brian schaaf cfo, ford credit jpmorgan conference · 9 • ford and ford credit have a relationship...

Brian SchaafCFO, Ford Credit

JPMorgan Conference

August 11, 2020

2

Ford Fixed Income Investor Relations:Karen Rocoff [email protected]

Kristi [email protected]

Information on Ford:• www.shareholder.ford.com• 10-K Annual Reports• 10-Q Quarterly Reports• 8-K Current Reports

Information on Ford Motor Credit Company:• www.fordcredit.com/investor-center• 10-K Annual Reports• 10-Q Quarterly Reports• 8-K Current Reports

2

Further Information

mailto:[email protected]:[email protected]://www.shareholder.ford.com/http://www.fordcredit.com/investor-center

3

Information Regarding This PresentationForward-Looking Statements

This presentation 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, 2019, as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

GAAP And Non-GAAP Financial Measures

This presentation includes financial measures calculated in accordance with Generally Accepted Accounting Principles (“GAAP”) and non-GAAP financial measures. The non-GAAP financial measures are intended to be considered supplemental information to their comparable GAAP financial measures. The non-GAAP financial measures are defined and reconciled to the most comparable GAAP financial measures in the Appendix to this presentation.

Additional Information

Calculated results may not sum due to rounding. N / M denotes “Not Meaningful.” All variances are year-over-year unless otherwise noted.

3

Strategic Overview

6

Ford Credit’s Value Proposition

Support Sales Through All Economic Cycles

Higher Satisfaction and Loyalty

Consistent Profits and Shareholder Value

Return Dividends to Support Product

Development

Ensure competitive retail, lease and wholesale financing

Continue to drive highersatisfaction and loyalty to Ford

Consistency in Delivering Our Value Proposition Has Served Us Well

Highest Customer SatisfactionLincoln AFS: 2012 – 2019

Ford Credit: 2015, 2016, 2017, 2019

• Externally recognized loyalty and awards

• Highly refined model and best-in-class operating cost

• Success reinforcing long held beliefs

7

Over The Last 20 Years, Ford Credit Generated $44 Billion In Earnings Before Taxes And $29 Billion In Distributions

$2.5 $2.5

$4.9

$2.0

$3.7 $2.9

$2.0

$1.2

$(2.6)

$2.0

$3.1

$2.4 $1.7 $1.8 $1.9

$2.1 $1.9 $2.3

$2.6 $3.0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Earnings Before TaxesDistributions

Ford Credit -- A Strategic Asset

8

Distributions• Distributions are a function of

– Net income,

– Balance sheet size, and

– Leverage

• Increases in net income and reductions in balance sheet size could result in larger distributions

• We expect to maintain managed leverage in an 8:1 – 9:1x range in 2020

• A rule of thumb is $100 million of distributions for each $1 billion decline in receivables, assuming 9:1x managed leverage

9

• Ford and Ford Credit have a relationship agreement that governs our interactions. This ensures that intercompany transactions are arm’s length and our financing activities are prudent and commercially reasonable.

• Ford Credit will not guarantee more than $500 million of indebtedness of, or make equity investments in any of, Ford or its automotive affiliates

• Ford Credit can require Ford to make a capital contribution if Ford Credit’s managed leverage is greater than 11.5 to 1

• Ford Credit will not be required to accept credit or residual risk beyond what it would be willing to accept acting in a prudent and commercially reasonable manner

• Ford and Ford Credit are separate, legally distinct companies and will continue to maintain separate books, accounts, assets and liabilities

Relationship Agreement with Ford

10

Q2 2020 Earnings Key Takeaways• Strong Q2 EBT of $543M

• Balance sheet is inherently liquid; smaller size reflects lower production

• Liquidity is strong at $32B; we continue to access diverse funding sources

• Portfolio is performing well – delinquencies, charge-offs and loss-to-receivables (LTR) ratio remained low in Q2. Our credit loss reserve reflects lifetime losses at about the same level as Q1

