SolarEdge Announces Fiscal Third Quarter Financial Results

FREMONT, Calif.--(BUSINESS WIRE)-- SolarEdge Technologies, Inc. (NASDAQ: SEDG) today announced its financial results for the fiscal third quarter ended March 31, 2016.

Fiscal Third Quarter 2016 Highlights

• Record revenue of $125.2 million, up 0.3% from last quarter and 44.9% year-over-year
• GAAP gross margin of 32.5%
• GAAP net income of $20.8 million
• Non-GAAP net income of $23.3 million
• 416 Megawatts (AC) of inverters shipped

"We are pleased with another strong quarter despite challenging market conditions. Our growing customer base, continued diligent execution, strong balance sheet and increased cash flow from operations, coupled with our advanced technology, position us well moving forward,” said Guy Sella, Founder, Chairman and CEO of SolarEdge.

Revenues

The Company reported revenues of $125.2 million, an increase of $0.4 million, or 0.3% from the prior quarter and an increase of $38.8 million or 44.9% from the fiscal third quarter of 2015.

Gross margins

GAAP gross margin was 32.5%, up from 30.9% in the prior quarter and up from 27.4% in the fiscal third quarter of 2015. Non-GAAP gross margin was 32.7%, up from 31.1% in the prior quarter and 27.6% in the fiscal third quarter of 2015. See “Reconciliation on Non-GAAP Measures” below.

Operating expenses

GAAP operating expenses were $21.0 million, or 16.8% of revenue, an increase from $19.3 million, which represented 15.5% of revenue in the prior quarter and an increase from $13.9 million, or 16.1% of revenue when compared to the same fiscal quarter of 2015.

Operating income

Operating income was $19.7 million, up from $19.3 million in the prior quarter and up from operating income of $9.8 million in the fiscal third quarter of 2015.

Financial Expenses

Financial income of $2.0 million compared to financial expense of $1.0 million in the previous quarter and financial expense of $3.4 million in the same quarter last year.

Net Income

GAAP net income was $20.8 million, down from $24.1 million in the prior quarter (including a one-time $6.6 million tax asset) and up from $6.0 million in the fiscal third quarter of 2015. Non-GAAP net income was $23.3 million, an increase from $19.8 million in the prior quarter and an increase from $8.7 million in the fiscal third quarter of 2015. See “Reconciliation on Non-GAAP Measures” below.

EPS

GAAP net diluted earnings per share (“EPS”) was $0.47, down from $0.55 in the prior quarter (including the one-time $6.6 million tax asset) and up from $0.01 in the fiscal third quarter of 2015. Non-GAAP net diluted EPS was $0.51, an increase from $0.44 in the prior quarter and an increase from $0.20 in the fiscal third quarter of 2015. See “Reconciliation on Non-GAAP Measures” below.

Cash

At March 31, 2016, cash, cash equivalents, restricted cash and investment in marketable securities, totaled $172.2 million compared to $162.0 million on December 31, 2015. During the fiscal third quarter, the Company generated $15.3 million from operating activities.

Outlook for the Fiscal Fourth Quarter 2016

The Company provides guidance for the fiscal fourth quarter of 2016 as follows:

• Revenues to be within the range of $125 million to $134 million;
• Gross margins to be within the range of 29.0 % to 31.0%.

Conference Call

The Company will host a conference call to discuss these results at 5:00 P.M. Eastern Time on Monday, May 9, 2016. The call will be available, live, to interested parties by dialing +1 877-681-3375. For international callers, please dial +1 719-325-4907. The Conference ID number is 4543534. A live webcast will also be available in the Investors Relations section of SolarEdge website at: http://investors.solaredge.com

A replay of the webcast will be available in the Investor Relations section of the Company’s web site approximately two hours after the conclusion of the call and remain available for approximately 30 calendar days.

About SolarEdge

SolarEdge provides an intelligent inverter solution that has changed the way power is harvested and managed in solar photovoltaic systems. The SolarEdge DC optimized inverter system maximizes power generation at the individual PV module-level while lowering the cost of energy produced by the solar PV system. The SolarEdge system consists of power optimizers, inverters, storage solutions and a cloud-based monitoring platform and addresses a broad range of solar market segments, from residential solar installations to commercial and small utility-scale solar installations.

