General Motors Company U.S. All Stars Conference

Great. Well, thanks for having us. It's always great to be at this conference. Number 1, I love the venue. But 2, I just love being over here, and I'm not shy about saying the questions over here tend to be 5 years or longer in the future, versus 5 days of trading and data. But love the strategic focus and the long-range planning, because I think that's one thing that we've done exceptionally well. That being said, just a couple of comments about the quarter. We're almost to the end of the quarter. The consumer continues to hold up really well. Probably surprisingly well over the last several years in terms of what we've seen pressure-wise. But that's been great for our portfolio. We're wrapping up the third quarter.

We have been able to take up guidance twice this year, and we're very much on track with our higher range for the full year. We're excited to finish out 2026. We're really starting to look forward to 2027 as we're in the planning cycle. I'm sure we'll have a lot of questions about 2027. Just grateful to be here, and thank you all for joining us.

Well, thank you. That'd be a good change.

Yeah. So it was at this conference a year ago that we talked about the transformation and really focused it on cash flow. I'm an old school CFO. I believe cash is king, and at the end of the day, it's super important to really drive that cash generation in the business and transfer it and make it pass all the way through to free cash flow, through disciplined capital expenditures. So the team has done an amazing job of transformation here. If you look at the last decade, the first five years, we averaged about $3 billion of free cash flow. The last five, we've averaged over $10 billion. And that's incredible generation. I think it really starts with an incredible product portfolio. Probably the best in our company's history from price point to price point.

I think it's important that people understand, a lot of times when you think about GM, you think about trucks and SUVs. They are a great contributor and a fabulous business that we have there. But most people don't realize that last year, we also sold over 700,000 vehicles with a starting MSRP below $30,000. We've really crossed all aspects of the consumer wallet and really try to be there for as many customers as we can. What that's done, I think, is made us far more resilient. As you look at the cash flow story and the focus, we've set our capital budgeting around that $10 billion-$12 billion a year. That's higher than it's been historically. But our operating cash flow has grown even more than that.

That discipline, combined with the performance of the company, has been a huge catalyst for us that we plug into our capital allocation philosophy. Invest in the business, because it's critical that we're already working on the vehicles that are going to be dazzling customers three, four, five, six years, and beyond. Maintain a very strong balance sheet. If you look at our balance sheet, it's probably arguably stronger than it's been in decades. A pension plan that is very close to fully funded, credit stats and credit metrics that are on a generally sort of positive bias from all the rating agencies across the board, and very healthy debt loads. Then third is return capital to shareholders, and obviously, that's been a linchpin of our strategy for the last several years. We've retired, I think, over 37% of our shares outstanding really since 2013.

As long as we continue to see the type of free cash flow yield and the low multiple on the stock, we feel very committed to continuing to do that. While the actual amounts are a board decision, our board has been very supportive of that strategy for the last few years, as you've seen.

Well, I wouldn't say there's any trigger for stopping repurchasing. We've been very outspoken, excuse me, about wanting the multiple to move. I think we deserve a higher multiple. I'd be shocked if you had a CFO up here that said they didn't. But you look at our performance over the last few years, the consistency of it, our relative performance against the industry, whether it be pricing or share levels or margins, et cetera, across the board. I think we should have a higher multiple from that standpoint. We're not shy about saying that. We trade at a discount to many of our peers who are underperforming. But I understand that. I understand the historical cyclicality. That's why last year we chose this conference to really talk about taking away some of the self-imposed cyclicality, maintaining better inventory levels, maintaining better pricing, managing better free cash flow.

All of these are cushions against what the next down cycle might be. We don't see any signs of that right now. But it'll come, and we need to be ready for that. So I would just say that there's room for substantial improvement in the multiple, and I think as you see us starting to lean more into the digital and subscription story, and what that revenue stream looks like, some of the other businesses like GM Defense, et cetera. I think there are opportunities to expand that multiple. But it's going to be a little bit of a journey, and in the meantime, we're retiring shares very cheaply at that double-digit free cash flow yield.