Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Company — Q1 2020 Earnings Presentation
60 slides from Ford Mtr Co Del's earnings presentation, Apr 28, 2020
Slide 1: Q1 Earnings Review
Q1 Earnings Review April 28, 2020
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: First Quarter Financial Results
Company First Quarter Financial Results Adj. FCF Adj. EBIT $(2.2)B $(0.6)B Down $4.1B Down $3.1B Cash Balance $34B Liquidity $35B Revenue Adj. EPS Adj. EBIT Margin $34B $(0.23) (1.8)% Down $6B Down $0.67 Down 791 bps Includes Estimated COVID-19 EBIT Impact Of At Least $(2)B 3
Slide 4: Global Response To COVID-19
Company Global Response To COVID-19 • Put people first – proactive policies focused on health of our stakeholders People • Phased-in production restart with robust safety protocols • Community support, producing medical and protective equipment • Offering deferred payments and no-contact service opt
Slide 5: Winning Portfolio
Company Winning Portfolio Mach-E Territory Corsair Super Duty Bronco Explorer Transit 2T F-150 Ranger Aviator Small, Rugged Escape / Kuga Off-Road Utility Puma Portfolio Transformation Underway With Launches From 2018 Through 2021; Shutdown Has Delayed Launches From Original Plan Not Yet In Showroom
Slide 6: Cash Flow, Cash Balance & Liquidity ($B)
Company Cash Flow, Cash Balance & Liquidity ($B) Adjusted FCF Cash Balance & Liquidity Liquidity $1.9 $1.5 $37.3 • Q1 Adjusted FCF of $(2.2)B, $34.2 $35.2 $35.4 $35.4 $35.1 down $4.1B, driven by lower Automotive EBIT, adverse $34.3 $0.5 working capital due to the $0.2 $0.2 March production suspensio
Slide 7: COVID-19 Impact On Cash & Liquidity ($B)
Company COVID-19 Impact On Cash & Liquidity ($B) Cash Balance & Liquidity • Completed $8B unsecured Liquidity debt issuance in April $37.3 $35.1 $35.1 $35.2 $35.4 $35.4 • Sufficient liquidity through $34.2 year end, even with no further $34.3 $34.6 production or financing actions • Two phases of cas
Slide 8: Revenue & EBIT Metrics
Company Revenue & EBIT Metrics Revenue ($B) & Wholesale Units (000) Adjusted EBIT ($B) & EBIT Margin (%) Wholesale Units Adj. EBIT Margin $3.0 • Q1 revenue of $34B, down 13.0% $41.8 $2.4 15%, more than explained by $2.5 $40.3 $38.9 $39.7 11.0% lower wholesale units $37.0 $2.0 $1.8 9.0% $34.3 $1.7 $1
Slide 9: Q1 2020 Results ($B)
Company Q1 2020 Results ($B) $0.0 $(0.2) $(0.2) • Company Adjusted EBIT of $(0.2) $(0.3) $(0.3) $(0.6)B, down $3.1B, driven $(0.6) by the COVID-19 impact to $(0.8) Automotive and Credit • Pre-tax Special Items reflect primarily UAW buyouts and $(2.0) global redesign actions • Taxes include $(0.9)B T
Slide 10: Q1 2020 Adjusted EBIT ($B)
Company Q1 2020 Adjusted EBIT ($B) North South Total Total Europe China IMG America America Auto Company Q1 2019 $ 2.2 $ (0.2) $ 0.1 $ (0.1) $ 0.0 $ 2.0 $ 2.4 Industry (1.4) YoY Change Other (0.1) Volume / Mix $ (1.0) $ (0.0) $ (0.3) $ (0.1) $ (0.1) $ (1.5) $ (1.5) Material / Freight (0.6) Net Prici
Slide 11: North America
Business Unit Results North America EBIT YoY Bridge ($B) Wholesale Units (000) 738 753 693 639 681 619 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 YoY (0)% (5)% (7)% (1)% (8)% (18)% Q1 2019 Volume / Net Cost Exchange Other Q1 2020 Revenue ($B) Mix Pricing $25.9 $25.4 $25.3 $24.0 $23.4 $21.8 • Q1
Slide 12: South America
Business Unit Results South America EBIT YoY Bridge ($B) Wholesale Units (000) 89 75 79 74 68 59 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 YoY (17)% (21)% (22)% (16)% (17)% (13)% Q1 2019 Volume / Net Cost Exchange Other Q1 2020 Revenue ($B) Mix Pricing $1.2 $0.9 $1.0 $1.0 $1.0 $0.7 • Q1 wholes
Slide 13: Europe
Business Unit Results Europe EBIT YoY Bridge ($B) Wholesale Wholesale Units* Units (000) (000) 349 382 368 341 298 288 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 YoY (12)% (12)% 4% (13)% (2)% (25)% Q1 2019 Volume / Net Cost Exchange Other Q1 2020 Revenue ($B) Mix Pricing $7.1 $7.4 $7.3 $7.0 $6.
