What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-07 · 178 added, 173 removed, 230 unchanged (60% of the section changed)

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This discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, technology developments, new products and services, financing and investment plans, competitive position, industry and regulatory environment, effects of acquisitions, growth opportunities and the effects of competition.

Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, technology developments, new products and services, financing and investment plans, competitive position, backlog, industry and regulatory environment, effects of acquisitions, growth opportunities, potential future impairments, and the effects of competition.

Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “could,” “seek,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or similar expressions and the negatives of those terms.

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• our customers’ financial stability, creditworthiness, and debt leverage ratio;

• our ability to retain key personnel and attract additional qualified personnel;

• loss of key executives, and our ability to retain key personnel and attract additional qualified personnel;

• our ability to effectively design, launch, market, and sell new generations of our products and services;

• our ability to retain, and events affecting, our major customers;

• our ability to service our debt;

the other factors set forth under “Item 1A.

Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business.

• natural disasters, public health events and other disruptions;

• impairment of our goodwill or other long-lived and intangible assets;

• our liquidity and ability to service our debt;

the other factors set forth below in Part II, Item 1.A under “Risk Factors” and in Part I, Item 1A under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 and in other documents we file from time to time with the SEC that disclose risks and uncertainties that may affect our business.

The preceding list is not intended to be an exhaustive list of all of our forward-looking statements.

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The Energy Storage segment provides purpose-built components and solutions, hardware and software, as well as pre and post sales engineering support to design, build, and manage battery and system solutions according to the customer’s use cases and mission profiles.

The “All other” category includes the design, development, manufacturing and sales of e-Mobility products and automated machines (in prior periods).

The “All other” category includes the design, development, manufacturing and sales of e-Mobility products (in prior periods) and automated machines.

In the third quarter of 2020, we began commercial shipments from our manufacturing facility in the North of Israel, “Sella 1”.

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Sella 2 currently has a 2GWh capacity.

In light of the Inflation Reduction Act legislation in the United States, which incentivizes the local manufacturing of renewable energy products by providing benefits to installers for the purchase and installation of product with domestic content, as well as by incentivizing local manufacturing of our products, we have begun manufacturing inverters in Texas and are currently establishing additional manufacturing capabilities in Florida for optimizers and inverters.

With the ramp up of these new sites and due to a decrease in demand for our products, we have reduced capacity in all of our manufacturing sites outside of the U,S and discontinued manufacturing of our products in Mexico.

As of June 30, 2024, we shipped approximately 128.2 million power optimizers, 5.7 million inverters and 276.2 thousand batteries for PV applications.

In light of the Inflation Reduction Act legislation in the United States, which incentivizes the local manufacturing of renewable energy products by providing benefits to installers for the purchase and installation of product with domestic content, as well as by incentivizing local manufacturing of our products, we began manufacturing inverters in Texas and reached full capacity there during the third quarter of 2024.

We are also currently expanding additional manufacturing capabilities in G, for optimizers and inverters.

With the manufacturing capabilities of these new sites and due to a decrease in demand for our products, we have reduced capacity in all of our manufacturing sites outside of the U.S.

As of September 30, 2024, we shipped approximately 130.0 million power optimizers, 5.7 million inverters and 303.3 thousand batteries for PV applications.

Over 4.1 million installations, many of which may include multiple inverters, are currently connected to, and monitored through, our cloud-based monitoring platform.

As of June 30, 2024, we shipped approximately 54.5 GW of our DC optimized inverter systems and approximately 2.0 GWh of our batteries for PV applications.

Our revenues for the three months ended June 30, 2024, and 2023 were $265.4 million and $991.3 million, respectively.

Gross loss was 4.1% for the three months ended June 30, 2024, compared to gross margin of 32.0% for the three months ended June 30, 2023.

Net loss for the three months ended June 30, 2024 was $130.8 million compared to net income in the amount of $119.5 million for the three months ended June 30, 2023.

Our revenues for the six months ended June 30, 2024, and 2023 were $469.8 million and $1,935.2 million, respectively.

Gross loss was 7.9% for the six months ended June 30, 2024, compared to gross margin of 31.9% for the six months ended June 30, 2023.

Net loss for the six months ended June 30, 2024 was $288.1 million compared to net income in the amount of $257.9 million for the six months ended June 30, 2023.

As of September 30, 2024, we shipped approximately 55.3 GW of our DC optimized inverter systems and approximately 2.1 GWh of our batteries for PV applications.

Our revenues for the three months ended September 30, 2024, and 2023 were $260.9 million and $725.3 million, respectively,.

Gross loss was 269.2% for the three months ended September 30, 2024, compared to our gross margin of 19.7% for the three months ended September 30, 2023.

Net loss for the three months ended September 30, 2024, and 2023 was $1,205.3 million and $61.2 million, respectively.

Our revenues for the nine months ended September 30, 2024, and 2023 were $730.7 million and $2,660.5 million, respectively.

Gross loss was 101.2% for the nine months ended September 30, 2024, compared to our gross margin of 28.6% for the nine months ended September 30, 2023.

Net loss for the nine months ended September 30, 2024 was $1,493.5 million compared to our net income in the amount of $196.7 million, for the nine months ended September 30, 2023.

Global Circumstances Influencing our Business and Operations

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In particular, beginning in the second part of the third quarter of 2023, we experienced substantial unexpected cancellations and push outs of existing backlog from our European distributors.

We attribute these cancellations and pushouts to high inventory in the channels and slower than expected installation rates both in the United States and Europe.

We attribute these cancellations and push outs to high inventory in the channels and slower than expected installation rates both in the United States and Europe.

This trend continued in the subsequent quarters.

Additionally, the Company anticipates a continued lower level of revenues in the third quarter of 2024 when compared to the same quarter last year, as the inventory destocking process continues.

Additionally, the Company anticipates a continued lower level of revenues in the fourth quarter of 2024 when compared to the same quarter last year, as the inventory destocking process continues.

Disruptions due to the war in Israel

Due to the war that began on October 7, 2023, approximately 10% of our employees in Israel were called to active reserve duty and additional employees may be called in the future, if needed.

