Q2 2020 Solaredge Technologies Inc Earnings Call
[music].
Okay.
Oh, I'm pretty solar edge conference call for the second quarter ended June Thirtyth 2020. This call is being webcast live on the company's website at www Dot solar edge Dot com in the Investor section on the event calendar page. This call is the fold.
So we're actually with all rights reserved at any recording reproduction or transmission of this call without the expressed written consent of solar edge is prohibited you may listen to a webcast replay of this call by visiting the events calendar page.
Our edge Investor website, I would now let's turn the conference over to Erica Mannion Safire Investor Relations Investor Relations for storage. Please go ahead.
Good afternoon. Thank you for joining us just got Stoneridges operating results for the second quarter ended June 32020, as well as a company outlook for the third quarter of 2020 with me today.
<unk>, Chief Executive Officer, and running fire Chief Financial Officer.
Beginning with a brief review of the results for the second quarter ended June 32020.
Roaming will review the financial results for the second quarter, followed by the company's outlook for the third quarter of 2020, We'll then open the call for questions.
Please note that this call will include forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations.
We encourage you to review the Safe Harbor statements contained in our press release and the slides published today for a more complete description.
All material can change in the webcast as a sole property and copyright if so rich technologies with all rights reserved.
Please note. This presentation describes certain non-GAAP measures, including non-GAAP net income and non-GAAP net diluted earnings per share, which are not measures prepared in accordance with netscout.
Non-GAAP measures presented in this presentation as we believe they provide investors with a means of evaluating and understanding how the company's management evaluate the company's operating performance.
Non-GAAP measures should not be considered in isolation from as substitutes for or superior to financial measures prepared in accordance with U.S. GAAP.
Listeners, who do not have a copy of the quarter ended June 32020 press release or the presentation may obtain a copy by visiting the investors section of the company's website now I will turn the call it was TV.
Thank you are.
Good afternoon. Thank you all for joining us on our cost in school [laughter] consecutive earning calls in which a keep seeing abella discussion is goldman team and its implications on our business.
Unfortunately, that's done then it continues to spread globally.
That being the largest livelihoods of millions holes in place with a host of those affected and the success of those working on that solution to treatments.
Yes, it's gone through studio studies finally pulled over Q twos is the Chief Science did the majority of those customers and dedication and hard work of our employees.
The second quarter.
We are reporting revenues of $331.9 million.
The topic ranges, our guidance and slightly above revenues in the same quarter last year.
The other news for the second quarter in our solar business grew approximately $210 million also slightly above the same quarter last year.
The deployment revenues compared to the first quarter of Twentytwenty, let's just call. It should be instructed the global Pembina expects me hips knees in certain regions.
Overall this quarter, we shipped tea in the house, Northern Delaware, Optimizers and 142000 visitors.
[laughter] during your last call you know discussion of the business environment. He explained that in order to assist market dynamics. You are closely tracking installation rates of our clubs do I would love doing portal nobody has to come true.
As I said last quarter. This provides part of that there too.
He is not the lift be indicative of new solar system sales by our installers. However, we need to get this thing holds it too just to see market than them.
Continues to be hopefully this quarter.
The schools with other indications, we have such as new oldest smooth and point of sale data from our distributors.
Based on these sources of installation I will discuss the momentum you're seeing over there.
Starting with the North American more good news.
<unk> of $124 million, you know solar business in the United States, representing 40% total solar revenues.
And to keep it into the revenues in Q2 2019. This isn't a significant reduction relative to last quarter village that students considering that the United States have been heavily impacted by calls at 19.
Having said that since the end of April we are seeing positive signs of increased orders and have increased Indian solutions in the United States can this be closely monitoring portal.
This positive trend. It is also manifested in the said Oh distributors.
Each of these other good do consistently month over month since the end of April resulting in decline as inventories of residential products not that we'll just do that is.
At the same time.
The data shows that the recovery subsea nine installations in the United States, It's slow and this isn't the inventory levels are still has let us it leads to the installation rate that this stuff.
In summary, we are cautiously optimistic about the recovery of the U.S. smokers in the coming months.
Moving to Europe, where we have experienced strong Kona grills.
Revenues in new at this quarter were $144 million ups, when one of them do them $22 million last quarter.
We attribute these positive results to two factors. The first is that while Europe hasn't been impacted by the global pandemic.
Several countries in Europe husband, 50 implements measures to keep the economy's drone, including incentive renewable energy.
