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Numbers: - 1Q Adj Loss/Shr $3.35, Est. Loss/Shr $3.41 - 1Q Rev. $3.41B, Est. $3.32B - Tesla reported 19.7% gross margins for Q1, beating Wall Street estimates
by chollida1 9y ago
Numbers:
- 1Q Adj Loss/Shr $3.35, Est. Loss/Shr $3.41
- 1Q Rev. $3.41B, Est. $3.32B
- Tesla reported 19.7% gross margins for Q1, beating Wall Street estimates. Model S and Model X are now above 25%,
- Cash burn in the quarter looks to be $1.05 billion
Misc:
- Customer deposits up to $984 million from $854 million
- says it will reach full GAAP profitability in Q3 and
- company had $3.2 billion in cash on hand.
- says it can get to 5,000 Model 3 units a week in about two months.
- Solar City seems done as a consumer product, After installing just 87 megawatts in the fourth quarter, it deployed even less in 1Q -- 76 megawatts.
- Tesla's 5.3% bonds are unchanged at 89 cents on the dollar,
- Tesla will not offer a leasing option on the Model 3 this year. Translation, Telsa needs cash and needs it right now in a big way.
- "Our Model 3 general assembly line consists of fewer than 50 steps, which is about 70% less than conventional assembly lines. All Model 3 vehicles use only one standard body frame, down from more than 80 for Model S, a wiring harness that has 50% less mass than average vehicles, and a fraction of the number of controllers, connectors and CPUs."
- "At this stage, we are expecting total 2018 capex to be slightly below $3 billion, which is below the total 2017 level of $3.4 billion." Open Question... how do you ramp up car manufacturing from 2500 to 5000 to 10,000 per week and reduce CapEx at the same time. Seems like eithr Capex estimates will blow out or prodcution will but both can't coexists. Check bond yields....
- Tesla spent $146 million on interest payments in 4Q -- roughly the same interest expense as GM, a company with approximately 10 times more revenue. Interest expenses rose to $149.5 million last quarter.
- empath75 9y agoIt seems like there’s a disconnect between expected revenue and the stock price. If people took the expected revenue from analysts seriously then they’d have to believe that Tesla was nearly insolvent.
- rdl 9y agoSolar City is 'done', does that include the Powerwall?
- Robotbeat 9y agoYou're confusing editorializing and actual data. "Solar city is done" is an editorial opinion by the poster based on the lower installed Megawatts this quarter from last, it isn't necessarily reflective of Tesla's actual plans. An equally valid perspective is it's currently a low priority compared to just getting Model 3 out the door. There are occasional comments by Musk that they're still very much interested in consumer solar roofs and certainly Powerwall. Granted, it's also a valid point to say "the proof is in the pudding" and point out the lower actual installed capacity this quarter.
- cowsandmilk 9y agoI would suggest reading the section on solar in Tesla's letter[1]. They put some of the blame for declining solar sales on the fact that customers are waiting for powerwall. They expect sales to pick up as powerwall sales pick up. [1] http://files.shareholder.com/downloads/ABEA-4CW8X0/6240200368x0x979026/44C49236-1FC2-4FD9-80B1-495ED74E4194/TSLA_Update_Letter_2018-1Q.pdf http://files.shareholder.com/downloads/ABEA-4CW8X0/624020036...
- gcb0 9y agoAm I reading this right? over 1/4 of revenue attributed to customer deposit?
- slg 9y agoIt has been a while since I have taken an accounting class, but I am pretty sure the deposits can't be recognized as revenue since they also count as a liability. They are only recognizable as revenue once that liability has been cleared, basically once Tesla has delivered the car. It would be like issuing a bond, a positive cash flow event that doesn't alter the company's revenue or total value.
- mortehu 9y agoYou're describing accrual accounting, as opposed to cash accounting, and all public companies in US do indeed use accrual accounting.
- danohu 9y agoHow do you understand the lease-vehicles line in the balance sheet? From $4.1bn down to $2.3bn. I understand there's some accounting change, but I don't see where the other side of that missing $1.8bn shows up.
- bhouston 9y agoWhy did Telsa buy Solar City if it seems like a dud?
- elsewhen 9y agoHindsight is 20/20
- cs702 9y agoI also see the quarterly cash burn of $1.054 billion, and also don't understand how the company could reduce capex by $0.4 billion this year at the same time it aggressively ramps up Model 3 production... seems optimistic. Looks like Tesla will need to raise more cash fairly soon.
- dmode 9y agoThat is fairly simple. The main CapEx is installing a new line, setting up supply chain, acquiring robots, programming robots. Once you are done with that, you then just need to crank out cars.
- blowski 9y ago> you then just need to crank out cars To my ignorant but cynical ears, that sounds like a developer saying “then we just need to deploy it”.
- 1123581321 9y agoMore like saying that once you have the chairs, desks and computers, you just need to write the software. The developer salaries are operating expenses (opex.)
- adrianratnapala 9y agoIsn't that the point though? That for building this kind of plant, you spend the money up front and then spend a lot of time, but less money, actually making it work. From the outside that will look like a reduction in CapEx (once the up-front spend is done) followed by a "mysteriously" cheap ramp-up in production volume.
- danmaz74 9y agoYes. Deploy at internet-scale while debugging a completely new approach. Which could work - or not.
- pooya13 9y agoI saw a chart showing the same periods from S and X production. Apparently the highest capex comes right before ramp up since they have bought new equipment, tuned the process etc. As those issues are resolved you need less and less capex. But I am not an expert.
