SolarEdge Announces Quarter Ended December 31, 2016 Financial Results

FREMONT, Calif.--()--SolarEdge Technologies, Inc. (Nasdaq: SEDG), a global leader in PV inverters, power optimizers, and module-level monitoring services, today announced its financial results for the quarter ended December 31, 2016.

Quarter Ended December 31, 2016 Highlights

  • Revenues for the quarter of $111.5 million
  • GAAP gross margin for the quarter of 35.0%
  • GAAP operating income for the quarter of $15.1 million
  • GAAP net income for the quarter of $9.8 million
  • Non-GAAP net income for the quarter of $14.7 million
  • GAAP net diluted earnings per share for the quarter of $0.22
  • Non-GAAP net diluted earnings per share for the quarter of $0.32
  • 413 Megawatts (AC) of inverters shipped for the quarter

“We focused this quarter on the ramp up of manufacturing new products, including the HD Wave inverter which is now available worldwide. We continued our cost reduction measures yielding solid operating income and record gross margin despite lower revenues than in previous quarters,” said Guy Sella, Founder, Chairman and CEO of SolarEdge. “We remain confident in our ability to grow revenues and profitability in 2017.”

Quarter Ended December 31, 2016 Summary

The Company reported revenues of $111.5 million, 13% down from the prior quarter and 11% year over year.

GAAP gross margin reached 35.0%, up from 32.6% in the prior quarter and from 30.9% year over year.

GAAP operating expenses were $23.9 million, an increase of 1% from the prior quarter and of 24% year over year.

GAAP operating income was $15.1 million, down from $18.2 million in the prior quarter and from $19.3 million year over year.

GAAP net income was $9.8 million, down from $15.6 million in the prior quarter and from $24.1 million year over year.

Non-GAAP net income was $14.7 million, down from $20.9 million in the prior quarter and down from $19.8 million year over year.

GAAP net diluted earnings per shares (“EPS”) was $0.22, down from $0.35 in the prior quarter and down from $0.55 year over year.

Non-GAAP net diluted EPS was $0.32, down from $0.46 in the prior quarter and down from $0.44 year over year.

As of December 31, 2016, cash, cash equivalents, restricted cash and marketable securities totaled $224.3 million, compared to $206.7 million on September 30, 2016.

Outlook for the Quarter Ending March 31, 2017

The Company also provides guidance for the quarter ending March 31, 2017 as follows:

  • Revenues to be within the range of $110 million to $120 million;
  • Gross margins to be within the range of 31% to 33%.

Conference Call

The Company will host a conference call to discuss these results at 5:00 P.M. EST on Tuesday, February 14, 2017. The call will be available, live, to interested parties by dialing 877-874-1570. For international callers, please dial +1 719-325-4762. The Conference ID number is 9063628. 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 provides an intelligent inverter solution that has changed the way power is harvested and managed in solar photovoltaic systems. The SolarEdge 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. The SolarEdge system consists of power optimizers, inverters, storage solutions and a cloud-based monitoring platform and addresses a broad range of solar market segments, from residential solar installations to commercial and small utility-scale solar installations. 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 Registration Statement on Form S-1 (including the related prospectus), Annual Report on Form 10-K for the fiscal year ended June 30, 2016, filed on August 17, 2016, Current Reports on Form 8-K and other reports filed with the SEC. All information set forth in this release is as of February 14, 2017. 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)

 
Six months Ended

December 31,

Year ended

June 30,

2016 2016   2015   2014
 
Revenues $ 239,997 $ 489,843 $ 325,078 $ 133,217
Cost of revenues   159,097     337,887     243,295     111,246  
 
Gross profit   80,900     151,956     81,783     21,971  
 
Operating expenses:
 
Research and development, net 20,279 33,231 22,018 18,256
Sales and marketing 20,444 34,833 24,973 17,792
General and administrative   6,790     12,133     6,535     4,294  
 

Total operating expenses

  47,513     80,197     53,526     40,342  
 
Operating income (loss) 33,387 71,759 28,257 (18,371 )
 
Other expenses - - 104 -
 
Financial income (expenses), net   (2,789 )   471     (5,077 )   (2,787 )
 
Income (loss) before taxes on income 30,598 72,230 23,076 (21,158 )
 
Taxes on income (tax benefit)   5,217     (4,379 )   1,955     220  
 
Net income (loss) $ 25,381   $ 76,609   $ 21,121   $ (21,378 )
     

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands

 
December 31, June 30, June 30,
2016 2016 2015
 
CURRENT ASSETS:
Cash and cash equivalents $ 104,683 $ 74,032 $ 144,750
Restricted cash 897 928 3,639
Marketable Securities 74,465 59,163 -
Trade receivables, net 71,041 72,737 35,428
Prepaid expenses and other accounts receivable 21,347 21,340 32,645
Inventories   67,363     81,550     73,950  
 

Total current assets

  339,796     309,750     290,412  
 
LONG-TERM ASSETS:
Marketable securities 44,262 52,446 -
Property, equipment and intangible assets, net 37,381 28,547 14,717
Prepaid expenses and lease deposits 489 399 529
Deferred tax assets, net   2,815     6,296     -  
 

