SolarEdge Technologies, Inc. EBITDA surged on 54.8% and EBITDA Margin showed almost no change
02/20/2019 • About SolarEdge Technologies, Inc. (
$SEDG) • By InTwits
SolarEdge Technologies, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- SolarEdge Technologies, Inc. is a fast growth stock: 2018 revenue growth was 54.4%, 5 year revenue CAGR was 64.0% at 2018 ROIC 28.6%
- EBITDA Margin is quite volatile: 16.2% in 2018, 16.2% in 2017, 15.5% in 2016, 9.4% in 2015, -12.3% in 2014
- SolarEdge Technologies, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.6%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $39m in 2018, $21m in 2017, $21m in 2016, $12m in 2015, $3m in 2014
- The company has highly profitable business model: ROIC is 28.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 54.4%. Revenue growth showed slowdown in 18Q4 - it was 39.3% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 10.3 pp from 18.8% to 8.5% in FY2018. EBITDA Margin pursued a growing trend in 2014-2018.
Gross Margin decreased slightly on 1.3 pp from 35.4% to 34.1% in 2018. Gross Margin stuck to a growing trend at 4.5 pp per annum in the last 5 years. SG&A as a % of Revenue decreased slightly on 0.91 pp from 11.3% to 10.4% in 2018. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018. SBC as a % of Revenue grew at 0.69 pp per annum in 2014-2018.
Net Income margin showed almost no change in 2018. During 2014-2018 Net Income margin topped in 2017 at 13.9%. The efficient tax rate was 6.6% in 2018.
Investments (CAPEX, working capital and M&A)
SolarEdge Technologies, Inc.'s CAPEX/Revenue was 4.1% in 2018. SolarEdge Technologies, Inc. showed small growth in CAPEX/Revenue of 0.50 pp from 3.6% in 2015 to 4.1% in 2018. It's average CAPEX/Revenue for the last three years was 4.0%.
Accounts receivable as a % of Revenue showed almost no change in 2018. Inventories as a % of Revenue increased slightly on 1.4 pp from 13.7% to 15.1% in 2018. Accounts payable as a % of Revenue showed almost no change in 2018.
Return on investment
The company operates at high and attractive ROIC (28.6%) and ROE (26.8%). ROIC increased on 2.0 pp from 26.5% to 28.6% in 2018. ROE increased on 2.3 pp from 24.5% to 26.8% in 2018.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.1x and Debt / EBITDA is 0.1x. Debt jumped while cash jumped on 17.4%.
SolarEdge Technologies, Inc. has no short term refinancing risk: cash is higher than short term debt (1,151.7%).
Valuation and dividends
SolarEdge Technologies, Inc.'s trades at EV/EBITDA 12.0x and P/E 15.4x.
Management team
Guy Sella is a SolarEdge Technologies, Inc.'s CEO. Guy Sella is a founder and has spent 13 years with the company. CEO total compensation was
$4,178,181 in 2018 which included
$595,267 salary. SolarEdge Technologies, Inc.'s CFO is Ronen Faier. Ronen Faier has 8 years tenure at the company.
The company has 3.8% shares owned by insiders. Insider ownership didn't change in 2018.
The company has 598 employees. The number of employees didn't change in 2018. Average revenue per employee in 2018 was
$1,567,286 and it jumped on 54.4%.
