UNITED STATES
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
SOLAREDGE TECHNOLOGIES, INC. |
Delaware | 20-5338862 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |
1 HaMada Street | ||
Herziliya Pituach, 4673335, Israel | ||
(Address of Principal Executive Offices, zip code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common stock, par value $0.0001 per share | SEDG | NASDAQ (Global Select Market) |
☒ Yes ☐ No
Large accelerated filer | ☒ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller Reporting Company | ☐ |
Emerging growth company | ☐ |
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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 |
March 31, 2022 | December 31, 2021 | |||||||
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 | 0 | 0 | ||||||
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 |
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 | 0 | 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 | ||||
Net basic earnings per share of common stock | $ | 0.62 | $ | 0.58 | ||||
Net diluted earnings per share of common stock | $ | 0.60 | $ | 0.55 | ||||
Weighted average number of shares used in computing net basic earnings per share of common stock | 53,134,937 | 51,726,998 | ||||||
Weighted average number of shares used in computing net diluted earnings per share of common stock | 56,315,193 | 55,997,136 |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Net income | $ | 33,123 | $ | 30,076 | ||||
Other comprehensive loss, net of tax: | ||||||||
Net change related to available-for-sale securities | (9,506 | ) | (1,185 | ) | ||||
Net change related to cash flow hedges | (680 | ) | (128 | ) | ||||
Foreign currency translation adjustments on intra-entity transactions that are of a long-term investment nature | (6,983 | ) | (3,675 | ) | ||||
Foreign currency translation adjustments, net | (1,579 | ) | (5,630 | ) | ||||
Total other comprehensive loss | (18,748 | ) | (10,618 | ) | ||||
Comprehensive income | $ | 14,375 | $ | 19,458 |
Accumulated | ||||||||||||||||||||||||
Common stock | Additional paid in | other comprehensive | ||||||||||||||||||||||
Number | Amount | Capital | loss | Retained earnings | Total | |||||||||||||||||||
Balance as of January 1, 2022 | 52,815,395 | $ | 5 | $ | 687,295 | $ | (27,319 | ) | $ | 650,058 | $ | 1,310,039 | ||||||||||||
Issuance of Common Stock upon exercise of stock-based awards | 270,751 | * 0 | 1,478 | 0 | 0 | 1,478 | ||||||||||||||||||
Stock based compensation expenses | - | 0 | 34,107 | 0 | 0 | 34,107 | ||||||||||||||||||
Issuance of common stock in a secondary public offering, net of underwriters' discounts and commissions of $27,140 and $834 of offering costs | 2,300,000 | 1 | 650,525 | 0 | 0 | 650,526 | ||||||||||||||||||
Other comprehensive loss adjustments | 0 | 0 | 0 | (18,748 | ) | 0 | (18,748 | ) | ||||||||||||||||
Net income | 0 | 0 | 0 | 0 | 33,123 | 33,123 | ||||||||||||||||||
Balance as of March 31, 2022 | 55,386,146 | $ | 6 | $ | 1,373,405 | $ | (46,067 | ) | $ | 683,181 | $ | 2,010,525 |
Accumulated | ||||||||||||||||||||||||
Common stock | Additional paid in | other comprehensive | ||||||||||||||||||||||
Number | Amount | Capital | income (loss) | Retained earnings | Total | |||||||||||||||||||
Balance as of January 1, 2021 | 51,560,936 | $ | 5 | $ | 603,891 | $ | 3,857 | $ | 478,004 | $ | 1,085,757 | |||||||||||||
Cumulative effect of adopting ASU 2020-06 | - | - | (36,336 | ) | 0 | 2,884 | (33,452 | ) | ||||||||||||||||
Issuance of Common Stock upon exercise of stock-based awards | 405,239 | * 0 | 5,008 | 0 | 0 | 5,008 | ||||||||||||||||||
Stock based compensation expenses | - | 0 | 23,153 | 0 | 0 | 23,153 | ||||||||||||||||||
Other comprehensive loss adjustments | 0 | 0 | 0 | (10,618 | ) | 0 | (10,618 | ) | ||||||||||||||||
Net income | 0 | 0 | 0 | 0 | 30,076 | 30,076 | ||||||||||||||||||
