Ford Mtr Co Del · NYSE:F

Ford Mtr Co Del — Ford Motor Credit Company — Q4 2016 Earnings Presentation

33 slides from Ford Mtr Co Del's earnings presentation, Jan 26, 2017

  1. Slide 1: 4Q 2016 and FY Ford Credit Earnings Review and 2017 Outlook

    4Q 2016 AND FY FORD CREDIT EARNINGS REVIEW AND 2017 OUTLOOK January 26, 2017 (PRELIMINARY RESULTS)

  2. Slide 2: Ford Credit Strategy

    FORD CREDIT STRATEGY ORIGINATE SERVICE FUND  Support Ford and  High customer and dealer  Strong liquidity Lincoln sales satisfaction  Diverse sources and  Strong dealer relationships  World-class servicing channels  Full spread of business  Collections within portfolio  Cost effective loss

  3. Slide 3: 4Q 2016 Key Metrics

    4Q 2016 KEY METRICS U.S. Retail and Lease 4Q receivables grew as Net Managed Pre-Tax Average Over-60-Day Loss-to-Receivables expected; solid PBT, but Receivables Receivables* Results Placement Delinquencies (LTR) (Bils) (Bils) (Mils) FICO (Pct) (Pct) lower YoY $137 741 741 $130 $122 $127 $556 Portfo

  4. Slide 4: 4Q 2016 Pre-Tax Results

    4Q 2016 PRE-TAX RESULTS (MILS) $556 Pension Settlement $(77) Other 10 $398 Residual Gains / (Losses) $(21) Lower PBT driven by Supplemental Depreciation (51) pension settlement in $102 Charge-offs Reserve $(48) 9 Ford Credit Europe and unfavorable lease $(39) $(17) residual performance $(65) $(72) $

  5. Slide 5: FY 2016 Pre-Tax Results

    FY 2016 PRE-TAX RESULTS (MILS) $2,086 $1,879 Operating Cost Pension Settlement $(100) (77) Lower PBT driven by Derivatives Market Valuation 70 Other 31 unfavorable lease residual performance and higher credit losses Charge-offs $(150) $505 Reserve (58) Credit losses normalizing with higher charge-of

  6. Slide 6: North America Financing Shares and Contract Placement Volume

    NORTH AMERICA FINANCING SHARES AND CONTRACT PLACEMENT VOLUME 2012 2013 2014 2015 2016 Financing Shares (excl. Fleet) Retail installment and lease share of Ford retail sales United States 54 % 56 % 63 % 65 % 56 % Canada 55 65 67 73 75 Wholesale share United States 78 % 77 % 77 % 76 % 76 % Canada 66 6

  7. Slide 7: International Financing Shares and Contract Placement Volume

    INTERNATIONAL FINANCING SHARES AND CONTRACT PLACEMENT VOLUME 2012 2013 2014 2015 2016 Financing Shares (incl. Fleet) Retail installment and lease share of total Ford sales Europe 32 % 34 % 36 % 37 % 37 % China 14 13 13 12 19 Wholesale share Europe 98 % 98 % 98 % 98 % 98 % China 58 59 62 56 58 Contra

  8. Slide 8: U.S. Origination Metrics

    U.S. ORIGINATION METRICS FICO and Higher Risk Mix Retail Contract Terms Retail and Lease Average Placement FICO Average Retail Placement Term Higher Risk Portfolio Mix Retail ≥73 Months Mix 737 738 741 740 739 64 mo. 65 mo. 60 mo. 60 mo. 62 mo. 6% 5% 5% 6% 6% 4% 4% 0% 0% 1% 2012 2013 2014 2015 2016

  9. Slide 9: U.S. Retail and Lease Credit Loss Drivers

    U.S. RETAIL AND LEASE CREDIT LOSS DRIVERS Over-60-Day Delinquencies (Excl. Bankruptcies) Repossessions (000) Repo. Ratio 1.35% 1.18% 1.06% 0.98% 1.05% 0.15% 0.15% 0.14% 0.15% 0.12% 32 29 28 28 33 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Severity Charge-Offs (Mils) and LTR Ratio (%) $10,100

  10. Slide 10: Worldwide Credit Loss Metrics

    WORLDWIDE CREDIT LOSS METRICS Charge-Offs (Mils) and LTR Ratio (%) LTR 0.31% 0.19% 0.23% 0.16% 0.18% $136 $176 $209 $271 $415 2012 2013 2014 2015 2016 Credit Loss Reserve (Mils) and Reserve as a Pct. of EOP Managed Receivables Reserve as % of EOP Rec. 0.44% 0.37% 0.40% 0.32% 0.33% $408 $380 $359 $42

  11. Slide 11: U.S. Lease Origination Metrics

    U.S. LEASE ORIGINATION METRICS Lease Placement Volume (000) Lease Share of Retail Sales 24-Month 36-Month 39-Month / Other 407 393 357 Industry* 92 56 30% 324 87 28% 26% 94 236 24% 22% 22% 21% 298 20% 113 276 18% 230 189 15% 91 Ford Credit 32 41 40 39 39 2012 2013 2014 2015 2016 2012 2013 2014 2015

