Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Company — Q2 2017 Earnings Presentation
81 slides from Ford Mtr Co Del's earnings presentation, Jul 26, 2017
Slide 1: 2Q 2017 Earnings Review
2Q 2017 EARNINGS REVIEW July 26, 2017
Slide 2: Business Review, Financial Review and Appendix contents
Business Review Appendix Ford Credit Vision and Strategy 3 Shareholder Distributions A1 Business Product and Other Highlights 4 Shareholder Payout Ratio A2 Strategy FC2 2Q 2017 Highlights FC3 Financial Review Reconciliations to GAAP Adjusted Pre-Tax Profit A3 Financial Financial Headlines 6 Adjusted
Slide 3: 100 Day Review: Unpack the Long Term Strategy
100 DAY REVIEW UNPACK THE LONG TERM STRATEGY REVENUE look at opportunities FITNESS improve it for the company CAPITAL look for opportunities INNOVATION in all parts of the business CULTURE Creating the environment to win 3
Slide 4: Product and Other Highlights
PRODUCT AND OTHER HIGHLIGHTS U.S. F-Series sales totaled 224,579 In China, Ford sold more than Launched full range of all-new Fiesta in 2Q; best 2Q since 2001 282,000 vehicles in 2Q; Lincoln models in Europe achieved best-ever quarterly sales Earned No. 2 ranking of non- Ford’s first software update
Slide 5: Financial Review
FINANCIAL REVIEW
Slide 6: Financial Headlines
FINANCIAL HEADLINES EPS Automotive Automotive Total Company Segment Segment Total Company Total Company Adjusted Adjusted Operating Operating Revenue Net Income Pre-Tax Results* EPS EPS* Margin Cash Flow (GAAP) (GAAP) (Non-GAAP) (GAAP) (Non-GAAP) (GAAP) (GAAP) 2Q 2017 $39.9B $2.0B $2.5B $0.51 $0.56
Slide 7: Key Financial Summary
KEY FINANCIAL SUMMARY 2Q YTD B / (W) B / (W) 2Q wholesale volume lower; Wholesales (000) 2017 1,651 2016 (43) 2017 3,354 2016 (60) revenue up slightly Revenue (Bils) $ 39.9 $ 0.4 $ 79.0 $ 1.8 Results (Mils) Company adj. PBT of Automotive Segment Financial Services Segment $ 2,191 603 $ (641) 218 $ 4
Slide 8: Total Company 2Q 2017 Adjusted Pre-Tax Results
TOTAL COMPANY 2Q 2017 ADJUSTED PRE-TAX RESULTS* (MILS) $2,507 $2,191 Company adj. PBT driven by Auto and Financial Services results $603 All Other primarily net interest expense plus FSM LLC $(287) Total Automotive Financial All Other Decline in Company Segment Services Segment adj. PBT due to Auto
Slide 9: Automotive Segment 2Q 2017 Pre-Tax Results
AUTOMOTIVE SEGMENT 2Q 2017 PRE-TAX RESULTS (MILS) $2,191 $2,198 Auto PBT driven by NA; other regions about $88 $143 breakeven in total $(53) Europe and AP profitable $(185) YoY decline in Auto PBT $(7) driven by NA and Europe Total North South Europe Middle East Asia America America & Africa Pacific
Slide 10: Automotive Segment 2Q 2017 Key Metrics
AUTOMOTIVE SEGMENT 2Q 2017 KEY METRICS Wholesales Revenue Market Share Operating Margin Pre-Tax Results (000) (Bils) (Pct) (Pct) (Mils) Auto top-line metrics 1,694 1,651 $37.0 $37.1 $2,832 mixed YoY; financial $2,191 metrics lower 7.5% 7.4% 7.7% 5.9% Global SAAR up 4% due to AP, Europe and SA Global
Slide 11: Automotive Segment 2Q 2017 Pre-Tax Results
