F - Earnings call transcript Q4 2021

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Operator

Good day, ladies and gentlemen. My name is Holly and I'll be your conference operator today. At this time, I would like to welcome you to the Ford Motor Company Fourth Quarter and Full Year 2021 Earnings Conference Call. [Operator Instructions] At this time I would like to turn the call over to Lynn Antipas Tyson, Executive Director of Investor Relations.

Lynn Antipas Tyson

Thank you, Holly. Company's XXXX Motor Call. Ford to Fourth Earnings Quarter Welcome President Jim and Officer. With are; our and Financial me today Chief Farley CEO; our John Lawler joining of Harris is for Credit. Also CEO us Q&A Ford Marion non-GAAP discussions references. Today's some include These are most the reconciled comparable U.S. to our appendix GAAP deck. of in earnings measures the

is with with Markets Jim fireside participate X, and Kumar February host will a results the Farley Tuesday a who significant otherwise with Americas events. Murphy to weighted. results America statements volume John cash forward-looking basis. year-over-year. On John most chat can February EPS fireside XX, Lawler differ of in XX. On stated. that actual Wednesday and Bank expectations. adjusted are included President, and chat Rod will IR from of Galhotra Sustainability, will Group. is Actual at and Dave Global free Global materials Auto Tech President Thursday noted, differ Company A the February about our Page from Governance Engineering; The includes on quick and find You and flow important Safety Lache Unless Environmental discussion participate Treasurer Conference. XX, content an in also Bob and the the Webb our rest Social mix could Vice are are Conference. cause earnings may Ford's update on all And on the comparisons Product near-term other EBIT, and factors at deck our Holycross along Mobility Wolfe shareholder.ford.com. on Today's Environment RBC International our

to the turn Now call over Farley. I'll Jim

Jim Farley

modern critical to started a last business now ambition our as year the breakthrough as with this year may results have base simply of some important strengthened XXXX and year. for portray company. everyone. to We moving a real would And for Hello build as just Lynn. Well, Thanks Ford. progress Ford, I and deliver even speed we expect a stronger it described year

I like a that engine ahead platform customers new will and observers still production remain emerge challenger, our like skeptical recent compete as growth new Ford scaling of a with may momentum Even to going of industry. in us, like Pro our okay ourselves software are experience. ours, our our company our true customers' to revolutionize times popular commercial these vehicles, overtime. like in XXX-year-old a a for intelligent some actions, prove electric Ford know winner battery Our that. breakthroughs the with And I'm speak with We're building our rapidly disruptive like businesses turning

let's into last year. So dive

never about our That's I vehicles. why all launching we of very running. the out North Mustang Maverick them launched company. new The by us the more Few or or of the portfolio we have As of awards Bronco Mach-E for two of We've North America Truck a market won improved Maverick, mentioned Bronco, the and significantly new America of the Utility our now the hot years any Year base business. asking have In largest happened any could the F-XXX many when we plates we lineup delivery and month in Bronco phased them Lightning. Lighting. people Last more kits. our we're spring, all, name In middle of brand-new take E-Transit. new ask of sedans they for Sport,

we're this America that very ensure outside don't increase wait like and and production making taking everything to of our action they So don't unreasonable pay We've our also in customers and constraints. powers we is we're important. North break to made doing our markups. can progress We

in and other more sustainably Ford deep believe because to customers services. these And regions, a better, those electric we restructuring we has too South in for and America create businesses really want one-legged products can Europe with long. been stool markets. in serve Lincoln Europe into vehicle stayed The profitability strong much grown role set contender put and there. we connected in We've the We forward. to and In strong a we're going now in quietly us luxury world's on bigger play in grow a up America market. largest South to and going China, a the have position EV boom

China is fact, Lincoln market globally. now number one In the

is Our international Ranger markets the we're important for this group our profitable now and of year. pickup next-generation preparing launch

we're products of our and remain adding crisis business the and our great and for the experiences. we While still And same in progress the on brands And key is more always Ford+ in plan. aspects on solutions, user customers overall with means relationships of more shortages, time, COVID distinctive semiconductor rapidly at making shape. the teeth that ever-improving

for Now of the a electric these E-Transit, year. units EVs scaling of first production demand We building mentioned. we're our The new for things, to and vehicles includes In past Mustang muscles our up wave XXX,XXX the planned the certainly Lighting. XXXX capacity deliver the I doubled EVs. months, to under-called our Mach-E, F-XXX we as that six

mortar required this knocking and at Lightnings. center, working everything to from supplies and to to SK while increase wet walls still room more vehicle build make Now electric was the improve LG battery down Rouge our with to

knows up team manufacturing to and we're capability scale how now that ramp production of to EVs. Our harnessing

