GM Surges Ahead with Robust Q3 Results and Upbeat Guidance

General Motors (GM) has given investors a reason to cheer as the automaker raised its guidance for the third time this year, in addition to easily beating third-quarter revenue and profit expectations. The company's strong performance has showcased its resilience and ability to navigate the challenges of the automotive industry.

Driving Towards a Brighter Future

Exceeding Expectations with Impressive Q3 Results

GM's third-quarter revenue reached $48.78 billion, easily surpassing the consensus estimate of $44.69 billion and exceeding the previous quarter's nearly $48 billion. This impressive performance represents a 10.5% increase compared to the same period a year ago. The company's adjusted earnings per share (EPS) of $2.96 also far outstripped the expected $2.44, with EBIT-adjusted profit climbing 15.5% year-over-year to $4.115 billion. This strong financial showing has driven GM's EBIT-adjusted margin to 8.4%, up from 8.1% in the prior year.

Upward Revisions to Full-Year Guidance

Buoyed by its robust third-quarter results, GM has made several upward revisions to its full-year 2024 forecast. The company now expects adjusted EBIT (earnings before interest and taxes) to be in the range of $14 billion to $15 billion, up from the previous guidance of $13 billion to $15 billion. Automotive operating cash flow is projected to be between $22 billion and $24 billion, an increase from the previous range of $19.2 billion to $22.2 billion. Additionally, adjusted automotive free cash flow is expected to be in the $12.5 billion to $13.5 billion range, up from the previous $9.5 billion to $11.5 billion. Diluted-adjusted EPS is now anticipated to be between $10 and $10.50, compared to the previous guidance of $9.50 to $10.50.

Navigating the Competitive Landscape

Despite the impressive results, GM CEO Mary Barra emphasized that the company is not resting on its laurels. "I'm proud that GM is delivering our best vehicles ever with strong financial results. But I want to be clear that we are not mistaking progress for winning," Barra wrote in her letter to shareholders. She acknowledged that the competition in the automotive industry remains fierce, and the regulatory environment will continue to evolve, requiring GM to remain focused on optimizing its internal combustion engine (ICE) vehicle margins and working to make its electric vehicles (EVs) profitable on an EBIT basis as quickly as possible.

Driving EV Adoption and Profitability

GM's EV sales were a highlight in the third quarter, with total EV sales reaching 32,195 units, a 60% increase compared to the same period a year ago. This growth came despite a drop in sales for the Bolt EV, as the company's other EV models picked up the slack. GM CFO Paul Jacobson emphasized the importance of achieving variable profit on EVs, stating that it represents a crucial step towards profitability. "Variable profit is a really important step on the journey to profitability. It means you reached an inflection point," Jacobson said, explaining that as sales scale up, the high fixed costs will start to come down, and EBIT losses will begin to improve.

Charting the Path Ahead

Looking ahead, GM expects its 2025 adjusted EBIT to be in a similar range to the full-year 2024 results, as the company had previously indicated during its investor day. This suggests that the automaker is confident in its ability to maintain its strong financial performance and continue its momentum in the coming years. With a focus on optimizing ICE margins, driving EV profitability, and navigating the evolving regulatory landscape, GM is positioning itself to capitalize on the opportunities in the rapidly changing automotive industry.