Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Company — Q1 2019 Earnings Presentation
56 slides from Ford Mtr Co Del's earnings presentation, Apr 25, 2019
Slide 1: 1Q Earnings Review
1Q Earnings Review April 25, 2019
Slide 2: Creating Tomorrow, Together
Creating Tomorrow, Together Our Freedom of movement drives human progress. Belief Our To become the world’s most trusted company, Aspiration designing smart vehicles for a smart world. Passion for Product & Deep Customer Insight Our Plan for Value Creation Winning Propulsion Autonomous Mobility Port
Slide 3: 2019 A Year Of Action
2019 A Year Of Action • Fortifying franchise strengths with new products Winning Portfolio • Improving mix with higher ATPs and margins • Strengthened electric vehicle plan, including future vehicle with Rivian • Improving operating leverage and breakeven • Reallocating capital to higher-return inve
Slide 4: Announcements
2019 A Year Of Action Announcements Accelerating Smart Vehicles For Winning Portfolio Fitness Global Redesign A Smart World COMPANY NORTH AMERICA SOUTH AMERICA MOBILITY Redesign of management Expedition and Navigator – 20% structure increase in production Third city selected for AV Exit heav
Slide 5: Fortifying Franchise Strengths: Key Product Launches
2019 A Year Of Action Fortifying Franchise Strengths: Key Product Launches Late 2018 Early 2019 Mid 2019 Late 2019 Super Duty Transit Connect Edge Explorer Transit 2T TRUCK & VAN TRUCK & VAN UTILITY UTILITY TRUCK & VAN Corsair UTILITY Territory UTILITY Ranger Aviator Escape / Kuga Puma Nautilus UTIL
Slide 6: $1B+ EBIT
2019 A Year Of Action Example – Michigan Assembly Plant Before And After 2017 Products 2017 vs. 2021 2021 Products (200K Units) Improvement (200K+ Units) C-MAX Ranger (2019 launch) $1B+ EBIT Focus Bronco (2020 launch) 6
Slide 7: Financial Highlights
2019 A Year Of Action Financial Highlights FIRST QUARTER Company Revenue $40.3B Company Adj. EBIT* $ Company Adj. EBIT Margin* $2.4B 6.1% NA EBIT Margin 8.7% Ford Credit EBT $0.8B Company Adj. Op. Cash Flow* $1.9B Company Cash* Liquidity $24.2B $35.2B Adj. EPS* $0.44 * See Appendix for reconciliatio
Slide 8: Bob Shanks, Chief Financial Officer: Financial Review
Bob Shanks Chief Financial Officer Financial Review
Slide 9: Key Metrics Summary
Company Key Metrics Summary FIRST QUARTER 2018 2019 H / (L) • Wholesales, market share and Wholesales (000) 1,662 1,425 (14) % revenue lower YoY; Company Market Share (Pct) 6.5 % 5.9 % (0.6) ppts adj. EBIT and EBIT margin improved YoY for first time in six quarters GAAP Revenue (Bils) $ 42.0 $ 40.3
Slide 10: Key Financial Metrics
Company Key Financial Metrics Company Revenue (Bils) Company Adjusted EBIT Margin (Pct) $41.3 $42.0 $41.8 6.1% $38.9 $40.3 4.9% 5.2% $37.6 4.3% 4.4% 3.5% 4Q 2017 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 4Q 2017 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 Company Adjusted EBIT (Bils) Company Adjusted Oper
Slide 11: 1Q 2019 Results (Mils)
Company 1Q 2019 Results (Mils) • Company adj. EBIT of $2.4B driven by best results at Auto in seven quarters and highest $2,447 quarterly EBT at Ford Credit $2,009 since 2010 $1,146 • Loss at Mobility due to planned $801 investment increases for development of mobility services and autonomous vehicl
Slide 12: 1Q 2019 EBIT By Region (Mils)
Automotive 1Q 2019 EBIT By Region (Mils) • Best quarterly EBIT in seven quarters at North America drove similar achievement for $2,205 Automotive EBIT $2,009 • YoY improvement for Auto and North America driven by gains in F-Series, Transit and Ranger, as well as benefits from decision on $(196) trad
