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Near-future quarterly financial projections
- Thread starter luvb2b
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- elon is an ass
My understanding is that winter months contribute to more losses passed on to NCIs. 2Q18 is certainly atypical. If there has been some disposal of these assets, that could explain but do not recollect anything like that happening recently. I'd be expecting you to know..
i think it's a function of how many of externally funded solar leases they do.
these projects get tax equity investors who receive tax credits and accelerated depreciation. the accelerated depreciation losses are what i believe is the loss being transferred. as they have switched to a more cash sale model these have declined.
these projects get tax equity investors who receive tax credits and accelerated depreciation. the accelerated depreciation losses are what i believe is the loss being transferred. as they have switched to a more cash sale model these have declined.
The crazy contracts in the solar lease funding Special Purpose Vehicles, and the looney mix of tax accounting and GAAP accounting which applies to them.
As far as I know, the *entire accounting for these* is going to change starting in Q1 2019 with the changes to GAAP lease accounting. I haven't found anyone who can explain what the accounting will look like after the change.
quoting the 18q1 letter:
thanks in advance. i assumed excluding leasing but it makes a big difference.
Gross margins of Model S and Model X have increased to slightly above 25% due to better cost reductions, mix management, FX gains and pricing actions compared to Q4.
anyone know if this means s/x margins excluding leasing or including leasing?
thanks in advance. i assumed excluding leasing but it makes a big difference.
dhanson865
Well-Known Member
@ValueAnalyst and friends (those of you that enjoy discussing numbers). I replied to a reddit post tonight and ended up looking at production and delivery rates because someone objected to the concept of Tesla selling 300,000 cars in a year. Point me to another thread if there is already a poll but take a look at Tesla starts expanding its massive solar array at Gigafactory 1 - Tesla has the ambition to eventually power the factory entirely from renewable energy with plans for a giant 70 MW rooftop array, which would be the largest in the world by a wide margin. : energy and see what you think about these numbers
Am I out of line? High, low, close?
Am I out of line? High, low, close?
ValueAnalyst
Closed
I have Tesla at 10,000 S/X/3 at end-18, with that being the July 1, 2018 through June 30, 2019 average, so 500,000 total produced.
So, I was previously working in M&A and I have quickly set up a simple and basic model for a possible Q3 P&L for TESLA and let's see where we land: 0 net income. (without considering allowances for these tweets)
see yourself...all estimations realistically applied...
edit: Does anyone have more information about SG&A costs? The labour deployement, had that already been included in Q2 or will this affect Q3? If so, I might reduce SG&A bye around 25%.
Indeed, I think thanks to the job cuts we might see a net profit in-between 120 - 250 million (approx. 1.50$ per share) in Q3. But I do not know how TESLA will do the accounting for the law proceedings... if they go over the P&L - they might report a huge loss. But as the amount of liabilities is not yet sure (US GAAP says the amount has to be clear in order to build allowances, I think Q3 is safe).
see yourself...all estimations realistically applied...
edit: Does anyone have more information about SG&A costs? The labour deployement, had that already been included in Q2 or will this affect Q3? If so, I might reduce SG&A bye around 25%.
Indeed, I think thanks to the job cuts we might see a net profit in-between 120 - 250 million (approx. 1.50$ per share) in Q3. But I do not know how TESLA will do the accounting for the law proceedings... if they go over the P&L - they might report a huge loss. But as the amount of liabilities is not yet sure (US GAAP says the amount has to be clear in order to build allowances, I think Q3 is safe).
Last edited:
Pras
Member
SebastianR
Active Member
See, now with your edit it works
There are fine folks on this board that have really good models and forecasts. Q3 should send shockwaves all around..,
Fact Checking
Well-Known Member
So, I was previously working in M&A and I have quickly set up a simple and basic model for a possible Q3 P&L for TESLA and let's see where we land: 0 net income. (without considering allowances for these tweets)
see yourself...all estimations realistically applied...
edit: Does anyone have more information about SG&A costs? The labour deployement, had that already been included in Q2 or will this affect Q3? If so, I might reduce SG&A bye around 25%.
While this is not the right topic for the Market Action thread, at a first glance there's a couple of basic mistakes in your spreadsheet:
- You are scaling up SG&A, while Tesla guided SG&A to remain flat in Q3. That takes $75m out of cash flow and net income.
- You have not considered the effects of the regulatory environment, in particular tariffs (which Tesla guided to have no effect on profitability) and ZEV credits, which Tesla is accumulating at an accelerating rate due to much higher Model 3 deliveries. That's another ~$200m of cash flow and net income missing from your calculation.
- Your $103m 'restructuring and other costs' for Q3 is inexplicable - why? "Restructuring costs due to law suits" doesn't make any sense either. (Tesla is likely to have zero restructuring costs in Q3, and those if they are one-time items would probably not be counted towards net income in any case.)
If you correct these mistakes in your calculation then Q3 profits will go up from your marginal $0.4m to around +$378m...
But again, this is not the right thread for such discussions, I just wanted to correct the basic misunderstandings your numbers are showing about Tesla's finances.
Fact Checking
Well-Known Member
Revised prognosis
While your spreadsheet is now showing net profits of +$188m, the flaws I mentioned in my other reply still remain, and there's a new flaw: you calculate with a decreasing SG&A, while Tesla guided for SG&A to remain 'flat', i.e. constant.
Fixing those mistakes in your calculation will increase net income to about +$378m. Note that there some other Tesla upsides as well that are missing from your calculation.
ValueAnalyst
Closed
Four quarters of positive. I'm not going to guess a number. I'll just watch for the S&P addition late in Q2 or early in Q3.
Elon has mentioned he wants to show profit and be cash flow positive. He has also mentioned that he wants to use the cash flow to fund growth and in future quarters may just be barely cash flow positive. EPS for 2019 depends a lot on how they fund this future growth and where in the investment cycle they are. Major capex for y and roadster might not be needed until early 2020. China GF3 might get some really great lending terms which also might not effect 2019 EPS too substantially. Lots of unknowns. Best way to start modeling would probably to see how much profit would be generated without growth assuming 10k M3 per week at 15% with a 50k ASP and 2k X&S at 25% with a 100k ASP. And then start guesstimating how much capex they could actually realistically spend in 2019.
Just to take a shot in the dark. I’ll say $10.
not sure how to do p/e/g with a stock going from negative earnings to positive. also i haven't yet tried to model 2019 numbers. but my estimates call for somewhere between 2.50-3.00 gaap eps for the 18h2.
Almost but not quite correct. COGS includes allocations to warranty reserves NOT warranty repairs. Warranty repairs debit to warranty reserves. Over time as actual experience results in either higher or lower actual warranty costs than allocated to the reserve adjustments are made, ordinarily by either decreasing future reserve credits in the first case or increasing them in the second case. If the differences are deemed material (they very rarely are) previous period statements are restated. Normally the errors are not substantial so with experience future reserve allocations are adjusted. Under only very rare circumstances (I personally know of none) is any adjustment been treated as an exceptional item. Such radically unusual cases as the BMW E32 750i and, more recently the Cadillac ATS and Mercedes CLA have produced wildly excessive warranty costs but IIRC none were recognized explicitly as exceptional items. The sole exception of which I know is the NSU Ro-80 because that vehicle drove the manufacturer out of business and they were bought by VW where eventually their design philosophy became Audi's.
Tesla has been a unique case since they had minimal experience with running gear but have eight year unlimited mileage warranty on Models S and X. It appears that they've had much better experience than they initially forecast, but that is not specifically disclosed. The basic warranty has been different since the majority of FOR data was easily inferable from supplier data and much of the most sensitive repair risks were parts that were already in production with Mercedes Benz models. Large exception: FWD. Then the various Performance models all have much higher insurance reserves than do other models, and that has plentiful relevant data from, among others, AMG and M. As it turns out the relationship between P and normal is less distinct than it is for both AMG and M, probably because of various ICE-specific high performance parts being more failure-prone than are the electrical equivalent.
NOTE: a disclaimer. Although I did work as a consultant to PWC and SRI International on auto industry practices regarding warranty and R&D issues, that was a long time ago and I used nothing at all sourced from any work I did for them either for specific clients or for multi-client projects.
sorry for all the space. Tesla has not had a problem with warranty costs, even when replacing drive units, 12v batteries and door components.
