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- Revenue: $49 billion, up 10% year-over-year.
- EBIT Adjusted: $4.1 billion, with 8.4% EBIT-adjusted margins.
- EPS Diluted Adjusted: $2.96 per share, up roughly 30% year-over-year.
- Adjusted Automotive Free Cash Flow: $5.8 billion, up $900 million compared to last year.
- North America EBIT-Adjusted Margins: 9.7%, resulting in $4 billion of EBIT adjusted.
- US Incentives: Approximately 2.4 percentage points lower than the industry average.
- Stock Repurchase: $1 billion worth of stock repurchased, retiring 23 million shares.
- GM Financial EBT Adjusted: $700 million, down $50 million year-over-year.
- Cruise Expenses: $400 million, down $350 million from a year ago.
- Full Year EBIT Adjusted Guidance: $14 billion to $15 billion.
- Full Year EPS Diluted Adjusted Guidance: $10 to $10.50 per share.
- Full Year Adjusted Automotive Free Cash Flow Guidance: $12.5 billion to $13.5 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- General Motors Co (NYSE:GM) reported strong third-quarter results, with revenue up 10% to $49 billion, driven by growth in both ICE (NYSE:ICE) and EV segments.
- The company achieved $4.1 billion in EBIT adjusted, with an 8.4% EBIT-adjusted margin, and EPS diluted adjusted of $2.96, up roughly 30% year over year.
- GM's retail market share in the US has grown, supported by above-average pricing and well-managed inventories.
- The company is on track to produce and wholesale about 200,000 EVs in North America this year, with a focus on making EVs profitable on an EBIT basis.
- GM has successfully maintained strong pricing with significantly lower incentives compared to competitors, demonstrating the strength of its product portfolio and disciplined go-to-market strategy.
- The operating environment in China remains challenging, with GM International's third-quarter EBIT adjusted down $300 million year-over-year.
- Warranty costs have increased due to inflationary pressures and claims on high-volume vehicles, leading to a $700 million year-over-year adjustment in the third quarter.
- The company anticipates lower earnings in the fourth quarter due to factors such as supply chain disruptions and seasonal production slowdowns.
- GM faces fierce competition and a tough regulatory environment, necessitating a focus on optimizing ICE and EV margins.
- Despite progress, GM's EV business is still working towards achieving profitability, with ongoing efforts needed to drive improvements across the business.
A: Paul Jacobson, CFO, explained that the warranty costs were influenced by inflation in parts and labor, despite a 25% reduction in quality events over the past years. The third quarter saw a review of warranty accruals, and some quality issues from prior model years have been addressed. This should stabilize costs, potentially providing a tailwind in future comparisons.
Q: How does GM plan to manage its inventory, particularly with EVs, and what impact does this have on financials?
A: Paul Jacobson noted that GM pulled forward some production from the fourth quarter into the third quarter, impacting inventory levels. The company aims to end the year with ICE inventory in the 50-60 day range and appropriate EV levels. The inventory adjustment is tied to both finished cells and products, with ongoing profitability improvements expected to slow down inventory adjustments.
Q: What is GM's outlook for 2025, especially concerning EV profitability and ICE business performance?
A: Paul Jacobson indicated that while GM expects a $2 billion to $4 billion improvement in EV losses, the overall EBIT for 2025 is projected to be similar to 2024. This suggests potential headwinds in the ICE business, but GM is focused on maintaining pricing discipline and managing costs effectively.
Q: What is the motivation behind GM's potential capital raise for Cruise, and how does it align with GM's broader strategy?
A: Mary Barra, CEO, stated that GM is exploring ways to invest in autonomy efficiently, potentially through partnerships. This approach aims to manage investments wisely and leverage partnerships, similar to GM's collaborations with Hyundai and Honda, to enhance efficiency and strategic alignment.
Q: How is GM managing pricing resilience in the face of industry normalization, and what are the expectations for future pricing?
A: Paul Jacobson highlighted GM's disciplined approach to pricing, supported by a strong product portfolio and strategic inventory management. Despite industry normalization, GM has maintained pricing resilience, with expectations for continued strong performance as new SUV refreshes are introduced.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.