Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Company — Q3 2016 Earnings Presentation
46 slides from Ford Mtr Co Del's earnings presentation, Oct 27, 2016
Slide 1: 3Q 2016 Earnings Review
3Q 2016 EARNINGS REVIEW October 27, 2016 1
Slide 2: Business Review and Appendix contents
Business Review Appendix Financial Headlines 3 Business Unit Guidance A1 Creating Value 4 Reconciliations to GAAP Other Highlights 5 Non-GAAP Financial Measures A2 Business Environment 6 Adjusted Pre-Tax Profit A3 Financial Review Adjusted Effective Tax Rate A4 Key Financial Summary 8 Special Items
Slide 3: Financial Headlines
FINANCIAL HEADLINES EPS Total Company Automotive Automotive Total Company Adjusted Pre-Tax Adjusted Total Company Global Segment Segment Net Income Results* EPS* Revenue Market Share Operating Margin Operating Cash Flow 3Q 2016 $1.0B $1.4B $0.26 $35.9B 7.5% 3.3% $(2.0)B B/W $1.2B $1.7B $0.26 $2.2B 0
Slide 4: Creating Value – Progress This Quarter
CREATING VALUE – PROGRESS THIS QUARTER GROWTH RETURNS ! RISK REWARDS Launched all-new Super Europe profitable for the Contributed over Distributed $600 million Duty and all-new Lincoln 6th quarter in a row -- $200 million to our of dividends to Continental in NA best 3Q since 2007 funded
Slide 5: Other Highlights
OTHER HIGHLIGHTS Lincoln nearly tripled China sales in All-new 2017 Super Duty earned All-new Ka+ imported from India to Third Quarter 13th ‘Truck of Texas’ award at TAWA Europe Truck Rodeo Acquired Chariot, a San Francisco Ford entered Indian car-sharing Announced four investments and based shuttle
Slide 6: Business Environment
BUSINESS ENVIRONMENT Global growth outlook for 2016 remains modest at just under 3% Full year GDP outlook reduced for U.S. on weak first half data; consumer spending remains solid with vehicle sales at high plateau Europe growth steady; U.K. data improving after initial Brexit shock but tone h
Slide 7: Financial Review
FINANCIAL REVIEW
Slide 8: Key Financial Summary
KEY FINANCIAL SUMMARY 3Q YTD B / (W) B / (W) 2016 2015 2016 2015 Wholesales (000) 1,530 (66) 4,944 84 Revenue (Bils) $ 35.9 $ (2.2) 113.1 3.8 3Q profitable, lower YoY Results (Mils) Automotive Segment $ 1,084 $(1,678) $ 7,380 $ 134 Financial Services Segment 552 26 1,436 (50) Wholesale volume down A
Slide 9: 3Q 2016 Adjusted Pre-Tax Results
TOTAL COMPANY 3Q 2016 ADJUSTED PRE-TAX RESULTS* (MILS) $1,084 $1,413 $1,262 Automotive segment PBT driven by NA, Europe $552 and record 3Q in AP $138 $131 Strong Financial Services profit $(152) $(223) $(295) Automotive Segment All Other primarily net Financial North South Middle East Asia Services
Slide 10: 3Q 2016 Key Metrics
AUTOMOTIVE SEGMENT 3Q 2016 KEY METRICS All key metrics lower than a year ago driven by NA Wholesales Revenue Market Share Operating Margin Pre-Tax Results (000) (Bils) (Pct) (Pct) (Mils) Wholesales down 4%; $35.8 7.6% 7.5% 7.7% $2,762 revenue down 7% 1,596 1,530 $33.3 Global market share lower due t
Slide 11: 3Q 2016 Pre-Tax Results
AUTOMOTIVE SEGMENT 3Q 2016 PRE-TAX RESULTS (MILS) Industry Share $ (57) (229) Material Excl. Commodities $(285) Commodities 131 Lower PBT driven by lower Warranty (599) volume and higher Stocks (759) $2,762 Mix / Other (51) Other 145 Pricing $1,056 Incentives / Other (440) Engineering $(241) warrant
Slide 12: 3Q 2016 Key Metrics – North America
AUTOMOTIVE SEGMENT – NORTH AMERICA 3Q 2016 KEY METRICS All key metrics lower than last year Wholesales Revenue Market Share Operating Margin Pre-Tax Results (000) (Bils) (Pct) (Pct) (Mils) Top line down due to lower volume – unfavorable $23.7 14.1% 13.6% 12.3% $2,909 stock changes and lower 771 $21.
