Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

SolarEdge Technologies Inc., consolidated cash flow statement

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net income	93,779)	169,170)	140,322)	144,957)	128,046)
Depreciation of property, plant and equipment	40,580)	29,359)	22,355)	17,261)	11,426)
Amortization of intangible assets	9,096)	10,176)	9,479)	9,634)	1,193)
Amortization of debt discount and debt issuance costs	2,916)	2,903)	3,185)	—)	—)
Amortization of premium and accretion of discount on available-for-sale marketable securities, net	9,310)	9,462)	1,168)	92)	1,242)
Impairment of goodwill and intangible assets	118,492)	—)	—)	—)	—)
Stock-based compensation expenses	145,539)	102,593)	67,309)	60,353)	30,618)
Gain from sale of privately held company	(7,719)	—)	—)	—)	—)
Deferred income taxes, net	(11,055)	(12,045)	(2,738)	(6,037)	(7,093)
Exchange rate fluctuations and other items, net	10,052)	20,697)	3,860)	8,174)	551)
Inventories, net	(341,085)	(43,051)	(149,661)	(22,544)	(20,178)
Prepaid expenses and other assets	(64,991)	(39,444)	(3,276)	(67,323)	(2,711)
Trade receivables, net	(457,610)	(247,723)	86,538)	(124,071)	(60,514)
Trade payables, net	194,524)	91,709)	3,333)	47,837)	31,482)
Employees and payroll accruals	26,238)	26,519)	18,315)	18,592)	4,583)
Warranty obligations	120,169)	60,524)	32,274)	50,780)	41,878)
Deferred revenues and customers advances	44,376)	29,936)	(21,438)	83,137)	37,041)
Accrued expenses and other liabilities, net	98,673)	3,344)	11,630)	38,158)	(8,485)
Changes in assets and liabilities	(379,706)	(118,186)	(22,285)	24,566)	23,096)
Adjustments to reconcile net income to net cash provided by operating activities	(62,495)	44,959)	82,333)	114,043)	61,033)
Net cash provided by operating activities	31,284)	214,129)	222,655)	259,000)	189,079)
Proceed from sales and maturities of available-for-sale marketable securities	231,210)	202,188)	141,839)	142,744)	129,345)
Purchase of property, plant and equipment	(169,341)	(149,251)	(126,790)	(72,562)	(38,608)
Investment in available-for-sale marketable securities	(507,171)	(579,377)	(223,705)	(160,054)	(142,627)
Investment in a privately-held company	—)	(16,643)	—)	—)	—)
Proceeds from sale of a privately-held company	24,362)	—)	—)	—)	—)
Withdrawal from (investment in) bank deposits, net	—)	60,096)	(54,752)	4,860)	(6,001)
Withdrawal from (investment in) restricted bank Deposits, net	(242)	798)	25,267)	(26,145)	—)
Business combinations, net of cash acquired	—)	—)	—)	(38,435)	(94,737)
Other investing activities	4,138)	(2,022)	1,504)	(3,261)	—)
Net cash used in investing activities	(417,044)	(484,211)	(236,637)	(152,853)	(152,628)
Proceeds from secondary public offering, net of issuance costs	650,526)	—)	—)	—)	—)
Repayment of bank loans	(138)	(16,073)	(15,595)	(9,514)	(3,786)
Proceeds from exercise of stock-based award	4,030)	6,486)	16,671)	9,066)	10,021)
Tax withholding in connection with stock-based awards, net	3,023)	(4,283)	4,829)	—)	—)
Proceeds from issuance of convertible senior notes, net	—)	—)	617,869)	—)	—)
Proceeds from bank loans	—)	—)	16,944)	249)	—)
Change in non-controlling interests	—)	—)	—)	(71,468)	(14,190)
Other financing activities	(2,834)	(1,308)	(234)	(1,354)	—)
Net cash provided by (used in) financing activities	654,607)	(15,178)	640,484)	(73,021)	(7,955)
Effect of exchange rate differences on cash and cash equivalents	(15,824)	(11,797)	(23,257)	3,011)	86)
Increase (decrease) in cash and cash equivalents	253,023)	(297,057)	603,245)	36,137)	28,582)
Cash and cash equivalents at the beginning of the period	530,089)	827,146)	223,901)	187,764)	164,679)
Cash and cash equivalents at the end of the period	783,112)	530,089)	827,146)	223,901)	193,261)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Net Income: Net income showed a general upward trend from 2018 to 2021, increasing from $128 million to $169 million, indicating improved profitability. However, in 2022, net income declined sharply to approximately $94 million, signaling potential challenges in the most recent year.
