☒ |
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
|
Delaware
|
20-5338862
|
|
(State or other jurisdiction of
incorporation or organization)
|
(IRS Employer
Identification No.) |
|
1 HaMada Street
Herziliya Pituach 4673335, Israel (Address of principal executive offices, zip code) |
||
972 (9) 957-6620
|
||
(Registrant’s telephone number, including area code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common stock, par value $0.0001 per share
|
SEDG
|
NASDAQ (Global Select Market)
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐ (Do not check if a smaller reporting company)
|
Smaller Reporting Company
|
☐
|
Emerging growth company
|
☐
|
Page
|
|
F-2 - F-3
|
|
F-4
|
|
F-5
|
|
F-6 - F-7
|
|
F-8 - F-9
|
|
F-10 - F-26
|
March 31,
|
December 31,
|
|||||||
2019
|
2018
|
|||||||
Unaudited
|
||||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$
|
226,478
|
$
|
191,633
|
||||
Short-term bank deposits
|
6,057
|
6,001
|
||||||
Restricted cash
|
1,811
|
1,628
|
||||||
Marketable securities
|
107,064
|
118,680
|
||||||
Trade receivables, net
|
187,496
|
173,579
|
||||||
Prepaid expenses and other current assets
|
37,828
|
45,073
|
||||||
Inventories
|
150,798
|
141,519
|
||||||
Total current assets
|
717,532
|
678,113
|
||||||
LONG-TERM ASSETS:
|
||||||||
Marketable securities
|
57,252
|
74,256
|
||||||
Operating lease right-of-use assets
|
30,839
|
-
|
||||||
Property, plant and equipment, net
|
132,988
|
119,329
|
||||||
Deferred tax assets, net
|
14,589
|
14,699
|
||||||
Intangible assets, net and Goodwill
|
211,420
|
73,378
|
||||||
Other non-current assets
|
12,303
|
4,697
|
||||||
Total long term assets
|
459,391
|
286,359
|
||||||
Total assets
|
$
|
1,176,923
|
$
|
964,472
|
March 31,
|
December 31,
|
|||||||
2019
|
2018
|
|||||||
Unaudited
|
||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
CURRENT LIABILITIES:
|
||||||||
Trade payables, net
|
$
|
90,190
|
$
|
107,079
|
||||
Employees and payroll accruals
|
31,524
|
29,053
|
||||||
Current maturities of bank loans and accrued interest
|
17,233
|
16,639
|
||||||
Warranty obligations
|
35,229
|
28,868
|
||||||
Deferred revenues
|
13,527
|
14,351
|
||||||
Accrued expenses and other current liabilities
|
60,369
|
29,728
|
||||||
Total current liabilities
|
248,072
|
225,718
|
||||||
LONG-TERM LIABILITIES:
|
||||||||
Bank loans
|
7,029
|
3,510
|
||||||
Warranty obligations
|
101,517
|
92,958
|
||||||
Deferred revenues
|
66,037
|
60,670
|
||||||
Operating lease liabilities
|
24,790
|
-
|
||||||
Deferred tax liabilities, net
|
8,544
|
1,499
|
||||||
Other non-current liabilities
|
23,417
|
9,391
|
||||||
Total long-term liabilities
|
231,334
|
168,028
|
||||||
COMMITMENTS AND CONTINGENT LIABILITIES
|
||||||||
STOCKHOLDERS’ EQUITY:
|
||||||||
Common stock of $0.0001 par value - Authorized: 125,000,000 shares as of March 31, 2019 (unaudited) and December 31, 2018; issued and outstanding: 47,501,363 and 46,052,802 shares as of March 31, 2019 (unaudited) and December 31, 2018, respectively
|
5
|
5
|
||||||
Additional paid-in capital
|
417,385
|
371,794
|
||||||
Accumulated other comprehensive loss
|
(1,220
|
)
|
(524
|
)
|
||||
Retained earnings
|
210,149
|
191,133
|
||||||
Total SolarEdge Technologies, Inc. stockholders’ equity
|
626,319
|
562,408
|
||||||
Non-controlling interests
|
71,198
|
8,318
|
||||||
Total stockholders’ equity
|
697,517
|
570,726
|
||||||
Total liabilities and stockholders’ equity
|
$
|
1,176,923
|
$
|
964,472
|
Three months ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Unaudited
|
||||||||
Revenues
|
$
|
271,871
|
$
|
209,871
|
||||
Cost of revenues
|
185,761
|
130,274
|
||||||
Gross profit
|
86,110
|
79,597
|
||||||
Operating expenses:
|
||||||||
Research and development
|
26,199
|
17,875
|
||||||
Sales and marketing
|
20,172
|
16,205
|
||||||
General and administrative
|
11,691
|
4,753
|
||||||
Total operating expenses
|
58,062
|
38,833
|
||||||
Operating income
|
28,048
|
40,764
|
||||||
Financial expenses (income), net
|
6,151
|
(584
|
)
|
|||||
Income before taxes on income
|
21,897
|
41,348
|
||||||
Taxes on income
|
3,922
|
5,662
|
||||||
Net income
|
$
|
17,975
|
$
|
35,686
|
||||
Net loss attributable to Non-controlling interests
|
1,041
|
-
|
||||||
Net income attributable to SolarEdge Technologies, Inc.
