SolarEdge Announces Third Quarter 2021 Financial Results

Rhea-AI Summary

SolarEdge Technologies, Inc. (NASDAQ: SEDG) reported record revenues of $526.4 million for Q3 2021, a 10% increase quarter-over-quarter and a 56% rise year-over-year. Solar segment revenues reached $476.8 million, marked by a GAAP gross margin of 32.8%. GAAP net income rose to $53.0 million, with GAAP net diluted EPS at $0.96. Despite challenges like a 12-week shutdown in Vietnam, the company ends the quarter with a strong backlog. Guidance for Q4 2021 anticipates revenues between $530 million and $560 million.

Positive

• Record revenues of $526.4 million, up 10% Q/Q and 56% Y/Y.
• GAAP net income increased to $53.0 million, up 18% Q/Q.
• Non-GAAP net diluted EPS improved to $1.45, up from $1.28 Q/Q.

Negative

• Gross margin from solar segment decreased to 36.6%, down from 37.4% Q/Q.
• Operating expenses rose to $106.1 million, a 5% increase Q/Q.

MILPITAS, Calif.--(BUSINESS WIRE)-- SolarEdge Technologies, Inc. (Nasdaq: SEDG), a global leader in smart energy technology, today announced its financial results for the third quarter ended September 30, 2021.

Third Quarter 2021 Highlights

• Record revenues of $526.4 million
• Record revenues from solar segment of $476.8 million
• GAAP gross margin of 32.8%
• Non-GAAP gross margin of 34.0%
• Gross margin from solar segment of 36.6%
• GAAP net income of $53.0 million
• Non-GAAP net income of $82.1 million
• GAAP net diluted earnings per share (“EPS”) of $0.96
• Non-GAAP net diluted EPS of $1.45
• 1.9 Gigawatts (AC) of inverters shipped

“We are pleased with our record revenues in the third quarter amid the unprecedented global logistics and supply chain challenges,” said Zvi Lando, Chief Executive Officer of SolarEdge. “Despite a twelve week covid-related shutdown in our Vietnam manufacturing facility during the quarter, we were able to supply products to meet the growing demand of our customers. We are exiting the third quarter with record backlog for the fourth quarter of 2021 and the first quarter of 2022 and will continue navigating the various challenges in order to support our customers’ businesses.”

Third Quarter 2021 Summary

The Company reported revenues of $526.4 million, up 10% from $480.1 million in the prior quarter and up 56% from $338.1 million in the same quarter last year.

Revenues from the solar segment were $476.8 million, up 11% from $431.4 million in the prior quarter and up 53% from $312.5 million in the same quarter last year.

GAAP gross margin was 32.8%, up from 32.5% in the prior quarter and up from 32.0% in the same quarter last year.

Non-GAAP gross margin was 34.0%, up from 33.9% in the prior quarter and up from 33.5% in the same quarter last year.

Gross margin from the solar segment was 36.6%, down from 37.4% in the prior quarter and up from 34.8% in the same quarter last year.

GAAP operating expenses were $106.1 million, up 5% from $100.6 million in the prior quarter and up 37% from $77.7 million in the same quarter last year.

Non-GAAP operating expenses were $83.8 million, up 3% from $81.5 million in the prior quarter and up 33% from $63.2 million in the same quarter last year.

GAAP operating income was $66.4 million, up 20% from $55.6 million in the prior quarter and up 119% from $30.4 million in the same quarter last year.

Non-GAAP operating income was $95.2 million, up 17% from $81.3 million in the prior quarter and up 90% from $50.0 million in the same quarter last year.

GAAP net income was $53.0 million, up 18% from $45.1 million in the prior quarter and up 21% from $43.8 million in the same quarter last year.

Non-GAAP net income was $82.1 million, up 13% from $72.5 million in the prior quarter and up 25% from $65.9 million in the same quarter last year.

GAAP net diluted EPS was $0.96, up from $0.82 in the prior quarter and up from $0.83 in the same quarter last year.

Non-GAAP net diluted EPS was $1.45, up from $1.28 in the prior quarter and up from $1.21 in the same quarter last year.

Cash flow from operating activities was $61.8 million, up from $38.7 million in the prior quarter and up from $28.4 million in the same quarter last year.

As of September 30, 2021, cash, cash equivalents, bank deposits, restricted bank deposit and marketable securities totaled $524.1 million, net of debt, compared to $509.3 million on June 30, 2021.

