Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Company — Q2 2021 Earnings Presentation
57 slides from Ford Mtr Co Del's earnings presentation, Jul 28, 2021
Slide 1: Q2 2021 Earnings Review
Q2 2021 Earnings Review July 28, 2021
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: Second Quarter Financial Results
Second Quarter Financial Results $26.8B $1.1B 4.0% $(5.1)B $0.13 Up $7.4B Up $3.0B Up 14.0 ppts Down $0.4B Up $0.48 Ye a r - To - D a t e $63.0B $5.9B 9.4% $(5.5)B $1.01 Up $9.3B Up $8.5B Up 14.2 ppts Up $1.4B Up $1.60 3 Note: See slide A16 for related notes
Slide 4: Ford+ Investment Thesis
Ford+ Investment Thesis Disruptive Technology Allows Us to Leverage Foundational Strengths to Build New Capabilities – Enriching Customer Experiences and Deepening Loyalty CUSTOMER EXPERIENCE FOUNDATIONAL ENHANCED EXPANDED TAM STRENGTHS CAPABILITIES & VALUE CREATION Electric Iconic Integrated Hardwa
Slide 5: Delivering Ford+
Delivering Ford+ Disruptive Disruptive Technology Technology Allows Allows Us Us to to Leverage Leverage Foundational Foundational Strengths Strengths to to Build Build New New Capabilities Capabilities –– Enriching Enriching Customer Customer Experiences Experiences and and Deepening Deepening Loya
Slide 6: Revenue And EBIT Metrics
Revenue And EBIT Metrics Wholesale Units (000) & Adjusted EBIT ($B) & Revenue ($B) EBIT Margin (%) Wholesale Units $4.8 • Q2 wholesale units up 18%, driven $37.5 $3.6 $36.0 $36.2 by the non-recurrence of $34.3 industrywide COVID-related shutdowns, offset partially by $26.8 $1.7 semiconductor-related
Slide 7: Cash Flow, Cash Balance And Liquidity ($B)
Cash Flow, Cash Balance And Liquidity ($B) Adjusted Free Cash Flow Cash Balance & Liquidity Liquidity $6.6 $46.9 $47.2 $45.5 • Q2 Adjusted FCF of $(5.1)B $39.8 $41.0 driven by: $1.9 ‒ Expected adverse working capital $35.1 $39.3 and timing differences due to semiconductor-related volume $34.3 $30.8
Slide 8: Q2 2021 Results
Q2 2021 Results ($B) $1.6 $1.1 • Company Adjusted EBIT of $1.1B, $0.6 up $3.0B, driven by improvement in Automotive and Ford Credit $0.1 • Ford Credit record EBT of $1.6B $(0.1) $(0.2) $(0.2) • Special Items of $0.1B, down $3.4B, $(0.3) $(0.5) reflecting the non-recurrence of the gain on the Argo AI
Slide 9: Q2 2021 Adjusted EBIT ($B)
Q2 2021 Adjusted EBIT ($B) North South Total Total Europe China IMG America America Auto Company Q2 2020 $ (0.9) $ (0.2) $ (0.7) $ (0.1) $ (0.1) $ (2.1) $ (1.9) YoY Change: Volume / Mix $ 0.3 $ 0.0 $ (0.0) $ (0.0) $ 0.2 $ 0.4 $ 0.4 Net Pricing 1.6 0.2 0.1 0.0 0.0 1.9 1.9 Material / Freight $ 0.0 Cos
Slide 10: North America
North America Leadership in trucks and Ford Pro commercial vehicles, plus utilities and iconic nameplates Wholesale Units (000) Q2 Headlines 619 651 540 533 327 • Strong demand for new product supported profit optimization; revenue per unit 272 up 14% reflecting lower incentives and favorable mix •
Slide 11: South America
South America Lean, de-risked and asset-light business, focused on key franchises like Ranger and Transit Wholesale Units (000) Q2 Headlines 59 48 63 • Restructuring on track 14 18 18 • Seventh consecutive quarter of YoY EBIT improvement Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 • Preparation
Slide 12: Europe
