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Auto Roundup: GM Tops Q4 Earnings Estimates, LAD Buys Pendragon & More
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Last week, many auto biggies released U.S. vehicle sales data for the month of January 2024. According to GlobalData, the daily selling rate last month averaged 42,300 units, a significant decline from December's rate of 56,800. The seasonally adjusted annualized rate of sales, reported at 14.8 million by GlobalData, fell well below initial forecasts, ranging from 15.2 million to 15.8 million. This figure also represents a decrease from December's 16.08 million and January 2023's 15.26 million. While January typically records lower new vehicle sales, the latest SAAR reading marks the lowest for the month since 2012, a period when the industry was still recovering from the 2008-09 financial crisis.
Meanwhile, quarterly results of U.S. auto giant General Motors (GM - Free Report) , auto retailer Group 1 Automotive (GPI - Free Report) and heavy equipment maker Oshkosh Corp (OSK - Free Report) were released last week. General Motors’ fourth-quarter 2023 earnings and sales beat estimates but declined year over year. Group 1 missed earnings estimates but beat on revenues. While the bottom line fell 12.5% year over year, revenues rose 10%. Oshkosh’s earnings topped estimates and also increased on a yearly basis. Revenues missed the consensus mark but increased year over year.
One of the leading auto retailers, Lithia Motors (LAD - Free Report) , strengthened its foothold in the UK market with the acquisition of Pendragon PLC's UK motor and fleet management divisions, rebranding the latter as Pinewood Technologies Group PLC. The integration of Pendragon Vehicle Management and the adoption of Pinewood's technology position Lithia as a leading player in the UK automotive landscape, offering diversified solutions and unmatched advantages to competitors.
Electric vehicle (EV) titan Tesla (TSLA - Free Report) recalled 2.2 million vehicles in the United States over small font size in warning lights, heightening safety concerns.
General Motors reported fourth-quarter 2023 adjusted earnings of $1.24 per share, which surpassed the Zacks Consensus Estimate of $1.12. The bottom line, however, decreased from the year-ago quarter’s level of $2.12. Revenues of $42.98 billion beat the Zacks Consensus Estimate of $40.78 billion but decreased from $43.1 billion recorded in the year-ago period. It recorded adjusted earnings before interest and taxes (EBIT) of $1.75 billion, lower than $3.79 billion in the prior-year quarter. The automaker’s share in the GM market was 8.5% in the reported quarter compared with 9.1% in the year-ago quarter.
General Motors had cash/cash equivalents of $18.85 billion as of Dec 31, 2023. The long-term automotive debt at the end of the quarter was $15.98 billion. The company recorded an adjusted automotive free cash flow of $1.34 billion in fourth-quarter 2023. It declared its first-quarter dividend of 12 cents per share, marking a 35% increase from the prior payout. The dividend will be paid on Mar 14, 2024, to shareholders as of Mar 1, 2024.
For full-year 2024, GM expects adjusted EBIT in the range of $12-$14 billion. Adjusted EPS is anticipated in the range of $8.50-$9.50. Capex is predicted to be in the $10-$11 billion range. Adjusted automotive free cash flow is expected in the band of $8-$10 billion.
Tesla issued a recall for 2.2 million vehicles in the United States due to concerns regarding the font size of warning lights on the instrument panel. The small font size, particularly for brake, park, and antilock brake system warnings, poses readability challenges, potentially increasing the risk of accidents, as indicated by the National Highway Traffic Safety Administration (NHTSA). This font size discrepancy is reported to be in violation of federal safety standards. The NHTSA announced the recall following a routine audit of Tesla vehicles.
Tesla stated no knowledge of any accidents or injuries resulting from this issue. The recall affects various models, including the Model S (2012-2023), Model X (2016-2024), Model 3 (2017-2023), Model Y (2019-2024), and 2024 Cybertruck vehicles. The company plans to address the problem through an over-the-air software update, eliminating the need for owners to visit a Tesla service center. Owner notification letters will be sent out starting Mar 30.
In a separate development, the NHTSA disclosed a preliminary evaluation concerning reports of power steering issues in certain Tesla vehicles on Thursday. Specifically, 2,388 complaints have been identified regarding steering control loss in select 2023 Tesla Model 3 and Model Y vehicles. Tesla has issued a number of recalls recently, targeting backup camera malfunctions and autopilot system flaws, following extensive investigations by the NHTSA into related incidents.
