Q1 2025 SolarEdge Technologies Inc Earnings Call
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Operator: Hello, and welcome to the Solaredge conference call. For the first quarter ended March 31st 2025. This call is being webcast live on the company's website at www.solaredge.com and the investors section on the events calendar page.
Speaker Change: Hello, and welcome to the solar Etch conference call for the first quarter ended March 31st 2025. This call is being webcast slides on the company's website at www Dot solar edge dotcom and the investors section on the events calendar page. This call is the sole.
Operator: This call is the sole property and copyright of Solaredge with all rights reserved and any recording, reproduction, or transmission of this call without the express written consent of Solaredge is prohibited. You may listen to my webcast replay of this call by visiting the event calendar page of the Solaredge Investor website.
Speaker Change: Property and copyright of solar etch with all rights reserved and any recording reproduction or transmission of this call without the express written consent of solar edge is prohibited.
Speaker Change: You may listen to my web cast replay of this call by visiting the event calendar page of the solar etch Investor website.
J.B. Lowe: I would now like to turn the call over to J.B. Lowe, Head of Investor Relations for Solaredge. Please begin.
Speaker Change: I would now like to turn the call over to J P. Hallo head of Investor Relations for solar edge.
Speaker Change: Please begin.
Shuki Nir: Good morning. Thank you for joining us to discuss Solaredge's operating results for the first quarter ended March 31, 2025, as well as the company's outlook for the second quarter of 2025. With me today are Shuki Nir, Chief Executive Officer, and Asaf Alperovitch, Chief Financial Officer.
Speaker Change: Good morning, Thank you for joining us to discuss solar edges operating results for the first quarter ended March 31, 2025, as well as the company's outlook for the second quarter of 2025.
Speaker Change: With me today are <unk>, Chief Executive Officer.
Speaker Change: A pair of itch Chief financial Officer.
Shuki Nir: ShootKey will begin with a brief review of the results for the first quarter ended March 31st, 2025. Asaf will review the financial results for the first quarter, followed by the company's outlook for the second quarter of 2025.
Speaker Change: <unk> will begin with a brief review of the results for the first quarter ended March 31 2025.
Speaker Change: SaaS will review the financial results for the first quarter, followed by the company's outlook for the second quarter of 2025.
Operator: We will then open the call for questions.
Speaker Change: We will then open the call for questions.
Operator: 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 earnings press release, the slide presentation posted on our website ahead of this call today, and our filings with the SEC for a more complete description of such risks and uncertainties.
Speaker Change: 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.
Speaker Change: We encourage you to review the Safe Harbor statements contained in our earnings press release, the slide presentation posted on our website ahead of this call today.
Speaker Change: And our filings with the SEC for a more complete description of such risks and uncertainties.
Operator: Please note, during this earnings call, we may refer to 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 U.S. GAAP. The non-GAP measures are being presented because we believe that they provide investors with a means of evaluating and understanding how the company's management evaluates the company's operating performance. Reconciliation of these measures can be found in our earnings press release, slide presentation, and SEC filings. These non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with U.S.
Speaker Change: Please note during this earnings call, we may refer to 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 U S. GAAP.
Speaker Change: The non-GAAP measures are being presented because we believe that they provide investors with the means of evaluating and understanding how the company's management evaluates the company's operating performance.
Speaker Change: Reconciliation of these measures can be found in our earnings press release slide presentation and SEC filings.
Speaker Change: These 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.
Operator: GAAP.
Operator: listeners who do not have a copy of the quarter ended March 31st 2025 press release or the supplemental material may obtain a copy by visiting the investor relations section of the company's website.
Speaker Change: Listeners, who do not have a copy of the quarter ended March 31, 2025 press release or the supplemental material.
Speaker Change: May obtain a copy by visiting the Investor Relations section of the company's website.
Shuki Nir: With that, I will turn the call over to shoot. Thank you, J.B. Good morning, everyone, and thank you for joining us today.
Speaker Change: With that I will turn the call over tissue.
Jamie: Thank you Jamie.
Speaker Change: Good morning, everyone and thank you for joining us today.
Shuki Nir: Before we dive in, I want to welcome Asaf Alperovich to the Solaredge team. Asaf brings deep financial and operational experience, and I'm confident he'll be an important part of executing our turnaround and reaching our full potential. Now to build. I will start with our progress on the four strategic priorities we set for the year. Then I'll walk through our approach to mitigating the impact of the recently imposed tariffs. And finally, I'll share my perspective on the state of the business across our key geographies. Let's begin with our priority.
Speaker Change: Before we dive in I want to welcome Stephane aerobics to the solar etch team.
Speaker Change: Submarine deep financial and operational experience and I'm confident it'll be an important part of executing our turnaround and reaching our full potential.
Speaker Change: Now it could be.
Speaker Change: I will start with our progress on before strategic priorities, we set for the year.
Speaker Change: I'll walk through our approach to mitigating the impact of the recently both batteries and.
Speaker Change: Finally, I'll share my perspective on the state of the business across all key geographies.
Speaker Change: Let's begin with our priority.
Shuki Nir: Last quarter, I outlined the four key priorities that are going to drive the Solaredge turnaround story and position us for sustained long-term growth. First, strengthening of an Second, regaining market share. Third, accelerating innovation, and fourth, ramping up our U.S. manufacturing. I believe that our first quarter results and our second quarter outlook demonstrate meaningful progress across all four priorities.
Speaker Change: Last quarter I outlined the four key priorities.
Speaker Change: Going to drive the solar its turnaround story and position us.
Speaker Change: For sustained long term growth.
Speaker Change: First strengthening I'll find out.
Speaker Change: Second regaining market share.
Speaker Change: Third.
Speaker Change: Celebrating innovation.
Speaker Change: And fourth ramping up our U S manufacturing.
Speaker Change: I believe that our first quarter results and our second quarter outlook demonstrates meaningful progress across all full payout.
Shuki Nir: First on Financial Strength. In Q1, we delivered quarter-over-quarter and year-over-year revenue growth. We expanded our gross margins, we reduced our operating expenses, and we delivered our second straight quarter of positive free cash. All that in the face of a more challenging global environment. We're not done focusing on operational issues. Last month, we sold one of our battery manufacturing facilities in Korea to Enobit and last week we divested our tracker business, which will reduce our operating expenses without a significant impact to our token.
Speaker Change: First on financial strength.
Speaker Change: In Q1, we delivered quarter over quarter and you'll be at your revenue growth.
Speaker Change: We expanded our gross margin we've used our operating expenses and we delivered our second straight quarter of positive free cash flow.
Speaker Change: All of that in the face of a more challenging global environment.
Speaker Change: We're not done focusing on operational efficiency.
Speaker Change: Last month, we sold the one off all battery manufacturing facilities in Korea.
Speaker Change: And last week, we divested our truckload business, which will reduce our operating expenses without a significant impact to our top line.
Shuki Nir: Our second priority is recapturing markets. This effort spans geographies, product lines, market segments, and customer types. Starting with the U.S. In 2024, Wood Mackenzie recognized Solaredge as the number one inverter supplier in the U.S. for rooftop solar installation. We believe this is a result of our focus on customers, our leading technology, our strong service and support capabilities, and our enhanced product quality and reliability. In U.S. Resi, we have seen a continued shift to the TPO model, where our domestically made inverters and optimizers have to qualify for the 10% domestic content entry. We are also seeing higher demand for our residential batteries in part due to the change in Section 48E, as well as our growing participation in VPP programs. Over 35% of our battery-attached sites participate in one of 28 different CBP programs through our CPO partners or directly.
Speaker Change: Our second priority is recapturing market share.
Speaker Change: This effort spanned the geography product line market segments and customer type.
Speaker Change: Starting with the U S.
Speaker Change: 'twenty 'twenty four wood Mackenzie recognized solar rates as the number one supplier in the U S for rooftop solar installation.
Speaker Change: We believe this is a result of our focus on customers.
Leading technology.
Speaker Change: So long service and support capabilities, and our enhanced product quality and reliability.
Speaker Change: The U S. Maybe we have seen a continued shift to the GPO model, where all domestically, making burgers and all he might have had to qualify for the 10% domestic content.
Speaker Change: We are also seeing higher demand for our residential batteries.
Speaker Change: Part due to the change infection 48 E as well as our growing participation in the PPP program.
Speaker Change: Almost 35% of our battery attach site participate in one of 28 different DPP program throughout the PPO partner or direct.
Shuki Nir: A similar shift towards domestic content in the C&I space provides us with a distinct competitive advantage and an ability to take share in this growing sector. Enterprise accounts are a large and growing part of the CNI system. We believe that we are the perfect partner for these customers because they have complex requirements, they demand efficient, cost-effective energy generation, they want leading-edge energy management capabilities, and they hold their vendors to the highest standards of service, safety, quality, and reliability. We see a healthy and growing pipeline of opportunities in the enterprise space and have already signed several agreements.
Speaker Change: A similar shift towards domestic content in the C&I space provides us with a distinct competitive advantage and an ability to take share in this growing segment.
Speaker Change: Enterprise accounts are a large and growing part of 15 I think.
Speaker Change: We believe that we are the perfect partner for these customers because they have complex requirements. They demand efficient cost effective energy generation, they want leading edge energy management capability.
They hold their vendors to the highest standard of therapy safety quality and reliability.
Speaker Change: We see a healthy and growing pipeline of opportunities in the enterprise space and have already signed several agreements.
