SolarEdge Technologies Inc. (NASDAQ:SEDG)

Asset Turnover

The reported total asset turnover ratio demonstrates a declining trend from 0.97 in 2018 to 0.6 in 2020, before slightly improving to 0.73 by 2022. A similar pattern is observed in the adjusted total asset turnover, which decreases sharply from around 1.01 in 2018 to 0.59 in 2020, then gradually rises to 0.75 in 2022. This suggests a reduction in the efficiency with which the company utilized its assets around 2020, followed by a modest recovery in subsequent years.

Current Ratio

The reported current ratio shows fluctuations, beginning at 3.0 in 2018, dipping to 2.14 in 2019, then increasing markedly to 3.94 in 2020, before settling around 3.26 in both 2021 and 2022. The adjusted current ratio follows a similar pattern but with higher values, ranging from 3.72 in 2018 to a peak of 4.94 in 2020, followed by a slight decline and stabilization near 3.82 in 2022. Overall, liquidity appears strong throughout the period, with a notable peak in 2020.

Debt Ratios

Debt to equity ratios, both reported and adjusted, indicate an upward movement from nearly negligible or zero levels in 2019 to a peak in 2020 (0.55 reported, 0.45 adjusted), followed by a steady decline to 0.31 (reported) and 0.27 (adjusted) by 2022. The debt to capital ratios mirror this trend, increasing up to 2020 before decreasing notably through 2022. This pattern highlights a phase of increased leverage during 2020, with a subsequent focus on reducing debt levels in the following years.

Financial Leverage

Reported financial leverage rises from 1.71 in 2018 to a maximum of 2.24 in 2020, then decreases to 1.96 in 2022. Adjusted financial leverage similarly grows from 1.29 in 2018 to 1.7 in 2020, completing a gradual fall to 1.55 in 2022. This indicates the company increased its use of leverage until 2020, after which it adopted a more conservative financial structure.

Profitability Margins

The net profit margin reveals a steady decline across the years. Reported margins drop significantly from 13.75% in 2018 to 3.02% in 2022, while adjusted margins decrease from 21.09% to 6.39% over the same period. This trend points to diminishing profitability, particularly pronounced after 2020.

Return on Equity (ROE)

ROE values also decline over time. Reported ROE decreases from 22.91% in 2018 to 4.31% in 2022, and adjusted ROE follows a similar downward path from 27.33% to 7.38%. This reflects a reduction in the company's efficiency in generating profit from shareholders' equity.

Return on Assets (ROA)

Reported ROA falls from 13.36% in 2018 to 2.2% in 2022, with adjusted ROA dropping from 21.27% to 4.77%. The decreasing returns on assets indicate reduced effectiveness in using total assets to produce net income over the analyzed period.

Revenue Analysis

The revenues show a consistent upward trend throughout the period from 2018 to 2022. Starting at approximately $937 million in 2018, revenues increased significantly each year, reaching over $3.11 billion by the end of 2022. This represents more than a threefold growth over five years, indicating robust sales expansion.

Total Assets

Total assets have also grown substantially during the same period. The assets increased from about $964 million in 2018 to approximately $4.27 billion in 2022. The growth in total assets outpaced revenue growth in some years, particularly from 2019 to 2020 and continuing through 2022, reflecting considerable capital investment or asset accumulation.

Total Asset Turnover (Reported)

The reported total asset turnover ratio, which measures the efficiency of asset use to generate revenue, declined markedly from 0.97 in 2018 to 0.6 in 2020. This decline suggests that asset growth initially outpaced revenue growth, reducing asset utilization efficiency. However, from 2020 onwards, the ratio improved slightly to 0.73 by 2022, indicating a modest recovery in how effectively assets are leveraged to produce revenue.

Adjusted Revenues and Assets

The adjusted revenues closely follow the trend of reported revenues, with values slightly higher. Adjusted revenues rose from roughly $978 million in 2018 to over $3.15 billion in 2022, confirming strong revenue expansion when accounting for adjustments. Similarly, adjusted total assets increased from about $970 million in 2018 to over $4.22 billion in 2022, mirroring the pattern seen in reported total assets.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio starts at a slightly higher level compared to the reported ratio, near 1.01 in 2018, indicating initial strong efficiency. This ratio remains stable at about 1.02 in 2019, before declining to 0.59 in 2020, consistent with the reported figures. From 2020, the adjusted turnover ratio improved to 0.75 in 2022, showing a recovery in asset utilization efficiency, similar to the reported ratio trend but at slightly improved levels overall.

