General Motors Company · NYSE:GM
General Motors — Q2 2008 Earnings Presentation
47 slides from General Motors's earnings presentation, Aug 1, 2008
Slide 1: Preliminary 2008 Second Quarter Results
Preliminary 2008 Second Quarter Results
Slide 2: Forward Looking Statements
Forward Looking Statements 1 In this presentation and in related comments by our management, our use of the words "expect," "anticipate," "estimate," "goal," "target," "believe," "improve," "intend," "potential," "continue," "designed," "opportunity," "risk," "may," "would," "could," "should," "proj
Slide 3: Second Quarter Operational Highlights
Second Quarter Operational Highlights 2 Global market share of 12.3%, down 0.9 p.p. vs. Q2 2007 due to weak North American industry and weaker share Share up 0.3 p.p. outside GMNA on gains in every region Global automotive revenue down sharply, more than explained by GMNA decline due to industry vol
Slide 4: Liquidity Planning Assumptions
Liquidity Planning Assumptions 3 As announced July 15, for liquidity planning purposes GM has developed actions based on conservative U.S. industry assumptions: Plan designed to emphasize aggressive operating actions that can be implemented quickly without reliance on capital markets Asset sales and
Slide 5: Liquidity Plan Improvements
Liquidity Plan Improvements 4 Cumulative Cash Impact Through YE 2009 GMNA Structural Cost ~$2.5B Salaried Employment & OPEB Savings ~$1.5B Capital Expenditure Reductions ~$1.5B Working Capital Improvements ~$2.0B UAW VEBA Payment Deferrals ~$1.7B Dividend Suspension ~$0.8B Total Operating/Other Acti
Slide 6: Balanced Set of Operational Actions
Balanced Set of Operational Actions 5 Steady cadence of aggressive operating, product and liquidity actions announced over last 60 days in response to weakening U.S. industry conditions Capacity/Structural Cost Production cessation at four truck plants Shift reductions at two additional truck plants
Slide 7: Second Quarter Financial Highlights
Second Quarter Financial Highlights 6 GAAP net loss of $(15.5)B, $(27.33) EPS including special items of $(9.1)B Adjusted net loss of $(6.3)B, $(11.21) EPS, excluding special items Includes $(2.0)B related to lease asset impairments and lease reserve adjustments; $(2.4)B at combined GM/GMAC level Ad
Slide 8: Second Quarter Adjusted Results
Second Quarter Adjusted Results 7 Refer to Supplemental Charts for reconciliation to GAAP figures
Slide 9: Second Quarter Adjustments to Income
Second Quarter Adjustments to Income 8 Exclusion of special items useful for: Management to measure operations Comparisons between reporting periods Investors to measure and assess company's core performance
Slide 10: GMNA Special Attrition Program
GMNA Special Attrition Program 9 GM Special Attrition Program (SAP) yielded approximately 19k hourly participants Approximately 17k retirements Approximately 2k voluntary separations $3.3B pretax charge taken in Q2 related to costs associated with SAP $2.4B related to pension and benefits, principal
Slide 11: GMNA Restructuring Related
GMNA Restructuring Related 10 Significant GMNA capacity actions announced in Q2 to better align manufacturing footprint with rapidly evolving U.S. industry conditions April: Announced shift reductions at four fullsize truck plants in the U.S. and Canada May: Announced production cessation at Windsor
Slide 12: CAW Contract Related
CAW Contract Related 11 2008 Canadian Auto Workers labor agreement ratified in May Associated pretax charge of $340 million taken in Q2 principally due to immediate recognition of unamortized prior service cost related to pension benefit increases from prior contracts Consistent with 2007 UAW Labor
Slide 13: GMAC Impairment
GMAC Impairment 12 U.S. GAAP states that a loss in value of an investment that is other than temporary should be recognized In Q1, GM recorded impairments against its GMAC investment based on market conditions and pricing prevailing at that time Common and preferred interests impaired by $1.3B and $
Slide 14: Delphi Related Items
Delphi Related Items 13 GM recorded Q2 adjustment of $2.8B to Delphi reserve, primarily due to updated estimates related to Delphi's ongoing reorganization Reflects higher expected obligations (e.g. net pension liabilities) and additional uncertainty around nature, value, and timing of GM recoveries
Slide 15: Cash Impact of Special Items
