jpd80 Posted August 8, 2013 Share Posted August 8, 2013 Automotive News August 7, 2013 - 6:05 pm ET -- UPDATED: 8/7/13 9:45 pm ET - adds details LOS ANGELES -- Three months after generating the first quarterly profit in its 10-year history, Tesla Motors Inc. today posted a $30.5 million net loss for the second quarter, while adjusted earnings topped analysts' expectations. Revenue directly related to auto sales dipped sharply to $401 million in the second quarter from $555 million in the first quarter, the company said today in a statement. The drop in revenue reflected an accounting requirement that defers some revenue on vehicles financed through Tesla and its financial partners. Total revenue fell to $405 million in the second quarter from $561 million in the first quarter. A year ago, when Tesla was preparing to launch the Model S sedan, the company posted second-quarter revenue of $26.7 million and a $105.6 million loss. Using generally accepted accounting principles, or GAAP, which is consistent with the way other automakers report financial results, Tesla said it lost $11.79 million from operations, before interest and taxes, during the second quarter. The company burned through $78.7 million in cash during the latest period. On a non-GAAP basis, Tesla said second-quarter net income totaled $26 million, but added that the profits excluded special items such as stock-based compensation, the impact of lease accounting, the change in fair value related to Tesla's warrant liabilities, non-cash interest expenses and one-time expenses associated with the early repayment of its Department of Energy loan. With $100 million in gross profit, on a non-GAAP basis, the company said it produced a gross profit margin of 22 percent. The automaker expects its gross profit margin to reach 25 percent by the fourth quarter. The company's second-quarter gross profit excludes r&d expenses, and sales and administrative costs. With those outlays included, Tesla said it posted an operating loss of $12 million during the second quarter. Analysts surveyed by Thomson Reuters expected Tesla to report a loss of 17 cents a share on $383 million in revenue. Tesla said it delivered 5,150 cars during the second quarter, surpassing a company estimate of 4,500 deliveries. Tesla continued to benefit from the sale of zero-emissions credits to other automakers. It sold $51 million worth of ZEV credits in the second quarter, as well as $18 million in "other regulatory credits." In the first quarter, Tesla traded $67.9 million in ZEV credits, as well as $17.1 million in other regulatory credits. In a conference call with analysts today, Tesla CEO Elon Musk said the company is fighting some supply-chain bottlenecks, which he hopes to have cleared by this time next year. Musk said "about 90 percent" of the company's suppliers will be able to ramp up to Tesla's production targets, but most of the others will "have some difficulty" in ramping up, "and some just can't." "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." Tesla expects to continue selling about 5,000 units a quarter in the second half. The company said it began sales in Europe this week with a healthy order bank. Initial sales in Europe will be weighted toward the more expensive 85kW Model S model, which should help revenues, the company said. In the closing notes of a letter to shareholders today, Musk noted that Tesla expects to spend about $150 million in the second half on capital expenditures, including the purchase of 31 acres adjacent to its Fremont, Calif., factory. In commenting on the land purchase, Musk also teased at a long-term maximum volume goal for the automaker. "Buying that land makes it easier for us to achieve that 500k number," Musk said. Previously, Tesla had mentioned peak volumes well below 500,000 units. However, the new forecast may signal the company's outlook and targets for the Tesla Gen III compact sedan that arrives in late 2016 or early 2017. "We are also continuing to invest in our sales and service infrastructure," Musk wrote in the letter to shareholders. "All these investments, funded in part by our profitable operations, position us for further expansion of our product portfolio and growth globally." Tesla raised more than $1 billion in equity and debt in May and paid off the balance on a $440-million U.S. government loan. It said it closed the quarter with $746 million in cash -- reflecting funds raised by the equity offering -- up from $214 million at the end of the first quarter and $210 million a year ago. Tesla said it expects to post operating profits and generate cash every quarter in 2013, excluding sales of green-car credits to other automakers. In Nasdaq trading today, before the latest quarterly results were released, Tesla shares closed at $134.23, down $7.92 a share, or 5.6 percent. In after hours trading, shares quickly soared past $150 a share. Reuters and Bloomberg contributed to this report. You can reach Mark Rechtin at mrechtin@crain.com. -- Follow Mark on Read more: http://www.autonews.com/article/20130807/OEM05/130809872#ixzz2bMLU6dkU Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted August 8, 2013 Share Posted August 8, 2013 Oh, their non-GAAP accounting resulted in a profit? How nice. In my non-GAAP accounting, wherein I value my TV set at $1,000,000, I am a millionaire! 1 Quote Link to comment Share on other sites More sharing options...