Outlook for the Fourth Quarter 2021

The Company also provides guidance for the fourth quarter ending December 31, 2021 as follows:

• Revenues to be within the range of $530 million to $560 million
• Non-GAAP gross margin expected to be within the range of 30% to 32%
• Revenues from solar segment to be within the range of $490 million to $515 million
• Gross margin from solar segment expected to be within the range of 31% to 34%

Conference Call

The Company will host a conference call to discuss these results at 4:30 p.m. ET on Tuesday, November 2, 2021. The call will be available, live, to interested parties by dialing 800-635-7637. For international callers, please dial +1 334-777-6980. The Conference ID number is 5961090. 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/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 November 2, 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 September 30,							Nine months ended September 30,
		2021				2020			2021				2020
Revenues		$	526,404			$	338,095		$	1,411,950			$	1,101,164
Cost of revenues			353,843				230,032			943,123				750,130
Gross profit			172,561				108,063			468,827				351,034
Operating expenses:
Research and development			55,666				40,817			155,307				115,610
Sales and marketing			29,383				21,924			85,752				67,113
General and administrative			21,098				14,928			60,317				45,077
Other operating expenses (income), net			-				-			1,350				(4,900	)
Total operating expenses			106,147				77,669			302,726				222,900
Operating income			66,414				30,394			166,101				128,134
Financial income (expenses), net			(5,751	)			15,765			(13,591	)			10,725
Income before income taxes			60,663				46,159			152,510				138,859
Income taxes			7,615				2,408			24,294				16,192
Net income		$	53,048			$	43,751		$	128,216			$	122,667

SOLAREDGE TECHNOLOGIES INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands)
		September 30, 2021			December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	526,588		$	827,146
Short-term bank deposits			10,122			60,096
Restricted bank deposits			1,064			2,611
Marketable securities			145,459			143,687
Trade receivables, net of allowances of $2,826 and $2,886, respectively			416,244			218,706
Inventories, net			304,713			331,696
Prepaid expenses and other current assets			148,364			135,399
Total current assets			1,552,554			1,719,341
LONG-TERM ASSETS:
Marketable securities			473,315			147,434
Deferred tax assets, net			21,827			11,676
Property, plant and equipment, net			353,344			303,408
Operating lease right-of-use assets, net			39,314			41,600
Intangible assets, net			61,639			67,818
Goodwill			131,757			140,479
Other long-term assets			23,083			5,353
Total long-term assets			1,104,279			717,768
Total assets		$	2,656,833		$	2,437,109

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables, net		$	137,621			$	162,051
Employees and payroll accruals			63,845				63,738
Current maturities of bank loans and accrued interest			141				16,894
Warranty obligations			67,096				62,614
Deferred revenues and customers advances			16,939				24,648
Accrued expenses and other current liabilities			119,865				106,154
Total current liabilities			405,507				436,099
LONG-TERM LIABILITIES:
Convertible senior notes, net			620,808				573,350
Warranty obligations			179,967				142,380
Deferred revenues			136,269				115,372
Deferred tax liabilities, net			405				8,593
Finance lease liabilities			25,375				26,173
Operating lease liabilities			31,509				35,194
Other long-term liabilities			14,910				14,191
Total long-term liabilities			1,009,243				915,253
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS’ EQUITY:
Common stock of $0.0001 par value - Authorized: 125,000,000 shares as of September 30, 2021 and December 31, 2020; issued and outstanding: 52,519,490 and 51,560,936 shares as of September 30, 2021 and December 31, 2020, respectively			5				5
Additional paid-in capital			652,109				603,891
Accumulated other comprehensive income (loss)			(19,135	)			3,857
Retained earnings			609,104				478,004
Total stockholders’ equity			1,242,083				1,085,757
Total liabilities and stockholders’ equity		$	2,656,833			$	2,437,109

SOLAREDGE TECHNOLOGIES INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
		Nine months ended September 30,
		2021				2020
Cash flows provided by operating activities:
Net income		$	128,216			$	122,667
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment			21,492				16,376
Amortization of intangible assets			7,487				7,081
Amortization of debt discount and debt issuance costs			2,175				168
Amortization of premium and accretion of discount on available-for-sale marketable securities, net			6,301				602
Stock-based compensation expenses			73,390				42,993
Deferred income taxes, net			(6,686	)			(5,263	)
Loss from disposal of assets			2,013				-
Exchange rate fluctuations and other items, net			13,086				(235	)
Changes in assets and liabilities:
Inventories, net			30,678				(121,999	)
Prepaid expenses and other assets			(14,977	)			37,871
Trade receivables, net			(206,131	)			118,044
Trade payables, net			(22,959	)			(35,499	)
Employees and payroll accruals			14,321				3,132
Warranty obligations			42,368				23,155
Deferred revenues and customers advances			13,723				(24,283	)
Other liabilities			20,055				10,619
Net cash provided by operating activities			124,552				195,429
Cash flows from investing activities:
Investment in available-for-sale marketable securities			(511,615	)			(36,781	)
Proceeds from sales and maturities of available-for-sale marketable securities			174,817				116,419
Purchase of property, plant and equipment			(94,135	)			(90,553	)
Withdrawal from (investment in) bank deposits, net			50,020				(14,667	)
Investment in privately held company			(16,643	)			-
Payment for asset acquisition, net of cash acquired			(2,996	)			-
Withdrawal from restricted bank deposits			46				25,538
Other investing activities			2,547				743
Net cash provided by (used in) investing activities		$	(397,959	)		$	699

