SOLAREDGE TECHNOLOGIES, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - SOLAREDGE TECHNOLOGIES, INC.	zk1618482.htm

Exhibit 99.1

SolarEdge Announces Fiscal Third Quarter Financial Results

Fremont, CA — May 9, 2016. SolarEdge Technologies, Inc. (NASDAQ: SEDG) today announced its financial results for the fiscal third quarter ended March 31, 2016.

Fiscal Third Quarter 2016 Highlights

Record revenue of $125.2 million, up 0.3% from last quarter and 44.9% year-over-year

GAAP gross margin of 32.5%

GAAP net income of $20.8 million

Non-GAAP net income of $23.3 million

416 Megawatts (AC) of inverters shipped

"We are pleased with another strong quarter despite challenging market conditions. Our growing customer base, continued diligent execution, strong balance sheet and increased cash flow from operations, coupled with our advanced technology, position us well moving forward,” said Guy Sella, Founder, Chairman and CEO of SolarEdge.

Revenues

The Company reported revenues of $125.2 million, an increase of $0.4 million, or 0.3% from the prior quarter and an increase of $38.8 million or 44.9% from the fiscal third quarter of 2015.

Gross margins

GAAP gross margin was 32.5%, up from 30.9% in the prior quarter and up from 27.4% in the fiscal third quarter of 2015. Non-GAAP gross margin was 32.7%, up from 31.1% in the prior quarter and 27.6% in the fiscal third quarter of 2015. See “Reconciliation on Non-GAAP Measures” below.

Operating expenses

GAAP operating expenses were $21.0 million, or 16.8% of revenue, an increase from $19.3 million, which represented 15.5% of revenue in the prior quarter and an increase from $13.9 million, or 16.1% of revenue when compared to the same fiscal quarter of 2015.

Operating income

Operating income was $19.7 million, up from $19.3 million in the prior quarter and up from operating income of $9.8 million in the fiscal third quarter of 2015.

Financial Expenses

Financial income of $2.0 million compared to financial expense of $1.0 million in the previous quarter and financial expense of $3.4 million in the same quarter last year.

Net Income

GAAP net income was $20.8 million, down from $24.1 million in the prior quarter (including a one-time $6.6 million tax asset) and up from $6.0 million in the fiscal third quarter of 2015. Non-GAAP net income was $23.3 million, an increase from $19.8 million in the prior quarter and an increase from $8.7 million in the fiscal third quarter of 2015. See “Reconciliation on Non-GAAP Measures” below.

EPS

GAAP net diluted earnings per share (“EPS”) was $0.47, down from $0.55 in the prior quarter (including the one-time $6.6 million tax asset) and up from $0.01 in the fiscal third quarter of 2015. Non-GAAP net diluted EPS was $0.51, an increase from $0.44 in the prior quarter and an increase from $0.20 in the fiscal third quarter of 2015. See “Reconciliation on Non-GAAP Measures” below.

Cash

At March 31, 2016, cash, cash equivalents, restricted cash and investment in marketable securities, totaled $172.2 million compared to $162.0 million on December 31, 2015. During the fiscal third quarter, the Company generated $15.3 million from operating activities.

Outlook for the Fiscal Fourth Quarter 2016

The Company provides guidance for the fiscal fourth quarter of 2016 as follows:

Revenues to be within the range of $125 million to $134 million;

Gross margins to be within the range of 29.0 % to 31.0%.

Conference Call

The Company will host a conference call to discuss these results at 5:00 P.M. Eastern Time on Monday, May 9, 2016. The call will be available, live, to interested parties by dialing +1 877-681-3375. For international callers, please dial +1 719-325-4907. The Conference ID number is 4543534. A live webcast will also be available in the Investors Relations section of SolarEdge 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 remain available for approximately 30 calendar days.

About SolarEdge

SolarEdge provides an intelligent inverter solution that has changed the way power is harvested and managed in solar photovoltaic systems. The SolarEdge DC optimized inverter system maximizes power generation at the individual PV module-level while lowering the cost of energy produced by the solar PV system. The SolarEdge system consists of power optimizers, inverters, storage solutions and a cloud-based monitoring platform and addresses a broad range of solar market segments, from residential solar installations to commercial and small utility-scale solar installations.