Slide 13: 1Q 2019 EBIT YoY Bridge (Mils) - Mobility
Mobility 1Q 2019 EBIT YoY Bridge (Mils) • Mobility EBIT loss of $288M, driven by investment for mobility services and AV business development Ford Smart Autonomous 1Q 2018 Mobility Vehicles 1Q 2019 13
Slide 14: Ford Credit Key Metrics
Ford Credit Key Metrics FIRST QUARTER 2018 2019 H / (L) • Strong EBT up 25% YoY, the Net Receivables (Bils) $ 148 $ 147 (1) % best quarterly result since 2010 Managed Receivables* (Bils) $ 156 $ 155 - % Loss-to-Receivables** (LTR) 61 bps 55 bps (6) bps • Receivables down slightly from Auction Values
Slide 15: Special Items (Mils)
Company Special Items (Mils) FIRST QUARTER Global Redesign (Bils) 2018 2019 Future Actions Recorded This Quarter Global Redesign Recorded In Prior Quarters South America São Bernardo closure $ - $ (193) Other South America (9) (8) ~$11 Russia - (174) Other Europe - (115) Separations (not included ab
Slide 16: Cash Flow And Balance Sheet (Bils)
Company Cash Flow And Balance Sheet (Bils) 2018 2019 1Q 1Q • Committed to maintaining a Company Cash Flow strong balance sheet and Company Adj. Op. Cash Flow* $ 3.0 $ 1.9 investment grade ratings Change in Company Cash 1.1 1.1 • Company cash and liquidity balances remain strong and 2018 2019 above t
Slide 17: 2019 Outlook
Company 2019 Outlook Longer-Term 2018 2019 Target Revenue Growth 2% > Global GDP $ Adj. EBIT Margin* 4.4% Improvement 8%+ From 2018 Adj. ROIC* 7.1% High Teens+ Adj. Cash Conversion* 40% 65%+ Higher Than Adj. Debt To EBITDA* 3.2 <2.5 2018 * See Appendix for reconciliation to GAAP, calculations and de
Slide 18: Questions & Answers
Questions & Answers
Slide 19: Creating Tomorrow, Together
Creating Tomorrow, Together • A solid plan to create value in the near term and long term Our Freedom of movement drives human progress. Belief • Taking action, moving Our To become the world’s most trusted company, decisively and building Aspiration designing smart vehicles for a smart world. momen
Slide 20: Supplemental Materials
Supplemental Materials Financial Review
Slide 21: 1Q 2019 Revenue YoY Bridge (Bils)
Company 1Q 2019 Revenue YoY Bridge (Bils) • Company revenue of $40.3B, down 4% • Top-line drivers (volume, mix and pricing) about flat YoY; unfavorable exchange effects the main factor in YoY decline • Lower volume reflects mainly global industry decline, discontinuation of North America Focus, prod
Slide 22: Automotive Key Metrics
Automotive Key Metrics • Automotive top-line metrics lower YoY, bottom-line metrics improved – first YoY gain since FIRST QUARTER 3Q 2017 2018 2019 H / (L) • Global SAAR down 1% driven Global SAAR (Mils) 95.3 94.3 (1) % by Turkey and Argentina • Global market share lower with Market Share (Pct) 6.5
Slide 23: Automotive 1Q 2019 EBIT YoY Bridge (Mils)
Automotive 1Q 2019 EBIT YoY Bridge (Mils) Exchange $(224) China JVs (179) Other (52) Industry $(242) Share (175) • Automotive EBIT of $2B up Stocks (424) Other Volume (146) $0.3B YoY Mix 712 • Favorable market factors offset Commodities $(132) in part by lower China JV net Warranty (210) Other Contr
Slide 24: North America Key Metrics
North America • All North America key metrics Key Metrics improved except industry SAAR and wholesale volume, more than explained by FIRST QUARTER discontinuation of Focus and 2018 2019 H / (L) all-new Explorer launch • North America and U.S. SAAR SAAR (Mils) 21.6 21.2 (2) % down 2% and 1%, with U.S
