SolarEdge Technologies Inc. (NASDAQ:SEDG)

Net Fixed Asset Turnover

The net fixed asset turnover ratio exhibited an overall declining trend from March 2019 to December 2022. Beginning at 7.51 in the first quarter of 2019, the ratio initially increased and peaked at 8.49 in September 2019 but then gradually decreased to 4.81 by December 2020. This downward trajectory continued with slight fluctuations, stabilizing around the mid-5 range in 2022, ending at 5.72 in the last quarter. This decline suggests a reduced efficiency in generating revenue from fixed assets over the analyzed period.

Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)

This adjusted ratio showed a similar trend to the standard net fixed asset turnover but at consistently lower levels. Starting at 6.1 in March 2019, it rose to 6.9 in September 2019 before descending steadily to 4.23 at the end of 2020. From 2021 onward, the ratio modestly recovered to reach 5.13 by the last quarter of 2022. The inclusion of operating leases and right-of-use assets generally reduced the turnover ratio values, reflecting the impact of recognizing leased assets on turnover efficiency.

Total Asset Turnover

The total asset turnover ratio increased from 0.85 in March 2019 to a peak of 1.05 in March 2020, indicating improved overall asset utilization. However, a sharp decline followed, reaching a low of 0.58 at the end of 2020. From 2021 through 2022, the ratio showed a gradual recovery trend, climbing from 0.58 to 0.73 by December 2022. This pattern reflects fluctuations in the efficiency with which the company employed its total assets to generate revenue, with a notable dip likely associated with challenges during 2020.

Equity Turnover

The equity turnover ratio displayed a decreasing trend after an initial increase. It rose from 1.6 in March 2019 to a peak of 1.83 in March 2020, indicating higher revenue generation relative to shareholder equity. Thereafter, a decline occurred, reaching 1.1 by March 2022, suggesting reduced efficiency in equity utilization. The ratio then improved somewhat to 1.43 by December 2022. This trend implies a weakening and partial recovery in how effectively the company leveraged equity to produce sales.

The analysis of the quarterly financial figures reveals distinct trends in revenues, assets, and efficiency ratios over the observed periods from March 2019 through December 2022.

Revenues

There is a clear upward trajectory in revenues across the examined quarters. Starting at approximately $271.9 million in the first quarter of 2019, revenues experienced fluctuations but generally increased, surpassing $890.7 million by the last quarter of 2022. The most significant revenue growth occurred starting from 2021 onward, with quarterly revenues consistently rising, indicating rapid expansion or increased market demand. Notably, the revenue spikes in Q2 2021 through Q4 2022 suggest strong sales momentum and possibly enhanced operational capacity or market penetration during this period.

Property, Plant and Equipment, Net

Net property, plant, and equipment (PPE) exhibited steady growth throughout the timeframe, more than quadrupling from about $133.0 million in Q1 2019 to approximately $544.0 million in Q4 2022. This increment in fixed assets suggests substantial investments in physical infrastructure and capacity expansion over these years. The increase is consistent quarter over quarter, reflecting a strategic emphasis on scaling up operational capabilities, possibly to support the growing sales volume as seen in revenue figures.

Net Fixed Asset Turnover

The net fixed asset turnover ratio, which measures the efficiency of using fixed assets to generate revenues, shows a declining trend initially, dropping from 7.51 in Q1 2019 to lows near 4.59–4.81 during 2020. This decline indicates that asset growth initially outpaced revenue growth, implying less efficient utilization of fixed assets during this period. However, starting in early 2021, the ratio stabilized and showed signs of improvement, rising from 4.59 to 5.72 by Q4 2022. This recovery suggests enhanced efficiency in using the expanded asset base to generate sales, aligning with the observed revenue acceleration during these later quarters.

In summary, the company has demonstrated strong revenue growth alongside substantial investment in fixed assets. The initial decline in asset turnover indicates that the asset base expanded faster than revenues at first, but the subsequent recovery in the ratio highlights improved operational efficiency in deploying those assets to support growing sales. This pattern reflects a phase of aggressive capital investment followed by better asset utilization.

Revenues

The revenue figures display a general upward trajectory over the observed quarters, increasing significantly from approximately 272 million to nearly 891 million US dollars. Notable growth is observed in the periods ending March 31, 2022, through December 31, 2022, where quarterly revenues rose sharply, indicating accelerated business expansion or higher sales volume during these periods. Some quarters, such as June 30, 2020, show a temporary decline compared to the immediate prior and subsequent quarters, suggesting potential seasonal effects or external factors impacting sales performance.

Property, Plant and Equipment, Net

The net value of property, plant, and equipment, including right-of-use assets, shows a consistent and progressive increase across all reporting periods. Starting from around 164 million US dollars at the beginning of 2019, the asset base grew substantially, reaching over 606 million US dollars by the end of 2022. This steady investment suggests ongoing capital expenditures and an expansion of operational capacity, aligning with the rising revenue trend. There are no periods of decline, highlighting sustained asset growth.

