2012 Q4 Earnings Report thread

[DaveT]

From the call it sounded like Elon Musk is firmly in control and very confident on the future of Tesla. 2013 is a done deal with 20k+ cars. This year they're work on efficiency and cutting costs. And they're looking to build demand for 2014. They could try to pump out 30k cars this year but that would probably be moving too fast. So, I like the cautious approach.

I'm thinking the stock won't dip too much tomorrow (ie., will stay above 36). Just my guess.

 

[Alpha]

I'm very happy with earnings. If stock dips below 36, I'll be buying some more!

 

[blakegallagher]

Something does not add up for me. Close all stores and they'll be still delivering 20,000.

My res nr back in April 2012 was in the 8000. Today we're hearing res nr of almost 20,000. They delivered mine (8???) this month. So if you subtract 8000 from 20000, I get 12,000.

So how can 12000 equal 20,000 ... total production of the year?

I am guessing due to orders around the world? pretty much all of the reservation numbers referenced here are US reservations

 

[Citizen-T]

I was happy with the report. Everything was pretty much in-line with what I expected except that I wanted to hear the target was going up to 30k. That said, I accept Elon's argument for why they are going to sit at the current rate for now. Though, if I read between the lines, they still want to increase production, they just don't want to commit to it yet.

 

[blakegallagher]

Any dip tomorrow is likely buyable. Nothing was revealed today that signifies any trouble ahead, and ultimately, the 20k number and 25% margins are what matters. Analysts do not "take Elon's gross margin or unit sales claims seriously", and are only pricing in 15-18% Gross Margins and 13K cars into their bullish targets.

I don't think Analysts are accounting for the profit from the sale of EV credits. Maybe this was the reason Elon repeated multiple times, the part about "profit from EV credits not being part of the 25% Margins." Tomorrow should be interesting.

It's possible they will come to Tesla's defense and upgrade the stock. Likewise it's also possible they will interpret the cancelation rate to be a problem, and will ignore the profit from EV credits or statements until they can see it, resulting in downgrades. Thoughts?

I think the stock will rebound from after market lows .... just about everything seemed very positive to me .... the 30 percent cancellation rate sucked but it does not really matter .... as the wait list is dropped the rate will shrink to near zero when the wait time for a car approaches a few weeks. The average employee work time of ~67 hours down to ~50 hours is incredible. That to me was one of the most telling parts of the call.

 

[smorgasbord]

Something does not add up for me. Close all stores and they'll be still delivering 20,000.
My res nr back in April 2012 was in the 8000. Today we're hearing res nr of almost 20,000. They delivered mine (8???) this month. So if you subtract 8000 from 20000, I get 12,000.
So how can 12000 equal 20,000 ... total production of the year?

With very careful wording. Elon didn't say no new reservations, he said stores closing. Which means that online orders continue. Plus, you need to add in the people under 8000 who were skipped due to 40kWh, red, or air suspension.

 

[Norbert]

I am guessing due to orders around the world? pretty much all of the reservation numbers referenced here are US reservations

Due to orders on the internet based on word of the mouth.

Seems some people misunderstood this and made snarky comments.

 

[Objective1]

Thanks!



Yes, more than 50% for the 85 kWh pack.

Maybe I don't hear well, but after saying "a majority" are going for 85 KWh, I thought I heard someone in the background talking to him, and then he said "30%." If I heard right, that implies that 55% are 60 KWH.

 

[DriverOne]

I didn't quite get the bit about improved SuperCharger technology.

Did Elon say faster? Through software, or changes in the Superchargers?

I remember seeing something about 120A chargers (related to Model X?)

 

[ChrisC]

Will this conference call audio eventually make it to the public where I can hear it? I don't want to have to register on TM's site to listen to the webcast there.

EDIT: thanks guys

 

[Norbert]

Maybe I don't hear well, but after saying "a majority" are going for 85 KWh, I thought I heard someone in the background talking to him, and then he said "30%." If I heard right, that implies that 55% are 60 KWH.

Besides saying "majority" once or twice, he also said explicitly "more than 50%". I don't remember him saying 30%, but maybe 30-something is the number for the 60 kWh pack.

 

[Beavis]

Will this conference call audio eventually make it to the public where I can hear it? I don't want to have to register on TM's site to listen to the webcast there.

yes, it will take a couple of days.

 

[Citizen-T]

Will this conference call audio eventually make it to the public where I can hear it? I don't want to have to register on TM's site to listen to the webcast there.

It often gets onto YouTube, I'd search there.

 

[Norbert]

The recording is already available. You just need to type in name and email. Not necessary to set up an account with password or so.

 

[CyberDutchie]

Morgan Stanley's analysis of Q4 earnings report: operating profit miss; outlook intact; reservations may disappoint.

4Q summary
Tesla delivered 2,400 Model S’s in 4Q12, beating MSe 2,300 but missing guidance of 2,500-3,000. Revenues of $306mm handily beat MSe $260mm and were also above cons. $298mm. Despite the top line beat, OP of -$91mm was slightly worse than MSe -$89mm, while EPS of -$0.79 was slightly better than MSe -$0.81. FCF burn of $102mm was higher than MSe of $76mm, driven by higher than expected capex.

2013 outlook
The company guided to 4,500 Model S deliveries in 1Q (vs. MSe of 3,000) and reiterated its FY 2013 goal of 20,000 deliveries (vs. MSe 15,000), exiting the year at a greater than 20,000/year run-rate. The company expects to achieve slightly positive net income (non-GAAP) and near breakeven cash flow in 1Q on mid-teen gross margins. We were expecting -$41mm net income (non-GAAP) and slightly positive cash flow. The company expects gross margins to ramp up from the mid-teens level in 1Q to over 25% by the second half of 2013.

Reservations
Net reservations came to over 15,000 by the end of 4Q vs. our est. of 14,000, reflecting increased holiday traffic and media awards. Despite the growth, however, investors were likely disappointed as industry discussions had client expectations set for >16,000. The company pointed to an increase in cancellations in 4Q as more reservation holders were asked to configure their vehicles, and guided for 1Q cancellation rates to remain elevated.

Overall, compared to Morgan Stanley's estimates, the numbers were quite OK, and I don't expect them to change their current $47 price target.

 

[brianman]

Aside from not matching potentially arbitrary projections of analysts, was there any bad news in the report or the call? I don't recall seeing or hearing any.

 

[Norbert]

Aside from not matching potentially arbitrary projections of analysts, was there any bad news in the report or the call? I don't recall seeing or hearing any.

In terms of the things I cared for, and had expectations about, it was better. For those who look at the quarter summary numbers, some numbers *were* (but aren't anymore in Q1) below the expectations (from those people who had expectations about them).

Points from my point of view:

a) most importantly, Tesla is already profitable (as of Q1 2013, half of which has passed already).
b) production has settled at a steady rate (at the target level).
c) Supercharger technology itself will have some advancements in the coming months, with a more or less official intent ("ideal") to build them at a distance of 150 miles or less.
d) demand for 2013 is not in question. Clarification that Tesla does not intend to have, or push for, a long waiting list. Therefore this number is not a measure of success (anymore).
e) big expectations for sales in Asia.
f) Model X sales expectations (> 70% of Model S) are higher than I expected
f) I welcome the intent to optimize Model S production, and making sure customers are happy with delivered cars, before pushing the limits of capacity above targets
g) expectations for future Model S volumes above 20,000/year appear to have become more realistic. I might have had slight hopes for more in 2013, and wasn't sure about 2014. The fact that it appears to be the other way around (increasing volumes especially in 2014) is only good for the future.
h) assurance that Tesla has enough cash left
i) assurance that Tesla has realistic plans and knows what to do
j) more than 50% of customers opt for the 85 kWh battery. This is good for driving progress in battery technology.

In summary, there was a lot of assurance that Tesla has made it to a sustainable mode of being, is laying a good foundation for the future, while improving what needs to be improved.

Usually I enjoy hearing more about future products and developments... I take it that Elon simply didn't consider this the right point in time to talk about those (except for hinting at upcoming Supercharger technology advancements).

 

[AnOutsider]

I assume he is going to announce it is going to 120kWh which was discussed previously in the last conference call. The existing chargers use a 120kWh head so it shouldn't be hard to switch over.

That would be awesome. Back to full charge in 45 minutes? Also might be a precursor to (hopefully) 120kwh packs in the x.

 

[Right_Said_Fred]

In terms of the things I cared for, and had expectations about, it was better. For those who look at the quarter summary numbers, some numbers *were* (but aren't anymore in Q1) below the expectations (from those people who had expectations about them).

Points from my point of view:

a) most importantly, Tesla is already profitable (as of Q1 2013, half of which has passed already).
b) production has settled at a steady rate (at the target level).
c) Supercharger technology itself will have some advancements in the coming months, with a more or less official intent ("ideal") to build them at a distance of 150 miles or less.
d) demand for 2013 is not in question. Clarification that Tesla does not intend to have, or push for, a long waiting list. Therefore this number is not a measure of success (anymore).
e) big expectations for sales in Asia.
f) Model X sales expectations (> 70% of Model S) are higher than I expected
f) I welcome the intent to optimize Model S production, and making sure customers are happy with delivered cars, before pushing the limits of capacity above targets
g) expectations for future Model S volumes above 20,000/year appear to have become more realistic. I might have had slight hopes for more in 2013, and wasn't sure about 2014. The fact that it appears to be the other way around (increasing volumes especially in 2014) is only good for the future.
h) assurance that Tesla has enough cash left
i) assurance that Tesla has realistic plans and knows what to do
j) more than 50% of customers opt for the 85 kWh battery. This is good for driving progress in battery technology.

In summary, there was a lot of assurance that Tesla has made it to a sustainable mode of being, is laying a good foundation for the future, while improving what needs to be improved.

Usually I enjoy hearing more about future products and developments... I take it that Elon simply didn't consider this the right point in time to talk about those (except for hinting at upcoming Supercharger technology advancements).

On point j) you can add that Tesla likely makes more money on the sale of a 85 kWh car than on the sale of a 40 or 60 kWh car. That's another good thing of getting a higher percentage of orders for the big pack than they expected. What I missed is the percentage of Performance cars. It's my impression that this is also pretty high, and maybe higher than expected. The Performance should have a higher margin too.

 

[brianman]

What I missed is the percentage of Performance cars. It's my impression that this is also pretty high, and maybe higher than expected. The Performance should have a higher margin too.

To my recollection, they didn't give a number but rather just pointed out that the Performance option was chosen more often than expected. Given that Tesla's statements (such as the 25% profit number) are pretty agressive, news that "people are spending more than we expected per car" should bolster the financial outlook regardless of the specific Performance percentage.