GM Q2 2021 Earnings: $2.8 Billion Income On $34.2 Billion Revenue22
General Motors Company reported its second quarter 2021 financial results today. GM Q2 2021 earnings are headlined by $2.8 billion in income on $34.2 billion in revenue. Compared to the second quarter of 2020, the results represent a 450 percent jump in income and a 103 percent growth in revenue.
In a press release, GM characterized the earnings as “strong,” enabling the Detroit-based firm “to accelerate its EV and AV growth initiatives.” The company also stated that it “successfully prioritized production of its highest demand vehicles, gained significant retail market share in the full-size pickup segment in the United States and benefited from strong pricing and mix.” Meanwhile, high used vehicle prices as a result of low new vehicle inventories drove continued record results at GM’s captive finance arm, GM Financial.
All of those factors have caused GM to raise its full-year guidance.
GM Q2 2021 Earnings SummaryFigures in billions of USD, except for per share amounts and percentages.
|METRIC||Q2 2021||Q2 2020||Q2 2021 - Q2 2020||% CHANGE Q2 2021 / Q2 2020|
|EARNINGS PER SHARE (EPS) DILUTED||$1.90||$(0.56)||$+2.5||+439.3%|
|NON GAAP METRICS|
|ADJUSTED AUTOMOTIVE FREE CASH FLOW||$2.5||$(9.0)||$11.5||+127.8%|
|EPS DILUTED - ADJUSTED||$1.97||$(0.50)||$+2.5||+494%|
|GM NORTH AMERICA EBIT-ADJUSTED||$2.9||-$0.1||$+3.0||+3000%|
|GM NORTH AMERICA EBIT-ADJUSTED MARGIN||10.4%||-0.9%||11.3%||N/A|
|GM INTERNATIONAL EBIT-ADJUSTED||-$0.3||-$0.4||$+0.1||+25%|
|- CHINA EQUITY INCOME||$0.3||$0.2||$+0.1||+50%|
|GM FINANCIAL EBT-ADJUSTED||$1.6||$0.2||$+1.4||+700%|
GM North America
GM North America (GMNA), General Motors’ largest and most profitable division, posted:
- $27.9 billion in revenue vs. $11.6 billion in revenue in the year-ago quarter
- $2.9 billion EBIT-adjusted vs. -$0.9 billion in the year-ago quarter
- U.S. electric vehicle sales of 11.3K units vs. 2.5K units in the year-ago quarter as Chevy Bolt EV and Bolt EUV sales grew 351 percent during the quarter
- GM says that it’s committed to achieving #1 EV market share in North America
- U.S. dealer inventory of 212K units vs. 444K units in the year-ago quarter
GM International (GMI), which excludes GM China joint venture results, posted:
- $2.8 billion in revenue on 118K wholesales vs. $1.7 billion and 90K wholesales in the year-ago quarter
- -$0.3 billion EBIT-adjusted vs. -$0.4 billion in the year-ago quarter, primarily due to strong mix and pricing actions, which were partially offset by semiconductor headwinds, commodity costs and warranty expenses
GM China Auto Joint Venture
GM’s China joint ventures posted:
- $9.0 billion in revenue on 620K wholesales vs. $9.2 billion in revenue on 733K wholesales in the year-ago quarter
- Equity income of $0.3 billion vs. $0.2 billion in the year-ago quarter,
- The results were slightly above GM’s forecasted -$0.2 billion quarterly run-rate, driven by strong mix, stabilization in pricing and material performance, partially offset by semiconductor and commodity headwinds
- GM received $0.6 billion divided from its China automotive joint ventures during the quarter
- Wuling Mini EV continued to be the top-selling EV in China
Cruise, GM’s division that’s developing and bringing to market a robo-taxi service, posted:
- $0 in revenue, equal to that in the year-ago quarter
- -$0.3 billion EBIT-adjusted vs. -$0.2 billion in the year-ago quarter
- $0.3 billion cash used for operating activities vs. -$.02 billion in the year-ago quarter
- GM is now assembling pre-production Cruise Origin vehicles for validation testing
- GM Financial, GM’s captive finance arm, will provide Cruise a $5 billion line of credit to fund the purchase of AVs from GM. This will bring Cruise’s total liquidity to more than $10 billion as it enters commercialization
GM Financial, General Motors’ captive finance arm, posted:
- $1.6 billion EBT-adjusted with a 35.5 percent return on average tangible common equity vs. $0.2 billion and 12.1 percent in the year-ago quarter
- $28 billion in liquidity on 7.66x leverage ratio vs. $24.0 billion and 9.38x in the year-ago quarter
- Ending earning assets of $102.7 billion vs. $94.0 billion in the year-ago quarter
- GM Financial represented 43.1 percent of GM U.S. retail sales vs. $53 percent in the year-ago quarter
- GM Financial paid $0.6 billion dividend to GM during Q2 2021
- The division has sufficient capital and ample liquidity to support earning asset growth and navigate economic cycles
Automotive Liquidity & Debt
GM ended the quarter with $38 billion in automotive liquidity, comprised of $20.9 billion in cash, cash equivalents and marketable debt securities and $17.2 billion in available credit facilities. That compares to $40.5 billion in the last quarter of 2020, comprised of $22.3 billion in cash, cash equivalents and marketable debt securities and $18.2 billion in available credit facilities.
