10-QPeriod: Q3 FY2012

Tesla, Inc. Quarterly Report for Q3 Ended Sep 30, 2012

Filed November 7, 2012For Securities:TSLA

Summary

Tesla, Inc. (TSLA) reported its third quarter 2012 results, a period marked by the commencement of Model S deliveries in June 2012, a significant milestone for the company. While total revenues declined year-over-year due to a decrease in development services and Roadster sales, automotive sales revenue saw an increase, primarily driven by early Model S deliveries and powertrain systems supplied to Toyota. The company continues to invest heavily in research and development and infrastructure, leading to a substantial net loss for the quarter. However, Tesla successfully completed a public offering in early October 2012, raising approximately $222.1 million in net proceeds, which, combined with existing liquidity sources, is expected to provide adequate funding until profitability is reached in 2013. Management expressed confidence in reaching positive free cash flow by the end of Q4 2012, contingent on meeting Model S delivery targets.

Financial Highlights

45 data points
Beta

Revenue

$50.10M

-17.5% Gross Margin

Net Income

-$110.80M

-221.1% Net Margin

Total Assets

$809.18M

Cash & Equivalents

$85.69M

Free Cash Flow

-$163.42M

Financial Statements
Beta
Revenue$50.10M
Cost of Revenue$58.87M
Gross Profit-$8.76M
R&D Expenses$61.90M
SG&A Expenses$37.80M
Operating Expenses$99.70M
Operating Income-$108.46M
Interest Expense$78K
Net Income-$110.80M

Key Highlights

  • 1Commenced Model S deliveries in June 2012, a key strategic milestone.
  • 2Automotive sales revenue increased by 16% year-over-year for the third quarter, driven by Model S and Toyota RAV4 EV powertrain supply.
  • 3Significant investments in R&D and manufacturing infrastructure led to a Q3 2012 net loss of $110.8 million.
  • 4Total revenues decreased 13% year-over-year for the third quarter, impacted by lower development services and Tesla Roadster sales.
  • 5Completed a public offering in October 2012, raising $222.1 million in net proceeds.
  • 6Ended the quarter with $108.6 million in principal sources of liquidity (cash and restricted cash).
  • 7Management anticipates reaching profitability in 2013 and positive free cash flow by the end of Q4 2012.

Frequently Asked Questions

As of September 30, 2012, Tesla had $85.7 million in cash and cash equivalents and $22.8 million in restricted cash, totaling approximately $108.6 million in liquidity. Despite this, the company reported a significant net loss of $110.8 million for the third quarter and has accumulated substantial net losses since inception. However, the successful completion of a public offering in October 2012 provided a significant cash infusion.

The primary revenue drivers for Q3 2012 were automotive sales, which saw an increase primarily due to the commencement of Model S deliveries and continued supply of powertrain systems to Toyota for the RAV4 EV. Development services revenue significantly decreased compared to the prior year, as major development projects neared completion.

Tesla's management anticipates achieving profitability in 2013. They also project reaching positive free cash flow towards the end of the fourth quarter of 2012, contingent on meeting their Model S delivery targets of 2,500 to 3,000 vehicles for the quarter. Continued investment in operations and the Model S ramp are key factors influencing this outlook.

Tesla has fully drawn down its $465.0 million Department of Energy (DOE) Loan Facility. The company is required to comply with various covenants, including financial covenants such as a minimum current ratio and fixed charge coverage ratio. Amendments were made to these covenants, and Tesla anticipates needing further amendments in the future to ensure compliance, especially regarding the fixed charge coverage ratio and leverage ratios.