Overall Insights

The data reveals substantial growth in both revenues and total assets over the five-year period. However, the efficiency with which the company utilizes its assets to generate revenues declined sharply in 2020 but has been recovering since then. This suggests a phase of rapid asset accumulation possibly preceding the company’s ability to fully capitalize on those assets. The adjustments made to revenues and assets do not significantly alter the general trends but show marginally higher efficiency metrics, indicating the adjustments might relate to reclassifications or other factors improving ratio precision. The increasing asset base alongside strong revenue growth points towards an expansion strategy with improving operational efficiency after an initial dip.

Current Assets

Current assets exhibited a consistent and substantial increase over the period from 2018 to 2022. Starting at approximately $678 million in 2018, these assets grew to nearly $2.9 billion by 2022, indicating significant asset growth and an increased liquidity position.

Current Liabilities

Current liabilities also rose notably over the same timeframe, from about $226 million in 2018 to approximately $890 million in 2022. The increase suggests a growing obligation in the short term, albeit at a slower pace relative to the growth in current assets.

Reported Current Ratio

The reported current ratio experienced fluctuations throughout the years. It decreased from 3.00 in 2018 to 2.14 in 2019, indicating a relative tightening in liquidity. However, it rebounded substantially to 3.94 in 2020, before moderating slightly to around 3.26 in both 2021 and 2022. Overall, the ratio remained above 2, reflecting a generally comfortable liquidity position.

Adjusted Current Assets

Adjusted current assets followed a trend similar to current assets, increasing from roughly $679 million in 2018 to over $2.9 billion in 2022. The adjustments appear to have resulted in marginally higher asset values in all years, suggesting some reclassification or valuation changes that increased the reported asset base.

Adjusted Current Liabilities

Adjusted current liabilities grew from approximately $182 million in 2018 to about $759 million in 2022. This adjusted figure is consistently lower than the reported current liabilities across all years, implying that certain liabilities may have been excluded or reclassified in the adjustment process, reflecting a more conservative liability measure.

Adjusted Current Ratio

The adjusted current ratio showed a general upward trajectory from 3.72 in 2018 to peaks at 4.94 in 2020, before declining slightly to 3.82 in 2022. This ratio consistently exceeded the reported current ratio, suggesting that the adjustments provide a more robust view of liquidity. The elevated figures reflect strong short-term financial stability throughout most of the period under review.

Total Debt

The total debt increased significantly over the reported periods, starting from a relatively low level of $2.63 million in 2019, rising sharply to over $601 million in 2020, and reaching approximately $673 million by the end of 2022. This upward trend indicates a substantial increase in leverage and borrowing over the analyzed timeframe.

Total Stockholders’ Equity

Stockholders’ equity showed consistent and substantial growth throughout the years, rising from approximately $562 million in 2018 to over $2.17 billion by the end of 2022. This growth suggests an expansion in the company’s net worth and retained earnings, reflecting a strengthening capital base over time.

Reported Debt to Equity Ratio

The reported debt to equity ratio demonstrates fluctuations but an overall decreasing trend since 2020. The ratio moved from zero in 2019 to 0.55 in 2020, indicating increased leverage, then slightly decreased to 0.51 in 2021, and further declined to 0.31 in 2022. This suggests a relative improvement in the equity position compared to debt in recent years.

Adjusted Total Debt

The adjusted total debt figures also exhibit a sharp increase over time, from approximately $19.8 million in 2018 to $735.5 million by 2022. This aligns with the trend observed in reported total debt, indicating that the company’s overall debt burden has significantly increased over the period analyzed.

Adjusted Total Stockholders’ Equity

Adjusted total stockholders’ equity mirrors the upward trend seen in the reported equity figures, growing from around $755 million in 2018 to over $2.73 billion by 2022. This indicates sustained growth in the company’s adjusted net assets, reinforcing indications of financial strength.

Adjusted Debt to Equity Ratio

This ratio shows a pattern of increase from a very low level of 0.03 in 2018 to 0.45 in 2020, after which it decreases progressively to 0.27 by 2022. The initial increase reflects rising debt levels relative to equity, whereas the subsequent decrease points to improved financial leverage management and a healthier equity position relative to debt.

The financial data reveals a significant evolution in the company's debt levels, capital structure, and leverage ratios over the period from 2018 to 2022.

Total Debt

There was no reported total debt as of the end of 2018. Starting in 2019, total debt increased sharply from 2.63 million USD to over 673 million USD by the end of 2022. This represents a substantial rise representing the company's growing reliance on debt financing over these years.

Total Capital

Total capital exhibited strong and steady growth throughout the period. It increased from approximately 562 million USD in 2018 to nearly 2.85 billion USD by 2022. This substantial increase suggests significant capitalization expansions, likely from both equity and debt increases.

