SolarEdge Announces First Quarter 2022 Financial Results

MILPITAS, Calif.--()--SolarEdge Technologies, Inc. (Nasdaq: SEDG), a global leader in smart energy technology, today announced its financial results for the first quarter ended March 31, 2022.

First Quarter 2022 Highlights

  • Record revenues of $655.1 million
  • Record revenues from solar segment of $608.0 million
  • GAAP gross margin of 27.3%
  • Non-GAAP gross margin of 28.4%
  • Gross margin from solar segment of 30.2%
  • GAAP net income of $33.1 million
  • Non-GAAP net income of $68.8 million
  • GAAP net diluted earnings per share (“EPS”) of $0.60
  • Non-GAAP net diluted EPS of $1.20
  • 2.13 Gigawatts (AC) of inverters shipped

“We are pleased with our record revenues for the first quarter which represent 62% growth from the first quarter of last year and which are driven by record revenues in the United States and 14 countries in Europe,” said Zvi Lando, Chief Executive Officer of SolarEdge. “We continue to demonstrate our operational capabilities by navigating the current supply chain environment to meet strong worldwide demand for our products, and continuing to build long-term manufacturing capacity to support our growing businesses.”

First Quarter 2022 Summary

The Company reported record revenues of $655.1 million, up 19% from $551.9 million in the prior quarter and up 62% from $405.5 million in the same quarter last year.

Revenues from the solar segment were record $608.0 million, up 21% from $502.7 million in the prior quarter and up 62% from $376.4 million in the same quarter last year.

GAAP gross margin was 27.3%, down from 29.1% in the prior quarter and down from 34.5% in the same quarter last year.

Non-GAAP gross margin was 28.4%, down from 30.3% in the prior quarter and down from 36.5% in the same quarter last year.

Gross margin from the solar segment was 30.2%, down from 32.8% in the prior quarter and down from 39.7% in the same quarter last year.

GAAP operating expenses were $128.1 million, up 7% from $119.5 million in the prior quarter and up 34% from $95.9 million in the same quarter last year.

Non-GAAP operating expenses were $98.9 million, up 5% from $94.1 million in the prior quarter and up 30% from $76.2 million in the same quarter last year.

GAAP operating income was $50.9 million, up 24% from $41.0 million in the prior quarter and up 15% from $44.1 million in the same quarter last year.

Non-GAAP operating income was $87.2 million, up 20% from $72.9 million in the prior quarter and up 21% from $71.9 million in the same quarter last year.

GAAP net income was $33.1 million, down 19% from $41.0 million in the prior quarter and up 10% from $30.1 million in the same quarter last year.

Non-GAAP net income was $68.8 million, up 10% from $62.8 million in the prior quarter and up 24% from $55.5 million in the same quarter last year.

GAAP net diluted EPS was $0.60, down from $0.74 in the prior quarter and up from $0.55 in the same quarter last year.

Non-GAAP net diluted EPS was $1.20, up from $1.10 in the prior quarter and up from $0.98 in the same quarter last year.

Cash flow used in operating activities was $163.0 million, compared with $89.6 million generated from operating activities in the prior quarter and $24.1 million generated from operating activities in the same quarter last year.

As of March 31, 2022, cash, cash equivalents, bank deposits, restricted bank deposit and marketable securities totaled $979.0 million, net of debt, compared to $548.0 million on December 31, 2021.

On March 17, 2022, the Company offered and sold 2,300,000 shares of its common stock in a public offering at a price of $295.00 per share. The net proceeds to the Company after underwriters' discounts and commissions and offering costs were $650.5 million.