Cash flows from financing activities:
Repayment of bank loans		$	(16,219	)		$	(15,194	)
Proceeds from exercise of stock-based awards and payment of withholding taxes			(2,274	)			19,205
Proceeds from issuance of convertible senior notes, net			-				618,269
Proceeds from bank loans			-				15,185
Other financing activities			(939	)			(152	)
Net cash provided by (used in) financing activities			(19,432	)			637,313
Increase (decrease) in cash and cash equivalents			(292,839	)			833,441
Cash and cash equivalents at the beginning of the period			827,146				223,901
Effect of exchange rate differences on cash and cash equivalents			(7,719	)			(9,233	)
Cash and cash equivalents at the end of the period		$	526,588			$	1,048,109

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						Nine months ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Gross profit (GAAP)		172,561		156,192		108,063		468,827		351,034
Revenues from finance component		(111)		(99)		----		(296)		----
Stock-based compensation		4,289		4,291		2,730		14,370		7,362
Cost of product adjustment		----		----		----		----		313
Amortization and depreciation of acquired assets		2,341		2,401		2,429		7,054		7,110
Gross profit (Non-GAAP)		179,080		162,785		113,222		489,955		365,819
		Reconciliation of GAAP to Non-GAAP Gross Margin
		Three months ended						Nine months ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Gross margin (GAAP)		32.8%		32.5%		32.0%		33.2%		31.9%
Revenues from finance component		0.0%		0.0%		----		0.0%		----
Stock-based compensation		0.8%		0.9%		0.8%		1.0%		0.7%
Cost of product adjustment		----		----		----		----		0.0%
Amortization and depreciation of acquired assets		0.4%		0.5%		0.7%		0.5%		0.6%
Gross margin (Non-GAAP)		34.0%		33.9%		33.5%		34.7%		33.2%
		Reconciliation of GAAP to Non-GAAP Operating expenses
		Three months ended						Nine months ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Operating expenses (GAAP)		106,147		100,633		77,669		302,726		222,900
Stock-based compensation - R&D		(11,949)		(9,805)		(6,904)		(30,552)		(18,129)
Stock-based compensation - S&M		(5,737)		(5,780)		(4,066)		(16,952)		(10,703)
Stock-based compensation - G&A		(4,210)		(4,176)		(2,559)		(11,516)		(6,799)
Amortization and depreciation of acquired assets - R&D		(207)		(9)		(26)		(228)		(77)
Amortization and depreciation of acquired assets - S&M		(229)		(236)		(370)		(702)		(957)
Amortization and depreciation of acquired assets - G&A		(8)		(7)		(8)		(23)		(25)
Assets sale (disposal)		37		----		(558)		99		(558)
Other operating income (expenses)		----		859		----		(1,350)		4,900
Operating expenses (Non-GAAP)		83,844		81,479		63,178		241,502		190,552

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						Nine months ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Operating income (GAAP)		66,414		55,559		30,394		166,101		128,134
Revenues from finance component		(111)		(99)		----		(296)		----
Cost of product adjustment		----		----		----		----		313
Stock-based compensation		26,185		24,052		16,259		73,390		42,993
Amortization and depreciation of acquired assets		2,785		2,653		2,833		8,007		8,169
Assets (sale) disposal		(37)		----		558		(99)		558
Other operating (income) expenses		----		(859)		----		1,350		(4,900)
Operating income (Non-GAAP)		95,236		81,306		50,044		248,453		175,267
		Reconciliation of GAAP to Non-GAAP Financial expenses (income), net
		Three months ended						Nine months ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Financial expenses (income), net (GAAP)		5,751		1,743		(15,765)		13,591		(10,725)
Notes due 2025		(726)		(726)		(168)		(2,176)		(168)
Non-cash interest		(1,469)		(1,439)		(1,254)		(4,244)		(3,582)
Currency fluctuation related to lease standard		(574)		(1,300)		(243)		415		(102)
Amortization and depreciation of acquired assets		----		----		----		----		(982)
Financial expenses (income), net (Non-GAAP)		2,982		(1,722)		(17,430)		7,586		(15,559)
		Reconciliation of GAAP to Non-GAAP Tax on income
		Three months ended						Nine months ended
		September 30, 2021		June 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Tax on income (GAAP)		7,615		8,724		2,408		24,294		16,192
Deferred taxes		2,528		1,789		(816)		6,458		5,956
Tax on income (Non-GAAP)		10,143		10,513		1,592		30,752		22,148