Total automotive debt was $17.3 billion vs. $17.5 billion in the last quarter of 2020. Both figures are comprised of senior unsecured notes and other instruments.
GM raised its full-year guidance, as follows:
|EBIT-Adjusted||$11.5B – $13.5B||$10.0B – $11.0B|
|EPS-Diluted Adjusted||$5.40 – $6.40||$4.50 – $5.25|
|Adjusted Auto Free Cash Flow||$1.0B – $2.0B||$1.0B – $2.0B|
Following are the key variance drivers for the second half of 2021 compared to the first half:
- Decreased volumes of ~100K units in GMNA
- $1.5B-$2.0B increased commodity costs
- $1.0-$1.5B GM Financial: expect lower lease termination volume and record high purchase rates capping gains at contract residual value, H1 allowance adjustments we assume will not repeat and credit starting to normalize
- $0.5B investments in growth initiatives
- $0.4B mark-to-market gains on equity investments in H1 we assume will not repeat
Additionally, current guidance takes into account the following factors:
- The semiconductor shortage “remains fluid and supply chain challenges continue in H2”
- Due to this uncertainty, GM’s guidance “assumes no year end work-in-process inventory related to vehicles produced without modules”
- Significant cash flows could shift from 2021 to 2022 if GM has work-in-process vehicles produced without modules held at year end
GM reiterated its short-term and medium-term direction, as follows:
- Focus on profitable growth opportunities and new revenue streams
- Developing a full EV portfolio that doesn’t depend on partial solutions like hybrids and “electrified” ICE vehicles
- Prioritizing speed to market as GM launches more than 30 new EVs in North America and China by 2025
- To meet expected demand, GM is pulling forward the transition of its CAMI Assembly plant in Canada from building gas-powered vehicles to assembling the BrightDrop EV600
- BrightDrop is a new business within GM that is pioneering connected and electrified first-to-last mile delivery solutions
- It’s the result of synergies created by the automaker’s design, engineering, manufacturing and sourcing expertise
- Upcoming EV launches including GMC Hummer EV and Cadillac Lyriq are on track
- Construction in Lordstown battery plant (Ultium batteries), Factory Zero, and Spring Hill (Ultium batteries) is progressing with no delays
- GM plans to share additional insight into its EV & AV strategy and growth opportunities, including software and services and product and technology demonstrations, October 6th-7th
The Detroit-based automaker plans to share additional insight into its growth strategy, including software and services, at an event later this year.
We will continue our obsessive coverage of all things General Motors, and invite you to subscribe to GM Authority for more GM financial news, GM business news, and around-the-clock GM news coverage.
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And the stock is down 10% today hahaha.
Unfortunately, Wall Street is much more interested in pie in the sky endeavors / barely turning a profit Tesla rather than a company that posts very healthy figures quarter after quarter.
That’s why interest rates need to soar.
So Wall Street gets the harsh reality check it deserves.