Shuki Nir: For example, last month, we entered into a multi-year strategic partnership with the global leader in logistics, Under our partnership, this leading logistics real estate enterprise is planning to integrate Solaredge's products across its global portfolio.
Speaker Change: For example, last month, we entered into a multiyear strategic partnership with the global leader in logistics real estate.
Speaker Change: Under our partnership with leading logistics real estate enterprise is planning to integrate solar agent product across the global portfolio.
Shuki Nir: Turning to Europe. We are cautiously optimistic that we have turned the corner in our market share position. A strong POS in the quarters and feedback from our channel partners indicate promising results from our pricing and promotion company. Two markets that have seen particular strength are Germany, where our sales rule was up quarter over quarter, and the Netherlands, where our sales rule was up for the second quarter in a row. In the Netherlands, we see some positive momentum for our upgrade campaign that replaces a PV-only inverter with a new backup inverter plus two batteries. Given our large installed base in the country, we expect this battery upgrade campaign to be a source of growth as the Netherlands gets closer to eliminating net zero.
Speaker Change: Turning to Europe.
Speaker Change: We are cautiously optimistic, but we have turned the corner in our market share position.
Speaker Change: Our strong Pos in the quarter and feedback from our tenant partners, indicating promising results from our pricing and promotion campaign.
Speaker Change: Two markets that have seen particular strength in Germany, well central was up quarter over quarter, and the Netherlands, where our sell through was up for the second quarter in a row.
Speaker Change: In the Netherlands.
Speaker Change: We see some positive momentum for Applebee's campaign, but replaces a PD one inhibitor with a new back up even further to a battery.
Speaker Change: Even though a large installed base in the country. We expect these battery upgrades campaign to be a source of growth as the Netherlands get closer to eliminating nice to meet them.
Shuki Nir: Turning to our third priority. Accelerating Innovation. InterSolar starts tomorrow in Munich, and if you are in town, please stop by our booth, and one of our associates would be happy to take you through our latest offering. Starting with the new Nexus platform, which remains on track for initial volumes in the fourth quarter of 2025. At InterSolar, we will be displaying live production data from our three-phase inverter AlphaSight, and our new single-phase and scalable storage solutions will also be on display. We have also announced that our SolarEdge1 controller for residential is compliant with Germany's Regulation 14a which applies to most new installations of batteries, EV chargers, and heat pumps.
Speaker Change: Turning to our third priority accelerating.
Speaker Change: Accelerating innovation.
Speaker Change: In this total starts tomorrow in unique and you feel in town. Please stop by our Booth and one of our associates would be happy to take you through our latest offering.
Speaker Change: Starting with our new Nexus platform, which remains on track for initial volumes in the fourth quarter of 2025.
Speaker Change: In the solar we will be displaying live production data for Basel, III phase inverter out of supply.
Speaker Change: And our newest single phase and scalable storage solution will also be on display.
Speaker Change: We are also going down that's also like one controller for residential is compliant with Germany's regulation 14, eight which applies to most new installation both battery EBIT charges and heat pump.
Shuki Nir: This opens up a significant opportunity for us in the German residential market by providing our customers with a simple solution to comply with the complex regulations. On the CNI side, we are launching a new EV charging hardware and software solution which significantly reduces EV charging costs for businesses. This solution is integrated into the One4CNI energy optimization software platform which is now available to all Solaredge customers. At the core of these solutions is our team's drive for meaningful innovation that adds value to our customers and differentiates us from our competition. It therefore makes us proud to be recognized by VDE Renewables, a leading provider of quality assurance services for the global renewable energy sector.
Speaker Change: This opens up a significant opportunity for us in the German residential market by providing our customers with a simple solution to comply with the complex regulations.
Speaker Change: On the C&I side, we're launching a new EV charging hardware and software solution, which significantly reduces EV charging for abuse.
Speaker Change: This solution is integrated into the one for CNI energy optimization software platform, which is now available to all solar rich Kaufman.
At the core of this solution is our team's drive for meaningful innovation.
Speaker Change: Its value to our customers and differentiates us from our competition.
Speaker Change: Therefore, it makes us proud to be recognized by VB you renew it for <unk>.
Speaker Change: Leading provider of quality assurance services for the global renewable energy sector.
Shuki Nir: Their recent report covers several areas where our technology has a distinct advantage in efficiency and safety. VDE reported that our advanced safety solutions effectively prevent fire hazards and exceed international PV safety regulations. On cybersecurity, the VDE report highlighted that Solaredge provides an example of how robust cybersecurity mechanisms are essential to mitigating risks associated with cybersecurity. They also note that our approach aligns with international best practices and validates the growing need for cyber security within the solar industry. We believe that such recognition does not go unnoticed by our country.
Speaker Change: Very recent report covers paper on areas, where our technology has a distinct advantage in efficiency and speed.
Speaker Change: You reported that our advanced safety solutions effectively prevents firehouse.
Speaker Change: And exceed the international CV safety regulations.
Speaker Change: On cyber security the beat that you report highlighted that solar rates provides an example of how robust cyber security mechanisms are essential to mitigating risks associated with cyber threat.
Speaker Change: They also note with our approach aligns with international best practices and validates the growing need for cyber security within the solar industry.
Speaker Change: We believe that flex recognition does not go unnoticed by our customers.
Shuki Nir: Our fourth key priority is ramping up our U.S. In Q1, we executed our plan to ramp up manufacturing of US-made products. We have created nearly 2,000 jobs in the U.S., helping us reach a capacity of 70,000 inverters per quarter. including the shipment of our first domestic content CNI product. As you can see, we've made a lot of progress in a short time.
Speaker Change: Our fourth key priority is ramping up our U S manufacturing Inc.
Speaker Change: In Q1, we executed our plans to ramp up manufacturing of U S made product.
Speaker Change: We have created nearly 2000 jobs in the U S, helping us reach a capacity of 70000 in third quarter.
Speaker Change: Including the shipment of our first domestic content CNI product.
Speaker Change: As you can see.
Speaker Change: We've made the local progress in a short time.
Shuki Nir: With that, let me turn to our plan to mitigate the impact of the recently imposed tariffs. One of the benefits of our U.S. manufacturing footprint is that it positions us well to handle the current tariff environment. Solaredge has already done the hard part, we already reshored manufacturing to the United Our operations team can now focus on alternative sourcing and supply chain optimization for whatever tariff scenario is in place. Of course, until we fully optimize our sourcing, operating in an environment with newly announced and incremental 145% tariffs on products from China and 10% tariffs on imports from other countries will have a negative impact on our finances.
Speaker Change: With that let me turn to our plan to mitigate the impact of the recently imposed tariffs.
Speaker Change: One of the benefits of our U S manufacturing footprint.
Speaker Change: It positions us well to handle the current powertrain environment.
Speaker Change: So low rates has already done the hard part.
Richard: We all read you Richard manufacturing to the United States.
Richard: Our operations team can now focus on alternative sourcing and supply chain optimization for whatever scenario you have in place.
Richard: Of course.
Richard: Until we fully optimize our Philippine operating in an environment with new again, known and incremental 145% tariffs on product from China.
Richard: 10% tariffs on imports from other countries will have a negative impact on our financials.
Shuki Nir: In the second quarter, assuming these tariff rates, we expect the negative impact will be limited to a 2% reduction in our gross margins, as we have non-tariffed inventory already located in the US. In the second half of the year, assuming the same tariff rate, we anticipate a 4% to 6% gross margin impact net of pricing adjustment. To mitigate the impact of TARIF, our experience team has been working relentlessly to diversify our supply chain. We're moving quickly and have already taken several actions that we believe will reduce the impact of tariffs to a 2% gross margin impact net of pricing adjustment in Q1 2020.
Richard: In the second quarter, assuming view target rate, we expect the negative impact will be limited to a 2% reduction in our gross margin as we have non ferrous inventory already located in the U S.
Richard: In the second half of the year, assuming the same parish rate, we anticipate a 4% to 6% gross margin impact net of pricing adjustment.
Richard: To mitigate the impact of salary our experienced team has been working relentlessly to diversify our supply chain.
Richard: We're moving quickly and have already taken several actions that we believe will reduce the impact of salaries to a 2% gross margin impact net of pricing adjustment in Q1 2026.
Shuki Nir: And we will do our best to offset the entire growth margin impact later in 2020.
Richard: And we would do our best to offer the entire gross margin impact later in 2020.
Shuki Nir: The tariff will also impact our cash flow. Last quarter, we discussed that we expect to generate positive free cash flow in 2025. With the new tariffs in place, we expect to be approximately three cash flow break even for the future.
Richard: The tariffs will also impact our cash flow.
Richard: Last quarter, we discussed that we expect to generate positive free cash flow in 2025.
Richard: With the new targets in place, we expect to be approximately free cash flow breakeven for the full year.
Shuki Nir: Moving to the region. Our central for Q1 was approximately $370 million. In North America, our sales rule was down 18% quarter over quarter, mainly due to seasonality. Our channel inventories here remain largely normalized. While there is an additional uncertainty in the U.S. market due to potential policy changes and tariffs, the underlying fundamentals of solar and storage still have support. Power prices continue to increase in several key states and regions, and battery attach rates continue to rise. In Europe, our sales rule was up 6% quarter over quarter, and we expect the majority of our distribution partners to reach normalized inventory levels by the end of Q2 2020.
Richard: Moving to the region.
Richard: Our sexual for Q1 was approximately $370 million.
Richard: In North America, our sales were down 18% quarter over quarter, mainly due to seasonality.
