|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 |
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 |
|
|
|
|
(State or other jurisdiction
of
incorporation or organization)
|
|
(IRS Employer
Identification No.) |
|
| |
| ||
| ||
(Address of Principal Executive Offices, zip code)
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
|
|
|
|
☒
|
Accelerated
filer |
☐
|
Non-accelerated
filer |
☐
|
Smaller
Reporting Company |
|
Emerging
growth company |
☐
|
F-1 | |
F-1 | |
F-1 | |
F-3 | |
F-4 | |
F-5 | |
F-6 | |
F-8 | |
3 | |
13 | |
14 | |
14 | |
14 | |
14 | |
15 | |
15 | |
15 | |
15 | |
16 | |
16 |
March 31,
2022
|
December
31,
2021
|
|||||||
ASSETS |
||||||||
CURRENT ASSETS: |
||||||||
Cash and cash equivalents |
$ |
|
$ |
|
||||
Marketable securities |
|
|
||||||
Trade receivables, net of allowances of $ |
|
|
||||||
Inventories, net |
|
|
||||||
Prepaid expenses and other current assets |
|
|
||||||
Total
current assets |
|
|
||||||
LONG-TERM ASSETS: |
||||||||
Marketable securities |
|
|
||||||
Deferred tax assets, net |
|
|
||||||
Property, plant and equipment, net |
|
|
||||||
Operating lease right-of-use assets, net |
|
|
||||||
Intangible assets, net |
|
|
||||||
Goodwill |
|
|
||||||
Other long-term assets |
|
|
||||||
Total
long-term assets |
|
|
||||||
Total
assets |
$ |
|
$ |
|
March
31, 2022 |
December
31, 2021 |
|||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
CURRENT LIABILITIES: |
||||||||
Trade payables, net |
$ |
|
$ |
|
||||
Employees and payroll accruals |
|
|
||||||
Warranty obligations |
|
|
||||||
Deferred revenues and customers advances |
|
|
||||||
Accrued expenses and other current liabilities |
|
|
||||||
Total
current liabilities |
|
|
||||||
LONG-TERM LIABILITIES: |
||||||||
Convertible senior notes, net |
|
|
||||||
Warranty obligations |
|
|
||||||
Deferred revenues |
|
|
||||||
Finance lease liabilities |
|
|
||||||
Operating lease liabilities |
|
|
||||||
Other long-term liabilities |
|
|
||||||
Total
long-term liabilities |
|
|
||||||
COMMITMENTS AND CONTINGENT LIABILITIES |
||||||||
STOCKHOLDERS’ EQUITY: |
||||||||
Common stock of $ |
|
|
||||||
Additional paid-in capital |
|
|
||||||
Accumulated other comprehensive loss |
(
|
) |
(
|
) | ||||
Retained earnings |
|
|
||||||
Total
stockholders’ equity |
|
|
||||||
Total
liabilities and stockholders’ equity |
$ |
|
$ |
|
Three
Months Ended March 31, |
||||||||
2022
|
2021
|
|||||||
Revenues
|
$
|
|
$
|
|
||||
Cost
of revenues |
|
|
||||||
Gross
profit |
|
|
||||||
Operating
expenses: |
||||||||
Research
and development |
|
|
||||||
Sales
and marketing |
|
|
||||||
General
and administrative |
|
|
||||||
Other
operating expenses |
|
|
||||||
Total
operating expenses |
|
|
||||||
Operating
income |
|
|
||||||
Financial
expense, net |
(
|
)
|
(
|
)
| ||||
Income
before income taxes |
|
|
||||||
Income
taxes |
|
|
||||||
Net
income |
$
|
|
$
|
|
||||
Net
basic earnings per share of common stock |
$
|
|
$
|
|
||||
Net
diluted earnings per share of common stock |
$
|
|
$
|
|
||||
Weighted
average number of shares used in computing net basic earnings per share of common stock |
|
|
||||||
Weighted
average number of shares used in computing net diluted earnings per share of common stock |
|
|
Three
Months Ended March 31, |
||||||||
2022
|
2021
|
|||||||
Net
income |
$
|
|
$
|
|
||||
Other comprehensive loss,
net of tax: |
||||||||
Net
change related to available-for-sale securities |
(
|
)
|
(
|
)
| ||||
Net
change related to cash flow hedges |
(
|
)
|
(
|
)
| ||||
Foreign
currency translation adjustments on intra-entity transactions that are of a long-term investment nature |
(
|
)
|
(
|
)
| ||||
Foreign
currency translation adjustments, net |
(
|
)
|
(
|
)
| ||||
Total other comprehensive
loss |
(
|
)
|
(
|
)
| ||||
