Attached files
| file | filename |
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| EX-99.1 - EXHIBIT 99.1 - FORD MOTOR CO | exhibit991todeutschebank.htm |
| 8-K - 8-K - FORD MOTOR CO | deutschebankconference8-kd.htm |
Deutsche Bank
Global Automotive
Conference
Ford Motor Company | January 16, 2018
2
• This presentation includes our preliminary view of 2017 results. Our actual results could differ
materially from the preliminary results included in this presentation. We will provide additional detail
on 2017 results in our earnings presentation on January 24, 2018. Our Annual Report on Form 10-K,
which will be filed in February, will include our audited financial results.
• This presentation also includes forward-looking statements. Forward-looking statements are based on
expectations, forecasts, and assumptions by our management and involve a number of risks,
uncertainties, and other factors that could cause actual results to differ materially from those
stated. For a discussion of these risks, uncertainties, and other factors, please see the “Cautionary Note
on Forward-Looking Statements” at the end of this presentation and “Item 1A. Risk Factors” in our
Annual Report on Form 10-K for the year ended December 31, 2016, as updated by subsequent Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K.
Important Notice Regarding This Presentation
3
Bob Shanks
Chief Financial Officer
4
We are focused on improving our recent performance
Cumulative cash flow
since 2012
$31B
Returned to shareholders
since 2012
$15B
Avg. Auto operating margin
since 2012
5.9%
Ongoing automotive
operating margin target
8+%
5
And working to win in a future of
Smart Vehicles in a Smart World
6
Our priorities
1. Rapidly improving our fitness to lower costs, release capital and finance growth
2. Accelerating the introduction of connected, smart vehicles and services
3. Re-allocating capital to where we can win in the future
4. Continuously innovating to create the most human-centered mobility solutions
5. Empowering our team to work together effectively to compete and win
7
In 2017 we delivered solid results, in line with guidance
Company
Revenue
(GAAP)
Company Adjusted
Pre-Tax Results*
(Non-GAAP)
Adjusted
EPS*
(Non-GAAP)
EPS
(GAAP)
Automotive Segment
Operating Margin
(GAAP)
Automotive Segment
Operating Cash Flow
(GAAP)
FY 2017 $156.8B $8.4B $1.78 $1.95 5.0% $3.9B
B / (W)
FY 2016 $5.0B $(1.9)B $0.02 $0.80 (1.7) ppts $(2.5)B
$
* See Appendix for detail, reconciliation to GAAP and definitions
8
We continue to reward shareholders consistent with our
distribution strategy
Supplemental
dividend
13¢
Payout ratio
on net income*
43%
Shareholder
distributions
2012 - 2018
$18B+
* Shareholder distributions divided by net income excluding pension and OPEB reimbursement gains and losses and tax-only specials
Regular dividend
for 1Q 2018
15¢
Shareholder
distributions
planned for 2018
$3.1B
9
In 2018, we will change how we report to improve
transparency and better align with industry convention
Automotive 7.3$
Financial Services 2.2
All Other (1.1)
Adjusted Pre-Tax Results 8.4$
Special Items (0.3)
Taxes (0.3)
Less: Non-Controlling Interest -
Net Income (GAAP) 7.8$
Preliminary 2017 Results – Prior (Bils) Preliminary 2017 Results – New (Bils)
Automotive 8.1$
Mobility (0.3)
Ford Credit 2.3
Corporate Other (0.5)
Company Adjusted EBIT 9.6$
Interest on Debt (1.2)
Special Items (0.3)
Taxes (0.3)
Less: Non-Controlling Interest -
Net Income (GAAP) 7.8$
10
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
11
For 2018, we expect external factors to be mixed
2017 2018 Change
Industry Volume (Mils.)