About 75% of these employees have returned to work, though recruitments for additional reserve duties may and have reoccurred.

Due to the war that began on October 7, 2023, some of our employees in Israel were called to active reserve duty and additional employees may be called in the future, if needed.

In the three months ended September 30, approximately 10% of our employees in Israel have been called to active reserve duty for varying periods.

While our offices and facilities are open worldwide, including in Israel, and, to date, we have not had disruptions to our ability to manufacture and deliver products and services to customers, a prolonged war or an escalation of the current condition in Israel could materially adversely affect our business, financial condition, and results of operations.

Due to the recency of these events, and their ongoing and evolving nature, the extent of the adverse effect on our business operations is still unknown.

Due to the ongoing and evolving nature, and the extent of these events, the adverse effect on our business operations is still unknown.

The majority of our key employees and officers are residents of Israel.

If any of our facilities in Israel were to be damaged, destroyed or otherwise rendered unable to operate, whether due to war, acts of hostility, earthquakes, fire, floods, hurricanes, storms, tornadoes, other natural disasters, employee malfeasance, terrorist acts, power outages or otherwise, or if performance of our research and development is disrupted for any other reason, such an event could delay commercialization of our products, and if we choose to manufacture all or any part of them internally, jeopardize our ability to manufacture our products as promptly as our prospective customers will likely expect, or possibly at all.

If we experience delays in achieving our development objectives within a timeframe that meets our prospective customers’ expectations, our business, prospects, financial results and reputation could be harmed.

Impact of Ukraine’s Conflict on the Energy Landscape

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Furthermore, various shipment routes were adversely impacted by the conflict resulting in increased shipment lead times and shipping costs for our products.

While the impact of this conflict decreased in 2023, a change or escalation of this ongoing conflict could increase the impacts from the circumstances described above and may lead to an adverse effect on our business and results of operations.

While the impact of this conflict continued to decrease in 2024, a change or escalation of this ongoing conflict could increase the impacts from the circumstances described above and may lead to an adverse effect on our business and results of operations.

Inflation Reduction Act

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To that end, we established manufacturing capabilities in the U.S.

in 2023 and announced additional capacity expected during 2024.

These provisions of the law are new and regulations and guidance concerning their implementation are gradually being published by the U.S.

Treasury Department.

We continue to monitor the benefits that may be available to us, such as the availability of tax credits for domestic manufacturers.

To the extent that tax benefits or credits may be available to competing technology and not to our technology, our business could be adversely disadvantaged.

On October 24, 2024, final regulations concerning the application of IRC §45X were published.

The regulations contain detailed rules concerning the eligibility, qualifying and accounting for AMPTCs.

Of particular relevance to the Company are the rules concerning the qualification and measurement of AMPTCs to Residential Inverters, Commercial Inverters and DC-Optimized Inverter Systems, that are included in the definition of Microinverters.

We continue to monitor the benefits that may be available to us, such as the availability of tax credits for domestic manufacturers and the domestic content tax credit bonus that provides incentives for project owners.

Key Operating Metrics

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However, revenues may increase in a non-correlated manner to the “megawatt shipped” metric since other products such as power optimizers, are not accounted for in this metric.

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Inverters shipped

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Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

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Income (loss) before income taxes

Tax benefits (income taxes)

Net loss from equity method investments

Net income (loss)

Comparison of three and six months ended June 30, 2024, to the three and six months ended June 30, 2023

Three months ended June 30, 2024 to 2023

Six months ended June 30, 2.024 to 2023

Comparison of three and nine months ended September 30, 2024, and the three and nine months ended September 30, 2023

Three months ended September 30, 2024 to 2023

Nine months ended September 30, 2024 to 2023

(In thousands)

Revenues decreased by $725.9 million, or 73.2%, in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, primarily due to (i) a decrease of $609.7 million related to a decrease in the number of inverters and power optimizers sold;

(ii) a decrease of $87.0 million related to the lower number of batteries for PV applications sold, primarily in Europe;

(iii) a decrease of $20.9 million in revenues generated in 2023 from e-mobility components, related to the discontinuation of the Company’s LCV e-Mobility activity;

and (iv) a decrease of $15.2 million related to less ancillary solar products sold.

The overall decrease in revenues was due to the decline in demand that began in the third quarter of 2023.

This decline was the result of high inventory in the channels and slower than expected installation rates beginning in the third quarter of 2023, leading to substantial unexpected cancellations and push outs of existing backlog, from our distributors.

Revenues decreased by $464.4 million, or 64.0%, in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily due to (i) a decrease of $416.5 million related to a decrease in the number of inverters and power optimizers sold;

(ii) a decrease of $22.1 million in revenues generated in 2023 from e-mobility components, related to the discontinuation of the Company’s LCV e-Mobility activity;

and (iii) a decrease of $14.6 million related to less ancillary solar products sold.

The overall decrease in revenues was due to a decline in demand that began in the second part of the third quarter of 2023.

This decline was the result of high inventory in the channels and slower than expected installation rates, leading to substantial unexpected cancellations and push outs of existing backlog, from our distributors.

Revenues from outside of the U.S.

comprised 63.4% of our revenues in the three months ended June 30, 2024 as compared to 80.3% in the three months ended June 30, 2023.

The number of power optimizers recognized as revenues decreased by approximately 3.5 million units, or 63.6%, from approximately 5.5 million units in the three months ended June 30, 2023 to approximately 2.0 million units in the three months ended June 30, 2024.

The number of inverters recognized as revenues decreased by approximately 268.5 thousand units, or 80.4%, from approximately 333.8 thousand units in the three months ended June 30, 2023 to approximately 65.4 thousand units in the three months ended June 30, 2024.

The megawatts hour of batteries for PV applications recognized as revenues decreased by approximately 146.0 megawatts hour, or 53.8% from approximately 271.0 in the three months ended June 30, 2023 to approximately 125.0 megawatts hour in the three months ended June 30, 2024, as a result of lower demand.

comprised 50.7% of our revenues in the three months ended September 30, 2024 as compared to 73.0% in the three months ended September 30, 2023.

