New NASDAQ 100 Member Tesla Reported Q2 Financial Results Wednesday, August 7th After The Bell

New NASDAQ 100 Member Tesla Reported Q2 Financial Results Wednesday, August 7th After The Bell

After just delivering their first Model S sedan today in Europe (specifically in Oslo Norway), Tesla surprised Wall Street by reporting a second-quarter adjusted profit of $26 million dollars.

First Tesla Model S Has Now Been Delivered In Europe!

First Tesla Model S Has Now Been Delivered In Europe!

That worked out to 20 cents per share, besting analyst's expectations for a loss of around 19 cents.

The non-adjusted result  (ex-one time items and the such)was a second-quarter net loss of $30.5 million.

"While profits were still modest in absolute terms and not our primary mission, net income increased by 70% from last quarter, driven by record Model S deliveries and a significant improvement in automotive gross margin," said CEO ElonMusk in a statement on earnings.

So far this year, Tesla shares have increased by more than 300%, and the after hours trade has been positive to say the least.  Share were up about 13% immediately following the news. (real-time quote here)

Revenue for the quarter also came in higher than expected at $405 million, the street estimate ranged between 385 and 403 million.  Gross margins stood at 22% for the quarter and Tesla still expects to see that number rise to 25% by year's end.

Overall, Tesla said they delivered 5,150 Model S sedans in the quarter which was higher than their earlier guidance.  (We'd also like to note that our own InsideEV's estimate was that 4,950 Model S sedans were sold during the quarter...so we were pretty close)

"During Q2, we improved our production rate by 25% from 400 to almost 500 vehicles per week. 5,150 cars were delivered during the quarter, significantly surpassing our expectation of 4,500 deliveries."

New Tesla Financing Programs Received Well

New Tesla Financing Programs Received Well

Financing Program Received Well

Tesla says their new financing program with the resale value guarantee has been successful, noting that "over 30% of vehicles delivered in Q2 took advantage of our financing program."   Tesla further expects "the penetration rate to increase with the expansion of our financing programs in additional states in the United States and in international markets."

Europe And Future Growth

As mentioned earlier, a launch party in Oslo, Norway today celebrated the first deliveries into Europe this week.  Tesla notes that the first countries to receive their Model S sedans will be Norway, Switzerland and the Netherlands.

"In Norway alone, we expect to deliver almost 800 vehicles this year based on current orders. Orders from Europe have grown every month since February. If demonstrated demand in North America and Europe is matched by similar demand in Asia, annualized sales for Model S could exceed 40,000 units per year by late 2014"

The above statement while seeming positive, is a little bit of a 'tricky wicket' as it could open up interpretation that Tesla needs sales in Asia to be as strong as North America and Europe combined to hit future forecasts.  No guidance on US sale acquisition rates were also offered; something the market is desperate to ascertain.

41 Tesla

41 Tesla "Dealer" Store Now Operation...Future Expansion To Slow In 2nd Half

Boutique Stores And Service Footprint

Tesla notes there is now 41 company-owned dealer stores worldwide, and 47 service centers.   Going forward for the balance of 2013, Tesla says it will focus more on expanding the service stations over the retail outlets.

"In the near term, we will slightly curtail the rate of stores openings in favor of more service centers, as it appears that simply increasing our service center coverage is sufficient to drive substantial Model S sales in any region that has a critical mass of Model S customers."

"We only opened 6 service centers in Q2, for a total of 47 globally, but will accelerate this dramatically in coming quarters and relentlessly focus on providing a level of service that is as close to flawless as humanly possible. As a result, service expenditures in the short term will rise, but we believe that this is the right thing to do for the long-term value of the company."

Random Notes Of Interest

  • Tesla Recognized Over $4 Million In Revenue From Upcoming Mercedes B-Class Project

    Tesla Recognized Over $4 Million In Revenue From Upcoming Mercedes B-Class Project

    Vehicle average selling prices declined slightly during the quarter because of sales of 60 kWh cars that were range limited, due to honoring 40 kWh cars commitments (the 40 kWh version of the Model S was discontinued).  This 40 kWh 60 kWh cars were sold at a $10,000 lower starting price point

  • Tesla continued to supply full electric powertrains to Toyota for the RAV4 EV
  • Tesla  completed "various deliverables" under the Mercedes Benz B-Class EV program, which the company says contributed to development services revenue of almost $4 million
  • Thanks to tapping their equity position, Tesla's cash balance increased to $747 million at quarter end from $231 million at the end of Q1
  • cash outflows from operations was a net draw of $38 million

Model X

Not much news, but it continues to make its way into production.   Tesla notes that "R&D expenses are expected to increase significantly in Q3 as we accelerate product development efforts on Model X"

Tesla's Outlook For Q3 And FY 2013

"While we expect production to increase from Q2, a considerable number of vehicles produced during the quarter will be in transit to European markets at the end of Q3. As a result, we plan to deliver slightly over 5,000 Model S vehicles in Q3, and remain on plan to deliver 21,000 vehicles worldwide for 2013."

ZEV/GHG Revenue And The Bottom Line

A Model S Sold In The US Means ZEV Revenue, A Model S In Europe? Not So Much

A Model S Sold In The US Means ZEV Revenue, A Model S In Europe? Not So Much

Last quarter, an unexpectedly high $68 million dollars in ZEV credit revenue (+$17.1 million in other credits) was responsible for Tesla's first ever profit of $15 million dollars.

At the time, Tesla told shareholders not to expect the same revenue stream in the future, saying:

"We expect (ZEV revenue) to decline significantly in future quarters, as ZEV credits will only apply to about 1/6 of worldwide deliveries, versus roughly half of US deliveries, and the price per credit has declined.”

It appears as though the same story is still playing out in Q2, as another $51 million (+$18 million in other GHG credits) was realized this quarter.  A number that will be decimated in Q3 as far fewer Model S sedans will be sold in the United States as production is redirected to Europe.

Still, it is easy to see how a $26 million profit from $51 million in ZEV (+$18 million in other credits) shows improvement over a $15 million dollar profit in Q1 from $68 million (+$17.1 million in other credits) in emissions revenue.

In other words, Tesla is still moving in the right direction...and that is good to hear.

(You can check out all the number in their unaudited glory here)