Outlook for the Second Quarter 2022

The Company also provides guidance for the second quarter ending June 30, 2022 as follows:

  • Revenues to be within the range of $710 million to $740 million
  • Non-GAAP gross margin expected to be within the range of 26% to 29%
  • Revenues from solar segment to be within the range of $660 million to $690 million
  • Gross margin from solar segment expected to be within the range of 28% to 31%

Conference Call

The Company will host a conference call to discuss these results at 4:30 p.m. ET on Monday, May 2, 2022. The call will be available, live, to interested parties by dialing 800-304-0389. For international callers, please dial +1 313-209-5140. The Conference ID number is 9289118. 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 www.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, 2021, filed on February 22, 2022 and our quarterly reports filed on Form 10-Q, Current Reports on Form 8-K and other reports filed with the SEC. All information set forth in this release is as of May 2, 2022. The Company undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.

 

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(in thousands, except per share data)

 

 

 

Three Months Ended
March 31,

 

 

 

2022

 

 

 

2021

 

Revenues

 

$

655,080

 

 

$

405,489

 

Cost of revenues

 

 

476,122

 

 

 

265,415

 

Gross profit

 

 

178,958

 

 

 

140,074

 

Operating expenses:

 

 

 

 

Research and development

 

 

66,349

 

 

 

46,977

 

Sales and marketing

 

 

35,316

 

 

 

26,911

 

General and administrative

 

 

26,429

 

 

 

19,849

 

Other operating expenses

 

 

 

 

 

2,209

 

Total operating expenses

 

 

128,094

 

 

 

95,946

 

Operating income

 

 

50,864

 

 

 

44,128

 

Financial expense, net

 

 

(5,449

)

 

 

(6,097

)

Income before income taxes

 

 

45,415

 

 

 

38,031

 

Income taxes

 

 

12,292

 

 

 

7,955

 

Net income

 

$

33,123

 

 

$

30,076

 

 

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except per share data)

March 31,

2022

 

December 31,

2021

ASSETS

 

 

 

 

CURRENT ASSETS:

 

 

 

 

Cash and cash equivalents

 

$

1,002,772

 

 

$

530,089

 

Marketable securities

 

 

158,557

 

 

 

167,728

 

Trade receivables, net of allowances of $3,226 and $2,626, respectively

 

 

676,820

 

 

 

456,339

 

Inventories, net

 

 

432,504

 

 

 

380,143

 

Prepaid expenses and other current assets

 

 

191,664

 

 

 

176,992

 

Total current assets

 

 

2,462,317

 

 

 

1,711,291

 

LONG-TERM ASSETS:

 

 

 

 

Marketable securities

 

 

449,673

 

 

 

482,228

 

Deferred tax assets, net

 

 

31,205

 

 

 

27,572

 

Property, plant and equipment, net

 

 

473,511

 

 

 

410,379

 

Operating lease right-of-use assets, net

 

 

59,783

 

 

 

47,137

 

Intangible assets, net

 

 

55,734

 

 

 

58,861

 

Goodwill

 

 

127,109

 

 

 

129,629

 

Other long-term assets

 

 

23,583

 

 

 

24,963

 

Total long-term assets

 

 

1,220,598

 

 

 

1,180,769

 

Total assets

 

$

3,682,915

 

 

 

2,892,060

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

Trade payables, net

 

$

241,630

 

 

$

252,068

 

Employees and payroll accruals

 

 

84,309

 

 

 

74,465

 

Warranty obligations

 

 

82,340

 

 

 

71,480

 

Deferred revenues and customers advances

 

 

25,511

 

 

 

17,789

 

Accrued expenses and other current liabilities

 

 

134,951

 

 

 

109,379

 

Total current liabilities

 

 

568,741

 

 

 

525,181

 

LONG-TERM LIABILITIES:

 

 

 

 

Convertible senior notes, net

 

 

622,263

 

 

 

621,535

 

Warranty obligations

 

 

210,326

 

 

 

193,680

 

Deferred revenues

 

 

158,734

 

 

 

151,556

 

Finance lease liabilities

 

 

53,405

 

 

 

40,508

 

Operating lease liabilities

 

 

48,480

 

 

 

38,912

 

Other long-term liabilities

 

