Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Company — FY2016 Earnings Presentation
58 slides from Ford Mtr Co Del's earnings presentation, Jan 26, 2017
Slide 1: 4Q 2016 and Full Year Earnings Review and 2017 Outlook
4Q 2016 AND FULL YEAR EARNINGS REVIEW AND 2017 OUTLOOK January 26, 2017 (PRELIMINARY RESULTS) 1
Slide 2: Business Review and Appendix Contents
Business Review Appendix Appendix (continued) Financial Headlines 3 Reconciliations to GAAP Full Year Financial Review Creating Value 4 Adjusted Pre-Tax Profit A1 North America A15 Other Highlights 5 Adjusted Effective Tax Rate A2 South America A16 Special Items A3 Europe A17 Financial Review Adjust
Slide 3: Financial Headlines
FINANCIAL HEADLINES EPS Automotive Total Company Automotive Segment Total Company Adjusted Pre-Tax Adjusted Total Company Global Segment Operating Cash Net Income Results* EPS* Revenue Market Share Operating Margin Flow FY 2016 $4.6B $10.4B $1.76 $151.8B 7.3% 6.7% $6.4B B/W $2.8B $0.4B $0.17 $2.2B 0
Slide 4: Creating Value – Progress in 2016
CREATING VALUE – PROGRESS IN 2016 GROWTH RISK RETURNS REWARDS FY wholesale volume Strong NA results 2nd best FY adjusted $3.5 billion distributed and Auto revenue sustained, while PBT for Company and to shareholders, about flat YoY operations outside NA AP; record profit in including 1st pro
Slide 5: Other Highlights
OTHER HIGHLIGHTS Ford best-selling brand in U.S. for F-Series best-selling truck in U.S. Transit, best-selling cargo van in the seventh straight year 40 years in a row world; Ford, best-selling commercial vehicle brand in Europe Chariot expanded to Austin; City Ford awarded the most U.S. patents Lau
Slide 6: Financial Review
FINANCIAL REVIEW
Slide 7: Key Financial Summary
KEY FINANCIAL SUMMARY 4Q FY 2016 B / (W) 2015 2016 B / (W) 2015 Strong quarter and Wholesales (000) Revenue (Bils) 1,707 $ 38.7 $ (68) (1.6) 6,651 151.8 16 2.2 another strong year – Results (Mils) 2nd best FY Company Automotive Segment $ 2,042 $ (280) $ 9,422 $ (146) adjusted PBT Financial Services
Slide 8: FY 2016 Adjusted Pre-Tax Results (Mils)
TOTAL COMPANY FY 2016 ADJUSTED PRE-TAX RESULTS* (MILS) $9,422 $10,375 $9,001 2nd best Auto PBT Auto operations outside NA profitable in total and improved YoY $1,820 $1,205 $627 Record Europe FY PBT; 2nd best AP PBT $(302) $(867) $(1,109) Financial Services solidly Automotive Segment Financial profi
Slide 9: FY 2016 Key Metrics
AUTOMOTIVE SEGMENT FY 2016 KEY METRICS Wholesales Revenue Market Share Operating Margin Pre-Tax Results FY Auto PBT and operating (000) (Bils) (Pct) (Pct) (Mils) margin close to last year’s 6,635 6,651 $140.6 $141.5 7.4% 7.3% $9,568 $9,422 record results 6.8% 6.7% Wholesales and revenue about unchan
Slide 10: FY 2016 Pre-Tax Results (Mils)
AUTOMOTIVE SEGMENT FY 2016 PRE-TAX RESULTS (MILS) $9,568 $9,422 Industry $ 517 Material Excl. Commodities $(305) Ratification Bonus $452 Lower Auto PBT driven by Commodities 919 Share Stocks (32) (1,244) Warranty Other (880) 463 Parts & Service Other 236 389 warranty costs, mainly Mix / Other 1,411