Second is always strong position in many countries in Europe, which enabled us to serve our customers during these challenging times and grow our business with them.
In particular in Germany.
Oh, it's leases residential stores inverters beneath popularity.
And believe we believe that Weve been then we are in prison I will share in the two things or they're going to European markets in Germany, Switzerland and others.
I wouldn't bother this momentum in Europe is not limited to the German would eventually market and also include increased revenues compared to last quarter, and another learned Italy, Switzerland, Poland in France.
We are also happy with it bothered with momentum outside the U.S. in Europe, where we are reporting its second consecutive quarter.
Greetings and strengthens deals in Australia, Israel in Taiwan.
We do you see this momentum in both kids adventure and that the motion segments.
And just them beginning in June we started selling I wouldn't just GPU suicide, Minnesota and well. These are still small quantities, which means that you are now able to address the residential and small commercial markets and this promising region.
On the product side this quarter was characterized by production ramp.
Since we released energy hubs storage in total so the newest markets.
Which together with our back up into Phase then they lose any one inverter.
Soon flexible home backup storage easy charging and generator integration.
So you would.
We continued the production ramp of the three stages. It does just urgent voters.
We also lamps deduction of the new enlarged three phase to Merck sullenberger.
As mentioned the all of these products have been positively received in the market and thousands of units of each well results to the regions.
We also released this quarter the ground Mount version of the need to say commercial inverter combined with the four to one optimizer.
Targeting the community solar round mountain segment in the United States.
On top of the do continued progress in developing into those eventually Bert the other is targeted for release later this year.
You know in Nonsolar business, I would focus on investing and developing new product offerings continues as planned.
Including shipments of additional sold electrical power train units for final due to reductions validation by an automotive manufacturer.
We are also happy to update that we have completed the construction of the seller one manufacturing facility in Israel.
And are beginning to around our own manufacturing of Inverters in outdoor lose.
First commercial shipments expected later this month.
As a reminder, our objective is to use this factory to supplement non terrorists demand.
And more importantly, and especially during this period to enable food qualification of quality production processes of new products. So I go to ramping at Cal contract manufacturing sites [noise].
In summary, we are proud that even under these challenging circumstances.
Successfully adjusted to the changing environment, and our lives, Virginia with Who's Gonna diffusion capabilities to continues to deliver process.
Generates cash loved pushing forward or with acknowledging this innovation and investments in our future.
And with this I handed over to women, who will review our financial results.
Thank you PV and good afternoon, everyone.
There's always May review includes GAAP and non-GAAP discussion.
Reconciliation the pro forma to GAAP results discuss Moody's cool is available on our website and in the press release issued today.
[laughter] for the second quarter booking revenues were $331.9 million, 23% decrease compared to $431.2 million last quarter, and a 2% increase compared to $325 million. So the same quarter last year.
Revenues from the sale of sort of products were $310.1 million compared to 407.6 million last quarter.
You're sort of revenues this quarter were 124.5 million daughter and represented 40.2% Robert sooner revenues, we view as revenues included the safe Harbor revenues of $17 million.
Solar revenues from Europe, where 144.3 million for 46.5% of our revenues.
Revenues generated from outside the United States endure this quarter, we're at a record of $41.3 million, representing 13.3% or sooner or revenues this quarter.
On a megawatt basis. These quarterly we delivered 404 megawatts to the United States.
748 megawatts to euro and 290 megawatts to the rest of the world.
Maybe there's some products represented 44% over megawatts shipped and commercial systems were 56% this quarters.
[laughter] this quarter, our top 10 sort or customers represented 58.4% of our quarterly sooner revenues decreased from the last quarter and one distributor accounted for more than 10% of revenues.
Blended ASV per watt.
Well first solar products decreased this quarter by approximately 8% compared to the last quarter due to a change into your geographic mix and increased rate of revenues generated from commercial products. These two factors were slightly offset by the strengthening of the euro against the U.S. dollar.
This quarter revenues from our non sort of products were $21.8 million, mostly related to the sale of lithium ion batteries by Qualcomm.
GAAP gross margins for the quarter was 31 per cent compared to 32.5% into prior quarter and 34.1% into same quarter last year.
Non-GAAP gross margin this quarter was 32.4 per cent compared to 33.6% in the prior quarter and 35.7% in the same quarter last year.