|
$
|
19,016
|
$
|
35,686
|
||||
Net basic earnings per share of common stock attributable to SolarEdge Technologies, Inc.
|
$
|
0.40
|
$
|
0.81
|
||||
Net diluted earnings per share of common stock attributable to SolarEdge Technologies, Inc.
|
$
|
0.39
|
$
|
0.75
|
||||
Weighted average number of shares used in computing net basic earnings per share of common stock
|
47,020,218
|
44,231,679
|
||||||
Weighted average number of shares used in computing net diluted earnings per share of common stock
|
49,026,327
|
47,673,522
|
Three months ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Unaudited
|
||||||||
Net income
|
$
|
17,975
|
$
|
35,686
|
||||
Other comprehensive income (loss):
|
||||||||
Available-for-sale securities:
|
||||||||
Changes in unrealized gains (losses) net of tax
|
485
|
(510
|
)
|
|||||
Reclassification adjustments for losses included in net income
|
120
|
-
|
||||||
Net change
|
605
|
(510
|
)
|
|||||
Foreign currency translation adjustments, net
|
(1,301
|
)
|
(14
|
)
|
||||
Total other comprehensive loss
|
(696
|
)
|
(524
|
)
|
||||
Comprehensive income
|
$
|
17,279
|
$
|
35,162
|
||||
Comprehensive loss attributable to Non-controlling interests
|
849
|
-
|
||||||
Comprehensive income attributable to SolarEdge Technologies, Inc.
|
$
|
18,128
|
$
|
35,162
|
SolarEdge Technologies, Inc. Stockholders’ Equity
|
||||||||||||||||||||||||||||||||
Common stock
|
Additional paid in
Capital
|
Accumulated
Other comprehensive
Income (loss)
|
Retained earnings
|
Total
|
Non-controlling interests
|
Total stockholders’
equity
|
||||||||||||||||||||||||||
Number
|
Amount
|
|||||||||||||||||||||||||||||||
Balance as of January 1, 2018
|
43,812,601
|
$
|
4
|
$
|
331,902
|
$
|
(611
|
)
|
$
|
66,172
|
$
|
397,467
|
$
|
-
|
$
|
397,467
|
||||||||||||||||
|
||||||||||||||||||||||||||||||||
Cumulative effect of adopting ASC 606
|
-
|
-
|
-
|
-
|
(3,872
|
)
|
(3,872
|
)
|
-
|
(3,872
|
)
|
|||||||||||||||||||||
Issuance of Common Stock upon exercise of employee and non-employees stock-based awards
|
1,084,507
|
* -
|
4,605
|
-
|
-
|
4,605
|
-
|
4,605
|
||||||||||||||||||||||||
Equity based compensation expenses to employees and non-employee consultants
|
-
|
-
|
6,849
|
-
|
-
|
6,849
|
-
|
6,849
|
||||||||||||||||||||||||
Other comprehensive loss adjustments
|
-
|
-
|
-
|
(524
|
)
|
-
|
(524
|
)
|
-
|
(524
|
)
|
|||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
35,686
|
35,686
|
-
|
35,686
|
||||||||||||||||||||||||
Balance as of March 31, 2018
|
44,897,108
|
$
|
4
|
$
|
343,356
|
$
|
(1,135
|
)
|
$
|
97,986
|
$
|
440,211
|
$
|
-
|
$
|
440,211
|
SolarEdge Technologies, Inc. Stockholders’ Equity
|
||||||||||||||||||||||||||||||||
Common stock
|
Additional paid in
Capital
|
Accumulated
Other comprehensive
Income (loss)
|
Retained earnings
|
Total
|
Non-controlling interests
|
Total stockholders’
equity
|
||||||||||||||||||||||||||
Number
|
Amount
|
|||||||||||||||||||||||||||||||
Balance as of January 1, 2019
|
46,052,802
|
$
|
5
|
$
|
371,794
|
$
|
(524
|
)
|
$
|
191,133
|
$
|
562,408
|
$
|
8,318
|
$
|
570,726
|
||||||||||||||||
-
|
||||||||||||||||||||||||||||||||
Issuance of Common Stock upon exercise of employee and non-employees stock-based awards
|
254,515
|
* -
|
309
|
-
|
-
|
309
|
-
|
309
|
||||||||||||||||||||||||
Equity based compensation expenses to employees and non-employee consultants
|
-
|
-
|
9,704
|
-
|
-
|
9,704
|
-
|
9,704
|
||||||||||||||||||||||||
Consideration in common stock related to business combination
|
1,194,046
|
* -
|
34,601
|
-
|
-
|
34,601
|
-
|
34,601
|
||||||||||||||||||||||||
Non-controlling interests related to business combination
|
-
|
-
|
-
|
-
|
-
|
-
|
67,734 |
67,734
|
||||||||||||||||||||||||
Change to Non-controlling interests
|
-
|
-
|
977
|
-
|
-
|
977
|
(2,964
|
)
|
(1,987
|
)
|
||||||||||||||||||||||
Other comprehensive income adjustments
|
-
|
-
|
-
|
(696
|
)
|
-
|
(696
|
)
|
(849
|
)
|
(1,545
|
)
|
||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
19,016
|
19,016
|
(1,041
|
)
|
17,975
|
|||||||||||||||||||||||
Balance as of March 31, 2019
|
47,501,363
|
$
|
5
|
$
|
417,385
|
$
|
(1,220
|
)
|
$
|
210,149
|
$
|
626,319
|
$
|
71,198
|
$
|
697,517
|
Three months ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Unaudited
|
||||||||
Cash flows provided by operating activities:
|
||||||||
Net income
|
$
|
17,975
|
$
|
35,686
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation of property, plant and equipment
|
3,870
|
2,394
|
||||||
Amortization of intangible assets
|
1,971
|
36
|
||||||
Amortization of premium and accretion of discount on available-for-sale marketable securities
