General Motors Company (GM) Q3 2012 earnings summary

Executive summary

• Q3 revenue was $37.6B vs. $36.7B YoY; adjusted EBIT rose to $2.3B from $2.2B, while net income to common stockholders fell to $1.5B from $1.7B and diluted EPS declined to $0.89 from $1.03.

• Results outside Europe were strong, but European weakness continued to weigh on sales and profitability.

Financial highlights

• Automotive net cash from operating activities was $3.1B vs. $1.8B; automotive free cash flow was $1.2B vs. $0.3B.

• GAAP operating income was $1.6B vs. $1.8B YoY.

• A $100M GM Korea goodwill impairment reduced diluted EPS by $0.04.

Outlook and guidance

• Q4 adjusted EBIT expected to follow seasonal trends and be similar to or slightly better than Q4 2011.

• Europe’s 2012 adjusted EBIT loss forecast at $1.5B–$1.8B; 2013 targeted slightly better, with break-even targeted by mid-decade.

• Pension transactions expected to generate a $2.9B pretax Q4 charge and $200M annual unfavorable pension-income impact.

• Continued positive trends could prompt significant U.S. and Canadian deferred-tax valuation allowance reversals in Q4, potentially resulting in goodwill impairment.