Lithia has acquired U.K. car dealership group Pendragon, solidifying its expansion into Britain and venturing into the dealership management system (DMS) sector. The deal, valued at nearly $500 million, marks a significant milestone for both companies. After a period of acquisition interest from various parties, Pendragon shareholders voted overwhelmingly in favor of Lithia's revised higher-priced offer. With the closure of the deal, Lithia owns Pendragon's 160 stores, predominantly new-car dealerships, along with its fleet business and a portion of its DMS company, Pinewood.
The acquisition is expected to add around $4.5 billion to Lithia’s annualized revenues. This aligns with Lithia's ambitious goal of reaching $50 billion in annual revenues by the end of 2025, with acquisitions serving as a key strategy. Neil Williamson, Lithia's U.K. regional president, emphasized the strategic significance of the acquisition, underscoring the expanded footprint, brand portfolio, and technological advancements that position Lithia as a formidable player in the U.K. automotive industry. This move signifies Lithia's commitment to growth and innovation, solidifying its position as a leader in the global automotive market.
Pendragon is to be rebranded as Pinewood Technologies. This strategic move bolsters LAD's digital capabilities in the United Kingdom by incorporating Pinewood's technology platform across all locations and co-developing automotive solutions for the North American market. Pinewood Technologies will transition into a software-as-a-service (SaaS) business, enhancing its focus on dealer management software.
Group 1 reported fourth-quarter 2023 adjusted earnings per share of $9.50, missing the Zacks Consensus Estimate of $10.49. The bottom line also decreased from the prior-year quarter’s earnings of $10.86 per share. It registered net sales of $4.48 billion, beating the Zacks Consensus Estimate of $4.38 billion. Also, the top line rose from the year-ago quarter’s $4.07 billion.
New vehicle retail sales increased 17.2% from the prior-year quarter to $2.3 billion and exceeded our projection of $2.13 billion on the back of higher-than-expected volumes and average selling prices. Used-vehicle retail sales rose 1.1% from the year-ago period to $1.33 billion and outpaced our forecast by $1.3 billion on higher-than-expected average selling prices. Used-vehicle wholesale sales rose 19.3% year over year to $102.3 million and beat our expectation of $91.7 million. In the Parts and Service business, the top line rose 5.1% from the year-ago quarter to $545 million. Revenues from the Finance and Insurance (F&I) business came in at $187.1 million, up 8.4% from the year-ago period levels.
During the quarter under discussion, GPI repurchased 160,968 shares at an average price of $262.25 per common share for a total of $42.2 million. The company currently has $143.3 million remaining on its authorized stock buyback program. Group 1 had cash and cash equivalents of $57.2 million as of Dec 31, 2023, up from $47.9 million as of 2022-end. Total debt was $2.1 billion as of Dec 31, 2023, up from $2.08 billion recorded on Dec 31, 2022.
Oshkosh reported fourth-quarter 2023 adjusted earnings of $2.56 per share, beating the Zacks Consensus Estimate of $2.17. The bottom line also rose from $1.60 per share recorded in the year-ago period. Consolidated net sales climbed 12% year over year to $2,466.8 million. The top line, however, marginally missed the Zacks Consensus Estimate of $2,468 million.
The Accesssegment’s net sales rose 7.1% year over year to $1.15 billion. Revenues from the Defense segment increased 7.2% year over year to $586.9 million. Vocational unit sales rose 26.1% year over year to $735.3 million. The company anticipates full-year 2024 sales to be around $10.4 billion. It expects earnings of $9.45 per share and adjusted earnings of $10.25 per share.
Oshkosh had cash and cash equivalents of $125.4 million as of Dec 31, 2023, compared with $805.9 million as of Dec 31, 2022. The company recorded a long-term debt of $597.5 million, up from $595 million on Dec 31, 2022. OSK hiked its quarterly cash dividend to 46 cents per share. The dividend will be paid out on Feb 29, 2024, to shareholders of record as of Feb 15, 2024.
Price Performance
The following table shows the price movement of some of the major auto players over the last week and six-month period.
Image Source: Zacks Investment Research
What’s Next in the Auto Space?
Industry watchers will keep a tab on vehicle sales in China for the month of January. Meanwhile, the automotive industry has a flurry of earnings releases this week. Investors eagerly await quarterly reports from major players such as Ford, Toyota, Cummins, O'Reilly and BorgWarner, among others.