@Evan Stock value is about the future, not the present, or past. Investors invest their money where they think it has the best chance to grow. I am am a big GM fan and took it on the chin hard today, but you know what, thats part of investing, stocks do not only go up, or investing would be easy.
GM stock dropped today because the guidance from GM going forward was not great. GM had a great first half, but until they get past the parts shortages, Wall Street has lost some faith in them executing growth. Wall Street wants to hear better forward guidance, and see those truck plants pumping out truck and the price will recover, and likely go to new highs. GM will have a tough slog for a while now, until the news gets better, or they start launching EV’s. Hummer is very close, the first production representative model rolled out of the factory last Saturday and into GM’s captured fleet. I expect to Hear GM make an announcement on that accomplishment in the next couple weeks.
Stock value is based on euphoria in 2021.
It’s not based on reality or realistic projections for the future.
@ Alex I find it interesting if you consider yourself a journalist and knowledgable in finance that you could make such a nutty statement… I mean, I am not Tesla fan, but when you make such a clearly inaccurate statement you should be corrected.
Tesla is a growth company growing sales at a rate of 50% per year since they started (many years including so far in 2021 beating the 50% YOY growth rate) If you look at Tesla’s operating leverage they have finally grown sales enough to cover their overhead, and be sustainably profitable. In Q2 2021 with all the chip shortages, etc… Tesla set a record with $11B in Revenue, and on that turned a $1.1B net profit. That my friend is a 10% NET margin, which is outstanding for any automaker, and beats GM’s Q2 performance. As Tesla grows, you can see the operating leverage play out in their margin, which grew 1000% Q2 YOY… The next 50% of growth Tesla achieves you will see that 10% margin likely jump to 12 or 15%, at which point will be industry leading. Tesla is a juggernaut that is unstoppable now. I still think their share price is too high, and have sold most of my holdings, but I have to say, the anti tesla folks are getting schooled in operating leverage.
Now, it’s clear you do not like EV’s or Tesla, but if you cannot see the operating leverage Tesla has built up, and see the trend in their finances, you are just not too bright in understanding finance.
Oh boy! Your comment incorrectly assumes so much, that it misses not just one, but all points in their entirety.
I’m not for or against EVs. I just don’t think Tesla has much of a future once the big boys (GM, Ford, Nissan, Stellantis) start making them en masse. As of right now, Tesla has the market almost to itself, save for a few half-baked efforts from the usual suspects.
Meanwhile, a scenario wherein Tesla has a tough time competing once it has real competition from full-line automakers is one that can’t really be ignored. Hence the reason for my earlier comment about Tesla stock being way overvalued.
Hopefully, my comment is “bright” enough for you.
OK Alex, I do not disagree about Tesla being overvalued, but Competition hurting Tesla? Have you driven a Tesla? Then compare to Bolt EUV? Kona? ID.4? Mach E? E-Tron? Taycan? E-tron GT? In China, BYD, Xpeng, NIO All of these competitors beat Tesla in one way , or another, but Tesla crushes all of them in Efficiency, Charging and Range (most important EV factors) Hyundai Ioniq 5 might be the first real competitor for Tesla Model 3 and Y.
All these competitors, and yet Tesla is increasing their growth rate beyond the guided 50% YOY, and running their 2 factories 24-7 as fast as they can go. If you look at Teslas financials all the trends look like a rocket to me.
I have one hope for GM, I heard from a reporter that was at Milford a couple weeks ago to test the new Supercruise that GM had a Tesla Y out there benchmarking it on the proving grounds. I can just imagine the GM engineers in charge of that were saying “WOW… We have work to do”
Tesla will be killed off when the low interest rate free money Gravy Train ends.
Evan, put your head back in the sand… Tesla is past the point of sustainability, and could handle an economic correction much better then the big OEM’s, as they now have almost double the cash as they have debt, and Elon just farts and the market will give him another $10B, just like they did in 2020 in the middle of a pandemic and stock market crash.
Tesla has the “highest” customer satisfaction in every survey that includes them, and is grown sales FAST… Then look at their financials, Most profitable American automaker already when it comes to margin, and they are still in the growth phase.
