01—Abstract
Summary
Summary of the 10-K filed February 7, 2024. Cited figures are marked; the original filing is the authoritative source.
Ford Motor Company's 2023 Form 10-K shows a year of recovering core profitability alongside heavy EV investment and large one-time charges.
Revenue rose 11% to $176.2 billion, and net income swung to $4.3 billiona (diluted EPS $1.08) from a $2.0 billion loss in 2022. That swing was driven mainly by the non-recurrence of the 2022 Rivian mark-to-market loss and Argo AI impairment, partly offset by $5.1 billion of pre-tax special items, chiefly a pension/OPEB remeasurement loss and European and Chinese restructuring. Company adjusted EBIT was flat at $10.4 billion, with an adjusted EBIT margin of 5.9%, down from 6.6%.
Adjusted EPS rose to $2.01b from $1.88. Segment performance was divided. Ford Pro was the standout, with EBIT up $4.0 billion to $7.2 billion and a 12.4% margin, supported by pricing and wholesale growth.
Ford Blue EBIT rose modestly to $7.5 billionc. Ford Model e lost $4.7 billion (margin of -79.7%), a $2.6 billion deterioration from lower pricing and higher costs. Management recorded about $0.7 billion of EV-related charges and noted lower-than-anticipated EV adoption.
Ford Credit EBT fell 50% to $1.3 billiond as financing margins, lease residuals, and credit losses worsened. Cash flow from operations rose to $14.9 billion, but adjusted free cash flow fell to $6.8 billion because of higher capital spending ($8.2 billion) and lower Ford Credit distributions. Shareholder distributions totaled $5.3 billion.
Looking ahead, 2024 guidance calls for adjusted EBIT of $10–12 billion and adjusted free cash flow of $6–7 billion, with Model e expected to lose $5–5.5 billion. Key risks include the Brazilian tax assessments, a $1.3 billion U.S. customs penalty (Transit Connect), a $1.7 billion punitive damages verdict under appeal, EV transition and regulatory uncertainty, supplier and labor cost pressure from the new UAW contract, and rising interest rates. S&P upgraded Ford to BBB- in October 2023, while Moody's still rates it Ba1.
02—Key points
Key Highlights
- Revenue grew 11% to $176.2B; net income rebounded to $4.3B (EPS $1.08) from a $2.0B loss, mainly from the absence of 2022's Rivian and Argo charges
- Company adjusted EBIT was flat at $10.4B; adjusted EBIT margin fell to 5.9% from 6.6%, while adjusted EPS rose to $2.01 from $1.88
- Ford Pro was the top performer: EBIT up $4.0B to $7.2B with a 12.4% margin, driven by higher net pricing and wholesales
- Ford Model e's EBIT loss widened $2.6B to $4.7B (margin -79.7%) on lower pricing and higher costs, and about $0.7B of EV-related charges were recorded
- Ford Credit EBT halved to $1.3B on lower financing margin, lease residual losses, and higher credit losses
- Adjusted free cash flow fell to $6.8B despite $14.9B operating cash flow, as capex rose to $8.2B; $5.3B was returned to shareholders
- 2024 guidance: adjusted EBIT $10–12B, adjusted FCF $6–7B, capex $8–9.5B; Model e expected to lose $5–5.5B
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, Ford Motor Co kept $0.02.
- Revenue$176.19B100.0%
- Cost of revenue−$150.55B85.4%
- Gross profit$25.64B14.6%
- Operating costs−$20.18B11.5%
- Operating income$5.46B3.1%
- Interest, other & tax−$1.13B0.6%
- Net income$4.33B2.5%
Where FY2023 revenue went
$176.19B- Cost of revenue: $150.55B, 85% of revenue
- Net income: $4.33B, 2.5% of revenue
- R&D: $8.20B, 4.7% of revenue
- SG&A: $10.70B, 6.1% of revenue
- Other operating costs: $1.28B, 0.7% of revenue
- Interest, other & tax: $1.13B, 0.6% of revenue
Kept 2.5% as net incomeNet income $4.33B · 2.5%Other operating costs $1.28B · 0.7%Interest, other & tax $1.13B · 0.6%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 7, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $176.19B$158.06B | +11.5% |
| Cost of Revenue | $150.55B$134.40B | +12.0% |
| Gross Profit | $25.64B$23.66B | +8.4% |
| R&D Expenses | $8.20B$7.80B | +5.1% |
| SG&A Expenses | $10.70B$10.89B | −1.7% |
| Operating Expenses | $170.73B$151.78B | +12.5% |
| Operating Income | $5.46B$6.28B | −13.0% |
| Interest Expense | $7.61B$4.59B | +65.8% |
| Net Income | $4.33B-$1.98B | +318.5% |
| EPS (Basic) | $1.09$-0.49 | +322.4% |
| EPS (Diluted) | $1.08$-0.49 | +320.4% |
| Shares Outstanding (Basic) | 4.00B4.01B | −0.4% |
| Shares Outstanding (Diluted) | 4.04B4.01B | +0.7% |
05—Questions
Frequently Asked Questions
Why did Ford's net income swing to a profit in 2023 if adjusted EBIT was flat?
The swing reflects the non-recurrence of the 2022 special items, mainly the $7.4B Rivian mark-to-market loss and the $2.7B Argo AI impairment. Ford's 2023 special items totaled $5.1B pre-tax, driven mainly by a $2.1B pension/OPEB remeasurement loss, European and Chinese restructuring charges, and the $0.4B Transit Connect customs accrual. Adjusted EBIT, which excludes these items, was essentially unchanged at $10.4B.
How is Ford's EV business performing, and what does it mean for 2024?
Model e wholesales rose 20% to about 116,000 units, but its EBIT loss widened to $4.7B on lower pricing, higher material costs, and launch and capacity expenses. Ford recorded about $0.7B of EV-related charges and says EV adoption has been slower than planned. Guidance expects a $5–5.5B Model e loss in 2024, reflecting continued pricing pressure and next-generation vehicle investment.
What are the biggest legal and financial risks disclosed?
The main items are: a $1.7B punitive damages award in Hill v. Ford (Ford is appealing); a $1.3B U.S. customs penalty plus $181M in duties tied to Transit Connect imports, which Ford is contesting; Brazilian tax assessments that could require more than $1B in collateral if appeals require it, which Ford considers a remote risk of loss; and an estimated up to $1.4B of reasonably possible loss in indirect tax and customs matters. Ford also faces a European Commission and U.K. CMA investigation into end-of-life vehicle collusion.
Is Ford's balance sheet and dividend policy sustainable?
Company cash was $28.8B and liquidity $46.4B, above Ford's $20B cash floor, while Company debt (excluding Ford Credit) was flat at $19.9B. Ford declared a $0.15 regular dividend plus an $0.18 supplemental dividend for Q1 2024. Shareholder distributions target 40–50% of adjusted free cash flow, but 2023 distributions of $5.3B exceeded adjusted FCF of $6.8B by a narrower margin than the target implies, so future payouts depend on FCF recovery.
06—Continue