Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Company — Deutsche Bank Global Automotive Conference 2018
48 slides from Ford Mtr Co Del's conference presentation, Jan 16, 2018
Slide 1: Deutsche Bank Global Automotive Conference
Deutsche Bank Global Automotive Conference Ford Motor Company | January 16, 2018
Slide 2: Important Notice Regarding This Presentation
Important Notice Regarding This Presentation • This presentation includes our preliminary view of 2017 results. Our actual results could differ materially from the preliminary results included in this presentation. We will provide additional detail on 2017 results in our earnings presentation on Jan
Slide 3: Bob Shanks, Chief Financial Officer
Bob Shanks Chief Financial Officer 3
Slide 4: We are focused on improving our recent performance
We are focused on improving our recent performance $31B $15B 5.9% 8+% Cumulative cash flow Returned to shareholders Avg. Auto operating margin Ongoing automotive since 2012 since 2012 since 2012 operating margin target 4
Slide 5: Working to win in a future of Smart Vehicles in a Smart World
And working to win in a future of Smart Vehicles in a Smart World 5
Slide 6: Our priorities
Our priorities 1. Rapidly improving our fitness to lower costs, release capital and finance growth 2. Accelerating the introduction of connected, smart vehicles and services 3. Re-allocating capital to where we can win in the future 4. Continuously innovating to create the most human-centered mobili
Slide 7: In 2017 we delivered solid results, in line with guidance
In 2017 we delivered solid results, in line with guidance $ Automotive Automotive Segment Company Company Adjusted Adjusted Segment Operating Operating Cash Revenue Pre-Tax Results* EPS* EPS Margin Flow (GAAP) (Non-GAAP) (Non-GAAP) (GAAP) (GAAP) (GAAP) FY 2017 $156.8B $8.4B $1.78 $1.95 5.0% $3.9B B
Slide 8: We continue to reward shareholders consistent with our distribution strategy
We continue to reward shareholders consistent with our distribution strategy 13¢ 15¢ 43% $3.1B $18B+ Supplemental Regular dividend Payout ratio Shareholder Shareholder dividend for 1Q 2018 on net income* distributions distributions planned for 2018 2012 - 2018 * Shareholder distributions divided by
Slide 9: In 2018, we will change how we report
In 2018, we will change how we report to improve transparency and better align with industry convention Preliminary 2017 Results – Prior (Bils) Preliminary 2017 Results – New (Bils) Automotive $ 7.3 Automotive $ 8.1 Financial Services 2.2 Mobility (0.3) All Other (1.1) Ford Credit 2.3 Adjusted Pre-T
Slide 10: U.S. tax reform is expected to have a beneficial impact on Ford
U.S. tax reform is expected to have a beneficial impact on Ford Tax Reform Element Preliminary Results / Expected Outcome 2018 Adjusted Effective Tax Rate ~15% Ongoing Tax Rate (2019+) ~18% (down from ~30%) Impact of Tax Reform On 2017 Results Not Material Tax Credit Carryovers Retained Dollar-For-D
Slide 11: For 2018, we expect external factors to be mixed
For 2018, we expect external factors to be mixed 2017 2018 Change Industry Volume (Mils.) Global 94.6 ~ 97 Higher U.S. 17.5 Low 17s Slightly Lower Brazil 2.2 Mid 2s Higher Europe 20.9 Low 21s Slightly Higher China 27.8 Mid 28s Slightly Higher Key Commodities Unfavorable Key Currencies Unfavorable 11
Slide 12: Company outlook for adjusted EPS in 2018 is lower than 2017
Our Company outlook for adjusted EPS in 2018 is lower than 2017 due to external headwinds Company Operating Company Revenue Adjusted EPS* Cash Flow** (GAAP) (Non-GAAP) (Non-GAAP) Flat To Modestly Higher Positive But Lower Than 2018 FY $1.45 - $1.70 Than 2017 2017 Preliminary Available At 2017 FY $15
Slide 13: Commodity prices and exchange rates have significantly impacted results
Commodity prices and exchange rates have significantly impacted Company results since 2015, and will again in 2018 Adj. EBIT (Bils) Adj. EBIT Margin (Pct) Company Adj. EBIT At 2015 Constant Commodities & Exchange Company Adj. EBIT Margin At 2015 Constant Commodities & Exchange Company Adj. EBIT Comp
Slide 14: Improving our fitness and making strategic choices
We are improving our fitness and making strategic choices for today, tomorrow and the long term FAR NEAR NOW NOW 14
Slide 15: Jim Farley, President, Global Markets
Jim Farley President, Global Markets
Slide 16: Fitness, Partnerships, Portfolio Reset
Fitness Partnerships Portfolio Reset Electrified Vehicles Autonomous Vehicles
Slide 17: Fitness, Partnerships, Portfolio Reset
Fitness Partnerships Portfolio Reset Electrified Vehicles Autonomous Vehicles
Slide 18: What do we mean by fitness?
