General Motors (GM) announced on Tuesday that it has increased key guidance for 2023 after its first-quarter results exceeded Wall Street's top and bottom-line predictions. According to average estimates from Refinitiv, the company reported:
- Adjusted earnings per share: $2.21, surpassing the expected $1.73
- Revenue: $39.99 billion, higher than the predicted $38.96 billion
GM has raised its adjusted earnings expectations for the entire year to a range of $11 billion to $13 billion, equivalent to $6.35 to $7.35 per share, up from the earlier range of $10.5 billion to $12.5 billion or $6 to $7 per share. Additionally, the company has increased its adjusted automotive free cash flow expectations to a range of $5.5 billion to $7.5 billion, up from the previous forecast of $5 billion to $7 billion.
However, GM has lowered its guidance for net income attributable to stockholders due to $875 million in special charges related to a previously announced employee buyout program during the quarter. The new range is now between $8.4 billion and $9.9 billion, down from $8.7 billion to $10.1 billion.
Following the report, GM shares rose around 3% in premarket trading.
GM reported an 11.1% increase in revenue during the first three months of this year compared to approximately $36 billion a year ago. However, the company's net income during the first quarter fell by roughly 18% to $2.3 billion compared to the previous year.
GM's CFO, Paul Jacobson, stated that the company felt confident in raising its adjusted earnings guidance after first-quarter results exceeded internal expectations. Factors contributing to this performance included strong demand for high-end models and cost-cutting measures such as the employee buyout program, which impacted results faster than anticipated.
The employee buyouts are part of GM's earlier plan to reduce $2 billion in structural costs by the end of 2024.
During a call with reporters, Jacobson expressed confidence in the company's outlook for 2023.
GM's Q1 results included $3.8 billion in adjusted earnings, a 6% decrease from the previous year. Net income attributable to stockholders, which excludes certain dividend payouts, fell by 18.5% to approximately $2.4 billion from Q1 of 2022. Alongside the employee buyout program, GM also spent $99 million on buying out Buick dealers during the quarter.
In a letter to shareholders on Tuesday, GM CEO Mary Barra emphasized improvements in the company's international operations, excluding China, which has seen significant declines in recent years.
GM's equity income from China dropped by 64.5% to $83 million during Q1, while earnings from other international operations increased by 5.8% to $347 million. North America generated about $3.6 billion for GM to begin the year, a 13.8% increase from Q1 of 2022.
Wall Street analysts will pay close attention to any new information about the company's electric vehicle (EV) production during GM's earnings call on Tuesday morning, as the ramp-up has been slow.
Jacobson mentioned that GM doesn't feel the need to match or follow recent price cuts on EVs by competitors like Tesla, stating that they are satisfied with their current pricing.
In a separate announcement on Tuesday, GM revealed plans to invest over $3 billion in collaboration with South Korea-based Samsung SDI to construct a new battery cell manufacturing facility in the United States, with operations slated to begin in 2026. The location for the plant has not yet been determined.
The facility, which will be GM's fourth battery production site in the U.S., is expected to produce "nickel-rich prismatic and cylindrical cells." These batteries differ from the pouch cells used in GM's latest U.S. electric vehicles.
