10-QPeriod: Q1 FY2020

FORD MOTOR CO Quarterly Report for Q1 Ended Mar 31, 2020

Filed April 29, 2020For Securities:FF-PCF-PDF-PB

Summary

Ford Motor Company's first quarter 2020 results, filed on April 28, 2020, were significantly impacted by the onset of the COVID-19 pandemic. The company reported a substantial net loss of $1.993 billion, a stark contrast to the net income of $1.183 billion in the same period of the prior year. This downturn was driven by a significant decrease in revenues, down 15% to $34.320 billion, largely due to the suspension of manufacturing operations in late March across most of the globe. In response to the crisis, Ford took decisive actions to bolster liquidity, including fully drawing down its corporate and supplemental revolving credit facilities for $15.4 billion and suspending its quarterly dividend. The company also issued $8 billion in unsecured debt in April 2020. While operations are beginning to restart in the second quarter, the full financial impact of the pandemic remains uncertain, with management expecting full-year 2020 results to be adversely affected. Despite these challenges, Ford maintained a strong cash position, ending the quarter with $26.160 billion in cash, cash equivalents, and restricted cash.

Financial Highlights

51 data points
Beta

Revenue

$34.32B

11.1% Gross Margin

Net Income

-$1.99B

-5.8% Net Margin

EPS (Diluted)

$-0.50

Total Assets

$264.15B

Cash & Equivalents

$25.97B

Free Cash Flow

-$473.00M

Financial Statements
Beta
Revenue$34.32B
Cost of Revenue$30.52B
Gross Profit$3.80B
SG&A Expenses$2.43B
Operating Expenses$35.88B
Operating Income-$1.56B
Net Income-$1.99B
EPS (Basic)$-0.50
EPS (Diluted)$-0.50
Shares Outstanding (Basic)3.96B
Shares Outstanding (Diluted)3.96B

Key Highlights

  • 1Net loss of $1.993 billion in Q1 2020, compared to a net income of $1.183 billion in Q1 2019.
  • 2Total revenues decreased by 15% to $34.320 billion in Q1 2020, primarily due to the suspension of manufacturing operations caused by COVID-19.
  • 3Automotive segment EBIT was a loss of $177 million, a significant decline from a $2.009 billion profit in Q1 2019, heavily influenced by COVID-19 disruptions and higher costs.
  • 4Ford Credit's EBT was $30 million in Q1 2020, a substantial decrease from $801 million in Q1 2019, largely due to an increase in credit loss reserves ($600 million) driven by COVID-19 uncertainty.
  • 5Company strengthened its liquidity position by drawing down $15.4 billion on credit facilities and subsequently issuing $8 billion in unsecured notes.
  • 6Total cash, cash equivalents, and restricted cash increased to $26.160 billion at March 31, 2020, up from $17.741 billion at the end of 2019.
  • 7The company established an $855 million valuation allowance against certain deferred tax assets due to the impact of COVID-19.

Frequently Asked Questions

The primary driver was the significant impact of the COVID-19 pandemic. This led to the suspension of manufacturing operations, a sharp decline in revenues, and a substantial net loss for the quarter.

Ford took several measures to bolster its liquidity. This included fully drawing $15.4 billion from its corporate and supplemental revolving credit facilities, suspending its quarterly dividend, and subsequently issuing $8 billion in unsecured notes in April 2020.

Ford Credit experienced a significant decline in earnings, with EBT falling to $30 million from $801 million in the prior year. This was largely due to a substantial increase in the provision for credit losses, reflecting concerns about potential defaults from customers and dealers impacted by the economic downturn and unemployment driven by the pandemic.

Ford expects full-year 2020 results to be adversely affected by the pandemic. While manufacturing operations are beginning to restart, the full impact on demand, supply chains, and economic conditions remains uncertain. The company has withdrawn its prior financial guidance and is prioritizing cash preservation.