Good day, ladies and gentlemen. Welcome to the SolarEdge conference call for the first quarter ended March 31, 2022. This call is being webcast live on the company's website at www.solaredge.com in the investors section of the event calendar page. This call is the sole property and copyright of SolarEdge, with all rights reserved and any recording, reproduction or transmission of this call without express written consent of SolarEdge is prohibited. You may listen to a webcast replay of this call by visiting the event calendar page of the SolarEdge investor website. I would now like to turn the call over to Mike Funari with Sapphire Investor Relations, investor relations for SolarEdge. Please go ahead. Good afternoon. Thank you for joining us to discuss SolarEdge's operating results for the first quarter ended March 31, 2022, as well as the company's outlook for the second quarter of 2022. With me today are Zvi Lando, Chief Executive Officer, and Ronen Faier, Chief Financial Officer. Zvi will begin with a brief review of the results for the first quarter ended March 31, 2022. Ronen will review the financial results for the first quarter, followed by the company's outlook for the second quarter of 2022. We'll then open the call for questions. Please note 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 statement contained in our press release and slides published today for more complete description. All material contained in the webcast is the sole property and copyright of SolarEdge Technologies with all rights reserved. Please note that this presentation describes certain Non-GAAP measures, including Non-GAAP net income and Non-GAAP net dilute earnings per share, which are not measures prepared in accordance with U.S. GAAP. The Non-GAAP measures are presented in this presentation as we believe they provide investors with a means of evaluating and understanding how the company's management evaluates the company's operating performance. These Non-GAAP measures should not be considered in isolation from, as a substitute for, or superior to financial measures prepared in accordance with U.S. GAAP. Listeners who do not have a copy of the quarter ended March 31, 2022 press release or the supplemental material may obtain a copy by visiting the Investors section of the company's website. Now I'll turn the call over to Zvi Lando. Thank you, Mike. Good afternoon, and thank you all for joining us on our conference call today. Starting with highlights of our first quarter results. We concluded the quarter with record revenues of approximately $655 million, more than $100 million over our previous record revenues achieved last quarter. Revenues from our solar business were at a record high of $608 million, while revenues from our non-solar business were $47 million. This quarter, we shipped 5.7 million power optimizers and 211,000 inverters, an increase of 600,000 and 14,000 units respectively from last quarter. Our solar business grew quarter-over-quarter by 21%, driven by growth in all segments and geographies, including record quarterly revenues in the United States and 14 European countries, including the Netherlands, Italy, Poland, Spain, Switzerland, and the U.K. There's a lot of attention recently to what is happening in Europe, and I would like to add some color on this topic since it is a large source of our revenues. Traditionally, the first quarter in Europe is seasonally lower than other quarters, with significant pickup in the second quarter of each year. However, this year, we have seen significant increase in demand already in the first quarter, and the growth in our megawatt shipments from Q4 2021 to Q1 2022 was 40% in the residential segment and 52% in the commercial segment. On top of this, when we examine the sellout data from our distributors in Europe, it is at an all-time high, and inventory days on hand at the distributors are exceptionally low. Considering the current dynamics in Europe of elevated electricity prices, supportive government initiatives, and our historically strong position in this region, and taking into account our current portfolio and new products we plan to release in the coming quarters, we expect our strong growth momentum in Europe to continue. In order to meet the high demand in Europe this quarter, we did have to ship additional products by air, which in combination with the euro to dollar decline, put pressure on our gross margin. Ronen will elaborate on this in a few moments. In the U.S. as well, this was a record revenue quarter. In particular, we saw high quarter-over-quarter growth in the commercial segment, where megawatt shipments grew by over 40%. This correlates with the global strong commercial momentum that we described in the Analyst Day that is associated with corporate ESG focus and high electricity prices. We continued to grow also in regions outside Europe and the U.S. with record revenues. Noteworthy among these countries is Taiwan, where we shipped this quarter more than 50 MW of products, and in Japan, where we are ramping sales and installations of our newly certified residential offering. On the product side, we shipped this quarter approximately 100 MWh of our SolarEdge Home residential battery. We are seeing good market acceptance and strong demand from multiple countries for this product, most recently with a successful launch in Australia. Customer feedback continues to be positive, in particular regarding ease of installation, multiple battery flexibility, and the overall advantages of a DC-coupled system. We are on track in ramping our manufacturing facility and plan to ship over 200 MWh of batteries in the second quarter. We are also experiencing strong demand for all of our other SolarEdge home products, including water heaters, meters, and most notably, our standalone and inverter integrated EV chargers, of which we shipped approximately 8,000 units worldwide in the first quarter. In the commercial and industrial segment this quarter, we released the S1200, a high-wattage power optimizer based on our fourth generation ASIC that supports the recently available high power and bifacial modules. We also continue to test our 330 KW large-scale inverter in sites in Israel and in