SEDG - Earnings call transcript Q4 2017 | SolarEdge Technologies, Inc.

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Operator

Welcome to the SolarEdge Conference Call for the quarter and year ended December 31, 2017. This call is being webcast live on the company's website at www.solaredge.com in the Investors section, on the Event Calendar page. This call is a sole property and copyright of SolarEdge with all rights reserved, and any recordings, reproduction or transmission of this call without the expressed written consent of SolarEdge is prohibited.

You may listen to a webcast replay of this call by visiting the Event Calendar page of the SolarEdge investor website. I would now like to turn the conference over to Erica Mannion, at Sapphire Investor Relations, Investor Relations for SolarEdge. ahead. go Please

Erica Mannion

Sella, measures, could and in full this for involve for review open will the for you results will results will results Thank are XXXX. ended slides release us quarter discuss We company's Officer. to financial full XX, quarter today prepared fourth With encourage is reserved. Ronen with evaluating we rights Please of XX, considered include believe Good and for Financial evaluates US understanding measures are this the performance. be me results ended published the superior accordance as contained forward-looking non-GAAP the presented Listeners XXXX. for CEO; who the company’s The risks company's provide of fourth website. the or actual operating outlook the the how materially are as measures non-GAAP management's the the December for as safe management visiting call year that the the Faier, or followed and with outlook material our measures of a contained isolation investors non-GAAP presentation year copy review first December in do webcast quarter SolarEdge's diluted first non-GAAP of uncertainties and quarter call income prepared Ronen quarter the the harbor Guy for in share, XXXX, current XXXX. to copy today net afternoon. a the Technologies, GAAP. the year, more that cause by for from of well joining describes GAAP. net with from, the substitutes accordance XXXX that and with per not we should and all financial earnings December note, will statements not non-GAAP or complete review begin in US of may press company's of and which Chief and presentation, you press means questions. expectations. obtain they and ended year Then not XX, Guy with Founder, company's Chairman differ in in quarter section to sole certain for, a measures brief copyright have the including the These note by the description. All fourth statements and Investors a operating to Please presentation release SolarEdge property the and full this

Now, I CEO, turn to call Sella. the Guy over will

Guy Sella

margin call Good gross and million for of with and you, joining We record afternoon concluded our quarter on XX.X%. today. Thank you us $XXX.X Erica. all thank revenues conference the of

$XX.X we shipped megawatt to income which quarter have generated We we positive quarter, X a power XX,XXX and and the America. million December XX, $X.XX per In nameplate non-GAAP over XXXX, cash non-GAAP net XXX inverters. $XX.X of megawatts approximately from a operations. AC we of diluted Overall, of and of was inverters, million flow earnings of optimizers shipped ended North XXX this shipped share million

a meet while expanding we revenues the availability, manufacturing were components grow products. of continued and able in to our overcome have As for to growing anticipated, terms wide demand our to year industry our challenging capability

year-over-year results. at reveal figures strong Looking our

$XX non-GAAP XX, and ended million year record an million compared December annual annual the of revenues income reporting net XX, XXXX the over in $XXX $XXX in non-GAAP are $XXX million We net of to December income year XXXX compared XXXX. ended million a for to of

increase $XXX.X term million to XX in from key years EPS $XX $X.XX the the characterize year, operations, an in to XXXX this the module-level is prior generated power XX, we that warranty products. we success cash diluted year. Our This year that for sheet it XXXX $X.XX compared calendar to the ended Profitability generated December cash. non-GAAP from fiscal electronics balance when a is strong and million industry in able support critical and being long to is in

performance, evident is it’s our our As from growing a strong healthy financial at business rate.

result, expanded stay margin gross stable, cost initiatives line and continuing this our as our increased ASP We bottom to On continue flow on cash generation. keeping and our our focused numbers. by front, a reduction profitability we

cost footprint in continue invest R&D services. products our We infrastructure our new, and and more efficient even to resources better support with geographic growing significant address expanding customer to

ASP We have margin record relatively high a reached XXXX a for XX.X%. stable gross maintained and annual our of

that to a time starting so Chinese manufacturer with have about the been far, product we high of are pricing introduced led Australia. rumors introduced reduced has and There functionality some features only the this we and see products and and safety what heard have From optimizer from a Europe communication have now in products recently for market mechanism. will relatively as set be in features seen basic have well. We

Omron our they inverter power optimized mention inverters, that market co-operation and would effect will on voltage Western to module-level properly Japanese not solution, electrical and that European consisting cautious PV States Last recently on especially Japanese mindful offering Corporation. countries high PV monitoring products three-phase with grid, their their relate challenging, announced penetration be to leaving will technology are expect are be of putting rooftop leader if DC optimizers and against and We United systems in security secured Omron of like the of quality cyberattacks. the market. month, to SolarEdge I that announced concerns

our high-voltage, of superior our market indication market success a our technology Japanese brand a known will market SolarEdge financial reliability service gaining Omron for after-sales in supply customer This PV optimizers will confident distribution the As solution. is Japan sales. and the address us Omron’s which SolarEdge inverters to and and in quality local launch, To of locations technology and leadership, surface. three-phase markets products leader prestige and well conclude, worldwide now SolarEdge as been part these XXX cooperation the very of network remain have the with establishing and well for seven in services, power leadership even years. will the maintain market than for solutions. more to strength, as our in leader acceptance help the products in as our We another

financial confident new and to XXXX. to can Given investment our and And growth grow we we Ronen I markets with continue the our States over will who our that continued revenues outside of hand different this, our the United speaker in are regions, in results. in review

Ronen Faier

and afternoon, everyone. Guy Thank good you,

our deferred compensation, of call as Full Act and discussed GAAP Cuts results and the to quarter and on be will for full will GAAP remind our as in the and review taxes cases, the impact release financial earning I would the numbers while impact Tax exclude non-GAAP press measures, is in on starting a the to per available I that share. on this fourth of discussing year non-GAAP result be Jobs certain basis, overview today. Before website listeners which the XXXX, the stock-based of of well reconciliation like of and pro-forma issued the

fourth to period revenues last of the XX.X% the $XXX.X XX.X% let's results an million, Now, million same million for compared Total increase last financial XXX.X in a XXX.X the from of year. and revenues quarter increase start with XXXX. quarter, were of

States Europe record our million, reached in from represented quarterly quarter, to represented revenues. the $XXX.X This revenues of a of XX.X% absolute million revenue. $XX and our quarterly United and high overall numbers Sales were XX.X%

increase decreased the characterized high are with months may reached often that our represented generated revenue, accounted prior XX margins States of geographic while quarter Revenue of perspective, for for United this only one XX.X% per our a compared region. record slight environment, quarter product this a watt in an to than the our offset revenues. revenue. XX.X% XX.X% the basis, outside margin the result of the XX.X On sales record the commercial total that customer of in per quarterly costs. the a cost overall initiatives manufacturing were reduction recall in This last XX.X% a of winter From sales gross more of You year. ASP continued Europe ASP by is product of business quarter basis, and due mainly with mix, XX% concentration blended product our a in was million, Gross the a quarter mix. and representing ASP and while XX% combined our lower to top stable slower from same increase customers level customer slightly

demand we spent more component increased accommodate shipments was availability product and industry anticipated, on to in order issues. As wide air

the our to support and revenues. side, represented related fixed manufacturing On expenses our lower of percentage flip

to the future. and that we investors circumstances, maintain with consistent in the Our we model, current gross public margin in which unusual communicated top long we of term level foreseeable the we went it XXXX range absent believe can is when

R&D innovation, million, continue to to operating invest This further new to the expenses, our an Moving with development manufacturing of in reduce expenses their last current the and bring and us decision $XX.X to mainly compared of XX.X% same year. previous attributed and increase is increase, to XX.X% increase an to the of quarter headcount, compared consistent an were quarter improve to product processes resources reduction in cost will the quality. cost as products to market allow our that as well and products advanced increase

already revenue $XX.X in and expenses last in for of were increase were XX.X investments. Sales an litigation and the profitability total, by compared in in an which quarter million increase expenses This quarter growing QX million the mainly XX.X% that of we million, to of quarter operate from the quarter, year, the previous prior footprint. X.X% expansion million of compared same and strength last one-time expenses the expense last to $X.X were increase quarter XX.X% year. XX.X% or the revenue In compared geographic and investment to continued from driven year. the the a or financial our countries XX.X& XX.X of the our of million quarter or to G&A QX. a the revenue these marketing quarter prior concluded increase for the resulting XX.X% Our quarter we and compared is XX.X in and quarter same operating an fuel for same increase XX.X% fourth and initiated for

record to the XX.X of last exchange on and rate high quarter compared for Financial As our $XX.X quarter $X.X of a for the operating same gains a is investment. income the million of in for of million the million in the all a and year. quarter result income to the $XX.X for factors favorable period our a financial $X.X million expense compared of This earned a was interest last year. financial million X.X financial and the same previous million reached result income previous discussed, just income period of quarter

now tax to turn income quarter the implementation were Act Let's were of signed this period million $XX.X into law for compared by in $X.X the quarter the this prior expenses last a the same that Tax expenses quarter XXXX. to was and tax in Cuts Jobs X.X and impacted of million million that expense tax year. GAAP December

in States GAAP profit results. a This addition, of in that net In this accumulated tax million, provisional primarily and which one-time quarter, earnings repatriation $XX.X tax, only the prior due is in provision we deemed for of was to recorded and repatriation charge our text fourth included quarter. related one-time United fully mandatory the is XXXX booked outside to years, in

majority than out to of new April eight be The from ability the beginning the over efficient law the eight access will United year the other XXXX in we news tax payment years by manner. tax period. the of cash reduced of spread a due in of three tax States, will repatriation this the payment in the that the the States United is However, the in good years, with benefit our rate last having highly next

a a have non-GAAP last expenses overall for allocation respect to greater the investment year. million was were year. fourth to our for million and XX $X.X decision. to quarter the income GAAP we with quarter our and result, basis, a net $X.X On of flexibility a $XX.X quarter quarter last million net previous compared million and million income X.X same for tax $X the GAAP same As compared capital quarter for million the last

fourth for income the quarter the EPS non-GAAP share the million $X.XX quarter was previous same in $X.XX in Non-GAAP Our XX.X $XX.X year. quarter income in last the compared quarter diluted $X.XX for last net the and year. the and to quarter for GAAP $X.XX compared million, net earning quarter same same was net the to previous net and quarter to year. $X.XX non-GAAP last diluted $X.XX a in compared previous million per was $XX.X of

$XXX.X XX, the and of to balance investments as cash at sheet, XXX.X equivalents, cash September compared restricted December to million were now XX, XXXX, cash, Turning million XXXX.

of generated remained operations. XXXX, quarter, relatively $XXX.X the quarter this while DSO million $XX.X million During we reaching XX.X net receivable to fourth compared flat. quarter, from in increased cash million Accounts last

inventory As million of net our compared reserve quarter. level to December $XX XX, at was XXXX, XX.X prior in the million of

GAAP diluted for XX.X%, million, million, XX.X Non-GAAP and XX.X% million $X.XX compared summarize representing revenues expenses the compared XXX of increase year for million was operating of a from the were XX.X prior was gross $XXX the to results. prior of a calendar to year in Revenues in from in prior diluted to the net operations. EPS $XXX.X now income year. cash XXXX, generated revenue. year. GAAP $X.XX net to XX.X% non-GAAP increase we million XX.X% turn GAAP which compared Let's represented $XX.X and XX.X% to million, in compared to compared in in compared the XX.X% the XXXX $X.XX full $XXX.X This were was prior increase XXXX to GAAP million income $X.XX XXX margin million, year, of million of the of XXXX. year year. year XX.X a EPS XXXX XX.X% in

to to on I to revenues questions. gross operator flat for over please? to to the first for quarter to of now open $XXX million will the range $XXX within the XX% be the within the of XXXX, we call turn range Moving expect up the it XX%. and margins million expect guidance to of remain Operator,

Operator

Shen, to [Operator Instructions] And Partners. we’ll go Philip Roth Capital

Philip Shen

results the general. the Hey, you’re Guy having on that in and congrats and success Ronen,

First components. question I have is about

I challenges there detail and us able then would this And to get to of sidestep the that the wondering I but shortage that if give impact or quantified degree, due more, That components think some wide you you to QX? a little more problem. can you if impact bit impact QX the you actual to certainly gave we for the how helpful. an guide? industry could were some was Can as in captured were is you quantify what what be color, have

Guy Sella

coming So capacitors end of reversely I it, found -- their some they in in gave didn't the high -- but detailed nobody understood we shortage color of bill started it past, explanation but book out and so where growing. think obvious. suppliers only coming this the that [indiscernible] we The was is XXXX. in hand, started that the was practically, to is then, voltage it's XXXX to basically gave XXX%. Back of a is the supposed the supplier it’s middle on demand, sometime to to, assumption itself What up that really February we did from in supposed depending fix In XXXX. they one understanding were the that understand April

air phase, some in We but shipments. the Therefore, components demand. order three to layouts XXXX, majority growth effect shortage develop the resources to supply reduced move and We sources the part demand more one in component in of second reported On combination cases, to major remember. of we in and dramatically other accommodate had you in our different QX, phase practically on if plus purposes. to much and the we put for hand we all the had these XXX% we the finished into other hand, of of of overcome these goods QX all the started inventory overall basically already optimizers

have, and component two components for we that last demand in ship had be will mid-XXXX. we That QX had what the those directly XXXX, much we suppliers according and the volumes big marketplace for prices, put we them of to for saw air more they and from went Starting over suppliers higher components major to to orders -- big the ’XX. buy QX. major until shipment. effects for year with the at suppliers. very to we resources we XXXX the mentioned in were currently some from they course at to put in major see, course April Today, the April We instead same of and have June, we us Of component can

So, and will finished build enough that take I we we two, another slowly but goods start secured believe components until it of probably we’ll to the believe we'll therefore be If behind us. inventory, three quarters higher it more we majority the will of anticipated, maybe XXXX growth growth analyze be us These than under the XXXX. until properly. effect are assumption with that might see the

Philip Shen

our with in great We've week in -- mostly in of checks timeframe. on are the congrats job general. on kind times sidestepping that plus issue the customers heard lead XX key Well,

So So like good. it continue? should the we expect volumes that seems to are

the you time You wait actually could times typical if that the some is volume get down get do can three expect the to when over down volume, wait or get the to and some of time incremental you cut to maybe and down you weeks. times lead five steady just

Guy Sella

mentioned. That's I we as the If I you we told have what script, as I assume in growth XXXX. mentioned that, nice we in last year, assume, -- we

other five to two assumptions can we that was we if the to short the in not which overcome type cannot parameters, are the model, and the XXXX, once then mistaken. I’m reach location that go ’XX, range time product our the lead weeks we goods back in finished to there, many time. four weeks. but we short to I demand or of inventory Assuming in three it had will quarters the promise we need on that analyzed, the lead probably our and properly It of three to depends to

Philip Shen

to mix. gears overall shift let's the And

beyond do geographic into US expect were or QX, then the by and you the either regions QX. then and was how about and you that between And I the both ahead US? strength of other share What you Can region? Europe what or where was guys elsewhere? next revenues million megawatts dollars looking in US the XXX Australia megawatts talked mix XXXX, think plus for to and then evolve? in

Guy Sella

and So a the from America. Israel total North remember XX% other from XXX and was mainly sorry, India XXX I came XXX megawatt Japan, rest properly, if and XXX from Europe bit The came rest or little -- Australia, where markets. small the

that the America on North America probably the I is end in mentioned believe XX%, we’ll little Europe where As XX% the rest I and and coming basis, bit a XX% coming North a coming from less to XXXX, the past, in yearly word. around from rest of or XX% from where year the

will getting our it from is term there. growing XX% is nicely. are longer model, probably growing growing nicely. is XXXX, XX% America, India North And Europe Asia. and Australia ’XX, we be For nicely. for XX% from from Japan

I I just think total the in the you. right we are to gave the form direction blend in revenues

Operator

Strouse, And next we’ll go JPMorgan. to Mark

Mark Strouse

So the Europe. resi to launch then, so could that was markets? indicator there? you of I Can initial just know when early. the potentially expand can believe launch anything in initial I it's one just of share you might product, to give talk And the an kilowatt just two about you you just other

Guy Sella

orders product. we for started to just So take this

Currently, demand, very Chinese of we're but So we New just a the see beginning. in middle the far, Year. nice the

engineers, to So risk understand, et lines cetera. you are Year, or – all product producing not you want Chinese that the we're during the take full the any New of from don't reasons not new

produce to Year. first batches, start production, to supposed after Chinese right mass We’re New

for product that segment in a nice of demand of February, installation the at. product. a It of to us we weren’t before new segment see house is we beginning two playing this So an European that week of mainly March, kilowatt one March, opens as the last

other We're be We might demand the reasons A all good of know we’ll in supplying well. probably all a now in the want regions. region demand supply to Europe see the are maybe in start and with more to products these effect lot what to the that looking before going to you first where actual and issues when depends we sell volume one due as in to on have about will product that actual demand prefer open it. you -- quarter

Mark Strouse

Ronen, sorry quick. I'm missed then And just if real I this,

in still about call, last X.X% talk I the on that to the Is XXXX? mentioned about right? believe expectations ASPs Just about down XX%. for you

Ronen Faier

our as about really So the expectation in at general, absent don't landscape. the erosions, we saw XXXX, Last expectation reduction In something as this because a almost reasons see we such, that we look put saw to market the anything that targets see a as these we we match of I year, X.X% environment. is one order product general, still ASP we these basis, see. at it from as to assumption in the long least XX%, that when cost usually well assumptions of with changes believe else in and a as our competitive were that working flat we are on per or

assumption, So at this X.X% the least to to and really not but XX% as XX% changes we major competitive now and not working continue at do X.X% happen see in can prevail. did least environment, the the

Guy Sella

That's blended a ASP. on

there differences between I the erosion phase that here inverters. bigger on commercial inverters think and ASP be will one

believe to of gain better will we cost we order of in is market we mentioned, reached As margin a share. the XX% gross good effect working what point and

specific the margin to we flat and work the will specific segment, to market et keep cost of products, in we course, will cetera, share of So our have. cetera, but benefit extra gain et with improved gross way

Operator

Jeffrey Company. to and Cowen Osborne, And go we will

Jeffrey Osborne

XXX Just to following IGBT a MOSFET talked about did point from think question, shortage? to gross we’re Phil’s having gross hit on margin I quick quarter basis impact last question the quantify up airship. you margins the you

other questions. two that it. I answered missed you’ve Then If I have

Guy Sella

we we we very XX%. again, said of the the -- that the general, this model, I now to that want and we're make market perspective. as from, got of share top area to a get from So from that that quantify, call those once playing And sure the it's we is the targets the growth number that levers within many in but we in such, with have would that can beginning play this XX% levers we order we it, that perspective to

we given the air we if cost can do at to reduction share. shipments more to sell want And these. we little a can increase bit of prices, to time, So would market we take ability if have more, any reduce like we point

quantify we don't although can it, margin an simply So a actually of I a to the be. stabilize there airship to less, more, little we that bit think to have as lot because a in assumption we it order level gross taking if we bit at little need in is value use other that wanted leverages our

Jeffrey Osborne

was and add? other percentage to I the C&I this Two questions revenue, missed will give well. the mix and that you helpful may that percentage units, did of of in be have quarter what as But either

Guy Sella

it did but Last can give it not give, was XX.X%. we quarter, So we now.

This quarter, XX.X%. it was

Jeffrey Osborne

And as revenue. or units

Guy Sella

megawatt This is shipped. on

Jeffrey Osborne

might given there, do or a OpEx on like? And better dilutive then contributor your be even how about that if were that leveraging we it you but look just to somewhat notable P&L, just that become given them. how margin, maybe that to gross Omron’s equivalent assumption new, operating and the significant do Japan my My margin, to last would think question, leveraging is or about think we what distribution, but

Guy Sella

Prices models so in on Not affect in wouldn't the with I necessarily, one Omron collaboration won’t gross Japan because margin high hand. tweak the are company level. the of

collaboration. this On happy the with other hand, very I'm

longer mid-term, great. it term, be will that think I

rate expecting become adoption the term, suddenly the exponential. short will and and I'm that conservativeness level still it's the On Japan not

be to So in the I the a it our in player won’t a assumptions, would a effect forward to great Japan, step I support XXXX. take product the wouldn't, quality significant and be as big honest. in to come of great That’s completely but

Operator

Vishal next Deutsche Bank. go we’ll Shah, to And

Vishal Shah

So, a of questions. couple

So XXXX from you maybe [indiscernible] of any especially Ronen, C&I will what be seen percentage in impact market C&I. think at shipments and all Guy, have your the you the recent

XX% up Do could be C&I. case? in the still said You’ve you the past that’s think to

Guy Sella

you you little I’m is and modules quite average at a US. according closing between of it channels, last maybe the we yet as have in a bit X the affect is aware what XX a model come, bit different in of installation year So of QX, in if opinion, the contract the know, But change it, prices to little know, my of, look US effect as XX QX effect, to numbers, both QX maybe in lead lot you the to humble don’t and the you in will a will weeks. time see

I think of in effect see come in and what will QX effect QX, So will if in that also and we will won't probably come, Excel be think on effect, and QX QX the the I modules the spreadsheet.

at changed If put significant of you installation way take more particular Excel the in of in one and -- presidential the the market completely of in can the these the a Excel. end emotionally what to than total I of this general cost we in behavior, additional this on in modules market severely commercial, cost the and way XXXX, think a US the past in saw the enough we but change that see changes

the total what I'm estimate be from that sure make XXXX. put the in wouldn't myself guess effect, to effect to in it bigger QX QX and the big effect. mid to wants I position So will or long-term,

why the Regarding, that this differences second in mentioned we to megawatt residential. we year right of between basis commercial XX-XX believe the a end between in And would direction on like question I percentage I on think that's was it. correct. also by That's that's get Vishal and past I erosion also think mentioned I the residential. and see regarding commercial and the to percent why the ASP and to of get so I We might Vishal, the hope commercial. assured we��re

fewer quarter, allow the install plus every gaining Jupiter effect configuration every XXX-kilowatt one We X% in of installation. you that the are new to – percentage, will X%,

us to point. to supposed get this think I that’s

Vishal Shah

the to just It's I ASP Ronen, price Is year. QX, to you just that want not see XX% starting of in something the clarify, the yet. expect erosion mentioned, maybe you X.X% that's second outlook to lower into right? that not to half You're that factored right?

Ronen Faier

So do We should changes prices be through Guy expectation. anything in is again, environment working gross the in is change our will right in believe and this general to margin see account stable general, all in in now year on QX mentioned, that that is not the reflected it, the competitive that, as but already assumption. do already the we’ll taken whatever a we into

Vishal Shah

impact last share One looks competitor, year. product have despite in What you the share middle European guys a launched launch. like it gained in last of seen in at your look Huawei, market question, if kind market? market I a your European mean, the they market you Guy, of on have product you

what kind that launch? of customers getting feedback from are So product the you on

Guy Sella

gained we just market So Europe. share in

and/or releasing end it would and optimizers the and they but do more that have in by they managed and product Europe that sometime just be So market gain I does not gain you product not last safety in in we or market to despite honestly love launched of The able to it's therefore have share, QX, really I'm released communication more probably product mid a share. believe I between to ago in that the Europe that not product year, fact they’re a do the quite QX be in Australia that fact a that Europe. now I we’ll month is inverter despite available confident tell and think will yet more available monitoring.

at sell. solution higher prices the a pretty what it's than crippled So we

cetera. with the competitors do are we expecting two, SMA, three, competition impacted I'm in quarters, them slight to take four other every very preparing seriously et next So as type year we but of and ourselves we many good as such any for not be

Operator

Edwin Needham Mok, and We’ll Company. go to next

Edwin Mok

So that that to do shipping lot of just kind wanted talk drivers expect is partnership, this growth you Ronen in over or start to to terms about quarter? of of that, within current quarter it the a

Guy Sella

in release, March So from of launch also their their press but XXXX. it's product is perspective the the

a very have won’t just it SolarEdge time. on start perspective. I but So market cautious want Japanese probably, stamp is in take course see out Omron, of solution a to The we’ll QX, people but that to with take it, again shipments market the I'm not and allow of two, three will conservative kind of it exponential Short model growth that player it very the in Japan, of wrong out I significant do perspective in also become won’t will us Japan. influence time believe way. do it to take that proportion in so term. mid, long in it years, longer please expecting not of term --

Edwin Mok

then And how year. if think and of quarter do the it, talked kind on sorry you remainder about OpEx the this for Ronen, of the OpEx, for about you

Ronen Faier

a So the situation. in along very think and I nice have script, we the we said expenses that today general, operating it

as and long golden to are limitation many we a And even R&D, being good that ideas we're financial and a geography. us continue in throughout decreasing that as there there our, we and to it not and profitable, good increasing gives in This where actually or competitors or will I one we situation those. some can put or see and of invest We grow such, year. while a would our -- the are either a R&D new invest develop we very are opportunity growing as are that so are to of is place strength, things expect I call it stagnant lot

strengthening make that can useful geographies, And relatively will is in is areas G&A, the us I structure growth how that currently do in we sufficient. we the actually you believe will that operate. in employees. people can becoming the we think major expect which R&D The mostly sales also new can limit where the be the we a on on cost you that are natural in will will place but you do sure marketing, be G&A, growth mostly mostly thing Pacific, train of rate and where many recruit, this only on that the and Asia not

Edwin Mok

a Third process do starting have well? in and to on manufacturing or have, question looking build I firstly the automation you the side, line. stand in Where order got about to that or as inverters that are terms manufacturing that lines HD-wave is transitioning to guys you do you of for the talk you of

Guy Sella

Yes.

you have capacity, to approximately for takes we, automatic the longer line XX% bigger time lines more XX%, We of increase our we So, -- volumes. automatic capacity lead get, ordered today, as it optimizers. XX%

from of quarter XXXK to to million. million from to XXX optimizer much volume X a easier is than much, increase increasing So X units

the the -- at we expecting line. of in of our are XXXX. HD-wave we growth time, will and once of So ordered the level finish is XXXX, for three assembly we automatic designing finish the get that in we view we process, for a line the process development the same to the we're in lines product, automatic to quite a And the are years, lot we four development that automatic in we of in general, will

range product, very for, of of weight able day inverters, of cases, the assembly of automotive like XXX in pound of pounds, be maybe with weight very, much for from the in we'll not to the a lines Pretty physical the So -- let's to in the something automatic course, say finish most the of product one the development companies general. in big but product.

Operator

Chip with to We’ll next Moore go Canaccord.

Chip Moore

are impact to Thanks. any at you Maybe just are can than efforts a Outside the optimization more follow manufacturing shortages, you confident offset that. from those or inflationary of seeing that up all component that. pressures

Guy Sella

We et don't test production, on capacity control we -- on manufacturing good have cetera.

to and took I'm this is think good you think capacity, in which once put to don't have completely to hard. we building, of but it's we’re components see doable. very for and not I enough our XXXX. inventory, increase secured It big risks this have is major in expecting I -- the become easier in I'm manufacturing component something a it you that enough one the expecting XXXX production total of proportion, management focus increase not portion volumes XXXX, So will

Chip Moore

some more maybe that your of having all? And about do about you how at think flexibility cash. you more, with thinking Great. Strategically, Does repatriation one change talked that?

Ronen Faier

So of new fact we real dramatically no of again thing and that tax this change taxation strategic repatriation is have cash, the the little other not is on our profits of one but earned we from bit therefore paid decisions. utilize there more expect strategically, outside reform because of the now we can will The be at did fact the to States, the than matter that tax United we better that flexibility the do again, corporate fact the a look level. happen the that

Operator

And we’ll next go Oppenheimer. to Colin Rusch,

Colin Rusch

on R&D. comments the for thanks Guys,

You've the portfolio little cash in sheet the in right on you awful XXXX? bit deploy we're in a talk got about balance focused R&D where lot how an really here of now. cash Can you're to that areas going

Guy Sella

keep past, working happen are XX Those that plan we from are year. the very on component of range R&D We the think cannot None running order size but extensively of programs, of So to we phase will almost can growing you months the one high inverter. I over course, XXXX, but sizes. and these three component, see of in ASICs the more reach more ASIC for inverters reveal of to to control have over spread we projects any XX our developments the in product. developing black of

believe next not I at heavily We of in storage a in area and after step ahead another started develop find next the We of you in product, market. XXXX, we what today generation will be optimizers. own are that generation we’ll our can but line investing think of generation with to and a assembly which automatic come next

Colin Rusch

your talk gains share decision this a decisions and about making at And around point you how on making those then market you're can and balancing basis? price geographic

Guy Sella

of buy algorithm It's judgment computer. and a an not lots to It's try involved.

general strong in each managers We geography. have of very the

right in India is market of the and you market different is in come Europe. Japan. are from working, course residential to market and US different commercial the Once in the We

and is very is of feel this no let’s where to evolution So general point, transferring this that’s increase the understanding VP close is XX% we worth share are the working strategic market in PV where our do we that of myself, point the of are and margin say, that of general Global way manager one have very and efficiency at this analyzed talented to point we algorithm it that lots have gross have us general, Ronen that will control here. Sales level the at profitability. the We in and to at in higher in point non-GAAP and geography, pricing above Senior hand. the in at market there XX% effect which What we level, one in and experience with of again, effective that's this how we company this industry, it’s

different product. try geographies not we between open using gap to hand, other the the once too they're On a big exactly of same

regarding it product, it to the when due cause, in and the at As or cost you probably for of also inverters might the quite US same know, it bigger but product safety some be request residential the difference might different and be fits looking Europe.

a fact benefits the call the to target So and We the that market increase market on judgment in filled it's good coming share. of want a we margin order use period, kind gain based share. reduced XX% it for we gross extra prefer cost is to to

Operator

go FBR. we’ll B. Carter Driscoll, Riley to And next

Carter Driscoll

I physically. hope First you're well off, Guy, feeling

spend is around question were products, planning least you what at really of to spend. in a dollar on idea Could versus R&D basis? an percentage the give First you XXXX adjacent us in solar

Guy Sella

and do know adjacent we products what between don’t today. I Honestly, the split

we're on embed the think that around working not number, developing teams one, that that in and selling. that's amount you the you of but of servicing XX% at selling, you’re the would, because not selling those like are currently caught products that we teens this I the are a when software, cannot products So, et promise of I a teams me developing cost, that that currently exactly split all products rough can that are on are look cetera, AC I areas teams. currently I

hard it estimate will the to ratio. be what So exactly

Carter Driscoll

module the Has with scale. affected fulfilling the resi up, adjacently, you And side least all have then were at timing? just the obviously after in handful you follow talked all but and past and about go as demand, plans in to the those utility outstanding C&I a plans changes at and/or the

Guy Sella

capacity module MLP, be very the to the total thin on mentioned, if in influencing a we think market of going have not just aspects I but that's film large model none want input come wise, and different the dollar do than that that available product of working is in the just of up well working feed level the market, -- in utilities, again, It’s voltage installation, around technologies the modules, but to player modules, definitely those the something on today. on third and different with going as high that segment need technologies that forward, of are those will financial a type models, and currently, the XXXX. it of we're fronts, you to you of to we'll total very will some we utility the and definitely round that more sizes not cover all we’re some technology of We're voltages No. ruin to a

mentioned So that development the much months. takes those XX I programs are that longer than

Operator

And [Operator Instructions] we’ll go to next Osha, Securities. Joseph JMP

Joseph Osha

a Just couple.

fair customers. the that what course how assumption but you that is that through probably year, pricing year conclusion. second you've your I the and about over the working if suggest the first half that of to said Is component give of in -- listen of about half of obviously the of to the start you're to First, some handling the pricing being steady you back your would a year, room talked that, timing to it in got shortages more

Guy Sella

I'm sure from shortages. it's component not coming

X.X%, or market pointed answer right we are XX% think I the do plan or be in products expect it seven coming change not reduction regarding the major basis, yearly in pricing that I to will general we in to influence the reduction, right mentioned from total [indiscernible] to total QX, the ASP as up it's expecting share, on we erosion that geographies. will specifically the cost cost development, think but any model in I

one. assumption on the X. on probably and more the see QX, But your the effect major on of the QX. that We’ll second So, I won’t effect yes, X right year the be the is that think effect is part

Ronen Faier

effect margin, this effect XX%. more one being thing, we on continue rather one and that to Joe, gross, again effect gross and expect just not maintain And but fact on again but not being, thing, the

effect really the on the in So the itself. than margin the effect the more is gross market, effect

Joseph Osha

Right. That trying was to what say. I was

than of on it of up expressed more grown? a did. that I little you sequential think normal has question, business in quickly supply some perhaps representative the a the catching how is component just issues effectively the bump second the some that I given thing or bit inventories, is of And operational then

Guy Sella

had we inventory the XXXX, mentioned. that's you of extra by end The what

Joseph Osha

Yeah.

XX but obviously up line -- was were million, You up the so top well. as

So –

Guy Sella

million the in majority China But ships finished Europe and million XX that's XXX is in and from on comparison to actually goods, US. Yeah. included inventory the to transit,

In our shipping time much costs. effect. on goods in order in lead for model, logistic tiny higher to a very our centers order next third-party our unfortunately, would So in shorten we in and to like finished percentage hand have sales of to optimize customers quarter's

we So are from far ‘XX. unfortunately the that in XXXX, model we operate

Operator

any turn to or question-and-answer I'd like over closing for for Guy And today. remarks. conclude that to our does Sella session things additional

Guy Sella

were slightly very revenues and much. fourth quarter generation. gross summary, profitability cash our you our guidance with margins, above In Thank record

would very this, and and overall parameters financial we products geographic with while innovative thank on to you healthy in was new I customer Our and can in grow with cash trajectory focusing market XXXX profitability our all strong share, we and same that today's to on I'm continue the performance us for and like XXXX for coupled keep joining generation. sure call. diversity,

Operator

today’s you conference We does call. And conclude that joining thank us. all for

SolarEdge (SEDG) 14 Feb 182017 Q4 Earnings call transcript