Comprehensive
income |
$
|
|
$
|
|
Accumulated | ||||||||||||||||||||||||
Common
stock |
Additional
paid in |
other
comprehensive |
||||||||||||||||||||||
Number
|
Amount
|
Capital
|
loss
|
Retained
earnings |
Total
|
|||||||||||||||||||
Balance
as of January 1, 2022 |
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||||||||
Issuance
of Common Stock upon exercise of stock-based awards |
|
*
|
|
|
|
|
||||||||||||||||||
Stock
based compensation expenses |
-
|
|
|
|
|
|
||||||||||||||||||
Issuance
of common stock in a secondary public offering, net of underwriters' discounts and commissions of $ |
|
|
|
|
|
|
||||||||||||||||||
Other
comprehensive loss adjustments |
|
|
|
(
|
)
|
|
(
|
)
| ||||||||||||||||
Net
income |
|
|
|
|
|
|
||||||||||||||||||
Balance
as of March 31, 2022 |
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
|
Accumulated | |||||||||||||||||||||||
Common
stock |
Additional
paid in |
other comprehensive | ||||||||||||||||||||||
Number
|
Amount
|
Capital
|
income
(loss) |
Retained
earnings |
Total
|
|||||||||||||||||||
Balance
as of January 1, 2021 |
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||
Cumulative
effect of adopting ASU 2020-06 |
-
|
-
|
(
|
)
|
|
|
(
|
)
| ||||||||||||||||
Issuance
of Common Stock upon exercise of stock-based awards |
|
*
|
|
|
|
|
||||||||||||||||||
Stock
based compensation expenses |
-
|
|
|
|
|
|
||||||||||||||||||
Other
comprehensive loss adjustments |
|
|
|
(
|
)
|
|
(
|
)
| ||||||||||||||||
Net
income |
|
|
|
|
|
|
||||||||||||||||||
Balance
as of March 31, 2021 |
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
Three
Months Ended March 31, |
||||||||
2022
|
2021
|
|||||||
Cash
flows from operating activities: |
||||||||
Net
income |
$
|
|
$
|
|
||||
Adjustments
to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation
of property, plant and equipment |
|
|
||||||
Amortization
of intangible assets |
|
|
||||||
Amortization
of debt discount and debt issuance costs |
|
|
||||||
Amortization
of premium and accretion of discount on available-for-sale marketable securities, net |
|
|
||||||
Stock-based
compensation expenses |
|
|
||||||
Deferred
income taxes, net |
(
|
)
|
(
|
)
| ||||
Loss
(gain) from sale and disposal of assets |
(
|
)
|
|
|||||
Exchange
rate fluctuations and other items, net |
|
|
||||||
Changes
in assets and liabilities: |
||||||||
Inventories,
net |
(
|
)
|
(
|
)
| ||||
Prepaid
expenses and other assets |
(
|
)
|
|
|||||
Trade
receivables, net |
(
|
)
|
(
|
)
| ||||
Trade
payables, net |
(
|
)
|
(
|
)
| ||||
Employees
and payroll accruals |
|
|
||||||
Warranty
obligations |
|
|
||||||
Deferred
revenues and customers advances |
|
|
||||||
Other
liabilities, net |
|
|
||||||
Net
cash provided by (used in) operating activities |
(
|
)
|
|
|||||
Cash
flows from investing activities: |
||||||||
Proceed
from sales and maturities of available-for-sale marketable securities |
|
|
||||||
Purchase
of property, plant and equipment |
(
|
)
|
(
|
)
| ||||
Investment
in available-for-sale marketable securities |
(
|
)
|
(
|
)
| ||||
Withdrawal
from bank deposits, net |
|
|
||||||
Other
investing activities |
|
|
||||||
Net
cash used in investing activities |
$
|
(
|
)
|
$
|
(
|
)
|
Three
Months Ended March 31, |
||||||||
2022
|
2021
|
|||||||
Cash
flows from financing activities: |
||||||||
Proceeds
from secondary public offering, net of issuance costs |
|
|
||||||
Proceeds
from exercise of stock-based awards |
|
|
||||||
Proceeds
(withholdings) from stock-based awards, net |
|
(
|
)
| |||||
Other
financing activities |
(
|
)
|
(
|
)
| ||||
Net
cash provided by (used in) financing activities |
|
(
|
)
| |||||
Increase
(decrease) in cash and cash equivalents |
|
(
|
)
| |||||
Cash
and cash equivalents at the beginning of the period |
