01—Abstract
Summary
Summary of the 10-K filed February 4, 2022. Cited figures are marked; the original filing is the authoritative source.
Ford Motor Company's 2021 Form 10-K shows a sharp financial recovery from 2020, driven mainly by pricing, lower warranty costs and a large non-operating gain.
Revenue rose 7% to $136.3 billiona, and net income attributable to Ford reached $17.9 billion (diluted EPS $4.45), versus a $1.3 billion loss in 2020. However, roughly $9.1 billion of pre-tax gains came from the Rivian IPO and mark-to-market valuation, and a $9.6 billion total pre-tax special-items benefit (largely pension remeasurement and Rivian) inflates GAAP results. Company adjusted EBIT was $10.0 billion (7.3% margin) and adjusted EPS was $1.59, which better reflect operating performance.
Automotive EBIT rose to $7.4 billionb on higher net pricing, despite wholesales falling 6% to about 3.94 million units because of the semiconductor shortage. Balance sheet and liquidity improved meaningfully. Company cash rose to $36.5 billion (about $26.0 billion excluding Rivian shares), and Company debt excluding Ford Credit fell to $20.4 billion after $7.6 billion of higher-coupon debt was retired, at a $1.7 billion extinguishment loss.
Company cash net of debt swung to $16.1 billionc. Ford reinstated a $0.10 quarterly dividend in Q4 2021. Ford Credit remained highly profitable, with EBT of $4.7 billion and ROE of 32%, though its receivables shrank 11% and financial statement leverage rose to 9.5:1.
Key risks include the ongoing semiconductor shortage, which constrained production and dealer inventory; the Brazilian tax assessments (potential collateral above $1 billiond, which management considers remote risk); a $1.3 billion CBP penalty plus $181 million in additional duties on Transit Connect imports, which Ford is contesting; and the heavy cost of the Global Redesign program (about $11 billion of EBIT charges). Management guides 2022 adjusted EBIT to $11.5–12.5 billion, adjusted free cash flow to $5.5–6.5 billion, and wholesales up 10–15%, while noting elevated commodity costs and inflation.
02—Key points
Key Highlights
- Revenue increased 7% to $136.3B and Company adjusted EBIT rose to $10.0B (7.3% margin) from $2.5B (2.0%) in 2020.
- GAAP net income of $17.9B (diluted EPS $4.45) was inflated by a $9.1B Rivian-related gain and a $3.8B pension/OPEB remeasurement gain; adjusted EPS was $1.59.
- Automotive EBIT reached $7.4B (5.9% margin), driven by higher net pricing and lower warranty costs, despite wholesales down 6% to 3.94M units from the semiconductor shortage.
- Company cash reached $36.5B (about $26.0B excluding Rivian shares) and Company debt fell to $20.4B after a $7.6B higher-coupon debt repurchase, producing $16.1B of net cash.
- Free cash flow (Company adjusted) improved to $4.6B, helped by $7.5B in Ford Credit distributions, though operating cash flow fell to $15.8B on working capital pressure from inventory build.
- Ford Credit delivered $4.7B EBT and a 32% ROE, supported by favorable lease residuals and reduced credit loss reserves, while total net receivables fell 11% to $118B.
- 2022 guidance: adjusted EBIT $11.5–12.5B, adjusted FCF $5.5–6.5B, capex $7.0–8.0B, wholesales up 10–15%; the Board reinstated a $0.10 quarterly dividend in Q4 2021.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Ford Motor Co kept $0.13.
- Revenue$136.34B100.0%
- Cost of revenue−$114.65B84.1%
- Gross profit$21.69B15.9%
- Operating costs−$17.17B12.6%
- Operating income$4.52B3.3%
- Interest, other & tax$13.39B9.8%
- Net income$17.91B13.1%
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 4, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $136.34B$127.14B | +7.2% |
| Cost of Revenue | $114.65B$112.75B | +1.7% |
| Gross Profit | $21.69B$14.39B | +50.7% |
| R&D Expenses | $7.60B$7.10B | +7.0% |
| SG&A Expenses | $11.91B$10.19B | +16.9% |
| Operating Expenses | $131.82B$131.55B | +0.2% |
| Operating Income | $4.52B-$4.41B | +202.6% |
| Interest Expense | $4.59B$5.05B | −9.1% |
| Net Income | $17.91B-$1.28B | +1503.6% |
| EPS (Basic) | $4.49$-0.32 | +1503.1% |
| EPS (Diluted) | $4.45$-0.32 | +1490.6% |
| Shares Outstanding (Basic) | 3.99B3.97B | +0.5% |
| Shares Outstanding (Diluted) | 4.03B3.97B | +1.5% |
05—Questions
Frequently Asked Questions
Why is GAAP net income so much higher than Ford's operating earnings in 2021?
GAAP net income of $17.9B includes $9.6B of pre-tax special items, mainly a $9.1B gain on Ford's Rivian stake (from its IPO and mark-to-market valuation) and a $3.8B pension/OPEB remeasurement gain. Excluding these, Company adjusted EBIT was $10.0B, and adjusted EPS was $1.59 versus GAAP diluted EPS of $4.45. Investors should treat the Rivian gain as non-recurring and subject to share-price volatility.
How exposed is Ford to the semiconductor shortage and what does 2022 look like?
The shortage reduced 2021 wholesales and dealer inventory, and management says supply constraints will remain fluid in 2022. Ford expects wholesales up about 10–15%, with adjusted EBIT guidance of $11.5–12.5B. Working capital and timing differences (about $1.7B and $3.1B negative in 2021) are expected to normalize as supply is restored, but this is contingent on supplier performance.
What are the largest legal and regulatory contingencies disclosed?
The Brazilian tax assessments are substantial and could require collateral above $1B, though Ford considers the risk of loss remote. The CBP assessed a $1.3B penalty plus $181M in additional duties on Transit Connect imports (November 2021), which Ford intends to contest. Indirect tax and customs matters carry an estimated reasonably possible loss of up to about $1.7B. The CBP penalty is the most significant near-term item to monitor.
How strong is Ford's liquidity and balance sheet after 2021?
Company liquidity was $52.4B and Company cash was $36.5B, but about $10.6B of Company cash is Rivian shares, which are volatile and subject to a 180-day lockup. Company debt excluding Ford Credit fell to $20.4B after a $7.6B higher-coupon debt repurchase that cost a $1.7B pre-tax loss. Ford Credit's leverage rose to 9.5:1 (financial statement basis), above its 8–9:1 target range, and the Company targets a minimum Company cash balance of $20B.
06—Continue