01—Abstract
Summary
Summary of the 8-K filed July 24, 2024. Cited figures are marked; the original filing is the authoritative source.
Ford Motor Company reported second-quarter 2024 results on July 24, 2024, with revenue of $47.8 billiona (up 6% year-over-year), GAAP net income of $1.8 billion (EPS $0.46 diluted), and Company Adjusted EBIT of $2.8 billion, down from $3.8 billion a year earlier.
The margin compression, from 8.4% to 5.8%, was driven mainly by higher warranty costs and continued losses at Ford Model e, which posted a $1.1 billionb EBIT loss. Adjusted EPS fell to $0.47 from $0.72. Management said quality improvements are beginning to show up in leading indicators, though warranty costs typically lag in financial results.
The segment picture is mixed. Ford Pro was the standout, with EBIT of $2.6 billionc on a 15% margin and revenue up 9%, driven by strong demand for Super Duty trucks and Transit vans that exceeds production capacity. Ford announced a third North American assembly plant in Oakville, Ontario, starting in 2026.
Ford Blue's EBIT fell to $1.2 billiond on higher warranty costs, though hybrid sales rose 34%. Ford Credit earned $343 million pre-tax. On guidance, Ford kept its full-year 2024 Adjusted EBIT range at $10–12 billion but raised its Adjusted free cash flow outlook by $1 billion to $7.5–8.5 billion.
Within the EBIT guidance, Ford Pro's outlook was raised to $9.0–10.0 billion, while Ford Blue's was lowered to $6.0–6.5 billion. Model e's expected full-year loss of $5.0–5.5 billion is unchanged.
Capital expenditures are expected at $8.0–9.0 billion. The company ended the quarter with about $27 billion in cash and $45 billion in liquidity, and declared a third-quarter dividend of $0.15 per share.
02—Key points
Key Highlights
- Q2 2024 revenue of $47.8B, up 6% YoY; GAAP net income of $1.8B vs. $1.9B a year earlier; diluted EPS $0.46 vs. $0.47
- Company Adjusted EBIT fell to $2.8B from $3.8B, and adjusted EBIT margin contracted to 5.8% from 8.4%, mainly on higher warranty costs and Model e losses
- Adjusted diluted EPS of $0.47 vs. $0.72 a year earlier; adjusted free cash flow of $3.2B in Q2 and $2.8B year-to-date
- Ford Pro delivered $2.6B EBIT on a 15% margin with 9% revenue growth; demand for Super Duty and Transit exceeds capacity, prompting a new Oakville plant from 2026
- Full-year 2024 Adjusted EBIT guidance held at $10–12B, while adjusted FCF guidance was raised $1B to $7.5–8.5B
- Ford Blue full-year EBIT outlook cut to $6.0–6.5B on higher warranty costs; Ford Pro raised to $9.0–10.0B
- Model e expected to lose $5.0–5.5B in 2024 amid EV pricing pressure; Ford declared a $0.15 quarterly dividend payable Sept. 3
03—Questions
Frequently Asked Questions
Why did Ford's adjusted EBIT decline so sharply year-over-year?
Adjusted EBIT fell to $2.8B from $3.8B, mainly because of higher warranty costs, which weighed on Ford Blue, and continued losses at Ford Model e, which posted a $1.1B EBIT loss amid industrywide EV pricing pressure and lower wholesales. Ford Pro's strong performance partly offset these pressures.
Did Ford change its full-year 2024 guidance?
Partly. Adjusted EBIT guidance stayed at $10–12B, and the Model e loss outlook of $5.0–5.5B was unchanged. Adjusted free cash flow guidance was raised by $1B to $7.5–8.5B. Within EBIT, Ford Pro's outlook was raised to $9.0–10.0B and Ford Blue's was lowered to $6.0–6.5B. Capex is still expected at $8.0–9.0B.
What is driving Ford Pro's strength?
Demand from commercial customers for Super Duty trucks and Transit vans is outpacing production capacity. Segment revenue rose 9% to $17.0B, and EBIT reached $2.6B at a 15% margin. Software subscriptions rose 35%, and Ford is adding a third North American assembly plant in Oakville, Ontario, starting in 2026.
Is Ford's warranty problem expected to continue to affect results?
Management says quality is improving, citing J.D. Power rankings and internal 3MIS (first three months in service) data, which are leading indicators of warranty costs. However, those improvements typically show up in financial results later, and Ford acknowledged it still has significant work to do on quality and cost. Investors should expect warranty costs to remain a headwind in the near term.
How is Ford's liquidity and shareholder return position?
Ford ended Q2 with roughly $27B in cash and about $45B in total liquidity. It generated $5.5B of operating cash flow in the quarter and declared a $0.15 per share dividend for Q3, payable September 3, 2024, to holders of record on August 7, 2024.
04—Continue