Slide 25: North America 1Q 2019 EBIT YoY Bridge (Mils)
North America 1Q 2019 EBIT YoY Bridge (Mils) • North America EBIT at $2.2B, up Exchange $ (82) Other (129) $270M YoY • Favorable market factors drove YoY EBIT gain, with partial offsets from higher warranty cost Commodities $ (80) Warranty (264) related to changes in accrual Industry $(154) Share 70
Slide 26: U.S. F-Series Performance
North America U.S. F-Series Performance Sales* (000) Retail Average Transaction Price** (000) 2017 F-Series Ram 2018 Silverado Segment Avg. Excl. Ford 2019 $47,383 $47,127 $47,224 225 237 229 228 238 230 $46,334 205 214 215 $44,166 $44,262 $41,901 $41,930 $42,884 $43,065 $41,503 $40,291 2Q 3Q 4Q 1Q
Slide 27: South America Key Metrics
South America Key Metrics • All South America metrics down YoY FIRST QUARTER • South America SAAR down 2018 2019 H / (L) 4%, with 12% gain in Brazil and decline of ~50% in Argentina SAAR (Mils) 4.6 4.4 (4) % • Lower market share driven by Brazil 2.5 2.8 12 % phaseout of Fiesta and Focus Market Share
Slide 28: South America 1Q 2019 EBIT YoY Bridge (Mils)
South America 1Q 2019 EBIT YoY Bridge (Mils) • South America EBIT loss of $158M about flat YoY • Continued favorable cost performance more than offset by inflationary and adverse exchange effects and sharply lower Argentina industry • São Bernardo plant closure Commodities $(41) announced. Plant shu
Slide 29: Europe Key Metrics
Europe • All Europe key metrics Key Metrics unfavorable YoY, although business profitable in quarter and up $256M from prior quarter FIRST QUARTER • Industry SAAR decline driven by 2018 2019 H / (L) passenger vehicles; commercial vehicles up SAAR (Mils) 21.6 21.0 (3) % • Market share decline driven
Slide 30: Europe 1Q 2019 EBIT YoY Bridge (Mils)
Europe 1Q 2019 EBIT YoY Bridge (Mils) • Europe EBIT at $57M, down $62M YoY Contribution Cost $(152) Industry $ (29) Structural Cost 134 Share (136) • Decline driven by adverse Stocks (31) Other Volume (53) Exchange $(95) balance sheet exchange due to Other 15 Mix 21 weaker euro • Cost about flat, ai
Slide 31: Middle East & Africa Key Metrics
Middle East & Africa Key Metrics • Middle East & Africa top-line metrics down YoY; bottom-line metrics improved FIRST QUARTER 2018 2019 H / (L) • Middle East & Africa SAAR flat YoY, although up 5% in SAAR (Mils) 3.8 3.8 - % markets where we participate • Market share lower in most Market Share (Pct)
Slide 32: Middle East & Africa 1Q 2019 EBIT YoY Bridge (Mils)
Middle East & Africa 1Q 2019 EBIT YoY Bridge (Mils) • Middle East & Africa EBIT of $14M, up $68M YoY Commodities $ (4) • Driven by lower cost and Other Contribution Cost 13 Structural Cost 38 favorable mix Industry $ 1 Share (12) Stocks 13 Other Volume (5) Mix 30 Volume / Net 1Q 2018 Mix Pricing Cos
Slide 33: China Key Metrics
China Key Metrics FIRST QUARTER 2018 2019 H / (L) • All China key metrics down YoY except EBIT SAAR (Mils) 26.6 26.7 - % • China SAAR about flat Market Share (Pct) 3.2 % 2.1 % (1.1) ppts • Wholesale decline largely at Wholesales* (000) 222 115 (48) % JVs Revenue (Bils) $ 1.2 $ 0.9 (31) % • China JV
Slide 34: China 1Q 2019 EBIT YoY Bridge (Mils)
China 1Q 2019 EBIT YoY Bridge (Mils) Consolidated Operations $201 • China EBIT at a loss of $128M, improvement of $22M YoY • Consolidated operations improved $201M driven by lower cost and favorable exchange, offset Industry $(20) Share (33) partially by lower volume; net Exchange $119 Stocks (63) O
Slide 35: Asia Pacific Operations Key Metrics
