SEDG - Earnings call transcript Q2 2020 | SolarEdge Technologies, Inc.

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Operator

Welcome to the SolarEdge Conference Call for the Second Quarter Ended June 30, 2020. 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 the sole property and copyright of SolarEdge with all rights reserved and any recording, 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 call over to Erica Mannion at Sapphire Investor Relations, Investor Relations for SolarEdge. ahead. go Please

Erica Mannion

quarter you results Thank XXXX, us discuss Executive the to well are me Good Lando, Zvi the for second operating Chief third for outlook for the and XX, XXXX. quarter SolarEdge's With for as today Ronen afternoon. for followed Officer; Company's joining will of ended Zvi as ended June quarter the Officer. Financial a review Chief for quarter first financial begin with the quarter, brief of XXXX. the Ronen the review Company's outlook Faier, XXXX. will of by the results June the second results third XX,

the a in to We call materially of the not description. ended expectations. a GAAP. section prepared presentation XXXX, of current encourage Company's published the presentation complete will measures and not All call presentation from, release risks June our and Listeners are measures, today slides evaluating prepared or describes from non-GAAP obtain open measures in you Technologies certain of These believe will we by copy statements as in that the We with the to Safe contained be and release to the the of how as measures earnings SolarEdge property non-GAAP for who forward-looking the sole substitutes Company's in questions. considered isolation results or they that contained Please all management in diluted involve superior quarter then net share, could Please Harbor differ visiting this in copy include accordance means press a evaluates measures for not with may rights per that the non-GAAP investors Investors' performance. material presented note statements accordance with These and the management's press website. note the non-GAAP U.S. that should income uncertainties are review operating non-GAAP reserved. XX, which for provide the U.S. with Company's is GAAP. have actual this do more and webcast including the net copyright cause financial understanding

will I to over call Zvi. turn Now, the

Zvi Lando

you and on employees. call. last and Erica. impacting of of solar a million quarter and quarter us regions. certain seen revenues the this the million XXXX our compared working the impact our XXX,XXX business. second of of the work quarter second lives first decline and million those the Good and that's hope its range of same thank report we we course, our consecutive Overall year. same above and key livelihoods our also COVID-XX joining quarter, have in this to reflects optimizers pandemic global Thanks conference The earnings the spread success you context, the slightly shipped we our that of third X.X we inverters. implications globally and in pandemic the to year. power top the satisfied revenues the This discussion approximately In slightly hard are at those are $XXX of our afternoon quarter guidance were We revenues and on millions. and in quarter, treatments. vaccinations reporting all above for health for pray dedication business loyalty for in to results and our the Within the of continues a of on is Revenues last $XXX.X theme affected our and of Unfortunately, achieved. the is Thank QX customers call to

per closely dynamics, monitoring country. through in order our globally environment, installation portal, business products to assess our our During we are in our of we last discussion tracking and that market the rates of explained

picture, directly as the As indicative system part by new I solar of said, last its sales installers. quarter not of provides our this

be are I solar a on quarter, do American information, $XXX That these the will order is think of foresee helpful Based other discuss flow million our market our to of represented continues the sources data Starting data momentum we States XX% globally. seeing demand. the as in business have from from distributors. it and of coupled solar we to this point-of-sale Revenues indications market. of with new North we helpful tool such However, total United revenues. course with

residential time, the which same are the the sign in said in United revenues Having end quarter, expected at April, our significant a end of portal. the the the shows in relative products seeing the with inventory monitoring optimistic to impacted the are this is in equivalent by States, cautiously rate aggregate April At been relatively still connecting to high this about time. view considering of heavily reduction since consistently This manifested then though in our are by C&I decline our to the XXXX, also months. is distributors. recovery positive thus distributors, States the its resulting that, market the the sell-out installation has the in inventories QX of month-over-month the increased States of positive lower. In since last levels in recovery U.S. to installation trend While And our coming and that COVID-XX. of you of that of orders at in installations increased the United data United summary, we