Financial and operational results
FY ended 12/31/2018
SolarEdge Technologies, Inc. ($SEDG) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 133.2 | 325.1 | 490.0 | 607.0 | 937.2 | 54.4% |
| Gross Profit | 22.0 | 81.8 | 160.7 | 214.8 | 319.2 | 48.6% |
| SG&A | 22.1 | 31.5 | 51.5 | 68.7 | 97.6 | 42.0% |
| EBITDA | -16.4 | 30.5 | 75.9 | 98.2 | 152.0 | 54.8% |
| EBIT | -18.4 | 28.3 | 71.0 | 91.1 | 139.4 | 53.1% |
| Interest expence | 2.0 | | | | | |
| Tax | 0.2 | 2.0 | 6.3 | 16.1 | 9.1 | -43.5% |
| Net Income | -21.4 | 21.1 | 63.5 | 84.2 | 128.8 | 53.1% |
| Stock Based Compensation | 1.1 | 3.0 | 11.6 | 17.6 | 30.6 | 74.3% |
Balance Sheet
|
|---|
| Cash | 9.8 | 144.8 | 104.7 | 163.2 | 191.6 | 17.4% |
| Accounts Receivable | 19.3 | 35.4 | 71.0 | 109.5 | 173.6 | 58.5% |
| Inventory | 25.5 | 74.0 | 67.4 | 83.0 | 141.5 | 70.5% |
| Accounts Payable | 36.8 | 80.7 | 34.0 | 69.5 | 107.1 | 54.1% |
| Short Term Debt | 16.8 | 0.0 | 0.0 | 0.0 | 16.6 | |
| Long Term Debt | 3.4 | 0.0 | 0.0 | 0.0 | 3.5 | |
Cash flow
|
|---|
| Capex | 3.0 | 11.8 | 21.1 | 21.4 | 38.6 | 80.6% |
Ratios
|
|---|
| Revenue growth | 68.6% | 144.0% | 50.7% | 23.9% | 54.4% | |
| EBITDA growth | -36.0% | -286.1% | 148.9% | 29.4% | 54.8% | |
|
|---|
| Gross Margin | 16.5% | 25.2% | 32.8% | 35.4% | 34.1% | -1.3% |
| EBITDA Margin | -12.3% | 9.4% | 15.5% | 16.2% | 16.2% | 0.0% |
| EBIT Margin | -13.8% | 8.7% | 14.5% | 15.0% | 14.9% | -0.1% |
| SG&A, % of revenue | 16.6% | 9.7% | 10.5% | 11.3% | 10.4% | -0.9% |
| SBC, % of revenue | 0.8% | 0.9% | 2.4% | 2.9% | 3.3% | 0.4% |
| Net Income Margin | -16.0% | 6.5% | 13.0% | 13.9% | 13.7% | -0.1% |
| CAPEX, % of revenue | 2.2% | 3.6% | 4.3% | 3.5% | 4.1% | 0.6% |
|
|---|
| ROIC | -815.6% | 33.6% | 31.2% | 26.5% | 28.6% | 2.0% |
| ROE | | | 27.8% | 24.5% | 26.8% | 2.3% |
| Net Debt/EBITDA | | -4.7x | -1.4x | -1.7x | -1.1x | 0.5x |
| Interest expence / Average debt | 9.8% | | | | | |
People
|
|---|
| Insider ownership | 3.8% | 3.8% | 3.8% | 3.8% | 3.8% | 0.0% |
| Employees | | | | 598 | 598 | 0.0% |
| Revenue/Employee, th. $ | | | | 1,015 | 1,567 | 54.4% |
SolarEdge Technologies, Inc. ($SEDG) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 210 | 227 | 237 | 264 | | 82.4% | 66.9% | 42.0% | 39.3% |
| EBITDA | 43 | 43 | 37 | 30 | | 219.4% | 108.9% | 37.5% | -19.5% |
| Net Income | 36 | 35 | 46 | 13 | | 151.8% | 53.5% | 63.2% | -33.7% |
Balance Sheet
|
|---|
| Cash | 229 | 215 | 193 | 192 | | 91.1% | 89.1% | 29.1% | 17.4% |
| Short Term Debt | 0 | 0 | 0 | 17 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 4 | | | | | |
Ratios
|
|---|
| Gross Margin | 37.9% | 36.1% | 33.0% | 30.2% | | 4.3% | 1.5% | -1.9% | -7.3% |
| EBITDA Margin | 20.6% | 19.1% | 15.8% | 11.2% | | 8.8% | 3.8% | -0.5% | -8.2% |
| Net Income Margin | 17.0% | 15.2% | 19.3% | 4.9% | | 4.7% | -1.3% | 2.5% | -5.4% |
Peers in Semiconductor Equipment
Below we provide SolarEdge Technologies, Inc. benchmarking against other companies in Semiconductor Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Atomera Incorporated ($ATOM) | | | | | 123.6% |
| ACM Research, Inc. ($ACMR) | | | -12.3% | 33.4% | 104.5% |
| SCI Engineered Materials Inc ($SCIA) | | -13.0% | -32.1% | 24.4% | 67.0% |
