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General Motors shares gain after truck sales deliver big earnings beat in third quarter

GM’s net income surged 74% to $4.05 billion in the third quarter from $2.35 billion during the same three months last year….

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General Motors on Thursday reported third-quarter earnings that beat Wall Street expectations, thanks to its highly profitable trucks and SUVs in North America.

Here are the numbers:

  • Adjusted EPS: $2.83, vs. $1.38 expected, based on average analysts’ estimates compiled by Refinitiv
  • Revenue: $35.48 billion, vs. $35.51 billion expected

GM declined to give new earnings guidance for the year, citing a number of “moving pieces” such as potential stimulus and the coronavirus pandemic. GM CEO Mary Barra said the fourth quarter isn’t expected to be as strong as the third quarter. She downplayed the possibility that the uncertain outcome of the presidential election could hurt sales for the rest of the year.

“When we look at the election, we think the extended length of time to finalize the vote count was anticipated given the unique circumstances coming into this election,” Barra said during a media call Thursday morning. “There are a lot of moving pieces right but we’re hopeful that we’ll continue to have a strong recovery that we’ve seen in the United States and in China.”

Shares of GM jumped more than 7% following the company reporting earnings during premarket trading. The stock closed up 5.4% to $37.14.

GM’s North American operations earned $4.37 billion in the third quarter, up 44% from a year earlier, despite its U.S. sales declining 9.9% during the period. The company reported a 15% pretax profit margin for the quarter. Earnings for its international operations were in the black with pretax earnings of $10 million.

John Stapleton, GM’s interim CFO, said the automaker’s sales in the U.S. and China are “recovering faster than many people expected, and GM is benefiting from robust customer demand for our new vehicles and services, especially our full-size pickups and SUVs.”

Barra said the automaker is working to increase production of its trucks, saying an announcement is expected “very shortly” but declining to elaborate. She told investors later in the morning that the company plans to invest up to around $1 billion in its Canadian operations to increase production.

A General Motors Co. (GM) Chevrolet 2020 Silverado HD High Country edition pickup truck sits on the assembly line during a reveal event at the GM plant in Flint, Michigan, U.S., on Tuesday, Feb. 5, 2019.

Jeff Kowalsky | Bloomberg | Getty Images

“We are always working to eek out every single truck we can possibly produce,” she said. “I’d just ask you to stay tuned. You will hear more about that very shortly.”

Net income rose 74% to $4.05 billion from $2.35 billion during the third quarter of 2019.

GM repaid $5.2 billion of its revolving credit facilities during the third quarter, and an additional $3.9 billion in October. The company said it expects to repay the balance by year-end “while maintaining a strong cash balance.” GM’s automotive liquidity was above its target, ending the third quarter at $37.8 billion.

Then-CFO Dhivya Suryadevara told investors in July that the automaker expected the third quarter to be “slightly stronger” than the fourth quarter.

Suryadevara, who unexpectedly left GM for digital payments company Stripe in August, said if the monthly sales pace during the second half of the year was 14 million, investors should expect a pretax profit of $4 billion to $5 billion through the fourth quarter. In that scenario, GM expected to generate free cash flow of $7 billion to $9 billion. Suryadevara declined to release official guidance at the time, citing fluidity due to the coronavirus pandemic.

Cox Automotive estimated the U.S. sales pace at 15.3 million in the third quarter, which should allow GM to outperform those projections.

GM reported an adjusted pretax profit of $3 billion, or $1.72 earnings per share, in the third quarter of 2019. Revenue was $35.47 billion.

Both Ford Motor and Fiat Chrysler beat Wall Street’s expectations on better-than-expected demand for trucks and SUVs in North America. Those are segments GM has substantial market shares of as well.

Source: https://www.cnbc.com/2020/11/05/general-motors-gm-earnings-q3-2020.html

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Source: https://www.cnbc.com/us-top-news-and-analysis/

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Source: https://www.cnbc.com/earnings/

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Nike earnings and sales beat estimates as retailer books record revenue in North America

Nike on Thursday reported fiscal fourth-quarter earnings and sales that topped analysts’ estimates, fueled by record revenue in North America.

