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Q2 Earnings $SEDG
Personally SolarEdge was one of the most anticipated earning reports of the season. Positive reports across the industry from peers like $ENPH lead me to believe similar news was in store here. I believed SolarEdge was better positioned than Enphase into Q2 and the coming months. On 08/02 earnings were released after hours with some disappointing results. I'm still confident it the company's position in the industry as well the overall industry tailwinds. This quarter wasn't great but I believe investors will be able to look through a number of 1 time events and see a path to greater margin expansion in the coming quarters.
Highlights
- Record revenue in 14 countries & record revenue overall of $727.8m, representing 52% YoY growth. 51% of total megawatts shipped were commercial & 49% residential, with 45% of total revenue from the United States & 47% from Europe.
- Guidance for Q3 has revenue in the range of $810-840m which represents 54-60% YoY growth as the company continues to cite strong demand & supportive government programs.
- Strong attach rates for their battery. 75% of batteries are sold in Europe with a 60% attach rate in Germany. Greater battery sales is a path to higher overall margins for the business.
Issues:
- FX headwinds were a factor; reduced $18m in revenue and 240bps of margin. As a company that manufactures in US Dollars & sells in Euros they cite the ebbs & flows that come with the currency market as a reason they maintain a strong cash position on their balance sheet.
- A supplier of key components shut down for 3 weeks as a result of Shanghai's Covid response. This lead to muted growth in the shipments of Optimizers & Inverters. SolarEdge cites inventory has increased 9% QoQ with the raw materials component increasing the most. To combat this production slowdown the company will endure extra costs to expedite the shipment of goods, as their backlog is 2-3 quarters deep. Demand is progressing faster than they are able to add capacity with a backlog for residential products ranging 12-14 weeks. The company has pricing power but will not flex it on those goods already ordered so it may be a quarter or two before we see the average sale price increase as they finally pass on the extra costs.
- E-Mobility unit revenue growth was negative QoQ
- $4m goodwill write-down of an acquisition completed 4 years ago. This is their UPS battery unit which they are discontinuing but plan on using the technology elsewhere in their products.
Just bought some at $301! If it keeps going down ill keep buying more. I believe $SEDG has a better moat then enphase but i like em both
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