Europe Commercial vehicle strength with Ford Pro, focused passenger portfolio with key imports Wholesale Wholesale Units* Units (000) (000) 339 Q2 Headlines 288 239 278 154 182 • EBIT up $0.4B driven by improved mix of utilities, commercial vehicles and cost reductions • Underlying run-rate of the b
Slide 13: China
China Focused on strength in Lincoln brand, commercial vehicles and Ford utility portfolio Wholesale Wholesale Units* Units (000) (000) JV Volume 202 Q2 Headlines 169 164 150 150 190 81 • Fifth consecutive quarter of YoY EBIT improvement, driven by strength of localized 156 146 140 149 Lincoln, impr
Slide 14: International Markets Group
International Markets Group Portfolio strengths of Ranger pickup truck and Everest Wholesale Wholesale Units* Units (000) (000) 93 Q2 Headlines 78 76 82 87 • Accelerating IMG’s transformation by focusing on key markets driving record 36 quarterly EBIT, up $0.4B • Capitalizing on our strengths with R
Slide 15: Mobility
Mobility Focused on large scale commercial deployment of autonomous vehicles for moving people and goods EBIT ($B) Q2 Headlines $(0.3) $(0.3) $(0.2) $(0.3) $(0.2) $(0.2) • Industry-first collaboration with Argo and Lyft to deploy Ford autonomous vehicles on the Lyft network. First step in phased com
Slide 16: Ford Credit
Ford Credit Best-in-class finance company is a strategic asset and competitive advantage EBT ($B) $1.6 Q2 Headlines $1.1 $1.0 $0.9 • Launched the first loyalty-building Ford Pro FinSimple products and services $0.5 with digital commercial lines of credit and digital combined billing $0.0 • Establish
Slide 17: Cash Flow And Balance Sheet ($B)
Cash Flow And Balance Sheet ($B) Second Quarter First Half Balance Sheet 2020 2021 2020 2021 2020 2021 Dec. 31 Jun. 30 Company Adj. EBIT excl. Ford Credit $ (2.5) $ (0.5) $ (3.2) $ 3.3 Company Excl. Ford Credit Capital Spending $ (1.2) $ (1.5) $ (2.9) $ (2.9) Depreciation and Tooling Amortization 1.
Slide 18: Special Items ($B)
Special Items ($B) Second Quarter First Half Global Redesign 2020 2021 2020 2021 Potential 2022+ Actions and Cash Effects Potential 2021 Actions and Cash Effects Global Redesign Recorded 2018 - 2020 South America $ (0.0) $ (0.1) $ (0.0) $ (0.5) Europe (0.1) (0.2) (0.2) (0.3) ~$11 Russia (0.0) 0.0 0.
Slide 19: 2021 Adjusted EBIT HoH ($B)
2021 Adjusted EBIT HoH ($B) $(2) – $(3) • 2H EBIT lower than 1H reflecting favorable market factors offset by volume-related structural costs ~$6 Market Factors, Net of Vehicle-Related Production Costs ~$3.0 – $ 4.0 Commodities ~$(2.0) • Commodity headwinds expected Warranty ~$(0.5) Investments In M
Slide 20: 2021 Outlook ($B)
2021 Outlook ($B) 2020 2021 Outlook Actual Adjusted EBIT $9.0 - $10.0 $2.8 Adjusted FCF $4.0 - $5.0 $1.5 Capital Spending $6.0 - $6.5 $5.7 Pension Contributions $0.7 - $0.8 $0.6 Global Redesign EBIT Charges $2.2 - $2.7 $3.4 Global Redesign Cash Effects $3.0 - $3.5 $0.5 20 Note: See slide A16 for rel
Slide 21: Cautionary Note On Forward-Looking Statements
Cautionary Note On Forward-Looking Statements Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptio
Slide 22: Appendix
Appendix Note: See slide A16 for related notes
Slide 23: Key Metrics
Key Metrics Wholesale Units (000) Market Share (%) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 North America 619 272 651 540 533 327 13.6 % 14.2 % 13.6 % 12.1 % 12.5 % 10.4 % South America 59 14 48 63 18 18 6.9 6.5 5.7 6.0 3.6 2.3 Europe 288 154 23