Europe, and are on track for ramp later this year, further strengthening our offer for ground mount installations. I would like now to elaborate on the operational challenges we are facing while ramping production of inverters, optimizers, and batteries to meet the continuously increasing demand we are seeing. We are facing three main areas of challenge while building our capacity to meet this demand. The first is electronic component availability, in particular at the elevated volumes we require. The second is unpredictable COVID-related disruptions, such as the recent one in Shanghai, affecting some of our raw material and component suppliers. Third are the longer logistic routes affecting both incoming supply to manufacturing sites and finished good shipments. In order to overcome these challenges and to continue and supply our customers with the products they need, when and where they need them, now and in the future, we are on the one hand, investing in growing our contract manufacturing facilities by adding space, people and equipment. On the other hand, managing the component supply chain with expedited shipments, paying, in some cases, high logistics costs to get components to our factories and to get products to our customers. While we have raised prices to cover increased components and material costs, we are not placing all of the infrastructure development and expedited shipment costs on our customers. We expect that some of these costs will be mitigated as we grow manufacturing capabilities, such as in Mexico, where this quarter we began to ship inverters and optimizers into the U.S., and we are on track to supply our entire residential inverter and optimizer U.S. offering from the Mexico factory by year-end. While we do not have clear visibility on when the shortage of components will stabilize and our elevated demand will be met in a more predictable manner, we are optimistic that the work we are doing to qualify additional component suppliers and to align short and long-term forecasts with top management of our key suppliers will ease the constraints towards the end of the year. In our non-solar business, our e-Mobility division continued delivering full powertrain units and batteries for the Fiat E-Ducato in Europe, doubling our deliveries from the prior quarter, and we are expecting to grow another 30% in the coming quarter. In our energy storage division, the Sella 2 factory for lithium-ion cells and batteries in Korea is now fully constructed and has received permits required to initiate test runs for full cell qualification. In summary, this is an exciting period where we are capitalizing on our long-term investment in a broad portfolio and global presence, and are significantly growing our infrastructure and our business globally, albeit in a challenging operational environment. With this, I hand it over to Ronen, who will review our financial results. Thank you, Zvi, and good afternoon, everyone. This financial review includes a GAAP and Non-GAAP discussion. Full reconciliation of the pro forma to GAAP results discussed on this call is available on our website and in the press release issued today. Segment profit is comprised of gross profits for the segment, less operating expenses and do not include amortization, stock-based compensation, expenses, and certain other items. Total revenues for the first quarter were a record $655.1 million, a 19% increase compared to $551.9 million last quarter, and a 62% increase compared to $405.5 million for the same quarter last year. Revenues from our solar segment, which include the sales of residential batteries, were a record $608 million, a 21% increase compared to the $502.7 million last quarter, and a 62% increase compared to $376.4 million for the same quarter last year. U.S. solar revenues this quarter were a record $265.2 million, a 3% increase from the last quarter and represented 43.6% of our solar revenues. Solar revenues from Europe were a record $285.4 million, a 48% increase from the last quarter and represented 47% of our solar revenues. Rest of the world solar revenues were a record $57.4 million, a 10% increase compared to the last quarter and represented 9.4% of our total solar revenues, with a very strong quarter in Israel, Australia and Japan, and a record quarter in Taiwan. On a megawatt basis, we shipped 721 MW to the United States, 1.1 GW to Europe, and 309 MW to the rest of the world. 47% of the megawatt shipments were commercial products, and the remaining 53% were residential. ASP per watt, excluding battery revenues this quarter, was $0.269, a 6.2% increase from $0.253 last quarter, a result of our geographic and product sales mix as well as a price increase implemented in several regions. These price increases will fully materialize in Q3. This quarter, one U.S. customer accounted for more than 10% of our solar revenues. Revenues from our non-solar business were $46.9 million. A significant portion of these revenues came from our e-Mobility division, where the volume of powertrain units delivered to Stellantis continued to grow. Consolidated GAAP gross margins for the quarter was 27.3% compared to 29.1% in the prior quarter, and 34.5% in the same quarter last year. Non-GAAP gross margin this quarter was 28.4% compared to 30.3% in the prior quarter and 36.5% in the same quarter last year. Gross margin for the solar segment was 30.2% compared to 32.8% in the prior quarter. Since our solar segment gross margin have gradually eroded over the last few quarters, I would like to spend some time explaining the main drivers compared to the last quarter in order to provide a broader perspective. There were four primary factors which impacted our gross margins this quarter versus last. The first was increased shipping expenses, both on finished goods and raw materials, for the reasons previously detailed by Zvi. This had a strong impact on our margin, and at current level, it is 480 basis points above where we were in the first quarter of 2021. We expect this to continue in the second quarter and gradually ease from the third quarter onward as we ramp Mexico and decrease the portion of Chinese-made products for the U.S. market. The second is related to costs paid to our contract