Slide 14: China
Business Unit Results China EBIT YoY Bridge ($B) Wholesale Units* (000) JV Volume 171 159 126 134 115 147 81 139 108 116 99 72 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Total China YoY (54)% (48)% (32)% (12)% (7)% (29)% Q1 2019 Volume / Net Cost Exchange Other JVs Q1 2020 Mix Pricing Consolida
Slide 15: International Markets Group
Business Unit Results International Markets Group EBIT YoY Bridge ($B) Wholesale Units* (000) 126 107 103 98 93 78 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 YoY (5)% (12)% (14)% (20)% (22)% (27)% Q1 2019 Volume / Net Cost Exchange Other Q1 2020 Revenue ($B) Mix Pricing $3.0 $2.6 $2.6 $2.4 $2.3
Slide 16: Mobility
Mobility EBIT YoY Bridge ($B) • COVID-19 is shifting consumer behavior; assessing the impact on moving people and goods services • Start of AV commercial services moved to 2022 • Disciplined approach to investment • Mid-year VW investment in Q1 2019 Ford Smart Autonomous Q1 2020 Argo on track Mobili
Slide 17: Ford Credit
Ford Credit EBT YoY Bridge ($B) EBT ($B) $0.8 $0.8 $0.7 $0.7 $0.6 $0.0 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Distributions ($B) $0.7 $0.7 $0.6 $1.1 $0.5 $0.3 $(0.0) U.S. Retail LTR Ratios* (%) Q1 2019 Volume / Financing Credit Lease Exchange Other Q1 2020 Mix Margin Loss Residual 0.66% 0.6
Slide 18: Cash Flow And Balance Sheet ($B)
Company Cash Flow And Balance Sheet ($B) FIRST QUARTER BALANCE SHEET 2019 2020 2019 2020 Dec 31 Mar 31 Company Adj. EBIT excl. Ford Credit $ 1.6 $ (0.7) Company Excluding Ford Credit Capital spending $ (1.6) $ (1.8) Company Cash Balance $ 22.3 $ 34.3 Depreciation and tooling amortization 1.4 1.4 Liq
Slide 19: Special Items ($B)
Company Special Items ($B) FIRST QUARTER 2020 GLOBAL REDESIGN* 2019 2020 Potential 2020 Actions Recorded This Quarter Global Redesign Europe excl. Russia $ (0.1) $ (0.1) India - (0.0) South America (0.2) (0.0) Russia (0.2) 0.0 China (0.0) (0.0) Separations and Other (Not Included Above) (0.0) (0.0)
Slide 20: Q2 Adj. EBIT $1.7B Loss > $5B
2019 2020* Q2 ADJ. EBIT $1.7B Loss > $5B FY Capital Spending $7.6B $6.3 - $6.8B FY Pension Contributions $0.7B $0.5 - $0.7B FY Global Redesign EBIT Charges $(3.2)B $(0.7) - $(1.2)B FY Global Redesign Cash Effects $(0.9)B $(0.7) - $(1.2)B * Our actual results could differ materially from our guidance
Slide 21: Summary
Summary • We remain committed to a strong balance sheet – optimizing liquidity during this time of unprecedented uncertainty • Recent actions provide flexibility to weather the present disruption caused by COVID-19, AND the confidence to continue to invest in growth opportunities • Strong bias for a
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Slide 23: Cautionary Note On Forward-Looking Statements
Cautionary Note On Forward-Looking Statements Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptio
Slide 24: Appendix
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Slide 25: Dynamics Of Estimated COVID-19 EBIT Impact
Company Dynamics Of Estimated COVID-19 EBIT Impact INCLUDED EXCLUDED • Lost variable profit on lower wholesales • Changes in economic factors • Higher credit loss reserves • Other mitigating actions • Pricing and incentives • Lower assessment of used vehicle prices • Lost profit on parts and accesso
Slide 26: Key Metrics
