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Tesla (TSLA) Q1 Loss Wider, Focus on Infrastructure Growth
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Tesla, Inc.'s (TSLA - Free Report) adjusted loss was of $1.97 per share in the first quarter of 2017, compared with an adjusted loss of $1.24 in the year-ago quarter. Moreover, the loss was wider than the Zacks Consensus Estimate of a loss of 67 cents.
The reported net loss in the quarter was $330.3 million or $2.04 per share compared with the year-ago loss of $282.3 million or $2.13.
Revenues more than doubled year over year to $2,696.3 million from $1,147 million recorded in first-quarter 2016. The figure also surpassed the Zacks Consensus Estimate of $2,561 million.
Tesla delivered record 25,051 cars in the reported quarter, up 13% from the fourth-quarter 2016 and about 69% year over year. Additionally, about 4,650 vehicles were in transit to customers, slated to be delivered in the second quarter of 2017. The company manufactured record 25,418 vehicles in the first quarter, up 64% year on year.
Revenues from Automotive sales rose to $2.29 billion in the quarter from $1.03 billion a year ago.
Energy generation and storage revenues surged from $22.7 million in the first quarter of 2016 to $213.9 million in the reported quarter.
Services and Other revenues surged 96% to $192.7 million from $98.3 million in the year-ago quarter.
Tesla’s first-quarter gross margin was 24.8%. Adjusted automotive gross margin was 27.8% in the quarter, up 560 basis points (bps) from the fourth quarter due to improved average transaction prices and manufacturing efficiencies.
Energy generation and storage gross margin rose 2,640 bps sequentially to 29.1% in the quarter. The surge in gross margin was driven by improved energy storage margins, sale of energy credits as well as higher production of solar energy. In the quarter, service and other gross margin fell 300 bps sequentially to a decline of 11%.
Tesla had cash and cash equivalents of $4 billion as of Mar 31, 2017, compared with $3.39 billion as of Dec 31, 2016. Long-term debt totaled $8.16 billion as of Mar 31, 2017, compared with $7.15 billion as of Dec 31, 2016.
Cash used in operating activities amounted to $69.8 million in the first quarter as against outflows of $249.6 million a year ago. Capital expenditures increased to $552.6 million from $216.9 million in the year-ago quarter.
Business Expansion
Tesla is expanding its vehicle charging network. The company aims to at least double its Supercharger locations globally in 2017 to over 10,000. To supplement the Superchargers, Tesla aims to increase the number of Destination Charging connectors globally as well to 15,000 in 2017. These chargers offer easy charging at hotels, malls as well as restaurants. The company plans to add almost 100 retail, delivery and service locations globally, representing a 30% increase in facilities in the year. This includes the first stores opened in Dubai and South Korea in the quarter. Tesla plans to expand delivery hubs in other cities as the existing delivery hubs at the centers have increased delivery levels.
Tesla also aims to improve customer experience with out-of-warranty body repairs. For this, the company intends to open the first Tesla-owned body repair shop later this year and expand the existing network of third party Tesla certified body shops. Moreover, over 100 mobile repair trucks are also expected to be added in the second quarter of 2017.
Model 3 Update
Tesla has almost completed the development of Model 3 vehicles. The company is on track to begin production in Jul 2017. The company aims to steadily increase production to 5,000 units per week in 2017 and 10,000 vehicles per week in 2018. Equipment is also being installed for volume production of cells, modules, battery packs and drive units at Gigafactory 1 to support the Model 3.
Outlook
Tesla expects to see advancement in its transport, energy generation and storage product lines.
Tesla continues to target 47,000−50,000 vehicle deliveries in the first half of 2017, representing 61−71% growth year over year. The company will provide guidance for the second half after the production of Model 3 is underway as it can drastically impact deliveries.
In second-quarter 2017, the company expects adjusted automotive gross margin to decline 250 bps sequentially, due to the absence of a one-time benefit received in the first quarter as well as changes in the product mix. However, Model S and Model X vehicle costs are expected to decline each quarter due to better manufacturing efficiencies. Second-quarter operating expenses are expected to be flat or moderately up sequentially due to Model 3 development and expansion of infrastructure.
Tesla is also focused on profitability and cash preservation in the energy generation and storage business, which is expected to grow significantly this year. The company remains on track to generate $500 million cash by 2019 and achieve the expected synergies from the acquisition of SolarCity.
Tesla expects capital expenditure in the year to be slightly over $2 billion prior to the commencement of the Model 3 production. The company also expects additional investments in the year to support increased automation development and production capacity.
Price Performance
Tesla has outperformed the Zacks categorized Auto Manufacturers-Domestic industry over the past three months, with the company rising 19.7% while the industry lost 0.7% over the same period.
Fiat Chrysler has long-term expected growth rate of 22.4%.
Lear has long-term expected growth rate of 7.1%.
Tata Motors has long-term expected growth rate of 27.9%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Tesla (TSLA) Q1 Loss Wider, Focus on Infrastructure Growth
Tesla, Inc.'s (TSLA - Free Report) adjusted loss was of $1.97 per share in the first quarter of 2017, compared with an adjusted loss of $1.24 in the year-ago quarter. Moreover, the loss was wider than the Zacks Consensus Estimate of a loss of 67 cents.
