Paul Jacobson
Executive Vice President and Chief Financial Officer at General Motors
Thank you, Mary, and thank you, Kyle, and good morning everyone, thank you for joining us today. I'm pleased to report a strong start to the year as the team continues to execute on our transformation. We're strategically transitioning the business while at the same time leveraging our important ICE portfolio with new and refreshed products driving continued robust demand for our vehicles, while pricing has remained stable. We're also excited to bring on incremental EV volumes, particularly in the second half of the year as we increased battery cell production at Ultium Cells. And as Mary mentioned, we took initial steps in Q1 towards implementing our $2 billion cost initiative of which we now expect to realize about 50% in 2023 with the majority of this benefit occurring in the back half of the year. The performance based exits and roughly 5,000 individuals who participated in the voluntary severance program will drive approximately $1 billion towards this target. But people cost is just one of several areas we're focusing on. The remaining $1 billion will come from the following initiatives actions to reduce complexity across the portfolio and throughout the business in everything we do from vehicle design to engineering and manufacturing. Prioritizing our growth initiatives, we simply cannot do everything. We're focusing on projects like Cruise, BrightDrop and software defined vehicles, which offer the biggest returns on revenue and margin. And lastly, we're being tactical on overheads and discretionary costs including corporate travel, IT costs and marketing spend. These actions will have a near term impact on costs, but we also outlined a number of additional medium to long term opportunities at our Investor Day in November last year, which we are aggressively pursuing. For example, we are developing a fully integrated battery ecosystem and taking a portfolio approach to battery raw materials. We will source from a mix of established and early stage miners, giving us both security of supply and lower pricing volatility, these are meaningful advantages as we scale into the back half of the decade. The Treasury Department's recent guidance on the clean energy consumer purchase incentive also validated our battery supply chain work with our entire fleet of EVs under the MSRP cap qualifying for the full $7,500 incentives this year.
Now let's discuss another important topic dealer inventory. As we mentioned on the last earnings call, our plan is to balance supply with demand and that's exactly what we did this quarter. Early in the year production improved as supply constraints started to ease and began to outpace still healthy and growing demand. As a result, we proactively planned some downtime, which allowed us to end the quarter with US dealer stock flat compared to December while we gained 1.3 points of share and increased volumes, 4% year-over-year. These production actions were contemplated in our 2023 guidance metrics laid out at the beginning of the year. We are still planning to a 15 million units SAAR and targeting to end 2023 with 50 to 60 days of total dealer inventory. Although seasonality production schedules and timing of fleet deliveries may take us out of this range from time-to-time.
Now let's get into the Q1 results, revenue was $40 billion, up 11% year-over-year. We achieved $3.8 billion in EBIT adjusted, 9.5% EBIT adjusted margins and $2.21 in EPS diluted adjusted. Total company results were down only $200 million year-over-year despite a combined $800 million headwind from lower pension income and lower GM financial earnings, providing more evidence that the underlying business remains quite strong. Adjusted auto free cash flow was essentially flat year-over-year driven by higher capital expenditures related to our EV investments, seasonal working capital headwinds and GM Financial dividend timing. However, we used our strong balance sheet to repurchase $365 million of stock in Q1 retiring 9 million shares and early retiring $1.5 billion in debt maturing later this year. Given the strong Q1 results and our current outlook, we are increasing our full year guidance to EBIT adjusted and the $11 billion to $13 billion range EPS diluted adjusted to the $6.35 to $7.35 range and automotive adjusted automotive free cash flow in the $5.5 billion to $7.5 billion range.
I'll provide more details on this after I cover the regional results. North America delivered Q1 EBIT adjusted of $3.6 billion, up $400 million year-over-year and EBIT adjusted margins of 10.9%. Results were primarily driven by higher pricing and volume, partially offset by mix, lower pension income, warranty reserve adjustments and higher commodity and logistics cost. We saw $1.3 billion pricing tailwind year-over-year in the quarter, driven largely by the price increases in 2022 carrying into 2023. We expect this year-over-year pricing benefit to moderate as we progress through the year. However, we anticipate pricing performance on all -- on our all new mid-size pickups and refreshed HD pickups to partially offset this headwind. Demand for our full-size pickups remained strong with increased year-over-year total sales of our Silverado and Sierra full-size pickups up 3%. We also gained 0.3 percentage points of total market share to continue our number one position in full size pickup sales.
