GM beats, raises annual outlook for second straight quarter on strong sales

General Motors (GM) again reported strong second-quarter results, boosting its guidance for the second time this year as customers continue to buy gas-powered vehicles and trucks — and even electric cars — from the Detroit-based automaker.

For the quarter, GM reported record revenue of $47.97 billion versus the $45.51 billion expected (Bloomberg consensus), a 7.2% jump from a year ago ($44.75 billion). GM reported adjusted earnings per share of $3.06, compared to estimates of $2.70. GM also reported adjusted earnings before interest and taxes of $4.438 billion, easily beating estimates of $3.88 billion.

In terms of guidance, GM announced the following updates to its full-year 2024 outlook:

• Adjusted EBIT: $13.0 billion to $15.0 billion ($12.5 billion – previously $14.5 billion)

• Automobile Operating Cash Flow: $19.2B – $22.2B ($18.3 billion – $21.3 billion previously)

• Auto industry adjusted free cash flow: $9.5 billion – $11.5 billion ($8.5 billion – $10.5 billion previously)

• Diluted EPS: $9.50 $10.50 ($9.00 previously $10.00)

GM shares rose 3.5% in premarket trading after the results were announced.

This was the second time this year that GM has raised its full-year earnings forecast, and the company attributes much of that success to the popularity of its cars.

“I want to begin by thanking the GM team, as well as our dealers, suppliers and other business partners, for helping us deliver strong second-quarter and first-half results, including record revenue in both periods,” GM CEO Mary Barra said in her letter to shareholders. “This has paved the way for us to increase our guidance for full-year earnings, free cash flow and earnings per share.”

The enhanced guidance and cash return in the form of shareholder buybacks “comes from ICE [internal combustion engine] “The portfolio of businesses and the underlying performance of the company … generate significant free cash flow,” Paul Jacobson, GM’s chief financial officer, said on a call with reporters. GM approved a $6 billion share buyback plan in June.

Regarding the electric vehicle plan, General Motors confirmed that it still expects to produce between 200,000 and 250,000 electric vehicles this year, which is slightly less than the plan of 200,000 to 300,000 units, which is much less than its previous expectations. Initial plans for electric cars 400,000 electric cars to be produced by 2024.

GM also pledged to reach certain profitability benchmarks by the end of the year.

“Despite our enthusiasm for our electric vehicles and early success, we are committed to disciplined volume growth, which is key to delivering positive variable earnings from our portfolio in the fourth quarter, which remains our goal,” Barra said in her letter.

The story continues

The term “positive variable profit” refers to the profit from sales of a particular product where only variable costs such as materials are deducted from revenue. Without including “fixed costs,” variable profit gives a better view of how profitable a product is, and how much sales are required to break even.

Overall, GM's second-quarter sales helped boost the company's bottom line at just the right time, and electric vehicle sales were also strong.

In the quarter, GM delivered 696,086 vehicles in the U.S., up 0.6% year over year, its best performance since the fourth quarter of 2020. GM also said it was the leader in full-size pickup truck sales, and electric vehicle sales also set a record. GM said sales of the full-size Chevrolet Silverado and GMC Sierra were up about 5% year over year in the first half of 2024, with the Colorado and Canyon midsize trucks posting their best first-half performance since 2019.

General Motors said it delivered 21,930 electric vehicles in the first quarter, up 34% from the previous quarter — and up 40% from a year ago. Despite the U-turn on its original plans for electric vehicles, GM said it will have 10 electric models on the market by the end of the year.

GM said its Cruise self-driving unit is also ramping up testing after it was halted last year due to crashes. Cruise will expand to new cities, where supervised testing is currently underway in Phoenix, Dallas and Houston. Cruise will also switch all of its vehicles to GM’s Chevrolet Bolt EV platform from Origin’s self-driving vehicle, which will address the regulatory uncertainty GM faced with Origin and will have much lower unit costs going forward.

GM Chief Financial Officer Paul Jacobson told reporters the company will take a one-time penalty of $600 million for “indefinitely suspending development of the Origin vehicle.”

Pras Subramanian is a Yahoo Finance reporter covering the auto industry. You can follow him on X and on Instagram.

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