|
(59
|
)
|
778
|
|||||
Stock-based compensation
|
9,704
|
6,849
|
||||||
Capital loss from disposal of equipment
|
66
|
64
|
||||||
Realized loss from sale of available-for-sale marketable securities
|
120
|
-
|
||||||
Changes in assets and liabilities:
|
||||||||
Inventories
|
964
|
(15,348
|
)
|
|||||
Prepaid expenses and other assets
|
10,885
|
9,210
|
||||||
Trade receivables, net
|
(7,379
|
)
|
(17,935
|
)
|
||||
Operating lease right-of-use assets and liabilities, net and effect of exchange rate differences
|
828
|
(74
|
)
|
|||||
Deferred tax assets and liabilities, net
|
(973
|
)
|
(1,321
|
)
|
||||
Trade payables, net
|
(21,720
|
)
|
13,595
|
|||||
Employees and payroll accruals
|
3,250
|
7,153
|
||||||
Warranty obligations
|
14,947
|
9,384
|
||||||
Deferred revenues
|
1,730
|
6,981
|
||||||
Other liabilities
|
20,271
|
6,527
|
||||||
Net cash provided by operating activities
|
56,450
|
63,979
|
||||||
Cash flows from investing activities:
|
||||||||
Business combination, net of cash acquired
|
(39,315
|
)
|
-
|
|||||
Purchase of property, plant and equipment
|
(10,620
|
)
|
(11,325
|
)
|
||||
Investment in short term bank deposits
|
(56
|
)
|
-
|
|||||
Investment in available-for-sale marketable securities
|
(15,316
|
)
|
(25,436
|
)
|
||||
Proceeds from sales and maturities of available-for-sale marketable securities
|
44,575
|
34,500
|
||||||
Net cash used in investing activities
|
$
|
(20,732
|
)
|
$
|
(2,261
|
)
|
Three months ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Unaudited
|
||||||||
Cash flows from financing activities:
|
||||||||
Proceeds from bank loans borrowing
|
$
|
51
|
$
|
-
|
||||
Payments of bank loans
|
(1,003
|
)
|
-
|
|||||
Proceeds from issuance of shares under stock purchase plan and upon exercise of stock-based awards
|
309
|
4,605
|
||||||
Change in Non-controlling interests
|
(1,987
|
)
|
-
|
|||||
Net cash provided by (used in) financing activities
|
(2,630
|
)
|
4,605
|
|||||
Increase in cash, cash equivalents and restricted cash
|
33,088
|
66,323
|
||||||
Cash, cash equivalents and restricted cash at the beginning of the period
|
193,261
|
164,679
|
||||||
Effect of exchange rate differences on cash, cash equivalents and restricted cash
|
1,940
|
(17
|
)
|
|||||
Cash, cash equivalents and restricted cash at the end of the period
|
$
|
228,289
|
$
|
230,985
|
||||
Supplemental disclosure of non-cash activities:
|
||||||||
Operating lease, right of use asset
|
$
|
32,531
|
$
|
-
|
NOTE 1:- |
GENERAL
|
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), (iii) a related cloud-based monitoring platform, that collects and processes information from the power optimizers and inverters of a solar PV system to enable customers and system owners as applicable, to monitor and manage the solar PV systems and (iv) a storage solution that is used to increase energy independence and maximize self-consumption for homeowners by utilizing a battery that is sold separately by third party manufacturers, to store and supply power as needed (the “StorEdge solution”). The StorEdge solution is designed to provide smart energy functions such as maximizing self-consumption, Time-of-Use programming for desired hours of the day, and home energy backup solutions.
|
b. |
New accounting pronouncements not yet effective:
|
NOTE 1:- |
GENERAL (Cont.)
|
c. |
Recently issued and adopted pronouncement:
|
d. |
Basis of Presentation:
|
NOTE 1:- |
GENERAL (Cont.)
|
e. |
The Company depends on three contract manufacturers and several limited or single source component suppliers. The Company is in the process of discontinuing its activity with one of those contract manufacturers. Reliance on these vendors makes the Company vulnerable to possible capacity constraints and reduced control over component availability, delivery schedules, manufacturing yields, and costs.
|
f. |
Business Combination:
|
g. |
Accounting for share-based compensation:
|
h. |
Certain prior period amounts have been reclassified to conform to the current period presentation.
|
NOTE 2:- |
BUSINESS COMBINATION
|
Components of Purchase Price:
|
||||
Cash
|
$
|
42,240
|
||
Less cash acquired
|
(2,925
|
)
|
||
Common stock
|
34,601
|
|||
Total purchase price
|
$
|
73,916
|
||
Allocation of Purchase Price:
|
||||
Total net identifiable assets
|
$
|
9,916
|
||
Total identifiable intangible assets, net and Goodwill (1)
|
131,734
|
|||
Noncontrolling interest
|
(67,734
|
)
|
||
Total purchase price allocation (2)
|
$
|
73,916
|
(1) |
The intangible assets comprised primarily of technology, in process research and development and customer relationships.