manufacturers in order to continue manufacturing during the Chinese New Year period and are one time in nature, and for ramp-up expenses in Mexico, China, and Vietnam that will continue through the end of this year. The third element is the increase in revenues from batteries out of our total product mix, which have lower gross margins. Fourth relates to the devaluation of the euro against the U.S. dollar, which impacted us significantly due to the high volume of sales in Europe. We expect this last factor to continue and negatively impact our gross margins into the second quarter, as reflected in our guidance. Goods subject to tariffs shipped into the United States from China accounted for 32% of our U.S. shipments this quarter. Gross margin for the non-solar segment was 5.6% compared to 4.2% in the previous quarter, mostly driven by higher margin on the storage product and improved margins in the e-Mobility business. On a Non-GAAP basis, operating expenses for the first quarter were $98.9 million or 15.1% of revenues, compared to $94.1 million or 17.1% of revenues in the prior quarter, and $76.2 million or 18.8% of revenues for the same quarter last year. For the solar segment, operating expenses as percentage of solar revenues were 13.9% compared to 15.8% last quarter, representing an improved operating leverage as our revenues continue to rapidly expand. Non-GAAP operating income for the quarter was $87.2 million, compared to $72.9 million in the previous quarter and $71.9 million for the same period last year. This quarter, the solar segment generated operating profit of $98.7 million, compared to an operating profit of $85.3 million last quarter. The non-solar segment generated an operating loss of $11.5 million, compared to an operating loss of $12.4 million in the previous quarter. Non-GAAP financial expense for the quarter was $4.9 million, compared to a Non-GAAP financial expense of $2.2 million in the previous quarter. Our Non-GAAP tax expense was $13.5 million, compared to $7.9 million in the previous quarter and $10.1 million for the same period last year. It is worth mentioning that due to the way that the tax provision related to GILTI income is calculated, the company's effective tax rate is not linear throughout the year and is generally higher in the first half of the year, and it will decrease in the second half of 2022. This nonlinear calculation reduced our EPS this quarter by approximately $0.05, which is expected to be recovered in the second half of the year. GAAP net income for the first quarter was $33.1 million, compared to a GAAP net income of $41 million in the previous quarter and $30.1 million for the same quarter last year. Our Non-GAAP net income was $68.8 million compared to a Non-GAAP net income of $62.8 million in the previous quarter and $55.5 million in the same quarter last year. GAAP net diluted earnings per share was $0.60 for the first quarter, compared to $0.74 in the previous quarter and $0.55 in the same quarter last year. Non-GAAP net diluted EPS was $1.20, compared to $1.10 in the previous quarter and $0.98 for the same quarter last year. Turning now to the balance sheet. As of March 31, 2022, cash equivalents, bank deposits, restricted bank deposits, and investments were $1.6 billion. Net of debt, this amount was $979 million. During the first quarter of 2022, we used $163 million of cash for operating activities. High cash consumption is not necessarily unusual for a rapidly growing business. In this case, the non-typical cash consumption in the first quarter is a result of the extended shipping times for both finished goods and components, high volume purchases of battery cells from Samsung for batteries to be manufactured and delivered in the second quarter, and the consumption of working capital while increasing our revenues rapidly. We expect this trend to be reversed in the next quarter. Accounts receivable net increased this quarter to $676.8 million compared to $456.3 million in the last quarter as a result of our growing revenues. As of March 31, 2022, our inventory level net of reserve was at $432.5 million compared to $380.1 million in the prior quarter. Most of this increase is related to an increased level of raw materials, battery cells, and component inventory in the solar segment, while our finished goods inventory continued to decrease as a result of the growing demand for our products. Our non-solar inventory levels slightly decreased compared to the previous quarter. Turning to our guidance for the second quarter of 2022. We are guiding revenues to be within the range of $710 million-$740 million. Revenues from the solar segment are expected to be within the range of $660 million-$690 million. We expect Non-GAAP gross margins to be within the range of 26%-29%. Gross margin from the solar segment is expected to be within the range of 28%-31%, mostly impacted by the euro-dollar exchange rate and an increased level of European revenues. I will now turn the call over to the operator to open it up for questions. Thank you. Ladies and gentlemen, if you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We ask that you please limit yourself to one question and one follow-up question per person. You may then reenter the queue by pressing star one. Again, please press star one to ask a question. We'll pause a moment to give everyone opportunity to signal for questions. We'll take our first question from Brian Lee with Goldman Sachs. Please go ahead. Hey, guys. Thanks for taking the questions. Appreciate all the updates here and some of the moving parts on margins. Appreciate, you know, you guys walking us through that. Maybe on that topic first, Ronen, and for you, I know you had talked about in the past couple quarters as well as on the recent Analyst Day, that your target margins for the inverters and optimizers specifically was 35, you know, getting back to kind of that 35%-30% level in the second half of 2022. Just, you know, given all that you're facing real time, is that still the target for the back half of the year? Do you have visibility into that? Maybe what are the, you know, one or two big pieces that get you from You know, I'm kind of backing into kind of a low 30% gross margin