|
|
||||||
Effect
of exchange rate differences on cash and cash equivalents |
(
|
)
|
(
|
)
| ||||
Cash
and cash equivalents at the end of the period |
$
|
|
$
|
|
||||
Supplemental
disclosure of non-cash activities: |
||||||||
Right-of-use
asset recognized with corresponding lease liability |
$
|
|
$
|
|
a. |
SolarEdge Technologies, Inc. (the “Company”)
and its subsidiaries design, develop, and sell an intelligent inverter solution designed to maximize power generation at the individual
photovoltaic (“PV”) module level while lowering the cost of energy produced by the solar PV system and providing comprehensive
and advanced safety features. The Company’s products consist mainly of (i) power optimizers designed to maximize energy throughput
from each and every module through constant tracking of Maximum Power Point individually per module, (ii) inverters which invert direct
current (DC) from the PV module to alternating current (AC) including the Company’s future ready energy hub inverter which supports,
among other things, connection to a DC- coupled battery for backup capabilities, (iii) a remote cloud-based monitoring platform, that
collects and processes information from the power optimizers and inverters to enable customers and system owners, to monitor and manage
the solar PV system (iv) a residential storage and backup solution which includes a company designed and manufactured lithium-ion DC-coupled
battery that is used to increase energy independence and maximize self-consumption for homeowners including a battery, and (v) additional
smart energy management solutions. |
b. |
The Company has expanded its activity to other
areas of smart energy technology organically and through acquisitions. The Company now offers a variety of energy solutions, which include
lithium-ion cells, batteries and energy storage systems (“Energy Storage”), full powertrain kits for electric vehicles, or
EVs (“e-Mobility”), uninterrupted power supply solutions or UPS (“Critical Power”), as well as automated machines
for industrial use (“Automation Machines”). |
c. |
Basis of Presentation: |
d. |
Use of estimates: |
e. |
Concentrations of supply risks:
|
F - 8
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 1: GENERAL (Cont.)
f. |
New accounting pronouncements not yet adopted:
|
g. |
Recently issued and adopted pronouncements:
|
h. |
Certain prior period amounts have been reclassified
to conform to the current period presentation. |
F - 9
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
Amortized
cost |
Gross
unrealized
gains
|
Gross
unrealized
losses
|
Fair
value |
|||||||||||||
Available-for-sale
– matures within one year: |
||||||||||||||||
Corporate
bonds |
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Governmental
bonds |
|
|
(
|
)
|
|
|||||||||||
|
|
(
|
)
|
|
||||||||||||
Available-for-sale
– matures after one year: |
||||||||||||||||
Corporate
bonds |
|
|
(
|
)
|
|
|||||||||||
Governmental
bonds |
|
|
(
|
)
|
|
|||||||||||
|
|
(
|
)
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
Amortized
cost
|
Gross
unrealized
gains
|
Gross
unrealized
losses
|
Fair
value |
|||||||||||||
Available-for-sale
– matures within one year: |
||||||||||||||||
Corporate
bonds |
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|||||||
Governmental
bonds |
|
|
(
|
)
|
|
|||||||||||
|
|
(
|
)
|
|
||||||||||||
Available-for-sale
– matures after one year: |
||||||||||||||||
Corporate
bonds |
|
|
(
|
)
|
|
|||||||||||
Governmental
bonds |
|
|
(
|
)
|
|
|||||||||||
|
|
(
|
)
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
F - 10
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 3: INVENTORIES, NET
March
31,
2022
|
December
31,
2021
|
|||||||
Raw
materials |
$
|
|
$
|
|
||||
Work
in process |
|
|
||||||
Finished
