Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Credit Company — FY2017 Earnings Presentation
44 slides from Ford Mtr Co Del's earnings presentation, Jan 24, 2018
Slide 1: 4Q 2017 And Full Year Earnings Review And 2018 Outlook
4Q 2017 And Full Year Earnings Review And 2018 Outlook January 24, 2018 (Preliminary Results) FC1
Slide 2: Ford Credit Strategy
Ford Credit Strategy ORIGINATE SERVICE FUND • Support Ford and • High customer and dealer • Strong liquidity Lincoln sales satisfaction • Diverse sources and channels • Strong dealer relationships • World-class servicing • Cost effective • Full spread of business • Credit losses within • Credit avai
Slide 3: 4Q 2017 Highlights
4Q 2017 Highlights • Strong fourth quarter pre-tax profit across all segments • Receivables grew globally led by retail • Significant benefit resulted from Tax Cuts and Jobs Act in the U.S. • Launched Canvas vehicle subscription service in Los Angeles, in addition to San Francisco • Ford Credit and
Slide 4: Financial Review
Financial Review
Slide 5: Key Financial Summary
Key Financial Summary 4Q FY H / (L) H / (L) 2017 2016 2017 2016 Total contract volumes (000) 576 57 2,149 38 Results (Mils) Americas segment $ 487 $ 144 $ 1,795 $ 284 Pre-tax results higher YoY Europe segment 106 125 329 91 Managed receivables grew across Asia Pacific segment 16 1 85 24 all segments
Slide 6: Tax Cuts And Jobs Act – Impact To Ford Credit
Tax Cuts and Jobs Act – Impact to Ford Credit (Mils) FY 2017 Effective Tax 4Q 2017 FY 2017 Rate Pre-tax results $ 610 $ 2,310 Tax reform resulted in $1.4 billion (Provision for) / Benefit from income taxes, before adjustments (202) (733) 32% of favorable benefits Tax Cuts And Jobs Act Ford Credit’s
Slide 7: FY 2017 Pre-Tax Results By Segment
FY 2017 Pre-Tax Results By Segment (Mils) $2,310 $2,209 $1,795 Solidly profitable globally Improved YoY in all segments $329 $85 $101 Asia Unallocated Total Americas Europe Pacific Other* B / (W) FY 2016 $ 431 $284 $91 $24 $32 * See Appendix for definitions FC7
Slide 8: FY 2017 Key Metrics
FY 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) (Bils) (Bils) (Mils) FICO (Pct) (Pct) $143 $151 $2,310 0.53% $130 $137 739 746 $1,879 0.47% 0.15% Strong and improved YoY PBT 0.14% Bus
Slide 9: FY 2017 Pre-Tax Results
FY 2017 Pre-Tax Results (Mils) Residual Losses $118 Supplemental Depreciation (62) PBT improved $431M YoY reflecting favorable volume and Non-Repeat of 2016 Pension Settlement $ 77 Operating Costs & Other (37) mix, lease residual improvement and financing margin Volume and mix up due to global recei
Slide 10: 4Q 2017 Pre-Tax Results By Segment
4Q 2017 Pre-Tax Results By Segment (Mils) $609 $610 $487 Solidly profitable globally Improved YoY in all segments $106 $16 $1 Asia Unallocated Total Americas Europe B / (W) Pacific Other* 4Q 2016 $212 $144 $125 $1 $(58) * See Appendix for definitions FC10
Slide 11: 4Q 2017 Key Metrics
4Q 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) (Bils) (Bils) (Mils) FICO (Pct) (Pct) $143 $151 Strong 4Q PBT up sharply YoY $130 $137 741 750 $610 0.59% 0.60% Receivables grew global
Slide 12: 4Q 2017 Pre-Tax Results
4Q 2017 Pre-Tax Results (Mils) 4Q Ford Credit PBT YoY improvement of $212M broad-based as all factors favorable except credit losses Residual Losses $106 Volume and mix gain due to global Supplemental Depreciation (50) receivables growth Non-Repeat of 2016 Pension Settlement $ 77 Operating Costs & O
Slide 13: Americas Financing Shares And Contract Placement Volume
Americas Financing Shares And Contract Placement Volume 4Q FY 2016 2017 2016 2017 Financing Shares (%) Retail Installment and Lease Share of Ford Retail Sales (excl. Fleet) United States 47 % 58 % 56 % 55 % Canada 80 87 75 77 Wholesale Share United States 76 % 75 % 76 % 76 % Canada 62 59 61 61 Contr
Slide 14: Europe Financing Shares And Contract Placement Volume
Europe Financing Shares And Contract Placement Volume 4Q FY 2016 2017 2016 2017 Financing Shares (incl. Fleet) (%) Retail Installment and Lease Share of Total Ford Sales U.K. 39 % 38 % 38 % 35 % Germany 51 47 47 48 Total Europe Segment 39 38 37 37 Wholesale Share U.K. 100 % 100 % 100 % 100 % Germany
Slide 15: Asia Pacific Financing Shares And Contract Placement Volume
Asia Pacific Financing Shares And Contract Placement Volume 4Q FY 2016 2017 2016 2017 Financing Shares (incl. Fleet) (%) Retail Installment Share of Total Ford Sales China 26 % 29 % 19 % 28 % India 11 10 5 10 Wholesale Share China 60 % 60 % 58 % 57 % India 34 36 29 36 Contract Placement Volume - New
Slide 16: 4Q 2017 Net Receivables Mix
4Q 2017 Net Receivables Mix (Bils) Net Investment in Operating Leases Consumer Financing Non-Consumer Financing $142.7 $26.7 $111.3 4Q 2017 H/(L) 2016 Prudent management of lease mix (Pct.) (Ppts.) $26.4 SUV / CUV 55 1 Operating lease portfolio was 19% Car 22 (4) Truck 23 3 of total net receivables
Slide 17: U.S. Origination Metrics
U.S. Origination Metrics FICO and Higher Risk Mix (Pct) Higher Risk Portfolio Mix Retail and Lease Average Placement FICO 748 750 743 741 741 744 6% 6% 6% 6% 6% 6% Disciplined and consistent underwriting practices Portfolio quality evidenced by FICO 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 scores and steady ri
Slide 18: U.S. Retail And Lease Credit Loss Drivers
U.S. Retail And Lease Credit Loss Drivers Over-60-Day Delinquencies (excl. Bankruptcies) Repossessions (000) and Repo. Rate (Pct) Repo. Rate Repossessions 1.16% 1.16% 1.12% 1.16% 0.16% 0.16% 0.16% 1.06% 1.06% 0.15% 0.13% 0.13% Delinquencies and repossessions 10 9 9 10 remain low 8 8 Severity trended
Slide 19: Worldwide Credit Loss Metrics
Worldwide Credit Loss Metrics Charge-Offs (Mils) and LTR Ratio (Pct) LTR Ratio Charge-offs 0.39% 0.39% 0.35% 0.33% 0.32% 0.29% Worldwide credit loss metrics remain strong $107 $132 $119 $101 $118 $143 Credit loss reserve based on 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 historical losses, portfolio quality and
Slide 20: U.S. Lease Origination Metrics
U.S. Lease Origination Metrics Lease Placement Volume (000) 24-Month 39-Month / Other 36-Month 91 98 97 91 89 82 10 10 10 11 11 8 69 70 77 76 72 65 9 10 11 11 9 9 Lease share continues to be below 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 industry reflecting Ford sales mix Lease Share of Retail Sales (Pct) Lowe
Slide 21: U.S. Lease Residual Performance
U.S. Lease Residual Performance Lease Return Volume (000) and Return Rates (Pct) Return Rates Return Volume 83% 81% 81% 79% 78% 77% Healthy used car market supporting lease residual and credit 60 65 79 80 70 61 loss performance 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Auction values higher YoY Off-Lease Auctio
Slide 22: Funding Structure – Managed Receivables
Funding Structure – Managed Receivables* (Bils) $151 $137 $5 $127 $4 $5 Commercial Paper Ford Interest Advantage / Deposits $2 $6 $6 $53 $50 Term Asset-Backed Securities $50 Funding is diversified across platforms and markets Well capitalized with strong $75 investment grade balance sheet $66 Term D
Slide 23: Public Term Funding Plan
Public Term Funding Plan* (Bils) 2015 2016 2017 2018 Actual Actual Actual Forecast Unsecured -- Currency of issuance (USD Equivalent) USD $ 11 $ 9 $ 10 $ 10 - 12 CAD 1 1 2 1-2 EUR / GBP 4 3 3 2-3 Other 1 1 1 1 Total unsecured $ 17 $ 14 $ 16 $ 14 - 18 Securitizations $ 13 $ 13 $ 15 $ 13 - 15 Total pu
Slide 24: Balance Sheet Metrics
Balance Sheet Metrics Leverage (to 1 )* Managed Financial Statement 10.2 9.9 8-9 9.5 9.2 8.7 8.0 Managed leverage at low end of target range reflecting favorable YE15 YE16 YE17 Target one-time tax adjustment Liquidity Available For Use (Bils) Liquidity remains strong and above target $30 $27 $25+ $2
Slide 25: 2018 Guidance
2018 Guidance (Mils) 2016 FY 2017 FY 2018 FY Expect 2018 pre-tax profit to be Results Results Plan strong but lower than 2017 Distributions are planned to maintain leverage within target Pre-Tax Profit $ 1,879 $ 2,310 < 2017 FY range Expect distributions of about Distributions $ - $ 406 ~ $2,000 $2
Slide 26: Key Takeaways
Key Takeaways • Full year 2017 pre-tax profit $2.3 billion; up 23% YoY • Receivables grew globally • Consistent originations, servicing, and collections • Funding plan well-positioned for business cycles • Expect strong profitability in 2018 and about $2 billion in distributions • Strategic asset to
Slide 27: 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 28: Appendix
Appendix
Slide 29: Appendix
Appendix Credit Ratings FCA1 Americas Financing Shares And Contract Placement Volume FCA2 Europe Financing Shares And Contract Placement Volume FCA3 Asia Pacific Financing Shares And Contract Placement Volume FCA4 U.S. Origination Metrics FCA5 U.S. Retail And Lease Credit Loss Drivers FCA6 Worldwide
Slide 30: 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 31: Americas Financing Shares And Contract Placement Volume
Americas Financing Shares And Contract Placement Volume 2013 2014 2015 2016 2017 Financing Shares (%) Retail Installment and Lease Share of Ford Retail Sales (excl. Fleet) United States 56 % 63 % 65 % 56 % 55 Canada 65 67 73 75 77 Wholesale Share United States 77 % 77 % 76 % 76 % 76 Canada 65 64 64
Slide 32: Europe Financing Shares And Contract Placement Volume
Europe Financing Shares And Contract Placement Volume 2013 2014 2015 2016 2017 Financing Shares (incl. Fleet) (%) Retail Installment and Lease Share of Total Ford Sales U.K. 38 % 40 % 40 % 38 % 35 Germany 45 48 48 47 48 Total Europe Segment 34 36 37 37 37 Wholesale Share U.K. 100 % 100 % 100 % 100 %
Slide 33: Asia Pacific Financing Shares And Contract Placement Volume
Asia Pacific Financing Shares And Contract Placement Volume 2013 2014 2015 2016 2017 Financing Shares (incl. Fleet) (%) Retail Installment Share of Total Ford Sales China 13 % 13 % 12 % 19 % 28 % India - - 1 5 10 Wholesale Share China 59 % 62 % 56 % 58 % 57 % India - - 14 29 36 Contract Placement Vo