for those particular products right now. There's, you know, maybe a 400 or 500 basis point pickup you need if you're still targeting that. Where would you get that from over the next couple quarters? Thanks. Okay. First of all, thank you very much for the question, Brian. First of all, yes, the target is still, as we mentioned in the Analyst Day, to go back on the inverters and optimizers to 35%-37% gross margins. I think that when we are analyzing this and what should happen, I think that we need to differentiate between items that are within our controls and those that are beyond them. In the items that are within our control, the first thing that happens is actually the fact that we are ramping Mexico very nicely. Next quarter alone, the Mexico factory is supposed to provide about 20% of the products going into the United States. This obviously reduces the cost of shipment and the need for expedited shipment. The second issue that we do see as well is the fact that we continue to get components or expect to start getting components in a more regular way that will reduce the necessity to air ship products and sometimes air ship components to the manufacturing sites. This is, of course, going to impact as well. The third issue are the price increases that we have affected starting Q1 and will materialize into Q3 that are compensating for some of these elevated costs and some of the costs associated with increased price of our components. All of those items are within our expectation, and we simply execute on them one quarter after the other. Within the items that are not within our expectation is, first of all, the situation that we see on global supply chain, especially around what happens right now in Shanghai and other ports. Some of our component manufacturers have logistics hubs there, and this is something that may affect a little bit the supply of their components and some of the parts that we need into our factories. This is something that may necessitate more expedited shipments. Of course, we also believe that this is something that may create a little bit more pressure on ports once this traffic jam in Shanghai is going to be released. The last issue that is beyond our control is actually the euro versus the dollar currency. Our sales in Europe are growing by absolute value and also sometimes as percentage of the revenues. When we see dollar to euro, that if I'm not mistaken, right now the rate is at the lowest part since 2002, this is something that has impact as well. We of course can affect some price increases, but they do not have an immediate effect. With all those items that's within our control, this is the target and we believe that we can achieve. We hope that, you know, things will settle a little bit in Shanghai and that currencies will not work very much against us. All right. No, fair enough. That all helps. It sounds like if I summarize you're sort of looking at margins troughing here in Q2, and depending on some of those factors you don't control, even with some, you know, the shift to Mexico manufacturing, lower freight expenses, you should see a meaningful margin pickup into Q3 and then even into Q4. That's the fair way to summarize that? That's correct, yes. Second question, on batteries, and I'll pass it on. You know, appreciate you giving us the ASP on the inverter side. When we kind of back into the 100 MWh of shipments here this quarter, it implies, you know, somewhere in the $350-$400 per kWh range is the implied ASP for the residential battery. First, is that kind of the right ballpark to be in? Second, are there pricing increases on that product either being contemplated or having already been implemented that'll push that number higher as we move through the year? Thank you. Brian, thanks. The number is not fully accurate because of the difference between shipment and revenue. While we shipped 100 MWh this quarter, we did not recognize revenue on 100 MWh this quarter, and that's part of where the misalignment is coming. But the second part of the question is, yes. We've implemented the price increase on the batteries. We typically try not to increase pricing retroactively on orders that customers gave us a significant time in advance. That's why it takes a little bit longer to materialize. That's what, when I mentioned that, some of the price increases that will materialize in the second and more significantly in the third quarter are on the battery as well. Okay. Thanks a lot, guys. I'll pass it on. Yeah. Thanks, Brian. Thanks. We'll take our next question from Mark Strouse with J.P. Morgan. Please go ahead. Yes, thank you very much for taking our questions. You talked about strong demand in U.S., but obviously getting a lot of questions on the anti-circumvention case. Just wanted to specifically ask what you are hearing from your customers in that region, and kind of what you're expecting, what you're baking into your guidance in 2Q. Yeah. First, obviously like anybody else in the industry, these type of unpredictable disruptions are not healthy for the business, for the market and especially for the current dynamic where this energy transformation is critical to all of us. It's not a good situation for anybody. That said, taking into account that a big portion of our business is outside of the U.S. and while some people predict that as a result of that module prices might decrease outside of the U.S. and there might be an additional cause for momentum, we're not seeing that outside of the U.S. and the business is strong and module prices are stable and module availability is good. In terms of within the U.S., we have, other than hearing concern, we haven't seen any type of a push-out delay or changes to any of our backlog in business, for sure not in residential and also not in C&I. We don't expect it to have a short-term impact, definitely not in Q2 and probably not on Q3 as well if it continues. The backlog is very strong and just the amount of calls that we're getting for expediting is an indication of the situation. That said, a new project development for larger scale projects into the end of the year and the beginning of next year could be impacted in particular in large C&I where we are active and