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SolarEdge Announces Fiscal Fourth Quarter and Year End 2016 Financial Results

August 9, 2016 4:06 PM

FREMONT, Calif.--(BUSINESS WIRE)-- SolarEdge Technologies, Inc. (Nasdaq: SEDG), a global leader in PV inverters, power optimizers, and module-level monitoring services, today announced its financial results for the fiscal fourth quarter and year ended June 30, 2016.

Fourth Quarter and Full Fiscal Year 2016 Highlights

“Our fiscal 2016 results demonstrate consistent and strong execution with record revenues and 51% annual growth. We maintain our profitability and continue to generate cash flow from our operations, quarter over quarter. While this quarter is characterized by a general slowdown in the residential U.S. market, we were able to compensate with increased sales in other geographic regions in which we sell,” said Guy Sella, Founder, Chairman and CEO of SolarEdge. “We remain on target with our plans to grow our business and increase market share without sacrificing gross margins and profitability.”

Fourth Quarter 2016 Summary

The Company reported revenues of $124.8 million for fiscal Q4 2016, a decrease of 0.4% from the prior quarter and increase of 26.8% from fiscal Q4 2015.

GAAP gross margin reached 31.4% for fiscal Q4 2016, down slightly from 32.5% in the prior quarter and up from 28.7% in fiscal Q4 2015.

Non-GAAP gross margin was 31.6% for fiscal Q4 2016, down slightly from 32.7% in the prior quarter and up from 28.9% in fiscal Q4 2015.

GAAP operating expenses were $21.2 million for fiscal Q4 2016, consistent with $21.0 million, from the prior quarter and an increase from $16.4 million in fiscal Q4 2015.

GAAP operating income was $17.9 million for fiscal Q4 2016, down from $19.7 million in the prior quarter and up from $11.9 million in fiscal Q4 2015.

GAAP net income was $17.3 million for fiscal Q4 2016, down from $20.8 million in the prior quarter and up from $9.3 million in fiscal Q4 2015.

Non-GAAP net income was $19.9 million for fiscal Q4 2016, a decrease from $23.3 million in the prior quarter and an increase from $13.8 million in fiscal Q4 2015.

GAAP net diluted earnings per share (“EPS”) was $0.39 for fiscal Q4 2016, down from $0.47 in the prior quarter and up from $0.21 in fiscal Q4 2015.

Non-GAAP net diluted EPS was $0.44 for fiscal Q4 2016, a decrease from $0.51 in the prior quarter and an increase from $0.31 in fiscal Q4 2015.

As of June 30, 2016, cash, cash equivalents, restricted cash and marketable securities totaled $186.6 million, compared to $172.2 million on March 31, 2016. As of June 30, 2016, the Company did not have any debt.

Full Fiscal Year 2016 Summary

For the full fiscal year 2016, the Company reported:

Outlook for the First Fiscal Quarter 2017

The Company also provides guidance for the first fiscal quarter of 2017 as follows:

Conference Call

The Company will host a conference call to discuss these results at 4:30 P.M. Eastern Time on Tuesday, August 9, 2016. The call will be available, live, to interested parties by dialing +1 877-741-4239. For international callers, please dial +1 719-325-4750. The Conference ID number is 8624082. 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 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. SolarEdge is online at http://www.solaredge.com

Use of Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures in this release. 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 Registration Statement on Form S-1 (including the related prospectus), Annual Report on Form 10-K for the fiscal year ended June 30, 2015, 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 August 12, 2015. 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 OPERATIONS

(In thousands, except per share data)

Three months ended

June 30,

Fiscal year ended

June 30,

2016 2015 2016 2015
(unaudited)
Revenues

$

124,752

$

98,420

$

489,843

$

325,078

Cost of revenues 85,639 70,149 337,887 243,295
Gross profit 39,113 28,271 151,956 81,783
Operating expenses:
Research and development, net 9,232 6,701 33,231 22,018
Sales and marketing 8,930 7,432 34,833 24,973
General and administrative 3,067 2,265 12,133 6,535

Total operating expenses

21,229 16,398 80,197 53,526
Operating income 17,884 11,873 71,759 28,257
Other expenses - 104 - 104
Financial income (expenses), net (527 ) (1,699 ) 471

(5,077

)

Income before taxes on income 17,357 10,070 72,230 23,076
Taxes on income (tax benefit) 84 809 (4,379 ) 1,955
Net income

$

17,273

$

9,261

$

76,609

$

21,121

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

June 30,
2016 2015
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 74,032 $ 144,750
Restricted cash 928 3,639
Marketable Securities 59,163 -
Trade receivables, net 72,737 35,428
Prepaid expenses and other accounts receivable 21,340 32,645
Inventories 81,550 73,950

Total current assets

309,750 290,412
PROPERTY AND EQUIPMENT, NET 27,831 14,717
LONG-TERM ASSETS:
Long-term marketable securities 52,446 -
Long-term prepaid expenses and lease deposits 399 529
Deferred tax assets, net 6,296 -
Intangible assets, net 716 -