Net Fixed Asset Turnover Ratio

The net fixed asset turnover ratio exhibits a declining trend from early 2019 through late 2020, decreasing from about 6.1 times to a low of approximately 4.23 times. This decrease indicates that revenue growth did not keep pace with the increasing fixed asset base during this time, reflecting potential underutilization or ramp-up phases of newly acquired assets. From early 2021 onwards, the ratio stabilizes and then gradually improves, reaching around 5.13 times by the last quarter of 2022. This recovery suggests improved efficiency in using fixed assets to generate revenue, potentially due to better operational management or favorable market conditions.

Overall Analysis

The financial data reflects a company experiencing robust and accelerating revenue growth alongside substantial investments in property, plant, and equipment. While asset additions initially outpaced revenue growth, leading to a decline in asset turnover efficiency, the latter periods indicate a positive adjustment with enhanced asset utilization. This pattern suggests a strategic expansion phase followed by optimization of asset deployment to support higher sales volumes.

The analysis of the quarterly financial data reveals several notable trends in revenues, total assets, and total asset turnover ratios over the examined periods.

Revenues

Revenues demonstrated a consistent upward trend throughout the time frame. Starting at approximately $271.9 million in the first quarter of 2019, revenues increased steadily each quarter, reaching about $890.7 million by the last quarter of 2022. This represents more than a threefold increase over the period. The growth shows some variability in quarterly increments; however, it maintained a generally positive trajectory without significant contractions.

Total Assets

Total assets also exhibited an increasing trend, growing from approximately $1.18 billion in the first quarter of 2019 to around $4.27 billion by the end of 2022. The growth in assets accelerated particularly from 2020 onwards, with a pronounced surge between the second quarter of 2020 and the first quarter of 2022. The expansion suggests substantial investment in asset acquisition or indication of acquisitions, reflecting an aggressive scaling of the company’s asset base.

Total Asset Turnover

The total asset turnover ratio started at 0.85 in the first quarter of 2019, peaking at 1.05 by the first quarter of 2020, indicating efficient use of assets to generate revenues during this early phase. Post this peak, the ratio declined sharply to below 0.60 by the last quarter of 2020 and hovered around this lower range through 2021 and 2022, with slight gradual improvement toward the end of 2022, reaching 0.73 in the final quarter. This decline suggests that asset growth outpaced revenue growth for much of the period, indicating a decrease in asset utilization efficiency.

In summary, while the company experienced robust revenue growth and a significant increase in asset base, the efficiency with which assets were used to generate sales deteriorated notably after early 2020. The surge in assets may reflect expansion strategies that have yet to fully translate into proportional revenue increases, as evidenced by the lower asset turnover ratios in the latter years.

The analysis of the quarterly financial data reveals several notable trends in revenues, stockholders’ equity, and equity turnover over the observed periods.

Revenues

Revenues demonstrated a generally upward trajectory throughout the periods observed. Beginning at approximately 272 million US dollars in the first quarter of 2019, revenues showed a strong increase, reaching 418 million by the fourth quarter of the same year. Despite a decline in mid-2020, which can be observed between the first and second quarters of 2020 dropping from 431 million to 332 million, revenues resumed a positive growth trend afterwards. By the final quarter of 2022, revenues had more than doubled, reaching nearly 891 million US dollars. This pattern suggests robustness and recovery following a mid-period dip.

Total Stockholders’ Equity

Stockholders’ equity also exhibited a consistent increase across the examined timeline. Starting at around 626 million US dollars in early 2019, equity steadily grew each quarter, with significant acceleration observed beginning in 2022. The increase from approximately 1.31 billion at the end of 2021 to over 2.17 billion by the end of 2022 indicates substantial growth in equity base, reflecting possibly strong retained earnings, issuance of new capital, or other equity-enhancing factors.

Equity Turnover Ratio

The equity turnover ratio, which measures how efficiently equity capital is used to generate revenues, showed some fluctuation throughout the periods. Initially, it rose from 1.6 in the first quarter of 2019 to a peak of 1.83 in the first quarter of 2020. Following this peak, a downward trend is observed through 2020 into early 2021, hitting a low near 1.3, indicating a period of less efficient utilization of equity to generate revenues. From mid-2021 onward, the ratio improved again, although it did not reach the earlier peak levels; it moved from 1.1 in the first quarter of 2022 upward to approximately 1.43 by the end of 2022. This recovery suggests improvements in operational efficiency or revenue generation relative to equity during the latter periods.

In summary, the data indicates strong growth in both revenue and stockholders’ equity over the examined period, with a temporary decline in growth momentum in mid-2020 that was followed by sustained recovery and enhancement through 2022. The equity turnover ratio reveals varying efficiency in the use of equity to produce revenues, with the most efficient performance noted around early 2020 and a gradual improvement noted in the latest quarters.