AUTOMOTIVE SEGMENT 2Q 2017 PRE-TAX RESULTS (MILS) Industry $(156) $2,832 Share 4 $2,191 Stocks Mix 21 310 Mat’l, Excl. Commodities Commodities $ (40) (387) Lower Auto PBT due to Other (64) Freight / Other 99 Pricing $ 721 Engineering $(127) higher commodity cost, Incentives / Other (619) Other (4) u
Slide 12: North America 2Q 2017 Key Metrics
AUTOMOTIVE SEGMENT – NORTH AMERICA 2Q 2017 KEY METRICS Wholesales Revenue Market Share Operating Margin Pre-Tax Results (000) (Bils) (Pct) (Pct) (Mils) $2,703 815 807 $23.8 $24.5 14.5% 14.4% NA top-line metrics mixed; $2,198 financial metrics lower 11.3% 9.0% NA and U.S. SAARs each down 0.5M units 1
Slide 13: North America 2Q 2017 Pre-Tax Results
AUTOMOTIVE SEGMENT – NORTH AMERICA 2Q 2017 PRE-TAX RESULTS (MILS) $2,703 $2,198 Lower NA PBT mainly due Industry $(202) Share Stocks 7 189 Mat’l, Excl. Commodities $(177) to higher commodity cost Mix Other 217 (34) Commodities Freight / Other (294) 28 and non-repeat of last Pricing $ 497 year’s sale
Slide 14: A Disciplined Approach to the U.S. Business
AUTOMOTIVE SEGMENT – NORTH AMERICA A DISCIPLINED APPROACH TO THE U.S. BUSINESS YoY Average Transaction Price (USD)* YoY Incentive Change as Pct. of Vehicle Price* Industry Average Industry Average Ford Ford $1,716 $1,727 $1,634 Better $1,476 0.9 0.9 0.9 1.0 0.2 $556 $289 $340 $186 (0.3) (0.2) (0.5)
Slide 15: South America 2Q 2017 Key Metrics
AUTOMOTIVE SEGMENT – SOUTH AMERICA 2Q 2017 KEY METRICS Wholesales Revenue Market Share Operating Margin Pre-Tax Results (000) (Bils) (Pct) (Pct) (Mils) SA’s key metrics improved YoY for 3rd consecutive 93 9.2% 83 8.7% quarter $1.5 $1.3 (12.6)% Top line higher due to $(185) volume and pricing $(265)
Slide 16: South America 2Q 2017 Pre-Tax Results
AUTOMOTIVE SEGMENT – SOUTH AMERICA 2Q 2017 PRE-TAX RESULTS (MILS) $86 $80 $20 $20 $(19) $(19) $(8) PBT improved in SA due to Industry $ 58 favorable market factors Share Stocks 2 (17) with cost about flat and adverse exchange impact Mix (11) Other (12) $(185) modest $(265) Market Factors Total Cost
Slide 17: Europe 2Q 2017 Key Metrics
AUTOMOTIVE SEGMENT – EUROPE 2Q 2017 KEY METRICS Wholesales* Revenue Market Share Operating Margin Pre-Tax Results (000) (Bils) (Pct) (Pct) (Mils) 430 7.5% 7.3% $467 All of Europe’s key metrics 375 5.8% lower $8.1 $7.1 Europe SAAR up 5%, including gain in Russia 1.2% $88 Market share down due to 13%
Slide 18: Europe 2Q 2017 Pre-Tax Results
AUTOMOTIVE SEGMENT – EUROPE 2Q 2017 PRE-TAX RESULTS (MILS) $467 Industry Share $ (26) (22) Lower Europe PBT due to: Stocks (183) $88 Mix Other 46 (29) Commodities Other $(69) 44 • Brexit effects $6 $5 (exchange and U.K. pricing and industry) $(25) $(48) $(379) $(103) • Launch effects of $(214) all-n
Slide 19: Middle East & Africa 2Q 2017 Key Metrics
AUTOMOTIVE SEGMENT – MIDDLE EAST & AFRICA 2Q 2017 KEY METRICS Wholesales Revenue Market Share Operating Margin Pre-Tax Results (000) (Bils) (Pct) (Pct) (Mils) MEA’s pre-tax result 38 improved but all other 4.6% $1.0 key metrics lower 24 3.4% $0.6 (7.2)% SAAR down 12% in (9.7)% $(53) markets where we
Slide 20: Middle East & Africa 2Q 2017 Pre-Tax Results