Richard: Channel inventories here remains largely normalize.
Richard: While there is an additional uncertainty in the U S market due to potential policy changes in Paris.
Richard: Underlying fundamentals of the solar and storage still have support.
Richard: Power prices continue to increase in February a key states in the region and battery attach rates continue to rise.
Richard: In Europe, our steps to fix.
Richard: 6% quarter over quarter, and we expect the majority of our distribution partners to reach normalized inventory level, but at the end of Q2 2025.
Shuki Nir: Samurai. We are still in the early stages of our turnaround journey and have a lot of work ahead of us. The numbers speak to the solid progress we've made, but it's the energy inside the company, the pace of innovation, and the conversations we are having with our customers that make me the most optimistic.
Richard: To summarize.
Richard: We are still in the early stages of our turn in line journey and have lots of work ahead of us.
Richard: The numbers speak to the solid progress we've made but it's the energy inside the company the pace of innovation and the conversations we're having with our customers that makes me the most optimistic.
Asaf Alperovitch: With that, I will turn it over to our Thank you, Shuki, and good morning, everyone. I'm excited to join Solaredge at such a pivotal time for the company and to support the execution of our turnaround plan. A little bit about myself. I have an extensive accounting and operational background with over two decades of leadership experience with global companies. that includes transforming organization and leading financial strategy. Most pertinent to my new role here at Solaredge, I have significant experience with the global industrial manufacturing organization. So I'm well-versed in logistics, supply chains, and operations, and I'm excited to apply this experience to help drive operational and financial excellence here at Solaredge.
Richard: With that I will turn it over to us.
Sue: Thank you Sue and good morning, everyone.
Speaker Change: I'm excited to join solar it's at such a pivotal time for the company and to support the execution of our turnaround plan.
Speaker Change: Little bit bought myself I have an extensive accounting and operational background with over two decades of leadership experience with global companies.
Speaker Change: Includes transforming organization and leading financial strategy.
Speaker Change: Most of that going into my new role here at southern Rich I have significant experience with global industrial manufacturing organization.
Speaker Change: So a more diverse logistics supply chain and operations and I am excited to apply this experience to help drive operational and financial excellence.
Speaker Change: Salaries.
Asaf Alperovitch: Turning now to the quarterly results, total revenue for the first quarter were $219.5 million. Excluding revenues from our discontinued operations at the Kokum Energy Storage Division of $7.4 million, our non-GAP revenues were $212.1 million. Revenues from the U.S. this quarter amounted to $132.1 million, representing 62% of our non-GAAP revenue. Revenues from Europe amounted to $47.4 million, representing 22% of our non-GAAP revenue. International market revenues amounted to $32.6 million, representing 16% of our non-GAAP revenue. On a megawatt basis, we shipped 642 megawatts to the United States, 324 megawatts to Europe, and 242 megawatts to the international market.
Speaker Change: Turning now to the quarterly results.
Speaker Change: Total revenue for the first quarter with $219 $5 million.
Speaker Change: Excluding revenues from discontinued operations at the Coke energy storage division of $7 $4 million or non-GAAP revenues were $212.1 million.
Speaker Change: Revenues from the U S. This quarter amounted to $132 $1 million, representing 62% of our non-GAAP revenues.
Speaker Change: Revenues from Europe amounted to $47 $4 million, representing 22% over our non-GAAP revenues.
Speaker Change: International markets revenues amounted to $32 $6 million, representing 16% of our non-GAAP revenues.
Speaker Change: On a megawatt basis, we shipped 642 megawatts with United States.
Speaker Change: 324 megawatts to Europe, and 242 megawatts to the international markets.
Asaf Alperovitch: for approximately 1.2 gigawatts of total shipments, which is the highest shipment level we've had since the third quarter of 2023. 50% of total megawatt shipments this quarter were commercial and utility products, and 50% were residential. ASP Paywatt was 17.3 cents, down 17% from Q4. Lower pricing in Europe and a lower optimizer to universal ratio drove the quarter over quarter decline. In Q1, we shipped 180 MWh of batteries, with the majority shipped to Europe. Our blended ASP per kilowatt hour on all PV-attached batteries was $267 in Q1, which was up from $262 in Q4.
Speaker Change: For approximately one two gigawatts of total shipments, which is the highest shipment level, we've had since the third quarter of 2023.
Speaker Change: 50% of total megawatt shipments this quarter or commercial and utility products and 50%, whereas the denim shop.
Speaker Change: ASP per watt was 17, three cents down 17% from Q4.
Speaker Change: Lower pricing in Europe, and the lower optimizer are doing a very sure at your drove the quarter over quarter decrease.
Speaker Change: In Q1, we shipped 180 megawatts hour of battery with a majority shipped to Europe.
Speaker Change: Our blended ASP per kilowatt hour on all P V attached about the reason was $267 in Q1, which was up from $262 in Q4.
Asaf Alperovitch: This increase is largely due to me. Non-gap gross margin this quarter was up to 7.8% compared to negative 39.5% in Q4. Non-GAP operating expenses for the first quarter were $89.1 million compared to $106.8 million in the previous quarter. In the first quarter, we were able to collect certain aged AR balances, which resulted in a reversal of an accrual for bed debt. Excluding this amount and other non-recurring items, our non-GAAP operating expenses would have been approximately $96 million. Non-gap operating loss for Q1 was $72.4 million compared to a non-gap operating loss of $184.1 million in Q4.
Speaker Change: This increase is largely due to mix.
Speaker Change: non-GAAP gross margin this quarter was up to seven 8% compared to negative 39, 5% in Q4.
Speaker Change: non-GAAP operating expenses for the first quarter, or an $89 $1 million compared to $106 $8 million in the previous quarter.
Speaker Change: In the first quarter, we were able to collect certain aged AR balances, which resulted in a reversal of an accrual for bad debt.
Speaker Change: Excluding these amounts and other nonrecurring items, our non-GAAP operating expenses would have been approximately $96 million.
Speaker Change: non-GAAP operating loss for Q1 was $72 $4 million compared to a non-GAAP operating loss of $184 $1 million in Q4.
Asaf Alperovitch: A non-GAAP net loss of $66.1 million in Q1 compared to a non-GAAP net loss of $202.5 million in Q4. Non-gap net loss per share was $1.14 in Q1 compared to $3.52 in Q4.
Speaker Change: Our non-GAAP net loss was $66 $1 million in Q1 compared to a non-GAAP net loss of $202 $5 million in Q4.
Speaker Change: non-GAAP net loss per share was $1 14 in Q1 compared to $3.52 in Q4.
Asaf Alperovitch: Turning now to our balance As of March 31, 2025, our cash and investments portfolio was approximately $794 million. Our cash position, net of short-term debt, was approximately $455 million. Net of total debt, this amount was approximately $113 million. This quarter, cash provided by operating activities was approximately $34 million. Net of approximately $10 million in capex and excluding $3.8 million of positive cash flow from discontinued operations at the Kokum Energy Storage Division, free cash flow generated in a quarter was approximately $20 million. This is the second straight quarter of positive free cash flow generation, which is a direct result of our focus on working capital management and control.
Speaker Change: Turning now to our balance sheet.
Speaker Change: As of March 31, 2025, our cash and investments portfolio was approximately $794 million.
Speaker Change: Our cash position net of short term debt was approximately $455 million.
Speaker Change: Net of total debt this amount was approximately $113 million.
Speaker Change: This quarter cash provided by operating activities was approximately $34 million.
Speaker Change: Net of approximately $10 million in Capex, and excluding $3 $8 million of PAH.
Speaker Change: Positive cash flow from discontinued operations at the Coke energy storage storage division free cash flow generated in the quarter was approximately $20 million.
Speaker Change: This is the second straight quarter of positive free cash flow generation, which is a direct result of our focus on working capital management and control.
Asaf Alperovitch: As Shuki mentioned, considering the incremental impact of newly introduced higher tariffs, we would expect to be approximately free cash flow break-even for the year. ARNet decreased this quarter to $133 million compared to $160 million last quarter. We are working closely with our customers and continue to focus on DSO improvement through effective collection management. Our inventory level, net of reserves, was $637 million compared to $646 million in the previous quarter. Q1 marked the fourth consecutive quarter in inventory reduction. This is despite our continued ramp of U.S. production to support anticipated growth and the introduction of new products.
Speaker Change: As Julie mentioned, considering any incremental impact of newly introduced higher tariffs, we would expect to be approximately free cash flow breakeven for the year.
Speaker Change: Hey, Amit decreased this quarter to $133 million compared to $160 million last quarter.
Speaker Change: We're working closely with our customers and continue to focus on DSO improvement through effective collection management.
Speaker Change: Our inventory level net of reserves was $637 million compared to $646 million in the previous quarter.
Speaker Change: Q1 marked the fourth consecutive quarter inhibitory deduction.
Speaker Change: This is despite a continued ramp of U S production to support anticipated growth and the introduction of new products.
Asaf Alperovitch: During the quarter, we consumed roughly $60 million of finished goods from existing inventory.
Speaker Change: During the quarter, we consumed roughly $60 million of finished goods from existing inventory.
Asaf Alperovitch: Turning now to our guidance for the second quarter of 2025. We are guiding revenues to be within the range of $265 to $285 million. We expect non-gap gross margin to be within the range of 8-12%, including approximately 2 percentage points of new tariff impact. We expect our non-GAAP operating expenses to be within the range of $90 to $95 million.
