SolarEdge(US:SEDG)2025-05-08 11:52PART I. FINANCIAL INFORMATION Financial Statements The company reported a narrowed net loss and positive operating cash flow in Q1 2025 despite ongoing restructuring Condensed Consolidated Balance Sheet Data (in thousands) | | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $1,989,683 | $2,050,565 | | Total assets | $2,525,173 | $2,646,453 | | Total current liabilities | $974,426 | $1,057,337 | | Total liabilities | $1,930,960 | $1,988,111 | | Total stockholders' equity | $594,213 | $658,342 | Condensed Consolidated Statements of Loss (in thousands, except per share data) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenues | $219,480 | $204,399 | | Gross profit (loss) | $17,536 | $(26,187) | | Operating loss | $(102,726) | $(173,705) | | Net loss | $(98,523) | $(157,311) | | Net basic and diluted loss per share | $(1.70) | $(2.75) | Condensed Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $33,823 | $(217,019) | | Net cash provided by investing activities | $67,597 | $149,008 | | Net cash used in financing activities | $(6,237) | $(50,987) | - The company designs, develops, and sells intelligent inverter solutions for the photovoltaic (PV) market38 - The company depends on two contract manufacturers, who jointly accounted for 64.3% of total trade payables as of March 31, 20254445 - The company announced a restructuring plan in January 2024, reducing headcount by ~900 employees, and later announced the closure of its Energy Storage Division, impacting an additional ~500 employees159160 - The company is involved in a securities class action lawsuit and related derivative complaints, but a potential range of loss cannot be reasonably estimated at this stage137142145 - Following the discontinuation of its Energy Storage activity in 2024, the company now operates as a single operating segment178 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Revenue and gross margin improved YoY amid a market slowdown, with a focus on U.S. manufacturing and liquidity management Overview and Key Metrics - The company now operates as a single solar segment after discontinuing its LCV e-Mobility, Automation Machines, and Energy Storage businesses to focus on core activities194195 - The company is increasing manufacturing in the U.S. (Texas, Florida, Utah) while discontinuing manufacturing in China, Mexico, and Hungary196 - The company has faced a slowdown in demand since Q3 2023 due to high inventory in distribution channels and slower installation rates, particularly in Europe199 Key Operating Metrics | Metric | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Inverters shipped | 84,533 | 68,882 | | Power optimizers shipped | 2,251,596 | 1,070,987 | | Megawatts shipped | 1,208 | 946 | | Megawatt hours shipped (batteries) | 177 | 128 | Results of Operations Revenue Comparison (in thousands) | | Q1 2025 | Q1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $219,480 | $204,399 | $15,081 | 7.4% | - The revenue increase was primarily driven by a $36.4 million increase from a higher number of power optimizers sold, partially offset by a $14.1 million decrease in ancillary solar product sales215 Gross Profit (Loss) Comparison (in thousands) | | Q1 2025 | Q1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Cost of revenues | $201,944 | $230,586 | $(28,642) | (12.4)% | | Gross profit (loss) | $17,536 | $(26,187) | $43,723 | (167.0)% | - The improvement in gross profit was mainly due to a $17.2 million decrease in warranty expenses and an $8.7 million decrease in inventory costs223 - R&D expenses decreased by 17.7% and Sales & Marketing expenses decreased by 18.6% YoY, primarily due to reduced personnel-related costs from the company's restructuring plan224 - Net loss decreased by $58.8 million (37.4%) to $98.5 million in Q1 2025 compared to Q1 2024235 Liquidity and Capital Resources - As of March 31, 2025, cash and cash equivalents were $401.4 million, with an additional $284.3 million in marketable securities and $104.5 million in restricted cash237 - Net cash provided by operating activities was $33.8 million in Q1 2025, a significant improvement from the $217.0 million used in Q1 2024239 - Cash used in financing activities decreased from $51.0 million in Q1 2024 to $6.2 million in Q1 2025, mainly due to a $50.0 million reduction in share repurchases241 - In June 2024, the company issued $300 million of 2.25% convertible senior notes due 2029 and used proceeds to repurchase a portion of its 2025 notes245 Quantitative and Qualitative Disclosures About Market Risk The company faces primary market risks from foreign currency rates, customer concentration, and commodity price volatility - The company's main market risks are foreign currency fluctuations (primarily Euro and NIS), customer concentration, and commodity price volatility248 - A hypothetical 10% change in foreign currency exchange rates would impact net income by $4.0 million for the Euro and $12.8 million for the NIS for the quarter249 - As of March 31, 2025, three major customers accounted for 35.9% of consolidated trade receivables, while two customers accounted for 41.4% of total revenues for the quarter253 - The company uses derivative financial instruments to hedge portions of anticipated payroll payments denominated in NIS251 Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025256 - There were no material changes in the company's internal control over financial reporting during the first quarter of 2025257 PART II. OTHER INFORMATION Legal Proceedings & Risk Factors The company faces uncertain legal outcomes and highlights new risks from U.S. tariffs on Chinese goods - The company is involved in various legal claims but cannot predict if any resulting liability would have a material adverse effect258 - A key risk is the imposition of new U.S. tariffs, including a 145% tariff on goods from China, which could increase costs for key components and adversely affect financial results260 - While the company is exploring alternative suppliers outside of China, there is no assurance of success or that alternatives won't result in increased costs260 Other Items The company reported no unregistered equity sales, senior security defaults, or other material information for the quarter - The company reported "None" for Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults upon Senior Securities), and Item 5 (Other Information)264265 - Item 4 (Mine Safety Disclosures) was reported as "Not applicable"264