Depreciation and Amortization: Depreciation of property, plant, and equipment consistently increased over the five years, rising from $11.4 million in 2018 to $40.6 million in 2022, suggesting ongoing investments in fixed assets or aging assets. Amortization of intangible assets rose markedly in 2019 and stabilized afterward, while amortization related to debt discounts and issuance costs appeared from 2020 onwards, remaining steady. The amortization of premiums and accretion on marketable securities showed variability, spiking significantly in 2021 and sustaining in 2022.
Impairment and Extraordinary Items: An impairment of goodwill and intangible assets was recorded in 2022 amounting to $118 million, representing a significant one-time charge that likely impacted profitability. Additionally, there was a loss from the sale of a privately held company in 2022, adding a negative impact to that year's results.
Stock-based Compensation: Stock-based compensation expenses exhibited a strong upward trend, rising from $30.6 million in 2018 to $145.5 million in 2022, indicating increased employee incentives or dilution costs that impact operating expenses.
Deferred Taxes and Exchange Rate Effects: Deferred income taxes displayed consistent negative values, increasing in absolute magnitude in earlier years but slightly reducing in 2022. Exchange rate fluctuations and related items generally contributed positively to income, peaking in 2021 but decreasing thereafter.
Working Capital Components: Inventories and trade receivables presented significant fluctuations, with inventories turning markedly negative in 2022 (-$341 million), suggesting either reductions in stock or accounting adjustments. Trade receivables swung from positive to highly negative values, reaching -$457 million in 2022, possibly reflecting collection issues or timing changes. Trade payables increased substantially, from $31.5 million in 2018 to $194.5 million in 2022, which may indicate extended payment terms or increased purchases. Payroll accruals increased steadily over time, roughly doubling from 2018 to 2022.
Warranty Obligations and Deferred Revenues: Warranty obligations nearly tripled between 2018 and 2022, reaching $120 million, indicating potentially higher anticipated costs related to product warranties. Deferred revenues and customer advances showed notable volatility, with a substantial negative value in 2020 but positive growth again by 2022.
Changes in Assets and Liabilities: Changes in assets and liabilities fluctuated considerably, with notably large outflows in 2021 and 2022 (-$118 million and -$380 million respectively), which could reflect working capital consumption or restructuring effects influencing cash flow.
Operating Cash Flow: Net cash provided by operating activities increased from $189 million in 2018 to a peak of $259 million in 2019 but experienced declines thereafter, dropping sharply to approximately $31 million in 2022. This decrease suggests reduced operating efficiency or less favorable working capital management in the latest period.
Investing Activities: Significant cash outflows were consistent across all years due to acquisitions of property, plant, and equipment and investments in marketable securities and privately-held companies. Investment in marketable securities was especially pronounced during 2021 and 2022, exceeding half a billion dollars each year, indicating strategic asset accumulation. Net cash used in investing activities expanded considerably over the years, reflecting aggressive capital and investment expenditures.
Financing Activities: Financing activities revealed contrasting patterns. The company repaid bank loans steadily over the years, reducing debt slightly. There were occasional proceeds from stock-based awards exercise and issuance of convertible notes in 2020. A major inflow occurred in 2022 from a secondary public offering netting $650 million, markedly boosting financing cash inflows. Overall, financing cash flow was negative in the earlier period but became substantially positive in 2020 and 2022, supporting liquidity.
Cash Position: Cash and cash equivalents increased substantially in 2020 due to financing activities, peaking at $827 million year-end, then declined in 2021, and rebounded to $783 million by the end of 2022. The cash flow patterns and cash balances indicate volatile but generally strong liquidity management with heavy reliance on financing inflows in recent years.

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SolarEdge Technologies Inc. (NASDAQ:SEDG)

Cash Flow Statement