverters shipped 179,546 141,689 361,451 343,698 Power optimizers shipped 5,011,290 3,515,906 8,746,080 8,576,297 Megawatts shipped (1) 1,643 1,442 3,334 3,292
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(1) Calculated based on the aggregate nameplate capacity of inverters shipped
during the applicable period. Nameplate capacity is the maximum rated power
output capacity of an inverter as specified by the manufacturer.
Results of Operations
The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this report.
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The following table sets forth selected consolidated statements of income data for each of the periods indicated.
Three Months Ended Six Months Ended
June 30, June 30,
2021 2020 2021 2020
(In thousands) (In thousands)
Revenues $ 480,057 $ 331,851 $ 885,546 $ 763,069
Cost of revenues 323,865 228,888 589,280 520,098
Gross profit 156,192 102,963 296,266 242,971
Operating expenses:
Research and development 52,664 38,098 99,641 74,793
Sales and marketing 29,458 20,936 56,369 45,189
General and administrative 19,370 13,964 39,219 30,149Other operating expenses (income) (859 ) - 1,350
(4,900 ) Total operating expenses 100,633 72,998 196,579 145,231 Operating income 55,559 29,965 99,687 97,740
Financial expenses (income), net 1,743 (11,565 ) 7,840
5,040 Income before taxes on income 53,816 41,530 91,847 92,700 Taxes on income 8,724 4,862 16,679 13,784 Net income$ 45,092 $ 36,668 $ 75,168 $ 78,916 Comparison of the Three and Six Months EndedJune 30, 2021 to the Three and Six Months EndedJune 30, 2020 Revenues Three Months Ended Six Months Ended June 30, 2021 to 2020 June 30, 2021 to 2020 2021 2020 Change 2021 2020 Change Revenues (Dollars in thousands)$ 480,057 $ 331,851 148,206 44.7 %$ 885,546 $ 763,069 $ 122,477 16.1 % Power optimizers (units) 4,937,986 3,741,646 1,196,340 32.0 %
8,725,444 8,538,080 187,364 2.2 % Inverters (units)
178,693 141,732 36,961 26.1 % 361,607 338,822 22,785 6.7 %
Revenues increased by$148.2 million , or 44.7%, for the three months endedJune 30, 2021 as compared to the three months endedJune 30, 2020 , primarily due to (i) an increase in the number of inverters and power optimizers sold, with significant growth in revenues in all geographies; and (ii) an increase in the numbers of powertrain kits supplied bySolarEdge e-Mobility SPA ("SolarEdge e-Mobility"), in an aggregate amount of$20.4 million . Revenues from outside of theU.S. comprised 63.4% of our revenues in the three months endedJune 30, 2021 , as compared to 62.0% in the three months endedJune 30, 2020 . Our blended ASP per watt for solar products is calculated by dividing the solar revenues by the name plate capacity of inverters shipped. Our blended ASP per watt increased by$0.056 , or 26.0%, in the three months endedJune 30, 2021 as compared to the three months endedJune 30, 2020 . A primary contributor to this increase was a relatively higher number of power optimizers shipped compared to the number of inverters shipped, which increased our total solar revenues but did not impact the watt amount used for calculating the ASP per watt. 8
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The increase in blended ASP per watt is also attributed to an increase in the sale of residential products out of our total solar product mix, mainly inEurope and in theU.S , that are characterized with higher ASP per watt as well as the strengthening of the Euro and other currencies against theU.S. Dollar. This increase in blended ASP per watt was partially offset by a change in our customer mix in theU.S. toward larger customers that enjoy preferential pricing due to volume commitments. Revenues increased by$122.5 million , or 16.1%, for the six months endedJune 30, 2021 as compared to the six months endedJune 30, 2020 , primarily due to (i) an increase in the number of inverters and power optimizers sold, with significant growth in revenues coming fromEurope , and the rest of the world; and (ii) an increase in the numbers of powertrain kits supplied bySolarEdge e-Mobility in an aggregate amount of$30.8 million . This increase was partially offset by a decrease in revenues which we attribute principally to the high level of safe harbor-related revenues in the amount of$51.4 million generated in theU.S. in the first quarter of 2020 which did not occur in 2021 due to the expected extension of the Solar Investment Tax Credits. Revenues from outside of theU.S. comprised 61.7% of our revenues in the six months endedJune 30, 2021 , as compared to 51.0% in the six months endedJune 30, 2020 . Our blended ASP per watt for solar products shipped increased by$0.022 , or 9.9%, in the six months endedJune 30, 2021 as compared to the six months endedJune 30, 2020 . This increase is primarily attributed to an increase in the proportion of residential products sold out of our solar product mix, mainly inEurope and in theU.S , that are characterized with higher ASP per watt as well as the strengthening of the Euro and other currencies against theU.S. Dollar.