AUTOMOTIVE SEGMENT – MIDDLE EAST & AFRICA 2Q 2017 PRE-TAX RESULTS (MILS) Industry $(25) Share (54) $85 Stocks (24) Mix 16 Other (34) $51 $12 $4 $6 $(13) Lower cost and favorable exchange more than offset $(53) $(65) lower volume $(121) Market Factors Total Cost Volume / Net Contribution Structural 2
Slide 21: Asia Pacific 2Q 2017 Key Metrics
AUTOMOTIVE SEGMENT – ASIA PACIFIC 2Q 2017 KEY METRICS Wholesales* Revenue Market Share Operating Margin Pre-Tax Results AP’s key metrics improved (000) (Bils) (Pct) (Pct) (Mils) $3.4 4.1% Wholesales and revenue 352 3.6% 3.7% 328 $2.8 $143 up due mainly to China AP SAAR up 2.3M units, mainly China (0
Slide 22: Asia Pacific 2Q 2017 Pre-Tax Results
AUTOMOTIVE SEGMENT – ASIA PACIFIC 2Q 2017 PRE-TAX RESULTS (MILS) $253 $151 $143 $74 Higher AP PBT driven by $14 favorable volume and mix $(8) and lower cost $(45) Industry $39 $(75) $(70) China drove lower net Share Stocks 71 56 pricing (industry) and Mix 42 Other 45 unfavorable exchange Market Fact
Slide 23: Ford Credit 2Q 2017 Key Metrics
FINANCIAL SERVICES SEGMENT – FORD CREDIT 2Q 2017 KEY METRICS U.S. Retail and Lease Net Managed Pre-Tax Average Over-60-Day Loss-to-Receivables Receivables Receivables* Results Placement Delinquencies (LTR) Ford Credit’s best quarterly (Bils) (Bils) (Mils) FICO (Pct) (Pct) 741 744 PBT since 2011 $135
Slide 24: Ford Credit 2Q 2017 Pre-Tax Results
FINANCIAL SERVICES SEGMENT – FORD CREDIT 2Q 2017 PRE-TAX RESULTS (MILS) $219 Ford Credit’s YoY PBT gain driven by most factors $619 Residual Losses $5 Volume and mix up due to $400 Supplemental Depreciation (8) global receivables growth Change in Reserves $ 54 Derivatives Market Valuation $90 Actual
Slide 25: U.S. Automotive Financing Trends
FINANCIAL SERVICES SEGMENT – FORD CREDIT U.S. AUTOMOTIVE FINANCING TRENDS Lease Share of Retail Sales (%) Lease Return Vol. (000) and Auction Values** Ford Credit Industry* 36 Month Return Volume $17,605 $17,495 $17,270 Lease share lower YoY and 32% 31% 31% $16,290 $16,450 $16,715 remains below indu
Slide 26: Automotive Segment Cash Flow
AUTOMOTIVE SEGMENT CASH FLOW (Bils) 2Q 2017 YTD 2017 Cash at end of period $ 28.4 $ 28.4 Cash at beginning of period 28.0 27.5 Change in cash $ 0.4 $ 0.9 2Q operating cash flow of $1.3B Automotive segment pre-tax profits $ 2.2 $ 4.2 Capital spending (1.5) (3.2) Capital spending on track Depreciation
Slide 27: Balance Sheet Summary
BALANCE SHEET SUMMARY (Bils) 2016 2017 Dec 31 Jun 30 Automotive Segment Cash, cash equivalents and marketable securities $ 27.5 $ 28.4 Available credit lines* 10.8 10.9 Total liquidity $ 38.3 $ 39.3 Debt Cash net of debt $ 15.9 11.6 $ 16.2 12.2 Auto cash and liquidity Ford Credit balances strong Man
Slide 28: GDP and Industry Planning Assumptions
GDP AND INDUSTRY PLANNING ASSUMPTIONS GDP Growth (Pct) Industry (Mils) For 2017, continue to 2016 2017 2016 2017 expect growth in global GDP and industry volume Global* 3.0% 3.5% 92.5 94.6 U.S. industry moderation led by lower fleet sales U.S. 1.6% 2.2% 17.9 17.5 Europe industry growth Brazil (3.6)%
Slide 29: 2017 Full Year Company Guidance
