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Near-future quarterly financial projections
- Thread starter luvb2b
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- elon is an ass
Indeed, no. Every time I was buying it, my estimates were too high.
I will make two positive adjustments though. I missed that they mentioned that AWD got 50% in the option mix so I need to increase by a small amount. Plus account for the price increase today. Eyeballing it, gross margin improvement by 1%.
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Why? Energy storage saw a quarter-on-quarter decline even after deducting the one time impact of the SA project. Tesla Storage production was stopped or reduced to prioritize Model 3 battery pack production at least once last quarter. Relief in additional capacity will take time to ramp up, but so does Model 3 battery pack demand. Finally, no large scale project has been announced. Tesla Energy numbers will continue to disappoint for at least 1 and likely even 2 quarters. I have Tesla Storage revenue at $144M and $180M respectively and @luvb2b makes me question if even that is too high.
Yes, all this doubling, tripling and quadrupling is so terribly disappointing! I mean, last year they installed 358MWh, and they only managed 203MWh this quarter -- not even as much this quarter as all of last year. Lame.
In Q2, energy storage deployments grew to 203 MWh, an increase of 106% from Q2 2017. During the first half of 2018, our energy storage deployments were 450% higher compared to the same period last year. Our goal is to triple energy storage deployments in 2018 compared to last year. http://ir.tesla.com/static-files/7235e525-db16-470c-8dce-9ecac0ad7712
Todd Burch
14-Year Member
Pearl white paint for M3 now $500 more.
AWD now $1000 more (back up to $5k) so models will need to be tweaked for that.
AWD now $1000 more (back up to $5k) so models will need to be tweaked for that.
Agree. I added $400 to the ASP for this quarter and $600 for next quarter. Gross margin on M3 improved in Q4 to 17% as a consequence.
Allright, with reasonably optimistic assumptions it is possible to make Q3 profitable without ZEV credits.
SX each $1.2B revenue, 25% GM gives 2x$300M gross profit
Leasing gross profit $100M
M3 60,000 delivered, ASP of 62k, 15% GM gives $560M gross profit
Tesla energy gross profit $50M
Service gross profit -100M
That's 1,210M gross profit.
SG&A : $680M
R&D : $330M
Interest : $170M
FX effect : $30M
Tax : $5M
NCI : $-25M
That's $1190M operational expenses.
Now, I don't actually think Tesla is going to make all the optimistic guidance so there will be some ZEV credits needed to get in the black. Still, reasonably good chance.
SX each $1.2B revenue, 25% GM gives 2x$300M gross profit
Leasing gross profit $100M
M3 60,000 delivered, ASP of 62k, 15% GM gives $560M gross profit
Tesla energy gross profit $50M
Service gross profit -100M
That's 1,210M gross profit.
SG&A : $680M
R&D : $330M
Interest : $170M
FX effect : $30M
Tax : $5M
NCI : $-25M
That's $1190M operational expenses.
Now, I don't actually think Tesla is going to make all the optimistic guidance so there will be some ZEV credits needed to get in the black. Still, reasonably good chance.
@schonelucht sums it up. although tesla is guiding for deliveries in excess of 50k, even my conservative guesses have always been too high for model 3 deliveries. i've wasted too much capital betting on their execution capabilities. i don't trust they can execute on plan & on time until i see it happen.
couple things, they are guiding for mwh installed of storage in 2h18 to more than double vs 2h17. my tesla energy forecasts are based on somewhat low price per mwh of storage. this may or may not be appropriate, my estimates suggested that the australia project had a meaningful discount attached to it.
anyone have insights into to the all-in price per mwh of storage capacity that tesla receives? for tesla powerwall you could crudely estimate installed cost of $7500 usd per 14kwh = $535/kwh.
another easy way to think about it is if you believed my 17q3/q4 numbers that tesla storage revenue was around 125m then keeping prices the same and more than doubling installed storage means at least 250m revenue for tesla energy in 2h18.
didn't they guide to "flat" opex excluding one-time & stock based comp next quarter? i thought last quarter was 1.14b excluding one time charges and excluding some stock based comp i feel like we should expect opex nearer to 1.1b.
and now my last discussion point which has been bothering me slightly. as model 3 has been ramping, we've seen various expense items go up mysteriously. consider for example how services which were running 20-50m loss levels up to 17q2 suddenly jumped to 75m loss level by 17q4 and then even more to 105m loss level recently. we didn't see this same decline in services profitability as model x was ramping. tesla's explanation for the loss is under-utilized service capacity, and while that is true in some geographies we know in others it is fully utilized (norway, for example).