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						Nine months ended
	September 30, 2021		June 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Net income (GAAP)	53,048		45,092		43,751		128,216		122,667
Revenues from finance component	(111)		(99)		----		(296)		----
Cost of product adjustment	----		----		----		----		313
Stock-based compensation	26,185		24,052		16,259		73,390		42,993
Amortization and depreciation of acquired assets	2,785		2,653		2,833		8,007		9,151
Assets (sale) disposal	(37)		----		558		(99)		558
Other operating (income) expenses	----		(859)		----		1,350		(4,900)
Notes due 2025	726		726		168		2,176		168
Non-cash interest	1,469		1,439		1,254		4,244		3,582
Currency fluctuation related to lease standard	574		1,300		243		(415)		102
Deferred taxes	(2,528)		(1,789)		816		(6,458)		(5,956)
Net income (Non-GAAP)	82,111		72,515		65,882		210,115		168,678
	Reconciliation of GAAP to Non-GAAP Net basic EPS
	Three months ended						Nine months ended
	September 30, 2021		June 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Net basic earnings per share (GAAP)	1.01		0.87		0.87		2.46		2.46
Revenues from finance component	0.00		(0.01)		----		0.00		----
Cost of product adjustment	----		----		----		----		0.01
Stock-based compensation	0.50		0.47		0.32		1.41		0.86
Amortization and depreciation of acquired assets	0.05		0.05		0.05		0.15		0.18
Assets (sale) disposal	0.00		----		0.01		0.00		0.01
Other operating (income) expenses	----		(0.02)		----		0.03		(0.10)
Notes due 2025	0.02		0.01		0.00		0.04		0.00
Non-cash interest	0.03		0.03		0.03		0.08		0.08
Currency fluctuation related to lease standard	0.01		0.03		0.00		(0.01)		0.00
Deferred taxes	(0.05)		(0.04)		0.02		(0.12)		(0.12)
Net basic earnings per share (Non-GAAP)	1.57		1.39		1.30		4.04		3.38

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						Nine months ended
	September 30, 2021		June 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Net diluted earnings per share (GAAP)	0.96		0.82		0.83		2.32		2.33
Revenues from finance component	0.00		(0.01)		----		(0.01)		----
Cost of product adjustment	----		----		----		----		0.01
Stock-based compensation	0.45		0.42		0.28		1.27		0.74
Amortization and depreciation of acquired assets	0.05		0.04		0.05		0.14		0.17
Assets (sale) disposal	0.00		----		0.01		0.00		0.01
Other operating (income) expenses	----		(0.01)		----		0.02		(0.09)
Notes due 2025	0.00		0.00		0.00		0.01		0.00
Non-cash interest	0.03		0.03		0.02		0.08		0.07
Currency fluctuation related to lease standard	0.01		0.02		0.00		(0.01)		0.00
Deferred taxes	(0.05)		(0.03)		0.02		(0.11)		(0.11)
Net diluted earnings per share (Non-GAAP)	1.45		1.28		1.21		3.71		3.13
	Reconciliation of GAAP to Non-GAAP No. of shares used in Net diluted EPS
	Three months ended						Nine months ended
	September 30, 2021		June 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Number of shares used in computing net diluted earnings per share (GAAP)	55,929,000		55,930,562		53,144,188		55,955,441		52,623,675
Stock-based compensation	653,967		780,309		1,134,877		733,488		1,229,630
Number of shares used in computing net diluted earnings per share (Non-GAAP)	56,582,967		56,710,871		54,279,065		56,688,929		53,853,305

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211102006166/en/

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

Source: SolarEdge Technologies, Inc.

FAQ

What were SolarEdge's financial results for Q3 2021?

SolarEdge reported record revenues of $526.4 million for Q3 2021, with a GAAP net income of $53.0 million.

What is SolarEdge's guidance for Q4 2021?

SolarEdge expects revenues for Q4 2021 to be between $530 million and $560 million.

How much did SolarEdge earn per share in Q3 2021?

SolarEdge reported a GAAP net diluted earnings per share of $0.96 for Q3 2021.

What challenges did SolarEdge face in Q3 2021?

SolarEdge experienced a 12-week shutdown at its Vietnam manufacturing facility due to COVID-19.