General Motors (GM) continued its earnings momentum with strong first-quarter results on Tuesday, as the automaker raised its full-year guidance and said it still sees “positive variable profitability” in its electric vehicle business in the back half of 2024.
For the quarter, GM reported Top-line revenue of $43.0 billion beat analysts' expectations of $42.09 billion, according to Bloomberg data. That was up 7% from the same period a year ago and matched last quarter's $43 billion in sales.
The company reported adjusted earnings of $2.62 per share, above forecasts for $2.12, and adjusted EBIT (earnings before interest and taxes) of $3.9 billion. GM's Q1 operating profit came in at $3.7 billion, compared to estimates of $3.12 billion.
GM shares rose 5% in early trading following the results.
GM's strong performance prompted the company to raise its 2024 guidance. The company now sees full-year adjusted EBIT of $12.5 billion-$14.5 billion, up from $12 billion-$14 billion previously. Adjusted earnings are now expected to come in at $9.00-$10.00 per share in 2024; GM previously saw full-year EPS between $8.50-$9.50.
GM raised its automotive operating cash flow outlook to $18.3 billion-$21.3 billion and adjusted automotive free cash flow to $8.5 billion-$10.5 billion.
“As we continue to strengthen our ICE portfolio, scale EVs and reinvest in the business, we are focused on capital efficiency, improving profitability and free cash flow, and we will continue to take action to create shareholder value,” said GM CEO Mary. Barra The shareholder said in the letter.
GM CFO Paul Jacobson said on a media call with reporters that raising GM's guidance was the “right thing to do” following its “strong” first quarter.
Jacobson also said GM's customers are “remarkably resilient to higher interest rates.”
GM's EV Outlook and Overall Q1 Sales
GM reiterated that it sees “positive variable profitability” in its EV business in the second half of 2024, with around 200,000-300,000 EVs sold by the end of the year.
The company expects EBIT margin in the EV business to improve 60 points from 2023 to 2024, and when the effect of the Clean Energy Tax Credits is included, it will have a “mid-single-digit EBIT margin” by 2025.
Jacobson noted on the analyst call that the Cadillac LYRIQ EV is now $12,000 cheaper than last year due to lower battery and module costs. Economies of scale will help GM “add savings” in the second and third years of production for some EVs, Jacobson said.
GM previously dropped its goal of building 400,000 EVs by mid-2024. Jacobson said on the media call that GM will “accelerate ourselves with the customer” when it comes to EV sales, while Parra said on the analyst conference call that GM is “always going to be responsive to the customer.”
Barra wrote in his letter that leveraging the strength of the traditional gas-powered business allowed the company to grow its EV business over time “delivering stronger margins and cash flows.”
GM Q1 sales in the US topped the estimates But that was lower than a year ago, thanks to lower fleet sales. GM delivered 594,233 vehicles, down 1.5% year over year, while retail sales increased 6%.
GM said it delivered more vehicles than any other automaker in the U.S. in the first quarter.
On the EV front, GM posted significant gains with the Cadillac LYRIQ, Hummer EV and Silverado EV. The Silverado EV will only be available to fleet customers, but deliveries to retail customers will begin “in the coming months,” the company said.
Chevrolet's Blazer EV reached just 500 sales in the quarter, though it only resumed sales in March after a software issue halted sales. The highly anticipated Equinox EV goes on sale in the second quarter, with prices starting around $35,000.
Barra said GM is starting to put cars back on the road in the Phoenix area in its autonomous driving division, Cruise. Cruise halted all operations last year following a pedestrian accident and other incidents involving its autonomous vehicles.
Press Subramanian is a Yahoo Finance reporter. You can follow him Twitter And on Instagram.
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