Use of Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures in this release, including non-GAAP gross margin, non-GAAP net income and non-GAAP net diluted EPS. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows that either exclude or include amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the United States, or GAAP. Reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure can be found in the accompanying tables to this press release. These non-GAAP financial measures do not reflect a comprehensive system of accounting, differ from GAAP measures with the same captions and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies. As such, these non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

The Company uses these non-GAAP financial measures to analyze its operating performance and future prospects, develop internal budgets and financial goals, and to facilitate period-to-period comparisons. The Company believes that these non-GAAP financial measures reflect an additional way of viewing aspects of its operations that, when viewed with its GAAP results, provide a more complete understanding of factors and trends affecting its business.

For a reconciliation of non-GAAP measures to their most comparable GAAP measures, please see “Reconciliation on Non-GAAP Measures” below.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This release contains forward looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward looking statements include information, among other things, concerning: our projection of future revenues and gross margin, our possible or assumed future results of operations; future demands for solar energy solutions; business strategies; technology developments; new products and services; financing and investment plans; dividend policy; competitive position; industry and regulatory environment; general economic conditions; potential growth opportunities; and the effects of competition. These forward looking statements are often characterized by the use of words such as “anticipate,” “believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or similar expressions and the negative or plural of those terms and other like terminology.

Forward-looking statements are only predictions based on our current expectations and our projections about future events. These forward looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual revenues, gross margins, other financial results, levels of activity, performance or achievements to be materially different from those expressed or implied by the forward looking statements. Given these factors, you should not place undue reliance on these forward-looking statements. These factors include, but are not limited to, the matters discussed in Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2015 and, Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, when it becomes available, Current Reports on Form 8-K and other reports filed with the SEC. All information set forth in this release is as of May 9, 2016. SolarEdge undertakes no duty or obligation to update any forward-looking statements contained in this release as a result of new information, future events or changes in its expectations.

SOLAREDGE TECHNOLOGIES INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)
			Three months endedMarch 31,								Nine months endedMarch 31,
				2016			2015					2016				2015
			Unaudited								Unaudited
Revenues			$	125,205		$	86,399				$	365,091			$	226,658
Cost of revenues				84,471			62,698					252,248				173,146
Gross profit				40,734			23,701					112,843				53,512
Operating expenses:
Research and development, net				8,709			5,490					23,999				15,317
Sales and marketing				8,826			6,422					25,903				17,541
General and administrative				3,460			1,990					9,066				4,270
Total operating expenses				20,995			13,902					58,968				37,128
Operating income				19,739			9,799					53,875				16,384
Financial income (expenses), net				2,029			(3,436	)				998				(3,378	)
Income before taxes on income				21,768			6,363					54,873				13,006
Taxes on income (tax benefit)				969			398					(4,463	)			1,146
Net income			$	20,799		$	5,965				$	59,336			$	11,860

SOLAREDGE TECHNOLOGIES INC.CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)
			March 31,				June 30,
				2016				2015
			Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents			$	84,070			$	144,750
Restricted cash				944				3,639
Marketable Securities				44,059				-
Trade receivables, net				56,145				35,428
Prepaid expenses and other accounts receivable				18,613				32,645
Inventories				85,514				73,950
Total current assets				289,345				290,412
PROPERTY AND EQUIPMENT, NET				26,213				14,717
LONG-TERM ASSETS:
Long-term marketable securities				43,151				-
Long-term prepaid expenses and lease deposits				440				529
Deferred tax assets, net				6,486				-
Intangible assets, net				737				-
				50,814				529
Total assets			$	366,372			$	305,658
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables			$	45,138			$	80,684
Employees and payroll accruals				12,358				6,814
Warranty obligations				13,510				9,431
Deferred revenues				2,642				1,676
Accrued expenses and other accounts payable				7,797				6,987
Total current liabilities				81,445				105,592
LONG-TERM LIABILITIES
Warranty obligations				33,149				22,448
Deferred revenues				13,266				8,289
Lease incentive obligation				2,265				2,385
Total long-term liabilities				48,680				33,122
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS’ EQUITY:
Share capital				4				4
Additional paid-in capital				296,480				287,152
Accumulated other comprehensive income (loss)				417				(222	)
Accumulated deficit				(60,654	)			(119,990	)
Total stockholders’ equity				236,247				166,944
Total liabilities and stockholders’ equity			$	366,372			$	305,658