• Off-lease auction values experienced sharp recovery and performed better than expected in Q2 and lease share remained below industry average

11

Distributions ($M) $675 $650 $1,100 $475 $275 $275

0.55%0.39%

0.51%0.63% 0.62%

0.15%

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

U.S. Retail LTR Ratios (%)

$18,935

$20,115 $20,265

$18,790 $19,115 $19,755

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

Auction Values (Per Unit)*

EBT YoY Bridge ($M)

$801 $831 $736 $630

$30

$543

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

EBT ($M)

• Strong Q2 EBT of $543M is down $288M, reflecting higher supplemental depreciation on operating leases and lower derivative market valuation gains

• Portfolio performing well – loss-to-receivables (LTR) remains low; auction values improved from the first quarter. FY auction values forecast to be down about 5%, consistent with third party estimates

• Balance sheet and liquidity remain strong

Volume /Mix

FinancingMargin

LeaseResidual

Credit Loss

Q2 2020Q2 2019 Exchange Other

* U.S. 36-month off-lease auction values at Q2 2020 mix

Credit Losses $ 19Reserve (52)

Auction Performance $ 118Supplemental Depreciation (265)Op Lease Defaults & Reserve 20

DMV $(77)Other 14

Key Metrics

12

Q2 2020 Net Receivables Mix ($B)

• Receivables declined $13B YoY and $12B from YE 2019 ($7.5B in Q2) primarily reflecting lower wholesale receivables

• Operating lease portfolio was 20% of total net receivables

$30.2 $20.3 $8.9

$73.7

$57.0

$13.9

$26.4

$26.2

Total All OtherUnited Statesand Canada

Net Investment in Operating LeasesConsumer FinancingNon-Consumer Financing

Europe

$11.5

$130.3

$103.5

$23.0

$3.8

Q2 2020 H / (L) 2019SUV / CUV 58% 1 ppts.Truck 31 2Car 11 (3)

H/(L) Q2 2019 $(13.1) $(7.9) $(3.5) $(1.7) H/(L) Q4 2019 (11.7) (8.6) (2.0) (1.1)

13

60+ Day Delinquencies* 0.13% 0.11% 0.14% 0.14% 0.16% 0.15%

Severity (000) $10.9 $10.4 $10.3 $11.4 $11.4 $10.9* Excluding bankruptcies

U.S. Origination Metrics And Credit Loss Drivers• Disciplined and consistent

underwriting practices

• Portfolio quality evidenced by FICO scores and consistent risk mix

• Repossessions, charge-offs and LTR lower than Q1 reflecting government stimulus, retail financing and lease extension programs offered and decision to temporarily suspend involuntary repossessions due to COVID

• Longer-term contracts increased as a result of 84-month “Built to Lend a Hand” campaign

65 mo 65 mo 66 mo 65 mo 66 mo

71 mo

5%3% 3% 3%

7%

15%

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

741 747 750753

739 743

6% 6% 6% 6% 6% 6%

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

Retail & Lease FICO andHigher Risk Mix (%)

Retail Contract Terms

$65

$45

$61

$76 $73

$190.55%

0.39%0.51%

0.63% 0.62%

0.15%

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

Retail Charge-Offs ($M) and LTR Ratio (%)

76

7 7 7

31.24% 1.13%

1.32% 1.27% 1.24%

0.52%

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

Retail Repossessions (000) andRepossession Rate (%)

Higher Risk Portfolio Mix (%) Repossession Rate (%)

Retail > 84 months Placement Mix (%) LTR Ratio (%)

14

84% Payment Made

0K

10K

20K

30K

40K

50K

60K

70K

80K

Mar 1 Mar 8 Mar 15 Mar 22 Mar 29 Apr 5 Apr 12 Apr 19 Apr 26 May 3 May 10 May 17 May 24 May 31 Jun 7 Jun 14 Jun 21 Jun 28

