In a strategic move marking its one-year anniversary, General Motors (GM) has reinstated its earnings guidance for the full year of 2023. This decision comes after two previous upward revisions were withdrawn in the third quarter due to the United Automobile Workers’ (UAW) strike, which resulted in an estimated $1.1 billion adjusted EBIT impact related to lost production.
GM now anticipates a net income attributable to stockholders in the range of $9.1-$9.7 billion, a slight adjustment from the previous outlook of $9.3-$10.7 billion. The adjusted EBIT is projected to be between $11.7-$12.7 billion, down from the initial guidance of $12-$14 billion. Adjusted diluted EPS has been revised to $7.20-$7.70 from $7.15-$8.15. Additionally, the company forecasts net automotive cash provided by operating activities in the range of $19.5-$21 billion, up from the previous range of $17.4-$20.4 billion, and adjusted automotive free cash flow is now expected between $10.5 billion and $11.5 billion compared to the earlier guidance of $7-$9 billion.
Addressing Challenges and Capital Expenditure Adjustments
General Motors is addressing challenges associated with Cruise, its autonomous vehicle subsidiary, which incurred a loss of $1.9 billion in the first nine months of 2023. The company aims to cut spending on Cruise by hundreds of millions of dollars in 2024 compared with 2023.
Despite facing increased costs of $9.3 billion due to the new labor deal in the United States and Canada, GM is mitigating these expenses by narrowing its full-year 2023 capital spending guidance. The revised projection now ranges between $11 billion and $11.5 billion, compared to the previous guidance of $11-$12 billion, attributed to the retiming of certain product programs and effective capital investment.
Financial Moves and Share Repurchase Programs
In a substantial financial move, GM has announced a $10 billion accelerated share repurchase (ASR) program. Under this program, an aggregate of $10 billion will be advanced to executing banks, including Bank of America, Goldman Sachs & Co., Barclays Bank PLC, and Citibank. GM will immediately receive and retire $6.8 billion worth of its common stock, with the final number of repurchased shares to be determined upon settlement and based on the daily volume-weighted average prices of common stock during the program’s term.
Additionally, GM has $1.4 billion remaining under its share repurchase authorization for opportunistic share repurchases. The company has canceled a $6 billion revolving credit facility and plans to enter a new 364-day $3 billion credit facility.
In a bid to reward shareholders, GM has returned $4.2 billion in dividends and buybacks from January 2022 through the third quarter of 2023. Looking ahead, the company plans to increase its dividend to 12 cents, representing a 33% rise from the previous quarter, starting in 2024.
General Motors’ latest financial moves and strategic plans signal a proactive approach to navigate challenges, capitalize on opportunities, and deliver value to its stakeholders as it enters its second year of operations.
Also read: General Motors Pauses Plant Production Of Its New Vehicle Line
