Ford Motor Company: Ford Motor Company Reports Third Quarter 2019 Financial Results


NEWS

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Improvement in Key Automotive Markets, Ford Credit Contribute to Ford’s Q3, YTD Operating Results

  • GAAP operating cash flow up 8 percentyear-to-date; adjusted free cash flow for the same period increased 80 percent
  • Automotive EBIT increased 10 percentyear-to-date; EBIT from North America, Europe and China higher in the quarter
  • Aggressive global rollouts ofcustomer-centered new vehicles include ongoing renewal of North American lineup
  • Company continues to expectfull-year growth in 2019 adjusted free cash flow, driven by Automotive; forecasts full-year adjusted EBIT of between $6.5 billion and $7.0 billion

DEARBORN, Mich., Oct. 23, 2019– Ford Motor Company said its third-quarter 2019 performance included progress in the North America, Europe and China automotive businesses and strong results from Ford Credit. At the same time, the company took further steps in Q3 to become even more fit and customer-centered amid expected long-term industry change.

Company Key Metrics Summary

Reported revenue for the third quarterwas $37.0 billion, down 2 percent from the prior year, largely as a result of currency exchange. Third-quarter net income was $425 million. A decline

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in per-share earnings to 11 cents was primarily attributable to charges for special items associated with the company’s strategic Global Redesign. Special items in Q3 included charges related to the proposed creation of a joint venture in India with Mahindra & Mahindra. Cash flow from operating activities was $4.7 billion, down 9 percent. Unless otherwise noted, all comparisons here areyear-over-year.

Adjusted free cash flow for Q3 was $207 million. Adjusted EBIT in the quarter increased

8 percent to $1.8 billion. The higher operating results were attributable to mark-to-market investment gains; improvement in the company’s businesses in North America, Europe and China; and another strong performance by Ford Credit. Adjusted per-share earnings for the third quarter were 34 cents.

For the year to date, adjusted free cash flow was up 80 percent. EBIT from Ford’s Automotive business for the first nine months of the year increased 10 percent.

“Our Global Redesign is about making choices to transform our organization, to become the world’s most trusted company and a clear leader in an era of rapid change,” said Jim Hackett, Ford president and chief executive officer. “We are getting stronger today and we have more work to do.”

Business-unit highlights during the quarter included:

  • Ongoing product renewal inNorth America, where all-new Ford Explorer and Escape and Lincoln Aviator and Corsair models will soon be followed by a new F-Series Super Duty with best-in-class diesel towing, diesel and gas power and torque, and payload; a new F-150; an innovative, Mustang-inspiredbattery-electric vehicle; and the return of the Bronco.
  • Opening of a newcustomer-contact center in Houston to develop even closer relationships with U.S.owners of Ford vehicles.
  • Further strides in restructuring the company’sEuropeanbusiness, focusing on industry- leading commercial vehicles, a smaller portfolio of profitable passenger vehicles, and niche imported models.
  • Signs of improvement in Ford’sChinabusiness. The company has begun introducing new country-focused products while at the same time lowering costs and strengthening its dealer network and sales and marketing capabilities.
  • Formation of Ford’sInternational Markets Group, or IMG, a new business unit bringing together 100 high-potential mature and emerging markets under a single leadership team. Those markets include India, Australia, ASEAN, the Middle East, Africa and Russia. Auto sales in emerging countries are growing at almost double the rate of the global industry, and by 2024 will likely account for one in three vehicles sold worldwide.

Ford IMG will be a beneficiary of the new joint venture with Mahindra. The company said the JV reinforces a commitment to profitable growth in India and is expected to unlock the low-cost product development capabilities key to emerging-market growth.

  • Sustained strong performance byFord Credit, which delivered a 9-percent increase in EBT.
  • Selection of Austin, Texas, as the third launch market forFord Mobilityself-driving vehicles. Additionally, Ford’s Spin, which is among the top three micro-mobility companies in the U.S., continues to grow, with more than 3 million rides across

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now 60 markets through the first nine months of the year. Spin is expanding the company’s reach in ways that are expected to broaden the base for its future autonomous-vehicles businesses.

“We are laying the groundwork for consistently higher customer experience and future growth in free cash flow and profitability,” said Tim Stone, Ford’s chief financial officer. “We have a bias for action and are driving disciplined, long-term execution.”

Regional Highlights

Outlook

  • Ford continues to expect lowerfull-year structural costs in its Automotive business, excluding pensions and other post-employment benefits, and sustained strength in Ford Credit. The company still anticipates full-year growth in adjusted free cash flow, its most important financial measure, driven by Automotive.
  • However,fourth-quarter headwinds – higher warranty costs, higher than planned incentives in North America, and lower volumes in China – have intensified since Ford last gave financial guidance for 2019.
  • As a result, Ford is lowering its guidance forfull-year company adjusted EBIT to between $6.5 billion and $7.0 billion, compared with $7.0 billion in 2018.
  • Full-yearadjusted EPS is now anticipated to be $1.20 to $1.32, versus $1.30 in 2018, with an adjusted effective tax rate of around 12 to 13 percent.
  • Ford’s guidance assumes no material change in the current economic environment, including commodities, foreign exchange and tariffs. Actual results could differ materially from guidance due to risks, uncertainties and other factors, including those detailed in the company’s Cautionary Note on Forward Looking Statements.