# of

Ext

ensi

ons

Extensions

• 361K pandemic extensions (11% of outstanding contracts) processed March – May

• 96% of extensions have made payments post extension

• Extensions returning to pre-pandemic levels

U.S. Consumer Pandemic Extensions

3% No Payment & Not Re-extended

12% Payment Made & Re-extended

1% Re-extended

Pandemic Extensions By Week

Extensions That Came Due Prior To July 28

15

Worldwide Credit Loss Metrics

• Worldwide credit loss metrics improvement reflects government stimulus and retail financing and lease extension programs offered

• Our credit loss reserve reflects lifetime losses at about the same level as Q1

$513 $513 $513 $513

$1,231 $1,285

0.42% 0.43% 0.44% 0.43%

1.07% 1.18%

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

$109

$66$89

$107 $101

$45

0.36%

0.22%0.30%

0.36% 0.35%

0.17%

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

Charge-Offs ($M) and LTR Ratio (%)

Credit Loss Reserve ($M) and Reserve as a % of EOP Managed Receivables

LTR Ratio (%)

Reserve as a % of EOP Managed Receivables (%)

16* Source: J.D. Power PIN

U.S. Lease Metrics

• Lower lease return volumes reflect impact of lease extension programs

• FY auction values forecast to be down about 5%, consistent with third party estimates

Lease Placement Volume (000)

Lease Share of Retail Sales (%)Off-Lease Auction Values

(36-month, at Q2 2020 Mix)

Lease Return Volume (000) and Return Rates (%)

Return Rate (%)

31% 30% 29% 30% 31%

25%

23%20% 19% 19%

22%

15%Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

26 16 4 621 7

48 56 68 64 3836

9 9 11 1211

9

83 81 83 8270

52

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

24-Month36-Month39-Month / Other

Industry*Ford Credit

$18,935

$20,115 $20,265

$18,790 $19,115$19,755

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

74 75 70 71 6758

80% 78% 76% 77% 76% 76%

Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020

17

Cumulative Maturities At June 30, 2020* ($B)

• Strong balance sheet is inherently liquid with cumulative debt maturities having a longer tenor than asset maturities

• As of June 30, $76B of $154B assets are unencumbered

$64 $95

$121

$154

$35

$75$97

$134

Jul – Dec 2020 2021 2022 2023 & Beyond$8.0 $16.7 $13.3 $30.3Unsecured Long-Term Debt

Maturities in Each Period

AssetsDebt

* See Appendix for assets and debt definitions

18

Funding Structure – Managed Receivables* ($B)

• Well capitalized with a strong balance sheet

• Funding is diversified across platforms and markets

• Expect higher mix of ABS going forward

* See Appendix for definitions and reconciliation to GAAP

2019 2020Dec 31 Jun 30

Term Debt (incl. Bank Borrowings) 73$ 73$ Term Asset-Backed Securities 57 55 Commercial Paper 4 2 Ford Interest Advantage / Deposits 7 6 Other 9 6 Equity 14 14 Adjustments for Cash (12) (17)

Total Managed Receivables 152$ 139$

Securitized Funding as Pct of Managed Receivables 38% 39%

Special Items

2017201920202020

ActualDec 31Dec 31Mar 31Jun 30

Term Debt (incl. Bank Borrowings)$ 75$ 73$ 72$ 73

Term Asset-Backed Securities453575655

Commercial Paper$ 115432

Ford Interest Advantage / Deposits15766

Other9966

Equity16141414

Adjustments for Cash1(12)(12)(11)(17)

Total Managed Receivables$ 13$ 151$ 152$ 146$ 139

Securitized Funding as Pct

of Managed Receivables35%38%38%39%

19* See Appendix for definitions** As of July 30, 2020** Includes Rule 144A offerings

Public Term Funding Plan* ($B)

• Completed $12B of public issuance year-to-date including $2B of unsecured in June

