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GM Reports Q2 2016 Income Up 157%, $2.9 Billion

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#1 ·
GM Reports Second-Quarter Net Income of $2.9 Billion, Up 157 Percent
General Motors

July 21, 2016


  • Strong EPS diluted of $1.81; record EPS diluted-adjusted of $1.86
  • Record net revenue of $42.4 billion, up 11 percent
  • Record EBIT-adjusted of $3.9 billion, up 37 percent
  • GM North America sets records for EBIT-adjusted of $3.6 billion, 12.1 percent margin

DETROIT – General Motors Co. (NYSE: GM) today announced strong second-quarter net income to common stockholders of $2.9 billion, up 157 percent compared to $1.1 billion in the second quarter of 2015. Earnings per share (EPS) diluted was a strong $1.81, compared to $0.67 in the second quarter a year ago.

EPS diluted-adjusted was a record at $1.86, up 44 percent compared to $1.29 in the second quarter of 2015.

The company reported records for earnings before interest and tax (EBIT) adjusted of $3.9 billion and EBIT-adjusted margin of 9.3 percent. These compare to EBIT-adjusted of $2.9 billion and EBIT-adjusted margin of 7.5 percent in the second quarter of 2015, which included the impact of $0.3 billion restructuring costs.

“This was an outstanding quarter for GM,” said Chairman and CEO Mary Barra. “Our results were generated by strong retail sales in the U.S., record sales in China and a continued emphasis on improving the performance of our operations worldwide. We’ll continue to focus on driving profitable growth and leveraging our technical expertise to lead in the future of personal mobility.”

Net revenue of $42.4 billion was a record, compared to $38.2 billion in the second quarter of 2015. Holding exchange rates constant, net revenue was $5.0 billion higher than the second quarter of 2015.

Segment EBIT-Adjusted Results

  • GM North America reported record EBIT-adjusted of $3.6 billion compared with $2.8 billion in the second quarter of 2015. For the quarter, EBIT-adjusted margin was a record 12.1 percent, compared to 10.5 percent a year ago.
  • GM Europe reported EBIT-adjusted of $0.1 billion compared with breakeven EBIT-adjusted results in the second quarter of 2015. This result is the first profitable quarter since the second quarter of 2011.
  • GM International Operations reported EBIT-adjusted of $0.2 billion compared with $0.3 billion in the second quarter of 2015. Results included China equity income of $0.5 billion in both periods.
  • GM South America reported EBIT-adjusted of $(0.1) billion, about equal with the second quarter of 2015.
  • GM Financial reported earnings before tax of $0.3 billion, compared with $0.2 billion in the second quarter of 2015.

Cash Flow and Liquidity
For the quarter, automotive cash flow from operating activities was $5.0 billion. Adjusted automotive free cash flow was $3.2 billion. GM ended the quarter with total automotive liquidity of $34.1 billion, and automotive cash and marketable securities of $20.1 billion.

“When you deliver cars, trucks and crossovers customers really value, and generate efficiencies across the enterprise, great results follow,” said Chuck Stevens, GM executive vice president and chief financial officer. “With our aggressive vehicle launch cadence and robust global industry sales, we are confident that we can continue to achieve strong financial performance.”

GM expects a higher proportion of volume from new or refreshed vehicles each year through 2020 compared to the prior five years, increasing to 40 percent of its total global volume, up from 26 percent in 2015.

2016 Outlook
Based on the company’s strong financial performance through the first half of 2016 and its current outlook for the second half of the year, GM now expects 2016 full year EPS diluted-adjusted to be $5.50 – $6.00, up from the previously announced $5.25 – $5.75 range.

Global Vehicle Sales
GM sold 2.4 million vehicles globally in the second quarter of 2016 to customers, about equal to the second quarter of 2015. Through June 30, the company sold 4.76 million vehicles globally.

In the U.S., GM sold 1.44 million vehicles in the first six months of the year, which included a retail sales increase of more than 1 percent. U.S. retail market share rose 0.4 percentage points through June, the largest retail share gain of any full-line automaker. In China, GM and its joint ventures delivered a record 1.81 million vehicles during the first half of the year, an increase of 5.3 percent. In Europe,
Opel / Vauxhall outperformed the industry with a 7-percent sales increase to 621,000 vehicles in the first half of the year.
 