Non-GAAP gross margin for the sooner activities with 33.8% compared to 35% in the last quarter. This reduction is the result of a higher rate sales in Europe. The heat treat you should we characterized by lower gross margin due to heightened competition from European and Chinese in Brazil. Many.
Fixtures and a higher portion of commercial revenue that our Janet currently generating lower margins. In addition, the combination of reduce the man two hour and are sufficient manufacturing capacity enabled us for the first time in many quarters to reduce air shipments.
Expensive to an insignificant level.
The inventory levels, we have built will enable us to avoid substantial air shipments in the near future.
Actual parity payments on train you've made product imports into the U.S. decreases with these corridor as a result of lower shipments to the United States increased manufacturing in Vietnam.
Non-GAAP gross margins for our non sort or activity was 13, and a half per cent compared to 9% into previous quarter.
The increase was the result of an improvement in margins on the sale of Emobility powertrain users.
Moving to our operating expenses.
Total operating expenses for the second quarter wouldn't 73 million or 22% of revenue compared to 72.2 million or 16.8% of revenue in the prior quarter.
And to 65.3 million or 20% 0.1 of revenue for the same quarter last year.
On a non-GAAP basis operating expenses for the second quarter were $61.1 million were 18.4% of revenue compared to 66.3 million or 15.4% of revenue in the prior quarter and 64.9 medium were 16.9% of revenue for the.
Same quarter last year.
The second quarter was correct widened by lowering non-GAAP operating expenses due to covert 19 related travel to restriction, which eliminated travel expenses and reduced marketing in pretrial related expenditures. In addition, reduce the base salaries over executives and cash portion of our director.
Compensation like 20% renegotiated other expenses, such as leases and other services.
All of which contributed to the reduction of non-GAAP corporate Opex spending.
Our non-GAAP sooner operating expenses as percentage of sort of revenues were 16.2 per cent compared to 13.5% last quarter as a result lower revenues.
Our GAAP operating income for the quarter was $13 million compared to 67.8 million be the previous quarter and 45.4 meet him for the same period last year.
Non-GAAP operating income for the quarter with $46.6 million compared to 78.6 million in the previous quarter and $61 million for the same period last year.
This quarter been known solar activity resulted in non-GAAP operating loss of $8 million compared to an operating loss of $9.3 million into previous quarter, driven by continued investment in the critical power solution automation machine and Emobility businesses well done.
So from energy storage business continued to be profitable.
[noise] financial income for the quarter was $11.6 million compared to financial expenses of $16.6 million in the previous quarter and finance income of zero point Eightmillion for the same period last year.
This is a result foreign currency changes, resulting mostly from unrealized exchange rate fluctuations in the accounting treatment of intercompany balances and intercompany loans provided for the acquisition in Korea and equally.
Thanks extensive work.
$4.9 million this quarter compared to $8.9 million into prior quarter and 13.2 medium for the same period last year.
Our non-GAAP tax expense was $8.1 billion compared to 12.5 million in the previous quarter and 14.2 million for the same period last year.
GAAP net income for the second quarter was $36.7 million compared to a GAAP net income of $42.2 million for the previous quarter and 33.1 million for the same quarter last year.
Our non-GAAP net income was $52.1 million compared to a non-GAAP net income of 50.7 in the previous quarter and 49.3 million for the same quarter last year.
Got it and then diluted earning per share was 70 cents for the second quarter compared to 81 cents to the previous quarter and 66 cents for the same quarter last year non government to diluted earning per share was 97 cents compared to 95 cents to the previous quarter.
We're at 94 cents in the same quarter last year.
Our non solar businesses generated 20 cents non-GAAP diluted earning per share loss.
[noise], turning now to the balance sheet as of June 32020, cash cash equivalents meant to be positive restricted Banco de Bogot, then investments worth $592.7 million during the second quarter 2020, we generated $59.3 million in.
Cash from operations.
Our net decrease this quarter, reaching $181.7 million compared to $235.7 million last quarter.
Yes, so this quarter into sooner business was 73 days, an increase from 62 days last quarter due to a small number of temporary payment extension provided to certain customers. Most of you each have been repaid.
Despite the substantial impact of corporate 19 on our business, we did not incur any substantial losses related to customer bankruptcies and we continued to be very cautious in the way that we provide critical to our customers.
As of June 32020, our inventory level net of reserve was at $264.5 million compared to $198.6 million in the prior quarter. Most of this increase is related to an increase in are finished good inventory, which allow us to it.