2017 FULL YEAR COMPANY GUIDANCE EPS Automotive Automotive Automotive Adjusted Adjusted Effective Tax Segment Segment Segment Operating EPS* Rate* (Pct) Revenue Operating Margin Cash Flow About Equal To Lower Than Positive But Lower 2017 FY $1.65 - $1.85 About 15% 2016 2016 Than 2016 2016 FY $1.76 31
Slide 30: 2017 Business Unit Full Year Guidance
2017 BUSINESS UNIT FULL YEAR GUIDANCE Automotive North South Middle East Asia Total Europe Ford Credit All Other America America & Africa Pacific Automotive PBT Higher Than B / (W) 2016 $1.5B -- Commodities + Net Pricing -- Exchange + Cost + Volume & -- Commodities -- Residual -- FSM (Brexit) Mix --
Slide 31: Key Takeaways
KEY TAKEAWAYS Strong balance sheet, including Progressing 100 day review cash and liquidity 2Q Company adjusted PBT of $2.5B; Continuing to take disciplined 5.9% op margin; $1.3B op cash flow; approach across the business adjusted EPS up YoY Ford Credit result strong with Updated guidance to well pe
Slide 32: Q&A
Q&A
Slide 33: Risk Factors
RISK FACTORS 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 assumptions by our management and involve
Slide 34: Appendix
APPENDIX
Slide 35: Shareholder Distributions
SHAREHOLDER DISTRIBUTIONS (BILS) Supplemental Dividend $15.4 Anti-Dilutive Share Repurchases Regular Dividends $1.2 Total shareholder $2.7 distributions of $15.4B 2012 - 2017 We paid a second quarter regular dividend of $11.5 15¢ per share $3.5 $1.0 $2.7 We plan 2017 $2.3 $0.6 distributions of about
Slide 36: Shareholder Payout Ratio
SHAREHOLDER PAYOUT RATIO 2015 - 2016 2015 2016 Cumulative Shareholder Payout (Mils) Quarterly cash dividends $ 2,380 $ 2,383 $ 4,763 Targeting total Purchases of common stock 129 145 274 Subsequent year supplemental cash dividends 992 199 1,191 distributions of 40% - 50% Total shareholder payout $ 3
Slide 37: Net Income Reconciliation to Adjusted Pre-Tax Profit
TOTAL COMPANY NET INCOME RECONCILIATION TO ADJUSTED PRE-TAX PROFIT (Mils) 2Q YTD Memo: 2016 2017 2016 2017 FY 2016 Net income / (Loss) attributable to Ford (GAAP) $ 1,970 $ 2,042 $ 4,422 $ 3,629 $ 4,596 Income / (Loss) attributable to non-controlling interests 2 8 5 15 11 Net income / (Loss) $ 1,972
Slide 38: Effective Tax Rate Reconciliation to Adjusted Effective Tax Rate
TOTAL COMPANY EFFECTIVE TAX RATE RECONCILIATION TO ADJUSTED EFFECTIVE TAX RATE 2017 Memo: 2Q YTD FY 2016 Pre-Tax Results (Mils) Income / (Loss) before income taxes (GAAP) $ 2,259 $ 4,502 $ 6,796 Less: Impact of special items (248) (224) (3,579) Adjusted pre-tax profit (Non-GAAP) $ 2,507 $ 4,726 $ 10
Slide 39: Special Items
TOTAL COMPANY SPECIAL ITEMS (Mils) 2Q YTD Memo: 2016 2017 2016 2017 FY 2016 Pension and OPEB remeasurement gain / (loss) $ (11) $ - $ (11) $ - $ (2,996) Separation-related actions $ (102) $ (7) $ (276) $ (29) $ (304) Other Items San Luis Potosi plant cancellation $ - $ 7 $ - $ 53 $ (199) Japan, Indo
Slide 40: Earnings Per Share Reconciliation to Adjusted EPS
TOTAL COMPANY EARNINGS PER SHARE RECONCILIATION TO ADJUSTED EARNINGS PER SHARE 2017 2Q YTD Diluted After-Tax Results (Mils) Diluted after-tax results (GAAP) $ 2,042 $ 3,629 Less: Impact of pre-tax and tax special items (202) (193) Adjusted net income – diluted (Non-GAAP) $ 2,244 $ 3,822 Basic and Di