this quarter it's opex jumping mysteriously. i still can't understand how opex net of restructuring charges goes up when you drop 9% of the workforce mid-quarter, purge expensive consultants, and force all big dollar spending to go through elon-approval. one thought i had is maybe the temporary personnel hired in the big delivery centers and the rental of those facilities is going into opex, and probably that's where they belong from an accounting look, but from a business standpoint they're part of the cost of delivering the car.
it's been a primary short thesis so i'm sure this is what the shorts will see: if we take these extra costs and move them into model 3 gross margin, then model 3 gross margins are still running quite negative.
until now the amounts have been comparatively small, so they could be hidden in plain sight effectively by shifting line items. in 18q3 there will be nowhere to hide. with 3b in model 3 revenue there would be nowhere to put the extra costs where they wouldn't immediately be questioned.
the bull camp will say these are all normal expenses, nothing unusual, and no costs have been shifted, so take management guidance at face value.
the situation is partly confused by the introduction of a new, undefined metric "non-gaap operating expenses" in the 18q1 letter: "Quarterly non-GAAP operating expenses should grow sequentially at approximately the same rate as in the past four quarters, with our gross profit expected to grow much faster than our operating expenses."
it's used again this letter: "For the rest of this year, total non-GAAP operating expenses should remain relatively stable at Q2 levels excluding restructuring costs, as a result of our overall drive towards operating efficiencies."
without a definition i can only guess as to its meaning, that probably it's operating expenses - one time charges - stock based comp in opex. i excluded stock based comp in cogs from total stock based comp to calculate. using this i get the following levels and changes quarter over quarter for the last few quarters:
17q2 $798,955 4.5%
17q3 $882,133 10.4%
17q4 $918,761 4.2%
18q1 $926,939 0.9%
18q2 $952,742 2.8%
under this twisted lens, management met its guidance as the last 4 quarters averaged around 4-5% growth and they delivered 2.8%. i still don't like that they had to create a new financial term to explain opex growth, but ok i get it.
if anyone else would like to throw some more brainpower at it and post some thoughts for modeling purposes it would be great. thanks.
For powerpack the best is that we know revenue from SA project was $72M for 129MWh = $558/kwh. So a band between 500 and 600 would be good. I tend to be at the top side because of installation costs for powerwalls may be relatively heavy.
I have $132M and $165M for the next two quarters. Relative to the >$200M from Q1, I think that's disappointing. There is huge demand, they just don't have the product. That's also somewhat disappointing given that the gigafactory should never have been the bottleneck in the first place.
You can't simple ignore stock based comp when deciding on profitability, it's an integral part. I am ok with excluding one-times. I am seeing SG&A grow (a little) simply because their delivery capacity is strained at the moment, they need to spend to increase capacity there. And R&D simply because Elon is a sucker for talent. Regardless of the lay offs, his natural instinct is to hire a good engineer when he sees one. With Tesla being an ultra desireable place to work for, I bet he's going to see his fair share of exceptional talent this quarter too. Excluding one-offs it grew this quarter as well as you note which is to a point a surprise.
I agree their explanation is lacking. And adding insult to injury, if their service were top notch (like it used to be), I could chalk it up to as a marketing expense to a certain degree. But it isn't. Rectifying it will require big expenses : in house bodyshops, additional parts inventory, new (and better) hires, CPO program restarted for real... Oh. and in Q3 the famous 2 year lease deals from 2016 come due. You know those with the inflated residuals on pre-facelift/AP1 cars. If you browse the threads, no one is planning to buy out their lease (why would they, the exact same car on CPO is cheaper than their residual). I have a sneaky suspicion that they will take some of the hit in services&other.
Good catch. It's funny one of the known big time shorts ran a mock poll on twitter : "I am old enough to remember 'free cashflow from operations', which new accounting term will Tesla invent this time around". He's otherwise obnoxious but he had a point there.
it's used again this letter: "For the rest of this year, total non-GAAP operating expenses should remain relatively stable at Q2 levels excluding restructuring costs, as a result of our overall drive towards operating efficiencies."
As usual you are already ahead of me so I can't offer anything for now. Still struggling with the big jump in leasing (to mention something positive for a change!) Hopefully the 10-Q helps us a bit.
we agree, i was just saying the numbers you posted show a decline in opex vs flat to up. maybe a typo?
