Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Company — Q1 2016 Earnings Presentation
47 slides from Ford Mtr Co Del's earnings presentation, Apr 28, 2016
Slide 1: 1Q 2016 Earnings Review
1Q 2016 EARNINGS REVIEW April 28, 2016 1
Slide 2: Business Review and Appendix Contents
Business Review Appendix Financial Headlines 3 Income from Continuing Operations A1 Creating Value 4 Special Items A2 Progress This Quarter 5 Sector Income Statement A3 Other Highlights 6 Calculation of Earnings Per Share A4 Business Environment 7 Automotive Debt A5 China Unconsolidated Affiliates A
Slide 3: Financial Headlines
FINANCIAL HEADLINES Total Company Total Company Global Automotive Automotive Operating- Pre-Tax Results* Revenue Market Share Operating Margin* Related Cash Flow* 1Q 2016 $3.8B $37.7B 7.1% 9.8% $2.7B B/(W) 1Q 2015 $2.1B $3.8B 0.2 ppts 5 ppts $2.2B * Excludes special items; see Appendix for detail, r
Slide 4: Creating Value
CREATING VALUE GROWTH RETURNS ! RISK REWARDS 4
Slide 5: Progress This Quarter
PROGRESS THIS QUARTER GROWTH RETURNS ! RISK REWARDS Grew top line – Record Company Operations outside NA Distributed $1.7B to volume, revenue and pre-tax profit and 1Q profitable in total and shareholders global market share Auto operating-related improved YOY cash flow Distributions i
Slide 6: Other Highlights
OTHER HIGHLIGHTS F-150 Lincoln MKX 2016 Ford F-150 Consumer Reports Ford a 2016 World’s Most Ethical China 1Q Lincoln sales up three-fold Top Pick; SuperCab and SuperCrew Company by Ethisphere Institute – compared to a year ago earned IIHS Top Safety Pick 7th year in a row First automaker to test au
Slide 7: Business Environment
BUSINESS ENVIRONMENT Global GDP growth for 2016 expected to be in 3.1 - 3.5% range – Favorable conditions for industry sales in the U.S.; consumer confidence supported by healthy labor market conditions – Ongoing recovery in Europe – China growth supported by stimulus measures Strong U.S. dollar
Slide 8: Financial Review
FINANCIAL REVIEW
Slide 9: Key Financial Summary
KEY FINANCIAL SUMMARY B / (W) 1Q 2016 1Q 2015 Wholesales (000) 1,720 152 Strong start for the year Revenue (Bils) $37.7 $3.8 Operating results* Wholesale volume up 10%; Automotive sector pre-tax results $3,338 $2,028 revenue up 11%, 15% at Financial Services sector pre tax-results 499 30 Total Compa
Slide 10: Total Company
TOTAL COMPANY 1Q 2016 PRE-TAX RESULTS* (MILS) All-time record quarterly $3,837 Company profit $3,080 All-time record quarterly North America profit Best quarterly profit in $434 $499 Europe since 2008 $220 $(256) $(14) $(126) Auto operations outside of NA profitable in total North South Middle East
Slide 11: 1Q 2016 Key Metrics
AUTOMOTIVE SECTOR 1Q 2016 KEY METRICS* Wholesales Revenue Market Share Operating Margin Pre-Tax Results All metrics strong and (000) (Bils) (Pct) (Pct) (Mils) improved 1,720 $35.2 9.8% $3,338 1,568 $31.8 6.9% 7.1% Top line up YOY Global market share 4.8% increased driven by NA, $1,310 Europe and AP
Slide 12: 1Q 2016 Pre-Tax Results
AUTOMOTIVE SECTOR 1Q 2016 PRE-TAX RESULTS* (MILS) $2,028 Industry $263 $3,338 Share 369 Stocks 653 Material Excl. Commodities $358 Mix / Other 572 Commodities 488 Warranty / Freight / Other 120 $1,857 Pricing $ 935 Profit gain driven by higher $1,310 Incentives / Other (1,483) Manufacturing Incl. Vo
Slide 13: 1Q 2016 Key Metrics – North America
AUTOMOTIVE SECTOR – NORTH AMERICA 1Q 2016 KEY METRICS Strong performance Wholesales Revenue Market Share Operating Margin Pre-Tax Results across the board (000) (Bils) (Pct) (Pct) (Mils) Wholesale volume and $3,080 814 $23.9 14.0% 14.6% 12.9% revenue sharply higher 678 $20.0 $1,569 Market share up –
