Mary Barra – TheNewsHub

Here's what investors need to know after GM's capital markets day

suimt — Wed, 09 Oct 2024 14:58:54 +0000

The GM logo is seen on the facade of the General Motors headquarters in Detroit on March 16, 2021.

Rebecca Cook | Reuters

DETROIT — Wall Street reacted to General Motors’ investor day on Tuesday with a shrug.

Executives used the Detroit automaker’s event to focus on broad, near-term updates to the company’s operations in an attempt to separate itself from its competitors amid more challenging market and economic conditions. But it did little to move the company’s stock.

GM believes it is in a unique position to outperform the industry and Wall Street’s expectations with its all-electric vehicles and traditional internal combustion engine vehicles. The company expects to improve profits for both types of vehicles as it targets adjusted earnings next year to be similar to 2024.

“It all starts there: scale, capital efficiency and cost discipline. These will differentiate us from others in our industry, and frankly, from our own past performance,” GM CEO Mary Barra said during the roughly three-hour event from its manufacturing operations in Spring Hill, Tennessee.

GM President Mark Reuss even took jabs at its traditional crosstown rivals Ford Motor and Stellantis. Without naming them, he said GM doesn’t need a “skunkworks” team to develop affordable EVs like Ford and that cutting to profitability, like Stellantis appears to be doing, doesn’t work.

Nonetheless, investors have largely failed to reward GM for being ahead of the curve for domestic EV production as well as outperforming many automakers in the profitability of its traditional gas- and diesel-powered vehicles.

Several Wall Street analysts were unchanged in their opinion and ratings of the automaker after the event, citing continued optimism but a lack of details in its overall strategy.

Shares of GM, Ford and Stellantis in 2024

“A missed opportunity — no strategy, just tactics. GM’s investor day showcased many of the company’s current achievements, but did not provide much insight on strategy,” Bernstein analyst Daniel Roeska wrote Wednesday in an investor note.

Others such as Barclays’ Dan Levy and BofA Securities’ John Murphy said while the event lacked some details, it fortified GM’s positioning compared to competitors.

“GM’s Investor Day yesterday didn’t provide much in the way of sharp shifts in strategy. However, we believe it served as a strong reminder of GM’s balanced and pragmatic approach — a thoughtful combination of ramping on EVs alongside a keen focus on execution and cost while continuing to generate robust shareholder returns,” Levy wrote in a Wednesday investor note.

Shares of GM closed Tuesday essentially unchanged at $46.01. The stock remains up nearly 30% this year, but it has been under pressure of late due to several downgrades and price target adjustments by Wall Street analysts.

Here are several topics investors should know from the event:

“similar range” to the company’s results this year, CFO Paul Jacobson said.

Its targeted adjusted earnings before interest and taxes for 2024 were between $13 billion and $15 billion, or $9.50 and $10.50 per share, up from previous guidance of $12.5 billion to $14.5 billion, or $9 to $10 per share, earlier this year.

Through the first half of 2024, GM earned $8.3 billion in EBIT-adjusted and generated $6.4 billion in adjusted automotive free cash flow.

Jacobson said GM’s capital spend also is expected to be consistent in 2025 with this year. GM’s 2024 financial guidance includes anticipated capital spending of between $10.5 billion and $11.5 billion.

is ultimately dead.

GM will drop the “Ultium” name for its electric vehicle batteries and supporting technologies after spending years promoting the brand as it rethinks its EV and battery operations.

The company said the batteries and the technologies will remain, but the name will be gone, except in production operations such as its “Ultium Cells” joint venture plants with LG Energy Solution.

Instead, GM plans to use a variety of battery chemistries and cell designs, said Kurt Kelty, a former Tesla executive who joined GM as vice president of battery earlier this year.

“GM is evolving to a multifaceted approach,” he said. “This should only help GM strengthen our position of producing more EV models than any other automaker.”

previously announced initiative that’s expected to retire roughly 250 million shares of the automaker.

From 2022 through the end of 2024, GM will have returned about $20 billion to shareholders through share repurchases and dividends, Barra said.

The automaker is targeting to get below 1 billion outstanding shares by early 2025, Jacobson said. It has more than 1.1 billion outstanding shares as of Wednesday morning, according to FactSet.

operations in China.

GM’s operations in China have experienced a decade-long slide in earnings, and executives said they are discussing restructuring options with their China-based partners.

“In China, you’ll begin to see evidence of a turnaround this year, with a significant reduction in dealer inventory and modest improvements in sales and share,” Barra said.

Regarding Cruise, GM said its spending next year is not expected to top this year’s. It did not provide updates on its long-term plans for the troubled robotaxi business.

