General Motors Co. (NYSE: GM) today basically shrugged off months of anti-American labor speculation and media commentary while announcing a $10 Billion Accelerated Share Repurchase Program (ASR)* and 33% dividend increase to 12 cent per quarter starting in 2024. GM continues to generate huge cash flows and invest in the business in the face of the retro-think of stock mis-analysts. GM has also canceled the $6.0 billion revolving credit facility it entered in October and plans to enter into a new 364-day $3.0 billion committed credit facility with the banks executing the ASR acting as lenders.
“We are finalizing a 2024 budget that will fully offset the incremental costs of our new labor agreements and the long-term plan we are executing includes reducing the capital intensity of the business, developing products even more efficiently, and further reducing our fixed and variable costs,” said Mary Barra, GM Chair and CEO.
As in all successful businesses GM’s strategy hasn’t changed. It has adjusted its tactics. GM has and will go forward with a strong and profitable internal combustion engine vehicle business. It is also forecasting growth there. Electric vehicles ran across a bumpy road this year, and GM wasn’t unique in the industry. However, next year is going to be an important year. GM said by mid-year or sooner EV battery and supply constraints will evaporate. The GM EV portfolio is getting stronger. The progress in the so-called software defined vehicle continues, as does the work on autonomous vehicles despite the recent challenges and subsequent reorganization at Cruise.
2023 Guidance
During 2023, GM twice raised its full-year earnings guidance before withdrawing it in the third quarter due to labor disruptions. GM’s reinstated guidance includes an estimated $1.1 billion EBIT-adjusted impact from the UAW strike, primarily from lost production.
- Net income attributable to stockholders of $9.1 billion-$9.7 billion, compared to the previous outlook of $9.3 billion-$10.7 billion.
- EBIT-adjusted $11.7 billion-$12.7 billion, compared to the previous outlook of $12.0 billion- $14.0 billion.
- EPS-diluted in the $6.52-$7.02 range, including the estimated impact of the ASR, compared to the previous outlook of $6.54-$7.54.
- EPS-diluted-adjusted in the $7.20-$7.70 range including the estimated impact of the ASR, compared to the previous outlook of $7.15-$8.15.
- Net automotive cash provided by operating activities of $19.5 billion-$21.0 billion, compared to the previous outlook of $17.4 billion-$20.4 billion Adjusted automotive free cash flow of $10.5 billion-$11.5 billion, compared to the previous outlook of $7.0 billion-$9.0 billion.
- GM now anticipates full-year 2023 capital spending to be $11.0 billion-$11.5 billion, at the lower end of its prior guidance range of $11.0 billion-$12.0 billion, because of the previously announced retiming of some product programs and more capital-efficient investment.
- Accelerated share repurchase program In connection with GM’s ASR program, GM will advance an aggregate of $10.0 billion to the executing banks and will immediately receive and retire $6.8 billion worth of GM’s common stock. GM had approximately 1.37 billion shares of common stock outstanding prior to the ASR.
- GM estimates new contracts that we have in place with the UAW and Unifor will increase labor costs in North America by ~$500 per vehicle in 2024 and ~$575 on average over the life of the contract.
*The total number of shares ultimately repurchased under the ASR program will be determined upon final settlement and will be based on the average of the daily volume-weighted average prices of GM’s common stock during the term of the ASR program. The ASR program is expected to conclude in the fourth quarter of 2024.
The ASR program will be executed by Bank of America, N.A., Goldman Sachs & Co. LLC, Barclays Bank PLC and Citibank, N.A. Outside of the ASR program, GM will have $1.4 billion of capacity remaining under its share repurchase authorization for additional, opportunistic share repurchases.
GM Takes UAW Contract Costs in Stride. Ups 2024 Dividend
General Motors Co. (NYSE: GM) today basically shrugged off months of anti-American labor speculation and media commentary while announcing a $10 Billion Accelerated Share Repurchase Program (ASR)* and 33% dividend increase to 12 cent per quarter starting in 2024. GM continues to generate huge cash flows and invest in the business in the face of the retro-think of stock mis-analysts. GM has also canceled the $6.0 billion revolving credit facility it entered in October and plans to enter into a new 364-day $3.0 billion committed credit facility with the banks executing the ASR acting as lenders.
“We are finalizing a 2024 budget that will fully offset the incremental costs of our new labor agreements and the long-term plan we are executing includes reducing the capital intensity of the business, developing products even more efficiently, and further reducing our fixed and variable costs,” said Mary Barra, GM Chair and CEO.
As in all successful businesses GM’s strategy hasn’t changed. It has adjusted its tactics. GM has and will go forward with a strong and profitable internal combustion engine vehicle business. It is also forecasting growth there. Electric vehicles ran across a bumpy road this year, and GM wasn’t unique in the industry. However, next year is going to be an important year. GM said by mid-year or sooner EV battery and supply constraints will evaporate. The GM EV portfolio is getting stronger. The progress in the so-called software defined vehicle continues, as does the work on autonomous vehicles despite the recent challenges and subsequent reorganization at Cruise.
2023 Guidance
During 2023, GM twice raised its full-year earnings guidance before withdrawing it in the third quarter due to labor disruptions. GM’s reinstated guidance includes an estimated $1.1 billion EBIT-adjusted impact from the UAW strike, primarily from lost production.
*The total number of shares ultimately repurchased under the ASR program will be determined upon final settlement and will be based on the average of the daily volume-weighted average prices of GM’s common stock during the term of the ASR program. The ASR program is expected to conclude in the fourth quarter of 2024.
The ASR program will be executed by Bank of America, N.A., Goldman Sachs & Co. LLC, Barclays Bank PLC and Citibank, N.A. Outside of the ASR program, GM will have $1.4 billion of capacity remaining under its share repurchase authorization for additional, opportunistic share repurchases.