The cost of expedited shipments and to be prepared for and possible upside in particular in the north American residential market.
We have also increased.
The levels of safety stock of raw materials, if our contract manufacturers to avoid possible supply chain disruption due to cope with 19.
Additionally, approximately $38.7 million of our inventory relates to the loan solar inventory. The majority of wage is raw materials hasn't they could come in on par with the level held last quarter.
Moving now to the guidance to the third quarter.
2020.
We expect revenue for the third quarter 2020 to be within the range of 325 million to $350 million revenues from the sale of sort of products are expected to be within the range of 305 million to $325 million, we expect no.
Non-GAAP gross margin was to be within the range of 30% to 34%.
Non-GAAP gross margin from store activity is expected to be within the range of 33, 35% I.
I will now turn to quote overcome the operator to open it up for questions operator. Please.
Thank you at this time, if you do have a question that won't be star. One we could you. Please limit yourself to one question wasn't one follow up against start one for questions. We'll hear first today from a market itself what the JP Morgan.
Yeah. Thank you very much for taking my questions.
One or two a wanted to start with just the U.S. market before you can give a bit more color on your.
Your commentary about your optimism about a recovery in that market over the coming months, just what gives you the confidence in that and it thinking back to the last call. You know one of the things that seem to be holding you back.
On being more optimistic or just kind of uncertainty around cancellation rates. If he is kinda give us an update on that metric as well. Thank you.
Yes, I think actually that is where.
The optimism lies so we indeed in the early parts of the second quarter.
Experience some level of cancellations and push outs.
And the rate there's no decline throughout the quarter.
To a point or at the latter part of the quarter on the other parts of this quarter, we're not seeing any of that technically anymore of those.
Types of push outs and cancellations and unparalleled as mentioned we are seeing a gradual increase in order flow and installation rates as well as in the a point of sale data coming from our distributors. So combining those factors is where we see.
Clear indication of a ah of or a recovery.
There is races that recovery is questionable and a and that's why we are cautious in our predictions.
For the for the third quarter.
Okay when city and then just as a follow up on the supply side can you talk about the Oh, you had the capacity additions in Vietnam.
When do you expect that to be fully ramped and.
Maybe talk about kind of the mix of business going higher mix of shipments going into the U.S.
When we conceded majority and then when we can see all of that supply becoming carefree.
So in general and Mark.
What we see that in Vietnam. The capacity that we have built these are already in a full capacity from the amount of products and German infection than what we're doing a now he's actually to shift more of I would call it to a product variety into the factories capacity when you factor.
Any any factories not just related to the amount of products that they can make but actually the amount of product would be no call to make and by definition caused them to the stick to the reach of travel is the making this a little bit more complicated, but but that said, we do see an increase or even the low.
Given the products and the amount of products coming from beer and we are working on these favorite certification I believe that towards the end of this year about two thirds of our products will come from a a non carrier manufacturing areas and I'm, adding to these are not just the Vietnam line, but also the line that we have.
In Hungary and of course self first shipments that would come from our seller one factory in Israel. The to go to a 400% a non dairy products Oh I'm not sure when will be dependent because you also have to look at the mix and how many product. So you want to too heavy constantly.
They did in one single location I believe that the rate of 66% will continue to increase into Twoq 2021, but I'm not sure that really be in a position where 100% everything would come from and momentary areas I would say at least in to our next year a year or so.
Okay I'll hop back in queue. Thank you very much.
Well hear next from Cowen Roche with Oppenheimer.
I'm not so much how can you give us an update on the progress with and historic product in terms of getting all approval and preparedness to become wrapping them more we might see first product delivers.
Florida.
Yes.
I'm not sure I got the question correctly. The question is about the our residential batteries.
Correct and getting the the hardware approach them, perhaps so they can become or after them and start shipping.
And time in her at all.
[music].
Yeah, and indeed, that's those are the two elements is element there will be R&D, which is ER, which is progressing and as as planned and as the element of certification.
It is more challenging do they do move the battery around together with the people to the certification labs in order to.
To get all the required certifications they are still on pass for availability towards the end of the year and as we said a into this girl, we don't expect it to be a major revenue contributor.
This year.
All in parallel as I mentioned, the Energyhub inverter is ramping up is very high rate continues to be installed with LG Chem batteries in a b C couple of configuration and many many other types of batteries in an AC couple of configuration.
