General Motors Company (GM) Q3 2013 earnings summary

Executive summary

• Q3 revenue rose to $38.983B from $37.6B; adjusted EBIT increased to $2.6B from $2.3B, while net income to common stockholders fell to $698M from $1.476B.

• Worldwide retail vehicle sales rose to 2.398M from 2.273M and global share increased to 11.7% from 11.6%.

• North America and South America earnings improved, Europe’s loss narrowed, while GMIO weakened; a $816M preferred-share repurchase charge and higher taxes weighed on earnings.

Financial highlights

• Consolidated operating income rose to $2.256B from $1.603B; diluted EPS fell to $0.45 from $0.89, including a $0.51-per-share impact from special items.

• Adjusted automotive free cash flow was $1.330B versus $1.172B; automotive operating cash flow was $3.271B versus $3.113B, with $1.9B of Q3 capital expenditures.

• Adjusted EBIT increased $0.3B YoY; favorable price and mix were partly offset by unfavorable cost, other items and currency effects.

• Q3 income tax expense rose to $842M from $357M; 9M tax expense was $1.993B versus $814M, primarily reflecting the 2012 release of valuation allowances.

Outlook and guidance

• North America targeted 10%+ adjusted EBIT margins by mid-decade at mid-cycle industry volumes; Q3’s 9.3% margin was not expected to annualize, with significant YoY margin growth expected next year.

• Q4 pricing was expected to show good YoY impact but face sequential seasonality; pricing opportunities were expected to continue in H1 2014, then normalize in H2.

• Europe’s mid-decade break-even plan included $500M of incremental fixed-cost reductions; Bochum production was planned to end by 2014, and restructuring charges could affect results from Q4 2013.

• Planned annual capital expenditures were $8B; ~$900M was expected to fund a planned GMAC-SAIC interest acquisition, subject to approvals, with closing expected in 2014.