Use of Non-GAAP Financial Measures

The Company has presented certain non-GAAP financial measures in this release, including non-GAAP gross margin, non-GAAP net income and non-GAAP net diluted EPS. 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 press 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.

For a reconciliation of non-GAAP measures to their most comparable GAAP measures, please see “Reconciliation on Non-GAAP Measures” below.

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 projection of future

revenues and gross margin, our possible or assumed future results of operations; future demands for solar energy solutions; business strategies; technology developments; new products and services; 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 revenues, gross margins, other financial 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 Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2015 and, Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, when it becomes available, Current Reports on Form 8-K and other reports filed with the SEC. All information set forth in this release is as of May 9, 2016. SolarEdge 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.

Investor Contacts

SolarEdge Technologies, Inc.

Ronen Faier, Chief Financial Officer

investors@solaredge.com

+1 510-498-3263

Sapphire Investor Relations, LLC

Erica Mannion or Michael Funari

investors@solaredge.com

+1 617-542-6180

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three months ended March 31,					Nine months ended March 31,
	2016		2015			2016			2015
	Unaudited					Unaudited

Revenues	$	125,205	$	86,399		$	365,091		$	226,658
Cost of revenues		84,471		62,698			252,248			173,146

Gross profit		40,734		23,701			112,843			53,512

Operating expenses:

Research and development, net		8,709		5,490			23,999			15,317
Sales and marketing		8,826		6,422			25,903			17,541
General and administrative		3,460		1,990			9,066			4,270

Total operating expenses		20,995		13,902			58,968			37,128

Operating income		19,739		9,799			53,875			16,384

Financial income (expenses), net		2,029		(3,436	)		998			(3,378	)

Income before taxes on income		21,768		6,363			54,873			13,006

Taxes on income (tax benefit)		969		398			(4,463	)		1,146

Net income	$	20,799	$	5,965		$	59,336		$	11,860

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	March 31,			June 30,
	2016			2015
	Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	84,070		$	144,750
Restricted cash		944			3,639
Marketable Securities		44,059			-
Trade receivables, net		56,145			35,428
Prepaid expenses and other accounts receivable		18,613			32,645
Inventories		85,514			73,950
Total current assets		289,345			290,412
PROPERTY AND EQUIPMENT, NET		26,213			14,717
LONG-TERM ASSETS:
Long-term marketable securities		43,151			-
Long-term prepaid expenses and lease deposits		440			529
Deferred tax assets, net		6,486			-
Intangible assets, net		737			-
		50,814			529
Total assets	$	366,372		$	305,658

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables	$	45,138		$	80,684
Employees and payroll accruals		12,358			6,814
Warranty obligations		13,510			9,431
Deferred revenues		2,642			1,676
Accrued expenses and other accounts payable		7,797			6,987
Total current liabilities		81,445			105,592
LONG-TERM LIABILITIES
Warranty obligations		33,149			22,448
Deferred revenues		13,266			8,289
Lease incentive obligation		2,265			2,385
Total long-term liabilities		48,680			33,122
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS’ EQUITY:
Share capital		4			4
Additional paid-in capital		296,480			287,152
Accumulated other comprehensive income (loss)		417			(222	)
Accumulated deficit		(60,654	)		(119,990	)
Total stockholders’ equity		236,247			166,944
Total liabilities and stockholders’ equity	$	366,372		$	305,658

SOLAREDGE TECHNOLOGIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Nine months ended March 31,
	2016			2015
	Unaudited
Cash flows provided by (used in) operating activities:
Net income	$	59,336		$	11,860
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		2,601			1,647
Amortization of intangible assets		63			-
Amortization of premiums on available-for-sale marketable securities		209			-
Stock-based compensation related to employees and non-employees consultants stock options		6,689			1,750
Financial income, net related to term loan		-			(992	)
Remeasurement of warrants to purchase preferred and common stock		-			2,065
Changes in assets and liabilities:
Inventories		(11,446	)		(39,071	)
Prepaid expenses and other accounts receivable		13,186			(12,198	)
Trade receivables, net		(20,681	)		(25,993	)
Deferred tax assets, net		(6,627	)		-
Trade payables		(35,554	)		39,604
Employees and payroll accruals		5,517			883
Warranty obligations		14,780			9,718
Deferred revenues		5,942			2,116
Accrued expenses and other accounts payable		497			2,733
Lease incentive obligation		(120	)		2,243
Net cash provided by (used in) operating activities		34,392			(3,635	)

