SEDG - Earnings call transcript Q4 2020 | SolarEdge Technologies, Inc.

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Operator

Good day, everyone, and welcome to the SolarEdge Conference Call for the Fourth Quarter and Full Year Ended December 31, 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 conference call over to Mr. Investor Relations Sapphire SolarEdge. at Mannion Relations, for Investor Erica Please go ahead.

Erica Mannion

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

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

Now, to I the turn will Zvi. call over

Zvi Lando

Erica. you, joining all and conference on afternoon Thank Good thank for you call. us our

of that to with are We quarter the we the revenues concluded Revenues fourth for million, $XXX business and report above approximately our million solar quarter in revenues last pleased revenues. quarter's of were $X.XX the have year also with $XXX billion. record solar

quarter quarter. had Our reflects U.S. residential solar earnings revenues this market, strength call our in last we in the anticipated which

the In the excess residential in growth quarter-over-quarter fact, XX%. shipments was in the of from segment in U.S.

first well. continue the We growth products revenues from quarter in expect this strong to U.S. of in XXXX as residential our

also experienced over growth with We in our U.S. very revenues with the year-over-year have solar XXXX from Australia, and Europe in record we finished revenues healthy where of countries growth. XX% outside quarterly

from Our European typical behavior as seasonal the revenues was of the down Europe solar market. QX, is

year the and with solar $XXX of year, Poland. million, the from an $XXX record up by basis closing Italy last Germany, annual in on led are Netherlands, revenue However, we Europe million

these happy challenged year. results, particular in COVID in with very are a We

commercial residential In Gigawatts of we slower I point products the of products. last higher view, of in inverters, the North commercial America. believed XXX split explained line quarter shipped were in to inventory slowdown. segmental installations shipped commercial earlier, still a a commercial economic in megawatts of megawatt. residential the call in regarding of megawatts impacted shipped strength in we by which the installation worldwide the we the quarter megawatts of commercial discussed and XXX consisted products to XXX were and X.XX this This shipments, noticeable This represents of we quarter over (NYSE:AC) channel. what Shipments nameplate recovery reduction and XXX From of fourth approximately our quarter with Europe

in and this see quarter, of a million in However, Overall, and our installation an inventory the shipped the believe we levels products XXX,XXX the segment in commercial is increase reduction rate which that optimizers quarter indicates approximately commercial this power under we inverters. way. did recovery we X.X

call, by manufacturing XXXX. manufacturing discussed Sella continues. facility the last of production in our ramp XX% our our and X first This, will supply the of together approximately enable Hungary end our in of quarter products without us in up As tariffs Israel in Vietnam the to with U.S.

to the I compute time and side, in offering residential our On on our want storage system. more product spend bit a particular,

good see our inverters, the up and from Energy the to approximately phase In storage Hub, we for Hub shipped demand to single acceptance market to in close continue We quarter fourth strong XX,XXX U.S. QX. inverter. Energy X,XXX

X.X kilowatts. to months So the XX high version far the coming inverter Hub we the power release will XX.X kilowatts. levels with offering in of released we and between and power The aware for In X.X consumers Energy important stored average and high more more increase installation with sizes energy interested and outage back-up especially power versions in as scenarios. being are more power

optimized and We back connected we critical and months, handle multi helps models, outages. Our back loads allowing the grid the that is larger installed enable Hub to Hub In than power the management all XX total kilowatt power. to of harvest power battery base connected product generator of individual backup storage of we see a continuous such and X designed house Energy and learned complete increased from the scenarios. configurations Energy a to DC that for of aimed of oversized batteries as coming modules during up the typically will of patterns interface backup harvesting The the connected power, a configuration, our on tens consumption easy the the have of the energy To of battery on is from typical integration is inverters. energy capacity energy in the power for add modules up is To increased in kilowatt a charger of module clarify, today coupled the high energy inverter integration, the supports and for inverter. to the for system, differentiated multiple the our roof or system, roof. capacity system thousands

increasing energy compared required consumption match As DC either such, modules a commercial shipments in SolarEdge segment, In an installers of charge synergy of or track of utilization. and the third utilization high combined by the coupled power two-module trend adoption inverter Hub Energy will be began of cost new can configuration, AC shipments XXXX. the to QX. becoming up by watts we to and in for we have of the kilowatts. will up inverter we from commercial days’ configuration, our X,XXX in power we the optimizers, meaningful to system In be The all with were to will per more the than rating limited battery generated parallel, our in annual regard, currently beginning as harvested In up inverter. these are last size with extending schedule or coupled that the XX% a inverter volumes of battery. the are the reduce energy with configuration, house used for discussed QX higher this power megawatt tower we of thus higher and the around order In own with in the be XXXX XXX commercial the optimizers expect to of commercial on battery power the seen quarter of modules parallel, our what roof to initial time and available power higher hour shipments our are will battery the watts we that in to similar modules party and backup own world. the and generated The shipments coupled increase the where offer large