Slide 41: Total Net Receivables Reconciliation to Managed Receivables
FINANCIAL SERVICES SEGMENT – FORD CREDIT TOTAL NET RECEIVABLES RECONCILIATION TO MANAGED RECEIVABLES (Bils) 2015 2016 2016 2017 Dec 31 Jun 30 Dec 31 Jun 30 Financial Services finance receivables, net (GAAP)* $ 90.7 $ 95.3 $ 96.2 $ 101.4 Net investment in operating leases (GAAP)* 25.1 26.8 27.2 26.7
Slide 42: Financial Statement Leverage Reconciliation to Managed Leverage
FINANCIAL SERVICES SEGMENT – FORD CREDIT FINANCIAL STATEMENT LEVERAGE RECONCILIATION TO MANAGED LEVERAGE (Bils) 2016 2016 2017 2017 Jun 30 Dec 31 Mar 31 Jun 30 Leverage Calculation Total debt* $ 126.3 $ 126.5 $ 129.2 $ 129.3 Adjustments for cash** (11.6) (10.8) (11.3) (10.1) Adjustments for derivati
Slide 43: Automotive Segment Debt
AUTOMOTIVE SEGMENT DEBT 2016 2017 (Bils) Dec 31 Mar 31 Jun 30 Public unsecured debt $ 9.2 $ 9.2 $ 9.2 U.S. Department of Energy 3.2 3.1 2.9 Other debt (including international) 3.5 3.9 4.1 Total Automotive debt $ 15.9 $ 16.2 $ 16.2 Memo: Automotive debt payable within one year $ 2.7 $ 3.1 $ 2.9 A9 4
Slide 44: China Unconsolidated Affiliates
AUTOMOTIVE SEGMENT – ASIA PACIFIC CHINA UNCONSOLIDATED AFFILIATES 2Q YTD Memo: 2016 2017 2016 2017 FY 2016 China Unconsolidated Affiliates Wholesales (000) 231 246 541 524 1,217 Ford equity income (Mils)* $ 296 $ 195 $ 740 $ 469 $ 1,439 China JV net income margin 16.1% 10.7% 16.3% 11.9% 14.6% * Ford
Slide 45: 2Q Industry SAAR
AUTOMOTIVE SEGMENT 2Q INDUSTRY SAAR Units (Mils) 2Q YTD 2016 2017 B / (W) 2016 2017 B / (W) North America 21.5 21.0 (0.5) 21.5 21.2 (0.3) U.S. 17.5 17.0 (0.5) 17.6 17.2 (0.4) South America 3.6 4.2 0.6 3.6 4.0 0.4 Brazil 2.0 2.3 0.3 2.1 2.2 0.1 Europe 19.8 20.7 0.9 19.9 20.6 0.7 Middle East & Africa
Slide 46: 2Q Market Share
AUTOMOTIVE SEGMENT 2Q MARKET SHARE (Percent) 2Q YTD 2016 2017 B / (W) 2016 2017 B / (W) Total Share of Total Industry North America 14.5 % 14.4 % (0.1) ppts 14.5 % 14.3 % (0.2) ppts U.S. 15.3 15.2 (0.1) 15.4 15.2 (0.2) South America 8.7 9.2 0.5 8.5 9.1 0.6 Brazil 8.5 9.7 1.2 8.6 9.5 0.9 Europe 7.5 7
Slide 47: Production Volumes
AUTOMOTIVE SEGMENT PRODUCTION VOLUMES Key drivers of 3Q YoY: (000) 2Q 2017 Actual 3Q 2017 Forecast O / (U) O / (U) • NA – matching Units 2016 Units 2016 production to demand North America 841 (2) 665 (34) and Navigator / South America 87 8 96 8 Expedition launch Europe 357 (75) 339 50 • EU – matchin
Slide 48: Dealer Stocks
AUTOMOTIVE SEGMENT - SELECTED MARKETS DEALER STOCKS (000) U.S. Brazil Europe 21 MEA China 2Q June 30, 2017 699 15 251 51 176 March 31, 2017 704 16 275 59 195 Stock Change H / (L) (5) (1) (24) (8) (19) 2Q Prior Year June 30, 2016 728 21 247 65 144 March 31, 2016 755 19 230 70 169 Stock Change H / (L)
Slide 49: 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 50: Definitions and Calculations
DEFINITIONS AND CALCULATIONS Automotive Records References to Automotive records for operating cash flow, operating margin and business units are since at least 2000 Wholesales and Revenue Wholesale unit volumes include all Ford and Lincoln badged units (whether produced by Ford or by an unconso