Reported Debt to Capital Ratio

This ratio was reported as zero in 2019, implying minimal or no recognized debt relative to capital in that year. Subsequently, the ratio moved to 0.36 in 2020, then showed a gradual decline to 0.24 by 2022. The initial sharp increase followed by a steady decrease indicates that although debt levels rose considerably, the capital base expanded at a faster pace, leading to an overall improvement in leverage ratio.

Adjusted Total Debt

The adjusted total debt figures, which might include additional liabilities or adjustments for off-balance-sheet items, rose from about 19.8 million USD in 2018 to over 735 million USD in 2022. This trend parallels the total debt increase but with higher baseline values, indicating that adjusted liabilities form a significant portion of the company's financing structure.

Adjusted Total Capital

Adjusted total capital also expanded significantly, moving from approximately 775 million USD in 2018 to nearly 3.47 billion USD by 2022. The faster growth relative to adjusted debt supports a strengthening capital base even when considering adjustments for additional liabilities.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio remained very low in 2018 and 2019 (0.03 and 0.04, respectively), showing minimal leverage at the start of the period. It then jumped to 0.31 in 2020, reflecting increased borrowing or adjusted liabilities. From 2020 onwards, the ratio decreased from 0.31 to 0.21 by 2022, mirroring the trend seen in the reported ratio. This decline suggests improving financial leverage as capital expansion outpaced debt growth under adjusted measures.

Overall, the company demonstrated substantial growth in both total and adjusted capital alongside a pronounced increase in debt levels. Despite the growing debt, leverage ratios exhibit a declining trend in recent years, indicating improved balance sheet strength and a possible focus on capital optimization. The increasing scale of capital relative to debt supports a potentially stronger credit profile moving forward.

The financial data reveals several notable trends in the company's asset base, equity, and leverage ratios over the five-year period from 2018 to 2022.

Total Assets

Total assets have shown a consistent upward trajectory, increasing from approximately $964 million in 2018 to about $4.27 billion in 2022. This significant growth indicates an aggressive expansion or accumulation of resources.

Total Stockholders’ Equity

The equity base has similarly expanded, rising from $562 million in 2018 to $2.18 billion in 2022. This enhancement in equity suggests successful retention of earnings or capital infusions, which supports the asset growth.

Reported Financial Leverage

The reported financial leverage ratio initially increased from 1.71 in 2018 to a peak of 2.24 in 2020, reflecting higher reliance on debt or liabilities relative to equity. However, after 2020, the leverage ratio declined to 1.96 by 2022, which may indicate a strategic deleveraging or an improvement in equity relative to liabilities.

Adjusted Total Assets

Adjusted total assets closely mirror the trend in reported total assets, growing from $970 million in 2018 to $4.22 billion in 2022. The adjustments do not materially alter the upward trend, suggesting consistency in asset valuation methodologies.

Adjusted Stockholders’ Equity

The adjusted equity figures show a steady increase from $755 million in 2018 to $2.73 billion in 2022. The adjusted equity values are higher than reported equity, which may reflect more conservative assessments in the reported figures or adjustments for non-recurring items.

Adjusted Financial Leverage

The adjusted financial leverage demonstrates a pattern of moderate increase from 1.29 in 2018 to 1.7 in 2020, followed by a gradual decrease to 1.55 in 2022. This pattern is similar to the reported leverage but at lower levels, indicating a more conservative leverage profile when adjustments are considered.

The analysis of the financial performance over the five-year period reveals several key trends and shifts in profitability and revenue growth.

Revenue Trends

Revenues demonstrated a steady and significant increase throughout the period. Starting at approximately $937 million in 2018, revenues grew substantially to over $3.11 billion by 2022. The growth accelerated especially between 2021 and 2022, indicating strong business expansion or increased market demand.

Net Income Performance

Net income attributable to the company showed growth initially, rising from about $129 million in 2018 to a peak of around $169 million in 2021. However, in 2022, net income declined sharply to approximately $94 million, indicating potential challenges or increased costs affecting profitability despite the revenue increase.

Reported Net Profit Margin

The reported net profit margin declined steadily from 13.75% in 2018 to a low of 3.02% in 2022. This downward trend reflects a diminishing ratio of net income relative to revenues, corroborating the reduction in net income growth relative to the significant rise in revenue, possibly due to rising expenses or pricing pressures.

Adjusted Financial Measures

Adjusted revenues followed a similar pattern to reported revenues, with an increase from about $978 million in 2018 to over $3.15 billion in 2022, confirming strong top-line growth. Adjusted net income, however, experienced notable volatility, rising from $206 million in 2018 to a peak of $277 million in 2019, followed by a sharp drop to roughly $155 million in 2020, then recovering to about $216 million in 2021, and slightly declining to $202 million in 2022.