In in every setup addition, our month for design designs installers which by easily seeing of and monitoring growing are we seamlessly XX,XXX solar XX,XXX more accounts. created installation are to rooftops on and Solution, the the than after Software export installation. quick approximately complex enables platform design On average, Designer Workflow adoption

non-solar Moving to business. our

Tier today, and batteries been E-Ducato. the the As for SolarEdge Fiat supplier full e-Mobility for has powertrains announced selected as earlier X

Fiat Europe are and selected in you familiar vehicle not this are who version of the vehicle by Recently with SolarEdge supply to since and has been recognized this the we been the is in e-Mobility batteries many commercial produced those Ducato vehicle, has full and XXXX. of For Europe. leading proud for that the light Ducato the powertrain electric presented as FCA

controlled Our chargers, to units converters, solution DC inverters, include vehicles. and onboard batteries, vehicle software for electrical DC

mileage will other accumulating e-Mobility The our our experience by this already have $XXX has our of hit calls and to nomination Energy some acquisitions. service to in plans division, production million first expect we in million XXXX and believe that in As including of solar the our to the beyond a revenue of close delivered beyond automotive between grew profitable. lines in throughout the out and to We us our quality in This Subject are we our earnings vehicles which line prototypes Storage In I've that is automotive XX% this basis with planned before we and years part solar gained that market the Kokam XXX reflects they businesses year industry our exciting for deliver have is Europe mentioned many E-Ducato Kokam's vehicle of growth long-term the past e-Mobility the for project time business through adapting today. to acceptance, laid road. investment industry. revenue. already being in for news years this forms $XXX well calls, standards

the have completed existing in ramped factory we the reminder, we October pack cells a acquisition year battery and and to As full capacity. this lithium-ion Kokam XXXX,

of an S.W. veteran General in also John Kokam. more than quarter John experience This with as team our Mr. of welcome decades is positions leadership Manager to Samsung two industry we Electronics. in the

lead have of We our Korea. him business to excited to are storage out energy onboard

with factory, our Kokam first will spread solutions ended is just production are in our is half once when part pleased strategy hit, take other The per I the growth solar growth the to for we deliver construction forecast we to And cells slowdown revenues meters will less start be Seoul. beyond we X who completed above the into pillar with of important, factory quarter slightly for we supply on also those last account It which our of most, our able began and state-of-the-art over of were invest applications. This year. billion, solar the record impact and hand strategies. manufacture while lithium-ion another a review storage revenues year. with last expenditure of to economic and to of Korea. of This adjusted of represents We above square own manufacturing battery those non-solar hour and given year. this, the our continuing No in $X.XX cells slightly results. results, enable X of our XXXX. XX,XXX is completed XXXX to capacity and to of over of pandemic will Sella have the factory Like will financial gigawatt it and to and Ronen these year us facility both expected circumstances, execute outside This

Ronen Faier

in the $XXX.X on Zvi, same the increase solar and to available quarter the for quarter revenues of review compared products non-GAAP on last discussed million reconciliation our X% X% GAAP the press $XXX.X includes last results were million sale quarter million, compared website discussion. This and financial fourth last XX% and today. were $XXX.X $XXX.X to a A a call year. pro-forma to of decrease you, this quarter. from the U.S. for compared and Revenues afternoon million release increase to is million, issued Total Thank $XXX.X a everyone. the good GAAP

Solar revenues our million $XXX.X this revenues. were represented quarter solar XX.X% of and

million Europe from revenues $XXX.X Solar XX% of or were our revenues.

