Tesla beats forecasts with second quarterly profit for 2019

Tesla reported its a second profitable quarter for 2019, beating analyst forecasts.

Lora Kolodny had the news for CNBC:

Tesla has reported fourth-quarter results, and it’s a beat on earnings. The stock spiked as much as 13% on the news after hours.

Here’s how the company did versus expectations:

• Earnings: $2.14 adjusted vs. $1.72 per share expected.
• Revenue: $7.38 billion versus $7.02 billion, expected according to Refinitiv.

Tesla said it expects positive cash flow and net income on a continuing basis going forward, with possible exceptions as it launches and ramps up production for new products.

The company’s automotive gross margins were down slightly year-over-year and sequentially at 22.5% for the quarter. The company said it had already begun a production ramp for Model Y, its newest crossover SUV, at its Fremont, California car plant. The company also has plans to build the Model Y eventually at a factory it plans to build in Brandernburg, Germany in 2021.

For 2020, Tesla said vehicle deliveries should “comfortably exceed 500,000 units.”

Claudia Assis from MarketWatch wrote:

Tesla Inc. stock rallied 12% late Wednesday after the Silicon Valley car maker reported quarterly earnings that topped Wall Street views and set a goal to “comfortably” sell more than 500,000 vehicles this year.

Tesla TSLA, +10.30%  said it earned $105 million, or 56 cents a share, in the fourth quarter, compared with $140 million, or 78 cents a share, in the year-ago quarter. Adjusted for one-time items, the company earned $2.14 a share, compared with $2 a share a year ago.

Revenue rose 2% to $7.4 billion, compared with $7.2 billion a year ago.

Analysts polled by FactSet had expected the car maker to report adjusted earnings of $1.77 a share on sales of $7 billion.

The after-hours share surge continued as Tesla hosted its conference call with investors, and a mention of potential delays in the Model 3 production in Shanghai due to the deadly coronavirus did nothing to temper investors’ enthusiasm.

Tesla Chief Financial Officer Zach Kirkhorn said during the call that Tesla is expecting “a one- to one-and-a-half-week delay in the ramp of Shanghai-built Model 3 due to a government-required factory shutdown” related to the virus.

“This may slightly impact profitability for the quarter, but is limited, as the profit contribution from Model 3 Shanghai remains in the early stages,” he said. “We are also closely monitoring whether there will be interruptions in the supply chain for cars built in Fremont [Calif.],” but Tesla so far is not aware of anything material, Kirkhorn said.

CNN’s Chris Isidore noted:

Tesla has had only a handful of quarterly profits in its 10 years as a public company. On a strict accounting basis the company posted yet another loss for 2019. However, Tesla posted a $386 million profit in the final three months of 2019 using the operating basis followed by most analysts and investors. That left it with a narrow $35.8 million profit for the year.

“2019 was a turning point for Tesla,” the company said in its statement.

The company said it should be able to continue to grow, with the opening of its Shanghai factory ahead of schedule and a new, lower priced SUV, the Model Y, on which the company recently started production. It expects the first limited deliveries of the Model Y later in this quarter.

It also plans to open a new factory near Berlin in 2021. It said it should “comfortably exceed” 500,000 cars sold this year, a 36% increase from its 2019 sales total.

The results are a validation for Tesla’s controversial CEO Elon Musk, who has fans and detractors on Wall Street as he bucked the traditional auto industry. The company has often fallen short of its promises, but it has not entered a period in which results are regularly exceeding expectations.

Tesla said that even on a strict accounting basis it expects to be profitable going forward. In the past it was known for burning through cash, raising fears of a cash crunch. Now it said it expects to be cash flow positive going forward except for brief periods tied to the launch and ramp-up of new vehicles.

“We continue to believe our business has grown to the point of being self-funding,” said the company in its earnings release. “Continuous volume growth, capacity expansion and cash generation remain the main focus.