SolarEdge Announces First Quarter 2021 Financial Results

SolarEdge Technologies, Inc. (Nasdaq: SEDG), a global leader in smart energy technology, today announced its financial results for the first quarter ended March 31, 2021.

First Quarter 2021 Highlights

  • Revenues of $405.5 million
  • Revenues from solar products of $376.4 million
  • GAAP gross margin of 34.5%
  • Non-GAAP gross margin of 36.5%
  • GAAP gross margin from sale of solar products of 38.3%
  • Record non-GAAP gross margin from sale of solar products of 39.7%
  • GAAP net income of $30.1 million
  • Non-GAAP net income of $55.5 million
  • GAAP net diluted earnings per share (“EPS”) of $0.55
  • Non-GAAP net diluted EPS of $0.98
  • 1.69 Gigawatts (AC) of inverters shipped

“We are happy to report our first quarter results, representing continued growth in our solar business across geographies and segments,” said Zvi Lando, CEO of SolarEdge. “We are particularly pleased with our operational performance this quarter, which will enable us to meet the continued increase in demand for our residential and commercial products worldwide. This quarter, we also began delivering full powertrain kits for the e-Mobility sector in Europe in line with our growth strategy beyond solar.”

First Quarter 2021 Summary

The Company reported revenues of $405.5 million, up 13% from $358.1 million in the prior quarter and down 6% from $431.2 million in the same quarter last year.

Revenues related to the sale of solar products were $376.4 million, up 15% from $327.1 million in the prior quarter and down 8% from $407.6 million in the same quarter last year.

GAAP gross margin was 34.5%, up from 30.8% in the prior quarter and up from 32.5% year over year.

Non-GAAP gross margin was 36.5%, up from 32.5% in the prior quarter and up from 33.6% year over year.

GAAP gross margin from the sale of solar products was 38.3%, up from 35.3% in the prior quarter and up from 34.6% year over year.

Non-GAAP gross margin from the sale of solar products was 39.7%, up from 36.2% in the prior quarter and up from 35.0% year over year.

GAAP operating expenses were $95.9 million, flat with $95.9 million in the prior quarter and up 33% from $72.2 million in the same quarter last year.

Non-GAAP operating expenses were $76.2 million, up 4% from $72.9 million in the prior quarter and up 15% from $66.3 million in the same quarter last year.

GAAP operating income was $44.1 million, up 206% from $14.4 million in the prior quarter and down 35% from $67.8 million in the same quarter last year.

Non-GAAP operating income was $71.9 million, up 65% from $43.5 million in the prior quarter and down 9% from $78.6 million in the same quarter last year.

GAAP net income was $30.1 million, up 70% from $17.7 million in the prior quarter and down 29% from $42.2 million in the same quarter last year.

Non-GAAP net income was $55.5 million, compared to $55.7 million in the prior quarter and up 10% from $50.7 million in the same quarter last year.

GAAP EPS was $0.55, up from $0.33 in the prior quarter and down from $0.81 in the same quarter last year.

Non-GAAP net diluted EPS was $0.98, flat with $0.98 in the prior quarter and up from $0.95 in the same quarter last year.

Cash flow from operating activities was $24.1 million, down from $27.2 million in the prior quarter and down from $107.7 million in the same quarter last year.

As of March 31, 2021, cash, cash equivalents, bank deposits, restricted bank deposit and marketable securities totaled $515.2 million, net of debt, compared to $530.2 million on December 31, 2020.

Outlook for the Second Quarter 2021

The Company also provides guidance for the second quarter ending June 30, 2021 as follows:

  • Revenues to be within the range of $445 million to $465 million
  • Non-GAAP gross margin expected to be within the range of 32% to 34%
  • Revenues from solar products to be within the range of $405 million to $420 million
  • Non-GAAP gross margin from sale of solar products expected to be within the range of 36% to 38%

Conference Call

The Company will host a conference call to discuss these results at 4:30 p.m. ET on Monday, May 3, 2021. The call will be available, live, to interested parties by dialing 800-367-2403. For international callers, please dial +1 334-777-6978. The Conference ID number is 5167186. A live webcast will also be available in the Investor 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/A for the year ended December 31, 2020, filed on February 19, 2021 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 3, 2021. 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
(In thousands)

