Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Credit Company — Q1 2020 Earnings Presentation
22 slides from Ford Mtr Co Del's earnings presentation, Apr 28, 2020
Slide 1: Q1 Earnings Review
Q1 Earnings Review April 28, 2020
Slide 2: Key Takeaways
Key Takeaways • Q1 2020 EBT of $30M is down $771M YoY. Strong portfolio performance in Q1 offset by higher credit loss reserves, lower values of off-lease vehicles awaiting sale and anticipated lease defaults • Strong balance sheet is inherently liquid; smaller size reflects auto sales decline • Liq
Slide 3: COVID-19 Response
COVID-19 Response • Ford Credit has taken significant action to safeguard our employees, customers, and dealers • Employee health and safety remain the top priority, and nearly 100% of the workforce is working remotely, including effectively originating business and serving customers • For existing
Slide 4: Key Metrics
Key Metrics EBT YoY Bridge ($M) EBT ($M) $801 $831 $663 $736 $630 $30 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Distributions ($M) $660 $675 $650 $1,100 $475 $275 $(51) Q1 2019 Volume / Financing Credit Lease Exchange Other Q12020 U.S. Retail LTR Ratios* (%) Mix Margin Loss Residual 0.66% 0.63
Slide 5: Q1 2020 Net Receivables Mix ($B)
Q1 2020 Net Receivables Mix ($B) Net Investment in Operating Leases Consumer Financing Non-Consumer Financing $137.8 • Operating lease portfolio was $27.0 $110.2 20% of total net receivables Q1 2020 H / (L) 2019 $26.8 SUV / CUV 58% 1 ppts. • Receivables declined $9 billion Truck 31 3 YoY and $4 bill
Slide 6: U.S. Origination Metrics & Credit Loss Drivers
U.S. Origination Metrics & Credit Loss Drivers Retail & Lease FICO and Retail Repossessions (000) and Higher Risk Mix (%) Repossession Rate (%) Higher Risk Portfolio Mix (%) Repossession Rate (%) • Disciplined and consistent 747 747 750 753 741 739 underwriting practices 7 7 7 7 7 6% 6% 6% 6% 6% 6%
Slide 7: Worldwide Credit Loss Metrics
Worldwide Credit Loss Metrics Charge-Offs ($M) and LTR Ratio (%) LTR Ratio (%) $129 $109 $107 $101 0.42% $89 0.36% $66 0.36% 0.35% • Worldwide credit loss metrics 0.30% remain strong 0.22% • Increase in credit loss reserve reflects January 1, Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 2020 adop
Slide 8: Q1 2020 Credit Loss Reserve Adjustment ($M)
Q1 2020 Credit Loss Reserve Adjustment ($M) • Current Expected Credit Losses (CECL) accounting standard reflects forward- looking estimate of lifetime losses • $252M adjustment at adoption recorded through retained earnings • Increase in retail reserve driven by probability of default primarily refl
Slide 9: U.S. Lease Metrics
U.S. Lease Metrics Lease Return Volume (000) Lease Placement Volume (000) and Return Rates (%) 24-Month Return Rate (%) 36-Month 39-Month / Other 93 9 83 81 83 82 9 9 11 12 70 74 75 • Lease placement and lease 71 70 71 67 11 return volume lower 75 48 56 38 68 64 78% 80% 78% 77% • Lease share below i
Slide 10: Ford Credit Funding Strategy
Ford Credit Funding Strategy • Our strong balance sheet and substantial liquidity provide Ford Credit considerable flexibility • Lower expected originations as a result of the impact of COVID-19 are projected to decrease the size of the balance sheet and our funding requirements in 2020 • Despite th
Slide 11: Cumulative Maturities at March 31, 2020 ($B)
Cumulative Maturities at March 31, 2020* ($B) • Strong balance sheet is Assets Debt inherently liquid with $155 $139 cumulative debt maturities $135 $116 having a longer tenor than $102 asset maturities $83 $72 • As of March 31st, $80 billion $50 (including $2.9 billion cash) of $155 billion assets
Slide 12: Funding Structure – Managed Receivables ($B)