• Strong balance sheet and substantial liquidity provide funding flexibility

2018 2019 2020 ThroughActual Actual Forecast** Jul 29

Unsecured 13$ 17$ $ 7 - 10 5$

Securitizations** 14 14 11 - 14 7

Total 27$ 31$ $ 18 - 24 12$

Special Items

20152017201820192020Through

ActualActualActualActualForecast**Jul 29

Public Issuances

UnsecuredERROR:#REF!$ 16$ 13$ 17$ 7 - 10$ 5

Securitizations**$ 13151414 11 - 14 7

Total ERROR:#REF!$ 32$ 27$ 31$ 18 - 24$ 12

1

2

3

5

6

7

A

B

Unsecured

20

Cautionary Note On Forward-Looking StatementsStatements 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:• Ford and Ford Credit’s financial condition and results of operations have been and may continue to be adversely affected by public health issues, including epidemics or pandemics such as COVID-19;• Ford’s long-term competitiveness depends on the successful execution of global redesign and fitness actions;• Ford’s vehicles could be affected by defects that result in delays in new model launches, recall campaigns, or increased warranty costs;• Ford may not realize the anticipated benefits of existing or pending strategic alliances, joint ventures, acquisitions, divestitures, or new business strategies;• Operational systems, security systems, and vehicles could be affected by cyber incidents;• Ford’s production, as well as Ford’s suppliers’ production, could be disrupted by labor issues, natural or man-made disasters, financial distress, production difficulties, or other factors;• Ford’s ability to maintain a competitive cost structure could be affected by labor or other constraints;• Ford’s ability to attract and retain talented, diverse, and highly skilled employees is critical to its success and competitiveness;• Ford’s new and existing products and mobility services are subject to market acceptance;• Ford’s results are dependent on sales of larger, more profitable vehicles, particularly in the United States;• With a global footprint, Ford’s results could be adversely affected by economic, geopolitical, protectionist trade policies, or other events, including tariffs and Brexit;• Industry sales volume in any of our key markets can be volatile and could decline if there is a financial crisis, recession, or significant geopolitical event;• Ford may face increased price competition or a reduction in demand for its products resulting from industry excess capacity, currency fluctuations, competitive actions, or other factors;• Fluctuations in commodity prices, foreign currency exchange rates, interest rates, and market value of our investments can have a significant effect on results;• Ford and Ford Credit’s access to debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts could be affected by credit rating downgrades, market volatility, market

disruption, regulatory requirements, or other factors;• Ford’s receipt of government incentives could be subject to reduction, termination, or clawback;• Ford Credit could experience higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles;• Economic and demographic experience for pension and other postretirement benefit plans (e.g., discount rates or investment returns) could be worse than Ford has assumed;• Pension and other postretirement liabilities could adversely affect Ford’s liquidity and financial condition;• Ford could experience unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, perceived environmental impacts, or otherwise;• Ford may need to substantially modify its product plans to comply with safety, emissions, fuel economy, autonomous vehicle, and other regulations that may change in the future;• Ford and Ford Credit could be affected by the continued development of more stringent privacy, data use, and data protection laws and regulations as well as consumer expectations for the safeguarding of personal

information; and• Ford Credit could be subject to new or increased credit regulations, consumer protection regulations, or other regulations.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, 2019, as updated by subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Appendix

22

EBT By Segment* ($M)

2020H / (L) 2019 2020

H / (L) 2019

ResultsUnited States and Canada segment 445$ (144)$ 467$ (744)$ Europe segment 65 (48) 82 (145) All Other segment 17 (20) 24 (71)

Total segments 527$ (212)$ 573$ (960)$ Unallocated other 16 (76) - (99)

Earnings before taxes 543$ (288)$ 573$ (1,059)$ Taxes (136) 82 (145) 271

Net income 407$ (206)$ 428$ (788)$

Distributions 275$ (375)$ 550$ (775)$

YTDQ2

* See Appendix for definitions

Ford Credit

Fin Sum

Q2YTD2QYTD

2020H / (L) 20192020H / (L) 201920172017

Americas segment$ 311$ -$ 311$ 311$ 423$ 423

Europe segment76-76768181

Asia Pacific segment24-24241717

Results

United States and Canada segment$ 445$ (144)$ 467$ (744)$ 465$ 823

Europe segment65(48)82(145)74151

All Other segment17(20)24(71)1846

Total segments$ 527$ (212)$ 573$ (960)$ 557$ 1,020

Unallocated other16(76)-(99)