Global 94.6 ~ 97 Higher
U.S. 17.5 Low 17s Slightly Lower
Brazil 2.2 Mid 2s Higher
Europe 20.9 Low 21s Slightly Higher
China 27.8 Mid 28s Slightly Higher
Key Commodities Unfavorable
Key Currencies Unfavorable
12
Our Company outlook for adjusted EPS in 2018 is lower
than 2017 due to external headwinds
Company Revenue
(GAAP)
Adjusted EPS*
(Non-GAAP)
Company Operating
Cash Flow**
(Non-GAAP)
2018 FY Flat To Modestly Higher Than 2017 $1.45 - $1.70
Positive But Lower
Than 2017
Preliminary
2017 FY
Result
$156.8B $1.78 Available At4Q Earnings
* See Appendix for detail, reconciliation to GAAP and definitions
** Excludes Ford Credit’s cash flows
13
Commodity prices and exchange rates have
significantly impacted Company results since 2015, and
will again in 2018
Adj. EBIT (Bils) Adj. EBIT Margin (Pct)
2015 2016 2017 2018 2015 2016 2017 2018
$11.6
$10.6
$10.6
$11.3
$9.6
Company Adj. EBIT At 2015 Constant Commodities & Exchange
Company Adj. EBIT
7.8%
6.9%
6.7%
7.5%
6.1%
Company Adj. EBIT Margin At 2015 Constant Commodities & Exchange
Company Adj. EBIT Margin
14
We are improving our fitness and making strategic
choices for today, tomorrow and the long term
FAR
NEAR
NOWNO
Jim Farley
President, Global Markets
Fitness
Partnerships
Portfolio Reset
Electrified Vehicles
Autonomous Vehicles
Fitness
Partnerships
Portfolio Reset
Electrified Vehicles
Autonomous Vehicles
18
What do we mean by fitness?
Customer centricity
Simplicity
Speed & agility
Efficiency
Accountability
Step-change improvement of
financial performance
Company EBIT
EBIT Margin
Capital
Return on Invested Capital
Operating Cash Flow
Total Shareholder Return
19
Simplicity through complexity reduction
Complexity Reduction at the vehicle level and part level drive near term improvements
including lower inventories, faster product turns and lower logistics costs
Future product programs benefit from lower required investment
Sustainability driven by the right management systems
IT incremental investment will drive more efficiency and eliminate legacy systems
20
Efficiency through best-in-class approach
Product creation process re-engineered and optimized
Modular product and manufacturing architectures
Design process improvement
Reduction in marketing cost
Fitness
Partnerships
Portfolio Reset
Electrified Vehicles
Autonomous Vehicles
22
Partnerships strengthen our competitive position
Markets Technologies Capabilities Mobility
Recently announced
Fitness
Partnerships
Portfolio Reset
Electrified Vehicles
Autonomous Vehicles
24
We continue to evolve, building on our strengths while
addressing market challenges
• Strategic choices
• Marketing reset and brand plan
• Cost reset
• Product – play-to-win profitably
• 100% connectivity in the U.S. by 2019;
90% globally by 2020
25
Shifting product portfolio to leverage our strengths
• Leadership in trucks, vans
and SUVs
• Wider coverage for F-Series
and Ranger
• Incremental SUV offerings
including Bronco
• Authentic performance and off-road offerings
• New Transit derivatives for commercial leadership
• Lincoln SUVs and electrified
North America 25
launches by 2019
35%
refresh rate by 2019
7 BEVs by 2022
26
Shifting product portfolio to leverage our strengths
• Rationalize car lineup
• Small urban utilities
• Authentic off-road offerings
• More 3-row utilities
• Expanded lineup in Russia
• Continue commercial vehicle leadership
• High-revenue derivatives
Europe27
launches by 2019
35%
refresh rate by 2019
3 BEVs by 2022
27
Shifting product portfolio to leverage our strengths
Asia Pacific
• Ranger growth plan in Australia,
New Zealand and ASEAN
• 50 new Ford and Lincoln models in China by
2025 including eight all-new SUVs and at least
15 electrified vehicles
• More local assembly
24
launches by 2019
29%
refresh rate by 2019
13 BEVs by 2022
Fitness
Partnerships
Portfolio Reset
Electrified Vehicles
Autonomous Vehicles
29
EV strategy plays to our strengths, builds on our brands,
leverages scale and innovates across the value chain
Mach I – Performance BEV
F-150 Hybrid
Mustang Hybrid
Transit Plug-In Hybrid
Ionity
Fast Charging
Infrastructure
30
We will spend over $11 billion on electrification by 2022
U.S.
