Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Company — Q3 2019 Earnings Presentation
39 slides from Ford Mtr Co Del's earnings presentation, Oct 23, 2019
Slide 1: Q3 Earnings Review
Q3 Earnings Review October 23, 2019
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: Ford: Our Plan for Value Creation
Ford OUR BELIEF OUR ASPIRATION OUR PLAN FOR VALUE CREATION UR PEOPLE bret) CREATING TOMORROW TOGETHER Freedom of movement drives human progress To become the world’s most trusted company Customer-Centric & Passion For Product WINNING PORTFOLIO NEW PROPULSION AUTONOMOUS TECHNOLOGY CONNECTED SERVICES
Slide 4: Financial Highlights
Company Financial Highlights Company Company Adj. Free Cash Flow Adj. EBIT Q3 YTD Q3 YTD $0.2B $2.3B $1.8B $5.9B Up 80% Up 80% Up 8% Up 6% Cash Balance $22B; Liquidity $35B Q3 Company Company Revenue Adj. EPS Adj. EBIT Margin Q3 Q3 $0.34 $37B Up $0.05 4.8% Down 2% Up 0.4 ppts 4
Slide 5: Global Redesign
Global Redesign NORTH AMERICA CHINA Product Renewal • Reducing costs • Replacing 75% of lineup by volume • Launching products tailored to Chinese by 2020 customers • Refreshing and expanding SUV and • Reinvigorating dealer network truck portfolio • Rationalized inventory levels SOUTH AMERICA INTERNA
Slide 6: Partnerships, Mobility And Autonomous Vehicles
Partnerships, Mobility And Autonomous Vehicles LEVERAGING PARTNERSHIPS New JV With Mahindra • Unlock low-cost product development capabilities to grow in emerging markets • Ford and Mahindra will share and fully leverage respective strengths SHARPENED FOCUS IN MOBILITY • Connected-vehicle services •
Slide 7: Winning Portfolio
Winning Portfolio Mustang-Inspired Territory BEV SUV Corsair Super Duty Bronco Explorer Transit 2T F-150 Ranger Aviator Small, Rugged Escape / Kuga Off-Road Utility Puma Portfolio Transformation Underway With Significant New Introductions Not Yet In Showrooms North America South America Europe China
Slide 8: Highlights
Highlights • Focused on consistently improving customer experience and operational execution across our business • Making progress on our Global Redesign, making the tough choices to lay the groundwork for improvement in future growth, free cash flow, profitability and returns on capital • Positioni
Slide 9: Cash Flow, Cash Balance & Liquidity ($B)
Company Cash Flow, Cash Balance & Liquidity ($B) Adjusted Free Cash Flow Cash Balance & Liquidity Liquidity $37.3 $36.1 $35.4 $1.9 $34.7 $35.2 $34.2 • YTD adj. free cash flow of $1.5 $2.3B up 80%, driven by $25.2 higher Ford Credit $23.7 $24.2 $23.1 $23.2 $22.3 distributions, lower capital $0.1 $0.2
Slide 10: Revenue & EBIT Metrics
Company Revenue & EBIT Metrics Revenue ($B) & Wholesale Units (000) Adjusted EBIT ($B) & EBIT Margin (%) Wholesale Units EBIT Margin $41.8 $2.4 $40.3 $38.9 $38.9 $37.6 $37.0 • Q3 wholesale units down 8%, $1.8 primarily Europe, China and $1.7 $1.7 $1.7 South America $1.5 6.1% 1,493 1,474 • Q3 revenue
Slide 11: Q3 2019 Results ($B)
Company Q3 2019 Results ($B) $1.8 $1.3 • Company adj. EBIT up 8%, $0.7 driven by improvements in $0.4 $0.4 key regions, mark-to-market $0.0 gains and an increase in Ford Credit EBT $(0.3) $(0.3) • Special Items largely reflect Global Redesign including European restructuring and $(1.5) our new JV in
Slide 12: Automotive EBIT ($B)
Automotive EBIT ($B) North South Asia Pacific Middle East Europe China Automotive America America Operations & Africa Q3 2018 $ 2.0 $ (0.2) $ (0.2) $ (0.4) $ 0.2 $ 0.0 $ 1.4 • Total Automotive EBIT Volume / Mix 0.1 (0.0) (0.1) 0.0 (0.1) 0.0 (0.2) down $0.1B Net Pricing 0.7 0.2 0.1 0.0 (0.0) 0.0 0.9
Slide 13: North America
Business Unit Results North America EBIT YoY Bridge ($B) Wholesale Units (000) 742 738 753 693 644 639 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 YoY (8)% (1)% (0)% (5)% (7)% (1)% Q3 2018 Volume / Net Cost Exchange Other Q3 2019 Revenue ($B) Mix Pricing $25.9 $25.4 $23.7 $24.0 $23.4 • Wholesale