- dharmon 9y agoIn case you ever feel like its a waste of time, I, for one, appreciate your posts with notes + numbers. Its so easy for conversations about these things to get derailed about, oh, I dunno, flying cars, that its great having your post with hard numbers there to keep the discussion grounded. Its great that companies have big dreams and grand visions, but how will it work out in the numbers?
- danso 9y agoDitto. I'm surprised u/chollida1 hasn't considered making a little newsletter/blog for this content (with the advantages that HTML/etc provide for text and data formatting) and then submitting the link to HN. Even just writing and posting in Github Markdown would feel easier than using HN's plaintext editor.
- eric_b 9y agoI second this! I always look for the chollida post in any kind of earnings release.
- chollida1 9y agoThx, that's appreciated. It's really something I do for my job, I just put them here as well. I think I often get penalized by the HN algorithms because a post can get edited 4-5 times.
- jacquesm 9y ago> I think I often get penalized by the HN algorithms because a post can get edited 4-5 times. They should be boosted, not penalized.
- mkmk 9y agoI really enjoy your posts too, thanks! Stupid questions: can you explain 'wall street estimates'? I've heard it a million times, and I get that there are people at the company that make estimates and also analysts at financial firms (investment banks?) that supposedly take a stab at what the earnings per share will be, but-- who are they? What determines if somebody 'counts' as an analyst? How are estimates recorded so that they show up in yahoo finance? What are the motivations and abilities those analysts have to be right?
- avs733 9y ago>- "Our Model 3 general assembly line consists of fewer than 50 steps, which is about 70% less than conventional assembly lines. All Model 3 vehicles use only one standard body frame, down from more than 80 for Model S, a wiring harness that has 50% less mass than average vehicles, and a fraction of the number of controllers, connectors and CPUs." There is a lot to unpack in this statement... I find it hard to believe there were 80 unique body models for the model S. The S has 3 major trims and about 3 major options that could even theoretically change things like wiring harnesses or body panels. This seems to me another Elon overstatement (air resistance and heat and robots oh my...). also, re his later subcontractors comment. I have been given the impression here and by industry friends that subcontractors are increasingly unwilling to work with them.
- secabeen 9y agoThere's also a lot of different homologation requirements to sell in different markets. That could blow out the number of models.
- avs733 9y agofair, hadn't considered that. Still...80...? He's not saying exterior panels or different parts...he basically said frames. Even if we assume that they (insanely) have significant different bodies for each trim of the S, that means they have >25 different version of the design. That can't be right. This is all the reason why major auto manufacturers have product 'architectures'.
- hinkley 9y agoCould he be including revisions in those numbers? There were six battery sizes on this vehicle. The largest is almost twice the size of the smallest. They may have modified the design several times to either fit or support different battery configurations. Maybe some unplanned changes around 120/230V and safety?
- varjag 9y ago
- kyleblarson 9y agoSolid cash burn of ~12 million per day.
- sysk 9y ago> Tesla's 5.3% bonds are unchanged at 89 cents on the dollar Can anyone explain this like I'm 5?
- panarky 9y agoThe bonds pay 5.3% of their $1000 face value in interest every year, or $53. You can buy this bond for $890, so the effective interest rate is actually 53 / 890 = 5.96% per year. The fact that the price of the bonds is unchanged indicates that Tesla's earnings report didn't cause any change in market expectations of the company's ability to repay the bonds in full. The price could drop to, say, 79 cents on the dollar if there's a greater probability that Tesla goes bankrupt and the bonds won't be repaid. Bond prices also fall when market interest rates increase since that $53 per year isn't as competitive if other investments yield more.
- blowski 9y agoThanks for your explanation, let me see if I understand. They promise to give $1,000 in some years, plus $53 per annum until that happens. That promise is currently worth $890. But if people were worried about the repayments, that might fall to $790. So they get less money for taking on the same debt. Have I understood? What are the rates at companies like Apple or Exxon?
- wklauss 9y ago> What are the rates at companies like Apple or Exxon? Anytime they issue a new bond, figures change so difficult to give a straight answer. For Apple, bonds typically range around 3/3.5% yield. And prices of the bond usually stay above 90 cents on the dollar, AFAIK (not an expert)
- panarky 9y agoApple has bonds that pay 3.85% that mature in 2043. They're currently trading at about 95 cents on the dollar, for an effective yield of 4.05%. There's nearly zero risk that Apple will default. Their bonds sell at a discount because market interest rates have increased since the bonds were issued, making them worth less. Note that Tesla's bonds yield almost a full percentage point more than Apple's bonds, which reflects Tesla's higher probability of default. But if investors were really worried about default, they'd demand a lot more than an extra 1%. See --> https://imgur.com/a/OLKqgga https://imgur.com/a/OLKqgga
- Someone 9y ago”how do you ramp up car manufacturing from 2500 to 5000 to 10,000 per week and reduce CapEx at the same time.” That could be possible if the production line for the larger production rates is mostly done, and all that’s needed is fine-tuning robots, training personnel, and starting to run the factory 24/7.
- mrfusion 9y agoWon’t solar city start back up once they get the solar tiles going? Otherwise that seems like big news?
- davej 9y agoThe solar tiles are Tesla technology.
- djrogers 9y ago> - Tesla will not offer a leasing option on the Model 3 this year. Translation, Telsa needs cash and needs it right now in a big way. This doesn't necesarily follow, as it'd be fairly straightforward to run the leases through a third party who would give Tesla cash.
- screaminghawk 9y agoBut then Tesla isn't offering it, the 3rd party is
- zwily 9y agoYeah but that’s already how they do it. It’s through a third party for the S and X.
- gonesilent 9y agoI think Tesla will push it's own lease with car sharing options.