Ford Mtr Co Del · NYSE:F
Ford Mtr Co Del — Ford Motor Company — Q4 2019 Earnings Presentation
43 slides from Ford Mtr Co Del's earnings presentation, Feb 4, 2020
Slide 1: Q4 2019 And Full Year Earnings Review
2019 (01-14-20) Version 1.0 6:00pm Q4 2019 And Full Year Earnings Review February 4, 2020 All-Electric Mustang Mach-E
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 Belief, Aspiration and 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 Results
Company Financial Results Adjusted Free Cash Flow Adjusted EBIT Q4 FY Q4 FY $0.5B $2.8B $0.5B $6.4B Down 67% Flat Down 67% Down 9% Cash Balance $22B; Liquidity $35B Revenue Adjusted EPS Adjusted EBIT Margin Q4 FY Q4 FY Q4 FY $40B $156B $0.12 $1.19 1.2% 4.1% Down 5% Down 3% Down $0.18 Down $0.11 Down
Slide 5: Strategic Focus – 2019 Highlights
Strategic Focus – 2019 Highlights • North America: Fortified franchise strengths with new products; 43 consecutive years of F-Series sales leadership in the U.S.; best total pickup sales since 2005; Ford and Lincoln both ranked in Top 5 in J.D. Power 2019 U.S. Initial Quality Winning Survey; 5 best-
Slide 6: Ford's Strong Nameplates
Ford’s Strong Nameplates F-Series #1 full-size pickup globally Ranger #2 medium-size pickup globally Transit #1 cargo van globally Explorer #1 America’s all-time best-selling SUV Mustang #1 sports coupe globally Bronco Re-introduction of iconic nameplate 6
Slide 7: Winning Portfolio
Winning Portfolio Mustang Territory Mach-E Corsair Super Duty Bronco Explorer Transit 2T F-150 Ranger Aviator Small, Rugged Escape / Kuga Off-Road Utility Puma Portfolio Transformation Underway With Significant New Introductions From Late 2018 Through Early 2021 Not Yet In Showrooms North America So
Slide 8: Cash Flow, Cash Balance & Liquidity ($B)
Company Cash Flow, Cash Balance & Liquidity ($B) Adjusted Free Cash Flow (FCF) Cash Balance & Liquidity Liquidity • Q4 Adj. FCF of $0.5B, down 67%, driven by $0.6B UAW $37.3 contract-related bonuses, $1.9 $34.7 $35.2 $35.4 $35.4 $34.2 lower Ford Credit distributions and higher $1.5 capital spending
Slide 9: Revenue & EBIT Metrics
Company Revenue & EBIT Metrics Revenue ($B) & Wholesale Units (000) Adjusted EBIT ($B) & EBIT Margin (%) Wholesale Units Adj. EBIT Margin • Q4 revenue of $40B, down 5%, driven by lower volume in all $41.8 regions; FY revenue of $156B, $40.3 $2.4 $37.6 $38.9 $39.7 down 3% $37.0 6.1% • Q4 wholesale un
Slide 10: Q4 2019 Results ($B)
Company Q4 2019 Results ($B) $0.8 $0.6 $0.5 $0.2 • Company Adj. EBIT down $(0.0) $(0.3) $(0.3) 67%, driven by lower Automotive EBIT and increased investment in Mobility $(1.7) • Pre-tax Special Items reflect primarily $(2.2)B mark-to- $(2.7) market adjustments for global pension and OPEB Taxes / Non
Slide 11: FY 2019 Results ($B)
Company FY 2019 Results ($B) • Company Adj. EBIT down 9%, $6.4 driven by higher investment in $4.9 Mobility and lower Automotive $3.0 EBIT, offset partially by improved Ford Credit EBT $0.7 $0.0 • Pre-tax Special Items reflect $(0.4) $(1.0) primarily $(3.2)B of Global $(1.2) Redesign, including Euro
Slide 12: Automotive Q4 2019 EBIT ($B)
Automotive Q4 2019 EBIT ($B) North South Asia Pacific Middle East Europe China Automotive America America Operations & Africa • Total Automotive EBIT Q4 2018 $ 2.0 $ (0.2) $ (0.2) $ (0.5) $ 0.2 $ (0.0) $ 1.1 down $0.9B Volume / Mix $ (0.3) $ (0.0) $ 0.1 $ 0.0 $ (0.1) $ 0.0 $ (0.4) • Cost increase dr
Slide 13: Automotive FY 2019 EBIT ($B)
Automotive FY 2019 EBIT ($B) North South Asia Pacific Middle East Europe China Automotive America America Operations & Africa • Total Automotive EBIT down $0.5B FY 2018 $ 7.6 $ (0.7) $ (0.4) $ (1.5) $ 0.4 $ (0.0) $ 5.4 • Higher net pricing in all Volume / Mix $ (0.2) $ (0.2) $ (0.1) $ 0.0 $ (0.2) $
Slide 14: North America
Business Unit Results North America EBIT YoY Bridge ($B) Wholesale Units (000) 738 753 693 681 644 639 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 YoY (1)% (0)% (5)% (7)% (1)% (8)% Q4 2018 Volume / Net Cost Exchange Other Q4 2019 Revenue ($B) Mix Pricing $25.9 $25.4 $25.3 $24.0 • Q4 wholesale un