|
NOTE 2:- |
BUSINESS COMBINATION (Cont.)
|
(2) |
The Company is expecting to complete the preliminary estimated purchase price allocation during the measurement period of one year from January 24, 2019. Fair values that are still under review include among others, values assigned to identifiable intangible assets, goodwill, deferred income taxes and contingent liabilities.
|
Three months ended March 31,
|
||||||||
2019
|
2018
|
|||||||
Unaudited
|
||||||||
Revenue
|
$
|
272,943
|
$
|
231,784
|
||||
Net income
|
$
|
16,610
|
$
|
28,654
|
NOTE 3:- |
INTANGIBLE ASSETS AND GOODWILL
|
As of March 31, 2019
|
As of December 31, 2018
|
|||||||
Intangible assets with finite lived:
|
||||||||
Current technology
|
$
|
30,214
|
$
|
30,821
|
||||
Customer relationships
|
3,793
|
3,857
|
||||||
Trade names
|
3,642
|
3,721
|
||||||
Patents
|
1,400
|
1,400
|
||||||
Backlog
|
193
|
193
|
||||||
Gross intangible assets
|
39,242
|
39,992
|
||||||
Less - accumulated amortization
|
(2,619
|
)
|
(1,488
|
)
|
||||
Total intangible assets, net
|
36,623
|
38,504
|
||||||
Goodwill:
|
||||||||
Goodwill from business combinations
|
34,874
|
34,445
|
||||||
Foreign currency translation
|
(678
|
)
|
429
|
|||||
Goodwill
|
34,196
|
34,874
|
||||||
Intangible assets with finite lived, net and goodwill resulting from SMRE Acquisition
|
140,601
|
-
|
||||||
Total Intangible assets with finite lived, net and goodwill
|
$
|
211,420
|
$
|
73,378
|
NOTE 4:- |
INVENTORIES
|
March 31,
2019
|
December 31,
2018
|
|||||||
(unaudited)
|
||||||||
Raw materials
|
$
|
55,133
|
$
|
39,380
|
||||
Work in process
|
21,332
|
18,115
|
||||||
Finished goods
|
74,333
|
84,024
|
||||||
$
|
150,798
|
$
|
141,519
|
NOTE 5:- |
WARRANTY OBLIGATIONS
|
Three months ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
(unaudited)
|
||||||||
Balance, at beginning of period
|
$
|
121,826
|
$
|
78,811
|
||||
Additions and adjustments to cost of revenues
|
22,105
|
13,159
|
||||||
Usage and current warranty expenses
|
(7,185
|
)
|
(3,775
|
)
|
||||
Balance, at end of period
|
136,746
|
88,195
|
||||||
Less current portion
|
(35,229
|
)
|
(16,605
|
)
|
||||
Long term portion
|
$
|
101,517
|
$
|
71,590
|
NOTE 6:- |
FAIR VALUE MEASUREMENTS
|
NOTE 6:- |
FAIR VALUE MEASUREMENTS (Cont.)
|
Fair value measurements
as of
|
||||||||||
Fair Value |
March 31,
|
December 31,
|
||||||||
Description
|
Hierarchy
|
2019
|
2018
|
|||||||
(unaudited)
|
||||||||||
Measured at fair value on a recurring basis:
|
||||||||||
Assets:
|
||||||||||
Cash equivalents:
|
||||||||||
Money market mutual funds
|
Level 1
|
$
|
3,050
|
$
|
1,767
|
|||||
Short-term marketable
securities:
|
||||||||||
Corporate bonds
|
Level 2
|
101,734
|
110,385
|
|||||||
Governmental bonds
|
Level 2
|
5,330
|
8,295
|
|||||||
Long-term marketable
securities:
|
||||||||||
Corporate bonds
|
Level 2
|
57,252
|
74,256
|
|||||||
Governmental bonds
|
Level 2
|
-
|
-
|
|||||||
Liabilities
|
||||||||||
Long-term Earn-out provision
|
Level 3
|
(1,045
|
)
|
(332
|
)
|
NOTE 7:- |
LEASES
|
NOTE 7:- |
LEASES (cont.)
|
Classification on the condensed consolidated Balance Sheet
|
As of March 31, 2019
|
|||||
Assets
|
||||||
Operating lease assets, net of lease incentive obligation
|
Operating lease right-of-use assets
|
$
|
30,839
|
|||
Finance lease assets
|
Property, plant and equipment, net
|
2,905
|
||||
Total lease assets
|
$
|
33,744
|
||||
Liabilities
|
||||||
Operating and finance leases short term
|
Accrued expenses and other current liabilities
|
$
|
8,808
|
|||
Operating leases long term
|
Operating lease liabilities
|
24,790
|
||||
Finance leases long term
|
Other non-current liabilities
|
2,045
|
||||
Total lease liabilities
|
$
|
35,643
|
||||
Weighted average remaining lease term in years
|
||||||
Operating leases
|
5.08
|
|||||
Finance leases
|
8.67
|
|||||
Weighted average annual discount rate
|
||||||
Operating leases
|
1.56
|
%
|
||||
Finance leases
|
2.87
|
%
|
Three months
ended March
31, 2019
|
||||
Finance lease cost
|
||||
Amortization of leased assets
|
$
|
27
|
||
Interest on lease liabilities
|
16
|
|||
Operating lease cost
|
2,231
|
|||
Total lease cost
|
$
|
2,274
|
NOTE 7:- |
LEASES (cont.)