Balance as of March 31, 2021 | 51,966,175 | $ | 5 | $ | 595,716 | $ | (6,761 | ) | $ | 510,964 | $ | 1,099,924 |
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 | 0 | 16,470 | ||||||
Other investing activities | 1,692 | 571 | ||||||
Net cash used in investing activities | $ | (15,134 | ) | $ | (153,582 | ) |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Cash flows from financing activities: | ||||||||
Proceeds from secondary public offering, net of issuance costs | 650,526 | 0 | ||||||
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 | ||||
Supplemental disclosure of non-cash activities: | ||||||||
Right-of-use asset recognized with corresponding lease liability | $ | 27,248 | $ | 1,745 |
a. | SolarEdge Technologies, Inc. (the “Company”) and its subsidiaries design, develop, and sell an intelligent inverter solution designed to maximize power generation at the individual photovoltaic (“PV”) module level while lowering the cost of energy produced by the solar PV system and providing comprehensive and advanced safety features. The Company’s products consist mainly of (i) power optimizers designed to maximize energy throughput from each and every module through constant tracking of Maximum Power Point individually per module, (ii) inverters which invert direct current (DC) from the PV module to alternating current (AC) including the Company’s future ready energy hub inverter which supports, among other things, connection to a DC- coupled battery for backup capabilities, (iii) a remote cloud-based monitoring platform, that collects and processes information from the power optimizers and inverters to enable customers and system owners, to monitor and manage the solar PV system (iv) a residential storage and backup solution which includes a company designed and manufactured lithium-ion DC-coupled battery that is used to increase energy independence and maximize self-consumption for homeowners including a battery, and (v) additional smart energy management solutions. |
b. | The Company has expanded its activity to other areas of smart energy technology organically and through acquisitions. The Company now offers a variety of energy solutions, which include lithium-ion cells, batteries and energy storage systems (“Energy Storage”), full powertrain kits for electric vehicles, or EVs (“e-Mobility”), uninterrupted power supply solutions or UPS (“Critical Power”), as well as automated machines for industrial use (“Automation Machines”). |
c. | Basis of Presentation: |
d. | Use of estimates: |
e. | Concentrations of supply risks: |
F - 8
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 1: GENERAL (Cont.)
As of March 31, 2022, and December 31, 2021, two contract manufacturers collectively accounted for 20.9% and 27.9% of the Company’s total trade payables, net, respectively.
f. | New accounting pronouncements not yet adopted: |
g. | Recently issued and adopted pronouncements: |
h. | Certain prior period amounts have been reclassified to conform to the current period presentation. |
F - 9
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | |||||||||||||
Available-for-sale – matures within one year: | ||||||||||||||||
Corporate bonds | $ | 154,930 | $ | 0 | $ | (882 | ) | $ | 154,048 | |||||||
Governmental bonds | 4,528 | 0 | (19 | ) | 4,509 | |||||||||||
159,458 | 0 | (901 | ) | 158,557 | ||||||||||||
Available-for-sale – matures after one year: | ||||||||||||||||
Corporate bonds | 453,220 | 0 | (16,507 | ) | 436,713 | |||||||||||
Governmental bonds | 13,428 | 0 | (468 | ) | 12,960 | |||||||||||
466,648 | 0 | (16,975 | ) | 449,673 | ||||||||||||
Total | $ | 626,106 | $ | 0 | $ | (17,876 | ) | $ | 608,230 |
Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | |||||||||||||
Available-for-sale – matures within one year: | ||||||||||||||||
Corporate bonds | $ | 160,462 | $ | 23 | $ | (320 | ) | $ | 160,165 | |||||||
