Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Company — Q2 2020 Earnings Presentation
58 slides from Ford Mtr Co Del's earnings presentation, Jul 30, 2020
Slide 1: Q2 Earnings Review
Q2 Earnings Review July 30, 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: Highlights
Highlights • Effectively restarted production with robust safety protocols, aggressively mitigated production losses and navigated a tenuous supply base • Keenly focused on cost and cash • Disciplined management of balance sheet and strong liquidity position, ensuring financial flexibility, particul
Slide 4: Second Quarter Company Financial Results
Second Quarter Company Financial Results ADJ. FCF REVENUE ADJ. EBIT ADJ. EBIT ADJ. EPS MARGIN $(5.3)B $19B $(1.9)B (10.0)% $(0.35) DOWN $5.5B DOWN $19B DOWN $3.6B DOWN 14.3 ppts DOWN $0.63 First Half $(7.6)B $54B $(2.6)B (4.8)% $(0.59) DOWN $9.6B DOWN $26B DOWN $6.7B DOWN 10 ppts DOWN $1.31 4
Slide 5: Influential New Products
Influential New Products F-150 MUSTANG MACH-E BRONCO FAMILY America’s Best-Selling Power, Style And Freedom Return Of An Icon Vehicle For The Last 38 Years For A New Generation Growing Our Winning Portfolio With Exciting New Products Leveraging Our Iconic Nameplates 5
Slide 6: Commitment To Electric Vehicles
Commitment To Electric Vehicles BEV versions of the #1 full-size pickup and Battery Electric F-150 cargo van globally arriving in the next And Transit 24 months Dynamic performance with targeted EPA-estimated Mustang Mach-E range of at least 300 miles1; available late 2020 NA Escape plug-in hybrid a
Slide 7: Strategic Developments With VW
Strategic Developments With VW Ford and VW expect to produce a combined 8M commercial vehicles during the product lifecycle Commercial And Ford to build European electric vehicle Electric Vehicles based on VW’s Module Electric Drive (MEB) Ford to engineer and build medium size pickup, to be sold by
Slide 8: Cash Flow, Cash Balance And Liquidity
Cash Flow, Cash Balance And Liquidity ($B) Adjusted FCF Cash Balance And Liquidity Liquidity $39.8 $39.3 • Q2 Adjusted FCF of $(5.3)B, $37.3 $1.9 $35.4 $35.4 down $5.5B, driven by an $35.2 $35.1 $34.3 Adj. EBIT loss, unfavorable $0.5 $0.2 $0.2 timing differences and negative working capital • Quarte
Slide 9: Revenue And EBIT Metrics
Revenue And EBIT Metrics Revenue ($B) & Wholesale Units (000) Adjusted EBIT ($B) & EBIT Margin (%) Wholesale Units Adj. EBIT Margin $2.4 19.0% • Q2 revenue of $19B, down $2.5 17.0% $40.3 $39.7 15.0% 50%, driven by lower volume $38.9 $1.8 $37.0 $1.7 13.0% $34.3 $1.5 11.0% • Wholesale units of 645K, d
Slide 10: Q2 2020 Results
Q2 2020 Results ($B) $3.5 $1.1 $0.5 • Company Adjusted EBIT of $0.0 $(1.9)B, down $3.6B, driven $(0.1) by the COVID impact on $(0.3) $(0.5) Automotive • Pre-tax Special Items reflect $(2.1) $(1.9) primarily gain on Argo AI Taxes / Non- transaction with VW Automotive Mobility Ford Credit Corporate Co
Slide 11: Q2 2020 Adjusted EBIT
Q2 2020 Adjusted EBIT ($B) North South Total Total Europe China IMG America America Auto Company Q2 2019 $ 1.7 $ (0.2) $ 0.1 $ (0.2) $ (0.1) $ 1.4 $ 1.7 Industry $(4.0) YoY Change: Stocks / Other (1.7) Volume / Mix $ (4.3) $ (0.1) $ (1.0) $ (0.0) $ (0.3) $ (5.7) $ (5.7) Material / Freight $(0.7) War
Slide 12: North America