  12. Slide 12: U.S. Lease Residual Performance

    U.S. LEASE RESIDUAL PERFORMANCE Lease Return Volume (000) Off-Lease Auction Values (At Incurred Mix) 24-Month 36-Month 39-Month / Other 24-Month 246 189 73 $19,875 $19,785 180 $19,000 $19,085 $18,765 114 114 84 148 $17,865 $17,975 $17,535 $17,385 62 71 $17,210 46 75 33 26 36-Month 17 29 25 12 17 21

  13. Slide 13: Funding Structure – Managed Receivables

    FUNDING STRUCTURE – MANAGED RECEIVABLES* $137 $127 $4 (Bils) $113 $2 $6 $6 $2 Commercial Paper $6 $50 $50 Ford Interest Advantage $43 Term Asset-Backed Securities** $66 $62 Term Debt (incl Bank Borrowings) $55 Other $9 $5 $6 Equity $11 $12 $13 Cash*** $9 $11 $11 Year-End Year-End Year-End Securitize

  14. Slide 14: Public Term Funding Plan

    PUBLIC TERM FUNDING PLAN 2014 2015 2016 2017 (Bils) Actual Actual Actual Forecast Unsecured Issuance plans are - Ford Motor Credit $8 $11 $10 [ $8 - 10 consistent with - Ford Credit Canada 2 1 1 [ 1-2 prior years - FCE Bank 3 4 3 [ 2-3 - Rest of World 0 0 0 [ 1 Issuance remains Total Unsecured* $13

  15. Slide 15: Balance Sheet Metrics

    BALANCE SHEET METRICS Leverage (To 1)* Liquidity Available For Use (Bils) Financial Statement Managed 10.2 9.9 9.2 9.5 9.2 8.7 8-9 $27 $27 $25+ $24 YE14 YE15 YE16 Target YE14 YE15 YE16 Target * See Appendix for reconciliation to GAAP 14 • At December 31, financial statement leverage was 9.9 to 1, an

  16. Slide 16: 2017 Guidance

    2017 GUIDANCE 2015 FY 2016 FY 2017 FY Results Outlook Results Plan Pre-Tax Profit $2,086M < 2015 $1,879 ~ $1,500M Resuming with Distributions $250M $0 $0 leverage in target range 15 • For 2017, we continue to expect full year pre-tax profit to be about $1.5 billion, which is lower compared with 2016

  17. Slide 17: Key Takeaways

    KEY TAKEAWAYS 1. Strategic asset to Ford, delivering profitable growth globally 2. Solid quarterly and full year pre-tax profit 3. Consistent originations, servicing, and collections resulting in robust portfolio performance 4. Continued U.S. industry headwinds from lower auction values 5. Funding p

  18. Slide 18: Risk Factors

    RISK FACTORS 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 assumptions by our management and involve

  19. Slide 19: Appendix

    APPENDIX

  20. Slide 20: Appendix Index

    APPENDIX INDEX  Credit Ratings 1  FY 2016 Key Metrics 2  North America Financing Shares and Contract Placement Volume 3  International Financing Shares and Contract Placement Volume 4  U.S. Origination Metrics 5  U.S. Retail and Lease Credit Loss Drivers 6  Worldwide Credit Loss Metrics 7  U

  21. Slide 21: Credit Ratings

    CREDIT RATINGS S&P Moody's Fitch DBRS Issuer Ratings Ford Motor BBB N/A BBB BBB Ford Credit BBB N/A BBB BBB FCE Bank plc BBB N/A BBB NR Long-Term Senior Unsecured Ford Motor BBB Baa2 BBB BBB Ford Credit BBB Baa2 BBB BBB FCE Bank plc BBB Baa2 BBB NR Short-Term Unsecured Ford Credit A-2 P-2 F2 R-2M Ou

  22. Slide 22: FY 2016 Key Metrics

    FY 2016 KEY METRICS U.S. Retail and Lease Net Managed Pre-Tax Average Over-60-Day Loss-to-Receivables Receivables Receivables* Results Placement Delinquencies (LTR) (Bils) (Bils) (Mils) FICO (Pct) (Pct) FY receivables grew $130 $127 $137 $2,086 740 739 as expected $122 $1,879 Solid PBT, but lower Yo

  23. Slide 23: North America Financing Shares and Contract Placement Volume

    NORTH AMERICA FINANCING SHARES AND CONTRACT PLACEMENT VOLUME Fourth Quarter Full Year 2015 2016 2015 2016 Financing Shares (excl. Fleet) Retail installment and lease share of Ford retail sales United States 59 % 47 % 65 % 56 % Canada 75 80 73 75 Wholesale share United States 76 % 76 % 76 % 76 % Cana