The number of power optimizers recognized as revenues decreased by approximately 1.4 million units, or 43.8%, from approximately 3.3 million units, in the three months ended September 30, 2023, to approximately 1.8 million units in the three months ended September 30, 2024.

The number of inverters recognized as revenues decreased by approximately 203.9 thousand units, or 76.5%, from approximately 266.6 thousand units in the three months ended September 30, 2023 to approximately 62.7 thousand units in the three months ended September 30, 2024.

The megawatts hour of batteries for PV applications recognized as revenues increased by approximately 55.2 megawatts hour, or 35.9% from approximately 153.7 in the three months ended September 30, 2023 to approximately 208.9 megawatts hour in the three months ended September 30, 2024, as a result of lower demand.

Our blended ASP per watt for solar products excluding batteries for PV applications is calculated by dividing the sales of solar products, excluding the sales of batteries for PV applications, by the name plate capacity of inverters shipped.

Our blended ASP per watt for solar products shipped excluding batteries for PV applications increased by $0.026, or 13.8%, in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

The increase in blended ASP per watt is mainly attributed to a significantly higher number of power optimizers and other solar products shipped compared to the number of inverters shipped.

This increase in blended ASP per watt was partially offset by an additional price reduction we initiated in the second quarter and an increase in the sale of commercial products that are characterized by lower ASP per watt, out of our total solar product mix.

Our blended ASP per watt for solar products shipped excluding batteries for PV applications increased by $0.039, or 24.0%, in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

The increase in blended ASP per watt is mainly attributed to a higher number of power optimizers and other solar products shipped compared to the number of inverters shipped.

This increase in blended ASP per watt was partially offset by an increase in the sale of commercial products that are characterized by lower ASP per watt, out of our total solar product mix.

Our blended ASP per watt/hour for batteries for PV applications is calculated by dividing batteries for PV applications sales, by the nameplate capacity of batteries for PV applications shipped.

Our blended ASP per watt/hour for batteries for PV applications decreased by $0.108, or 22.7%, in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

Our blended ASP per watt/hour for batteries for PV applications decreased by $0.158, or 33.3%, in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

The decrease in blended ASP per watt/hour is mainly attributed to a price reduction of our batteries for PV applications.

This decrease in ASP per watt/hour was partially offset by an increase in the sale of our one-phase battery that is sold at a higher ASP per watt/hour.

Revenues decreased by $1,465.4 million, or 75.7%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to (i) a decrease of $1,224.0 million related to a decrease in the number of inverters and power optimizers sold;

Revenues decreased by $1,929.8 million, or 72.5%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to (i) a decrease of $1,640.5 million related to a decrease in the number of inverters and power optimizers sold;

(ii) a decrease of $167.7 million related to the lower number of batteries for PV applications sold, primarily in Europe;

(iii) a decrease of $45.4 million related to less ancillary solar products sold;

and (iv) a decrease of $43.7 million in revenues generated from e-mobility components, related to the discontinuation of the Company’s LCV e-Mobility activity.

The overall decrease in revenues was due to the decline in demand that began in the third quarter of 2023.

(iii) a decrease of $65.9 million in revenues generated from e-mobility components, related to the discontinuation of the Company’s LCV e-Mobility activity;

and (iv) a decrease of $60.0 million related to less ancillary solar products sold.

The overall decrease in revenues was due to the decline in demand that began in the second part of the third quarter of 2023.

Revenues from outside of the U.S.

comprised 65.4% of our revenues in the six months ended June 30, 2024 as compared to 76.7% in the six months ended June 30, 2023.

The number of power optimizers recognized as revenues decreased by approximately 9.0 million units, or 74.5%, from approximately 12.0 million units in the six months ended June 30, 2023 to approximately 3.1 million units in the six months ended June 30, 2024.

The number of inverters recognized as revenues decreased by approximately 538.1 thousand units, or 80.8%, from approximately 665.8 thousand units in the six months ended June 30, 2023 to approximately 127.7 thousand units in the six months ended June 30, 2024.

The megawatts hour of batteries for PV applications recognized as revenues decreased by approximately 268.0 megawatts hour, or 55.0% from approximately 487.0 megawatts hour in the six months ended June 30, 2023 to approximately 220.0 megawatts hour in the six months ended June 30, 2024 as a result of lower demand.

Our blended ASP per watt for solar products shipped excluding batteries for PV applications decreased by $0.011, or 5.2%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

The decrease in blended ASP per watt is mainly attributed to price reduction as well as an increase in the sale of commercial products that are characterized by lower ASP per watt.

This decrease in blended ASP per watt was partially offset by a relatively higher number of power optimizers shipped compared to the number of inverters shipped.

Our blended ASP per watt/hour for batteries for PV applications decreased by $0.101, or 21.1%, in the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

comprised 60.2% of our revenues in the nine months ended September 30, 2024 as compared to 75.7% in the nine months ended September 30, 2023.

The number of power optimizers recognized as revenues decreased by approximately 10.4 million units, or 68.0%, from approximately 15.3 million units, in the nine months ended September 30, 2023, to approximately 4.9 million units in the nine months ended September 30, 2024.

The number of inverters recognized as revenues decreased by approximately 742.0 thousand units, or 79.6%, from approximately 932.4 thousand units in the nine months ended September 30, 2023 to approximately 190.4 thousand units in the nine months ended September 30, 2024.

The megawatts hour of batteries for PV applications recognized as revenues decreased by approximately 215.2 megawatts hour, or 33.4% from approximately 643.6 megawatts hour in the nine months ended September 30, 2023 to approximately 428.4 megawatts hour in the nine months ended September 30, 2024 as a result of lower demand.

Our blended ASP per watt for solar products shipped excluding batteries for PV applications increased by $0.005, or 2.9%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

The increase in blended ASP per watt is mainly attributed to a higher number of power optimizers and other solar products shipped compared to the number of inverters shipped.

This increase in blended ASP per watt was partially offset by price reduction as well as an increase in the sale of commercial products that are characterized by lower ASP per watt, out of our total solar product mix.

Our blended ASP per watt/hour for batteries for PV applications decreased by $0.126, or 26.3%, in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

The decrease in blended ASP per watt/hour is mainly attributed to price reduction of our batteries for PV applications.