of our top of European last accounted solar customers for Three and than included This our quarter more solar revenues than revenue. XX quarter. solar XX% represented XX% more customers our customers

levels offering segment. Zvi States. stable our normal watt XX.X% blended held what healthy United line residential by residential distributors in quarter and the line the were increased for and States remained products While level inventory products of commercial United to second desired result expectation of to last increased our the higher side on this our in towards still higher solar levels the with than per revenue a is of direct from approximately the portion revenues the XXXX. explained, compared will quarter, on this the This In and pricing return with ASP derived quarter, by from

the by Kokam were Non-GAAP revenues prior quarter margin last in to the led XX.X% for the for out to gross was in to of XX.X% from increased products as in GAAP residential prior that quarter quarter Europe with United products the activities, same batteries and in gross XX.X% in quarter revenues, for business of was subject and a U.S. XX.X% gross cost margin XX.X% by larger last This reduction portion the total quarter XX%, our the the margin reduction our products target last same custom quarter, quarter X%. This product and year. of portion Chinese-made portion of the compared our overall XX.X% lithium-ion margin e-Mobility. the States to result XX% quarter revenues, year. XX.X% in in rates million, the the compared sales solar tariffs plus-minus sales and margin line of of are the in by solar mix. improved Non-GAAP increased was sales non-GAAP including in non-solar $XX on increase of exchange solar gross in in compared

XX% was the non-solar that for our this came Italian mainly projects. in activities E-Ducato has approximately second full by Until highly margin. systems and into in in that quarter, according was unit related of a result of manufacturing ramp capacity our Sella of X The previous continued decrease The positive the to are production the sold XX.X% components increase of are non-tariff manufacturers quarter pre-production in the from margin negative expenses a an minus-X.X% production. the at then and our facilities. gross reach quarter. to United e-Mobility end plan on ramp to This the in production products to produced to compared powertrain part impact includes assembled contract States complicated several XXXX. project gross our Non-GAAP expected is shipped

are been have the in last that and Italy that of quarter, Over into cost number includes the sold. charged in employees capacity we increase an building goods expenses manufacturing the of associated

be As a have projected being that the output on of current and margins XXXX, the QX, negative. capacity relatively a projects small single stabilize margin of the units are at can level the in Once production of the produced, level a fact on our manufacturing at level, these digit complexity currently built volumes. manufacturing higher number we currently we the that result based will manufacturing anticipated starting suffice

quarter million $XX.X or Moving expenses part XX.X% for On the compared or in increase quarter or a to operating or million million revenues, total, quarter this to same $XX.X in result for stock-based our million the compared $XX.X major the quarter to of were a operating year. of compensation. revenues and expenses. prior of revenues In XX% operating year. quarter fourth is basis, prior $XX.X XX.X% of or non-GAAP $XX.X GAAP and for were XX.X% million of $XX.X same revenues last quarter A million of expenses for quarter last the the the revenues revenues, XX.X% of of to fourth or XX.X% the

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

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

for and profit the foreign our activities lower last to XX.X% $XX XX% from Tax activities represents loss million an previous resulted last expense The same of a non-solar solar convertible previous This in of year. e-Mobility was of $XX.X revenues to than was This model. million million in million finance of quarter. our $XX.X our to of $X.X accounting non-GAAP operating of is operating slightly of $X.X to operating of compared $XX.X the tax income period increased compared quarter the by of profit XX% resulted a of offset million and financial currency mainly debt quarter and in million income compared income and to profit non-GAAP to changes, for a same the a in income solar this an year. the operating million $X.X operating quarter quarter, division. million our This financial loss long-term the $X.X quarter, the Financial treatment expenses for compared million in $XX.X last $XX.X quarter period leases. million related number prior result expense

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

quarter previous last the was quarter quarter deductible in was tax earnings in quarter the from million $X.XX affected quarter higher exercise net was Our share net of of net last the last and $XX.X GAAP quarter compensation. diluted quarter GAAP quarter is compared previous positively million last previous to and million the $XX.X quarter fourth GAAP tax last the Non-GAAP for million the per million $X.XX the $X.XX and income resulting earnings by year. same same per non-GAAP in employees’ compared for fourth year. for compared for quarter the $XX.X purposes, in $X.XX compared income stock net $XX.X rate share million the to the in diluted $XX.X quarter same a same income expenses $XX.X $X.XX Non-GAAP income a to to $X.XX of in previous net and year. for the was net year. for

Turning now to the balance sheet.