Slide 13: 3Q 2016 Pre-Tax Results – North America
AUTOMOTIVE SEGMENT – NORTH AMERICA 3Q 2016 PRE-TAX RESULTS (MILS) Industry $(133) Mat’l, Excl. Commodities $(296) Lower PBT driven by Super $2,909 Share (283) Commodities 95 Stocks (585) Mix / Other (71) Warranty Other (591) 79 Duty launch, dealer stock Pricing $ 663 reduction this year versus Engin
Slide 14: 3Q 2016 Key Metrics – South America
AUTOMOTIVE SEGMENT – SOUTH AMERICA 3Q 2016 KEY METRICS 3Q and YTD metrics down Wholesales Revenue Market Share Operating Margin Pre-Tax Results from a year ago as (000) (Bils) (Pct) (Pct) (Mils) economic conditions remained challenging 102 10.2% 9.4% 89 $1.6 Top line lower due to lower (10.3)% $1.3
Slide 15: 3Q 2016 Pre-Tax Results – South America
AUTOMOTIVE SEGMENT – SOUTH AMERICA 3Q 2016 PRE-TAX RESULTS (MILS) $7 $96 $(3) $(56) Higher loss driven by unfavorable effects of $(163) Industry Share $ (7) (22) $(176) inflation and weaker local Stocks/Other (27) currencies exceeding $(295) higher net pricing $(132) Cost performance Economics / con
Slide 16: 3Q 2016 Key Metrics – Europe
AUTOMOTIVE SEGMENT – EUROPE 3Q 2016 KEY METRICS Best 3Q PBT since 2007 with operating margin and Wholesales* Revenue Market Share Operating Margin Pre-Tax Results (000) (Bils) (Pct) (Pct) (Mils) PBT up sharply YoY $7.0 7.9% 7.9% 2.2% $138 Top line decline due to 375 $6.3 320 volume Europe SAAR highe
Slide 17: 3Q 2016 Pre-Tax Results – Europe
AUTOMOTIVE SEGMENT – EUROPE 3Q 2016 PRE-TAX RESULTS (MILS) $129 6th consecutive profitable quarter and 4th with YoY $138 Industry $ 49 cost improvement Share (10) $109 Stocks (225) $88 Mix / Other 110 Most factors drove higher $20 $22 PBT; volume lower due to $9 dealer stock reduction this $(34) yea
Slide 18: 3Q 2016 Key Metrics – Middle East & Africa
AUTOMOTIVE SEGMENT – MIDDLE EAST & AFRICA 3Q 2016 KEY METRICS Unfavorable YoY change in Wholesales Revenue Market Share Operating Margin Pre-Tax Results most key metrics driven by (000) (Bils) (Pct) (Pct) (Mils) external factors and 42 $0.9 (1.6)% $(15) performance in the Middle 4.4% 36 $0.8 4.1% Ea
Slide 19: 3Q 2016 Key Metrics – Asia Pacific
AUTOMOTIVE SEGMENT – ASIA PACIFIC 3Q 2016 KEY METRICS Record 3Q PBT with strong YoY performance across Wholesales* Revenue Market Share Operating Margin Pre-Tax Results (000) (Bils) (Pct) (Pct) (Mils) the board 4.0% 3.5% 4.3% $131 Top line up sharply – China $3.1 and rest of AP 398 $2.6 306 Market s
Slide 20: 3Q 2016 Pre-Tax Results – Asia Pacific
AUTOMOTIVE SEGMENT – ASIA PACIFIC 3Q 2016 PRE-TAX RESULTS (MILS) Industry $73 Share 95 Stocks 90 Mix / Other (40) $109 $218 Manufacturing Incl. Vol. Related $(40) Engineering (56) $131 Spending Related Other (27) 2 Higher PBT driven by $77 improvements outside $46 $22 China, as well as at China JVs
Slide 21: 3Q 2016 Key Metrics – Ford Credit
FINANCIAL SERVICES SEGMENT – FORD CREDIT 3Q 2016 KEY METRICS U.S. Retail and Lease Net Receivables Managed Receivables* Pre-Tax Results Average Placement Over-60-Day Loss-to-Receivables Delinquencies (LTR) Best quarterly PBT since (Bils) (Bils) (Mils) FICO (Pct) (Pct) 2011 and up YoY; YTD $128 $134
Slide 22: 3Q 2016 Pre-Tax Results – Ford Credit
FINANCIAL SERVICES SEGMENT – FORD CREDIT 3Q 2016 PRE-TAX RESULTS (MILS) $26 $567 $541 Higher profit driven by Derivatives Market Valuation Other $41 (9) receivables growth -- Residual Gains / (Losses) $4 volume and mix Supplemental Depreciation (48) $128 Charge-offs $(35) Credit losses normalizing R
