Q4 2019 And Full Year Earnings Review February 4, 2020
Key Metrics EBT YoY Bridge ($M) EBT ($M) $831 $ 663 $42 $801 $736 $678 $663 $630 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Distributions ($M) $600 $660 $675 $650 $1,100 $475 U.S. Retail LTR Ratios* (%) Q4 2018 Volume / Financing Credit Lease Exchange Other Q4 2019 Mix Margin Loss Residual 0.66% 0.63% 0.55% 0.51% 0.51% • Continued strong EBT 0.39% • Healthy U.S. consumer credit metrics; LTR reflects normal seasonality and improvement YoY Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 • FY auction values down 2% YoY. Expect 2020 FY auction values to be down about 5% YoY based on Auction Values (Per Unit)** third-party assessments • Balance sheet and liquidity remain strong; managed $19,895 $18,935 $18,200 $19,335 $19,520 $18,120 leverage within target range of 8:1 to 9:1 • FY EBT of $3B, up 14% YoY, driven by favorable lease residuals, credit losses, and derivatives performance Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 * LTR = Loss-to-Receivables 2 ** U.S. 36-month off-lease auction values at Q4 2019 mix
FY 2019 EBT YoY Bridge ($M) • FY EBT at $3B, up 14% YoY • Favorable lease residual performance driven by lower supplemental depreciation on vehicles in Ford Credit’s lease portfolio, partially offset by non- recurrence of 2018 auction performance gains • Other includes favorable derivatives market valuation driven by lower interest rates in 2019 • Credit loss reflects lower reserves and the non-recurrence of 2018 non-consumer losses Volume / Financing Credit Lease 2018 Mix Margin Loss Residual Exchange Other 2019 • Unfavorable financing margin primarily driven by higher borrowing cost 3
Q4 2019 Net Receivables Mix ($B) Net Investment in Operating Leases Consumer Financing Non-Consumer Financing $142.0 $27.7 $113.5 • Operating lease portfolio was Q4 2019 H / (L) 2018 19% of total net receivables SUV / CUV 57% 1 ppts. Truck 30 3 $27.3 Car 13 (4) • U.S. and Canada represent 99% of operating lease portfolio $73.5 $56.0 $11.5 $25.0 $40.8 $14.8 $30.2 $3.5 $9.8 Total Americas Europe Asia Pacific 4
U.S. Origination Metrics and Credit Loss Drivers Retail & Lease FICO and Retail Repossessions (000) and Higher Risk Mix (%) Repossession Rate (%) Higher Risk Portfolio Mix (%) Repossession Rate (%) • Disciplined and consistent underwriting practices 753 750 747 747 747 741 7 7 7 7 7 • Portfolio quality evidenced by 6 6% 6% 6% 6% 6% 6% FICO scores and consistent risk mix 1.32% 1.26% 1.26% 1.27% 1.24% 1.13% • Delinquencies and repossessions remained low Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 60+ Day Delinquencies* 0.14% 0.13% 0.13% 0.11% 0.14% 0.14% • Extended-term contracts Retail Contract Terms Retail Charge-Offs ($M) and LTR Ratio (%) relatively small part of our Retail > 84 months Placement Mix (%) LTR Ratio (%) business $80 $76 $65 66 mo 66 mo • Strong loss metrics reflect $61 $61 65 mo 65 mo 65 mo 65 mo healthy consumer credit $45 0.66% 0.63% conditions 5% 5% 0.55% 0.51% 0.51% 4% 0.39% 3% 3% 3% Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Severity (000) $9.8 $10.6 $10.9 $10.4 $10.3 $11.4 5 * Excluding bankruptcies
Worldwide Credit Loss Metrics Charge-Offs ($M) and LTR Ratio (%) LTR Ratio (%) $127 $129 $109 $107 0.43% $89 0.42% 0.36% $66 0.36% 0.30% • Worldwide credit loss metrics 0.22% remain strong Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 • Credit loss reserve based on historical losses, portfolio Credit Loss Reserve ($M) and quality, and receivables level Reserve as a % of EOP Managed Receivables Reserve as a % of EOP Managed Receivables (%) $586 $589 $513 $513 $513 $513 0.49% 0.48% 0.44% 0.43% 0.43% 0.42% Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 6
U.S. Lease Metrics Lease Return Volume (000) and Return Rates (%) Lease Placement Volume (000) 24-Month Return Rate (%) 36-Month 39-Month / Other 95 93 83 83 82 10 81 9 9 11 75 9 74 12 71 71 71 70 • Lease share below industry, 48 reflecting Ford sales mix 75 80 56 68 64 80% 78% 78% 77% 77% 76% 26 • FY auction values down 2% 16 9 6 5 4 YoY Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Off-Lease Auction Values • Expect 2020 FY auction values Lease Share of Retail Sales (%) (36-month, at Q4 2019 Mix) to be down about 5% Industry* Ford Credit $19,520 31% $19,335 30% 30% $18,935 29% 29% 29% $19,895 $18,200 $18,120 23% 21% 21% 20% 19% 19% Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 7 * Source: J.D. Power PIN
Funding Structure – Managed Receivables* ($B) 2018 2019 Dec 31 Dec 31 Term Debt (incl. Bank Borrowings) $ 70 $ 73 Term Asset-Backed Securities 60 57 • Funding is diversified across Commercial Paper 4 4 platforms and markets Ford Interest Advantage / Deposits 6 7 • Well capitalized with a strong Other 10 9 balance sheet and ample Equity 15 14 liquidity Adjustments For Cash (10) (12) Total Managed Receivables $ 155 $ 152 Securitized Funding as Pct of Managed Receivables 39% 38% 8 * See Appendix for definitions and reconciliation to GAAP
Public Term Funding Plan* ($B) 2017 2018 2019 2020 Through Actual Actual Actual Forecast Feb 3 Unsecured ― Currency of issuance (USD Equivalent) USD $ 10 $ 6 $ 11 $ 7 - 10 $ 2 CAD 2 1 1 1 - 2 - EUR / GBP 3 4 5 3 - 4 - Other 1 1 1 1 - Total unsecured $ 16 $ 13 $ 17 $ 12 - 17 $ 2 Securitizations** 15 14 14 12 - 14 1 Total public $ 32 $ 27 $ 31 $ 24 - 31 $ 3 * Numbers may not sum due to rounding; see Appendix for definitions 9 ** Includes Rule 144A offerings
EBT By Segment Q4 FY H / (L) H / (L) 2018 2018 2019 2019 Results ($M) Americas Segment $ 586 $ (3) $ 2,422 $ 214 Europe Segment 49 (39) 363 (28) Asia Pacific Segment 11 (5) 75 (27) Total Segments $ 646 $ (47) $ 2,860 $ 159 Unallocated other* (16) 14 138 212 Earnings before taxes $ 630 $ (33) $ 2,998 $ 371 (Provision for) / Benefit from income taxes (189) (52) (770) (367) Net income $ 441 $ (85) $ 2,228 $ 4 Distributions ($M) $ 475 $ (185) $ 2,900 $ 177 10 * See Appendix for definitions
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