Automotive Key Metrics WHOLESALE UNITS (000) MARKET SHARE (%) Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 North America 738 753 693 639 681 619 12.8 % 13.6 % 13.8 % 12.6 % 12.8 % 13.6 % South America 89 68 75 79 74 59 7.6 7.7 7.4 7.1 6.9 6.9 Europe
Slide 27: Key Metrics
Automotive Key Metrics EBIT ($B) EBIT CHANGE (%) Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 North America $ 2.0 $ 2.2 $ 1.7 $ 2.0 $ 0.7 $ 0.3 11 % 14 % (3) % 3 % (64) % (84) % South America (0.2) (0.2) (0.2) (0.2) (0.2) (0.1) (5) (6) (15) (9) 11 2
Slide 28: Key Metrics
Automotive Key Metrics WHOLESALE UNITS (000) MARKET SHARE (%) 2020 B / (W) 2020 B / (W) Q1 2019 Q1 2020 Q1 2019 Q1 2020 2019 2019 North America 753 619 (134) 13.6 % 13.6 % 0.0 ppts South America 68 59 (9) 7.7 6.9 (0.8) Europe 382 288 (94) 7.6 6.9 (0.7) China 115 81 (34) 2.1 2.2 0.1 International Mar
Slide 29: Q1 Results ($M)
Company Q1 Results ($M) 2019 2020 2020 B / (W) 2019 North America $ 2,205 $ 346 $ (1,859) South America (158) (113) 45 Europe 85 (143) (228) China (128) (241) (113) International Markets Group 5 (26) (30) Automotive $ 2,009 $ (177) $ (2,185) Mobility (288) (334) (46) Ford Credit 801 30 (771) Corpora
Slide 30: Quarterly Results ($M)
Company Quarterly Results ($M) 2018 2019 2020 Full Year Q1 Q2 Q3 Q4 Full Year Q1 North America $ 7,607 $ 2,205 $ 1,696 $ 2,012 $ 700 $ 6,612 $ 346 South America (678) (158) (205) (165) (176) (704) (113) Europe (excl. Russia) (211) 85 110 (144) 72 123 (143) China (1,545) (128) (155) (281) (207) (771)
Slide 31: Net Income Reconciliation To Adjusted EBIT ($M)
Company Net Income Reconciliation To Adjusted EBIT ($M) Q1 2019 2020 Net income / (Loss) attributable to Ford (GAAP) $ 1,146 $ (1,993) Income / (Loss) attributable to non-controlling interests 37 - Net income / (Loss) $ 1,183 $ (1,993) Less: (Provision for) / Benefit from income taxes (427) (847) In
Slide 32: Net Cash From Operating Activities Reconciliation To Company Adjusted FCF
Company Net Cash Provided By / (Used In) Operating Activities Reconciliation To Company Adjusted FCF ($M) Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Net cash provided by / (used in) operating activities (GAAP) $ 5,179 $ 1,357 $ 3,544 $6,463 $4,732 $2,900 $ (473) Less: Items Not Included
Slide 33: Earnings Per Share Reconciliation To Adjusted Earnings Per Share
Company Earnings Per Share Reconciliation To Adjusted Earnings Per Share Q1 2019 2020 Diluted After-Tax Results ($M) Diluted after-tax results (GAAP) $ 1,146 $ (1,993) Less: Impact of pre-tax and tax special items (585) (1,074) Less: Non-controlling interests impact of Russia restruturing (35) - Adj
Slide 34: Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate
Company Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate 2020 Memo: Q1 FY 2019 Pre-Tax Results ($M) Income / (Loss) before income taxes (GAAP) $ (1,146) $ (640) Less: Impact of special items (287) (5,999) Adjusted earnings before taxes (Non-GAAP) $ (859) $ 5,359 Taxes ($M) (Provision
Slide 35: Adjusted ROIC ($B)
Company Adjusted ROIC ($B) Four Quarters Four Quarters Adjusted Net Operating Profit After Cash Tax Ending Q1 2019 Ending Q1 2020 Net income attributable to Ford $ 3.1 $ (3.1) Add: Non-controlling interest 0.0 - Less: Income tax (0.9) 0.3 Add: Cash tax (0.7) (0.6) Less: Interest on debt (1.2) (1.0)
Slide 36: 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 37: Non-GAAP Financial Measures That Supplement GAAP Measures
Non-GAAP Financial Measures That Supplement GAAP Measures • Company Adjusted Free Cash Flow (FCF) (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 elemen