This decrease in ASP per watt/hour was partially offset by an increase in the sale of our one-phase battery that is sold at a higher ASP per watt/hour.

Cost of Revenues and Gross Profit (loss)

Three months ended June 30, 2024 to 2023

Six months ended June 30, 2024 to 2023

Three months ended September 30, 2024 to 2023

Nine months ended September 30, 2024 to 2023

(In thousands)

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Gross profit (loss)

Cost of revenues decreased by $397.6 million, or 59.0%, in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, primarily due to:

• a decrease in direct cost of revenues sold of $280.2 million associated mainly with a decrease in the volume of products sold as well as an increase of $15.2 million in AMPTC recognized;

Cost of revenues increased by $380.7 million, or 65.4%, in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily due to an increase in inventory write-down accruals of $642.4 million related to the slowdown in our products demand, and excess inventory in our channels, the repeated price reductions and the introduction of a new generation of our products, which was partially offset by:

• a decrease in direct cost of revenues sold of $157.2 million which includes a decrease in the volume of products sold and an increase of $14.0 million in AMPTC recognized;

• a decrease in warranty expenses and warranty accruals of $52.1 million associated primarily with a decrease in revenues;

• a decrease in shipment and logistic costs in an aggregate amount of $43.8 million due to a decrease in volumes shipped and a decrease in expedited shipments costs;

• a decrease in in personnel-related costs of $2.9 million resulting from our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics.

Gross profit as a percentage of revenue decreased from 32.0% in the three months ended June 30, 2023 to gross loss of 4.1% in the three months ended June 30, 2024, primarily due to:

• price reductions and a higher portion of our single phase batteries out of our total product mix resulting in lower gross margin of approximately 18%;

• a decrease in shipment and logistic costs in an aggregate amount of $44.2 million due to a decrease in volumes shipped;

Gross profit as a percentage of revenue decreased from 19.7%, in the three months ended September 30, 2023, to a gross loss of 269.2% in the three months ended September 30, 2024, primarily due to:

• inventory write-down accruals resulting in lower gross margin of approximately 250%;

• price reductions to our batteries for PV applications, which contributed a higher portion of our total product mix resulting in lower gross margin of approximately 23%;

• lower absolute fixed and other production related costs, which were divided this quarter by significantly lower revenue, resulting in lower gross margin of approximately 13%.

These were partially offset by an increase of approximately 6% due to AMPTC recognized.

Cost of revenues decreased by $810.8 million, or 61.5%, in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to:

• a decrease in direct cost of revenues sold of $574.0 million associated primarily with a decrease in the volume of products sold as well as an increase of $30.1 million AMPTC recognized;

Cost of revenues decreased by $430.0 million, or 22.6%, in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, primarily due to:

• a decrease in direct cost of revenues sold of $731.2 million which includes both a decrease in the volume of products sold and an increase of $44.1 million AMPTC recognized;

• a decrease in warranty expenses and warranty accruals of $190.0 million associated primarily with a decrease in revenues;

• a decrease in shipment and logistic costs in an aggregate amount of $124.1 million due to a decrease in volumes shipped and a decrease in expedited shipments costs.

Gross profit as a percentage of revenue decreased from 31.9% in the six months ended June 30, 2023 to gross loss of 7.9% in the six months ended June 30, 2024 primarily due to:

• price reduction primarily in our batteries for PV applications and a higher portion of our single phase batteries out of our total product mix resulting in lower gross margin of approximately 18%;

• lower absolute fixed and other production related costs, which were divided this year by significantly lower revenue, resulting in lower gross margin of approximately 27%.

These were partially offset by an increase of approximately 6% due to AMPTC recognized.

These movements were partially offset by an increase of $636.5 million in inventory write-down related to the slowdown in our products demand and excess inventory in our channel, the repeated price reductions and the introduction of a new generation of our products.

Gross profit as a percentage of revenue decreased from 28.6% in the nine months ended September 30, 2023 to gross loss of 101.2% in the nine months ended September 30, 2024 primarily due to:

• inventory write-down accruals resulting in lower gross margin of approximately 90%;

• lower absolute fixed and other production related costs, which were divided this year by a significantly lower revenue, resulting in a lower gross margin, of approximately 23%;

• price reduction and a higher portion of our single phase batteries, out of our total product mix, resulting in lower gross margin of approximately 16%.

Operating Expenses:

Research and Development

Three months ended June 30, 2024 to 2023

Six months ended June 30, 2024 to 2023

Three months ended September 30, 2024 to 2023

Nine months ended September 30, 2024 to 2023

(In thousands)

Research and development

Research and development costs decreased by $17.3 million or 19.9%, in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to:

Research and development costs decreased by $9.7 million or 12.1%, in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to:

• a decrease in personnel-related costs of $5.8 million resulting from our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics;

• a decrease in expenses related to consultants and sub-contractors in an amount of $2.5 million.

Research and development costs decreased by $21.8 million or 13.1%, in the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to:

Research and development costs decreased by $31.5 million or 12.8%, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to:

• a decrease in personnel-related costs of $20.6 million resulting from our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics;

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Sales and Marketing

Three months ended June 30, 2024 to 2023

Six months ended June 30, 2024 to 2023

Three months ended September 30, 2024 to 2023

Nine months ended September 30, 2024 to 2023

(In thousands)

Sales and marketing

Sales and marketing expenses decreased by $4.2 million, or 9.6%, in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to:

• a decrease in personnel-related costs of $2.7 million resulting from our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics;

• a decrease in lead generation incentives of $1.4 million.

Sales and marketing expenses decreased by $6.3 million, or 7.4%, in the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to:

Sales and marketing expenses decreased by $2.9 million, or 7.2%, in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to a decrease in personnel-related costs of $2.7 million resulting from our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics.

Sales and marketing expenses decreased by $9.2 million, or 7.3%, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to:

• a decrease in personnel-related costs of $6.4 million resulting from our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics;

• a decrease of $1.4 million in training-related expenses as a result of resuming training activities that had been previously cancelled or postponed due to Covid-19 restrictions;

• a decrease in lead generation incentive of $1.4 million.