The reported net loss in the quarter was $330.3 million or $2.04 per share compared with the year-ago loss of $282.3 million or $2.13.
Revenues more than doubled year over year to $2,696.3 million from $1,147 million recorded in first-quarter 2016. The figure also surpassed the Zacks Consensus Estimate of $2,561 million.
Tesla delivered record 25,051 cars in the reported quarter, up 13% from the fourth-quarter 2016 and about 69% year over year. Additionally, about 4,650 vehicles were in transit to customers, slated to be delivered in the second quarter of 2017. The company manufactured record 25,418 vehicles in the first quarter, up 64% year on year.
Revenues from Automotive sales rose to $2.29 billion in the quarter from $1.03 billion a year ago.
Energy generation and storage revenues surged from $22.7 million in the first quarter of 2016 to $213.9 million in the reported quarter.
Services and Other revenues surged 96% to $192.7 million from $98.3 million in the year-ago quarter.
Tesla’s first-quarter gross margin was 24.8%. Adjusted automotive gross margin was 27.8% in the quarter, up 560 basis points (bps) from the fourth quarter due to improved average transaction prices and manufacturing efficiencies.
Energy generation and storage gross margin rose 2,640 bps sequentially to 29.1% in the quarter. The surge in gross margin was driven by improved energy storage margins, sale of energy credits as well as higher production of solar energy. In the quarter, service and other gross margin fell 300 bps sequentially to a decline of 11%.
Tesla Inc. Price, Consensus and EPS Surprise
Tesla Inc. Price, Consensus and EPS Surprise | Tesla Inc. Quote
Financial Position
Tesla had cash and cash equivalents of $4 billion as of Mar 31, 2017, compared with $3.39 billion as of Dec 31, 2016. Long-term debt totaled $8.16 billion as of Mar 31, 2017, compared with $7.15 billion as of Dec 31, 2016.
Cash used in operating activities amounted to $69.8 million in the first quarter as against outflows of $249.6 million a year ago. Capital expenditures increased to $552.6 million from $216.9 million in the year-ago quarter.
Business Expansion
Tesla is expanding its vehicle charging network. The company aims to at least double its Supercharger locations globally in 2017 to over 10,000. To supplement the Superchargers, Tesla aims to increase the number of Destination Charging connectors globally as well to 15,000 in 2017. These chargers offer easy charging at hotels, malls as well as restaurants. The company plans to add almost 100 retail, delivery and service locations globally, representing a 30% increase in facilities in the year. This includes the first stores opened in Dubai and South Korea in the quarter. Tesla plans to expand delivery hubs in other cities as the existing delivery hubs at the centers have increased delivery levels.
Tesla also aims to improve customer experience with out-of-warranty body repairs. For this, the company intends to open the first Tesla-owned body repair shop later this year and expand the existing network of third party Tesla certified body shops. Moreover, over 100 mobile repair trucks are also expected to be added in the second quarter of 2017.
Model 3 Update
Tesla has almost completed the development of Model 3 vehicles. The company is on track to begin production in Jul 2017. The company aims to steadily increase production to 5,000 units per week in 2017 and 10,000 vehicles per week in 2018. Equipment is also being installed for volume production of cells, modules, battery packs and drive units at Gigafactory 1 to support the Model 3.
Outlook
Tesla expects to see advancement in its transport, energy generation and storage product lines.
Tesla continues to target 47,000−50,000 vehicle deliveries in the first half of 2017, representing 61−71% growth year over year. The company will provide guidance for the second half after the production of Model 3 is underway as it can drastically impact deliveries.
In second-quarter 2017, the company expects adjusted automotive gross margin to decline 250 bps sequentially, due to the absence of a one-time benefit received in the first quarter as well as changes in the product mix. However, Model S and Model X vehicle costs are expected to decline each quarter due to better manufacturing efficiencies. Second-quarter operating expenses are expected to be flat or moderately up sequentially due to Model 3 development and expansion of infrastructure.
Tesla is also focused on profitability and cash preservation in the energy generation and storage business, which is expected to grow significantly this year. The company remains on track to generate $500 million cash by 2019 and achieve the expected synergies from the acquisition of SolarCity.
Tesla expects capital expenditure in the year to be slightly over $2 billion prior to the commencement of the Model 3 production. The company also expects additional investments in the year to support increased automation development and production capacity.
Price Performance
Tesla has outperformed the Zacks categorized Auto Manufacturers-Domestic industry over the past three months, with the company rising 19.7% while the industry lost 0.7% over the same period.
Zacks Rank & Key Picks
Currently, Tesla carries a Zacks Rank #2 (Buy).
Other stocks worth considering in the auto space include Fiat Chrysler Automobiles N.V. , Lear Corporation (LEA - Free Report) and Tata Motors Ltd . All the three stocks hold a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Fiat Chrysler has long-term expected growth rate of 22.4%.
Lear has long-term expected growth rate of 7.1%.
Tata Motors has long-term expected growth rate of 27.9%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think. See This Ticker Free >>