When are Q4 results coming?
February 20th, 2013.
Today is February 20th, 2013.
"Tesla Motors, Inc. Fourth Quarter 2012 Financial Results Q&A Conference Call: Feb 20, 2013 at 2:30 PM PT"
"Today's the day
The Tessy Bears have their
Extract from Forbes:
"For the quarter, the company posted revenue of $306 million, up 500% sequentially from the $50.1 million reported in Q3, up more than sevenfold from $39.4 million a year ago, and ahead of the Street consensus forecast at $298.4 million. The company lost 65 cents a share on a non-GAAP basis in the quarter, wider than the Street consensus forecast of a loss of 53 cents a share. On a GAAP basis, the company lost 79 cents a share.
Gross margin improved to almost 8%, from -17% in Q3. The company expects gross margin to drive toward its 25% target by year end.
Tesla says that as a result of production and delivery efficiencies, it now expects to report a Q1 profit, excluding non-cash expenses related to options and warrants. The company had previously projected reaching break-even late in 2013. The company also expects to be close to break-even on cash flow from operations in Q1. Street consensus has called for the company to post Q1 revenues of $378.1 million with a loss of 17 cents a share.
For 2013, the company expects to deliver about 20,000 Model S unit. The company expects about 4,500 deliveries in Q1. European deliveries will start this summer, with Asian deliveries to begin later this year. Tesla notes that it expects Q1 material, labor and overhead costs to be down substantially in Q1 from Q4, and for the trend to continue in 2013. Q1 gross margin is expected to be in the mid-teens."
Tesla Motors, Inc. – Fourth Quarter & Full Year 2012 Shareholder Letter
Achieved 20,000 annualized production rate
Record new Model S reservations
Model S unanimously named Motor Trend Car of the Year®
Q4 revenue increases sequentially by 500% to $306 million
Rapid growth of Model S sales and service network
First profit now expected Q1 2013 versus prior guidance of late 2013
Several interesting comments in the Q&A session.
Expect to deliver 4500 in Q1
Over 50% of orders are for the 85 KWH model, Less than 10% for the 40 KWH version.
Leasing program planned for second half 2013.
Highly confident of profitability in Q1, feels likely to continue profitability in subsequent quarters.
Paid back first $12.5M installment of government loan in Q4, next payment on track for March.
Link to the shareholder letter at the bottom of this page http://ir.teslamotors.com/
How is it that Tesla got pounded on the market after they announced their earnings then? WTF! Clearly Tesla are doing very well. The only issue appears to be the large investment required for equipment... something that won't be required for the coming few quarters, most likely.
My theory is that the hedge funds shorting the stock pounded on it after hours yesterday, when with little money you can really move the price, to set up a low price today so they could unwind their short positions.
They were able to do this because the headlines were mixed, and especially using the higher loss per share for Q4 than the average analyst estimate.
Today volume is super high, nearly 5 million shares so far, with the price consistently holding above $34.50. So there are a lot of buyers at that price. I think a significant part of these are unwinding shorts.
The good thing about this theory is that it should be easy to prove or falsify. Let's see what happens with the % of short interest over the next few days.
I would tend to agree, they hit the high end of their target production and the investment in infrastructure is for both the production equipment and the superchargers. This is a moat that will be harder for competitors to cross. As the cost is sunk it becomes a barrier to entry beyond just the drivetrain.
The reason the stock got hit is public perception after NYT article, coupled with annoucememt of reservation cancelations. Shorts pounced, stock holders responded. What Elon should learn from this is take any and all opportunities to sell the car instead of get pulled into arguments with instigators or trolls. Especially right now. No matter how people get interested (through good or bad press), always be selling to the public the virtues of Tesla and future affordability. And get buts in seats on test drives. Analysts and investors are the general public too. They need to constantly be reminded, reaffirmed of its promise.
The Supercharger investment is trivial. TM's share of the layout of the whole 100 station (1st year) n/w is worth about $40 million. All the arrays and power costs are Sun City's, recouped through solar feed-in.
jk, I don't think the Times article had any impact today. It was all about the Q4 results and call.