 

Three months ended
March 31,

2021

2020

Unaudited

Revenues

$

405,489

$

431,218

Cost of revenues

265,415

291,910

Gross profit

140,074

140,008

Operating expenses:

Research and development

46,977

36,695

Sales and marketing

26,911

24,253

General and administrative

19,849

16,185

Other operating expenses (income), net

2,209

(4,900

)

Total operating expenses

95,946

72,233

Operating income

44,128

67,775

Financial expenses, net

6,097

16,605

Income before income taxes

38,031

51,170

Income taxes

7,955

8,922

Net income

$

30,076

$

42,248

SOLAREDGE TECHNOLOGIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

  

March 31,

December 31,

2021

2020

CURRENT ASSETS:

 

Cash and cash equivalents

$

685,157

$

827,146

 

Short-term bank deposits

43,626

60,096

 

Restricted bank deposits

2,509

2,611

 

Marketable securities

139,079

143,687

 

Trade receivables, net of allowances of $3,576 and $2,886, respectively

271,713

218,706

 

Inventories, net

340,038

331,696

 

Prepaid expenses and other current assets

102,985

135,399

 

Total current assets

1,585,107

1,719,341

 

 

LONG-TERM ASSETS:

 

Marketable securities

294,828

147,434

 

Deferred tax assets, net

17,353

11,676

 

Property, plant and equipment, net

312,214

303,408

 

Operating lease right-of-use assets, net

39,804

41,600

 

Intangible assets, net

64,196

67,818

 

Goodwill

134,620

140,479

 

Other long-term assets

16,473

5,353

 

Total long-term assets

879,488

717,768

 

 

Total assets

$

2,464,595

$

2,437,109

 

 

CURRENT LIABILITIES:

 

Trade payables, net

$

122,063

$

162,051

 

Employees and payroll accruals

63,929

63,738

 

Current maturities of bank loans and accrued interest

16,215

16,894

 

Warranty obligations

63,443

62,614

 

Deferred revenues and customers advances

21,065

24,648

 

Accrued expenses and other current liabilities

111,011

106,154

 

Total current liabilities

397,726

436,099

 

 

LONG-TERM LIABILITIES:

 

Convertible senior notes, net

619,357

573,350

 

Warranty obligations

154,510

142,380

 

Deferred revenues

122,168

115,372

 

Deferred tax liabilities, net

-

8,593

 

Finance lease liabilities

24,918

26,173

 

Operating lease liabilities

32,667

35,194

 

Other long-term liabilities

13,325

14,191

 

Total long-term liabilities

966,945

915,253

 

 

STOCKHOLDERS’ EQUITY:

 

Common stock

5

5

 

Additional paid-in capital

595,716

603,891

 

Accumulated other comprehensive income (loss)

(6,761

)

3,857

 

Retained earnings

510,964

478,004

 

Total stockholders’ equity

1,099,924

1,085,757

 

 

Total liabilities and stockholders’ equity

$

2,464,595

$

2,437,109

 
  

SOLAREDGE TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

 

Three months ended
March 31,

2021

2020

Cash flows provided by operating activities:

Net income

$

30,076

$

42,248

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

Depreciation of property, plant and equipment

6,887

5,004

Amortization of intangible assets

2,391

2,321

Amortization of debt discount and debt issuance costs

724

-

Amortization of premium and accretion of discount on available-for-marketable

securities, net

1,295

120

Stock-based compensation expenses

23,153

12,773

Deferred income taxes, net

(2,141

)

(2,859

)

Loss from disposal of assets

2,147

6

Exchange rate fluctuations and other items, net

13,303

(1,018

)

Changes in assets and liabilities:

Inventories, net

(8,376

)

(29,004

)

Prepaid expenses and other assets

20,218

49,888

Trade receivables, net

(57,380

)

59,420

Trade payables, net

(39,034

)

(17,589

)