North America EBIT YoY Bridge ($B) Wholesale Units (000) 753 693 639 681 619 272 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 YoY (5)% (7)% (1)% (8)% (18)% (61)% Q2 2019 Volume / Net Cost Exchange Other Q2 2020 Revenue ($B) Mix Pricing $25.4 $24.0 $23.4 $25.3 $21.8 • Q2 wholesale units down 61%,
Slide 13: South America
South America EBIT YoY Bridge ($B) Wholesale Units (000) 75 79 74 68 59 14 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 YoY (21)% (22)% (16)% (17)% (13)% (81)% Q2 2019 Volume / Net Cost Exchange Other Q2 2020 Revenue ($B) Mix Pricing $1.0 $1.0 $1.0 $0.9 $0.7 • Q2 wholesale units down 81%, reflect
Slide 14: Europe
Europe EBIT YoY Bridge ($B) Wholesale Wholesale Units* Units (000) (000) 382 368 341 298 288 154 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 YoY (12)% 4% (13)% (2)% (25)% (58)% Q2 2019 Volume / Net Cost Exchange Other Q2 2020 Revenue ($B) Mix Pricing $7.4 $7.3 $7.0 $6.3 $6.2 • Q2 wholesale units
Slide 15: China
China EBIT YoY Bridge ($B) Wholesale Units* (000) JV Volume 159 169 126 134 115 81 156 139 108 116 99 72 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Total China YoY (48)% (32)% (12)% (7)% (29)% 34% Q2 2019 Volume / Net Cost Exchange Other JVs Q2 2020 Mix Pricing Consolidated Revenue ($B) Consoli
Slide 16: International Markets Group
International Markets Group EBIT YoY Bridge ($B) Wholesale Units* (000) 107 103 98 93 78 36 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 YoY (12)% (14)% (20)% (22)% (27)% (64)% Q2 2019 Volume / Net Cost Exchange Other Q2 2020 Revenue ($B) Mix Pricing $2.6 $2.6 $2.4 $2.3 $2.0 $1.0 • Q2 wholesale u
Slide 17: Mobility
Mobility EBIT YoY Bridge ($B) • VW investment in Argo AI completed • Transaction resulted in a gain of $3.5B, reported as a Special Item • Argo AI deconsolidated, effective June 1 • Expect investments in Autonomous Vehicles to Q2 2019 Ford Smart Autonomous Q2 2020 continue at similar levels Mobility
Slide 18: Ford Credit
Ford Credit EBT YoY Bridge ($B) EBT ($B) $0.8 $0.8 $0.8 $0.7 $0.6 $0.5 $0.0 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Distributions ($B) $0.7 $0.6 $1.1 $0.5 $0.3 $0.3 U.S. Retail LTR Ratios (%) Q2 2019 Volume / Financing Credit Lease Exchange Other Q2 2020 Mix Margin Loss Residual 0.63% 0.62%
Slide 19: Cash Flow And Balance Sheet
Cash Flow And Balance Sheet ($B) SECOND QUARTER FIRST HALF BALANCE SHEET 2019 2020 2019 2020 2019 2020 Dec 31 Jun 30 Company Adj. EBIT excl. Ford Credit $ 0.8 $ (2.5) $ 2.5 $ (3.2) Company Excluding Ford Credit Capital Spending $ (1.9) $ (1.2) $ (3.5) $ (2.9) Company Cash Balance $ 22.3 $ 39.3 Depre
Slide 20: Special Items
Special Items ($B) SECOND QUARTER FIRST HALF 2020 GLOBAL REDESIGN* 2019 2020 2019 2020 Potential 2020 Actions Recorded This Quarter Recorded In First Quarter Global Redesign Europe excl. Russia $ (0.7) $ (0.1) $ (0.8) $ (0.2) India - (0.0) - (0.0) South America (0.2) (0.0) (0.4) (0.0) $(0.7) - $(1.2
Slide 21: Outlook
Outlook 2019 2020* Adjusted EBIT - Q3 $1.8B $0.5B - $1.5B - Q4 $0.5B Loss - Full Year $6.4B Loss Capital Spending $7.6B $6.1B - $6.6B Pension Contributions $0.7B $0.5B - $0.7B Global Redesign EBIT Charges $3.2B $0.7B - $1.2B Global Redesign Cash Effects $0.9B $0.7B - $1.2B * Our guidance assumes no