Slide 38: 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
Slide 39: Q1 Earnings Review
Q1 Earnings Review April 28, 2020
Slide 40: Key Takeaways
Key Takeaways • Q1 2020 EBT of $30M is down $771M YoY. Strong portfolio performance in Q1 offset by higher credit loss reserves, lower values of off-lease vehicles awaiting sale and anticipated lease defaults • Strong balance sheet is inherently liquid; smaller size reflects auto sales decline • Liq
Slide 41: COVID-19 Response
COVID-19 Response • Ford Credit has taken significant action to safeguard our employees, customers, and dealers • Employee health and safety remain the top priority, and nearly 100% of the workforce is working remotely, including effectively originating business and serving customers • For existing
Slide 42: Key Metrics
Key Metrics EBT YoY Bridge ($M) EBT ($M) $801 $831 $663 $736 $630 $30 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Distributions ($M) $660 $675 $650 $1,100 $475 $275 $(51) Q1 2019 Volume / Financing Credit Lease Exchange Other Q1 2020 U.S. Retail LTR Ratios* (%) Mix Margin Loss Residual 0.66% 0.6
Slide 43: Q1 2020 Net Receivables Mix ($B)
Q1 2020 Net Receivables Mix ($B) Net Investment in Operating Leases Consumer Financing Non-Consumer Financing $137.8 • Operating lease portfolio was $27.0 $110.2 20% of total net receivables Q1 2020 H / (L) 2019 $26.8 SUV / CUV 58% 1 ppts. • Receivables declined $9 billion Truck 31 3 YoY and $4 bill
Slide 44: U.S. Origination Metrics & Credit Loss Drivers
U.S. Origination Metrics & Credit Loss Drivers Retail & Lease FICO and Retail Repossessions (000) and Higher Risk Mix (%) Repossession Rate (%) Higher Risk Portfolio Mix (%) Repossession Rate (%) • Disciplined and consistent 747 747 750 753 741 739 underwriting practices 7 7 7 7 7 6% 6% 6% 6% 6% 6%
Slide 45: Worldwide Credit Loss Metrics
Worldwide Credit Loss Metrics Charge-Offs ($M) and LTR Ratio (%) LTR Ratio (%) $129 $109 $107 $101 0.42% $89 0.36% $66 0.36% 0.35% • Worldwide credit loss metrics 0.30% remain strong 0.22% • Increase in credit loss reserve reflects January 1, Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 2020 adop
Slide 46: Q1 2020 Credit Loss Reserve Adjustment ($M)
Q1 2020 Credit Loss Reserve Adjustment ($M) • Current Expected Credit Losses (CECL) accounting standard reflects forward- looking estimate of lifetime losses • $252M adjustment at adoption recorded through retained earnings • Increase in retail reserve driven by probability of default primarily refl
Slide 47: U.S. Lease Metrics
U.S. Lease Metrics Lease Return Volume (000) Lease Placement Volume (000) and Return Rates (%) 24-Month Return Rate (%) 36-Month 39-Month / Other 93 9 83 81 83 82 9 9 11 12 70 74 75 • Lease placement and lease 71 70 71 67 11 return volume lower 75 48 56 38 68 64 78% 80% 78% 77% • Lease share below i
Slide 48: Ford Credit Funding Strategy
Ford Credit Funding Strategy • Our strong balance sheet and substantial liquidity provide Ford Credit considerable flexibility • Lower expected originations as a result of the impact of COVID-19 are projected to decrease the size of the balance sheet and our funding requirements in 2020 • Despite th
Slide 49: Cumulative Maturities at March 31, 2020 ($B)