Cost of Revenues and Gross Profit
Three Months Ended Six Months Ended
June 30, 2021 to 2020 June 30, 2021 to 2020
Dollars in thousands 2021 2020 Change 2021 2020 Change
Cost of revenues
$ 520,098 $ 69,182 13.3 % Gross profit$ 156,192 $ 102,963 $ 53,229 51.7 %$ 296,266 $ 242,971 $ 53,295 21.9 % Cost of revenues increased by$95.0 million , or 41.5%, in the three months endedJune 30, 2021 , as compared to the three months endedJune 30, 2020 , primarily due to: •
an increase in the volume of products sold;
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a significant increase in shipment costs in an aggregate amount of
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an increase in personnel-related costs of$3.5 million mainly related to the expansion of our operations and support headcount in the solar business, which grew in parallel to our growing install base worldwide; and
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an increase in warranty expenses and warranty accruals of
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These increases were partially offset by:
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decreased customs duties of$8.9 million attributed to lower tariff charges due to the manufacture of a higher portion of our products for theU.S. outside ofChina ; Gross profit as a percentage of revenue increased from 31.0% in the three months endedJune 30, 2020 to 32.5% in the three months endedJune 30, 2021 , primarily due to: •
an increased rate of shipments generated from the sale of residential products,
mainly in
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decreased customs duties inthe United States attributed to lower tariff charges due to the manufacture of a higher portion of our products for theU.S. outside ofChina ; •
favorable exchange rates on our sales outside of the
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continued cost reduction efforts.
These factors were partially offset by:
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an increase in support costs and warranty obligations due to an increase in our install base and costs associated with providing our warranty coverage;
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a change in our customer mix in the
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a significant increase in shipping rates world-wide; and
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a negative impact on margins attributed to our non-solar businesses, that are characterized by a lower gross profit.
Cost of revenues increased by$69.2 million , or 13.3%, in the six months endedJune 30, 2021 , as compared to the six months endedJune 30, 2020 , primarily due to: •
an increase in the volume of products sold;
•
an increase in warranty expenses and warranty accruals of
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an increase in shipping costs, in an aggregate amount of
•
an increase in personnel-related costs of
These factors were partially offset by:
•
decreased custom duties of$29.3 million attributed to lower tariff charges due to the manufacture of a higher portion of our products for theU.S. outside ofChina ; 10
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Gross profit as a percentage of revenue increased from 31.8% in the six months endedJune 30, 2020 to 33.5% in the six months endedJune 30, 2021 , primarily due to: •
an increased rate of shipments generated from the sale of residential products,
mainly in
•
decreased custom duties in the
•
the absence of safe harbor related sales, that were characterized with a lower gross margin in the first quarter of 2020;
•
favorable exchange rates on our sales outside of the
•
continued cost reduction efforts.
These were partially offset by:
•
an increase in support costs related to our warranty obligations due to an increase in our install base and and the costs associated with providing our warranty coverage;
•
a change in our customer mix in the
•
a significant increase in shipping rates world-wide; and
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a negative impact on margin attributed to our non-solar businesses, that are characterized by a lower gross profit.