| Aehr Test Systems ($AEHR) | | -49.1% | 44.7% | 30.3% | 56.4% |
| Lam Research Corporation ($LRCX) | | 14.2% | 11.9% | 36.1% | 38.2% |
| |
|---|
| Median (37 companies) | | -2.0% | 6.5% | 24.7% | 14.0% |
|---|
| SolarEdge Technologies, Inc. ($SEDG) | | 144.0% | 50.7% | 23.9% | 54.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Xperi Corporation ($XPER) | 99.5% | 99.8% | 99.8% | 98.3% | 96.7% |
| KLA-Tencor Corporation ($KLAC) | 57.9% | 56.8% | 61.0% | 63.0% | 64.1% |
| Teradyne, Inc. ($TER) | 53.3% | 55.8% | 54.7% | 57.2% | 58.1% |
| Nova Measuring Instruments Ltd. ($NVMI) | 52.7% | 51.9% | 45.9% | 59.1% | 57.8% |
| Nanometrics Incorporated ($NANO) | 47.2% | 47.9% | 51.6% | 52.9% | 56.7% |
| |
|---|
| Median (38 companies) | 34.6% | 38.9% | 40.0% | 44.0% | 41.2% |
|---|
| SolarEdge Technologies, Inc. ($SEDG) | 16.5% | 25.2% | 32.8% | 35.4% | 34.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| KLA-Tencor Corporation ($KLAC) | 29.2% | 26.4% | 34.4% | 38.3% | 39.6% |
| DAQO New Energy Corp. ($DQ) | 32.9% | 31.6% | 43.3% | 49.1% | 36.1% |
| Xperi Corporation ($XPER) | 66.7% | 67.5% | 47.6% | 23.4% | 34.3% |
| Lam Research Corporation ($LRCX) | 21.1% | 20.3% | 23.2% | 27.6% | 32.0% |
| Cabot Microelectronics Corporation ($CCMP) | 21.6% | 22.6% | 23.4% | 27.2% | 31.5% |
| |
|---|
| Median (37 companies) | 7.0% | 10.3% | 11.4% | 16.0% | 16.6% |
|---|
| SolarEdge Technologies, Inc. ($SEDG) | -12.3% | 9.4% | 15.5% | 16.2% | 16.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Rubicon Technology, Inc. ($RBCN) | 15.0% | 4.0% | 3.6% | 0.0% | 58.8% |
| DAQO New Energy Corp. ($DQ) | 42.2% | 44.7% | 29.5% | 19.8% | 47.4% |
| AXT Inc ($AXTI) | 2.4% | 5.4% | 3.4% | 21.6% | 39.6% |
| STR Holdings Inc ($STRI) | 7.9% | 8.1% | 1.6% | 9.0% | 36.6% |
| Photronics, Inc. ($PLAB) | 20.0% | 19.8% | 10.4% | 20.4% | 17.3% |
| |
|---|
| Median (37 companies) | 2.3% | 2.7% | 2.2% | 2.8% | 2.9% |
|---|
| SolarEdge Technologies, Inc. ($SEDG) | 2.2% | 3.6% | 4.3% | 3.5% | 4.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| KLA-Tencor Corporation ($KLAC) | 17.9% | 16.5% | 27.2% | 34.0% | 39.9% |
| Lam Research Corporation ($LRCX) | 10.7% | 10.9% | 11.8% | 18.7% | 33.9% |
| Versum Materials, Inc. ($VSM) | | 26.2% | 32.4% | 30.0% | 32.1% |
| Advanced Energy Industries, Inc. ($AEIS) | 8.8% | 30.2% | 41.2% | 45.7% | 31.3% |
| SCI Engineered Materials Inc ($SCIA) | -3.6% | -2.3% | -19.5% | 1.6% | 26.6% |
| |
|---|
| Median (39 companies) | 3.5% | 5.2% | 6.9% | 12.2% | 11.2% |
|---|
| SolarEdge Technologies, Inc. ($SEDG) | -815.6% | 33.6% | 31.2% | 26.5% | 28.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Xperi Corporation ($XPER) | -0.3x | -0.1x | 4.2x | 5.0x | 2.6x |
| Ultra Clean Holdings, Inc. ($UCTT) | -1.2x | 1.5x | 0.4x | -0.2x | 2.4x |
| Ichor Holdings ($ICHR) | 3.1x | 1.7x | -0.4x | 2.0x | 1.8x |
| Versum Materials, Inc. ($VSM) | -0.2x | -0.1x | 2.7x | 2.1x | 1.4x |
| DAQO New Energy Corp. ($DQ) | 4.6x | 4.3x | 2.3x | 0.9x | 1.2x |
| |
|---|
| Median (31 companies) | -1.2x | -1.0x | -1.2x | -0.7x | -1.0x |
|---|
| SolarEdge Technologies, Inc. ($SEDG) | | -4.7x | -1.4x | -1.7x | -1.1x |
