SolarEdge Technologies Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021
OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-36894

SOLAREDGE TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		20-5338862 (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) ____________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller Reporting Company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

As of May 1, 2021, there were 51,976,195 shares of the registrant’s common stock, par value of $0.0001 per share, outstanding.

SOLAREDGE TECHNOLOGIES, INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2021

INDEX




PART I. FINANCIAL INFORMATION	3
ITEM 1Financial Statements	3
Condensed Consolidated Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020	F-2
Condensed Consolidated Statements of Income for the three months ended March 31, 2021 and, 2020 (unaudited)	F-4
Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2021 and, 2020 (unaudited)	F-5
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2021 and, 2020 (unaudited)	F-6
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and, 2020 (unaudited)	F-8
Notes to the Condensed Consolidated Financial Statements (unaudited)	F-10
ITEM 2Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
ITEM 3Quantitative and Qualitative Disclosures About Market Risk	14
ITEM 4Controls and Procedures	15

PART II. OTHER INFORMATION	16
ITEM 1Legal Proceedings	16
ITEM 1ARisk Factors	16
ITEM 2Unregistered Sales of Equity Securities and Use of Proceeds	16
ITEM 3Defaults upon Senior Securities	17
ITEM 4Mine Safety Disclosures	17
ITEM 5Other Information	17
ITEM 6Exhibits	17

EXHIBIT INDEX	17

PART I. FINANCIAL INFORMATION

ITEM 1FINANCIAL STATEMENTS

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF MARCH 31, 2021

IN U.S. DOLLARS

UNAUDITED

INDEX

	Page
Condensed Consolidated Balance Sheets	F-2
Condensed Consolidated Statements of Income	F-4
Condensed Consolidated Statements of Comprehensive Income	F-5
Condensed Consolidated Statements of Changes in Stockholders’ Equity	F-6
Condensed Consolidated Statements of Cash Flows	F-8
Notes to the Condensed Consolidated Financial Statements	F-10

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

U.S. dollars in thousands (except share and per share data)

	March 31, 2021		December 31, 2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	685,157		$	827,146
Short-term bank deposits		43,626			60,096
Restricted bank deposits		2,509			2,611
Marketable securities		139,079			143,687
Trade receivables, net of allowances of $3,576 and $2,886, respectively		271,713			218,706
Inventories, net		340,038			331,696
Prepaid expenses and other current assets		102,985			135,399
Total current assets		1,585,107			1,719,341
LONG-TERM ASSETS:
Marketable securities		294,828			147,434
Deferred tax assets, net		17,353			11,676
Property, plant and equipment, net		312,214			303,408
Operating lease right-of-use assets, net		39,804			41,600
Intangible assets, net		64,196			67,818
Goodwill		134,620			140,479
Other long-term assets		16,473			5,353
Total long-term assets		879,488			717,768
Total assets	$	2,464,595		$	2,437,109

The accompanying notes are an integral part of the consolidated financial statements.

F - 2

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Cont.)

U.S. dollars in thousands (except share and per share data)

	March 31, 2021			December 31, 2020
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Trade payables, net	$	122,063		$	162,051
Employees and payroll accruals		63,929			63,738
Current maturities of bank loans and accrued interest		16,215			16,894
Warranty obligations		63,443			62,614
Deferred revenues and customers advances		21,065			24,648
Accrued expenses and other current liabilities		111,011			106,154
Total current liabilities		397,726			436,099
LONG-TERM LIABILITIES:
Convertible senior notes, net		619,357			573,350
Warranty obligations		154,510			142,380
Deferred revenues		122,168			115,372
Deferred tax liabilities, net		-			8,593
Finance lease liabilities		24,918			26,173
Operating lease liabilities		32,667			35,194
Other long-term liabilities		13,325			14,191
Total long-term liabilities		966,945			915,253
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS’ EQUITY:
Common stock of $0.0001 par value - Authorized: 125,000,000 shares as of March 31, 2021 and December 31, 2020; issued and outstanding: 51,966,175 and 51,560,936 shares as of March 31, 2021 and December 31, 2020, respectively		5			5
Additional paid-in capital		595,716			603,891
Accumulated other comprehensive income (loss)		(6,761	)		3,857
Retained earnings		510,964			478,004
Total stockholders’ equity		1,099,924			1,085,757
Total liabilities and stockholders’ equity	$	2,464,595		$	2,437,109

The accompanying notes are an integral part of the consolidated financial statements.

F - 3

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

U.S. dollars in thousands (except share and per share data)


	Three months ended March 31,
	2021		2020
Revenues	$	405,489	$	431,218
Cost of revenues		265,415		291,210
Gross profit		140,074		140,008
Operating expenses:
Research and development		46,977		36,695
Sales and marketing		26,911		24,253
General and administrative		19,849		16,185
Other operating expenses (income), net		2,209		(4,900	)
Total operating expenses		95,946		72,233
Operating income		44,128		67,775
Financial expenses, net		6,097		16,605
Income before income taxes		38,031		51,170
Income taxes		7,955		8,922
Net income	$	30,076	$	42,248
Net income per share:
Net basic earnings per share of common stock	$	0.58	$	0.86
Net diluted earnings per share of common stock	$	0.55	$	0.81
Weighted average number of shares used in computing net basic earnings per share of common stock		51,726,998		49,193,240
Weighted average number of shares used in computing net diluted earnings per share of common stock		55,997,136		52,172,720

The accompanying notes are an integral part of the consolidated financial statements.

