Tesla (TSLA) shares rise after hours in another profit slam.
Tesla posted earnings in the second quarter of 2020 and stocks are moving after news hours. This is the first time in the company's history that they have achieved positive GAAP net income in four consecutive quarters. The company is now eligible for inclusion in the S&P 500 index.
Strengths
Cash
$ 535M increase in our Q2 cash and cash equivalents to $ 8.6B
Operating cash flow less CAPEX (free cash flow) $ 418 million in the second quarter
Cost effectiveness
GAAP operating profit of $ 327 million; 5.4% operating margin in the second quarter
GAAP net income of $ 104 million; Non-GAAP net income of $ 451 million (excluding SBC) in the second quarter
Four quarters of sequential profitability
Operations
The following US Gigafactory site is selected Preparations in progress
Model S range increased to 402 miles (EPA)
Production rates for Model Y and 3 made in China continue to rise
summary
Our company has demonstrated strong resilience during these unprecedented times. Despite closing our main plant in Fremont for almost half the quarter, we recorded our fourth sequential GAAP earnings in the second quarter of 2020, while generating a positive free cash flow of $ 418 million.
Our profit was sequentially improved through fundamental operational improvements. In addition, we incurred costs associated with plant closings, which were offset by actions taken during the quarter to reduce expenses. Over the past 12 months, our GAAP operating margin has reached almost 5%. We expect that our operating margin will continue to grow over time, reaching maximum levels.
We believe that the progress we made in the first half of this year has positioned us for a successful second half of 2020. Production at our existing facilities continues to improve to meet demand and we are adding capacity. . Later this year, we will build three factories on three continents simultaneously.
As we invest in our product roadmap, improve technology, and locate production, we continue to drive profitability across the business and strictly manage working capital. It is important to manage our cash flow diligently to ensure that we are prepared for any scenario.
Returned
In the second quarter, total revenue remained relatively stable in the third quarter. The positive effect of higher vehicle deliveries, higher income from regulatory credits and higher energy production and storage income was offset to some extent by the lower average price of vehicle sales and lower services and other income.
Cost effectiveness
Our operating profit improved in the second quarter despite difficult circumstances. Positive impacts included lower operating costs due to a temporary reduction in employee compensation expense, a sequential increase in regulatory credit revenue, and the recognition of deferred revenue of $ 48 million related to the launch of the feature. Complete self-driving (FSD). These positive contributions were offset by significant costs related to plant closings, as well as a sequential increase in SBC's non-cash expense primarily due to $ 101 million related to the 2018 CEO award milestones.
As ASPs have declined sequentially, improvements in product and manufacturing costs, driven by the Model Y and Model 3 made in China, as well as improved revenue and connectivity for secondary market software have had a negative impact. Positive impact on our profitability.
Cash
Cash and cash equivalents at the end of the quarter increased $ 535 million Q / Q to $ 8.6 billion primarily due to free cash flow of $ 418 million. Free cash flow was negatively affected by a higher percentage of deliveries towards the end of the quarter compared to previous quarters, as well as an increase in government reimbursements and regulatory credit receivables, which are paid according with your payment terms. payment. Since vehicle production resumed in Fremont and Nevada in early May, our back days have not been affected as much as originally anticipated.
See the full press release on Tesla's official investor relations website.
Check back on some highlights from the Tesla Q2 2020 earnings conference call, which begins at
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