Slide 15: Europe
Business Unit Results Europe EBIT YoY Bridge ($B) Wholesale Units* (000) 361 391 379 356 346 303 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 YoY 4% (13)% (13)% 3% (15)% (4)% Q4 2018 Volume / Net Cost Exchange Other Q4 2019 Revenue ($B) Mix Pricing $7.4 $7.4 $7.6 $7.6 $7.1 $6.4 • Q4 wholesale uni
Slide 16: China
Business Unit Results China EBIT YoY Bridge ($B) Wholesale Units* (000) JV Volume 171 159 153 126 134 115 135 147 139 108 116 99 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q4 2018 Volume / Net Cost Exchange Other JVs Q4 2019 Total China YoY (48)% (54)% (48)% (32)% (12)% (7)% Mix Pricing Consoli
Slide 17: Ford Credit
Ford Credit EBT YoY Bridge ($B) EBT ($B) $0.7 $0.0 $0.8 $0.8 $0.7 $0.7 $0.7 $0.6 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Distributions ($B) $0.6 $0.7 $0.7 $0.6 $1.1 ( $0.5 Q4 2018 Volume / Financing Credit Lease Exchange Other Q4 2019 U.S. Retail LTR Ratios* (%) Mix Margin Loss Residual 0.66
Slide 18: Mobility
Mobility EBIT YoY Bridge ($B) • Continued investment in mobility, connected services and autonomous vehicle business Q4 2018 Ford Smart Autonomous Q4 2019 Mobility Vehicles 18
Slide 19: Cash Flow And Balance Sheet ($B)
Company Cash Flow And Balance Sheet ($B) FOURTH QUARTER FULL YEAR BALANCE SHEET 2018 2019 2018 2019 2018 2019 Dec 31 Dec 31 Company Adj. EBIT excl. Ford Credit $ 0.8 $ (0.1) $ 4.4 $ 3.4 Company Excluding Ford Credit Capital spending $ (2.1) $ (2.3) $ (7.7) $ (7.6) Company Cash Balance $ 23.1 $ 22.3
Slide 20: Special Items ($B)
Company Special Items ($B) Global Redesign ($B) FOURTH QUARTER FULL YEAR 2018 2019 2018 2019 Future Actions Global Redesign Recorded This Quarter Europe excl. Russia $ (0.2) $ (0.2) $ (0.3) $ (1.2) Recorded In Prior Quarters* India - (0.0) - (0.8) South America (0.0) (0.1) (0.1) (0.6) ~$11 Russia -
Slide 21: Ford 2020 Dynamics
Ford 2020 Dynamics TAILWINDS HEADWINDS Full-year sales of all-new Explorer Back-end loaded cadence of product launches, including F-150 Improved product mix and pricing from other new products Cost of CO2 compliance Improved fitness and benefits Increased investments in Mobility from global redesign
Slide 22: 2020 Guidance
2019 2020* ADJ. FCF $2.8B $2.4 - $3.4B ADJ. EBIT – FY $6.4B $5.6 - $6.6B – Q1 $2.4B >$1.1B Lower YoY ADJ. EPS $1.19 $0.94 - $1.20 Capital Spending $7.6B $6.8 - $7.3B Pension Contributions $0.7B $0.6 - $0.8B Regular Dividend $0.15 / Quarter $0.15 / Quarter** Adjusted Effective Tax Rate 11.2% Mid-To-H
Slide 23: Summary
Summary • First, our customers are informing and driving everything we do – That is why 2019 was – and 2020 will continue to be – such robust launch years for us – We are bolstering our Winning Portfolio of vehicles based on what consumers want and need – reallocating capital to those higher-return
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Slide 25: Closing Thoughts
Closing Thoughts Our Global Redesign is on track, and we are focused on operational execution and decisive actions to strengthen our business, including the rigorous allocation of capital to higher-return investments to optimize long-term value creation – This year we will have our strongest lineu
Slide 26: Cautionary Note On Forward-Looking Statements
Cautionary Note On Forward-Looking Statements Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptio
Slide 27: Appendix
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Slide 28: Key Metrics
Automotive Key Metrics WHOLESALE UNITS (000) MARKET SHARE (%) Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 North America 644 738 753 693 639 681 13.3 % 12.8 % 13.6 % 13.8 % 12.6 % 12.8 % South America 94 89 68 75 79 74 8.4 7.6 7.7 7.4 7.1 6.9 Europe
Slide 29: Key Metrics