bets in lowering of We the force a material also the declines costs. just usual have and beyond materials our task above bill to dedicated for

pickup last the in in per high starting come. manufacturing will the with ground a ramp And produce pickup break time, to be sourcing advanced scale Tennessee We getting full and to will capacity But starting $XXXX we more Europe. For our opportunity our And just be supply in chain team that's of coming fully electric Lightning. which market This position to And that leveraging in same much design a first-mover there's on of It addition Oval the to vehicle. months, City Tennessee. in just in the volumes will Mustang China Blue our month, we'll In plan the more started. found our XXXX. up advantage largest, production. plant on three coming history electric integration vertical as simplification, is and Mach-E take with delivered Kentucky, electric team in than and of the the large-scale our in vehicles with second example, through it stream have million enough at on battery truck most generation battery Ford's is X we produce full-sized cells complex for battery in year. plants truck and

of on to we high-volume BEVs higher compete. our at XX% market We segments margins way XXXX key share are equal by least to high-profit well and the a strong with in mix achieve our

to the our very Model Y F-XXX demand the we a benefits this rival if meet the leveraging For had BEV example, leading to we connectivity. business. of would current Lightning, We production the our ICE the nameplate And we're business market. in a complexity healthy increasing, as do grow BEV reducing everywhere, profitable without can't full today while US

a mix we recognizing fewer includes customer insights this data. will demand same to top manufacture We're to also with to as returns. being capital based BEVs but a approach deploy vehicles cash products vehicle ICE continue a that on judicious guided from things disciplined deep hats on of like optimizing and Now focus generated with that our that we increases, by vehicle ICE content as

margins. to improve to So our EBIT our is automotive goal continue

Let me say that again.

our an In even to we on as goal of XXXX, mix to of is to life. BEVs. experience bring began Our EBIT ramp to and up auto retail vision for we continue margins improve commercial the always customers our

generation to Palo our culture the hardware Our of will of hubs The Alto technology next experiences. using will but We're fundamentally customers in and the engineering are benefits the engineers just like specialists. our But embedded And systems software inside the be realizing changing that's places vehicles' more important always software software we're and updates. attract Ford. over-the-air our the great the beginning. and define more of

have we than central will at customers the the the compute supplier-provided as today. to rather all benefits amazed think we distributed I modules move be across compute

human-centered work can professionals over of an screens digital now interfaces, organization Our And engineers the authority we're careers. where one experiences, controls. software are to do in committed the environment their and in-car providing very best interface single with

not turn change. in never served it decades. We're past done the of velocity well and over risk change change to I is Ford of me John, half Fear close, increasing. incremental with legacy automakers couple the has seeking Before of We're let at measures.

We will generate from a business strong clear bias recruiting capital the incredible plan, the We're confident Ford. a best fraction base fund need people have our and a talent outside with to company whatever-it-takes future. the we mindset. We're to work from exciting very

are we wait can't excited show for the market the them coming in our we today, customers as that in have portfolio what's As to future. great

quarter the and to John, who over take it for year. turn for I'll results expectations this the our you Now through will

John Lawler

closing Ford+ investing exciting our challenges with ongoing we In you, redesign, industry-wide our out the chain strengthening and global our in opportunities constraints, Thank of growth including disruptions, and portfolio executed supply face to value Jim. creation. semiconductor fundamental and plan, new product

the its in to glide automotive to margin For billion We of for since margin, adjusting And business XX% and X.X% right delivered at game delivered in margin. America the a margin wholesale, since our X% a our adjusted X.X%. is our strongest guidance path decline EBIT, posted midpoint an a the despite we the North XXXX. of firmly posted XXXX. a on special EBIT item. EBIT with EBIT our range $XX year, strongest Rivian performance That's re-class first of quarter

production In outside work, US our year electrification results challenge the the the new operations XXXX. last launches, resiliency to rose I'm of team's optimized the since our constrained our addition, proud customer hard profitable we best their very orders, posted strategy, collectively most and and vehicles. protect to as

and supply highly losses. combined incentive in production than spend, warranty commodity which improvement remain offset with headwinds more disciplined costs, also and management, our We with chain-related mix

Ford value $XX.X which seeing lows. are were $X.X record on year. values for highs share reinstated improvements for auction continue the an near per was flow source Rivian advance cash and $X.XX a underlying regular creating strong to we capital XXXX, $X.X year Credit, dividend liquidity our the of more and end the now in delivered $XX dividends respectively, focus shareholders. In we billion business. losses We with continue $XX were our billion, the valued important includes given Free cash the of whose than and in we're EBT and and we strong quarter us our the the at billion, capital at at at as billion stake fourth ended year. to record credit as profits strategy was billion in

met significantly We framework by covering also sustainable ongoing further both first industry's and strengthened deleveraging was in and debt, with integrated $X.X financing interest incredible fully finance launch completed the repurchasing $X.X balance the following And BEV November, balance green our exciting OEM sheet introduced issuance, captive reducing expense. auto company. inaugural high-cost the We we the our of our our fund and portfolio. which demand billion sheet an billion help investor its will of bond framework

including invest Our cash, solid sheet provides our Ford+ strong a priorities. in continue to to foundation balance