Slide 11: 4Q 2016 Adjusted Pre-Tax Results (Mils)
TOTAL COMPANY 4Q 2016 ADJUSTED PRE-TAX RESULTS* (MILS) $2,042 $2,132 $1,956 Strong Auto PBT in 4Q driven by NA, AP and Europe $284 $384 Financial Services PBT $166 solid notwithstanding $(71) declining auction values $(293) $(294) Automotive Segment Financial All Other primarily net North South Midd
Slide 12: 4Q 2016 Key Metrics
AUTOMOTIVE SEGMENT 4Q 2016 KEY METRICS Wholesales Revenue Market Share Operating Margin Pre-Tax Results Strong 4Q consistent with (000) (Bils) (Pct) (Pct) (Mils) expectations 1,775 1,707 $37.9 7.2% 7.1% $2,322 $36.0 6.1% 5.7% $2,042 Wholesales down 4%; revenue down 5% Global SAAR up 2% with gains in
Slide 13: 4Q 2016 Pre-Tax Results (Mils)
AUTOMOTIVE SEGMENT 4Q 2016 PRE-TAX RESULTS (MILS) Industry $ 126 Share (97) Material Excl. Commodities $(476) Commodities (86) Ratification Bonus Other $452 175 Lower PBT driven by stock changes and higher costs Stocks (1,021) Warranty / Other 59 Mix / Other 353 $2,322 $2,042 Pricing $ 888 Manuf. In
Slide 14: 4Q 2016 Key Metrics – North America
AUTOMOTIVE SEGMENT – NORTH AMERICA 4Q 2016 KEY METRICS Strong 4Q PBT and record operating margin; all other Wholesales Revenue Market Share Operating Margin Pre-Tax Results key metrics lower (000) (Bils) (Pct) (Pct) (Mils) $24.9 8.5% Top line down due to 808 13.4% 13.1% 8.2% 703 $23.1 $2,029 $1,956
Slide 15: 4Q 2016 Pre-Tax Results – North America
AUTOMOTIVE SEGMENT – NORTH AMERICA 4Q 2016 PRE-TAX RESULTS (MILS) Industry Share $ 18 (139) Mat’l, Excl. Commodities $(629) Lower PBT driven by stock $2,029 $1,956 changes and higher Stocks (971) Commodities (36) Mix / Other 470 Warranty / Other (39) Ratification Bonus $452 Other 253 Pricing Incenti
Slide 16: 4Q 2016 Key Metrics – South America
AUTOMOTIVE SEGMENT – SOUTH AMERICA 4Q 2016 KEY METRICS All key metrics up for 1st time since 3Q 2013 Wholesales Revenue Market Share Operating Margin Pre-Tax Results (000) (Bils) (Pct) (Pct) (Mils) Top line higher due to 90 $1.4 8.8% volume and pricing $1.2 8.4% 80 SA and Brazil SAARs declined at sl
Slide 17: 4Q 2016 Pre-Tax Results – South America
AUTOMOTIVE SEGMENT – SOUTH AMERICA 4Q 2016 PRE-TAX RESULTS (MILS) Industry $20 Share (5) Stocks / Mix 12 $130 $2 $27 $31 High inflation and weaker local currencies not offset $(15) by pricing $(171) Balance sheet related improvement reflects $(295) $(293) non-repeat of currency remeasurement in Econ
Slide 18: 4Q 2016 Key Metrics – Europe
AUTOMOTIVE SEGMENT – EUROPE 4Q 2016 KEY METRICS Wholesales* Revenue Market Share Operating Margin Pre-Tax Results 4Q PBT and operating (000) (Bils) (Pct) (Pct) (Mils) margin improved from a $7.3 $7.2 7.6% 7.4% 2.3% year ago, although top line 390 390 $166 1.8% about flat $131 Europe SAAR up 6% Marke
Slide 19: 4Q 2016 Pre-Tax Results – Europe
AUTOMOTIVE SEGMENT – EUROPE 4Q 2016 PRE-TAX RESULTS (MILS) $35 Material Excl. Commodities $41 Commodities 8 $166 Warranty / Other 58 7th consecutive profitable $131 Industry Share $ 27 (31) Pension Settlement $ 77 quarter Stocks (46) $107 Engineering (69) Spending Related (20) Mix / Other 39 $53 Oth
