Ford Motor (F) 27 Jul 232023 Q2 Earnings call transcript

Good day, everyone. My name is MJ, and I will be your conference operator today. At this time, I would like to welcome you to the Ford Motor Company Second Quarter 2023 Earnings Conference Call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions] [Operator

I Tyson, turn Relations. Executive ahead. time, to call Please like Antipas Lynn Director would this the to over go At of Investor

you, Also Farley, of Ted President Company's CEO; and Harris, Ford call. Thank CEO Chief Ford me for and welcome Cannis, Financial Q&A Lawler, Ford XXXX Marion Officer. With Jim and quarter Pro. us CEO earnings Motor are today John and MJ, joining Credit second of to is

These are taxes references. to Today's the of U.S. discussion non-GAAP includes comparable reconciled in the most some earnings appendix the deck.

along You can find the our the important shareholder.ford.com. deck earnings other materials content at with and of rest

cause includes an volume Page year-over-year. may statements stated. flow Company significant noted, those Unless actual Our our expectations. cash are differ on could adjusted otherwise and weighted. are mix most forward-looking are basis included results differ discussion XX. all to on from EPS Actual results is comparisons The product free also that and about factors

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across sales five and we're and already years, options the quadruple we number two in hybrid our last to ICE the next adding line-up, are year. in expect We our market hybrid

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line on when reach with EVs capacity to balancing that, we we are million we now we returns. reach next profitability targeting two annual we global by maintain and production where because reach year, total units growth, are EV XXX,XXX In of and flexibility

move we growth At window demand the durable with Ford for from the made can Blue potentially expected. and in and of vehicles ICE be as we hybrid design proven internal this is of and transition. their and through profitable our sure than will develop our combustion We've that believe portfolio out stand propulsion, popular same, most competition longer the we richer EV we irregardless Ford

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say, Also that in in can't first our built competitors market. XXX% times of the half almost the truck the this the by year, of U.S. pickup the rate way, three best our seller, grew F-XXX, overall

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business Pro's other also continued version the pillar, grow brand the profit our in that's one key And Europe. launch Ford And Transit the the quarter. of before of to all-new in

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John. you, to Over

Jim. Thanks,

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over to the on based footprint Now several profitable flexibility years, and the demonstrated us with allocation customer will that on provides as to we and ultimately leading delivering a we've laser-focused last be demand. continue capital EV by scale disciplined

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average margin, already reflecting performance, with down loss reserve $XXX of expectations, down which in our ago, generated strong releases, and auction million Credit lower first values but remains Credit in expected a residual XXXX. $XXX credit and of of our is value peak Results below but historical increase but Ford all was in were their EBT loss million. performance robust, remain year from to are from line outlook. full nonrecurring reflected financing half year our the

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outlook, in billion, $X of adjusted billion $XX now company billion total flow net billion. our billion year Ford between EBIT Ford $X.X billion of $XX $X Pro Regarding with we pricing and expenditures Blue primarily and stronger full to expect capital reflecting $X and cash free adjusted to

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for that you. what address questions. please our and your use Thank time we'll balance of And prepared So open minds. to wraps the operator, the remarks, line

Instructions] [Operator go Please with from question first Your comes Adam ahead. today Stanley. Jonas Morgan

everybody. Hey

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industry the amongst so when the Model question, thank continue. do the courage Jim, to showing E a else in for legacy losses in on nobody And Losing can't this just unit model peers. $XX,XXX a has one obviously you

your that radical something does Or thinking SAIC Audi something feel need more China. this in Xing is you to out So can and just grow to are of? And turning and I'm Volkswagen you way change?

be something seems some reluctantly the seem your There you work was where there's leadership to really and to with stuff Tesla there. industry your in you peers of willingness showed your pivot on -- going a a follow competitors, to with

being So while I'm collaborative of that relevant wondering in to capital more you disciplined. or embrace be also -- more if remain could approach EVs

say, would and I right. And even absolutely our especially really we teardowns on You're when time, and a the Changan, wider, Texas. did we the board same came at Adam, China. Doug partner understood in BYD

opened a in eyes Our ago, more so than the that our coming that year made and their at designed time traditional platform competitors bets non-semi were platforms. were new when our a and already we EV have fortunate are

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and with we and compete top we Ford still the where great we our architecture and products was like where of win type conquest war can by simpler, bet, decision think our advanced to it's we to is new, simple reputation bet. vehicle electrical we bundle very segments add energy-efficient engineering to And hat software an platform that competitive. shipping the it can have of This bet, our that a the more in

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that at We've So we're strategy, been always not Ford. China. including on changing strategy

with The comes Rod from Lache ahead. Please next question Wolfe go Research.

a I Model wanted ask to also question about E.

might the the out see volume volume longer talk from I contribution additional kind to targets, targets that about to EV make to Just of price. being offset sense hoping the we margins want term. was pushing when you But us

XXXX the units. it committed to fixated with And to to of to in to you to million you target? when structural have are your costs margin adjust two be your to I'm X% on regard infrastructure capable make mean does investment your ability hitting to that? commitments you What is suppliers hear that targets? still What or glad aren't

Lawler John - A

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work to we've up coming got pricing Jim in team is value and as And which is and working products, of settling we with the the critical, that whether this right understanding second on said, have generation equation.

in the continue 'XX, and work to we're away on walking from not to we're So going X% that.