Cash flows used in investing activities:
Purchase of property and equipment		(11,545	)		(8,254	)
Purchase of intangible assets		(800	)		-
Decrease (increase) in restricted cash		2,695			(1,973	)
Decrease (increase) in short and long-term lease deposits		23			(24	)
Purchases of available-for-sale marketable securities		(88,883	)		-
Maturities of available-for-sale marketable securities		1,000			-
Net cash used in investing activities		(97,510	)		(10,251	)

Cash flows from financing activities:
Proceeds from short-term bank loans		-			23,000
Repayments of short term loan		-			(36,326	)
Repayments of term loan		-			(5,919	)
Proceeds from issuance of stock		-			24,712
Proceeds from IPO, net		-			133,944
Proceeds from exercise of employees and non-employees consultants stock options		2,639			46
Net cash provided by financing activities		2,639			139,457
Increase (decrease) in cash and cash equivalents		(60,479	)		125,571
Cash and cash equivalents at the beginning of the period		144,750			9,754
Erosion due to exchange rate differences		(201	)		(121	)
Cash and cash equivalents at the end of the period	$	84,070		$	135,204

SOLAREDGE TECHNOLOGIES INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands, except per share data)

(unaudited)

Reconciliation of Non-GAAP Financial Measures

	Reconciliation of GAAP to Non-GAAP Gross Profit
	Three months ended									Nine months ended
	Mar 31, 2016			Dec 31, 2015			Mar 31, 2015 (1)			Mar 31, 2016			Mar 31, 2015 (1)

Gross profit (GAAP)		40,734			38,582			23,701			112,843			53,512
Stock-based compensation		246			209			142			635			254
Gross profit (Non-GAAP)		40,980			38,791			23,843			113,478			53,766

	Reconciliation of GAAP to Non-GAAP Gross Margin
	Three months ended									Nine months ended
	Mar 31, 2016			Dec 31, 2015			Mar 31, 2015 (1)			Mar 31, 2016			Mar 31, 2015 (1)
Gross margin (GAAP)		32.5	%		30.9	%		27.4	%		30.9	%		23.6	%
Stock-based compensation		0.2	%		0.2	%		0.2	%		0.2	%		0.1	%
Gross margin (Non-GAAP)		32.7	%		31.1	%		27.6	%		31.1	%		23.7	%

	Reconciliation of GAAP to Non-GAAP Operating expenses
	Three months ended									Nine months ended
	Mar 31, 2016			Dec 31, 2015			Mar 31, 2015 (1)			Mar 31, 2016			Mar 31, 2015 (1)
Operating expenses (GAAP)		20,995			19,320			13,902			58,968			37,128
Stock-based compensation R&D		724			518			184			1,637			450
Stock-based compensation S&M		842			749			292			2,207			546
Stock-based compensation G&A		819			750			354			2,210			502
Operating expenses (Non-GAAP)		18,610			17,303			13,072			52,914			35,630

	Reconciliation of GAAP to Non-GAAP Operating income
	Three months ended									Nine months ended
	Mar 31, 2016			Dec 31, 2015			Mar 31, 2015 (1)			Mar 31, 2016			Mar 31, 2015 (1)
Operating income (GAAP)		19,739			19,262			9,799			53,875			16,384
Stock-based compensation		2,631			2,226			972			6,689			1,752
Operating income (Non-GAAP)		22,370			21,488			10,771			60,564			18,136

	Reconciliation of GAAP to Non-GAAP Finance expenses
	Three months ended									Nine months ended
	Mar 31, 2016			Dec 31, 2015			Mar 31, 2015 (1)			Mar 31, 2016			Mar 31, 2015 (1)
Finance expenses (Income) (GAAP)		(2,029	)		959			3,436			(998	)		3,378
Warrants remeasurement		----			----			1,800			----			2,065
Finance expenses (Non-GAAP)		(2,029	)		959			1,636			(998	)		1,313