Slide 24: Key Metrics
Key Metrics EBIT ($B) EBIT Change (%) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 North America $ 0.4 $ (0.9) $ 3.2 $ 1.1 $ 2.9 $ 0.2 (83) % (156) % 59 % 53 % N/M 120 % South America (0.1) (0.2) (0.1) (0.1) (0.1) (0.1) 28 19 34 40 35 48 Europe (0.1
Slide 25: Key Metrics
Key Metrics Wholesale Units (000) Market Share (%) 2021 B / (W) 2021 B / (W) 2021 B / (W) 2021 B / (W) Q2 2020 Q2 2021 2020 1H 2021 1H Q2 2020 Q2 2021 2020 1H 2021 1H 2020 2020 2020 2020 North America 272 327 56 890 861 (30) 14.2 % 10.4 % (3.8) ppts 13.8 % 11.4 % (2.4) ppts South America 14 18 4 73
Slide 26: Q2 Results ($M)
Q2 Results ($M) Second Quarter Fi rst Hal f 2020 2021 2021 B / (W) 2020 2020 2021 2021 B / (W) 2020 North America $ (946) $ 194 $ 1,140 $ (574) $ 3,143 $ 3,717 South America (165) (86) 79 (277) (159) 118 Europe (667) (284) 383 (816) 57 873 China (136) (123) 13 (376) (138) 238 International Markets G
Slide 27: First Half 2021 Adjusted EBIT ($B)
First Half 2021 Adjusted EBIT ($B) North South Total Total Europe China IMG America America Auto Company First Half 2020 $ (0.6) $ (0.3) $ (0.8) $ (0.4) $ (0.2) $ (2.2) $ (2.6) YoY Change: Volume / Mix $ (0.3) $ (0.1) $ (0.2) $ (0.0) $ 0.2 $ (0.4) $ (0.4) Net Pricing 4.1 0.2 0.3 0.0 0.1 4.8 4.8 Mate
Slide 28: Quarterly Results ($M)
Quarterly Results ($M) 2020 2021 Q1 Q2 Q3 Q4 Ful l Year Q1 Q2 North America $ 373 $ (946) $ 3,202 $ 1,082 $ 3,710 $ 2,949 $ 194 South America (112) (165) (107) (105) (489) (73) (86) Europe (149) (667) (444) 409 (851) 341 (284) China (241) (136) (57) (65) (499) (15) (123) International Markets Group
Slide 29: Net Income / (Loss) Reconciliation To Adjusted EBIT ($M)
Net Income / (Loss) Reconciliation To Adjusted EBIT ($M) Second Quarter First Half Memo: 2020 2021 2020 2021 FY 2020 Net income / (loss) attributable to Ford (GAAP) $ 1,117 $ 561 $ (876) $ 3,823 $ (1,279) Income / (Loss) attributable to non-controlling interests 1 (8) 1 (8) 3 Net income / (loss) $ 1
Slide 30: Net Cash From Operating Activities Reconciliation To Company Adj. FCF
Net Cash Provided By / (Used In) Operating Activities Reconciliation To Company Adj. FCF ($M) First Half Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 2020 2021 Net cash provided by / (used in) operating activities (GAAP) $ (473) $ 9,115 $ 11,088 $ 4,539 $ 4,492 $ 756 $ 8,642 $ 5,248 Less: Items N
Slide 31: EPS Reconciliation To Adjusted EPS
Earnings / (Loss) Per Share Reconciliation To Adjusted Earnings / (Loss) Per Share Second Quarter First Half 2020 2021 2020 2021 Diluted After-Tax Results ($M) Diluted after-tax results (GAAP) $ 1,117 $ 561 $ (876) $ 3,823 Less: Impact of pre-tax and tax special items 2,525 50 1,451 (252) Adjusted n
Slide 32: Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate
Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate 2021 Memo: Q2 First Half Full Year 2020 Pre-Tax Results ($M) Income / (Loss) before income taxes (GAAP) $ 735 $ 4,677 $ (1,116) Less: Impact of special items 106 (295) (2,246) Adjusted earnings before taxes (Non-GAAP) $ 629 $ 4,972 $ 1
Slide 33: Adjusted ROIC ($B)