F - 4

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

U.S. dollars in thousands (except share and per share data)


	Three months ended March 31,
	2021			2020
Net income	$	30,076		$	42,248
Other comprehensive income (loss), net of tax:
Net change related to available-for-sale securities		(1,185	)		(1,165	)
Net change related to cash flow hedges		(128	)		538
Foreign currency translation adjustments on intra-entity transactions that are of a long-term investment nature		(3,675	)		-
Foreign currency translation adjustments, net		(5,630	)		(2,954	)
Total other comprehensive loss		(10,618	)		(3,581	)
Comprehensive income	$	19,458		$	38,667

The accompanying notes are an integral part of the consolidated financial statements.

F - 5

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)

U.S. dollars in thousands (except share and per share data)

	Common stock			Additional paid in Capital		Accumulated Other comprehensive loss			Retained earnings		Total stockholders’ equity
	Number	Amount		Additional paid in Capital		Accumulated Other comprehensive loss			Retained earnings		Total stockholders’ equity

Balance as of January 1, 2020	48,898,062	$	5	$	475,792	$	(1,809	)	$	337,682	$	811,670
Issuance of Common Stock upon exercise of employee and non-employees stock-based awards	701,431		* -		3,308		-			-		3,308
Equity based compensation expenses to employees and nonemployees	-		-		12,773		-			-		12,773
Other comprehensive loss adjustments	-		-		-		(3,581	)		-		(3,581	)
Net income	-		-		-		-			42,248		42,248
Balance as of March 31, 2020	49,599,493	$	5	$	491,873	$	(5,390	)	$	379,930	$	866,418

* Represents an amount less than $1.

F - 6

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (Cont.)

U.S. dollars in thousands (except share and per share data)

	Common stock			Additional paid in Capital			Accumulated Other comprehensive Income (loss)			Retained earnings		Total stockholders’ equity
	Number	Amount		Additional paid in Capital			Accumulated Other comprehensive Income (loss)			Retained earnings		Total stockholders’ equity
Balance as of January 1, 2021	51,560,936	$	5	$	603,891		$	3,857		$	478,004	$	1,085,757
Cumulative effect of adopting ASU 2020-06	-		-		(36,336	)		-			2,884		(33,452	)
Issuance of Common Stock upon exercise of employee and non-employees stock-based awards	405,239		* -		5,008			-			-		5,008
Equity based compensation expenses to employees and nonemployees	-		-		23,153			-			-		23,153
Other comprehensive loss adjustments	-		-		-			(10,618	)		-		(10,618	)
Net income	-	$	-	$	-		$	-		$	30,076	$	30,076
Balance as of March 31, 2021	51,966,175	$	5	$	595,716		$	(6,761	)	$	510,964	$	1,099,924

* Represents an amount less than $1.

The accompanying notes are an integral part of the consolidated financial statements.

F - 7

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

U.S. dollars in thousands (except share and per share data)

	Three months ended March 31,
	2021			2020
Cash flows provided by operating activities:
Net income	$	30,076		$	42,248
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property, plant and equipment		6,887			5,004
Amortization of intangible assets		2,391			2,321
Amortization of debt discount and debt issuance costs		724			-
Amortization of premium and accretion of discount on available-for-sale marketable securities, net		1,295			120
Stock-based compensation expenses		23,153			12,773
Deferred income taxes, net		(2,141	)		(2,859	)
Loss from disposal of assets		2,147			6
Exchange rate fluctuations and other items, net		13,303			(1,018	)
Changes in assets and liabilities:
Inventories, net		(8,376	)		(29,004	)
Prepaid expenses and other assets		20,218			49,888
Trade receivables, net		(57,380	)		59,420
Trade payables, net		(39,034	)		(17,589	)
Employees and payroll accruals		7,477			11,821
Warranty obligations		13,088			13,809
Deferred revenues and customers advances		3,615			(31,729	)
Other liabilities		6,640			(7,466	)
Net cash provided by operating activities		24,083			107,745
Cash flows from investing activities:
Investment in available-for-sale marketable securities		(186,528	)		(31,924	)
Proceed from maturities of available-for-sale marketable securities		40,450			42,333
Purchase of property, plant and equipment		(24,545	)		(27,053	)
Withdrawal from (investment in) bank deposits, net		16,470			(3,316	)
Other investing activities		571			36
Net cash used in investing activities	$	(153,582	)	$	(19,924	)

F - 8

SOLAREDGE TECHNOLOGIES, INC.

AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Cont.)

U.S. dollars in thousands (except share and per share data)

	Three months ended March 31,
	2021			2020
Cash flows from financing activities:
Repayment of bank loans	$	(34	)	$	(15,232	)
Proceeds from bank loans		-			15,295
Proceeds from exercise of stock-based awards net of tax withholding		(1,716	)		3,308
Other financing activities		(312	)		(

SEC Form 10-Q filed by SolarEdge Technologies, Inc.