FREMONT, Calif. — SolarEdge Technologies, Inc. (Nasdaq: SEDG), a global leader in smart energy, today announced its financial results for the third quarter ended September 30, 2019.
Third Quarter 2019 Highlights
- Record revenues of $410.6 million
- Record revenues from solar products of $387.8 million
- GAAP gross margin of 33.9%
- GAAP gross margin from sale of solar products of 35.0%
- Non-GAAP gross margin from sale of solar products of 35.4%
- GAAP net income of $41.6 million
- Record Non-GAAP net income of $63.6 million
- GAAP net diluted earnings per share (“EPS”) of $0.81
- Record Non-GAAP net diluted EPS of $1.21
- 1.5 Gigawatts (AC) of inverters shipped
“Our performance this quarter was at the upper range of our guidance, with record revenues, record non-GAAP profitability and record cash generation,” said Zvi Lando, Acting CEO and VP Global Sales of SolarEdge. “While we are pleased with the financial and operational results, this was a somber quarter for the Company due to the untimely passing of Mr. Guy Sella, Founder, Chairman and CEO of SolarEdge. Guy was not only our CEO and Chairman but a technological visionary, a role model and dear friend and will be greatly missed. SolarEdge management, most of whom have been leading the company together with Guy for many years, are dedicated to continue to strive for excellence in innovation and execution. We believe we are well positioned for continued growth both in our core business as leaders of PV inverter technology and in our new businesses of lithium-ion cells and batteries, e-mobility powertrain solutions and uninterruptible power supply systems.”
Third Quarter 2019 Summary
The Company reported record revenues of $410.6 million, up 26% from $325.0 million in the prior quarter and up 74% from $236.6 million in the same quarter last year.
Revenues related to the solar business were $387.8 million, up 26% from $306.7 million in the prior quarter and up 66% from $233.8 million in the same quarter last year.
GAAP gross margin was 33.9%, slightly down from 34.1% in the prior quarter and up from 33.0% year over year. This quarter’s gross margins were negatively impacted by increased air shipments as well as the increase in U.S. tariffs on China made products.
Non-GAAP gross margin was 35.1%, down from 35.7% in the prior quarter and up from 33.6% year over year.
GAAP gross margin for the solar business was 35.0%, down from 36.4% in the prior quarter and up from 33.9% year over year.
Non-GAAP gross margin for the solar business was 35.4%, down from 36.9% in the prior quarter and up from 34.4% year over year.
GAAP operating expenses were $73.3 million, up 12% from $65.3 million in the prior quarter and up 67% from $43.9 million in the same quarter last year. Operating expenses this quarter include $8.3 million non-recurring expense related to acceleration of equity awards and other payments related to the untimely death of Mr. Guy Sella, former Chairman, CEO and Founder of the Company.
Non-GAAP operating expenses were $54.8 million, relatively flat to $54.9 million in the prior quarter and up 48% from $37.0 million in the same quarter last year.
GAAP operating income was $66.0 million, up 46% from $45.4 million in the prior quarter and up 94% from $34.0 million in the same quarter last year.
Non-GAAP operating income was $89.2 million, up 46% from $61.0 million in the prior quarter and up 110% from $42.5 million in the same quarter last year.
GAAP net income was $41.6 million, up 26% from $33.1 million in the prior quarter and down 9% from $45.6 million in the same quarter last year.
Non-GAAP net income was $63.6 million, up 29% from $49.3 million in the prior quarter and up 49% from $42.7 million in the same quarter last year.
GAAP net diluted EPS was $0.81, up from $0.66 in the prior quarter and down from $0.95 in the same quarter last year.
Non-GAAP net diluted EPS was $1.21, up from $0.94 in the prior quarter and up from $0.86 in the same quarter last year.
Cash flow from operating activities was $68.7 million, up from $50.8 million in the prior quarter and up from $34.3 million in the same quarter last year.
As of September 30, 2019, cash, cash equivalents, bank deposits, restricted bank deposit and marketable securities totaled $432.9 million, compared to $373.6 million on June 30, 2019.
Outlook for the Fourth Quarter 2019
The Company also provides guidance for the fourth quarter ending December 31, 2019 as follows:
- Revenues to be within the range of $410 million to $420 million
- Gross margin expected to be within the range of 32% to 34%
- Revenues from solar products to be within the range of $388 million to $398 million
- Gross margin from sale of solar products expected to be within the range of 33% to 35%
The Company will host a conference call to discuss these results at 4:30 P.M. ET on Wednesday, November 6, 2019. The call will be available, live, to interested parties by dialing 800-367-2403. For international callers, please dial +1 334-777-6978. The Conference ID number is 5370286. A live webcast will also be available in the Investors Relations section of the Company’s 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 will remain available for approximately 30 calendar days.
SolarEdge is a global leader in smart energy. By leveraging world-class engineering capabilities and with a relentless focus on innovation, SolarEdge creates smart energy solutions that power our lives and drive future progress. SolarEdge developed an intelligent inverter solution that changed the way power is harvested and managed in photovoltaic (PV) systems. The SolarEdge DC optimized inverter seeks to maximize power generation while lowering the cost of energy produced by PV systems. Continuing to advance smart energy, SolarEdge addresses a broad range of energy market segments through its PV, storage, EV charging, batteries, UPS, electric vehicle powertrains, and grid services solutions. SolarEdge is online at solaredge.com
Use of Non-GAAP Financial Measures
The Company has presented certain non-GAAP financial measures in this release, such as non-GAAP net income, non-GAAP net diluted EPS, non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income and non-GAAP gross margin from sale of solar products. 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 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.
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 possible or assumed future results of operations; future demands for solar energy solutions; business strategies; technology developments; 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 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 the section entitled “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2018, filed on February 28, 2019, Current Reports on Form 8-K and other reports filed with the SEC. All information set forth in this release is as of November 6, 2019. The Company 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.