Cash Impact of Special Items 14 Cash Impact $ Billions Non-Cash 2008/09 Post 2009 GMNA SAP 3.0 0.3 -- GMNA Restructuring 0.2 0.3 0.6 CAW Contract Related 0.3 -- -- American Axle Related -- 0.2 -- GMAC Goodwill Impairment 1.3 -- -- Delphi Related 1.6 0.1 1.1 All Other 0.0 0.1 -- Total Special Items $
Slide 16: Lease Residual Impacts
Lease Residual Impacts 15 Deteriorating U.S. industry conditions, particularly vehicle mix, driving overall decline in used / off-lease vehicle residuals Deteriorating residuals can directly impact GM in three ways Residual Support / Risk Sharing: Affects incentive accruals, adjusted each quarter fo
Slide 17: Lease Impairments / Reserve Adjustments
Lease Impairments / Reserve Adjustments 16 GMNA (reserve adjustments) $(1.6)B GM FIO (lease asset impairments) $(0.1)B GMAC (lease asset impairment) $(0.3)B Total GM Impact (EBT) $(2.0)B Memo: GM/GMAC group impact (EBT) $(2.4)B GM/GMAC group impairments only $(0.8)B Note: All impacts are included in
Slide 18: GMNA Second Quarter Adjusted Results
GMNA Second Quarter Adjusted Results 17 2007 excludes results from Allison Transmission, recorded as Discontinued Operations
Slide 19: GMNA Vehicle Revenue Per Unit
GMNA Vehicle Revenue Per Unit Calendar Year Second Quarter Net Revenue Gross Revenue less Sales Incentives Vehicle revenue per unit excludes items such as daily rental accounting impact, Service Parts, OnStar, other outside sales 18 Adjusted to remove Allison. Refer to Supplemental Charts for reconc
Slide 20: GMNA Adjusted EBT - Q2 2008 vs. Q2 2007
GMNA Adjusted EBT - Q2 2008 vs. Q2 2007 $ Billions - Continuing Operations Only Q2 2007 Earnings Before Tax $0.1 Volume (2.0) Mix (1.5) Price (1.7) Net Material 0.1 Pension / OPEB / Manufacturing 0.6 Hedging / Exchange / Other 0.0 2008 Earnings Before Tax $(4.4) 19 2007 excludes results from Allison
Slide 21: GMNA Adjusted EBT - YTD 2008 vs. YTD 2007
GMNA Adjusted EBT - YTD 2008 vs. YTD 2007 $ Billions - Continuing Operations Only YTD 2007 Earnings Before Tax $(0.2) Volume (3.1) Mix (1.6) Price (2.2) Net Material 0.3 Pension / OPEB / Manufacturing 1.1 Hedging / Exchange / Other 0.7 2008 Earnings Before Tax $(5.0) 20 2007 excludes results from Al
Slide 22: Overview of Other Regions
Overview of Other Regions Automotive revenue outside GMNA up 10% vs. Q2 2007 on unit sales records once again in all overseas regions 55% of global auto revenue generated in GME / GMLAAM / GMAP 65% of unit sales generated outside the U.S. $0.5B of adjusted EBT generated in other regions, despite non
Slide 23: Emerging Markets Growth Trends
Emerging Markets Growth Trends 22 GM unit sales outside GMNA up 10% in Q2 largely on strength in key emerging markets in GMLAAM and GMAP Chevrolet brand a key global growth driver, supporting strong gains in Russia and in GME overall despite slowdown in Western Europe * Total of 47 markets, includin
Slide 24: GME Second Quarter Adjusted Results
GME Second Quarter Adjusted Results 23
Slide 25: GME Adjusted EBT - Q2 2008 vs. Q2 2007
GME Adjusted EBT - Q2 2008 vs. Q2 2007 $ Billions - Continuing Operations Only Q2 YTD 2007 Earnings Before Tax $0.3 $0.4 Exchange (0.2) (0.3) Volume / Mix / Price (0.1) (0.1) Cost Factors 0.1 0.3 2008 Earnings Before Tax $0.1 $0.3 24 2007 excludes results from Allison Transmission, recorded as Disco
Slide 26: GMLAAM Second Quarter Adjusted Results
GMLAAM Second Quarter Adjusted Results 25
Slide 27: GMLAAM Key Second Quarter Profit Drivers
GMLAAM Key Second Quarter Profit Drivers 26 GM able to drive continued strong revenue and profit growth in LAAM based on its strong position against very strong industry dynamics GM unit sales up 18% on strong growth across all key market areas South America up 16% Africa up 34% Middle East up 12% A
Slide 28: GMAP Second Quarter Adjusted Results
GMAP Second Quarter Adjusted Results 27 * Reflects $(285) million impact of hedging related adjustments *
Slide 29: GMAC Second Quarter Overview
GMAC Second Quarter Overview 28 On a standalone basis, GMAC reported $(2.5)B net loss, a deterioration of $(2.8)B vs. Q2 2007 North America Auto Finance negatively impacted by weak auto industry conditions and deteriorating used vehicle residual values GMAC recorded an impairment of $0.7B against op
Slide 30: GMAC Second Quarter Business Line Results
GMAC Second Quarter Business Line Results 29
Slide 31: GM Liquidity Position
GM Liquidity Position 30 Liquidity position of $21.0B at June 30, 2008 Includes $0.5B of readily-available VEBA assets Represents decrease of $(2.9)B from prior quarter Reflects negative adjusted automotive OCF driven primarily by lower Q2 production in GMNA, including impact of American Axle strike