Slide 14: 1Q 2016 Pre-Tax Results – North America
AUTOMOTIVE SECTOR – NORTH AMERICA 1Q 2016 PRE-TAX RESULTS (MILS) $1,511 Profit improvement due to $3,080 Industry $216 Material Excl. Commodities $260 higher volume, favorable Share Stocks 341 691 Commodities Warranty / Freight / Other 434 239 mix and lower costs Mix / Other 163 $1,569 Pricing $ 574
Slide 15: 1Q 2016 Key Metrics – South America
AUTOMOTIVE SECTOR – SOUTH AMERICA 1Q 2016 KEY METRICS Results driven by difficult Wholesales Revenue Market Share Operating Margin Pre-Tax Results (000) (Bils) (Pct) (Pct) (Mils) external conditions Top line down sharply – 101 9.6% $1.5 8.4% industry and exchange (12.5)% 63 $(189) Market share down
Slide 16: 1Q 2016 Pre-Tax Results – South America
AUTOMOTIVE SECTOR – SOUTH AMERICA 1Q 2016 PRE-TAX RESULTS (MILS) $2 $76 $75 Higher loss due to lower industry – Brazil down 29% $(85) $(135) $(189) Cost performance $(256) Industry $(91) continued to be favorable Share (45) Stocks (9) $(67) Mix / Other 10 Removed 3rd crew at Camaçari during the Econ
Slide 17: 1Q 2016 Key Metrics – Europe
AUTOMOTIVE SECTOR – EUROPE 1Q 2016 KEY METRICS Europe Transformation Wholesales* Revenue Market Share Operating Margin Pre-Tax Results Strategy is delivering (000) (Bils) (Pct) (Pct) (Mils) Top line grew – revenue up 399 $434 376 $6.9 $6.9 7.7% 8.0% 6.3% 6% at constant exchange Share higher – driven
Slide 18: 1Q 2016 Pre-Tax Results – Europe
AUTOMOTIVE SECTOR – EUROPE 1Q 2016 PRE-TAX RESULTS (MILS) $476 Industry $91 $434 Share 20 Stocks (10) Mix / Other 160 Every part of the business $261 improved Favorable mix driven by $106 $48 $52 SUVs and commercial $6 $3 vehicles $(42) Reduced both contribution Market Factors Total Cost Volume / Ne
Slide 19: 1Q 2016 Key Metrics – Middle East & Africa
AUTOMOTIVE SECTOR – MIDDLE EAST & AFRICA 1Q 2016 KEY METRICS Wholesales Revenue Market Share Operating Margin Pre-Tax Results (000) (Bils) (Pct) (Pct) (Mils) 7.5% $79 Results adversely 47 46 $1.1 4.3% 4.3% impacted by weak $0.9 currencies, low oil prices and political strife (1.5)% $(14) Decline in
Slide 20: 1Q 2016 Key Metrics – Asia Pacific
AUTOMOTIVE SECTOR – ASIA PACIFIC 1Q 2016 KEY METRICS Another strong quarter driven by new products Wholesales* Revenue Market Share Operating Margin Pre-Tax Results (000) (Bils) (Pct) (Pct) (Mils) Top line grew – revenue up $2.7 25% at constant exchange 3.6% 8.2% $2.3 3.3% 398 $220 Market share up –
Slide 21: 1Q 2016 Pre-Tax Results – Asia Pacific
AUTOMOTIVE SECTOR – ASIA PACIFIC 1Q 2016 PRE-TAX RESULTS (MILS) Industry Share $ 66 61 Higher profit driven mainly Stocks (40) $115 Mix / Other 214 by favorable mix, primarily $301 SUVs $220 China and ex-China $105 operations contributed to $34 $13 YOY gain $(39) Lower net pricing driven by $(76) $(
Slide 22: 1Q 2016 Key Metrics – Ford Credit
FINANCIAL SERVICES SECTOR – FORD CREDIT 1Q 2016 KEY METRICS U.S. Retail and Lease Contract Managed Average Over-60-Day Loss-to-Receivables Volume Receivables* Pre-Tax Results Placement Delinquencies (LTR) (000) (Bils) (Mils) FICO (Pct) (Pct) Strong quarterly profit $132 739 732 482 480 $514 Receivab
Slide 23: 1Q 2016 Pre-Tax Results – Ford Credit
FINANCIAL SERVICES SECTOR – FORD CREDIT 1Q 2016 PRE-TAX RESULTS (MILS) $31 $483 $514 Strong profit Growth in all products and $137 regions $36 $17 Credit losses and residual $(65) $(61) $(33) performance primarily driven by lower auction Volume / Financing Credit Lease values 1Q 2015 1Q 2016 Mix Mar