Speaker Change: Turning now to our guidance for the second quarter of 2025.
Speaker Change: We are guiding revenues to be within the range of $265 million to $285 million.
Speaker Change: We expect non-GAAP gross margin to be within the range of 8% to 12%, including approximately two percentage points of new tariff impact.
Speaker Change: We expect our non-GAAP operating expenses to be within the range of $90 million to $95 million.
Operator: I will now turn the call over to the operator to open it up for questions.
Speaker Change: I will now turn the call over to the operator to open it up for questions.
Operator: Operator. Thank you. And at this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2.
Speaker Change: Operator.
Operator: Thank you Andrew.
Operator: At this time, if you would like to ask a question. Please press the star and one on your telephone keypad.
Operator: May you remove yourself from the queue at any time by pressing star Q.
Operator: In the interest of time, we do ask that you please limit your questions to one question and one follow-up. Once again, that is star and 1 to ask a question.
Speaker Change: In the interest of time, we do ask that you. Please limit your questions. One question and one follow up once again that is star one to ask a question and your first question comes from the line of Christine Cho with Barclays. Please go ahead.
Christine Cho: And your first question comes from the line of Christine Cho with Barclays. Please go ahead. Good morning. Storage was quite strong this quarter. Can you just give us an idea of how much commercial storage is growing within this? And then given that some of your peers in the U.S.
Christine Cho: Good morning.
Operator: Storage was quite strong this quarter.
Speaker Change: Can you just give us an idea of how much commercial storage is filing with them.
Speaker Change: And then given that some of your peers in the U S are going to be subject to very high pass and your price increases can you talk about what your strategy.
Shuki Nir: are gonna be subject to very high Chinese tariffs and your price increases, can you talk about what your strategy is going to be given, I don't think that you have some of the... And then if you can also just talk through your new battery rollout, if timing is going to be impacted at all. Thank you for your question.
Speaker Change: Is going to be given I don't think you have some questions. Michelle and then if you can also just talk about your new battery rollout timing.
Speaker Change: Timing is going to be impact that at all because I do believe that.
Speaker Change: With himself.
Speaker Change: Thank you for your question.
Shuki Nir: And so you started with the commercial battery, and as you know, we are not detailing specific numbers about specific products. But overall, as we indicated last quarter, we're pleased with the growth of that category for us. And we're seeing increased attach rate for commercial batteries in different countries in the world. As it pertains to the U.S., and I assume that you refer to commercial batteries or to batteries in general, And over there, we are also seeing an increase in the touch rate of batteries. And the new battery that you're referring to, if I'm not mistaken, is the Nexus one.
Speaker Change: And so you started with the commercial battery.
Speaker Change: And as you know we are not detailing specific numbers about specific products.
Speaker Change: But overall as we indicated last quarter. We are pleased with the growth of that category for a while and we're seeing increased attach rates for commercial batteries in different countries in the world.
Speaker Change: As it pertains to the U S and I assumed that you referred to commercial batteries or battery or in general.
Speaker Change: And over there we are also seeing an increasing attach rate of battery.
Speaker Change: And the new battery that you are referring to if I'm not mistaken is the Nexus one which is on the residential side.
Shuki Nir: which is on the residential side. And over there, we expect to start shipping towards the end of the year, in the fourth quarter. And we believe that the solution we're going to introduce is going to benefit our customers immensely, both in terms of PV, as well as the combination of PV and storage, as we develop the battery together with the inverter to be an optimized system.
Speaker Change: And over there we expect to start shipping towards the end of the year in the fourth quarter and we believe that the solution, we're going to introduce who's going to benefit our customers our customers demand fleet. Both in terms of PV as well as the combination of PV and storage as we develop the battery together with the inverter.
Speaker Change: To be an optimized system.
Shuki Nir: When you talk about your four to six percent impact on gross margins from the tariff, can you give us an idea of how much of that is from China versus other regions? We, the guidance or the estimate that we've provided is based on the currently known tariff of 145% for products coming from China and 10% for products that are coming from other markets. And this is how we base our calculation. So obviously, the impact on products and components coming from China is much more, is much higher than from other countries. At the same time, as we said, our supply chain team is working diligently in order to find alternative sources, as well as to optimize our supply chain based on whether it's coming from China or from other places to provide us with, number one, the most...
Speaker Change: When you talk about your Florida, 6%.
Speaker Change: Pact on gross margins from the tariffs.
Speaker Change: Can you give us an idea of how much of that is from China versus other regions.
Speaker Change: So.
Speaker Change: We the guidance or the estimate that we've provided.
Speaker Change: Based on the currently known tariffs of 145% for products coming from China, and 10% for products that are coming from other market.
Speaker Change: And this is how we based our calculation. So obviously the impact on products and components coming from China is much more much higher than from other countries.
Speaker Change: At the same time, as we said our supply chain.
Speaker Change: The team is working diligently in order to find.
Speaker Change: Alternative sources as well as to optimize our supply chain based on whether it's coming from China or from other places who provide us with number one the most.
Shuki Nir: supply chain friendly sources, but at the same time, we are very, very cognizant of the need for quality products. So we are not going to rush and just substitute one component with another because they are cheaper. We're going to actually test them, make sure that the quality is according to our standard, and then we're going to roll it out. Thank you.
Speaker Change: Supply chain friendly sources, but at the same time, we are very very cognizant of the need for quality product, but we are not going to rush and just substitute one components with another because they are cheaper.
Speaker Change: And to actually test them make sure that the quality.
Speaker Change: According to our standard and then we're going to roll it out.
Speaker Change: Yeah.
Speaker Change: Thank you and your next question comes from the line of Colin Rusch with Oppenheimer. Please go ahead.
Colin Rusch: And your next question comes from the line of Colin Rusch with Oppenheimer. Please go ahead. Thanks so much, guys.
Colin Rusch: Thanks, So much guys can you talk a little bit about your pricing strategy as you get in a.
Shuki Nir: Can you talk a little bit about your pricing strategy as you get into the meat of the year, as you think about some of the dynamics around, you know, continuing to flush some of the inventory that's still on the channel and, you know, continuing to work towards improved margins? Just want to get a sense of what you guys are up to. How aggressive do you feel like you can be on raising prices? Yes, thank you for your question. So talking about pricing in general, and globally speaking even, what we've tried to do and what we will continue doing is to price our product and our solutions based on the value that we bring to our customers and based on the competitive advantage or the competitive advantage we have in specific markets.
Speaker Change: For the year as you think about some.
Speaker Change: Some of the dynamics around continuing to flush some of the inventory that's on the channel.
Speaker Change: And continuing to work towards improved margins just wanted to a sense of how aggressive you feel like you can be in.
Speaker Change: Raising prices in Belgium.
Speaker Change: Yes.
Speaker Change: Yes. Thank you for your question.
Ben: So talking about pricing in general and globally speaking you Ben.
Ben: What we've tried to do and what we would continue doing due to price.
Ben: Our products and our solutions based on the value that we bring to our customers and based on the competitive advantage or the competitive advantage we have in specific market.
Shuki Nir: So for example, when VD appreciates the energy that we generate or the increased energy that we generate. We will take that into account and we'll price it accordingly, and other factors in the market are going to impact our pricing as well. Overall, we feel that our pricing promotion in Europe is actually doing well, and the feedback that we received from the channel partners is that these promotions and pricing actions that we took are having initial positive signs.
Ben: For example.
Ben: When V D appreciates the energy that we.
Ben: Generally there are the increased energy, but we regenerate.
Ben: We will take that into account and we will price it accordingly.
Ben: Other factors in the market are going to impact our pricing as well overall, we feel that our pricing promotion in Europe.
Ben: Really doing well and the feedback that we received from the from the channel partners that this promotion and pricing actions that we took are.
Ben: Having initial positive sign.
Shuki Nir: and we will continue monitoring that and adjust as needed. Thanks.
Ben: And we will continue monitoring it up and adjust as needed.
Shuki Nir: And then the follow-up here is really around the inventory reduction. So you're kind of flat quarter over quarter on an inventory basis. What's the right level of inventory that you guys want to be able to carry, and how quickly can you get there?
Ben: Thanks, and then.
Ben: Here, it's really around the inventory reduction next year, you're kind of flat quarter over quarter.
Ben: On an inventory basis, what's the right level of inventory.
Ben: Guys I wanted to be able to carry and how quickly can you get there.
Shuki Nir: Hi. In terms of inventory, we are consuming existing balance inventory, mostly within the European continent. In terms of inventory, we are working closely with the operation team and we want to constantly reduce it quarter by quarter. I don't think we want to provide a specific guidance or target for that, but it's one of our main priorities in terms of reducing the DAO consistently. Thanks so much, guys. Thank you.
Ben: Alright, so it does the inventory we are consuming inventory existing balancing inventory and mostly within the European continent.
Ben: In terms of inventory, we are working closely with the operations team and everyone at AR.
Ben: The cost of the reduce it quarter by quarter I don't think we want to provide the specific guidance or targets for that.
Ben: But it's a one of our main priority in terms of reducing.
Ben: The <unk> consistently.
Ben: Thanks, so much guys.
Speaker Change: Thank you and your next question comes from the line of Philip Shen with Roth Capital Partners. Please go ahead.
Philip Shen: And your next question comes from the line of Philip Shen with Roth Capital Partners. Please go ahead. Please go ahead, Philip Shen, your line is open. Thanks for taking my questions. First ones on pricing. I believe back in November, you guys And I think there was a 24% discount, but then there's also a... And at the end, do you have plans on expanding or extending that? elaborate more. or just more in general about how you expect. ASB is the trend by quarter through the rest of the year. Thanks. Thank you.
