Second Quarter 2020
Earnings Summary
August 3, 2020
Safe Harbor
Use of Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements include information, among other things, concerning: the expected impact of the COVID-19 pandemic and related public health measures on our business, results of operations, financial condition and liquidity; 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.
Forward-looking statements are only predictions based on our current expectations and are inherently subject to risks and uncertainties. They should not be considered guarantees of future results, which could differ materially from the results set forth in, contemplated by, or underlying this presentation.
Factors that could cause actual results to differ materially from our expectations are described in the reports filed by SolarEdge with the Securities and Exchange Commission and we encourage you to review our filings carefully, especially the sections entitled "Risk Factors" in our annual report on Form 10-K and our quarterly reports on Form 10-Q, noting that many of the risks, uncertainties and other factors identified therein are, and will be, amplified by the COVID-19 pandemic. .
SolarEdge undertakes no duty or obligation to update any forward-looking statements contained in this presentation as a result of new information, future events or changes in its expectations.
This presentation describes non-GAAP revenues, gross margin, operating expenses, operating income, net income and non-GAAP net diluted earnings per share, which are not measures prepared in accordance with U.S. GAAP (i.e. "Non-GAAP" measures). The Non-GAAP measures are presented in this presentation as we believe that they provide investors with a means of evaluating and understanding how SolarEdge's management evaluates the company's operating performance. These Non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with U.S. GAAP.
2
Second Quarter Key Metrics
3.5M | 142K | 1.44 GW $331.9M | |
Power Optimizers | Inverters Shipped | Systems Shipped | Revenues |
Shipped
3
Financial Results for Quarter
Revenue of $331.9 million
Revenue from solar products of $310.1 million
Total cash and investments, net of debt, $577.4 million GAAP gross margin of 31.0%
Non-GAAP gross margin of 32.4%
Non-GAAP gross margin for the solar business of 33.8% GAAP operating income of $30.0 million
Non-GAAP operating income of $46.6 million GAAP net income of $36.7 million Non-GAAP net income of $52.1 million
Net diluted GAAP earnings per share of $0.70
Net diluted Non-GAAP earnings per share of $0.97 Cash flow from operation of $59.3 million
4
Noteworthy
Revenues of $331.9 million led by Europe, the U.S. and Australia Continued profitability and healthy cash generation
Sales and installations in Europe have returned, and in some countries exceeding, pre COVID-19 rates Signs of recovery in the U.S., although not at pre COVID-19 level, yet
Commercial business grew to 56% of MW shipped
Company continues to operate at full capacity despite country specific restrictions
Positive new product reception in the U.S. (EnergyHub) and Germany (3 phase storage inverter) Sella 1 factory in Israel set to start manufacturing in August
Tracking indicators such as weekly new orders, installation rates and distributor sell outs all trending positively though the rate of improvement varies between regions and segments