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Auto Roundup: GM Tops Q4 Earnings Estimates, LAD Buys Pendragon & More
Last week, many auto biggies released U.S. vehicle sales data for the month of January 2024. According to GlobalData, the daily selling rate last month averaged 42,300 units, a significant decline from December's rate of 56,800. The seasonally adjusted annualized rate of sales, reported at 14.8 million by GlobalData, fell well below initial forecasts, ranging from 15.2 million to 15.8 million. This figure also represents a decrease from December's 16.08 million and January 2023's 15.26 million. While January typically records lower new vehicle sales, the latest SAAR reading marks the lowest for the month since 2012, a period when the industry was still recovering from the 2008-09 financial crisis.
Meanwhile, quarterly results of U.S. auto giant General Motors (GM - Free Report) , auto retailer Group 1 Automotive (GPI - Free Report) and heavy equipment maker Oshkosh Corp (OSK - Free Report) were released last week. General Motors’ fourth-quarter 2023 earnings and sales beat estimates but declined year over year. Group 1 missed earnings estimates but beat on revenues. While the bottom line fell 12.5% year over year, revenues rose 10%. Oshkosh’s earnings topped estimates and also increased on a yearly basis. Revenues missed the consensus mark but increased year over year.
One of the leading auto retailers, Lithia Motors (LAD - Free Report) , strengthened its foothold in the UK market with the acquisition of Pendragon PLC's UK motor and fleet management divisions, rebranding the latter as Pinewood Technologies Group PLC. The integration of Pendragon Vehicle Management and the adoption of Pinewood's technology position Lithia as a leading player in the UK automotive landscape, offering diversified solutions and unmatched advantages to competitors.
Electric vehicle (EV) titan Tesla (TSLA - Free Report) recalled 2.2 million vehicles in the United States over small font size in warning lights, heightening safety concerns.
While OSK sports a Zacks Rank #1 (Strong Buy), GM carries a Zacks Rank #2 (Buy). TSLA, LAD and GPI are currently #3 Ranked (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Last Week’s Top Stories
General Motors reported fourth-quarter 2023 adjusted earnings of $1.24 per share, which surpassed the Zacks Consensus Estimate of $1.12. The bottom line, however, decreased from the year-ago quarter’s level of $2.12. Revenues of $42.98 billion beat the Zacks Consensus Estimate of $40.78 billion but decreased from $43.1 billion recorded in the year-ago period. It recorded adjusted earnings before interest and taxes (EBIT) of $1.75 billion, lower than $3.79 billion in the prior-year quarter. The automaker’s share in the GM market was 8.5% in the reported quarter compared with 9.1% in the year-ago quarter.
General Motors had cash/cash equivalents of $18.85 billion as of Dec 31, 2023. The long-term automotive debt at the end of the quarter was $15.98 billion. The company recorded an adjusted automotive free cash flow of $1.34 billion in fourth-quarter 2023. It declared its first-quarter dividend of 12 cents per share, marking a 35% increase from the prior payout. The dividend will be paid on Mar 14, 2024, to shareholders as of Mar 1, 2024.
For full-year 2024, GM expects adjusted EBIT in the range of $12-$14 billion. Adjusted EPS is anticipated in the range of $8.50-$9.50. Capex is predicted to be in the $10-$11 billion range. Adjusted automotive free cash flow is expected in the band of $8-$10 billion.
Tesla issued a recall for 2.2 million vehicles in the United States due to concerns regarding the font size of warning lights on the instrument panel. The small font size, particularly for brake, park, and antilock brake system warnings, poses readability challenges, potentially increasing the risk of accidents, as indicated by the National Highway Traffic Safety Administration (NHTSA). This font size discrepancy is reported to be in violation of federal safety standards. The NHTSA announced the recall following a routine audit of Tesla vehicles.
Tesla stated no knowledge of any accidents or injuries resulting from this issue. The recall affects various models, including the Model S (2012-2023), Model X (2016-2024), Model 3 (2017-2023), Model Y (2019-2024), and 2024 Cybertruck vehicles. The company plans to address the problem through an over-the-air software update, eliminating the need for owners to visit a Tesla service center. Owner notification letters will be sent out starting Mar 30.
In a separate development, the NHTSA disclosed a preliminary evaluation concerning reports of power steering issues in certain Tesla vehicles on Thursday. Specifically, 2,388 complaints have been identified regarding steering control loss in select 2023 Tesla Model 3 and Model Y vehicles. Tesla has issued a number of recalls recently, targeting backup camera malfunctions and autopilot system flaws, following extensive investigations by the NHTSA into related incidents.