in utility. That said, again, the U.S. commercial is an important business to us. It's not a very high percentage of our total business. Right. Okay. Just as a follow-up, I was just hoping you could give a bit more color on the component constraints that you're talking about. Just maybe a bit more color on what those are, and then kind of the time that's needed to not only qualify an additional supplier, but for that supplier to ramp up with you. I think we can separate it to tactical and strategic. On a tactical level, as Ronen mentioned, some of our, you know, large U.S. component suppliers have distribution hubs in the Shanghai area where they distribute their components after their packaging processes in Asia. There's a lot of tactical tackling going on in terms of getting stuff in and out of Shanghai or some of the other affected locations in China. That, you know, like everybody else, we're waiting for the situation to ease. I think indications are that it's improving, but obviously that's going to be a process because with the congestion at the ports coming in and out, even if as things begin to relax, it's going to take some time for stuff to flow through freely. On a more strategic level, when we look at the ramp in our business and especially project into 2023, we are already talking of volumes of components that require, call it attention, and real high volume long-term agreements with some of the component suppliers. That's something that we've been active in the last three months, is really going between them, meeting, sharing our forecasts, aligning with many of them that are placing renewable energy higher on their priority list and making sure that as part of their expansion plans for the next, you know, 12-24 months, they're building in the type of capacity that we expect to need, looking at the momentum of our business. This is across the board. It's transistors, it's IGBTs, it's ASICs from the foundries. With each one of these key suppliers, we are aligning the midterm forecasts and building the relationship to ensure the supply that we need. The short term, we hope that as challenges ease in Shanghai in particular and in Asia in general, the flow will resume, and it will make our next couple of quarters or especially from Q3 a bit easier. Looking into 2023, it's really already about increasing significantly the capacity at some of our suppliers and a more strategic relationships with some of these key component manufacturers. Okay. Very helpful. Thank you. We'll take our next question from Laura Sanchez with Morgan Stanley. Please go ahead. Hi. Thank you so much. Thank you for taking my question. I think if I can go back to the DOC investigation, I'm wondering, do you think installers have sufficient inventories to supply demand for the rest of the year, or is it that installers can pass the higher cost to customers in case they start importing from China? I think it's probably a little bit of both, and obviously it starts with the distributors, and I believe in particular for residential, the distributors probably have some level of inventory, and the distributors and installers still have some room to modify pricing without impacting demand. At a certain point, obviously that's the increasing pricing is going to begin to impact the demand. I think the duration of this unstable environment is going to be critical to understand if it's a bump that just because the whole industry is driving so fast, we are going to pass over without major impact or if it's a longer and higher bump, it will begin to have some impact towards the end of the year and beginning of next year, starting from utility obviously, which is already impacted, then. Shifting over to C&I and maybe eventually reaching residential. Probably will take longer for that to happen and hopefully this whole crisis will be resolved fast enough not to see this type of dynamic. Understood. As a follow-up, do you think, let's say like the supply in those four Southeast Asian countries, do you think it's possible that they can start supplying the strong demand in Europe? In which case, as you highlighted before, a lot of your revenues, I think over 50% comes from Europe. I'm trying to think or see if we see an impact in the U.S. from the DOC investigation, if that could be potentially offset by a stronger demand in Europe, especially if there is a manufacturing constraint that now those four Southeast Asian countries could supply. I think and again I'm not necessarily that they have exact data, but naturally that makes a lot of sense. There has been some messaging about module companies that are diverting module capacity that was intended for the U.S. to Europe and the rest of the world. Then in theory that could lead to you know definitely to robust supply, maybe to oversupply and some price decreasing and even further momentum in Europe, which we potentially could capitalize on. To be frank, the momentum right now in Europe is so strong that it doesn't need another push. The bottlenecks for the rate of installations in Europe is beginning to reach the point where their labor is in shortage and some other elements. The momentum is so strong that not necessarily will it become much stronger even when modules intended for the U.S. are diverted to Europe. That could happen and definitely in some countries that are more price sensitive, for instance, in Asia, the availability of modules could boost project development rates in countries like Thailand, Taiwan, Philippines, and other places, Japan, and create momentum over there, which again, we would benefit from. Again, that's, there's potential for this to happen. I think it's still early on to say that this is really the dynamic that is happening and really how quickly the situation is addressed by the administration and resolved here in the U.S. is gonna determine if that dynamic evolves or if we're back to some form of business as usual, if you will. Yeah, that's very helpful. Thank you so much. I think you touched on the labor restrictions. Okay, last question here. Could you comment on the sales channel and your ability to continue to gain market share in Europe? Because that does seem to be an area of concern that we're