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Slide 23: Cautionary Note On Forward-Looking Statements And Disclaimers
Cautionary Note On Forward-Looking Statements And Disclaimers CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS: Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
Slide 24: Appendix
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Slide 25: Key Metrics
Key Metrics WHOLESALE UNITS (000) MARKET SHARE (%) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 North America 753 693 639 681 619 272 13.6 % 13.8 % 12.6 % 12.8 % 13.6 % 14.2 % South America 68 75 79 74 59 14 7.7 7.4 7.1 6.9 6.9 6.5 Europe 382 368 29
Slide 26: Key Metrics
Key Metrics EBIT ($B) EBIT CHANGE (%) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 North America $ 2.2 $ 1.7 $ 2.0 $ 0.7 $ 0.3 $ (1.0) 14 % (3) % 3 % (64) % (84) % (157) % South America (0.2) (0.2) (0.2) (0.2) (0.1) (0.2) (6) (15) (9) 11 29 19 Europ
Slide 27: Key Metrics
Key Metrics WHOLESALE UNITS (000) MARKET SHARE (%) 2020 B / (W) 2020 B / (W) 2020 B / (W) 2020 B / (W) Q2 2019 Q2 2020 2019 1H 2020 1H Q2 2019 Q2 2020 2019 1H 2020 1H 2019 2019 2019 2019 North America 693 272 (421) 1,446 890 (556) 13.8 % 14.2 % 0.4 ppts 13.7 % 13.8 % 0.1 ppts South America 75 14 (61
Slide 28: Q2 Results
Q2 Results ($M) Q2 First Half 2019 2020 2020 B / (W) 2019 2019 2020 2020 B / (W) 2019 North America $ 1,696 $ (974) $ (2,670) $ 3,900 $ (628) $ (4,528) South America (205) (165) 39 (362) (278) 84 Europe 110 (664) (774) 195 (807) (1,002) China (155) (136) 19 (283) (377) (94) International Markets Gro
Slide 29: First Half 2020 Adjusted EBIT
First Half 2020 Adjusted EBIT ($B) North South Total Total Europe China IMG America America Auto Company First Half 2019 $ 3.9 $ (0.4) $ 0.2 $ (0.3) $ (0.1) $ 3.4 $ 4.1 Industry $(5.4) YoY Change: Stocks / Other (1.8) Volume / Mix $ (5.4) $ (0.1) $ (1.3) $ (0.1) $ (0.3) $ (7.2) $ (7.2) Material / Fr
Slide 30: Quarterly Results
Quarterly Results ($M) 2019 2020 Q1 Q2 Q3 Q4 Full Year Q1 Q2 North America $ 2,205 $ 1,696 $ 2,012 $ 700 $ 6,612 $ 346 $ (974) South America (158) (205) (165) (176) (704) (113) (165) Europe (excl. Russia) 85 110 (144) 72 123 (143) (664) China (128) (155) (281) (207) (771) (241) (136) International M
Slide 31: Net Income Reconciliation To Adjusted EBIT
Net Income Reconciliation To Adjusted EBIT ($M) Q2 First Half Memo: 2019 2020 2019 2020 FY 2019 Net income / (Loss) attributable to Ford (GAAP) $ 148 $ 1,117 $ 1,294 $ (876) $ 47 Income / (Loss) attributable to non-controlling interests 2 1 39 1 37 Net income / (Loss) $ 150 $ 1,118 $ 1,333 $ (875) $
Slide 32: Net Cash From Operating Activities Reconciliation To Company Adjusted FCF
Net Cash Provided By / (Used In) Operating Activities Reconciliation To Company Adjusted FCF ($M) First Half Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 2019 2020 Net cash provided by / (Used in) operating activities (GAAP) $ 3,544 $ 6,463 $ 4,732 $ 2,900 $ (473) $ 9,115 $ 10,007 $ 8,642 Less: I
Slide 33: Earnings Per Share Reconciliation To Adjusted Earnings Per Share
Earnings Per Share Reconciliation To Adjusted Earnings Per Share Q2 First Half 2019 2020 2019 2020 Diluted After-Tax Results ($M) Diluted after-tax results (GAAP) $ 148 $ 1,117 $ 1,294 $ (876) Less: Impact of pre-tax and tax special items (989) 2,525 (1,574) 1,451 Less: Non-controlling interests imp