Ben: Okay.
Ben: Okay.
Ben: Please go ahead Philip Shen your line is open.
Ben: Hi, Thanks for taking my questions.
Ben: First one is on pricing.
Ben: I believe back in November you guys cut pricing.
Ben: For your distributors.
Ben: And I think there was a 24% discount but then there was also a 15% recovery discounts.
Ben: I think that recovery period might be coming to an end do you have plans on expanding or extending that recovery period, and then can you.
Ben: To elaborate more.
Ben: Explicit or just more in general about how you expect your U.
Ben: The EU asps to trend by quarter through the rest of the year.
Ben: Thank you.
Shuki Nir: So you referred to the price promotion in Europe, just to make sure that everyone is on the same page. And as we indicated, together with our distribution partners, we launched a campaign in Europe back in November, in which we are trying to actually gain share or regain share in Europe. Part of it is pricing, and part of it are other things that we are doing in order to engage more installers with the Solaredge solution and we are showing them the value of the product and of the service. As it pertains to pricing, as we said in our prepared remarks, we expect the majority of our distributors to reach normalized levels of inventory at the end of Q2.
Speaker Change: So you referred to the price promotion in Europe, just to make sure that everyone was on the same page and and as we indicated.
Speaker Change: Together with our distribution partner, we launched a campaign in Europe back in November.
Speaker Change: In which we are trying.
Speaker Change: To actually gain share we gained share in Europe part of it is pricing and part of it the oddest things that we're doing in order to engage more installers with the solar solution and we're showing them the value of the product and our service.
Speaker Change: As it pertains to pricing as we as we said in our prepared remarks, we expect the majority of our distributors to reach normalized levels of inventory at the end of Q2.
Shuki Nir: and we believe that when they are going to reach that level, we will no longer have to provide the incremental pricing adjustment. These are obviously things that are changing from day-to-day, from market-to-market. As I mentioned earlier, our pricing strategy is to be competitive at the market, with a price that actually reflects the value that we bring to the customer. So these things can move left and right, but overall, when the channel inventory is going to be normalized, we believe that we will be able to reduce the level of support that we give to our distributors.
Speaker Change: And we believe that when they are going to reach that level, we will no longer have to provide the incremental pricing adjustment.
Speaker Change: These are obviously things that are changing from day to day from market to market as I mentioned earlier, our pricing strategy is is to be competitive in the market with a price that accurately reflect the value that we bring to the customer. So these things can move left and right, but overall.
Speaker Change: And when the channel inventory is going to be normalized.
Speaker Change: We believe that we will be able to.
Speaker Change: <unk> reduced the level of support that we get started Susan.
Operator: Great. Okay.
Speaker Change: Great. Okay. Thank you sure shifts.
Operator: Shifting to Distributors The Massive Drop in Value of Modules and Batches. a shift of power. Thoughts on that dynamic? So, how do you think of that impact, the way you sell to the European markets?
Speaker Change: Shifting to.
Speaker Change: The distributors.
Speaker Change: With the massive drop in value of modules and batteries.
Speaker Change: Do you see a shift of power.
Speaker Change: From the Pan European distributors to more local distributors what are your thoughts on that dynamic and how could that impact the way you sell to the European markets.
Operator: Thanks.
Speaker Change: So.
Shuki Nir: Actually tomorrow I'm heading to InterSolar in Germany and we are going to meet with many of our customers, both distributors and installers, and I will be able to ask them that question and get a better answer than what I can provide you now. At the same time, we at Solaredge, we look at our customers and our channel partners, whether they are large or small, as important ones, we're trying to address their needs, and whether it will be large distributors that have more share or small distributors that will have more share, we treat them as partners and we are working together with them in order to actually deliver the best products to our installers.
Speaker Change: Actually tomorrow I'm heading to into solar in Germany.
Speaker Change: And we are going to meet with many of our customers both distributors and installers.
Speaker Change: And I will be able to ask them that question and get a better answer than what they can provide you know.
Speaker Change: And at the same time.
Speaker Change: We have solar ridge, we look at our customers and our channel partners.
Speaker Change: Large or small is important one we're trying to address their needs.
Speaker Change: And whether it will be large distributor.
Speaker Change: Moshe or small distributors that we'd have more sure we treat them as partners and we are working together with them in order to actually deliver the best products saw installer.
Shuki Nir: Right, who are the ones that choose to work with Solaredge and choose to install our solutions to their end customers?
Speaker Change: One other one.
Speaker Change: <unk> to work with all origin to install our solutions to their end customers.
Mark Strouse: Thank you. And your next question comes from the line of Mark Strouse with J.P. Morgan. Please go ahead. Your line is open. Yeah, good morning. Thanks for taking the questions. It's Drew on from Mark.
Speaker Change: Thank you and your next question comes from the line of Mark Strouse with Jpmorgan. Please go ahead. Your line is open.
Mark Strouse: Yes, good morning, thanks for taking the questions.
Speaker Change: On to Mark first one when I go back to pricing here, but maybe if I could buy all different way.
Shuki Nir: First one, I'm going to go back to pricing here, but maybe think about it in a little different way. You talked about the gross margin impact net of pricing. Can you just talk about what you're seeing in the market for the market's ability to withstand higher pricing and what that will do to demand, and then also what you're seeing from your competition in the market and how much your price increases are going to compare to others? Thank you for it's an excellent work and thank you for that.
Speaker Change: You talked about the gross margin impact net of pricing can you just talk about what youre seeing.
Speaker Change: In the market for the.
Speaker Change: Margaret the market's ability to withstand higher pricing and what that will do to demand and then also what youre seeing from your competition in the market and how much of your price increases are going to compare to others.
Speaker Change: Thank you for it it's an excellent question and thank you for that.
Shuki Nir: I assume that you refer to the U.S. market in this specific question. And as we mentioned, as we mentioned, the tariffs... You know, they came not so long ago, and still there is uncertainty in the market about their impact and what will actually happen. And as you as we mentioned, we are actually manufacturing in the US. So from that perspective, the adjustments that we need to make to our costs and to our supply chain are limited to sourcing and optimization of the supply chain. When it comes to pricing, we we've made our estimates about where we believe the customers are going to be, what the value that we're going to provide them is, as well as the competitive landscape.
Speaker Change: I assume that you referred to the U S market in this specific question and as we as we mentioned as we mentioned in.
Speaker Change: The tariff.
Speaker Change: Okay.
Speaker Change: They came not so long ago and still there is uncertainty in the market about their impact.
Speaker Change: And what will actually happen.
Speaker Change: As you as we mentioned we are actually manufacturing in the U S.
Speaker Change: So from that perspective, the adjustments that we need to make to our costs.
Speaker Change: Supply chain are limited to sourcing and optimization of the supply chain.
Speaker Change: When it comes to pricing, we we've made our estimates about when we believe the customers are.
Speaker Change: I was going to be what the value that we're going to provide them as well as the competitive landscape but.
Shuki Nir: But I think that we haven't seen any specific number or any specific figure that I can share with you from our competition. Okay, thank you.
Speaker Change: I think that.
Speaker Change: Well, we haven't seen any specific number or specific figure that they can share with you from our competition.
Speaker Change: Okay. Thank you and then just.
Shuki Nir: And then just, excuse me, one follow up. Appreciate the updated full year free cash flow outlook. Can you just talk about how that's impacting your decision to address the convert? Yeah, in terms of the converts. Hi, good morning. At this point, our plans are not changed compared to last time, which is to use the cash on our balance sheet to pay down the debt. fully. As you've seen the balance sheet for the Q, we have enough cash to pay it, given our $794 million in cash balance. But as we noted in the past, we're always assessing different options that may be available, but practically, again, at this point, plans are unchanged.
Speaker Change: Excuse me in one follow up.
Speaker Change: Great.
Speaker Change: The updated full year free cash flow outlook can you just talk about how that's.
Speaker Change: Impacting your decision to address the convert.
Yes in terms of the converts hi, good morning.
Speaker Change: This point, our plans are not changed compared to last time.
Speaker Change: To use the cash on our balance sheet to pay down the debt.
Speaker Change: Will it.
Speaker Change: As you've seen the balance sheet for the fuel we have enough cash to pay given off $794 million in cash balance.
Speaker Change: But as we noted in the past, we're always assessing different options that may be available but.
Speaker Change: Practically again at this point plans are unchanged.
Speaker Change: Okay.
Operator: Great, thank you. Thank you.
Speaker Change: Great. Thank you.
Speaker Change: Thank you and your next question comes from the line of Karen Blanchard with Deutsche Bank. Please go ahead. Your line is open.
Corinne Blanchard: And your next question comes from the line of Corinne Blanchard with Deutsche Bank. Please go ahead, your line is open. Hey, good morning. Thanks for taking my question.
Hey, good morning, Thanks for taking my question.
Shuki Nir: The first question would be on the storage, and it's a two-question. How fast can you secure more ex-China supply? And then could you guys rethink your strategy regarding SELAR II, because you had that facility, and it could be a relatively easy way to get more battery and not be exposed to as much tariff. And then the second question would be on Europe. If you can provide a European domain in the market, update what you've seen, that would be very helpful.
Speaker Change: First question would be on the storage is a two question how fast can you say kill more ex China.
The supply and then could you guys rethink your strategy regarding Statehouse Q nickels, you at that facility and it could be like an easy.
