GM Q2 2021 Earnings: $2.8 Billion Income On $34.2 Billion Revenue
22
Sponsored Links
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 Summary
Figures 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 |
|---|---|---|---|---|
| GAAP METRICS | ||||
| REVENUE | $34.2 | $16.8 | $+17.4 | +103.6% |
| NET INCOME | $2.8 | $(0.8) | $+3.6 | +450% |
| EARNINGS PER SHARE (EPS) DILUTED | $1.90 | $(0.56) | $+2.5 | +439.3% |
| NON GAAP METRICS | ||||
| EBIT-ADJUSTED | $4.1 | $(0.5) | $+4.6 | +920% |
| EBIT-ADJUSTED MARGIN | 12.0% | 3.2% | 8.8% | N/A |
| ADJUSTED AUTOMOTIVE FREE CASH FLOW | $2.5 | $(9.0) | $11.5 | +127.8% |
| EPS DILUTED - ADJUSTED | $1.97 | $(0.50) | $+2.5 | +494% |
| DIVISIONAL RESULTS | ||||
| 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% |
| CRUISE | -$0.3 | -$0.2 | $-0.1 | -50% |
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
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
GM Cruise
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
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
Cadillac XT6
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.
Guidance
GM raised its full-year guidance, as follows:
| Current | Prior | |
|---|---|---|
| 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
Strategic Direction
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.
- Sweepstakes Of The Month: Win a 2023 Corvette Z06 Convertible. Details here.
Sponsored Links