Slide 20: 4Q 2016 Key Metrics – Middle East & Africa
AUTOMOTIVE SEGMENT – MIDDLE EAST & AFRICA 4Q 2016 KEY METRICS Wholesales Revenue Market Share Operating Margin Pre-Tax Results A challenging quarter and (000) (Bils) (Pct) (Pct) (Mils) full year driven by external 54 factors and unfavorable $1.1 4.7% 1.2% $13 4.4% 41 $0.9 exchange 4Q SAAR down 22% o
Slide 21: 4Q 2016 Key Metrics – Asia Pacific
AUTOMOTIVE SEGMENT – ASIA PACIFIC 4Q 2016 KEY METRICS PBT and operating margin Wholesales* Revenue Market Share Operating Margin Pre-Tax Results solid, but lower (000) (Bils) (Pct) (Pct) (Mils) China JVs at $380M; 483 443 $3.4 $3.4 13.1% margin at 12.8% 4.2% $444 3.9% 8.4% Higher China SAAR drove $2
Slide 22: 4Q 2016 Pre-Tax Results – Asia Pacific
AUTOMOTIVE SEGMENT – ASIA PACIFIC 4Q 2016 PRE-TAX RESULTS (MILS) $444 Material Excl. Commodities $158 Commodities (11) Industry $114 Warranty / Other (39) Share 104 Stocks (91) $284 Mix / Other (37) Manufacturing Incl. Vol. Related $(40) Engineering (73) Other (12) Lower PBT mainly due to $90 $108 n
Slide 23: 4Q 2016 Key Metrics – Ford Credit
FINANCIAL SERVICES SEGMENT – FORD CREDIT 4Q 2016 KEY METRICS U.S. Retail and Lease 4Q receivables grew as Net Managed Pre-Tax Average Over-60-Day Loss-to-Receivables expected; solid PBT, but Receivables Receivables* Results Placement Delinquencies (LTR) (Bils) (Bils) (Mils) FICO (Pct) (Pct) lower Yo
Slide 24: 4Q 2016 Pre-Tax Results – Ford Credit
FINANCIAL SERVICES SEGMENT – FORD CREDIT 4Q 2016 PRE-TAX RESULTS (MILS) $556 Pension Settlement $(77) $398 Other 10 Residual Gains / (Losses) $(21) Lower PBT driven by Supplemental Depreciation (51) pension settlement in $102 Charge-offs Reserve $(48) 9 Ford Credit Europe and unfavorable lease $(17)
Slide 25: U.S. Automotive Financing Trends
U.S. AUTOMOTIVE FINANCING TRENDS Off-Lease Auction Values (At 4Q16 Mix) Lease Share of Retail Sales 24-Month Industry* $20,845 32% Lower auction values 31% $19,925 $20,055 $20,100 $19,895 29% 29% 29% 28% $18,895 26% 22% 22% 23% reflected increased supply $17,815 18% 19% and lower values on $17,290 $
Slide 26: Cash Flow
AUTOMOTIVE SEGMENT CASH FLOW (Bils) 4Q 2016 FY 2016 Strong 4Q and FY Cash at end of period $ 27.5 $ 27.5 Cash at beginning of period 24.3 23.6 operating cash flow driven Change in Cash $ 3.2 $ 3.9 by Auto PBT Automotive segment pre-tax profits $ 2.0 $ 9.4 Capital spending (2.0) (6.9) FY capital spen
Slide 27: Pension Update
PENSION UPDATE 2016 B / (W) Year End Underfunded Status (Bils) 2015 2016 2015 Underfunded status of – U.S. plans $ 3.7 $ 3.8 $ (0.1) pension plans at $8.9B, – Non-U.S. plans Total Underfunded Status $ 4.5 8.2 $ 5.1 8.9 $ (0.6) (0.7) modestly higher than a Year-End Discount Rate (Weighted Average) ye
Slide 28: Balance Sheet Summary
BALANCE SHEET SUMMARY (Bils) 2015 2016 Dec. 31 Dec. 31 Automotive Segment Cash, cash equivalents and marketable securities $ 23.6 $ 27.5 Available credit lines* 10.9 10.8 Total liquidity $ 34.5 $ 38.3 Auto cash and liquidity Debt Cash net of debt $ 12.8 10.8 $ 15.9 11.6 balances strong Ford Credit F