Speaker Change: The easy way to get more battery.
Speaker Change: Next question to ask with stories and then second question would be on <unk>. If you can provide like a European demand in the market update what you're seeing that would be very helpful.
Shuki Nir: Okay, thank you. So starting with your question about batteries. So, as we said, we've provided what we believe would be the impact of the new imposed tariffs on our gross margin in In total, we're not breaking it down into specifics, whether it's batteries or other components. and our supply chain team is I started actually looking into different ways in order to optimize our supply chain and our sourcing and to find the best possible way and while maintaining the quality of our product that we will be able to deliver quality products to the US, to our customers in the US.
Speaker Change: Okay. Thank you.
Speaker Change: So starting with your question about about batteries so.
Speaker Change: As we as we said we've provided what we believe would be the impact of the new imposed tariffs on our gross margin injecting.
Speaker Change: In total we're not breaking it down into specifics, whether it's battery, though other component.
Speaker Change: And our supply chain team is.
Speaker Change: It started actually looking into different ways.
Speaker Change: To optimize our supply chain and our sourcing and to find the best possible way and while maintaining the quality of our product that we will be able to deliver quality products to the U S to our customers in the U S.
Shuki Nir: As it pertains to CELA-2, as you may recall, the technology over there is NMC technology and at this stage we don't think that we are going to use that facility to make it.
Speaker Change: As it pertains to sell it to us.
Speaker Change: You may recall, the technology of NMC.
Speaker Change: NMC.
Speaker Change: Technology and at this stage, we don't think that we are going to use that facility to make.
Shuki Nir: Thank you. Battery Cell. Now, the second question was... I'm sorry, just on that one, could you change that line to LFP or would it be too time consuming and too much capex? It will require a substantial CapEx investment and time, which at this stage, we are focusing on what we can control and on our core. And it's important for us to focus the resources that we have, both the people and the funds, and to direct them to the core business and to make...
Speaker Change:
Speaker Change: Battery cells.
Speaker Change: The second question.
Speaker Change: I'm sorry, Jeff.
Speaker Change: One could you change that line to NXP.
Speaker Change: Would you be too time consuming and too much capex call Jamie.
Speaker Change: Okay.
Speaker Change: It will require a substantial capex investment anytime.
Speaker Change: Which at this stage, we are focusing on what we can control and on our call.
Speaker Change: And it's important for us to focus the resources that we have both the people and the fun and to direct them to the core business and to make that business grow and become profitable.
Shuki Nir: that business grow and become profitable. Your second question was about Europe, if I'm not mistaken, but could you please repeat the question? Sure. If you can just provide an update, you know, what you're seeing in Europe. Obviously, it has been quite challenging in the last several quarters. So just wondering if you see like an improvement in certain markets or if the situation has remained unchanged. Yes, so the market in Europe, as you know, is challenging at this stage. And our estimate, as well as other people's estimates, is that the market is going to decline in Europe.
Speaker Change: Your second question was about Europe you.
Speaker Change: If I'm not mistaken, but could you please repeat the question.
Speaker Change: Sure if you can just.
Speaker Change: You're right on that what Youre, saying, youre, probably still doesn't quite challenging in the last quarter.
Speaker Change: So just wondering if you see like an improvement in certain market or in this situation as you may know change.
Speaker Change: Yes, so the market in Europe.
Speaker Change: As you know is challenging at this stage in our estimates as well as the other People's estimate is that the market is going to decline year over year.
Shuki Nir: Obviously, Europe consists of different countries and different markets, but as a whole, we expect it to decline year over year.
Speaker Change: Obviously Europe is the consists of different countries in different markets, but there is a whole yeah. We.
Speaker Change: We expect it to decline year over year at the same time.
Shuki Nir: At the same time, the early indications that we have And so that we we've turned the corner in terms of our market share position and we we feel and our channel partners are sharing with us as well as the POS, the sales rule that we've seen that we saw in Q1 is all good indications that show that we We may have turned the corner in terms of market share and start to gain share actually in the Thank you.
Speaker Change: Early indications that we have.
Speaker Change: Showed that we've turned the corner in terms of our market share position.
Speaker Change: We feel and our channel partners are sharing with us as well as the P O S.
Speaker Change: The sell through that we've seen that we saw in Q1.
Speaker Change: All good indications that show that we own.
Speaker Change: We may have turned the corner in terms of market share and start to gain share in the market.
Speaker Change: Thank you.
Hannah Velazquez: And your next question comes from the line of Julien Dumoulin-Smith with Jeffrey's. Please go ahead. Your line is open. Hey, good morning. This is Hannah Velazquez on for Julien. Thanks for the update. So one quick question and then a follow up. How are you thinking about the 90 day tariff pause as it pertains to your maybe longer term margin impact? I know you talk about improving to two points by 1Q26 and then improving further thereafter. But does that assume the 90 day pause on ex-China tariffs gets extended?
Speaker Change: And your next question comes from the line of Julien Dumoulin Smith with Jefferies. Please go ahead. Your line is open.
Hannah: Hey, Good morning. This is Hannah <unk> on for Julian Thanks for the update so one quick question and then I'll follow up.
Speaker Change: Are you thinking about the 90 day tariff pies as it pertains to year, maybe longer term margin impact I know you talk about improving Q points by <unk> 26, and then improving further thereafter, but does that assume the 90 day pause on ex China tariffs gets extended.
Hannah: Okay.
Shuki Nir: Yeah, good morning. As we said All the numbers that we provided over there are based on the assumption that the incremental tariff on products coming from China is $145. and we have the 10% on products coming from other So we did not assume any changes or extended pauses or anything of that sort. Okay, thank you. Super clear.
Speaker Change: Yes, good morning.
Hannah: As we said all.
Hannah: All the all the numbers that we provided over there are based on the assumption that the incremental tariff on products coming from China is the 145% and then and we have the 10% on products coming from other places. So we did not assume any changes, though extended pauses or anything of that sort.
Speaker Change: Okay. Thank you Super clear and then can you just talk a little bit about how you're thinking about any potential changes to transfer ability as it pertains to fortify that I assume no current changes reflected in your guidance, but I.
Shuki Nir: And then, can you just talk a little bit about how you're thinking about any potential changes to transferability as it pertains to 45X? I assume no current changes reflected in your guidance, but just an update there in terms of how you're thinking about it. Thank you.
Hannah: Just an update there in terms of how youre thinking about it. Thank you.
Shuki Nir: Sure, good morning. In case we experience timing issues which are related to certain limitations on transferability over the IRA 45X tax credits, we believe that we will be able to get a refund through a direct pay mechanism. Considering these credits are backed by the federal authorities, we believe we can fund proper bridge financing for short-term monetization if required, if needed.
Speaker Change: Sure good morning.
Speaker Change: In case, we experience timing issues, which are related to certain limitation on thrust durability over the <unk> 45 ex tax credits.
Speaker Change: We believe that we will be able to get a refund through a direct pay mechanism.
Speaker Change: Considering these credits are backed by the federal authorities. We believe we can find popular bridge financing for short term authorization.
Speaker Change: If required if needed.
Speaker Change: Okay.
Speaker Change: Thank you Anne.
Brian Lee: And your next question comes from the line of Brian Lee with Goldman Sachs. Please go ahead, your line is open. Hey, guys. Good morning. Thanks for getting me out of the call. I was a little bit late joining, so I apologize if some of this was covered. But when we look at the implied ASP per watt, it was lower than expected, but I think megawatt volumes shipped in the quarter were much better than expected. So I guess a question on that, did you clear out volume through price in the quarter, or was there just maybe a higher mix of commercial versus expected in the quarter?
Speaker Change: And your next question comes from the line of Brian Lee with Goldman Sachs. Please go ahead. Your line is open.
Brian Lee: Hey, guys. Good morning, Thanks for.
Speaker Change: Joining me on the call I was.
Brian Lee: A little bit late joining so I apologize if some of this was covered but.
Brian Lee: When we look at the implied ASP per watt it was lower than expected, but I think megawatt volume shipped in the quarter were much better than expected. So I guess question on that did you clear out volume to price in the quarter or was there just maybe a higher mix of commercial versus expected in the quarter.
Asaf Alperovitch: And then how should we think about price per watt embedded in the 2Q guidance and for the rest of the year? Is this kind of the level of $0.17 a watt that's implied, or is that going to go back up, go down? I'm just trying to get a sense of what to read through on the pricing side based on just the reported results for Q1.
Brian Lee: Then.
Brian Lee: How should we think about price per watt.
Brian Lee: <unk> guidance for rest of the year. This is kind of the level of 17 cents a lot that's implied or is that going to go back up could go down just trying to get a sense of what to read through on that.
Brian Lee: <unk> side based on just the reported results for Q1.
Brian Lee: Yeah.
Asaf Alperovitch: Hi, good morning, and thank you for your question. As it relates to Q1, the explanation is relating to the shipments versus their actual revenue recognized. We had relatively more deferred revenues this quarter than usually, than typically, due to timing of shipments versus the actual revenue recognition.
Brian Lee: Hi, Good morning, and thank you for your question as it relates to Q1.
Brian Lee: The explanation is relating to the shipments versus the actual revenue recognized.
Brian Lee: Relatively more deferred revenues this quarter than usual and typically due to timing of shipments versus the actual revenue recognition as it relates to Q2, we don't provide this level of detail.