Great and then if you look at her marching on per month.
Quarter over quarter and the guidance you know how much of that can be attributed to geographic mix you talked about.
To Q or or extra next ship into Europe.
Got it and she'll on a margins, but love to just unpack how much of the margins on the injured by watching them how much. It's by next from geography was and then another.
The carriers are variable.
So in this case since we do not get see major shipping day geographical mix I think if most of the improvement that we're going to see towards the third quarter as we guided will come from first of all a additional cost reduction activities that we do.
You know while the pandemic continues then Oh, maybe revenue Liberals are decreasing we continue to invest all the time in RMB and R&D is also directed of course towards cost reduction and were able to a utilize these cost reductions in our mixed feels and this is something that will continue and continued this quarter.
We also see little bit of improvement in the euro to U.S. dollar rate, which is of course with something that hurt us a little beating the previous quarters and now we're benefiting from it.
In general I think that the mix itself is not continue not expected to be dramatically different over the next a a corporate fleet is therefore on most of these reductions will come from either our own a activities or a little bit due to.
Extreme goods.
Okay perfect. Thanks, guys.
Well hear next from Mcelroy with credit Suisse.
Hi, Thanks for taking other questions then I'm, assuming cones personally ER on gross margins as but think about but could you guide to how should we think about gross margins for the.
I see dental business most of the commercial and that the new products launching.
How should I can never done through three on a going problem.
So so here again, I think look it's a little bit too you don't take margins within Q3 and reflects into what we're going to see in a world where appropriate 19 will bring back B I would call is more of a normal mix that we used to see before whether you are facing.
A more substantial part of our revenue.
In general when when we're looking at a world as we guided by the way in our entity. They were approximately 50% of revenues are coming from the with where both the margins are usually higher and the ratio of residential and commercial more leans towards a residential.
In this case, these 36% give or take 1% that we guided being the number that we still see and before taking into account a blend of new product and older products a product that we are just really see with your gross margins and then cost reductions that we do on the existing ones.
Today, what we see that Europe, both being a little bit more competitive into pricing and decided that Europe and rest of the world are more inclined toward.
Relatively large commercial systems that are I think today correct arise with the lower gross margins given being slightly more a newer products where cost reduction curves is us deal or a being handled and also where the competition is heightened.
I do not think that you will see lots of changes in at least Q3.
And much into Q4, unless the shift of the U.S. sales a win a lean towards the higher portion of this amount so in the world without Corona the 36% give take 1% is exactly what we continue to see and the fact that prices are relatively stable is helping us a little bit.
Steve you're comfortable with these kind of guidance for the long term.
Thank you.
Just a follow up or can you talk what are your open market in the remarks, you spoke about a 10 doesn't the bucket, but oh, how does that translate into higher demand or.
Either pricing power at all for you guys.
This year or commitments.
Yeah.
Well, let me. So there are few a examples in various countries that are as follows.
The stimulus answer for the local economies they are.
Strengthening the incentives for installations of renewable energy systems.
An example would be in Italy, and a couple of other other countries. So that is a and these.
Incentives have a window.
For the consumers to benefit from them. So that creates a similar to dynamics in other countries, a a window of opportunity where customers want to install more.
Solar systems and being that our position.
In these markets to begin with is quite a strong we are likely ones did benefit from a awesome. This trend in the a in the business and this is a this is happening also on the overall Europe.
Policies or for that.
Last year up as well as some local country incentives and policies.
Got it bankrolled dipped by them.
From Roth capital partners from a move next to Philip Shen.
Hi, Good morning. Thanks for the question first one is on a the competitive dynamics in the U.S. was wondering if you could speak to what you're seeing out there now and sort of work that we've done it seems like generac.
Might be are taking some share with storage.
And as a result on matching that they're selling some inverters there as well but was wondering.
If you're seeing area that yeah as you compete.
And then also or just overall what are you seeing journalist to competition.
Well, so without resorting to over one specific products versus the other I think it's actually the tendency in the time of defend them. Eric I think can be expected that people are kind of sticking to what they're used to and Ah.
I think we're seeing at least a in the last few months.
To the extent that we see the market on and I'm sure that there are a corners or parts of the market that we don't see a clearly at any given moment, but generally the Uh huh.
The competitive environment to the best of our knowledge has not changed significantly over the last two three months, if there's nothing that is which we've noticed.