Asia Pacific Operations Key Metrics • All Asia Pacific Operations key FIRST QUARTER metrics down YoY except 2018 2019 H / (L) industry SAAR • Higher Asia Pacific Operations SAAR (Mils) 16.7 16.9 1 % SAAR driven by a 14% increase Market Share (Pct) 1.8 % 1.7 % (0.1) ppts in ASEAN Wholesales (000) 84
Slide 36: Asia Pacific Operations 1Q 2019 EBIT YoY Bridge (Mils)
Asia Pacific Operations 1Q 2019 EBIT YoY Bridge (Mils) Exchange $(87) Other 28 • Asia Pacific Operations EBIT of $19M, down $12M YoY • EBIT decline driven by a weaker Australian dollar and stronger euro; offset partially by lower cost Volume / Net 1Q 2018 Mix Pricing Cost Other 1Q 2019 Market Factor
Slide 37: Ford Credit 1Q 2019 EBT YoY Bridge (Mils)
Ford Credit 1Q 2019 EBT YoY Bridge (Mils) • Ford Credit EBT at $801M, up $160M YoY • Higher EBT reflects incremental benefit from: Change in Reserves $ 78 Charge-offs (18) - Lower supplemental depreciation on vehicles in Supplemental Depreciation $ 257 Ford Credit’s lease portfolio Residual Losses (
Slide 38: U.S. Automotive Financing Trends
Ford Credit U.S. Automotive Financing Trends Lease Share of Retail Sales (Pct) Lease Return Vol. (000) and Auction Values** Ford Credit Industry* 36-Month Return Volume $18,360 $18,870 $17,950 $17,585 $17,510 $17,240 31% 30% 31% 28% 29% 29% 68 71 71 71 74 • Lease share below industry 61 reflecting F
Slide 39: Cash Flow (Bils)
Company Cash Flow (Bils) FIRST QUARTER 2018 2019 Company Adjusted EBIT* $ 2.2 $ 2.4 Excluding: Ford Credit EBT (0.6) (0.8) Subtotal $ 1.6 $ 1.6 • Company adj. operating cash Capital spending $ (1.8) $ (1.6) flow of $1.9B driven by Depreciation and tooling amortization 1.3 1.4 Automotive EBIT and For
Slide 40: 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 41: Appendix
APPENDIX ADDITIONAL MATERIALS Prior Results A1 Shareholder Distributions A2 RECONCILIATIONS TO GAAP Adjusted EBIT A3 Adjusted Operating Cash Flow A4 Adjusted Operating Cash Flow – Trailing 5 Quarters A5 Adjusted Earnings Per Share A6 Adjusted Effective Tax Rate A7 Adjusted ROIC A8 Adjusted Debt / EB
Slide 42: Prior Results (Mils)
Company Prior Results (Mils) 2017 2018 4Q 1Q 2Q 3Q 4Q Full Year North America $ 1,771 $ 1,935 $ 1,753 $ 1,960 $ 1,959 $ 7,607 South America (189) (149) (178) (152) (199) (678) Europe 89 119 (73) (245) (199) (398) Middle East & Africa (66) (54) 49 47 (49) (7) China (20) (150) (483) (378) (534) (1,545
Slide 43: Shareholder Distributions (Bils)
Company Shareholder Distributions (Bils) Supplemental Dividend Anti-Dilutive Share Repurchases $21.0 Regular Dividends $1.7 $3.1 • Planned FY 2019 total shareholder distributions of $2.6B • Declared 2019 second quarter regular dividend of 15¢ per $16.2 share $3.5 $2.3 $2.7 $3.1 $2.6 $0.6 $1.0 $2.4 $
Slide 44: Net Income Reconciliation To Adjusted EBIT (Mils)
Company Net Income Reconciliation To Adjusted EBIT (Mils) 1Q 2018 2019 Net income / (Loss) attributable to Ford (GAAP) $ 1,736 $ 1,146 Income / (Loss) attributable to non-controlling interests 9 37 Net income / (Loss) $ 1,745 $ 1,183 Less: (Provision for) / Benefit from income taxes (174) (427) Inco
Slide 45: Net Cash From Operating Activities Reconciliation
Company Net Cash Provided By / (Used In) Operating Activities Reconciliation To Company Adjusted Operating Cash Flow (Mils) 1Q 2018 2019 Net cash provided by / (used in) operating activities (GAAP) $ 3,514 $ 3,544 Less: Items not included in Company Adjusted Operating Cash Flows Ford Credit operatin