Slide 23: U.S. Automotive Financing Trends
FINANCIAL SERVICES SEGMENT – FORD CREDIT U.S. AUTOMOTIVE FINANCING TRENDS Off-Lease Auction Values (At 3Q16 Mix) Lease Share of Retail Sales 24-Month Industry* $20,540 $20,080 29% 32% 31% 29% Lower auction values $19,180 $19,320 $19,345 $19,110 27% 28% 26% 23% reflect higher supply and 22% 22% 22% $
Slide 24: Cash Flow
AUTOMOTIVE SEGMENT CASH FLOW (Bils) 3Q 2016 YTD 2016 Cash at end of period $ 24.3 $ 24.3 Negative 3Q operating Cash at beginning of period 27.2 23.6 cash flow due to Change in Cash $ (2.9) $ 0.7 unfavorable working Automotive Segment pre-tax profits $ 1.1 $ 7.4 capital and timing / other Capital spe
Slide 25: Balance Sheet Summary
BALANCE SHEET SUMMARY (Bils) 2016 2015 Sept. 30 Dec. 31 Automotive Segment Cash, cash equivalents and marketable securities $ 24.3 $ 23.6 Available credit lines* 10.9 10.9 Total liquidity $ 35.2 $ 34.5 Auto cash and liquidity Debt $ 13.1 $ 12.8 balances strong Cash net of debt 11.2 10.8 Ford Credit
Slide 26: Industry and GDP Planning Assumptions
INDUSTRY AND GDP PLANNING ASSUMPTIONS GDP Growth (Pct) Industry (Mils) 2015 2016 Outlook 2015 2016 Outlook Global GDP updated to low Prior Present Prior Present end of prior range Global 3.1%* 2.9 – 3.3%* 2.9%* 88.2 90.0 – 92.0 91.1 Global industry volume gains in 2016 driven by U.S. 2.6% 1.6% 1.6 1
Slide 27: 2016 Company Guidance
2016 COMPANY GUIDANCE 2015 FY 2016 FY Memo: 2016 YTD Results Plan Outlook Results Total Company Adjusted Pre-Tax Results* $10.8B ≥ 2015 ≈ $10.2B $8.2B Adjusted EPS* $1.93 ≥ 2015 Lower $1.46 Automotive Segment Revenue $140.6B ≥ 2015 On Track $105.5B Automotive Segment Operating Margin 6.8% ≥ 2015 Low
Slide 28: Key Takeaways
KEY TAKEAWAYS 1. Better-than-expected 3Q Company adjusted pre-tax profit of $1.4 billion; stronger result to be offset in 4Q. All key metrics lower YoY 2. Lower profit in North America due to Super Duty launch, a reduction in dealer stocks this year versus an increase a year ago for F-150, normaliza
Slide 29: Q&A
Q&A October 27, 2016 Go Further
Slide 30: 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 31: Appendix
APPENDIX
Slide 32: 2016 Business Unit Guidance
2016 BUSINESS UNIT GUIDANCE 2015 FY 2016 FY Memo: 2016 YTD Results Plan Outlook Results Automotive North America $9,345M ≈ 2015 Lower $7,045M Operating Margin 10.2% 9.5% or Higher Lower* 10.1% South America $(832)M Loss > 2015 On Track $(816)M Europe 259M > 2015 On Track 1,039M Middle East & Africa
Slide 33: 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 34: Net Income Reconciliation to Adjusted Pre-Tax Profit
TOTAL COMPANY NET INCOME RECONCILIATION TO ADJUSTED PRE-TAX PROFIT (Mils) 3Q YTD Memo: 2015 2016 2015 2016 FY 2015 Net income / (loss) attributable to Ford (GAAP) $ 2,192 $ 957 $ 5,505 $ 5,379 $ 7,373 Income / (Loss) attributable to non-controlling interests -- 4 2 9 (2) Net income $ 2,192 $ 961 $ 5
Slide 35: Effective Tax Rate Reconciliation to Adjusted Effective Tax Rate
TOTAL COMPANY EFFECTIVE TAX RATE RECONCILIATION TO ADJUSTED EFFECTIVE TAX RATE 2016 Memo: 3Q YTD FY 2015 Pre-Tax Results (Mils) Income before Income Taxes (GAAP) $ 1,387 $ 7,913 $ 10,252 Less: Impact of special items (26) (330) (548) Adjusted Pre-tax results (Non-GAAP) $ 1,413 $ 8,243 $ 10,800 Taxes
Slide 36: Special Items