Lithia has acquired U.K. car dealership group Pendragon, solidifying its expansion into Britain and venturing into the dealership management system (DMS) sector. The deal, valued at nearly $500 million, marks a significant milestone for both companies. After a period of acquisition interest from various parties, Pendragon shareholders voted overwhelmingly in favor of Lithia's revised higher-priced offer. With the closure of the deal, Lithia owns Pendragon's 160 stores, predominantly new-car dealerships, along with its fleet business and a portion of its DMS company, Pinewood.
The acquisition is expected to add around $4.5 billion to Lithia’s annualized revenues. This aligns with Lithia's ambitious goal of reaching $50 billion in annual revenues by the end of 2025, with acquisitions serving as a key strategy. Neil Williamson, Lithia's U.K. regional president, emphasized the strategic significance of the acquisition, underscoring the expanded footprint, brand portfolio, and technological advancements that position Lithia as a formidable player in the U.K. automotive industry. This move signifies Lithia's commitment to growth and innovation, solidifying its position as a leader in the global automotive market.
Pendragon is to be rebranded as Pinewood Technologies. This strategic move bolsters LAD's digital capabilities in the United Kingdom by incorporating Pinewood's technology platform across all locations and co-developing automotive solutions for the North American market. Pinewood Technologies will transition into a software-as-a-service (SaaS) business, enhancing its focus on dealer management software.
Group 1 reported fourth-quarter 2023 adjusted earnings per share of $9.50, missing the Zacks Consensus Estimate of $10.49. The bottom line also decreased from the prior-year quarter’s earnings of $10.86 per share. It registered net sales of $4.48 billion, beating the Zacks Consensus Estimate of $4.38 billion. Also, the top line rose from the year-ago quarter’s $4.07 billion.
New vehicle retail sales increased 17.2% from the prior-year quarter to $2.3 billion and exceeded our projection of $2.13 billion on the back of higher-than-expected volumes and average selling prices. Used-vehicle retail sales rose 1.1% from the year-ago period to $1.33 billion and outpaced our forecast by $1.3 billion on higher-than-expected average selling prices. Used-vehicle wholesale sales rose 19.3% year over year to $102.3 million and beat our expectation of $91.7 million. In the Parts and Service business, the top line rose 5.1% from the year-ago quarter to $545 million. Revenues from the Finance and Insurance (F&I) business came in at $187.1 million, up 8.4% from the year-ago period levels.
During the quarter under discussion, GPI repurchased 160,968 shares at an average price of $262.25 per common share for a total of $42.2 million. The company currently has $143.3 million remaining on its authorized stock buyback program. Group 1 had cash and cash equivalents of $57.2 million as of Dec 31, 2023, up from $47.9 million as of 2022-end. Total debt was $2.1 billion as of Dec 31, 2023, up from $2.08 billion recorded on Dec 31, 2022.
Oshkosh reported fourth-quarter 2023 adjusted earnings of $2.56 per share, beating the Zacks Consensus Estimate of $2.17. The bottom line also rose from $1.60 per share recorded in the year-ago period. Consolidated net sales climbed 12% year over year to $2,466.8 million. The top line, however, marginally missed the Zacks Consensus Estimate of $2,468 million.
The Accesssegment’s net sales rose 7.1% year over year to $1.15 billion. Revenues from the Defense segment increased 7.2% year over year to $586.9 million. Vocational unit sales rose 26.1% year over year to $735.3 million. The company anticipates full-year 2024 sales to be around $10.4 billion. It expects earnings of $9.45 per share and adjusted earnings of $10.25 per share.
Oshkosh had cash and cash equivalents of $125.4 million as of Dec 31, 2023, compared with $805.9 million as of Dec 31, 2022. The company recorded a long-term debt of $597.5 million, up from $595 million on Dec 31, 2022. OSK hiked its quarterly cash dividend to 46 cents per share. The dividend will be paid out on Feb 29, 2024, to shareholders of record as of Feb 15, 2024.
Price Performance
The following table shows the price movement of some of the major auto players over the last week and six-month period.
Image Source: Zacks Investment Research
What’s Next in the Auto Space?
Industry watchers will keep a tab on vehicle sales in China for the month of January. Meanwhile, the automotive industry has a flurry of earnings releases this week. Investors eagerly await quarterly reports from major players such as Ford, Toyota, Cummins, O'Reilly and BorgWarner, among others.