Slide 29: Industry and GDP Planning Assumptions
INDUSTRY AND GDP PLANNING ASSUMPTIONS GDP Growth (Pct) Industry (Mils) Global GDP projected at 2016 Est. 2017 Outlook 2016 Est. 2017 Outlook 3.4% Global industry volume Global* 2.9% 3.4% 91.4 93.1 gains in 2017 to be driven by AP and Europe U.S. 1.6% 2.2% 17.9 17.7 U.S. industry expected to decline
Slide 30: 2016 Company Guidance
2016 COMPANY GUIDANCE 2015 FY 2016 FY Results Outlook Results Total Company Adjusted Pre-Tax $10.8B ≈ $10.2B $10.4B Results* Adjusted EPS* $1.93 < 2015 $1.76 Automotive Segment Revenue $140.6B ≥ 2015 $141.5B Automotive Segment Operating Margin 6.8% < 2015 6.7% Automotive Segment Operating Cash Stron
Slide 31: 2017 Company Guidance
2017 COMPANY GUIDANCE EPS Total Company Automotive Automotive Automotive Adjusted Adjusted Segment Segment Segment Operating Adjusted Effective Pre-Tax Results* EPS* Revenue Operating Margin Cash Flow Tax Rate* (Pct) B / (W) 2016 2016 FY Results $10.4B $1.76 $141.5B 6.7% $6.4B 31.9% * Excluding spec
Slide 32: 2017 Business Unit Guidance
2017 BUSINESS UNIT GUIDANCE Automotive North South Middle East Asia America America Europe & Africa Pacific Ford Credit All Other PBT B / (W) 2016 -- Volume, Mix + Net Pricing -- Exchange + Cost + Volume, Mix -- Residual -- Net Interest (Brexit) Values Expense -- Emerging + Volume + Net Pricing + Co
Slide 33: Key Takeaways – Full Year
KEY TAKEAWAYS – FULL YEAR 1. Delivered 2nd best Company adjusted pre-tax profit of $10.4 billion, Automotive operating margin of 6.7% and Automotive operating cash flow of $6.4 billion 2. Delivered NA operating margin of 9.7%; record profit and operating margin in Europe; 2nd best profit in Asia Pac
Slide 34: Vision and Strategy
VISION AND STRATEGY VISION MAKING PEOPLE'S LIVES BETTER BY CHANGING THE WAY THE WORLD MOVES Deliver top quartile shareholder returns through focused automotive and high-growth mobility businesses, building STRATEGY on Ford’s unique legacy of advancing human progress through a culture driven by the c
Slide 35: Q&A
— January 26, 2017 Go Further
Slide 36: 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 37: Appendix
APPENDIX
Slide 38: Net Income Reconciliation to Adjusted Pre-Tax Profit
TOTAL COMPANY NET INCOME RECONCILIATION TO ADJUSTED PRE-TAX PROFIT (Mils) 4Q FY 2015 2016 2015 2016 Net income / (loss) attributable to Ford (GAAP) $ 1,868 $ (783) $ 7,373 $ 4,596 Income / (loss) attributable to non-controlling interests (4) 2 (2) 11 Net income / (loss) $ 1,864 $ (781) $ 7,371 $ 4,6
Slide 39: Effective Tax Rate Reconciliation to Adjusted Effective Tax Rate
TOTAL COMPANY EFFECTIVE TAX RATE RECONCILIATION TO ADJUSTED EFFECTIVE TAX RATE 2016 Memo: 4Q FY FY 2015 Pre-Tax Results (Mils) Income / (Loss) before Income Taxes (GAAP) $ (1,117) $ 6,796 $ 10,252 Less: Impact of special items (3,249) (3,579) (548) Adjusted Pre-tax Profit (Non-GAAP) $ 2,132 $ 10,375
Slide 40: Special Items