Okay. Thanks again in terms of 'em margins was wondering for Q2, if you guys could share a you know the commercial versus residential margin.
By geography, so for the U.S. you know.
I know the residential segment is likely higher commercial is likely lower than corporate average, but then be viewed useful to understand how the U.S. commercial margin compares with the European commercial margin. If you have any updates or any changes on that and so if you can give us some specific data on the Q2.
Quarter or that would be great and then what you might expect a ahead for.
Each item thanks.
So we usually not breaking it'll be the segment's margins by product and regions, but as we mentioned if you remember in the last quarter.
Keith or the end of Q1 B.
Let's see on a product basis. The margin difference was approximately 400 basis points on each and every or I would say product to product. The comparison, because something that go to little bit better during the last quarter, mainly due to the affected the euro evaluated against the U.S., daughter, and therefore it.
We saw some of the saw a 230 basis points erosion that we sold in Q in the last.
Nine months seats that ended in Q1, where we covered most all of it. So by definition. This difference was a little bit lower I think the only thing that we can say is that a margins in the U.S. are usually better for both residential and commercial compared to our Europe in rest of the world because as you see a breadth of there will be thinking bigger.
Share of revenue was a every quarter and the second thing is that in general.
You do see that Europe, and and rest of the war portion of the over or a commercially that little bit bigger and that means that there is a little bit more competition there, but other than these I don't think that there's a lot that we can say.
Well here now from Jeff Osborne with Cowen and company.
Hi, good afternoon, mostly a questions have been asked but I was wondering if you could confirm that pricing on a like for like basis.
It sounded like that that was consistent or flat or just wanted to double check.
Yeah, that's up definitely case.
And is it similar expectation for the third quarter run it.
I'm not I think that PC, our expectation is just not to see major changes there during the quarter, but by the way one thing again to say that at least in Europe against the dollar equivalent of everything that we sell is a little bit higher but it's not the price the downstream customers seating and we do not expect major changes there.
And then any read through in July about the Cnine market in the U.S. recovering you flagged that you saw some channel inventory there.
At distributors, but what are you seeing the started the quarter.
[noise] so.
There is a recovery, but this is a very mild and I wouldn't jump to conclusions based on a one month or.
Data point, there was definitely.
[noise] more discussion and and customers that we know had projects in their pipeline and projects that have confirmed.
But they are intended to be installed with our technology and they've been silent for a couple of months. So those discussions.
Have resumed and more designs are flowing to our designers to.
Et cetera. So the rest of discussions has increased the rate of installations of increase the mildly in July.
[noise] well hear next from Mike.
The Needham and company.
I can.
Just wanted to follow up on a couple of quick items I know I believe last quarter.
Having our quarterly earnings call. There was discussion that exiting Q2 of the non-GAAP opex was going to be tracking around 50 to 50 by running a quarter and I'm curious is if revenue trends or.
Better than what you guys expected, so maybe opex should be higher than than that discussion that we had last quarter.
So actually Ngls would or wouldn't be setting that who believed that the Ah Ah cuts that would take us to this level, even going to be we see the affected there during the third quarter actually due to debated in some cases, we reduced our headcount and they're usually the effect.
Takes a little bit longer because of note. These periods that you need to give.
With that said what do we see the operating expenses is that on one hand, he has a pretty good control over the operating expenses, we were able to renegotiate a lot of the terms that we had we actually exits almost every line on the operating expenses and try to renegotiate that didn't change at the same time would we continued to do.
Do and we are leveraging on our strength is the fact that we do see in certain areas talent that are maybe we tried to recouping the path and we were not able to do because at least stuff in there are areas, where we were most effective can already be there was a big demand for engineers and now there are more available to one and therefore, we are.
Our using deep opportunity to either higher talent that we could not get before or spreads strengthening areas that the talent was more care. So in the sense. The measures that allowed us to gets to the $59 million were old taken but no as we see.
First of all in competing the guidance for the next quarter I kind of a stabilization in their revenue level and our ability to assess a better what kind of resources and benefits we can get other be situation.
We are going to be wisely spend being our operating expenses knowing that we are profitable we continue to generate cash and you have the ability to strength in certain areas. So all in all very very good control over the operating expenses and we'll keep you use our resources widely to continue.
TV said being in the script, you know to invest in technology and growth.