|
Three months
ended March
31, 2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities
|
||||
Operating cash flows for operating leases
|
$
|
2,231
|
Operating
Lease
|
Finance
Leases
|
|||||||
2019
|
$
|
6,632
|
$
|
156
|
||||
2020
|
7,444
|
208
|
||||||
2021
|
6,443
|
208
|
||||||
2022
|
5,470
|
194
|
||||||
2023
|
4,732
|
194
|
||||||
Thereafter
|
4,435
|
1,620
|
||||||
Total lease payments
|
35,156
|
2,580
|
||||||
Less: amount of lease payments representing interest
|
(1,737
|
)
|
(356
|
)
|
||||
Present value of future lease payments
|
33,419
|
2,224
|
||||||
Less: current obligations under leases
|
(8,629
|
)
|
(179
|
)
|
||||
Long-term lease obligations
|
$
|
24,790
|
$
|
2,045
|
NOTE 8:- |
COMMITMENTS AND CONTINGENT LIABILITIES
|
a. |
Guarantees:
|
b. |
Contractual purchase obligations:
|
NOTE 8:- |
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
|
c. |
Legal claims:
|
NOTE 9:- |
STOCK CAPITAL
|
a. |
Common Stock:
|
Number of shares
|
||||||||||||||||
Authorized
|
Issued and outstanding
|
|||||||||||||||
March 31, 2019
|
December 31, 2018
|
March 31, 2019
|
December 31, 2018
|
|||||||||||||
(unaudited)
|
(unaudited)
|
|||||||||||||||
Stock of $0.0001 par value:
|
||||||||||||||||
Common stock
|
125,000,000
|
125,000,000
|
47,501,363
|
46,052,802
|
b. |
Stock Incentive plans:
|
NOTE 9:- |
STOCK CAPITAL (Cont.)
|
c. |
Options granted to employees and members of the board of directors:
|
Weighted
|
||||||||||||||||
average
|
||||||||||||||||
Weighted
|
remaining
|
|||||||||||||||
Number
|
average
|
contractual
|
Aggregate
|
|||||||||||||
of
|
exercise
|
term
|
intrinsic
|
|||||||||||||
Options
|
price
|
in years
|
Value
|
|||||||||||||
Outstanding as of December 31, 2018
|
2,401,893
|
11.04
|
6.19
|
58,323
|
||||||||||||
Granted
|
267,852
|
36.15
|
||||||||||||||
Exercised
|
(25,512
|
)
|
11.33
|
|||||||||||||
Forfeited or expired
|
(10,625
|
)
|
14.51
|
|||||||||||||
Outstanding as of March 31, 2019
|
2,633,608
|
13.58
|
6.33
|
63,544
|
||||||||||||
Vested and expected to vest as of March 31, 2019
|
2,592,033
|
13.44
|
6.30
|
62,901
|
||||||||||||
Exercisable as of March 31, 2019
|
1,896,037
|
8.32
|
5.46
|
55,675
|
NOTE 9:- |
STOCK CAPITAL (Cont.)
|
Number of
RSUs
|
Weighted average
grant date fair value
|
|||||||
Unvested as of December 31, 2018
|
2,807,232
|
34.40
|
||||||
Granted
|
306,562
|
38.55
|
||||||
Vested
|
(223,210
|
)
|
31.14
|
|||||
Forfeited
|
(96,018
|
)
|
33.91
|
|||||
Unvested as of March 31, 2019
|
2,794,566
|
35.13
|
e. |
Options and RSUs issued to non-employee consultants:
|
Outstanding
|
Exercisable
|
|||||||||||
as of
|
as of
|
|||||||||||
Issuance
|
March 31,
|
Exercise
|
March 31,
|
Options exercisable
|
||||||||
Date
|
2019
|
price
|
2019
|
through
|
||||||||
2014
|
6,023
|
$3.51 - $5.01
|
5,245
|
October 29, 2024
|
||||||||
2015
|
2,127
|
$0.00
|
-
|
|||||||||
2016
|
5,001
|
$0.00 - $15.34
|
-
|
September 21, 2026
|
||||||||
2017
|
13,126
|
$0.00 - $13.70
|
-
|
March 15, 2027
|
||||||||
2018
|
19,496
|
$0.00
|
-
|
|||||||||
2019
|
9,499
|
$0.00
|
-
|
|||||||||
55,272
|
5,245
|
NOTE 9:- |
STOCK CAPITAL (Cont.)