• a decrease of $1.4 million in training-related expenses.

General and Administrative

Three months ended June 30, 2024 to 2023

Six months ended June 30, 2024 to 2023

Three months ended September 30, 2024 to 2023

Nine months ended September 30, 2024 to 2023

(In thousands)

General and administrative

General and administrative expenses increased by $2.8 million, or 7.8%, in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to an increase in expenses related to doubtful debt of $7.4 million.

General and administrative expenses increased by $2.1 million, or 5.4%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to an increase in expenses related to doubtful debt of $4.4 million.

This was partially offset by:

• a decrease in personnel-related costs of $3.1 million resulting from our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics;

• a decrease in expenses related to consultants and sub-contractors of $0.7 million;

General and administrative expenses decreased by $2.9 million, or 4.0%, in the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to:

• a decrease in personnel-related costs of $0.5 million resulting from our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics.

General and administrative expenses decreased by $0.8 million, or 0.7%, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to:

• a decrease in personnel-related costs of $7.1 million resulting from our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics;

• a decrease in expenses related to consultants and sub-contractors $5.6 million.

• a decrease of $1.1 million related to other administrative costs.

These were partially offset by an increase in expenses related to doubtful debt of $13.2 million

Other operating expense (income), net

Three months ended June 30, 2024 to 2023

Six months ended June 30, 2024 to 2023

Three months ended September 30, 2024 to 2023

Nine months ended September 30, 2024 to 2023

(In thousands)

Other operating expense (income), net

Other operating expenses, net, increased by $1.0 million in the three months ended June 30, 2024 , compared to the three months ended June 30, 2023 , primarily due to an increase in losses related to the sale of property, plant and equipment and other assets.

Other operating expense, net was $3.3 million, in the six months ended June 30, 2024 , compared to other operating income, net of $1.4 million in the six months ended June 30, 2023 , primarily due to:

• an increase of $2.1 million in losses related to the sale of property, plant and equipment;

• an increase of $1.7 million in impairment of property, plant and equipment.

Other operating expenses, net, increased by $233.9 million in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to:

• an increase of $207.4 million in losses related to the impairment of property, plant and equipment;

• an increase of $22.5 million in losses related to the impairment of intangible assets;

• an increase of $2.3 million in losses related to the impairment of goodwill.

Other operating expense, net was $237.3 million, in the nine months ended September 30, 2024, compared to other operating income, net of $1.4 million in the nine months ended September 30, 2023, primarily due to:

• an increase of $209.1 million in losses related to the impairment of property, plant, and equipment;

• an increase of $22.5 million in losses related to the impairment of intangible assets;

• an increase of $2.3 million in losses related to the impairment of goodwill.

Financial income (expense), net

Three months ended June 30, 2024 to 2023

Six months ended June 30, 2024 to 2023

Three months ended September 30, 2024 to 2023

Nine months ended September 30, 2024 to 2023

(In thousands)

Financial income (expense), net

Financial expense, net was $0.9 million in the three months ended June 30, 2024, compared to financial income, net in the amount of $3.4 million in the three months ended June 30, 2023, primarily due to an increase of $9.2 million in expenses due to credit loss related to loans receivables.

This was partially offset by an increase of $4.5 million in income due to fluctuations in foreign exchange rates, primarily between the Euro and the NIS against the U.S.

Financial expenses, net was $7.9 million in the six months ended June 30, 2024, compared to financial income, net in the amount of $27.1 million in the six months ended June 30, 2023, primarily due to:

• an expense of $5.1 million in the six months ended June 30, 2024, compared to income of $21.2 million in the six months ended June 30, 2023, as a result of fluctuations in foreign exchange rates, primarily between the Euro and the NIS against the U.S.

• an increase of $11.4 million expenses due to credit loss related to loans receivables.

These were partially offset by a decrease of $2.6 million in accretion (amortization) of discount (premium) on marketable securities.

Financial income, net was $5.6 million in the three months ended September 30, 2024, compared to financial expense, net in the amount of $7.9 million in the three months ended September 30, 2023, primarily due to $4.6 million income in the three months ended September 30, 2024 as compared to expenses of $16.4 million in the three months ended September 30, 2023, as a result of fluctuations in foreign exchange rates, primarily between the Euro and the NIS against the U.S.

This was partially offset by a decrease of $5.8 million in income related to hedging transactions.

Financial expenses, net was $2.4 million in the nine months ended September 30, 2024, compared to financial income, net in the amount of $19.2 million in the nine months ended September 30, 2023, primarily due to:

• an increase in expenses of $11.4 million due to credit loss related to loans receivables.

• a decrease of $5.0 million in income related to hedging transactions.

• an expense of $0.5 million compared to an income of $4.8 million in fluctuations in foreign exchange rates primarily between the Euro and the NIS against the U.S.

Please refer to the section entitled "Foreign Currency Exchange Risk" under Item 3 of this report for additional information.

Other income (loss), net

Three months ended June 30, 2024 to 2023

Six months ended June 30, 2024 to 2023

Three months ended September 30, 2024 to 2023

Nine months ended September 30, 2024 to 2023

(In thousands)

Other income (loss), net

Other income increased by $18.6 million in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to:

• an increase of $15.5 million due to a gain from the repurchase of the 2025 Notes;

• an increase of $2.0 million in realized gain from marketable securities;

• an increase of $1.1 million due to gain from the revaluation of equity investment as a result of business combination.

Other income, net was $18.6 million in the six months ended June 30, 2024, compared to other loss, net of $0.1 million in the six months ended June 30, 2023, primarily due to:

Other loss increased by $3.4 million in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to a loss of $5.0 million related to impairment of an investment in a privately held company.

This was partially offset by an increase of $1.1 million in realized gain from marketable securities.

Other income, net was $14.6 million in the nine months ended September 30, 2024, compared to other loss, net of $0.6 million in the nine months ended September 30, 2023, primarily due to:

• an increase of $15.5 million due to a gain from the repurchase of the 2025 Notes;

• an increase of $3.2 million in realized gain from marketable securities;

• an increase of $1.1 million due to gain from the revaluation of equity investment as a result of business combination.