Asaf Alperovitch: As it relates to Q2, we don't provide this level of detail, so that's as much as I can say. And then maybe just on the battery side, I know there's been a lot of questions and focus around not giving the tariff situations. I mean, Solaredge is a little bit unique because, you know, you had this Samsung NMC contract. I'm not sure if there's any volume still left, but can you kind of update us on the status of that? Is there some that will go towards satisfying U.S. battery storage demand this year so you're a little bit less...
Brian Lee: So that's as much as I can say.
Brian Lee: Okay.
Brian Lee: And then maybe just on the battery side I know, there's been a lot of questions and focus around that given the tariff situations and.
Brian Lee: And until the edges, a little bit unique because you had the Samsung NMC contract.
Speaker Change: I'm not sure if there's any volume still left but can you kind of update us on the status of that is there some of that.
Speaker Change: We'll go towards satisfying use battery storage demand. This year, so you get a little bit less in.
Asaf Alperovitch: impacted and then just the strategy going forward sourcing LFP versus NMC and you know what suppliers are you planning to work with and from what regions and then maybe what by what time frame if you could give us some more you know elaboration on the different pieces around your strategy. Thank you. Yes, thank you, Brian. So as we said, we do not break down the impact between the different components and the different products and the different sources. And the impact, keep in mind, it's also a net of pricing adjustments. And what we are focused on is to find the best solution.
Speaker Change: Impacted and then just the strategy going forward sourcing LSP versus that M C.
Speaker Change: What suppliers are you planning to work with and for what regions and then maybe what by what timeframe. If you could give us some more elaboration on the different pieces around your strategy. Thank you.
Speaker Change: Yes, Thank you Brian.
Speaker Change: So.
Speaker Change: As we said, we do not break down the impact between the different components and the different products and different sources and the impact keep in mind. It's also net of.
Speaker Change: The pricing adjustment.
Speaker Change: And what we are focused on is to find the best solution. Our supply chain team is working diligently to find.
Asaf Alperovitch: Our supply chain team is working diligently to find either to optimize our supply chain by finding the best sources, both in terms of price as well as in terms of quality. So we don't want to compromise on that, obviously.
Speaker Change: Either.
Speaker Change: Hum.
Speaker Change: To optimize our supply chain by by finding the best sources, both in terms of price as well as in terms of quality.
Speaker Change: Don't want to compromise on that obviously and the impact that we've.
Asaf Alperovitch: And the impact that we've provided to you based on this, you know, the second quarter, the second half, and later in 2026 is a combination of all of this. Thank you.
Speaker Change: Provided to you based on the.
Speaker Change: Second quarter or the second half in later in 2026 is a combination of all of these things.
Speaker Change: Yeah.
Speaker Change: Thank you and your next question comes from the line of Austin Muller with Canaccord. Please go ahead. Your line is open.
Austin Moeller: And your next question comes from the line of Austin Moeller with Canaccord. Please go ahead, your line is open. Hi, good morning.
Hi, good morning.
Shuki Nir: I know you've talked about Europe already, but can you provide any details on the clearing of the channel, given where electricity rates are throughout Europe? Yeah, thank you. So as we said, we expect the majority of our distribution partners to reach normalized inventory level by the end of Q2. And it has to do with the underlying demand that exists for solar. You know, for the market, as well as the activities, the actions, and the promotions that we've put in place in order to gain share within this market. So the combination of these two things are helping us gaining share.
Austin Muller: I know you talked about Europe already but can you provide any details on the clearing of the channel given where electricity rates are throughout Europe.
Austin Muller: Okay.
Austin Muller: Yeah. Thank you. So as we said we expect a majority of our distribution partners to reach normalized inventory level by the end of Q2.
Austin Muller: And it has to do with the underlying demand that exists for solar.
Austin Muller: No.
Austin Muller: For the market as well as the activities the actions and the promotions that we've put in place in order to.
Austin Muller: Gained share within this market. So the combination of these two things are helping us gaining share. In addition to the growth in attach rate of battery, which is also helping us.
Shuki Nir: In addition to the growth in the tax rate of batteries, which are also helping us in that regard. And the combination of all of these things- Obviously it is impacted by energy prices, but there are other factors that are contributing to the demand.
Austin Muller: That's we got and the combination of all of these things.
Austin Muller: Obviously that it's easily impacted by energy prices, but.
Austin Muller: The other other factors that are contributing to the demand as well.
Shuki Nir: Okay, and just a follow up. Are you seeing the substantial demand pull forward in the US relative to what you expected, given the risk to the investment tax credit as of January 2026? Or do you think that's being somewhat muted by current So, thank you for that. We don't really see anything of that sort. Obviously, the uncertainty in the market is there. Our customers, we are engaging with our customers, and we, you know, if they have any specific needs or any specific deals or transactions that they would like to engage with, we're going to definitely look into that.
Austin Muller: Okay, and just a follow up are you seeing substantial demand pull forward in the U S relative to what you expected given the risks to the investment tax credit as of January 2026, or do you think thats being somewhat muted by current interest rates.
Austin Muller: So thank you for that we don't really see.
Austin Muller: Anything of that sort.
Austin Muller: Obviously the uncertainty in the market is there are customers, we are engaging with our customers and.
Austin Muller: If they have any specific needs or any specific.
Austin Muller: <unk> deals or transactions that they would like to engage with.
Austin Muller: Going to definitely look into that.
Austin Muller: But as we as we indicated we have just signed a multiyear agreement with.
Shuki Nir: But as we indicated, we've just signed a multi-year agreement with the leading global real estate enterprise, and over there is something that is going to take several years to actually execute on installing Solaredge products in all of their facilities. So, you know, while there is some uncertainty in the short term, we... We believe that the underlying demand is there and the growth in need for electricity is going to continue growing. Thank you.
Austin Muller: The leading global real estate or enterprise and over there its something that is going to take several years to actually execute on it.
Austin Muller: Installing solar as a product in all of their facilities. So.
Austin Muller: You know while there is some uncertainty in the in the short term we.
Austin Muller: We believe that the.
Austin Muller: The underlying demand is there and the growth in meat forward electricity and he's going to continue to grow.
Austin Muller: Thank you.
Kashi Harrison: And your next question comes from the line of Kashi Harrison with Piper Sandler. Please go ahead, your line is open. Good morning. Thanks for taking the question and congrats on all the progress during the quarter. So first question for me, what were the safe harbor revenues in 1Q and then as you look into 2Q, is the revenue growth coming from the U.S. or Europe? And I have a follow-up.
Unnamed Operator: And your next question comes from the line of Kashi Harrison with Piper Sandler. Please go ahead. Your line is open.
Kashi Harrison: Good morning, Thanks for taking my question and congrats on all the progress during the quarter.
Kashi Harrison: So first question for me what were the Safe Harbor revenues in <unk> and then as you as you look into two Q.
Kashi Harrison: Is the revenue growth coming from the U S or Europe, and I have a follow up.
Asaf Alperovitch: Hi, good morning. So in terms of Q1, a portion of safe harbor, as we already indicated a thing in the past, we don't break this out. In terms of Q2, what we can say is that there is a lower safe harbor amount in Q2 compared to Q1. And is that, so the 2Q growth, is that revenue growth, is that coming from the US or is that coming from Europe? I don't think we can elaborate beyond what I just said, sorry.
Speaker Change: Hi, good morning, So in terms of Q1, a portion of safe Harbor as we already indicated I think in the past we don't break this out.
Speaker Change: In terms of Q2, what we can say is that there is a lower safe harbor amount in Q2 compared to Q1.
Speaker Change: Yeah.
Speaker Change: And so the <unk> growth is that revenue growth is that coming from the U S or is that coming from from Europe.
Speaker Change: I don't think we can elaborate beyond what I just said sorry.
Asaf Alperovitch: Okay, fair enough. And just for my follow-up question, you know, if we look at your margins in 2Q, I think they would have been 12% before the impact of the tariffs. If you could, you know, theoretically close that gap between your, you know, your sell-in at $2.75 and your sell-through at $3.75, so in other words, if revenues increase to $3.75, where would you expect the margins to be, again, before the impact of tariffs? So clearly, in terms of the levers on the gross margin, the biggest driver is higher revenue leverage, given our fixed cost position in infrastructure and the higher the revenue, the better utilization of fixed costs and the higher the marginality.
Unnamed Operator: Okay Fair enough and just for my follow up question.
Speaker Change:
Speaker Change: If we look at your your your margins.
Speaker Change: Yeah.
Speaker Change: In <unk> I think they would have been 12%.
Speaker Change: Before the impact of the tariffs.
Speaker Change: If you could theoretically close that gap between your your sell in at $2 75, and your sell through at $3 75. So in other words, if revenues increased to $3 75.
Speaker Change: Where would you expect the margins to be again before the impact of tariffs.
Speaker Change: So clearly in terms of the levers on the gross margin the biggest driver is higher revenue leverage.
Speaker Change: Our fixed cost position in infrastructure and the higher the revenue.
Speaker Change: The better utilization of fixed costs and the higher the marginality.
Asaf Alperovitch: Just to talk about a couple of two relevant, I think, major levers, that would be the new products coming in later this year with better cost structure and higher margins. And as long as we continue, as we indicated, to ramp up the U.S. production, which is the most economically attractive location to manufacture, considering the IRA credits, we will see an increase in the margin, the marginality.
Speaker Change: Just to talk about couple of two relevant I think major levers that would be the new products coming in later this year with better cost.
Speaker Change: <unk> and higher margins.