goods |
|
|
|
|
||||
$
|
|
$
|
|
F - 11
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
F - 12
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 6: FAIR VALUE MEASUREMENTS
Fair
value measurements as of |
||||||||||
Description
|
Fair
Value Hierarchy |
March
31,
2022
|
December
31, 2021 |
|||||||
Assets:
|
||||||||||
Cash
equivalents: |
||||||||||
Money
market mutual funds |
Level
1 |
$
|
|
$
|
|
|||||
Derivative
instruments asset: |
||||||||||
Forward
contracts designated as hedging instruments |
Level
2 |
$
|
|
$
|
|
|||||
Options
and forward contracts not designated as hedging instruments |
Level
2 |
$
|
|
$
|
|
|||||
Short-term
marketable securities: |
||||||||||
Corporate
bonds |
Level
2 |
$
|
|
$
|
|
|||||
Governmental
bonds |
Level
2 |
$
|
|
$
|
|
|||||
Long-term
marketable securities: |
||||||||||
Corporate
bonds |
Level
2 |
$
|
|
$
|
|
|||||
Governmental
bonds |
Level
2 |
$
|
|
$
|
|
|||||
Liabilities
|
||||||||||
Derivative
instruments liability: |
||||||||||
Options
and forward contracts designated as hedging instruments |
Level
2 |
$
|
(
|
)
|
$
|
|
||||
Forward
contracts not designated as hedging instruments |
Level
2 |
$
|
(
|
)
|
$
|
|
NOTE 7: WARRANTY OBLIGATIONS
Three
Months Ended March 31, |
||||||||
2022
|
2021
|
|||||||
Balance,
at the beginning of the period |
$
|
|
$
|
|
||||
Additions
and adjustments to cost of revenues |
|
|
||||||
Usage
and current warranty expenses |
(
|
)
|
(
|
)
| ||||
Balance,
at end of the period |
|
|
||||||
Less
current portion |
(
|
)
|
(
|
)
| ||||
Long
term portion |
$
|
|
$
|
|
F - 13
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 8: DEFERRED REVENUES
Three
Months Ended March 31, |
||||||||
2022
|
2021
|
|||||||
Balance,
at the beginning of the period |
$
|
|
$
|
|
||||
Revenue
recognized |
(
|
)
|
(
|
)
| ||||
Increase
in deferred revenues and customer advances |
|
|
||||||
Balance,
at the end of the period |
|
|
||||||
Less
current portion |
(
|
)
|
(
|
)
| ||||
Long
term portion |
$
|
|
$
|
|
2022
|
$
|
|
||
2023
|
|
|||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
Thereafter
|
|
|||
Total
deferred revenues |
$
|
|
March
31,
2022
|
December
31, 2021 |
|||||||
Accrued
expenses |
$
|
|
$
|
|
||||
Government
authorities |
|
|
||||||
Operating
lease liabilities |
|
|
||||||
Provision
for legal claims |
|
|
||||||
Other
|
|
|
||||||
$
|
|
$
|
|
F - 14
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 10: CONVERTIBLE SENIOR NOTES
March
31,
2022
|
December
31,
2021
|
|||||||
Liability:
|
||||||||
Principal
|
$
|
|
$
|
|
||||
Unamortized
issuance costs |
(
|
)
|
(
|
)
| ||||
Net
carrying amount |
$
|
|
$
|
|
F - 15
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
F - 16
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 11: STOCK CAPITAL (Cont.)
Number
of options |
Weighted
average exercise price |
Weighted
average remaining contractual term in years |
Aggregate
intrinsic Value |
|||||||||||||
Outstanding as of December
31, 2021 |
|
$
|
|
|
$
|
|
||||||||||
Exercised
|
(
|
)
|
|
- |
|
|||||||||||
Forfeited
or expired |
(
|
)
|
|
- |
- |
|||||||||||
Outstanding as of March
31, 2022 |
|
$
|
|
|
|
$
|
|
|||||||||
Vested and expected to
vest as of March 31, 2022 |
|
$
|
|
|
|
$
|
|
|||||||||
Exercisable as of March
31, 2022 |
|
$
|
|
|
|
$
|
|
Number
of RSUs |
Weighted
average grant date fair value |
|||||||
Unvested
as of December 31, 2021 |
|
$
|
|
|||||
Granted
|
|
|
||||||
Vested
|
(
|
)
|
|
|||||
Forfeited
|
(
|
)
|
|
|||||
Unvested
as of March 31, 2022 |
|
$
|
|
Number
of PSUs |
Weighted
average grant date fair value |
|||||||
Unvested
as of December 31, 2021 |
|
$
|
|
|||||
Granted
|
|
|
||||||
Unvested
as of March 31, 2022 |
|
$
|
|
F - 17
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 11: STOCK CAPITAL (Cont.)
Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Cost
of revenues |
$
|
|
$
|
|
||||
Research
and development |
|
|
||||||
Selling
and marketing |
|
|
||||||
General
and administrative |
|
|
||||||
Total
stock-based compensation expenses |
$
|
|
$
|
|
F - 18
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 12: COMMITMENTS AND CONTINGENT LIABILITIES
F - 19
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
NOTE 13: ACCUMULATED OTHER COMPREHENSIVE LOSS
Three
Months Ended
March
31, |
||||||||
2022
|
2021
|
|||||||
Unrealized
gains (losses) on available-for-sale marketable securities |
||||||||
Beginning
balance |
$
|
(
|
)
|
$
|
|
|||
Revaluation
|
(
|
)
|
(
|
)
| ||||
Tax
on revaluation |
|
|
||||||
Other
comprehensive loss before reclassifications |
(
|
)
|
(
|
)
| ||||
Reclassification
|
|
|
||||||
Tax
on reclassification |
(
|
)
|
|
|||||
Losses
reclassified from accumulated other comprehensive income |
|
|
||||||
Net
current period other comprehensive loss |
(
|
)
|
(
|
)
| ||||
Ending
balance |
$
|
(
|
)
|
$
|
(
|
)
| ||
Unrealized
gains (losses) on cash flow hedges |
||||||||
Beginning
balance |
$
|
|
$
|
|
||||
Revaluation
|
(
|
)
|
(
|
)
| ||||
Tax on revaluation
|
|
|
||||||
Other comprehensive loss
before reclassifications |
(
|
)
|
(
|
)
| ||||
Reclassification
|
|
|
||||||
Tax
on reclassification |
(
|
)
|
|
|||||
Losses reclassified from
accumulated other comprehensive loss |
|
|
||||||
Net current period other
comprehensive loss |
(
|
)
|
(
|
)
| ||||
Ending
balance |
$
|
|
$
|
(
|
)
| |||
Foreign
currency translation adjustments on intra-entity transactions that are of a long-term investment in nature |
||||||||
Beginning
balance |
$
|
(
|
)
|
$
|
|
|||
Revaluation
|
(
|
)
|
(
|
)
| ||||
Tax
on revaluation |
|
|
||||||
Other
comprehensive loss before reclassifications |
(
|
)
|
(
|
)
| ||||
Net
current period other comprehensive loss |
(
|
)
|
(
|
)
| ||||
Ending
balance |
$
|
(
|
)
|
$
|
(
|
)
| ||
Unrealized
gains (losses) on foreign currency translation |
||||||||
Beginning
balance |
$
|
(
|
)
|
$
|
|
|||
Revaluation
|
(
|
)
|
(
|
)
| ||||
Tax
on revaluation |
|
|
||||||
Other
comprehensive loss before reclassifications |
(
|
)
|
(
|
)
| ||||
Net
current period other comprehensive loss |
(
|
)
|
(
|
)
| ||||
Ending
balance |
$
|
(
|
)
|
$
|
(
|
)
| ||
Total
|
$
|
(
|
)
|
$
|
(
|
)
|
F - 20
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
Details
about Accumulated Other Comprehensive Loss Components |
Three
Months Ended March 31, |
Affected
Line Item in the Statement of Income | |||||||
2022
|
2021
|
||||||||
Unrealized
losses on available-for-sale marketable securities |
|||||||||
$
|
(
|
)
|
$
|
|
Financial
expense, net | ||||
|
|
Income
taxes | |||||||
$
|
(
|
)
|
$
|
|
Total,
net of income taxes | ||||
Unrealized
losses on cash flow hedges, net |
|||||||||
(
|
)
|
|
Cost
of revenues | ||||||
(
|
)
|
|
Research
and development | ||||||
(
|
)
|
|
Sales
and marketing | ||||||
(
|
)
|
|
General
and administrative | ||||||
$
|
(
|
)
|
$
|
|
Total,
before income taxes | ||||
|
|
Income
taxes | |||||||
(
|
)
|
|
|||||||
Total
reclassifications for the period |
$
|
(
|
)
|
$
|
|
F - 21
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
Three
Months Ended March 31, |
||||||||
2022
|
2021
|
|||||||
Basic
EPS: |
||||||||
Numerator:
|
||||||||
Net
income |
$
|
|
$
|
|
||||
Denominator:
|
||||||||
Shares
used in computing net earnings per share of common stock, basic |
|
|
||||||
Diluted
EPS: |
||||||||
Numerator:
|
||||||||
Net
income attributable to common stock, basic |
$
|
|
$
|
|
||||
Notes
due 2025 |
|
|
||||||
Net
income attributable to common stock, diluted |
$
|
|
$
|
|
||||
Denominator:
|
||||||||
Shares
used in computing net earnings per share of common stock, basic |
|
|
||||||
Notes
due 2025 |
|
|
||||||
Effect
of stock-based awards |
|
|
||||||
Shares
used in computing net earnings per share of common stock, diluted |
|
|
F - 22
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
Three
Months Ended March 31, |
||||||||||||||||
2022
|
2021
|
|||||||||||||||
Solar
|
All
other |
Solar
|
All
other |
|||||||||||||
Revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Cost of revenues
|
|
|
|
|
||||||||||||
Gross profit (loss)
|
|
|
|
(
|
)
| |||||||||||
Research and development
|
$
|
|
$
|
|
|
|
||||||||||
Sales and marketing
|
|
|
|
|
||||||||||||
General and administrative
|
|
|
|
|
||||||||||||
Segments profit (loss)
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
F - 23
SOLAREDGE TECHNOLOGIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(in thousands, except per share data)
Three
Months Ended March 31, |
||||||||
2022
|
2021
|
|||||||
Solar
revenues |
$
|
|
$
|
|
||||
All
other revenues |
|
|
||||||
Revenues
from services ASC 606 |
|
|
||||||
Consolidated
revenues |
$