Earnings before taxes$ 543$ (288)$ 573$ (1,059)$ 557$ 1,020

Taxes(136)82(145)271(173)(321)

Net income$ 407$ (206)$ 428$ (788)$ 384$ 699

Distributions$ 275$ (375)$ 550$ (775)

Contract placement volumes (000)1,282(279)5131,021

23

Financing Shares And Contract Placement Volume

* United States and Canada exclude Fleet sales, other markets include Fleet

2019 2020 2019 2020

Share of Ford Sales*United States 49 % 77 % 49 % 67 %Canada 65 63 66 63U.K. 36 44 38 44Germany 49 34 49 39China 32 37 34 36

Wholesale ShareUnited States 75 % 73 % 76 % 74 %Canada 57 42 57 45U.K. 100 100 100 100Germany 93 93 93 93China 64 61 62 58

Contract Placement Volume - New and Used (000)United States 220 297 420 502 Canada 40 25 70 48 U.K. 34 13 75 43 Germany 45 19 87 48 China 28 28 54 44

YTDQ2

Ford Credit

Share & Volume

Q2YTD

2019202020192020

Share of Ford Sales*

United States49%077%49%67%

Canada650636663

U.K.360443844

Germany490344939

China320373436

Wholesale Share

United States75%073%76%74%

Canada570425745

U.K.1000100100100

Germany930939393

China640616258

Contract Placement Volume - New and Used (000)

United States220297420502

Canada40257048

U.K.34137543

Germany45198748

China28285444

24

2019 2019 2020Jun 30 Dec 31 Jun 30

Liquidity SourcesCash 14.1$ 11.7$ 17.1$ Committed asset-backed facilities 35.7 36.6 37.1 Other unsecured credit facilities 2.9 3.0 2.5 Ford corporate credit facility allocation 3.0 3.0 -

Total liquidity sources 55.7$ 54.3$ 56.7$

Utilization of LiquiditySecuritization cash (4.0)$ (3.5)$ (3.6)$ Committed asset-backed facilities (17.5) (17.3) (17.7) Other unsecured credit facilities (0.9) (0.8) (0.6) Ford corporate credit facility allocation - - -

Total utilization of liquidity (22.4)$ (21.6)$ (21.9)$

Gross liquidity 33.3$ 32.7$ 34.8$ Adjustments 0.3 0.4 (2.4)

Net liquidity available for use 33.6$ 33.1$ 32.4$

• Liquidity of $32.4B is $0.7B lower than 2019 YE, and includes reallocation of $3B corporate revolver in March

* Numbers may not sum due to rounding; see Appendix for definitions

Liquidity Sources* ($B)Ford Credit

Special Items

201920192019201920202020

Mar 31Jun 30Sep 30Dec 31Mar 31Jun 30

Liquidity Sources

Cash$ 12.8$ 14.1$ 14.3$ 11.7$ 11.3$ 17.1

Committed asset-backed facilities35.235.735.236.635.937.1

Other unsecured credit facilities3.32.92.63.02.82.5

Ford corporate credit facility allocation3.03.03.03.0- 0- 0

Total liquidity sources$ 54.3$ 55.7$ 55.1$ 54.3$ 50.0$ 56.7

Utilization of Liquidity

Securitization cash$ (3.3)$ (4.0)$ (2.9)$ (3.5)$ (2.9)$ (3.6)

Committed asset-backed facilities(19.8)(17.5)(14.4)(17.3)(18.6)(17.7)

Other unsecured credit facilities(0.6)(0.9)(0.5)(0.8)(0.5)(0.6)

