Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Company — Q3 2020 Earnings Presentation
58 slides from Ford Mtr Co Del's earnings presentation, Oct 28, 2020
Slide 1: Q3 Earnings Review
Q3 Earnings Review October 28, 2020 All-New Ford Bronco Sport
Slide 2: Information Regarding This Presentation
Information Regarding This Presentation Forward-Looking Statements This presentation includes forward-looking statements. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could caus
Slide 3: Company Highlights
Company Highlights • Moving with urgency to turn around our automotive operations – to improve quality, reduce costs and accelerate the restructuring of underperforming businesses • Transformation and growth plan predicated on delivering a company adjusted EBIT margin of 8 percent or better, and the
Slide 4: Financial Highlights
Financial Highlights • Quarterly adjusted EBIT margin of 9.7% and $6.3B adjusted Free Cash Flow • Higher-than-expected vehicle demand, positive net pricing and favorable mix • Ford Credit $1.1B in EBT – strongest performance in 15 years • Strong performance from North America; continued progress in
Slide 5: Third Quarter Company Financial Results
Third Quarter Company Financial Results ADJ. FCF REVENUE ADJ. EBIT ADJ. EBIT ADJ. EPS MARGIN $6.3B $38B $3.6B 9.7% $0.65 UP $6.1B UP $0.5B UP $1.9B UP 4.9 ppts UP $0.31 All-New Ford F-150 Year To Date $(1.2)B $91B $1.1B 1.2% $0.07 DOWN $3.5B DOWN $25B DOWN $4.8B DOWN 3.9 ppts DOWN $0.99 5
Slide 6: Exciting Product Portfolio – Upcoming Launches
Exciting Product Portfolio – Upcoming Launches Launch Checkpoints D S M • Best-in-class max available towing and available payload F-150 • Over-the-air (OTA) update capability • Available 3.5L PowerBoostTM full hybrid V6 engine is targeting an Production Start Oct. 12 EPA-estimated range of appr
Slide 7: Q4 North America Launches Underway
Q4 North America Launches Underway 7
Slide 8: Cash Flow, Cash Balance And Liquidity ($B)
Cash Flow, Cash Balance And Liquidity ($B) Adjusted FCF Cash Balance And Liquidity Liquidity $45.5 $6.3 $39.8 • Q3 Adjusted FCF of $6.3B, up $6.1B, driven by rebuilding $37.3 $35.4 $35.4 $35.1 $39.3 the payables depleted in 1H COVID-related production $34.3 shutdown and higher EBIT $0.2 $0.2 $0.5 $2
Slide 9: Revenue And EBIT Metrics
Revenue And EBIT Metrics Revenue ($B) & Wholesale Units (000) Adjusted EBIT ($B) & EBIT Margin (%) Wholesale Units Adj. EBIT Margin $3.6 • Q3 revenue of $38B, up 1%, $39.7 driven by favorable mix, higher $38.9 $37.0 $37.5 net pricing, offset partially by $34.3 $1.7 $1.8 lower volume 1,364 1,354 • Wh
Slide 10: Q3 2020 Results ($B)
Q3 2020 Results ($B) $3.6 $2.6 $2.4 • Company Adjusted EBIT of $1.1 $3.6B, up $1.9B, driven by improvement in Automotive $0.2 and Credit • Special Items of $(0.4)B $(0.3) $(0.5) $(0.4) $(0.4) reflect primarily global Taxes / Non- redesign actions in Europe Automotive Mobility Ford Credit Corporate C
Slide 11: Q3 2020 Adjusted EBIT ($B)
Q3 2020 Adjusted EBIT ($B) North South Total Total Europe China IMG America America Auto Company Q3 2019 $ 2.0 $ (0.2) $ (0.1) $ (0.3) $ (0.1) $ 1.3 $ 1.8 YoY Change: Industry $(1.0) Volume / Mix $ 0.4 $ (0.0) $ (0.5) $ 0.0 $ (0.0) $ (0.2) $ (0.2) Share / Mix / Other 0.8 Net Pricing 0.9 0.2 0.3 (0.0
Slide 12: North America