Slide 24: U.S. Automotive Financing Trends
FINANCIAL SERVICES SECTOR – FORD CREDIT U.S. AUTOMOTIVE FINANCING TRENDS Lease Share of Retail Sales Retail Contract Placement Terms Average Retail Term Retail ≥73 Months Mix Industry* 28% 29% 32% 63 mo. 64 mo. 67 mo. 63 mo. 64 mo. Balanced lease portfolio 27% 28% 26% through One Ford Lease 22% 22%
Slide 25: Cash
AUTOMOTIVE SECTOR CASH (Bils) Cash at end of period 1Q 2016 $24.3 Strength of cash flow Cash at beginning of period 23.6 highlights quality of Change in Cash $0.7 earnings Automotive pre-tax profits $3.3 Capital spending (1.5) Depreciation and tooling amortization 1.1 Cash and liquidity Changes in w
Slide 26: Industry and GDP Planning Assumptions
INDUSTRY AND GDP PLANNING ASSUMPTIONS Industry (Mils) GDP Growth (Pct) Global industry to grow 2015 2016 2015 2016 modestly in 2016 Global 88.2 88.0 – 92.0 3.2%* 3.1 – 3.5%* Outlook for major market industry volumes U.S. 17.8 17.5 – 18.5 2.4% 2.1 – 2.6% unchanged from prior guidance Brazil 2.6 2.0 –
Slide 27: 2016 Business Unit Guidance
2016 BUSINESS UNIT GUIDANCE 2015 FY 2016 FY Results Guidance Automotive North America $9,345M ≈ 2015 Operating Margin 10.2% 9.5% or higher South America $(832)M Loss > 2015 Europe 259M > 2015 Middle East & Africa 31M ≥ 2015 Asia Pacific 765M > 2015 Other Automotive (796)M ~ $(800)M Ford Credit $2,08
Slide 28: 2016 Company Guidance
2016 COMPANY GUIDANCE 2015 FY 2016 FY Results Guidance Automotive Revenue $140.6B ≥ 2015 Automotive Operating Margin* 6.8% ≥ 2015 Automotive Operating-Related Cash Flow* $7.3B Strong, but < 2015 Total Company Pre-Tax Profits* $10.8B ≥ 2015 Operating Effective Tax Rate* (Pct) 28.6% Low 30s Operating
Slide 29: Key Takeaways
KEY TAKEAWAYS 1. Record quarter following a record year 2. Top line grew; global market share increased 3. Net income, Company pre-tax profit and operating EPS more than doubled a year ago 4. Record quarterly North America profit; best quarterly profit in Europe since 2008; operations outside North
Slide 30: Q&A
Q&A April 28, 2016 Go Further
Slide 31: 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 32: Appendix
APPENDIX
Slide 33: Income from Continuing Operations
INCOME FROM CONTINUING OPERATIONS 1Q (Mils) 2015 2016 Automotive North America $1,569 $3,080 South America (189) (256) Europe (42) 434 Middle East & Africa 79 (14) Asia Pacific 105 220 Other Automotive (212) (126) Total Automotive (excl. special items) $1,310 $3,338 Special items -- Automotive -- (1
Slide 34: Special Items
SPECIAL ITEMS 1Q (Mils) 2015 2016 Pre-tax Special Items Separation-related actions $ -- $(174) Japan / Indonesia Market Closure -- (12) Total Pre-tax Special Items $ -- $(186) Tax-related Special Items* $ -- $(66) Memo: Special Items impact on earnings per share* $ -- $(0.07) * Includes related tax
Slide 35: Sector Income Statement
SECTOR INCOME STATEMENT For the quarters ended March 31, 1Q Unaudited (Mils) 2015 2016 AUTOMOTIVE Revenues $31,800 $35,257 Costs and Expenses Cost of sales 28,472 30,281 Selling, administrative, and other expenses 2,472 2,562 Total costs and expenses 30,944 32,843 Interest expense 165 200 Interest i
Slide 36: 2016 Calculation of Earnings Per Share
2016 CALCULATION OF EARNINGS PER SHARE 1Q After-Tax Operating Net Income Results Attributable Excluding to Ford Special Items After-Tax Results (Mils) Diluted after-tax results $2,452 $2,704 Basic and Diluted Shares (Mils) Basic shares (Average shares outstanding) 3,970 3,970 Net dilutive options 26
