Solaredge announces fourth quarter and full year 2020 financial results
Fremont, calif.--(business wire)--solaredge technologies, inc. (nasdaq: sedg), a global leader in smart energy, today announced its financial results for the fourth quarter and year ended december 31, 2020. fourth quarter 2020 highlights revenues of $358.1 million revenues from solar products of $327.1 million gaap gross margin of 30.8% non-gaap gross margin of 32.5% gaap gross margin from sale of solar products of 35.3% non-gaap gross margin from sale of solar products of 36.2% gaap net income of $17.7 million non-gaap net income of $55.7 million gaap net diluted earnings per share (“eps”) of $0.33 non-gaap net diluted eps of $0.98 1.36 gigawatts (ac) of inverters shipped full year 2020 highlights record revenues of $1.46 billion record revenues from solar products of $1.36 billion gaap gross margin of 31.6% gaap gross margin from sale of solar products of 34.3% non-gaap gross margin from sale of solar products of 35.0% gaap net income of $140.3 million non-gaap net income of $224.4 million gaap net diluted earnings per share (“eps”) of $2.66 non-gaap net diluted eps of $4.11 6.1 gigawatts (ac) of inverters shipped “our fourth quarter results are reflective of strength in the u.s. residential market and record revenues from outside of europe and the u.s., led by australia,” said zvi lando, ceo of solaredge. “the return to growth in installations in the u.s. residential market drove our sequential growth and return to the anticipated solar margins. despite the global pandemic, we concluded the year with slight growth in revenues, healthy cash generation and are well positioned for 2021 and beyond, having invested significantly in development of new products to be released this year as well as development of our non-solar businesses, with readiness to supply full powertrain kits for the e-mobility sector in europe.” fourth quarter 2020 summary the company reported revenues of $358.1 million, up 6% from $338.1 million in the prior quarter and down 14% from $418.2 million in the same quarter last year. revenues related to the solar business were $327.1 million, up 5% from $312.5 million in the prior quarter and down 16% from $389.0 million in the same quarter last year. gaap gross margin was 30.8%, down from 32.0% in the prior quarter and down from 34.3% year over year. non-gaap gross margin was 32.5%, down from 33.5% in the prior quarter and down from 35.5% year over year. gaap gross margin for the solar business was 35.3%, up from 34.1% in the prior quarter and down from 37.3% year over year. non-gaap gross margin for the solar business was 36.2%, up from 34.8% in the prior quarter and down from 37.8% year over year. gaap operating expenses were $95.9 million, up 23% from $77.7 million in the prior quarter and up 3% from $92.7 million in the same quarter last year. non-gaap operating expenses were $72.9 million, up 15% from $63.2 million in the prior quarter and up 15% from $63.1 million in the same quarter last year. gaap operating income was $14.4 million, down 53% from $30.4 million in the prior quarter and down 71% from $50.5 million in the same quarter last year. non-gaap operating income was $43.5 million, down 13% from $50.0 million in the prior quarter and down 49% from $85.3 million in the same quarter last year. gaap net income was $17.7 million, down 60% from $43.8 million in the prior quarter and down 67% from $52.8 million in the same quarter last year. non-gaap net income was $55.7 million, down 15% from $65.9 million in the prior quarter and down 36% from $87.4 million in the same quarter last year. gaap net diluted earnings per share (“eps”) was $0.33, down from $0.83 in the prior quarter and down from $1.03 in the same quarter last year. non-gaap net diluted eps was $0.98, down from $1.21 in the prior quarter and down from $1.65 in the same quarter last year. cash flow from operating activities was $27.0 million, down from $28.4 million in the prior quarter and down from $83.1 million in the same quarter last year. as of december 31, 2020, cash, cash equivalents, bank deposits, restricted bank deposit and marketable securities totaled $530.2 million, net of debt, compared to $553.8 million on september 30, 2020. full year 2020 summary total revenues of $1.46 billion, up 2% from $1.43 billion in the prior year. gaap gross margin was 31.6%, down from 33.6% in the prior year. non-gaap gross margin was 33.0%, down from 34.9% in the prior year. gaap operating income was $142.6 million, down 25% from $189.9 million in the prior year. non-gaap operating income was $218.8 million, down 21% from $276.8 million in the prior year. gaap net