So the let $X.X a was billion in margin on X.X%, $X me flow. billion fourth quarter. and EBIT we free generated cash briefly adjusted With touch of

eased expenses. Some in our October of chain other was and demand as quarter. North with XX% modeled for us the largely America Volume of for strong. $X.X volume on remained products driven delivered a stronger a to we and XX% sequential constraints was by up X.X%. sequential lower this profit relative corporate that basis, margin We to know EBIT billion increase, supply custom expectations in higher guided

commercial quarter of modest and now region Ford's trajectory new of a sustainable Europe, its profit business the on market, business With business the to EBIT restructuring focused the profitability. margin. position truck for In delivered a the is the our up vehicle consecutive deliver enriching growing set complete, second accelerate America strengthening the experiences. towards X% underlying customer business to legacy South is and continues in now

near-term effect supply disruption that mask to However, the chain improvement. of continues adverse

bank the Importantly for and bank. consecutive we one continues for sales the a year. In commercial highly almost sales were to to achieved contributing in number off we be extremely momentum seventh real order a an we increase record building and brand to profitable Mustang the China, in are brand strong region and start transition premium transit order an Lincoln the share China, XX% in the accelerate as Lockheed quarter, healthy in Europe to segment. the growing spot gain fourth of In BEV. with continues year vehicle have the the bright the to

important We electrification quarter vehicle the local deliveries XXXX to launch are bank an portfolio Mustang fourth achieved the and we of and Zephyr. The order began in Mach-E. In start. of milestone the the Lincoln also we all-new opened for a expanding fast as the with is recently in that off China customer production

direct-to-customer order and stores. select through for online Our Ford Mach-E allows XX people to city model

year international group its strengths Our XX.X% year delivered to markets which of points our quarter had the fourth full year-over-year. share well record Ranger and in from playing a performed up percentage flagship pickup, especially X.X segment

commercialization moving major to solution. and Thailand investment are And rationalizing progress of delivering announced And are the Argo's our Level X autonomous assembly scaled investments also modernize people autonomous we in steady towards We South portfolio production the and this next-generation moving on Ranger four year. focusing progress confident and goods we development. we've in made in vehicle in launch addition, later a mobility, plants and and both Africa from in

share I'll XXXX. current our about with Now, you thinking

and the see on throughout believe XX% XX% the full our quarter, COVID. supplier semiconductors in in a shutdown and We expect up of shortages we including year, high will now, single a about to remain reflecting be to supply fluid factors semiconductors. related Omicron year low we XXXX first with decline to Based variety digit what constraints to wholesales reflecting

For adjusted and an one if billion billion and margin, $XX.X $XX.X we EBIT range end shared full year, And XXXX. margin target last our X% to the earn that's North the you May. XX% America of be XX% versus high expect with business EBIT EBIT XX% adjusted would which up year of achieve the and than earlier to we between equates at company the to we in

we for The important to and mark-to-market will quarter quarterly Rivian, It's in which a our we sits out results income marketable balance minute. not and sheet. This may in point Now something investment GAAP volatility results. cash cause can each GAAP our net turning that to on mark-to-market EPS forecast. in securities is our

EBIT adjusted our rolls how at looking up. So guidance

collected our global as higher profitability assumes North redesign and of the efforts. in profits outside Our range significantly realize North America we America, benefits of full

Ford expect flat. EBIT we roughly Credit and strong, We but other corporate expect profits, also EBT than be XXXX be mobility and lower to to

expect to free $X.X we of billion billion. adjusted Lastly, $X.X and generate between cash flow

we into Now, guidance include. other our factored assumptions

customer strong expect and iconic demand our nameplates. enthusiasm we new for First, remain to

and full of Maverick, to year addition E-Transit of lineup, BEV a have F-XXX in will production. We Mustang Bronco in all with a production Mach-E, the award-winning and robust Lightning

pricing strong, between anticipate interplay environment the up to XX% to will wholesales about dynamic. XX%, remain with Second, we the pricing remain although volume and

range $X.X we Credit, strong to Ford persist. XXXX, billion supply billion. other at commodity costs. $X expect which we And will Third, auction of anticipate about constraints as we pressures, Fourth, headwinds remain values inflationary of impact a expect to fifth, broad in

customers returned relationships Ford+ growth with I reflecting devoting always releases, invest as anticipate committed normalized customer-facing we includes connectivity, This off-lease and reserve more credit mentioned, continue vehicles technology, losses. we'll non-recurrence and EBT importantly, our resources value Most on to primarily creation. electrification. However, lower fewer our plan of drive to to we're and aggressively to and

payback We will substantial. investments be are those confident from the long-term

So and Operator, mind. We'll of the to the the on your please address for Thank balance what's up line that hear you. time our open questions. use remarks. prepared wraps

Operator

our to And Instructions] come from Bank line is Murphy question the America. first of going with John of [Operator

John Murphy

evening everybody. time the for Good Thanks tonight.