5
GAAP Financial Results
*USD in millions | Q2 19 | Q1 20 | Q2 20 |
Revenues | 325.0 | 431.2 | 331.9 |
Gross margin | 34.1% | 32.5% | 31.0% |
Operating expenses ** | 65.3 | 72.2 | 73.0 |
Operating income | 45.4 | 67.8 | 30.0 |
Net income | 33.1 | 42.2 | 36.7 |
Net diluted earnings per share | 0.66 | 0.81 | 0.70 |
*With the exception of gross margin and per share data
** Q1 20 includes non recurring operating income of ($4.9M).
6
NON-GAAP Financial Results
*USD in millions | Q2 19 | Q1 20 | Q2 20 |
Revenues | 325.0 | 431.2 | 331.9 |
Gross margin | 35.7% | 33.6% | 32.4% |
Operating expenses | 54.9 | 66.3 | 61.1 |
Operating income | 61.0 | 78.6 | 46.6 |
Net income | 49.3 | 50.7 | 52.1 |
Net diluted earnings per share | 0.94 | 0.95 | 0.97 |
*With the exception of gross margin and per share data
7
Units Shipped
Power optimizers shipped | ||||||
K Units | ||||||
5,500 | ||||||
5,060 | ||||||
5,000 | ||||||
4,587 | 4,454 | |||||
4,500 | ||||||
3,731 | ||||||
4,000 | 3,516 | |||||
3,500 | ||||||
2,738 3,004 | 3,134 | 3,029 | ||||
3,000 | ||||||
2,500 | ||||||
2,000 | ||||||
1,500
1,000
500
-
Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20
8
Inverters shipped
K Units | ||||||||
220.0 | ||||||||
202.0 | ||||||||
200.0 | ||||||||
187.9 | 186.8 | |||||||
180.0 | ||||||||
160.1 | ||||||||
160.0 | ||||||||
141.7 | ||||||||
140.0 | ||||||||
121.8 | 120.5 | 130.7 | ||||||
120.0 | 113.8 | |||||||
100.0 | ||||||||
80.0
60.0
40.0
20.0
0.0
Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20
Quarterly Revenues
9
Gross Margins Trend by Quarters (%)
GAAP | Non-GAAP | ||||||||||||||
40% | 40% | ||||||||||||||
34.3% | 35.7% | 35.1% | 35.5% | ||||||||||||
35% 34.1% | 33.9% | 32.5% | 31.0% | 35% | 33.6% | 32.4% | |||||||||
30% | 30% | ||||||||||||||
25% | 25% | ||||||||||||||
20% | 20% | ||||||||||||||
% | 15% | ||||||||||||||
15 | |||||||||||||||
10% | 10% | ||||||||||||||
5% | 5% | ||||||||||||||
0% | 0% | ||||||||||||||
Q2 19 | Q3 19 | Q4 19 | Q1 20 | Q2 20 | Q2 19 | Q3 19 | Q4 19 | Q1 20 | Q2 20 | ||||||
10
GAAP Operating Expenses
11
Consolidated Operating Income
GAAP | Non-GAAP | |||||||||||
70 | 66.0 | 67.8 | 90 | 89.2 | ||||||||
85.3 | ||||||||||||
78.7 | ||||||||||||
60 | 80 | |||||||||||
50 | 45.4 | 50.5 | 70 | 61.0 | ||||||||
60 | ||||||||||||
40 | ||||||||||||
50 | 46.6 | |||||||||||
30.0 | ||||||||||||
30 | 40 | |||||||||||
20 | 30 | |||||||||||
20 | ||||||||||||
10 | 10 | |||||||||||
0 | 0 | |||||||||||
Q2 19 | Q3 19 | Q4 19 | Q1 20 | Q2 20 | Q2 19 | Q3 19 | Q4 19 | Q1 20 | Q2 20 | |||
USD Millions | ||||||||||||
12 | * | GAAP Q1 20, Q4 19 and Q3 19 include non recurring operating (income) expenses of ($4.9M), $22.4M and $8.3M respectively |
Consolidated Net Income
GAAP | Non-GAAP |
70
60
52.8 | ||||
50 | ||||
42.2 | ||||
41.6 | ||||
40 | 36.7 | |||
33.1 | ||||
30 | ||||
20
10
0
Q2 19 | Q3 19 | Q4 19 | Q1 20 | Q2 20 |
90
80
70
60
50
40
30
20
10
0
USD Millions
87.4
63.6
49.3 | 50.7 | 52.1 | |
Q2 19 | Q3 19 | Q4 19 | Q1 20 | Q2 20 |
13 * Q1 20, Q4 19 and Q3 19 include non recurring operating (income) expenses of ($4.9M), $22.4M and $8.3M respectively
Balance Sheet & Cash flow
USD in millions | Q2 19 | Q1 20 | Q2 20 |
Cash deposits and | 373.6 | 558.7 | 592.7 |
investments | |||
Inventory | 148.9 | 198.6 | 264.5 |
Capital Expenditures | 11.7 | 27.4 | 26.4 |
Total Debt* | 22.0 | 15.0 | 15.3 |
Cash Flow From Operations | 50.8 | 107.7 | 59.3 |
* Debt balances relate to pre acquisition loans in Kokam and SMRE
14
Third Quarter Guidance*
Revenues to be within the range of $325 million to $350 million;
Non-GAAP gross margins expected to be within the range of 32% to 34%;
Revenues from solar products to be within the range of $305 million to $325 million;
Non-GAAP gross margins from sale of solar products expected to be within the range of 33% to 35%
*The pandemic effects on economies around the world are unprecedented. The guidance includes the anticipated impact of the COVID-19 pandemic and related public health measures on the
Company's business, at the time of publication.