Total assets

$

397,438

$ 305,658
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables $ 48,481 $ 80,684
Employees and payroll accruals 10,092 6,814
Warranty obligations 14,114 9,431
Deferred revenues 3,859 1,676
Accrued expenses and other accounts payable 10,725 6,987

Total current liabilities

87,271 105,592
LONG-TERM LIABILITIES:
Warranty obligations 37,078 22,448
Deferred revenues 14,684 8,289
Lease incentive obligation 2,297 2,385
Total long-term liabilities 54,059 33,122
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS’ EQUITY:
Share capital 4 4
Additional paid-in capital 299,214 287,152
Accumulated other comprehensive income (loss) 271 (222 )
Accumulated deficit (43,381 ) (119,990 )

Total stockholders’ equity

256,108 166,944

Total liabilities and stockholders’ equity

$ 397,438 $ 305,658

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year ended June 30,
2016 2015 2014

Cash flows provided by (used in) operating activities:

Net income (loss) $ 76,609 $ 21,121 $ (21,378 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation 3,763 2,253 1,978
Amortization of intangible assets 84 - -
Amortization of premiums on available-for-sale marketable securities 532 - -
Stock-based compensation 9,089 2,956 1,082
Financial expenses (income), net related to term loan - (992 ) 431
Remeasurement of warrants to purchase convertible preferred stock - 5,350 (53 )
Capital loss from disposal of property - 104 -
Interest expenses related to short term bank loan - - 44
Changes in assets and liabilities:
Inventories (7,356 ) (48,507 ) (10,681 )
Prepaid expenses and other accounts receivable 10,542 (19,563 ) (7,409 )
Trade receivables, net (37,271 ) (16,333 ) (9,911 )
Deferred tax assets, net (6,380 ) - -
Trade payables (32,200 ) 41,111 19,441
Employees and payroll accruals 3,278 1,668 1,726
Warranty obligations 19,313 13,698 7,803
Deferred revenues 8,578 3,989 (500 )
Accrued expenses and other accounts payable 3,934 2,530 (418 )
Lease incentive obligation (88 ) 2,669 -
Net cash provided by (used in) operating activities 52,427 12,054 (17,845 )

Cash flows from investing activities:

Purchase of property and equipment (15,690 ) (11,765 ) (2,990 )
Purchase of intangible assets (800 ) - -
Decrease (increase) in restricted cash 2,711 (2,038 ) (156 )
Decrease (increase) in long-term lease deposit 103 (134 ) (1 )
Investment in available-for-sale marketable securities (118,511 ) - -
Maturities of available-for-sale marketable securities 6,350 - -
Net cash used in investing activities (125,837 ) (13,937 ) (3,147 )
Cash flows from financing activities:
Proceeds from short term bank loan - 23,000 21,813
Repayment of short term bank loan - (36,326 ) (12,447 )
Repayments of term loan - (5,919 ) (2,401 )
Proceeds from issuance of Series D-2 Convertible Preferred stock, net - - 669
Proceeds from issuance of Series D-3 Convertible Preferred stock, net - - 9,991
Proceeds from issuance of Series E Convertible Preferred stock, net - 24,712 -
Proceeds from initial public offering, net - 131,402 -
Proceeds from issuance of shares under stock purchase plan and upon exercise of options 2,973 84 51
Issuance costs related to initial public offering (194 ) - -
Net cash provided by financing activities 2,779 136,953 17,676
Increase (decrease) in cash and cash equivalents (70,631 ) 135,070 (3,316 )
Cash and cash equivalents at the beginning of the period 144,750 9,754 13,142
Effect of exchange rate differences on cash and cash equivalents (87 ) (74 ) (72 )
Cash and cash equivalents at the end of the period $ 74,032 $ 144,750 $ 9,754
SOLAREDGE TECHNOLOGIES INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except per share data)
(unaudited)
Reconciliation of Non-GAAP Financial Measures
Reconciliation of GAAP to Non-GAAP Gross Profit
Three months ended 12 months ended

June 30, 2016

Mar 31, 2016

June 30, 2015

June 30, 2016

June 30, 2015(1)