Research and Development
Three Months Ended Six Months Ended
June 30, 2021 to 2020 June 30, 2021 to 2020
Dollars in thousands 2021 2020 Change 2021
2020
Research and development costs increased by
• an increase in personnel-related costs of$13.7 million resulting from an increase in our research and development headcount, as well as salary expenses associated with employee equity-based compensation. The increase in headcount reflects our continuing investment in the enhancement of existing products as well as research and development expenses associated with bringing new products to the market; •
increased expenses related to other overhead costs in an amount of
•
increase in depreciation expenses from property and equipment in an amount of
These were partially offset by a reimbursement of costs charged to a customer, in an amount of$2.1 million , related to research and development activities performed bySolarEdge e-Mobility. Research and development costs increased by$24.8 million , or 33.2%, in the six months endedJune 30, 2021 , as compared to the six months endedJune 30, 2020 , primarily due to: • an increase in personnel-related costs of$22.5 million resulting from an increase in our research and development headcount as well as salary expenses associated with employee equity-based compensation. The increase in headcount reflects our continued investment in enhancements of existing products and research and development expenses associated with bringing new products to the market; 11
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•
increased expenses related to consultants and sub-contractors in an amount of
•
increased expenses related to other overhead costs in an amount of
•
an increase in depreciation expenses of property and equipment in an amount of
These increases were partially offset by a reimbursement of costs charged to a customer, in an amount of$4.6 million , related to the research and development activities performed bySolarEdge e-Mobility. Sales and Marketing Three Months Ended Six Months Ended June 30, 2021 to 2020 June 30, 2021 to 2020 Dollars in thousands 2021 2020 Change 2021
2020 Change
Sales and Marketing
Sales and marketing expenses increased by$8.5 million , or 40.7%, in the three months endedJune 30, 2021 , as compared to the three months endedJune 30, 2020 , primarily due to increased personnel-related costs of$7.3 million as a result of an increase in headcount supporting our growth inIsrael , theU.S. andAsia , as well as salary expenses associated with employee equity-based compensation. Sales and marketing expenses increased by$11.2 million , or 24.7%, in the six months endedJune 30, 2021 as compared to the six months endedJune 30, 2020 , primarily due to increased personnel-related costs of$11.2 million as a result of an increase in headcount supporting our growth inIsrael , theU.S. , andAsia , as well as salary expenses associated with employee equity-based compensation.
General and Administrative
Three Months Ended Six Months Ended
June 30, 2021 to 2020 June 30, 2021 to 2020
Dollars in thousands 2021 2020 Change 2021
2020 Change
General and Administrative
General and administrative expenses increased by$ 5.4 million , or 38.7%, in the three months endedJune 30, 2021 , as compared to the three months endedJune 30, 2020 , primarily due to: •
increased personnel-related costs of
•
the reinstatement of executive management salaries that were voluntarily reduced in early 2020 in order to mitigate the potential effects of COVID-19; and
•
the expansion of certain general and administrative functions in the non-solar
businesses in the second half of 2020, as well as salary expenses associated
with employee equity-based compensation.
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These expenses were partially offset by a decrease in expenses related to an
accrual for doubtful debts in an amount of
General and administrative expenses increased by$9.1 million , or 30.1%, in the six months endedJune 30, 2021 as compared to the six months endedJune 30, 2020 primarily due to: •
increased personnel-related costs of
•
the reinstatement of executive management salaries that were voluntarily reduced in early 2020 in order to mitigate the potential effects of COVID-19;
•
the expansion of certain general and administrative functions in the non-solar businesses in the second half of 2020, as well as salary expenses associated with employee equity-based compensation; and
•
an increased provision of
These expenses were partially offset by a decrease in expenses related to an
accrual for doubtful debts in an amount of
Other operating expenses (income)
Three Months Ended Six Months Ended
June 30, 2021 to 2020 June 30, 2021 to 2020
Dollars in
thousands 2021 2020 Change 2021 2020 Change
Other
operating
expenses
(income)
Other operating income increased by$0.9 million , in the three months endedJune 30, 2021 compared to the three months endedJune 30, 2020 primarily due to a payment received by us out of the Kokam escrow account with regards to a capital adjustment in connection with the acquisition ofKokam Co., Ltd. ("Kokam").
