Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Credit Company — Q2 2018 Earnings Presentation
25 slides from Ford Mtr Co Del's earnings presentation, Jul 25, 2018
Slide 1: 2Q Earnings Review
2Q Earnings Review July 25, 2018
Slide 2: 2Q 2018 Highlights
2Q 2018 Highlights • Strong quarterly results across all segments • Receivables grew globally YoY led by retail financing • Credit loss metrics remain strong • Auction values trending better than expectations 2
Slide 3: Key Metrics
Key Metrics SECOND QUARTER YEAR TO DATE 2017 2018 H / (L) 2017 2018 H / (L) • Strong 2Q EBT Net Receivables (Bils) $ 135 $ 143 6 % $ 135 $ 143 6 % Managed Receivables* (Bils) $ 142 $ 151 7 % $ 142 $ 151 7 % • Receivables up globally YoY led Loss-to-Receivables** (LTR) 46 bps 36 bps (10) bps 50 bps 4
Slide 4: 2Q 2018 EBT YoY (Mils)
2Q 2018 EBT YoY (Mils) • EBT up $26M YoY • Volume and mix higher due to Residual Losses $32 global receivables growth Supplemental Depreciation 56 Derivatives Market Valuation $ (95) • Higher auction values drove Operating Costs & Other (30) lease residual improvement • Unfavorable derivatives marke
Slide 5: 2Q 2018 EBT By Segment
2Q 2018 EBT By Segment 2Q YTD H / (L) H / (L) 2018 2017 2018 2017 Results (Mils) Americas segment $ 548 $ 83 $ 1,063 $ 240 Europe segment 103 29 214 63 Asia Pacific segment 27 9 73 27 Total segments $ 678 $ 121 $ 1,350 $ 330 • EBT higher YoY in all segments Unallocated other* (33) (95) (64) (144) Ea
Slide 6: Americas Financing Shares And Contract Placement Volume
Americas Financing Shares And Contract Placement Volume 2Q YTD 2017 2018 2017 2018 Financing Shares (%) Retail Installment and Lease Share of Ford Retail Sales (excl. Fleet) United States 50 % 57 % 54 % 59 % Canada 76 79 75 75 Wholesale Share United States 76 % 76 % 76 % 76 % Canada 63 59 61 60 Cont
Slide 7: Europe Financing Shares And Contract Placement Volume
Europe Financing Shares And Contract Placement Volume 2Q YTD 2017 2018 2017 2018 Financing Shares (incl. Fleet) (%) Retail Installment and Lease Share of Total Ford Sales U.K. 35 % 37 % 35 % 37 % Germany 46 54 47 51 Total Europe Segment 37 39 36 37 Wholesale Share U.K. 100 % 100 % 100 % 100 % German
Slide 8: Asia Pacific Financing Shares And Contract Placement Volume
Asia Pacific Financing Shares And Contract Placement Volume 2Q YTD 2017 2018 2017 2018 Financing Shares (incl. Fleet) (%) Retail Installment Share of Total Ford Sales China 28 % 31 % 26 % 33 % India 10 9 10 9 Wholesale Share China 63 % 59 % 57 % 60 % India 36 37 35 38 Contract Placement Volume - New
Slide 9: 2Q 2018 Net Receivables Mix (Bils)
2Q 2018 Net Receivables Mix (Bils) Net Investment in Operating Leases Consumer Financing Non-Consumer Financing $143.2 $27.3 • Prudent management of lease $112.2 mix 2Q 2018 H/(L) 2017 (Pct.) (Ppts.) SUV / CUV 55 0 • Operating lease portfolio was $26.8 Truck 25 4 19% of total net receivables Car 20
Slide 10: U.S. Origination Metrics
U.S. Origination Metrics Retail and Lease FICO and Higher Risk Mix (Pct) Higher Risk Portfolio Mix Average Placement FICO 748 750 744 743 745 741 • Disciplined and consistent underwriting practices 6% 6% 6% 6% 6% 6% • Portfolio quality evidenced by FICO scores and steady risk 1Q17 2Q17 3Q17 4Q17 1Q1
Slide 11: 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% 1.22% 0.16% 1.06% 1.12% 0.15% 1.00% • Delinquencies and 0.13% 0.13% 0.12% 0.10% repossessions remained low 10 10 9 9 8 8 • Severity t
Slide 12: Worldwide Credit Loss Metrics
Worldwide Credit Loss Metrics Charge-Offs (Mils) and LTR Ratio (Pct) LTR Ratio Charge-Offs 0.39% 0.35% 0.33% 0.29% 0.31% 0.25% • Worldwide credit loss metrics remained strong $119 $101 $118 $143 $118 $97 • Credit loss reserve based on 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 historical losses, portfolio qualit