	Reconciliation of GAAP to Non-GAAP Tax on income (Tax benefit)
	Three months ended									Nine months ended
	Mar 31, 2016			Dec 31, 2015			Mar 31, 2015 (1)			Mar 31, 2016			Mar 31, 2015 (1)
Tax on income (Tax benefit) (GAAP)		969			(5,802	)		398			(4,463	)		1,146
Tax benefit due to deferred tax asset		100			6,527			----			6,627			----
Tax on income (Tax benefit) (Non-GAAP)		1,069			725			398			2,164			1,146

	Reconciliation of GAAP to Non-GAAP Net income
	Three months ended									Nine months ended
	Mar 31, 2016			Dec 31, 2015			Mar 31, 2015 (1)			Mar 31, 2016			Mar 31, 2015 (1)
Net income (GAAP)		20,799			24,105			5,965			59,336			11,860
Stock-based compensation		2,631			2,226			972			6,689			1,752
Warrants remeasurement		----			----			1,800			----			2,065
Tax benefit due to deferred tax asset		(100	)		(6,527	)		----			(6,627	)		----
Net income (Non-GAAP)		23,330			19,804			8,737			59,398			15,677

	Reconciliation of GAAP to Non-GAAP Net basic EPS
	Three months ended							Nine months ended
	Mar 31, 2016		Dec 31, 2015			Mar 31, 2015 (1)		Mar 31, 2016			Mar 31, 2015 (1)
Net basic earnings per share (GAAP)		0.52		0.61			0.01		1.49			0.02
Stock-based compensation		0.06		0.06			0.03		0.17			0.05
Warrants remeasurement		----		----			0.04		----			0.07
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods		----		----			0.14		----			0.34
Tax benefit due to deferred tax asset		----		(0.17	)		----		(0.16	)		----
Net basic earnings per share (Non-GAAP)		0.58		0.50			0.22		1.50			0.48

	Reconciliation of GAAP to Non-GAAP No. of shares used in net basic EPS
	Three months ended							Nine months ended
	Mar 31, 2016		Dec 31, 2015			Mar 31, 2015 (1)		Mar 31, 2016			Mar 31, 2015 (1)
Number of shares used in computing net basic earnings per share (GAAP)		40,362,093		39,511,967			2,822,893		39,725,227			2,817,090
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods		----		----			36,297,931		----			30,025,279
Number of shares used in computing net basic earnings per share (Non-GAAP)		40,362,093		39,511,967			39,120,824		39,725,227			32,842,369

	Reconciliation of GAAP to Non-GAAP Net diluted EPS
	Three months ended							Nine months ended
	Mar 31, 2016		Dec 31, 2015			Mar 31, 2015 (1)		Mar 31, 2016			Mar 31, 2015 (1)
Net diluted earnings per share (GAAP)		0.47		0.55			0.01		1.34			0.01
Stock-based compensation		0.04		0.03			0.01		0.11			0.05
Warrants remeasurement		----		----			0.04		----			0.05
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods		----		----			0.14		----			0.32
Tax benefit due to deferred tax asset		----		(0.14	)		----		(0.14	)		----
Net diluted earnings per share (Non-GAAP)		0.51		0.44			0.20		1.31			0.43

	Reconciliation of GAAP to Non-GAAP No. of shares used in Net diluted EPS
	Three months ended							Nine months ended
	Mar 31, 2016		Dec 31, 2015			Mar 31, 2015 (1)		Mar 31, 2016			Mar 31, 2015 (1)
Number of shares used in computing net diluted earnings per share (GAAP)		44,577,901		44,007,348			7,099,046		44,347,071			5,534,903
Stock-based compensation		1,071,876		1,341,335			647,474		1,033,227			670,669
Warrants remeasurement		----		0			103,777		0			36,839
Additional shares giving effect to IPO and conversion of preferred stock at the beginning of the periods		----		----			36,297,931		----			30,025,279
Number of shares used in computing net diluted earnings per share (Non-GAAP)		45,649,777		45,348,683			44,148,228		45,380,298			36,267,690

(1) Assumes shares of common stock outstanding after accounting for the automatic conversion of the shares of preferred stock then outstanding into common stock at the beginning of fiscal year 2015.

SOLAREDGE TECHNOLOGIES, INC. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - May 9, 2016

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