|
f. |
Employee Stock Purchase Plan (“ESPP”):
|
g. |
Stock-based compensation expense for employees and non-employee consultants:
|
Three months ended March 31,
|
||||||||
2019
|
2018
|
|||||||
Cost of revenues
|
$
|
1,354
|
$
|
924
|
||||
Research and development
|
3,490
|
2,382
|
||||||
Selling and marketing
|
2,404
|
2,204
|
||||||
General and administrative
|
2,456
|
1,339
|
||||||
Total stock-based compensation expense
|
$
|
9,704
|
$
|
6,849
|
NOTE 10:- |
BASIC AND DILUTED NET EARNINGS PER SHARE
|
Three months ended March 31,
|
||||||||
2019
|
2018
|
|||||||
Unaudited
|
||||||||
Numerator:
|
||||||||
Net income
|
$
|
17,975
|
$
|
35,686
|
||||
Net loss attributable to Non-controlling interests
|
1,041
|
-
|
||||||
Net income attributable to SolarEdge Technologies, Inc.
|
$
|
19,016
|
$
|
35,686
|
||||
Denominator:
|
||||||||
Shares used in computing net earnings per share of common stock, basic
|
47,020,218
|
44,231,679
|
||||||
Effect of stock-based awards
|
2,006,109
|
3,441,843
|
||||||
Shares used in computing net earnings per share of common stock, diluted
|
49,026,327
|
47,673,522
|
NOTE 11:- |
INCOME TAXES
|
a. |
Taxes on income (tax benefit) are comprised as follows:
|
Three months ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Unaudited
|
||||||||
Current period taxes
|
$
|
4,895
|
$
|
7,001
|
||||
Deferred tax income, net and others
|
(973
|
)
|
(1,339
|
)
|
||||
Taxes on income
|
$
|
3,922
|
$
|
5,662
|
b. |
Deferred income taxes:
|
As of March 31, 2019
|
As of December 31, 2018
|
|||||||
(Unaudited)
|
||||||||
Deferred tax assets, net:
|
||||||||
Research and Development carryforward expenses
|
$
|
8,751
|
$
|
9,482
|
||||
Carryforward tax losses
|
5,384
|
4,155
|
||||||
Stock based compensation expenses
|
3,571
|
3,160
|
||||||
Inventory Impairment
|
1,299
|
1,471
|
||||||
Allowance and other reserves
|
6,675
|
4,340
|
||||||
Total deferred tax assets
|
$
|
25,680
|
$
|
22,608
|
||||
Deferred tax liabilities, net:
|
||||||||
Purchase price allocation adjustments
|
(19,635
|
)
|
(9,408
|
)
|
||||
Total deferred tax liabilities
|
$
|
(19,635
|
)
|
$
|
(9,408
|
)
|
||
Recorded as:
|
||||||||
Deferred tax assets, net
|
$
|
14,589
|
$
|
14,699
|
||||
Deferred tax liabilities, net
|
(8,544
|
)
|
(1,499
|
)
|
||||
Net deferred tax assets
|
$
|
6,045
|
$
|
13,200
|
c. |
Uncertain tax positions:
|
March 31, 2019
|
December 31, 2018
|
|||||||
(Unaudited)
|
||||||||
Balance at January 1,
|
$
|
8,499
|
$
|
579
|
||||
Increases related to current year tax positions
|
1,033
|
8,499
|
||||||
Decreases related to prior year tax positions
|
-
|
(579
|
)
|
|||||
$
|
9,532
|
$
|
8,499
|
NOTE 12:- |
CONCENTRATION OF CREDIT RISK AND MAJOR CUSTOMERS
|
a. |
For the three months period ended March 31, 2019 (unaudited) and 2018 (unaudited), the Company had one major customer that accounted for 14.2% and 20.4% of its condensed consolidated revenues, respectively.
|
b. |
As of March 31, 2019 (unaudited) and as of December 31, 2018, one and two customers accounted for approximately 13.1% and 41.3%, respectively, of the Company’s net accounts receivables.
|
NOTE 13:- |
SEGMENT INFORMATION
|
As of
March 31,
|
As of
December 31,
|
|||||||
2019
|
2018
|
|||||||
Solar
|
$
|
1,038,612
|
$
|
866,868
|
||||
Non-Solar
|
138,311
|
97,604
|
||||||
Total assets
|
$
|
1,176,923
|
$
|
964,472
|
NOTE 14:- |
SUBSEQUENT EVENTS
|
a. |
During the period from March 31, 2019 through May 10, 2019, the Company purchased additional common shares of SMRE in the market and through a tender offer in a total amount of $64.5 million. As of May 10, 2019, the Company holds 99.6% of the outstanding common shares and voting rights of SMRE and such company’s shares have been delisted from the Italian AIM.
|
b. |
On May 8, 2019, the Company received notice that Huawei has filed two lawsuits in the Guangzhou intellectual property court against the Company's two Chinese subsidiaries and its equipment manufacturer in China. The lawsuit alleges infringement of two patents and asks for an injunction of manufacture, use, sale and offer for sale, and damage awards of approximately $3.1 million. The Company has not yet been served, believes that it has meritorious defenses to the claims asserted and intends to vigorously defend against this lawsuit.
|
· |
our limited history of profitability, which may not continue in the future;
|
· |
our limited operating history, which makes it difficult to predict future results;
|
· |
future demand for 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 deliver our products in a cost effective manner;
|
· |
our dependence upon a small number of outside contract manufacturers and 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;
|
· |
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; and
|
the other factors set forth under “Item 1A. Risk Factors” in “Part II-OTHER INFORMATION” section of this report.
