General Motors (GM) is implementing investor-focused measures to rebuild confidence, unveiling a $10 billion accelerated share repurchase program and reinstating its 2023 earnings guidance.
The move follows a challenging period for the Detroit automaker, marked by labor strikes and hurdles in its electric and autonomous vehicle plans.
Increasing General Motors' Quarterly Dividend
In an effort to reassure investors, General Motors is set to boost its quarterly dividend by 33%, reaching 12 cents per share in 2024.
The company aims to counterbalance the anticipated $1.1 billion EBIT-adjusted impact from about six weeks of US labor strikes by the United Auto Workers union, included in the reinstated 2023 guidance.
In a statement, GM chair and CEO Mary Barra expressed confidence in the company's performance for 2023, citing a robust vehicle portfolio and operational discipline as key factors.
"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 noted.
"With this clear path forward and our strong balance sheet, we will return significant capital to shareholders," she added.
The reinstated 2023 guidance includes details such as net income attributable to stockholders of $9.1 billion-$9.7 billion, EBIT-adjusted of $11.7 billion-$12.7 billion, EPS-diluted in the $6.52-$7.02 range (including the estimated impact of the accelerated share repurchase), and adjusted automotive free cash flow of $10.5 billion-$11.5 billion.
GM anticipates full-year 2023 capital spending to be $11.0 billion-$11.5 billion. According to Business Insider, GM stock jumped over 10% Wednesday as the automaker announced the $10 billion share buyback and dividend hike.
Accelerated Share Repurchase Program of General Motors
General Motors is set to initiate an accelerated share repurchase program, advancing $10.0 billion to executing banks. The company will retire $6.8 billion worth of common stock immediately, with the total number of repurchased shares to be determined based on the average daily volume-weighted average prices during the program.
The accelerated share repurchase program is slated to conclude in the fourth quarter of 2024. Additionally, GM has canceled a $6.0 billion revolving credit facility, opting for a new 364-day $3.0 billion committed credit facility.
The company plans to increase its common stock dividend by 3 cents per quarter, reaching 12 cents beginning in 2024.
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