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About Ford Motor Company

Ford Motor Company is a global company based in Dearborn, Michigan. The company designs, manufactures, markets and services a full line of Ford cars, trucks, SUVs, electrified vehicles and Lincoln luxury vehicles, provides financial services through Ford Motor Credit Company and is pursuing leadership positions in electrification, autonomous vehicles and mobility solutions. Ford employs approximately 191,000 people worldwide. For more information regarding Ford, its products and Ford Motor Credit Company, please visit www.corporate.ford.com.

Contact(s):

Media:

Equity Investment

Fixed Income

Shareholder

Community:

Investment

Inquiries:

Community:

Brad Carroll

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Karen Rocoff

1.800.555.5259 or

313.390.5565

313.621.2902

313.621.0965

313.845.8540

Bcarro37@ford.com

Ltyson4@ford.com

Krocoff@ford.com

Stockinf@ford.com

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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 assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:

  • Ford’slong-term competitiveness depends on the successful execution of fitness actions;
  • Industry sales volume, particularly in the United States, Europe, or China, could decline if there is a financial crisis, recession, or significant geopolitical event;
  • Ford’s new and existing products and mobility services are subject to market acceptance;
  • Ford’s results are dependent on sales of larger, more profitable vehicles, particularly in the United States;
  • Ford may face increased price competition resulting from industry excess capacity, currency fluctuations, or other factors;
  • Fluctuations in commodity prices, foreign currency exchange rates, and interest rates can have a significant effect on results;
  • With a global footprint, Ford’s results could be adversely affected by economic, geopolitical, protectionist trade policies, or other events, including Brexit;
  • Ford’s production, as well as Ford’s suppliers’ production, could be disrupted by labor disputes, natural or man- made disasters, financial distress, production difficulties, or other factors;
  • Ford’s ability to maintain a competitive cost structure could be affected by labor or other constraints;
  • Pension and other postretirement liabilities could adversely affect Ford’s liquidity and financial condition;
  • Economic and demographic experience for pension and other postretirement benefit plans (e.g., discount rates or investment returns) could be worse than Ford has assumed;
  • Ford’s vehicles could be affected by defects that result in delays in new model launches, recall campaigns, or increased warranty costs;
  • Ford may need to substantially modify its product plans to comply with safety, emissions, fuel economy, and other regulations that may change in the future;
  • Ford could experience unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, perceived environmental impacts, or otherwise;
  • Ford’s receipt of government incentives could be subject to reduction, termination, or clawback;
  • Operational systems, security systems, and vehicles could be affected by cyber incidents;
  • Ford and Ford Credit’s access to debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts could be affected by credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors;
  • Ford Credit could experiencehigher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles;
  • Ford Credit could face increased competition from banks, financial institutions, or other third parties seeking to increase their share of financing Ford vehicles; and
  • Ford Credit could be subject to new or increased credit regulations, consumer or data protection regulations, or other regulations.

We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise. For additional discussion, see “Item 1A. Risk Factors” in our 2018 Form 10-K Report, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

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Conference Call Details

Ford Motor Company (NYSE:F) and Ford Motor Credit Company will release their 2019 third quarter financial results at 4:05 p.m. ET on Wednesday, October 23. Following the release, Jim Hackett, Ford president and chief executive officer; Tim Stone, Ford chief financial officer; and members of Ford’s senior management team will host a conference call at 5:00 p.m. ET to discuss the results. The presentation and supporting materials will be available at www.shareholder.ford.com. Representatives of the investment community will have the opportunity to ask questions on the call.

Ford Earnings Call: 5:00 p.m. ET

Toll-Free: 1.877.870.8664

International: 1.970.297.2423

Passcode: Ford Earnings

Web: www.shareholder.ford.com

REPLAY

(Available after 8:00 p.m. ET the day of the event through October 30, 2019) Web: www.shareholder.ford.com

Toll-Free: 1.855.859.2056

International: 1.404.537.3406

Replay Passcode: 2196076

  • The following applies to the information throughout this release:
    • See tables later in this release for the nature and amount of special items, and reconciliations of thenon-GAAP financial measures designated as “adjusted” to the most comparable financial measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”).
    • Wholesale unit sales and production volumes include Ford brand and Jiangling Motors Corporation (“JMC”) brand vehicles produced and sold in China by our unconsolidated affiliates; revenue does not include these sales. See materials supporting the October 23, 2019 conference call atwww.shareholder.ford.comfor further discussion of wholesale unit volumes.

