10-QPeriod: Q2 FY2020

General Motors Co Quarterly Report for Q2 Ended Jun 30, 2020

Filed July 29, 2020For Securities:GM

Summary

General Motors Company (GM) reported a net loss of $758 million for the second quarter of 2020, a significant decline from a net income of $2.4 billion in the same period last year. This loss is primarily attributed to the severe impact of the COVID-19 pandemic, which led to a substantial decrease in net sales and revenue to $16.8 billion from $36.1 billion year-over-year. Production was suspended across global manufacturing facilities, impacting sales volumes significantly across all segments, particularly in North America and International Operations. Despite the challenging quarter, GM's liquidity remains a focus, with a significant increase in cash and cash equivalents to $32.6 billion. The company took steps to bolster its financial flexibility by borrowing under credit facilities and issuing senior unsecured notes. Management has implemented austerity measures and cost-reduction initiatives to navigate the ongoing economic uncertainty. The company is also progressing with its strategic transformation plans, including investments in future technologies like autonomous vehicles through its Cruise segment.

Financial Statements
Beta
Revenue$16.78B
Operating Expenses$17.99B
Operating Income-$1.21B
Net Income-$758.00M
EPS (Basic)$-0.56
EPS (Diluted)$-0.56
Shares Outstanding (Basic)1.43B
Shares Outstanding (Diluted)1.43B

Key Highlights

  • 1Net loss of $758 million for Q2 2020, a significant decrease from a net income of $2.4 billion in Q2 2019, largely due to the COVID-19 pandemic's impact.
  • 2Total net sales and revenue decreased by 53.5% to $16.8 billion in Q2 2020 compared to $36.1 billion in Q2 2019, reflecting reduced vehicle sales volumes.
  • 3Automotive wholesale vehicle sales decreased significantly year-over-year, with GMNA down 62.0% and GMI down 65.3% in the three months ended June 30, 2020.
  • 4Cash, cash equivalents, and restricted cash increased to $32.6 billion at June 30, 2020, up from $20.2 billion at December 31, 2019, indicating strengthened liquidity.
  • 5GM Financial reported a decrease in EBT-adjusted to $226 million from $536 million, primarily due to higher provision for loan losses and decreased leased vehicle income, reflecting economic pressures.
  • 6The company took proactive measures to enhance liquidity by drawing $15.9 billion under revolving credit facilities and issuing $4.0 billion in senior unsecured notes.
  • 7Restructuring charges of $92 million were recorded in GMI for actions in Australia, New Zealand, and Thailand, primarily related to the wind-down of operations.

Frequently Asked Questions

The primary driver was the unprecedented impact of the COVID-19 pandemic. This led to the suspension of global manufacturing operations, resulting in a substantial decrease in vehicle sales volumes and thus a sharp decline in net sales and revenue.

GM has actively managed its liquidity by drawing down $15.9 billion from its revolving credit facilities and issuing $4.0 billion in senior unsecured notes to increase its cash reserves. The company has also implemented austerity measures, such as limiting expenses and deferring compensation, to conserve cash.

GM Financial's performance was impacted by economic pressures, with a decrease in EBT-adjusted. This was driven by an increased provision for loan losses, reflecting higher expected charge-offs and lower expected recoveries due to the pandemic's economic impact, as well as a decrease in leased vehicle income. The company anticipates potential headwinds for used vehicle prices in the second half of 2020.

Yes, in the GMI segment, GM is undertaking restructuring actions related to the wind-down of Holden sales and design/engineering operations in Australia and New Zealand, as well as selling manufacturing facilities in Thailand. These actions resulted in restructuring charges of $92 million in Q2 2020.