The results were good and totally within reason. But there was no major upside surprise, while the Q4 loss was a little higher than expected and the cancellation rate surprised some people.
A Q1 profit was mentioned but Musk sounded equivocal, probably because he always does when talking about things with uncertainty attached to them.
It was by no means a bad Q4 presentation but it was ambiguous enough to allow an attack on the stock.
I expect the short interest to be lower after this. I could be wrong, but that's my theory and I'm sticking to it for now.
There clearly is a perception problem being relayed through the media that this is an overpriced city car "second car." Even lebeau agreed in the video link below. Elon needs to work hard to show this is not the high priced leaf. This is very important going into the next year after back log drops. Need to bring in more then just eager early adopters by that point. There is so much good to sell about it, it is Tesla's opportunity to change the NYT Broder perception that most people continue to attribute to EVs in general. The nyt article is the public's apprehension manifested. It is the central issue to mass adoption. Tesla has the answer just need to sell it, find ways to sell it now that the public is thinking about it more.
I think when the first MS goes from la to NYC using superchargers exclusively for free is the man on the moon moment for EVs. The savings in gas will easily be apparent. To know that it was powered by the sun, will be astonishing.
Thanks for the link, jk.
That's the message Tesla has to get the media to hammer out - this is a car that would serve as an ONLY car for 95% of our driving population.
Tesla, should I come & help you with the data and stats? - please pay heed to this.
The DOT has data from huge samples that show (2009 was the last survey) that 95% of daily trips averaged 36.13 miles, with a confidence interval of 1.35. So, Tesla can safely say that over 90% of drivers will have more than enough range with the Model S.
For Long distance vacation trips, as the superchargers make their way around the nation, drivers will soon require less planning than they may now need(esp in colder climes).
Okay, Tesla marketing, please get to work - your fans on these forums and elsewhere are doing their part.
Kkiri -- biggest point of all is superchargers are free. Charging at home is massively cheaper then gas. You will have all the range you need and then some for free or a fraction of what you pay in gas. That is what's coming for 30k. What's coming for 30k? Geniii. See the benefits of the MS? That the total cost of owning the car is equal or less then a car half it's purchase price over life of equal ownership? Yes. Well, that's what's coming with geniii. Savings you've never had or knew existed. Use that money to spend more time with your loved ones. To buy the things you need in this tight economy. Don't have anxiety about gas prices going up or worrying about how much less money is in your account after a bad month at the pump.
This is what's coming. MS is showing you that promise right now. MX will highlight it even more soon.
I think what annoys me is the general public refuses to take time to consider the value of a Model S. They're stuck in "ICE-Mode" where if an alternative vehicle doesn't do exactly as an ICE would, it's inherently a lesser car. Not so of course, but perception is reality.
"if an alternative vehicle doesn't do exactly as an ICE would...."
Waste 80% of its energy while driving down the road
Spew waste heat, fuel, poisonous byproducts into the air causing disease
Necessitate massive search and spending to supply fuel
Necessitate massive political actions to support fuel supply
Spontaneously combust at the side of the road once every minute and a half
Grind its drive train of several hundred moving parts to destruction
Require expensive systems on every vehicle to mitigate noise and pollution
Require exclusive companies to dictate sources and prices of fuel
Require thousands of dollars per year supplying fuel and maintenance
They are stuck in pure ignorance, as in "ignore" the facts. Somehow thinking that a pickup truck is on any kind of par with an electric vehicle just because it has more cup holders and can fill up (for a price!!) in only 5 minutes (yeah, right) makes perfect sense.
"If you're living the American Dream, You're probably asleep."
I just copy and pasted your excellent reply into a Word doc. I am sure I'll use it again.
Add noise to the second line... One of the major ICE pollutants. Can you imagine SF with only EVs ?
"I think when the first MS goes from la to NYC using superchargers exclusively for free is the man on the moon moment for EVs. The savings in gas will easily be apparent. To know that it was powered by the sun, will be astonishing."
Yes, that will be a very important moment for the recognition of the EV as a really good vehicle for long distance driving. Free and powered by the sun. Super.