Adjusted ROIC ($B) Four Quarters Four Quarters Adjusted Net Operating Profit / (Loss) After Cash Tax Ending Q2 2020 Ending Q2 2021 Net income / (loss) attributable to Ford $ (2.1) $ 3.4 Add: Non-controlling interest (0.0) (0.0) Less: Income tax 0.4 (0.2) Add: Cash tax (0.4) (0.5) Less: Interest on d
Slide 34: 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 35: 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 36: Definitions And Calculations
Definitions And Calculations Wholesale Units and Revenue • Wholesale unit volumes include all Ford and Lincoln badged units (whether produced by Ford or by an unconsolidated affiliate) that are sold to dealerships, units manufactured by Ford that are sold to other manufacturers, units distributed by
Slide 37: Product Notes
Product Notes 2022 Ford Lightning (shown on slide 3) • Preproduction computer-generated image shown; available starting Spring 2022 2022 Ford E-Transit (shown on slide 3) • Preproduction computer-generated image shown; available late 2021 2022 Ford Maverick (shown on slide 20) • Preproduction model
Slide 38: Q2 2021 Earnings Review
Q2 2021 Earnings Review July 28, 2021 1
Slide 39: 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 40: Key Takeaways
Key Takeaways • Q2 EBT of $1,623M highest ever quarterly EBT • Off-lease auction values at record-high levels • Portfolio performing well – historically low losses and strong recoveries during the period. Credit loss reserve reduced reflecting expectation of lower COVID-related losses • Distribution
Slide 41: Key Metrics
Key Metrics EBT ($M) $1,623 Q2 Headlines $1,123 $912 $962 • Launched the first loyalty-building Ford Pro FinSimple products and services with $543 digital commercial lines of credit and digital combined billing $30 • Established product teams to increase speed and robustness of our digital portfolio
Slide 42: Q2 2021 Net Receivables Mix
Q2 2021 Net Receivables Mix ($B) Net Investment in Operating Leases Consumer Financing Non-Consumer Financing $117.7 • Receivables declined $13B YoY, primarily reflecting lower $26.2 wholesale receivables $93.7 • Operating lease portfolio was $25.9 22% of total net receivables $74.3 $56.4 $19.3 $17.
Slide 43: U.S. Origination Metrics And Credit Loss Drivers
U.S. Origination Retail & Lease FICO and Retail Repossessions (000) and Metrics And Higher Risk Mix (%) Repossession Rate (%) Higher Risk Portfolio Mix (%) Repossession Rate (%) Credit Loss 743 748 747 Drivers 739 738 735 7 6% 6% 6% 6% 6% 5% 5 5 5 1.24% 3 1.04% 1.01% 3 • Disciplined and consistent 0
Slide 44: Worldwide Credit Loss Metrics
Worldwide Credit Loss Net Charge-Offs ($M) and LTR Ratio (%) Metrics LTR Ratio (%) $101 $88 0.35% $67 0.32% $45 0.24% $41 • Worldwide credit loss metrics 0.17% 0.16% $1 remain strong and below year 0.00% ago levels, reflecting historically low losses Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 •
Slide 45: U.S. Lease Metrics
U.S. Lease Metrics Lease Return Volume (000) and Return Rates (%) Lease Placement Volume (000) 24-Month Return Rate (%) 36-Month 39-Month / Other • Auction values up 39% YoY 70 75 12 62 62 67 58 65 11 57 reflecting continued strong 52 11 10 11 53 51 9 36 demand for used vehicles 38 59 41 76% 76% 63%
Slide 46: Cumulative Maturities At June 30, 2021
