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Last Update: 05-Nov-12 08:56 ET
Tesla Motors shares rise by 4% following beat on revenues
Tesla Motors (TSLA $30.05 +1.13) reported third quarter loss of $0.92 per share, excluding non-recurring items, $0.01 worse than the Capital IQ consensus of ($0.91), while revenues fell 13.2% year/year to $50.1 million versus the $48.6 mln consensus (co guided to Q3 rev to $44-46 mln vs. the $91 mln consensus on Sept 25). Co reaffirms guidance for FY12, sees FY12 revs of $400-440 million versus the $399.93 million consensus and cut fiscal year 2012 revenue guidance from $560-600 million on Sept due to slower than expected production ramp for the Model S. "Towards the end of the quarter, we expect to achieve positive free cash flow (cash flow from operations, inclusive of capital expenditures) in spite of short term cost inefficiencies. Automotive sales gross margin is expected to improve significantly in Q4 due to higher volumes and planned cost reductions. We are also reaffirming our gross margin target of 25% in 2013 upon achieving the manufacturing efficiencies and planned cost reductions associated with our objective of 20,000 deliveries in 2013...Given Tesla's rate of progress over the past few months, we are confident of being able to deliver 2,500 to 3,000 Model S vehicles in Q4 and over 20,000 in 2013... In Q3, we produced almost 350 and delivered over 250 Model S sedans to our customers, all while maintaining very high build quality levels... production has continued to ramp into Q4, with over 200 cars produced this past week... The third quarter was a fundamental turning point for Tesla as we successfully transitioned to a mass production car co, growing from manufacturing 5 cars per week at the beginning of the quarter to 100 cars per week by the end. That rate has doubled since last month and is now at over 200 cars per week or 10,000 cars per year, which is at the critical threshold needed for Tesla to generate positive operating cash flow. One month from now, we expect Tesla to double production again and achieve the target rate of 400 cars per week or 20,000 per year. Despite many short term costs associated with the ramp, Tesla nonetheless expects to get approximately halfway to the 25% gross margin target by end of year... Co continued growth in net reservation count to over 13,200, up from 11,500 at the end of Q2. We expect Q4 to set a new high water mark in net reservations."