Most people on this forum are in agreement with precisely the points you make, but most of the world is too unconscious to even care.
... and as if that wasn't frustrating enough, the shorts make me want to go berserk. These people are some of the lowest forms of life on earth. If lawyers are bad and insurance companies are worse, stock traders are probably right after both on the scale down to amoeba. (And actually, if you think about amoebas don't spend time concocting "reviews" in order to downgrade stock prices so they can profit at the expense of societal progress. What does that say?)
It's a bit more subtle than that. Shorts are playing with fire.
@ Brian H:
No doubt there are many subtleties I know nothing of with regard to the stock market. Nonetheless there's no doubt that shorts create FUD amongst more than just their own ilk thus ensuring the general public is skeptical for no reason.
I looked at the balance sheet in the 8K again:http://investing.money.msn.com/investments/sec-filings/?symbol=tsla
Cash was $202M+$27M acct receivable=$229M that is liquid and available.
Inventory at $269M. That is huge considering that expected sales are $400M/Q. Why is it so hi? Unfinished cars? Piled up inventory that was over ordered? Inventory that was bought big batches? ARe unfinished cars valued at cost?
Accounts payable is $343M. Most of it is probably owned to suppliers. Even if they sell all their inventory is cars and were sold to pay off the vendors, the shortfall would be $74M. Remaining cash would be $128M. No margin for error.
The company would have to generate free cash flow by now, just to stay ahead and not be forced to raise cash. No sign of that so far, we are in the 3rd month of Q1. Tesla would start making noises of a secondary, but I have not read anything to that effect.
Tesla said that they are focussing in making the operations efficient, cutting costs, etc. With no much margin for error considering the net cash situation, this is a high wire act.
You have to account for the reservation payments as well. Maybe in Q1, 5k per reservation at 5k reservations is 25m in working capital...
That inventory is equal to about half a year's production. I would expect the raw aluminum rolls and battery cells from Panasonic awaiting assembly might account for quite a bit of it, perhaps half or one third. And every finished but undelivered car is "unsold".
Bubba2000 - 2k in delivery at $100k each is $200M. Assuming there are 1k-2k cars in delivery on trucks or sitting in delivery centers is not unreasonable. That is a potential big chunk right there. The inefficiencies of 70 hrs work weeks etc are not likely in mfg, but I think mainly in logistics.
I think a large contributor to the cash outflows in Q4 came from all the 1500 sig reservation payment liabilities (40k per) coming off the books. Added to the 900 production reservation payments (5k per), a total of 64.5m of cash outflows resulted. Although revenues were 306m, these res payments cut in substantially. With the craziness of cancelations (and re-reserving) due to the price hike and Broder debacle, I feel the reservation payment increase post all the awards didn't offset the out flowing cash for Q4. ( add the overtime and other challenges stated). So, they cut into cash and cash equivalents deeper then they probably wanted to, although some people didn't think they would have anything near 200m going into 2013.
Now that the sigs are cleared off the books, substantially less cash outflows attributed to reservation payments liabilities will happen in Q1. Only 5k per car sold will come off (I anticipate they will sell 4.5k), so 22.5m instead of 64.5m this quarter. Add in the new reservations, which could turn out to be over 5k, the there might be a net in-flow of cash which might not have been the case in Q4. I'm thinking they will use far less cash and cash equivalents in Q1, so they will not have to worry about raising more money in Q2.
Euro sigs and 40 production starting up might challenge cash flows in Q2. However, this might be the time, maybe in the last month or so of Q4, Tesla decides to raise production to 500/week.
It will be a definite work of art through how they cut costs, work reservation payments, time production increases throughout the year in order to achieve profitability and maintain enough cash.
I think they will do it and demonstrate to investors viability as a car company. In 2014, I expect a substantial follow on offering that could potentially raise 500m-1b and we could see the mythic geniii come to market sooner then expected. Since I feel the stock is already priced on anticipation of mass production geniii, I don't think the stock price rise will not get slowed any by the offer, might even accelerate it.
Correction... I meant an increase to production to 500/week by last month of Q2...