Total long term assets

  84,947     87,688     15,246  
 

Total assets

$ 424,743   $ 397,438   $ 305,658  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables $ 34,001 $ 48,481 $ 80,684
Employees and payroll accruals 13,018 10,092 6,814
Warranty obligations 13,616 14,114 9,431
Deferred revenues 1,202 3,859 1,676
Accrued expenses and other accounts payable   8,648     10,725     6,987  
 

Total current liabilities

  70,485     87,271     105,592  
 
LONG-TERM LIABILITIES:
Warranty obligations 44,759 37,078 22,448
Deferred revenues 18,660 14,684 8,289
Lease incentive obligation   2,061     2,297     2,385  
 
Total long-term liabilities   65,480     54,059     33,122  
 
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS’ EQUITY:
Common stock 4 4 4
Additional paid-in capital 307,098 299,214 287,152
Accumulated other comprehensive income (loss) (324 ) 271 (222 )
Accumulated deficit   (18,000 )   (43,381 )   (119,990 )
 

Total stockholders’ equity

  288,778     256,108     166,944  
 

Total liabilities and stockholders’ equity

$ 424,743   $ 397,438   $ 305,658  
   

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

Six months ended
December 31,

Year ended
June 30,

2016 2016   2015   2014

Cash flows provided by (used in) operating activities:

Net income (loss) $ 25,381 $ 76,609 $ 21,121 $ (21,378 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of intangible assets 2,759 3,847 2,253 1,978
Amortization of premiums on available-for-sale marketable securities 681 532 - -
Stock-based compensation 6,600 9,089 2,956 1,082
Financial expenses (income), net related to term loan - - (992 ) 431
Remeasurement of warrants to purchase convertible preferred stock - - 5,350 (53 )
Capital loss from disposal of property - - 104 -
Interest expenses related to short term bank loan - - - 44
Changes in assets and liabilities:
Inventories 14,022 (7,356 ) (48,507 ) (10,681 )
Prepaid expenses and other accounts receivable (367 ) 10,542 (19,563 ) (7,409 )
Trade receivables, net 1,555 (37,271 ) (16,333 ) (9,911 )
Deferred tax assets, net 3,652 (6,380 ) - -
Trade payables (14,464 ) (32,200 ) 41,111 19,441
Employees and payroll accruals 2,996 3,278 1,668 1,726
Warranty obligations 7,183 19,313 13,698 7,803
Deferred revenues 1,335 8,578 3,989 (500 )
Accrued expenses and other accounts payable (1,999 ) 3,934 2,530 (418 )
Lease incentive obligation   (236 )   (88 )   2,669     -  
Net cash provided by (used in) operating activities   49,098     52,427     12,054     (17,845 )
 

Cash flows from investing activities:

Purchase of property and equipment (11,025 ) (15,690 ) (11,765 ) (2,990 )
Purchase of intangible assets (600 ) (800 ) - -
Decrease (increase) in restricted cash 31 2,711 (2,038 ) (156 )
Decrease (increase) in long-term lease deposit (77 ) 103 (134 ) (1 )
Investment in available-for-sale marketable securities (40,858 ) (118,511 ) - -
Maturities of available-for-sale marketable securities   32,782     6,350     -     -  
Net cash used in investing activities   (19,747 )   (125,837 )   (13,937 )   (3,147 )
 

Cash flows from financing activities:

Proceeds from short term bank loan - - 23,000 21,813
Repayment of short term bank loan - - (36,326 ) (12,447 )
Repayments of term loan - - (5,919 ) (2,401 )
Proceeds from issuance of Series D-2 Convertible Preferred stock, net - - - 669
Proceeds from issuance of Series D-3 Convertible Preferred stock, net - - - 9,991
Proceeds from issuance of Series E Convertible Preferred stock, net - - 24,712 -
Proceeds from initial public offering, net - - 131,402 -
Issuance costs related to initial public offering - (194 ) - -
Proceeds from issuance of shares under stock purchase plan and upon exercise of stock-based awards   1,284     2,973     84     51  
Net cash provided by financing activities   1,284     2,779     136,953     17,676  
 
Increase (decrease) in cash and cash equivalents 30,635 (70,631 ) 135,070 (3,316 )
Cash and cash equivalents at the beginning of the period 74,032 144,750 9,754 13,142
Effect of exchange rate differences on cash and cash equivalents   16     (87 )   (74 )   (72 )
Cash and cash equivalents at the end of the period $ 104,683   $ 74,032   $ 144,750   $ 9,754  
 

SOLAREDGE TECHNOLOGIES INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands, except per share data)

(Audited)

 
Reconciliation of GAAP to Non-GAAP Gross Profit
Three months ended   6 months ended

December 31,
2016

 

September 30,
2016

 

December 31,
2015

December 31,
2016

 

December 31,
2015

 
Gross profit (GAAP) 39,025 41,875 38,582 80,900 72,109
Stock-based compensation 486   385   209   871   389  
Gross profit (Non-GAAP) 39,511   42,260   38,791   81,771   72,498  
 