Europe results factors; this strong of million, Europe from to the the We to $XXX economy in Moving energy. implement first countries experienced quarter. quick to have in we where quarter Revenues $XXX two strong, including incentives been several been renewable these million last the have growth. has measures up to in quarter global pandemic, Europe that were the keep Europe, impacted by while is attribute positive

residential Germany, with us increasing in countries we share with markets inverter times others. particular, and enabled during three-phase our many serve popularity business position three-phase strong our our challenging are Europe, in storage Germany, in European is customers In our gaining the grow demand, these believe is residential Second, which in our and Switzerland that we them. and to in

not market Europe revenues limited the in to compared include and is in positive Our last Netherlands, to France. quarter and residential German Poland the also increased Switzerland, Italy, momentum

also Europe, we happy positive and Israel outside the are quarter, and are the strength with U.S. where in consecutive second record reporting sales Australia, We the momentum of from in seedings Taiwan.

region. And and and the selling small small this see are residential are started in we You'll quantities, these commercial certified both June, still it promising while markets in momentum we means Japan, beginning Jet, In residential to commercial in the inverter. address our JET that able now segments. this

was home by inverters of ramp released recently market, integration. our characterized production the one which US enables and On easy with energy storage the interface storage, hubs, charging inverter, the quarter backup backup flexible generator product side, full in for this together

For ramped we Europe, continued production inverter. commercial of three-phase we production the the also new three-phase enlarged storage inverters ramp the of and residential

As received are have been to in of mentioned units route and of all these the market, in each products the regions. positively thousands of

released validation power investing later the progress pre manufacturer. product release on of ground three-phase for shipments battery by a and four-to-one mounts units this and continued the development our production our commercial in new solar On an focus developing the as these, the business, mount residential States. train solar quarter We version offerings year. optimizer segments we top including for inverter this of ground non-solar community United new final continued of also targeting our of automotive combined electrical targeted plan In additional with

expected ramp to to in happy construction own our also Israel beginning inverters optimizers this completed later of are of have one manufacturing We we and update with and are commercial facility month. that shipments the the first seller manufacturing

will our qualification circumstances processes factory non-tariffs these financial even to new As environment sites. of and and summary, especially quality we proven our to with production under is have successfully to capabilities in who to of are Ronen, to review reminder, continue products a more use prior future. full while investments to it and our objective execution over contract hand cash leveraging proud to and pushing the importantly, and demand technology enable our the adjusted period, this to we innovation results. ramping this, challenging during deliver our profits forward generate manufacturing And supplement In are I and changing

Ronen Faier

good everyone. Thank you, afternoon Zvi and

As available always, reconciliation results issued website of Full today. discussed non-GAAP our is GAAP press includes to the on GAAP this forma call discussion. pro and my and release review in the

the quarter, $XXX.X revenues X% sale increase included to $XX solar represented and million of last Revenues second this million, quarter U.S. decrease products $XXX.X million. compared U.S. our million revenues. million These worth revenues year. the quarter total were same to were Safe revenues compared from solar and quarter, solar $XXX.X Harbor $XXX.X last million, of $XXX.X XX.X% of revenues quarter. XX% $XXX for the a For compared a last to

megawatt XXX basis, XXX rest systems shipped in Solar to megawatt the of world. the megawatts million XX% representing and to to of were the States we revenues our On our revenues from products States, a Revenues and XX.X% generated this from this Residential million Europe the megawatts solar United were XX.X% $XX.X Europe this of or were our delivered the quarter. quarter at $XXX.X outside XXX quarter. of quarter megawatts Europe commercial revenues. XX% represented record of United this

result last ASP of quarter solar inverter XX.X% last reduction commercial the mix sales a higher revenues, margin is sale to than of geographic XX% GAAP in commercial decreased for gross and by distributor Europe, same $XX.X from rates gross euro products the this offset manufacturers, compared related due was quarter that year. represented solar a XX.X% to one approximately the by X% solar margins. the quarter, This the XX.X% XX.X% was XX.X% heightened revenues and decreased lithium our by the margin to customers generating quarter, lower factors revenue this portion watt quarter, and rate were of in a of batteries and for XX is year. quarter XX% Non-GAAP and gross was from U.S. quarter, the margin and prior prior to characterized Non-GAAP the currently quarterly gross from the our to higher These from products. due in that same revenues to This of Top European strengthening accounted of last the for Kokam. our a of XX.X% a dollar. last are increased generated ion XX.X% margins more the Chinese quarter, competition of XX% last products lower our slightly Blended in traditionally quarter to quarter two the quarter solar million, against quarter. in per compared mostly by the in compared change These of the in compared activities non-solar were revenues.