Governmental bonds | 7,576 | 0 | (13 | ) | 7,563 | |||||||||||
168,038 | 23 | (333 | ) | 167,728 | ||||||||||||
Available-for-sale – matures after one year: | ||||||||||||||||
Corporate bonds | 474,412 | 9 | (5,580 | ) | 468,841 | |||||||||||
Governmental bonds | 13,506 | 0 | (119 | ) | 13,387 | |||||||||||
487,918 | 9 | (5,699 | ) | 482,228 | ||||||||||||
Total | $ | 655,956 | $ | 32 | $ | (6,032 | ) | $ | 649,956 |
F - 10
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 3: INVENTORIES, NET
March 31, 2022 | December 31, 2021 | |||||||
Raw materials | $ | 317,173 | $ | 247,386 | ||||
Work in process | 16,800 | 13,863 | ||||||
Finished goods | 98,531 | 118,894 | ||||||
$ | 432,504 | $ | 380,143 |
F - 11
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
F - 12
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 6: FAIR VALUE MEASUREMENTS
Fair value measurements as of | ||||||||||
Description | Fair Value Hierarchy | March 31, 2022 | December 31, 2021 | |||||||
Assets: | ||||||||||
Cash equivalents: | ||||||||||
Money market mutual funds | Level 1 | $ | 603,405 | $ | 21,680 | |||||
Derivative instruments asset: | ||||||||||
Forward contracts designated as hedging instruments | Level 2 | $ | 465 | $ | 992 | |||||
Options and forward contracts not designated as hedging instruments | Level 2 | $ | 1,577 | $ | 3,017 | |||||
Short-term marketable securities: | ||||||||||
Corporate bonds | Level 2 | $ | 154,048 | $ | 160,165 | |||||
Governmental bonds | Level 2 | $ | 4,509 | $ | 7,563 | |||||
Long-term marketable securities: | ||||||||||
Corporate bonds | Level 2 | $ | 436,713 | $ | 468,841 | |||||
Governmental bonds | Level 2 | $ | 12,960 | $ | 13,387 | |||||
Liabilities | ||||||||||
Derivative instruments liability: | ||||||||||
Options and forward contracts designated as hedging instruments | Level 2 | $ | (245 | ) | $ | 0 | ||||
Forward contracts not designated as hedging instruments | Level 2 | $ | (291 | ) | $ | 169 |
NOTE 7: WARRANTY OBLIGATIONS
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Balance, at the beginning of the period | $ | 265,160 | $ | 204,994 | ||||
Additions and adjustments to cost of revenues | 47,907 | 29,971 | ||||||
Usage and current warranty expenses | (20,401 | ) | (17,012 | ) | ||||
Balance, at end of the period | 292,666 | 217,953 | ||||||
Less current portion | (82,340 | ) | (63,443 | ) | ||||
Long term portion | $ | 210,326 | $ | 154,510 |
F - 13
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 8: DEFERRED REVENUES
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Balance, at the beginning of the period | $ | 169,345 | $ | 140,020 | ||||
Revenue recognized | (14,529 | ) | (19,786 | ) | ||||
Increase in deferred revenues and customer advances | 29,429 | 22,999 | ||||||
Balance, at the end of the period | 184,245 | 143,233 | ||||||
Less current portion | (25,511 | ) | (21,065 | ) | ||||
Long term portion | $ | 158,734 | $ | 122,168 |
2022 | $ | 15,468 | ||
2023 | 17,380 | |||
2024 | 8,468 | |||
2025 | 7,506 | |||
2026 | 6,769 | |||
Thereafter | 128,654 | |||
Total deferred revenues | $ | 184,245 |
March 31, 2022 | December 31, 2021 | |||||||
Accrued expenses | $ | 65,903 | $ | 51,014 | ||||
Government authorities | 27,707 | 22,631 | ||||||
Operating lease liabilities | 14,570 | 12,728 | ||||||
Provision for legal claims | 11,476 | 11,622 | ||||||
Other | 15,295 | 11,384 | ||||||
$ | 134,951 | $ | 109,379 |
F - 14
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 10: CONVERTIBLE SENIOR NOTES
March 31, 2022 | December 31, 2021 | |||||||
Liability: | ||||||||
Principal | $ | 632,500 | $ | 632,500 | ||||
Unamortized issuance costs | (10,237 | ) | (10,965 | ) | ||||
Net carrying amount | $ | 622,263 | $ | 621,535 |
F - 15
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
F - 16
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 11: STOCK CAPITAL (Cont.)
