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General Motors (GM) Q1 Earnings Top Estimates, Revenues Lag

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General Motors GM reported adjusted earnings of $2.25 per share for first-quarter 2021, breezing past the Zacks Consensus Estimate of $1.02. Higher-than-anticipated profits from its North America and International units drove this outperformance. The bottom line was also significantly higher than the year-ago earnings of 62 cents per share amid cost-containment efforts, and robust demand for SUVs as well as pickups.

However, revenues of $32,474 million missed the Zacks Consensus Estimate of $33,260 million. Revenues also slipped from the year-ago figure of $32,709 million. The company recorded adjusted earnings before interest and taxes (EBIT) of $4,417 million, significantly up from $1,250 million in the prior-year quarter. The upside can be attributed to the launch of SUVs, effective pricing on pickups and strong used-car prices.

The automaker’s market share in the GM market was 10.1% for the reported quarter, decreasing from the year-ago period’s 10.4%.

Segmental Performance

GM North America (GMNA) generated first-quarter net revenues of $25,957 million, up from $25,831 million recorded in the corresponding period of 2020. Also, revenues from the unit outpaced the Zacks Consensus Estimate of $23,811 million. While the region’s wholesale vehicle sales of 664,000 units declined from 775,000 units in the comparable year-ago quarter, the segment’s operating profit increased 42.8% to $3,134 million. The segmental profit also outpaced the consensus mark of $1,917 million. The results marked an improvement primarily owing to newly launched full-size SUVs, and improved pricing on pickups owing to tight inventory and high demand for the same.

GM International’s (GMI) net revenues for the reported quarter were $3,086 million, down from the year-ago quarter’s $3,280 million on lower year-over-year vehicle sales. The unit turned an operating profit of $308 million against the year-ago loss of $551 million and the consensus estimate of a loss of $42 million owing to strong pricing, vehicle launches and benefits from cost-containment actions.

GM Financial generated net revenues of $3,407 million for the March-end quarter, down from $3,561 million recorded in the year-ago period. Nonetheless, the segment recorded an operating profit of $1,182 million, jumping from $230 million witnessed in the prior-year quarter and beating the consensus mark of $871 million. This upswing resulted from the positive impact of high used-vehicle prices, strong credit performance and reduced interest expense.

GM Cruise witnessed net revenues of $30 million for the first quarter, up from $25 million reported in the year-earlier period. The segment posted an operating loss of $229 million compared with $228 million loss reported in the prior-year quarter.

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 $21.6 billion as of Mar 31, 2021 compared with $19.9 billion at 2020-end. Long-term automotive debt at the end of the quarter under review was $16.4 billion compared with $16.2 billion as of Dec 31, 2020.

General Motors’ automotive liquidity amounted to $37.2 billion at the end of the January-March quarter. The company recorded adjusted negative automotive free cash flow (FCF) of $1.9 billion for first-quarter 2021, comparing unfavorably with negative FCF of $903 million in the prior-year period.

2021 View

The Zacks Rank #3 (Hold) company expects 2021 adjusted EBIT and EPS per share in the band of $10-$11 billion and $4.5-$5.25, respectively. Adjusted automotive FCF is envisioned between $1 billion and $2 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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