Cumulative Maturities At June 30, 2021* ($B) Assets Debt • Strong balance sheet is $138 inherently liquid with cumulative $120 debt maturities having a longer $107 tenor than asset maturities $81 $84 $65 • As of June 30, 2021 $72B of $47 $36 $138B assets are unencumbered Jul – Dec 2021 2022 2023 202
Slide 47: Funding Structure – Managed Receivables ($B)
Funding Structure – Managed 2020 Dec 31 2021 Jun 30 Receivables* ($B) Term Unsecured Debt $ 76.6 $ 67.1 Term Asset-Backed Securities 54.6 45.9 • Well capitalized with a strong Ford Interest Advantage / Deposits 6.5 8.0 balance sheet; $33B in net Other 5.7 6.0 liquidity Equity 15.6 13.1 • Funding is
Slide 48: Public Term Funding Plan
Public Term Funding Plan* ($B) • Completed $7B of public 2019 2020 2021 Through issuance in 2021 Actual Actual Forecast Jul 27 • Strong balance sheet and substantial liquidity provide Unsecured $ 17 $ 14 $ 5-8 $ 2 funding flexibility Securitizations** 14 13 8 - 10 5 • Significantly reduced public fu
Slide 49: 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 50: Appendix
Appendix EBT By Segment A2 Financing Shares And Contract Placement Volume A3 Total Net Receivables Reconciliation To Managed Receivables A4 Financial Statement Leverage Reconciliation To Managed Leverage A5 Liquidity Sources A6 Non-GAAP Financial Measures That Supplement GAAP Measures A7 Definitions
Slide 51: EBT By Segment ($M)
EBT By Segment* ($M) Q2 YTD H / (L) H / (L) 2021 2020 ** 2021 2020 ** Results United States and Canada segment $ 1,466 $ 1,021 $ 2,462 $ 1,995 Europe segment 81 16 147 65 All Other segment 22 5 7 (17) Total segments $ 1,569 $ 1,042 $ 2,616 $ 2,043 Unallocated other 54 38 (31) (31) Earnings before ta
Slide 52: Financing Shares And Contract Placement Volume
Financing Shares And Contract Placement Volume Q2 YTD 2020 2021 2020 2021 Share of Ford Sales* United States 77 % 47 % 67 % 47 % Canada 63 74 63 68 U.K. 44 37 44 36 Germany 34 41 39 39 China 37 45 36 43 Wholesale Share United States 73 % 71 % 74 % 72 % Canada 42 9 45 11 U.K. 100 100 100 100 Germany
Slide 53: Total Net Receivables Reconciliation To Managed Receivables ($B)
Total Net Receivables Reconciliation To Managed Receivables ($B) 2020 2020 2021 Jun 30 Dec 31 Jun 30 Finance receivables, net (GAAP) $ 103.9 $ 105.0 $ 91.5 Net investment in operating leases (GAAP) 26.4 26.7 26.2 Total net receivables* $ 130.3 $ 131.7 $ 117.7 Unearned interest supplements and residu
Slide 54: Financial Statement Leverage Reconciliation To Managed Leverage ($B)
Financial Statement Leverage Reconciliation To Managed Leverage* ($B) 2020 2020 2021 Jun 30** Dec 31 Jun 30 Leverage Calculation Debt $ 135.3 $ 137.7 $ 121.0 Adjustments for cash (17.1) (18.5) (15.3) Adjustments for derivative accounting (1.8) (1.5) (0.9) Total adjusted debt $ 116.4 $ 117.7 $ 104.8
Slide 55: Liquidity Sources ($B)
Liquidity Sources* ($B) 2020 2020 2021 Jun 30 Dec 31 Jun 30 Liquidity Sources Cash $ 17.1 $ 18.5 $ 15.3 Committed asset-backed facilities 37.1 38.1 38.4 Other unsecured credit facilities 2.5 2.5 2.6 Total liquidity sources $ 56.7 $ 59.1 $ 56.3 Utilization of Liquidity Securitization & restricted cas
Slide 56: 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 57: Definitions And Calculations
Definitions And Calculations ABS capacity in excess of eligible receivables and other 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”), w