North America EBIT YoY Bridge ($B) Wholesale Units (000) 693 639 681 651 619 272 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 YoY (7)% (1)% (8)% (18)% (61)% 2% Q3 2019 Volume / Net Cost Exchange Other Q3 2020 Revenue ($B) Mix Pricing $24.0 $23.4 $25.3 $25.3 $21.8 • Q3 wholesale units up 2%, refle
Slide 13: South America
South America EBIT YoY Bridge ($B) Wholesale Units (000) $0.0 75 79 74 59 48 14 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 YoY (22)% (16)% (17)% (13)% (81)% (39)% Q3 2019 Volume / Net Cost Exchange Other Q3 2020 Revenue ($B) Mix Pricing $1.0 $1.0 $1.0 • Q3 wholesale units down 39%, driven by CO
Slide 14: Europe
Europe EBIT YoY Bridge ($B) Wholesale Wholesale Units* Units (000) (000) 368 341 298 288 239 154 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 YoY 4% (13)% (2)% (25)% (58)% (20)% Q3 2019 Volume / Net Cost Exchange Other Q3 2020 Revenue ($B) Mix Pricing $7.3 $7.0 $6.3 $6.2 $5.7 • Q3 wholesale units
Slide 15: China
China EBIT YoY Bridge ($B) Wholesale Units* (000) JV Volume 159 169 164 126 134 81 156 146 139 108 116 72 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Total China YoY (32)% (12)% (7)% (29)% 34% 22% Q3 2019 Volume / Net Cost Exchange Other JVs Q3 2020 Mix Pricing Consolidated Revenue ($B) Consolid
Slide 16: International Markets Group
International Markets Group EBIT YoY Bridge ($B) Wholesale Units* (000) 103 93 98 78 76 36 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 YoY (14)% (20)% (22)% (27)% (64)% (18)% Q3 2019 Volume / Net Cost Exchange Other Q3 2020 Revenue ($B) Mix Pricing $2.6 $2.4 $2.3 • Q3 wholesales down 18%, reflec
Slide 17: Mobility
Mobility EBIT YoY Bridge ($B) • Building fourth generation AV test vehicles with latest SDS technology to support multi-city testing • Generated first AV-related revenue from fleet operations pilot in Austin, Texas • Strategically expanding SPIN operations in the U.S., U.K. and Germany; seeing stron
Slide 18: Ford Credit
Ford Credit EBT YoY Bridge ($B) EBT ($B) $1.1 $0.8 $0.7 $0.6 $0.5 $0.0 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Distributions ($B) $0.7 $1.1 $0.5 $0.3 $0.3 $0.6 Q3 2019 Volume / Financing Credit Lease Exchange Other Q3 2020 U.S. Retail LTR Ratios (%) Mix Margin Loss Residual 0.63% 0.62% 0.51%
Slide 19: Cash Flow And Balance Sheet ($B)
Cash Flow And Balance Sheet ($B) THIRD QUARTER YEAR TO DATE BALANCE SHEET 2019 2020 2019 2020 2019 2020 Dec. 31 Sep. 30 Company Adj. EBIT excl. Ford Credit $ 1.1 $ 2.5 $ 3.5 $ (0.6) Company Excl. Ford Credit Capital Spending $ (1.8) $ (1.2) $ (5.3) $ (4.2) Company Cash Balance $ 22.3 $ 29.5 Deprecia
Slide 20: Special Items ($B)
Special Items ($B) THIRD QUARTER YEAR TO DATE Global Redesign ($B) 2019 2020 2019 2020 Potential Future Actions Recorded since Q1 2018 Global Redesign Europe excl. Russia $ (0.2) $ (0.2) $ (1.0) $ (0.4) India (0.8) (0.0) (0.8) (0.0) ~$11 South America (0.0) (0.1) (0.5) (0.1) Russia 0.0 0.0 (0.4) 0.0
Slide 21: Outlook Adjusted EBIT
OUTLOOK 2019 2020* Outlook Adjusted EBIT - Q4 $0.5B $(0.5)B - $0.0B - Full Year $6.4B $0.6B - $1.1B Capital Spending $7.6B $5.9B - $6.4B Pension Contributions $0.7B $0.5B - $0.7B Global Redesign EBIT Charges $3.2B $0.7B - $1.2B Global Redesign Cash Effects $0.9B $0.7B - $1.2B All-New China-Built Lin
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Slide 23: Cautionary Note On Forward-Looking Statements