• an increase of $1.1 million due to a gain from the revaluation of equity investment as a result of business combination.

These were partially offset by an increase in loss of $5.0 million as a result of an impairment of an investment in privately held company.

Tax benefits (income taxes)

Three months ended June 30, 2024 to 2023

Six months ended June 30, 2024 to 2023

Three months ended September 30, 2024 to 2023

Nine months ended September 30, 2024 to 2023

(In thousands)

Tax benefits (income taxes)

Tax benefits were $12.2 million in the three months ended June 30, 2024 compared to income taxes of $34.2 million in the three months ended June 30, 2023, primarily due to:

• a current tax benefit of $3.4 million in the three months ended June 30, 2024, compared to a current tax expenses of $38.0 million in the three months ended June 30, 2023 related to the decrease in profits before tax in certain jurisdictions, partially offset by an increase in our provision for uncertain tax positions;

• an increase of $5.2 million in deferred tax income driven by the net operating loss in the current quarter compared to net profit in the comparable period in 2023, as well as the increase of the Preferred Technological Enterprises Tax rate in Israel, This was offset by lower tax benefits relating to stock-based compensation.

Tax benefit was $36.0 million in the six months ended June 30, 2024, compared to income taxes of $63.6 million in the six months ended June 30, 2023 primarily due to:

• a decrease of $57.2 million mainly related to the decrease in profits before tax in certain jurisdictions, partially offset by an increase in our provision for uncertain tax positions;

• an increase of $43.2 million in deferred tax income driven by the net operating loss in the six months ended June 30, 2024 compared to net profit in the six months ended June 30, 2023, as well as the increase of the Preferred Technological Enterprises Tax rate in Israel.

This was offset by lower tax benefits relating to stock-based compensation.

Income taxes increased by $85.0 million in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to:

• an increase in deferred tax expenses of $141.2 million in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, driven mainly by a valuation allowance due to uncertainty regarding future profitability.

• a decrease of $46.8 million in current tax expenses related to the decrease in profits before tax in certain jurisdictions, partially offset by an increase in our provision for uncertain tax positions.

Income taxes decreased by $14.5 million in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023 primarily due to:

• a decrease of $104.0 million in current tax expenses mainly related to the decrease in profits before tax in certain jurisdictions, partially offset by an increase in our provision for uncertain tax positions.

• an increase in deferred tax expenses of $98.0 million, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, driven mainly by the valuation allowance due to uncertainty regarding future profitability.

Net loss from equity method investments

Three months ended June 30, 2024 to 2023

Six months ended June 30, 2024 to 2023

Three months ended September 30, 2024 to 2023

Nine months ended September 30, 2024 to 2023

(In thousands)

Net loss from equity method investments

Net loss from equity method investments increased by $0.6 million, or 100% in the three months ended June 30, 2024 as compared to the three months ended June 30, 2023.

Net loss from equity method investments increased by $0.9 million, or 100% in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.

Net loss from equity method investments increased by $0.6 million, or 100% in the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

Net loss from equity method investments increased by $1.4 million, or 100% in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023.

Net Income (loss)

Three months ended June 30, 2024 to 2023

Six months ended June 30, 2024 to 2023

Three months ended September 30, 2024 to 2023

Nine months ended September 30, 2024 to 2023

(In thousands)

Net income (loss)

As a result of the factors discussed above, net loss was $130.8 million in the three months ended June 30, 2024, as compared to a net income of $119.5 million in the three months ended June 30, 2023.

As a result of the factors discussed above, net loss was $288.1 million in the six months ended June 30, 2024, as compared to a net income of $257.9 million in the six months ended June 30, 2023.

As a result of the factors discussed above, net loss in the three months ended September 30, 2024 and September 30, 2023 was $1,205.3 million and $61.2 million, respectively.

As a result of the factors discussed above, net loss was $1,493.5 million in the nine months ended September 30, 2024, as compared to a net income of $196.7 million in the nine months ended September 30, 2023.

Segment analysis

1 unchanged sentence

Following the discontinuation of its e-Mobility LCV activity, the Company operates in three different operating segments:

Solar, Energy Storage and Automation Machines.We have identified two operating segments as reportable – the Solar and the Energy Storage segments.

Solar, Energy Storage and Automation Machines.

We have identified two operating segments as reportable – the Solar and the Energy Storage segments.

The other operating segments are insignificant individually, and therefore, their results are presented together under “All other.”

2 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(In thousands)

6 unchanged sentences

As discussed above, this decrease in revenues was due to high inventory in the channels and slower than expected installation rates beginning in the third quarter of 2023, leading to substantial unexpected cancellations and push outs of existing backlog from our distributors.

Solar revenues decreased by $706.1 million, or 74.5%, in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023 primarily due to (i) a decrease of $609.7 million related to a decrease in the number of inverters and power optimizers sold;

(ii) a decrease of $87.0 million related to the number of batteries for PV applications sold primarily in Europe;

(iii) a decrease of $15.2 million related to less ancillary solar products sold.

Solar operating loss was $105.1 million, in the three months ended June 30, 2024, as compared to profit of $207.0 million in the three months ended June 30, 2023.

This was due to the decrease of $706.1 million in revenue followed by a lesser decrease of $380.8 million in cost of revenues, mainly attributed to fixed and other production related costs as well as a decrease of $15.2 million in AMPTC recognize.

This was partially offset by a decrease of $13.2 million in operating expenses, as a result of our workforce reduction plan designed to reduce operating expenses and align our cost structure with current market dynamics.

Solar revenues decreased by $1,424.5 million, or 76.8%, in the six months ended June 30, 2024, as compared to the six months ended June 30, 2023 primarily due to (i) a decrease of $1,224.0 million related to a decrease in the number of inverters and power optimizers sold;

Solar revenues decreased by $429.4 million, or 63.4%, in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023 primarily due to (i) a decrease of $416.5 million related to a decrease in the number of inverters and power optimizers sold;

and a decrease of $14.6 million related to less ancillary solar products sold.

