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General Motors released 2009 quarter one financial results this morning and despite being better than analysts expected- the downward slide continues.  The company is reporting a quarterly loss of $6-billion amid sliding market share and a revenue stream that is only running at a trickle.

An overview of the numbers

• The company’s Q1-09 revenue dropped by 47% to 22.4-billion
• GM lost $6-billion in the first three months of 2009
• Despite $15.4-billion in Government infusions- the company only had $11.6-billion of cash on hand as of March 31st
• GM North American market share dropped 3.8%- from 21.7% Q1-08 to 17.9% Q1-09
• GMNA dealer inventory currently sits at 767,000 vehicles – a 4.5-month supply if all plants sat idle

In the first quarter of 2008 GM reported revenue of $42.4-billion and lost $3.3-billion. This year, in Q1-09 GM’s revenue slid off a cliff, down $20-billion over Q1-08 to $22.4-billion. This massive drop has lead to a staggering Q1-09 loss of $6-billion.

These huge losses can be traced back to one undeniable fact- people are not buying many cars these days. Worse for GM- people are buying even fewer General Motors products. North American market share has sunk from 21.7% a year ago to 17.9% today. In North America alone GM revenue is down 50% over Q1 results last year. Year-over-year, GMNA production volume has fallen 58%.

It’s no news that US auto-dealers are seeing the very worst of the downturn. GM vehicle inventory on dealer lots sits at 767,000 units in the US. It’s an improvement of 105,000 units over the 872,000 cars on dealer lots at the start of the year.   It’s no wonder that GM is shutting down many of its assembly lines this summer- it just can’t sell cars fast enough. Even at a rate of 170,000 car sales a month (GM reported 173k sales in April) it would take over four months to clear out GM’s inventory while every plant sat idle.

While revenue continues to flow at a trickle General Motors cash on hand continues to shrink.  On December 31st, 2008 the company had $14.2-billion of cash and “marketable securities” on hand.  Fast forward to March 31st, 2009 and despite $15.4-billion in TARP intervention the company is down to only $11.6-billion of cash on hand. This is dangerously low to the $10-billion figure floated as the absolute lowest the company can go before bankruptcy is unavoidable.

“This is a defining moment in the history of General Motors, and we are committed to our Plan, which we believe will lead to a stable and sustainable operating structure with a strong balance sheet,” said Henderson. “Our goal is to fix this business once and for all to position ourselves to win in the long-term. That will be achieved by putting the customer first in all we do, focusing on fewer, stronger brands and developing great products that lead in design, technology, quality and fuel efficiency.”

GM Reported Figures

GMNA

GMNA revenue for the first quarter 2009 was $12.3 billion, down 50 percent compared to $24.5 billion in the year-ago period, mainly attributable to the impact of the U.S. recession on consumer spending. Earnings were affected by substantially lower production volume, down 58 percent year-over-year, due to the depressed industry, lower market share and adjustments to U.S. dealer inventory. GMNA managed its business in-line with lower industry demand by reducing U.S. dealer inventories by 105,000 units within the first quarter of 2009, from 872,000 units down to 767,000 units. GMNA’s losses were partially offset by a reduction in the accrual for residual support programs for leased vehicles, primarily due to the improvement in residual values. In addition, GMNA significantly reduced engineering and manufacturing cost in the first quarter.

GME

GM Europe (GME) sales volume was up in Germany, as were industry sales, which were aided by aggressive government stimulus for the automotive sector. However, due to sales declines in other countries, GME experienced a 46 percent decline in production volume versus the year-ago quarter, which largely impacted regional earnings. In addition, GME experienced unfavorable foreign currency exchange, driven mainly by the weakening of the British Pound, and unfavorable mark-to-market commodity hedging. Results were partially offset by favorable mix and pricing, due in part to the success of the Opel/Vauxhall Insignia, and improved structural cost performance across the region.

GMAP

GM sales in China were up 17 percent, driven by strong SAIC-GM-Wuling performance and aggressive government stimulus. This helped fuel overall regional sales and market share increases. However, sales decreased in most countries across the region excluding China, driving down production volumes, which impacted GMAP revenue. In addition, GM Daewoo revenue dropped as export volumes declined significantly across its major export markets.

GMLAAM

GM Latin America, Africa and Middle East (GMLAAM) experienced sales increases in Ecuador and Peru in the first quarter, where it set new sales records. At the same time, GMLAAM saw market share increases in Colombia, Ecuador, Chile, Peru, Venezuela, Egypt, Kenya and North Africa. However, consistent with the industry’s downward trend in the region , GMLAAM production volume dropped 24 percent versus the year-ago quarter, which impacted revenue. The region also experienced unfavorable foreign currency exchange primarily related to the depreciation of the Brazilian Real. In addition, special charges related to restructuring were incurred in several countries.

GMAC

On a standalone basis, GMAC reported a net loss of $675 million for the first quarter 2009, down $86 million from the year-ago quarter. GM realized a reported loss of $500 million for the quarter as a result of its equity interest in GMAC. Excluding the impact of the $385 million gain related to GM’s portion of GMAC’s gain associated with the accounting on its debt extinguishment, GM realized an adjusted net loss of $885 million.

GMAC’s results were primarily attributable to continued pressure in mortgage operations, weaker credit performance on both auto and mortgage assets, mark-to-market adjustments, and an original issue discount related to its fourth quarter debt exchange. The losses were partially offset by profitable performance in its insurance business and gains on debt extinguishment transactions.

Cash and Liquidity

Cash and marketable securities totaled $11.6 billion on March 31, 2009, down from $14.2 billion on December 31, 2008.

The change in liquidity reflects negative adjusted operating cash flow of $10.2 billion in the first quarter of 2009, which was partially offset by U.S. TARP funding. Further detail on GM’s current liquidity position and outlook will be disclosed in a Form 10-Q filing with the Securities and Exchange in the coming days.

Reinventing GM

On April 27, 2009, GM announced its revised Viability Plan, which is expected to result in sustainable cash flow and profitability, as well as a stronger balance sheet. The Plan includes faster and deeper acceleration of operational actions, encompassing further rationalization of its U.S. brands and nameplates, dealer consolidation, manufacturing capacity, and hourly employee and labor-cost reductions. GM also expects to implement additional salaried employee and executive reductions. These actions are designed to enable the company to dramatically reduce its U.S. breakeven volume, enabling GM to be profitable at below-trend industry sales volumes.

In addition, GM announced a number of initiatives to restructure and deleverage its balance sheet as an important part of the revised Viability Plan, including an exchange offer to its bondholders aimed at reducing its unsecured debt by at least $24 billion, conditioned upon exchanging at least half of its VEBA obligations (about $10 billion) to GM common stock and the conversion of at least half of GM’s U.S. government debt to GM common stock. GM has not reached agreement with the UAW on the VEBA trust or with the U.S. Treasury on these conditions yet.

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