air reduce to important tariff well insignificant in and shipments a expenses for of our us margins first the payments to the powertrain U.S. manufacturing compared decreased -- the E-mobility near demand have our Vietnam. avoid our the in in X% shipments will we Chinese this shipments was In quarters increase combination activity reduced sale XX.X% margins result of made the to the gross and substantial enables levels as lower air a sufficient previous for increased in inventory the The non-solar Actual was addition, result manufacturing United of to built on to future. improvement an products Non-GAAP time of States units. The to as enable on quarter. to quarter the an level. in many capacity us

quarter million of or total, the revenue, operating million our million to second compared the or of the revenues was of XX.X% non-GAAP for On same year. $XX.X quarter, revenue the a million to revenues, XX.X% prior to XX.X% expenses. compared were for or quarter for of same in or last second and million basis, revenues year. XX% operating quarter $XX.X in of and the prior the quarter $XX.X expenses $XX.X XX.X% last $XX XX.X% for revenue Moving [ph] million quarter, of or expenses operating $XX.X or to In

characterized The marketing which travel related and by to reduced eliminated non-GAAP expenditures. operating travel related second tradeshow quarter lowering and COVID-XX restrictions, expenses was expenses due

our of and reduce other we our of of We as the portion leases of which and addition, services, spending. OpEx base XX%. In compensation non-GAAP reduction such executive negotiated by director all other contributed expenses, to salaries the cash

of solar quarter, Our compared non-GAAP revenues. XX.X% to lower a of result last expenses as percentage XX.X% solar were revenue as operating

the $XX and the operating the GAAP quarter quarter, previous compared year. to Our for million income for million compared the $XX was for year. $XX.X in same quarter $XX.X operating last in million, the $XX.X to period Non-GAAP the for $XX.X previous and same quarter last was period income million million,

last same foreign of of million Korea last acquisitions for period Financial operating year. $X.X an fluctuation non-GAAP in operating non-solar compared of the intercompany loss previous continued million, This and resulted million exchange while treatment the automation and quarter, compared to unrealized mostly changes businesses, E-mobility $XX.X investment the $XX.X intercompany the of $X million the driven finance be This energy from compared part for Tax income in to the currency loss in provided in solution, a income Italy. continued resulted and of storage year. for financial $X.X the business activity in expenses and were quarter, of million, loans critical same quarter, $X.X profitable. for the the to balances quarter the expenses in accounting this million $X.X result quarter million the is and period by Kokam to in rates quarter, million prior $XX.X was machine previous

$XX.X compared the tax million, same Our quarter GAAP net the net the the year. a compared period and non-GAAP the previous million, last million to was $XX.X and quarter year. last was in quarter, of million expense $XX.X for income $XX.X for for to for million previous GAAP million quarter same of $X.X $XX.X second income

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

non-GAAP generated loss. a diluted $X.XX share businesses non-solar Our per earnings

now sheet. Turning to balance the

deposit restricted worth June $XXX.X As investment of deposits, bank bank million. cash XX, XXXX. cash, equivalents, and

second quarter cash operations. the During $XX.X we XXXX. in of from generated million

last temporary XX this decrease was a number the increased quarter. million this small million reaching quarter, XX days, quarter to $XXX.X net provided extensions an days customers, last solar to certain of $XXX.X from to we to have which in Our DSO any compared due provide business of quarter, very of to our did bankruptcies. not most COVID-XX been the And we Despite impact to continue credit business, cautious that our we customers. way substantial be the in repaid. incur losses related on customer substantial payment

June prior million allows in our possible increase the of our in inventory, an As quarter. Most XXXX, upside $XXX.X net cost of of these and in to prepared American level the of reserve residential market. which related was reduce us million is shipments XX, goods in the expedited compared inventory increase to to at to be particular $XXX.X North an finished for

We have been materials contract to disruption supply at stock levels chain raw avoid the manufacturers to COVID-XX. due possible also our increase safety of of

inventory, million non-solar $XX.X approximately by par on is inventory to our the held last of of and level majority quarter. the with Kokam Additionally, relates raw held the materials which

the third to XXXX. now Moving guidance to of quarter the

Revenues solar the from products are the of million. of $XXX $XXX to X $XXX within be to third to range sale range for million the be $XXX to million. expect expected revenues We quarter of within million the XXXX of

expect within to operator it expect XX% gross to We be XX%. for the I please. now to be the of questions. XX% the gross the activity margin Non-GAAP over range margins from to range of XX%. Operator, is within solar up will open to it turn call to non-GAAP

Operator

JP with Morgan. We'll Instructions] Mark hear [Operator first from Strouse you. today Thank

Mark Strouse

over the that Thank your Yes. can questions. about market. your months. a taking more in you for the coming you give market about with very commentary color Wanted the optimism U.S. start my just to much recovery on bit Hopefully

you. on more of thinking you give rates. call, Just metric of kind confidence the uncertainty be you one And was as to that you the an that what being on holding just the things kind Thank optimistic Can cancellation gives around seem back last to that? back update of us in well?