Ford corporate credit facility allocation- 0- 0- 0- 0- 0- 0

Total utilization of liquidity$ (23.7)$ (22.4)$ (17.8)$ (21.6)$ (22.0)$ (21.9)

Gross liquidity$ 30.6$ 33.3$ 37.3$ 32.7$ 28.0$ 34.8

Adjustments0.40.3(1.9)0.40.3(2.4)

Net liquidity available for use$ 31.0$ 33.6$ 35.4$ 33.1$ 28.3$ 32.4

25

Total Net Receivables Reconciliation To Managed Receivables ($B)

2019 2019 2020Jun 30 Dec 31 Jun 30

Finance receivables, net (GAAP) 115.7$ 114.3$ 103.9$ Net investment in operating leases (GAAP) 27.7 27.7 26.4

Total net receivables* 143.4$ 142.0$ 130.3$

Held-for-sale receivables (GAAP) -$ 1.5$ -$ Unearned interest supplements and residual support 6.9 6.7 6.5 Allowance for credit losses 0.5 0.5 1.3 Other, primarily accumulated supplemental depreciation 1.1 1.0 1.3

Total managed receivables (Non-GAAP) 151.9$ 151.7$ 139.4$

* See Appendix for definitions; numbers may not sum due to rounding

Ford Credit

Sheet2 (2)

201920192019201920202020


Net Receivables*

Finance receivables -- North America Segment

Consumer retail financing$49.2$49.2$49.2$49.2$49.2$49.2

Non-consumer: Dealer financing**25.525.525.525.525.525.5

Non-consumer: Other0.90.90.90.90.90.9

Total finance receivables -- North America Segment$75.6$75.6$75.6$75.6$75.6$75.6

Finance receivables -- International Segment




Total finance receivables -- International Segment$23.7$23.7$23.7$23.7$23.7$23.7

Unearned interest supplements(2.1)(2.1)(2.1)(2.1)(2.1)(2.1)

Allowance for credit losses(0.4)(0.4)(0.4)(0.4)(0.4)(0.4)

Finance receivables, net (GAAP)$ 119.3$ 115.7$ 112.8$ 114.3$ 110.8$ 103.9

Net investment in operating leases (GAAP)27.627.727.527.727.026.4

Total net receivables*$ 146.9$ 143.4$ 140.3$ 142.0$ 137.8$ 130.3

Managed Receivables

Total net receivables (GAAP)$ 142.0$ 137.8$ 130.3

Held-for-sale receivables (GAAP)$ - 0$ - 0$ - 0$ 1.5$ - 0$ - 0

Unearned interest supplements and residual support6.86.96.86.76.36.5

Allowance for credit losses0.50.50.50.51.21.3

Other, primarily accumulated supplemental depreciation1.11.11.11.01.11.3

Total managed receivables (Non-GAAP)$ 155.3$ 151.9$ 148.7$ 151.7$ 146.4$ 139.4

*Includes finance receivables (retail and wholesale) sold for legal purposes and net investment in operating leases included in securitization transactions that do not satisfy the requirements for accounting sale treatment. These receivables and operating leases are reported on Ford Credit's balance sheet and are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions; they are not available to pay the other obligations of Ford Credit or the claims of Ford Credit's other creditors.**Primarily includes Automotive segment receivables purchased by Ford Credit which are classified to Trade and other receivables on our consolidated Balance Sheet. Also includes eliminations of intersegment transactions

4

5

21

22

23

24

28

A

B

C

Finance receivables, net (GAAP)

Net investment in operating leases (GAAP)

Total net receivables*

Held-for-sale receivables (GAAP)

26

Financial Statement Leverage Reconciliation To Managed Leverage* ($B)

* See Appendix for definitions

2019 2019 2020Jun 30 Dec 31 Jun 30

Leverage CalculationDebt 141.5$ 140.0$ 135.3$ Adjustments for cash (14.1) (11.7) (17.1) Adjustments for derivative accounting (0.6) (0.5) (1.8)