TOTAL COMPANY SPECIAL ITEMS (Mils) 4Q FY 2015 2016 2015 2016 Pension and OPEB Remeasurement Gain / (Losses) Year End Net Pension and OPEB Remeasurement Loss $ (698) $ (2,985) $ (698) $ (2,985) Other Pension Remeasurement Loss -- -- -- (11) Separation-related actions $ -- $ (11) $ -- $ (304) Other It
Slide 41: Earnings Per Share Reconciliation to Adjusted EPS
TOTAL COMPANY EARNINGS PER SHARE RECONCILIATION TO ADJUSTED EARNINGS PER SHARE 2016 4Q FY Diluted After-Tax Results (Mils) Diluted After-tax results (GAAP) $ (783) $ 4,596 Less: Impact of Pre-tax and tax special items (2,001) (2,458) Adjusted Net Income – Diluted (Non-GAAP) $ 1,218 $ 7,054 Basic and
Slide 42: Total Net Receivables Reconciliation to Managed Receivables
FINANCIAL SERVICES SEGMENT – FORD CREDIT TOTAL NET RECEIVABLES RECONCILIATION TO MANAGED RECEIVABLES Dec. 31, Dec. 31, Dec. 31, (Bils) 2014 2015 2016 Finance receivables, net $ 86.9 $ 96.8 $ 103.0 Net investment in operating leases 21.5 25.1 27.2 Total net receivables* (GAAP) $ 108.4 $ 121.9 $ 130.2
Slide 43: Financial Statement Leverage Reconciliation to Managed Leverage
FINANCIAL SERVICES SEGMENT – FORD CREDIT FINANCIAL STATEMENT LEVERAGE RECONCILIATION TO MANAGED LEVERAGE Dec. 31, Dec. 31, Dec. 31, (Bils) 2014 2015 2016 Leverage Calculation Total debt* $ 105.0 $ 119.6 $ 126.5 Adjustments for cash** (8.9) (11.2) (10.8) Adjustments for derivative accounting*** (0.4)
Slide 44: Debt
AUTOMOTIVE SEGMENT DEBT (Bils) 2015 2016 Dec. 31 Sept. 30 Dec. 31 Public unsecured debt $ 6.4 $ 6.4 $ 9.2 U.S. Department of Energy 3.8 3.4 3.2 Other debt (including international) 2.6 3.3 3.5 Total Automotive debt $ 12.8 $ 13.1 $ 15.9 Memo: Automotive debt payable within one year $ 1.8 $ 2.5 $ 2.7
Slide 45: China Unconsolidated Affiliates
AUTOMOTIVE SEGMENT – ASIA PACIFIC CHINA UNCONSOLIDATED AFFILIATES 4Q FY 2015 2016 B / (W) 2015 2016 B / (W) China Unconsolidated Affiliates Wholesales (000) 340 380 40 1,123 1,217 94 Ford Equity Income (Mils)* $ 490 $ 380 $ (110) $ 1,514 $ 1,439 $ (75) China JV Net Income Margin 16.0% 12.8% (3.2) pp
Slide 46: Return on Invested Capital Calculation
RETURN ON INVESTED CAPITAL CALCULATION (Bils.) 2012 2013 2014 2015 2016 Net Operating Profit After Tax (NOPAT) Pre-Tax Profit (Incl. Special Items) $ 2.0 $ 14.4 $ 1.2 $ 10.3 $ 6.8 Add Back: Costs related to Invested Capital Automotive Interest Expense 0.7 0.8 0.8 0.8 0.9 Funding-related pension and
Slide 47: Employment Data by Business Unit
EMPLOYMENT DATA BY BUSINESS UNIT* (000) 2015 2016 Dec. 31 Dec. 31 North America 96 101 South America 15 15 Europe 53 52 Middle East & Africa 3 3 Asia Pacific 25 23 Total Automotive 192 194 Financial Services 7 7 Total Company 199 201 * Employment data includes the approximate number of individuals e
Slide 48: 4Q Industry SAAR / FY Industry
AUTOMOTIVE SEGMENT 4Q INDUSTRY SAAR / FY INDUSTRY Units (mils) 4Q SAAR FY Industry 2015 2016 Est. B / (W) 2015 2016 Est. B / (W) North America 22.1 22.5 0.4 21.5 21.8 0.3 U.S. 18.3 18.4 0.1 17.8 17.9 0.1 South America 4.0 3.8 (0.2) 4.2 3.7 (0.5) Brazil 2.4 2.0 (0.4) 2.6 2.1 (0.5) Europe 19.5 20.7 1.