Zvi Lando

So, I the optimism lies. think actually is that where

cancellations. declined rate we latter throughout of of the quarter, quarter, So quarter, more of flow the in pushouts some distributors. as from second in in gradual as early order not of seeing parallel, rates, the of seeing coming those outs, to any a and pointer the indeed increase cancellations and the and part any types and parts a push those mentioned, well as in we're of parts in the point-of-sale quarter this at the our practically in the early that of we're data And of experienced level installation

So combining our the in we are those indication clear that all factors questionable. that's And for recovery predictions the quarter. third is see a where is why we of recovery, cautious races

Mark Strouse

of And Okay. as fully maybe can follow that talk side, be you expect kind the of the we ramped? can free.? or just the about -- capacity additions then that When mix talk up you U.S. mix see see becoming supply can all about And to Vietnam. on a And in majority? then going into the going we do supply And business the of of tariff shipments when when

Ronen Faier

to to shipments said, product make, you is now to amount these there. this capacity of just the can of making are is not is that they believe what of by actually it general make. COVID products line non-tariff two-thirds our year, of an I have end but And amount the just but do products towards and XXX% restriction in And adding to amount we variety we increase and and rate these non-tariff because see you and I'm having on line, to come course, in first that from they of continue come believe this of -- many will into in in we from product the from the more increase products Vietnam, see we working doing you when level manufacturing I'm or products any will the the I about one the Israel. the complicated. Vietnam of And Hungary of the that the to To diversification. will not want where So, these actually would single I areas. year sure location, that to factory amount next full more in come of time, But call that already coming little in the how a products, the travel and to XXX% of capacity we a I'm the a from that they that look a product will how go definition to one that say know seller the bit also a have non-tariff not everything is is not factories. that that built in so. manufacturing related products at of But will shift have Mark, at would in from areas, factory sure least will of the XXXX. full Capacity position of XX% in we're are also be of I into manufacturing in be what concentrated restricted a mix

Mark Strouse

in back hop Thank you I'll queue. very Okay, much.

Operator

We'll from Oppenheimer. from hear Rusch Colin next

Colin Rusch

give approval progress [ph] product of Thanks Guys, update in preparedness delivers? and energy getting you mall an us the ramping terms can products much. with like storage and more so first on to to begin

Zvi Lando

I question the sure is residential availability. about got our The not I'm data correctly. question

Colin Rusch

and ramping around and all the And Correct. approved of timing they begin prep, getting hardware can start them. and shipping so

Zvi Lando

labs major all certifications. don't to said around we've previous They in as a contributor challenging more of Yes, the year. we move for days that still the is are And the the year. expect in those the certification pass people this the certification planned. elements. R&D call, with the revenue together as of the towards end And and are progressing get element the availability these for on element be two order it which required indeed is battery is The to to

I it batteries at as types energy in ramping a other in configuration. While an coupled With be the continues hub parallel, in and configuration to coupled very high of installed Chem a AC and inverter batteries mentioned, is many DC rate LG

Colin Rusch

guidance, as mix. then, in look the of to And much improvement how Great. be attributed the can margin you quarter-over-quarter that at geographic

to Europe being the just extra other by You variables from shipping margin for unpack volume? much that? on any would by it's XQ How mix is impact an talked margins that indicators mix how to or issue logistics. about geographies? of much But And driven

Zvi Lando

and see geographical So, improvement in mix, I quarter going towards And of that this as maybe come directed, yet And are next since reduction do not all third continues, on time this cost additional decreasing, this course we guided do, think the and also continue to we're from is will pandemic the able we the our levels cost see shifts -- the of all, the activities major we case, that of to towards R&D. reduction R&D most will this in And invest utilize that we first something we're to continue reduction. is revenue continue while cost quarter. sales. in

which, not also -- dramatically most a a we're see And reductions bit continued not quarter is now that activities least. the was previous a itself bit at do to U.S. own either our Euro mix to general, little over think from will us little the different next to the these come expected in to rates. therefore something exchange rate, We or quarters, of the and of course, benefiting improvement little from of I In in bit it. dollar that hurt be

Colin Rusch

Thanks, guys. Okay, perfect.

