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Tesla Motors Corp (NASDAQ: TSLA) Sales up 16% and Increases PM; Earnings Flat

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By on Technology & Software

Tesla Motors Corp (NASDAQ: TSLA) did not surprise investors this time, missing analyst expectations by $0.01 with an EPS of $0.11 while the predicted EPS was $0.12.  This does not come as a surprise as Tesla plans the Gigafactory site and Model X production.  At best at least the stock does not fall much since earnings were flat.  Executives don’t want to share too much forecasting or “show all their cards” dismissing an analyst’s question about the forecast. Goldman Sach analyst seems pessimistic about Tesla’s future deliveries and wonder about the risks and how deliveries can go from 78 to 13,000 in one quarter. Tesla Motors says demand is not an issue at all, they can launch new retail sales.  They said production is the main issue and service centers right now.  One man in china was so upset about the slow delivery that he bashed his car in, according to the executive speaking. Tesla states their earnings per square foot is double that of Apple’s.

 

Link to Call: Click here to see link to call - 5:30pm EST Expectations:

$811mm  in Q2 with $3.4mm in profits and ($0.11) EPS or $0.03-$0.04 Adjusted EPS compared to last quarter’s $0.12.

Sales in China are the biggest question.  Investors are encouraged to participate in the company before sales in China start growing fast, by then the stock price may climb too high.  21,000 sales are expected globally with 14,000 units being sold domestically totaling 35,000 expected annual deliveries.  Tesla’s adjusted gross margin at 25.4% is double compared to traditional car makers, and if their margin falls significantly this could factor into the stock price as well.

 

Earnings Call Results:

Net Income of $16mm and $0.11 EPS

Partnership agreement between Panasonic and Tesla to develop the Gigafactory.

8,763 Model S cars were sold during the quarter, up 16% from Q1. Less than a day, is the average time to service a customer and fix a car.

They can pick up a car from an office and fix the car and bring it back, before the customer even finishes work.

Quarter 2 Model S orders increased the most in North America and Europe Non-GAAP revenue increased 55% to $858 million compared to Q1.

Profit Margins increased slightly from 25.4% to 26.8% excluding ZEV credits.

R&D up 37% to $93 million on a non-GAAP basis due to Model X development costs

SG&A up 20% at $117 million -Underwriters contributed $267 million in cash providing a total of $2.7 billion in cash to Tesla.

Panasonic isn’t providing much input on the development of the gigafactory site.

Tesla is primarily in charge of evaluating the sites used.

A lot of discussions on the call about the technical and chemistry standpoints of the battery production.

Tesla executives convinces he analysts that the chemistry is well understood, and that it’s just a series of checklists on what they have to do next.

Expectations for Q3

-9000 cars for Q3 taking into account the two week factory shut down in Fremont; otherwise 11,000 units predicted.

-Expectation of 7,800 Model S vehicles in Q3.

-28% profit margin by the end of this year without the ZEV credits

-Expectations to lease 300 cars in Q3 ,and more in Q4

-Increase of $100mm from prior guidance for investment between $750mm and $950mm in 2014.

For the stock to soar, we need to see that Tesla beats deliveries expectations, earning expectations and increases gross margins.

Financials Tesla Financial (Tesla.com)

tesla-report-1 Tesla Financial Non-GAAP (Tesla.com) tesla-report2

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