Slide 51: 2Q 2017 Ford Credit Earnings Review
2Q 2017 FORD CREDIT EARNINGS REVIEW July 26, 2017
Slide 52: Ford Credit Strategy
FORD CREDIT STRATEGY ORIGINATE SERVICE FUND Support Ford and High customer and dealer Strong liquidity Lincoln sales satisfaction Diverse sources and Strong dealer relationships World-class servicing channels Full spread of business Credit losses within Cost effective expectations
Slide 53: 2Q 2017 Highlights
2Q 2017 HIGHLIGHTS Best quarterly pre-tax profit since 2011 Receivables grew globally Auction values stronger-than-expected Robust credit loss performance 2017 full year pre-tax profit is now expected to be higher than $1.5 billion, reflecting an improved lease residual outlook, along with
Slide 54: Financial Review
FINANCIAL REVIEW
Slide 55: Key Financial Summary
KEY FINANCIAL SUMMARY 2Q YTD H / (L) H / (L) 2017 2016 2017 2016 Total contract volumes (000) 513 (27) 1,021 1 Results (Mils) Managed receivables grew Americas segment $ 465 $ 143 $ 823 $ 78 across all geographies Europe segment 74 (23) 151 (27) Asia Pacific segment 18 9 46 20 PBT results improved Y
Slide 56: 2Q 2017 Pre-Tax Results by Segment
2Q 2017 PRE-TAX RESULTS BY SEGMENT (MILS) $619 $557 $465 Solidly profitable globally Unallocated Other reflects primarily favorable $74 $62 $18 derivatives market valuation Unallocated Total Americas Europe Asia Pacific Other* B / (W) 2Q 2016 $219 $143 $(23) $9 $90 * See Appendix for definitions FC6
Slide 57: 2Q 2017 Key Metrics
2Q 2017 KEY METRICS U.S. Retail and Lease Net Managed Pre-Tax Average Over-60-Day Loss-to-Receivables Receivables Receivables* Results Placement Delinquencies (LTR) Ford Credit’s best quarterly (Bils) (Bils) (Mils) FICO (Pct) (Pct) 741 744 PBT since 2011 $135 $142 $128 $134 $619 Receivables grew glo
Slide 58: 2Q 2017 Pre-Tax Results
2Q 2017 PRE-TAX RESULTS (MILS) $219 Ford Credit’s YoY PBT gain driven by most factors $619 Residual Losses $5 Volume and mix up due to $400 Supplemental Depreciation (8) global receivables growth Change in Reserves $ 54 Derivatives Market Valuation $90 Actual Losses (18) Other 4 Lease residual refle
Slide 59: Americas Financing Shares and Contract Placement Volume
AMERICAS FINANCING SHARES AND CONTRACT PLACEMENT VOLUME 2Q YTD 2016 2017 2016 2017 Financing Shares (%) Retail Installment and Lease Share of Ford Retail Sales (excl. Fleet) United States 60 % 50 % 59 % 54 % Canada 76 76 75 75 Wholesale Share United States 75 % 76 % 75 % 76 % Canada 61 63 61 61 Cont
Slide 60: Europe Financing Shares and Contract Placement Volume
EUROPE FINANCING SHARES AND CONTRACT PLACEMENT VOLUME 2Q YTD 2016 2017 2016 2017 Financing Shares (incl. Fleet) (%) Retail Installment and Lease Share of Total Ford Sales U.K. 38 % 35 % 39 % 35 % Germany 48 46 46 47 Total Europe Segment 37 37 36 36 Wholesale Share U.K. 100 % 100 % 100 % 100 % German
Slide 61: Asia Pacific Financing Shares and Contract Placement Volume