Speaker Change: And as long as we continue although we indicated to ramp up the U S production.
Speaker Change: Which is the most economically attractive location to manufacture considering direct credits, we will see an increase.
Speaker Change: An increase in the margins and the margin.
Operator: Thank you.
Unnamed Operator: Thank you and your next question comes from the line of Amit <unk> with BMO capital markets. Please go ahead. Your line is open.
Ameet Thakkar: And your next question comes from the line of Ameet Thakkar with BMO Capital Markets.
Ameet Thakkar: Please go ahead, your line is open. Good morning, I just have a couple of quick housekeeping questions. And thanks for the time.
Speaker Change: Yeah.
Speaker Change: Good morning, and just have a couple of quick housekeeping questions.
Asaf Alperovitch: The $100 million kind of increase in prepaid expenses and other assets on the cash flow statement and then I guess the Dialogues at www.frumproductions.com Yeah, these line items refer largely to the 45x credits and to the deferred revenue. Deferred revenue mostly declined due to the shipments of our safe hardware transaction, which we announced in Q4. And you pointed rightly to the relevant balance sheet items. Thank you.
Speaker Change: Thanks for the time.
Speaker Change: The $100 million kind of an increase in prepaid expenses and other assets on the cash flow statement and then.
Speaker Change: $52 million decline in deferred revenues and customer advances is that safe harbor in kind of 45 ex tax credit sale related and if so can you kind of just kind of clarify which line items, which.
Speaker Change: These line items.
Speaker Change: I'll refer largely into the 45 weeks credits and to the deferred revenue and deferred revenue most of the decline.
Speaker Change: Due to the shipments so far safe Harbor transaction, which we announced in Q4.
Speaker Change: And you pointed the right rightly tool to the relevant balance sheet items.
Speaker Change: Okay.
Speaker Change: Thank you.
Unnamed Operator: Thank you and your next question comes from the line of Jordan Levy with <unk>. Please go ahead. Your line is open.
Jordan Levy: And your next question comes from the line of Jordan Levy with Truist. Please go ahead, your line is open. Hi, hat team. Tenrion for Jordan here. Thanks for squeezing me in. Just a quick one for me, noting this is still a small part of the business, but it looks like the utility segment also had a nice quarter relative to last year.
Unnamed Operator: Hi, Hi team, it's Henry on for Jordan here. Thanks for.
Unnamed Operator: Squeezing me in just a just a quick one for me. During this is still a small part of the business, but it looks like the utility segment also had a nice quarter relative to last year.
Shuki Nir: I'm just curious on your thoughts around that market this year and your ability to compete there. Thank you. Yes, thank you for that. Yeah, it's a, as we said before, Solaredge technology is actually optimizing the production, the power production of a given set of modules, and it excels in conditions that are not ideal. So initially utility was something, or the utility space was something that we did not participate in. However, last year we introduced a product that is addressing what we refer to as optimized utility. There are several types of utility type projects that require the optimization and the advantages that Solaredge brings to the table.
Unnamed Operator: Curious on your thoughts around that market this year and your ability to compete there. Thank you.
Unnamed Operator: Yeah.
Unnamed Operator: Yes.
Unnamed Operator: Yes. It is.
Unnamed Operator: As we said before solar Rage technology is actually.
Unnamed Operator: Optimizing the production and the power production.
Unnamed Operator: Forgiven.
Unnamed Operator: Of modules.
Unnamed Operator: And it excels in conditions are not ideal.
Unnamed Operator: And so initially utility was something in the OTT space with something that we did not participate in however.
Unnamed Operator: However, last year, we introduced a product that is addressing what we refer to as optimized utility.
Unnamed Operator: There are several types of utility type projects that required optimization and the advantages that sort of brings to the table, but we figured that we can we can actually not only competing in this space that actually adds value in.
Operator: So we figured that we can actually not only compete in this space, but actually add value. demand or gain the share that we deserve in that segment of the market, and we're actually seeing traction to that, which you can see in the increased revenue of that segment. Thank you. And as a reminder, if you would like to ask a question, please press the star and 1 on your telephone keypad now.
Unnamed Operator: <unk> and <unk>.
Unnamed Operator: Demand Oh gain the share that we deserve in that in that segment of the market and we're actually seeing traction to that.
Unnamed Operator: You can see the increased revenue for that segment.
Unnamed Operator: Yeah.
Unnamed Operator: Thank you and as a reminder, if you would like to ask a question. Please press the star and one on your telephone keypad now.
Vikram Bagri: And your next question comes from the line of Vikram Bagri with Citi. Please go ahead, your line is open. Please go ahead, the crawnier line is open.
And your next question comes from the line of Vikram <unk> with Citi. Please go ahead. Your line is open.
Unnamed Operator: Please go ahead your line is open.
Asaf Alperovitch: Good morning, everyone. I apologize, I joined a little late, in case you've already answered these questions. I wanted to ask a few housekeeping questions. First on OPEX, good progress there. I believe your current plan is to have OPEX run rate of, non-gap OPEX run rate of 80 to $90 million. Is that still the plan? Has that target moved at all in last few months? Secondly, I think you mentioned break-even free cash flow this year. Does that mean second quarter will be somewhat break-even too in case you've disclosed what the second quarter free cash flow target is?
Vikram: Good morning, everyone I apologize I joined a little late in case, you have already answered these questions.
Speaker Change: I wanted to ask a few housekeeping questions first on Opex good progress there.
Speaker Change: Our current plan is to have Opex run rate of non-GAAP Opex run rate of $80 million to $90 million does that still the plan has that targeted moves.
Speaker Change: At all in last few months.
Speaker Change: Secondly, I think you mentioned breakeven free cash flow this year.
Speaker Change: Does that mean second quarter will be somewhat breakeven due in case, you have disclosed what the second quarter free cash flow target days and then finally, you highlighted majority of distributors will have normalized inventory by the end of second quarter. What does this mean in terms of selling matching sell through should we expect third quarter.
Asaf Alperovitch: And then finally, you've highlighted majority of distributors will have normalized inventory by the end of second quarter. What does it mean in terms of selling matching sell-through? Should we expect third quarter revenues to be normalized quote-unquote revenue level, or should we see some inventory reduction always in third quarter as well?
Speaker Change: Revenues to be normalized clinical revenue level or should we see some inventory reduction noise in third quarter. So thank you.
Operator: Thank you.
Asaf Alperovitch: Hi, good morning, and thank you for the three questions. So in terms of OPEX, I think as you noted, and we previously communicated, we have a target OPEX level by the year-end of 85 to 90 million dollar range. I think Shuki mentioned before that we will continue to focus on our core business, which could result in additional cost savings. And we are reviewing, and that's part of my job, any particular, every avenue for efficiency improvements, measures, and it's something, again, that I'll be proactively driving. In terms of the second question on the cash flow, so as you may know, we are not providing any particular quarterly free cash flow guidance.
Speaker Change: Hi, good morning, and thank you for the three questions.
Speaker Change: So it does all the Opex I think as you'll notice than we've previously communicated that we have a target opex level by the year end over $85 million to $90 million range.
Speaker Change: I think <unk> mentioned before that we will continue to focus on our core core business, which could result in additional cost savings.
Speaker Change: We are reviewing and Thats part of my job.
Speaker Change: And any particular every avenue for efficiency improvement measures.
Speaker Change: It's something again that will be proactively driving.
Speaker Change: In terms of the second.
Speaker Change: Question on the cash flow. So as you may know, we're not providing any particular quarterly free cash flow guidance.
Asaf Alperovitch: as it depends on timing of cash flows which may shift between quarters. We are saying, we did say, however, that we will be approximately breakeven for the year, and that, of course, includes the incremental tariff impact. As it pertains to the third question, the inventory levels in Q3, I said before that we are very focused on reducing our DIO and inventory levels and consuming the balance sheet inventory in the European continent, but I guess that's as much as we can say for Q3 inventory.
Speaker Change: As it depends on timing of cash flows which may shift between quarters.
Speaker Change: We are saying we did say however that we will be approximately breakeven for the year and that of course include the incremental tariff impact.
Speaker Change: As it pertains to the first question the inventory levels in Q3, I said before we're very focused on reducing our inventory.
Speaker Change: Inventory levels and consuming the balance sheet inventory and the European continent.
Speaker Change: I guess, that's as much as we can say for Q3 inventory.
Speaker Change: Okay.
Speaker Change: Sure.
Shuki Nir: Thank you.
Kruszewski: Thank you and this concludes our question and answer session I will now turn the program back kruszewski for closing remarks.
Operator: And this concludes the question and answer session.
Shuki Nir: I will now turn the program back to Shuki for closing remarks. Thank you. Thank you, everyone, for joining us this morning. As we mentioned, we are pleased with the progress that we've made, and we are focused on what we can control in this environment. And I look forward to continue updating you on our progress with the turnaround story of Solaredge. Thank you and have a great day. Thank you.
Kruszewski: Thank you. Thank you everyone for joining us. This morning, as we mentioned we are pleased with the progress that we've made and we are focused on what we can control in this environment.
Speaker Change: And I look forward to continue updating you on our progress with the turnaround story of solar it. Thank you and have a great day.
Kruszewski: Okay.
Operator: This does conclude today's presentation. Thank you for your participation. You may disconnect at any time.
Kruszewski: Thank you. This does conclude today's presentation. Thank you for your participation you may disconnect at any time.
Kruszewski: Yeah.
Kruszewski: Hum.
Kruszewski: [music].
Kruszewski: