Tesla Motors Beats The Street

Posted: May 8 2014, 2:27am CDT | by , Updated: May 8 2014, 2:31am CDT, in News | Cars & Vehicles

Tesla Motors Beats The Street

Tesla beat every number that mattered, reporting revenues of $713 million and earnings of $0.12 per share while delivering 6,457 vehicles — slightly more than its guidance (but below the 6,900 in the prior quarter as expected). Still, the stock is sliding after hours, down about 6%. Investors must have been looking for even better results as gross margins were up to a record this quarter, increasing sequentially despite Tesla’s decision to add new titanium underbody shields to further protect its cars against fire risk. Further, the results were achieve with no revenues from Zero Emission Vehicle credits, which propped up last year’s first quarter by $68 million. Tesla did book $12 million in other regulatory credits, $3 million less than last quarter.

The company actually produced an additional thousand vehicles this past quarter beyond the deliveries, bringing the total to 7,535 and a run rate of 700 per week. It says it’s on track to hit both its goals of 1,000 per week production and 35,000 deliveries by the end of the year. Looking forward, Tesla sees right-hand drive deliveries beginning in the U.K. this month and Japan in summer. It reiterated plans to deliver the Model X in the spring of 2015 and to open its battery Gigafactory by 2017.

While Tesla says batteries are still constraining its production, it believes next quarter’s deliveries will set a record with 7,500 and that it can produce between 8,500 and 9,000 cars. As the pipelines to Asia and Europe get filled more efficiently over time, it hopes to shrink the gap between production and deliveries. In the meantime, thanks to a convertible offering that raised $2 billion last quarter, Tesla has $2.6 billion on the balance sheet, giving it the resources the company says it needs to complete its many initiatives.

As has been the case, Tesla’s top-line and bottom line is reported using both GAAP and non-GAAP numbers. The $713 million is a non-GAAP measure and is up 27% from a year ago. The company accounts for its lease-like financing in a way that leads the GAAP number to be significantly lower at $621. The higher figure provides the better direct comparison. Gross margins of 25.4% are nearly identical to the GAAP figure of 25.3%. The company took a $2 million charge to retrofit existing vehicles with the titanium shields if customers request them. Tesla says it booked $15 million from Toyota in the quarter for powertrain work on the RAV4 EV and that it expects to begin deliveries of similar components for the Mercedes B-Class shortly.

I’ll have a follow-up with details from the conference call shortly.

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