With GM’s investor day being two days ahead of Tesla’s highly anticipated robotaxi day, Wall Street analysts expected some sort of update on the venture, especially regarding future financing or capital spend for the company.

Hyundai Motor: When asked about GM’s announced non-binding memorandum of understanding with Hyundai, Barra said the teams “are working closely and making progress every week on what will become definitive agreements.”
Chevy Bolt: GM said its next-generation Chevrolet Bolt EV that’s expected next year will be only slightly higher than the 2023 Bolt, which started at $28,795.

PHEVs: GM reconfirmed plans to introduce plug-in hybrid electric vehicles, of PHEVs, in 2027. In the meantime, Reuss, citing single-digit market share, said GM is “not missing on anything right now without PHEVs.”

— CNBC’s Michael Bloom contributed to this report.

GM investor day: Cruise, cash and EV profits top of mind for Wall Street

suimt — Mon, 07 Oct 2024 17:42:06 +0000

Mary Barra, chair and chief executive officer of General Motors Co., during a news conference at the Hudson’s building in Detroit, Michigan, US, on Monday, April 15, 2024.

Jeff Kowalsky | Bloomberg | Getty Images

DETROIT — A lot has changed since General Motors’ last investor day two years ago, but one thing that hasn’t is the automaker’s ability to outperform Wall Street’s expectations — doing so every quarter since then.

GM CEO Mary Barra will attempt to convince investors during a capital markets day Tuesday that she and her executive team can continue to do that despite slowing consumer demand and changing market conditions.

Wall Street analysts are eager to hear about plans for electric vehicles and hybrids, the company’s embattled Cruise autonomous vehicle unit, its China restructuring and GM’s near-term plans for free cash flow, lowering costs and rewarding investors.

Many of them are expecting GM will be more grounded in its near-term targets and messaging than it has in its most recent investor days, including three years ago, when Barra and others laid out ambitious long-term financial targets by to double the automaker’s revenue to about $280 billion by 2030.

“It’s clear we enter a very different industry environment vs. three years ago,” Barclays analyst Dan Levy said last week in an investor note. “Accordingly, whereas the theme for GM three years ago was “Growth Motors,” we believe the theme today is “praGMatic Motors.”

The company is expected to tout its “flexibility” when it comes to producing EVs, as well as vehicles with traditional internal combustion engines, commonly called ICE, at the event. To underscore that effort, the event is taking place GM’s vehicle assembly and Ultium EV battery plants in Tennessee. Spring Hill Assembly produces both types of vehicles.

Barra and other executives have stressed such a dual strategy since lowering or withdrawing nearly all of the company’s EV targets amid slower than expected adoption of electric vehicles.

“We are making the most of every opportunity we have in ICE and in EV and leveraging our core strengths,” Barra said during the company’s second-quarter investor call in July. “We’re being flexible and opportunistic, but also importantly, we’re being very disciplined.”

downgraded GM and cut price targets, citing challenging market conditions and low upside potential, among other things.

“We want to wait and see which updates GM shares with the market and downgrade the stock to Market-Perform,” Bernstein analyst Daniel Roeska wrote in a Sept. 23 investor note.

GM’s stock remains overweight with a price target of $54.64 a share, according to average estimates of 29 analysts compiled by FactSet.

business in the country has been in a yearslong freefall.

The operations, which recorded $2 billion in equity income in 2018, posted a loss of $104 million during the second quarter — its second consecutive quarterly loss after hitting a roughly 20-year low in 2023.

China has been inundated with domestic automakers such as BYD that have caused a pricing war, especially when it comes to EVs.

GM’s 2024 Chevrolet Equinox EV (right) next to a gas-powered Chevy Equinox on May 16, 2024 in Detroit.

Michael Wayland / CNBC

In GM’s home market, investors are seeking updates to its plans for EVs as well as hybrids. Unlike crosstown rival Ford, which has amped up its focus on hybrids, GM hasn’t offered a hybrid option other than a Corvette for many years.

“The event will likely provide a glimpse into GM’s efforts to balance the slowdown in EV adoption with its Future business plan, which we still expect will be centered on electrification, but with a greater emphasis on hybrid technology,” BofA Securities analyst John Murphy said in a Sept. 20 note.

GM has maintained expectations that its EVs will be profitable on a production, or contribution-margin basis, once it reaches output of 200,000 units by the fourth quarter.

Regarding Cruise, Wall Street is particularly interested in the company’s future funding plans for the embattled autonomous vehicle unit.

After ceasing all on-road operations last year and ousting leaders following an accident involving a pedestrian in October, Cruise has slowly been attempting to relaunch operations, but it remains far from it was before the incident.