Slide 14: Europe
Business Unit Results Europe EBIT YoY Bridge ($B) Wholesale Units* (000) 367 356 361 391 379 303 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 YoY (2)% 4% (13)% (13)% 3% (15)% Q3 2018 Volume / Net Cost Exchange Other Q3 2019 Revenue ($B) Mix Pricing $7.6 $7.4 $7.4 $7.6 $7.6 $6.4 • Wholesale units
Slide 15: China
Business Unit Results China EBIT YoY Bridge ($B) Wholesale Units* (000) JV Volume 184 171 153 126 134 174 115 135 147 108 116 99 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q3 2018 Volume / Net Cost Exchange Other JVs Q3 2019 Total China YoY (32)% (48)% (54)% (48)% (32)% (12)% Mix Pricing Consol
Slide 16: Ford Credit
Ford Credit EBT YoY Bridge ($B) EBT ($B) and Distributions ($B) Distributions $1.1 $0.8 $0.8 $0.7 $0.6 $0.7 $0.7 $0.6 $0.7 $0.7 $0.7 $0.5 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 EBT YoY 4% 13% 9% 25% 29% (12)% 9% Q3 2018 Volume / Financing Credit Lease Exchange Other Q3 2019 U.S. Retail LTR
Slide 17: Mobility
Mobility • Continued investment in Mobility services o New opportunities to EBIT YoY Bridge ($B) realize value from connected vehicles • Micro Mobility o Spin – Among top three micro mobility companies in U.S.; 60 markets; more than 3 million rides YTD • Continued investment in Autonomous Vehicles o
Slide 18: Cash Flow And Balance Sheet ($B)
Company Cash Flow And Balance Sheet ($B) THIRD QUARTER YEAR TO DATE BALANCE SHEET 2018 2019 2018 2019 2018 2019 Dec 31 Sep 30 Company Excluding Ford Credit Company Adj. EBIT excl. Ford Credit $ 1.0 $ 1.1 $ 3.6 $ 3.5 Company Cash Balance $ 23.1 $ 22.3 Capital spending $ (2.0) $ (1.8) $ (5.6) $ (5.3)
Slide 19: Special Items ($B) and Global Redesign ($B)
Company Special Items ($B) Global Redesign ($B) THIRD QUARTER YEAR TO DATE 2018 2019 2018 2019 Future Actions Global Redesign Recorded This Quarter Recorded In Prior Quarters* South America incl. São Bernardo do Campo closure $ (0.0) $ (0.0) $ (0.0) $ (0.5) Europe excl. Russia (0.1) (0.2) (0.1) (1.0
Slide 20: 2019 Outlook
Company 2019 Outlook 2018 2019 Improvement Adj. Free Cash Flow $2.8B From 2018 Adj. EBIT $7.0B $6.5 - $7.0B Adj. EPS $1.30 $1.20 - $1.32* * Assumes an adjusted effective tax rate of around 12 - 13% 20 20
Slide 21: Key Takeaways
Key Takeaways • Our third quarter results demonstrate the Global Redesign of Ford is driving positive shifts in our business – but we have much more work to do • We are focused on improving our fitness • We are focused on driving a Winning Portfolio, where we are fortifying our strengths, improving
Slide 22: Cautionary Note On Forward-Looking Statements
Cautionary Note On Forward-Looking Statements Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptio
Slide 23: Appendix
Appendix
Slide 24: Key Metrics
Automotive Key Metrics WHOLESALE UNITS (000) MARKET SHARE (%) Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 North America 742 644 738 753 693 639 14.0 % 13.3 % 12.8 % 13.6 % 13.8 % 12.6 % South America 96 94 89 68 75 79 8.6 8.4 7.6 7.7 7.4 7.1 Europe
Slide 25: Key Metrics
Automotive Key Metrics EBIT ($B) EBIT CHANGE (%) Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 North America $ 1.8 $ 2.0 $ 2.0 $ 2.2 $ 1.7 $ 2.0 (25) % 7 % 11 % 14 % (3) % 3 % South America (0.2) (0.2) (0.2) (0.2) (0.2) (0.2) (1) (1) (5) (6) (15) (9)
Slide 26: Key Metrics – YoY
Automotive Key Metrics – YoY WHOLESALE UNITS (000) MARKET SHARE (%) 2019 B / (W) 2019 B / (W) 2019 B / (W) 2019 B / (W) Q3 2018 Q3 2019 2018 YTD 2019 YTD Q3 2018 Q3 2019 2018 YTD 2019 YTD 2018 2018 2018 2018 North America 644 639 (5) 2,182 2,085 (97) 13.3 % 12.6 % (0.7) ppts 13.6 % 13.3 % (0.3) ppts
Slide 27: Results ($M)
Company Results ($M) 2018 2019 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 North America $ 1,935 $ 1,753 $ 1,960 $ 1,959 $ 7,607 $ 2,205 $ 1,696 $ 2,012 South America (149) (178) (152) (199) (678) (158) (205) (165) Europe 119 (73) (245) (199) (398) 57 53 (179) China (150) (483) (378) (534) (1,545) (128) (155) (2