• Positioned for EV leadership
• HEV offered on all mainstream
models
China
• BEVs and hybrids from our CAF and
JMC JVs
• Value BEVs from our Zotye JV
Europe
• Strong BEV portfolio
• Mild hybrids
$4.5
$6.7
>$11
Original
Investment
Revised
Investment
2015 - 2022
Electrification Investment (Bils)
2015 - 2020
50%
31
By 2022, we will have a significant BEV and electrified
lineup
16
Full Battery
Electric Vehicles
40
Electrified Vehicles
• Dedicated BEV platforms
• Includes our trucks and vans
• Supports our commercial and
Lincoln businesses
• Includes Zotye nameplates
Fitness
Partnerships
Portfolio Reset
Electrified Vehicles
Autonomous Vehicles
33
Our approach to AVs is focused on combining scalable,
human-centered foundational technology with
innovative, robust business models
AV Software
Strong software talent
Strategic investments in enabling technologies (e.g., LiDAR)
Vehicle
Platform
Scale manufacturing
Proven track record of commercial vehicle leadership
Diverse partner network to maximize revenue per mile
Commercial durability to maximize utilizationAV Business
34
We are building our AV business in multiple cities in
preparation for a 2021 production launch
Multiple Demand Sources
Maximized
Revenue
Per Mile
&
Vehicle
Utilization
Robust
Partnership
Platform
Durable,
Commercial
Grade Technology
+
$
Food & Goods Delivery
Ride Sharing
Small Business Services
35
Timeline – building an AV business
2018
2019 - 2020
2021
Scale production
deployment
Partnership Platform
• Expand business model and
user experience pilots with
strategic partners
Launch Cities 1 & 2
• Establish terminal operations
for fleet management
Technology Development
• Grow prototype test fleet
Partnership Platform
• Diversify partner network
including small businesses
Launch Cities
• Expand footprint to
additional cities
Technology Development
• Deploy self-driving vehicles on
partner networks with
customers
36
37
Questions & Answers
38
Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts,
and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:
• Decline in industry sales volume, particularly in the United States, Europe, or China, due to financial crisis, recession, geopolitical events, or other factors;
• Lower-than-anticipated market acceptance of Ford’s new or existing products or services, or failure to achieve expected growth;
• Market shift away from sales of larger, more profitable vehicles beyond Ford’s current planning assumption, particularly in the United States;
• Continued or increased price competition resulting from industry excess capacity, currency fluctuations, or other factors;
• Fluctuations in foreign currency exchange rates, commodity prices, and interest rates;
• Adverse effects resulting from economic, geopolitical, protectionist trade policies, or other events;
• Work stoppages at Ford or supplier facilities or other limitations on production (whether as a result of labor disputes, natural or man-made disasters, tight credit markets or other financial distress, production constraints or difficulties, or other
factors);
• Single-source supply of components or materials;
• Labor or other constraints on Ford’s ability to maintain competitive cost structure;
• Substantial pension and other postretirement liabilities impairing liquidity or financial condition;
• Worse-than-assumed economic and demographic experience for pension and other postretirement benefit plans (e.g., discount rates or investment returns);
• Restriction on use of tax attributes from tax law “ownership change;”
• The discovery of defects in vehicles resulting in delays in new model launches, recall campaigns, or increased warranty costs;
• Increased safety, emissions, fuel economy, or other regulations resulting in higher costs, cash expenditures, and/or sales restrictions;
• Unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, perceived environmental impacts, or otherwise;
• Adverse effects on results from a decrease in or cessation or claw back of government incentives related to investments;
• Cybersecurity risks to operational systems, security systems, or infrastructure owned by Ford, Ford Credit, or a third party vendor or supplier;
• Failure of financial institutions to fulfill commitments under committed credit and liquidity facilities;
• Inability of Ford Credit to access debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts, due to credit rating downgrades, market volatility, market disruption, regulatory requirements, or other
factors;
• Higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles;
• Increased competition from banks, financial institutions, or other third parties seeking to increase their share of financing Ford vehicles; and
• New or increased credit regulations, consumer or data protection regulations, or other regulations resulting in higher costs and/or additional financing restrictions.
