10-QPeriod: Q3 FY2015

General Motors Co Quarterly Report for Q3 Ended Sep 30, 2015

Filed October 21, 2015For Securities:GM

Summary

General Motors Co. reported third-quarter 2015 results with total net sales and revenue of $38.84 billion, a slight decrease of 1.0% compared to the same period in 2014. Net income attributable to stockholders was $1.36 billion, or $0.84 per diluted share. The company's automotive segment experienced a revenue decline, primarily driven by weaker performance in its South America and International Operations segments, impacted by macroeconomic challenges and foreign currency headwinds. Despite the top-line dip, GM Financial saw significant revenue growth of 35.6%. A key development during the quarter was the resolution of significant legal matters, including a $900 million deferred prosecution agreement with the U.S. Department of Justice related to ignition switch recalls, a $300 million settlement for a shareholder class action, and a $275 million settlement for personal injury claimants. These resolutions, while substantial, were treated as adjustments for EBIT-adjusted reporting purposes, impacting the automotive selling, general, and administrative expenses significantly. The company reaffirmed its commitment to returning cash to stockholders and maintaining an investment-grade balance sheet, announcing a $5 billion common stock repurchase program initiated in March 2015. Management also highlighted positive momentum in North America, expecting to achieve EBIT-adjusted margins of 10% in 2015, ahead of schedule.

Financial Highlights

48 data points
Beta

Revenue

$38.84B

17.5% Gross Margin

Net Income

$1.34B

3.5% Net Margin

EPS (Diluted)

$0.84

Total Assets

$188.62B

Cash & Equivalents

$15.43B

Free Cash Flow

$1.47B

Financial Statements
Beta
Revenue$38.84B
Cost of Revenue$32.06B
Gross Profit$6.79B
SG&A Expenses$4.28B
Operating Expenses$37.85B
Operating Income$997.00M
Net Income$1.34B
EPS (Basic)$0.86
EPS (Diluted)$0.84
Shares Outstanding (Basic)1.58B
Shares Outstanding (Diluted)1.62B

Key Highlights

  • 1Total net sales and revenue decreased by 1.0% to $38.84 billion for the third quarter of 2015 compared to the prior year.
  • 2Net income attributable to stockholders was $1.36 billion for the quarter, with diluted earnings per share of $0.84.
  • 3GM Financial demonstrated strong performance, with revenue increasing by 35.6% to $1.70 billion.
  • 4The company resolved significant legal liabilities related to ignition switch recalls, including a $900 million deferred prosecution agreement with the DOJ.
  • 5Restructuring and strategic actions were ongoing in several international markets, including Russia, Australia, Korea, Thailand, and Indonesia, impacting segment results.
  • 6General Motors maintained a strong liquidity position with total available liquidity of $34.0 billion at the end of the quarter.
  • 7The company continued its share repurchase program, having purchased $2.9 billion of common stock year-to-date.

Frequently Asked Questions

The decrease in total net sales and revenue was primarily driven by weaker performance in the South America (GMSA) and International Operations (GMIO) segments, which were significantly impacted by macroeconomic challenges, foreign currency depreciation, and strategic business model changes in certain regions like Russia.

General Motors resolved major legal matters, including a $900 million deferred prosecution agreement for ignition switch recalls, a $300 million shareholder class action settlement, and a $275 million personal injury claimant settlement. These costs, totaling approximately $1.5 billion for the quarter, were recorded as Automotive selling, general and administrative expense and treated as adjustments for EBIT-adjusted reporting purposes, impacting operating income but adjusted out for the non-GAAP measure.

GM Financial is experiencing significant growth, with revenue up 35.6% year-over-year. The company is expanding its leasing and prime lending programs in North America and became the exclusive U.S. lease provider for Buick-GMC, Cadillac, and Chevrolet dealers. GM expects GM Financial's income before income taxes-adjusted to more than double from 2014 to 2018.

General Motors announced a plan to return all available free cash flow to stockholders while maintaining an investment-grade balance sheet. This includes a target of $20 billion in combined cash and marketable securities and plans to reinvest in the business for a target ROIC of 20% or more. The company initiated a $5 billion common stock repurchase program in March 2015.