Operator

from Maheep next with hear Mandloi We'll Suisse. Credit

Maheep Mandloi

commercial? on residential the just Thanks think QX on how gross forward? new just should about And questions. and And we that. about Could launching, to Hi. taking margins products we business going Colin's on gross building versus the you guide think the for are how for question the should margins in

Ronen Faier

new being this a products, in little products one. Europe, large commercial then and are is that margins world older ratio characterize the In newer in lower see on the relatively So that of gross them here existing to the a and bit going the margin to will will a where take a think lower U.S. I hard a see more we world looking COVID-XX more see pricing, we're bit revenue. of amount. our much that I curve do think to it do is not a used product reductions releasing a QX what the competition I be handled little normal of when portion commercial with we margin to Day, more of and again, with into or think towards that where call it what just we heightened. of take still that this part Today, competitive least we substantial we're mix are to that see taking approximately in will back reflect those both inclined would general bring before it's this lot higher revenues that guided residential where number sales leans and we the products we the and least that account are of cost rest with and still more towards more cost Analyst from XX%, we the gross blend our at changes towards lean systems a of and you see. X% the the being residential. also more at a given the coming fact and higher XX% Europe give a these guided way U.S. reduction the that it's is is in that usually case, at a as shift the In taking where QX margins being the of where U.S. today unless we world the into slightly are And by of

exactly we without So prices give with continue to helping is X% see. fact of feel long Corona, that guidance kind in And what relatively or the XX%, take are this for the comfortable term. the stable is to the us world

Maheep Mandloi

you the Talking market, for you. European you years? in higher new or up. translate this But guys that either power year And or about market. the a follow the into the Thank remarks it. does Got in coming incentives just about in pricing how demand spoke

Zvi Lando

example So, be systems. examples of They energy various of other local the there would effort renewable a installations of strengthening in part the in countries. stimulus incentives Italy couple are few are and economies. countries, for An for the a varies

consumers So window that to is these and a have them. from the -- incentives for benefit

other solar strong. customers with, So that is more systems. similar And opportunity of that a dynamics window creates being these to begin markets in where to our in install quite position country to want

from policy ones are as benefit policies. We the also on happening incentives for this and local likely this in well as [Indiscernible] country is that some business. trend across the to the And overall Europe

Maheep Mandloi

Thanks. back. jump I'll

Operator

move ROTH Partners, Philip From Capital we'll Shen. to next

Philip Shen

Thanks the morning. for Good Hi. questions.

compete? storage. And I'm I But you then the as that was also, some general of well. First be on inverters the like overall, And there with in the you're are Generac selling if some with could any speak one as is a you're seems result, dynamics in we've was now. as imagining of they're if I competitive what U.S. to work done. It there some just that the out wondering competition? that seeing you seeing what taking Then you share wondering might seeing

Zvi Lando

are not that three has to that there sure our noticed. we of see And of corners the significantly of one the seeing knowledge at months, that nothing that other, we've any extent And the least don't the best at we're or moment. that few in So of we competitive expected generally to. actually changed the can in think market. be they're the the last two, at kind without to time people last over pandemic, that the product what it's used parts think But I I market I sticking given don't the to specific the versus tendency think referring clearly months, to least the I'm are see environment

Philip Shen

Thanks Great. Zvi.

commercial margin terms by geography. could In share of margins, was versus the wondering if QX, resi you guys for

likely average. lower be European likely for to compares commercials is residence the Commercial I U.S. the with margin. So how higher, But the U.S. useful the would understand then, commercial know segment the margin it corporate than

any on or have you that. changes any If updates

specific so, give on if item? what for And great? data ahead us you Thanks. the would that some be QX each then quarter, expect can might And you