income was $140.3 million, down 4% from $146.5 million in the prior year. non-gaap net income was $224.4 million, down 4% from $233.2 million in the prior year. gaap net diluted eps was $2.66, down from $2.90 in the prior year. non-gaap net diluted eps was $4.11, down from $4.44 in the prior year. cash flow from operating activities of $222.7 million, down from $259.0 million in the prior year. outlook for the first quarter 2021 the company also provides guidance for the first quarter ending march 31, 2021 as follows: revenues to be within the range of $385 million to $405 million non gaap gross margin expected to be within the range of 34% to 36% revenues from solar products to be within the range of $360 million to $375 million non gaap gross margin from sale of solar products expected to be within the range of 36% to 38% conference call the company will host a conference call to discuss these results at 4:30 p.m. et on tuesday, february 16, 2021. the call will be available, live, to interested parties by dialing 800-347-6311. for international callers, please dial +1 646-828-8143. the conference id number is 3276360. 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. about solaredge 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, 2019, filed on february 27, 2020 and our quarterly reports filed on form 10-q, current reports on form 8-k and other reports filed with the sec. all information set forth in this release is as of february 16, 2021. 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. solaredge technologies inc. condensed consolidated statements of income (in thousands) three months ended december 30, year ended december 31, 2020 2019 2020 2019 unaudited revenues $ 358,107 $ 418,223 $ 1,459,271 $ 1,425,660 cost of revenues 247,782 274,974 997,912 946,322 gross profit 110,325 143,249 461,359 479,338 operating expenses: research and development 47,513 34,900 163,123 121,351 sales and marketing 28,872 23,659 95,985 87,984 general and administrative 18,042 11,771 63,119 49,361 other operating expenses (income), net 1,471 22,391 (3,429) 30,696 total operating expenses 95,898 92,721 318,798 289,392 operating income 14,427 50,528 142,561 189,946 financial expenses (income), net (10,380) (11,058) (21,105) 11,343 income before income taxes 24,807 61,586 163,666 178,603 income taxes 7,152 9,241 23,344 33,646 net income $ 17,655 $ 52,345 $ 140,322 $ 144,957 net loss attributable to non-controlling interests - 433 - 1,592 net income attributable to solaredge technologies, inc. $ 17,655 $ 52,778 $ 140,322 $ 146,549 solaredge technologies inc. condensed consolidated balance sheets (in thousands) december 31, 2020 2019 current assets: cash and cash equivalents $ 827,146 $ 223,901 short-term bank deposits 60,096 5,010 restricted bank deposits 2,611 27,558 marketable securities 143,687 91,845 trade receivables, net of allowances of $2,886 and $2,473, respectively 218,706 298,383 inventories, net 331,696 170,798 prepaid expenses and other current assets 135,399 115,268 total current assets 1,719,341 932,763 long-term assets: marketable securities 147,434 119,176 deferred tax assets, net 11,676 16,298 property, plant and equipment, net 303,408 176,963 operating lease right-of-use assets, net 41,600 35,858 intangible assets, net 67,818 74,008 goodwill 140,479 129,654 other long-term assets 5,353 9,904 total long-term assets 717,768 561,861 total assets $ 2,437,109 $ 1,494,624 current liabilities: trade payables, net $ 162,051 $ 157,148 employees and payroll accruals 63,738 47,390 current maturities of bank loans and accrued interest 16,894 15,673 warranty obligations 62,614 65,112 deferred revenues and customers advances 24,648 70,815 accrued expenses and other current liabilities 106,154 80,576 total current liabilities 436,099 436,714 long-term liabilities: convertible senior notes, net 573,350 - warranty obligations 142,380 107,451 deferred revenues 115,372 89,982 deferred tax liabilities, net 8,593 4,461 finance lease liabilities 26,173 2,399 operating lease liabilities 35,194 30,213 other long-term liabilities 14,191 11,734 total long-term liabilities 915,253 246,240 stockholders’ equity: common stock 5 5 additional paid-in capital 603,891 475,792 accumulated other comprehensive income (loss) 3,857 (1,809) retained earnings 478,004 337,682 total stockholders’ equity 1,085,757 811,670 total liabilities and stockholders’ equity 2,4307,109 1,494,624 solaredge technologies inc. condensed consolidated statements of cash flows (in thousands) year ended december 31, 2020 2019 cash flows provided by operating activities: net income $ 140,322 $ 144,957 adjustments to reconcile net income to net cash provided by operating