Tesla (TSLA) Posts Q3 adj.-EPS of 71c

(Updated - October 26, 2016 4:11 PM EDT)

Tesla (NASDAQ: TSLA) reported Q3 EPS of $0.71, $1.25 better than the analyst estimate of ($0.54). Revenue for the quarter came in at $2.3 billion versus the consensus estimate of $2.35 billion.

We achieved record production levels in Q3, rising to 25,185 vehicles for an increase of 37% from Q2 and an increase of 92% from Q3 last year.

More than four years since its introduction, Model S continues to expand market share, which is a testament to our continuous vehicle innovation. In the U.S., which is Tes la’s most mature market, Model S deliveries grew nearly 60% year over year, increasing its lead status with a 32% share of the top 12 selling large luxury sedans, as Model S unit growth significantly outpaced U.S. large luxury sedan category sales growth

Future Growth Initiatives

For Model 3, we have completed production line layouts and will soon begin installation of new body welding and final assembly lines. We have established a world class team of suppliers for Model 3 production equipment and components and critical long lead time equipment and components have been sourced. We are now testing vehicle systems such as chassis, the high voltage drive system, and low voltage subsystems such as vehicle controllers, HVAC, infotainment and lighting. As refinement of the Model 3 continues, we remain on plan for our timing, volume, vehicle capability, pricing, and margin targets.

The Gigafactory remains on track to begin cell production later this year for use initially in our energy storage products and later to support volume production and deliveries of Model 3 in the second half of 2017. In addition, we continue to expand production capacity at our Fremont facility and are exploring additional production capacity in Asia and Europe.

With the previously announced plan to acquire SolarCity, we look forward to making solar as compelling as electric vehicles. Acquiring SolarCity would leverage Tes la¡¦s exis ting investments in the Gigafactory and the next-generation Powerwall and Powerpack to drive revenue growth. In addition to the revenue growth associated with making solar more compelling, the combined company is expected to achieve over $150 million of direct cost synergies in the first full year post-close. Over the coming days, there will be a number of additional events relating to the SolarCity acquisition and our strategic plan for the combined company:

• October 28th: Product demonstration event to unveil an integrated solar roof with next-generation energy storage and EV charging.
• November 1st: Additional information to be released about the combined company.
• November 17th: Stockholder meeting to tally the final vote on the acquisition.

Outlook
We maintain our guidance of 50,000 new vehicle deliveries for the second half of 2016, with a Q4 plan of just over 25,000 deliveries, despite the challenges of winter weather and the holiday season. We expect about 30% to 35% of these deliveries to be accounted for as leases for revenue recognition purposes.

As previously provided in our second quarter update, we guided a 2 to 3 percentage points improvement in automotive gross mar gin on a GAAP and non-GAAP basis by the end of 2016. Automotive gross margin on a non-GAAP basis excludes ZEV credits and SBC. We are on track to meet this guidance.

We also guided in our second quarter update that full year 2016 operating expenses, both on a GAAP and non -GAAP basis, would grow approximately 30% from 2015. We are also on track to meet this guidance.

We now expect our capital expenditures in 2016 will be approximately $1.8 billion as we continue to focus on capital efficiency. Capital expenditures for the past three quarters totaled $759 million.

We plan to continue demonstrating strong execution against established goals while also creating new opportunities for future growth.

For earnings history and earnings-related data on Tesla (TSLA) click here.

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