Shares of SolarEdge Technologies Inc (NASDAQ:SEDG) are up 13.6% at $13.99 at last glance, after a rare double-upgrade from Goldman Sachs to "buy" from "sell." The analyst sees upside for the stock in 2025, saying the market is "overplaying the risks" of the solar sector. Goldman Sachs is now, notably, one of just a few analysts in coverage carrying a bullish rating on SEDG. Of the 35 analysts in coverage, 24 carry a "hold," and eight a "sell" or worse. SolarEdge stock is now headed for its largest single-da ...

SolarEdge Technologies Inc. (SEDG) recently launched its first commercial storage system, the CSS-OD battery, in Germany. This new battery, paired with SolarEdge’s solar inverter and power optimizer, offers an integrated solar and storage solution, which can be used both indoors and outdoors. This launch should strengthen SEDG’s footprint in the rapidly expanding global battery energy storage systems (BESS) market.More on SEDG’s CSS-OD BatteryThe CSS-OD battery comes with a 102.4 kWh-rated cabinet and can b ...

Struggling next-generation energy company SolarEdge Technologies (SEDG 8.55%) gave investors a reason to be sunny and cheerful on Thursday with its latest news. The company announced it was shutting down one of its less significant businesses, and the market reacted by sending the stock price nearly 9% higher. This was in sharp contrast to the slumping S&P 500 index, which ended the day 0.4% lower.Pulling the plugBefore market open, SolarEdge announced that it is ceasing all activity in its energy storage d ...

SolarEdge Technologies, Inc. SEDG shares are trading relatively flat on Thursday.Yesterday, the company reported third-quarter results, with revenues of $260.9 million, down 2% from $265.4 million in the prior quarter and down 64% from $725.3 million in the same quarter last year.Revenues from the solar segment were $247.5 million, down 63% from $676.9 million in the same quarter last year.Here are the analysts’ takes on the earnings results:Piper Sandler analyst Kashy Harrison downgraded the stock to Under ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Unaudited consolidated financial statements, including balance sheets, income, cash flows, and detailed notes, are presented [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents SolarEdge's unaudited condensed consolidated financial statements, including balance sheets, income statements, and cash flows, with detailed notes on accounting policies and segment performance [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets significantly decreased to **$2,816,394 thousand** by September 30, 2024, driven by reductions in marketable securities, receivables, and inventories, alongside a substantial drop in stockholders' equity | Metric | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | Change (in thousands) | | :---------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | **ASSETS** | | | | | Total current assets | $2,118,115 | $3,304,306 | $(1,186,191) | | Total long-term assets | $698,279 | $1,283,425 | $(585,146) | | **Total assets** | **$2,816,394** | **$4,587,731** | **$(1,771,337)** | | **LIABILITIES & EQUITY** | | | | | Total current liabilities | $903,812 | $893,231 | $10,581 | | Total long-term liabilities | $956,216 | $1,282,591 | $(326,375) | | **Total stockholders' equity** | **$956,366** | **$2,411,909** | **$(1,455,543)** | | **Total liabilities and stockholders' equity** | **$2,816,394** | **$4,587,731** | **$(1,771,337)** | [Condensed Consolidated Statements of Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Loss%29) The company reported significant net losses for both the three and nine months ended September 30, 2024, primarily due to decreased revenues and massive inventory write-downs and impairment charges | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Revenues | $260,903 | $725,305 | $730,707 | $2,660,484 | | Cost of revenues | $963,229 | $582,488 | $1,470,189 | $1,900,236 | | Gross profit (loss) | $(702,326) | $142,817 | $(739,482) | $760,248 | | Operating income (loss) | $(1,085,266) | $(16,726) | $(1,419,153) | $277,786 | | Net income (loss) | $(1,205,321) | $(61,176) | $(1,493,450) | $196,712 | | Net basic earnings (loss) per share | $(21.13) | $(1.08) | $(26.22) | $3.49 | | Net diluted earnings (loss) per share | $(21.13) | $(1.08) | $(26.22) | $3.34 | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) The company reported a comprehensive loss of **$(1,184,624) thousand** for the three months and **$(1,503,818) thousand** for the nine months ended September 30, 2024, primarily driven by the net loss | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Net income (loss) | $(1,205,321) | $(61,176) | $(1,493,450) | $196,712 | | Total other comprehensive income (loss) | $20,697 | $(6,517) | $(10,368) | $(10,840) | | Comprehensive income (loss) | $(1,184,624) | $(67,693) | $(1,503,818) | $185,872 | [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity significantly decreased from **$2,411,909 thousand** at January 1, 2024, to **$956,366 thousand** at September 30, 2024, primarily due to the net loss and share repurchases | Metric | Balance as of Jan 1, 2024 (in thousands) | Balance as of Sep 30, 2024 (in thousands) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | | Common stock | $6 | $6 | | Additional paid-in capital | $1,680,622 | $1,779,212 | | Treasury stock | $- | $(50,315) | | Accumulated other comprehensive loss | $(46,885) | $(57,253) | | Retained earnings (Accumulated deficit) | $778,166 | $(715,284) | | **Total stockholders' equity** | **$2,411,909** | **$956,366** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2024, the company experienced increased cash used in operating activities, a shift to cash provided by investing activities, and increased cash used in financing activities, resulting in an overall decrease in cash and cash equivalents | Cash Flow Activity | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (in thousands) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | | Net cash used in operating activities | $(325,656) | $(40,203) | $(285,453) | | Net cash provided by (used in) investing activities | $318,755 | $(188,187) | $506,942 | | Net cash used in financing activities | $(19,873) | $(11,305) | $(8,568) | | Decrease in cash and cash equivalents | $(34,564) | $(231,990) | $197,426 | | Cash and cash equivalents at end of period | $303,904 | $551,122 | $(247,218) | [Notes to the Condensed Consolidated Financial Statements (unaudited)](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20%28unaudited%29) The notes provide detailed explanations of financial statements, covering business, accounting policies, acquisitions, investments, and changes in key accounts, along with commitments, contingent liabilities, and the impact of restructuring and tax changes [NOTE 1: GENERAL](index=12&type=section&id=NOTE%201%3A%20GENERAL) SolarEdge designs, develops, and sells intelligent inverter solutions for PV systems, including power optimizers, inverters, monitoring platforms, and batteries, and has expanded into other smart energy technologies - SolarEdge's core business is intelligent inverter solutions for PV systems, including power optimizers, inverters, monitoring, and batteries. The company also offers energy storage and automation machines[82](index=82&type=chunk)[84](index=84&type=chunk) - The company identified impairment indicators for long-lived assets in Q3 2024 due to a sustained decline in share price and a major slowdown in operations[88](index=88&type=chunk) - The company relies on two contract manufacturers and several limited or single-source component suppliers, making it vulnerable to capacity constraints and supply chain issues[124](index=124&type=chunk) [NOTE 2: BUSINESS COMBINATIONS](index=14&type=section&id=NOTE%202%3A%20BUSINESS%20COMBINATIONS) In April 2024, SolarEdge acquired Weev Energy B.F. Ltd. ("Wevo"), an EV charging optimization software startup, for approximately **$13,331 thousand** in cash, resulting in **$11,344 thousand** in goodwill attributed to expected synergies within the Solar segment - SolarEdge acquired all remaining shares of Wevo, an EV charging optimization software startup, for approximately **$13,331 thousand** in cash on April 1, 2024[130](index=130&type=chunk) | Acquired Asset/Liability | Amount (in thousands) | Average Useful Life (in