activities: depreciation of property, plant and equipment 22,355 17,261 amortization of intangible assets 9,479 9,634 amortization of debt discount and debt issuance costs 3,185 - amortization of premium and accretion of discount on available-for-sale marketable securities, net 1,168 92 stock-based compensation expenses 67,309 60,353 deferred income taxes, net (2,738) (6,037) loss from sale of business - 5,269 other items 2,451 713 changes in assets and liabilities: inventories, net (149,661) (22,544) prepaid expenses and other assets (3,276) (67,323) trade receivables, net 86,538 (124,071) operating lease right-of-use assets and liabilities, net and effect of exchange rate differences 1,409 2,192 trade payables, net 3,333 47,837 employees and payroll accruals 18,315 18,592 warranty obligations 32,274 50,780 deferred revenues and customers advances (21,438) 83,137 other liabilities 11,630 38,158 net cash provided by operating activities 222,655 259,000 cash flows from investing activities: investment in available-for-sale marketable securities (223,705) (160,054) proceed from sales and maturities of available-for-sale marketable securities 141,839 142,744 purchase of property, plant and equipment (126,790) (72,562) withdrawal from (investment in) bank deposits, net (54,752) 4,860 withdrawal from (investment in) restricted bank deposits, net 25,267 (26,145) business combinations, net of cash acquired - (38,435) other investing activities 1,504 (3,261) net cash used in investing activities (236,637) (152,853) cash flows from financing activities: proceeds from issuance of convertible senior notes, net 617,869 - repayment of bank loans (15,595) (9,514) proceeds from bank loans 16,944 249 proceeds from exercise of stock-based awards 21,500 9,066 change in non-controlling interests - (71,468) other financing activities (234) (1,354) net cash provided by (used in) financing activities 640,484 (73,021) increase in cash and cash equivalents 626,502 33,126 cash and cash equivalents at the beginning of the period 223,901 187,764 effect of exchange rate differences on cash and cash equivalents (23,257) 3,011 cash and cash equivalents at the end of the period $ 827,146 $ 223,901 solaredge technologies inc. reconciliation of non-gaap financial measures (unaudited) (in thousands, except share and per share data) reconciliation of gaap to non-gaap gross profit three months ended year ended december 31, 2020 september 30, 2020 december 31, 2019 december 31, 2020 december 31, 2019 gross profit (gaap) 110,325 108,063 143,249 461,359 479,338 stock-based compensation 3,720 2,730 2,268 11,082 6,964 cost of product adjustment ---- ---- 448 313 1,556 amortization and depreciation of acquired assets 2,374 2,429 2,489 9,484 9,771 gross profit (non-gaap) 116,419 113,222 148,454 482,238 497,629 reconciliation of gaap to non-gaap gross margin three months ended year ended december 31, 2020 september 30, 2020 december 31, 2019 december 31, 2020 december 31, 2019 gross margin (gaap) 30.8% 32.0% 34.3% 31.6% 33.6% stock-based compensation 1.0% 0.8% 0.5% 0.8% 0.5% cost of product adjustment ---- ---- 0.1% ---- 0.1% amortization and depreciation of acquired assets 0.7% 0.7% 0.6% 0.6% 0.7% gross margin (non-gaap) 32.5% 33.5% 35.5% 33.0% 34.9% reconciliation of gaap to non-gaap operating expenses three months ended year ended december 31, 2020 september 30, 2020 december 31, 2019 december 31, 2020 december 31, 2019 operating expenses (gaap) 95,898 77,669 92,721 318,798 289,392 stock-based compensation - r&d (8,919) (6,904) (4,937) (27,048) (16,872) stock-based compensation - s&m (8,710) (4,066) (3,157) (19,413) (11,062) stock-based compensation - g&a (2,967) (2,559) 916 (9,766) (6,991) amortization and depreciation of acquired assets - r&d (14) (26) (30) (91) (92) amortization and depreciation of acquired assets - s&m (230) (370) 33 (1,187) (1,214) amortization and depreciation of acquired assets - g&a (8) (8) 45 (33) (35) acquisition related expenses ---- ---- ---- ---- (949) assets disposal (649) (558) (56) (1,207) (622) other operating income (expenses) (1,471) ---- (22,391) 3,429 (30,696) operating expenses (non-gaap) 72,930 63,178 63,144 263,482 220,859 solaredge technologies inc. reconciliation of non-gaap financial measures (unaudited) (in thousands, except share and per share data) reconciliation of gaap to non-gaap operating income three months ended year ended december 31, 2020 september 30, 2020 december 31, 2019 december 31, 2020 december 31, 2019 operating income (gaap) 14,427 30,394 50,528 142,561 189,946 cost of product adjustment ---- ---- 448 313 1,556 stock-based compensation 24,316 16,259 9,446 67,309 41,889 amortization and