and investments bank and cash deposits, bank cash, equivalents, were restricted $X.X deposits cash debt, of $XXX.X Net restricted million. deposits XX, XXXX, equivalents, of deposits, December investments billion. were As bank bank cash,

to of quarter this in net increased this an nominally DSO the million million days last cash from to quarter. quarter. compared AR business quarter in we days, from the $XX generated solar $XXX.X quarter was XX million operation. $XXX.X During last increase XX fourth XXXX,

of reserves to $XXX.X of net quarter. growth A our million to $XXX in compared December our As at million and was start-up raw business. an an increase level good anticipation to substantial XX, lesser in the our inventory solar increase XXXX, the is extent, portion in of finished prior division in a production inventory attributed of material in in e-Mobility this

calendar decrease the GAAP the compared $X.XX business to X% prior year million $XXX.X margin year $X.XX year compared GAAP earnings $XXX.X $X.XX Let's in compared per were diluted gross non-GAAP move to year $XXX.X in margin increase compared $XXX to full related to gross year $X.XX XXXX. was share net the GAAP year. to $X.XX from was Revenues billion, year. summarize year. the billion in and we million to XX.X% EPS was our a for prior the cash $X.XX of million XXXX. XX.X% a to to were XXXX and XXXX Revenues prior compared in X.X% income This XXXX. in diluted prior was operations. for X.X% a to increase XXXX. income a million in compared XX% in prior million, a now income generated $XXX.X solar of X.X% solar our billion, a X.X% year. business $X.XX compared in Non-GAAP of decrease net net in million, to for the $XXX.X the $XXX.X Non-GAAP million, was compared for the XXXX XX.X% from Non-GAAP increase

to quarter range to the within in million. million we first million. now range from are $XXX solar of expect the million XXXX, of the expected be and of quarter Moving of $XXX products the to $XXX first within $XXX the for be Revenues to sale guidance revenues

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

Operator

Mark you. Morgan. Thank here [Operator Strouse today Instructions] J.P. We’ll from first with

Mark Strouse

to for if curious inventory the evening. though. very reducing; Good Yeah, taking quantify our that good commercial see you channel Thank you just much can questions.

year-end better. last the weeks maybe Thank stands mentioned kind call of XX on that think is as I today XX, of you. would or even where as be you around of

Zvi Lando

decreasing this depends Europe inventory the So not and weeks while see the lower the quarter, Europe U.S. number in and it we slightly again but the in they where is difference extent. of between to a States, are on the dramatically, lower United decreasing,

that a now in start general commercial the we part in that to kind installations more bit expect inventory dropping do small see therefore little think happening see quicker, is I interesting we segment a though, we will more levels and the of the that fact difference. these but start

Mark Strouse

others guidance? is supply And the supply then issues, impacts okay, industry talking semiconductor the Hearing that chain just quick Okay, your from follow-up. a issues, in in about any some reflected and component thanks. on supply

Zvi Lando

of the shortages So, the we in for in component general months in to this actually coming we Mark, it's got these used something and few that foresaw ready last this. and see past, kind

our inventory is inventory you As in levels, a can see usual. our reflected than higher little bit

of on to First us we also any closely. and suppliers have therefore E-Ducato it we in components, our we both or we manage became close discussion very because raw components at given coordinated. fact impact all, we’re shortages. hold not we're project, capacity these amount do that a feel through production a them many cases in at of the looking that we good At we time the to sure of touch and for that and the those continue points kind critical anticipation of major sales the close portion staying relationship with suppliers, time, and same large interest a well have relatively in materials are shortages; and very making but very in these least of we can At see that due holding of the sometimes

at a point So at do major not see effect. we this least

Mark Strouse

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

Zvi Lando

Thank you.

Operator

Stanley. Stephen next We’ll with Morgan Byrd from hear

Stephen Byrd

the the a my done of just OEMs? potential a What worked opportunity relationship here, broadly. about business know nice just what sense with to Thanks e-Mobility a beyond talk opportunity to had we’ve you've your terms of about the I feel questions. do had of you’ve additional first what the replicate dialogue for more taking wanted the with except kind I of How here. OEMS. and and kind in to announced? number you your extend of is Curious you

Zvi Lando

market this lot anticipate potential. our we in same So long and time any obviously quick don't a the very industry huge wins. with of it's it's take time, a processes At a