Number of options | Weighted average exercise price | Weighted average remaining contractual term in years | Aggregate intrinsic Value | |||||||||||||
Outstanding as of December 31, 2021 | 474,280 | $ | 44.68 | 5.22 | $ | 112,479 | ||||||||||
Exercised | (51,759 | ) | 28.55 | - | 15,142 | |||||||||||
Forfeited or expired | (243 | ) | 5.01 | - | - | |||||||||||
Outstanding as of March 31, 2022 | 422,278 | $ | 46.63 | 5.04 | $ | 114,987 | ||||||||||
Vested and expected to vest as of March 31, 2022 | 420,193 | $ | 46.36 | 5.45 | $ | 115,977 | ||||||||||
Exercisable as of March 31, 2022 | 342,083 | $ | 31.86 | 4.99 | $ | 99,379 |
Number of RSUs | Weighted average grant date fair value | |||||||
Unvested as of December 31, 2021 | 1,759,972 | $ | 189.25 | |||||
Granted | 94,839 | 312.32 | ||||||
Vested | (218,992 | ) | 118.04 | |||||
Forfeited | (44,567 | ) | 204.02 | |||||
Unvested as of March 31, 2022 | 1,591,252 | $ | 185.66 |
Number of PSUs | Weighted average grant date fair value | |||||||
Unvested as of December 31, 2021 | 108,595 | $ | 296.40 | |||||
Granted | 54,964 | 209.33 | ||||||
Unvested as of March 31, 2022 | 163,559 | $ | 267.14 |
F - 17
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 11: STOCK CAPITAL (Cont.)
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Cost of revenues | $ | 5,062 | $ | 5,790 | ||||
Research and development | 14,985 | 8,798 | ||||||
Selling and marketing | 6,701 | 5,435 | ||||||
General and administrative | 7,359 | 3,130 | ||||||
Total stock-based compensation expenses | $ | 34,107 | $ | 23,153 |
F - 18
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 12: COMMITMENTS AND CONTINGENT LIABILITIES
F - 19
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 13: ACCUMULATED OTHER COMPREHENSIVE LOSS
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Unrealized gains (losses) on available-for-sale marketable securities | ||||||||
Beginning balance | $ | (4,709 | ) | $ | 240 | |||
Revaluation | (12,721 | ) | (1,468 | ) | ||||
Tax on revaluation | 2,471 | 283 | ||||||
Other comprehensive loss before reclassifications | (10,250 | ) | (1,185 | ) | ||||
Reclassification | 844 | 0 | ||||||
Tax on reclassification | (100 | ) | 0 | |||||
Losses reclassified from accumulated other comprehensive income | 744 | 0 | ||||||
Net current period other comprehensive loss | (9,506 | ) | (1,185 | ) | ||||
Ending balance | $ | (14,215 | ) | $ | (945 | ) | ||
Unrealized gains (losses) on cash flow hedges | ||||||||
Beginning balance | $ | 874 | $ | 0 | ||||
Revaluation | (1,337 | ) | (146 | ) | ||||
Tax on revaluation | 159 | 18 | ||||||
Other comprehensive loss before reclassifications | (1,178 | ) | (128 | ) | ||||
Reclassification | 565 | 0 | ||||||
Tax on reclassification | (67 | ) | 0 | |||||
Losses reclassified from accumulated other comprehensive loss | 498 | 0 | ||||||
Net current period other comprehensive loss | (680 | ) | (128 | ) | ||||
Ending balance | $ | 194 | $ | (128 | ) | |||
Foreign currency translation adjustments on intra-entity transactions that are of a long-term investment in nature | ||||||||
Beginning balance | $ | (17,420 | ) | $ | 0 | |||
Revaluation | (6,983 | ) | (3,675 | ) | ||||
Tax on revaluation | 0 | 0 | ||||||
Other comprehensive loss before reclassifications | (6,983 | ) | (3,675 | ) | ||||
Net current period other comprehensive loss | (6,983 | ) | (3,675 | ) | ||||
Ending balance | $ | (24,403 | ) | $ | (3,675 | ) | ||
Unrealized gains (losses) on foreign currency translation | ||||||||
Beginning balance | $ | (6,064 | ) | $ | 3,617 | |||
Revaluation | (1,579 | ) | (5,630 | ) | ||||
Tax on revaluation | 0 | 0 | ||||||
Other comprehensive loss before reclassifications | (1,579 | ) | (5,630 | ) | ||||
Net current period other comprehensive loss | (1,579 | ) | (5,630 | ) | ||||
Ending balance | $ | (7,643 | ) | $ | (2,013 | ) | ||
Total | $ | (46,067 | ) | $ | (6,761 | ) |
F - 20
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
Details about Accumulated Other Comprehensive Loss Components | Three Months Ended March 31, | Affected Line Item in the Statement of Income | |||||||
2022 | 2021 | ||||||||
Unrealized losses on available-for-sale marketable securities | |||||||||
$ | (844 | ) | $ | 0 | Financial expense, net | ||||
100 | 0 | Income taxes | |||||||
$ | (744 | ) | $ | 0 | Total, net of income taxes | ||||
Unrealized losses on cash flow hedges, net | |||||||||
(67 | ) | 0 | Cost of revenues | ||||||
(338 | ) | 0 | Research and development | ||||||
(71 | ) | 0 | Sales and marketing | ||||||
(89 | ) | 0 | General and administrative | ||||||
$ | (565 | ) | $ | 0 | Total, before income taxes | ||||
67 | 0 | Income taxes | |||||||
(498 | ) | 0 | |||||||
Total reclassifications for the period | $ | (1,242 | ) | $ | 0 |
F - 21
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Basic EPS: | ||||||||
Numerator: | ||||||||
Net income | $ | 33,123 | $ | 30,076 | ||||
Denominator: | ||||||||
Shares used in computing net earnings per share of common stock, basic | 53,134,937 | 51,726,998 | ||||||
Diluted EPS: | ||||||||
Numerator: | ||||||||
Net income attributable to common stock, basic | $ | 33,123 | $ | 30,076 | ||||
Notes due 2025 | 553 | 534 | ||||||
Net income attributable to common stock, diluted | $ | 33,676 | $ | 30,610 | ||||
Denominator: | ||||||||
Shares used in computing net earnings per share of common stock, basic | 53,134,937 | 51,726,998 | ||||||
Notes due 2025 | 2,276,818 | 2,276,818 | ||||||
Effect of stock-based awards | 903,438 | 1,993,320 | ||||||
Shares used in computing net earnings per share of common stock, diluted | 56,315,193 | 55,997,136 |
F - 22
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
Three Months Ended March 31, | ||||||||||||||||
2022 | 2021 | |||||||||||||||
Solar | All other | Solar | All other | |||||||||||||
Revenues | $ | 607,997 | $ | 46,948 | $ | 376,287 | $ | 29,116 | ||||||||
Cost of revenues | 424,500 | 44,341 | 226,833 | 30,483 | ||||||||||||
Gross profit (loss) | 183,497 | 2,607 | 149,454 | (1,367 | ) | |||||||||||
Research and development | $ | 43,131 | $ | 7,930 | 31,902 | 6,265 | ||||||||||
Sales and marketing | 25,805 | 2,574 | 18,742 | 2,497 | ||||||||||||
General and administrative | 15,849 | 3,625 | 13,272 | 3,501 | ||||||||||||
Segments profit (loss) | $ | 98,712 | $ | (11,522 | ) | $ | 85,538 | $ | (13,630 | ) |
F - 23
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Solar revenues | $ | 607,997 | $ | 376,287 | ||||
All other revenues | 46,948 | 29,116 | ||||||
Revenues from services ASC 606 | 135 | 86 | ||||||
Consolidated revenues | $ | 655,080 | $ | 405,489 |
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Solar segment profit | $ | 98,712 | $ | 85,538 | ||||
All other segment loss | (11,522 | ) | (13,630 | ) | ||||
Segments operating profit | 87,190 | 71,908 | ||||||
Amounts not allocated to segments: | ||||||||
Stock based compensation expenses | (34,107 | ) | (23,153 | ) | ||||
Other unallocated expenses | (2,219 | ) | (4,627 | ) | ||||
Consolidated operating income | $ | 50,864 | $ | 44,128 |
• | existing and future responses to and effects of Covid-19; |
• | future demand for renewable energy including solar energy solutions; |
• | changes to net metering policies or the reduction, elimination or expiration of government subsidies and economic incentives for on-grid solar energy applications; |
• | changes in the U.S. trade environment, including the recent imposition of import tariffs; |
• | federal, state, and local regulations governing the electric utility industry with respect to solar energy; |
• | the retail price of electricity derived from the utility grid or alternative energy sources; |
• | interest rates and supply of capital in the global financial markets in general and in the solar market specifically; |
• | competition, including introductions of power optimizer, inverter and solar photovoltaic (“PV”) system monitoring products by our competitors; |
• | developments in alternative technologies or improvements in distributed solar energy generation; |
• | historic cyclicality of the solar industry and periodic downturns; |
• | defects or performance problems in our products; |
• | our ability to forecast demand for our products accurately and to match production with demand; |
• | our dependence on ocean transportation to timely deliver our products in a cost-effective manner; |
• | our dependence upon a small number of outside contract manufacturers and limited or single source suppliers; |
• | capacity constraints, delivery schedules, manufacturing yields, and costs of our contract manufacturers and availability of components; |
• | delays, disruptions, and quality control problems in manufacturing; |
• | shortages, delays, price changes, or cessation of operations or production affecting our suppliers of key components; |
• | business practices and regulatory compliance of our raw material suppliers; |
• | performance of distributors and large installers in selling our products; |
• | disruption in our global supply chain and rising prices of oil and raw materials as a result of the conflict between Russia and Ukraine may adversely affect our business; our customers’ financial stability, creditworthiness, and debt leverage ratio; |
• | our ability to retain key personnel and attract additional qualified personnel; |
• | our ability to effectively design, launch, market, and sell new generations of our products and services; |
• | our ability to maintain our brand and to protect and defend our intellectual property; |
• | our ability to retain, and events affecting, our major customers; |
• | our ability to manage effectively the growth of our organization and expansion into new markets; |
• | our ability to integrate acquired businesses; |
• | fluctuations in global currency exchange rates; |
• | unrest, terrorism, or armed conflict in Israel; |
• | general economic conditions in our domestic and international markets; |
• | consolidation in the solar industry among our customers and distributors; |
• | our ability to service our debt; and |
• | the other factors set forth under “Item 1A. Risk Factors” in “Part II-OTHER INFORMATION” section of this report, our annual report on Form 10-K for the year ended December 31, 2021 and subsequent reports on Form 10-Q and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business. |
We are a leader in the global module-level power electronics (“MLPE”) market. As of March 31, 2022, we have shipped approximately 89.6 million power optimizers, 3.7 million inverters and 16.3 thousand residential batteries. Over 2.6 million installations, many of which may include multiple inverters, are currently connected to, and monitored through, our cloud-based monitoring platform. As of March 31, 2022, we have shipped approximately 31.6 GW of our DC optimized inverter systems and approximately 160.4 MW of our residential batteries.
Three months ended March 31, | ||||||||
2022 | 2021 | |||||||
Inverters shipped | 211,114 | 181,905 | ||||||
Power optimizers shipped | 5,724,131 | 3,734,790 | ||||||
Megawatts shipped1 | 2,130 | 1,691 | ||||||
Residential batteries shipped | 9,985 | — |
1 Excluding residential batteries, based on the aggregate nameplate capacity of inverters shipped during the applicable period. Nameplate capacity is the maximum rated power output capacity of an inverter as specified by the manufacturer.
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
(In thousands) | ||||||||
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 |
Three months ended March 31, | 2021 to 2022 | |||||||||||||||
2022 | 2021 | Change | ||||||||||||||
(In thousands) | ||||||||||||||||
Revenues | 655,080 | 405,489 | 249,591 | 61.6 | % |
Three months ended March 31, | 2021 to 2022 | |||||||||||||||
2022 | 2021 | Change | ||||||||||||||
(In thousands) | ||||||||||||||||
Cost of revenues | 476,122 | 265,415 | 210,707 | 79.4 | % | |||||||||||
Gross profit | 178,958 | 140,074 | 38,884 | 27.8 | % |
• | an increase in the volume of products sold and the increase in the cost of components used in the manufacturing of our products; |
• | a significant increase in shipment and logistic costs in an aggregate amount of $29.4 million due to (i) an increase in shipment rates; and (ii) an increase in volumes shipped; |
• | an increase in warranty expenses and warranty accruals of $17.9 million associated primarily with an increased number of products in our install base as well as an increase in costs related to the different elements of our warranty expenses which include the cost of the products, shipment and other related expenses; |
• | an increase in custom duties of $10.1 million attributed to higher tariff charges due to the manufacture of a higher portion of our products for the U.S. in China; |
• | an increase in other production costs of $14.9 million, which is mainly attributed to charges from our contract manufacturers due to manufacturing disruptions, related to the global supply constraints, increased logistics costs resulting from transportation disruptions and the mobilization of components among our different manufacturing sites and ramp up costs associated with the new contract manufacturing site in Mexico; and |
• | an increase in personnel-related costs of $4.2 million related to the expansion of our production, operations, and support headcount which grew in parallel to our growing install base worldwide and the increase in costs associated with the production of powertrain units manufactured by the SolarEdge e-Mobility division. |
• | a decrease of $5.9 million in inventory accrual which is mainly attributed to changes in inventory valuations related to manufacturing volumes, anticipated future use of such raw materials and inventory write-offs. |
Three months ended March 31, | 2021 to 2022 | |||||||||||||||
2022 | 2021 | Change | ||||||||||||||
(In thousands) | ||||||||||||||||
Research and development | 66,349 | 46,977 | 19,372 | 41.2 | % |
• | an increase in personnel-related costs of $15.6 million resulting from an increase in our research and development headcount as well as salary expenses associated with employee equity-based compensation. The increase in headcount reflects our continuing investment in enhancements of existing products as well as research and development expenses associated with bringing new products to the market; |
• | a decrease in reimbursement of costs, in an amount of $2.6 million, related to the research and development activities performed by SolarEdge e-Mobility; |
• | an increase in expenses related to material consumption in the manufacturing of prototypes during our development process in an amount of $1.5 million; and |
• | an increase in depreciation expenses of property and equipment in an amount of $0.9 million. |
• | a decrease in expenses related to consultants and sub-contractors in an amount of $2.3 million. |
Three months ended March 31, | 2021 to 2022 | |||||||||||||||
2022 | 2021 | Change | ||||||||||||||
(In thousands) | ||||||||||||||||
Sales and marketing | 35,316 | 26,911 | 8,405 | 31.2 | % |
• | an increase in personnel-related costs of $5.7 million as a result of an increase in headcount supporting our growth in all geographies, as well as salary expenses associated with employee equity-based compensation; and |
• | an increase in expenses related to marketing activities by $1.2 million due to the renewal of marketing activities, exhibitions and shows, which were cancelled or postponed in 2020 and first half of 2021 due to Covid-19 restrictions. |
Three months ended March 31, | 2021 to 2022 | |||||||||||||||
2022 | 2021 | Change | ||||||||||||||
(In thousands) | ||||||||||||||||
General and administrative | 26,429 | 19,849 | 6,580 | 33.2 | % |
• | an increase in personnel-related costs of $6.8 million resulting from an increase in our general and administrative headcount, as well as salary expenses associated with employee equity-based compensation; and |
