10-QPeriod: Q1 FY2018

General Motors Co Quarterly Report for Q1 Ended Mar 31, 2018

Filed April 26, 2018For Securities:GM

Summary

General Motors Co. reported a significant decrease in net income attributable to stockholders for the first quarter of 2018, falling to $1,046 million ($0.73 per share) from $2,608 million ($1.73 per share) in the same period of 2017. This decline was primarily driven by a substantial drop in operating income, largely due to increased costs and expenses, despite a modest increase in revenue from GM Financial. Total net sales and revenue also saw a decline of 3.1% year-over-year. The company highlighted a strategic shift focused on "zero crashes, zero emissions, zero congestion," with investments in technology and innovation. Management aims for a 10% adjusted EBIT margin. The company is also navigating significant restructuring efforts, particularly in Korea, and managing ongoing legal and recall-related contingencies. Despite the reported drop in net income, GM Financial demonstrated strong revenue growth, contributing positively to the overall financial picture.

Financial Highlights

47 data points
Beta

Revenue

$36.10B

16.4% Gross Margin

Net Income

$1.05B

2.9% Net Margin

EPS (Diluted)

$0.72

Total Assets

$218.73B

Cash & Equivalents

$14.26B

Free Cash Flow

-$1.82B

Financial Statements
Beta
Revenue$36.10B
Cost of Revenue$30.18B
Gross Profit$5.92B
SG&A Expenses$2.37B
Operating Expenses$35.57B
Operating Income$529.00M
Net Income$1.05B
EPS (Basic)$0.73
EPS (Diluted)$0.72
Shares Outstanding (Basic)1.41B
Shares Outstanding (Diluted)1.43B

Key Highlights

  • 1Net income attributable to stockholders decreased by 59.9% to $1,046 million in Q1 2018 from $2,608 million in Q1 2017.
  • 2Diluted earnings per share decreased to $0.72 from $1.70 year-over-year.
  • 3Total net sales and revenue declined by 3.1% to $36,099 million from $37,266 million.
  • 4GM Financial revenue increased by 24.1% to $3,411 million, driven by leased vehicle income.
  • 5Operating income significantly decreased to $529 million from $2,583 million, impacted by higher costs and expenses.
  • 6The company adopted new accounting standards, including ASC 606 (Revenue from Contracts with Customers), which impacted reported revenue and expenses.
  • 7GM incurred restructuring charges of $942 million related to GMI operations, primarily in Korea.

Frequently Asked Questions

The primary driver for the significant decrease in net income was a substantial drop in operating income. This was largely due to an increase in costs and expenses, including restructuring charges, which outweighed the growth seen in GM Financial's revenue and the overall decline in net sales and revenue.

The adoption of new accounting standards, particularly ASC 606 (Revenue from Contracts with Customers), impacted the financial statements. It led to a shift in the timing of revenue and expense recognition, particularly for sales incentives and certain lease arrangements, affecting reported automotive net sales, cost of sales, and the classification of equipment on operating leases.

General Motors is focused on transforming into the world's most valued automotive company with a vision of 'zero crashes, zero emissions, zero congestion.' They aim for a 10% adjusted EBIT margin and are investing in technology and innovation like electrification and autonomous driving. While expecting mid-six dollar EPS-diluted-adjusted for the full year 2018, they are also managing significant restructuring efforts and market challenges globally.

GM Financial showed strong performance, with its revenue increasing by 24.1% to $3,411 million. This growth was primarily driven by increased leased vehicle income due to a larger lease portfolio. Earnings before income taxes-adjusted for GM Financial also saw a significant increase, indicating a positive contribution to the overall company results, contrasting with the decline in automotive operating income.