Thank you that's helpful and I guess for the follow up I know it doesn't get as much attention is because the businesses or or subscale comparisons with the nonsolar businesses, which should be curious how these acquisitions have been tracking.
Since your internal expectations I know, there's a lot of R&D investment to complete in those businesses and on the code again would be helpful.
[laughter] I think the the three a area. So the first is our coke and Ah Coke on as we reported in the past is really.
Based on the capacity that we have available so the capacity that we have for the most Berkeley, so and the revenues are consistent.
And that's what we've been projecting for the year, because we know that the a added capacity, which we are working on will take time until into that becomes available.
In the two other areas of critical power and E mobility, our expectation would be too was to be in the investment sales in plenty plenty in order to start seeing there are some results towards the end of Twentytwenty in into Twentytwenty, one and I think.
So maybe we will clarify that into sub text book, but what we are.
To do as Lynn mentioned this tends to the control of expenses and a ended evidently that we're seeing the to execute those investments as planned and though we expect to start seeing some or all some food a couple of quarters from now, but really it's a much longer than a play in terms of being.
Investments and when all the significant impact on the revenue will be.
Thank you guys.
[noise] Entre Joseph shot with JMP Securities.
Oh, Hi, there. Thank you for taking my question I only have brought one I'm wondering if you can discuss how are the ramp of Qualcomm is going in relationship to your broader plans about storage. Thank you.
So I think we discussed this also on the handling base, so and I mentioned before with the current factory is pretty much fully loaded and capacity is being sold.
We presented a plan for building a Ah a much larger factory that will be.
Ready for production in Twentytwenty tool.
And we are on track for that or without schedule.
But unfortunately between now and then what we have is what we can sell them. That's the quite consistent revenue run rate that Ah. That's we're seeing from the coke on the current spoke on factor.
Okay. So you're you're effectuate there there haven't been any additional pick up there in terms of output or anything of just kind of is what it does.
Yeah, we were I mean, we're maximizing the capacity here and there we might just a couple of more percent based on mix or what are some a continuous improvement type.
Tried to expert but the bottom line is that this factory is at its limits and what we're able to produce were able to sell and the new factory in twentytwenty to it'll be a 10 times more than 10 times larger.
And then we'll be able to sell more than 10 times the revenue.
Okay. Thank you.
[noise] from Goldman Sachs.
Right.
Hey, Thanks, guys for taking the questions that several modeling ones if I could squeeze on just first swung around and if I look at that pricing and the less for solar yeah, just taking a.
Revenues in providing them in the megawatts it looks like pricing was up over 15% versus Q1, what drove that.
So let me again pricing.
It appears that question about the or the one to one comparison between product so.
It's not the then only on the segment basis. So for instance, the energyhub into other things with its much more capabilities and is more hardware. It's also more expensive than that moves the ASV out there on top of that if you remember Brian I'm in the P. This quarter, we mentioned that there.
It was a lot of large volumes for very large customers that that has its part of the safe Harbor during Q1 that tend to have a slightly lower.
I see it so.
He said that the increase in the ASV.
In the residential North America from Q1 is the Q2 is around a bit of product mix in a bit of customer mix, but generally the likes to like pricing has been quite stable.
Okay that helps and then second question if I, if I strip out the safe Harbor revenue from Q on Q2.
Your U.S. revenue came down about 45% from quarter to quarter, which.
It's kinda towards the lower additive, but none of that many of the customers have been talking about in terms of trends can you talk a bit about inventory in the channel where does the de stocking cycles stand right now with respect to U.S. and then do you expect U.S. revenues to grow in Q3, and if that's the case.
We do assume that means not U.S. declined just wondering you know what's what's driving the dynamics in that segment that's affects the trend.
Yes.
Brian I can you try again.
The question is coming in with a lot of interruptions and I'm not sure that he understood that's correct.
Yeah, I'll try to simplified I, just wondering where inventory in the channel stands today, just kinda what what's your thoughts on around the de stocking cycle.
Brian I apologize if we simply cannot understand there is the line is completely broken.
This is this better.
Let's find Hello.
Yeah, sorry, I'm going to take that into making every now and just what the what's the status of the de stocking cycle right now from a inventory in the channel perspective, and then if I look at solar product revenue the guidance for Q3 is relatively.
The flat so wondering if U.S. out than non U.S. is down or the is U.S. still.
Declining to the into the queue I think we simply.
If you go to send your line is completely broken energize it would have to pick it up by brand and we think it go here that converts or later sorry.