15
Appendix
Reconciliation of GAAP to Non-GAAP
Reconciliation of Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Gross Profit | |||||||||||
Three months ended | Six months ended | ||||||||||
June 30, 2020 | March 31, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||
Gross profit (GAAP) | 102,963 | 140,008 | 110,670 | 242,971 | 196,780 | ||||||
Stock-based compensation | 2,359 | 2,273 | 1,651 | 4,632 | 3,005 | ||||||
Cost of product adjustment | ---- | 313 | 319 | 313 | 1,001 | ||||||
Amortization and depreciation of acquired assets | 2,325 | 2,356 | 3,307 | 4,681 | 4,384 | ||||||
Gross profit (Non-GAAP) | 107,647 | 144,950 | 115,947 | 252,597 | 205,170 |
Reconciliation of GAAP to Non-GAAP Gross Margin | |||||||||||
Three months ended | Six months ended | ||||||||||
June 30, 2020 | March 31, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||
Gross margin (GAAP) | 31.0% | 32.5% | 34.1% | 31.8% | 33.0% | ||||||
Stock-based compensation | 0.7% | 0.5% | 0.5% | 0.6% | 0.5% | ||||||
Cost of product adjustment | ---- | 0.1% | 0.1% | ---- | 0.2% | ||||||
Amortization and depreciation of acquired assets | 0.7% | 0.5% | 1.0% | 0.6% | 0.7% | ||||||
Gross margin (Non-GAAP) | 32.4% | 33.6% | 35.7% | 33.1% | 34.4% |
17
Reconciliation of GAAP to Non-GAAP
Reconciliation of GAAP to Non-GAAP Operating expenses | |||||||||
Three months ended | Six months ended | ||||||||
June 30, 2020 | March 31, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||
Operating expenses (GAAP) | 72,998 | 72,233 | 65,317 | 145,231 | 123,379 | ||||
Stock-based compensation - R&D | (5,847) | (5,378) | (4,176) | (11,225) | (7,666) | ||||
Stock-based compensation - S&M | (3,445) | (3,192) | (2,722) | (6,637) | (5,126) | ||||
Stock-based compensation - G&A | (2,310) | (1,930) | (2,823) | (4,240) | (5,279) | ||||
Amortization and depreciation of acquired assets - R&D | (25) | (26) | (9) | (51) | (45) | ||||
Amortization and depreciation of acquired assets - S&M | (292) | (295) | 51 | (588) | (807) | ||||
Amortization and depreciation of acquired assets - G&A | (9) | (8) | (26) | (17) | (26) | ||||
Acquisition related expenses | ---- | ---- | (151) | ---- | (949) | ||||
Assets disposal | ---- | ---- | (552) | ---- | (552) | ||||
Other operating income (expenses) | ---- | 4,900 | ---- | 4,900 | ---- | ||||
Operating expenses (Non-GAAP) | 61,070 | 66,303 | 54,909 | 127,373 | 102,929 |
Reconciliation of GAAP to Non-GAAP Operating income | |||||||||
Three months ended | Six months ended | ||||||||
June 30, 2020 | March 31, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||
Operating income (GAAP) | 29,965 | 67,775 | 45,353 | 97,740 | 73,401 | ||||
Cost of product adjustment | ---- | 313 | 319 | 313 | 1,001 | ||||
Stock-based compensation | 13,961 | 12,773 | 11,372 | 26,734 | 21,076 | ||||
Amortization and depreciation of acquired assets | 2,651 | 2,686 | 3,291 | 5,337 | 5,262 | ||||
Acquisition related expenses | ---- | ---- | 151 | ---- | 949 | ||||
Assets disposal | ---- | ---- | 552 | ---- | 552 | ||||
Other operating ( income) expenses | ---- | (4,900) | ---- | (4,900) | ---- | ||||
Operating income (Non-GAAP) | 46,577 | 78,647 | 61,038 | 125,224 | 102,241 |
18
Reconciliation of GAAP to Non-GAAP
Reconciliation of GAAP to Non-GAAP Financial expenses (income), net | |||||||||||
Three months ended | Six months ended | ||||||||||
June 30, 2020 | March 31, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||
Financial expenses (income), net (GAAP) | (11,565) | 16,605 | (773) | 5,040 | 5,378 | ||||||
Non cash interest | (1,200) | (1,128) | (850) | (2,328) | (1,635) | ||||||
Currency fluctuation related to lease standard | (892) | 1,033 | (577) | 141 | (1,525) | ||||||
Amortization and depreciation of acquired assets | ---- | (982) | ---- | (982) | ---- | ||||||
Financial expenses (income), net (Non-GAAP) | (13,657) | 15,528 | (2,200) | 1,871 | 2,218 |
Reconciliation of GAAP to Non-GAAP Tax on income | |||||||||||
Three months ended | Six months ended | ||||||||||
June 30, 2020 | March 31, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||
Tax on income (GAAP) | 4,862 | 8,922 | 13,213 | 13,784 | 17,135 | ||||||
Deferred tax realized (asset) | 3,236 | 3,536 | 987 | 6,772 | 1,960 | ||||||
