General Motors Company — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; comparisons are with Q1 2021 unless stated otherwise. GM designs and sells vehicles and provides automotive financing through GM Financial; Cruise develops autonomous-vehicle technology.
Financial performance
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Total revenue | $35.979 billion | $32.474 billion |
| Operating income | $2.196 billion | $3.277 billion |
| Net income | $2.807 billion | $3.014 billion |
| Net income attributable to GM stockholders | $2.939 billion | $3.022 billion |
| Net income attributable to common stockholders | $1.987 billion | $2.976 billion |
| Diluted GAAP EPS | $1.35 | $2.03 |
| EBIT-adjusted | $4.044 billion | $4.417 billion |
| EPS-diluted-adjusted | $2.09 | $2.25 |
| Cash from operating activities, consolidated | $2.104 billion | $1.266 billion |
Revenue rose 10.8%, led by automotive pricing, mix and wholesale volume. Operating income and adjusted EBIT declined. GMNA adjusted EBIT was $3.141 billion, with a 10.7% margin versus 12.1%; GMI adjusted EBIT was $328 million, with a 9.9% margin versus 10.0%. GM Financial adjusted pretax earnings increased to $1.284 billion from $1.182 billion. Cruise reported an adjusted loss of $325 million, excluding the one-time stock-award modification charge.
Common-stockholder earnings and GAAP EPS were affected by a $909 million deemed dividend associated with GM’s redemption of Cruise preferred shares from SoftBank. A $482 million Cruise deferred-tax valuation-allowance release reduced tax expense; the reported income tax benefit was $28 million, compared with $1.177 billion of tax expense in Q1 2021. GM reported adjusted EPS of $2.09, excluding specified adjustments.
Cash, debt and liquidity
- At March 31, cash and cash equivalents were $16.349 billion and marketable debt securities were $9.907 billion; consolidated cash, cash equivalents and restricted cash totaled $19.978 billion, down from $23.542 billion at year-end.
- Automotive available liquidity was $32.9 billion, including $17.7 billion of cash, cash equivalents and marketable securities and $15.2 billion available under credit facilities. Automotive liquidity declined $4.0 billion during the quarter, including the SoftBank Cruise-share purchase and further Cruise investment.
- GM Financial available liquidity was $29.0 billion. GM stated it believed current liquidity and borrowing access were sufficient to meet requirements.
- Automotive debt was $16.9 billion; GM Financial debt was $92.9 billion. GM Financial debt primarily funds finance receivables and leased vehicles, and much secured debt is repayable only from pledged assets.
- Automotive operating cash flow was $1.6 billion, compared with cash use of $1.1 billion a year earlier; capital expenditures were $1.6 billion, leaving adjusted automotive free cash flow approximately zero before insignificant management-action adjustments.
Material changes and unusual items
- Higher automotive revenue and pricing were offset by increased material and freight costs, manufacturing costs, engineering spending and other expenses. Material and freight costs increased about $1.1 billion across the company.
- Cruise stock-award modifications generated approximately $1.2 billion of compensation expense; $1.057 billion was excluded from adjusted EBIT. The modification also resulted in 31 million RSUs becoming immediately vested.
- GM acquired SoftBank’s Cruise stake for $2.1 billion and invested an additional $1.35 billion in Cruise in place of SoftBank. GM expects Cruise award-holder liquidity payments of $1.0–$1.5 billion in 2022.
- GM recorded a $197 million loss on Stellantis warrants, compared with a $210 million gain in Q1 2021. It reduced patent-royalty accruals by $100 million after resolving substantially all related matters.
- GM Financial’s revenue decreased 7.4%, principally because its leased-vehicle portfolio was smaller. High used-vehicle prices supported lease economics; termination gains were $0.4 billion in both comparative quarters.
Outlook, risks and contingencies
For full-year 2022, management forecast net income attributable to stockholders of $9.6–$11.2 billion, EBIT-adjusted of $13.0–$15.0 billion, diluted EPS of $5.76–$6.76 and adjusted diluted EPS of $6.50–$7.50. GM expected an adjusted effective tax rate of approximately 20%. It expected relatively strong GMNA margins, supported by pricing and demand but partly offset by commodity, raw-material and logistics costs.
Management cited continuing semiconductor and supply-chain constraints, production interruptions, inflation, higher material and logistics costs, COVID-19 restrictions, geopolitical uncertainty and competitive and regulatory pressures. GM had suspended exports to Russia and directed its Russian sales company to cease vehicle sales; it said a loss of control or inability to resume operations could prompt an approximately $0.6 billion non-cash write-off. GM planned more than $35 billion of EV and AV investment through 2025 and projected medium-term annual capital spending and Ultium battery-joint-venture investment of approximately $9–$10 billion, in addition to engineering and product development.
GM’s legal and tax-related accruals were $1.4 billion. It estimated possible indirect-tax losses in excess of accruals of up to approximately $950 million; additional loss exposure in several proceedings could not be estimated. The company cited GM Korea wage litigation, emissions-related claims, Takata airbag matters and product-liability claims. For the Bolt recall, GM’s $1.9 billion receivable from LG substantially offsets recorded recall charges, but actual costs and recovery may differ. GM reported that its credit ratings remained investment grade, its covenants were met, and it had made no material changes to the risk factors in its 2021 Form 10-K.
Investor verification points
- Reconcile GAAP common-stockholder earnings and EPS with adjusted EPS, including the Cruise deemed dividend, compensation charge and tax valuation-allowance release.
- Assess whether pricing and vehicle mix can continue to offset supply constraints, inflation and logistics costs, and monitor production and inventory of vehicles awaiting components.
- Track automotive liquidity against GM’s stated $18 billion target average automotive cash balance, alongside EV, battery and Cruise funding commitments.
- Monitor GM Financial’s credit-loss provisions, delinquency trends, used-vehicle residual values and funding access.
- Follow Russia-related developments, recall recoveries and material legal or indirect-tax exposures, including matters for which losses remain difficult to estimate.