Solar operating loss was $717.3 million, in the three months ended September 30, 2024, as compared to profit of $45.1 million in the three months ended September 30, 2023.

This was due to the decrease of $429.4 million in revenue as well as a significant increase in inventory write-down accrual of $545.2 million related to the slowdown in our products demand and the repeated price reductions, which were partially offset by a decrease in direct cost of revenues associated with a decrease in the volume of products sold of $118.0 million, a decrease in warranty expenses and warranty accruals of $51.4 million associated primarily with a decrease in revenues and a decrease in shipment and logistic costs in an aggregate amount of $32.2 million_ due to a decrease in volumes shipped;

Solar revenues decreased by $1,853.9 million, or 73.2%, in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023 primarily due to (i) a decrease of $1,640.5 million related to a decrease in the number of inverters and power optimizers sold;

(ii) a decrease of $167.7 million related to the number of batteries for PV applications sold primarily in Europe;

(iii) a decrease of $60.0 million related to less ancillary solar products sold.

Solar operating loss was $215.4 million, in the six months ended June 30, 2024, as compared to profit of $413.7 million in the six months ended June 30, 2023.

This was primarily due to the decrease of $1,424.5 million in revenue followed by a lesser decrease of $774.1 million in cost of revenues, mainly attributed to fixed and other production related costs as well as a decrease of $30.1 million in AMPTC recognized.

This was partially offset by a decrease of $21.2 million in operating expenses as a result of our workforce reduction plan designed to reduce operating expenses and align our cost structure to current market dynamics.

Solar operating loss was $932.7 million, in the nine months ended September 30, 2024, as compared to profit of $458.9 million in the nine months ended September 30, 2023.

This was primarily due to the decrease of $1,853.9 million in revenue followed by a decrease in direct cost of revenues of $648.8 million, a decrease in warranty expenses and warranty accruals of $192.8 million, and a decrease of $118.9 million in shipment and logistic costs, all associated with a decrease in the volume of products sold which was offset by a significant increase in inventory write-down accrual valued at $554.3 million related to the slowdown in our products demand and repeated price reductions.

Energy Storage

Energy Storage revenues increased by $2.3 million, or 12.0%, in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

Energy Storage operating loss decreased by $5.7 million, or 37.1%, in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

The decrease in operating loss was primarily due to the increase in revenues, a decrease of $2.4 million in cost of revenues mainly attributed to a decrease in inventory write-down and a decrease of $0.9 million in operating expenses.

Energy Storage revenues increased by $3.8 million, or 13.4%, in the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

Energy Storage operating loss decreased by $12.0 million, or 35.5%, in the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

The decrease in operating loss was primarily due to an increase in revenues followed by a decrease of $4.2 million in cost of revenues mainly attributed to inventory write-down and a decrease of $4.0 million in operating expenses primarily due to a decrease in the doubtful debt expenses.

All other segments revenues decreased by $22.1 million, or 89.9%, in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, primarily due to the discontinuation of the Company’s LCV e-Mobility activity.

All other segments operating profit was $0.3 million in the three months ended June 30, 2024, compared to operating loss of $0.8 million, in the three months ended June 30, 2023.

Energy Storage revenues decreased by $13.3 million, or 55.0%, in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

Energy Storage operating loss increased by $72.6 million, or 388.5%, in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

The increase in operating loss was primarily due to the decrease in revenues and an increase of $59.4 million in cost of revenues mainly attributed to an increase in inventory write-down partially offset by a decrease in direct cost of revenues.

Energy Storage revenues decreased by $9.5 million, or 18.2%, in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

Energy Storage operating loss increased by $60.6 million, or 115.5%, in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

The increase in operating loss was primarily due to the decrease in revenues as well as an increase of $55.2 million in cost of revenues mainly attributed to an increase in inventory write-down partially offset by a decrease in direct cost of revenues.

All other segments revenues decreased by $21.7 million, or 90.7%, in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily due to the discontinuation of the Company’s LCV e-Mobility activity.

All other segments operating profit was $0.5 million in the three months ended September 30, 2024, compared to operating loss of $3.4 million, in the three months ended September 30, 2023.

This improvement was mainly due to the discontinuation of our LCV e-Mobility activity.

All other segments revenues decreased by $44.7 million, or 88.3%, in the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, primarily due to the discontinuation of the Company’s LCV e-Mobility activity.

All other segments operating profit was $0.4 million in the six months ended June 30, 2024, compared to operating loss of $5.2 million, in the six months ended June 30, 2023.

All other segments revenues decreased by $66.4 million, or 89.1%, in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to the discontinuation of the Company’s LCV e-Mobility activity.

All other segments operating profit was $0.9 million in the nine months ended September 30, 2024, compared to operating loss of $8.6 million, in the nine months ended September 30, 2023.

This improvement was mainly due to the discontinuation of our LCV e-Mobility activity.

Not allocated to segments

There were no significant changes in revenues not allocated to segments in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

Expenses, net, not allocated to segments increased by $5.3 million, or 13.0%, in the three months ended June 30, 2024, as compared to the three months ended June 30, 2023.

The increase was mainly due to an increase in costs related to the Restructuring Plan, which is not assessed by our CODM and therefore not allocated to any of the segments above.

There were no significant changes in revenues not allocated to segments in the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

Expenses, net, not allocated to segments increased by $16.8 million, or 21.0%, in the six months ended June 30, 2024, as compared to the six months ended June 30, 2023.

The increase was mainly due to an increase in costs related to the Restructuring Plan as well as an increase in impairment of property, plant, and equipment partially offset by an increase from the revaluation of equity investment as a result of business combination, all of which are not assessed by our CODM and therefore not allocated to any of the segments above.

There were no significant changes in revenues not allocated to segments in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

Expenses, net, not allocated to segments increased by $237.4 million, or 596.6%, in the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.

The increase was mainly due to the impairment of property, plant and equipment, intangible assets and goodwill.

There were no significant changes in revenues not allocated to segments in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

Expenses, net, not allocated to segments increased by $254.2 million, or 211.8%, in the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023.

