SolarEdge Announces Fiscal Second Quarter Financial Results

FREMONT, Calif.--()--SolarEdge Technologies, Inc. (NASDAQ: SEDG) today announced its financial results for the fiscal second quarter ended December 31, 2015.

“Execution of our strategy and related business plan has resulted in another successful quarter”

Fiscal Second Quarter 2016 Highlights

  • Record revenue of $124.8 million, up 8.5% from last quarter and 70.3% year-over-year
  • GAAP gross margin of 30.9%
  • GAAP net income of $24.1 million
  • Non-GAAP net income of $19.8 million
  • 416 Megawatts (AC) of inverters shipped

“Execution of our strategy and related business plan has resulted in another successful quarter,” said Guy Sella, Founder, Chairman and CEO of SolarEdge. “In addition to our revenue growth and increased profitability, this quarter we installed our first HD-wave inverter units and we commenced shipments of our StorEdge solution. We remain committed to introducing innovative technologies to continue to drive down the cost of and broaden the application of renewable energy technologies.”

Revenues

The Company reported revenues of $124.8 million, an increase of $9.8 million, or 8.5% from the prior quarter and an increase of $51.5 million or 70.3% from the second quarter of fiscal 2015.

Gross Margin

GAAP gross margin was 30.9%, up from 29.1% in the prior quarter and up from 21.5% in the second quarter of fiscal 2015. Non-GAAP gross margin was 31.1%, up from 29.3% in the prior quarter and 21.6% in the second quarter of fiscal 2015. See “Reconciliation on Non-GAAP Measures” below.

Operating Expenses

Operating expenses were $19.3 million, or 15.5% of revenue, increasing from $18.7 million, or 16.2% of revenue, in the prior quarter and an increase from $11.5 million, or 15.8% of revenue, when compared to the second quarter of fiscal 2015.

Operating Income

Operating income was $19.3 million, up from $14.9 million in the prior quarter and up from operating income of $4.2 million in the second quarter of fiscal 2015.

Financial Expenses

Financial expenses were $1.0 million compared to $0.1 million in the previous quarter and $0.5 million in the second quarter of fiscal 2015.

Tax Benefit

Tax benefit for the quarter was $5.8 million. Because the Company is profitable, and expects to continue to be profitable, the Company has recorded for the first time a $6.6 million tax asset, representing expected future utilization of its carry forward net operating losses and the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes as well as the amounts used for income tax purposes.

Net Income

GAAP net income was $24.1 million, up from $14.4 million in the prior quarter and up from $3.4 million in the second quarter of fiscal 2015. Non-GAAP net income was $19.8 million, an increase from $16.3 million in the prior quarter and an increase from $4.1 million in the second quarter of fiscal 2015. See “Reconciliation on Non-GAAP Measures” below.

EPS

GAAP net diluted earnings per share (“EPS”) was $0.55, up from $0.32 in the prior quarter and up from $0.00 in the second quarter of fiscal 2015. Non-GAAP net diluted EPS was $0.44, an increase from $0.36 in the prior quarter and an increase from $0.12 in the second quarter of fiscal 2015. See “Reconciliation on Non-GAAP Measures” below.

Cash

At December 31, 2015, cash, cash equivalents, restricted cash and investments totaled $162.0 million compared to $150.3 million on September 30, 2015. During the fiscal second quarter, the Company generated $13.1 million of cash from operating activities.

Outlook for the Third Quarter of Fiscal 2016

The Company provides guidance for the third quarter of fiscal 2016 as follows:

  • Revenues expected to be within the range of $121 million to $125 million;
  • Gross margins expected to be within the range of 29% to 31%.

Conference Call

The Company will host a conference call to discuss these results at 5:00 P.M. Eastern Time on Wednesday, February 3, 2016. The call will be available, live, to interested parties by dialing +1 877-719-9810. For international callers, please dial +1 719-325-4783. The Conference ID number is 9448208. 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 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.

Use of Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures in this release, including non-GAAP gross margin, non-GAAP net income and non-GAAP net diluted EPS. 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 press 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.

For a reconciliation of non-GAAP measures to their most comparable GAAP measures, please see “Reconciliation on Non-GAAP Measures” below.

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; new products and services; 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 revenues, gross margins, other financial 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 Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2015 and, Quarterly Report on Form 10-Q for the quarter ended December 31, 2015, when it becomes available, Current Reports on Form 8-K and other reports filed with the SEC. All information set forth in this release is as of February 3, 2016. SolarEdge undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 
 

Three months ended
December 31,

 

Six months ended
December 31,

2015   2014 2015   2014
Unaudited Unaudited
 
Revenues $ 124,832 $ 73,290 $ 239,886 $ 140,259
Cost of revenues   86,250     57,509     167,777     110,448
 
Gross profit   38,582     15,781     72,109     29,811
 
Operating expenses:
 
Research and development, net 8,299 4,768 15,290 9,827
Sales and marketing 8,833 5,658 17,077 11,119
General and administrative   2,188     1,121     5,606     2,280
 

Total operating expenses

  19,320     11,547     37,973     23,226
 
Operating income 19,262 4,234 34,136 6,585
 
Financial income (expenses), net   (959 )   (458 )   (1,031 )   58
 
Income before taxes on income 18,303 3,776 33,105 6,643
 
Taxes on income (tax benefit)   (5,802 )   401     (5,432 )   748
 
Net income $ 24,105   $ 3,375   $ 38,537   $ 5,895
 
 

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

   
December 31, June 30,

2015

2015
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 106,150 $ 144,750
Restricted cash 3,417 3,639
Marketable Securities 27,137 -
Trade receivables, net 46,685 35,428
Prepaid expenses and other accounts receivable 24,233 32,645
Inventories   87,400     73,950  

Total current assets

  295,022     290,412  
PROPERTY AND EQUIPMENT, NET   21,428     14,717  
LONG-TERM ASSETS:
Long-term marketable securities 25,290 -
Long-term prepaid expenses and lease deposits 510 529
Deferred tax assets 6,565 -
Intangible assets, net   758     -  
  33,123     529  

Total assets

$

349,573

  $ 305,658  
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 61,977 $ 80,684
Employees and payroll accruals 12,864 6,814
Warranty obligations 11,862 9,431
Deferred revenues 1,983 1,676
Accrued expenses and other accounts payable   7,169     6,987  

Total current liabilities

  95,855     105,592  
LONG-TERM LIABILITIES
Warranty obligations 29,032 22,448
Deferred revenues 11,427 8,289
Lease incentive obligation   2,320     2,385  
Total long-term liabilities   42,779     33,122  
STOCKHOLDERS’ EQUITY:
Share capital 4 4
Additional paid-in capital 292,681 287,152
Accumulated other comprehensive loss (293 ) (222 )
Accumulated deficit   (81,453 )   (119,990 )
 

Total stockholders’ equity

  210,939     166,944  
 

Total liabilities and stockholders’ equity

$

349,573

 

$

305,658

 
 
 

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 
 

Six months ended
December 31,

2015 2014
Unaudited

Cash flows provided by operating activities:

Net income $ 38,537 $ 5,895

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

Depreciation 1,629 1,103
Amortization of intangible assets 42 -

Amortization of premiums on available-for-sale marketable securities

35 -

Stock-based compensation related to employee and non-employee consultants stock options

4,057 780
Realized gains on cash flow hedges (2 ) -
Financial income, net related to term loan - (656 )

Remeasurement of warrants to purchase preferred and common stock

- 265
Changes in assets and liabilities:

Inventories

(13,452 ) (22,128 )
Prepaid expenses and other accounts receivable 6,504 (10,671 )
Trade receivables, net (11,268 ) (5,919 )

Deferred tax assets, net

(6,527 ) -
Trade payables (18,701 ) 33,429
Employees and payroll accruals 6,073 361
Warranty obligations 9,015 6,116
Deferred revenues 3,446 1,694
Accrued expenses and other accounts payable (273 ) (860 )
Lease incentive obligation (65 ) -
Net cash provided by operating activities   19,050     9,409  

Cash flows used in investing activities:

Investment in available-for-sale marketable securities (52,860 ) -
Purchase of property and equipment (5,636 ) (3,133 )
Purchase of intangible assets (800 ) -
Decrease (increase) in restricted cash 222 (1,807 )
Decrease (increase) in short and long-term lease deposits 37 (31 )

Net cash used in investing activities

  (59,037 )   (4,971 )
Cash flows from financing activities:
Proceeds from short-term bank loans $ - $ 6,000
Repayments of short term loan - (19,326 )
Repayments of term loan - (1,578 )
Proceeds from issuance of Series E Convertible Preferred stock - 24,837
Issuance costs - (292 )
Proceeds from exercise of employee stock options   1,472     16  
Net cash provided by financing activities   1,472     9,657  
Increase (decrease) in cash and cash equivalents (38,515 ) 14,095
Cash and cash equivalents at the beginning of the period 144,750 9,754
Erosion due to exchange rate differences   (85 )   (75 )
Cash and cash equivalents at the end of the period $ 106,150   $ 23,774  
 