What do we mean by fitness? Customer centricity Step-change improvement of financial performance Simplicity Company EBIT EBIT Margin Speed & agility Capital Return on Invested Capital Efficiency Operating Cash Flow Accountability Total Shareholder Return 18
Slide 19: Simplicity through complexity reduction
Simplicity through complexity reduction Complexity Reduction at the vehicle level and part level drive near term improvements including lower inventories, faster product turns and lower logistics costs Future product programs benefit from lower required investment Sustainability driven by the right
Slide 20: Efficiency through best-in-class approach
Efficiency through best-in-class approach Product creation process re-engineered and optimized Modular product and manufacturing architectures Design process improvement Reduction in marketing cost 20
Slide 21: Fitness, Partnerships, Portfolio Reset
Fitness Partnerships Portfolio Reset Electrified Vehicles Autonomous Vehicles
Slide 22: Partnerships strengthen our competitive position
Partnerships strengthen our competitive position Markets Technologies Capabilities Mobility Recently announced 22
Slide 23: Fitness, Partnerships, Portfolio Reset
Fitness Partnerships Portfolio Reset Electrified Vehicles Autonomous Vehicles
Slide 24: We continue to evolve, building on our strengths
We continue to evolve, building on our strengths while addressing market challenges • Strategic choices • Marketing reset and brand plan • Cost reset • Product – play-to-win profitably • 100% connectivity in the U.S. by 2019; 90% globally by 2020 24
Slide 25: Shifting product portfolio: North America
Shifting product portfolio to leverage our strengths North America 25 • Leadership in trucks, vans launches by 2019 and SUVs 35% refresh rate by 2019 • Wider coverage for F-Series and Ranger 7 BEVs by 2022 • Incremental SUV offerings including Bronco • Authentic performance and off-road offerings •
Slide 26: Shifting product portfolio: Europe
Shifting product portfolio to leverage our strengths 27 Europe launches by 2019 35% • Rationalize car lineup refresh rate by 2019 3 BEVs by 2022 • Small urban utilities • Authentic off-road offerings • More 3-row utilities • Expanded lineup in Russia • Continue commercial vehicle leadership • High-r
Slide 27: Shifting product portfolio: Asia Pacific
Shifting product portfolio to leverage our strengths Asia Pacific 24 launches by 2019 29% • Ranger growth plan in Australia, refresh rate by 2019 New Zealand and ASEAN 13 BEVs by 2022 • 50 new Ford and Lincoln models in China by 2025 including eight all-new SUVs and at least 15 electrified vehicles
Slide 28: Electrified Vehicles
Fitness Partnerships Portfolio Reset Electrified Vehicles Autonomous Vehicles
Slide 29: EV strategy plays to our strengths
EV strategy plays to our strengths, builds on our brands, leverages scale and innovates across the value chain Mach I – Performance BEV F-150 Hybrid Transit Plug-In Hybrid Ionity Mustang Hybrid Fast Charging Infrastructure 29
Slide 30: We will spend over $11 billion on electrification by 2022
We will spend over $11 billion on electrification by 2022 Electrification Investment (Bils) U.S. >$11 • Positioned for EV leadership • HEV offered on all mainstream models $6.7 Europe $4.5 50% • Strong BEV portfolio • Mild hybrids China Original Revised 2015 - 2022 • BEVs and hybrids from our CAF an
Slide 31: By 2022, we will have a significant BEV and electrified lineup
By 2022, we will have a significant BEV and electrified lineup • Dedicated BEV platforms 16 Full Battery • Includes our trucks and vans Electric Vehicles • Supports our commercial and Lincoln businesses 40 Electrified Vehicles • Includes Zotye nameplates 31
Slide 32: Autonomous Vehicles
Fitness Partnerships Portfolio Reset Electrified Vehicles Autonomous Vehicles
Slide 33: Our approach to AVs
Our approach to AVs is focused on combining scalable, human-centered foundational technology with innovative, robust business models Strong software talent AV Software Strategic investments in enabling technologies (e.g., LiDAR) Vehicle Scale manufacturing Platform Proven track record of com