|
|
$
|
|
Three
Months Ended March 31, |
||||||||
2022
|
2021
|
|||||||
Solar segment profit
|
$
|
|
$
|
|
||||
All other segment loss
|
(
|
)
|
(
|
)
| ||||
Segments operating profit
|
|
|
||||||
Amounts not allocated
to segments: |
||||||||
Stock
based compensation expenses |
(
|
)
|
(
|
)
| ||||
Other
unallocated expenses |
(
|
)
|
(
|
)
| ||||
Consolidated operating
income |
$
|
|
$
|
|
• |
existing and future responses to and
effects of Covid-19; |
• |
future demand for renewable energy
including solar energy solutions; |
• |
changes to net metering policies or
the reduction, elimination or expiration of government subsidies and economic incentives for on-grid solar energy applications; |
• |
changes in the U.S. trade environment,
including the recent imposition of import tariffs; |
• |
federal, state, and local regulations
governing the electric utility industry with respect to solar energy; |
• |
the retail price of electricity derived
from the utility grid or alternative energy sources; |
• |
interest rates and supply of capital
in the global financial markets in general and in the solar market specifically; |
• |
competition, including introductions
of power optimizer, inverter and solar photovoltaic (“PV”) system monitoring products by our competitors; |
• |
developments in alternative technologies
or improvements in distributed solar energy generation; |
• |
historic cyclicality of the solar
industry and periodic downturns; |
• |
defects or performance problems in
our products; |
• |
our ability to forecast demand for
our products accurately and to match production with demand; |
• |
our dependence on ocean transportation
to timely deliver our products in a cost-effective manner; |
• |
our dependence upon a small number
of outside contract manufacturers and limited or single source suppliers; |
• |
capacity constraints, delivery schedules,
manufacturing yields, and costs of our contract manufacturers and availability of components; |
• |
delays, disruptions, and quality control
problems in manufacturing; |
• |
shortages, delays, price changes,
or cessation of operations or production affecting our suppliers of key components; |
• |
business practices and regulatory
compliance of our raw material suppliers; |
• |
performance of distributors and large
installers in selling our products; |
• |
disruption in our global supply chain
and rising prices of oil and raw materials as a result of the conflict between Russia and Ukraine may adversely affect our business; our
customers’ financial stability, creditworthiness, and debt leverage ratio; |
• |
our ability to retain key personnel
and attract additional qualified personnel; |
• |
our ability to effectively design,
launch, market, and sell new generations of our products and services; |
• |
our ability to maintain our brand
and to protect and defend our intellectual property; |
• |
our ability to retain, and events
affecting, our major customers; |
• |
our ability to manage effectively
the growth of our organization and expansion into new markets; |
• |
our ability to integrate acquired
businesses; |
• |
fluctuations in global currency exchange
rates; |
• |
unrest, terrorism, or armed conflict
in Israel; |
• |
general economic conditions in our
domestic and international markets; |
• |
consolidation in the solar industry
among our customers and distributors; |
• |
our ability to service our debt; and |
• |
the other factors set forth under
“Item 1A. Risk Factors” in “Part II-OTHER INFORMATION” section of this report, our annual report on Form 10-K
for the year ended December 31, 2021 and subsequent reports on Form 10-Q and in other documents we file from time to time with the SEC
that disclose risks and uncertainties that may affect our business. |
We are a leader in the global module-level power electronics (“MLPE”) market. As of March 31, 2022, we have shipped approximately 89.6 million power optimizers, 3.7 million inverters and 16.3 thousand residential batteries. Over 2.6 million installations, many of which may include multiple inverters, are currently connected to, and monitored through, our cloud-based monitoring platform. As of March 31, 2022, we have shipped approximately 31.6 GW of our DC optimized inverter systems and approximately 160.4 MW of our residential batteries.
Three
months ended
March
31, |
||||||||
2022 |
2021 |
|||||||
Inverters
shipped |
211,114 |
181,905 |
||||||
Power
optimizers shipped |
5,724,131 |
3,734,790 |
||||||
Megawatts
shipped1 |
2,130 |
1,691 |
||||||
Residential
batteries shipped |
9,985 |
— |
1 Excluding residential batteries, based on the aggregate nameplate capacity of inverters shipped during the applicable period. Nameplate capacity is the maximum rated power output capacity of an inverter as specified by the manufacturer.