The increase was mainly due to the impairment of property, plant and equipment, intangible assets and goodwill as well as an increase in costs related to the Restructuring Plan, all of which are not assessed by our CODM and therefore not allocated to any of the segments above.

Liquidity and Capital Resources

The following table shows our cash flows from operating activities, investing activities, and financing activities for the stated periods:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

4 unchanged sentences

Increase (decrease) in cash and cash equivalents

As of June 30, 2024, our cash and cash equivalents were $259.5 million.

As of September 30, 2024, our cash and cash equivalents were $303.9 million.

This amount does not include $430.9 million invested in available-for-sale marketable securities and $4.1 million invested in restricted bank deposits.

Our principal uses of cash are for funding our operations, capital expenditures, other working capital requirements, other investments, any potential future share repurchases and the repayment of our convertible notes due 2025.

As of June 30, 2024, we have open commitments for capital expenditures in an amount of approximately $23.9 million.

As of September 30, 2024, we have open commitments for capital expenditures in an amount of approximately $18.5 million.

These commitments mainly reflect purchases of automated assembly lines and other machinery related to our manufacturing and operations.

We also have purchase obligations in the amount of $443.8 million related to raw materials and commitments for the future manufacturing of our products.

We believe our cash and cash equivalents, and available-for-sale marketable securities will be sufficient to meet our anticipated cash needs for at least the next 12 months as well as in the longer term, including the self-funding of our capital expenditure and operational commitments.

Operating Activities

Operating cash flows consist primarily of net income (loss), adjusted for certain non-cash items and changes in assets and liabilities.

Cash used in operating activities increased by $181.0 million in the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, mainly due to net loss adjusted for certain non-cash items generated in the six months ended June 30, 2024 as compared to net income adjusted for certain non-cash items in the six months ended June 30, 2023, which was partially offset by lower operating working capital requirements.

Cash used in operating activities increased by $285.5 million in the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, mainly due to net loss adjusted for certain non-cash items generated in the nine months ended September 30, 2024 as compared to net income adjusted for certain non-cash items in the nine months ended September 30, 2023, which was partially offset by lower operating working capital requirements.

Investing Activities

Investing cash flows consist primarily of capital expenditures, investment in, sales and maturities of available for sale marketable securities, investment and withdrawal of bank deposits and restricted bank deposits, cash used for acquisitions and disbursements and receipts from collections of loans made by the Company.

Cash provided by investing activities was $243.2 million in the six months ended June 30, 2024 as compared to cash used in investing activities of $144.5 million in the six months ended June 30, 2023, primarily driven by an increase of $445.8 million in proceeds provided by sales and maturities of available-for-sale marketable securities and a decrease of $35.5 million in purchase of property plant and equipment.

This was partially offset by an increase of $37.5 million in disbursements of loans made by the Company, an increase of $31.2 million in purchases of available-for-sale debt investments and an increase of $18.9 million in cash used in purchase of privately-held companies.

Cash provided by investing activities was $318.8 million in the nine months ended September 30, 2024 as compared to cash used in investing activities of $188.2 million in the nine months ended September 30, 2023, primarily driven by an increase of $508.9 million in proceeds provided by sales and maturities of available-for-sale marketable securities and a decrease of $34.1 million in purchase of property plant and equipment and a decrease of $13.6 million in purchases of available-for-sale debt investments.

These were partially offset by an increase of $22.9 million in disbursements of loans made by the Company and an increase of $17.7 million in cash used in the purchase of privately-held companies.

Financing Activities

Financing cash flows consisted primarily of repurchases of our common stock under the share repurchase program, proceeds from the sale of shares of common stock in a public offering and employee equity incentive plans.

Cash used in financing activities in the six months ended June 30, 2024 increased by $40.5 million compared to the six months ended June 30, 2023, primarily due to a $267.9 million increase in cash used for the repurchase of convertible note, an increase of $50.0 million in cash used in share repurchases, a $25.2 million increase in cash used to purchase the capped call transactions and $11.4 million decrease in proceeds provided by the exercise of stock-based awards.

Financing cash flows consisted primarily of repurchases of our common stock under the share repurchase program, the issuance and repurchase of convertible notes, and our employee equity incentive plans.

Cash used in financing activities in the nine months ended September 30, 2024 increased by $8.6 million compared to the nine months ended September 30, 2023, primarily due to a $267.9 million increase in cash used for the repurchase of convertible note, an increase of $50.3 million in cash used in share repurchases, a $28.3 million increase in cash used to purchase the capped call transactions and $13.0 million decrease in proceeds provided by the exercise of stock-based awards.

This was partially offset by a $329.2 million increase in cash provided by the issuance of convertible notes and a decrease of $21.6 million in withholding taxes remitted to the tax authorities related to the exercise of stock-based awards.

4 unchanged sentences

The program does not obligate SolarEdge to acquire any amount of common stock, it may be suspended, extended, modified, discontinued or terminated at any time at the Company’s discretion without prior notice, and will expire on December 31, 2024.

During the six months ended June 30, 2024, the Company repurchased 753,364 shares of common stock from the open market at an average cost of $66.79 per share for a total of $50.3 million.

During the nine months ended September 30, 2024, the Company repurchased 753,364 shares of common stock from the open market at an average cost of $66.79 per share for a total of $50.3 million.

Convertible Senior Notes

5 unchanged sentences

We intend to use the remainder of the net proceeds from the offering for general corporate purposes.

On July 8, 2024, we sold an aggregate principal amount of $37 million of the Notes 2029.

The Notes 2029 were sold pursuant to the Initial Purchasers’ exercise of the option granted by the Company to the Initial Purchasers to purchase additional Notes 2029, as described above in Note 16, “Convertible Senior Notes.”

Critical Accounting Policies and Significant Management Estimates

Management believes that there have been no significant changes during the six months ended June 30, 2024 to the items that we disclosed as our critical accounting policies and estimates in MD&A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, except as mentioned in Note 1, “General” (if any).

Management believes that there have been no significant changes during the nine months ended September 30, 2024 to the items that we disclosed as our critical accounting policies and estimates in MD&A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, except as mentioned in Note 1, “General” (if any).

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis