Ford Motor(F) - 2024 Q3 - Quarterly Report

Part I - Financial Information Financial Statements This chapter presents the company's consolidated financial statements as of September 30, 2024, including income, comprehensive income, balance sheets, cash flows, and equity statements, reflecting Q3 and YTD financial performance and condition Consolidated Income Statements Consolidated Statements of Comprehensive Income Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statements of Equity Third Quarter Financial Performance | Metric | Q3 2023 (million USD) | Q3 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Total Revenue | 43,801 | 46,196 | +2,395 | | Net Income Attributable to Ford Motor Company | 1,199 | 892 | -307 | | Basic Earnings Per Share | 0.30 | 0.22 | -0.08 | | Diluted Earnings Per Share | 0.30 | 0.22 | -0.08 | Year-to-Date Financial Performance | Metric | YTD 2023 (million USD) | YTD 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Total Revenue | 130,229 | 136,781 | +6,552 | | Net Income Attributable to Ford Motor Company | 4,873 | 4,055 | -818 | | Basic Earnings Per Share | 1.22 | 1.02 | -0.20 | | Diluted Earnings Per Share | 1.21 | 1.01 | -0.20 | Balance Sheet Highlights | Metric | December 31, 2023 (million USD) | September 30, 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Total Assets | 273,310 | 287,047 | +13,737 | | Total Liabilities | 230,512 | 242,708 | +12,196 | | Total Equity Attributable to Ford Motor Company | 42,773 | 44,315 | +1,542 | Notes to the Financial Statements This chapter provides detailed notes to the consolidated financial statements, covering accounting policies, new standards, revenue recognition, other income/loss, income taxes, equity, cash, receivables, inventory, liabilities, retirement benefits, debt, derivatives, employee separation, acquisitions, comprehensive income, VIEs, commitments, and segment information Note 1. Presentation This note clarifies the meaning of terms like "Ford" and "Company" and states that consolidated financial statements are prepared under GAAP and SEC rules, with interim results not necessarily indicative of full-year outcomes - The company's consolidated financial statements adhere to US GAAP, Form 10-Q instructions, and Regulation S-X Rule 10-01, with interim results not indicative of full-year performance[17][18] Note 2. New Accounting Standards This note discloses new accounting standards adopted in 2024, ASU 2023-01 and ASU 2023-02, which had no material impact, and lists unadopted standards ASU 2023-07 and ASU 2023-09, expected to alter disclosures but not balance sheets or income statements - The company adopted ASU 2023-01 (Leases: Common Control Arrangements) and ASU 2023-02 (Investments – Equity Method and Joint Ventures) in 2024, with no material impact on consolidated financial statements[19] - ASU 2023-07 (Segment Reporting) will be effective for annual financial statements in 2024 and interim periods beginning in 2025, requiring disclosure of significant segment expenses and "other segment items" on an interim basis, but will not impact the consolidated balance sheets or income statements[20] - ASU 2023-09 (Income Tax Disclosures) will be effective for annual periods after December 15, 2024, enhancing transparency for income tax disclosures, particularly effective tax rate reconciliation and income taxes paid, but will not impact the consolidated balance sheets or income statements[21] Note 3. Revenue This note details revenue by business type and segment, explaining changes from variable consideration and pricing adjustments, with a $329 million revenue reduction in Q3 2024 due to variable consideration estimates and disclosure of deferred revenue balances for service contracts Third Quarter Revenue by Source | Revenue Source | Q3 2023 (million USD) | Q3 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Company (excluding Ford Credit) | 41,176 | 43,069 | +1,893 | | Ford Credit | 2,625 | 3,127 | +502 | | Total Revenue | 43,801 | 46,196 | +2,395 | Year-to-Date Revenue by Source | Revenue Source | YTD 2023 (million USD) | YTD 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Company (excluding Ford Credit) | 122,688 | 127,770 | +5,082 | | Ford Credit | 7,541 | 9,011 | +1,470 | | Total Revenue | 130,229 | 136,781 | +6,552 | - In Q3 2024, the company's revenue decreased by $329 million due to changes in estimates for variable consideration, such as marketing incentives[29] - As of September 30, 2024, the deferred revenue balance related to extended service contracts was $5.3 billion, with approximately $500 million expected to be recognized in the remainder of 2024, $1.6 billion in 2025, and $3.2 billion thereafter[30] Note 4. Other Income/(Loss) This note outlines the components of other income/(loss), including pension and OPEB net periodic benefit/(cost), investment-related interest income, income tax interest income/(expense), and realized/unrealized gains/losses on marketable securities, with a significant net decrease in other income in Q3 2024 Other Income/(Loss) Breakdown | Metric | Q3 2023 (million USD) | Q3 