Near-future quarterly financial projections

[dc_h]

https://twitter.com/seanmmitchell/status/1278515150694150144



Given all we know that team effort was selling inventory down to very low levels, in Europe and a few other places,

And I suggest doing a good job of logistics and deliveries in China and NA.

So I'm in the camp that expects some inventory reduction..

You got that right! 4000 more SX and 4000 more 3Y sold then made in the quarter. That’s about 500 million in added cash flow. If break even was 85,000 profit should be at least 225 million. Love to see an update to models today. Congrats to the faithful. Looking forward to some crazy Q3 and 4 numbers!

 

[mongo]

You got that right! 4000 more SX and 4000 more 3Y sold then made in the quarter. That’s about 500 million in added cash flow. If break even was 85,000 profit should be at least 225 million. Love to see an update to models today. Congrats to the faithful. Looking forward to some crazy Q3 and 4 numbers!

I may be misreading here.
COGS gets applied when the car is sold. So reducing inventory helps cash, but doesn't yield extra margin or pure profit.

 

[The Accountant]

Q2 GAAP Estimate:
With the deliveries now known, I am showing GAAP Income of $65m.
There are still many wild cards (Regulatory Credits, FSD, etc).
This is preliminary and I will publish updates until ER day as I learn more.

 

[Doggydogworld]

If break even was 85,000 profit should be at least 225 million.

5650 cars over breakeven at ~10k per car gross margin boosts profit by 56.5m.

COGS attach to the car, not the manufacturing quarter. If you make 100k Model 3s in a quarter but sell zero you show zero revenue and zero COGS. If you make zero the next quarter but sell all 100k leftovers you show 5b revenue and 4b COGS. Basically a car generates the same profit no matter which quarter they sell it.

You would show a 4b hit to cash flow from operations the first quarter and a 5b inflow the second. But Tesla finances inventory with the ABL at 85% of COGS, so the actual effect on cash on hand is much smaller.

(All these statements are oversimplified to illustrate the principles).

 

[The Accountant]

Q2 Free Cash Flow:
I am expecting FCF of about $1 Billion.
I will update this until ER day as I get more information.

 

[mongo]

Q2 GAAP Estimate:
With the deliveries now known, I am showing GAAP Income of $65m.
There are still many wild cards (Regulatory Credits, FSD, etc).
This is preliminary and I will publish updates until ER day as I learn more.

View attachment 559617

And that is without that outstanding tax credit thingamajig in the mix, yeah?
I mean, at this point they would have to banking on another major shutdown to claim to not be profitable going forward (or a lot of ramp up parts inventory costs)

Q2 Free Cash Flow:
I am expecting FCF of about $1 Billion.
I will update this until ER day as I get more information.
View attachment 559618

And an increase in cash/ no touching of that recent capital raise!?!
Outstanding!

 

[The Accountant]

And that is without that outstanding tax credit thingamajig in the mix, yeah?

Ah yes - the Deferred Tax Asset Allowance ....that Thingamajig.
Most of that Tax Allowance relates to US profits (or lack thereof). My guess is that Tesla was profitable in the US this quarter but the auditors (PwC) may wait for the Q3 blow-out results before feeling comfortable in recognizing a part (or all) of this benefit.
If Tesla delivers as it should in Q3 and Q4, I believe we will see this Allowance released this year.

 

[mongo]

Ah yes - the Deferred Tax Asset Allowance ....that Thingamajig.
Most of that Tax Allowance relates to US profits (or lack thereof). My guess is that Tesla was profitable in the US this quarter but the auditors (PwC) may wait for the Q3 blow-out results before feeling comfortable in recognizing a part (or all) of this benefit.
If Tesla delivers as it should in Q3 and Q4, I believe we will see this Allowance released this year.

It's a DTAA you say? I'm going with Tax Asset Deferred Alowance, aka TADA!

 

[willow_hiller]

Just got off the phone with Tesla Solar following up on my quote. The guy apologized saying that they were absolutely swamped with new orders due to the price cuts.

