10-QPeriod: Q1 FY2017

General Motors Co Quarterly Report for Q1 Ended Mar 31, 2017

Filed April 28, 2017For Securities:GM

Summary

General Motors Co. (GM) reported strong financial results for the first quarter of 2017, driven by robust performance in its automotive segment and significant growth in GM Financial. Total net sales and revenue increased by 10.6% year-over-year to $41.2 billion, with Automotive sales growing to $38.3 billion and GM Financial's revenue reaching $2.875 billion. Net income attributable to common stockholders more than doubled to $2.608 billion, or $1.70 per diluted share, compared to $1.953 billion, or $1.24 per diluted share, in the prior year's quarter. The company also announced a significant strategic move: the sale of its European Opel and Vauxhall businesses and related financing operations to PSA Group for an estimated $2.2 billion. While this transaction is expected to result in a significant charge upon closing, it signals GM's focus on its core automotive operations and enhancing profitability. The company reiterated its positive outlook for 2017, expecting improved total net sales and revenue, EBIT-adjusted, and EBIT-adjusted margins.

Financial Highlights

48 data points
Beta

Revenue

$37.27B

20.1% Gross Margin

Net Income

$2.61B

7.0% Net Margin

EPS (Diluted)

$1.70

Total Assets

$230.79B

Cash & Equivalents

$12.86B

Free Cash Flow

$68.00M

Financial Statements
Beta
Revenue$37.27B
Cost of Revenue$29.76B
Gross Profit$7.50B
SG&A Expenses$2.36B
Operating Expenses$34.68B
Operating Income$2.58B
Net Income$2.61B
EPS (Basic)$1.73
EPS (Diluted)$1.70
Shares Outstanding (Basic)1.50B
Shares Outstanding (Diluted)1.53B

Key Highlights

  • 1Net income attributable to common stockholders surged to $2.608 billion, a 33.6% increase year-over-year.
  • 2Diluted Earnings Per Share (EPS) rose to $1.70 from $1.24 in the first quarter of 2016.
  • 3Total net sales and revenue grew by 10.6% to $41.2 billion, driven by a strong performance in both the Automotive and GM Financial segments.
  • 4GM announced the sale of its European Opel and Vauxhall businesses to PSA Group for approximately $2.2 billion, a significant strategic divestiture.
  • 5The company's Automotive segment generated operating income of $2.745 billion, up from $1.972 billion in the prior year.
  • 6GM Financial showed substantial growth, with total net sales and revenue increasing by 38.7% to $2.875 billion, contributing significantly to overall profitability.
  • 7The company maintained its dividend payout of $0.38 per common share, consistent with the prior year's first quarter.

Frequently Asked Questions

The significant increase in net income for GM in Q1 2017 was primarily driven by strong performance in its core Automotive segment, which saw higher sales and improved operating income. Additionally, GM Financial experienced substantial revenue growth, contributing significantly to the overall profitability. Favorable pricing and mix within the Automotive segment also played a role.

The sale of Opel and Vauxhall to PSA Group is a strategic move by GM to streamline its operations and focus on its core markets and brands. This divestiture is expected to reduce complexity, enhance profitability by exiting underperforming or non-strategic businesses, and allow GM to reallocate resources towards higher-growth and higher-margin opportunities, such as its Cadillac brand and autonomous vehicle technologies.

GM Financial is a crucial growth engine for General Motors. In Q1 2017, its total net sales and revenue increased by 38.7% to $2.875 billion. This growth, primarily fueled by increased leased vehicle income due to a larger lease portfolio, significantly boosted GM's consolidated earnings and demonstrated the value of a strong captive finance arm in supporting vehicle sales and generating profits.

GM expects to continue generating strong consolidated financial results for the full year 2017, with anticipated improvements in total net sales and revenue, EBIT-adjusted, and EBIT-adjusted margins. The company projects an EBIT-adjusted margin greater than 10% for GM North America and expects its overall 2017 EBIT-adjusted and margins to meet or exceed 2016 levels. The planned sale of European operations, while incurring a charge, is viewed as a strategic step to focus on core strengths and future growth areas.