Total adjusted debt 126.8$ 127.8$ 116.4$

Equity 14.9$ 14.3$ 13.8$ Adjustments for derivative accounting (0.1) (0.0) (0.0)

Total adjusted equity 14.8$ 14.3$ 13.8$

Financial statement leverage (to 1) (GAAP) 9.5 9.8 9.8 Managed leverage (to 1) (Non-GAAP) 8.6 8.9 8.5

Ford Credit

Sheet2 (2)

(Bils)Mar. 31Dec. 31Jun. 30, 2015Sep. 30, 2015Mar. 31

Dec. 31, 201420162016Jun. 30, 2015Sep. 30, 20152017

Net Receivables*(Bils)


Consumer retail financing$ 44.1$47.2$49.2$ 45.2$ 48.6$49.2



Total finance receivables -- North America Segment$ 67.6$73.6$75.6$69.2$72.4$75.6


Consumer retail financing$ 11.8$10.9$12.9$12.4$12.7$12.9



Total finance receivables -- International Segment$ 21.4$21.7$23.7$22.4$22.8$23.7



Financial Services finance receivables, net (GAAP)*$ 86.9$ 99.4$ 96.2$ 96.2$ 96.2$ 96.2$ 96.2$ 99.3

Net investment in operating leases (GAAP)*25.927.227.227.227.227.226.4

Consolidating adjustments**21.50.96.86.86.86.86.87.3

Ford Credit total net receivables$ 108.4$ 126.2$ 130.2$ 130.2$ 130.2$ 130.2$ 130.2$ 133.0

Managed Receivables

Total net receivables (GAAP)$ 108.4$ 126.2$ 130.2$ 130.2$ 130.2$ 130.2$ 130.2$ 133.0

Unearned interest supplements and residual support3.94.65.35.35.35.35.35.5

Allowance for credit losses0.40.50.50.50.50.50.50.6

Other, primarily accumulated supplemental depreciation0.10.50.90.90.90.90.90.9

Total managed receivables (Non-GAAP)$ 112.8$ 131.8$ 136.9$ 136.9$ 136.9$ 136.9$ 136.9$ 140.0

*Includes finance receivables (retail and wholesale) sold for legal purposes and net investment in operating leases included in securitization transactions that do not satisfy the requirements for accounting sale treatment. These receivables and operating leases are reported on Ford Credit's balance sheet and are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions; they are not available to pay the other obligations of Ford Credit or the claims of Ford Credit's other creditors.**Dealer financing primarily includes wholesale loans to dealers to finance the purchase of vehicle inventory.***2012 has been reclassified to includes unearned interest supplements and residual support related to net investment in operating leases to conform to current year presentation.****2012 has been reclassified to conform to current year presentation.

Sheet2 (3)

201920192019201920202020


Net Receivables*





Total finance receivables -- North America Segment$75.6$75.6$75.6$75.6$75.6$75.6





Total finance receivables -- International Segment$23.7$23.7$23.7$23.7$23.7$23.7



Leverage Calculation

Debt$ 142.9$ 141.5$ 139.3$ 140.0$ 136.8$ 135.3

Adjustments for cash(12.8)(14.1)(14.3)(11.7)(11.3)(17.1)

Adjustments for derivative accounting(0.1)(0.6)(0.8)(0.5)(1.6)(1.8)

Total adjusted debt$ 130.0$ 126.8$ 124.2$ 127.8$ 123.9$ 116.4

Equity$ 14.9$ 14.9$ 14.2$ 14.3$ 13.5$ 13.8

Adjustments for derivative accounting(0.2)(0.1)- 0(0.0)(0.0)(0.0)

Total adjusted equity$ 14.7$ 14.8$ 14.2$ 14.3$ 13.5$ 13.8

Financial statement leverage (to 1) (GAAP)9.69.59.89.810.19.8

Managed leverage (to 1) (Non-GAAP)8.88.68.88.99.28.5

10.1

9.2

4

5

21

22

A

B

C

Leverage Calculation

Debt

27

Definitions And CalculationsAdjustments (as shown on the Liquidity Sources chart)