 

10,441

 

 

 

10,649

 

Total long-term liabilities

 

 

1,103,649

 

 

 

1,056,840

 

COMMITMENTS AND CONTINGENT LIABILITIES

 

 

 

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

Common stock of $0.0001 par value - Authorized: 125,000,000 shares as of March 31, 2022 and December 31, 2021; issued and outstanding: 55,386,146 and 52,815,395 shares as of March 31, 2022 and December 31, 2021, respectively

 

 

6

 

 

 

5

 

Additional paid-in capital

 

 

1,373,405

 

 

 

687,295

 

Accumulated other comprehensive loss

 

 

(46,067

)

 

 

(27,319

)

Retained earnings

 

 

683,181

 

 

 

650,058

 

Total stockholders’ equity

 

 

2,010,525

 

 

 

1,310,039

 

Total liabilities and stockholders’ equity

 

$

3,682,915

 

 

$

2,892,060

 

 

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands, except per share data)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

Net income

 

$

33,123

 

 

$

30,076

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation of property, plant and equipment

 

 

9,002

 

 

 

6,887

 

Amortization of intangible assets

 

 

2,658

 

 

 

2,391

 

Amortization of debt discount and debt issuance costs

 

 

728

 

 

 

724

 

Amortization of premium and accretion of discount on available-for-sale marketable securities, net

 

 

2,550

 

 

 

1,295

 

Stock-based compensation expenses

 

 

34,107

 

 

 

23,153

 

Deferred income taxes, net

 

 

(1,034

)

 

 

(2,141

)

Loss (gain) from sale and disposal of assets

 

 

(410

)

 

 

2,147

 

Exchange rate fluctuations and other items, net

 

 

3,024

 

 

 

13,303

 

Changes in assets and liabilities:

 

 

 

 

Inventories, net

 

 

(51,323

)

 

 

(8,376

)

Prepaid expenses and other assets

 

 

(17,163

)

 

 

20,218

 

Trade receivables, net

 

 

(224,865

)

 

 

(57,380

)

Trade payables, net

 

 

(28,045

)

 

 

(39,034

)

Employees and payroll accruals

 

 

9,246

 

 

 

7,477

 

Warranty obligations

 

 

27,629

 

 

 

13,088

 

Deferred revenues and customers advances

 

 

15,029

 

 

 

3,615

 

Other liabilities, net

 

 

22,755

 

 

 

6,640

 

Net cash provided by (used in) operating activities

 

 

(162,989

)

 

 

24,083

 

Cash flows from investing activities:

 

 

 

 

Proceed from sales and maturities of available-for-sale marketable securities

 

 

53,096

 

 

 

40,450

 

Purchase of property, plant and equipment

 

 

(43,210

)

 

 

(24,545

)

Investment in available-for-sale marketable securities

 

 

(26,712

)

 

 

(186,528

)

Withdrawal from bank deposits, net

 

 

 

 

 

16,470

 

Other investing activities

 

 

1,692

 

 

 

571

 

Net cash used in investing activities

 

$

(15,134

)

 

$

(153,582

)

Cash flows from financing activities:

 

 

 

 

Proceeds from secondary public offering, net of issuance costs

 

 

650,526

 

 

 

 

Proceeds from exercise of stock-based awards

 

 

1,478

 

 

 

5,008

 

Proceeds (withholdings) from stock-based awards, net

 

 

822

 

 

 

(6,724

)

Other financing activities

 

 

(491

)

 

 

(346

)

Net cash provided by (used in) financing activities

 

 

652,335

 

 

 

(2,062

)

Increase (decrease) in cash and cash equivalents

 

 

474,212

 

 

 

(131,561

)

Cash and cash equivalents at the beginning of the period

 

 

530,089

 

 

 

827,146

 

Effect of exchange rate differences on cash and cash equivalents

 

 

(1,529

)

 

 

(10,428

)

Cash and cash equivalents at the end of the period

 