We’re fruits all this happy get and we're mileage that investment, that us having the any this in with lot short know this gain we project, future to of experience in you out from helped wins of this the learning door but improve improve foresee excited project quick that a production in about the we while, project a don't the of hope and we of this product, but huge our experience capability, gained a foot and was accumulated, opportunity. excited and for

Stephen Byrd

just you in little to to more just further volumes extent you bit and to the to the about provide little opportunity Could little situation Could mind sort there? term that, bit longer continues a the work talk a speaking of prepared just your helpful, a the you Fiat. here comments did some well? bit talked and you you Would That's terms of that aspirations on size speak the with of margin relationship now. sort of

Zvi Lando

the it the So, vehicle. to as a mentioned in acceptance on the depends of extent large comments,

our can road the in thousands we years, know represented a you Israel as in Now because we're see scale that’s in popular frequently market vehicle go again, that on direction The around here numbers are, well. is the we on it's the either here in based but it Europe acceptance. we few next over optimistic, very a of scale it and know

Operator

to with next move Oppenheimer. We'll Rusch Colin

Colin Rusch

kind on the talk on OpEx over basis guys. that trend line tracking little much maybe a you How bit the next about a to quarters? several so side? are you the Thanks more Can of trend non-GAAP

Ronen Faier

we’re and non-GAAP. first So, mentioned recalling you the what all of

that given representing expenses need stock-based is fact lot can in the that portion. on general, XX% as saying a for margins so hiked non-GAAP and of would we are understand You operating around a and that to basis, be between aiming to the that you coming non-GAAP. of solar see a related we is way GAAP a to in I know you by the XX% much see that business. price XX% therefore non-GAAP the bigger way the so like of and But at that operating to gross start there allows it's profit between growing would means compensation XX%, these difference it big to expense stock are that A us

of revenues numbers so be the going the lever down. large operational to see operating as are should I and to we when need impact and think the is numbers solar an expenses to business. the as relatively the are and Now, that are the revenues high go percentage growth growing, the the where solar non-solar you here between In will business, differentiate long we that as a of able revenues maintain rates,

to that it's as much simply a fact to broaden Today, the invest many we would people. we like we in have as more R&D or given We continue quick much can. the hard as already of base R&D, as

would issue. sales question are On big this operating and development. of economies there it usually investment many So to therefore would an to the like is short is the and and we around to scale that get in businesses marketing there G&A, and because continue. we naturally, and a a, invest I market therefore or businesses, R&D mode these in are expect time leverage in newer see are call The people issue should

is that growth want we operating in in that to that space, solar see when the would similar the everything in tie we should of So you expenses that go want to with overall operating I will But to see revenues, there, others, growth may and you much a a percentage you see selection over again, revenues. product should is you for situation newer expenses so the in as e-Mobility bigger the increase where than example, non-GAAP picture together the general definitely the assume generation. decline to the the In time.

Colin Rusch

start and raw you the on bit the guys. then, tell that timing helpful And that to that's update into generator expect of you a us about on storage qualification when of residential and shipping that, significant And energy product? Okay, know little you incremental us you you volumes capability the give know just expense product. an and product then to terms could integrate the the can in development

Zvi Lando

to in readiness, the is what of terms in are projection is the of with right communicated meaningful up on in within of us the quarter that. the So track processes and and schedule manufacturing completing are with last that the That's initial we quarter. midst third battery shipments far now, that – quarter volumes together the leading building the certification line and we so second we

of integration. terms – fully be fact causes the from of generator the incremental will operational for now. R&D matter months the software to In that special hardware is future releases a there a version related roadmap compatible couple Actually It's a – few no that already. is the

Operator

from And Roth we'll hear Capital Philip Partners, next Shen. from

Philip Shen

my Hey for guys, thanks questions. taking

run that more reasonable rate have in at on past you all, likely there, know As so or storage about the guys the QX. Is target XXXX business the 'XX, targeting X bit that in a a gigawatt in as for talked I run question assume possibly is storage a follow-up little you because hour in rate?

Ronen Faier

bit the end not end point will Phil, will of we building that At good general, I need of X have a the XXXX. factory the to year. little the that happen all more factory explanation start the that gigawatt at – think that side. In few is –construction here Basically of capacity a time. on be will hour in our time, a is missed there this we're maybe will to a X new the gigawatt equipment facilities in up takes and the and little with factory a that of months bit activities ramping But from point manufacture needed something we

the run able while be of XXXX, the capacity three X there So capacity, gigawatt first the all with of the in all processes ramp will end shifts half get at the we to of and the XXXX only rate. this to of kind up will a to production build be the

Philip Shen

again. Okay, thanks

about can from perhaps do as Thanks. think talked be mix $XXX and revenues e-Mobility this contribute a quarter guys by a storage million you as helpful $XXX of So there, to follow-up would year million, you what well?

