Tesla Surprises Analysts With Second Quarterly Profit – Depending How You Do The Math
Defying analysts’ predictions that Tesla Motors would report a quarterly loss of $0.17 a share, the EV startup instead announced that it had a second quarter profit, after adjustments, of 20 cents a share, according to non-GAAP principles. On the news, Tesla stock went up 13% in after hours trading.
When using GAAP principles, Tesla posted a net loss of $30.5 million for the quarter. Revenue related to car sales dropped from the first quarter by over $150 million to $401 million, reflecting deferred revenue on financed vehicles. Last year for the second quarter Tesla posted revenue of $26.7 million and a $105.6 million loss.
On a non-GAAP basis, Tesla said second-quarter net income totaled $26 million, excluding special items and $100 million in gross profit with a gross profit margin of 22 percent. That gross profit does not include a lot of overhead items like r&d, and sales and administrative costs. With those factored in, Tesla said it had an operating loss of $12 million for the quarter.
Part of the company’s bottom line has to do with the sale of zero emissions credits to other car companies. In the 2nd quarter, Tesla sold $51 million worth of ZEV credits and an additional $18 million in “other regulatory credits.” The company said that it ended the first half of fiscal 2013 with $746 million in cash on hand, up from $214 million at the end of the first quarter and $210 million a year ago. Tesla also rolled its lease accounting into this quarter’s results, something not allowed under GAAP. That helped Tesla arrive at the profit that they’ve been touting.
Net income was up 70% from the first quarter to $26 million, on 5,150 deliveries to customers, in line with Tesla’s earlier announced 20K/yr production rate on the Model S. The company says that it increased production in the quarter by 20% to 500 Model S cars, so actually current production is closer to 25,000 annual units.
Tesla said that it will open “several more” dealerships in the next year, one of them being their first store in China. It’s not clear if that dealership will be factory owned or not. Export markets are currently a focus of activity at Tesla. Deliveries of the Model S to Europe began this week. If needed as they expand into new markets, Tesla says that production could exceed 40,000 cars by the end of next year. Tesla CEO Elon Musk said that the company getting Asian variants of the Model S ready, a right hand drive version for Japan and a Chinese model with an “executive back seat” instead of the “family back seat” used in other markets. Those cars will be on sale by the end of 2014
Tesla shares, which closed at $134.23 on Wednesday, went above $150 in after-hours trading following the news.
In other product news, Musk said that the next Tesla, a mass market sedan to be priced at $35,000 (without government subsidies), will have a 200 mile range. He also said that the company will be working with its suppliers as it ramps up production. “You can’t give people a car that’s 99 percent complete,” Musk said. “Some suppliers are not set up for volume production. We’re striving to become demand-limited, rather than production-limited.”
You can view the financial results (PDF) that included a Q&A session with Musk here.
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If the car moves as well as the stock I wouldn't mind trying one. I saw a roadster recently and was really taken with its appearance. Too bad they have made the roofline so low on the S. I suspect they are placing the good customer's ass on the floorpan, the same as everyone else. I hate paypal, so I don't know why I am so intrigued with this car mfg. I guess just because the stock is so compelling.
Here in Santa Monica, I would say the Prius is the most common model of car in West LA. Prius owners, regardless of income, tend to drive them to advertise green-cred while still having a reliable, actually useful car. Those folks have one upgrade path up the social and performance ladder: A Model S. I see about four or five Model S's a day, compared to three or four just a couple months ago. Everybody I know with money enough to afford one, likes them. Like Apple Tesla has products that appeal to that succulent demographic of the trendy who actually have money. There is a deceptively large market for these automobiles,. The technology in the Model S, and I am surprised by this much as anyone, seems to work generally within what is advertised. And Tesla has accomplished something that seems in retrospect pretty hard: Their batteries don't catch on fire or blow up. Boeing failed at that, Chevy failed at that, Fisker failed at that among many, many things. Tesla I think has a chance to be the alternate-automotive Amazon; such to say they get a burgeoning new market all to themselves, executing right compared to incompetent competitors, with constantly rising revenue, customers, and expectations - yet make very little to no money, and for years remain perpetually overvalued.