General Motors (GM) Sees FY 2017 EPS of $6.00-$6.50, Vs Cons of $5.73; Adds $5B to Stock Buyback Plan

(Updated - January 10, 2017 1:13 PM EST)

General Motors (NYSE: GM) sees FY 2017 EPS of $6.00-$6.50, versus the consensus of $5.73. Announces an additional $5 billion buyback.

From the company:

• Announces 2017 EPS diluted-adjusted outlook of $6.00-$6.50
• Expects to maintain or improve EBIT-adjusted and EBIT-adjusted margin
• Authorizes additional $5 billion for share repurchases
• Increases cost efficiency target to $6.5 billion through 2018

General Motors Co. (NYSE: GM) today said it expects its 2017 earnings per share (EPS) diluted-adjusted to increase to $6.00-$6.50, up from its 2016 calendar-year outlook of $5.50-$6.00. In 2017, the company also expects to maintain or improve EBIT-adjusted and EBIT-adjusted margin on higher revenues, compared to 2016, and generate about $6.0 billion of automotive-adjusted free cash flow.

Based on this strong outlook, the GM Board of Directors approved an additional $5 billion in common stock repurchases under its existing share repurchase program, which was announced March 9, 2015. The new authorization, which has no expiration date, brings the total under the program to $14 billion.

Share buybacks for the program’s initial authorization of $5 billion were completed in the third quarter of 2016, one quarter earlier than planned. In the fourth quarter of 2016, the company also completed $1 billion of the next $4 billion authorization declared in January 2016. The company expects to meet its prior commitment to repurchase $9 billion of common stock by the end of 2017.

GM also announced a $1 billion increase to its cost efficiency target, raising it to $6.5 billion through 2018, of which about $4.0 billion has already been achieved through 2016. The increased estimate is based on expected additional savings in material, logistics, manufacturing and general administrative costs.

Chairman and CEO Mary Barra, President Dan Ammann and Executive Vice President and CFO Chuck Stevens shared this outlook with the investors and analysts attending the Deutsche Bank 2017 Global Auto Industry Conference in Detroit.

“We’ve generated consistently strong results the last few years by delivering great vehicles, growing the topline and driving efficiencies, while at the same time establishing a leading position in shaping the future of transportation,” Barra said. “We’ll stay focused on executing our strategic plan and generating the profitable growth needed to create long-term value for our shareholders.”

GM’s 2017 outlook is based on expected strong performance in North America and China, growth of GM Financial, continued cost efficiencies, improvement in South America and an ongoing strong vehicle launch cadence.

Specifically, the company anticipates the proportion of its global volume from new or refreshed vehicles – those in production less than 18 months – to grow to 38 percent in the 2017-2020 timeframe, up from 26 percent during the 2011-2016 period. Crossovers, trucks and SUVs as a proportion of GM’s global volume of new or refreshed vehicles in the 2017-2020 period are expected to increase significantly, to 52 percent – up from 38 percent the prior six years.

The company also reaffirmed its transparent capital allocation framework, introduced in March 2015:

• Reinvesting in the business to achieve a 20 percent or greater return on invested capital.
• Maintaining a strong, investment-grade balance sheet with a target cash balance of $20 billion.
• Beyond reinvesting in the business and maintaining an investment grade balance sheet, the company expects to return all available free cash flow to shareholders on an ongoing basis.

“Success in this business depends to a great degree on where you place your bets,” Stevens said. “We’ll continue to allocate capital where we expect to generate significant margins, while we work to drive business performance that meets our shareholder commitments.”

Among key accomplishments for 2016, the company noted the following:

• On-track to deliver full-year records for revenue, EBIT-adjusted and EBIT-adjusted margin.
• Expects to achieve full-year earnings per diluted-adjusted share in the high end of its previously-stated range of $5.50-$6.00.
• On-track to achieve more than a 10 percent EBIT-adjusted margin in GM North America for the second straight year.
• On-track to sustain strong equity income in China.
• Generated four-quarter trailing ROIC-adjusted of 30.6 percent through the third quarter.
• Through the end of 2016, the company has repurchased $6 billion of common stock since March 2015.
• GM’s U.S. retail strategy drove a retail market share increase of 0.5 points for the year, more than any full-line manufacturer.
• GM delivered more segment winners than any other manufacturer in JD Power's Vehicle Dependability, Initial Quality and APEAL studies in 2016.
• Introduced the 238 mile-per-full-charge Chevrolet Bolt EV, which won the 2017 Motor Trend and 2017 North American Car of the Year awards.
• Formed partnership with Lyft to create an integrated network of on-demand autonomous vehicles in the U.S.
• Acquired Cruise Automation to accelerate autonomous vehicle development.
• Launched Maven car-sharing brand, which is operating in 16 U.S. cities.
• Testing autonomous Chevrolet Bolt EVs on public roads in Scottsdale, Arizona, San Francisco and Warren, Michigan.

You May Also Be Interested In

• Gilead Sciences (GILD) Misses Q1 EPS by 288c
• Skechers USA (SKX) Tops Q1 EPS by 23c, Beats on Revenue; Offers FY24 Guidance
• PTC Therapeutics (PTCT) Tops Q1 EPS by 9c, provides guidance