Tags: Tesla | Results | Outlook | Share

Tesla's Strong Results, Outlook Fuel Big Share Gain

Wednesday, 08 May 2013 06:47 PM

 

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Shares of Tesla Motors Inc. soared in after-hours trading Wednesday after the electric car maker posted its first quarterly net profit since it was founded a decade ago. The results
beat Wall Street expectations.

The Palo Alto, Calif., company made $11.2 million, with break-even earnings per share, from January through March. That compares with an $89.9 million loss, or 86 cents per share, a year earlier.

Net profit included a one-time $10.7 million accounting gain connected with the elimination of a Department of Energy warrant liability, plus the cost of stock options. Tesla received a $465 million loan from the Energy Department to develop zero-emissions cars.

Excluding one-time items, adjusted earnings were $15 million, or 12 cents per share.

Revenue grew from $30.2 million last year to $561.8 million in the first quarter of 2013.

Analysts polled by FactSet expected loss of a penny per share on revenue of $500.2 million.

Tesla shares were up $13.96, or 25 percent, at $69.75 at 6:30 p.m. Eastern time. The stock closed up 28 cents to $55.79 in the regular session.

Tesla, the brainchild of PayPal billionaire and SpaceX founder Elon Musk, warned that the first-quarter profit won't be repeated in the second quarter. The company said that accounting rules defer revenue recognition from leases, and that will mean a net loss in the April-through-June period. The company said it would report earnings with and without the lease revenue "as we believe the actual effect on Tesla is positive."

Tesla also reported that it beat its targets for delivery and production of the Model S electric car, its only vehicle now on sale. The company delivered 4,900 cars during the first quarter, beating its guidance of 4,500. It also said it produced 400 or more cars per week, or over 5,000 during the quarter, Tesla said in a statement.

Also on Wednesday Tesla increased its guidance for worldwide deliveries to 21,000, about 1,000 more than its previous target. It expects to deliver just over 4,500 cars, all in North America, during the second quarter. Although Tesla expects to build 5,000 cars in the second quarter, some of them will be en route to Europe, so revenue won't be booked until the third quarter.

The company's gross margin for the first quarter — the percentage of each dollar in revenue a company actually keeps — was 17 percent, up from 8 percent in the fourth quarter of last year. The company still expects a 25 percent gross margin in the fourth quarter.

Tesla said it got about $68 million, or 12 percent of its revenue, from California zero-emission tax credits that were sold to other automakers. The company expects that to fall in future quarters.

Tesla finished the first quarter with $231 million in cash, up $10 million from last quarter. The increase came even though it paid almost $13 million on the Department of Energy loan, the company said.

Tesla's relatively quick climb to profitability proves that people will buy nice-looking, fun-to-drive cars, Alec Gutierrez, senior analyst at Kelley Blue Book, said in an email. "Though wider adoption of electric vehicles will still take time, as price and infrastructure play major roles, Tesla is a shining example of a company that didn't back away from its promise of building a car people will enjoy while helping the environment."

Tesla, which was founded in 2003 and went public in 2011, previously had not turned a profit. But Musk has said Tesla expects to be profitable this year thanks to growing sales of the Model S.

The Model S, which starts at around $70,000, went on sale last summer. Initial production at Tesla's Fremont, Calif., factory was hampered by parts shortages and other issues. But the company said its efficiency improved in the first quarter, with the hours required to build a car dropping by almost 40 percent compared with December.

Musk said in February that Tesla plans to pay off the government loan in five years, rather than the 10 years it's allowed. The company received the loan in 2010.

Tesla's stock rose Monday to a 52-week intraday high of $62.37 after the company announced that it hired Chris Porritt, the chief engineer at luxury car maker Aston Martin. But shares fell 7 percent Tuesday, to close at $55.51, after a Jefferies analyst said that the share price is being driven up by short-sellers who expect the upstart carmaker to fail. Their interest in Tesla could decline rapidly if the company keeps meeting its sales and profit goals, she said.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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