Three
Months Ended March 31, |
||||||||
2022 |
2021 |
|||||||
(In
thousands) |
||||||||
Revenues |
655,080 |
405,489 |
||||||
Cost
of revenues |
476,122 |
265,415 |
||||||
Gross
profit |
178,958 |
140,074 |
||||||
Operating
expenses: |
||||||||
Research
and development |
66,349 |
46,977 |
||||||
Sales
and marketing |
35,316 |
26,911 |
||||||
General
and administrative |
26,429 |
19,849 |
||||||
Other
operating expenses |
— |
2,209 |
||||||
Total
operating expenses |
128,094 |
95,946 |
||||||
Operating
income |
50,864 |
44,128 |
||||||
Financial
expense, net |
(5,449 |
) |
(6,097 |
) | ||||
Income
before income taxes |
45,415 |
38,031 |
||||||
Income
taxes |
12,292 |
7,955 |
||||||
Net
income |
33,123 |
30,076 |
Three
months ended March 31, |
2021
to 2022 |
|||||||||||||||
2022 |
2021 |
Change |
||||||||||||||
(In
thousands) |
||||||||||||||||
Revenues |
655,080 |
405,489 |
249,591 |
61.6 |
% |
Three
months ended March 31, |
2021
to 2022 |
|||||||||||||||
2022 |
2021 |
Change |
||||||||||||||
(In
thousands) |
||||||||||||||||
Cost
of revenues |
476,122 |
265,415 |
210,707 |
79.4 |
% | |||||||||||
Gross
profit |
178,958 |
140,074 |
38,884 |
27.8 |
% |
• |
an increase in the volume of products
sold and the increase in the cost of components used in the manufacturing of our products; |
• |
a significant increase in shipment
and logistic costs in an aggregate amount of $29.4 million due to (i) an increase in shipment rates; and (ii) an increase in volumes
shipped; |
• |
an increase in warranty expenses and
warranty accruals of $17.9 million associated primarily with an increased number of products in our install base as well as an increase
in costs related to the different elements of our warranty expenses which include the cost of the products, shipment and other related
expenses; |
• |
an increase in custom duties of $10.1 million
attributed to higher tariff charges due to the manufacture of a higher portion of our products for the U.S. in China; |
• |
an increase in other production costs
of $14.9 million, which is mainly attributed to charges from our contract manufacturers due to manufacturing disruptions, related
to the global supply constraints, increased logistics costs resulting from transportation disruptions and the mobilization of components
among our different manufacturing sites and ramp up costs associated with the new contract manufacturing site in Mexico; and |
• |
an increase in personnel-related costs
of $4.2 million related to the expansion of our production, operations, and support headcount which grew in parallel to our growing
install base worldwide and the increase in costs associated with the production of powertrain units manufactured by the SolarEdge e-Mobility
division. |
• |
a decrease of $5.9 million in
inventory accrual which is mainly attributed to changes in inventory valuations related to manufacturing volumes, anticipated future use
of such raw materials and inventory write-offs. |
Three
months ended March 31, |
2021
to 2022 |
|||||||||||||||
2022 |
2021 |
Change |
||||||||||||||
(In
thousands) |
||||||||||||||||
Research
and development |
66,349 |
46,977 |
19,372 |
41.2 |
% |
• |
an increase in personnel-related costs
of $15.6 million resulting from an increase in our research and development headcount as well as salary expenses associated with employee
equity-based compensation. The increase in headcount reflects our continuing investment in enhancements of existing products as well as
research and development expenses associated with bringing new products to the market; |
• |
a decrease in reimbursement of costs,
in an amount of $2.6 million, related to the research and development activities performed by SolarEdge e-Mobility; |
• |
an increase in expenses related to
material consumption in the manufacturing of prototypes during our development process in an amount of $1.5 million; and |
• |
an increase in depreciation expenses
of property and equipment in an amount of $0.9 million. |
• |
a decrease in expenses related to
consultants and sub-contractors in an amount of $2.3 million. |
Three
months ended March 31, |
2021
to 2022 |
|||||||||||||||
2022 |
2021 |
Change |
||||||||||||||
(In
thousands) |
||||||||||||||||
Sales
and marketing |
35,316 |
26,911 |
8,405 |
31.2 |
% |
• |
an increase in personnel-related costs
of $5.7 million as a result of an increase in headcount supporting our growth in all geographies, as well as salary expenses associated
with employee equity-based compensation; and |
• |
an increase in expenses related to
marketing activities by $1.2 million due to the renewal of marketing activities, exhibitions and shows, which were cancelled or postponed
in 2020 and first half of 2021 due to Covid-19 restrictions. |
Three
months ended March 31, |
2021
to 2022 |
|||||||||||||||
2022 |
2021 |
Change |
||||||||||||||
(In
thousands) |
||||||||||||||||
General
and administrative |
26,429 |