Employees and payroll accruals

7,477

11,821

Warranty obligations

13,088

13,809

Deferred revenues and customers advances

3,615

(31,729

)

Other liabilities

6,640

(7,466

)

Net cash provided by operating activities

24,083

107,745

Cash flows from investing activities:

Investment in available-for-sale marketable securities

(186,528

)

(31,924

)

Proceed from maturities of available-for-sale marketable securities

40,450

42,333

Purchase of property, plant and equipment

(24,545

)

(27,053

)

Withdrawal from (investment in) bank deposits, net

16,470

(3,316

)

Other investing activities

571

36

Net cash used in investing activities

(153,582

)

(19,924

)

Cash flows from financing activities:

Repayment of bank loans

(34

)

(15,232

)

Proceeds from bank loans

-

15,295

Proceeds from exercise of stock-based awards net of tax withholding

(1,716

)

3,308

Other financing activities

(312

)

(56

)

Net cash provided by (used in) financing activities

(2,062

)

3,315

Increase (decrease) in cash and cash equivalents

(131,561

)

91,136

Cash and cash equivalents at the beginning of the period

827,146

223,901

Effect of exchange rate differences on cash and cash equivalents

(10,428

)

9,035

Cash and cash equivalents at the end of the period

$

685,157

$

324,072

SOLAREDGE TECHNOLOGIES INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)
(In thousands, except share and per share data)

 

Reconciliation of GAAP to Non-GAAP Gross Profit

Three months ended

March 31, 2021

December 31, 2020

March 31, 2020

Gross profit (GAAP)

140,074

110,325

140,008

Revenues from finance component

(86)

----

----

Stock-based compensation

5,790

3,720

2,273

Cost of product adjustment

----

----

313

Amortization and depreciation of acquired assets

2,312

2,374

2,356

Gross profit (Non-GAAP)

148,090

116,419

144,950

Reconciliation of GAAP to Non-GAAP Gross Margin

Three months ended

March 31, 2021

December 31, 2020

March 31, 2020

Gross margin (GAAP)

34.5%

30.8%

32.5%

Revenues from finance component

0.0%

----

----

Stock-based compensation

1.4%

1.0%

0.5%

Cost of product adjustment

----

----

0.1%

Amortization and depreciation of acquired assets

0.6%

0.7%

0.5%

Gross margin (Non-GAAP)

36.5%

32.5%

33.6%

Reconciliation of GAAP to Non-GAAP Operating expenses

Three months ended

March 31, 2021

December 31, 2020

March 31, 2020

Operating expenses (GAAP)

95,946

95,898

72,233

Stock-based compensation - R&D

(8,798)

(8,919)

(5,378)

Stock-based compensation - S&M

(5,435)

(8,710)

(3,192)

Stock-based compensation - G&A

(3,130)

(2,967)

(1,930)

Amortization and depreciation of acquired assets - R&D

(12)

(14)

(26)

Amortization and depreciation of acquired assets - S&M

(237)

(230)

(295)

Amortization and depreciation of acquired assets - G&A

(8)

(8)

(9)

Assets sale (disposal)

62

(649)

----

Other operating income (expenses)

(2,209)

(1,471)

4,900

Operating expenses (Non-GAAP)

76,179

72,930

66,303

SOLAREDGE TECHNOLOGIES INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)
(In thousands, except share and per share data)

 

Reconciliation of GAAP to Non-GAAP Operating income

Three months ended

March 31, 2021

December 31, 2020

March 31, 2020

Operating income (GAAP)

44,128

14,427

67,775

Revenues from finance component

(86)

----

----

Cost of product adjustment

----

----

313

Stock-based compensation

23,153

24,316

12,773

Amortization and depreciation of acquired assets

2,569

2,626

2,686

Assets (sale) disposal

(62)

649

----

Other operating (income) expenses

2,209

1,471

(4,900)

Operating income (Non-GAAP)

71,911

43,489

78,647

Reconciliation of GAAP to Non-GAAP
Financial expenses (income), net

Three months ended

March 31, 2021

December 31, 2020

March 31, 2020

Financial expenses (income), net (GAAP)