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A man walks in front of Nike products exhibit, on February 22, 2021 in New York City.

John Smith | Corbis News | Getty Images

Nike on Thursday reported fiscal fourth-quarter earnings and sales that topped analysts’ estimates, fueled by record revenue in its largest market, North America.

It also offered a better-than-expected sales outlook for the upcoming year, driven by optimism around its women’s category, apparel business and Jordan brand.

Nike continues to benefit from consumers seeking out comfortable clothing to wear for workouts but also around the house. Even as people return to schools, offices and other social settings, many are still searching for relaxed options such as sneakers and stretchy pants.

Nike also saw a boost to its wholesale business — something that was largely inactive a year earlier during the Covid pandemic, when shopping malls and department stores had to temporarily shut their doors and put orders for merchandise on pause. Some of Nike’s key wholesale partners include Dick’s Sporting Goods, Foot Locker and JD Sports.

Nike shares jumped more than 12% in after-hours trading.

Here’s how the company did during its fiscal fourth quarter, compared with what analysts were anticipating, using Refinitiv estimates:

  • Earnings per share: 93 cents vs. 51 cents expected
  • Revenue: $12.34 billion vs. $11.01 billion expected

Nike’s net income for the period ended May 31 rose to $1.5 billion, or 93 cents per share, compared with a loss of $790 million, or 51 cents per share, a year earlier. That topped analysts’ forecast of 51 cents per share, using Refinitiv data.

Total revenue rose to $12.34 billion from $6.31 billion a year earlier, topping estimates for $11.01 billion. Sales were aided by the company selling more goods at full price and relying less on markdowns.

In North America, Nike’s biggest market, sales more than doubled to a record $5.38 billion as the company surged from a year earlier when the Covid pandemic was hitting the retail industry the hardest. The region’s sales were up 29% on a two-year basis.

In Greater China, sales were up just 17% at $1.93 billion. Though China is typically one of the fastest-growing markets for Nike, consumers in China have threatened a boycott after some Western brands including Nike expressed concern about allegations of forced labor in Xinjiang.

Management said Thursday that Nike is seeing improvement in China sequentially month by month.

“Building on our 40-year history in Greater China, we continue to invest in serving consumers with the best products Nike has to offer in locally relevant ways,” CFO Matt Friend said during a post-earnings conference call.

Digital sales were up 41% compared with the prior year and rose 147% compared with the same period in 2019.

The company said its membership model is helping to fuel its e-commerce business. Online purchases from Nike members, who receive first access to exclusive products and other perks, hit a record $3 billion during the fourth quarter. Nike said it now has more than 300 million members globally.

“Fueled by our momentum, we continue to invest in innovation and our digital leadership to set the foundation for Nike’s long-term growth,” said Nike CEO John Donahoe.

In fiscal 2022, Nike is expecting revenue to grow a low double-digit percentage, surpassing $50 billion. Analysts were looking for annual revenue of $48.5 billion.

The company anticipates the first half of the year to grow faster than the second half, Friend said.

“It’s important to note as we normalize our post-pandemic business and continue to reshape the marketplace, we do not expect quarter-by-quarter growth to be linear,” he said.

Nike also anticipates supply chain delays and higher logistics costs will persist throughout much of fiscal 2022. The headaches have been plaguing much of the retail industry for months now. A shortage of containers and a dearth of truck drivers, among other factors, have stalled merchandise from getting from ports to warehouses to shoppers’ homes.

Nike shares are down more than 5% year to date. The company has a market cap of $211 billion.

Find the full earnings press release from Nike here.

Nike continues to benefit from consumers seeking out comfortable clothing to wear for workouts but also around the house. Even as people return to schools, offices and other social settings, many are still searching for relaxed options such as sneakers and stretchy pants.

Source: https://www.cnbc.com/2021/06/24/nike-nke-q4-2021-earnings.html

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