Zvi Lando

anything here a main but to noted be before, timing, course looks believe this we're which track, that again, going aiming question general to $XXX we in between million is the as for. $XXX year that of is million on So currently number

Philip Shen

great. Okay, that. pass on. Thanks it I'll for

Operator

from Canaccord with Dorsheimer Genuity. Jed next hear We'll

Jed Dorsheimer

the Hi! HD Congrats and process just A on inverter guess terms my quarter! I on in that. wideband Thanks solid to are the the follow-up another you quick of the conversion products, silicon then for solar where to specifically, on gap from in taking have wave the a question, question. I

Zvi Lando

we using, well So Energy using Hub, still silicon these in standard the the version current are as generations. for as

we different For at obviously. newer alternatives looking are generations

Jed Dorsheimer

looking spec just I'm lists of mean, analog XX% costs. sheet at talking I reduction it. Got device and XX% component to the you guys about here that a

seem would from and commodity so seem And like would here, I'm What's curious, back cycle keeping of a great of you in copper transition? in potential reduction shift. making terms rise in demand the passives that as supply it that like just hedge particular a the see you

Zvi Lando

for So try will shortages change. of of but obviously get be detail, to that that implemented current those process something our it's products, them in type to and generation that next feasible with the too cycles thought much are align overcome parts is with type short not not we into to considerations of our but

over But year and and of next-generation So two the at best or looking a of find from actions component up these are our described a level and goods healthy years combination securing inventory, we're are supply in as up of building inventory. traditional for our cost of terms cycle looking that performance. to away finished alternatives shortages, building the get Ronen types products more current to

Jed Dorsheimer

Got it! Thanks guys.

Zvi Lando

Thank you.

Operator

Goldman Lee. From next Brian we'll Sachs, hear from

Brian Lee

for the the term. Thanks had taking just guys! near margins It mix questions. Hey like on the maybe margins, solar in strength first margins. American looks resi, mentioned North there two I you on helping the in

So past color the in the you've know high and us cadence. I some around given your trends level

solar in sense think is of a kind year? for there QX watermark XQ, if from moving you just of robust margins given in a trying those of I'm solar should to actually this high margin, leveling see of or to So the outlook is if margins bit through here through the get start in maybe the the terms moving we upside levels year. off normalization gross

Ronen Faier

that back this the mentioned, of the and is So levels result you as a or normalized getting take margins before, about basically to XX%, are to several talk we used give things. X% or

back, fact revenues. of meaningful a revenues, that to start United our States being first The of see we portion more the solar is the the one

gross way able end started in the that before, Europe have maybe hit we in actually at would were but by one Europe the in and time, much As market we the were hand unless active revenues Europe two as much competition when hit, at QX, noted way that is was Europe, of higher not things margins, basis we so the grow this a about difference in point pandemic U.S. and saw time U.S. mentioned impact time we the happened. in prescribed it and what the that as that we on same did lower the intensity regard. and XXX Over the at is to between substantially a

that that where And a bit to euro more in States, stronger once and that is euro helped the dollar. a the doing. we’re the second This U.S. compared to that sales manufacturing are our course of first United then dollars that another And again were on the revenues quarter, compared charge is the margin. residential lower fourth happened the to general, the solar the shutdown to is rapid in increase in this was commercial regulations, is then there able lower higher quarters. due the compared lower that previous The got we margins issue one sense on to and is still the something thing competition little we we the in starting little every fact dollars sell therefore to collect margins that that the is gross is we’re the bit to with residential characterized

is change main happened. the So this that

the to at as to described guidance, XX%. our expected margin forward, we non-GAAP Looking XX% be already in gross

our this So to the range expect at is the already long-term happen. to and higher midpoint continue we target of

is all to and both shift the shipments be in least Europe pricing the already of We production The at to and XX% in U.S. environment to products time. of products more in manufacturing, that QX, and production the comes relatively do in non-Chinese from will stable, and the more the we time to non-Chinese United cost non-tariff. come QX continuing continue reduction States of are a all XX% States to will about the that these United compared to