$

1,002,772

 

 

$

685,157

 

 

SOLAREDGE TECHNOLOGIES INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)

(in thousands, except per share data and percentages)

 

 

Reconciliation of GAAP to Non-GAAP

 

Three months ended

 

March 31,

2022

 

December 31,

2021

 

March 31,

2021

Gross profit (GAAP)

178,958

 

 

160,491

 

 

140,074

 

Revenues from finance component

(135

)

 

(122

)

 

(86

)

Stock-based compensation

5,062

 

 

4,373

 

 

5,790

 

Amortization and depreciation of acquired assets

2,219

 

 

2,272

 

 

2,312

 

Gross profit (Non-GAAP)

186,104

 

 

167,014

 

 

148,090

 

 

 

 

 

 

 

Gross margin (GAAP)

27.3

%

 

29.1

%

 

34.5

%

Revenues from finance component

0.0

%

 

0.0

%

 

0.0

%

Stock-based compensation

0.8

%

 

0.8

%

 

1.4

%

Amortization and depreciation of acquired assets

0.3

%

 

0.4

%

 

0.6

%

Gross margin (Non-GAAP)

28.4

%

 

30.3

%

 

36.5

%

 

 

 

 

 

 

Operating expenses (GAAP)

128,094

 

 

119,453

 

 

95,946

 

Stock-based compensation - R&D

(14,985

)

 

(14,872

)

 

(8,798

)

Stock-based compensation - S&M

(6,701

)

 

(5,882

)

 

(5,435

)

Stock-based compensation - G&A

(7,359

)

 

(4,076

)

 

(3,130

)

Amortization and depreciation of acquired assets - R&D

(303

)

 

(302

)

 

(12

)

Amortization and depreciation of acquired assets - S&M

(236

)

 

(225

)

 

(237

)

Amortization and depreciation of acquired assets - G&A

(6

)

 

(6

)

 

(8

)

Gain (loss) from assets sales and disposal

410

 

 

18

 

 

62

 

Other operating income (expenses)

 

 

 

 

(2,209

)

Operating expenses (Non-GAAP)

98,914

 

 

94,108

 

 

76,179

 

 

 

 

 

 

 

Operating income (GAAP)

50,864

 

 

41,038

 

 

44,128

 

Revenues from finance component

(135

)

 

(122

)

 

(86

)

Stock-based compensation

34,107

 

 

29,203

 

 

23,153

 

Amortization and depreciation of acquired assets

2,764

 

 

2,805

 

 

2,569

 

Loss (gain) from assets sales and disposal

(410

)

 

(18

)

 

(62

)

Other operating (income) expenses

 

 

 

 

2,209

 

Operating income (Non-GAAP)

87,190

 

 

72,906

 

 

71,911

 

 

SOLAREDGE TECHNOLOGIES INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)

(in thousands, except per share data and percentages)

 

 

Reconciliation of GAAP to non-GAAP

 

Three months ended

 

March 31,

2022

 

December 31,

2021

 

March 31,

2021

Financial income (expense), net (GAAP)

(5,449

)

 

(6,324

)

 

(6,097

)

Notes due 2025

728

 

 

727

 

 

724

 

Non cash interest

1,609

 

 

1,527

 

 

1,336

 

Unrealized gains/losses

 

 

(541

)

 

 

Currency fluctuation related to lease standard

(1,792

)

 

2,422

 

 

(2,289

)

Financial income (expense), net (non-GAAP)

(4,904

)

 

(2,189

)

 

(6,326

)

 

 

 

 

 

 

Income tax benefit (expense) (GAAP)

(12,292

)

 

6,240

 

 

(7,955

)

Uncertain tax positions

 

 

(9,007

)

 

 

Deferred taxes

(1,201

)

 

(5,181

)

 

(2,141

)

Income tax benefit (expense) (Non-GAAP)

(13,493

)

 

(7,948

)