Gross profit (GAAP) 39,113 40,734 28,271 151,956 81,783
Stock-based compensation 310 246 188 945 442
Gross profit (Non-GAAP) 39,423 40,980 28,459 152,901 82,225
Reconciliation of GAAP to Non-GAAP Gross Margin
Three months ended 12 months ended
June 30, 2016 Mar 31, 2016 June 30, 2015 June 30, 2016 June 30, 2015(1)
Gross margin (GAAP) 31.4% 32.5% 28.7% 31.0% 25.2%
Stock-based compensation 0.2% 0.2% 0.2% 0.2% 0.1%
Gross margin (Non-GAAP) 31.6% 32.7% 28.9% 31.2% 25.3%
Reconciliation of GAAP to Non-GAAP Operating expenses
Three months ended 12 months ended
June 30, 2016 Mar 31, 2016 June 30, 2015 June 30, 2016 June 30, 2015(1)
Operating expenses (GAAP) 21,229 20,995 16,398 80,197 53,526
Stock-based compensation R&D 747 724 184 2,384 634
Stock-based compensation S&M 730 842 263 2,937 809
Stock-based compensation G&A 613 819 569 2,823 1,071
Operating expenses (Non-GAAP) 19,138 18,610 15,382 72,052 51,012
Reconciliation of GAAP to Non-GAAP Operating income
Three months ended 12 months ended
June 30, 2016 Mar 31, 2016 June 30, 2015 June 30, 2016 June 30, 2015(1)
Operating income (GAAP) 17,884 19,739 11,873 71,759 28,257
Stock-based compensation 2,401 2,631 1,204 9,090 2,956
Operating income (Non-GAAP) 20,285 22,370 13,077 80,849 31,213
Reconciliation of GAAP to Non-GAAP Finance expenses
Three months ended 12 months ended
June 30, 2016 Mar 31, 2016 June 30, 2015 June 30, 2016 June 30, 2015(1)
Finance expenses (Income) (GAAP) 527 (2,029) 1,699 (471) 5,077
Warrants remeasurement ---- ---- 3,285 ---- 5,350
Finance expenses (Income) (Non-GAAP) 527 (2,029) (1,586) (471) (273)
Reconciliation of GAAP to Non-GAAP Tax on income (Tax benefit)
Three months ended 12 months ended
June 30, 2016 Mar 31, 2016 June 30, 2015 June 30, 2016 June 30, 2015(1)
Tax on income (Tax benefit) (GAAP) 84 969 809 (4,379) 1,955
Tax benefit due to deferred tax asset (247) 100 ---- 6,380 ----
Tax on income (Tax benefit) (Non-GAAP) (163) 1,069 809 2,001 1,955
Reconciliation of GAAP to Non-GAAP Net income
Three months ended 12 months ended
June 30, 2016 Mar 31, 2016 June 30, 2015 June 30, 2016 June 30, 2015(1)
Net income (GAAP) 17,273 20,799 9,261 76,609 21,121
Stock-based compensation 2,401 2,631 1,204 9,090 2,956
Warrants remeasurement ---- ---- 3,285 ---- 5,350
Tax benefit due to deferred tax asset 247 (100) ---- (6,380) ----
Net income (Non-GAAP) 19,921 23,330 13,750 79,319 29,427
Reconciliation of GAAP to Non-GAAP Net basic EPS
Three months ended 12 months ended
June 30, 2016 Mar 31, 2016 June 30, 2015 June 30, 2016 June 30, 2015(1)
Net basic earnings per share (GAAP) 0.42 0.52 0.24 1.92 0.30
Stock-based compensation 0.06 0.06 0.03 0.22 0.09
Warrants remeasurement ---- ---- 0.08 ---- 0.15
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods ---- ---- ---- ---- 0.31
Tax benefit due to deferred tax asset 0.01 ---- ---- (0.16) ----
Net basic earnings per share (Non-GAAP) 0.49 0.58 0.35 1.98 0.85
Reconciliation of GAAP to Non-GAAP No. of shares used in net basic EPS
Three months ended 12 months ended
June 30, 2016 Mar 31, 2016 June 30, 2015 June 30, 2016 June 30, 2015(1)
Number of shares used in computing net basic earnings per share (GAAP) 40,776,059 40,362,093 39,160,372 39,987,935 11,902,911
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods ---- ---- ---- ---- 22,518,959
Number of shares used in computing net basic earnings per share (Non-GAAP) 40,776,059 40,362,093 39,160,372 39,987,935 34,421,870
Reconciliation of GAAP to Non-GAAP Net diluted EPS
Three months ended 12 months ended
June 30, 2016 Mar 31, 2016 June 30, 2015 June 30, 2016 June 30, 2015(1)
Net diluted earnings per share (GAAP) 0.39 0.47 0.21 1.73 0.27
Stock-based compensation 0.04 0.04 0.02 0.16 0.07
Warrants remeasurement ---- ---- 0.08 ---- 0.14
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods ---- ---- ---- ---- 0.29
Tax benefit due to deferred tax asset 0.01 ---- ---- (0.15) ----
Net diluted earnings per share (Non-GAAP) 0.44 0.51 0.31 1.74 0.77
Reconciliation of GAAP to Non-GAAP No. of shares used in Net diluted EPS
Three months ended 12 months ended
June 30, 2016 Mar 31, 2016 June 30, 2015 June 30, 2016 June 30, 2015(1)
Number of shares used in computing net diluted earnings per share (GAAP) 44,463,087 44,577,901 44,473,080 44,376,075 15,269,448
Stock-based compensation 1,216,866 1,071,876 319,840 1,079,137 582,962
Warrants remeasurement ---- ---- 126,634 ---- 59,288
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods ---- ---- ---- ---- 22,518,959
Number of shares used in computing net diluted earnings per share (Non-GAAP) 45,679,953 45,649,777 44,919,554 45,455,212 38,430,656
(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.

Investor Contacts

SolarEdge Technologies, Inc.

Ronen Faier, +1 510-498-3263

Chief Financial Officer

[email protected]

or

Sapphire Investor Relations, LLC

Erica Mannion, +1 617-542-6180

Michael Funari, +1 617-542-6180

[email protected]

Source: SolarEdge Technologies, Inc.

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