Tesla Q4/FY 2015 Results Released After-Hours On Wednesday, February 10th
Given the recent shelling Tesla's stock price has taken (down some 37% for the first six weeks of the year), and the recent confirmation of Model 3 pricing, this earnings report is probably the most important to the company today.
Investors Keenly Look To Tesla For Update On Production Progress Surrounding The Model X
Heading into the report the street had been expecting a profit of 8 cents a share, which compares to a loss of 13 cents a year ago. Quarterly revenue was expected to grow 64%percent to ~$1.79 billion.
In actual fact, Tesla logged an 87 cent loss per share gain on $1.75 billion dollars. (13 cents due to unrealized losses from foreign currency revaluation)
But more important than those numbers for this quarter was Tesla's positive outlook for 2016 for the Model S and Model X, a forecast of profitability in 2016, and reconfirmations in the Model 3 and its roll-out.
Shares ended after hours trading Wednesday night up 9.6% at $157.50 +13.83, after peaking at up 12% (real-time quote here). Despite wider indices losses (what's new lately) Thursday morning, the stock held onto a 6-8% increase in early trading.
For 2016 Tesla guided higher than expected sales stating:
"...we plan to deliver 80,000 to 90,000 new Model S and Model X vehicles in 2016, representing accelerating growth over 2015 at the midpoint of the range."
Tesla also weighed in on demand for the Model S saying that orders grew by 35% (year-over-year) in Q4, with that growth coming in all major regions. As for the impact of much lower gas...Tesla is not feeling it.
"We continue to see no perceptible impact to our order growth from the change in the price of gasoline as our order rates have continued to increase even as the price of gasoline has fallen."
Margins for the quarter also came in lower than expect at just 20%, but Tesla says big changes in that number will occur in 2016.
"Throughout the rest of 2016, Automotive gross margin should continue to increase, helped by cost reductions for Model S and improving margin on Model X as our manufacturing efficiency improves for that vehicle. By year-end, Model S gross margin should begin to approach 30% and Model X gross margin should be about 25%, with continued improvement for Model X in 2017."
Future Profitability and Cash Flow
Tesla Cash Flow From Core Operations For 2015
From Tesla's "core operations" the company said it generated $179 million of positive cash flow - a first.
For next year the company states it will be profitable for the first time, despite ramp up of production and battery production at its Nevada facility.
"For 2016, we are planning for even faster delivery growth than last year. We plan to be net cash flow positive and achieve non-GAAP profitability for the year, even after investing about $1.5 billion to add more production capacity, start cell production at the Gigafactory, and establish additional customer support infrastructure."
If you enjoy your numbers GAAP-style, Tesla says profitability on that metric will arrive in Q4 of 2016.
Model S/Model X Q4 Production And Outlook
Besides logging 17,487 sales (881 of them being leases), Tesla produced 14,037 new vehicles during the quarter. The company also noted that when it came to Model X, they limited production "for a period of time to maintain our quality production standards."
"We are already seeing improvement from these efforts and we are now significantly increasing our Model X production throughout the balance of the quarter. We anticipate approaching a Model X production rate of 1,000 vehicles a week in Q2."
From Conference Call: Elon Musk clarifies at 1,000 a week is peak production for Q2 on Model X, might average out to 700 to 800 overall. Overall production between the Model S and X in 2016 should between 1,600 and 1,800.
As for sales estimates in Q1:
"In Q1, we plan to grow deliveries 60% year on year to approximately 16,000 vehicles, and we plan to directly lease about the same percentage of cars as we did in Q4."
Tesla Model S Sales To Accelerate In 2016
Tesla Model S
Tesla Sales In The US Versus Major Competitors
Of the 50,366 Model S sedans sold in 2015, Tesla detailed that it outsold all of its luxury competitors in the US with 25,202 sales.
"In the U.S., just over three years after entering the market, Model S took share from all incumbent manufacturers to become the number one selling comparably priced four-door sedan."
Tesla also took some time to talk about the dominant presence of the Model S internationally.
"Even on our competitors’ home turf and in countries without government incentives to purchase electric vehicles, Model S is winning. For example, in Switzerland, Model S outsold the Mercedes Benz S-Class, the BMW 7-Series, the Porsche Panamera and the Audi A-8 combined for the full year, and also outsold the Mercedes Benz E-Class.
In Germany in Q4, Model S outsold the Porsche Panamera. Finally, across all of Europe last year Model S outsold the Audi A8 and A7 combined and the BMW 7-Series and 6-Series combined."
From Conference Call: Tesla CEO Elon Musk says lots of opportunity to expand sales in US North East
Editor's Note: Now with confirmed 2015 numbers, our monthly scorecard (for all EVs sold in America) that estimated Tesla sales for 2015 at 25,700 has been adjusted to reflect these confirmed sales
Tesla Model 3 Update
As Tesla had mentioned in the past, the company will be unveiling the Model 3 in March, and in true Tesla style, that will come at the very end of the quarter - on March 31st.
Tesla states that that the ramp up to the car is on track, and they still aim for production AND deliveries in late 2017.
From Conference Call: Musk states that unlike other new car releases, the Model 3 won't be offered in the base/entry level trim before an higher option versions, as Tesla wants high initial sales on the Model 3 to quickly pay off tooling. Tesla also won't show "all their cards" on Model 3 launch. Model 3 will compete with BMW 3-series and Audi A4.
Model X Demand Still High According To Tesla
Tesla Model X Update
As one would expect, Tesla said that Model X reservations grew by more than 75% over orders taken previously, but did not break down the total number of reservations, or the follow-through to sales that was being achieved - an important number considering some reservists have been waiting multiple year.
Tesla did somewhat acknowledge a miss in planned deliveries of the X in Q4 stating margins were burdened in part by "unfavorable labor and overhead allocations associated with lower than planned Model X production volume".
From Conference Call: conversion rate of Model X reservists to order was classes as "strong", but without any numbers to define the metric
Pre-Owned Model S Update
"We are also seeing strong demand for pre-owned Tesla vehicles, which are trading at prices higher than our expected residual values. This residual performance is enabling our financing partners to reduce both lease and monthly loan payments".
Evidence of this new ability to lower rates on new cars was seen last month when Tesla announced new lease offers across the lineup in the US, starting from $698* per month.