Clarification... I think the current stock price is proportionate to the potential of geniii actually making it to market. As that potential becomes closer to becoming realized, the stock price will rise. When geniii begins production at 400k/year, price will align more closely with financials... Until the next big objective Esla announces...
For every cash flow impact of a reservation that comes off the books (?? moves from liability to revenue) there is the balance owing which is received on delivery. A delivery is a strong net positive cash flow event.
Brian, once rev rec'd, the res payments are accounted as operating expense... The cost of revenue...
?? When I learned accounting, reservation payments did not appear on the income statement at all, and in any case they must appear as debits in the bank account and credits somewhere else. They cannot be DR both in bank and expenses. That is bookkeeping heresy.
Res panets are a current liability. Tesla uses much of the res payments as working capital. Working capital is used in operations. Once car is sold and delivered, revenue is recognized. At that time, the spent money from the res payment is accounted for as cost of revenue in operations. So if they rev rec 100k from a sale, 5k of that is immediately recognized as cost of revenue since it was already spent become delivery.
Overall, most of 100m in res payment since res payment started had been used before Q4 production ramp. Therefore, much of that hit the bottom line already with the Sigs going out. This is why I feel there is strong support for cost reductions in this portion of cost of revenue. Some people can't see how they will be breakeven or slightly profitable and this is just of those parts they are overlooking. The clearing of the Sigs, streamlining production through reducing labor costs and rework, decreasing r&d, are the biggest areas they will do it.
If they turn a small profit, I think they won't drop below their current cash level. Maybe increase on scheduled investment returns going into Q2. I feel Q2 is going to be the demonstration of best financial management skills seen in a while... Get trough Q2, they've proven they will thrive for a long time. Q2 is the dragon thruster challenge of tesla. If they can hammer through it, cash on hand will be in a great place. Cash on hand in a great place, more investors will buy in...
How they batch produce the 40s and counterbalance the fall in revenue per unit with production increase to 500/week will be fascinating to watch...
My understanding is that an automated factory like Tesla takes a lot of effort to get working efficiently. The supply chain has to work like clockwork so that production does not slowdown. Enough inventory has to be at hand to provide a buffer. May be they will have to implement SAP, which is a challenge into itself.
The manufacturing process itself needs to be tuned up. The dies, presses, welding robots, assembly robots, painting, final assembly, etc all need to be continuously adjusted. Make one adjustment and something goes off tolerance. Distortions due to the temperature, welding, etc have to be incrementally adjusted. Same for the computer controlled machine tools that make the motors, etc. Follow Deming principles, etc.
I imagine they spend a lot of hours and effort tuning the whole process and reduce rework, inventory shortages and pile ups. Tesla has experienced people from Toyota, etc working for them. Due to the simple design of Model S, huge economies of scale are possible.
I have been reading about Graphene tech application in Li-Ion batteries. Promising, but this kind of stuff will take years. First use will be in smart phones or even the military. GenIII needs disruptive battery tech to make it affordable.
@Bubba2000 - just curious... are you working in production and did you tour the factory?
A small company like Tesla needs to maintain tight inventory controls. Sometimes it is difficult if the components are custom made given the low volumes. Worse if they are made in far away countries. Tesla's inventory is $269M. If there were no cars involved, and the BOM (bill of materials) is $50,000, then the inventory is good for 5,380 cars - more than 3 months of production. Quite high.
If they had 2 weeks of cars almost finished, but not shipped (800 cars @100,000), then the remaining inventory is good for 3,780 cars. Still hi, but ok given the size of the company, the product, etc.
Hopefully, they will get their logistics right. Use off the shelf parts like tires that can be sourced locally. Those 21" rims and tires must be custom, that is why they are so expensive. They will probably simply the logistics with time. Some items like the inverter, flat panel/tablet got to be custom. I wonder who makes them? GE? Some Japanese company? Korean? That is some precision equipment. They probably have to buy a whole bunch of them to get a volume discount.
Batteries are commodities, but Tesla has a special kind and they have to be shipped by container size. Big $$$.
Just comments on my part trying to understand the business.