TOTAL COMPANY SPECIAL ITEMS (Mils, except amounts per share data) 3Q YTD Memo: 2015 2016 2015 2016 FY 2015 Pre-tax Special Items Separation-related actions $ -- $ (17) $ -- $ (293) $ -- Japan / Indonesia market closure -- (9) -- (26) -- Nemak IPO 166 -- 166 -- 150 Pension & OPEB remeasurement gains
Slide 37: Earnings Per Share Reconciliation to Adjusted Earnings Per Share
TOTAL COMPANY EARNINGS PER SHARE RECONCILIATION TO ADJUSTED EARNINGS PER SHARE 2016 3Q YTD Diluted After-Tax Results (Mils) Diluted After-tax results (GAAP) $ 957 $ 5,379 Less: Impact of Pre-tax and tax special items (86) (457) Adjusted Net Income (Non-GAAP) $ 1,043 $ 5,836 Basic and Diluted Shares
Slide 38: Total Net Receivables Reconciliation to Managed Receivables
FINANCIAL SERVICES SEGMENT – FORD CREDIT TOTAL NET RECEIVABLES RECONCILIATION TO MANAGED RECEIVABLES Dec. 31, Sep. 30, Dec. 31, Sep. 30, (Bils) 2014 2015 2015 2016 Finance receivables, net $ 86.9 $ 92.7 $ 96.8 $ 100.9 Net investment in operating leases 21.5 24.5 25.1 27.0 Total net receivables* (GAA
Slide 39: Financial Statement Leverage Reconciliation to Managed Leverage
FINANCIAL SERVICES SEGMENT – FORD CREDIT FINANCIAL STATEMENT LEVERAGE RECONCILIATION TO MANAGED LEVERAGE Dec. 31, Jun. 30, Sep. 30, (Bils) 2015 2016 2016 Leverage Calculation Total debt* $ 119.6 $ 126.3 $ 123.5 Adjustments for cash** (11.2) (11.6) (9.2) Adjustments for derivative accounting*** (0.5)
Slide 40: Debt
AUTOMOTIVE SEGMENT DEBT (Bils) 2015 2016 Dec. 31 June 30 Sept. 30 Public unsecured debt $ 6.4 $ 6.4 $ 6.4 U.S. Department of Energy 3.8 3.5 3.4 Other debt (including international) 2.6 3.2 3.3 Total Automotive debt $ 12.8 $ 13.1 $ 13.1 Memo: Automotive debt payable within one year $ 1.8 $ 2.4 $ 2.5
Slide 41: China Unconsolidated Affiliates
AUTOMOTIVE SEGMENT – ASIA PACIFIC CHINA UNCONSOLIDATED AFFILIATES 3Q YTD Memo: 2015 2016 2015 2016 FY 2015 China Unconsolidated Affiliates Wholesales (000) 221 296 783 837 1,123 Ford Equity Income (Mils)* $ 253 $ 320 $ 1,024 $ 1,059 $ 1,515 China JV Net Income Margin 12.7% 13.4% 15.4% 15.3% 15.6% *
Slide 42: 3Q Industry SAAR
AUTOMOTIVE SEGMENT 3Q INDUSTRY SAAR Units (mils) 3Q YTD 2015 2016 B / (W) 2015 2016 B / (W) North America 22.0 21.8 (0.2) 21.3 21.6 0.3 U.S. 18.3 17.8 (0.5) 17.6 17.7 0.1 South America 4.0 3.6 (0.4) 4.3 3.6 (0.7) Brazil 2.4 2.0 (0.4) 2.6 2.1 (0.5) Europe 19.4 20.1 0.7 19.1 20.0 0.9 Middle East & Afr
Slide 43: 3Q Market Share
AUTOMOTIVE SEGMENT 3Q MARKET SHARE (Percent) 3Q YTD 2015 2016 B / (W) 2015 2016 B / (W) Total Share of Total Industry North America 14.1% 13.6% (0.5) ppts 14.1% 14.2% 0.1 ppts U.S. 14.7 14.0 (0.7) 14.8 14.9 0.1 South America 10.2 9.4 (0.8) 10.0 8.9 (1.1) Brazil 11.0 10.0 (1.0) 10.8 9.1 (1.7) Europe
Slide 44: Production Volumes
AUTOMOTIVE SEGMENT PRODUCTION VOLUMES Planned production 2016 consistent with guidance (000) 3Q Actual 4Q Forecast O / (U) O / (U) Key drivers of 4Q YoY: Units 2015 Units 2015 North America 699 (93) 700 (100) NA lower – matching production to demand South America 88 3 77 10 and non repeat of F-150 E
Slide 45: Dealer Stocks
AUTOMOTIVE SEGMENT - SELECTED MARKETS DEALER STOCKS (000) U.S. Brazil Europe 21 MEA China 3Q September 30, 2016 658 22 206 63 150 June 30, 2016 728 21 247 65 144 Stock Change H / (L) (70) 1 (41) (2) 6 3Q Prior Year September 30, 2015 605 29 203 64 143 June 30, 2015 611 29 189 68 163 Stock Change H /
Slide 46: 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