All the models you listed are exactly the half baked models that Alex referred to. You have to be a blind fanboi not to realize that Tesla will have to step up their game substantially once the other manufacturers get serious.. Tesla dominates and grows because of lack of competition.. not because they’re good cars.. as soon as there is real competition, Elon will sell his little niche company to the highest bidder. And really give yall something to cry about.
Chuck, You think competition will make a difference? Have you ever driven a Tesla? Not good cars? Hmmm, I beg to differ with you there. I hate to break it to you, but competition is not making much difference to Tesla, Let’s see, Mach E in July sold 3000 units in the USA, compared to 18K Tesla Model Y’s (Model Y best month yet in the USA) Model Y is also sold out until November right now. Last month Model Y sold more than Mach E has all year in the USA, Mach E has started to discount prices, while Tesla has raised prices 10% in the last 2 months, and nobody gets a discount on a Tesla. Ford also has a $7500 tax rebate on Mach E, where Tesla has no rebate… What happens when Ford’s rebate runs out and they have to compete head to head with Tesla? Bye Bye Mach E…
Tesla a little niche player? OK Chuck, let’s pull your head out of the sand. Tesla grows at 50% per year since they started selling Model S in 2012, 50% growth year after year… Last year they sold 500K cars, this year they are on pace to sell over 800K cars, and if Tesla had more production they would sell more, and they have 2 more factories that will start production in the next 6 months. Meanwhile, GM, and Ford have lost sales year after year, but the real eye opener is Tesla’s improving finances. I was one that did not think they would ever be profitable, but that has flipped as well. Tesla has the highest margins of any USA maker, and improving.
Anyway, where is the real competition? Model Y AWD, has 326 miles of EPA rated range on a 75 kWh battery pack, Ford, and GM need 100kWh battery packs to have less range (thats at least 25% battery cost disadvantage) Body Y goes 0-60 in 4.4 seconds, (3.5 seconds if you buy the performance model) Then we get to charging, Tesla has a proprietary charging network that is best in class, and the charging experience is seamless, no app or credit card, or buttons to push… just pull up and plug in, done. Did I mention Tesla charges faster than all its competitors?
So, Tesla advantages, More range, Faster DC charging, more efficient, sporty handling chassis, amazing software integration, and access to their proprietary charging network which is the best in class.
GM- Ford EV Advantages loyal customers, perceived as more patriotic, better designs
Do you notice none of GM or Fords advantages have anything to do with driving the car, it’s all perceptions, and subjective, Tesla wins all the objective categories (things that can be measured or calculated)
Chuck you should go drive a Tesla for a week, compare to the competitors, and get back to me… It might open your eyes and mind, allow you to evolve.
gm spent $800 million to fix the bolt batteries. that was a nice gut punch.
Hehehe, at least the aholes are gonna replace the batteries instead of bogus software fixes.
That was a big hit, but GM will likely get most of that back from LG at some point. If not voluntarily, GM would have to sue LG at some point in the future. For now I think GM just wants to pay the freight and move on, fight over responsibility later.
One bit of news that came out of the investor call is that Chevy is getting an electric utility van likely replacing the Express. I was sure that Brightdrop would be the only outlet for those types of vehicles going forward at GM but I stand corrected.
As a current GM stockholder and former employee I certainly support the GM stock price going up. However, it is also understandable that “Wall St Investors” place such a low price/earnings ratio on the stock in setting the price they are willing to pay. As mentioned by others in this thread, a stock’s value is largely determined by anticipated future earnings. When you look at GM over the longer term you see:
– A company that has gone from 50-60% market share in the 1960’s to around 17% today.
– A company driven by relatively short term financial goals that results in cost cutting rather than product improvement. This leads to poor quality, less competitive vehicles and eventually “quitting” market segments instead of being competitive or being a leader. As GM continues to leave the car markets they give themselves less and less market size to get future sales from.
– Strategy – GM is into EVs full-bore and is making a huge bet that EVs will be widely accepted. If this is not the case they will have spent billions on slow-selling products and will not have competitive ICE or hybrids to sell. This will result in further loss of market share.
