With ongoing strong demand for solar and energy storage systems at homes and businesses, SolarEdge Technologies Inc. executives expect the global supply chain and logistics challenges that hit profits in the fourth quarter of 2021 to continue through the first half of 2022.

"Ramping production to meet this demand in the current supply chain and logistics environment is having an impact on our top and bottom line as we prioritize expedited shipments in order to meet customer schedules, at times at the expense of our gross margin," SolarEdge CEO Zvi Lando said on a Feb. 15 earnings call. "We expect this situation to last until the middle of the year as we adjust our infrastructure and ramp manufacturing capacity to this new level of demand."

In the final three months of 2021, SolarEdge posted adjusted net earnings of $1.10 per share, missing the S&P Capital IQ consensus mark by nearly 17%. Quarterly revenues came in at a record $551.92 million, which were slightly above analysts' estimates in the fourth quarter and 54% higher than a year earlier. The company forecast that revenues will grow to between $615 million and $645 million in the first quarter.

However, SolarEdge's non-GAAP gross profit margin will remain under pressure at between 28% and 30% in the first three months of this year, CFO Ronen Faier said. That compares with 36.5% in the first quarter of 2021.

The CFO cited a variety of factors expected to continue to weigh on SolarEdge's profit margin in 2022, including growth in deliveries of solar power electronics and battery storage during a period of component shortages and high costs for shipping.

"We expect this impact to be temporary and will be mitigated upon full ramp of our Mexico manufacturing, which is expected to be concluded by the end of the year," Faier said.

The company is shifting over production of power electronics for home solar installations in North America to the new contract manufacturing facility in Mexico, alleviating challenges associated with its China-based manufacturing.

"This will have a favorable effect on shipping costs, tariffs, working capital management and timely meeting the U.S. demand and lead times," Lando said.

Because of component delays, SolarEdge shipped 42.5 MWh of batteries in the fourth quarter of 2021, below the 70 MWh the company planned to ship. SolarEdge intends to ramp up shipments of residential batteries to between 100 MWh and 120 MWh in the first quarter.

For the year, the company expects its revenue growth, combined with its operational expense, to "offset the temporary margin impact and ... increase our overall expected profit levels," Faier said.