GM Beats Street with Q1 Earnings Report

General Motors outperformed analysts’ expectations for the first quarter of the year, raising its full-year guidance numbers in the process.

GM CEO Mary Barra speaking REL
General Motors Chair and CEO Mary Barra said the company delivered “strong earnings.”

For the first quarter of this year, GM reported adjusted pre-tax profit of $3.8 billion, or $2.21 a share, on revenue of $40 billion. That’s a slight decline from the year-ago period’s pre-tax profit of $4 billion on revenue of $36 billion.

When it comes to the company’s bottom line, it reported net income of $2.4 billion, which was also down from last year’s result of $2.9 million, or down 18.5%. GM’s stock closed down 4% to $32.91, although the tide is turning in early afterhours trading.

“Once again, we delivered strong earnings and I appreciate the efforts of everyone involved including the GM team, our dealers, our suppliers, our unions, that all helped us meet strong customer demand for our products,” GM Chair and CEO Mary Barra said during a call with analysts and media Tuesday morning.

Cost cuts help bottom line

The company set an aggressive goal late last year to find $2 billion in savings around the company. It began its cost-cutting measures with the tried-and-true early retirement push. The company said about 5,000 executives took deals.

General Motors Executive Vice President and Chief Financial Officer Paul Jacobson said the company is going to achieve $1 billion of its $2 billion cost-cutting goal by the end of the year.

As a result, the company will likely see half of its goal — $1 billion — before the end of this year, CFO Paul Jacobson told analysts. The push will include continued reductions to complexity, prioritizing growth initiatives and being tactical on corporate costs, such as travel and purchasing.

Jacobson noted the company needed to focus on producing vehicles that make sense for the company and its customer base, saying “we simply cannot do everything.” The measures should be complete by the end of 2024.

Strong performance results in high hopes

By beating expectations, GM elected to raise its full-year guidance — sort of. The company is projecting adjusted earnings before interest and taxes to be between $11 billion and $13 billion, up from the previous forecast of $10.5 billion to $12.5 billion.

GM’s net income for the year is expected to fall between $8.4 billion and $9.9 billion, down from the previous guidance of $8.7 billion to $10.1 billion due to a $875 million charge to cover the costs of a buyout program for 5,000 employees.

Additionally, company officials said U.S. GAAP net automotive cash provided by operating activities will come in between $16.5 billion-$20.5 billion, compared to the previous outlook of $16 billion-$20 billion

Meanwhile, adjusted automotive free cash flow should rise to a range of $5.5 billion-$7.5 billion, versus the earlier outlook of $5 billion-$7 billion.


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