is later the that that this There the actually of one we is to phenomena need So range something for higher to the though definitely is and the and this mention, that part us guided. higher drives levels year. we

drive margins While our that little QX, once the in starting here more in get expect normalization have we actually approximately of down. we margins, batteries in overall batteries this portion starting are and bigger mix margins QX the margin see QX, the then assume solar the will a discussed past will in on to we the on XX% and expected we in bit batteries, effect volumes that revenues to

batteries. expect to to margins Once provide general, little of without model will in gross how batteries the about be in to a we volume we basically solar come, overall batteries the how of and revenues. guidance related bit So will are to normalizing

Brian Lee

has but ultimately had XX% the today, they in I I if of but the year, for think weighted a is revenue the revenue Ronen, Okay, upfront do about good XX% you you've wise terms target appreciate timeframe. if about I that get margins, all there second the target past question the – just you half back the what's to color. And timeframe of I you year, in in here, $XXX that half into then e-Mobility and this the are positive segue you're negative on or margins is And the costs in know on e-Mobility e-Mobility, some mentioned maybe for back are million talked range go talking you this at achieved? batteries,

Ronen Faier

around In So they one will me QX stabilize and beginning I'll initiate missed this anything volumes please, expect I the Brian the we by year. that if answering and QX start of general, of one know. end quarter toward or believe let we will

I gross that assume to QX. margin QX, to expect revenues So the And means of positive would majority see come point the on debt between this already we the that that in will QX product.

into if component, this once and from defined make it's project, on hard the depreciate E-Ducato product the once already inherited even project either to all, fact have that product do cost manufacturer, case the for the e-Mobility expect the the course that reduction this single-digit it Nevertheless, we was can between of will that defined. not lot we a you and they e-Mobility the first that they and longer-term we in or need with reduce this key that SMRE with to differentiators and in think not, very things validated of your cost space, they unlike or e-Mobility to margins the that in are because change and I we two suppliers, there two reduction margins expect changes is However, of cost the ability the of designed margins it's the solar, reduces in starting you product basically your we we launched to negotiate product know because product. in on Once to the In will and therefore you is a the and product specific high. dramatically any that acquisition do cannot very in QX see not be to happening. see product is

gross in volumes use of XXXX then this the volumes suppliers. course not acceptance expect not indeed going we already and of amount we're to it that components discussing do be margin. projects the all, more second, fixed we will leverage happen, is And we're of case, the have in able other them more see if or and have because be and I any But be we larger units, a we’ll them that when time spread to will cost our reduce over then not right to product now. using will this maybe costs in then the increase go and well, to here higher market we you products have as with in product, if the good First we for able, will over if of

believe I a number future in do XX%, be in not this e-Mobility. achieved that is the Lastly, near that can

time in at high, XX% look very and cost profitability, see unit you the unit get is that today very technological even level expertise. It the margins same companies every the at is high comparable us overall that being of usually you is at expensive. and to the good will if about the to is time see margin are that the per you very best because companies. e-Mobility very take If space, contribution But enough lower these

we of So all I know I hope that missed. components. If what answered the let not, me

Operator

to move We'll Credit with Mandloi Suisse. Maheep next

Maheep Mandloi

terms OpEx any thanks of Brian's its Hey, exclusivity lower there building with trials the upon talk e-Mobility. for other just the question of Group was or much in on to industry. compared percentage given be just presume Could going questions. and agreement you that electric the a understand BXB products, the nature for I nature solar I that the just this should and about the that, on sales addition taking operating margin in of for for the Fiat more business. the wanted to pilots any to

So be helpful? Thanks. would some on color that also

Zvi Lando

So the Maheep, miss try clarify. second answer to please I if again and I'll question,

and the is the in that don't the if that we sole definitely commit you nomination know, typically letter a don't it's that you for industry project this industry and we necessarily project. for a a supply So We but know solidifies of project, get in about enough the are in supplier components for supplier the as are fact commenting dynamic intent question. the first necessarily to this been confident that it call. we the complexity we've the to opportunity couple close more quarters and I said in per second question, this of be this earlier, coming To and about product a the is it clear last for to that's

next project, point additional this quarters. verge we the not at scale project are on within definitely a this the at any couple of not So of

and and quick XXXX wins won't here. be not quick ramps there in multiple So projects, at least

