Ford Motor Company (F)

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Ford Motor (F)

Q1 2011 Earnings Call

April 26, 2011 11:00 am ET

Executives

Alan Mulally - Chief Executive Officer, President, Executive Director, Member of Long-Term Incentive Compensation Award Committee and Member of Finance Committee

Unknown Executive -

Analysts

Eric Selle - J.P. Morgan

Brian Jacoby - Goldman Sachs

Unknown Analyst -

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the First Quarter Ford Fixed Income Conference Call. My name is Chantellay and I will be your facilitator for today's call. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Mr. Shawn Ryan, Manager Fixed Income, Investor Relations. Please proceed, sir.

Unknown Executive

Thank you, Chantellay, and good morning, ladies and gentlemen. Welcome to all of you who are joining us either by phone or webcast. On behalf of the entire Ford management team, I would like to thank you for spending time with us this morning. With me this morning are Bob Shanks, Ford Vice President and Controller; Michael Seneski, Ford Credit Chief Financial Officer; and David Brandi, Assistant Treasurer. We also have some other members of management who are joining us for the call, including K.R. Kent, Executive Director, Investor Relations; Brian Shoff [ph], Assistant Treasurer; and Paul Andonian, Director of Global Accounting.

Before we begin, I would like to review a couple of items. A copy of this morning's earnings release and the slides we will be using today have been posted on Ford Motor Company's Investor and Media websites for your reference. The financial results discussed herein are presented on a preliminary basis. The final data will be included in our Form 10-Q. Additionally, the financial results presented here are on a GAAP basis, and in some cases, on a non-GAAP basis. Any non-GAAP financial measures discussed on this call are reconciled to the U.S. GAAP equivalent as part of the appendix to the slide deck. Finally, today's presentation includes some forward-looking statements about our expectation for Ford's future performance. Actual results could differ materially from those suggested by our comments here. The most significant factors that could affect future results are summarized at the end of this presentation. These risk factors and other key information are detailed in our SEC filings, including our annual, quarterly and current reports to the SEC.

With that, I would like to turn the call over to Ford Vice President and Controller, Bob Shanks. Bob?

Unknown Executive

Thanks, Shawn, and good morning, everyone. Overall, our team delivered a great quarter of growth, profitability and positive automotive operating-related cash flow. Both volume and revenue were higher than a year ago and we earned a pretax operating profit for the seventh consecutive quarter. The results, in fact, were over 40% better than a year ago. In addition, each of our automotive operations was profitable, with results that were better than the first quarter of 2010. Financial services also was solidly profitable. We further strengthened our balance sheet by reducing debt during the quarter. And at the same time, we increased our overall liquidity and made further progress towards achieving investment grade. We also launched more great products our customers want and value, notably, the all new fuel-efficient Focus, in both North America and Europe.

The impact of the tragic events in Japan continues to unfold and we're managing this on a day-by-day basis. Our first quarter performance is a step forward in our delivery of profitable growth for all, not only for 2011 but for the years ahead. We're investing for future growth and are focused on developing outstanding products with segment-leading quality, safety, fuel economy and technology. We're also adding capacity in emerging economies to increase dramatically our participation, while investing to build the strength of our brand around the world. While these actions and investments are increasing cost, all in line with our plan, they also are driving higher volumes, richer mix and stronger transaction prices.

Slide 2 summarizes our first quarter business results compared with the year ago period. Vehicle wholesales were 1.4 million units, up 150,000 units or 12% from 2010. Revenue was $33.1 billion, an increase of $5 billion or 18% from 2010. For comparison purposes, we did exclude Volvo wholesales and revenues from 2010. Pretax operating profit, excluding special items was $2.8 million or $0.62 per share, an $827 million increase from a year ago.

Net income attributable to Ford, including unfavorable pretax special items of $61 million, was $2.6 billion or $0.61 per share, a $466 million increase from a year ago. We ended the quarter with $21.3 billion of automotive gross cash and with automotive gross cash exceeding debt by $4.7 billion, an improvement of $13.7 billion compared with a year ago.

Turning now to Slide 3, and a review of automotive gross cash and operating-related cash flow. We entered the quarter with $21.3 billion of automotive gross cash, an increase of $800 million from the end of 2010. This reflected positive automotive operating-related cash flow of $2.2 billion, mainly the flow-through of first quarter pretax operating profit of $2.1 billion. In addition, we had positive receipts of $1.3 billion from our Financial Services sector, including $900 million of Ford Credit distributions.

Our cash flow before changes in debt and pension contributions was $3.6 billion. Net debt declined $2.5 million in the quarter, and we also made payments of $300 million to non-U.S. funded pension plans.

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