Slide 34: U.S. Origination Metrics
U.S. Origination Metrics FICO and Higher Risk Mix (Pct) Higher Risk Portfolio Mix Retail and Lease Average Placement FICO 746 738 741 740 739 5% 5% 6% 6% 6% Disciplined and consistent underwriting practices 2013 2014 2015 2016 2017 Portfolio quality evidenced by FICO scores and steady risk mix Retai
Slide 35: U.S. Retail And Lease Credit Loss Drivers
U.S. Retail And Lease Credit Loss Drivers Over-60-Day Delinquencies (excl. Bankruptcies) Repossessions (000) and Repo. Rate (Pct) 75 Repo. Rate 70 65 Repossessions 60 1.18% 1.13% 55 1.06% 0.98% 1.05% 50 0.15% 0.14% 0.15% 45 0.14% 40 36 0.12% 29 33 Delinquencies and repossessions 35 28 28 30 25 remai
Slide 36: Worldwide Credit Loss Metrics
Worldwide Credit Loss Metrics Charge-Offs (Mils) and LTR Ratio (Pct) LTR Ratio 700 Charge-offs 0.34% 0.31% 0.23% 600 500 0.18% 0.19% 400 300 Worldwide credit loss metrics 200 remain strong 100 $176 $209 $271 $415 $481 0 Credit loss reserve based on 2013 2014 2015 2016 2017 historical losses, portfol
Slide 37: U.S. Lease Residual Performance
U.S. Lease Residual Performance Lease Return Volume (000) and Return Rates (Pct) Return Rates 400 Return Volume 80% 78% 74% 78% 71% 300 Healthy used car market supporting lease residual and credit 200 100 loss performance 114 189 180 246 290 0 Auction values stronger than 2013 2014 2015 2016 2017 ex
Slide 38: U.S. Lease Origination Metrics
U.S. Lease Origination Metrics Lease Placement Volume (000) 24-Month 39-Month / Other 36-Month 407 393 357 368 324 92 56 38 87 94 276 298 290 189 230 41 40 39 39 40 2013 2014 2015 2016 2017 Lease share continues to be below industry reflecting Ford sales mix Lease Share of Retail Sales (Pct) Ford Cr
Slide 39: Total Net Receivables Reconciliation To Managed Receivables
Total Net Receivables Reconciliation To Managed Receivables* (Bils) 2015 2016 2017 Dec 31 Dec 31 Dec 31 Americas Segment Consumer financing $ 47.3 $ 51.2 $ 55.1 Non-Consumer financing 27.2 28.9 29.8 Net investment In operating leases 24.9 26.9 26.4 Total Americas Segment $ 99.4 $ 107.0 $ 111.3 Europ
Slide 40: Financial Statement Leverage Reconciliation To Managed Leverage
Financial Statement Leverage Reconciliation To Managed Leverage* (Bils) 2015 2016 2017 Dec 31 Dec 31 Dec 31 Leverage Calculation Total debt $ 119.6 $ 126.5 $ 137.8 Adjustments for cash (11.2) (10.8) (11.8) Adjustments for derivative accounting (0.5) (0.3) - Total adjusted debt $ 107.9 $ 115.4 $ 126.
Slide 41: Liquidity Sources
Liquidity Sources* (Bils) 2015 2016 2017 Dec 31 Dec 31 Dec 31 Liquidity Sources Cash $ 11.2 $ 10.8 $ 11.8 Committed ABS facilities 33.2 34.6 33.4 Other unsecured credit facilities 2.3 2.5 3.3 Ford corporate credit facility allocation 3.0 3.0 3.0 Total liquidity sources $ 49.7 $ 50.9 $ 51.5 Utilizati
Slide 42: Balance Sheet Liquidity Profile
Balance Sheet Liquidity Profile (Bils) Cumulative Maturities at December 31, 2017 Assets* Debt** $161 $147 $138 $125 $106 $93 $87 $61 *** 2018 2019 2020 2021 & Beyond Unsecured Long-Term Debt Maturities $13.3 $13.4 $13.8 $28.4 * Includes finance receivables net of unearned income, investment in oper
Slide 43: 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
Slide 44: 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
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