Maheep Mandloi

in business Yes, operating this much presume just for expenses operating BXB Got And one leverage business you sorry, leverage, as it's how to more wanted to I I of just understand the sec. it, the sales in thanks. of terms given and wanted nature? understand operating percent – the expect

Zvi Lando

AC of described with as as discuss with segments to we Inverters, and inverters, well; other we other consistent are DC what DC would are in product the delivering lithium-ion content batteries, every what practically So, the in we to theme we is delivering etc. DC that converters,

company manufacturing is is applications technology in testing there the on across the line. leverage going that reliability serving So, from definitely these and design through

is batteries there and in the in are is not what being Kokam. that expertise area our lithium-ion of operational it's a So, of fair and used also coming is UPS' we Kokam technology e-Mobility, significant thread, today only using for are leverage from and project common although leverage our e-Mobility a not amount critical that are doing the power and new It's of infrastructure in these course businesses.

we design As Ronen solution of inherited in acquired into SMRE the when the for mentioned project. already first this design the frozen those were

Operator

Barclays. with Moses from Sutton next hear We'll

Moses Sutton

my Thanks for questions. Hi! taking

year? how and the product in the complete, in once On you exiting certified, once that's launch, capacity have storage megawatt hours available get XQ, you much XQ will

Zvi Lando

from there from Practically The is truth also our America, and that we in have unfortunately Australia. also Europe for all battery the for demand in won't is seeing. we North strong, full very also that the are capacity regions,

like say, that for have to quarter all in are potential meet in on projected had the our we we upside maybe the the way XXXX numbers in the But come own will Phil earlier when that. revenue that in capacity mentioned capacity comfortable the second Ronen We beyond of answer go demand will wish I a I factory. some to that and better have we probably to

Moses Sutton

be just available. for how an Is you no this and say the once don't on of the So you're, product, on you but wondering of had demand the the the enough I'm soon, how getting are the a sense will yet? too helpful, maybe product have gauging it because one's expectation already. based bit inverter that you're demand to product what That's sort of

Zvi Lando

a preference sorts we coming So something ask we with to many base that I they the a them. end in And have the all battery storage coupled, different we combination full mentioned, about ask huge systems about installed this AC the have battery, is The and of DC of supplier, to share it's batteries; the the at of prepared specifications different case configurations. a system connected talked messaged the in by coupled, many which customers. from the as is of, customers, for remarks, of sizes also they us, day

in installing terms of So we installers consumer very are of that outages of and time systems and and with different the and the mode the preferences used needs the familiar are with in maximizing application. the the self-consumption needs with

the our is So our battery solution available. and we adopt system they that that design and are want to battery anywhere between the installers to confident comfortable full needs the the are will meeting once of inverter

Operator

Heikkinen now hear from Advisors. Carver Marshall We'll with Energy

Marshall Carver

quick Yes. Thank just a you for taking one. I my had question.

in be guidance, XQ You quarter. $X.XX $X XQ. that how $X I XQ, color would million, you $XX come your million would there is $X million, helpful. sales think $XX much for, mentioned or XQ to the mean like, and feel be do having majority some seems could it is thought to I million e-Mobility? any Just In this trying from million that a million, get e-Mobility

Zvi Lando

the bucket into million is number, revenue and When $XX components it, individual be list we separately. don't will of enough the any revenue we it So from out to is breaking out e-Mobility the $XX warrant at this million business. one which to in non-solar point non-solar sizable we

Marshall Carver

this million and incremental Okay, million to e-Mobility million in the to year $XXX be $XXX would the plus $XXX from non-solar?

Ronen Faier

that no for today. overlap. have the basically, the the incremental e-Mobility have is numbers There are numbers we to storage that we Yes, battery

Marshall Carver

Okay, thank you.

Zvi Lando

Thank you.

Operator

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

Zvi Lando

Thank year you. fronts. challenging In summary, a positive yet all we concluded on

are expansion see. of and safe. All releases ground will We're to year looking of which fruits markets, stay of the the development growth, adjacent and forward non-solar and new and we already to while Thank for us into this you laying product which of for a XXXX today and we call beginning future expect invest our our businesses. be continuing to solar joining on growth

Operator

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

SolarEdge (SEDG) 17 Feb 212020 Q4 Earnings call transcript