– EVs – GM is coming out with 30 EV models by 2025, however, most other automakers will also have EVs for sale resulting in huge competition for a relatively small market volume. This will of course result in strong price competition and GM will not have the $7500 tax credit advantage that it’s competitors will have (except Tesla). GM’s market share will fall again.
– Reputation- GM’s reputation in the car buying public’s mind has not been as the market leader for years. The Bolt, even if it’s current pyrotechnic tendencies are ignored is at best a limp-wristed entry compared to Tesla and the Mustang MachE. Like it or not, it is GM’s mainstream entry for now and the Hummer and Lyriq, no matter how good, are not viable alternatives to most car buyers because of price.
Based on the above, GM does not appeal to many investors as the future growth is too uncertain.
Bill, some of your assumptions are right on target, and others are in La la land. The market values companies on many factors. GM was never going to keep the 50% market share when others come along, just like Tesla will not keep the 75% EV market share they had last year in the USA. Many people do not understand EV’s and the attraction, it sounds like you are one of those? EV’s are at their technological infancy and have a huge road map to improve, where as ICE has been developed for the last 100 years, and most of the advances are already squeezed out. Now emission regulations are squeezing hard on Ice powertrains. EV’s still cost more to build today, but with advances in battery processing, and designing EV’s using first principals EV’s will get more efficient, and cheaper, most experts think by 2027 it will be cheaper to build an EV than it is an ICE car in any segment meaning at that point if you are still “learning” about EV’s Tesla and others are going to crush you (I am looking at Toyota).
The reason Tesla dominates EV’s in the USA is because the committed to it, and spent the most effort trying to build the best and most efficient car they could. Tesla has gone through the car and squeezed out every ounce of fat there is, and has taken that same strategy to lookout how cars are built, again squeezing out all the fat. When you look under a GM or Ford car, there is so much waste, and extra parts that can be eliminated if you use first principals in your design, instead of doing theirs the way we always have. Watch the videos on Munro Live on youtube of the tearing down of the Mach E, and Tesla Y, and you will see why Tesla is profitable… They cut out all the fat, and design cars from first principals rather that “the way we have always built cars” Thats why Teslas are inherently more efficient than all other EV’s in their class, and do the best in crash testing. Tesla is not building cheap cars, they are building cars that are designed right. Tesla spends money where it makes sense to, Seats, Motors, Inverters, Power electronics and Software and then cuts on redundant items, and cosmetic trims etc… Tesla designs their heat management system again using first principals, using an Octovalve to control coolant flow, one valve, and one manifold for the whole car, (Mach E for this has dozens of relays, valves , 2 separate cooling loops, about 50lb more weight, more cost, more assembly complexity and more fault paths for future problems) GM’s designs are not much better, way too many parts to accomplish the same thing. Tesla does vehicle development with all teams working in the same building in the same room, with the goal to eliminate as many redundant parts as possible. GM or Ford have cooling system designers in one building, powertrain in another, software subbed out, and so on… This is why they have such a hard time competing with Tesla, Tesla looks at every project with first principals and the goal of making it the most efficient, simple to assemble, and have the least parts. Elon Musk “the best part is no part”
If GM builds the best EV’s they will have no trouble selling them, but they have to also control the economics. I think GM should establish an EV skunkworks, a team of no more the 20 top engineers to develop the next generation of cars, and they should look at everything from first principals the way Tesla does. All of their future EV’s should be best in class, or don’t build them. I think Lyriq is a great looking car, but for those that want the best EV, and best range, charging, efficiency, they will bypass the Lyriq and buy a Tesla because Lyriq while beautiful is too heavy and in an EV weight is critical for efficiency. Lyriq in RWD form with 335 HP weighs 5600 lbs, Tesla model S in AWD 600HP, weighs 4700 lbs and has 25% more range the same cargo storage.
As for your opinion of GM appealing to investors, you seem to be out to pasture, even after a major haircut yesterday GM is still trading above its previous all time high. There are investors who never considered GM previously that are buying in now, based on EV / AV investments. Just look at the Wall Street analysts covering GM now, a lot of tech people are interested, but GM needs to prove they are worthy of higher multiples. If not for the Chip Shortage GM would be launching the refreshed Silverado Sierra next month, and we would be singing a different tune. Instead GM is about 6 months behind the product cadence they planned to be, but the EV programs are not running late, Hummer has started early production, and will start deliveries earlier than originally planned in October instead of November as planned.