depreciation of acquired assets 2,626 2,833 2,441 10,795 11,112 acquisition related expenses ---- ---- ---- ---- 949 assets disposal 649 558 56 1,207 622 other operating (income) expenses 1,471 ---- 22,391 (3,429) 30,696 operating income (non-gaap) 43,489 50,044 85,310 218,756 276,770 reconciliation of gaap to non-gaap financial expenses (income), net three months ended year ended december 31, 2020 september 30, 2020 december 31, 2019 december 31, 2020 december 31, 2019 financial expenses (income), net (gaap) (10,380) (15,765) (11,058) (21,105) 11,343 notes due 2025 (3,017) (168) ---- (3,185) ---- non cash interest (1,305) (1,254) (1,055) (4,887) (3,645) currency fluctuation related to lease standard (2,172) (243) (266) (2,274) (2,591) amortization and depreciation of acquired assets ---- ---- 348 (982) 348 financial expenses (income), net (non-gaap) (16,874) (17,430) (12,031) (32,433) 5,455 reconciliation of gaap to non-gaap tax on income three months ended year ended december 31, 2020 september 30, 2020 december 31, 2019 december 31, 2020 december 31, 2019 tax on income (gaap) 7,152 2,408 9,241 23,344 33,646 deferred taxes (2,522) (816) 1,114 3,434 6,037 tax on income (non-gaap) 4,630 1,592 10,355 26,778 39,683 solaredge technologies inc. reconciliation of non-gaap financial measures (unaudited) (in thousands, except share and per share data) reconciliation of gaap to non-gaap net income three months ended year ended december 31, 2020 september 30, 2020 december 31, 2019 december 31, 2020 december 31, 2019 net income attributable to solaredge technologies inc. (gaap) 17,655 43,751 52,778 140,322 146,549 cost of product adjustment ---- ---- 448 313 1,556 stock-based compensation 24,316 16,259 9,446 67,309 41,889 amortization and depreciation of acquired assets 2,626 2,833 2,093 11,777 10,764 acquisition related expenses ---- ---- ---- ---- 949 assets disposal 649 558 56 1,207 622 other operating (income) expenses 1,471 ---- 22,391 (3,429) 30,696 notes due 2025 3,017 168 ---- 3,185 ---- non cash interest 1,305 1,254 1,055 4,887 3,645 currency fluctuation related to lease standard 2,172 243 266 2,274 2,591 deferred taxes 2,522 816 (1,114) (3,434) (6,037) net income attributable to solaredge technologies inc. (non-gaap) 55,733 65,882 87,419 224,411 233,224 reconciliation of gaap to non-gaap net basic eps three months ended year ended december 31, 2020 september 30, 2020 december 31, 2019 december 31, 2020 december 31, 2019 net basic earnings per share (gaap) 0.34 0.87 1.08 2.79 3.06 cost of product adjustment ---- ---- 0.01 0.01 0.03 stock-based compensation 0.48 0.32 0.20 1.34 0.87 amortization and depreciation of acquired assets 0.05 0.05 0.04 0.24 0.23 acquisition related expenses ---- ---- ---- ---- 0.02 assets disposal 0.01 0.01 ---- 0.02 0.01 other operating (income) expenses 0.03 ---- 0.46 (0.07) 0.64 notes due 2025 0.06 ---- ---- 0.06 ---- non cash interest 0.02 0.03 0.02 0.10 0.08 currency fluctuation related to lease standard 0.05 ---- ---- 0.05 0.06 deferred taxes 0.05 0.02 (0.02) (0.07) (0.13) net basic earnings per share (non-gaap) 1.09 1.30 1.79 4.47 4.87 solaredge technologies inc. reconciliation of non-gaap financial measures (unaudited) (in thousands, except share and per share data) reconciliation of gaap to non-gaap net diluted eps three months ended year ended december 31, 2020 september 30, 2020 december 31, 2019 december 31, 2020 december 31, 2019 net diluted earnings per share (gaap) 0.33 0.83 1.03 2.66 2.90 cost of product adjustment ---- ---- 0.01 ---- 0.02 nonvested psus ---- ---- (0.01) ---- ---- stock-based compensation 0.44 0.28 0.15 1.20 0.68 amortization and depreciation of acquired assets 0.05 0.05 0.04 0.21 0.22 acquisition related expenses ---- ---- ---- ---- 0.02 assets disposal 0.01 0.01 ---- 0.03 0.01 other operating (income) expenses 0.03 ---- 0.43 (0.07) 0.59 notes due 2025 0.02 ---- ---- 0.02 ---- non cash interest 0.02 0.02 0.02 0.08 0.07 currency fluctuation related to lease standard 0.04 ---- ---- 0.05 0.05 deferred taxes 0.04 0.02 (0.02) (0.07) (0.12) net diluted earnings per share (non-gaap) 0.98 1.21 1.65 4.11 4.44 reconciliation of gaap to non-gaap no. of shares used in net diluted eps three months ended year ended december 31, 2020 september 30, 2020 december 31, 2019 december 31, 2020 december 31, 2019 number of shares used in computing net diluted earnings per share (gaap) 53,496,384 53,144,188 50,966,778 52,795,475 50,195,661 stock-based compensation 865,179 1,134,877 1,774,490 1,138,517 2,011,807 notes due 2025 2,276,818 ---- ---- 618,701 ---- number of shares used in computing net diluted earnings per share (non-gaap) 56,638,381 54,279,065 52,741,268 54,552,693 52,207,468