hearing about. If I understand correctly, separating the question into two. The European installation rate of solar in general is growing significantly. We see this in Italy, we see this in Germany. A lot of the items that we shared, including by our European general manager at the Analyst Day in terms of what's happening in Europe. That is a market dynamic. It's not related to us. That market dynamic in some countries is approaching the constraint of availability of installation crews. You know, some of the countries in Europe were relying on a lot of installation crews coming from Ukraine, and that is obviously an issue. Europe could probably grow faster than what we're seeing right now, but labor availability is a bit of a constraint for the momentum or growth being even stronger than what it is today. Now how does that impact us? Obviously, we're very strong in Europe. We're present in all of the countries that are growing. We're present in the segments that are growing, which are residential and commercial. We are benefiting from that, and we're very focused on not being the limiter by supplying our products to all of these installations that require them. Also in our judgment, there's optimism about the current and momentum in Europe and the fact that it's likely to become even stronger. This is even unrelated to the whole dynamic in the U.S. I hope that's not too much detail, but it kind of gives the picture, which is obviously a complex one right now. Very helpful. Thank you so much. Yeah. We'll take our next question from Julien Dumoulin-Smith with Bank of America. Please go ahead. Hey, good afternoon, team. Thanks for the time and the opportunity. Just wanted to go back to the gross margin conversation that we were starting with earlier and just try to understand a little bit more in the back half of the year, specifically on ASPs and pricing increases. You talk about that really kicking in, third quarter. You didn't define the magnitude quite yet. Can you talk about that a little bit? I mean, obviously, ASPs here in the first quarter up a nice amount on the core solar side. Can you talk a little bit more about the order of magnitude that we should be expecting here? Basically, just to hear you out loud about this. As both the shipping and logistics considerations ease themselves up with Mexico and as ASPs improve, how meaningful of a gross margin improvement can we see? Is this about reversing year-over-year trends, or is it about, you know, better than that, if you will? Thanks for the question, Julien. First of all, from price increases, the methodology that we're using is the fact that we usually do not increase prices on orders that we already have. Since in some cases we have orders that were given to us, let's say in the first quarter that went and extended into the second and the third quarter, when we increase prices, we are not increasing on those orders that we have already received and confirmed pricing as much as we can do that. In that case, the reason that things will materialize towards Q3 is mostly related to the timing and to the shipment times and delivery times that we have committed. In general, I can tell you that we have commissioned price increases of high single digits moving across regions and across products. Because in some cases, like in the commercial products, we see sometimes higher competition in Europe coming from some players, Asian players that are not really increasing prices and have relatively good availability of product. That means that our ability to raise prices is not very large. In some cases, we could be a little bit more free to increase the prices. In general, we are trying to increase the prices only on those areas that are related to the fact that we see inflation in the costs that are associated with our manufacturing and shipping. We're trying not to pass to customers all of those, I would call it, expenses that are created due to the fact that we're catching up very big demand that we see with building the supply for this one. In general, this is how we treat these cost increases. When we talk about the magnitude, as I mentioned in my prepared remarks, when we looked at Q1 compared to Q1 last year, which by the way, prices in Q1 last year were already elevated, we saw about 480 additional basis points on the cost or actually a loss of about 480 basis points just compared to last year. We believe that going back to Mexico, from logistics only, and we expect that going back to Mexico and starting to manufacture from there will take the lion's share of it. We're not sure that it will take everything away because we do hear, and we do know that, you know, gas prices are going up and therefore also logistics from Mexico into the U.S. is more expensive, but at least you don't need to do the expedited shipments, and you do not need to do this kind of ocean freight where you pay about $20,000 sometimes for a container to go from China or Vietnam to the United States. In general, I would say that the potential from logistics alone is this about 480 basis points. Other than this, there are other potentials that we see and again, they're more related to the ability to source components, some costs that we can decrease once we have stabilized our R&D organization doing cost reduction and not just qualifying those suppliers. Again, we feel comfortable with the ability to go back to this 35%-37% on the inverters and optimizers. We believe that everything that is related to us has the potential to go to these numbers from where we are today, maybe slightly better. Again, we do see phenomena that are now pushing in the other direction like currencies. The result is that we feel comfortable with everything that we shared in the Analyst Day. Got it. Excellent. Just to clarify that on pricing a little bit more, you said pricing high single digits, you were up 6% here in the quarter, at least on the core ASP per watt metric you disclosed. Kind of a 3% increase in the back half of the year. I know it's apples and oranges 'cause you didn't quite frame it the same way. I just wanna understand the order of magnitude that's still left in that ASP increase again. I get that it's not comparable. It's not necessarily