Installing all of the new systems will take a few months, but I'm wondering if Tesla Energy will have a larger impact on Q3 than anyone is anticipating. No more first party financing, Tesla is getting cash for every install now (and making third party financing easily accessible).

 

[The Accountant]

Just got off the phone with Tesla Solar following up on my quote. The guy apologized saying that they were absolutely swamped with new orders due to the price cuts.

Installing all of the new systems will take a few months, but I'm wondering if Tesla Energy will have a larger impact on Q3 than anyone is anticipating. No more first party financing, Tesla is getting cash for every install now (and making third party financing easily accessible).

This is good to hear. Trying to estimate the quarterly Tesla Energy revenues is nearly impossible as there is a dearth of easily accessible external data to guide us. At some point we will see sharp growth in Tesla Energy and it will take everyone by surprise including me.

 

[willow_hiller]

This is good to hear. Trying to estimate the quarterly Tesla Energy revenues is nearly impossible as there is a dearth of easily accessible external data to guide us. At some point we will see sharp growth in Tesla Energy and it will take everyone by surprise including me.

If it helps you figure out margins, I did manage to get an itemized bill for my solar quote:

• 12.24 kW DC Solar Panels $6,580
• Inverter(s) & Balance of System $3,290
• Mounting Hardware $1,175
• Installation, Permitting, and Other Fees $12,455

If I were buying the same panels that Tesla is charging $6,580 for, they would cost about $8,640 retail. So it's possible they've been able to cut total system costs by negotiating bulk discounts on the equipment, without eating into labor and overheads.

 

[troym]

5650 cars over breakeven at ~10k per car gross margin boosts profit by 56.5m.

COGS attach to the car, not the manufacturing quarter. If you make 100k Model 3s in a quarter but sell zero you show zero revenue and zero COGS. If you make zero the next quarter but sell all 100k leftovers you show 5b revenue and 4b COGS. Basically a car generates the same profit no matter which quarter they sell it.

You would show a 4b hit to cash flow from operations the first quarter and a 5b inflow the second. But Tesla finances inventory with the ABL at 85% of COGS, so the actual effect on cash on hand is much smaller.

(All these statements are oversimplified to illustrate the principles).

Forgive me for my ignorance, but could you explain how producing 82k/vehicles Q2 vs 102k/vehicles Q1 affect COGs, if at all? I assume higher volume production in Q1 would equate to lower COGS/vehicle (Ceteris parabis) than Q2 due to fixed costs being spread over more units. Am I thinking about that correctly? That will then lead to inventory from Q1 sold in Q2 having a higher gross margin than vehicles produced and sold in Q2?

 

[Doggydogworld]

Forgive me for my ignorance, but could you explain how producing 82k/vehicles Q2 vs 102k/vehicles Q1 affect COGs, if at all? I assume higher volume production in Q1 would equate to lower COGS/vehicle (Ceteris parabis) than Q2 due to fixed costs being spread over more units. Am I thinking about that correctly? That will then lead to inventory from Q1 sold in Q2 having a higher gross margin than vehicles produced and sold in Q2?

Yes, cars produced in Q2 in Fremont could have higher COGS due to fixed cost being spread over fewer units (Shanghai is the opposite, producing more cars in Q2 than Q1).

Fremont fixed costs aren't that high. Tooling depreciation is variable (units-of-production method). I once estimated fixed building and equipment depreciation for Model 3 at 125m/quarter. S/X was more, if I recall.

I've read depreciation during shutdown is charged against opex, though I can't cite a reference. If true that wouldn't hit COGS. Minor fixed costs like utilities still would. Finally, I don't know if they actually track COGS at the individual VIN level or not. That'd make the most sense to me, but cost accounting is full of alternate techniques to assign COGS (e.g. LIFO, FIFO). So some of this is speculation.

 

[igranderojo]

If it helps you figure out margins, I did manage to get an itemized bill for my solar quote:

• 12.24 kW DC Solar Panels $6,580
• Inverter(s) & Balance of System $3,290
• Mounting Hardware $1,175
• Installation, Permitting, and Other Fees $12,455

If I were buying the same panels that Tesla is charging $6,580 for, they would cost about $8,640 retail. So it's possible they've been able to cut total system costs by negotiating bulk discounts on the equipment, without eating into labor and overheads.