years) | | :----------------------- | :-------------------- | :----------------------------- | | Cash | $2,914 | | | Net liabilities assumed | $(903) | | | Identified intangible assets: Technology | $4,049 | 7 | | Identified intangible assets: Customer relationships | $1,241 | 1 | | Identified intangible assets: Trade name | $665 | 2 | | Goodwill | $11,344 | | | **Total** | **$19,310** | | - Goodwill of **$11,344 thousand** from the Wevo acquisition was assigned to the Solar segment, driven by expected synergies[134](index=134&type=chunk) [NOTE 3: INVESTMENTS IN PRIVATELY-HELD COMPANIES](index=16&type=section&id=NOTE%203%3A%20INVESTMENTS%20IN%20PRIVATELY-HELD%20COMPANIES) SolarEdge made several investments in privately-held companies in 2024, including Ivy Energy, Stardust Solution, and Ampeers Energy, with the investment in Stardust impaired by **$5,000 thousand** in September 2024 - In 2024, SolarEdge invested **$6,075 thousand** in Ivy Energy, Inc., **$5,000 thousand** in Stardust Solution, Inc., and approximately **$17,000 thousand** in Ampeers Energy GmbH[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - The company impaired its **$5,000 thousand** investment in Stardust Solution, Inc. in September 2024[142](index=142&type=chunk) [NOTE 4: MARKETABLE SECURITIES](index=17&type=section&id=NOTE%204%3A%20MARKETABLE%20SECURITIES) Available-for-sale marketable securities decreased significantly from **$929,395 thousand** at December 31, 2023, to **$430,910 thousand** at September 30, 2024, with sales generating realized gains of **$2,747 thousand** for the nine months ended September 30, 2024 | Metric | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :---------------------------------- | :-------------------------- | :-------------------------- | | Total marketable securities (Fair value) | $430,910 | $929,395 | | Gross unrealized gains | $897 | $4,534 | | Gross unrealized losses | $(1,569) | $(10,735) | - Proceeds from sales of available-for-sale marketable securities were **$70,642 thousand** for the nine months ended September 30, 2024, resulting in realized gains of **$2,747 thousand**[148](index=148&type=chunk) [NOTE 5: INVENTORIES, NET](index=18&type=section&id=NOTE%205%3A%20INVENTORIES%2C%20NET) Inventories, net, decreased to **$798,383 thousand** at September 30, 2024, with significant write-downs of **$638,966 thousand** for the nine months ended September 30, 2024, due to decreased demand, excess channel inventory, and price reductions | Inventory Category | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :----------------- | :-------------------------- | :-------------------------- | | Raw materials | $204,083 | $340,604 | | Work in process | $493 | $20,885 | | Finished goods | $593,807 | $1,081,960 | | **Total inventories, net** | **$798,383** | **$1,443,449** | - The company recorded significant inventory write-downs of **$638,966 thousand** for the nine months ended September 30, 2024, due to slowdown in demand, excess channel inventory, price reductions, and new product introductions[153](index=153&type=chunk)[155](index=155&type=chunk) [NOTE 6: PREPAID EXPENSES AND OTHER CURRENT ASSETS](index=18&type=section&id=NOTE%206%3A%20PREPAID%20EXPENSES%20AND%20OTHER%20CURRENT%20ASSETS) Prepaid expenses and other current assets increased to **$401,551 thousand** at September 30, 2024, mainly driven by an increase in amounts due from government authorities | Category | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :---------------------------------- | :-------------------------- | :-------------------------- | | Government authorities | $255,603 | $167,221 | | Vendor non-trade receivables | $56,508 | $102,991 | | Loan receivables, net | $32,297 | $55,418 | | Prepayments | $38,438 | $29,578 | | Other | $18,705 | $23,186 | | **Total prepaid expenses and other current assets** | **$401,551** | **$378,394** | [NOTE 7: PROPERTY, PLANT AND EQUIPMENT, NET](index=19&type=section&id=NOTE%207%3A%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT%2C%20NET) Property, plant and equipment, net, decreased to **$423,905 thousand** at September 30, 2024, primarily due to impairment and abandonment by disposal of **$206,620 thousand** for the nine months ended September 30, 2024, affecting machinery, buildings, and assets under construction | Category | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :---------------------------------- | :-------------------------- | :-------------------------- | | Gross property, plant and equipment | $610,806 | $849,573 | | Less - accumulated depreciation | $(186,901) | $(234,994) | | **Total property, plant and equipment, net** | **$423,905** | **$614,579** | - The company recorded impairment and abandonment by disposal of property, plant and equipment totaling **$206,620 thousand** for the nine months ended September 30, 2024, mainly in the Solar and Energy Storage asset groups[162](index=162&type=chunk)[163](index=163&type=chunk) [NOTE 8: INTANGIBLE ASSETS, NET](index=20&type=section&id=NOTE%208%3A%20INTANGIBLE%20ASSETS%2C%20NET) Intangible assets, net, decreased to **$11,169 thousand** at September 30, 2024, largely due to an impairment and disposal of **$22,474 thousand** in intangible assets, primarily patents and licenses in the Solar segment and technology in the Energy Storage segment, deemed no longer relevant | Category | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :---------------------------------- | :-------------------------- | :-------------------------- | | Gross intangible assets | $19,575 | $56,382 | | Less - accumulated amortization | $(8,406) | $(21,037) | | **Total intangible assets, net** | **$11,169** | **$35,345** | - The company impaired and disposed of intangible assets totaling **$22,474 thousand**, mainly patents and licenses in the Solar segment and technology in the Energy Storage segment, due to their irrelevance for future operations[170](index=170&type=chunk) [NOTE 9: GOODWILL](index=21&type=section&id=NOTE%209%3A%20GOODWILL) Goodwill increased to **$51,875 thousand** at September 30, 2024, primarily due to acquisitions, but an impairment test resulted in a **$2,251 thousand** impairment of goodwill for the Energy Storage reporting unit | Category | Solar (in thousands) | Energy Storage (in thousands) | Total (in thousands) | | :---------------------------------- | :------------------- | :---------------------------- | :------------------- | | Goodwill at Dec 31, 2023 | $40,632 | $2,364 | $42,996 | | Acquisitions | $11,344 | $- | $11,344 | | Accumulated impairment losses | $- | $(2,251) | $(2,251) | | Foreign currency adjustments | $(101) | $(113) | $(214) | | **Goodwill at Sep 30, 2024** | **$51,875** | **$-** | **$51,875** | - The Energy Storage reporting unit's goodwill was impaired in its entirety by **$2,251 thousand** as of September 30, 2024, following an impairment test triggered by a sustained decline in stock price and market capitalization[177](index=177&type=chunk)[179](index=179&type=chunk)[181](index=181&type=chunk) [NOTE 10: OTHER LONG TERM ASSETS](index=22&type=section&id=NOTE%2010%3A%20OTHER%20LONG%20TERM%20ASSETS) Other long-term assets significantly increased to **$112,201 thousand** at September 30, 2024, primarily due to new loan receivables and increased investments in privately-held companies | Category | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :---------------------------------- | :-------------------------- | :-------------------------- | | Loan receivables | $50,000 | $- | | Cloud computing arrangements | $24,006 | $13,666 | | Severance pay fund | $9,561 | $9,241 | | Investments in privately held companies | $22,574 | $7,650 | | Prepaid expenses and other | $6,060 | $7,044 | | **Total other long term assets** | **$112,201** | **$37,601** | [NOTE 11: DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES](index=23&type=section&id=NOTE%2011%3A%20DERIVATIVE%20INSTRUMENTS%20AND%20HEDGING%20ACTIVITIES) SolarEdge uses derivative financial instruments, including foreign currency forward contracts and put/call options, to manage foreign currency exchange risks, primarily hedging NIS-denominated payroll payments, with total derivative assets decreasing to **$1,102 thousand** at September 30, 2024 - The company uses foreign currency forward contracts and put/call options to hedge exposure to foreign currency risks, particularly NIS-denominated payroll[44](index=44&type=chunk)[186](index=186&type=chunk)[192](index=192&type=chunk) | Derivative