10-QPeriod: Q3 FY2012

General Motors Co Quarterly Report for Q3 Ended Sep 30, 2012

Filed October 31, 2012For Securities:GM

Summary

General Motors Co. reported third-quarter and nine-month results for 2012. The company saw a slight increase in total net sales and revenue for the quarter, driven by higher wholesale volumes and favorable pricing and mix, though this was partially offset by unfavorable foreign currency translation. The European segment continued to struggle with declining sales and increased losses due to the weak economic environment. Conversely, the International Operations segment showed strong growth in revenue and significantly improved operating income. Financially, GM generated positive operating cash flow and free cash flow for the nine months ended September 30, 2012. The company's cash and cash equivalents increased significantly from the prior year. GM also made progress in managing its pension obligations, including offering lump-sum distributions and entering into agreements for annuity contracts, which are expected to result in significant charges in the fourth quarter of 2012. The company's credit ratings have seen some upgrades, and it continues to pursue investment-grade status.

Financial Highlights

49 data points
Beta

Revenue

$37.58B

11.5% Gross Margin

Net Income

$1.83B

4.9% Net Margin

EPS (Diluted)

$0.89

Total Assets

$155.46B

Cash & Equivalents

$23.32B

Free Cash Flow

$1.44B

Financial Statements
Beta
Revenue$37.58B
Cost of Revenue$32.73B
Gross Profit$4.33B
SG&A Expenses$2.85B
Operating Expenses$35.97B
Operating Income$1.60B
Interest Expense$128.00M
Net Income$1.83B
EPS (Basic)$0.94
EPS (Diluted)$0.89
Shares Outstanding (Basic)1.57B
Shares Outstanding (Diluted)1.66B

Key Highlights

  • 1Total net sales and revenue for the three months ended September 30, 2012 increased by 2.3% to $37.6 billion, driven by favorable vehicle mix, increased wholesale volumes, and improved pricing.
  • 2GM Financial's revenue increased by 31.5% to $514 million for the quarter, with income before taxes rising by 12.4% to $200 million, indicating solid performance from the financing arm.
  • 3The GM International Operations (GMIO) segment reported a 10.3% increase in net sales and revenue to $6.7 billion and an 88.8% increase in EBIT-adjusted to $689 million, highlighting strong performance in key growth markets.
  • 4GM Europe (GME) continued to face headwinds, with net sales and revenue decreasing by 17.7% to $5.1 billion and an EBIT (loss)-adjusted of $478 million for the quarter, reflecting the ongoing challenging economic conditions.
  • 5Net cash provided by operating activities for the nine months ended September 30, 2012 was $9.8 billion, a substantial increase from $6.7 billion in the prior year.
  • 6Free cash flow for the nine months ended September 30, 2012 was $3.2 billion, up from $2.1 billion in the comparable prior period.
  • 7Goodwill impairment charges increased significantly to $78 million for the three months ended September 30, 2012, primarily within the GMIO segment, compared to nil in the prior year quarter.

Frequently Asked Questions

In the third quarter of 2012, General Motors' total net sales and revenue increased by 2.3% to $37.6 billion compared to the same period in 2011. This increase was primarily driven by favorable vehicle mix, higher wholesale volumes, and improved vehicle pricing, though partially offset by foreign currency translation losses.

GM Europe (GME) experienced a challenging quarter, with net sales and revenue decreasing by 17.7% and reporting an EBIT (loss)-adjusted of $478 million, reflecting the weak European economic conditions. In contrast, GM International Operations (GMIO) showed robust growth, with net sales and revenue up 10.3% and EBIT-adjusted increasing significantly by 88.8%, driven by strong industry growth and new product launches in the region.

GM Financial demonstrated strong performance, with revenue increasing by 31.5% to $514 million and income before taxes rising by 12.4% to $200 million in the third quarter of 2012. This growth was attributed to a larger loan and lease portfolio, indicating its increasing importance and contribution to GM's overall financial health.

GM generated strong cash flow from operations, with $9.8 billion in the first nine months of 2012, and free cash flow increased to $3.2 billion. The company is also actively managing its pension obligations, with plans to purchase annuity contracts, which are expected to lead to significant pre-tax charges of approximately $2.9 billion in the fourth quarter of 2012, impacting earnings but aimed at reducing long-term pension liabilities.