SolarEdge Technologies Inc. (NASDAQ:SEDG)

The analysis of the property, plant, and equipment data reveals significant growth and dynamic changes over the five-year period ending December 31, 2022. The overall trend indicates steady investment and expansion in various asset categories, contributing to increased gross and net property, plant, and equipment balances.

Land

The value of land increased modestly from 6,592 thousand USD in 2018 to a peak of 17,935 thousand USD in 2020, followed by a gradual decline to 13,070 thousand USD by 2022. This suggests occasional acquisitions or revaluations, with some disposals or reclassifications thereafter.

Buildings and Plants

This category experienced substantial growth, rising from 18,196 thousand USD in 2018 to a pronounced increase of 152,218 thousand USD by 2022. The sharp acceleration from 2021 onwards indicates significant capital expenditures, likely reflecting expansion or upgrades of production facilities.

Computers and Peripheral Equipment

Values increased consistently from 13,896 thousand USD to 46,376 thousand USD over the period. The growth appears steady, reflecting ongoing investment in technology infrastructure in line with company needs.

Office Furniture and Equipment

Fluctuations are observed, with a decline from 9,005 thousand USD in 2018 to 6,792 thousand USD in 2019, followed by gradual increases up to 10,911 thousand USD in 2022. This pattern suggests cyclical replacement or adjustments linked to operational scale.

Laboratory and Testing Equipment

This asset class saw a consistent increase from 18,160 thousand USD in 2018 to 58,454 thousand USD in 2022, highlighting sustained investment in research and quality control capabilities.

Machinery and Equipment

Machinery and equipment values rose markedly, from 90,663 thousand USD to 315,155 thousand USD, demonstrating significant expansion and modernization efforts likely associated with production capacity enhancement.

Leasehold Improvements

There was a notable rise from 11,741 thousand USD in 2018 to 85,147 thousand USD in 2022, with a particularly sharp increase between 2019 and 2021. This points to substantial investments in leased properties, enhancing operational infrastructure.

Assets Under Construction and Payments on Account

Investments in assets under construction fluctuated, starting at 22,890 thousand USD in 2018, peaking at 112,037 thousand USD in 2021, then declining sharply to 47,168 thousand USD in 2022. This indicates active ongoing projects in 2021 that were likely completed or reclassified by 2022.

Gross Property, Plant, and Equipment

The total gross value of property, plant, and equipment showed strong upward momentum, increasing from 191,143 thousand USD to 728,499 thousand USD over the five years, reflecting aggressive capital investment and asset growth.

Accumulated Depreciation

Accumulated depreciation increased in magnitude from -71,814 thousand USD to -184,530 thousand USD, indicating the aging of assets and the recognition of depreciative expense consistent with asset additions.

Property, Plant, and Equipment, Net

Net property, plant, and equipment rose substantially from 119,329 thousand USD to 543,969 thousand USD, confirming considerable net asset growth after depreciation. This trend reflects the company's ongoing investment in physical infrastructure augmenting its productive capacity and operational capabilities.

Average Age Ratio

The average age ratio demonstrates a consistent decline over the observed periods, decreasing from 38.91% in 2018 to 25.79% in 2022. This downward trend indicates that the property, plant, and equipment (PP&E) are becoming relatively newer over time, suggesting active asset renewal or acquisitions of newer equipment.

Estimated Total Useful Life

The estimated total useful life of the assets shows some variability. It began at 16 years in 2018, decreased slightly to 15 years in 2019, then increased to 18 years in 2020, further extending to 19 years in 2021 before settling at 18 years in 2022. This fluctuation suggests periodic reassessment of asset longevity, likely reflecting changes in technology, asset quality, or maintenance practices.

Estimated Age, Time Elapsed Since Purchase

This metric remains relatively stable, starting at 6 years in 2018 and holding steady at 5 years from 2019 through 2022. The stability implies that the proportion of older assets has decreased relative to newer assets, consistent with the declining average age ratio.

Estimated Remaining Life

The estimated remaining life of the assets has shown a notable increase over the timeframe. It remained at 10 years in 2018 and 2019, then increased significantly to 13 years in 2020, reaching 14 years in 2021 before slightly decreasing to 13 years in 2022. This trend indicates optimism regarding asset longevity and possibly reflects improvements in maintenance, upgrades, or the quality of newly acquired assets.

Gross Property, Plant and Equipment

The gross property, plant, and equipment increased substantially over the five-year period. Starting at $191,143 thousand at the end of 2018, it experienced consistent growth each year, reaching $728,499 thousand by the end of 2022. This represents nearly a fourfold increase, indicating significant investment in physical assets.