AV to some totality. and the with that Just EV whether the backside also spin more pure-play company the a Argo. first of entire Jim, spinning speculation company legacy business that more ICE EV/AV a a it make lot might that sense your car a or you question. have assets might become there's of in of future been portion be of consider But there's

-- your what I I you would be way? And this? you how how this mean strategizing either you are about and how motivations do So mean, you think

Jim Farley

or is speculate are have customers is The the business go of chain I've develop supply kinds are the the and fundamentally -- different Yes, to the business on to different. we successful and the The development product will running don't And business want something speculation is, back the of go-to-market different. are different. But to not procurement in all rumors of in-sourcing different. think John. I going different. is Thanks, to process different. The successful BEV on press. said different. the speculate again ICE is which over same. and I talent be said a and are over products level The actually We the The rhythm we

really the So you I'm speculation the about excited I'm about be. businesses businesses differences. but And not I going talk the they to we're way those in operating operate press, tell the the company's as should that commitment to will acknowledges

Operator

Thank you.

with come Research. will of question next from Wolfe the line Lache Rod Our

Rod Lache

you Hi, everybody. little a wanted ask margins. to I about bit

looks it you end if you X% hit target your the said, John here. margins you're guys that from said targeting As Jim hit will of And you improving like high range.

a can us that little So many benchmark are X% that how and bit ago should just how on to it? give we maybe I'm that's how many there the more you color anymore, sure about been think years given changes is the business. not

spending ramping to lot you're up of also Ford grow the You're a up in but engineering infrastructure, EV and Pro going business. on spending

if So to maybe the And as you give about stood of Ford you takes and Pro just it, data part point where it? a how us us of on can in some just might XXXX. puts think give

John Lawler

Hi, Rod, it's Yes. John.

do can business continues there. levels at that structural focused with there's reducing done think at -- for that stock our develop. there but lower So and as and already, lot business said lot as on Jim we're are the to When the transition, a very us ICE still think looking We're lot I business. differently. the much guess managing both I a look We're opportunities costs. we that business would BEV say we're I operating a just at ICE that, our to We've we you improve more of looking

as So line that roughly than we'll our in have which leaner year want in from billion. the a we operate come top we quality is top and was which digital down top business. even the working from going in past we and We're be standpoint quality improve types manufacturing through our a that year-over-year and to opportunity There's this line. to from have our what every our leveraging warranty there. and saw improve parts $X.X And vehicle going as through that's opportunities we're distribution to continue the what help at have improving the it standpoint inventories business We warranty We're strengthen bring for to revitalize to well will doing also important. capabilities, at connected segment that There's costs. maximizing lower opportunity our business in we're cost those further, down. to of leverage technology to our

talked see be. over our business, that So even about BEV, further ICE about in when past not the we And talk margins opportunity we we as there's manage it there. we've improve from so to where time, are intend then you as BEV margins calls to

the ICE the our We saw $X,XXX we Transit. a want need we talked scale. going as but there have that first-mover the to vehicles of we with We're improving know is team We're important what know what with going are to to with We're and second-generation doing vehicle. to need understand vehicles to and do started about, just really unit hats. our today to business, as that, down to that on that finding going we're our then now the with in differently. commercial chase of right? then legacy high-volume to Mach-E leverage we knowledge really leverage that road approach the lower we're these we to where earlier the one our lean that's design. Mach-E, bottom right And about road the on with vehicles reduce of And line things they them, there. distribution. what's on and really need in can do these. design vehicles I on bring that have the compute on we We opportunity, the other into manufacturing going We're we in compute to on in do the second with scaling the what And right? production and versus to into that, We're the key and got going all generation having need at it we the simplify advantage bringing look have that not We like the and and the to what these. segments we complexity, with the cost We Jim we strong distribution system through said top that difference line in to see that today We're vehicles costs manufacturers. lineup that's Lightning Mustang for coming the do a down out off

for So to with that's improve partners our an that. to opportunity us work

billion opportunities So of our And on we Pro. XXXX. $XX then our vehicles you said as that those to into in commercial And business there's both with to by Ford grow we're opportunities. leading looking see business grow in revenues position to Rod and lean