akirby Posted August 8, 2013 Share Posted August 8, 2013 Too bad Fordbuyer isn't here so we could say "I told you so". Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted August 8, 2013 Share Posted August 8, 2013 Their continued highlight of non-GAAP metrics reflects an almost Enronian attempt at obfuscation, misdirection and confusion.... Anytime, *anytime*, some company starts pushing its own, more favorable interpretation of accounting principles, it's time to pack your bags and run for the hills. Promoting non-GAAP results is mendacious in the extreme. Quote Link to comment Share on other sites More sharing options...
aneekr Posted August 8, 2013 Share Posted August 8, 2013 Their continued highlight of non-GAAP metrics reflects an almost Enronian attempt at obfuscation, misdirection and confusion.... Anytime, *anytime*, some company starts pushing its own, more favorable interpretation of accounting principles, it's time to pack your bags and run for the hills. I am ready to go short on TSLA. My net long position in TSLA has been very favorable in the year or so I've owned shares and/or options, but this is a riskier investment than most others I've had in the automotive sector. In many ways, Tesla Motors resembles a Silicon Valley startup firm in the computing or telecom industries more than it does a traditional automotive OEM. As impressive the company's products are, new investors in Tesla Motors should proceed with caution, IMO. 1 Quote Link to comment Share on other sites More sharing options...
timf Posted August 8, 2013 Share Posted August 8, 2013 I'm not sure what to make of Tesla stock. I made a token investment early this year, and while that has paid off I see way too much risk in buying in at anything within 50% of the current price level. The product may be outstanding, but the market for cars at the price point of the Model S simply isn't big enough to sustain 4,000-5,000 cars per month for an extended time. Growth like that which we've been seeing is what I would expect with the launch of the more affordable third generation models, and that's still several years away. I want Tesla to be successful, but this is giving me flashbacks of the dot com boom and subsequent bust. I'm not sure what the trigger will be for a sell off, I just hope it's not something that threatens the company's future. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted August 8, 2013 Share Posted August 8, 2013 (edited) I dunno. I think the market's response to their obfuscatory release yesterday justifies a continued long position. Or at the very least, the danger of taking a short position. TSLA released the bare minimum to the SEC (Income statement, cash flows, balance sheet), and one note that recasts their GAAP earnings in a more positive light. Further, they emphasized gross margins which is utterly incomprehensible to me. Do they expect us to believe that SG&A costs will fall dramatically over time? Are we to believe that R&D costs for an incredibly competitive and incredibly complicated industry will also fall dramatically over time? And even if you credit their fanciful non-GAAP accounting, they still had a significant loss if not for the sale of EV credits to other manufacturers, which means that their non-GAAP profit was entirely due to a governmental program. And *with* the sale of those credits, their margin was what? 5%? That's significantly lower than other manufacturers in the US--especially if those manufacturers *also* prepared their figures to some other non-GAAP standard. Edited August 8, 2013 by RichardJensen Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted August 8, 2013 Share Posted August 8, 2013 (edited) I'm not sure what the trigger will be for a sell off, I just hope it's not something that threatens the company's future. I dunno. I think you might be able to buy a bit now and cash in later. But I agree there's going to be a sell-off. And, at core, Musk's got a good product. But that 'core' is the battery, charging infrastructure & propulsion system. If he had the ability to either listen to smarter people than him, or to perceive the industry better, he would've concentrated on providing infrastructure, batteries, and propulsion systems, instead of trying to fight 10,000 new car dealers and trying to reinvent an entire industry. Instead of trying to be the next Henry Ford, he should've aimed to be the next J.D. Rockefeller. Edited August 8, 2013 by RichardJensen Quote Link to comment Share on other sites More sharing options...