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the have information we of the on volume a have that talked John all profit plus on lot trade-off optimization, year So X%. ago the a levers that didn't about

with Dan Please comes The from question ahead. Suisse. next Credit Levy go

may with ask, number quadruple Levy Wanted tying base maybe to plan of what your wondering part I earlier Rod's Dan Barclays. on hybrids. don't made plan about Jim, just to your flexibility question, to you comment where little of into but simply a we remember what the the of you lever. And on push and is, and a are plan? push more do the looking between decarbonize how there part hybrids be hybrid that factor always Is in? Was at How incremental? EVs? hybrid

Great question.

EREV for very are -- it now decrease in electrification kind that about hybrid think And customers think buying I hybrid versus ago, based both acting infinite months ago, extreme markets their the year realize and rationally those. an SERA being like there's the how long-range of a pre we of how cycle. in customers of EV. and duty this number between general industry rational two towing, a an of thought we versus really a in of on What PHAB are is about China,

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platforms. lot of great have a multi-energy We

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capital Or mean You specific? deployment to be EVs? more can you

of Capital and reuse their mean I development announced of one week of reuse. function earlier capital. expected competitors program deployment to this of EV one to programs, a being sort which your that of cease, was refreshed with and

you things do? can there So Yes. are

see. I

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point, we're allocate those is of to and the capital strategy irregardless make going to margin Our price lines. along X%

architecture lots ourselves of and software we're the future electric product with the simplicity, and execute in revenue for efficiency that we we upgrade the So -- we rural segments, pressure profits all transparently. see for and in those own the their to and will stand with electric all margins have results in segment on all our report, our great of and hybrid vehicles. they And is you

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comes Please with Bank go of The next question John Murphy America. from ahead.

plug-in I we really When they talking you're follow-up you the that about hybrids one are are large understand about Jim. just will qualify that. $X,XXX just IRA or enough? hybrids, Just wanted credit quick batteries there, for that sure have make that talking to hybrids

It want to it term be a get Hybrid our to make hybrid sense that F-XXX to a the are means in plug. hybrid Yes. hybrids. be just to It not could in is They the The motor a without traditional our company. serial a powers hybrid. really -- going I'm hybrid going I vehicles referring are and batteries. plug-in or clear. the could hybrids like the industry --

with next Please question go ahead. from The Brinkman Ryan JPMorgan. comes

And now that a that Pro business, for some XXXX? reinvest with profit the on to expect by price the My question, EDs, target as changed a capabilities. development I driven the some outlook other for or may greater back outlook guidance the year. also which segment point into decision of But And first-generation electric some the loss is and that reflects at around be Model can accelerating to higher-than-expected for this EV-related vehicle portion margin competition. regard loss in conscious of in breakeven a the part of E bigger guess the contribution investors bigger Blue

EV all that given at Is And could target you the in reflecting reiteration from help market the some it here, call related then the expectation continue in for just some start target? give you more to sorted of EV could confidence the factors the the at in the less. maybe that with participants taking comments to Jim's us to time maybe finally X% for of that the by the of be XXXX, winners be losers, market your number 'XX,

more therefore, that that have confidence and competition on might levers that other is -- Or integration you you so vertical factors control And et identified, more leaning pricing more the give your cetera? confidence, rational? under

Ryan. Yes,

the all premium so now highlights changed that's that than say levers we plan. absence the -- moved we're haven't have that is we our the question and more What and in or that now. price with I and think would profitability to is complexity with I work of here, impacting what the into changed seeing we early EVs has majority right the expected, come normalized that adoption the so we've of quickly that and off

all But than had bridge deeper come had had that vehicles. of out that that levers as be those little path, It's a build And would we sooner through the second And we talked thought we than we're of to continuing down. it bit thought. generation that about, had work might thought. prices we we

physical also But generation. product, creating the confidence second the the with starting both us that the to confidence completely more and optimized giving ability software our that as sustainably our that's is of get products in to in the segment Doug towards EV, of and a experience more and and hardware the we more and vehicle, gain ability more and in confidence profitable execute combination a and move system higher

walking So X% from we're that not target. away

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is That's the products. thankful of important are referring bet that segment one I in we crossovers. on X-row we said our second-generation So so most is clearly to not why did compete what with levers John we that

bet deeply, now deeply. and learned million on complexity. subscribers. we we per cost from what X.X the like can't companies deeply, many unlearn now we're know, what and that we that we Doug, know EV know software segments almost where And we a software, we And have shipping touted on We have company

in us for yet, going differentiate these to the So It's based our cost the reductions not I And there we is to customers real see it's get duty and think think cycle. products second on strategy, site meantime. Ford. segments visible I which is doing demand compete, to up to the those really