Remember anyone ordering now is unlikely to get it in Q2. It is mostly a q3 thing.
ValueAnalyst
Closed
Top 3 garbage-ins in order of stench level:
- 50,000 Model 3 deliveries: this is the smell that lingers in the kitchen even after you take out the trash that sat there for two weeks;
- $133m of stock-based comp in Q3 & Q4 is too low: Q2 jump was unexplained, so we should be conservative on this; and
- Even though CapEx guidance was revised significantly downward, I think there still is some room. Keeping my $600M/Q projection.
"Cash crunch" never was.
With Moody's minimum required cash estimate of $500M, Tesla in fact is rolling in nearly $2B of excess cash, which should, but of course will not because conservatism is in fashion, be returned to shareholders with a $250M/Q stock buyback program, which has five key benefits:
- Increases the value of shares held by employees;
- Increases Elon's control over the company and the mission;
- Higher value shares can be used for tuck-in acquisitions;
- Outperforming stock price can be used to attract talent;
- Ends FUD.
The time to do it is now at $300's, not at $3,000's. We don't need $200B on the balance sheet to prove this. That's not productive.
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After being called out for GIGO myself...
1: Tesla's guidance is 50-55k produced, 50k delivered seems reasonable especially if the ramp bumps up at EOQ.
2: The severance packages included accelerated stock vesting (was the new board compensation similar to the previous cycle?)
3: The 2.5 Billion reported CapEx expectation coupled with 1.3 spent suppports your 600 million/ quarter rate (what is that item called in luv's spreadsheet?)
Even with the large in transit number from Q2 end, 50k *deliveries* seems plausible to me. There very well may be more lag due to production scale increase getting them delivered too. Deliveries will be tough to predict.
Mario Kadastik
Active Member
Even with raised production I doubt the hangover from Q3 will be as large as Q2 with the 200k target was. So >10k in transit is unlikely, more likely it’ll drop a pinch, but not much. This means that effectively we can count every produced car as delivered, so I’d say too that 50k is conservative, but would estimate 55k delivered.
Fact Checking
Well-Known Member
(Great discussion!)
I was wondering about the following possibility: in theory Tesla has the option to time their next bigger Fremont Model 3 lines shutdown to upgrade the lines to occur at the last week of Q3: last week of September, which week ends on a Saturday (the 30th).
Doing such an end-of-quarter shutdown has the following advantages:
- it would allow them to deliver about 1 week of Model 3 production while reducing inventory levels and having a lower rate of cash outflow,
- since the "payables latency" to parts vendors is 60 days, they could still hold on to that cash and use it to improve free cash flow,
- during the shutdown they'd have less labor cost,
- they could order their end of quarter deliveries so that the nearer, faster (west coast) deliveries occur last.
In short Tesla would perform similar end-of-quarter inventory management that other carmakers are performing too.
I believe if Tesla manages to deliver 5k-6k Model 3's at the end of quarter while not making cars in Fremont would have the following approximate effect on the quarterly results:
- At $55k ASP and 15% margins +5k-6k deliveries it would be:
- mostly revenue neutral,
- it would save the cash flow of direct labor, which at $8k of direct labor cost would reduce cash outflow by $40m-$48m
- if they prepared for this in advance and parts/materials will run low and the supply chain briefly stopped T-60 days for a week then parts/materials cost of ~$15k per unit could reduce cash outflow by $75m-$90m.
Furthermore, if the shutdown is a bit longer, say 10 days, and some of the factory workers are asked to temporarily help during this end of quarter "delivery push", which would involve preparing more cars, helping in delivery and service centers, etc.
Under such a scenario Tesla would first end Model 3 productiin in Fremont with a 2 weeks 6k/week high run-rate push and then they'd try to deliver those 12k Model 3's in the final 10 days of the quarter. Doing that would improve net income as well, as they'd be delivering ~4k more of the inventory: about +$220m of revenue, and about +$33m of net income improvement in addition to cash flow improvements.
Doing this would also give them more ZEV credits in Q3, due to the high unit count.
This would front-load Q4 to a much smaller degree - but perhaps the Fremont upgrade and 7k+ run-rates in Q4 would be able to counter that. Tesla coukd attempt such an inventory push at the end of Q4 as well.
Note that this "inventory push" does not appear to be worth the trouble with the Model S/X, as international deliveries take much longer. It does appear to be possible with the Model 3 though, which does ~95% U.S. deliveries.