Automotive Key Metrics EBIT ($B) EBIT CHANGE (%) Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 North America $ 2.0 $ 2.0 $ 2.2 $ 1.7 $ 2.0 $ 0.7 7 % 11 % 14 % (3) % 3 % (64) % South America (0.2) (0.2) (0.2) (0.2) (0.2) (0.2) (1) (5) (6) (15) (9) 11
Slide 30: Key Metrics – FY
Automotive Key Metrics – FY WHOLESALE UNITS (000) MARKET SHARE (%) 2019 B / (W) 2019 B / (W) 2019 B / (W) 2019 B / (W) Q4 2018 Q4 2019 2018 FY 2019 FY Q4 2018 Q4 2019 2018 FY 2019 FY 2018 2018 2018 2018 North America 738 681 (57) 2,920 2,765 (155) 12.8 % 12.8 % 0.0 ppts 13.4 % 13.2 % (0.2) ppts Sout
Slide 31: Results ($M)
Company Results ($M) 2018 2019 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year North America $ 1,935 $ 1,753 $ 1,960 $ 1,959 $ 7,607 $ 2,205 $ 1,696 $ 2,012 $ 700 $ 6,612 South America (149) (178) (152) (199) (678) (158) (205) (165) (176) (704) Europe 119 (73) (245) (199) (398) 57 53 (179) 21 (47) China
Slide 32: Results ($M)
Company Results ($M) Q4 FULL YEAR 2018 2019 2019 B / (W) 2018 2018 2019 2019 B / (W) 2018 North America $ 1,959 $ 700 $ (1,259) $ 7,607 $ 6,612 $ (995) South America (199) (176) 23 (678) (704) (26) Europe (199) 21 220 (398) (47) 351 China (534) (207) 327 (1,545) (771) 774 Asia Pacific Operations 153
Slide 33: 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) China (incl. Taiwan) Russia JV China (incl. Taiwan) Asia Pacific Operations International Markets Group Middle
Slide 34: Results – 2020 Reporting Structure ($M)
Company Results – 2020 Reporting Structure ($M) 2018 2019 Q1 Q2 Q3 Q4 Full Year Q1 Q2 Q3 Q4 Full Year North America $ 1,935 $ 1,753 $ 1,960 $ 1,959 $ 7,607 $ 2,205 $ 1,696 $ 2,012 $ 700 $ 6,612 South America (149) (178) (152) (199) (678) (158) (205) (165) (176) (704) Europe (excl. Russia) 158 (56) (
Slide 35: Net Income Reconciliation To Adjusted EBIT ($M)
Company Net Income Reconciliation To Adjusted EBIT ($M) Q4 FY 2018 2019 2018 2019 Net income / (loss) attributable to Ford (GAAP) $ (116) $ (1,672) $ 3,677 $ 47 Income / (Loss) attributable to noncontrolling interests 4 - 18 37 Net income / (loss) $ (112) $ (1,672) $ 3,695 $ 84 Less: (Provision for)
Slide 36: 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) FY Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 2018 2019 Net cash provided by / (used in) operating activities (GAAP) $ 4,972 $ 5,179 $ 1,357 $3,544 $6,463 $4,732 $2,900 $ 15,022 $17
Slide 37: Earnings Per Share Reconciliation To Adjusted Earnings Per Share
Company Earnings Per Share Reconciliation To Adjusted Earnings Per Share Q4 FY 2018 2019 2018 2019 Diluted After-Tax Results ($M) Diluted after-tax results (GAAP) $ (116) $ (1,672) $ 3,677 $ 47 Less: Impact of pre-tax and tax special items (1,320) (2,171) (1,517) (4,676) Less: Noncontrolling interes
Slide 38: Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate
Company Effective Tax Rate Reconciliation To Adjusted Effective Tax Rate 2019 Memo: Q4 FY FY 2018 Pre-Tax Results ($M) Income / (Loss) before income taxes (GAAP) $ (2,436) $ (640) $ 4,345 Less: Impact of special items (2,666) (5,999) (1,429) Adjusted earnings before taxes (Non-GAAP) $ 230 $ 5,359 $
Slide 39: Adjusted ROIC
Company Adjusted ROIC Four Quarters Four Quarters Ended Q4 2018 Ended Q4 2019 Adjusted Net Operating Profit After Cash Tax ($B) ($B) Net income attributable to Ford $ 3.7 $ 0.0 Add: Noncontrolling interest 0.0 0.0 Less: Income tax (0.7) 0.7 Add: Cash tax (0.8) (0.6) Less: Interest on debt (1.2) (1.0
Slide 40: Financial Statement Leverage Reconciliation To Managed Leverage ($B)
Financial Statement Leverage Reconciliation To Managed Leverage ($B) 2017 2018 2019 Dec 31 Dec 31 Dec 31 Leverage Calculation Debt* $ 137.8 $ 140.1 $ 140.0 Adjustments for cash** (11.8) (10.2) (11.7) Adjustments for derivative accounting*** - 0.2 (0.5) Total adjusted debt $ 126.0 $ 130.1 $ 127.8 Equ
Slide 41: 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 42: 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 43: 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