Slide 46: Reconciliation To Company Adjusted Operating Cash Flow (Mils)
Company Reconciliation To Company Adjusted Operating Cash Flow (Mils) 4Q 2017 1Q 2018 2Q 2018 3Q 2018 4Q 2018 1Q 2019 Net cash provided by / (Used in) operating activities (GAAP) $ 3,147 $ 3,514 $ 4,972 $ 5,179 $ 1,357 $3,544 Less: Items Not Included in Company Adjusted Operating Cash Flows Ford Cre
Slide 47: Earnings Per Share Reconciliation To Adjusted Earnings Per Share
Company Earnings Per Share Reconciliation To Adjusted Earnings Per Share 1Q 2018 2019 Diluted After-Tax Results (Mils) Diluted after-tax results (GAAP) $ 1,736 $ 1,146 Less: Impact of pre-tax and tax special items 19 (585) Less: Non-controlling interests impact of Russia restructuring - (35) Adjuste
Slide 48: Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate
Company Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate Memo: 1Q 2019 FY 2018 Pre-Tax Results (Mils) Income / (Loss) before income taxes (GAAP) $ 1,610 $ 4,345 Less: Impact of special items (592) (1,429) Adjusted earnings before taxes (Non-GAAP) $ 2,202 $ 5,774 Taxes (Mils) (Provisi
Slide 49: Adjusted ROIC (Bils)
Company Adjusted ROIC (Bils) Four Quarters Ending 1Q 2018 1Q 2019 Adjusted Net Operating Profit After Cash Tax Net income attributable to Ford $ 7.9 $ 3.1 Add: Non-controlling interest - - Less: Income tax 0.1 (0.9) Add: Cash tax (0.7) (0.7) Less: Interest on debt (1.2) (1.2) Less: Total pension / O
Slide 50: Adjusted Debt / EBITDA Reconciliation (Mils)
Company Adjusted Debt / EBITDA Reconciliation (Mils) Four Quarters Ending 1Q 2018 1Q 2019 Adjusted Debt Debt (excl. Ford Credit) $ 16,421 $ 14,210 Add: Unamortized discount & issuance costs 373 301 Add: Operating lease adjustment 1,432 1,544 Add: Net pension liability excl. prepaid assets 10,212 9,2
Slide 51: Total Net Receivables Reconciliation To Managed Receivables (Bils)
Ford Credit Total Net Receivables Reconciliation To Managed Receivables (Bils) 2017 2018 2018 2019 Dec 31 Mar 31 Dec 31 Mar 31 Ford Credit finance receivables, net (GAAP)* $ 108.4 $ 111.8 $ 109.9 $ 109.8 Net investment in operating leases (GAAP)* 26.7 26.7 27.4 27.6 Consolidating adjustments** 7.6 9
Slide 52: Financial Statement Leverage Reconciliation To Managed Leverage (Bils)
Ford Credit Financial Statement Leverage Reconciliation To Managed Leverage (Bils) 2018 2018 2019 Mar 31 Dec 31 Mar 31 Leverage Calculation Total debt* $ 142.0 $ 140.1 $ 142.9 Adjustments for cash** (11.8) (10.2) (12.8) Adjustments for derivative accounting*** 0.3 0.2 (0.1) Total adjusted debt $ 130
Slide 53: 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 54: Non-GAAP Financial Measures That Supplement GAAP Measures
Non-GAAP Financial Measures That Supplement GAAP Measures • Company Adjusted Operating 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 element
Slide 55: Non-GAAP Financial Measures That Supplement GAAP Measures
Non-GAAP Financial Measures That Supplement GAAP Measures • Ford Credit Managed Receivables – (Most Comparable GAAP Measure: Net Finance Receivables plus Net Investment in Operating Leases) – Measure of Ford Credit’s Total net receivables, excluding unearned interest supplements and residual support
Slide 56: Definitions And Calculations
Definitions And Calculations Automotive Records • References to Automotive records for EBIT margin and business units are since at least 2009 Wholesales and Revenue • Wholesale unit volumes include all Ford and Lincoln badged units (whether produced by Ford or by an unconsolidated affiliate) that ar