Correspondingly, the adjusted net profit margin decreased from a high of 21.09% in 2018 to 6.39% in 2022, with marked fluctuations during the intermediate years. The sharp decline between 2019 and 2020 and the partial recovery in 2021 suggest operational or market factors impacting profitability adjustments, with a persistent downward pressure into 2022.

Overall Insights

The company demonstrated robust revenue growth across the analyzed period, coupled with declining profitability ratios both on a reported and adjusted basis. The increased scale has not translated proportionately into net income growth, signaling rising costs, margin compression, or other operational challenges impacting bottom-line results. The volatility in adjusted net income and margins points toward variability in non-recurring or exceptional items influencing financial outcomes.

Net income attributable to SolarEdge Technologies, Inc.

The net income exhibited fluctuations over the five-year period. It increased from 128,833 thousand USD in 2018 to a peak of 169,170 thousand USD in 2021, followed by a significant decrease to 93,779 thousand USD in 2022. This indicates volatility in profitability, with the most recent year showing a notable decline.

Total SolarEdge Technologies, Inc. stockholders’ equity

Stockholders’ equity demonstrated consistent and substantial growth each year, rising from 562,408 thousand USD in 2018 to 2,176,366 thousand USD in 2022. This reflects a strong accumulation of equity capital and retained earnings, suggesting an expanding financial base.

Reported Return on Equity (ROE)

The reported ROE declined steadily over the period, starting at 22.91% in 2018 and dropping sharply to 4.31% by 2022. The decreasing trend indicates reduced efficiency in generating net income from the shareholders’ equity, particularly pronounced in the last year.

Adjusted net income

Adjusted net income showed an upward trend through 2019, reaching 276,805 thousand USD, followed by a notable drop to 154,621 thousand USD in 2020. It then recovered to 215,587 thousand USD in 2021 and slightly decreased to 201,640 thousand USD in 2022. Despite fluctuations, adjusted income remains relatively strong compared to the starting point.

Adjusted total stockholders’ equity

The adjusted stockholders’ equity increased steadily from 754,800 thousand USD in 2018 to 2,734,049 thousand USD in 2022. This growth, consistent with the reported equity, emphasizes a strengthening capital structure over time.

Adjusted Return on Equity (ROE)

Adjusted ROE trends similarly mirror the reported ROE but with higher values, starting at 27.33% in 2018, decreasing to 10.81% in 2020, then recovering moderately to 12.54% in 2021 before declining again to 7.38% in 2022. This pattern suggests that while adjustments improve profitability measurements, efficiency remains under pressure toward the end of the analyzed period.

The financial data over the five-year period reveals several notable trends and shifts in performance indicators for the company.

Net Income Attributable

The net income attributable showed an overall increase from 2018 to 2021, rising from approximately $128.8 million to $169.2 million. However, in 2022, there was a significant decline to about $93.8 million, representing a sharp drop compared to the previous year.

Total Assets

Total assets demonstrated consistent growth throughout the period, expanding from around $964.5 million in 2018 to approximately $4.27 billion in 2022. This substantial increase indicates significant asset accumulation or acquisition activity over time.

Reported Return on Assets (ROA)

Reported ROA exhibited a downward trend, starting at 13.36% in 2018 and decreasing steadily to 2.2% by 2022. This decline suggests diminishing efficiency in generating net income from the company's asset base.

Adjusted Net Income

Adjusted net income followed a fluctuating pattern. It peaked in 2019 at approximately $276.8 million, then declined sharply in 2020 to $154.6 million, rebounded in 2021 to $215.6 million, and slightly decreased in 2022 to $201.6 million. Despite variability, adjusted net income remained significantly higher than the net income attributable, indicating adjustments that might include non-recurring items or other accounting treatments.

Adjusted Total Assets

Adjusted total assets mirrored the trend of total assets, growing steadily from about $970 million in 2018 to roughly $4.22 billion in 2022, reflecting consistent expansion of the asset base on an adjusted basis.

Adjusted ROA

Adjusted ROA showed a notable decrease over the period, starting at 21.27% in 2018, falling sharply to 6.37% in 2020, then exhibiting a slight recovery to 7.52% in 2021 before declining again to 4.77% in 2022. Although the adjusted ROA remains higher than the reported ROA, the downward trend points to reduced asset efficiency even after accounting for adjustments.

In summary, while the company has rapidly increased its asset base over the years, both net income attributable and adjusted net income have not followed a consistent upward trajectory, with particular weakness apparent in 2022. The declining returns on assets metrics, both reported and adjusted, suggest that asset growth has outpaced earnings growth, resulting in lower profitability ratios and potentially reflecting challenges in leveraging the expanded asset base effectively.