Cumulative Maturities at March 31, 2020* ($B) • Strong balance sheet is Assets Debt inherently liquid with $155 $139 cumulative debt maturities $135 $116 having a longer tenor than $102 asset maturities $83 $72 • As of March 31, $80 billion $50 (including $2.9 billion cash) of $155 billion assets ar
Slide 50: Funding Structure – Managed Receivables ($B)
Funding Structure – Managed Receivables* ($B) 2019 2020 Dec 31 Mar 31 Term Debt (incl. Bank Borrowings) $ 73 $ 72 Term Asset-Backed Securities 57 56 • Funding is diversified across Commercial Paper 4 3 platforms and markets Ford Interest Advantage / Deposits 7 6 • Well capitalized with a strong Othe
Slide 51: Public Term Funding Plan ($B)
Public Term Funding Plan* ($B) 2018 2019 2020 Through Actual Actual Forecast Apr 27 Public Issuances • We are able to be flexible with our public term funding plans Unsecured $ 13 $ 17 $ 3-8 $ 3 as a result of our strong balance sheet and substantial Securitizations** 14 14 9 - 14 3 liquidity Total
Slide 52: 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 53: Appendix
APPENDIX EBT by Segment FC16 Financing Shares And Contract Placement Volume FC17 Total Net Receivables Reconciliation To Managed Receivables FC18 Financial Statement Leverage Reconciliation to Managed Leverage FC19 Liquidity Sources FC20 Non-GAAP Financial Measures that Supplement GAAP Measures FC21
Slide 54: EBT By Segment ($M)
EBT By Segment* ($M) Q1 H / (L) 2020 2019 Results United States and Canada segment $ 22 $ (600) Europe segment 17 (97) All Other segment 7 (51) Total segments $ 46 $ (748) Unallocated other (16) (23) Earnings before taxes $ 30 $ (771) (Provision for) / Benefit from income taxes (9) 189 Net income $
Slide 55: Financing Shares And Contract Placement Volume
Financing Shares And Contract Placement Volume Q1 2019 2020 Share of Ford Sales* United States 50 % 56 % Canada 67 63 U.K. 37 44 Germany 50 44 China 33 34 Wholesale Share United States 76 % 74 % Canada 57 55 U.K. 100 100 Germany 93 93 China 59 51 Contract Placement Volume - New and Used (000) United
Slide 56: Total Net Receivables Reconciliation To Managed Receivables ($B)
Total Net Receivables Reconciliation To Managed Receivables ($B) 2019 2019 2020 Mar 31 Dec 31 Mar 31 Finance receivables, net (GAAP) $ 119.3 $ 114.3 $ 110.8 Net investment in operating leases (GAAP) 27.6 27.7 27.0 Total net receivables* $ 146.9 $ 142.0 $ 137.8 Held-for-sale receivables (GAAP) $ - $
Slide 57: Financial Statement Leverage Reconciliation To Managed Leverage ($B)
Financial Statement Leverage Reconciliation To Managed Leverage* ($B) 2019 2019 2020 Mar 31 Dec 31 Mar 31 Leverage Calculation Debt $ 142.9 $ 140.0 $ 136.8 Adjustments for cash (12.8) (11.7) (11.3) Adjustments for derivative accounting (0.1) (0.5) (1.6) Total adjusted debt $ 130.0 $ 127.8 $ 123.9 Eq
Slide 58: Liquidity Sources ($B)
Liquidity Sources* ($B) 2019 2019 2020 Mar 31 Dec 31 Mar 31 Liquidity Sources Cash $ 12.8 $ 11.7 $ 11.3 Committed asset-backed facilities 35.2 36.6 35.9 Other unsecured credit facilities 3.3 3.0 2.8 Ford corporate credit facility allocation 3.0 3.0 - • Given excess liquidity, Total liquidity sources
Slide 59: 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 60: Definitions And Calculations
Definitions And Calculations Adjustments (as shown on the Liquidity Sources chart) • Includes asset-backed capacity in excess of eligible receivables; cash related to the Ford Credit Revolving Extended Variable-utilization program (“FordREV”), which can be accessed through future sales of receivable