General Motors Co. — Form 10-Q Summary
Reporting period: Quarter and nine months ended September 30, 2022. GM designs and sells vehicles and related services, provides financing through GM Financial, and is investing in electric and autonomous vehicles, including Cruise. Results are unaudited interim U.S. GAAP financial statements.
Financial performance and position
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $41.9bn | $26.8bn | $113.6bn | $93.4bn |
| Operating income | $3.4bn | $1.6bn | $7.7bn | $7.8bn |
| Net income | $3.3bn | $2.4bn | $7.7bn | $8.2bn |
| Diluted EPS | $2.25 | $1.62 | $4.73 | $5.55 |
| EBIT-adjusted | $4.3bn | $2.9bn | $10.7bn | $11.5bn |
| EPS-diluted-adjusted | $2.25 | $1.52 | $5.48 | $5.73 |
- Q3 revenue rose 56% year over year, driven primarily by higher wholesale volume and pricing in Automotive. Nine-month revenue increased 22%.
- Q3 EBIT-adjusted increased, while nine-month EBIT-adjusted declined. Higher vehicle volume and pricing were offset by increased material, freight, manufacturing, warranty, selling and engineering costs. Nine-month adjusted results also include a $1.1bn Cruise stock-award modification charge in GAAP results; GM excludes it from EBIT-adjusted.
- Automotive EBIT-adjusted margin was 11.2% in Q3 versus 10.3% a year earlier; for the nine months it was 10.0% versus 11.0%. GMNA’s nine-month margin fell to 10.0% from 11.0%; GMI’s rose to 7.9% from 6.3%.
- GM Financial reported Q3 EBT-adjusted of $911m, down 17%, and nine-month EBT-adjusted of $3.3bn, down 14%. Nine-month loan-loss provision was $500m versus $174m, reflecting reserve changes and a weaker economic outlook. Its loan-loss allowance was $2.1bn at quarter-end.
- Nine-month consolidated operating cash flow was $10.4bn, versus $8.4bn; investing cash outflow was $11.0bn and financing cash inflow was $0.7bn. Automotive operating cash flow was $11.6bn and capital expenditures $5.8bn; adjusted automotive free cash flow was approximately $5.8bn.
- At September 30, cash and cash equivalents were $20.7bn and marketable debt securities $9.6bn. Automotive available liquidity was $38.1bn, including $23.0bn cash and securities and $15.2bn available credit facilities. Total debt comprised $18.8bn Automotive debt and $93.8bn GM Financial debt; GM Financial debt is largely financing-related, including securitizations.
- Total assets were $260.5bn, total liabilities $190.8bn and total equity $69.5bn. Inventory was $16.4bn, up from $13.0bn at year-end 2021. Automotive warranty liabilities, net of supplier recoveries, were $7.5bn.
Changes, outlook and management commentary
- GM maintained 2022 guidance: net income attributable to stockholders of $9.6–$11.2bn; EBIT-adjusted of $13–$15bn; diluted EPS of $5.76–$6.76; and adjusted diluted EPS of $6.50–$7.50. Management expected an adjusted tax rate of about 20%.
- Management cited continuing supplier and semiconductor constraints, inflation in materials and services, higher interest rates, foreign-exchange volatility and potentially weaker economic conditions. GM prioritized high-demand trucks, SUVs and EVs and expected to complete and sell a substantial number of vehicles awaiting components before year-end.
- GM planned approximately $9–$10bn of 2022 capital spending and Ultium Cells investment. Its longer-term plan includes more than $35bn of EV and AV investment through 2025. GM’s $5bn share-repurchase program was expanded in August; $1.5bn and 38m shares were repurchased in the first nine months. The quarterly dividend was $0.09 per share.
- GM said available liquidity was sufficient for anticipated needs and targeted an average Automotive cash balance of $18bn while maintaining investment-grade credit. A conditional $2.5bn Department of Energy loan commitment to Ultium Cells was expected to close in Q4, subject to final documentation and conditions.
- Cruise’s Q3 adjusted loss was $497m, versus $286m; its nine-month adjusted loss was $1.4bn, versus $847m, primarily due to development spending toward commercialization. Cruise received a California permit in June 2022 allowing fares for certain driverless rides in San Francisco.
- Material exposures include $1.1bn of accrued litigation-related and tax administrative liabilities, with indirect-tax losses reasonably possible above accruals of up to approximately $1.0bn. GM Korea wage claims include an estimated $86m reasonably possible loss above accruals. GM could not estimate material loss ranges for certain emissions, oil-consumption, Takata and Bolt-related proceedings. The company recorded a $1.1bn Takata recall accrual and said additional international Takata recalls could be material.
- Other notable items: GM acquired SoftBank’s Cruise stake for $2.1bn and invested a further $1.35bn in Cruise in its place; GM exercised and sold Stellantis shares for approximately $1.1bn in net pre-tax proceeds, including dividends. GM warned that losing the ability to operate in Russia could result in an approximately $0.7bn non-cash charge.
Important facts for investors to verify
- Progress toward full-year guidance, particularly the fourth-quarter earnings and production needed to reach the EBIT-adjusted and EPS ranges.
- Whether supply constraints ease and whether pricing and vehicle mix can offset inflation, logistics, warranty and engineering costs.
- Automotive cash generation, capital spending, EV/battery investments, and remaining repurchase authorization and liquidity.
- GM Financial credit performance, loan-loss provisions, funding costs and sensitivity to used-vehicle residual values as prices normalize.
- Cruise commercialization milestones, cash requirements and the continuing expense and dilution effects of its equity-award program.
- Developments in disclosed legal, recall, tax and Russia-related exposures; several potential losses are not estimable from the filing.