 

SOLAREDGE TECHNOLOGIES INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands, except per share data)

(unaudited)

 
 
Reconciliation of Non-GAAP Financial Measures
  Three months ended   Six months ended
Dec 31, 2015   Sep 30, 2015   Dec 31, 2014 (1) Dec 31, 2015   Dec 31, 2014 (1)
 
Gross profit (GAAP) 38,582 33,527 15,781 72,109 29,811
Stock-based compensation 209 180 74 389 112
Gross profit (Non-GAAP) 38,791 33,707 15,855 72,498 29,923
 
Gross margin (GAAP) 30.9% 29.1% 21.5% 30.1% 21.3%
Stock-based compensation 0.2% 0.2% 0.1% 0.1% 0.0%
Gross margin (Non-GAAP) 31.1% 29.3% 21.6% 30.2% 21.3%
 
Operating expenses (GAAP) 19,320 18,653 11,547 37,973 23,226
Stock-based compensation R&D 518 395 155 913 266
Stock-based compensation S&M 749 616 153 1,365 254
Stock-based compensation G&A 750 641 77 1,391 148
Operating expenses (Non-GAAP) 17,303 17,001 11,162 34,304 22,558
 
Operating income (GAAP) 19,262 14,874 4,234 34,136 6,585
Stock-based compensation 2,226 1,832 459 4,058 780
Operating income (Non-GAAP) 21,488 16,706 4,693 38,194 7,365
 
Finance expenses (Income) (GAAP) 959 72 458 1,031 (58)
Warrants remeasurement ---- ---- 280 ---- 265
Finance expenses (Non-GAAP) 959 72 178 1,031 (323)
 
Tax on income (Tax benefit) (GAAP) (5,802) 370 401 (5,432) 748
Tax benefit due to deferred tax asset 6,527 ---- ---- 6,527 ----
Tax on income (Tax benefit) (Non-GAAP) 725 370 401 1,095 748
 
Net income (GAAP) 24,105 14,432 3,375 38,537 5,895
Stock-based compensation 2,226 1,832 459 4,058 780
Warrants remeasurement ---- ---- 280 ---- 265
Tax benefit due to deferred tax asset (6,527) ---- ---- (6,527) ----
Net income (Non-GAAP) 19,804 16,264 4,114 36,068 6,940
 
Net basic earnings per share (GAAP) 0.61 0.37 ---- 0.98 ----
Stock-based compensation 0.06 0.04 0.01 0.10 0.02
Warrants remeasurement ---- ---- 0.01 ---- 0.01
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods ---- ---- 0.11 ---- 0.20
Tax benefit due to deferred tax asset (0.17) ---- ---- (0.16) ----
Net basic earnings per share (Non-GAAP) 0.50 0.41 0.13 0.92 0.23
 
Number of shares used in computing net basic earnings per share (GAAP) 39,511,967 39,301,620 2,815,694 39,406,797 2,814,188
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods ---- ---- 28,202,001 ---- 26,888,953
Number of shares used in computing net basic earnings per share (Non-GAAP) 39,511,967 39,301,620 31,017,695 39,406,797 29,703,141
 
Net diluted earnings per share (GAAP) 0.55 0.32 ---- 0.87 ----
Stock-based compensation 0.03 0.04 ---- 0.07 0.01
Warrants remeasurement ---- ---- 0.01 ---- ----
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods ---- ---- 0.11 ---- 0.20
Tax benefit due to deferred tax asset (0.14) ---- ---- (0.14) ----
Net diluted earnings per share (Non-GAAP) 0.44 0.36 0.12 0.80 0.21
 

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

44,007,348 44,455,964 2,815,694 44,231,660 2,814,188
Stock-based compensation 1,341,335 686,470 3,173,096 1,013,903 2,620,910
Warrants remeasurement ---- 0 6,739 0 10,109
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods ---- ---- 28,202,001 ---- 26,888,953
Number of shares used in computing net diluted earnings per share (Non-GAAP) 45,348,683 45,142,434 34,197,530 45,245,563 32,334,160
 
(1) Assumes shares of common stock outstanding after accounting for the automatic conversion of the shares of preferred stock then outstanding into common stock at the beginning of fiscal year 2015.

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

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