SOLAREDGE TECHNOLOGIES INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)
			Nine months endedMarch 31,
				2016				2015
			Unaudited
Cash flows provided by (used in) operating activities:
Net income			$	59,336			$	11,860
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation				2,601				1,647
Amortization of intangible assets				63				-
Amortization of premiums on available-for-sale marketable securities				209				-
Stock-based compensation related to employees and non-employees consultants stock options				6,689				1,750
Financial income, net related to term loan				-				(992	)
Remeasurement of warrants to purchase preferred and common stock				-				2,065
Changes in assets and liabilities:
Inventories				(11,446	)			(39,071	)
Prepaid expenses and other accounts receivable				13,186				(12,198	)
Trade receivables, net				(20,681	)			(25,993	)
Deferred tax assets, net				(6,627	)			-
Trade payables				(35,554	)			39,604
Employees and payroll accruals				5,517				883
Warranty obligations				14,780				9,718
Deferred revenues				5,942				2,116
Accrued expenses and other accounts payable				497				2,733
Lease incentive obligation				(120	)			2,243
Net cash provided by (used in) operating activities				34,392				(3,635	)
Cash flows used in investing activities:
Purchase of property and equipment				(11,545	)			(8,254	)
Purchase of intangible assets				(800	)			-
Decrease (increase) in restricted cash				2,695				(1,973	)
Decrease (increase) in short and long-term lease deposits				23				(24	)
Purchases of available-for-sale marketable securities				(88,883	)			-
Maturities of available-for-sale marketable securities				1,000				-
Net cash used in investing activities				(97,510	)			(10,251	)
Cash flows from financing activities:
Proceeds from short-term bank loans				-				23,000
Repayments of short-term loan				-				(36,326	)
Repayments of term loan				-				(5,919	)
Proceeds from issuance of stock				-				24,712
Proceeds from IPO, net				-				133,944
Proceeds from exercise of employees and non-employees consultants stock options				2,639				46
Net cash provided by financing activities				2,639				139,457
Increase (decrease) in cash and cash equivalents				(60,479	)			125,571
Cash and cash equivalents at the beginning of the period				144,750				9,754
Erosion due to exchange rate differences				(201	)			(121	)
Cash and cash equivalents at the end of the period			$	84,070			$	135,204