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FORD MOTOR COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (in millions)

For the periods ended September 30,

2018

2019

First Nine Months

(unaudited)

Cash flows from operating activities

Net income

$

3,807

$

1,756

Depreciation and tooling amortization

6,930

7,310

Other amortization

(626)

(891)

Held-for-sale impairment charges

799

Provision for credit and insurance losses

367

292

Pension and other post-retirement employee benefits (“OPEB”) expense/(income)

(387)

401

Equity investment (earnings)/losses in excess of dividends received

15

73

Foreign currency adjustments

476

49

Net (gain)/loss on changes in investments in affiliates

(44)

(46)

Stock compensation

199

238

Provision for deferred income taxes

(82)

(403)

Decrease/(Increase) in finance receivables (wholesale and other)

746

2,792

Decrease/(Increase) in accounts receivable and other assets

(2,126)

(1,023)

Decrease/(Increase) in inventory

(2,360)

(1,790)

Increase/(Decrease) in accounts payable and accrued and other liabilities

6,786

5,226

Other

(36)

(44)

Net cash provided by/(used in) operating activities

13,665

14,739

Cash flows from investing activities

Capital spending

(5,669)

(5,358)

Acquisitions of finance receivables and operating leases

(48,227)

(41,142)

Collections of finance receivables and operating leases

38,418

37,854

Purchases of marketable securities and other investments

(14,547)

(12,367)

Sales and maturities of marketable securities and other investments

17,341

12,532

Settlements of derivatives

290

163

Other

(201)

(53)

Net cash provided by/(used in) investing activities

(12,595)

(8,371)

Cash flows from financing activities

Cash payments for dividends and dividend equivalents

(2,308)

(1,794)

Purchases of common stock

(164)

(237)

Net changes in short-term debt

(1,268)

(1,094)

Proceeds from issuance of long-term debt

37,211

35,705

Principal payments on long-term debt

(33,935)

(34,847)

Other

(184)

(173)

Net cash provided by/(used in) financing activities

(648)

(2,440)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(305)

(154)

Net increase/(decrease) in cash, cash equivalents, and restricted cash

$

117

$

3,774

Cash, cash equivalents, and restricted cash at beginning of period

$

18,638

$

16,907

Net increase/(decrease) in cash, cash equivalents, and restricted cash

117

3,774

Cash, cash equivalents, and restricted cash at end of period

$

18,755

$

20,681

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FORD MOTOR COMPANY AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENT (in millions, except per share amounts)

For the periods ended September 30,

2018

2019

2018

2019

Third Quarter

First Nine Months

(unaudited)

Revenues

Automotive

$

34,660

$

33,931

$

109,577

$

106,928

Ford Credit

2,998

3,045

8,950

9,231

Mobility

8

14

18

26

Total revenues

37,666

36,990

118,545

116,185

Costs and expenses

Cost of sales

31,568

32,282

100,515

99,881

Selling, administrative, and other expenses

2,882

2,601

8,407

8,169

Ford Credit interest, operating, and other expenses

2,352

2,368

7,052

7,104

Total costs and expenses

36,802

37,251

115,974

115,154

Operating income/(loss)

864

(261)

2,571

1,031

Interest expense on Automotive debt

328

262

890

723

Interest expense on Other debt

15

14

43

42

Other income/(loss), net

605

534

2,472

1,434

Equity in net income of affiliated companies

(32)

(16)

252

96

Income/(Loss) before income taxes

1,094

(19)

4,362

1,796

Provision for/(Benefit from) income taxes

101

(442)

555

40

Net income

993

423

3,807

1,756

Less: Income/(Loss) attributable to noncontrolling interests

2

(2)

14

37

Net income attributable to Ford Motor Company

$

991

$

425

$

3,793

$

1,719

EARNINGS PER SHARE ATTRIBUTABLE TO FORD MOTOR COMPANY COMMON AND CLASS B STOCK

Basic income

$

0.25

$

0.11

$

0.95

$

0.43

Diluted income

0.25

0.11

0.95

0.43

Weighted-average shares used in computation of earnings per share

Basic shares

3,976

3,970

3,976

3,976

Diluted shares

4,000

4,007

3,999

4,006

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FORD MOTOR COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in millions)

December 31,

September 30,

2018

2019

(unaudited)

ASSETS

Cash and cash equivalents

$

16,718

$

20,523

Marketable securities

17,233

16,808

Ford Credit finance receivables, net

54,353

51,183

Trade and other receivables, less allowances of $94 and $60

11,195

10,621

Inventories

11,220

12,451

Assets of held-for-sale operations

812

Other assets

3,930

3,356

Total current assets

114,649

115,754

Ford Credit finance receivables, net

55,544

53,530

Net investment in operating leases

29,119

29,452

Net property

36,178

35,404

Equity in net assets of affiliated companies

2,709

2,623

Deferred income taxes

10,412

10,677

Other assets

7,929

10,717

Total assets

$

256,540

$

258,157

LIABILITIES

Payables

$

21,520

$

22,228

Other liabilities and deferred revenue

20,556

21,731

Automotive debt payable within one year

2,314

1,622

Ford Credit debt payable within one year

51,179

52,852

Other debt payable within one year

130

Liabilities of held-for-sale operations

524

Total current liabilities

95,569

99,087

Other liabilities and deferred revenue

23,588

23,729

Automotive long-term debt

11,233

12,615

Ford Credit long-term debt

88,887

86,422

Other long-term debt

600

470

Deferred income taxes

597

447

Total liabilities

220,474

222,770

Redeemable noncontrolling interest

100

EQUITY

Common Stock, par value $.01 per share (4,011 million shares issued of 6 billion authorized)