We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and
actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future
events, or otherwise. For additional discussion, see "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2016, as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Cautionary Note On Forward-Looking Statements
39
Appendix
40
Why is Ford changing its financial reporting?
• Provide more transparency for our business including Mobility
• Focus more on operating results of the business
• Align with analyst models and reporting by other OEMs
What will be included for SEC operating segment disclosures?
• Ford will have three operating segments: Automotive, Mobility,
and Ford Credit
Why break-out Mobility? Why Now?
• To provide transparency for the Mobility Segment, which was
created in 2016 and continued to develop through 2017.
Although Mobility will continue to develop going forward, the
structure is sufficiently developed to report as a segment
When will Mobility show a profit?
• Initially, we expect Mobility to be loss making as we invest for
the future. We are in a transition period as the technology and
business models mature. We expect to generate attractive
returns in the future
Why is AV moving from Automotive to Mobility?
• AV will involve connectivity and business models more closely
aligned with our Mobility Segment than the Automotive
Segment
Where will EV be reported?
• EV will continue to be reported within Automotive
Why change reporting from PBT to EBIT ?
• EBIT provides more focus on operating results and better aligns
with modeling by analysts
What is the difference between prior reporting of Financial
Services and the new reporting for Ford Credit?
• Previously, Financial Services included Ford Credit and interest
on legacy debt from prior Financial Services businesses. Going
forward, the interest expense on legacy debt will be combined
with Automotive debt and reported as Interest on Debt
Where is Ford Credit revenue (interest income) and interest
expense reported?
• Ford Credit interest income and interest expense are integral to
business operations for that segment and are included in the
Ford Credit Segment
2018 Financial Reporting Change Questions
A1
41
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
U.S. Tax Reform Questions
A2
42
Company Net Income Reconciliation To
Adjusted Pre-Tax Profit
A3
(Bils) Memo:
FY Preliminary
2015 2016 Prelim. 2017 4Q 2017
Net income attributable to Ford (GAAP) 7.4$ 4.6$ 7.8$ 2.6$
Income / (Loss) attributable to non-controlling interests - - - -
Net income 7.4$ 4.6$ 7.8$ 2.6$
Less: Provision for income taxes (2.9) (2.2) (0.3) 0.7
Income before income taxes 10.3$ 6.8$ 8.1$ 1.9$
Less: Special items pre-tax (0.5) (3.6) (0.3) 0.2
Adjusted pre-tax profit (Non-GAAP) 10.8$ 10.4$ 8.4$ 1.7$
43
Company Earnings Per Share Reconciliation To
Adjusted Earnings Per Share
A
Memo:
FY Preliminary
2015 2016 Prelim. 2017 4Q 2017
Diluted After-Tax Results (Bils)
Diluted after-tax results (GAAP) 7.4$ 4.6$ 7.8$ 2.6$
Less: Impact of pre-tax and tax special items (0.3) (2.5) 0.7 1.0
Adjusted net income – diluted (Non-GAAP) 7.7$ 7.1$ 7.1$ 1.6$
Basic and Diluted Shares (Bils)
Basic shares (average shares outstanding) 4.0 4.0 4.0 4.0