Zvi Lando

something U.S. at it. not basis some as take in remember regions. bit or against the little that that evaluated erosion QX, that at least last and if better mentioned, product the you was the of they let's margin comparison. points last got breaking segment in quarter, due that nine we This will saw difference we is all the margins to at of these by approximately recovered, of XXX dollar. in therefore, a months I XXX not product-to-product say on on basis, a basis least usually fact product quarter, each -- during ended the -- the But were end QX the we're So the last the euro And mainly points

this So lower. a by bit definition, difference little was

is can that of that little is in bigger. of you I that think and usually bigger say you a A, to a that there for that more see, that commercial And of rest there. compared this, rest the thing second a see And world. thing the bit I share other the margin world is of U.S. competition taking the both of the general, better quarter. are there's is as residential say. means little than that the and you world revenues we the the in rest think and we that lot Europe only is that can Because every the are commercial bit open do But portion overall don't

Operator

We'll from Cowen Jeff hear Company & now Osborne with

Jeff Osborne

that pricing afternoon. like I basis. sounded Good confirm been I consistent check? But double but that wondering if you could was like-for-like just to Most have a asked. the want that or of on flat, It was questions

Zvi Lando

case. definitely Yes, that's the

Jeff Osborne

similar third quarter, that for the Ronen? expectation Is

Ronen Faier

we to way, our expectation to during Europe, is least No, I changes one again, at to say think is in a little -- do we that major see customer is major dollar it's price there By everything bit equivalent not that the higher, not is the that seeing the that quarter. the there. actual not the the changes and thing of sell expect but again,

Jeff Osborne

And July the about in then U.S. market the any in read through C&I recovering.

there some distributors, what at still you that of at flagged start the the are You seeing you but channel had inventory quarter?

Zvi Lando

technology. their pipeline a and are to customers is recovery, month jump point. be of very projects that couple they've had but with I So, and there more silent that they discussion. no And is There's on conclusions installed our to for projects confirmed in been wouldn't months. have intended based a that And a it definitely one mild data

discussions more our et tool, cetera. resumed flowing designs have to those are and designer So

has So July. of the The rate mildly have increased of in rate discussions installations increased.

Operator

Cikos We'll with & Company. hear from Mike next Needham

Mike Cikos

Hi.

OpEx or add was was want last discussion a of up Just a know the call, we should higher non-GAAP I follow quarter. to earnings around than tracking on So you items. exiting And going we QX, than there curious, revenue to XX trends guys be then quarter, discussion quick or a that couple to were quarter? I'm that last maybe be better had having quarterly if XX I million what our expected? that believe

Ronen Faier

is maybe do operating a past, before were because, in to areas the continue good longer We expenses effective that is in see talents to this in that strengths notice there that we now to certain renegotiate a the we of more either R&D, because he what could to where a we we going little not and most in actually, pretty said, deep demand the renegotiate usually strength that actually, actually quarter, and strengthening the do do, Is effected these we cases, for us we that bit third engineers are need that we on change. big we believed over there We therefore, that -- accessed some terms the was the least in to of ones. or a And give. is operating our takes and our using that periods With At hand, the last level we that leveraging we to you control areas we were talent line are areas the talents every on what available not try we opportunity that, had. are able hire we that expenses. to be expenses. operating at that same time, do the full was headcount. were and recruit one have fact are try take said curious. able almost in more and it to to And So fact lot the quarter will cuts the in what on that due reduce during see to get

that measures revenue stabilization this But of of of see, the were of get sense, quarter, can all kind now what all, to us and the we the a in the the next in in first their we as benefits out allowed ability get to So, taken. to situation. $XX kind guidance considering resources million, for our And level. a assess better,

operating to the continue we that our cash, generate going have areas. be expenses, knowing profitable, wisely and spending we're certain strengthen we We to to ability are

And the So growth. continue operating resources control all-in-all simply use said the over Zvi script, our expenses. wisely to technology to invest very, and in as in very good we'll

Mike Cikos

businesses, doesn't non-solar I guess just That's just been comparison. there's in of versus And in get curious again R&D a I how place the businesses internal subscale these the acquisitions the would be attention expectations. know would helpful? you. businesses, lot of lot but for much it tracking have a investment Thank those your up, be because follow know I are But be helpful. taking any would color

Zvi Lando

think they three I So, areas. the

is the we And the that Kokam, first capacity past we Kokam. in as based really is available. reported on So have the

revenue that in And of expect execute of able terms when much and is do we the investments some, play in start longer seeing order seeing expectation those what e-mobility, in clarify the will -- two And until in mentioned, There to our XXXX. quarters we a expenses phase the revenue are a the that end be. to some time the revenue capacity we was power of as in of it's to now, truth. we Ronen of investments XXXX the the year, we which be control critical sell think and to to that of have we're projecting the to areas it's investment subjects, towards And consistent. part XXXX, some been becomes as working on into from the start thanks are on what term In that be because that but I the other we that to would seeing will results we've really couple for planned. added available. maybe we the most know that's So the capacity, for take and the and are impact significant is

Mike Cikos

guys. Thank Alright. you

Operator

Joseph with to Osha on JMP Move Securities.

