SolarEdge Announces Fourth Quarter and Full Year 2017 Financial Results

FREMONT, Calif. — 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 fourth quarter and year ended December 31, 2017.

Fourth Quarter 2017 Highlights
• Total revenues of $189.3 million
• GAAP gross margin of 37.5%
• GAAP net diluted EPS of $0.42
• Non-GAAP net diluted EPS of $0.85
• 766 Megawatts (AC) of inverters shipped

Full Year 2017 Highlights
• Total revenues of $607.0 million
• GAAP gross margin of 35.4%
• GAAP net diluted EPS of $1.85
• Non-GAAP net diluted EPS of $2.43
• 2.5 Gigawatts (AC) of inverters shipped

“We ended the fourth quarter and full year of 2017 with record results in our key financial and operational metrics,” said Guy Sella, Founder, Chairman and CEO of SolarEdge. “We grew our revenues in each of the geographies in which we operate and overcame a challenging year in terms of industry-wide component availability and growing our manufacturing capacity to support the growing demand for our products. We expanded our gross margin by keeping our ASP stable, continuing our cost reduction initiatives and increased profitability and cash flow generation while maintaining and even increasing our investments in R&D and customer support and growing our geographic footprint.”

Fourth Quarter 2017 Summary
The Company reported record revenues of $189.3 million, up 14% from the prior quarter and up 70% year over year.

GAAP gross margin reached 37.5%, up from 34.9% in the prior quarter and up from 35.0% year over year.

GAAP operating expenses were $36.4 million, up 11% from the prior quarter and an increase of 52% year over year.

GAAP operating income was $34.6 million, up 36% from $25.4 million in the prior quarter and up 128% year over year.

GAAP net income was $19.5 million (including one-time transition tax of $18.7 million related to mandatory deemed repatriation of foreign earnings), down 30% from $28.0 million in the prior quarter and up from $9.8 million year over year.

Non-GAAP net income was $41.2 million, up 31% from $31.5 million in the prior quarter and up from $14.7 million year over year.

GAAP net diluted earnings per share (“EPS”) was $0.42, down from $0.61 in the prior quarter and up from $0.22 year over year.

Non-GAAP net diluted EPS was $0.85, up from $0.66 in the prior quarter and up from $0.32 year over year.

Cash flow from operating activities was $45.8 million, up from $33.6 million in the prior quarter and up from $24.7 million year over year.

As of December 31, 2017, cash, cash equivalents, restricted cash and marketable securities totaled $345.1 million, compared to $304.7 million on September 30, 2017.

Full Year 2017 Summary

Total revenues of $607.0 million, up 24% from the prior year.

GAAP gross margin reached 35.4%, up from 32.8% in the prior year.

GAAP operating income was $91.1 million, up 28% from $71.0 million the prior year.

GAAP net income was $84.2 million, up 33% from $63.5 million in the prior year.

Non-GAAP net income was $115.0 million, up 46% from $78.9 million in the prior year.

GAAP net diluted earnings per share (“EPS”) was $1.85, up from $1.44 in the prior year.

Non-GAAP net diluted EPS was $2.43, up from $1.72 in the prior year.

Cash flow from operating activities of $136.7 million, up from $82.5 million in the prior year.

Outlook for the First Quarter 2018
The Company also provides guidance for the first quarter ending March 31, 2018 as follows:

• Revenues to be within the range of $200 million to $210 million;
• Gross margins expected to remain flat 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 Wednesday, February 14, 2018. The call will be available, live, to interested parties by dialing 800-289-0438. For international callers, please dial +1 323-794-2423. The Conference ID number is 9331868. 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. Supporting increased PV proliferation, the SolarEdge system consists of power optimizers, inverters, home energy management, storage solutions, and a cloud-based monitoring platform. SolarEdge’s solutions address 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.us
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 Annual Report on Form 10-KT for the year ended December 31, 2016, filed on February 21, 2017, Current Reports on Form 8-K and other reports filed with the SEC. All information set forth in this release is as of February 14, 2018. 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.

Source: SolarEdge