10-QPeriod: Q1 FY2019

FORD MOTOR CO Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 26, 2019For Securities:FF-PCF-PDF-PB

Summary

Ford Motor Company reported lower net income in the first quarter of 2019 compared to the same period in 2018, with diluted earnings per share decreasing to $0.29 from $0.44. Total revenues also saw a slight decline, from $41.96 billion to $40.34 billion. The company's adjusted EBIT, a non-GAAP measure, showed improvement, increasing to $2.4 billion from $2.1 billion year-over-year, driven by better performance in the Automotive and Ford Credit segments. The Automotive segment benefited from improved performance in North America, China, and Europe, despite facing external headwinds. Ford Credit delivered its strongest Earnings Before Taxes (EBT) in nearly nine years, supported by lower depreciation on leased vehicles and improved credit loss reserves. However, the Mobility segment incurred increased losses due to planned investments in autonomous vehicle development and mobility services. The company also highlighted ongoing global redesign actions, particularly in South America and Russia, which are expected to incur significant charges. Despite the decrease in net income, Ford maintained a strong liquidity position with $37.9 billion in cash, cash equivalents, marketable securities, and restricted cash at the end of the quarter.

Financial Highlights

51 data points
Beta

Revenue

$40.34B

15.9% Gross Margin

Net Income

$1.15B

2.8% Net Margin

EPS (Diluted)

$0.29

Total Assets

$263.28B

Cash & Equivalents

$21.02B

Free Cash Flow

$3.54B

Financial Statements
Beta
Revenue$40.34B
Cost of Revenue$33.94B
Gross Profit$6.40B
SG&A Expenses$2.84B
Operating Expenses$39.14B
Operating Income$1.20B
Net Income$1.15B
EPS (Basic)$0.29
EPS (Diluted)$0.29
Shares Outstanding (Basic)3.97B
Shares Outstanding (Diluted)4.00B

Key Highlights

  • 1Net income attributable to Ford Motor Company decreased by 34% to $1.15 billion in Q1 2019, down from $1.74 billion in Q1 2018.
  • 2Total revenues for the first quarter of 2019 were $40.34 billion, a decrease from $41.96 billion in the prior year's first quarter.
  • 3Company Adjusted EBIT increased to $2.4 billion in Q1 2019, up from $2.1 billion in Q1 2018, indicating improved operational performance excluding certain items.
  • 4Ford Credit reported its highest EBT in nearly nine years, benefiting from lower depreciation on its lease portfolio and improved credit loss reserves.
  • 5The Mobility segment experienced an increased loss due to planned investments in autonomous vehicle development and mobility services.
  • 6Ford announced significant global redesign actions, including exiting the commercial heavy truck business in South America and restructuring operations in Russia, with expected charges of $3 billion to $3.5 billion in 2019.
  • 7The company maintained a strong liquidity position with $37.9 billion in cash, cash equivalents, marketable securities, and restricted cash as of March 31, 2019.

Frequently Asked Questions

The primary driver for the decrease in net income was a combination of lower total revenues and significant charges related to ongoing global redesign actions, particularly in South America and Russia. While adjusted EBIT showed improvement, GAAP net income was impacted by these restructuring costs and other factors.

Ford Credit performed very strongly, achieving its highest Earnings Before Taxes (EBT) in nearly nine years. This was driven by lower depreciation on vehicles in its lease portfolio and an improvement in its credit loss reserves, reflecting continued strength in consumer credit metrics.

Ford expects year-over-year improvement in key metrics for the full year 2019, including revenue growth greater than 2%, an adjusted EBIT margin greater than 4.4%, and adjusted ROIC greater than 7.1%. The company anticipates higher full-year adjusted EBIT compared to 2018, with improvements expected in China, Europe, and North America's Automotive segments. However, a larger loss is projected for the Mobility segment due to increased investments.

The global redesign actions, including restructuring in South America and Russia, are expected to result in significant EBIT charges totaling approximately $3 billion to $3.5 billion in 2019, with negative cash effects of about $7 billion. The majority of these charges are anticipated to be treated as special items, impacting profitability in the near term but aimed at improving long-term efficiency and competitiveness.