General Motors Company

Good morning and welcome to the General Motors Company second quarter 2026 earnings conference call. During the opening remarks, all participants will be in a listen-only mode. After the opening remarks, we will conduct a question and answer session. We are asking analysts to limit their questions to one and a brief follow-up. To ask a question, press star then one on your telephone keypad to join the queue. To withdraw your question, press star then two. As a reminder, this conference call is being recorded Tuesday, July 21st, 2026. I would now like to turn the conference over to Ashish Kohli, GM's Vice President of Investor Relations.

Thanks, Julie, and good morning, everyone. We appreciate you joining us as we review GM's financial results for the second quarter of 2026. Our conference call materials were issued this morning and are available on GM's investor relations website. We are also broadcasting this call via webcast. Joining us today are Mary Barra, GM's Chair and CEO, along with Paul Jacobson, GM's Executive Vice President and CFO. Susan Sheffield, President and CEO of GM Financial, will also be joining us for the Q&A portion. On today's call, management will make forward-looking statements about our expectations. These statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include the factors identified in our filings with the SEC. Please review the Safe Harbor Statement on the first page of our presentation, as the content of this call will be governed by this language. And with that, I'm delighted to turn the call over to Mary.

Thanks, Ashish, and good morning, everyone. Today we reported another solid quarter driven by the tremendous appeal of our product portfolio, the agility of our team, and disciplined execution across the business. Our employees, our dealers, and our suppliers are all making important contributions that continue to drive our success. Their commitment enables us to win in a dynamic market, and their efforts are leading us to raise our 2026 guidance for the second time this year. The business continues to perform very well. Customer demand in North America remains steady, including for our pickups and SUVs, and pricing is consistent. For example, despite lower than target inventories for most of the year, our share of the U.S. full-size pickup market stands at more than 42% through the first half of the year, which is more than 10 percentage points above our closest competitor. And we grew share year over year in both the second quarter and the first half. We also achieved our best quarter and first half ever for the new Super Cruise equipped vehicles. Strong commercial demand helped us deliver record full-size pickup deliveries in our fleet business and our U.S. incentive spend has remained well below the industry average for more than three years. GM International, inclusive of our China joint ventures, was also profitable. Our 8.6% EBIT adjusted margin in North America was up 2.5 points from a year ago and we continue to strengthen our product portfolio grow software and services revenue, lower our warranty costs, reduce EV losses, increase operating efficiency, and develop new revenue opportunities that drive improved results this year and going forward. This strategy has driven 70 basis points of total company margin expansion over the last three years, while our broader peer set has seen margin reduction by 400 basis points. All of this includes the impact of tariffs. We haven't made excuses. We've just continued to perform. At the same time, our operating discipline has been a key driver of the structural improvement in our adjusted automotive free cash flow generation, which has improved from $3 to $5 billion annually on average over the last decade to consistently above $10 billion since 2022. We expect these trends will continue to strengthen our performance into 2027 and beyond because we have multiple engines of margin expansion and growth We built a strong EBIT foundation with new and redesigned vehicles like the Chevrolet Trax, Equinox, and Traverse, the revitalization of Buick, the success of sub-brands like the Denali and AT4, and icons like the Chevrolet Corvette and the Cadillac Escalade. For example, since 2020, we have increased the EBIT profitability per unit of our crossover portfolio by four times. while our full-size pickup and full-size SUV segments are each up over 25%. Our next major launch, the next generation Chevrolet Silverado and GMC Sierra light duty pickups will further separate us from key competitors when they begin arriving in showrooms in December. The truck will deliver improved ride quality, power, durability, and towing capability. We have also significantly elevated the exterior and interior design to increase their presence, refinement, and Appeal. We plan to maintain record production volumes year over year while launching the trucks at three assembly plants, along with our next generation V8 engines, which are launching at three propulsion plants. We are also increasing capacity for full-size SUVs. Starting next spring and continuing into 2028, we will begin launching the next generation of Cadillac ICE vehicles, including the all-new CT5, XT5 and XT6, which will complement the Escalade, and the brand's luxury segment-leading EV portfolio, the Escalade IQ, VISTIC, Lyric and Optic. And we are onshoring significant manufacturing starting next year, which will bring our U.S. production capacity to more than 2 million units and further reduce our tariff exposure. At the same time, our high-margin software and services revenues continue to grow rapidly, with 1 million new subscriptions expected this year, contributing to more than $3 billion in recognized revenue. Next year, the growth should be even higher because we're making Super Cruise Standard on high-end Silverado and Sierra trims and optional on most everything else. We're estimating 160,000 incremental Super Cruise units from this product enhancement strategy. Alongside our core vehicle portfolio and software growth, new businesses' initiatives like GM Insurance and GM Defense are reaching critical mass because we offer unique value propositions. For example, when a customer purchases GM insurance, we create a reoccurring revenue stream from premiums along with incremental parts and vehicle sales, all while driving customer loyalty and higher satisfaction. The business has scaled from three states in early 2024 to 21 states today, making GM insurance available to over 60% of GM's U.S. sales, and we are on track to reach over 80% in the near term. GM Defense is another compelling growth opportunity that enables us to deliver defense solutions faster with better economics for the US taxpayer. The Chevrolet Colorado-based infantry squad vehicle is case in point. After initial multi-year order of about 1,200 ISVs, the US Army now plans to procure more than 10,000 if the appropriations is passed. We're building momentum with other products and customers, including the US State Department and Secret Service, as well as Canada, Cutter, Brazil, and other allies. And we're also supplying battery propulsion technology to lunar outposts, which has been awarded $220 million NASA contract to build the next generation lunar terrain vehicle. GM Defense expects 2026 revenue to grow to almost $700 million and is targeting positive results on an EBIT basis for this year, while also building a backlog of future business. We are expecting a top-line revenue CAGR for GM Defense of more than 30% over the next several years with double-digit margins. This includes ISV awards that are expected to exceed $1 billion based on the U.S. Army's procurement objectives. We are also working with Lockheed Martin and other leading companies to expand speed, scale, and resilience in the defense industrial base. We're focusing our efforts on strengthening supply chain management, improving manufacturing readiness and expanding production capacity in ways that serve the United States and its allies well. Over time, all of this should make GM Defense a more meaningful and diversified contributor to our earnings. With that, I'll turn it over to Paul.