ASIA PACIFIC FINANCING SHARES AND CONTRACT PLACEMENT VOLUME 2Q YTD 2016 2017 2016 2017 Financing Shares (incl. Fleet) (%) Retail Installment Share of Total Ford Sales China 16 % 28 % 14 % 26 % India 3 10 3 10 Wholesale Share China 61 % 63 % 57 % 57 % India 28 36 26 35 Contract Placement Volume – New
Slide 62: 2Q 2017 Net Receivables Mix
2Q 2017 NET RECEIVABLES MIX (BILS) Net investment in operating leases Consumer finance Non-consumer finance $135 $27 $109 SUV / CUV: 55% $27 Car: 24% Ford Credit’s lease Truck: 21% portfolio managed with an $68 enterprise view $52 $21 $5 $0.4 $40 $30 $13 $3 $2 $8 Total Americas Europe Asia Pacific F
Slide 63: U.S. Origination Metrics
U.S. ORIGINATION METRICS FICO and Higher Risk Mix Retail and Lease Average Placement FICO Higher Risk Portfolio Mix 741 743 741 741 744 Disciplined and consistent 732 underwriting practices for many years 6% 6% 6% 6% 6% 6% Portfolio quality evidenced 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 by FICO scores and
Slide 64: U.S. Retail and Lease Credit Loss Drivers
U.S. RETAIL AND LEASE CREDIT LOSS DRIVERS Over-60-Day Delinquencies (excluding bankruptcies) Repossessions (000) and Repo. Rate (%) Repossessions (000) Repo. Rate (%) 1.04% 0.96% 1.06% 1.16% 1.16% 1.06% Delinquencies and 0.16% 0.16% 0.16% 0.14% 0.12% 0.13% repossessions remain low Lower severity vs
Slide 65: Worldwide Credit Loss Metrics
WORLDWIDE CREDIT LOSS METRICS Charge-Offs (Mils) and LTR Ratio (%) Charge-Offs (Mils) LTR Ratio (%) 0.39% Worldwide credit loss 0.32% 0.35% 0.29% 0.25% 0.29% metrics remain strong Credit loss reserve based $92 $84 $107 $132 $119 $101 on historical losses, 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 portfolio qual
Slide 66: U.S. Lease Origination Metrics
U.S. LEASE ORIGINATION METRICS Lease Placement Volume (000) 24-Month 36-Month 39-Month / Other 107 106 98 97 89 91 18 16 10 10 11 11 Lease placement volume 79 80 69 70 77 76 and share lower YoY 10 10 9 10 11 11 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Lease share continues to Lease Share of Retail Sales (%) be
Slide 67: U.S. Lease Residual Performance
U.S. LEASE RESIDUAL PERFORMANCE Lease Return Volume (000) and Return Rates (%) Return Volume (000) Return Rates (%) Return rates higher YoY 81% 83% 81% reflecting lower used 78% 77% 77% vehicle values Return volumes higher 59 62 60 65 79 80 reflecting growth in 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 leasing
Slide 68: Funding Structure – Managed Receivables
FUNDING STRUCTURE – MANAGED RECEIVABLES*(BILS) $142 $137 $127 $5 $4 $2 $6 $6 Commercial Paper $6 Ford Interest Advantage / Deposits $48 $50 $50 Term Asset-Backed Securities** Funding is diversified across platforms $66 $70 Well capitalized with $62 Term Debt (incl Bank Borrowings) strong investment
Slide 69: Public Term Funding Plan
PUBLIC TERM FUNDING PLAN* (BILS) 2017 2015 2016 Through Actual Actual Forecast July 25 Unsecured Ford Motor Credit $ 11 $ 10 $ 9 - 10 $ 6 Issuance plans consistent Ford Credit Canada 1 1 1-2 1 with prior years FCE Bank 4 3 2-3 2 Rest of World - - 1 - Total Unsecured $ 17 $ 14 $ 13 - 16 $ 9 Issuance
Slide 70: Balance Sheet Metrics
