q1 2018 earnings estimates

my earnings model for q1 2018. comments welcome. thank you.

…	luv q1-18	Dec-17	Sep-17	Mar-17
ls veh % total	0.23	0.23	0.21	0.26
avg price s+x	98.00	98.15	100.84	108.06
avg price model 3	53.00	53.00	53.00	0.00
revenue
auto sales ex 3	1,645,028	2,148,241	2,064,390	2,000,060
auto sales mod 3	433,540	81,726	11,766	0
auto leasing	349,755	293,086	286,158	254,540
1 time autopilot	0	0	0	35,000
zev credits	0	179,142	575	0
total auto	2,428,323	2,702,195	2,362,889	2,289,600
energy storage	171,828	80,037	44,505	5,244
solarcity	218,000	218,000	273,000	208,700
grohmann	-3,000	-2,600	11,100	22,400
services/other	300,000	290,617	293,181	170,326
total revenue	3,115,151	3,288,249	2,984,675	2,696,270
cost of revenue
auto sales ex 3	1,271,446	1,740,075	1,661,834	1,496,649
auto sales mod 3	553,150	259,556	93,788	0
auto leasing	224,641	191,541	175,224	166,026
total auto	2,049,237	2,191,172	1,930,846	1,662,675
energy storage	189,010	131,715	59,188	6,473
solarcity	152,600	150,000	178,100	145,300
grohmann	11,000	11,000	10,100	14,900
services & other	366,000	365,576	357,301	198,976
total cost of rev	2,767,848	2,849,463	2,535,535	2,028,324
gross profit	347,303	438,786	449,140	667,946
auto gaap ex 3 gm	25.0%	20.9%	21.8%	27.4%
auto-zev ex 3 gm	25.0%	20.9%	21.8%	26.3%
model 3 gm	-27.6%	-217.6%	-697.1%	0.0%
auto-zev incl 3 gm	15.6%	13.2%	18.3%	26.3%
storage gm	-10.0%	-64.6%	-33.0%	-23.4%
scty gm	30.0%	31.2%	34.8%	30.4%
grohmann gm	466.7%	523.1%	9.0%	33.5%
services gm	-22.0%	-25.8%	-21.9%	-16.8%
opex
tesla r&d	320,000	319,637	301,622	239,070
tesla sg&a	540,000	542,290	512,998	446,637
1time acq cost	0	0	0	67,000
solarcity r&d	35,000	35,000	30,000	44,800
solarcity sg&a	140,000	140,000	140,000	127,988
total opex	1,035,000	1,036,927	984,620	925,495
op income	-687,697	-598,141	-535,480	-257,549
interest inc	6,000	6,280	5,531	3,090
interest exp	-65,000	-99,363	-68,409	-46,146
scty interest	-54,000	-47,000	-48,700	-53,200
other income exp	-12,000	-41,677	-24,390	-18,098
1time scty gain	0	0	0	0
pretax income	-812,697	-779,901	-671,448	-371,903
income tax	20,000	-9,094	-285	25,278
net income	-832,697	-770,807	-671,163	-397,181
non-cont int.	-50,000	-95,457	-51,787	-66,904
net inc to common	-782,697	-675,350	-619,376	-330,277
basic shares	170,000	168,314	167,294	162,129
diluted shares	170,000	168,314	167,294	162,129
diluted gaap eps	-4.60	-4.01	-3.70	-2.04
gaap net income	-782,697	-675,350	-619,376	-330,277
- stock based comp	140,000	134,348	112,653	103,717
- one time scty	0	27,950	18,225	11,571
non-gaap net income	-642,697	-513,052	-488,498	-214,989
non-gaap diluted eps	-3.78	-3.05	-2.92	-1.33

 

some percentage of cars are leased and can't be recognized as revenue in current period. this is not new, you'll see it in past quarters as well. that's for s/x only, for model 3 i assume all are sales.

 

i didn't show q2 data. only q1 for yoy compare, and q3/q4 17

 

i did have q2 17 in a prior earnings thread, try to find q3 or q4 2017 would probably see how it shook out there.

 

do you know how new rules are expected to impact leasing revenue? are you referring to pulling forward some of the deferred revenue and realizing this quarter? please clarify and expand comment.

gross margin i assumed s/x return to 25% and model 3 is running -25 to -30% at current volume levels. so yes could be high if they are only low 20s for s/x margin. it seemed that those lines were running at high efficiency though.

 

are you sure it's that narrow?
in my further modeling i can see q3 and q4 numbers coming in very high, cash generated from ops at 600m-900m ranges. additional lease securitization can fill the gap and they could self-fund capex, at least to the end of the year. i feel something has to go very wrong for cash to get anywhere near 1b by end of year.

 

prefacing the discussion with these are all estimates based on a lot of educated guesswork. we don't have good info on model 3 margins. my models there are crude approximations with only a few data points as input (only 2 quarters of data really).

by positive cash flow do you mean:
a. "positive cash from ops"
b. "positive free cash flow" (cash from ops - opex)
c. "net cash flow"

(a) happens fairly quickly. there's nearly 650m of combined depreciation and stock based comp which is all non-cash type of expense. also the delay between customer delivery and supplier payment benefits tesla's cash from operations. i think you hit (a) this quarter with 25k s/x and >25k 3's.

(b) free cash flow depends on capex, but assuming 1b in quarterly capex and no additional cash contributions from solar roofs and tesla energy products i estimate you need 25k s/x + >80k 3's per quarter.

(c) net cash flow can turn positive between (a) & (b). for example think about those 25% of vehicles that are leased each quarter. that's cash going out for production costs etc but not brought back in as sales b/c sales are realized over time. for the direct leases (non-guaranteed) they can securitize those leases and sell them to bring in more cash. just back of the envelope: 5k s/x at 100k each going on lease each quarter is 500m of leases per quarter. haircut those 20% for those that can't be securitized and you can recover 400m a quarter of cash. if you believe that, then about 25k s/x + 60k 3's per quarter will get you to being able to sustain capex with operations and lease securitization and no outside financing. this could be why tesla claims they won't need additional cash this year.