So it or it can someone that maybe if the equipment can be repeated and we'll be happy to answer as well.
Every committee.
I would also my time when it happened and.
Also may press Star one.
Oh I'm not sure Brian will see you can hear from any better now.
Okay, sorry, guys I'm not sure if it's my line or your I can you hear me better.
Yes.
Okay. Thank you and credit patients just wondering inventory in the channel could you talk a little bit about where you think that stands today and where we are on the de stocking cycle and then with respect to Q3 the outlook for solar products revenue is relatively flat.
Outage from quarter to quarter. So wondering is U.S. up in Q3, and non lessors down or is less down again in Q3, and you're still growing outside of the lets just wondering what the geographic trend is here in embedded in your Q3's solar products revenue guidance. Thanks, guys.
I see it so I'll try to answer again, I hope that I I heard everything correctly.
What we basically see and I understand that you're referring to that when you take the safe Harbor.
Inventory out of the or the safe Harbor sales out of the regular sales in the United States you see a reduction of about 45% and therefore, a the U.S. was going down and then the question was whether it be fees related I believe to a inventory into channels and how do we see Q3. So I'll answer these and if I did not pick it properly.
Let's do it in the buffer.
After the call but.
General.
Did you mention before that when the with years started first of all we started with a relatively higher inventories that came into the United States due to the safe Harbor by definition some of the customers acquired more inventory that they need for the first and second quarter on a regular basis in order.
This will enjoy the its benefit.
And this was in a year, where the market was expected to grow compared to the last year with coping coming and the safe Harbor inventory coming into the United States of course, the players that could allow themselves having these oh safe harbors did not need to local.
Revenues because of the lower installation rates and the fact that there were sitting on inventories. So I'm dead front of course of whoever bought a safe Harbor would buy less in Q2 and a and this is obvious when we look at the over all.
Distributor's inventory the distributors are usually having a pattern where they build during Q1 inventory levels that would be sufficient for this strong two quarters that will follow in Q2 in Q3 and this year was North Dakota No no exception other than the fact, the cobot came in March and affected the market then give.
For some of the.
Distributors found themselves with an inventory levels that were not abnormally high taking into account for regular a year, but given the fact the installation rates to be so in April.
In may were so much lower compared to would be so before these will definitely more inventory that they wanted to have and this is why as we mentioned in the last call and as we actually deals in Q2 whenever we sold customer that was struggling with inventories, we were allowing customers to cancel orders or.
Who basically we scheduled those orders because we didn't want to get them stuck with too much inventory would we do see in the last few weeks seats that we are to be a installation rates are growing and therefore, they are still through all of their sell out of the distributors is growing and therefore the image.
Out of inventories that distributors are Terry is going down at the same time by the way they do see that us other the and I believe other players are building also inventories to support them and we believed that there is a little bit more of a shifting the way that they're ordering their product in advance because they want to me.
Sure that they're not 51 too much and therefore, the third quarter sales or expectations that we see two the U.S. are similar to.
To what we believe that we sold in Q2, even decided that they would not include any safe harbor by definition means that we're selling more into the United States of what we call fresh sales and as Steve you mentioned before we're cautiously optimistic based on the signs if we see but.
Oh, we're still cautious on disregard so I hope it after your question.
And that I got it right.
Yeah, that's very helpful. So just as a follow up rather than does that mean non U.S.
By virtue of that's growing from Q2 that Q3, and the overall solar products revenue guidance being kind of flattish from Q2 to Kecy is non U.S.
Declining a doubling from keep to the Q3 and what's driving that dynamic if that's the case.
So if it's not necessarily the case again, you know when when we're guiding we're guiding based on on projection of and therefore, they can move a this where or another but in general what they could do that usually Q2 in Q3 are very strong in Europe, and we see it varies from Europe right now so that's by definition does it imply that.
Expected a reduction there into south or perhaps for of course. This is no winter. So you can see some seasonal effect, but in general Oh, we do not see or below forecast major decline in any of the region.
But at the same time again, there's cobot outside and we're cautious in the way that we guide.
[noise] kinda at this time I would like to turn things back to management for closing remarks.
Yes, Thank you essentially Erika and as we completed the hour I'll take this opportunity to thank everyone for joining us tonight than and wish you on your families.
They say since they healthy thank you.
Thank you very much.
And I will conclude today's conference again, thank you all for joining us.
[noise].