|
Three Months Ended
March 31, |
||||||||
2019
|
2018
|
|||||||
Inverters shipped
|
130,672
|
99,646
|
||||||
Power optimizers shipped
|
3,029,102
|
2,475,544
|
||||||
Megawatts shipped (1)
|
1,144
|
800
|
(1) |
Calculated 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,
|
||||||||
2019
|
2018
|
|||||||
(in thousands)
|
||||||||
Revenues
|
$
|
271,871
|
$
|
209,871
|
||||
Cost of revenues
|
185,761
|
130,274
|
||||||
Gross profit
|
86,110
|
79,597
|
||||||
Operating expenses:
|
||||||||
Research and development
|
26,199
|
17,875
|
||||||
Sales and marketing
|
20,172
|
16,205
|
||||||
General and administrative
|
11,691
|
4,753
|
||||||
Total operating expenses
|
58,062
|
38,833
|
||||||
Operating income
|
28,048
|
40,764
|
||||||
Financial expenses (income), net
|
6,151
|
(584
|
)
|
|||||
Income before taxes on income
|
21,897
|
41,348
|
||||||
Taxes on income
|
3,922
|
5,662
|
||||||
Net income
|
$
|
17,975
|
$
|
35,686
|
||||
Net loss attributable to Non-controlling interests
|
1,041
|
-
|
||||||
Net income attributable to SolarEdge Technologies, Inc
|
$
|
19,016
|
$
|
35,686
|
Three Months Ended
March 31,
|
Three Months Ended
March 31,
2018 to 2019
|
|||||||||||||||
2019
|
2018
|
Change
|
||||||||||||||
(in thousands)
|
||||||||||||||||
Revenues
|
$
|
271,871
|
$
|
209,871
|
$
|
62,000
|
29.5
|
%
|
Three Months Ended
March 31,
|
Three Months Ended
March 31,
2018 to 2019
|
|||||||||||||||
2019
|
2018
|
Change
|
||||||||||||||
(in thousands)
|
||||||||||||||||
Cost of revenues
|
$
|
185,761
|
$
|
130,274
|
$
|
55,487
|
42.6
|
%
|
||||||||
Gross profit
|
$
|
86,110
|
$
|
79,597
|
$
|
6,513
|
8.2
|
%
|
· |
an increase in the volume of products sold;
|
· |
inclusion of variable costs related to the assembly of UPS products and the manufacturing of Kokam and SMRE products in the aggregate amount of $14.3 million, which were not included in the cost of goods sold for the three months ended March 31, 2018 as those businesses were acquired after July 2018;
|
· |
increased warranty expenses and warranty accruals of $9.0 million associated with the rapid increase of products in our install base;
|
· |
increased personnel-related costs of $4.3 million connected to the expansion of our operations and support headcount which is growing in parallel to our growing install base worldwide and in connection with entering the UPS, battery and integrated powertrain technology businesses;
|
· |
increased shipment and logistics costs of $2.0 million attributed to the growth in volume of products shipped;
|
· |
increased of amortization of intangible assets and cost of product adjustment of $1.8 million related to the UPS assets acquisition, Kokam Acquisition and SMRE Acquisition; and
|
· |
depreciation expenses related to manufacturing that increased by $0.9 million.
|
· |
increased warranty and support services expenses and accruals;
|
· |
price reductions outpacing our costs reductions, primarily in commercial systems;
|
· |
lower gross profit from our UPS, battery business and SMRE products and due to underutilization of production facilities; and
|
· |
amortization of intangible assets and cost of product adjustment related to the UPS assets acquisition, Kokam Acquisition and SMRE Acquisition.
|
· |
increased efficiency in our supply chain; and
|
· |
general economies of scale in our personnel-related costs and other costs associated with our support and operations departments.
|
Three Months Ended
March 31,
|
Three Months Ended
March 31,
2018 to 2019
|
|||||||||||||||
2019
|
2018
|
Change
|
||||||||||||||
(in thousands)
|
||||||||||||||||
Research and development
|
$
|
26,199
|
$
|
17,875
|
$
|
8,324
|
46.6
|
%
|
· |
an increase in personnel-related costs of $6.1 million resulting from an increase in our research and development headcount as well as salary expenses associated with employee equity compensation. The increase in headcount reflects the inclusion of personnel costs from acquired businesses as well as our continuing investment in enhancements of existing products as well as research and development expenses associated with bringing new products to market;
|
· |
increased expenses related to consultants and sub‑contractors in an amount of $0.9 million;
|
· |
increased expenses related to material consumption costs in an amount of $0.5 million;
|
· |
increased expenses related to other overhead in an amount of $0.4 million; and
|
· |
increased depreciation expenses related to lab equipment in an amount of $0.4 million.
|
Three Months Ended
March 31,
|
Three Months Ended
March 31,
2018 to 2019
|
|||||||||||||||
2019
|
2018
|
Change
|
||||||||||||||
(in thousands)
|
||||||||||||||||
Sales and marketing
|
$
|
20,172
|
$
|
16,205
|
$
|
3,967
|
24.5
|
%
|
· |
an increase in personnel-related costs of $2.4 million as a result of the inclusion of personnel costs from acquired businesses as well as from an increase in headcount supporting our growth in the U.S., Europe, and Asia, as well as salary expenses associated with employee equity compensation;
|
· |
expenses related to amortization of intangible assets that increased by $ 0.9 million;
|
· |
expenses related to other overhead costs and travel that increased by $0.4 million;
|
· |
expenses related to external consultants and sub-contractors, sales and marketing activity and depreciation expenses that increased by $0.2 million; and
|
· |
expenses related to material consumption costs that increased by $0.1 million.