19,849 |
6,580 |
33.2 |
% |
• |
an increase in personnel-related costs
of $6.8 million resulting from an increase in our general and administrative headcount, as well as salary expenses associated with employee
equity-based compensation; and |
• |
an increase in expenses related to
consultants and sub-contractors in an amount of $2.3 million. |
• |
a decrease of $3.6 million related
to a provision for legal claims. |
Three
months ended March 31, |
2021
to 2022 |
|||||||||||||||
2022 |
2021 |
Change |
||||||||||||||
(In
thousands) |
||||||||||||||||
Other
operating expenses |
— |
2,209 |
(2,209 |
) |
(100.0 |
)% |
Three
months ended March 31, |
2021
to 2022 |
|||||||||||||||
2022 |
2021 |
Change |
||||||||||||||
(In
thousands) |
||||||||||||||||
Financial
expense, net |
(5,449 |
) |
(6,097 |
) |
648 |
|
10.6 |
% |
• |
a decrease of $2.6 million in financial
income related to hedging transactions. |
• |
an increase of $0.8 million in realized
loss on marketable securities. |
Three
months ended March 31, |
2021
to 2022 |
|||||||||||||||
2022 |
2021 |
Change |
||||||||||||||
(In
thousands) |
||||||||||||||||
Income
taxes |
12,292 |
7,955 |
4,337 |
54.5 |
% |
Income taxes increased by $4.3 million, or 54.5%, in the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, primarily due to an increase of $3.4 million in current tax expenses mainly attributed to an increase in taxable income in our foreign subsidiaries. This increase in taxable income is associated with the provisions of Section 174 of the U.S Internal Revenue Code, which went into effect on January 1, 2022, and required capitalization of our research and development expenses.
Three
months ended March 31, |
2021
to 2022 |
|||||||||||||||
2022 |
2021 |
Change |
||||||||||||||
(In
thousands) |
||||||||||||||||
Net
income |
33,123 |
30,076 |
3,047 |
10.1 |
% |
Three
months ended March 31, |
||||||||
2022 |
2021 |
|||||||
(In
thousands) |
||||||||
Net
cash provided by (used in) operating activities |
(162,989 |
) |
24,083 |
|||||
Net
cash used in investing activities |
(15,134 |
) |
(153,582 |
) | ||||
Net
cash provided by (used in) financing activities |
652,335 |
(2,062 |
) | |||||
Increase
(decrease) in cash, cash equivalents and restricted cash |
474,212 |
(131,561 |
) |
Investing cash flows consist primarily of capital expenditures, investment in, sales and maturities of available for sale marketable securities, investment and withdrawal of bank deposits and restricted bank deposits, and cash used for acquisitions. Cash used for investing activities decreased by $138.4 million in the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, primarily driven by a $172.5 million decrease in purchases of available-for-sale debt investments, net. This decrease was partially offset by an increase of $17.5 million in capital expenditures, net and a $16.5 million decrease in cash provided by withdrawal from bank deposits and restricted bank deposits.
Financing cash flows consisted primarily of the issuance and repayment of short-term and long-term debt and proceeds from the sale of shares of common stock in a public offering and employee equity incentive plans. Cash provided by financing activities in the three months ended March 31, 2022 was $652.3 million compared to $2.1 million cash used in financing activities in the three months ended March 31, 2021, primarily due to a $650.5 million increase in cash provided by the issuance of common stock, net through a secondary public offering and a $4.0 million increase in cash received from the exercise of stock-based awards net of withholding taxes remitted to the tax authorities.
On March 17, 2022, we offered and sold 2,300,000 shares of the Company’s common stock at a public offering price of $295.00 per share. The net proceeds to the Company after underwriters' discounts and commissions and offering costs were $650,526. We intend to use the proceeds from the public offering for general corporate purposes, which may include acquisitions. See Note 11b to our condensed consolidated financial statements for more information.
Exhibit
No. |
|
Description |
|
Incorporation
by Reference |
Filed
with this report. | ||||
Filed
with this report. | ||||
Filed
with this report. | ||||
Filed
with this report. | ||||
101 |
The
following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, formatted
in Inline XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated
Statements of Comprehensive Income, (iv) Condensed Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements
of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements |
Filed
with this report. | ||
104 |
The
cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 formatted in Inline XBRL |
Included
in Exhibit 101 |
|
/s/
Zvi Lando
Zvi
Lando
Chief Executive
Officer
(Principal
Executive Officer) |
|
/s/
Ronen Faier
Ronen
Faier
Chief
Financial Officer
(Principal
Financial Officer) |