Assets | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :---------------------------------- | :-------------------------- | :-------------------------- | | Designated cash flow hedges | $1,102 | $4,477 | | Non-designated hedges | $- | $410 | | **Total derivative assets** | **$1,102** | **$4,887** | [NOTE 12: FAIR VALUE MEASUREMENTS](index=24&type=section&id=NOTE%2012%3A%20FAIR%20VALUE%20MEASUREMENTS) The company measures cash equivalents and marketable securities at fair value using the market approach, with cash and cash equivalents classified as Level 1, and marketable securities and foreign currency derivative contracts as Level 2 - Cash and cash equivalents are classified as Level 1 fair value measurements, while marketable securities and foreign currency derivative contracts are Level 2[199](index=199&type=chunk) - Goodwill and long-lived assets are subject to nonrecurring fair value measurements, with inputs considered Level 3[200](index=200&type=chunk) [NOTE 13: WARRANTY OBLIGATIONS](index=24&type=section&id=NOTE%2013%3A%20WARRANTY%20OBLIGATIONS) Warranty obligations decreased to **$478,904 thousand** at September 30, 2024, with accruals for warranty significantly lower at **$47,320 thousand** for the nine months ended September 30, 2024, reflecting decreased revenues | Metric | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | | Balance, at the beginning of the period | $518,244 | $385,057 | | Accruals for warranty during the period | $47,320 | $220,422 | | Changes in estimates | $16,188 | $10,355 | | Settlements | $(102,848) | $(100,022) | | **Balance, at end of the period** | **$478,904** | **$515,812** | [NOTE 14: DEFERRED REVENUES AND CUSTOMERS ADVANCES](index=25&type=section&id=NOTE%2014%3A%20DEFERRED%20REVENUES%20AND%20CUSTOMERS%20ADVANCES) Deferred revenues and customer advances increased to **$254,137 thousand** at September 30, 2024, with **$16,674 thousand** in revenue expected to be recognized from these obligations in the remainder of 2024 | Metric | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | | Balance, at the beginning of the period | $255,443 | $213,577 | | Revenue recognized | $(37,442) | $(25,819) | | Increase in deferred revenues and customer advances | $36,136 | $46,331 | | **Balance, at the end of the period** | **$254,137** | **$234,089** | | Year | Estimated Revenues (in thousands) | | :--------- | :-------------------------- | | 2024 | $16,674 | | 2025 | $14,248 | | 2026 | $13,904 | | 2027 | $11,829 | | 2028 | $11,339 | | Thereafter | $186,143 | | **Total deferred revenues** | **$254,137** | [NOTE 15: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES](index=25&type=section&id=NOTE%2015%3A%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) Accrued expenses and other current liabilities remained relatively stable, decreasing slightly to **$202,134 thousand** at September 30, 2024 | Category | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :---------------------------------- | :-------------------------- | :-------------------------- | | Accrued expenses | $137,698 | $142,130 | | Government authorities | $35,595 | $34,309 | | Operating lease liabilities | $12,439 | $17,704 | | Accrual for sales incentives | $10,350 | $5,862 | | Other | $6,052 | $5,906 | | **Total accrued expenses and other current liabilities** | **$202,134** | **$205,911** | [NOTE 16: CONVERTIBLE SENIOR NOTES](index=26&type=section&id=NOTE%2016%3A%20CONVERTIBLE%20SENIOR%20NOTES) In June 2024, SolarEdge issued **$300,000 thousand** of 2.25% convertible senior notes due 2029, using proceeds to repurchase **$285,000 thousand** of 0.00% convertible notes due 2025, recognizing a **$15,456 thousand** gain - In June 2024, SolarEdge issued **$300,000 thousand** of 2.25% convertible senior notes due 2029 (Notes 2029)[240](index=240&type=chunk) - Approximately **$267,900 thousand** of the Notes 2029 proceeds were used to repurchase **$285,000 thousand** of Notes 2025, resulting in a **$15,456 thousand** gain[207](index=207&type=chunk) | Convertible Senior Notes | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :----------------------- | :-------------------------- | :-------------------------- | | Notes 2025 Principal | $347,500 | $632,500 | | Notes 2029 Principal | $337,000 | $- | | **Total notes carrying amount** | **$675,514** | **$627,381** | [NOTE 17: STOCK CAPITAL](index=29&type=section&id=NOTE%2017%3A%20STOCK%20CAPITAL) The company's stock capital includes common stock, equity incentive plans, and an ESPP, with **12,392,004 shares** available for future grants and **753,364 shares** repurchased for **$50,315 thousand** during the nine months ended September 30, 2024 - As of September 30, 2024, **12,392,004 shares** were available for future grants under the 2015 Global Incentive Plan[220](index=220&type=chunk) - The company repurchased **753,364 shares** of common stock for **$50,315 thousand** during the nine months ended September 30, 2024, as part of a **$300,000 thousand** share repurchase program[271](index=271&type=chunk) | Stock-based Compensation Expenses | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | | Cost of revenues | $18,224 | $17,732 | | Research and development | $51,893 | $50,962 | | Sales and marketing | $22,876 | $23,640 | | General and administrative | $19,825 | $22,681 | | **Total stock-based compensation expenses** | **$112,818** | **$115,015** | [NOTE 18: COMMITMENTS AND CONTINGENT LIABILITIES](index=33&type=section&id=NOTE%2018%3A%20COMMITMENTS%20AND%20CONTINGENT%20LIABILITIES) As of September 30, 2024, SolarEdge had contractual purchase obligations of **$443,830 thousand** and capital expenditure commitments of **$18,452 thousand**, and is involved in legal proceedings, including class action lawsuits, with an accrual of **$391 thousand** for legal claims - Contractual purchase obligations totaled **$443,830 thousand** as of September 30, 2024, with a **$46,617 thousand** provision for loss[277](index=277&type=chunk) - Capital expenditure commitments amounted to **$18,452 thousand**, primarily for new manufacturing sites in the U.S.[278](index=278&type=chunk) - The company faces class action and derivative lawsuits alleging failure to disclose information about European inventory and cancellation rates. An accrual of **$391 thousand** was recorded for legal claims[280](index=280&type=chunk)[284](index=284&type=chunk)[285](index=285&type=chunk)[287](index=287&type=chunk) [NOTE 19: ACCUMULATED OTHER COMPREHENSIVE LOSS](index=35&type=section&id=NOTE%2019%3A%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) The accumulated other comprehensive loss increased from **$(83,949) thousand** at September 30, 2023, to **$(57,253) thousand** at September 30, 2024, reflecting revaluation and reclassification adjustments related to marketable securities, cash flow hedges, and foreign currency translation | Component | Sep 30, 2024 (in thousands) | Sep 30, 2023 (in thousands) | | :---------------------------------------------------------------------------------- | :-------------------------- | :-------------------------- | | Unrealized gains (losses) on available-for-sale marketable securities (Ending balance) | $(490) | $(16,049) | | Unrealized gains (losses) on cash flow hedges (Ending balance) | $970 | $(2,699) | | Foreign currency translation adjustments on intra-entity transactions (Ending balance) | $(50,743) | $(60,684) | | Unrealized gains (losses) on foreign currency translation (Ending balance) | $(6,990) | $(4,517) | | **Total Accumulated Other Comprehensive Loss** | **$(57,253)** | **$(83,949)** | [NOTE 20: OTHER OPERATING EXPENSE (INCOME)](index=36&type=section&id=NOTE%2020%3A%20OTHER%20OPERATING%20EXPENSE%20%28INCOME%29) Other operating expense, net, significantly increased to **$237,271 thousand** for the nine months ended September 30, 2024, primarily due to substantial impairment losses on intangible assets (**$24,725 thousand**), property, plant, and equipment (**$206,620 thousand**), and goodwill (**$2,251 thousand**) | Category | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | | :---------------------------------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Impairment of intangible assets and goodwill | $24,725 | $- | | Impairment and disposal by abandonment of property, plant and equipment | $206,620 | $- | | Loss (gain) from sales of assets | $1,838 | $(1,434) | | Other | $4,088 | $- | | **Total other operating expense (income), net** | **$237,271** | **$(1,434)** | [NOTE 21: RESTRUCTURING AND OTHER EXIT ACTIVITIES](index=37&type=section&id=NOTE%2021%3A%20RESTRUCTURING%20AND%20OTHER%20EXIT%20ACTIVITIES) In January 2024, SolarEdge adopted a restructuring plan, reducing its headcount by approximately 16% in the first half of 2024, resulting in total restructuring and other exit charges of **$15,910 thousand** for the nine months ended September 30, 2024 - SolarEdge adopted a restructuring plan in January 2024, reducing headcount by approximately **16%** in H1 2024, and discontinued LCV e-Mobility activity[300](index=300&type=chunk) | Cost Type | 9 Months Ended Sep 30, 2024 (in thousands) | | :---------------------------------- | :----------------------------------------- | | Employee termination costs | $7,180 | | Contract termination and other | $9,985 | | e-Mobility Inventory write-down | $(138) | | e-Mobility Contract termination and other | $(859) | | **Total restructuring and other exit charges** | **$15,910** | [NOTE 22: INCOME TAXES](index=38&type=section&id=NOTE%2022%3A%20INCOME%20TAXES) The effective tax rate for the nine months ended September 30, 2024, was **(6.0)%**, a significant change from **33.6%** in the prior year, primarily due to the company transitioning to a loss position and higher tax expenses from an increased valuation allowance - The effective tax rate for the nine months ended September 30, 2024, was **(6.0)%**, compared to **33.6%** in the prior year, mainly due to a loss position and increased valuation allowance[306](index=306&type=chunk)[307](index=307&type=chunk) - A valuation allowance of **$217,314 thousand** was recorded as of September 30, 2024, due to uncertainty about realizing deferred tax assets[308](index=308&type=chunk)[310](index=310&type=chunk) - The company recognized **$44,084 thousand** in Advanced Manufacturing Production Tax Credits (AMPTCs) for the nine months ended September 30, 2024, recorded as a reduction in cost of revenues[312](index=312&type=chunk) [NOTE 23: EARNINGS (LOSS) PER SHARE](index=39&type=section&id=NOTE%2023%3A%20EARNINGS%20%28LOSS%29%20PER%20SHARE) The company reported a net basic and diluted loss per share of **$(26.22)** for the nine months ended September 30, 2024, a significant decline from basic EPS of **$3.49** and diluted EPS of **$3.34** in the prior year, reflecting the substantial net loss | Metric | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :---------------------------------- | :-------------------------- | :-------------------------- | | Net basic earnings (loss) per share | $(26.22) | $3.49 | | Net diluted earnings (loss) per share | $(26.22) | $3.34 | | Weighted average shares for basic EPS | 56,952,656 | 56,435,880 | | Weighted average shares for diluted EPS | 56,952,656 | 59,297,423 | - Outstanding common stock equivalents, including stock-based awards and convertible notes, were excluded from diluted EPS calculation due to their antidilutive nature for the nine months ended September 30, 2024[317](index=317&type=chunk) [NOTE 24: SEGMENT INFORMATION](index=40&type=section&id=NOTE%2024%3A%20SEGMENT%20INFORMATION) SolarEdge operates in Solar, Energy Storage, and Automation Machines segments, with Solar and Energy Storage being reportable, both reporting significant operating losses for the nine months ended September 30, 2024 - SolarEdge operates in Solar, Energy Storage, and Automation Machines segments, with Solar and Energy Storage identified as reportable segments[320](index=320&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk) | Segment | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (in thousands) | | :---------------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | | Solar Revenues | $678,861 | $2,532,794 | $(1,853,933) | | Solar Segment profit (loss) | $(932,734) | $458,855 | $(1,391,589) | | Energy Storage Revenues | $42,960 | $52,492 | $(9,532) | | Energy Storage Segment loss | $(113,061) | $(52,465) | $(60,596) | | All other Revenues | $8,156 | $74,594 | $(66,438) | | All other Segment profit (loss) | $866 | $(8,571) | $9,437 | [NOTE 25: SUBSEQUENT EVENTS](index=42&type=section&id=NOTE%2025%3A%20SUBSEQUENT%20EVENTS) On November 4, 2024, SolarEdge sold **$42,600 thousand** in §45X Advanced Manufacturing Production Tax Credits (AMPTCs) for a cash payment of **$40,000 thousand**, net of discounts and fees, to Genworth Financial Inc - On November 4, 2024, SolarEdge sold **$42,600 thousand** in §45X Advanced Manufacturing Production Tax Credits (AMPTCs) for **$40,000 thousand** cash[337](index=337&type=chunk)[117](index=117&type=chunk) - The AMPTCs were generated from inverter production at the company's Austin, Texas facility during the first half of 2024[337](index=337&type=chunk)[117](index=117&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, highlighting significant changes in revenues, costs, and profitability, and discussing global factors, key operating metrics, segment performance, liquidity, capital resources, and critical accounting policies [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=43&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights that the report contains forward-looking statements based on management's expectations, estimates, and assumptions, which inherently involve known and unknown risks and uncertainties, and the company assumes no obligation to update them - The report contains forward-looking statements based on management's expectations, estimates, projections, beliefs, and assumptions[339](index=339&type=chunk) - Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[340](index=340&type=chunk) - The company assumes no obligation to update forward-looking statements, except as required by law[343](index=343&type=chunk) [Overview](index=44&type=section&id=Overview) SolarEdge develops, manufactures, and sells products across solar, energy storage, and automation machines segments, having discontinued LCV e-Mobility activity and expanded manufacturing capabilities, with the Texas inverter facility reaching full capacity in Q3 2024 - SolarEdge operates in Solar, Energy Storage, and Automation Machines segments; LCV e-Mobility activity was discontinued in October 2023[344](index=344&type=chunk)[345](index=345&type=chunk) - The company has manufacturing facilities in Israel (Sella 1), Korea (Sella 2, **2GWh** capacity for Li-Ion cells), and Texas (inverters), with the Texas facility reaching full capacity in Q3 2024[347](index=347&type=chunk) | Metric | As of Sep 30, 2024 | | :---------------------------------- | :----------------- | | Power optimizers shipped | 130.0 million | | Inverters shipped | 5.7 million | | Batteries for PV applications shipped | 303.3 thousand | | DC optimized inverter systems shipped | 55.3 GW | | Batteries for PV applications shipped | 2.1 GWh | | Installations monitored | Over 4.1 million | [Global Circumstances Influencing our Business and Operations](index=45&type=section&id=Global%20Circumstances%20Influencing%20our%20Business%20and%20Operations) This section details external factors impacting SolarEdge's business, including a significant slowdown in product demand, disruptions from the ongoing war in Israel, lingering effects of the Ukraine conflict, and opportunities and regulatory developments related to the U.S. Inflation Reduction Act [Demand for Products](index=45&type=section&id=Demand%20for%20Products) Demand for Solar segment products slowed significantly from Q3 2023 due to high channel inventory and slower installation rates in the U.S. and Europe, leading to substantial cancellations and push-outs of existing backlog, with lower revenues anticipated in Q4 2024 - Demand for Solar segment products slowed from Q3 2023 due to high channel inventory and slower installation rates in the U.S. and Europe[350](index=350&type=chunk) - Substantial unexpected cancellations and push-outs of existing backlog from European distributors occurred[350](index=350&type=chunk) - Lower revenues are anticipated in Q4 2024 due to the ongoing inventory destocking process[350](index=350&type=chunk) [Disruptions due to the war in Israel](index=45&type=section&id=Disruptions%20due%20to%20the%20war%20in%20Israel) The ongoing war in Israel, which began in October 2023, has disrupted business operations, with approximately **10%** of the Israeli workforce called to active reserve duty, and a prolonged