Encouragingly, April to date, performance is also trending well as demand remains healthy, inventory levels are essentially flat, pricing has been consistent and we're seeing a steady increase in industry volume. GM International delivered Q1 EBIT adjusted of $350 million, largely flat year-over-year, despite the fact that equity income in China was down $150 million due to lower-volume and pricing pressure partially offset by cost actions. The environment in China has been very challenging as the industry navigates continued COVID related impacts, regulatory changes for both EV and ICE vehicles and greater than expected competitive pricing actions, the China team is taking aggressive actions to offset, however, we don't expect an improvement in equity income until the second half of the year. EBITDA, EBIT adjusted in GM International, excluding China equity income was $250 million, up over $150 million versus last year. The successful turnaround the team has executed over the past few years continued with another record quarter. The results were driven by higher pricing, volume and mix, partially offset by commodity and logistics costs and foreign currency headwinds. For the full year, we expect pricing to be up on a year-over-year basis, leveraging the strength of the portfolio and more than covering FX headwinds.
For GM international, we anticipate moderately improved full year 2023 results relative to '22, the strong results and momentum for the rest of GM international are anticipated to more than offset continued headwinds in China. GM financial delivered first quarter EBT adjusted of over $750 million, down $500 million year-over-year. As expected primarily due to the expected decrease in net leased vehicle income driven by lower lease sales mix as a result of reduced new vehicle production since Q3 2021 and lower net gains on lease terminations. Also, while higher cost of funds impacted results versus 2022, it was partially offset by higher effective yields on new originations and growth in the loan portfolio. GM financials key metrics, balance sheet and liquidity remained strong, providing them the ability to support the GM Enterprise across economic cycles. We've seen no material impact due to the recent banking crisis, in fact earlier this month, we were able to renew our $16 billion revolving credit facilities while also receiving a ratings upgrade of GM and GM financial bonds from Moody's. This upgrade should improve credit spreads on future bond issuances and improve cost of funds as their debt portfolio reprices.
GM financial also paid a $450 million dividend to GM in Q1. Our full year GM financial expectations of EBT adjusted in the mid $2 billion range and dividends similar to 2022 have not changed. Corporate expenses were $300 million in the quarter down slightly year-over-year as we continue to invest in growth initiatives. Cruise expenses were $550 million in the quarter, up $250 million year-over-year driven by an increase in operating spend as well as by the inclusion of stock based compensation expense this quarter versus Q1 2022. As we look forward to the rest of the year, our goal is to remain agile and adapt to the dynamic macro environment. Our updated guidance assumes that the pricing benefit we saw in Q1 is neutralized over the rest of the year as we cycle price increases taken in 2022 and incentives gradually increase. Commodity and logistics costs have been stickier than originally estimated, primarily due to higher steel prices on market index contracts. For the full year, we now expect commodity and logistics costs to be essentially flat year-over-year versus our prior expectation for a modest tailwind.
Our expectation to realize at least $300 million EBIT adjusted benefit in 2023 from the clean energy production tax credits is unchanged. And while we continue to experience parts availability and logistics challenges as we did in Q1, we expect these issues to gradually improve over the next few quarters and are therefore still expecting 2023 year-over-year wholesale volumes to increase 5% to 10%. As Mary mentioned, we are making great progress towards our goal of one million units of North America EV capacity in 2025. As we scale and launch multiple high volume EVs in strategically important segments, we will see the benefits of the Ultium platform, expand and help us deliver margins in the low to mid single digits by 2025.
In closing. I also want to say how proud and thankful I am for all of our amazing team members for their tireless efforts. They've executed quarter-after-quarter and delivered two consecutive years of record profits despite many external challenges needless to say, my optimism for GM's long-term potential remains very high.
This concludes our opening comments and we'll now move to the Q&A portion of the call.
