10-QPeriod: Q3 FY2013

General Motors Co Quarterly Report for Q3 Ended Sep 30, 2013

Filed October 30, 2013For Securities:GM

Summary

General Motors (GM) reported solid revenue growth in the third quarter and first nine months of 2013, driven by favorable vehicle pricing, mix, and increased sales from its GM Financial segment. The company saw a significant revenue boost from the acquisition of Ally Financial's international operations, which positively impacted GM Financial's results. Despite overall revenue growth, the automotive segment's gross margin experienced a slight decline year-over-year due to unfavorable vehicle mix and increased material costs, although this was partially offset by improved pricing and reduced warranty expenses. GM's financial health appears stable, with a healthy liquidity position and continued progress on its strategic initiatives, including the ongoing integration of acquired finance operations and restructuring efforts in Europe. The company's credit ratings saw positive movement with upgrades from Fitch, Moody's, and S&P, indicating improved financial standing and investor confidence. However, the company continues to navigate challenges such as ongoing restructuring in Europe and potential foreign currency headwinds.

Financial Highlights

50 data points
Beta

Revenue

$38.98B

14.9% Gross Margin

Net Income

$1.72B

4.4% Net Margin

EPS (Diluted)

$0.45

Total Assets

$168.54B

Cash & Equivalents

$20.36B

Free Cash Flow

$1.91B

Financial Statements
Beta
Revenue$38.98B
Cost of Revenue$33.17B
Gross Profit$5.82B
SG&A Expenses$2.88B
Operating Expenses$36.73B
Operating Income$2.26B
Interest Expense$65.00M
Net Income$1.72B
EPS (Basic)$0.50
EPS (Diluted)$0.45
Shares Outstanding (Basic)1.39B
Shares Outstanding (Diluted)1.68B

Key Highlights

  • 1Total net sales and revenue increased by 3.7% to $38.98 billion for the three months ended September 30, 2013, compared to the prior year period.
  • 2GM Financial revenue saw a substantial increase of 67.9% to $863 million for the quarter, largely due to acquisitions.
  • 3Automotive cost of sales increased by 1.3% to $33.17 billion, while automotive gross margin decreased by 0.7% to $4.95 billion, indicating pressure on profitability from costs and mix.
  • 4Goodwill impairment charges significantly decreased by 91.4% to $60 million for the nine months ended September 30, 2013, compared to $695 million in the prior year.
  • 5The company's liquidity remains strong, with total available liquidity at $37.3 billion as of September 30, 2013.
  • 6Credit rating agencies Fitch, Moody's, and S&P upgraded GM's ratings and/or outlooks, reflecting improved financial health and performance.
  • 7Net income attributable to stockholders decreased to $1.717 billion for the quarter, down from $1.833 billion in the prior year, impacted by various factors including increased income tax expense.

Frequently Asked Questions

The increase in revenue was primarily driven by favorable vehicle mix and pricing, increased revenue from GM Financial due to the acquisition of Ally Financial's international operations, and higher revenue from OnStar and parts and accessories. However, this was partially offset by unfavorable foreign currency effects.

The acquisition significantly boosted GM Financial's revenue and total assets. For the third quarter of 2013, GM Financial revenue increased by 67.9% compared to the prior year, driven by the acquired operations and a larger lease portfolio. This acquisition also increased interest expenses and operating expenses due to higher debt and a larger balance sheet.

GM anticipates continued losses in its European operations due to severe market conditions, including the sovereign debt crisis and high unemployment. While the company has a plan to strengthen its operations through product portfolio investments, cost reductions, and leveraging its alliance with PSA, it expects these adverse conditions to persist and not improve significantly in the near future.

GM's credit ratings have seen positive developments. Fitch, Moody's, and S&P all upgraded GM's ratings or outlooks during the third quarter of 2013. Moody's upgraded its corporate rating to investment grade (Baa3), while Fitch and S&P assigned positive outlooks and upgraded their senior unsecured ratings. GM aims to achieve investment grade status from all agencies to enhance financial flexibility and reduce borrowing costs.