Cautionary Note On Forward-Looking Statements Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptio
Slide 24: Appendix
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Slide 25: Key Metrics
Key Metrics WHOLESALE UNITS (000) MARKET SHARE (%) Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 North America 693 639 681 619 272 651 13.8 % 12.6 % 12.8 % 13.6 % 14.2 % 13.6 % South America 75 79 74 59 14 48 7.4 7.1 6.9 6.9 6.5 5.7 Europe 368 298 34
Slide 26: Key Metrics
Key Metrics EBIT ($B) EBIT CHANGE (%) Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 North America $ 1.7 $ 2.0 $ 0.7 $ 0.3 $ (1.0) $ 3.2 (3) % 3 % (64) % (84) % (157) % 58 % South America (0.2) (0.2) (0.2) (0.1) (0.2) (0.1) (15) (9) 11 29 19 35 Europe
Slide 27: Key Metrics
Key Metrics WHOLESALE UNITS (000) MARKET SHARE (%) 2020 B / (W) 2020 B / (W) 2020 B / (W) 2020 B / (W) Q3 2019 Q3 2020 2019 YTD 2020 YTD Q3 2019 Q3 2020 2019 YTD 2020 YTD 2019 2019 2019 2019 North America 639 651 11 2,085 1,541 (544) 12.6 % 13.6 % 1.0 ppts 13.3 % 13.8 % 0.5 ppts South America 79 48
Slide 28: Q3 Results ($M)
Q3 Results ($M) Q3 Year To Date 2019 2020 2020 B / (W) 2019 2019 2020 2020 B / (W) 2019 North America $ 2,012 $ 3,178 $ 1,167 $ 5,912 $ 2,550 $ (3,362) South America (165) (108) 57 (527) (386) 141 Europe (144) (440) (297) 51 (1,247) (1,298) China (281) (58) 223 (565) (435) 130 International Markets
Slide 29: Year To Date 2020 Adjusted EBIT ($B)
Year To Date 2020 Adjusted EBIT ($B) North South Total Total Europe China IMG America America Auto Company Year To Date 2019 $ 5.9 $ (0.5) $ 0.1 $ (0.6) $ (0.2) $ 4.7 $ 5.9 Industry $(6.3) YoY Change: Other Volume / Mix (1.0) Volume / Mix $ (5.0) $ (0.1) $ (1.8) $ (0.1) $ (0.4) $ (7.4) $ (7.4) Mater
Slide 30: Quarterly Results ($M)
Quarterly Results ($M) 2019 2020 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 North America $ 2,205 $ 1,696 $ 2,012 $ 700 $ 6,612 $ 346 $ (974) $ 3,178 South America (158) (205) (165) (176) (704) (113) (165) (108) Europe (excl. Russia) 85 110 (144) 72 123 (143) (664) (440) China (128) (155) (281) (207) (771) (241
Slide 31: Net Income Reconciliation To Adjusted EBIT ($M)
Net Income Reconciliation To Adjusted EBIT ($M) Q3 Year To Date Memo: 2019 2020 2019 2020 FY 2019 Net income / (Loss) attributable to Ford (GAAP) $ 425 $ 2,385 $ 1,719 $ 1,509 $ 47 Income / (Loss) attributable to non-controlling interests (2) 5 37 6 37 Net income / (Loss) $ 423 $ 2,390 $ 1,756 $ 1,5
Slide 32: Net Cash Provided By / (Used In) Operating Activities Reconciliation To Company Adjusted FCF
Net Cash Provided By / (Used In) Operating Activities Reconciliation To Company Adjusted FCF ($M) Year To Date Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 2019 2020 Net cash provided by / (Used in) operating activities (GAAP) $ 3,544 $ 6,463 $ 4,732 $ 2,900 $ (473) $ 9,115 $ 11,088 $ 14,
Slide 33: Earnings Per Share Reconciliation To Adjusted Earnings
Earnings Per Share Reconciliation To Adjusted Earnings Per Share Q3 Year To Date 2019 2020 2019 2020 Diluted After-Tax Results ($M) Diluted after-tax results (GAAP) $ 425 $ 2,385 $ 1,719 $ 1,509 Less: Impact of pre-tax and tax special items (931) (231) (2,505) 1,220 Less: Non-controlling interests i
Slide 34: Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate
Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate 2020 Memo: Q3 Year To Date FY 2019 Pre-Tax Results ($M) Income / (Loss) before income taxes (GAAP) $ 2,756 $ 2,694 $ (640) Less: Impact of special items (390) 2,803 (5,999) Adjusted earnings before taxes (Non-GAAP) $ 3,146 $ (109) $ 5,
Slide 35: Adjusted ROIC ($B)
Adjusted ROIC ($B) Four Quarters Four Quarters Adjusted Net Operating Profit After Cash Tax Ending Q3 2019 Ending Q3 2020 Net income attributable to Ford $ 1.6 $ (0.2) Add: Non-controlling interest 0.0 - Less: Income tax (0.1) (0.4) Add: Cash tax (0.7) (0.3) Less: Interest on debt (1.1) (1.4) Less:
Slide 36: 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 37: Non-GAAP Financial Measures That Supplement GAAP Measures
Non-GAAP Financial Measures That Supplement GAAP Measures • Company Adjusted Free Cash Flow (FCF) (Most Comparable GAAP Measure: Net Cash Provided By / (Used In) Operating Activities) – Measure of Company’s operating cash flow excluding Ford Credit’s operating cash flows. The measure contains elemen
Slide 38: Definitions And Calculations
Definitions And Calculations Automotive Records • References to Automotive records for EBIT margin and business units are since at least 2009 Wholesale Units and Revenue • Wholesale unit volumes include all Ford and Lincoln badged units (whether produced by Ford or by an unconsolidated affiliate) th
Slide 39: Product Notes
Product Notes F-150 XLT (shown on Slide 6) • Max towing on F-150 SuperCab 8’ box and SuperCrew 4x2 with available 3.5L EcoBoost, Max Trailer Tow Pkg. Max towing varies based on cargo, vehicle configuration, accessories and number of passengers. Towing and payload are independent attributes and may n
Slide 40: Q3 Earnings Review
Q3 Earnings Review October 28, 2020
Slide 41: Key Takeaways
Key Takeaways • Strong Q3 EBT of $1,123M (highest quarter since Q2 2005) • Balance sheet remains strong with liquidity at $31B; continue to access diverse funding sources • Portfolio is performing well – charge-offs and loss-to-receivables (LTR) ratio remained significantly below year-ago levels. Cr
Slide 42: Key Metrics
Key Metrics EBT YoY Bridge ($M) EBT ($M) $1,123 $831 $736 $630 $543 $30 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Distributions ($M) $650 $1,100 $475 $275 $275 $575 Q3 2019 Volume / Financing Credit Lease Exchange Other Q3 2020 U.S. Retail LTR Ratios (%) Mix Margin Loss Residual 0.63% 0.62% 0.
Slide 43: Q3 2020 Net Receivables Mix ($B)
Q3 2020 Net Receivables Mix ($B) Net Investment in Operating Leases Consumer Financing Non-Consumer Financing $131.5 $26.6 $106.0 Q3 2020 H / (L) 2019 SUV / CUV 58% 1 ppts. • Receivables declined $26.3 Truck 32 2 $9B YoY primarily reflecting Car 10 (3) lower wholesale receivables $76.3 • Operating l
Slide 44: U.S. Origination Metrics And Credit Loss Drivers
U.S. Origination Metrics And Credit Loss Drivers Retail & Lease FICO and Retail Repossessions (000) and Higher Risk Mix (%) Repossession Rate (%) • Disciplined and consistent Higher Risk Portfolio Mix (%) Repossession Rate (%) underwriting practices 747 750 753 743 739 738 • Portfolio quality eviden
Slide 45: Worldwide Credit Loss Metrics
Worldwide Credit Loss Metrics Charge-Offs ($M) and LTR Ratio (%) LTR Ratio (%) $107 $101 $89 $66 0.36% 0.35% $67 0.30% $45 0.24% 0.22% • Worldwide credit loss metrics 0.17% remained strong and significantly below year-ago Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 levels • Credit loss reserve r
Slide 46: U.S. Lease Metrics