WOW! Are there other costs or tax credits that were not included in this estimate?
I calculated $1.92 per watt installed!
Breaking below the $2 per watt level will significant impact on the solar market, with Tesla taking market share away from others.

12.24 kW DC Solar Panels $6,580
Inverter(s) & Balance of System. $3,290
Mounting Hardware $1,175
Installation Permitting
and Other Fees $12,455
Total $23,500

Cost per watt $1.92

 

[willow_hiller]

WOW! Are there other costs or tax credits that were not included in this estimate?
I calculated $1.92 per watt installed!
Breaking below the $2 per watt level will significant impact on the solar market, with Tesla taking market share away from others.

12.24 kW DC Solar Panels $6,580
Inverter(s) & Balance of System. $3,290
Mounting Hardware $1,175
Installation Permitting
and Other Fees $12,455
Total $23,500

Cost per watt $1.92

No other costs. $23,500 all inclusive. I put down a $100 deposit and the total for my third-party loan is $23,400.

Once all is said and done with Federal, State, and County incentives, I'm looking at $0.93 per watt installed and a payback time of less than 4 years.

I've posted around about the new pricing on social media, and most people can't believe how affordable it is. A lot are claiming that Tesla is engaging in predatory pricing to gain market share, but I don't think that's how Elon operates. It's just like how people couldn't believe Tesla could make a profit on an EV.

 

[duncan]

I have had solar for three years now - 5 kw system
My cost breakdown was
Panels, inverter and all the hardware - $9,000 (NZ)
Installation and all that $3,000 (NZ)

And at that the installer apologised for the cost - it was his first system and took longer than it should - and gave me sweetheart deal on my Shed power install

About $12,000 for the hardware on a system over twice the size is excellent

But $12,000 for the install and permitting is completely INSANE!!!

Here (NZ) there are zero subsidies or assistance of any kind for solar

 

[FrankSG]

For a couple more details, please refer to this blog post:

TSLA Q2'20 Earnings Forecast: $6.20B Revenue & $318M GAAP Profit

Keep in mind this quarter is particularly hard to forecast for a couple of reasons, so I expect to be off by more than usual.

I'm also very curious to see @The Accountant 's numbers.

Energy

Automotive

Income

Summary

​

 

[The Accountant]

Q2 Estimate: $69m GAAP Profit

Assumptions: Q2 vs Q1

Free Cash Flow Estimate: $975m

 

[The Accountant]

For a couple more details, please refer to this blog post:

TSLA Q2'20 Earnings Forecast: $6.20B Revenue & $318M GAAP Profit

Keep in mind this quarter is particularly hard to forecast for a couple of reasons, so I expect to be off by more than usual.

I'm also very curious to see @The Accountant 's numbers.

Energy
View attachment 566179

Automotive
View attachment 566176
View attachment 566177
View attachment 566178

Income
View attachment 566180

Summary
View attachment 566181 ​

@FrankSG - Although my GAAP Net Income of $69m is below your number, I have to say that this is the most conservative I have been when developing an estimate. Over the past 3 weeks I continued to find upside (e.g. better Model Y sales, higher FSD uptake, etc). When entering these upsides into my model, I often offset the upside by reducing my optimism in other areas (lowering production productivity, increasing other expenses, etc). So I am hoping we see TSLA print a number closer to your numbers than mine.

 

[JohnnyEnglish]

@FrankSG - Although my GAAP Net Income of $69m is below your number, I have to say that this is the most conservative I have been when developing an estimate. Over the past 3 weeks I continued to find upside (e.g. better Model Y sales, higher FSD uptake, etc). When entering these upsides into my model, I often offset the upside by reducing my optimism in other areas (lowering production productivity, increasing other expenses, etc). So I am hoping we see TSLA print a number closer to your numbers than mine.

$86m GAAP profit is my guestimate, so very much in the same ballpark given the uncertainties. Would be happy with anything positive!