conflict or escalation could materially adversely affect the business, financial condition, and results of operations - Approximately **10%** of the Israeli workforce has been called to active reserve duty due to the war in Israel[351](index=351&type=chunk) - A prolonged war or escalation could materially adversely affect business, financial condition, and results of operations, as headquarters and R&D are in Israel[351](index=351&type=chunk)[352](index=352&type=chunk) [Impact of Ukraine's Conflict on the Energy Landscape](index=46&type=section&id=Impact%20of%20Ukraine%27s%20Conflict%20on%20the%20Energy%20Landscape) The conflict between Ukraine and Russia has increased economic and political uncertainty, affecting global supply chains, raw material prices, and shipping costs, and while the impact decreased in 2024, escalation could still adversely affect the business - The Ukraine-Russia conflict has increased economic and political uncertainty, impacting global supply chains, raw material prices, and shipping costs[354](index=354&type=chunk) - While the impact decreased in 2024, escalation could still adversely affect the business[354](index=354&type=chunk) [Inflation Reduction Act](index=46&type=section&id=Inflation%20Reduction%20Act) The U.S. Inflation Reduction Act (IRA) incentivizes clean energy manufacturing and adoption, extending tax credits and offering Advanced Manufacturing Production Tax Credits (AMPTC) for U.S.-produced components, with SolarEdge establishing U.S. manufacturing capabilities in 2023 to benefit from these incentives - The IRA extends investment and production tax credits through 2034 and offers Advanced Manufacturing Production Tax Credits (AMPTC) for U.S. manufacturing[355](index=355&type=chunk) - SolarEdge established U.S. manufacturing in 2023 to leverage IRA incentives[355](index=355&type=chunk) - Final regulations for IRC §45X, relevant to AMPTCs for inverters and DC-optimized systems, were published in October 2024[355](index=355&type=chunk) [Key Operating Metrics](index=47&type=section&id=Key%20Operating%20Metrics) Key operating metrics show a significant decline in shipments for inverters and power optimizers for both the three and nine months ended September 30, 2024, compared to the prior year, reflecting decreased demand, while megawatts hour shipped for batteries for PV applications increased in the three-month period but decreased in the nine-month period | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :----------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Inverters shipped | 57,642 | 273,883 | 192,296 | 938,171 | | Power optimizers shipped | 1,848,653 | 3,266,487 | 4,921,254 | 15,238,543 | | Megawatts shipped | 850 | 3,796 | 2,668 | 11,728 | | Megawatts hour shipped - batteries for PV applications | 189 | 121 | 446 | 612 | [Results of Operations](index=48&type=section&id=Results%20of%20Operations) This section details the company's financial performance, showing a substantial decline in revenues and a shift to significant net losses for both the three and nine months ended September 30, 2024, driven by decreased product demand, massive inventory write-downs, and impairment charges [Revenues](index=49&type=section&id=Revenues) Revenues decreased significantly by **64.0%** for the three months and **72.5%** for the nine months ended September 30, 2024, primarily due to decreased sales of inverters and power optimizers, discontinuation of e-mobility components, and reduced ancillary solar product sales, driven by high channel inventory and slower installation rates | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :------- | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | Revenues | $260,903 | $725,305 | (64.0)% | $730,707 | $2,660,484 | (72.5)% | - The decrease in revenues was primarily due to a decline in inverter and power optimizer sales, discontinuation of LCV e-Mobility activity, and less ancillary solar products sold[365](index=365&type=chunk)[375](index=375&type=chunk) - The decline was driven by high inventory in channels and slower installation rates, leading to substantial cancellations and push-outs of backlog[365](index=365&type=chunk)[375](index=375&type=chunk) [Cost of Revenues and Gross Profit (loss)](index=51&type=section&id=Cost%20of%20Revenues%20and%20Gross%20Profit%20%28loss%29) Cost of revenues increased by **65.4%** for the three months ended September 30, 2024, but decreased by **22.6%** for the nine months, primarily due to a **$636.5 million** increase in inventory write-downs, leading to a gross loss of **269.2%** for the three months and **101.2%** for the nine months | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :------------------ | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | Cost of revenues | $963,229 | $582,488 | 65.4% | $1,470,189 | $1,900,236 | (22.6)% | | Gross profit (loss) | $(702,326) | $142,817 | (591.8)% | $(739,482) | $760,248 | (197.3)% | - Gross profit as a percentage of revenue decreased from **19.7%** to a gross loss of **269.2%** for the three months, and from **28.6%** to a gross loss of **101.2%** for the nine months[381](index=381&type=chunk)[383](index=383&type=chunk) - The primary driver for the gross loss was a **$636.5 million** increase in inventory write-down accruals for the nine months ended September 30, 2024[381](index=381&type=chunk)[383](index=383&type=chunk) [Operating Expenses: Research and Development](index=52&type=section&id=Operating%20Expenses%3A%20Research%20and%20Development) Research and development costs decreased by **12.1%** for the three months and **12.8%** for the nine months ended September 30, 2024, primarily due to reductions in personnel-related costs from workforce reduction plans and lower expenses for consultants and sub-contractors | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :-------------------------- | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | Research and development | $70,372 | $80,082 | (12.1)% | $214,999 | $246,481 | (12.8)% | - Decreases were mainly due to **$20.6 million** in lower personnel-related costs and **$8.4 million** in reduced consultant/sub-contractor expenses for the nine-month period[386](index=386&type=chunk) [Operating Expenses: Sales and Marketing](index=52&type=section&id=Operating%20Expenses%3A%20Sales%20and%20Marketing) Sales and marketing expenses decreased by **7.2%** for the three months and **7.3%** for the nine months ended September 30, 2024, primarily due to reduced personnel-related costs from workforce reductions and lower training-related expenses | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :------------------ | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | Sales and marketing | $37,427 | $40,351 | (7.2)% | $116,316 | $125,539 | (7.3)% | - The decrease was driven by **$6.4 million** in lower personnel-related costs and **$1.4 million** in reduced training expenses for the nine-month period[388](index=388&type=chunk) [Operating Expenses: General and Administrative](index=53&type=section&id=Operating%20Expenses%3A%20General%20and%20Administrative) General and administrative expenses increased by **5.4%** for the three months but decreased by **0.7%** for the nine months ended September 30, 2024, with the nine-month decrease primarily due to reduced consultant and personnel costs, partially offset by a **$13.2 million** increase in doubtful debt expenses | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :-------------------------- | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | General and administrative | $41,212 | $39,110 | 5.4% | $111,085 | $111,876 | (0.7)% | - For the nine months, G&A expenses decreased due to **$5.6 million** in lower consultant costs and **$7.1 million** in reduced personnel costs, but were partially offset by a **$13.2 million** increase in doubtful debt expenses[391](index=391&type=chunk)[392](index=392&type=chunk)[395](index=395&type=chunk) [Other operating expense (income), net](index=54&type=section&id=Other%20operating%20expense%20%28income%29%2C%20net) Other operating expense, net, significantly increased to **$233,929 thousand** for the three months and **$237,271 thousand** for the nine months ended September 30, 2024, primarily due to substantial impairment losses on property, plant, and equipment (**$207.4 million**), intangible assets (**$22.5 million**), and goodwill (**$2.3 