U.S. Lease Metrics Lease Return Volume (000) Lease Placement Volume (000) and Return Rates (%) 24-Month Return Rate (%) 36-Month 39-Month / Other • Auction values rebounded 81 83 82 strongly in the third quarter, 75 75 9 11 12 70 70 71 67 65 up 7% from second quarter 11 12 58 52 and 5% YoY 56 9 68 6
Slide 47: Cumulative Maturities At September 30, 2020 ($B)
Cumulative Maturities At September 30, 2020* ($B) Assets Debt • Strong balance sheet is $153 $132 inherently liquid with $112 cumulative debt maturities $90 having a longer tenor than $84 $67 asset maturities $49 • As of September 30, $77B of $21 $153B assets are unencumbered Oct – Dec 2020 2021 202
Slide 48: Funding Structure – Managed Receivables ($B)
Funding Structure – Managed Receivables* ($B) 2019 2020 Dec 31 Sep 30 Term Debt (incl. Bank Borrowings) $ 73 $ 73 Term Asset-Backed Securities 57 53 Commercial Paper 4 1 • Well capitalized with a strong Ford Interest Advantage / Deposits 7 6 balance sheet; $31B in net liquidity Other 9 9 Equity 14 1
Slide 49: Public Term Funding Plan ($B)
Public Term Funding Plan* ($B) 2018 2019 2020 Through Actual Actual Forecast Oct 27 • Completed $20B of public issuance year-to-date Unsecured $ 13 $ 17 $ 8 - 11 $ 8 • Strong balance sheet and substantial liquidity provide Securitizations** 14 14 12 - 13 11 funding flexibility Total $ 27 $ 31 $ 21 -
Slide 50: 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 51: 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 52: EBT By Segment ($M)
EBT By Segment* ($M) Q3 YTD H / (L) H / (L) 2020 2019 2020 2019 Results United States and Canada segment $ 932 $ 349 $ 1,399 $ (395) Europe segment 73 (5) 155 (150) All Other segment 14 (6) 38 (77) Total segments $ 1,019 $ 338 $ 1,592 $ (622) Unallocated other 104 49 104 (50) Earnings before taxes $
Slide 53: Financing Shares And Contract Placement Volume
Financing Shares And Contract Placement Volume 2019 2020 2019 2020 Share of Ford Sales* United States 57 % 55 % 52 % 63 % Canada 57 75 63 69 U.K. 40 40 39 42 Germany 44 39 47 39 China 35 40 34 37 Wholesale Share United States 76 % 74 % 76 % 74 % Canada 57 30 57 42 U.K. 100 100 100 100 Germany 93 93
Slide 54: Total Net Receivables Reconciliation To Managed Receivables ($B)
Total Net Receivables Reconciliation To Managed Receivables ($B) 2019 2019 2020 Sep 30 Dec 31 Sep 30 Finance receivables, net (GAAP) $ 112.8 $ 114.3 $ 104.9 Net investment in operating leases (GAAP) 27.5 27.7 26.6 Total net receivables* $ 140.3 $ 142.0 $ 131.5 Held-for-sale receivables (GAAP) $ - $
Slide 55: Financial Statement Leverage Reconciliation To Managed Leverage ($B)
Financial Statement Leverage Reconciliation To Managed Leverage* ($B) 2019 2019 2020 Sep 30 Dec 31 Sep 30 Leverage Calculation Debt $ 139.3 $ 140.0 $ 133.1 Adjustments for cash (14.3) (11.7) (14.6) Adjustments for derivative accounting (0.8) (0.5) (1.6) Total adjusted debt $ 124.2 $ 127.8 $ 116.9 Eq
Slide 56: Liquidity Sources ($B)
Liquidity Sources* ($B) 2019 2019 2020 Sep 30 Dec 31 Sep 30 Liquidity Sources Cash $ 14.3 $ 11.7 $ 14.6 Committed asset-backed facilities 35.2 36.6 37.4 Other unsecured credit facilities 2.6 3.0 2.4 Ford corporate credit facility allocation 3.0 3.0 - Total liquidity sources $ 55.1 $ 54.3 $ 54.4 Util
Slide 57: 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 58: 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