And so and improve think our key extremely with forward and beyond both as now opportunities across stay we business execution. on Ford segments And that to we focused need move X%. the the to Pro relentless of there's I

Operator

Levy Credit come the our from going Sam Thank to question with you. Suisse. line of next is And

Dan Levy

you've Hi. ask more broadly and like what about with electronic your to talked you're to Thank you. the sort about. about It’s notion Suisse. of Dan do Levy JV simplification, GlobalFoundries, I'd trying and which components with with of just Credit

that sub-sourcing more heard you'd Hau GlobalFoundries, to control like Thai-Tang we've So suppliers. the think, I to with mentioned, of

we this. unpack and to significant operating vehicle where frankly on your concurrently more deeper implications like and core Thank electronic to in a the inventory the case just from of more is by is given you're where the model a how just some now past this just-in-time should think given could undergoing a you chain? approach design what's How more Maybe the you in and you of suppliers. in of handled change achievable on in going You'd help outsourcing you. broadly the supply to especially components How that the can? products of this dictate been the itself this have been of transition you're of financial And EV? of focused us

Jim Farley

Thank all we we're very painfully now for question. these gift in that as Perhaps key is going the have. the manage learned your for the that the cannot supply through lesson have chain you pain semiconductors biggest we we for components

you we In memory fact advantages at the a to come different the of ecosystems have with Feature-rich doesn't second. Chemistries argue these of of kind we a the chip. it of the to The could And semiconductors way is sensors mine, advance could change GlobalFoundries biggest power to support lot. electric have chips inverters, all electric back supply vehicles X-nanometer way doesn't need I and in components regulator that types. itself -- the chain one inverters that have have. look transition be would back raw that digital electronics different key window particular battery. that chips the a company A in for our use has the into a or but I'll themselves still semiconductors. materials also we two batteries break them. the

nodes approach. actually ourselves. -- the company. physical We in first where to need print We coming direct to some a them. different with us. been. prefer many will the chips build cases a of world. until at need topic the is to be kind And important We supplier be to I the our partner us. need over really risk the for into build can very on need many, SoC need capacity States. going get on dependent producers. bet, for we direct how knows advanced industry nodes more as it few to feature-rich to resources. How is CHIPS we've takes time even years On a the of here. in depending different we're said but years in moves inspection we talent. very that to know interesting the ourselves the deal of different feature-rich capacitize government from them. come. to at really And use on And feature-rich with around benefit or It's more get We Obviously, to as We it's company. We takes nodes. United details. the build descale case a is? It contracts to need GlobalFoundries, for to including the thing there'll We're They them is GlobalFoundries this to big the from different. So depend when a many I this the that but design think actual Act XYZ for the big takes It current the It really ecosystem TSMC the it's direct GlobalFoundries on we out more talent

It's I a by put US other not participate. Ford. to deal. And to was really company. have We used companies be interesting industrial companies, cash up when just we Those feature-rich the will talking semis

thing components And of the the more is at culture You raw same advanced material deals change a of kind all chemistry. types Ford. expect the this and on I mentioned other on including various can nodes for battery

is BEV. this ICE and of change the said part rhythm between I As

Operator

you. Thank

line will of next Our from Brinkman Ryan question come the with JPMorgan.

Ryan Brinkman

$XX with Slide shows you excess years mean for billion is the for that in of $X.X for or XX it electrification. can think billion the investments another versus my talk $X.X billion investments chip $XX five-plus remember Despite this the to billion a And like used get which billion certainly heavily to top thanks I dividend to pandemic you like of on more billion and FCF calling of or still those shortage. of $XX and Hi, to with you're I billion of that course of cash that. taking might have now you're $XX.X with about costs closer billion. to liquidity there's of uncertainty $X.X year and more though, compares most the $X.X something question. investing record, like wanting cash I I be but ago

in bigger so on optimal what any cash XXXX. thoughts like structure move this the under the current the go might over So, it conditions record being how or that lockup on And updated just stake cash once what to have you the trajectory with thoughts capital the I'm above do balance structure. what about seems far what whether you capital more curious pile grow you deciding the only towards are your expires. it should time with Rivian might optimal earlier influence targeted

John Lawler

Ryan. Thanks

we're We've invest cash we us continue making quickly going investments have the about we're to gives BEVs. So, on focus to the in we'll a talked in from it pleased because breaking and as really flexibility yes be we with We'll to the we as the contains can. capacity scaling go. as position standpoint be business

about connected BEVs. There's thing potentially There's looking for integration. opportunities we other supply move to we secure think is more for chain opportunities beyond electronics, The for as capital vertical vehicles potentially these leveraging need into chain supply there. to advanced the our with

as our course, important of focused lot as We're this total move there's returns of is So, we leverage shareholder a opportunities forward to the well. on to And improve also shareholders. business. cash

move our continue to important provide shareholders, to as which So us we consumers shareholder is we're our dividends given our going base. forward to -- for to

continue we to to to is look to see balance cash and grow going a you'll to look business, we integrate, our as as So as that, I be supply what for look think our develop look plan. vertically secure we we benefit us, is as to Ford+ chain the we that expand,