million**) | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | Other operating expense (income), net | $233,929 | $0 | 100.0% | $237,271 | $(1,434) | (16,646.1)% | - The increase was driven by impairment losses of **$207.4 million** on property, plant, and equipment, **$22.5 million** on intangible assets, and **$2.3 million** on goodwill[394](index=394&type=chunk)[397](index=397&type=chunk)[398](index=398&type=chunk) [Financial income (expense), net](index=55&type=section&id=Financial%20income%20%28expense%29%2C%20net) Financial income, net, was **$5.6 million** for the three months ended September 30, 2024, compared to an expense of **$7.9 million** in the prior year, mainly due to foreign exchange rate fluctuations, while for the nine months, financial expenses, net, were **$2.4 million**, a significant decrease from **$19.2 million** income in the prior year, primarily due to increased credit loss expenses and decreased hedging income | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | Financial income (expense), net | $5,558 | $(7,901) | (170.3)% | $(2,371) | $19,157 | (112.4)% | - The nine-month change was primarily due to an **$11.4 million** increase in credit loss related to loan receivables and a **$5.0 million** decrease in hedging income[400](index=400&type=chunk)[401](index=401&type=chunk) [Other income (loss), net](index=56&type=section&id=Other%20income%20%28loss%29%2C%20net) Other loss, net, increased to **$3.9 million** for the three months ended September 30, 2024, primarily due to a **$5.0 million** impairment loss on a privately held company investment, while for the nine months, other income, net, was **$14.6 million**, a significant improvement from a **$0.6 million** loss in the prior year, driven by a **$15.5 million** gain from repurchasing 2025 Notes and increased realized gains from marketable securities | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :-------------------------- | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | Other income (loss), net | $(3,928) | $(484) | 711.6% | $14,623 | $(609) | (2,501.1)% | - The nine-month improvement was driven by a **$15.5 million** gain from the repurchase of 2025 Notes and a **$3.2 million** increase in realized gains from marketable securities[405](index=405&type=chunk) [Tax benefits (income taxes)](index=56&type=section&id=Tax%20benefits%20%28income%20taxes%29) Income taxes increased by **$85.0 million** for the three months ended September 30, 2024, primarily due to a **$141.2 million** increase in deferred tax expenses from a valuation allowance, while for the nine months, income taxes decreased by **$14.5 million**, mainly due to a **$104.0 million** decrease in current tax expenses, partially offset by a **$98.0 million** increase in deferred tax expenses from the valuation allowance | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :----------- | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | Income taxes | $(121,108) | $(36,065) | 235.8% | $(85,109) | $(99,622) | (14.6)% | - The increase in deferred tax expenses was driven by a valuation allowance due to uncertainty regarding future profitability[407](index=407&type=chunk)[409](index=409&type=chunk) [Net loss from equity method investments](index=57&type=section&id=Net%20loss%20from%20equity%20method%20investments) Net loss from equity method investments increased by **$0.6 million** for the three months and **$1.4 million** for the nine months ended September 30, 2024, as compared to no loss in the prior year periods | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | Net loss from equity method investments | $577 | $0 | 100.0% | $1,440 | $0 | 100.0% | [Net Income (loss)](index=57&type=section&id=Net%20Income%20%28loss%29) The company reported a net loss of **$1,205.3 million** for the three months and **$1,493.5 million** for the nine months ended September 30, 2024, a significant deterioration from a net loss of **$61.2 million** and net income of **$196.7 million**, respectively, in the prior year periods | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :------------------ | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | Net income (loss) | $(1,205,321) | $(61,176) | 1,870.3% | $(1,493,450) | $196,712 | (859.2)% | [Segment analysis](index=58&type=section&id=Segment%20analysis) SolarEdge operates in Solar, Energy Storage, and "All other" segments, with both Solar and Energy Storage segments reporting significant operating losses for the three and nine months ended September 30, 2024, primarily due to decreased revenues and increased inventory write-downs [Solar](index=58&type=section&id=Solar) Solar segment revenues decreased by **63.4%** for the three months and **73.2%** for the nine months ended September 30, 2024, leading to operating losses of **$(717.3) million** and **$(932.7) million**, respectively, primarily due to decreased sales of inverters and power optimizers, reduced battery sales in Europe, and significant inventory write-downs | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :-------------------------- | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | Revenues | $247,516 | $676,929 | (63.4)% | $678,861 | $2,532,794 | (73.2)% | | Segment profit (loss) | $(717,291) | $45,132 | (1,689.3)% | $(932,734) | $458,855 | (303.3)% | - The significant operating loss was driven by decreased revenues and a substantial increase in inventory write-down accrual (**$545.2 million** for three months, **$554.3 million** for nine months)[422](index=422&type=chunk)[424](index=424&type=chunk) [Energy Storage](index=60&type=section&id=Energy%20Storage) Energy Storage revenues decreased by **55.0%** for the three months and **18.2%** for the nine months ended September 30, 2024, with operating loss increasing significantly by **388.5%** to **$(91.3) million** for the three months and **115.5%** to **$(113.1) million** for the nine months, mainly due to decreased revenues and increased inventory write-downs | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :-------------------------- | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | Revenues | $10,900 | $24,215 | (55.0)% | $42,960 | $52,492 | (18.2)% | | Segment loss | $(91,288) | $(18,686) | 388.5% | $(113,061) | $(52,465) | 115.5% | - The increase in operating loss was primarily due to decreased revenues and a **$59.4 million** increase in cost of revenues, mainly from inventory write-downs, for the three months ended September 30, 2024[248](index=248&type=chunk) [All other](index=60&type=section&id=All%20other) All other segments' revenues decreased significantly by **90.7%** for the three months and **89.1%** for the nine months ended September 30, 2024, primarily due to the discontinuation of the LCV e-Mobility activity, though operating profit improved to **$0.5 million** for the three months and **$0.9 million** for the nine months | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :-------------------------- | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | Revenues | $2,237 | $23,946 | (90.7)% | $8,156 | $74,594 | (89.1)% | | Segment profit (loss) | $488 | $(3,381) | (114.4)% | $866 | $(8,571) | (110.1)% | - The decrease in revenues and improvement in operating profit were mainly due to the discontinuation of the LCV e-Mobility activity[251](index=251&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk) [Not allocated to segments](index=60&type=section&id=Not%20allocated%20to%20segments) Expenses not allocated to segments increased significantly by **596.6%** for the three months and **211.8%** for the nine months ended September 30, 2024, primarily due to impairment of property, plant and equipment, intangible assets, and goodwill, as well as costs related to the Restructuring Plan | Metric | 3 Months Ended Sep 30, 2024 (in thousands) | 3 Months Ended Sep 30, 2023 (in thousands) | Change (%) | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (%) | | :-------------------------- | :----------------------------------------- | :----------------------------------------- | :--------- | :----------------------------------------- | :----------------------------------------- | :--------- | | Expenses, net not allocated to segments | $(277,175) | $(39,791) | 596.6% | $(374,224) | $(120,033) | 211.8% | - The increase in unallocated expenses was mainly due to impairment of property, plant and equipment, intangible assets, and goodwill, and costs related to the Restructuring