Tax on income (Non-GAAP) | 8,098 | 12,458 | 14,200 | 20,556 | 19,095 |
19
Reconciliation of GAAP to Non-GAAP
Reconciliation of GAAP to Non-GAAP Net income | |||||||||||
Three months ended | Six months ended | ||||||||||
June 30, 2020 | March 31, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||
Net income attributable to Solaredge Technologies Inc. (GAAP) | 36,668 | 42,248 | 33,128 | 78,916 | 52,144 | ||||||
Cost of product adjustment | ---- | 313 | 319 | 313 | 1,001 | ||||||
Stock-based compensation | 13,961 | 12,773 | 11,372 | 26,734 | 21,076 | ||||||
Amortization and depreciation of acquired assets | 2,651 | 3,668 | 3,291 | 6,319 | 5,262 | ||||||
Acquisition related expenses | ---- | ---- | 151 | ---- | 949 | ||||||
Assets disposal | ---- | ---- | 552 | ---- | 552 | ||||||
Other operating ( income) expenses | ---- | (4,900) | ---- | (4,900) | ---- | ||||||
Non cash interest | 1,200 | 1,128 | 850 | 2,328 | 1,635 | ||||||
Currency fluctuation related to lease standard | 892 | (1,033) | 577 | (141) | 1,525 | ||||||
Deferred tax realized (asset) | (3,236) | (3,536) | (987) | (6,772) | (1,960) | ||||||
Net income attributable to Solaredge Technologies Inc. (Non-GAAP) | 52,136 | 50,661 | 49,253 | 102,797 | 82,184 |
20
Reconciliation of GAAP to Non-GAAP
Reconciliation of GAAP to Non-GAAP Net basic EPS | |||||||||||
Three months ended | Six months ended | ||||||||||
June 30, 2020 | March 31, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||
Net basic earnings per share (GAAP) | 0.74 | 0.86 | 0.69 | 1.59 | 1.10 | ||||||
Cost of product adjustment | ---- | 0.01 | 0.01 | 0.01 | 0.02 | ||||||
Stock-based compensation | 0.28 | 0.25 | 0.24 | 0.54 | 0.45 | ||||||
Amortization and depreciation of acquired assets | 0.05 | 0.08 | 0.07 | 0.13 | 0.11 | ||||||
Acquisition related expenses | ---- | ---- | ---- | ---- | 0.02 | ||||||
Other operating ( income) expenses | ---- | (0.10) | ---- | (0.10) | ---- | ||||||
Assets disposal | ---- | ---- | 0.01 | ---- | 0.01 | ||||||
Non cash interest | 0.02 | 0.02 | 0.02 | 0.05 | 0.03 | ||||||
Currency fluctuation related to lease standard | 0.02 | (0.02) | 0.01 | ---- | 0.04 | ||||||
Deferred tax realized (asset) | (0.06) | (0.07) | (0.02) | (0.14) | (0.04) | ||||||
Net basic earnings per share (Non-GAAP) | 1.05 | 1.03 | 1.03 | 2.08 | 1.74 |
21
Reconciliation of GAAP to Non-GAAP
Reconciliation of GAAP to Non-GAAP Net diluted EPS | |||||||||||
Three months ended | Six months ended | ||||||||||
June 30, 2020 | March 31, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||
Net diluted earnings per share (GAAP) | 0.70 | 0.81 | 0.66 | 1.51 | 1.05 | ||||||
Cost of product adjustment | ---- | 0.01 | ---- | ---- | 0.02 | ||||||
Stock-based compensation | 0.24 | 0.21 | 0.19 | 0.47 | 0.35 | ||||||
Amortization and depreciation of acquired assets | 0.05 | 0.07 | 0.07 | 0.11 | 0.11 | ||||||
Acquisition related expenses | ---- | ---- | ---- | ---- | 0.01 | ||||||
Other operating ( income) expenses | ---- | (0.09) | ---- | (0.09) | ---- | ||||||
Assets disposal | ---- | ---- | 0.01 | ---- | 0.01 | ||||||
Non cash interest | 0.02 | 0.02 | 0.02 | 0.05 | 0.04 | ||||||
Currency fluctuation related to lease standard | 0.02 | (0.02) | 0.01 | ---- | 0.03 | ||||||
Deferred tax realized (asset) | (0.06) | (0.06) | (0.02) | (0.13) | (0.04) | ||||||
Net diluted earnings per share (Non-GAAP) | 0.97 | 0.95 | 0.94 | 1.92 | 1.58 |
Reconciliation of GAAP to Non-GAAP No. of shares used in Net diluted EPS | |||||||||||
Three months ended | Six months ended | ||||||||||
June 30, 2020 | March 31, 2020 | June 30, 2019 | June 30, 2020 | June 30, 2019 | |||||||
Number of shares used in computing net diluted earnings per share (GAAP) | 52,536,437 | 52,172,720 | 49,940,034 | 52,357,838 | 49,358,280 | ||||||
Stock-based compensation | 1,154,279 | 1,399,732 | 2,130,135 | 1,277,006 | 2,448,673 | ||||||
Number of shares used in computing net diluted earnings per share (Non-GAAP) | 53,690,716 | 53,572,452 | 52,070,169 | 53,634,844 | 51,806,953 |
22
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SolarEdge Technologies Inc. published this content on 03 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 August 2020 20:16:07 UTC