Ryan Brinkman

interesting. Very you. Thank

Operator

come Deutsche next Emmanuel of question from Rosner Bank. the line with will Our

Emmanuel Rosner

ask you two very little much. evening. I items in Good bit outlook. Thank a related wanted more detail you, the to XXXX to

walk, assumption. North one American was were American is [Indiscernible] and your and piece right. year-over-year, first the year-over-year, mix your XX,XXX XX% volume The $XXX F-XXX I that's if million wholesale look the when something at mix the like of only be up may but your North like units quarter In up despite up what fourth is bridge volume

this? in contribution of curious as how XX% curious second what quantified That's think through just statement volume the as didn't for XXXX, to are terms model the why XX% flow mix to your so the that costs, in we about, technology we you've to that of really you first things what's kind of then on the contribution And XXXX. can do about from of grow you And we terms so EBIT And additional is item. quantify CapEx XXXX? one going in I'm EBIT. you're investments and a in expect in step-up that able there additional income in if investment in should just terms think

John Lawler

let So on XXXX me focus first.

a year-over-year So have but at you the a to the the XXXX, to in of walk also about that volume looking is basis. XX% mix part strong think on XX% for growth,

see the mix. to continued expect we my continued do remarks, strong I expect Pricing, in strong as said We environment. pricing

billion you $X.X when volume expect at So look billion. be and we pricing, $X.X that about to up to mix

walk bridge the so I'll that just where to see And through on XXXX. -- what we

working other was BEV broadly invest to continuing out we're in efficiencies are about $X.X our related That's on. headwind, with and we're We along product modernization that with that offset as that's spending, business. continuing but build our billion to

strong, net about be You also billion. got of be a do $X.X pension billion billion. of commodities next is we to income. course, about then to headwind expect see going Credit we've year but then to lower And $X them to that be Ford going down $X.X are And

So we increase. be strong line to expect with the volume the top

a We well we pricing continue basis. as on to expect And mix. year-over-year a have strength to then expect strong to be

Operator

And next… All our right.

Jim Farley

that's about seeing top profit think Sorry, from this what's we're year we're I leverage very seeing year line. or nice our this that good forecast incremental what encouraging. is, And

how lost top case always but our It's that line Ford. hasn't flow great that have at into been about see compares increase. profitability statistics the the that to past, We in

Operator

you. of Wells Langan with And Fargo. the is from line next going Colin come to our Thank question

Colin Langan

taking for my Thanks questions. Great.

up running on If It's that quarter? on of you're annualize walk. costs only I the also about as quarter sales. Is starting this billion. sort of point? What Just down Any higher this particularly actually following higher at sort QX, a color there? $X weaker seasonality, worse commodity hitting sequentially was

John Lawler

relative guided. But expected us the you And We how third hit several well had quarter And volume et then on were is – we than products. we costs when where think be couldn't we slightly. six-tenths. through key had costs midpoint we They of as the of what and our saw They hitting investing quarter. we came up disrupted that had from say quarter, through developed, suppliers. we're But supply what higher It let's And a couldn't up come connectivity just about of growth constraints quarter look this and had proxy, I We then inflation. as one get transportation, fourth the commodities. on volumes come cetera. was around to net-net specifically guidance. chain up in produce. saw the at us on mix the fuel, basis Omicron through, was our additional quarter-over-quarter a modernization headwinds some to as From things some as areas. IT those costs we

So and seen strong. have seeing were the you quarter. headwinds disruptions, the If without those a the in stronger we fourth the could demand quarter. production some would of was us have we're met demand hitting But

And ease, see [Technical we so versus the our for of be And We that's much supply the the improvement mix. continued growing. to see see continued see in going really line we as we more Difficulty] strong a We go into price. we're in tailwind XXXX, some demand constraints those top of seeing headwinds improvement we product as see as lineup,

Colin Langan

as be mix. in that just as Is dilutive And Lightning the there? to large to that color starts pretty Any impact obviously, runs will on going second on how think half following the as the it ramp? about up we battery

John Lawler

earlier was going to I we think to had were by quarter through we significant weren't side coming of done. the what that coming on or standpoint that lower back didn't certain we you North we then fourth up impact and asked vehicles as of ramp America. see did don't think There one the chain Duty in because commodities and line from the start vehicles this the that, is disruptions. a the our was those And to able upon profits quarter mix have on that of in the year questions a I No. that was I at have mix Colin again it's driven supply with maybe that Super launch it touch the down Emmanuel weren't build and get complete