Slide 34: Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate
Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate 2020 Memo: Q2 First Half FY 2019 Pre-Tax Results ($M) Income / (Loss) before income taxes (GAAP) $ 1,084 $ (62) $ (640) Less: Impact of special items 3,480 3,193 (5,999) Adjusted earnings before taxes (Non-GAAP) $ (2,396) $ (3,255) $ 5
Slide 35: Adjusted ROIC
Adjusted ROIC ($B) Four Quarters Four Quarters Adjusted Net Operating Profit After Cash Tax Ending Q2 2019 Ending Q2 2020 Net income attributable to Ford $ 2.2 $ (2.1) Add: Non-controlling interest 0.0 (0.0) Less: Income tax (0.7) 0.4 Add: Cash tax (0.8) (0.4) Less: Interest on debt (1.1) (1.2) Less
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 supplemental
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: Q2 Earnings Review
Q2 Earnings Review July 30, 2020
Slide 40: Key Takeaways
Key Takeaways • Strong Q2 EBT of $543M • Balance sheet is inherently liquid; smaller size reflects lower production • Liquidity is strong at $32B; we continue to access diverse funding sources • Portfolio is performing well – delinquencies, charge-offs and loss-to-receivables (LTR) ratio remained lo
Slide 41: Key Metrics
Key Metrics EBT YoY Bridge ($M) EBT ($M) $801 $831 $736 $630 $543 Credit Losses Reserve $ 19 (52) $30 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Auction Performance $ 118 DMV $(77) Supplemental Depreciation (265) Other 14 Distributions ($M) $675 $650 $1,100 $475 $275 $275 Op Lease Defaults & Re
Slide 42: Q2 2020 Net Receivables Mix
Q2 2020 Net Receivables Mix ($B) Net Investment in Operating Leases Consumer Financing Non-Consumer Financing $130.3 $26.4 $103.5 • Receivables declined Q2 2020 H / (L) 2019 SUV / CUV 58% 1 ppts. $13B YoY and $12B from $26.2 Truck 31 2 YE 2019 ($7.5B in Q2) Car 11 (3) primarily reflecting lower $73.
Slide 43: U.S. Origination Metrics And Credit Loss Drivers
U.S. Origination Metrics And Credit Loss Drivers Retail & Lease FICO and Retail Repossessions (000) and Higher Risk Mix (%) Repossession Rate (%) • Disciplined and consistent Higher Risk Portfolio Mix (%) Repossession Rate (%) underwriting practices 747 750 753 743 • Portfolio quality evidenced by 7
Slide 44: U.S. Consumer Pandemic Extensions
U.S. Consumer Pandemic Extensions 80K Pandemic Extensions By Week Extensions 70K 60K # of Extensions 50K 40K • 361K pandemic extensions 30K (11% of outstanding 20K contracts) processed 10K March – May 0K Mar 1 Mar 8 Mar 15 Mar 22 Mar 29 Apr 5 Apr 12 Apr 19 Apr 26 May 3 May 10 May 17 May 24 May 31 Ju
Slide 45: Worldwide Credit Loss Metrics
Worldwide Credit Loss Metrics Charge-Offs ($M) and LTR Ratio (%) LTR Ratio (%) $109 $107 $101 $89 0.36% $66 0.36% 0.35% 0.30% $45 • Worldwide credit loss metrics 0.22% 0.17% improvement reflects government stimulus and retail financing and lease Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 extens
Slide 46: U.S. Lease Metrics
U.S. Lease Metrics Lease Return Volume (000) Lease Placement Volume (000) and Return Rates (%) 24-Month Return Rate (%) 36-Month 39-Month / Other 83 81 83 82 9 9 11 12 70 74 75 70 71 • Lower lease return volumes 67 11 52 58 reflect impact of lease 48 9 56 68 64 38 80% extension programs 78% 77% 36 7
