General Motors


GM

reported adjusted earnings of $1.97 per share for second-quarter 2021, topping the Zacks Consensus Estimate of $1.89. Higher-than-anticipated profits from its North America and Financial units drove this outperformance. The bottom line also turned around the year-ago quarter’s loss of 50 cents per share amid the company’s cost-containment efforts, and robust demand for SUVs as well as pickups.

Revenues of $34,167 million also surpassed the Zacks Consensus Estimate of $29,000 million. The top-line figure also jumped from the year-ago figure of $16,778 million. The company recorded adjusted earnings before interest and taxes (EBIT) of $4,117 million, reversing the adjusted loss of $536 million seen in the prior-year quarter. This upside can be attributed to the prioritized production of its highest demand vehicles, gained market share in the full-size pick-up segment in the United States and strong used-car prices.

The automaker’s market share in the GM market was 10% for the reported quarter, decreasing from the year-ago period’s 10.9%.

Segmental Performance

GM North America

(GMNA) generated second-quarter net revenues of $27,932 million, significantly up from the $11,604 million recorded in the corresponding period of 2020. Also, revenues from the unit outpaced the Zacks Consensus Estimate of $22,053 million. The region’s wholesale vehicle sales of 642,000 units climbed from the 331,000 units reported in the year-ago quarter. The segment’s operating profit came in at $2,894 million, reversing the loss of $101 million witnessed the year-earlier period. The segmental profit also beat the consensus mark of $2,229 million. This outperformance was driven by solid customer demand for pick-ups and SUVs but slightly constrained by tight inventories amid the global semiconductor crunch.

GM International

’s (GMI) net revenues for the reported quarter were $2,792 million, up from the year-ago quarter’s $1,677 million. The reported metric, however, lagged the consensus mark of $2,937 million. The unit turned an operating profit of $15 million against the year-ago loss of $270 million. This upswing primarily resulted from strong mix and pricing actions, partially offset by semiconductor headwinds, commodity costs and warranty expenses. The reported profit, however, missed the consensus mark of $120 million.

GM Financial

generated net revenues of $3,426 million for the June-end quarter, slightly up from the $3,423 million recorded in the year-ago period but missing the consensus mark of $3,471 million. Nonetheless, the segment recorded an operating profit of $1,581 million, jumping from the $226 million witnessed in the prior-year quarter and beating the consensus mark of $1,239 million. This upside resulted from the positive impact of high used-vehicle prices, strong credit performance and reduced interest expense.

GM Cruise

witnessed net revenues of $25 million for the second quarter, down from the $28 million reported in the year-earlier period but at par with the consensus mark. The segment posted an operating loss of $332 million compared with the $195 million loss reported in the prior-year quarter. The reported loss is also wider than the consensus mark of a loss of $238 million.

Financial Position

General Motors — which shares space with other auto biggies including

Ford


F

,

Tesla


TSLA

and

Volkswagen


VWAGY

— had cash and cash equivalents of $22.9 billion as of Jun 30, 2021 compared with $19.9 billion at the end of 2020. Long-term automotive debt at the end of the quarter was $16.4 billion compared with $16.2 billion as of Dec 31, 2020.

General Motors’ automotive cash provided by operating activities amounted to $4,007 million at the end of the April-June quarter. The company recorded adjusted automotive free cash flow (FCF) of $2,478 million for second-quarter 2021, comparing favorably with the negative FCF of $9,042 million in the prior-year period.

2021 Guidance Up

This Zacks Rank #1 (Strong Buy) company expects 2021 adjusted EBIT and EPS per share in the band of $11.5-$13.5 billion and $5.4-$6.4, respectively, up from the previous forecast of $10-$11 billion and $4.5-$5.25. You can see


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