 

(10,096

)

 

 

 

 

 

 

Net income (GAAP)

33,123

 

 

40,954

 

 

30,076

 

Revenues from finance component

(135

)

 

(122

)

 

(86

)

Stock-based compensation

34,107

 

 

29,203

 

 

23,153

 

Amortization and depreciation of acquired assets

2,764

 

 

2,805

 

 

2,569

 

Loss (gain) from assets sales and disposal

(410

)

 

(18

)

 

(62

)

Other operating (income) expenses

 

 

 

 

2,209

 

Notes due 2025

728

 

 

727

 

 

724

 

Non cash interest

1,609

 

 

1,527

 

 

1,336

 

Unrealized gains (losses)

 

 

(541

)

 

 

Currency fluctuation related to lease standard

(1,792

)

 

2,422

 

 

(2,289

)

Uncertain tax positions

 

 

(9,007

)

 

 

Deferred taxes

(1,201

)

 

(5,181

)

 

(2,141

)

Net income (Non-GAAP)

68,793

 

 

62,769

 

 

55,489

 

 

SOLAREDGE TECHNOLOGIES INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)

(in thousands, except per share data and percentages)

 

 

Reconciliation of GAAP to non-GAAP

 

Three months ended

 

March 31,

2022

 

December 31,

2021

 

March 31,

2021

Net basic earnings per share (GAAP)

0.62

 

 

0.78

 

 

0.58

 

Revenues from finance component

0.00

 

 

0.00

 

 

0.00

 

Stock-based compensation

0.64

 

 

0.55

 

 

0.45

 

Amortization and depreciation of acquired assets

0.05

 

 

0.05

 

 

0.05

 

Loss (gain) from assets sales and disposal

(0.00

)

 

(0.00

)

 

(0.00

)

Other operating (income) expenses

 

 

 

 

0.04

 

Notes due 2025

0.01

 

 

0.02

 

 

0.01

 

Non cash interest

0.03

 

 

0.03

 

 

0.03

 

Unrealized gains (losses)

 

 

(0.01

)

 

 

Currency fluctuation related to lease standard

(0.03

)

 

0.04

 

 

(0.05

)

Uncertain tax positions

 

 

(0.17

)

 

 

Deferred taxes

(0.03

)

 

(0.10

)

 

(0.04

)

Net basic earnings per share (Non-GAAP)

1.29

 

 

1.19

 

 

1.07

 

 

 

 

 

 

 

Net diluted earnings per share (GAAP)

0.60

 

 

0.74

 

 

0.55

 

Revenues from finance component

0.00

 

 

0.00

 

 

0.00

 

Stock-based compensation

0.58

 

 

0.50

 

 

0.40

 

Amortization and depreciation of acquired assets

0.05

 

 

0.05

 

 

0.04

 

Loss (gain) from assets sales and disposal

(0.01

)

 

(0.00

)

 

(0.00

)

Other operating (income) expenses

 

 

 

 

0.04

 

Notes due 2025

0.01

 

 

0.00

 

 

0.00

 

Non cash interest

0.02

 

 

0.03

 

 

0.03

 

Unrealized gains (losses)

 

 

(0.01

)

 

 

Currency fluctuation related to lease standard

(0.03

)

 

0.04

 

 

(0.04

)

Uncertain tax positions

 

 

(0.16

)

 

 

Deferred taxes

(0.02

)

 

(0.09

)

 

(0.04

)

Net diluted earnings per share (Non-GAAP)

1.20

 

 

1.10

 

 

0.98

 

 

 

 

 

 

 

Number of shares used in computing net diluted earnings per share (GAAP)

56,315,193

 

 

56,011,040

 

 

55,997,136

 

Stock-based compensation

927,219

 

 

894,079

 

 

766,187

 

Number of shares used in computing net diluted earnings per share (Non-GAAP)

57,242,412

 

 

56,905,119

56,763,323

 

 

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

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