Slide 47: Cumulative Maturities At June 30, 2020
Cumulative Maturities At June 30, 2020* ($B) Assets Debt $154 • Strong balance sheet is $134 inherently liquid with $121 $97 cumulative debt maturities $95 $75 having a longer tenor than $64 asset maturities $35 • As of June 30, $76B of $154B assets are unencumbered Jul – Dec 2020 2021 2022 2023 & B
Slide 48: Funding Structure – Managed Receivables
Funding Structure – Managed Receivables* ($B) 2019 2020 Dec 31 Jun 30 Term Debt (incl. Bank Borrowings) $ 73 $ 73 Term Asset-Backed Securities 57 55 • Well capitalized with a strong Commercial Paper 4 2 balance sheet Ford Interest Advantage / Deposits 7 6 Other 9 6 • Funding is diversified across pl
Slide 49: Public Term Funding Plan
Public Term Funding Plan* ($B) 2018 2019 2020 Through • Completed $12B of public Actual Actual Forecast Jul 29 issuance year-to-date including $2B of unsecured in June Unsecured $ 13 $ 17 $ 7 - 10 $ 5 • Strong balance sheet and Securitizations** 14 14 11 - 14 7 substantial liquidity provide Total $
Slide 50: 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 51: Appendix
APPENDIX EBT By Segment A1 Financing Shares And Contract Placement Volume A2 Total Net Receivables Reconciliation To Managed Receivables A3 Financial Statement Leverage Reconciliation To Managed Leverage A4 Liquidity Sources A5 Non-GAAP Financial Measures That Supplement GAAP Measures A6 Definitions
Slide 52: EBT By Segment
EBT By Segment* ($M) Q2 YTD H / (L) H / (L) 2020 2019 2020 2019 Results United States and Canada segment $ 445 $ (144) $ 467 $ (744) Europe segment 65 (48) 82 (145) All Other segment 17 (20) 24 (71) Total segments $ 527 $ (212) $ 573 $ (960) Unallocated other 16 (76) - (99) Earnings before taxes $ 5
Slide 53: Financing Shares And Contract Placement Volume
Financing Shares And Contract Placement Volume Q2 YTD 2019 2020 2019 2020 Share of Ford Sales* United States 49 % 77 % 49 % 67 % Canada 65 63 66 63 U.K. 36 44 38 44 Germany 49 34 49 39 China 32 37 34 36 Wholesale Share United States 75 % 73 % 76 % 74 % Canada 57 42 57 45 U.K. 100 100 100 100 Germany
Slide 54: Total Net Receivables Reconciliation To Managed Receivables
Total Net Receivables Reconciliation To Managed Receivables ($B) 2019 2019 2020 Jun 30 Dec 31 Jun 30 Finance receivables, net (GAAP) $ 115.7 $ 114.3 $ 103.9 Net investment in operating leases (GAAP) 27.7 27.7 26.4 Total net receivables* $ 143.4 $ 142.0 $ 130.3 Held-for-sale receivables (GAAP) $ - $
Slide 55: Financial Statement Leverage Reconciliation To Managed Leverage
Financial Statement Leverage Reconciliation To Managed Leverage* ($B) 2019 2019 2020 Jun 30 Dec 31 Jun 30 Leverage Calculation Debt $ 141.5 $ 140.0 $ 135.3 Adjustments for cash (14.1) (11.7) (17.1) Adjustments for derivative accounting (0.6) (0.5) (1.8) Total adjusted debt $ 126.8 $ 127.8 $ 116.4 Eq
Slide 56: Liquidity Sources
Liquidity Sources* ($B) 2019 2019 2020 Jun 30 Dec 31 Jun 30 Liquidity Sources Cash $ 14.1 $ 11.7 $ 17.1 Committed asset-backed facilities 35.7 36.6 37.1 Other unsecured credit facilities 2.9 3.0 2.5 Ford corporate credit facility allocation 3.0 3.0 - • Liquidity of $32.4B is $0.7B Total liquidity so
Slide 57: 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 58: 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