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Tesla (TSLA) Q3 Earnings Beat, '20 Delivery Target Intact

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Tesla (TSLA - Free Report) delivered stellar results for third-quarter 2020, posting profit for the fifth consecutive quarter. The red hot EV maker delivered a comprehensive beat, smashing revenue and earnings estimates. The company reported earnings of 76 cents, which topped the Zacks Consensus Estimate of 55 cents per share. This outperformance stemmed from higher-than-anticipated revenues on record vehicle deliveries. The bottom line also compared favorably with the year-ago earnings of 37 cents a share. Total revenues came in at $8,771 million, surpassing the consensus mark of $8,225 million. The top line also witnessed year-over-year growth of 39%.

Tesla maintains the target of 500K deliveries for full-year 2020. The construction of Model Y lines in Shanghai, Texas and Berlin gigafactories is progressing well, and deliveries are expected to begin in 2021. Deliveries for Tesla Semi are also anticipated to begin in 2021. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways

Tesla reported stellar third-quarter 2020 production and deliveries amid a gradual recovery of the auto sector from the coronavirus crisis faced during the second quarter. Delivery and production numbers totaled 139,593 and 145,036 vehicles, pointing to a year-over-year increase of 44% and 51%, respectively. The delivery and production count marks a sequential jump of 54% and 76%, respectively. This upside mainly reflects the company’s ability to overcome the pandemic-induced restrictions that caused its vehicle assembly plant to wind down to minimum basic operations and the shutdown of the company’s main factory in Fremont in the second quarter.

Model 3/Y registered production and deliveries of 128,044 and 124,318 vehicles, implying a year-over-year increase of 60% and 56%, respectively. Meanwhile, Model S/X production and deliveries totaled 16,992 and 15,275 vehicles, up 4% and down 13% year over year, respectively.

Total automotive revenues surged 42% year over year to $7,611 million for the reported quarter. This included $397 million from the sale of regulatory credits for electric vehicles, which increased a whopping 196% year over year. Automotive gross margin was 27.7%, improving 483 basis points from third-quarter 2019.

Energy generation and storage revenues came in at $579 million for third-quarter 2020 compared with $402 million in the year-ago period. Services and other revenues were up 6% year over year to $581 million.

Operating expenses totaled $1,254 million during the quarter under review, up from $930 million in the corresponding period of 2019.

Financials

Tesla — whose peers include General Motors (GM - Free Report) , Ford (F - Free Report) and Toyota (TM - Free Report) — had cash and cash equivalents of $14,531 million as of Sep 30, 2020 compared with $5,338 million on Sep 30, 2019. Net cash provided by operating activities amounted to $2,400 million in third-quarter 2020 compared with $756 million in the prior-year period. Capital expenditure increased to $1,005 million from the year-ago quarter’s $385 million. Importantly, the firm generated free cash flow (FCF) of $1,395 million during the quarter. The metric compared favorably with $418 million and $371 million recorded in the prior quarter and the year-ago period, respectively.

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