because part of the 6% is also related to mix changes between, U.S. and Europe. I would say that I would believe it at about roughly half of it is still there to utilize. Excellent. Thank you so much. Thanks. We'll take our next question from Philip Shen with Roth Capital Partners. Please go ahead. Hi, everyone. Thanks for taking my questions. First one's on accounts receivables. The number was up $220 million or so in Q1. Ronen, I think you talked about, you know, revenue being up, but when you look at it from a days outstanding perspective. I think days went up from, call it 70 or 65 historically to 93 or so in Q1. Can you talk through a little bit more what's going on there? Thanks. Sure. Of course. So I think that the phenomenon is mostly related to first of all, as you mentioned, you know, the absolute value is related to the fact that we have higher revenues. Actually, the phenomenon that you see is also related to the pattern of when we are shipping to our customers. Q1 in particular is a complicated quarter because of Chinese New Year. During Chinese New Year, in some cases, you're not manufacturing at all and ports in China are mostly closed. In our case, during Q1, we actually paid to our contract manufacturers to maintain operations almost as usual, but still ports were not open. That means that a lot of our shipments, at least related to Q1, were more back-end loaded simply because of this closure of the Chinese New Year. This, of course, is increasing. If you look at, I would say, and by the way, this is a phenomena that we also saw in Q4, given the fact that we needed to pick up from our shutdown in Vietnam. Again, China needed to grow relatively quickly, and then Vietnam was open, so again, it was a little bit of back-end loaded. In general, I can tell you that our payment terms to customers are not changing. They're ranging between, usually, 30-60 days, in general. This is not changing at least as far as we see right now. Most of the phenomena that you see is simply related to the patterns of shipment within the quarter. Again, we hope that once we'll have more capacity in Mexico, the more we are regulated and being able to really produce on a regular manner throughout the quarter, then we will see this DSO going back to the levels that we used to see before. Great. That makes a lot of sense. Thanks. In terms of the battery, megawatt-hours recognized in revenue, can you share what was recognized in Q1? How many megawatt-hours do you expect to recognize in Q2 and Q3? I know you give the shipment expectations, but in terms of revenue recognition, that would be great. Thanks. In general, Philip, we usually recognize as long as we're growing, by the way, because, you know, once you stabilize at the manufacturing, everything that you do not recognize in one quarter, you recognize in the next. You're very much stabilized. I think that right now in the pace of growth, and as you can see, we grew about 100% from Q4 to Q1, and we expect to grow about 100% from Q1 into Q2. We recognize, I would say roughly around 70%-80% of the revenues from batteries in the same quarter, and the remaining part is simply delayed to the other one. This is also, by the way, very much dependent on how much you're shipping into Europe because we're manufacturing in Europe. The more shipping we see in Europe, the quicker we recognize. This quarter, we had a little bit of a higher shipment into the United States, so this also affected. Short number is about 70%, and reasons were detailed. Great. Thanks for taking the questions. I'll pass it on. Thank you. Thanks. We'll take our next question from Maheep Mandloi with Credit Suisse. Please go ahead. Hey, good evening, thanks for taking the questions. Just on Europe, just going back to it, could you just talk more about which countries do you see more demand from in Q1 and Q2? Just stepping back, like how should we see this European share grow in Q2 and the second half versus Q1? Thanks. Thanks, Maheep. So as we detailed it was a very broad wave or momentum in Europe covering also the large countries like Netherlands, where we had a record quarter, and Germany, where it was maybe not a record quarter, but still it was a very strong quarter. Italy, which because of some local government incentives is a very dynamic market right now. What was interesting is that also smaller countries or markets like Austria, Switzerland, Sweden, Poland for sure are becoming a sizable market. The drive to increase installation rate is happening all over these because they are all affected by higher electricity prices. If you assume that those electricity prices are not going to go down anytime soon, then the expectation is for this momentum to continue. We are definitely in our projections for Q2, there is nice growth in Europe. Again, we assume that continues. In parallel also, battery shipments and battery attach rates will increase in these markets. Germany is a very battery-heavy country, but the other markets like the U.K., Netherlands and Italy, until a couple of quarters ago, were not so heavy on batteries, and right now are markets with a lot of battery installation. It's kind of an exponential effect where solar installation rate is going up and the revenue per installation, if you will, or cost per installation is going up as well. We are projecting continued strong momentum in our numbers coming from Europe. On the battery side that you're already at the 200 MWh run rate, closer to that 1 GWh capacity from Samsung. Can you talk about like the sources of new supply in Q3? Like, will Sella 2 be able to contribute to that, or do you expect to expand your relationship with Samsung? Yeah. Thanks. No, no. I'm sorry. We still have a fair runway on the Samsung cells. Sella 2 will not be supplying cells for battery assembly in Q3. We still have the whole qualification process to go through. Then with battery cells, there's a longer period between when the cell is manufactured until it ends up in an installed battery. This year will be completely dominated by Samsung, and then next year, at the beginning of the year, it will be a mix. By then we will need to decide at what rate to augment our own supply with supply from others or