Slide 28: Results ($M)
Company Results ($M) Q3 YEAR TO DATE 2018 2019 2019 B / (W) 2018 2018 2019 2019 B / (W) 2018 North America $ 1,960 $ 2,012 $ 52 $ 5,648 $ 5,912 $ 264 South America (152) (165) (13) (479) (527) (48) Europe (245) (179) 66 (199) (69) 130 China (378) (281) 97 (1,011) (565) 446 Asia Pacific Operations 17
Slide 29: Business Unit Reporting Structure
Business Unit Reporting Structure 2019 Structure 2020 Structure Automotive Segment Automotive Segment North America North America South America South America Europe Europe (excl. Russia JV) Russia JV China (incl. Taiwan) China (incl. Taiwan) Asia Pacific Operations International Markets Group Middle
Slide 30: Results – 2020 Reporting Structure ($M)
Company Results – 2020 Reporting Structure ($M) 2018 2019 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 North America $ 1,935 $ 1,753 $ 1,960 $ 1,959 $ 7,607 $ 2,205 $ 1,696 $ 2,012 South America (149) (178) (152) (199) (678) (158) (205) (165) Europe (excl. Russia) 158 (56) (176) (136) (211) 85 110 (144) China (15
Slide 31: Net Income Reconciliation To Adjusted EBIT ($M)
Company Net Income Reconciliation To Adjusted EBIT ($M) Q3 YTD Memo: 2018 2019 2018 2019 FY 2018 Net income / (loss) attributable to Ford (GAAP) $ 991 $ 425 $ 3,793 $ 1,719 $ 3,677 Income / (Loss) attributable to noncontrolling interests 2 (2) 14 37 18 Net income / (loss) $ 993 $ 423 $ 3,807 $ 1,756
Slide 32: Net Cash Provided By / (Used In) Operating Activities
Company Net Cash Provided By / (Used In) Operating Activities Reconciliation To Company Adjusted Free Cash Flow ($M) YTD Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 2018 2019 Net cash provided by / (Used in) operating activities (GAAP) $ 3,514 $ 4,972 $ 5,179 $ 1,357 $3,544 $6,463 $4,732
Slide 33: Earnings Per Share Reconciliation To Adjusted Earnings
Company Earnings Per Share Reconciliation To Adjusted Earnings Per Share Q3 YTD 2018 2019 2018 2019 Diluted After-Tax Results ($M) Diluted after-tax results (GAAP) $ 991 $ 425 $ 3,793 $ 1,719 Less: Impact of pre-tax and tax special items (183) (931) (197) (2,505) Less: Noncontrolling interests impac
Slide 34: Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate
Company Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate 2019 Memo: Q3 YTD FY 2018 Pre-Tax Results ($M) Income / (Loss) before income taxes (GAAP) $ (19) $ 1,796 $ 4,345 Less: Impact of special items (1,536) (3,333) (1,429) Adjusted earnings before taxes (Non-GAAP) $ 1,517 $ 5,129 $
Slide 35: Adjusted ROIC
Company Adjusted ROIC Four Quarters Four Quarters Ended Q3 2018 Ended Q3 2019 Adjusted Net Operating Profit After Cash Tax ($B) ($B) Net income attributable to Ford $ 6.3 $ 1.6 Add: Noncontrolling interest 0.0 0.0 Less: Income tax 0.1 (0.1) Add: Cash tax (0.6) (0.7) Less: Interest on debt (1.2) (1.1
Slide 36: Financial Statement Leverage Reconciliation To Managed Leverage
Financial Statement Leverage Reconciliation To Managed Leverage ($B) 2018 2018 2019 2019 2019 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 Leverage Calculation Debt* $ 138.2 $ 140.1 $ 142.9 $ 141.5 $ 139.3 Adjustments for cash** (12.1) (10.2) (12.8) (14.1) (14.3) Adjustments for derivative accounting*** 0.6 0
Slide 37: 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 supplement
Slide 38: Non-GAAP Financial Measures That Supplement GAAP Measures
Non-GAAP Financial Measures That Supplement GAAP Measures • Company Adjusted Free Cash Flow (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 elements man
Slide 39: Definitions And Calculations
Definitions And Calculations Automotive Records • References to Automotive records for EBIT margin and business units are since at least 2009 Wholesale Units and Revenue • Wholesale unit volumes include all Ford and Lincoln badged units (whether produced by Ford or by an unconsolidated affiliate) th