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Pension and OPEB Net Periodic Benefit/(Cost) | (273) | (347) | -74 | | Investment-Related Interest Income | 414 | 367 | -47 | | Realized and Unrealized Gains/(Losses) on Marketable Securities, etc | (24) | (17) | +7 | | Total | 319 | 114 | -205 | Year-to-Date Other Income/(Loss) Breakdown | Metric | YTD 2023 (million USD) | YTD 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Pension and OPEB Net Periodic Benefit/(Cost) | (605) | (266) | +339 | | Investment-Related Interest Income | 1,134 | 1,144 | +10 | | Realized and Unrealized Gains/(Losses) on Marketable Securities, etc | (187) | (25) | +162 | | Total | 798 | 1,240 | +442 | Note 5. Income Taxes This note explains the company's interim income tax calculation and discloses a negative 3.1% effective tax rate for Q3 2024, driven by changes in tax forecasts, including write-downs of certain product-specific manufacturing and supplier tooling assets - In Q3 2024, the company's effective tax rate was negative 3.1%, primarily due to changes in the full-year tax forecast, including tax benefits related to write-downs of certain product-specific manufacturing and supplier tooling assets[34] Note 6. Capital Stock and Earnings/(Loss) Per Share This note provides the net income and weighted-average shares used to calculate basic and diluted earnings/(loss) per share attributable to Ford Motor Company Common Stock and Class B Stock Third Quarter Earnings Per Share Data | Metric | Q3 2023 (million USD) | Q3 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Net Income Attributable to Ford Motor Company | 1,199 | 892 | -307 | | Basic Shares (million shares) | 4,004 | 3,976 | -28 | | Diluted Shares (million shares) | 4,050 | 4,018 | -32 | | Diluted Earnings Per Share | 0.30 | 0.22 | -0.08 | Year-to-Date Earnings Per Share Data | Metric | YTD 2023 (million USD) | YTD 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Net Income Attributable to Ford Motor Company | 4,873 | 4,055 | -818 | | Basic Shares (million shares) | 3,999 | 3,980 | -19 | | Diluted Shares (million shares) | 4,040 | 4,020 | -20 | | Diluted Earnings Per Share | 1.21 | 1.01 | -0.20 | Note 7. Cash, Cash Equivalents, and Marketable Securities This note provides detailed classification and fair value information for cash, cash equivalents, and marketable securities, including data by fair value hierarchy and investment category, showing a decrease in total cash, cash equivalents, and marketable securities as of September 30, 2024, and disclosing unrealized losses on available-for-sale securities Cash, Cash Equivalents, and Restricted Cash | Metric | December 31, 2023 (million USD) | September 30, 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 24,862 | 23,449 | -1,413 | | Marketable Securities | 15,309 | 13,456 | -1,853 | | Restricted Cash | 248 | 234 | -14 | | Total Cash, Cash Equivalents, and Restricted Cash | 25,110 | 23,726 | -1,384 | - As of September 30, 2024, the company's (excluding Ford Credit) available-for-sale securities had total unrealized losses of $97 million, primarily due to changes in interest rates and market liquidity[38][42] Note 8. Ford Credit Finance Receivables and Allowance for Credit Losses This note details Ford Credit's finance receivables and allowance for credit losses, showing an increase in net finance receivables and a slight decrease in the allowance as of September 30, 2024, reflecting an improved macroeconomic outlook, and provides credit quality analysis for consumer and non-consumer portfolios, including delinquency and dealer risk ratings Finance Receivables and Allowance for Credit Losses | Metric | December 31, 2023 (million USD) | September 30, 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Total Finance Receivables Investment | 102,957 | 110,091 | +7,134 | | Allowance for Credit Losses | (882) | (862) | +20 | | Net Finance Receivables | 102,075 | 109,229 | +7,154 | - For the first nine months of 2024, the allowance for credit losses decreased by $20 million, primarily reflecting an improved macroeconomic outlook, partially offset by an increase in Ford Credit consumer receivables[64] - As of September 30, 2024, consumer receivables delinquent 31-60 days, 61-120 days, and over 120 days were 0.9%, 0.2%, and 0.1%, respectively[54] Note 9. Inventories This note discloses the composition of the company's inventories, including raw materials, work-in-process, supplies, and finished goods, with finished goods inventory increasing as of September 30, 2024, compared to year-end 2023, primarily driven by new model launches Inventory Categories | Inventory Category | December 31, 2023 (million USD) | September 30, 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Raw Materials, Work-in-Process, and Supplies | 6,196 | 6,024 | -172 | | Finished Goods | 9,455 | 12,001 | +2,546 | | Total Inventories | 15,651 | 18,025 | +2,374 | - As of September 30, 2024, finished goods inventory was higher than December 31, 2023, primarily reflecting an increase in in-plant and in-transit inventory, partly due to new model