Net dilutive options and unvested restricted stock units - - - -
Diluted shares 4.0 4.0 4.0 4.0
Earnings per share – diluted (GAAP) 1.84$ 1.15$ 1.95$ 0.65$
Less: Net impact of adjustments (0.09) (0.61) 0.17 0.26
Adjusted earnings per share – diluted (Non-GAAP) 1.93$ 1.76$ 1.78$ 0.39$
44
Company Effective Tax Rate Reconciliation To
Adjusted Effective Tax Rate
Memo:
FY Preliminary
2015 2016 Prelim. 2017 4Q 2017
Pre-Tax Results (Bils)
Income before income taxes (GAAP) 10.3$ 6.8$ 8.1$ 1.9$
Less: Impact of special items (0.5) (3.6) (0.3) 0.2
Adjusted pre-tax profit (Non-GAAP) 10.8$ 10.4$ 8.4$ 1.7$
Taxes (Bils)
Provision for income taxes (GAAP) (2.9)$ (2.2)$ (0.3)$ 0.7$
Less: Impact of special items 0.2 1.1 1.0 0.9
Adjusted provision for income taxes (Non-GAAP) (3.1)$ (3.3)$ (1.3)$ (0.2)$
Tax Rate (Pct)
Effective tax rate (GAAP) 28.1% 32.2% 4.2% (37.2)%
Adjusted effective tax rate (Non-GAAP) 28.6% 31.9% 15.3% 10.0%
A5
45
Company Net Income Reconciliation To
Adjusted EBIT
A6
(Bils) Memo:
FY Preliminary
2015 2016 Prelim. 2017 4Q 2017
Net Income attributable to Ford (GAAP) 7.4$ 4.6$ 7.8$ 2.6$
Income / (Loss) attributable to non-controlling interests - - - -
Net income 7.4$ 4.6$ 7.8$ 2.6$
Less: Provision for income taxes (2.9) (2.2) (0.3) 0.7
Income before income taxes 10.3$ 6.8$ 8.1$ 1.9$
Less: Special items pre-tax (0.5) (3.6) (0.3) 0.2
Less: Interest on debt (0.8) (1.0) (1.2) (0.3)
Adjusted EBIT (Non-GAAP) 11.6$ 11.3$ 9.6$ 2.0$
46
Automotive Operating Margin Reconciliation To
Company EBIT Margin
A7
Memo:
FY Preliminary
2015 2016 Prelim. 2017 4Q 2017
EBIT (Bils)
Automotive segment 10.0$ 10.1$ 8.1$ 1.6$
All other activities 1.6 1.3 1.6 0.4
Total Company 11.6$ 11.3$ 9.6$ 2.0$
Revenue (Bils)
Automotive segment 140.6$ 141.5$ 145.7$ 38.5$
All other activities 9.0 10.3 11.1 2.8
Total Company 149.6$ 151.8$ 156.8$ 41.3$
Margins (Pct)
Automotive Operating Margin* 7.1% 7.1% 5.5% 4.3%
Company EBIT Margin 7.8% 7.5% 6.1% 4.9%
* Reflects revised reporting methodology
47
Preliminary 4Q 2017 Results
Company
Revenue
(GAAP)
Company Adjusted
Pre-Tax Results*
(Non-GAAP)
Adjusted
EPS*
(Non-GAAP)
EPS
(GAAP)
Automotive Segment
Operating Margin
(GAAP)
Automotive Segment
Operating Cash Flow
(GAAP)
4Q 2017 $41.3B $1.7B $0.39 $0.65 3.7% $2.3B
B / (W)
4Q 2016 $2.6B $(0.4)B $0.09 $0.85 (2.0) ppts $0.8B
$
* See Appendix for detail, reconciliation to GAAP and definitions A8
48
Non-GAAP Financial Measures That Supplement GAAP
Measures
• We use both GAAP and non-GAAP financial measures for operational and financial decision making, and to assess Company and segment business performance. The non-GAAP measures listed below are intended to be
considered by users as supplemental information to their equivalent GAAP measures, to aid investors in better understanding our financial results. We believe that these non-GAAP measures provide useful perspective on
underlying business results and trends, and a means to assess our period-over-period results. These non-GAAP measures should not be considered as a substitute for, or superior to, measures of financial performance
prepared in accordance with GAAP. These non-GAAP measures may not be the same as similarly titled measures used by other companies due to possible differences in method and in items or events being adjusted.