Mr Donavan, obviously a lot of verbiage in you post but let me respond to some of them from here in the pasture of La-La Land:
– Over time it could be argued that GM could lose some market share from competition, however, GM has now lost 2/3 of its market share and is still losing market share as it abandons market segments. In LaLa Land this is not looked on as a positive trend. By the way, the company that GM was supposed to crush (Toyota) back in the 70’s has now surpassed them.
– EVs – My opinion of EVs (good or bad) is irrelevant to this discussion.
– GM building the best EVs – GM engineering is certainly capable, but GM management’s approach is to build down to a cost target, not up to a quality target. Even their cash cow (trucks) reflect this approach and it certainly has shown itself in the current Bolt. If you have a high confidence that GM will change this philosophy for EVs then perhaps you are right that they will have “no problem selling EVs” (in volume at a profit).
– Stock price at all-time high – Here in the LaLa Land pasture an individual stock’s performance to itself is not nearly as important as it’s performance to other stocks. The price / earnings ratio is a key indicator of investor’ communities confidence in a company’s ability to continue to grow and produce competitive earnings for stockholders (a higher number is better). The price / earnings ratio AVERAGE for the S&P 500 is about 34, GM’s is currently about 9. Sounds like a lot of investors live in LaLa Land.
Yes, GM is giving away market share in small cars and sedans. (they do not make money in those segments) At the same time GM has added market share in full sized pickups and full size SUV’s. As GM loses market share they gain profitability, what does that tell you? You know 3 years ago when GM had more marketshare they have a lower P/E ratio 4
As for GM competing with Toyota, GM may have had a chance in the 70’s, but now they have no chance. Toyota is a juggernaut, they are careful, conservative, and make very few mistakes. Toyota also owns most of its supply chain, and has good enough designs to make money on small cars. In my opinion Tesla will be the one to challenge Toyota someday and here is why, Tesla is very vertically integrated like Toyota, and Tesla has designed cars that sell well globally. Tesla Model S, 3, and Y are popular in all 3 of the worlds largest car markets. This is a key for Toyota too, they design global cars like Corolla or Camry that they sell in massive volumes. Toyota has not done as well with full size trucks in the USA market, never fulfilling their projections. I also think Tesla is on the verge of making their first major mistake with Cybertruck which IMO will flop in the market within a couple years.
On EV’s I agree with you, GM has to do better. GM designs look good, but their specs are very so so, and they have not proven they can build an EV that is technologically equal to Tesla (range, efficiency, charging).
As for the Stock, GM is currently at a P/E ratio of 6, which in my opinion is way undervalued. Right now the chip shortage has GM floundering, as they cannot build the cars their customers want, dealers have no inventory, and GM is not able to launch their refreshed models on schedule. This is something GM management did not cause, as the entire industry including Toyota has guided supply problems going forward. Now on P/E ratio I am not sure comparing to the S & P is fair for GM, maybe comparing to other automakers is a better comparison?
High P/E ratios mean investors have confidence in growth, which I find interesting when it comes to Ford, as I think Ford has the most headwinds of any of the Big 3, but they also have rolled out some impressive future products in Bronco, Maverick, and F150 Lightining. Ford is really struggling with current production now though, even more than GM.
GM is right now at the calm before the storm when it comes to growth, and once GM comes to market with Hummer, BrightDrop, Lyriq, refreshed pickups, and the chip shortages becomes more predictable I expect GM stock is going to make a big move upwards. I think GM will rise 35 to 50% by the end of the year (barring COVID, or chip calamity). and will still have a better PE ratio than Ford, meaning much more upside potential.
1.3 billion in recalls for Q2. That means you are building junk.11 grand a pop to fix the bolt 61,000 of them! The stockholder gets screwed again. The recalls for the Hummer are right around the corner. gm said they had the chip shortage improving 6 months ago. Now all the truck plants are shutdown. Donovan stop taking those koolaid pills.