10-QPeriod: Q2 FY2016

General Motors Co Quarterly Report for Q2 Ended Jun 30, 2016

Filed July 21, 2016For Securities:GM

Summary

General Motors Co. (GM) reported a strong second quarter and first half of 2016, driven by robust sales and improved operating income across its automotive segments. Total net sales and revenue increased by 11.0% year-over-year for the quarter, reaching $42.4 billion, and by 7.8% for the first half to $79.6 billion. This growth was primarily fueled by increased wholesale volumes, favorable pricing, and strong performance in North America and Europe. Net income attributable to common stockholders more than doubled to $2.9 billion in the second quarter, and rose significantly to $4.8 billion for the first half. Diluted earnings per share also saw a substantial increase. GM Financial also demonstrated significant growth, with its revenue up 51.2% for the quarter and 52.2% for the first half, contributing positively to overall results. The company's strategic initiatives, including focusing on technology and brand growth, appear to be yielding positive financial outcomes.

Financial Highlights

48 data points
Beta

Revenue

$37.38B

19.9% Gross Margin

Net Income

$2.87B

7.7% Net Margin

EPS (Diluted)

$1.81

Total Assets

$210.45B

Cash & Equivalents

$18.92B

Free Cash Flow

$4.38B

Financial Statements
Beta
Revenue$37.38B
Cost of Revenue$29.94B
Gross Profit$7.44B
SG&A Expenses$2.51B
Operating Expenses$34.41B
Operating Income$2.97B
Net Income$2.87B
EPS (Basic)$1.85
EPS (Diluted)$1.81
Shares Outstanding (Basic)1.55B
Shares Outstanding (Diluted)1.58B

Key Highlights

  • 1Total net sales and revenue increased by 11.0% to $42.4 billion in Q2 2016 and by 7.8% to $79.6 billion for the first six months of 2016 compared to the prior year periods.
  • 2Net income attributable to common stockholders surged to $2.9 billion ($1.81 per diluted share) in Q2 2016, a substantial increase from $1.1 billion ($0.67 per diluted share) in Q2 2015.
  • 3GM Financial reported a significant revenue increase of 51.2% to $2.3 billion in Q2 2016 and 52.2% to $4.4 billion for the first six months of 2016.
  • 4Operating income more than doubled to $3.0 billion in Q2 2016, compared to $1.3 billion in the same period last year.
  • 5The company repurchased shares and increased its dividend, demonstrating a commitment to returning capital to shareholders.
  • 6GM acquired Cruise Automation Inc. in May 2016 to accelerate its development of autonomous vehicle technology.

Frequently Asked Questions

Revenue growth was primarily driven by increased wholesale vehicle volumes, favorable pricing across new and carryover vehicles, and strong performance in key markets like North America and Europe. The significant expansion of GM Financial's operations also contributed substantially to the overall revenue increase.

The acquisition of Cruise Automation, completed in May 2016, contributed $581 million to deal consideration (cash and stock). While the operational results of Cruise were not significant enough to warrant separate pro forma disclosure, the acquisition is a strategic investment aimed at accelerating GM's autonomous vehicle technology development.

GM expects to continue generating strong consolidated financial results, with a projected diluted EPS of $5.50 to $6.00 for the full year 2016. Key strategic initiatives include focusing on customer loyalty through quality and safety, leading in technology and innovation (including autonomous and connected vehicles), growing its brands (especially Cadillac and Chevrolet), expanding its presence in China, and growing GM Financial. The company also plans to execute cost savings initiatives and reinvest in the business.

Significant risks and contingencies include ongoing legal proceedings related to safety recalls (like the ignition switch recall), potential regulatory investigations and penalties, product liability claims, and the impact of global economic conditions, currency fluctuations, and geopolitical events (such as Brexit). The company has accrued liabilities for many of these matters but notes that actual outcomes could differ and potentially be material.