• Company Adjusted Pre-tax Profit (Most Comparable GAAP Measure: Net income attributable to Ford) – The non-GAAP measure is useful to management and investors because it allows users to evaluate our pre-tax
results excluding pre-tax special items. Pre-tax special items consist of (i) pension and OPEB remeasurement gains and losses that are not reflective of our underlying business results, (ii) significant restructuring actions
related to our efforts to match production capacity and cost structure to market demand and changing model mix, and (iii) other items that we do not necessarily consider to be indicative of earnings from ongoing
operating activities. When we provide guidance for adjusted pre-tax profit, we do not provide guidance on a net income basis because the GAAP measure will include potentially significant special items that have not yet
occurred and are difficult to predict with reasonable certainty prior to year-end, including pension and OPEB remeasurement gains and losses.
• Adjusted Earnings Per Share (Most Comparable GAAP Measure: Earnings Per Share) – Measure of Company’s diluted net earnings per share adjusted for impact of pre-tax special items (described above), and tax special
items. The measure provides investors with useful information to evaluate performance of our business excluding items not indicative of underlying run rate of our business. When we provide guidance for
adjusted earnings per share, we do not provide guidance on an earnings per share basis because the GAAP measure will include potentially significant special items that have not yet occurred and are difficult to predict
with reasonable certainty prior to year-end, including pension and OPEB remeasurement gains and losses.
• Adjusted Effective Tax Rate (Most Comparable GAAP Measure: Effective Tax Rate) – Measure of Company’s tax rate excluding pre-tax special items (described above) and tax special items. The measure provides an
ongoing effective rate which investors find useful for historical comparisons and for forecasting. When we provide guidance for adjusted effective tax rate, we do not provide guidance on an effective tax rate basis
because the GAAP measure will include potentially significant special items that have not yet occurred and are difficult to predict with reasonable certainty prior to year-end, including pension and OPEB remeasurement
gains and losses.
• Company Adjusted EBIT (Most Comparable GAAP Measure: Net income attributable to Ford) – Earnings before interest and taxes (EBIT) includes non-controlling interests and excludes interest on debt (excl. Ford Credit
Debt), taxes and pre-tax special items. This non-GAAP measure is useful to management and investors because it allows users to evaluate our operating results aligned with industry reporting. Pre-tax special items
consist of (i) pension and OPEB remeasurement gains and losses that are not reflective of our underlying business results, (ii) significant restructuring actions related to our efforts to match production capacity and cost
structure to market demand and changing model mix, and (iii) other items that we do not necessarily consider to be indicative of earnings from ongoing operating activities. When we provide guidance for
adjusted pre-tax profit, we do not provide guidance on a net income basis because the GAAP measure will include potentially significant special items that have not yet occurred and are difficult to predict with reasonable
certainty prior to year-end, including pension and OPEB remeasurement gains and losses.
• Company Adjusted EBIT Margin (Most Comparable GAAP Measure: Automotive Operating Margin) – Company Adjusted EBIT margin is Company adjusted EBIT divided by Company revenue. This non-GAAP measure is
useful to management and investors because it allows users to evaluate our operating results aligned with industry reporting.
• Company Operating Cash Flow (Most Comparable GAAP Measure: Net cash provided by / (used in) operating activities) – Measure of Company’s operating cash flow excluding Ford Credit’s operating cash flows. The
measure contains elements management considers operating activities, including Automotive and Mobility capital spending and settlement of derivatives. The measure excludes cash outflows for Automotive and
Mobility funded pension contributions, separation payments, and other items that are considered operating cash outflows under U.S. GAAP. This measure is useful to management and investors because it is consistent
with management’s assessment of the Company’s operating cash flow performance. A9