40

40

Class B Stock, par value $.01 per share (71 million shares issued of 530 million authorized)

1

1

Capital in excess of par value of stock

22,006

22,179

Retained earnings

22,668

22,590

Accumulated other comprehensive income/(loss)

(7,366)

(7,842)

Treasury stock

(1,417)

(1,619)

Total equity attributable to Ford Motor Company

35,932

35,349

Equity attributable to noncontrolling interests

34

38

Total equity

35,966

35,387

Total liabilities and equity

$

256,540

$

258,157

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SUPPLEMENTAL INFORMATION

The tables below provide supplemental consolidating financial information. Company excluding Ford Credit includes our Automotive and Mobility reportable segments, Corporate Other, Interest on Debt, and Special Items. Eliminations, where presented, primarily represent eliminations of intersegment transactions and deferred tax netting.

Selected Cash Flow Information.The following tables provide supplemental cash flow information (in millions):

For the period ended September 30, 2019

First Nine Months

Company

excluding

Cash flows from operating activities

Ford Credit

Ford Credit

Eliminations

Consolidated

Net income

$

(31)

$

1,787

$

$

1,756

Depreciation and tooling amortization

4,574

2,736

7,310

Other amortization

38

(929)

(891)

Held-for-sale impairment charges

799

799

Provision for credit and insurance losses

292

292

Pension and OPEB expense/(income)

401

401

Equity investment (earnings)/losses in excess of dividends received

96

(23)

73

Foreign currency adjustments

116

(67)

49

Net (gain)/loss on changes in investments in affiliates

(39)

(7)

(46)

Stock compensation

232

6

238

Provision for deferred income taxes

(540)

137

(403)

Decrease/(Increase) in finance receivables (wholesale and other)

2,792

2,792

Decrease/(Increase) in intersegment receivables/payables

(684)

684

Decrease/(Increase) in accounts receivable and other assets

(1,043)

20

(1,023)

Decrease/(Increase) in inventory

(1,790)

(1,790)

Increase/(Decrease) in accounts payable and accrued and other liabilities

5,364

(138)

5,226

Other

(4)

(40)

(44)

Interest supplements and residual value support to Ford Credit

(3,658)

3,658

Net cash provided by/(used in) operating activities

$

3,831

$

10,908

$

$

14,739

Company

excluding

Cash flows from investing activities

Ford Credit

Ford Credit

Eliminations

Consolidated

Capital spending

$

(5,318)

$

(40)

$

$

(5,358)

Acquisitions of finance receivables and operating leases

(41,142)

(41,142)

Collections of finance receivables and operating leases

37,854

37,854

Purchases of marketable securities and other investments

(7,929)

(4,438)

(12,367)

Sales and maturities of marketable securities and other investments

10,210

2,322

12,532

Settlements of derivatives

76

87

163

Other

(50)

(3)

(53)

Investing activity (to)/from other segments

2,504

(2,504)

Net cash provided by/(used in) investing activities

$

(507)

$

(5,360)

$

(2,504)

$

(8,371)

Company

excluding

Cash flows from financing activities

Ford Credit

Ford Credit

Eliminations

Consolidated

Cash payments for dividends and dividend equivalents

$

(1,794)

$

$

$

(1,794)

Purchases of common stock

(237)

(237)

Net changes in short-term debt

18

(1,112)

(1,094)

Proceeds from issuance of long-term debt

2,282

33,423

35,705

Principal payments on long-term debt

(1,631)

(33,216)

(34,847)

Other

(86)

(87)

(173)

Financing activity to/(from) other segments

(2,504)

2,504

Net cash provided by/(used in) financing activities

$

(1,448)

$

(3,496)

$

2,504

$

(2,440)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

$

(61)

$

(93)

$

$

(154)

10

Selected Income Statement Information.The following table provides supplemental income statement information (in millions):

For the period ended September 30, 2019

Third Quarter

Company excluding Ford Credit

Automotive

Mobility

Other (a)

Subtotal

Ford Credit

Consolidated

Revenues

$

33,931

$

14

$

$

33,945

$

3,045

$

36,990

Total costs and expenses

33,158

339

1,386

34,883

2,368

37,251

Operating income

773

(325)

(1,386)

(938)

677

(261)