One right. Jim. All thing,

acquisition. once They retention this is also about are the vehicle the an time. loyal. at, over future over that you they're things we more looking rates a bring base, third in We so be about know second customers looking and other of the today that these is One installed at we're will this or vehicle. what come them in, We the think down and

also about vehicles. a from it We think modest rate software attach these to

that that's present we I numbers, in going very but closely. what team. said. specific we row? customers you customers we're an value we are the about. what of we And to that. where acquisition thinking look those to so the And And And about for. carefully cost, We we lines any the I'm acquisition invest with give given watch these talked the And know point you, is we of acquire cost with the and the get tell won't customer lifetime that if not that's there very that still to is value at positive cost, where can it

-- one that using as at other And we looking our this invest the so things future. we're that's of in we're

next ahead. with Philippe Please from Jefferies. comes question go The Houchois

understand a how to to I've seems quite had is reaction is understand how is I you And hear makes a to And in sense. difficult trying it's like very compared it Detroit, of I'm -- it's and much this ago, turnaround. Jim, contingents in this but BEV. saw saying, it's what it's few we lot. relation you -- a last a perfect now and It about, like you're It's just not that few to But like shaken seems it weeks more the not quite a weeks, much environment interesting. strategic.

or have taken should I Toyota complexity this you it's because careful you BMW, been at while a strategic competitors, have And bit transition, and look more approach a a back flexibility. have the about whether more

So just to sense of the mood. change

the in million Does were of a booked math, the car there's will was mean that Pro, in it EVs Pro. even Part the something -- $XX,XXX. loss simple added, in per we've like that There EVs be which I Pro higher, means were loss a XX%. There E. XX,XXX question, sorry, about $XXX in margin if XX,XXX do of about

Yes.

and a big way. number. wow, the math Just one it, it's understand that at And the appreciate you math doing thing. I I look

in You ramp to and investment quite carrying. And remember vehicles to it that put added going well. we're we so as about have make a to as that a work, we think well of -- to there's way it footprint are the have bit that lot these and of capacity

for so contribution break you future scale coming. we and the what's profit, We know that it have the business much can how gross to what's the this are we investing are margin, because into grow EVs

It's like a question not we're it's have to not going EV.

a because on that sure way, the grow. not math right our about working as business it's I'm do we're way cost we can how is of that that invest approaching vehicles. in to can cost upfront to and think but we has generation That the there second So remember, this third-generation footprint And our we're well. lot so

move about attach to as of we these that the it's don't think way all respectfully. to right So thinking it forward, I just quite be to vehicles,

first to vehicles Lighting I clear. Ford but sure, I in think electric not I'm to decrease, -- the XX,XXX really price referring want at be built and We about the quarter. On the going you're

is in bank $XXX,XXX. order we significant. the our bank is build order target looked ramp September That's that had F-XXX F-XXX four quarter Our always to Lightning like because tripling. that for four an really original nothing on The times. knew is production We the

for for above create And still to by the the $XXX,XXX the strategically is our to to decline its have second rate. price. coming, understand. because and price cycle oh, really so important an It's order cut be price way, the And F-XXX product tripling. that's We bank current profitable, that's really going a didn't critical after we $XX,XXX really a for and F-XXX it's production launch us the

today question last BNP ahead. with Paribas comes Picariello Exane. Please go from Jim The

that Blue, Just step-down, at the the $X to key items what half. looking for to just unpack $X billion sequential almost are for year. at second a half now Can There's -- obvious first the bridge But there the billion guidance right, Any this, around other step-down? stand you factors be for I could be thinking in should contract how mean know I the beyond pricing? baked for second for what the impact. there's UAW about half? out volumes, sensitivity Blue we

Thanks. Yes.

to So pressure in pricing when we continue at pricing held the that second do we a look in volumes we up increase better Blue planned some you for have there. basis, through on second thought we half we but quarter, that Blue much than see the half-over-half -- as will

happening see as we through. walk So that we

And primarily that's charge well, quarter. us, the in that in full through quarter which We also And dealers. get the some going that see all We with And seeing we're quarter, it the the a that. inflationary do as our we fourth then half, saw ratification, new come our when we're to is as that half through and take see for seeing We we the second the remember, quarter. have the of pressures. we that in amortize around warranty, we contract. a in don't in second costs

for inflation. warranty with and cetera, increasing So the up their they're Their gone costs repairs. labor have rates, et

quarter, is thing seeing right through the we the this it saw the second in board, costs. quarter other across we're freight we're the it then seeing but as well, And we see cost

rail We're coming constraints seeing rates the overseas. constraints. down. seeing of some are We're Although

seeing constraints there. generally well and up driving costs we're that's So as around freight,

So that's over and the half takes puts the combination for half. we Blue of as go our

Quarter the Conference Ford Motor participation. Earnings Thank This Company for Call. your Second concludes XXXX you

may You now disconnect.