Operator

will from Our next come Johnson question Barclays. Brian with

Brian Johnson

unit versus some want talk look EV. which your which prices your see X-point hands about X,XXX, meaning pricing. I of leaving transaction per Yet on about dealer $X.X the your billion broader to profit. articles up X,XXX, in $X,XXX more Yet $X.X that profit per revenue The at billion bit is to cited. J.D. about I markups pricing little in be pricing Detroit Yes, would January ran you clips of Press a lineup, good about are the the egregious up – Power of dealers' some the if another afternoon. I on action in taking you're

dealer wondering to you're kind forward kind looking transaction invoice go of you're the of and inventory at how level? the your move prices as So just balance especially as thinking the actual vehicle the per you revenue this about at simplified your dealers, model between

Jim Farley

ICE answer to say, would be your BEV slightly different. question for the and I you. Thank would

best the about our knowledge. of of XX% that, our supply-constrained have in last charging we're We above dealers MSRP to environment our year

they who directly future our action very good that product policy. And have be team. we've allocation of of quick knowledge We because will are. And by impacted seen their really of

heavily who is On than any going topic, margins go-to-market that, to forward. that of now for to in dependent team But to quite about us side, I for lesson will choose we manage a system, in on price it. build this market the franchise the and no optimistic the want the put quite going BEV intelligence into is to customer the important experience. are in BEV way. doubt our inefficiency very but trigger a important the different I'm we an allocation an won't that and because way has it's more be But this that that go we those dealers

Operator

Thank you.

is Our come Sachs. the with line next to going of from Goldman question Delaney Mark

Mark Delaney

for Thanks call. much Yes. taking very the

us EV as as target, reaching necessary like to better you the well maybe semiconductors could linearity supply terms So visibility of the that kind securing and both what of help batteries? capacity into things you in the XXX,XXX of have understand do annualized

Jim Farley

Thank you.

we hard at work process So the were oversubscribed for we've early been this quite some been pretty in has at it. actually. at the team We time and knew

us working. lift We the primary have been battery is Really, availability. for

some batteries actually securing we've now. So for time extra quite been

have some manning We options for Mach-E.

this units to move move be So That our Mach-E. we close will on year. big year XXXXXX will this

made move XXXXXX Lightning the details, battery I securing I'm and far big to in all going about so get the chemistries we've will batteries. our be units. progress excited won't really into Next but year,

we had capacity the Lightning, actually physical constraint F-XXX of the On a facility.

the decision we And XXX,XXX so facility can accommodate to the units. again redesign that already we took the so

We for have great the F-XXX capacity nonelectric on components.

Mach-E So final of labor getting the and in the get of this the is and the can Georgia batteries done. just matter a assembly so the place we redesigning out facility the F-XXX the getting batteries, getting and

chips concerned a As far battery company. electric the our for vehicles chain supply are advantage these and as strategic are

the where production. constraint in will So we protect will we battery supply protect our electric

Operator

Thank you.

Spak the Capital come Markets. line question from will with Our Joseph of next RBC

Joseph Spak

to extent, in about to so hear different you investment guess talk would it's is, ICE hear more EV to the think two it's also accelerate the for managing them investment Jim, two how of and more about of do does and business? the is the to ICE, them how as combining two you or question wring able separately. your in managing increase businesses back Thank planning give -- them the terms I spend? businesses are like really wring you Ford the you CEO But you Like business. and that refreshing you. I the think out you're to together which the businesses of have leeway out those to running guess and good of you to

Jim Farley

it is The increasingly for BEV a only not which us Absolutely. Absolutely. important profitability integrating also vertically ICE BEV, lever. becoming gives because scaling is important very optionality, of of profit but

we our pickup truck using think think we fast But business in our of the and of as retail for. any John we of ICE globally. them definitely push that into levers specialty as far ICE of everything there's, improve freshest business. of customers, increasingly transition our the business going said, the to our just and not we as to competitors ICE And this Bronco a lineup, use in So ton of those as US, ICE for can. they with want kind groupings I brands We're other side like, can margins Mustang. see our passion recreation pull for We can

example. look so the at And Maverick for we've had of success

sorts really in of opportunity us the our accelerating growth growth about also dealers us to building and excited you, through new business investment a experiences, integration the So, high and as BEV. optionality physical we're cash allow bet really -- invest in And vertical our for business focus the all continue like gives but customer things this both it to for margin focus high you on to to company businesses. our experiences

Operator

Thank you.