Interest expense on Automotive debt

262

262

262

Interest expense on Other debt

14

14

14

Other income/(loss), net

583

33

(132)

484

50

534

Equity in net income of affiliated companies

(27)

2

(25)

9

(16)

Income/(Loss) before income taxes

1,329

(290)

(1,794)

(755)

736

(19)

Provision for/(Benefit from) income taxes

132

(70)

(669)

(607)

165

(442)

Net income/(loss)

1,197

(220)

(1,125)

(148)

571

423

Less: Income/(Loss) attributable to

noncontrolling interests

(2)

(2)

(2)

Net income/(loss) attributable to Ford

Motor Company

$

1,199

$

(220)

$

(1,125)

$

(146)

$

571

$

425

For the period ended September 30, 2019

First Nine Months

Company excluding Ford Credit

Automotive

Mobility

Other (a)

Subtotal

Ford Credit

Consolidated

Revenues

$

106,928

$

26

$

$

106,954

$

9,231

$

116,185

Total costs and expenses

103,742

986

3,322

108,050

7,104

115,154

Operating income

3,186

(960)

(3,322)

(1,096)

2,127

1,031

Interest expense on Automotive debt

723

723

723

Interest expense on Other debt

42

42

42

Other income/(loss), net

1,463

107

(354)

1,216

218

1,434

Equity in net income of affiliated companies

62

11

73

23

96

Income/(Loss) before income taxes

4,711

(842)

(4,441)

(572)

2,368

1,796

Provision for/(Benefit from) income taxes

757

(203)

(1,095)

(541)

581

40

Net income/(loss)

3,954

(639)

(3,346)

(31)

1,787

1,756

Less: Income/(Loss) attributable to

noncontrolling interests

37

37

37

Net income/(loss) attributable to Ford

Motor Company

$

3,917

$

(639)

$

(3,346)

$

(68)

$

1,787

$

1,719

(a) Other includes Corporate Other, Interest on Debt, and Special Items

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Selected Balance Sheet Information.The following tables provide supplemental balance sheet information (in millions):

September 30, 2019

Company

excluding

Assets

Ford Credit

Ford Credit

Eliminations

Consolidated

Cash and cash equivalents

$

8,944

$

11,579

$

$

20,523

Marketable securities

13,354

3,454

16,808

Ford Credit finance receivables, net

51,183

51,183

Trade and other receivables, less allowances

3,700

6,921

10,621

Inventories

12,451

12,451

Assets of held-for-sale operations

812

812

Other assets

2,061

1,295

3,356

Receivable from other segments

301

2,095

(2,396)

Total current assets

41,623

76,527

(2,396)

115,754

Ford Credit finance receivables, net

53,530

53,530

Net investment in operating leases

1,960

27,492

29,452

Net property

35,195

209

35,404

Equity in net assets of affiliated companies

2,502

121

2,623

Deferred income taxes

12,906

182

(2,411)

10,677

Other assets

8,458

2,259

10,717

Receivable from other segments

414

2

(416)

Total assets

$

103,058

$

160,322

$

(5,223)

$

258,157

Company

excluding

Liabilities

Ford Credit

Ford Credit

Eliminations

Consolidated

Payables

$

21,156

$

1,072

$

$

22,228

Other liabilities and deferred revenue

20,151

1,580

21,731

Automotive debt payable within one year

1,622

1,622

Ford Credit debt payable within one year

52,852

52,852

Other debt payable within one year

130

130

Liabilities of held-for-sale operations

524

524

Payable to other segments

2,396

(2,396)

Total current liabilities

45,979

55,504

(2,396)

99,087

Other liabilities and deferred revenue

22,607

1,122

23,729

Automotive long-term debt

12,615

12,615

Ford Credit long-term debt

86,422

86,422

Other long-term debt

470

470

Deferred income taxes

146

2,712

(2,411)

447

Payable to other segments

9

407

(416)

Total liabilities

$

81,826

$

146,167

$

(5,223)

$

222,770

12

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 information to their equivalent GAAP measures, to aid investors in better understanding our financial results. We believe that these non-GAAP measures provide useful perspective on underlying business results and trends, and a means to assess our period-over-period results. These non-GAAP measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non- GAAP measures may not be the same as similarly titled measures used by other companies due to possible differences in method and in items or events being adjusted.