Accumulated Depreciation

Accumulated depreciation also showed a continuous upward trend, rising from $71,814 thousand in 2018 to $184,530 thousand in 2022. The increasing accumulation of depreciation aligns with the growing asset base and reflects the ongoing usage and aging of the company's property, plant, and equipment.

Land

The value of land holdings fluctuated during the period. From $6,592 thousand in 2018, it increased markedly to $17,935 thousand in 2020, followed by a decline to $13,070 thousand by 2022. This pattern suggests acquisition activity with some possible disposals or revaluations in later years.

Average Age Ratio

The average age ratio of the property, plant, and equipment steadily decreased from 38.91% in 2018 to 25.79% in 2022. This indicates that the asset base became younger over time, consistent with the sizeable increases in gross property, plant, and equipment, as new assets were added at a faster rate than older assets aged or were retired.

Overall Insights

The data collectively demonstrates a period of aggressive capital investment and asset growth. The company's substantial additions to property, plant, and equipment have outpaced depreciation and aging effects, leading to a rejuvenated asset structure. The declining average age ratio supports the conclusion that these investments are relatively recent, potentially enhancing productive capacity and operational capability.

Gross property, plant, and equipment

There is a consistent and substantial upward trend in the gross property, plant, and equipment value over the five-year period. The value increased from 191,143 thousand US dollars at the end of 2018 to 728,499 thousand US dollars by the end of 2022, indicating significant investment and expansion in physical assets.

Land

The value of land fluctuated somewhat during the period. It increased from 6,592 thousand US dollars in 2018 to a peak of 17,935 thousand US dollars in 2020, before declining to 13,070 thousand US dollars by the end of 2022. This suggests some changes in land holdings or revaluations that differ from the steady increase seen in overall property, plant, and equipment.

Depreciation expenses

Depreciation expenses showed a marked increase each year, rising from 11,426 thousand US dollars in 2018 to 40,580 thousand US dollars in 2022. This upward trend aligns with the growth in asset base, likely reflecting both the aging of assets and the addition of new assets subject to depreciation.

Estimated total useful life

The estimated total useful life of assets remained relatively stable, fluctuating slightly between 15 and 19 years. It started at 16 years in 2018, dropped to 15 in 2019, then increased to 18 years in 2020 and 2022, with a peak at 19 years in 2021. These variations suggest adjustments to asset lifespan estimates, possibly in response to changing asset compositions or accounting policies.

Accumulated Depreciation

The accumulated depreciation exhibits a consistent upward trajectory over the period from 2018 to 2022. Starting at 71,814 thousand USD in 2018, it increases each year, reaching 184,530 thousand USD by the end of 2022. This indicates ongoing depreciation of property, plant, and equipment assets, reflecting continued usage and aging of these assets.

Depreciation Expenses

Depreciation expenses show a notable rising trend year over year. The expenses escalate from 11,426 thousand USD in 2018 to 40,580 thousand USD in 2022. The increasing depreciation expense suggests either accelerated asset acquisition, changes in depreciation methods, or a shift towards shorter asset useful lives, leading to higher annual charges.

Time Elapsed Since Purchase

The reported time elapsed since purchase remains relatively stable at around 5 years from 2019 onwards, reduced from 6 years in 2018. This stability implies a consistent asset age profile in recent years, which aligns with the increasing annual depreciation expense, potentially due to new assets being added and older assets continuing to depreciate.

Property, plant, and equipment, net

The net value of property, plant, and equipment showed a consistent and substantial increase over the five-year period. Starting at $119.3 million in 2018, it rose steadily each year, reaching $544.0 million by the end of 2022. This represents more than a fourfold increase, indicating significant investment in fixed assets and expansion of operational capacity.

Land

The value of land exhibited fluctuations over the years. It increased from approximately $6.6 million in 2018 to a peak of $17.9 million in 2020, followed by a decrease to around $13.1 million by 2022. These variations may reflect acquisitions and disposals or revaluation of land assets during the period.

Depreciation expenses

Depreciation expenses have shown a robust upward trend, rising from $11.4 million in 2018 to $40.6 million in 2022. This increase aligns with the growth in property, plant, and equipment, suggesting the company is accounting for higher wear and use on an expanding asset base. The sharp rise, especially between 2021 and 2022, underscores the acceleration in depreciable asset additions in recent years.

Estimated remaining life

The estimated remaining useful life of the assets has remained relatively stable, fluctuating slightly between 10 and 14 years. After a constant 10 years in 2018 and 2019, it increased to 13-14 years during 2020 to 2021 before settling at 13 years in 2022. This marginal increase may indicate the acquisition of new assets with longer service lives or a reassessment of the useful life of existing assets.