BALANCE SHEET METRICS Leverage (to 1)* Financial Statement Managed 9.9 9.2 9.8 9.3 9.1 8.8 8-9 Managed leverage returned to target range 4Q16 1Q17 2Q17 Target Liquidity Available For Use (Bils) Liquidity remains strong and above target $27 $29 $29 $25+ 4Q16 1Q17 2Q17 Target * See Appendix for reconc
Slide 71: 2017 Guidance (Mils)
2017 GUIDANCE (MILS) 2016 FY 2017 FY Memo: 2017 1H Results Plan Outlook Results Pre-Tax Profit $ 1,879 About $1,500 Higher $ 1,100 Resuming with leverage Distributions $ - On track $ 28 in target range FC21
Slide 72: Key Takeaways
KEY TAKEAWAYS Best quarterly pre-tax profit Full year PBT is now expected to be since 2011 higher than $1.5 billion Consistent originations, servicing and Strategic asset to Ford, delivering collections; robust portfolio profitable growth globally performance Funding plan well-positioned for Ford Cr
Slide 73: Risk Factors
RISK FACTORS 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 assumptions by our management and involve
Slide 74: Ford Credit Appendix
FORD CREDIT APPENDIX
Slide 75: Ford Credit Appendix
Ford Credit Appendix Credit Ratings FCA1 Total Net Receivables Reconciliation to Managed Receivables FCA2 Financial Statement Leverage Reconciliation to Managed Leverage FCA3 Liquidity Sources FCA4 Non-GAAP Financial Measures that Supplement GAAP Measures FCA5 Definitions and Calculations FCA6
Slide 76: Credit Ratings
CREDIT RATINGS S&P Moody's Fitch DBRS Issuer Ratings Ford Motor BBB N/A BBB BBB Ford Credit BBB N/A BBB BBB FCE Bank plc BBB N/A BBB NR Long-Term Senior Unsecured Ford Motor BBB Baa2 BBB BBB Ford Credit BBB Baa2 BBB BBB FCE Bank plc BBB Baa2 BBB NR Short-Term Unsecured Ford Credit A-2 P-2 F2 R-2M Ou
Slide 77: Total Net Receivables Reconciliation to Managed Receivables
TOTAL NET RECEIVABLES RECONCILIATION TO MANAGED RECEIVABLES (Bils) 2015 2016 2016 2017 Dec 31 Jun 30 Dec 31 Jun 30 Finance receivables, net (GAAP) $ 96.8 $ 101.3 $ 103.0 $ 108.3 Net investment in operating leases (GAAP) 25.1 26.8 27.2 26.7 Total net receivables* $ 121.9 $ 128.1 $ 130.2 $ 135.0 Unear
Slide 78: Financial Statement Leverage Reconciliation to Managed Leverage
FINANCIAL STATEMENT LEVERAGE RECONCILIATION TO MANAGED LEVERAGE* (Bils) 2016 2016 2017 2017 Jun 30 Dec 31 Mar 31 Jun 30 Leverage Calculation Total debt $ 126.3 $ 126.5 $ 129.2 $ 129.3 Adjustments for cash (11.6) (10.8) (11.3) (10.1) Adjustments for derivative accounting (1.3) (0.3) (0.2) (0.2) Total
Slide 79: Liquidity Sources
LIQUIDITY SOURCES* (Bils) 2016 2016 2017 2017 Jun 30 Dec 31 Mar 31 Jun 30 Liquidity Sources Cash $ 11.6 $ 10.8 $ 11.3 $ 10.1 Committed ABS facilities 36.0 34.6 34.8 32.3 Committed Other unsecured credit facilities 2.7 2.5 2.6 2.7 Capacity Ford corporate credit facility allocation 3.0 3.0 3.0 3.0 $38
Slide 80: 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 81: Definitions and Calculations
DEFINITIONS AND CALCULATIONS Adjustments (as shown on the Liquidity Sources chart) Include certain adjustments for asset-backed capacity in excess of eligible receivables and cash related to the Ford Credit Revolving Extended Variable-utilization program (“FordREV”), which can be accessed through