• Includes asset-backed capacity in excess of eligible receivables; cash related to the Ford Credit Revolving Extended Variable-utilization program (“FordREV”), which can be accessed through future sales of receivables

Assets (as shown on the Cumulative Maturities chart)

• Includes gross finance receivables less the allowance for credit losses, investment in operating leases net of accumulated depreciation, cash and cash equivalents, and marketable securities (excluding amounts related to insurance activities). Amounts shown include the impact of expected prepayments

Cash (as shown on the Funding Structure, Liquidity Sources and Leverage charts)

• Cash and cash equivalents and Marketable securities reported on Ford Credit’s balance sheet, excluding amounts related to insurance activities

Debt (as shown on the Cumulative Maturities chart)

• Includes all of the wholesale ABS term maturities of $9.2 billion in the next 12 months that otherwise contractually extend beyond Q1 2021. Retail and lease ABS are treated as amortizing to match the underlying assets

Debt (as shown on the Leverage chart)

• Debt on Ford Credit’s balance sheet. Includes debt issued in securitizations and payable only out of collections on the underlying securitized assets and related enhancements. Ford Credit holds the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions

Committed Asset-Backed Security (“ABS”) Facilities (as shown on the Liquidity Sources chart)

• Committed ABS facilities are subject to availability of sufficient assets, ability to obtain derivatives to manage interest rate risk, and exclude FCE Bank plc (“FCE”) access to the Bank of England’s Discount Window Facility

Earnings Before Taxes (EBT)

• Reflects Income before income taxes as reported on Ford Credit’s income statement

Securitization cash (as shown on the Liquidity Sources chart)

• Securitization cash is cash held for the benefit of the securitization investors (for example, a reserve fund)

Securitizations (as shown on the Public Term Funding Plan chart)

• Public securitization transactions, Rule 144A offerings sponsored by Ford Credit, and widely distributed offerings by Ford Credit Canada

Term Asset-Backed Securities (as shown on the Funding Structure chart)

• Obligations issued in securitization transactions that are payable only out of collections on the underlying securitized assets and related enhancements

Total net receivables (as shown on the Total Net Receivables Reconciliation To Managed Receivables chart)

• Includes finance receivables (retail financing and wholesale) sold for legal purposes and net investment in operating leases included in securitization transactions that do not satisfy the requirements for accounting sale treatment. These receivables and operating leases are reported on Ford Credit’s balance sheet and are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions; they are not available to pay the other obligations of Ford Credit or the claims of Ford Credit’s other creditors

Unallocated other (as shown on the EBT By Segment chart)

• Items excluded in assessing segment performance because they are managed at the corporate level, including market valuation adjustments to derivatives and exchange-rate fluctuations on foreign currency-denominated transactions

Ford Credit

Brian Schaaf�CFO, Ford Credit��JPMorgan ConferenceSlide Number 2Information Regarding This PresentationStrategic OverviewSlide Number 5Slide Number 6Slide Number 7Slide Number 8Slide Number 9Q2 2020 Earnings Key TakeawaysKey MetricsQ2 2020 Net Receivables Mix ($B)U.S. Origination Metrics And Credit Loss DriversU.S. Consumer Pandemic ExtensionsWorldwide Credit Loss MetricsU.S. Lease MetricsCumulative Maturities At June 30, 2020* ($B)Funding Structure – Managed Receivables* ($B)Public Term Funding Plan* ($B)Cautionary Note On Forward-Looking StatementsAppendixEBT By Segment* ($M)Financing Shares And Contract Placement VolumeSlide Number 24Total Net Receivables Reconciliation To Managed Receivables ($B)Financial Statement Leverage Reconciliation To Managed Leverage* ($B)Definitions And Calculations

brian schaaf cfo, ford credit jpmorgan conference · 9 • ford and ford credit have a relationship...

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