Other operating expenses were
•
a decrease in income in the amount of
•
an increase of
These were partially offset by an increase of$0.9 million in income related to a payment made to us from an escrow account with regards to a working capital adjustment in connection with the Kokam acquisition. 13
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Financial expenses (income), net
Three Months Ended Six Months Ended
June 30, 2021 to 2020 June 30, 2021 to 2020
Dollars in
thousands 2021 2020 Change 2021 2020 Change
Financial
expenses
(income),
net $ 1,743 $ (11,565 ) $ 13,308 (115.1 )% $ 7,840 $ 5,040 $ 2,800 55.6 %
Financial expenses were $1.7 million in the three months ended June 30, 2021
compared to an income in the amount of $11.6 million in the three months ended
June 30, 2020 , primarily due to a decrease of $12.8 million in foreign exchange
fluctuations income, mainly between the Euro, the New Israeli Shekel and the
South Korean Won against the U.S. Dollar.
Financial expenses increased by
•
an increase of$5.6 million in foreign exchange fluctuations expenses, mainly between the Euro, the New Israeli Shekel and the South Korean Won against theU.S. Dollar; •
an increase of
•
an increase of
These expenses were partially offset by an increase of
Taxes on Income
Three Months Ended Six Months Ended
June 30, 2021 to 2020 June 30, 2021 to 2020
Dollars in thousands 2021 2020 Change 2021 2020 Change
Taxes on Income $ 8,724 $ 4,862 $ 3,862 79.4 % $ 16,679 $ 13,784 $ 2,895 21.0 %
Taxes on income increased by $3.9 million , or 79.4%, in the three months ended
June 30, 2021 , as compared to the three months ended June 30, 2020 , primarily
due to a decrease of $1.5 million in deferred tax assets (presented as tax
expenses), net, an increase of $2.0 million of current tax expenses mainly
attributed to an increase in taxable income in foreign subsidiaries that are
profitable in the three months ended June 30, 2021 , as compared to the three
months ended June 30, 2020 and an increase of $0.4 million in prior year tax
expenses.
Taxes on income increased by $ 2.9 million , or 21.0% in the six months ended
June 30, 2021 , as compared to the six months ended June 30, 2020 , primarily due
to a decrease of $2.8 million in deferred tax assets (presented as tax
expenses), net and an increase of $0.3 million in prior year tax expenses. These
were partially offset by a decrease of $0.2 million in current tax expenses,
net, mainly related to a decrease in profit before tax;
Net Income
Three Months Ended Six Months Ended
June 30, 2021 to 2020 June 30, 2021 to 2020
Dollars in thousands 2021 2020 Change 2021 2020 Change
Net Income $ 45,092 $ 36,668 $ 8,424 23.0 % $ 75,168 $
78,916
As a result of the factors discussed above, net income increased by
As a result of the factors discussed above, net income decreased by
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Liquidity and Capital Resources
The following table shows our cash flow from operating activities, investing activities and financing activities for the stated periods:
Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(In thousands)
Net cash provided
by operating
activities $ 38,685 $ 59,310 $ 62,768 $ 167,055
Net cash provided
by (used in)
investing
activities $ (182,416 ) $ 46,800 $ (335,998 ) $ 26,876
Net cash provided
by (used in)
financing
activities $ (19,144 ) $ 5,681 $ (21,206 ) $ 8,996
Increase
(decrease) in cash
and cash
equivalents $ (162,875 ) $ 111,791 $ (294,436 ) $ 202,927
As of June 30, 2021 , our cash and cash equivalents were $524.1 million . This
amount does not include $603.0 million invested in available for sale marketable
securities, $2.5 million invested in restricted bank deposits and $13.6 million
invested in short-term bank deposits. Our principal uses of cash are for funding
our operations and other working capital requirements. As of June 30, 2021 , we
have open commitments for capital expenditures in an amount of approximately
$80.0 million . These commitments reflect purchases of automated assembly lines
and other machinery related to our manufacturing operations. We also have
purchase obligations in the amount of $874.9 million related to raw materials
and commitments for the future manufacturing of our products. We believe that
cash provided by operating activities as well as our cash and cash equivalents
will be sufficient to meet our anticipated cash needs for at least the next 12
months including the self-funding of our capital expenditure commitments.
