Ford Presentation at Deutsche Bank Global Auto Industry Conference

Discussion in 'In the News' started by xcel, Jan 22, 2018.

  1. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    [​IMG] Promised new electrified vehicles and better financial footing were laid out.

    Wayne Gerdes – CleanMPG – Jan. 16, 2018

    Ford’s near term EV Strategy plays to the company's strength, builds the brand(s), leverages economies of scale and innovates across a number of areas.


    Ford announced its plans to improve operations, refocus capital allocation and accelerate the introduction of smart vehicles and services at the Deutsche Bank Global Auto Industry Conference in Detroit. Within the presentation, Ford provided preliminary results for full-year 2017, issued guidance for 2018 and outlined plans to accelerate investment in electric vehicles and SUVs.

    Jim Farley, Ford Exec. VP and President Global Markets:
    With the new tax Fed bill set to reduce Ford’s taxes significantly, Ford will be better able to make changes to products in production today.

    The company will reduce the number of orderable combinations on Escape, Fusion and EcoSport from thousands, to just 10 to 20 combinations. This will reduce expense, lower logistics expense and improve quality.

    Ford said it will shift toward a lower volume passenger car lineup in North America and Europe, while competing in more profitable sub-segments of the utilities market. In North America, Ford’s SUV mix will increase 10 percentage points, while its car portfolio will shrink 10 percentage points.

    Ford also will expand its electrified vehicle lineup with 16 BEVs and 26 HEV/PHEVs - a total of 40 vehicles - globally by 2022 with an investment of more than $11 billion in between 2015 and 2022. One 2020 SUV BEV will have at least a 300-mile range along with a hybridized F-150 and Mustang. Great news here!!!

    Regarding autonomous vehicles, Ford is focused on building an autonomous vehicle business, including a purpose-built vehicle entering production in 2021.

    2017 Preliminary Results and 2018 Guidance

    For full-year 2017, the company is announcing prelim results of $1.95 EPS, up 80 cents from a year ago, and adjusted EPS of $1.78, an increase of 2 cents from a year ago. The company also anticipates ending the year with automotive cash of $26.5 billion and automotive liquidity of nearly $37 billion.

    2017 results will include the impact of a non-cash pre-tax remeasurement loss of about $150 million related to the year-end revaluation of global pension and other postretirement employee benefits (OPEB) plans, also known as pension mark-to-market adjustment.

    Ford’s Board of Directors declared a first quarter regular dividend of $0.15 per share and a $500 million supplemental cash dividend that is equal to $0.13 per share. This provides a combined total of $0.28 per share of dividends on the company’s outstanding Class B and common stock.

    The first quarter regular dividend maintains the same level as the dividends paid in 2017. The first quarter regular and supplemental dividends are payable on March 1, 2018 to shareholders of record at the close of business on Jan. 30, 2018. Subject to the approval of the Board of Directors, the company expects to make distributions totaling about $3.1 billion in 2018. By year-end, cumulative distributions to shareholders will total more than $18 billion since the company’s regular dividend was restored in 2012.

    U.S. tax reform is expected to have a beneficial impact on Ford

    Tax Reform Element Preliminary Results / Expected Outcome

    2018 Adjusted Effective Tax Rate: ~15%
    Ongoing Tax Rate (2019+): ~18% (down from ~30%)
    Impact of Tax Reform On 2017 Results: Not Material
    Tax Credit Carryovers: Retained Dollar-For-Dollar
    Impact of Limits on Net Interest Expense: None

    U.S. Tax Reform Questions

    2017 Impact

    What is expected operating tax rate for 2017? The operating tax rate for 2017 is about 15%, consistent with prior guidance.

    Will Ford incur a one-time charge for deferred taxes and repatriation of earnings? No; we do not expect the impact to be material for 2017 with a modest tax charge for mandatory repatriation and modest tax benefit for setting deferred taxes to the new rate.

    Won’t Ford have a large write-down of deferred tax assets? No. A substantial part of Ford’s net deferred tax assets (net of liabilities) are research tax credit and foreign tax credit carryovers that are retained dollar for-dollar under the new law and do not have to be written down. The remainder of Ford’s U.S. deferred taxes net to a small deferred liability that will produce a modest benefit when reset at 21%.

    Will some of Ford’s tax credit carryovers expire unused at a 21% tax rate? Will Ford record a valuation allowance against these credits? Our analysis is still in progress, but we expect to be able to use all available tax credits before they expire.

    Do you expect a large profit and cash impact for mandatory repatriation of previously untaxed non-U.S. earnings? No. We expect a modest tax liability that will be offset with tax credit carryovers

    2018 Impact

    What is Ford’s expected operating tax rate for 2018? Expected 2018FY tax rate is about 15% with an ongoing rate of about 18%.

    Will Ford be subject to the Base Erosion Anti-Abuse Tax (“BEAT”)? Uncertain, but we expect we could mitigate any impact through restructuring.

    Will Ford be negatively impacted by limits on deductions of net interest expense? No. Ford (with Ford Credit) has net interest income, not net interest expense.

    Will tax reform reduce Ford’s cash taxes? Ford’s carryover tax credits provide a significant tax shield that will last many years at the lower 21% tax rate. Ford will not see reduced cash taxes in the near term.

    Will employees be given pay increase or bonuses as a result of tax reform? No. Bonuses will continue to be tied to Company performance for key metrics. Cash flow benefits are longer term due to the availability of carryover tax credits.

    Will Ford bring a lot of cash back to the U.S.? No significant remittance is expected; 90% of Automotive Cash is held by consolidated entities domiciled in the U.S.

    Will tax reform impact Ford Credit distributions to Auto? A lower tax rate on net deferred tax liabilities for leasing will support a higher distribution.

    What are implications of lower tax rate on Ford’s dividend to shareholders? We target a distribution payout of 40%-50% of prior-year net income, excluding pension and OPEB remeasurement gains / losses and tax-only special items. The lower tax rate will have a favorable effect on net income.

    For 2018, the company is guiding to an adjusted EPS in the range of $1.45 to $1.70. This guidance reflects higher commodity costs and further adverse exchange, offset in varying degrees by actions the company is taking to mitigate their effect.
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