Slide 32: Automotive Gross / Net Liquidity
Automotive Gross / Net Liquidity 31 1 Q4 2005 - Q3 2006 Net Liquidity figures exclude GMAC related debt 2 Including readily available VEBA assets Q4'00 YE '01 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4'07 Q1'08 Q2'08 Net Liquidity 5.2 4.8 4.8 3.5 -0.7 -13.833 -12.303 -11.394 -14.2 -1
Slide 33: GM Credit Facility Profile
GM Credit Facility Profile 32 Q2 credit facilities utilization increased primarily due to draws on lease asset carve-out facility and securitization programs U.S. committed facility availability of $5.0B at June 30
Slide 34: Debt Maturity Profile
Debt Maturity Profile 33 Note: Excludes IT VEBA obligations - $4.0B note due 2010; $1.7B note due 2010; $4.4B Series U Convertible due 2012
Slide 35: Automotive Cash Flow Summary
Automotive Cash Flow Summary Refer to Supplemental Charts for reconciliation to GAAP figures 34 * Earnings before Tax from Continuing Operations on a GAAP basis
Slide 36: Pension/OPEB and Accrued Expenses
Year-to-year Q2 variance in Pension/OPEB expense net of payments mainly driven by special attrition program (SAP) charge Pension/OPEB and Accrued Expenses 35 Accrued Expenses and Other reflects timing of cash flows vs. accruals Year over year variance driven by announced charges and reserve adjustme
Slide 37: Global Cash Management
Global Cash Management 36 Current global month-end cash requirement of between $11B and $14B, considering: Global supplier payments Some overseas cash not readily accessible (for example cash at joint ventures) Variability of cash flow Further seasonal factors such as July shut down can be met throu
Slide 38: Working Capital / Inventory Plan
Working Capital / Inventory Plan 37 As stated on July 15, targeting ~$2B of working capital improvements in North America and Europe from planned YE 2008 levels, primarily related to inventory GMNA inventories expected to be improved by ~$1.5B Productive material reductions estimated at almost $1B,
Slide 39: Summary
Summary 38 Number one management priority is strengthening liquidity and managing business for cash flow Liquidity plan announced on July 15 contemplated the weak Q2 results and challenging U.S. environment Will leverage SAP to reduce manufacturing costs and facilitate planned capacity actions Movin
Slide 40: North American Leasing Outlook
North American Leasing Outlook Industry conditions driving up risks and costs associated with leasing Significant industry volume decline and mix shift are impacting used vehicle residual values, in some cases dramatically (e.g. SUV's) GM has already taken steps to reduce percentage of our business
Slide 41: Looking Ahead
Looking Ahead Continued volume/mix pressures in U.S. market 2008 total industry outlook updated to mid 14 million unit range, which implies H2 SAAR of about 14 million units total Structural cost savings in GMNA related to SAP Continued strength in emerging markets, including Central/Eastern Europe
Slide 42: Supplemental Charts
Supplemental Charts The following supplemental charts are provided to reconcile adjusted financial data comprehended in the primary chart set with GAAP-based data (per GM's financial statements) and/or provide clarification with regard to definition of non-GAAP terminology
Slide 43: Reconciliation to Adjusted Net Income / EPS Q2 2008
Reconciliation to Adjusted Net Income / EPS Q2 2008 S1
Slide 44: Reconciliation to Adjusted Net Income / EPS Q2 2007
Reconciliation to Adjusted Net Income / EPS Q2 2007 S2
Slide 45: Reconciliation of GMNA Revenue Per Unit Second Quarter
Reconciliation of GMNA Revenue Per Unit Second Quarter S3 a). For GAAP reporting purposes, sales to other GM regions are eliminated whereas they are retained for managerial vehicle analysis b). Includes SPO parts, Powertrain engines, MSP, and Onstar service outside sales- excluded from managerial ve
Slide 46: Reconciliation of GMNA Revenue Per Unit Calendar Year
Reconciliation of GMNA Revenue Per Unit Calendar Year S4 a). For GAAP reporting purposes, sales to other GM regions are eliminated whereas they are retained for managerial vehicle analysis b). Includes SPO parts, Powertrain engines, MSP, and Onstar service outside sales- excluded from managerial veh
Slide 47: Reconciliation of Automotive & Corp/Other Cash Flow
Reconciliation of Automotive & Corp/Other Cash Flow Second Quarter and CYTD S5