  • Company Adjusted EBIT (Most Comparable GAAP Measure: Net income attributable to Ford) –Earnings before interest and taxes (EBIT) excludes interest on debt (excl. Ford Credit Debt), taxes andpre-taxspecial items. Thisnon-GAAPmeasure is useful to management and investors because it allows users to evaluate our operating results aligned with industry reporting.Pre-taxspecial items consist of (i) pension and OPEB remeasurement gains and losses, (ii) significant personnel expenses,dealer-relatedcosts, andfacility-relatedcharges stemming from our efforts to match production capacity and cost structure to market demand and changing model mix, and (iii) other items that we do not necessarily consider to be indicative of earnings from ongoing operating activities. When we provide guidance for adjusted EBIT, we do not provide guidance on a net income basis because the GAAP measure will include potentially significant special items that have not yet occurred and are difficult to predict with reasonable certainty prior toyear-end,including pension and OPEB remeasurement gains and losses.
  • Company Adjusted EBIT Margin (Most Comparable GAAP Measure: Company Net Income Margin) –Company Adjusted EBIT margin is Company adjusted EBIT divided by Company revenue. Thisnon-GAAPmeasure is useful to management and investors because it allows users to evaluate our operating results aligned with industry reporting.
  • Adjusted Earnings Per Share (Most Comparable GAAP Measure: Earnings Per Share) –Measure of
    Company’s diluted net earnings per share adjusted for impact of pre-tax special items (described above), tax special items and restructuring impacts in noncontrolling interests. The measure provides investors with useful information to evaluate performance of our business excluding items not indicative of the underlying run rate of our business. When we provide guidance for adjusted earnings per share, we do not provide guidance on an earnings per share basis because the GAAP measure will include potentially significant special items that have not yet occurred and are difficult to predict with reasonable certainty prior to year-end, including pension and OPEB remeasurement gains and losses.
  • Company Adjusted Free 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 elements management considers operating activities, including Automotive and Mobility capital spending, Ford Credit distributions to its parent, and settlement of derivatives. The measure excludes cash outflows for funded pension contributions, separation payments, and other items that are considered operating cash outflows under U.S. GAAP. This measure is useful to management and investors because it is consistent with management’s assessment of the Company’s operating cash flow performance. When we provide guidance for Company adjusted free cash flow, we do not provide guidance for net cash provided by/(used in) operating activities because the GAAP measure will include items that are difficult to quantify or predict with reasonable certainty, including cash flows related to the Company’s exposures to foreign currency exchange rates and certain commodity prices (separate from any related hedges), Ford Credit’s operating cash flows, and cash flows related to special items, including separation payments, each of which individually or in the aggregate could have a significant impact to our net cash provided by/(used in) our operating activities.
  • Adjusted ROIC– Calculated as the sum of adjusted net operating profit after cash tax from the last four quarters, divided by the average invested capital over the last four quarters. This calculation provides management and investors with useful information to evaluate the Company’s after-cash tax operating return on its invested capital for the period presented. Adjusted net operating profit after cash tax measures operating results less special items, interest on debt (excl. Ford Credit Debt), and certain pension/OPEB costs. Average invested capital is the sum of average balance sheet equity, debt (excl. Ford Credit Debt), and net pension/OPEB liability.

Note: Calculated results may not sum due to rounding

13

Net Income Reconciliation To Adjusted EBIT ($M)

Q3

YTD

Memo:

2018

2019

2018

2019

FY 2018

Net income / (loss) attributable to Ford (GAAP)

$

991

$

425

$

3,793

$

1,719

$

3,677

Income / (Loss) attributable to noncontrolling interests

2

(2)

14

37

18

Net income / (loss)

$

993

$

423

$

3,807

$

1,756

$

3,695

Less: (Provision for) / Benefit from income taxes

(101)

442

(555)

(40)

(650)

Income / (Loss) before income taxes

$

1,094

$

(19)

$

4,362

$

1,796

$

4,345

Less: Special items pre-tax

(231)

(1,536)

(250)

(3,333)

(1,429)

Income / (Loss) before special items pre-tax

$

1,325

$

1,517

$

4,612

$

5,129

$

5,774

Less: Interest on debt

(343)

(276)

(933)

(765)

(1,228)

Adjusted EBIT (Non-GAAP)

$

1,668

$

1,793

$

5,545

$

5,894

$

7,002

Memo:

Revenue ($B)

$

37.6

$

37.0

$

118.5

$

116.2

$

160.3

Net income margin (GAAP) (%)

2.6%

1.1%

3.2%

1.5%

2.3%

Adjusted EBIT Margin (Non-GAAP) (%)

4.4%

4.8%

4.7%

5.1%

4.4%

Earnings Per Share Reconciliation To Adjusted Earnings Per Share

Q3

YTD

2018

2019

2018

2019

Diluted After-Tax Results ($M)

Diluted after-tax results (GAAP)

$

991

$

425

$

3,793

$

1,719

Less: Impact of pre-tax and tax special items

(183)

(931)

(197)

(2,505)

Less: Noncontrolling interests impact of Russia restructuring

(35)

Adjusted net income – diluted (Non-GAAP)

$

1,174

$

1,356

$

3,990

$

4,259

Basic and Diluted Shares (M)

Basic shares (average shares outstanding)

3,976

3,970

3,976

3,976

Net dilutive options, unvested restricted stock units and restricted stock

24

37

23

30

Diluted shares

4,000

4,007

3,999

4,006

Earnings per share – diluted (GAAP)

$

0.25

$

0.11

$

0.95

$

0.43

Less: Net impact of adjustments

(0.04)

(0.23)

(0.05)

(0.63)

Adjusted earnings per share – diluted (Non-GAAP)

$

0.29

$

0.34

$

1.00

$

1.06

14

Net Cash Provided By / (Used In) Operating Activities Reconciliation To Company Adjusted Free Cash Flow ($M)

YTD

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

2018

2019

Net cash provided by / (used in) operating activities (GAAP)

$

3,514

$

4,972

$

5,179

$

1,357

$

3,544

$

6,463

$

4,732

$13,665

$14,739

Less: Items not included in Company Adjusted Free Cash Flows

Ford Credit free cash flows

(315)

5,907

3,811

(1,232)

1,118

5,267

4,523

9,403

10,908

Funded pension contributions

(88)

(72)

(123)

(153)

(294)

(106)

(211)

(283)

(611)

Global Redesign (including separations)

(16)

(18)

(45)

(117)

(136)

(222)

(334)

(79)

(692)

Other, net

53

(112)

163

(21)

(22)

175

(124)

104

30

Add: Items included in Company Adjusted Free Cash Flows

Automotive and Mobility capital spending

(1,769)

(1,898)

(1,968)

(2,102)

(1,620)

(1,911)

(1,787)

(5,635)

(5,318)

Ford Credit distributions

1,013

450

600

660

675

650

1,100

2,063

2,425

Settlement of derivatives

(161)

114

109

70

(26)

86

16

62

76

Pivotal conversion to a marketable security

263

263

Company adjusted free cash flow (Non-GAAP)

$

2,963

$

(1,804)

$

115

$

1,507

$

1,907

$

174

$

207

$

1,274

$

2,288

Cash Conversion Calculation

Company Adj. free cash flow (Non-GAAP) (sum of Trailing Four Qtrs)

$

5,137

$

2,089

$

3,519

$

2,781

$

1,725

$

3,703

$

3,795

Adj. EBIT (Non-GAAP) (sum of Trailing Four Qtrs)

$

9,303

$

8,190

$

7,573

$

7,002

$

7,263

$

7,226

$

7,351

Adj. free cash conversion (Non-GAAP) (Trailing Four Qtrs)*

55%

26%

46%

40%

24%

51%

52%

Net Cash Provided By / (Used In) Operating Activities divided by

Net Income Attributable to Ford (Trailing Four Qtrs)

219%

241%

266%

409%

488%

763%

1,004%

* Most comparable GAAP Measure: Net Cash Provided By / (Used In) Operating Activities divided by Net Income Attributable to Ford

Adjusted ROIC

Four Quarters

Four Quarters

Ended Q3 2018

Ended Q3 2019

($B)

($B)

Adjusted Net Operating Profit After Cash Tax

Net income attributable to Ford

$

6.3

$

1.6

Add: Noncontrolling interest

0.0

0.0

Less: Income tax

0.1

(0.1)

Add: Cash tax

(0.6)

(0.7)

Less: Interest on debt

(1.2)

(1.1)

Less: Total pension/OPEB income/(cost)

0.7

(1.2)

Add: Pension/OPEB service costs

(1.2)

(1.1)

Net operating profit after cash tax

$

4.9

$

2.3

Less: Special items (excl. pension/OPEB) pre-tax

(0.3)

(3.3)

Adj. net operating profit after cash tax

$

5.3

$

5.6

Invested Capital

Equity

$

36.6

$

35.4

Redeemable noncontrolling interest

0.1

Debt (excl. Ford Credit)

15.3

14.8

Net pension and OPEB liability

11.3

10.9

Invested capital (end of period)

$

63.3

$

61.1

Average invested capital

$

64.6

$

62.1

ROIC*

7.7%

3.6%

Adjusted ROIC (Non-GAAP)**

8.2%

9.0%

* Calculated as the sum of net operating profit after cash tax from the last four quarters, divided by the average invested capital over the last four quarters

** Calculated as the sum of adjusted net operating profit after cash tax from the last four quarters, divided by the average invested capital over the last four quarters

15

Special Items ($B)

Q3

YTD

2018

2019

2018

2019

Global Redesign

South America São Bernardo do Campo closure

$

(0.0)

$

(0.0)

$

(0.0)

$

(0.5)

Europe excl. Russia

(0.1)

(0.2)

(0.1)

(1.0)

Russia

0.0

(0.4)

India

(0.8)

(0.8)

Separations and Other (not included above)

(0.1)

(0.0)

(0.1)

(0.1)

Subtotal Global Redesign

$

(0.2)

$

(1.0)

$

(0.3)

$

(2.8)

Other Items

Focus cancellation

$

(0.0)

$

$

(0.0)

$

(0.1)

Other, incl. Transit Connect customs ruling and Chariot

(0.2)

(0.2)

Subtotal Other Items

$

(0.0)

$

(0.2)

$

(0.0)

$

(0.3)

Pension and OPEB Gain / (Loss)

Other pension remeasurement

$

$

(0.3)

$

0.0

$

(0.3)

Pension curtailment

0.0

Subtotal Pension and OPEB Gain / (Loss)

$

$

(0.3)

$

0.0

$

(0.3)

Total EBIT Special Items

$

(0.2)

$

(1.5)

$

(0.2)

$

(3.3)

Cash effect of Global Redesign (incl. separations)

$

(0.0)

$

(0.3)

$

(0.1)

$

(0.7)

16

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENT

(in millions)

For the periods ended September 30,

2018

2019

2018

2019

Third Quarter

First Nine Months

(unaudited)

Financing revenue

Operating leases

$

1,463

$

1,480

$

4,321

$

4,429

Retail financing

983

987

2,890

2,958

Dealer financing

519

534

1,624

1,738

Other financing

20

23

62

73

Total financing revenue

2,985

3,024

8,897

9,198

Depreciation on vehicles subject to operating leases

(936)

(894)

(2,975)

(2,712)

Interest expense

(989)

(1,081)

(2,898)

(3,316)

Net financing margin

1,060

1,049

3,024

3,170

Other revenue

Insurance premiums earned

39

43

123

136

Fee based revenue and other

57

60

180

175

Total financing margin and other revenue

1,156

1,152

3,327

3,481

Expenses

Operating expenses

368

350

1,070

1,064

Provision for credit losses

127

93

290

189

Insurance expenses

19

33

77

103

Total expenses

514

476

1,437

1,356

Other income, net

36

60

74

243

Income before income taxes

678

736

1,964

2,368

Provision for / (Benefit from) income taxes

160

165

266

581

Net income

$

518

$

571

$

1,698

$

1,787

17

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in millions)

December 31,

September 30,

2018

2019

(unaudited)

ASSETS

Cash and cash equivalents

$

9,607

$

11,579

Marketable securities

1,308

3,454

Finance receivables, net

Retail installment contracts, dealer financing, and other financing

110,388

104,302

Finance leases

8,426

8,469

Total finance receivables, net

118,814

112,771

Net investment in operating leases

27,449

27,530

Notes and accounts receivable from affiliated companies

905

794

Derivative financial instruments

670

1,295

Other assets

3,456

3,460

Total assets

$

162,209

$

160,883

LIABILITIES

Accounts payable

Customer deposits, dealer reserves, and other

$

1,097

$

1,081

Affiliated companies

426

549

Total accounts payable

1,523

1,630

Debt

140,146

139,274

Deferred income taxes

2,595

2,712

Derivative financial instruments

663

637

Other liabilities and deferred revenue

2,307

2,475

Total liabilities

147,234

146,728

SHAREHOLDER’S INTEREST

Shareholder’s interest

5,227

5,227

Accumulated other comprehensive income / (loss)

(829)

(1,011)

Retained earnings

10,577

9,939

Total shareholder’s interest

14,975

14,155

Total liabilities and shareholder’s interest

$

162,209

$

160,883

18

FORD MOTOR CREDIT COMPANY LLC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (in millions)

For the periods ended September 30,

2018

2019

First Nine Months

(unaudited)

Cash flows from operating activities

Net Income

$

1,698

$

1,787

Adjustments to reconcile net income to net cash provided in operations

Provision for credit losses

290

189

Depreciation and amortization

3,626

3,306

Amortization of upfront interest supplements

(1,513)

(1,605)

Net change in deferred income taxes

142

137

Net change in other assets

(329)

58

Net change in other liabilities

470

228

All other operating activities

210

109

Net cash provided by / (used in) operating activities

$

4,594

$

4,209

Cash flows from investing activities

Purchases of finance receivables

(33,751)

(28,449)

Principal collections of finance receivables

31,993

31,628

Purchases of operating lease vehicles

(11,015)

(9,728)

Proceeds from termination of operating lease vehicles

7,086

7,135

Net change in wholesale receivables and other short-duration receivables

686

2,822

Purchases of marketable securities

(3,401)

(4,438)

Proceeds from sales and maturities of marketable securities

4,504

2,322

Settlements of derivatives

228

87

All other investing activities

117

(41)

Net cash provided by / (used in) investing activities

(3,553)

1,338

Cash flows from financing activities

Proceeds from issuances of long-term debt

37,035

33,423

Principal payments on long-term debt

(32,588)

(33,216)

Change in short-term debt, net

(1,677)

(1,190)

Cash distributions to parent

(2,063)

(2,425)

All other financing activities

(141)

(87)

Net cash provided by / (used in) financing activities

566

(3,495)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(145)

(93)

Net increase / (decrease) in cash, cash equivalents and restricted cash

$

1,462

$

1,959

Cash, cash equivalents and restricted cash at beginning of period

$

9,682

$

9,747

Net increase / (decrease) in cash, cash equivalents and restricted cash

1,462

1,959

Cash, cash equivalents and restricted cash at end of period

$

11,144

$

11,706

19

Disclaimer
Ford Motor Company published this content on 23 October 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 October 2019 07:30:04 UTC






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