Funding Structure – Managed Receivables* ($B) 2019 2020 Dec 31 Mar 31 Term Debt (incl. Bank Borrowings) $ 73 $ 72 Term Asset-Backed Securities 57 56 • Funding is diversified across Commercial Paper 4 3 platforms and markets Ford Interest Advantage / Deposits 7 6 • Well capitalized with a strong Othe
Slide 13: Public Term Funding Plan ($B)
Public Term Funding Plan* ($B) 2018 2019 2020 Through Actual Actual Forecast Apr 27 Public Issuances • We are able to be flexible with our public term funding plans Unsecured $ 13 $ 17 $ 3-8 $ 3 as a result of our strong balance sheet and substantial Securitizations** 14 14 9 - 14 3 liquidity Total
Slide 14: Cautionary Note On Forward-Looking Statements
Cautionary Note On Forward-Looking Statements Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptio
Slide 15: Appendix
APPENDIX EBT by Segment A1 Financing Shares And Contract Placement Volume A2 Total Net Receivables Reconciliation To Managed Receivables A3 Financial Statement Leverage Reconciliation to Managed Leverage A4 Liquidity Sources A5 Non-GAAP Financial Measures that Supplement GAAP Measures A6 Definitions
Slide 16: EBT By Segment ($M)
EBT By Segment * ($M) Q1 H / (L) 2020 2019 Results United States and Canada segment $ 22 $ (600) Europe segment 17 (97) All Other segment 7 (51) Total segments $ 46 $ (748) Unallocated other (16) (23) Earnings before taxes $ 30 $ (771) (Provision for) / Benefit from income taxes (9) 189 Net income $
Slide 17: Financing Shares And Contract Placement Volume
Financing Shares And Contract Placement Volume Q1 2019 2020 Share of Ford Sales* United States 50 % 56 % Canada 67 63 U.K. 37 44 Germany 50 44 China 33 34 Wholesale Share United States 76 % 74 % Canada 57 55 U.K. 100 100 Germany 93 93 China 59 51 Contract Placement Volume - New and Used (000) United
Slide 18: Total Net Receivables Reconciliation To Managed Receivables ($B)
Total Net Receivables Reconciliation To Managed Receivables ($B) 2019 2019 2020 Mar 31 Dec 31 Mar 31 Finance receivables, net (GAAP) $ 119.3 $ 114.3 $ 110.8 Net investment in operating leases (GAAP) 27.6 27.7 27.0 Total net receivables* $ 146.9 $ 142.0 $ 137.8 Held-for-sale receivables (GAAP) $ - $
Slide 19: Financial Statement Leverage Reconciliation To Managed Leverage ($B)
Financial Statement Leverage Reconciliation To Managed Leverage* ($B) 2019 2019 2020 Mar 31 Dec 31 Mar 31 Leverage Calculation Debt $ 142.9 $ 140.0 $ 136.8 Adjustments for cash (12.8) (11.7) (11.3) Adjustments for derivative accounting (0.1) (0.5) (1.6) Total adjusted debt $ 130.0 $ 127.8 $ 123.9 Eq
Slide 20: Liquidity Sources ($B)
Liquidity Sources* ($B) 2019 2019 2020 Mar 31 Dec 31 Mar 31 Liquidity Sources Cash $ 12.8 $ 11.7 $ 11.3 Committed asset-backed facilities 35.2 36.6 35.9 Other unsecured credit facilities 3.3 3.0 2.8 Ford corporate credit facility allocation 3.0 3.0 - • Given excess liquidity, Total liquidity sources
Slide 21: Non-GAAP Financial Measures That Supplement GAAP Measures
Non-GAAP Financial Measures That Supplement GAAP Measures We use both GAAP and non-GAAP financial measures for operational and financial decision making, and to assess Company and segment business performance. The non-GAAP measures listed below are intended to be considered by users as supplemental
Slide 22: Definitions And Calculations
Definitions And Calculations Adjustments (as shown on the Liquidity Sources chart) • Includes asset-backed capacity in excess of eligible receivables; cash related to the Ford Credit Revolving Extended Variable-utilization program (“FordREV”), which can be accessed through future sales of receivable
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