Plan[26](index=26&type=chunk)[28](index=28&type=chunk) [Liquidity and Capital Resources](index=61&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2024, SolarEdge had **$303.9 million** in cash and cash equivalents, plus **$430.9 million** in marketable securities, which the company believes are sufficient to meet anticipated cash needs for at least the next 12 months and long-term - As of September 30, 2024, cash and cash equivalents were **$303.9 million**, with an additional **$430.9 million** in available-for-sale marketable securities[30](index=30&type=chunk) - The company believes its cash and marketable securities are sufficient to meet anticipated cash needs for the next 12 months and longer term[31](index=31&type=chunk) [Operating Activities](index=61&type=section&id=Operating%20Activities) Cash used in operating activities increased by **$285.5 million** for the nine months ended September 30, 2024, compared to the prior year, primarily due to a net loss (adjusted for non-cash items) in 2024 versus net income in 2023, partially offset by lower operating working capital requirements | Metric | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (in thousands) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | | Net cash used in operating activities | $(325,656) | $(40,203) | $(285,453) | - The increase in cash used was mainly due to a net loss in 2024 compared to net income in 2023, partially offset by lower operating working capital requirements[32](index=32&type=chunk) [Investing Activities](index=62&type=section&id=Investing%20Activities) Cash provided by investing activities was **$318.8 million** for the nine months ended September 30, 2024, a significant improvement from **$188.2 million** cash used in the prior year, primarily driven by a **$508.9 million** increase in proceeds from sales and maturities of marketable securities, and decreased purchases of property, plant, and equipment | Metric | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (in thousands) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | | Net cash provided by (used in) investing activities | $318,755 | $(188,187) | $506,942 | - The shift was primarily due to a **$508.9 million** increase in proceeds from sales and maturities of available-for-sale marketable securities[34](index=34&type=chunk) [Financing Activities](index=62&type=section&id=Financing%20Activities) Cash used in financing activities increased by **$8.6 million** for the nine months ended September 30, 2024, compared to the prior year, mainly due to increased cash used for repurchasing convertible notes (**$267.9 million**) and share repurchases (**$50.3 million**), partially offset by a **$329.2 million** increase in cash from the issuance of convertible notes | Metric | 9 Months Ended Sep 30, 2024 (in thousands) | 9 Months Ended Sep 30, 2023 (in thousands) | Change (in thousands) | | :---------------------------------- | :----------------------------------------- | :----------------------------------------- | :-------------------- | | Net cash used in financing activities | $(19,873) | $(11,305) | $(8,568) | - Increased cash used for repurchasing convertible notes (**$267.9 million**) and share repurchases (**$50.3 million**) was partially offset by **$329.2 million** from new convertible note issuance[35](index=35&type=chunk) [Share Repurchases](index=62&type=section&id=Share%20Repurchases) On November 1, 2023, the Board approved a share repurchase program authorizing up to **$300 million** of common stock repurchases, expiring December 31, 2024, with **753,364 shares** repurchased for **$50.3 million** during the nine months ended September 30, 2024 - A **$300 million** share repurchase program was approved on November 1, 2023, expiring December 31, 2024[36](index=36&type=chunk) - During the nine months ended September 30, 2024, **753,364 shares** were repurchased for **$50.3 million** at an average cost of **$66.79** per share[37](index=37&type=chunk) [Convertible Senior Notes](index=62&type=section&id=Convertible%20Senior%20Notes) In June 2024, SolarEdge sold **$300 million** of 2.25% convertible senior notes due 2029, using **$267.9 million** of the net proceeds to repurchase **$285 million** of its 0.00% convertible notes due 2025, with capped call transactions entered into to reduce potential dilution - In June 2024, SolarEdge sold **$300 million** of 2.25% convertible senior notes due 2029, with net proceeds of **$293.2 million**[38](index=38&type=chunk) - **$267.9 million** of the proceeds were used to repurchase **$285 million** of 0.00% convertible notes due 2025, resulting in a **$15.5 million** gain[38](index=38&type=chunk) - Capped call transactions were used to reduce potential dilution from the 2029 notes[38](index=38&type=chunk) [Critical Accounting Policies and Significant Management Estimates](index=63&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Management%20Estimates) Management believes there have been no significant changes to critical accounting policies and estimates disclosed in the 2023 Form 10-K for the nine months ended September 30, 2024, except as noted in "General" (Note 1) - No significant changes to critical accounting policies and estimates were identified for the nine months ended September 30, 2024, except as noted in "General" (Note 1)[40](index=40&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=63&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines SolarEdge's exposure to market risks, primarily from foreign currency exchange rates, customer concentrations, interest rates, and commodity prices, with the company employing derivative instruments to manage foreign currency risks but not hedging against commodity price fluctuations [Foreign Currency Exchange Risk](index=63&type=section&id=Foreign%20Currency%20Exchange%20Risk) Approximately **44.93%** of revenues for the nine months ended September 30, 2024, were non-U.S. dollar denominated, primarily Euro, with a hypothetical **10%** change in Euro/USD exchange rates impacting net income by **$45.8 million**, and a **10%** change in NIS/USD rates impacting net income by **$20.8 million** - **44.93%** of revenues for the nine months ended September 30, 2024, were non-U.S. dollar denominated, mainly Euro[42](index=42&type=chunk) - A hypothetical **10%** change in Euro/USD exchange rates would impact net income by **$45.8 million**, and NIS/USD by **$20.8 million** for the nine months ended September 30, 2024[42](index=42&type=chunk) - Derivative financial instruments (forward contracts, put/call options) are used to manage foreign currency risks, particularly for NIS payroll[44](index=44&type=chunk)[45](index=45&type=chunk) [Concentrations of Major Customers](index=63&type=section&id=Concentrations%20of%20Major%20Customers) As of September 30, 2024, three major customers accounted for **37.4%** of consolidated trade receivables, and for the three months ended September 30, 2024, one major customer accounted for **16.7%** of total revenues, and for the nine months, **11.0%** of total revenues - Three major customers accounted for **37.4%** of consolidated trade receivables as of September 30, 2024[46](index=46&type=chunk) - One major customer accounted for **16.7%** of total revenues for the three months ended September 30, 2024, and **11.0%** for the nine months ended September 30, 2024[46](index=46&type=chunk) [Commodity Price Risk](index=64&type=section&id=Commodity%20Price%20Risk) SolarEdge is exposed to fluctuating market prices of raw materials like Copper, Lithium, Nickel, and Cobalt, used in its products, and does not use hedging arrangements to mitigate this risk, which could reduce operating margins if not recovered from customers - The company is subject to risk from fluctuating market prices of commodity raw materials (Copper, Lithium, Nickel, Cobalt) used in its products[48](index=48&type=chunk) - No

Solar stocks got a lot cheaper this week. You still shouldn't buy them.SolarEdge (SEDG -1.08%) stock is taking investors on a wild ride on Thursday -- but not just investors in SolarEdge stock. After reporting a gigantic earnings miss last night, shares of the Israeli solar inverter stock opened down 13% from Wednesday's closing price. The shares proceeded to fall further in the day's opening minutes, before turning around, gaining back (almost) all their losses -- then retreating again. As of 11:15 a.m. ET ...