particularly from Samsung. That's a dynamic that is very open to us. At some point we'll look at the projections and see how quickly Sella 2 is ramping to the volumes that we need. If we need more, we're pretty positive that we'll be able to extend the Samsung contract and volumes. Thanks for taking the questions. Thanks, Maheep Mandloi. Thank you. We'll take our next question from Colin Rusch with Oppenheimer & Co. Please go ahead. Thanks so much, guys. Could you talk about the availability of the capital equipment for the battery ramp up? Are you guys seeing any bottlenecks on that front? Any changes in pricing? How should we think about, you know, that ramp and the build-out? No, that's pretty much done. I mean, the equipment is all in the factory, it's all running. We are very close to completing the unit process qualification, and now are beginning the integrated factory level qualification. In that regard, it's behind us. The capacity for the 2.5 GWh that we wanted to start with from an equipment point of view is all there and all installed. When we come to ramping phase two, that's when we'll start looking again of where capital equipment is going to be. We don't expect issues and it's not an issue right now for us, so. Okay. That's super helpful. Just in terms of sourcing material for the ramp up, you know, can you talk a little bit about how those contracts are structured and how much variability you have in them from an input cost perspective? Sure. First of all, you know, when you design a battery, once you've locked the chemistry, you're very much locked with the vendors that you have. In general, the materials that you're going to use are determined and usually go into supply agreements with your manufacturers. The most important will be the cathode materials, electrolyte and anode materials. In general, we have those in places. The work once you have the agreement in place is the fact that you give a kind of a rolling forecast and you basically need to make sure that the rolling forecast is matching what you're supposed to make. Right now, our relationship with all of the vendors related to the scale that we will manufacture in Sella 2 are established. The quantities and expected quantities were provided to them. At least right now, we do not see any issues with ramping as we plan. Excellent. Thanks so much, guys. Thank you. Ladies and gentlemen, as a reminder, if you'd like to ask a question or have a comment, you may do so by pressing star one on your touch tone telephone, star one for questions. We'll take our next question from Kashy Harrison with Piper Sandler. Please go ahead. Good evening and thanks for taking the questions. Maybe first one for me, you know, Ronen, you highlighted improving operating leverage in your prepared remarks. I was wondering if you could maybe walk us through how we should be thinking about operating expenses entering Q2 since operating leverage is becoming more of an important piece of the story. I was wondering if you could also share how much working capital you expect to spend this year. Finally, rest of the world volumes are down year-over-year. If you could just walk us through that would be great. Thank you. Okay. Let's actually start one by one. I'm sorry, I lost my train of thought. Can you start with the first one? Sorry. Operating leverage. Sorry, right, Kashy? Yes. Okay. From operating leverage, there are two phenomena that we've seen in Q2. The first one, by the way, is the fact that we see revenues continue to increase. As you saw in our guidance, we're guiding for $710 million-$740 million. This is approximately, you know, close to 10% or even more than 10% increase. We do not expect to see expenses growing. Usually in the second quarter of the year, we have one phenomena where our salary merit increases are taking place. You see a little bit of acceleration in the operating expenses in this quarter that is then going down a little bit into the third and fourth quarters. I think that, you know, when we shared the model of the analyst day, showing that we should end up at approximately 20% operating profit and having that implies about, I would say 10%-11% operating expenses out of the revenues. This is the number we're still aiming. This is what we see. We get a little bit of help here now, by the way, from exchange rate because whatever we are losing on the revenue line in Europe, euro, we're saving on the expense side on the shekel, the Israeli shekel weakening and the euro. Again, we believe that this is on track. You may see in Q2, at least on the expense side, you're going to see a little bit of a hike up that will be slowing down in Q3, and you will see the jump in revenue that we saw and this will lead us into that stage. Second question was what? Working capital. Working capital. Sorry, Kashy. Thank you very much for reminding. Actually, we expect to see the usage of working capital reversing already in Q2, and we expect for the year to be generating a substantial amount of cash flow from operations. In that sense, the working capital need that we saw in Q1, we view it as relatively unique and not something that will characterize the, I would call it, the remaining of the year. Okay. Thank you. The last question And then- The last question is. It's more of an internal prioritization. Q4, we delivered a lot to rest of world, and particularly to Asia and we balanced that out in Q1 using what we have. We are supply constrained, not demand constrained, and we probably could've delivered a record revenue to rest of world as well this quarter from a megawatts perspective, but with the capacity that we had and what we delivered in Q4, this quarter was indeed a lower quarter in the ROW compared to what we wanted to ship to Europe and the U.S. Excellent. Thank you very much. Thank you. At this time, we have no further questions in the queue. I would like to turn the conference back to Zvi Lando for any additional or closing remarks. Thank you, Keith. Just wanted to thank everyone for joining us today. Take care and stay safe, and I'll see you in another quarter. Thanks. Thank you. Ladies and gentlemen, this concludes today's conference. We appreciate your participation. You may now disconnect.