Our question Itay from next going to the of line come Michaeli is Citi. with

Itay Michaeli

Mach-E Great. profitability. Thanks. go back hoping to on an update Good evening was everybody. I get and

already like quarters. been were couple strong has positive the It a seems mentioned quarters ago think of really I pricing you you few EBIT. last in

the hoping course, you You update you where Edge. year give And up cutting see talked could an $XXXX about of perhaps kind maybe of relative this I of like you're versus on profitability your expectation ICE maybe volume. original going out Mach-E that was cost to forward. taking even maybe vehicles

John Lawler

Yes. Thanks. John It's here.

profitable So, our demand. We're Mach-E from a we said, Mach-E at look strong great when We're seeing mix. are seeing we standpoint. as profitability we

we've seen improve. profits So, the

opportunities is complexity. seeing and we're continue else what to the Importantly cost the reduce to reduce

focused those margins. more profitable our like as on quite fab to to we're we where our are not we especially So yet very the relative margins overall, improving past, ICE vehicles. them But be in said

do primarily forward. And as there move reducing complexity scaling, work continue we the have so, we around to to

to especially competitive expectation and further improve we to well those so by but our we we're far, work margins. to the strong to need mix fully on So we're our that seeing what we and move encouraged work Mach-E do the that's margins other as continue what demand as towards. that on forward And with we're BEV is there's need

Jim Farley

as change. supply And we we compared manufacturing have If that goodness lots OTAs kind others grew we're of even our you that between the XX learned for Just minor We BEV for has integration this be -- after. different we're probably as of I engineering. model. so a my launched it going impact. struck struck change grew I all rhythm what be or to not Mach-E thank at operations up wait most a going we're and I'm on then chain opportunities are minor our you exciting I'm That's work with XX those And the to next of to is And We're customer vehicle to system wait digital And engineering actually we showed much after to a really cooling one-third probably up cost ICE, input. where side, now, we're in within about the four integration engineering to because certainly or guess business a finding on profit the in ICE. and we side lack you two. going and Mach-E are throughout when starts career our get John's complement scaling needs a on Mach-E has hoses in are best-in-class. not for after we that. opportunities how the the of It year. versus of business engineering finding finding are that make model. of work what profit in one. I next motors that the job needs But the is

then actually all now after one just both E-Transit course electric like really cab, out and one kind this about one thought. the the of of off the to thing vehicle the that take I'm excited as data industry use integration same We Lightning, for it's And -- long vehicles more to vehicle XX opportunities. I And we has as the than as other we cost so of And are The in much is as the I that the configurations. F-XXX all customers' these for box. expertise -- this I our offering, felt from simple are use well going platforms. chance ICE haven't and opportunity. have, Being reengineer much job

I'm simpler. exciting about much -- on journey. haven't already John I really is And I'm this opportunity they're the very said. improvement we're this in -- And is of seen career. guess I beginning my of saying the in So profit it past And the what excited as very it's at kind

Operator

you. Thank

Our with Nomura. line of next from is question Das the come to going Anindya

open. is line Your

Okay.

question next will Jeoffrey line come Pickering. of the with Lambujon Our from Tudor

Jeoffrey Lambujon

in to I squeezing go the America North you just for embedded the in you're are in shared upper I back trajectory me as full discussion XXXX for could that us how if of IMG margins guide. improvement a to and give about regional specifically. you just the the Europe in. about Thanks afternoon. of the on sense end year margin we EBIT think thoughts Good wonder wanted thinking

on new recovery in new Just thinking Pro Europe, products focus Ranger focus IMG? shortfall about continued helping Ford the on some semiconductor time product in evolving the and accelerate over and then the and launches margin potentially to

John Lawler

Europe, improvement. expect profit In we

as a the see going India that's we to we year be be and into be year-over-year profitable. driven X% XXXX, transition it's that them by into deliver BEV. but that strength The again see we're accelerating ours commercial environment and a the vehicles, product We still to a the pillar going as International go and there Ranger. pricing new continue down is Ranger in expect be for They're them. the track down next They're by to on for we this IMG continue. favorable Mach-E very And to what of two is to And be them to seeing for as our are continuing key grow strong you move And the we meaningfully fact committed launch year They're expect things: as year-over-year strength well Group, and EBIT margin Europe. to XXXX. XXXX. forward. a Markets Europe Europe, With profitable in volumes

a Group. transition the it's International for so Markets And year in us

with about as So we Ranger, that and move leverage new with product they'll be what Group. but product we're we that forward really And International the down excited our in then can year-over-year Markets profitable. there from

Operator

Fourth Ford with will Year Company conclude XXXX that, and we And you. Motor Conference Earnings today's Call. Full Thank Quarter

You may now disconnect.

Ford Motor (F) 3 Feb 222021 Q4 Earnings call transcript