Slide 34: Building our AV business in multiple cities for 2021 launch
We are building our AV business in multiple cities in preparation for a 2021 production launch Multiple Demand Sources Robust Maximized Partnership Revenue $ Platform Per Mile + Ride Sharing & Durable, Commercial Grade Vehicle Food & Goods Delivery Technology Utilization Small Business Services 34
Slide 35: Timeline – building an AV business
Timeline – building an AV business 2018 Partnership Platform 2019 - 2020 Expand business model and 2021 • user experience pilots with Partnership Platform strategic partners • Diversify partner network including small businesses Launch Cities 1 & 2 • Establish terminal operations Launch Cities for f
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Slide 37: Questions & Answers
Questions & Answers Gra
Slide 38: 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 39: Appendix
Appendix 39
Slide 40: 2018 Financial Reporting Change Questions
2018 Financial Reporting Change Questions Why is Ford changing its financial reporting? Why is AV moving from Automotive to Mobility? • Provide more transparency for our business including Mobility • AV will involve connectivity and business models more closely • Focus more on operating results of t
Slide 41: U.S. Tax Reform Questions
U.S. Tax Reform Questions 2017 Impact 2018 Impact What is expected operating tax rate for 2017? What is Ford’s expected operating tax rate for 2018? • The operating tax rate for 2017 is about 15%, consistent with prior guidance • Expected 2018FY tax rate is about 15% with an ongoing rate of about 18
Slide 42: Net Income Reconciliation To Adjusted Pre-Tax Profit
Company Net Income Reconciliation To Adjusted Pre-Tax Profit (Bils) Memo: FY Preliminary 2015 2016 Prelim. 2017 4Q 2017 Net income attributable to Ford (GAAP) $ 7.4 $ 4.6 $ 7.8 $ 2.6 Income / (Loss) attributable to non-controlling interests - - - - Net income $ 7.4 $ 4.6 $ 7.8 $ 2.6 Less: Provision
Slide 43: EPS Reconciliation To Adjusted EPS
Company Earnings Per Share Reconciliation To Adjusted Earnings Per Share Memo: FY Preliminary 2015 2016 Prelim. 2017 4Q 2017 Diluted After-Tax Results (Bils) Diluted after-tax results (GAAP) $ 7.4 $ 4.6 $ 7.8 $ 2.6 Less: Impact of pre-tax and tax special items (0.3) (2.5) 0.7 1.0 Adjusted net income
Slide 44: Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate
Company Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate Memo: FY Preliminary 2015 2016 Prelim. 2017 4Q 2017 Pre-Tax Results (Bils) Income before income taxes (GAAP) $ 10.3 $ 6.8 $ 8.1 $ 1.9 Less: Impact of special items (0.5) (3.6) (0.3) 0.2 Adjusted pre-tax profit (Non-GAAP) $ 10.8
Slide 45: Net Income Reconciliation To Adjusted EBIT
Company Net Income Reconciliation To Adjusted EBIT (Bils) Memo: FY Preliminary 2015 2016 Prelim. 2017 4Q 2017 Net Income attributable to Ford (GAAP) $ 7.4 $ 4.6 $ 7.8 $ 2.6 Income / (Loss) attributable to non-controlling interests - - - - Net income $ 7.4 $ 4.6 $ 7.8 $ 2.6 Less: Provision for income
Slide 46: Automotive Operating Margin Reconciliation To Company EBIT Margin
Automotive Operating Margin Reconciliation To Company EBIT Margin Memo: FY Preliminary 2015 2016 Prelim. 2017 4Q 2017 EBIT (Bils) Automotive segment $ 10.0 $ 10.1 $ 8.1 $ 1.6 All other activities 1.6 1.3 1.6 0.4 Total Company $ 11.6 $ 11.3 $ 9.6 $ 2.0 Revenue (Bils) Automotive segment $ 140.6 $ 141.
Slide 47: Preliminary 4Q 2017 Results
Preliminary 4Q 2017 Results $ Automotive Automotive Segment Company Company Adjusted Adjusted Segment Operating Operating Cash Revenue Pre-Tax Results* EPS* EPS Margin Flow (GAAP) (Non-GAAP) (Non-GAAP) (GAAP) (GAAP) (GAAP) 4Q 2017 $41.3B $1.7B $0.39 $0.65 3.7% $2.3B B / (W) $2.6B $(0.4)B $0.09 $0.85
Slide 48: 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 supplementa
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