Slide 13: U.S. Lease Origination Metrics
U.S. Lease Origination Metrics Lease Placement Volume (000) 24-Month 39-Month / Other 36-Month 98 97 104 91 93 12 10 10 82 12 10 8 77 76 58 75 72 65 11 11 9 9 23 17 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 • Lease share about the same as prior year and below industry Lease Share of Retail Sales (Pct) reflectin
Slide 14: U.S. Lease Residual Performance
U.S. Lease Residual Performance Lease Return Volume (000) and Return Rates (Pct) Return Rates Return Volume 83% 81% 79% 78% 79% 78% • Healthy used car market supporting lease residual and credit loss performance 79 80 70 61 68 71 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 • Auction values stronger than expected
Slide 15: Funding Structure – Managed Receivables
Funding Structure – Managed Receivables* (Bils) 2016 2017 2018 Dec 31 Dec 31 Jun 30 Term Debt (incl. Bank Borrowings) $ 66 $ 75 $ 72 Term Asset-Backed Securities 50 53 55 Commercial Paper 4 5 4 • Funding is diversified across Ford Interest Advantage / Deposits 6 5 6 platforms and markets Other 9 9 1
Slide 16: Public Term Funding Plan (Bils)
Public Term Funding Plan* (Bils) 2018 2016 2017 Through Actual Actual Forecast Jul 24 Unsecured -- Currency of issuance (USD Equivalent) USD $ 9 $ 10 $ 5-7 $ 3 CAD 1 2 1-2 1 EUR / GBP 3 3 5-6 4 Other 1 1 1 1 Total unsecured $ 14 $ 16 $ 13 - 16 $ 10 Securitizations $ 13 $ 15 $ 13 - 15 $ 9 Total publi
Slide 17: 2018 Guidance (Mils)
2018 Guidance (Mils) • Now expect 2018 EBT to be improved from 2017 2018 FY 2018 1H Key Metric 2017 FY Results 2018 FY Plan Outlook Results • Distributions are planned to maintain leverage within EBT $2,310 < 2017 > 2017 $1,286 target range of 8:1 to 9:1 Distributions $406 ~ $2,000 ~ $2,500 $1,463 •
Slide 18: Key Takeaways
Key Takeaways • Strong second quarter EBT • Now expect FY 2018 EBT to be improved from 2017 • Strong loss metrics reflect healthy consumer credit conditions • Funding plan well-positioned for business cycles • Consistent originations, servicing, and collections • Strategic asset to Ford, supporting
Slide 19: 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 20: Appendix
Appendix Total Net Receivables Reconciliation to Managed Receivables A1 Financial Statement Leverage Reconciliation to Managed Leverage A2 Liquidity Sources A3 Non-GAAP Financial Measures that Supplement GAAP Measures A4 Definitions and Calculations A5
Slide 21: Total Net Receivables Reconciliation To Managed Receivables (Bils)
Total Net Receivables Reconciliation To Managed Receivables (Bils) 2016 2017 2017 2018 Dec 31 Jun 30 Dec 31 Jun 30 Finance receivables, net (GAAP) $ 103.0 $ 108.3 $ 116.0 $ 115.9 Net investment in operating leases (GAAP) 27.2 26.7 26.7 27.3 Total net receivables* $ 130.2 $ 135.0 $ 142.7 $ 143.2 Unea
Slide 22: Financial Statement Leverage Reconciliation To Managed Leverage (Bils)
Financial Statement Leverage Reconciliation To Managed Leverage* (Bils) 2017 2017 2018 2018 Jun 30 Dec 31 Mar 31 Jun 30 Leverage Calculation Total debt $ 129.3 $ 137.8 $ 142.0 $ 136.7 Adjustments for cash (10.1) (11.8) (11.8) (10.7) Adjustments for derivative accounting (0.2) - 0.3 0.5 Total adjuste
Slide 23: Liquidity Sources (Bils)
Liquidity Sources* (Bils) 2017 2017 2018 2018 Jun 30 Dec 31 Mar 31 Jun 30 Liquidity Sources Cash $ 10.1 $ 11.8 $ 11.8 $ 10.7 Committed ABS facilities 32.3 33.4 33.9 32.0 Other unsecured credit facilities 2.7 3.3 3.4 2.8 Ford corporate credit facility allocation 3.0 3.0 3.0 3.0 Total liquidity source
Slide 24: 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 25: 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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