6,097

(10,380)

16,605

Notes due 2025

(724)

(3,017)

----

Non cash interest

(1,336)

(1,305)

(1,128)

Currency fluctuation related to lease standard

2,289

(2,172)

1,033

Amortization and depreciation of acquired assets

----

----

(982)

Financial expenses (income), net (Non-GAAP)

6,326

(16,874)

15,528

Reconciliation of GAAP to Non-GAAP Tax on income

Three months ended

March 31, 2021

December 31, 2020

March 31, 2020

Tax on income (GAAP)

7,955

7,152

8,922

Deferred taxes

2,141

(2,522)

3,536

Tax on income (Non-GAAP)

10,096

4,630

12,458

SOLAREDGE TECHNOLOGIES INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)
(In thousands, except share and per share data)

 

Reconciliation of GAAP to Non-GAAP Net income

Three months ended

March 31, 2021

December 31, 2020

March 31, 2020

Net income (GAAP)

30,076

17,655

42,248

Revenues from finance component

(86)

----

----

Cost of product adjustment

----

----

313

Stock-based compensation

23,153

24,316

12,773

Amortization and depreciation of acquired assets

2,569

2,626

3,668

Assets (sale) disposal

(62)

649

----

Other operating (income) expenses

2,209

1,471

(4,900)

Notes due 2025

724

3,017

----

Non cash interest

1,336

1,305

1,128

Currency fluctuation related to lease standard

(2,289)

2,172

(1,033)

Deferred taxes

(2,141)

2,522

(3,536)

Net income (Non GAAP)

55,489

55,733

50,661

Reconciliation of GAAP to Non-GAAP Net basic EPS

Three months ended

March 31, 2021

December 31, 2020

March 31, 2020

Net basic earnings per share (GAAP)

0.58

0.34

0.86

Revenues from finance component

0.00

----

----

Cost of product adjustment

----

----

0.01

Stock-based compensation

0.45

0.48

0.25

Amortization and depreciation of acquired assets

0.05

0.05

0.08

Assets (sale) disposal

0.00

0.01

----

Other operating (income) expenses

0.04

0.03

(0.10)

Notes due 2025

0.01

0.06

----

Non cash interest

0.03

0.02

0.02

Currency fluctuation related to lease standard

(0.05)

0.05

(0.02)

Deferred taxes

(0.04)

0.05

(0.07)

Net basic earnings per share (Non-GAAP)

1.07

1.09

1.03

SOLAREDGE TECHNOLOGIES INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited)
(In thousands, except share and per share data)

 

Reconciliation of GAAP to Non-GAAP Net diluted EPS

Three months ended

March 31, 2021

December 31, 2020

March 31, 2020

Net diluted earnings per share (GAAP)

0.55

0.33

0.81

Revenues from finance component

0.00

----

----

Cost of product adjustment

----

----

0.01

Stock-based compensation

0.40

0.44

0.21

Amortization and depreciation of acquired assets

0.04

0.05

0.07

Assets (sale) disposal

0.00

0.01

----

Other operating (income) expenses

0.04

0.03

(0.09)

Notes due 2025

0.00

0.02

----

Non cash interest

0.03

0.02

0.02

Currency fluctuation related to lease standard

(0.04)

0.04

(0.02)

Deferred taxes

(0.04)

0.04

(0.06)

Net diluted earnings per share (Non-GAAP)

0.98

0.98

0.95

Reconciliation of GAAP to Non-GAAP
No. of shares used in Net diluted EPS

Three months ended

March 31, 2021

December 31, 2020

March 31, 2020

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

55,997,136

53,496,384

52,172,720

Stock-based compensation

766,187

865,179

1,399,732

Notes due 2025

----

2,276,818

----

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

56,763,323

56,638,381

53,572,452

Contacts:

Investor Contacts
SolarEdge Technologies, Inc.
Ronen Faier, Chief Financial Officer
+1 510-498-3263
investors@solaredge.com

Sapphire Investor Relations, LLC
Erica Mannion or Michael Funari
+1 617-542-6180
investors@solaredge.com

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