Slide 49: 4Q Market Share
AUTOMOTIVE SEGMENT 4Q MARKET SHARE (Percent) 4Q FY 2015 2016 B / (W) 2015 2016 B / (W) Total Share of Total Industry North America 13.4% 13.1% (0.3) ppts 14.0% 13.9% (0.1) ppts U.S. 14.2 13.9 (0.3) 14.7 14.6 (0.1) South America 8.4 8.8 0.4 9.6 8.8 (0.8) Brazil 9.0 9.4 0.4 10.4 9.2 (1.2) Europe 7.6 7
Slide 50: Production Volumes
AUTOMOTIVE SEGMENT PRODUCTION VOLUMES (000) 4Q 2016 Actual 1Q 2017 Forecast O / (U) O / (U) Key drivers of 1Q YoY: Units 2015 Units 2016 North America 710 (90) 815 (39) NA – lower fleet sales and non–repeat of South America 77 10 73 8 Fusion stock build Europe 357 (36) 445 20 Europe – higher Middle
Slide 51: Dealer Stocks – Selected Markets
AUTOMOTIVE SEGMENT - SELECTED MARKETS DEALER STOCKS (000) U.S. Brazil Europe 21 MEA China 4Q December 31, 2016 648 22 226 64 154 September 30, 2016 658 22 206 63 150 Stock Change H / (L) (10) -- 20 1 4 4Q Prior Year December 31, 2015 676 24 235 67 165 September 30, 2015 605 29 203 64 143 Stock Chang
Slide 52: FY 2016 Pre-Tax Results – North America
AUTOMOTIVE SEGMENT – NORTH AMERICA FY 2016 PRE-TAX RESULTS (MILS) $9,345 $9,001 Material Excl. Commodities $(645) Industry $ 95 Commodities 835 Ratification Bonus $452 Share Stocks 51 (1,053) Warranty Other (718) 286 Parts & Services Other 203 214 Lower PBT driven by dealer Mix / Other 935 Engineeri
Slide 53: FY 2016 Pre-Tax Results – South America
AUTOMOTIVE SEGMENT – SOUTH AMERICA FY 2016 PRE-TAX RESULTS (MILS) $290 $93 $63 Higher loss driven by $(216) Material Freight $100 32 higher inflation and $(507) Structural Cost 158 weaker local currencies in Industry $(108) $(832) Share Stocks (122) 102 excess of net pricing, $(1,109) Mix / Other (8
Slide 54: FY 2016 Pre-Tax Results – Europe
AUTOMOTIVE SEGMENT – EUROPE FY 2016 PRE-TAX RESULTS (MILS) $946 Industry $ 257 $1,205 Share (52) Stocks (232) Material Excl. Commodities $342 Mix / Other 491 Commodities 203 Warranty / Other (50) $464 $495 Strong improvement in $259 PBT driven by favorable $26 $61 mix and cost performance $(97) $(3)
Slide 55: FY 2016 Pre-Tax Results – Asia Pacific
AUTOMOTIVE SEGMENT – ASIA PACIFIC FY 2016 PRE-TAX RESULTS (MILS) Industry $423 Share 117 Stocks (87) Material Excl. Commodities $ 231 Mix / Other 148 Commodities 14 Warranty / Other (107) $765 $627 $601 Pricing $ 145 Manuf. Incl. Vol-Rel. $(128) Incentives / Other (431) Engineering (262) Spending Re
Slide 56: FY 2016 Pre-Tax Results – Ford Credit
FINANCIAL SERVICES SEGMENT – FORD CREDIT FY 2016 PRE-TAX RESULTS (MILS) $2,086 $1,879 Operating Cost $(100) Pension Settlement Derivatives Market Valuation (77) 70 Lower PBT driven by Other 31 unfavorable lease residual performance and higher credit losses Charge-offs $(150) $505 Reserve (58) Credit
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 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