General Motors Company (NYSE:GM) shares climbed over 8% in Wednesday pre-market trading after the US carmaker reinstated its 2023 earnings guidance and announced a $10 billion accelerated share repurchase (ASR) program and a 33% dividend increase from 2034.
After raising its full-year earnings guidance twice, the company withdrew it in the third quarter due to strikes by the United Auto Workers (UAW) that affected it, Ford and Stellantis.
The reinstated guidance includes an estimated $1.1 billion impact on adjusted underlying earnings (EBIT) from the UAW strike, primarily from lost production.
In a statement, GM chair and CEO Mary Barra commented: "GM will deliver very strong profits in 2023 thanks to an exceptional portfolio of vehicles that customers love and our operating discipline.”
The company now expects net income of $9.1 billion to $9.7 billion for the year, down from $9.3 billion-$10.7 billion previously, with adjusted EBIT of $11.7 billion to $12.7 billion, down from $12 billion-$14 billion.
Including the ASR, it expects diluted adjusted earnings per share (EPS) of $7.20 to $7.70, compared to the previous outlook of $7.15 to $8.15.
Adjusted automotive free cash flow for the year is expected to total $10.5 billion-$11.5 billion, compared to the previous outlook of $7 billion-$9 billion.
Under its ASR program, GM said it will advance an aggregate of $10 billion to executing banks and will immediately receive and retire $6.8 billion of its common stock.
Outside of the ASR program, the company said it will have $1.4 billion of capacity remaining under its share repurchase authorization for additional, opportunistic share repurchases.
It also expects to increase its common stock dividend by 3 cents per quarter to 12 cents beginning in 2024.
"We are finalizing a 2024 budget that will fully offset the incremental costs of our new labor agreements and the long-term plan we are executing includes reducing the capital intensity of the business, developing products even more efficiently, and further reducing our fixed and variable costs," Barra added. "With this clear path forward and our strong balance sheet, we will return significant capital to shareholders.”
Ahead of the opening bell, GM’s shares were up 8.1% at $31.22.
Contact the author at stephen.gunnion@proactiveinvestors.com