SolarEdge Technologies, Inc. (SEDG) reported a third-quarter 2024 adjusted loss of $15.33 per share, wider than the Zacks Consensus Estimate of a loss of $1.55. The bottom line also deteriorated from the prior-year quarter’s loss of 55 cents per share.See the Zacks Earnings Calendar to stay ahead of market-making news.Barring one-time adjustments, the company incurred a GAAP loss of $21.13 per share compared with the GAAP loss of $1.08 per share in the year-ago period.The year-over-year deterioration in the ...

I am mostly a trader engaging in both long and short bets intraday and occasionally over the short- to medium term. My historical focus has been mostly on tech stocks but over the past couple of years I have also started broad coverage of the offshore drilling and supply industry as well as the shipping industry in general (tankers, containers, drybulk). In addition, I am having a close eye on the still nascent fuel cell industry.I am located in Germany and have worked quite some time as an auditor for Pric ...

Financial Data and Key Metrics - Q3 2024 revenue was $261 million, with $248 million from the solar business and $13 million from non-solar businesses [21] - Free cash flow use in Q3 was $75 million, down significantly from $140 million in Q2 [11] - Inventory write-downs totaled $612 million, with $536 million related to the solar business and $76 million to non-solar business [29] - GAAP gross margin for Q3 was negative 269.2%, driven by a $1.03 billion impairment charge [34] - Non-GAAP operating loss for Q3 was $801.1 million, compared to $114.3 million in Q2 [35] - Cash and equivalents stood at $740 million as of September 30, 2024 [36] Business Line Data and Key Metrics - Solar business shipped 1.85 million power optimizers, 58,000 inverters, and 189 MWh of batteries in Q3 [21] - Non-solar business revenue was $13.1 million, primarily from energy storage and other segments [34] - The company divested its automation machines business, acquired as part of the S.M.R.E. acquisition in 2019, to focus on core solar and storage businesses [19] Market Data and Key Metrics - U.S. residential sell-through grew 8% quarter-over-quarter, while commercial sell-through increased by 15% [22] - European residential sell-through declined by 34%, and commercial sell-through dropped by 26% due to weak market conditions [23] - The company expects to increase U.S. manufacturing capacity, with the Florida facility on track to produce 2 million domestic optimizers per quarter by Q1 2025 [24] Company Strategy and Industry Competition - The company has identified three priorities: achieving financial stability, recapturing market share, and refocusing on core solar and storage businesses [10] - Price reductions and promotions in Europe aim to regain market share and reduce the pricing gap with low-cost competitors [16] - The company plans to introduce next-generation products in 2025, focusing on solar, storage, and energy management solutions [20] Management Commentary on Operating Environment and Future Outlook - The company expects to return to positive cash generation by the first half of 2025, with free cash flow use in Q4 2024 expected to be between negative $20 million and neutral [13] - Management anticipates a pickup in demand starting in Q2 2025, driven by price reductions and promotional campaigns [17] - The company is focused on reducing operational expenses and optimizing working capital to achieve financial stability [14] Other Important Information - The company sold $40 million in Section 45x manufacturing credits related to U.S. production in the first half of 2024 [12] - The CEO selection process is ongoing, with an announcement expected before the end of 2024 [15] Q&A Session Summary Question: Impact of price reductions and asset revaluation on revenue targets [38] - Management acknowledged the volatility in the market and the difficulty in committing to specific revenue targets due to uncertain demand in Europe and the U.S. [39][40] - The company expects revenue to pick up in Q2 2025, driven by price reductions and promotional campaigns [41] Question: Expectations for Q4 and Q1 revenue and market share [42] - Management does not expect Q1 2025 to be lower than Q4 2024, with stabilization or even an increase in revenue anticipated due to price reductions [43][44] - Market share in Europe is difficult to measure, but the company believes price reductions will help regain share [45] Question: Assumptions for achieving breakeven on cash flow [49] - The company expects to achieve breakeven through the sale of IRA credits, inventory usage, and low capital expenditures [51][52] Question: Timing of new product introductions [53] - New products, including a 20-kilowatt inverter and a second-generation battery, are expected to be introduced in 2025 [53] Question: Refinancing of convertible debt and 45x tax credit pricing [56] - The company plans to repay the convertible debt at maturity in September 2025 and sold 45x credits at mid-90s pricing [58][59] Question: Structural vs. one-time nature of price reductions in Europe [60] - Price reductions in Europe are expected to be permanent, with high single-digit to low double-digit reductions in 2024 and mid-to-high single-digit reductions in 2025 [63][64] Question: Core market focus and potential shift back to the U.S. [66] - Both the U.S. and Europe remain important markets, with a short-term focus on the U.S. due to stronger market conditions [67][68] Question: Undershipment in Q3 and expectations for Q4 and 2025 [72] - Undershipment in Q3 was approximately $210 million, with expectations for stabilization or improvement in Q1 2025 [73][74] Question: Potential for further inventory write-downs and domestic vs. European inventory [107] - The company does not expect further inventory write-downs in the solar division, with most write-downs related to obsolescence rather than selling below cost [108][111] Question: Impact of recent price reductions and manufacturing capacity [113] - Recent price reductions in Europe were not fully reflected in Q3 results, and the company no longer maintains $1 billion in manufacturing capacity [115][116]

Company Performance - SolarEdge Technologies reported a quarterly loss of $15.33 per share, significantly worse than the Zacks Consensus Estimate of a loss of $1.55, and compared to a loss of $0.55 per share a year ago, indicating a substantial decline in performance [1] - The company posted revenues of $260.9 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 3.13%, and a sharp decline from year-ago revenues of $725.31 million [2] - Over the last four quarters, SolarEdge has surpassed consensus EPS estimates only once and has topped consensus revenue estimates two times [2] Stock Performance - SolarEdge shares have declined approximately 79.8% since the beginning of the year, contrasting with the S&P 500's gain of 21.2% [3] - The current consensus EPS estimate for the upcoming quarter is -$1.34 on revenues of $299.54 million, and for the current fiscal year, it is -$6.47 on revenues of $1.04 billion [7] Industry Outlook - SolarEdge is currently positioned in the bottom 29% of the Zacks Industry Rank, which suggests that the outlook for the industry can significantly impact the stock's performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]