|
Three Months Ended
March 31,
|
Three Months Ended
March 31,
2018 to 2019
|
|||||||||||||||
2019
|
2018
|
Change
|
||||||||||||||
(in thousands)
|
||||||||||||||||
General and administrative
|
$
|
11,691
|
$
|
4,753
|
$
|
6,938
|
146.0
|
%
|
· |
an increase in personnel costs of $3.6 million related to (i) increased headcount resulting from the acquisitions of the UPS business and Kokam and SMRE and increased legal, finance, human resources, and information technology department, functions required of a fast-growing public company; and (ii) increased expenses related to equity-based compensation and changes in management compensation;
|
· |
expenses related to consultants and sub‑contractors that increased by $2.5 million due to legal proceedings initiated by us and other legal expenses in relation to SMRE acquisition costs;
|
· |
expenses related to overhead costs, depreciation, public company related expenses and travel expenses, all of which increased by $0.4 million; and
|
· |
a provision we recorded in the three months ended March 31, 2019, for $0.4 million in expectation of a settlement in a litigation process.
|
Three Months Ended
March 31,
|
Three Months Ended
March 31,
2018 to 2019
|
|||||||||||||||
2019
|
2018
|
Change
|
||||||||||||||
(in thousands)
|
||||||||||||||||
Financial expenses (income), net
|
$
|
6,151
|
$
|
(584
|
) |
$
|
6,735
|
N/A
|
· |
an increase of $6.7 million in foreign exchange fluctuations mainly between the Euro, the New Israeli Shekel, Australian Dollar and the South Korean Won against the U.S. Dollar;
|
· |
an increase of $0.9 million in foreign exchange fluctuations of lease agreements liabilities as part of the adoption of Accounting Standards Update No. 2016-02, (Topic 842) "Leases";
|
· |
an increase of $0.5 million in interest expenses, mainly related to interest on loans and to advance payments received for performance obligations that extend for a period greater than one year, as part of the requirements of Accounting Standards Codification 606, Revenue from Contracts with Customers (ASC 606); and
|
· |
an increase of $0.2 million in bank charges and other financial expenses.
|
· |
a decrease of $1.4 million in costs related to hedging transactions in the three months ended March 31, 2019 as compared to the three months ended March 31, 2018; and
|
· |
a decrease of $0.2 million in interest income and accretion (amortization) of discount (premium) on marketable securities.
|
Three Months Ended
March 31,
|
Three Months Ended
March 31,
2018 to 2019
|
|||||||||||||||
2019
|
2018
|
Change
|
||||||||||||||
(in thousands)
|
||||||||||||||||
Taxes on income
|
$
|
3,922
|
$
|
5,662
|
$
|
(1,740
|
)
|
(30.7
|
)%
|
· |
a decrease of $1.5 million in Global Intangible Low Taxed Income (“GILTI”) tax due to the two-years’ tax holiday in Israel which lapsed on December 31, 2018;
|
· |
a decrease of $0.8 million in transition tax on the federal mandatory deemed repatriation of cumulative foreign earnings;
|
· |
a decrease of $0.4 million in deferred tax assets (presented as tax income), mainly related to deferred tax assets as a result of the Kokam and SMRE acquisitions; and
|
· |
an increase of $0.2 million in current tax expenses in other jurisdictions.
|
Three Months Ended
March 31,
|
Three Months Ended
March 31,
2018 to 2019
|
|||||||||||||||
2019
|
2018
|
Change
|
||||||||||||||
(in thousands)
|
||||||||||||||||
Net income
|
$
|
17,975
|
$
|
35,686
|
$
|
(17,711
|
)
|
(49.6
|
)%
|
Three Months Ended
March 31, |
||||||||
2019
|
2018
|
|||||||
(in thousands)
|
||||||||
Net cash provided by operating activities
|
$
|
56,450
|
$
|
63,979
|
||||
Net cash used in investing activities
|
(20,732
|
)
|
(2,261
|
)
|
||||
Net cash provided by (used in) financing activities
|
(2,630
|
)
|
4,605
|
|||||
Net increase in cash, cash equivalents and restricted cash
|
$
|
33,088
|
$
|
66,323
|
Exhibit
No.
|
Description
|
Incorporation by Reference
(where a report is indicated below, that
document has been previously filed with
the SEC and the applicable exhibit is
incorporated by reference thereto)
|
Incorporated by reference to Exhibit 2.1 to Form 8-K filed with the SEC on January 7, 2019
|
||
Filed with this report.
|
||
Filed with this report.
|
||
Filed with this report.
|
||
Filed with this report.
|
||
101.INS
|
XBRL Instance Document
|
Filed with this report.
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
Filed with this report.
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
Filed with this report.
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
Filed with this report.
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
Filed with this report.
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
Filed with this report.
|
SOLAREDGE TECHNOLOGIES, INC. | |
/s/ Guy Sella | |
Date: May 10, 2019
|
Guy Sella
Chief Executive Officer and Chairman of the Board
(Principal Executive Officer)
|
/s/ Ronen Faier | |
Date: May 10, 2019
|
Ronen Faier
Chief Financial Officer
(Principal Financial and Accounting Officer)
|