jpd80 Posted August 8, 2013 Author Share Posted August 8, 2013 Musk has done everything to make the company look way more attractive than it is, anyone with a lick of sense would know that this can only end one way 1 Quote Link to comment Share on other sites More sharing options...
EBFlex Posted August 8, 2013 Share Posted August 8, 2013 Musk has done everything to make the company look way more attractive than it is,anyone with a lick of sense would know that this can only end one way Yep, they are the Solyndra of the automotive world. A complete house of cards. Quote Link to comment Share on other sites More sharing options...
twintornados Posted August 9, 2013 Share Posted August 9, 2013 Oh, their non-GAAP accounting resulted in a profit? How nice. In my non-GAAP accounting, wherein I value my TV set at $1,000,000, I am a millionaire! You must own a Zenith.... Quote Link to comment Share on other sites More sharing options...
mustang_sallad Posted August 12, 2013 Share Posted August 12, 2013 And even if you credit their fanciful non-GAAP accounting, they still had a significant loss if not for the sale of EV credits to other manufacturers, which means that their non-GAAP profit was entirely due to a governmental program. Government has decided building zero-emission vehicles has a value, and they've put a system in place for recognizing that value. Good on Tesla for capitalizing, and so far I'm happy to see it's helping them to advance the technology and set the bar pretty high. I'll be curious to see how far they have to make it before people stop doubting them. I was a doubter too initially, as recently as a year ago, but to see them not only deliver the Model S on time, but to essentially knock it out of the park, and then manage to accelerate production as quickly as they have to meet the pretty impressive demand - I'm betting on them rather than against them. To those questioning the size of the market for this vehicle - I agree that North American sales will plateau eventually, but they've barely even started sales in Europe, and are preparing for sales in China. Quote Link to comment Share on other sites More sharing options...
jpd80 Posted August 12, 2013 Author Share Posted August 12, 2013 To those questioning the size of the market for this vehicle - I agree that North American sales will plateau eventually, but they've barely even started sales in Europe, and are preparing for sales in China. The way Elon Musk is playing with figures, I think Teslar is already feeling the pinch. He did a huge pull forward on receipts for orders to make quarterly figures look good. Quote Link to comment Share on other sites More sharing options...
akirby Posted August 12, 2013 Share Posted August 12, 2013 Government has decided building zero-emission vehicles has a value, and they've put a system in place for recognizing that value. Good on Tesla for capitalizing, and so far I'm happy to see it's helping them to advance the technology and set the bar pretty high. I'll be curious to see how far they have to make it before people stop doubting them. I was a doubter too initially, as recently as a year ago, but to see them not only deliver the Model S on time, but to essentially knock it out of the park, and then manage to accelerate production as quickly as they have to meet the pretty impressive demand - I'm betting on them rather than against them. To those questioning the size of the market for this vehicle - I agree that North American sales will plateau eventually, but they've barely even started sales in Europe, and are preparing for sales in China. I think you're overestimating the market potential for Tesla vehicles and underestimating the investment and costs. Until you can sell them for $35K or less and make a profit it's going to be a niche vehicle. Quote Link to comment Share on other sites More sharing options...
RichardJensen Posted August 12, 2013 Share Posted August 12, 2013 (edited) Good on Tesla for capitalizing That's not my point. My point is that they were $78M cash-negative on $500M in revenue with a $30M loss---INCLUDING the tax credits. And they only spent ~$55M on R&D last quarter. Ford spent $100M on R&D last week. Edited August 12, 2013 by RichardJensen Quote Link to comment Share on other sites More sharing options...
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