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#27 ·
What does the 9.3% margin compare to the 1Q numbers? That's a huge improvement over last year's 2Q number.
Q1 2016 EBIT-adjusted margin was 7.1%. Trailing four-quarter consolidated EBIT-adjusted margin is just under 8%.

A summary of EBIT adjusted margins and operating margins for the five quarters from Q2 2015 to Q2 2016 can be found on page 9 of the Q2 earnings deck.
 
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#12 ·
Great, now there is no excuse on why you can't get Cadillac right, GMC a Wrangler, Buick a Riviera, and Chevy a Mid-Engine Corvette!

It amazes me that they are doing what they are supposed to do, make money off of what they build. Problem is, basically all of their designs with few exceptions have significantly changed since 2009. In my humble opinion, GM has not pushed their design team to come up with new exciting stuff that is a breakthrough. That is why concepts like Granite, Avista, Avenir, and Code 140 tugged at our heartstrings, they were something different, new, and a new direction. So that should be a priority, what can we do to shake things up designwise. The new decade is not that far away!
 
#14 ·
That headline right there is why GM doesn't care about the sales number (volume) on the new Camaro or the Cadillac cars. Those waiting for price drops or incentives will be waiting forever. GM is about profits and ATP, not market share.
 
#29 ·
For investors in automotive OEMs and others interested in earnings reports, here are some dates for upcoming events/presentations:
  • GM 2Q 2016: 21 July (link to resources)
  • Daimler 2Q 2016: 21 July (link to resources)
  • Ford 2Q 2016: 27 July
  • FCA 2Q 2016: 27 July
  • Nissan 1Q 2016: 27 July
  • Hyundai 2Q 2016: 27 July
  • Volkswagen 2Q 2016: 28 July
  • BMW 2Q 2016: 2 August
  • Toyota 1Q 2017: 4 August
 
#30 ·
#36 ·
Did I ever say I was directly comparing the numbers from 1Q to 2Q? Nope.

It's funny you harp so much on ONE vehicle (the Camaro) but keep ignoring all the very nice performing vehicles that GM is putting out now. It's obvious that GM is a leaner meaner company and if you want to look down on this earnings report then you must eat your cereal with piss and vinegar in the mornings.
 
#45 ·
Then what were you comparing it to?

- When you use the terms, Q1 and Q2 I interpret that as Quarter 1 and Quarter 2.
- then you say "compare to the 1Q numbers" you mean what, exactly?


Seems like great results on the surface here.

What does the 9.3% margin compare to the 1Q numbers? That's a huge improvement over last year's 2Q number.

and after your question was answered..........


Q1 2016 EBIT-adjusted margin was 7.1%. Trailing four-quarter consolidated EBIT-adjusted margin is just under 8%.

A summary of EBIT adjusted margins and operating margins for the five quarters from Q2 2015 to Q2 2016 can be found on page 9 of the Q2 earnings deck.
You said this, elaborating even more..............

I couldn't get the earnings report to open on my phone. :(

2.1% margin improvement in just one quarter is pretty good though.
Now if your math didn't compare it to Q1 and you didn't use phrases like; "margin improvement in just one quarter" I might have believed you.

You do understand why you can't compare Q1, typically one of the slowest selling, with Q2, one of the best selling quarters, right?

OK - I'm done, carry-on.
 
#38 ·
Interesting that GM is one of the first to report. I'd be curious to know the timing of their quarterly result reporting vs. the industry over the past 10+ years. I suspect we'd see GM speeding up the time of its reporting, which either tells us they are cutting corners/making everyone work 24 hour days or it is indicative of the improvement in "back-room health" of GM where they are increasing their capabilities to report earlier - better processes, better systems, etc.. Speaks to the overall health of the company and the changes they are making.
 
#39 · (Edited)
Of note, GM has no large special items or impairment charges like Q2 2015,
and IIRC, that cost GM around $1 Billion in profit, so good to see progress
with controlling / mitigating exposure to external risk.

That avoidance of special items plus the increased focus on Retail product mix saw
GM's Q2 after Tax profit zoom up from $1.1 Billion last year to $2.9 Billion this year.
 
#41 ·
I don't think you can trust quarterly results from any company. The ability of the pencil pushers to move items like charges, reserves sales and other things can make short term results look either good or bad, depending on what they want. You don't know what the truth is. The results can be reported to get executives a bonus or deny executives a bonus.

I think you need to take quarterly results with a grain of salt regardless of the company.
 
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