Solar inverter producer SolarEdge’s revenue in the third quarter of 2023 is expected to be about 20% lower than consensus due to cancellations and pushouts of existing backlog from European distributors.
In its preliminary Q3 financial result announcement, SolarEdge said its Q3 revenue would be in the range of US$720 million-US$730 million, compared to the previous expectation of US$880 million-US$920 million.
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SolarEdge CEO Zvi Lando said the company had experienced substantial unexpected cancellations and pushouts of existing backlog from European distributors during the second part of Q3 2023. Operating loss of Q3 would be within the range of US$9 million-US$28 million.
“We attribute these cancellations and pushouts to higher than expected inventory in the channels and slower than expected installation rates. In particular, installation rates for Q3 were much slower at the end of the summer and in September where traditionally there is a rise in installation rates,” Lando said.
Looking ahead, SolarEdge expected “significantly lower revenues” in Q4 as the inventory destocking process will continue.
Landon said the adjusted guidance was “unrelated to the tragic events that have unfolded in Israel”.
“While there has been some impact on daily routines at our headquarters, our offices and facilities are open worldwide, including in Israel, and we are manufacturing and providing customer support without interruption,” he said.
ROTH Capital believed that some distributor could have more than four months of SolarEdge’s inventory, with others having double that amount or even more. The company said Chinese single-phase inverters were an additional threat in the EU, but it did not see any price concessions from SolarEdge.
ROTH Capital believed that SolarEdge extended payment terms to help struggling distributors and offered discounts through sales and purchase agreements. However, some distributors asked for one to three months extensions to SolarEdge’s standard 60-day payment terms. According to ROTH Capital, SolarEdge already saw the risk of bankruptcies for distributors in the months ahead in both the US and EU.