Joseph Osha

there. in you? ramp question. you only taking going one. can have storage. I to Thank my how the Hi relationship Kokam Thank for your about of broader I'm you wondering plans discuss if is

Zvi Lando

data. it's So Analyst in discussed also we I think the

the the that capacity fully XXXX. sell with Kokam that mentioned is need. much is will a And that's schedule, factory is have So that be production now we and for are current track before, much unfortunately being I plan Kokam, and the as what then can factory factor. sold we're wherever ready loaded you that pretty building the current consistent for that resented what larger rate run in revenue on between but and we the we on seeing quite for from

Joseph Osha

Okay.

additional So you're of essentially just there anything, is is? kind it or there terms haven't been of it pickups any in output what

Ronen Faier

XXXX able able times times to be then be and if sell improvement new is based will get to to and but mean, larger, limit the in at capacity some we're factory what we're produce, more a and revenue. than XX is more able might sell. couple this mix here I project, we'll maximizing XX times more factory the line the on there, continuous type its And bottom than we're or the -- we of Yes, XX percent we're

Joseph Osha

you. Thank Okay.

Operator

Lee. Here Sachs, Brian from we will to Goldman move

Brian Lee

questions. these squeeze had I Thanks modeling guys taking I several in. ones could for if the

first over drove It What Ronen, U.S. I QX. that? at versus looks provide like then for was solar, one pricing taking just you in the and the if the revenues looked megawatts. Just pricing the XX% up

Zvi Lando

comparison about products. the So, again, pricing, there was a between one-to-one previous question

easy not segment a on only it's and basis. So

a it's and is Brian, Energy instance, with remember, of the ASP if And Hub hardware. more that, the more On capabilities more brings that up. the also means inverter that quarter, much lower part the -- For large in previous It's that a volume was Safe So top Harbor you expensive. its they'll for of large QX, there we customers that mentioned lot very have tend as slightly ASP. during that to part has of

the in from the the of a America product and to in So increase bit the of that I ASP bit North is generally quite like-to-like has mix been pricing would stable. residential mix, but QX say QX a customer around

Brian Lee

assume channel? if trend? Where stand do And right then us what's the wondering, if to the If Can Okay. a have the end what about down talking U.S. the revenue the talk revenue U.S. that's lower That means in your of US? destocking strip from Non if the Safe case, do that's XX% And from which grow revenues inventory driving towards been that's expect us kind the many I came the of to in the trends. Harbor cycle QX many in Then quarter-to-quarter, dynamics respect in we does about helps. customers now about is term? out with and question, bit of terms you declines that second of qX? just you your QX, of near

Zvi Lando

Ryan, and sure understood interruptions I that of a correctly. coming I'm can it you with try again, not the question we lot is in

Brian Lee

to try simplify I'll it. Yes,

your kind stands cycle? just destocking where the inventory channel wondering Just today, thoughts in of what the around are

Zvi Lando

broken. line completely apologize, understand. I we Brian, cannot The that is simply

Brian Lee

this better? Is

Zvi Lando

Let's try.

Brian Lee

And hear maybe Yes, for cycle now you destocking at relatively that status sorry, in solar the of guidance to if take from going its I'm the the What's I flat. now. me then look QX, product right perspective? the inventory channel revenue,

is often U.S. still is down declining wondering So Non QX the or U.S. into period? is U.S.

Zvi Lando

simply didn't We completely line I The understand. is apologize. broken.

Ronen Faier

pick We'll do have sorry. we'll up, and to conversation it later, Brian great

Zvi Lando

can and answer as happy someone, maybe if repeated we'll be the So, question to well. be can

Operator

any better can see if [Operator to Instructions] We'll back him you hear now. We'll go Brian.

