Business Wire | Feb 16, 2021 04:05PM EST

SolarEdge Announces Fourth Quarter and Full Year 2020 Financial Results

Feb. 16, 2021

FREMONT, Calif.--(BUSINESS WIRE)--Feb. 16, 2021--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 Year ended December 30, 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 18,042 11,771 63,119 49,361administrative

Other operating expenses 1,471 22,391 (3,429) 30,696(income), net



Total operating expenses 95,898 92,721 318,798 289,392



Operating income 14,427 50,528 142,561 189,946



Financial expenses (10,380) (11,058) (21,105) 11,343(income), net



Income before income 24,807 61,586 163,666 178,603taxes



Income taxes 7,152 9,241 23,344 33,646



Net income $ 17,655 $ 52,345 $ 140,322 $ 144,957



Net loss attributable to - 433 - 1,592Non-controlling interests



Net income attributableto SolarEdge $ 17,655 $ 52,778 $ 140,322 $ 146,549Technologies, Inc.

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 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 218,706 298,383$2,473, respectively

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 16,894 15,673interest

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.

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 3,185 -costs

Amortization of premium and accretion of discount 1,168 92on available-for-sale marketable securities, net

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 andliabilities, net and effect of exchange rate 1,409 2,192differences

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 (223,705) (160,054)securities

Proceed from sales and maturities of 141,839 142,744available-for-sale marketable securities

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 25,267 (26,145)Deposits, net

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, 617,869 -net

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 223,901 187,764period

Effect of exchange rate differences on cash and (23,257) 3,011cash equivalents



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 Gross Profit

Three months ended Year ended

December September December December December 31, 2020 30, 2020 31, 2019 31, 2020 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 --- --- 448 313 1,556adjustment

Amortization anddepreciation of acquired 2,374 2,429 2,489 9,484 9,771assets

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 September December December December 31, 2020 30, 2020 31, 2019 31, 2020 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 --- --- 0.1% --- 0.1%adjustment

Amortization anddepreciation of acquired 0.7% 0.7% 0.6% 0.6% 0.7%assets

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 September December December December 31, 2020 30, 2020 31, 2019 31, 2020 31, 2019

Operating expenses 95,898 77,669 92,721 318,798 289,392(GAAP)

Stock-based compensation (8,919) (6,904) (4,937) (27,048) (16,872)- R&D

Stock-based compensation (8,710) (4,066) (3,157) (19,413) (11,062)- S&M

Stock-based compensation (2,967) (2,559) 916 (9,766) (6,991)- G&A

Amortization anddepreciation of acquired (14) (26) (30) (91) (92)assets - R&D

Amortization anddepreciation of acquired (230) (370) 33 (1,187) (1,214)assets - S&M

Amortization anddepreciation of acquired (8) (8) 45 (33) (35)assets - G&A

Acquisition related --- --- --- --- (949)expenses

Assets disposal (649) (558) (56) (1,207) (622)

Other operating income (1,471) --- (22,391) 3,429 (30,696)(expenses)

Operating expenses 72,930 63,178 63,144 263,482 220,859(Non-GAAP)

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 Operating income

Three months ended Year ended

December September December December December 31, 2020 30, 2020 31, 2019 31, 2020 31, 2019

Operating income (GAAP) 14,427 30,394 50,528 142,561 189,946

Cost of product --- --- 448 313 1,556adjustment

Stock-based compensation 24,316 16,259 9,446 67,309 41,889

Amortization anddepreciation of acquired 2,626 2,833 2,441 10,795 11,112assets

Acquisition related --- --- --- --- 949expenses

Assets disposal 649 558 56 1,207 622

Other operating (income) 1,471 --- 22,391 (3,429) 30,696expenses

Operating income 43,489 50,044 85,310 218,756 276,770(Non-GAAP)

Reconciliation of GAAP to Non-GAAP Financial expenses (income), net

Three months ended Year ended

December September December December December 31, 2020 30, 2020 31, 2019 31, 2020 31, 2019

Financial expenses (10,380) (15,765) (11,058) (21,105) 11,343(income), net (GAAP)

Notes due 2025 (3,017) (168) --- (3,185) ---

Non cash interest (1,305) (1,254) (1,055) (4,887) (3,645)

Currency fluctuationrelated to lease (2,172) (243) (266) (2,274) (2,591)standard

Amortization anddepreciation of acquired --- --- 348 (982) 348assets

Financial expenses (16,874) (17,430) (12,031) (32,433) 5,455(income), net (Non-GAAP)

Reconciliation of GAAP to Non-GAAP Tax on income

Three months ended Year ended

December September December December December 31, 2020 30, 2020 31, 2019 31, 2020 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 income

Three months ended Year ended

December September December December December 31, 2020 30, 2020 31, 2019 31, 2020 31, 2019

Net income attributableto SolarEdge 17,655 43,751 52,778 140,322 146,549Technologies Inc. (GAAP)

Cost of product --- --- 448 313 1,556adjustment

Stock-based compensation 24,316 16,259 9,446 67,309 41,889

Amortization anddepreciation of acquired 2,626 2,833 2,093 11,777 10,764assets

Acquisition related --- --- --- --- 949expenses

Assets disposal 649 558 56 1,207 622

Other operating (income) 1,471 --- 22,391 (3,429) 30,696expenses

Notes due 2025 3,017 168 --- 3,185 ---

Non cash interest 1,305 1,254 1,055 4,887 3,645

Currency fluctuationrelated to lease 2,172 243 266 2,274 2,591standard

Deferred taxes 2,522 816 (1,114) (3,434) (6,037)

Net income attributableto SolarEdge 55,733 65,882 87,419 224,411 233,224Technologies Inc.(Non-GAAP)

Reconciliation of GAAP to Non-GAAP Net basic EPS

Three months ended Year ended

December September December December December 31, 2020 30, 2020 31, 2019 31, 2020 31, 2019

Net basic earnings per 0.34 0.87 1.08 2.79 3.06share (GAAP)

Cost of product --- --- 0.01 0.01 0.03adjustment

Stock-based compensation 0.48 0.32 0.20 1.34 0.87

Amortization anddepreciation of acquired 0.05 0.05 0.04 0.24 0.23assets

Acquisition related --- --- --- --- 0.02expenses

Assets disposal 0.01 0.01 --- 0.02 0.01

Other operating (income) 0.03 --- 0.46 (0.07) 0.64expenses

Notes due 2025 0.06 --- --- 0.06 ---

Non cash interest 0.02 0.03 0.02 0.10 0.08

Currency fluctuationrelated to lease 0.05 --- --- 0.05 0.06standard

Deferred taxes 0.05 0.02 (0.02) (0.07) (0.13)

Net basic earnings per 1.09 1.30 1.79 4.47 4.87share (Non-GAAP)

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210216006102/en/

CONTACT: Investor Contacts SolarEdge Technologies, Inc. Ronen Faier, Chief Financial Officer +1 510-498-3263 investors@solaredge.com

CONTACT: Sapphire Investor Relations, LLC Erica Mannion or Michael Funari +1 617-542-6180 investors@solaredge.com