Operating Activities
During the six months endedJune 30, 2021 , cash provided by operating activities was$62.8 million , derived mainly from a net income of$75.2 million that included$82.2 million of non-cash expenses, an increase of$27.3 million in warranty obligations,$19.7 million in accrued expenses and other accounts payable,$9.7 million in accruals for employees,$4.5 million in deferred revenues and customer advances and a decrease of$13.2 million in inventories. This was offset by an increase of$128.6 million in trade receivables,$20.3 million in prepaid expenses and other accounts receivable and a decrease of$20.1 million in trade payables. For the six months, endedJune 30, 2020 , cash provided by operating activities was$167.1 million derived mainly from net income of$78.9 million that included$35.5 million of non-cash expenses, a decrease of$116.0 million in trade receivables and$37.1 million in prepaid expenses and other accounts receivable, an increase of$5.8 million in accrued expenses and other accounts payable,$20.2 million in warranty obligations, and$1.4 million in accruals for employees. This was offset by a decrease of$31.8 million in deferred revenues and customer advances,$1.8 million in trade payables and an increase of$94.2 million in inventories. 15
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Investing Activities
During the six months endedJune 30, 2021 , net cash used in investing activities was$336.0 million , of which$422.5 million was invested in available-for-sale marketable securities and$65.3 million was related to capital investments in laboratory equipment, end of line testing equipment, automated assembly lines, manufacturing tools and leasehold improvements. Net cash used in investing activities was offset by$103.8 million from sales and maturities of available-for-sale marketable securities,$46.5 million from the withdrawal from bank deposits, net and$1.5 million related to other investing activities. During the six months endedJune 30, 2020 net cash provided by investing activities was$26.9 million , of which$89.7 million was proceeds from sales and maturities of available-for-sale marketable securities which we sold in order to maintain high cash balances to mitigate risks associated with COVID-19,$25.6 million was from the withdrawal from restricted bank deposits, net, and$2.1 million related to other investing activities. This was offset by$36.8 million which was invested in available-for-sale marketable securities, and$53.7 million related to capital investments in laboratory equipment, end of line testing equipment, automated assembly lines, manufacturing tools and leasehold improvements. Financing Activities During the six months endedJune 30, 2021 , net cash used in financing activities was$21.2 million , of which$16.4 related to repayment of loans,$4.2 million was attributed to cash received from the exercise of employee and non-employee stock-based awards net of withholding taxes remitted to the tax authorities and$0.6 million related to other financing activities. For the six months endedJune 30, 2020 , net cash provided by financing activities was$9.0 million , of which,$15.2 million was related to proceeds from new bank loans of Kokam and$9.1 million was attributed to cash received from the exercise of employee and non-employee stock-based awards. This was offset by$15.2 million used for repayment of loans we acquired as part of the Kokam acquisition and$0.1 million related to other financing activities.
Convertible Senior Note
OnSeptember 25, 2020 , we issued$632.5 million aggregate principal amount of our Notes in a transaction exempt from registration pursuant to Rule 144A and Regulation S under the Securities Act. Net proceeds from the offering, after underwriters' discount and commissions and offering expenses, was$617.9 million . We intend to use the proceeds of the Notes for general corporate purposes. See Note 7 to our interim financial statements for more information.
Debt Obligations
During 2020, we redeemed all outstanding loans, including the bank loan obligations acquired as part of the acquisition of Kokam and entered into new bank loans in an aggregate amount of$15.2 million . During the second quarter of 2021 we redeemed the new bank loans. In addition, during 2020, we entered into a second bank loan in an aggregate amount of$1.4 million . The second bank loan matures inSeptember 2030 , with a monthly interest rate of 2.5%. As ofJune 30, 2021 , the aggregate outstanding amount of the second bank loan was$1.4 million .
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
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