Brian Lee

Okay.

my you hear it's Sorry, guys. me Not better? sure or your line line. if Can

Zvi Lando

Yes.

Brian Lee

Okay. Thank patience. you. the Thanks for

destocking and with wondering today to about that in inventory Could then you And outlook where is the are a it flattish cycle? is revenue products the in think where the quarter-to-quarter, again U.S. for stands of is the Just talk down. non-U.S. they're so channel. little and from is relatively on wondering well still U.S. you QX down bit solar growing and respect we Or in outside QX U.S. QX, up

guidance? in guys. embedded here trend is solar geographic what products QX the your wondering Just Thanks, revenue

Ronen Faier

So see that the the regular the or inventory hope U.S. pick therefore, United basically And this, I out to when was, this understand is I of QX. everything heard XX%. were Again, whether try you about a Harbor the referring question see to inventory going the reduction see down. in channels What you sales to believe the do out Harbor was in of and -- Safe Safe answer. correctly. I'll sales that the the we And we and I you how States, related, of

inventories But safe grow So, market the all, to Zvi the I'll mentioned this when And properly, year. that to was it year before pick lot started of the COVID not did and of these need second this a into the benefit. let's the due came call. higher the in enjoy the basis and Harbor a in with of customers expected the in, if coming last it that to more where answer inventory players the installation do order started we fact and low on quarter the year not first Safe into allow the -- please, a that course, By coming compared was revenues, themselves of need general, that they harbors acquired relatively to inventory did Harbor. the With regular a rates inventory. the were States that could I United for they it after States, sitting first of because United in this definition, and Safe on some having

I by what we exception of we quarter make less last at that was And At way, sufficient bit way the to in the usually themselves inventory inventory, support than, third will sales in definition where are pattern that are to So were QX on to installation the shift in When the in with of the And follow is that And that more we buy no believe two optimistic we the therefore, having on front, do overall And that going may want came that they so what safe is rates their inventory into we believe we're And the still will struggling see we're selling whoever the because of them. distributors therefore, of that this amount any saw that on building carrying year even did much U.S. players that be the in and affected regular other bought we're the therefore What the cautious some a the as the Safe they for to the is But an same that more wanted a distributors that that and distributors that given distributors that we advanced, taking saw based they April, expectations that few little a include growing. inventories, sell-out cancel they cautiously before. we QX, signs on also COVID allowing orders and And we found rates do that QX stuck was installation level are abnormally this product they were levels before, ordering strong mentioned there bills during obvious. this see. this would inventory by sitting the sure weeks would sales. the QX. call, why into than And other fact orders, high, and is These in March have. the too not fact fact the that they're in us we fresh down. quarters inventory too mentioned but they QX. that the not we we harbor more are Zvi much with what to customer was are the or is course, to saw market. call and that Harbor. the they're we much. not And States we is in saw customers inventory look that actually the those last see because time, to want of other with rescheduled were of -- year, growing as see QX, the inventory. in or regard. whenever to similar and means United didn't as This account the distributors therefore the to in we a compared or the them definitely basically sell-through believe lower get

So got I answer question. right. I that your hope And that

Brian Lee

helpful. Yes. That's very

QX, of QX being just overall driving if U.S. on of key non a case? to kind products, QX growing to and again, and that the revenue qX the declining, virtue qX solar from and us that three, mean dynamic non from guidance follow ? So is what's as up does to flattish that's us the By from

Ronen Faier

another, see necessarily So we're we're you Again, move on the but can in if projections, are they tell based strong strong and can general, not what we that when a is QX, very this QX guiding or guiding, now. they and very usually it's and way case. in therefore Europe right Europe

forecast expect doesn't you so reduction again, of So that's outside the seasonal by not cautious that not same way we're definition effect. do the at there. in and But time we of major in course, the there's guide. can do imply, But see or see COVID southern any in region. some a the we is winter, hemisphere, decline we this but general, In now

Operator

to would remarks. closing back I And for like turn to at management time, things this

Zvi Lando

to this Thank and thank you safe we for Thank you. tonight I'll opportunity you. as completed And everyone and Thank stay you, us and families take healthy. wish the hour, your stay joining Erica.

Ronen Faier

much. Thank very you

Operator

that today's all conclude for thank joining Again, And you will conference. us.

SolarEdge (SEDG) 3 Aug 202020 Q2 Earnings call transcript