• | an increase in expenses related to consultants and sub-contractors in an amount of $2.3 million. |
• | a decrease of $3.6 million related to a provision for legal claims. |
Three months ended March 31, | 2021 to 2022 | |||||||||||||||
2022 | 2021 | Change | ||||||||||||||
(In thousands) | ||||||||||||||||
Other operating expenses | — | 2,209 | (2,209 | ) | (100.0 | )% |
Financial expense, net
Three months ended March 31, | 2021 to 2022 | |||||||||||||||
2022 | 2021 | Change | ||||||||||||||
(In thousands) | ||||||||||||||||
Financial expense, net | (5,449 | ) | (6,097 | ) | 648 | 10.6 | % |
• | a decrease of $2.6 million in financial income related to hedging transactions. |
• | an increase of $0.8 million in realized loss on marketable securities. |
Three months ended March 31, | 2021 to 2022 | |||||||||||||||
2022 | 2021 | Change | ||||||||||||||
(In thousands) | ||||||||||||||||
Income taxes | 12,292 | 7,955 | 4,337 | 54.5 | % |
Income taxes increased by $4.3 million, or 54.5%, in the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, primarily due to an increase of $3.4 million in current tax expenses mainly attributed to an increase in taxable income in our foreign subsidiaries. This increase in taxable income is associated with the provisions of Section 174 of the U.S Internal Revenue Code, which went into effect on January 1, 2022, and required capitalization of our research and development expenses.
Three months ended March 31, | 2021 to 2022 | |||||||||||||||
2022 | 2021 | Change | ||||||||||||||
(In thousands) | ||||||||||||||||
Net income | 33,123 | 30,076 | 3,047 | 10.1 | % |
As a result of the factors discussed above, net income increased by $3.0 million, or 10.1% in the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.
Three months ended March 31, | ||||||||
2022 | 2021 | |||||||
(In thousands) | ||||||||
Net cash provided by (used in) operating activities | (162,989 | ) | 24,083 | |||||
Net cash used in investing activities | (15,134 | ) | (153,582 | ) | ||||
Net cash provided by (used in) financing activities | 652,335 | (2,062 | ) | |||||
Increase (decrease) in cash, cash equivalents and restricted cash | 474,212 | (131,561 | ) |
Investing cash flows consist primarily of capital expenditures, investment in, sales and maturities of available for sale marketable securities, investment and withdrawal of bank deposits and restricted bank deposits, and cash used for acquisitions. Cash used for investing activities decreased by $138.4 million in the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, primarily driven by a $172.5 million decrease in purchases of available-for-sale debt investments, net. This decrease was partially offset by an increase of $17.5 million in capital expenditures, net and a $16.5 million decrease in cash provided by withdrawal from bank deposits and restricted bank deposits.
Financing cash flows consisted primarily of the issuance and repayment of short-term and long-term debt and proceeds from the sale of shares of common stock in a public offering and employee equity incentive plans. Cash provided by financing activities in the three months ended March 31, 2022 was $652.3 million compared to $2.1 million cash used in financing activities in the three months ended March 31, 2021, primarily due to a $650.5 million increase in cash provided by the issuance of common stock, net through a secondary public offering and a $4.0 million increase in cash received from the exercise of stock-based awards net of withholding taxes remitted to the tax authorities.
On March 17, 2022, we offered and sold 2,300,000 shares of the Company’s common stock at a public offering price of $295.00 per share. The net proceeds to the Company after underwriters' discounts and commissions and offering costs were $650,526. We intend to use the proceeds from the public offering for general corporate purposes, which may include acquisitions. See Note 11b to our condensed consolidated financial statements for more information.
Exhibit No. | Description | Incorporation by Reference | ||
Filed with this report. | ||||
Filed with this report. | ||||
Filed with this report. | ||||
Filed with this report. | ||||
101 | The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements | Filed with this report. | ||
104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 formatted in Inline XBRL | Included in Exhibit 101 |
/s/ Zvi Lando Zvi Lando Chief Executive Officer (Principal Executive Officer) |
/s/ Ronen Faier Ronen Faier Chief Financial Officer (Principal Financial Officer) |
17