SOLAREDGE TECHNOLOGIES INC.RECONCILIATION OF NON-GAAP FINANCIAL MEASURES(In thousands, except per share data)(unaudited)
		Reconciliation of GAAP to Non-GAAP Gross Profit
		Three months ended						Nine months ended
		Mar 31, 2016		Dec 31, 2015		Mar 31, 2015 (1)		Mar 31, 2016		Mar 31, 2015 (1)
Gross profit (GAAP)		40,734		38,582		23,701		112,843		53,512
Stock-based compensation		246		209		142		635		254
Gross profit (Non-GAAP)		40,980		38,791		23,843		113,478		53,766
		Reconciliation of GAAP to Non-GAAP Gross Margin
		Three months ended						Nine months ended
		Mar 31, 2016		Dec 31, 2015		Mar 31, 2015 (1)		Mar 31, 2016		Mar 31, 2015 (1)
Gross margin (GAAP)		32.5%		30.9%		27.4%		30.9%		23.6%
Stock-based compensation		0.2%		0.2%		0.2%		0.2%		0.1%
Gross margin (Non-GAAP)		32.7%		31.1%		27.6%		31.1%		23.7%
		Reconciliation of GAAP to Non-GAAP Operating expenses
		Three months ended						Nine months ended
		Mar 31, 2016		Dec 31, 2015		Mar 31, 2015 (1)		Mar 31, 2016		Mar 31, 2015 (1)
Operating expenses (GAAP)		20,995		19,320		13,902		58,968		37,128
Stock-based compensation R&D		724		518		184		1,637		450
Stock-based compensation S&M		842		749		292		2,207		546
Stock-based compensation G&A		819		750		354		2,210		502
Operating expenses (Non-GAAP)		18,610		17,303		13,072		52,914		35,630
		Reconciliation of GAAP to Non-GAAP Operating income
		Three months ended						Nine months ended
		Mar 31, 2016		Dec 31, 2015		Mar 31, 2015 (1)		Mar 31, 2016		Mar 31, 2015 (1)
Operating income (GAAP)		19,739		19,262		9,799		53,875		16,384
Stock-based compensation		2,631		2,226		972		6,689		1,752
Operating income (Non-GAAP)		22,370		21,488		10,771		60,564		18,136
		Reconciliation of GAAP to Non-GAAP Finance expenses
		Three months ended						Nine months ended
		Mar 31, 2016		Dec 31, 2015		Mar 31, 2015 (1)		Mar 31, 2016		Mar 31, 2015 (1)
Finance expenses (Income) (GAAP)		(2,029)		959		3,436		(998)		3,378
Warrants remeasurement		----		----		1,800		----		2,065
Finance expenses (Non-GAAP)		(2,029)		959		1,636		(998)		1,313
		Reconciliation of GAAP to Non-GAAP Tax on income (Tax benefit)
		Three months ended						Nine months ended
		Mar 31, 2016		Dec 31, 2015		Mar 31, 2015 (1)		Mar 31, 2016		Mar 31, 2015 (1)
Tax on income (Tax benefit) (GAAP)		969		(5,802)		398		(4,463)		1,146
Tax benefit due to deferred tax asset		100		6,527		----		6,627		----
Tax on income (Tax benefit) (Non-GAAP)		1,069		725		398		2,164		1,146
		Reconciliation of GAAP to Non-GAAP Net income
		Three months ended						Nine months ended
		Mar 31, 2016		Dec 31, 2015		Mar 31, 2015 (1)		Mar 31, 2016		Mar 31, 2015 (1)
Net income (GAAP)		20,799		24,105		5,965		59,336		11,860
Stock-based compensation		2,631		2,226		972		6,689		1,752
Warrants remeasurement		----		----		1,800		----		2,065
Tax benefit due to deferred tax asset		(100)		(6,527)		----		(6,627)		----
Net income (Non-GAAP)		23,330		19,804		8,737		59,398		15,677
		Reconciliation of GAAP to Non-GAAP Net basic EPS
		Three months ended						Nine months ended
		Mar 31, 2016		Dec 31, 2015		Mar 31, 2015 (1)		Mar 31, 2016		Mar 31, 2015 (1)
Net basic earnings per share (GAAP)		0.52		0.61		0.01		1.49		0.02
Stock-based compensation		0.06		0.06		0.03		0.17		0.05
Warrants remeasurement		----		----		0.04		----		0.07
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods		----		----		0.14		----		0.34
Tax benefit due to deferred tax asset		----		(0.17)		----		(0.16)		----
Net basic earnings per share (Non-GAAP)		0.58		0.50		0.22		1.50		0.48
		Reconciliation of GAAP to Non-GAAP No. of shares used in net basic EPS
		Three months ended						Nine months ended
		Mar 31, 2016		Dec 31, 2015		Mar 31, 2015 (1)		Mar 31, 2016		Mar 31, 2015 (1)
Number of shares used in computing net basic earnings per share (GAAP)		40,362,093		39,511,967		2,822,893		39,725,227		2,817,090
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods		----		----		36,297,931		----		30,025,279
Number of shares used in computing net basic earnings per share (Non-GAAP)		40,362,093		39,511,967		39,120,824		39,725,227		32,842,369
		Reconciliation of GAAP to Non-GAAP Net diluted EPS
		Three months ended						Nine months ended
		Mar 31, 2016		Dec 31, 2015		Mar 31, 2015 (1)		Mar 31, 2016		Mar 31, 2015 (1)
Net diluted earnings per share (GAAP)		0.47		0.55		0.01		1.34		0.01
Stock-based compensation		0.04		0.03		0.01		0.11		0.05
Warrants remeasurement		----		----		0.04		----		0.05
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods		----		----		0.14		----		0.32
Tax benefit due to deferred tax asset		----		(0.14)		----		(0.14)		----
Net diluted earnings per share (Non-GAAP)		0.51		0.44		0.20		1.31		0.43
		Reconciliation of GAAP to Non-GAAP No. of shares used in Net diluted EPS
		Three months ended						Nine months ended
		Mar 31, 2016		Dec 31, 2015		Mar 31, 2015 (1)		Mar 31, 2016		Mar 31, 2015 (1)
Number of shares used in computing net diluted earnings per share (GAAP)		44,577,901		44,007,348		7,099,046		44,347,071		5,534,903
Stock-based compensation		1,071,876		1,341,335		647,474		1,033,227		670,669
Warrants remeasurement		----		0		103,777		0		36,839
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods		----		----		36,297,931		----		30,025,279
Number of shares used in computing net diluted earnings per share (Non-GAAP)		45,649,777		45,348,683		44,148,228		45,380,298		36,267,690

(1) Assumes shares of common stock outstanding after accounting for the automatic conversion of the shares of preferred stock then outstanding into common stock at the beginning of fiscal year 2015.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160509006480/en/

Investor Contacts
SolarEdge Technologies, Inc.
Ronen Faier, +1 510-498-3263
Chief Financial Officer
[email protected]
or
Sapphire Investor Relations, LLC
Erica Mannion or Michael Funari, +1 617-542-6180
[email protected]

Source: SolarEdge Technologies, Inc.

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