  24. Slide 24: International Financing Shares and Contract Placement Volume

    INTERNATIONAL FINANCING SHARES AND CONTRACT PLACEMENT VOLUME Fourth Quarter Full Year 2015 2016 2015 2016 Financing Shares (incl. Fleet) Retail installment and lease share of total Ford sales Europe 37 % 39 % 37 % 37 % China 14 26 12 19 Wholesale share Europe 99 % 99 % 98 % 98 % China 57 60 56 58 Co

  25. Slide 25: U.S. Origination Metrics

    U.S. ORIGINATION METRICS FICO and Higher Risk Mix Retail Contract Terms Retail and Lease Average Placement FICO Average Retail Placement Term Higher Risk Portfolio Mix Retail ≥73 Months Mix 741 741 741 743 741 67 mo. 66 mo. 732 63 mo. 64 mo. 64 mo. 64 mo. 6% 6% 6% 6% 6% 6% 5% 3% 4% 3% 3% 4% 3Q15 4Q1

  26. Slide 26: U.S. Retail and Lease Credit Loss Drivers

    U.S. RETAIL AND LEASE CREDIT LOSS DRIVERS Over-60-Day Delinquencies (Excl. Bankruptcies) Repossessions (000) Repo. Ratio 1.01% 1.00% 1.04% 1.06% 1.16% 0.96% 0.14% 0.16% 0.16% 0.13% 0.13% 0.12% 7 8 8 7 8 10 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Severity Charge-Offs (Mils) and LT

  27. Slide 27: Worldwide Credit Loss Metrics

    WORLDWIDE CREDIT LOSS METRICS Charge-Offs (Mils) and LTR Ratio (%) LTR 0.32% 0.39% 0.27% 0.29% 0.25% 0.24% $73 $86 $92 $84 $107 $132 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 Credit Loss Reserve (Mils) and Reserve as a Pct. of EOP Managed Receivables Reserve as % of EOP Rec. 0.38% 0.40% 0.40% 0.33% 0.33% 0.35%

  28. Slide 28: U.S. Lease Origination Metrics

    U.S. LEASE ORIGINATION METRICS Lease Placement Volume (000) Lease Share of Retail Sales 24-Month 36-Month 39-Month / Other Industry* 111 107 106 32% 101 31% 26 18 16 89 91 29% 29% 29% 16 28% 11 11 26% 23% 22% 22% 79 80 18% 19% 75 75 69 70 Ford Credit 10 10 10 10 9 10 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 3Q

  29. Slide 29: U.S. Lease Residual Performance

    U.S. LEASE RESIDUAL PERFORMANCE Lease Return Volume (000) Off-Lease Auction Values (At 4Q16 Mix) 24-Month 36-Month 39-Month / Other 24-Month 65 $20,845 62 60 59 $19,925 $20,055 $20,100 $19,895 51 17 19 17 $18,895 43 20 20 20 $17,815 $17,585 $17,470 36 37 42 $17,290 $17,250 33 26 19 $16,240 36-Month

  30. Slide 30: Total Net Receivables Reconciliation to Managed Receivables

    TOTAL NET RECEIVABLES RECONCILIATION TO MANAGED RECEIVABLES Dec . 3 1 , Dec . 3 1 , Dec . 3 1 , (Bils) 2014 2015 2016 Net R ec eivables* Finance receivables -- North America Segment Consumer retail financing $44.1 $49.2 $53.4 Non-consumer: Dealer financing** 22.5 25.5 26.8 Non-consumer: Other 1.0 0.

  31. Slide 31: Financial Statement Leverage Reconciliation to Managed Leverage

    FINANCIAL STATEMENT LEVERAGE RECONCILIATION TO MANAGED LEVERAGE Dec. 31, Dec. 31, Dec. 31, (Bils) 2014 2015 2016 Leverage Calculation Total debt* $ 105.0 $ 119.6 $ 126.5 Adjustments for cash** (8.9) (11.2) (10.8) Adjustments for derivative accounting*** (0.4) (0.5) (0.3) Total adjusted debt $ 95.7 $

  32. Slide 32: Liquidity Sources

    LIQUIDITY SOURCES Dec. 31, Dec. 31, Dec. 31, (Bils) 2014 2015 2016 Liquidity Sources Cash* $8.9 $11.2 $10.8 Committed ABS facilities** 33.7 33.2 34.6 Committed Other unsecured credit facilities 1.6 2.3 2.5 Capacity $40.1 billion Ford corporate credit facility allocation 2.0 3.0 3.0 Total liquidity s

  33. Slide 33: Balance Sheet Liquidity Profile

    BALANCE SHEET LIQUIDITY PROFILE Cumulative Maturities at December 31, 2016 (Bils) Assets * $147 $135 $126 Debt ** $116 $98 $85 $81 $59 *** 2017 2018 2019 2020 & Beyond Unsecured Long-Term Debt Maturities $12.4 $12.4 $11.1 $25.8 * Includes finance receivables net of unearned income, investment in ope

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