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GM launches buyback, increases dividend and reinstates 2023 forecast

Nature

  • General Motors seeks to regain Wall Street’s trust by 2024 with several investor-focused initiatives Wednesday after a tumultuous year.
  • The Detroit automaker launches a share buyback, increases its dividend and reinstates its forecasts for the year 2023.

Mary Barra, Chairman and CEO of General Motors Company (GM), speaks at the Milken Institute Global Conference in Beverly Hills, California, May 2, 2022.

Patrick T. Fallon | AFP | Getty Images

General Motors seeks to regain Wall Street’s trust by 2024 with several investor-focused initiatives Wednesday after a tumultuous year of strikes and setbacks in its plans for electric and autonomous vehicles.

The Detroit automaker plans to increase its quarterly dividend next year by 33% to 12 cents per share; launch a $10 billion accelerated stock buyback; and reinstate its 2023 guidance to include an estimated $1.1 billion in earnings before interest and taxes, or EBIT-adjusted impact, resulting from approximately six weeks of strikes in the United States. United by the United Auto Workers union.

GM CEO Mary Barra said in a statement that the company is finalizing a budget for next year that “will fully offset the additional costs of our new labor agreements and that the long-term plan that we execute includes reducing the capital intensity of the company, product development. even more efficiently, and further reducing our fixed and variable costs. »

Shares of GM jumped about 6% in premarket trading Wednesday. Before the announcement, the stock was down 14.1% so far this year.

GM’s reinstated guidance for 2023 also includes:

  • Net profit attributable to shareholders of $9.1 billion to $9.7 billion, compared to a previous forecast of $9.3 billion to $10.7 billion.
  • Adjusted EBIT of $11.7 billion to $12.7 billion, compared to previous guidance of $12.0 billion to $14.0 billion.
  • Adjusted earnings per share of approximately $7.20 to $7.70, including share repurchases, compared to the previous outlook of $7.15 to $8.15.
  • EPS between $6.52 and $7.02 including share repurchases, compared to the previous outlook of $6.54 to $7.54.
  • Auto sector adjusted free cash flow of $10.5 billion to $11.5 billion, compared to previous outlook of $7.0 billion to $9.0 billion
  • Automotive sector net cash from operating activities of $19.5 billion to $21.0 billion, compared to the previous outlook of $17.4 billion to $20.4 billion.

GM withdrew its guidance when it released its third-quarter results on Oct. 24, citing volatility caused by UAW negotiations and strikes. The work stoppages ended on October 30 when the parties reached an agreement in principle.

Before the UAW strike, Chief Financial Officer Paul Jacobson said the company was on track to hit “the upper half” of its profit forecast.

At the time, GM said the UAW strikes cost the automaker about $800 million in pre-tax profits due to lost vehicle production, including $200 million in the third quarter.

See the table…

GM action after a series of trading updates Wednesday.

GM said Wednesday it now expects 2023 capital spending to be between $11.0 billion and $11.5 billion, down from an earlier forecast of between $11 billion and $12 billion, due to previously announced plans to delay certain new products and investments, particularly regarding electric vehicles.

Barra, in a letter to shareholders Wednesday, said she was “disappointed” with the company’s production this year of its next-generation electric vehicles, known as Ultium vehicles.

She said the company expects “significantly higher Ultium EV production and significantly improved EV margins.”

GM said it expects to achieve adjusted EBIT margins in the mid-single digits on its electric vehicle portfolio in 2025, before the positive impact of clean energy tax credits.

Barra also said the automaker was “addressing the challenges” of its majority-owned autonomous vehicle subsidiary, Cruise.

Cruise recently issued a voluntary recall affecting 950 of its robo-taxis and suspended all vehicle operations on public roads following a series of incidents that drew criticism from first responders, labor activists and elected officials local, particularly in San Francisco.

The events, particularly a pedestrian accident in October, led CEO and co-founder Kyle Vogt to resign from the company.

“Our priority now is to focus the team on safety, transparency and accountability,” Barra said. “We must rebuild trust with regulators at the local, state and federal levels, as well as first responders and the communities in which Cruise will operate.”

The accelerated stock buyback includes a total of $10 billion paid to banks running the program, including Bank of America, Goldman Sachs, Barclays and Citibank.

GM will immediately receive and retire $6.8 billion of its common stock. GM had approximately 1.37 billion shares of common stock outstanding before the program.

The total number of shares ultimately repurchased under the initiative will be determined at the end of the program, which is expected to occur during the fourth quarter. It will be based on the daily volume-weighted average of GM stock prices.

Outside of the announced program, GM said it would have $1.4 billion of capacity remaining under its stock repurchase authorization “for additional, opportunistic stock repurchases.”

This is breaking news. Please check again for updates.

Nature

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