Reconciliation of GAAP to Non-GAAP Gross Margin
Three months ended 6 months ended

December 31,
2016

September 30,
2016

December 31,
2015

December 31,
2016

December 31,
2015

Gross margin (GAAP) 35.0 % 32.6 % 30.9 % 33.7 % 30.1 %
Stock-based compensation 0.4 % 0.3 % 0.2 % 0.4 % 0.1 %
Gross margin (Non-GAAP) 35.4 % 32.9 % 31.1 % 34.1 % 30.2 %
 
Reconciliation of GAAP to Non-GAAP Operating expenses
Three months ended 6 months ended

December 31,
2016

September 30,
2016

December 31,
2015

December 31,
2016

December 31,
2015

Operating expenses (GAAP) 23,878 23,635 19,320 47,513 37,973
Stock-based compensation R&D 1,134 927 518 2,061 913
Stock-based compensation S&M 1,003 849 749 1,852 1,365
Stock-based compensation G&A 877   939   750   1,816   1,391  
Operating expenses (Non-GAAP) 20,864   20,920   17,303   41,784   34,304  
 
Reconciliation of GAAP to Non-GAAP Operating income
Three months ended 6 months ended

December 31,
2016

September 30,
2016

December 31,
2015

December 31,
2016

December 31,
2015

Operating income (GAAP) 15,147 18,240 19,262 33,387 34,136
Stock-based compensation 3,500   3,100   2,226   6,600   4,058  
Operating income (Non-GAAP) 18,647   21,340   21,488   39,987   38,194  
 
Reconciliation of GAAP to Non-GAAP Tax on income (Tax benefit)
Three months ended 6 months ended

December 31,
2016

September 30,
2016

December 31,
2015

December 31,
2016

December 31,
2015

Tax on income (Tax benefit) (GAAP) 2,203 3,014 (5,802 ) 5,217 (5,432 )
Deferred tax asset (realized) (1,473 ) (2,179 ) 6,527   (3,652 ) 6,527  
Tax on income (Tax benefit) (Non-GAAP) 730   835   725   1,565   1,095  
 

Reconciliation of GAAP to Non-GAAP Net income
Three months ended 6 months ended

December 31,
2016

 

September 30,
2016

December 31,
2015

December 31,
2016

December 31,
2015

Net income (GAAP) 9,765 15,616 24,105 25,381 38,537
Stock-based compensation 3,500 3,100 2,226 6,600 4,058
Deferred tax realized (asset) 1,473 2,179   (6,527 ) 3,652   (6,527 )
Net income (Non-GAAP) 14,738 20,895   19,804   35,633   36,068  
 
Reconciliation of GAAP to Non-GAAP Net basic EPS
Three months ended 6 months ended

December 31,
2016

September 30,
2016

December 31,
2015

December 31,
2016

December 31,
2015

Net basic earnings per share (GAAP) 0.24 0.38 0.61 0.62 0.98
Stock-based compensation 0.08 0.08 0.06 0.16 0.10
Deferred tax realized (asset) 0.04 0.05   (0.17 ) 0.09   (0.16 )
Net basic earnings per share (Non-GAAP) 0.36 0.51   0.50   0.87   0.92  
 
Reconciliation of GAAP to Non-GAAP Net diluted EPS
Three months ended 6 months ended

December 31,
2016

September 30,
2016

December 31,
2015

December 31,
2016

December 31,
2015

Net diluted earnings per share (GAAP) 0.22 0.35 0.55 0.58 0.87
Stock-based compensation 0.07 0.06 0.03 0.12 0.07
Deferred tax realized (asset) 0.03 0.05   (0.14 ) 0.08   (0.14 )
Net diluted earnings per share (Non-GAAP) 0.32 0.46   0.44   0.78   0.80  
 
Reconciliation of GAAP to Non-GAAP No. of shares used in Net diluted EPS
Three months ended 6 months ended

December 31,
2016

September 30,
2016

December 31,
2015

December 31,
2016

December 31,
2015

Number of shares used in computing net diluted earnings per share (GAAP) 43,683,458 43,995,227 44,007,348 43,839,342 44,231,660
Stock-based compensation 2,399,308 1,742,211   1,341,335   2,070,759   1,013,903  
Number of shares used in computing net diluted earnings per share (Non-GAAP) 46,082,766 45,737,438   45,348,683   45,910,101   45,245,563  

Contacts

Investor Contacts
SolarEdge Technologies, Inc.
Ronen Faier, +1 510-498-3263
Chief Financial Officer
investors@solaredge.com
or
Sapphire Investor Relations, LLC
Erica Mannion or Michael Funari, +1 617-542-6180
investors@solaredge.com

Contacts

Investor Contacts
SolarEdge Technologies, Inc.
Ronen Faier, +1 510-498-3263
Chief Financial Officer
investors@solaredge.com
or
Sapphire Investor Relations, LLC
Erica Mannion or Michael Funari, +1 617-542-6180
investors@solaredge.com