Slide 37: Automotive Debt
AUTOMOTIVE SECTOR AUTOMOTIVE DEBT Dec. 31, Mar. 31, (Bils) 2015 2016 Public unsecured debt $6.4 $6.4 U.S. Department of Energy 3.8 3.7 Other debt (including international) 2.6 2.9 Total Automotive debt $12.8 $13.0 Memo: Automotive debt payable within one year $1.8 $1.9 A5 37
Slide 38: China Unconsolidated Affiliates
AUTOMOTIVE SECTOR – ASIA PACIFIC CHINA UNCONSOLIDATED AFFILIATES 1Q Memo: 2015 2016 FY 2015 China Unconsolidated Affiliates Wholesales (000) 289 310 1,123 Ford Equity Income (Mils)* $360 $443 $1,514 China JV Net Income Margin 15.8% 16.4% 15.6% * Ford equity share of China joint ventures net income A
Slide 39: 1Q Industry SAAR
AUTOMOTIVE SECTOR 1Q INDUSTRY SAAR Units (Mils) 2015 2016 B / (W) North America 20.6 21.3 0.7 U.S. 17.1 17.5 0.4 South America 4.6 3.7 (0.9) Brazil 3.0 2.2 (0.8) Europe 19.1 20.1 1.0 Middle East & Africa 4.3 4.0 (0.3) Asia Pacific 38.9 40.9 2.0 China 23.8 26.2 2.4 Global 87.5 90.1 2.6 A7 39
Slide 40: 1Q Market Share
AUTOMOTIVE SECTOR 1Q MARKET SHARE (Percent) 2015 2016 B / (W) Total Share of Total Industry North America 14.0% 14.6% 0.6 ppts U.S. 14.7 15.5 0.8 South America 9.6 8.4 (1.2) Brazil 10.5 8.8 (1.7) Europe 7.7 8.0 0.3 Middle East & Africa 4.3 4.3 -- Asia Pacific 3.3 3.6 0.3 China* 4.3 4.5 0.2 Global 6.
Slide 41: Production Volumes
AUTOMOTIVE SECTOR PRODUCTION VOLUMES (000) 1Q 2016 2Q 2016 O / (U) O / (U) Units 2015 Units 2015 North America 854 131 850 35 South America 65 (37) 75 (19) Europe 425 (11) 440 37 Middle East & Africa 21 - 24 1 Asia Pacific 424 51 345 (17) Total 1,789 134 1,734 37 A9 41
Slide 42: Selected Markets – Dealer Stocks
SELECTED MARKETS DEALER STOCKS (000) U.S. Brazil Europe 21 MEA China 1Q March 31, 2016 755 19 230 70 169 December 31, 2015 676 24 235 67 165 Stock Change H / (L) 79 (5) (5) 3 4 1Q Prior Year March 31, 2015 619 35 187 73 155 December 31, 2014 611 31 185 72 132 Stock Change H / (L) 8 4 2 1 23 Year-Ove
Slide 43: Net Interest Reconciliation to GAAP
AUTOMOTIVE SECTOR NET INTEREST RECONCILIATION TO GAAP 1Q (Mils) 2015 2016 Interest expense (GAAP) $(165) $(200) Investment-related interest income (GAAP) 45 61 Interest income / (expense) on income taxes (GAAP) (9) (2) Subtotal $(129) $(141) Adjustment for items included / excluded from net interest
Slide 44: Operating-Related Cash Flows Reconciliation to GAAP
AUTOMOTIVE SECTOR OPERATING-RELATED CASH FLOWS RECONCILIATION TO GAAP Memo: (Bils) 1Q 2015 1Q 2016 FY 2015 Net cash provided by / (used in) operating activities (GAAP) $1.0 $3.6 $12.3 Items included in operating-related cash flows Capital spending (1.8) (1.5) (7.1) Proceeds from the exercise of stoc
Slide 45: Managed Receivables Reconciliation to GAAP
FINANCIAL SERVICES SECTOR – FORD CREDIT MANAGED RECEIVABLES RECONCILIATION TO GAAP Mar . 31, Dec. 31, Mar . 31, (Bils) 2015 2015 2016 Net R eceivables* Finance receivables -- North America Segment Consumer retail financing $43.7 $49.2 $49.4 Non-consumer: Dealer financing** 22.5 25.5 27.1 Non-consume
Slide 46: Managed Leverage Reconciliation to GAAP
FINANCIAL SERVICES SECTOR – FORD CREDIT MANAGED LEVERAGE RECONCILIATION TO GAAP Mar. 31, Dec. 31, Mar. 31, (Bils) 2015 2015 2016 Leverage Calculation Total debt* $109.1 $119.6 $127.4 Adjustments for cash** (13.0) (11.2) (14.9) Adjustments for derivative accounting*** (0.7) (0.5) (1.0) Total adjusted
Slide 47: Definitions and Calculations
DEFINITIONS AND CALCULATIONS Automotive Records References to Automotive records for operating-related 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