launches[66] Note 10. Other Liabilities and Deferred Revenue This note provides a detailed classification of the company's other liabilities and deferred revenue, including dealer allowances, deferred revenue, employee benefit plans, and accrued interest, distinguishing between current and non-current portions Other Liabilities and Deferred Revenue | Liability Category | December 31, 2023 (million USD) | September 30, 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Current | | | | | Dealer and Customer Allowances and Claims | 12,910 | 14,082 | +1,172 | | Deferred Revenue | 2,515 | 3,357 | +842 | | Employee Benefit Plans | 2,282 | 2,392 | +110 | | Total Current Other Liabilities and Deferred Revenue | 25,870 | 28,048 | +2,178 | | Non-Current | | | | | Dealer and Customer Allowances and Claims | 7,506 | 8,717 | +1,211 | | Pensions | 6,383 | 5,351 | -1,032 | | OPEB | 4,365 | 4,287 | -78 | | Total Non-Current Other Liabilities and Deferred Revenue | 28,414 | 28,977 | +563 | Note 11. Retirement Benefits This note discloses the company's pre-tax net periodic benefit cost/(benefit) for defined benefit pension and OPEB plans, and provides information on pension plan contributions and benefit payments for unfunded plans for the first nine months of 2024 Net Periodic Benefit Cost/(Benefit) | Metric | Q3 2023 (million USD) | Q3 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Pension Net Periodic Benefit Cost/(Benefit) | 350 | 423 | +73 | | OPEB Net Periodic Benefit Cost/(Benefit) | 64 | 65 | +1 | | Total Net Periodic Benefit Cost/(Benefit) | 414 | 488 | +74 | - For the first nine months of 2024, the company contributed $967 million to its global funded pension plans and paid $316 million in benefits to participants in unfunded plans[72] - The company expects to contribute approximately $1 billion to its global funded pension plans and pay approximately $400 million in benefits to unfunded plans for the full year 2024[72] Note 12. Debt This note details the debt composition for the company (excluding Ford Credit) and Ford Credit, including debt due within one year and long-term debt, with total debt for both segments increasing as of September 30, 2024, compared to year-end 2023 Debt by Category | Debt Category | December 31, 2023 (million USD) | September 30, 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Company (excluding Ford Credit) | | | | | Debt Due Within One Year | 477 | 1,526 | +1,049 | | Long-Term Debt After One Year | 19,467 | 19,071 | -396 | | Total | 19,944 | 20,597 | +653 | | Ford Credit | | | | | Debt Due Within One Year | 49,192 | 52,038 | +2,846 | | Long-Term Debt After One Year | 80,095 | 84,623 | +4,528 | | Total | 129,287 | 136,661 | +7,374 | Note 13. Derivative Financial Instruments and Hedging Activities This note describes how the company uses derivative financial instruments to manage foreign exchange, commodity price, and interest rate risks, disclosing their impact on the income statement and balance sheet, with significant changes in derivative gains/losses and fair values in Q3 2024 Derivative Financial Instruments Gains/(Losses) | Metric | Q3 2023 (million USD) | Q3 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Cash Flow Hedges Gains/(Losses) | 3 | 5 | +2 | | Fair Value Hedges Gains/(Losses) | (141) | 17 | +158 | | Derivatives Not Designated as Hedging Instruments Gains/(Losses) | (250) | 190 | +440 | | Total | (259) | 107 | +366 | Derivative Financial Instruments Fair Values | Metric | December 31, 2023 (million USD) | September 30, 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Total Gross Derivative Financial Assets | 1,087 | 1,508 | +421 | | Total Gross Derivative Financial Liabilities | 2,738 | 2,188 | -550 | | Total Notional Amount | 138,797 | 146,027 | +7,230 | Note 14. Employee Separation Actions and Exit and Disposal Activities This note outlines the company's global employee separation and exit/disposal activities, including business adjustments in Brazil, India, Spain, China, and Germany, with $1.1 billion in costs recorded for such actions in the first nine months of 2024, and anticipated future restructuring reviews - The company is undergoing global restructuring, including ceasing certain manufacturing or product development in Brazil, India, Spain, and China, and converting the Saarlouis plant in Germany into a technology center[84] - For the first nine months of 2024, the company recorded $1.1 billion in costs for employee separation and exit/disposal activities, compared to $1.2 billion in the same period of 2023[87] Employee Separation and Exit/Disposal Activities Rollforward | Metric | YTD 2023 (million USD) | YTD 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Beginning Balance | 588 | 1,086 | +498 | | Accrual Changes | 1,067 | 911 | -156 | | Payments | (493) | (730) | -237 | | Ending Balance | 1,073 | 1,257 | +184 | Note 15. Acquisitions and Divestitures This note discloses recent acquisition and divestiture activities, including the Q1 2024 agreement to sell Ford Sales and Service Korea (FSSK), the Q4 2023 acquisition of Auto Motive Power (AMP), and the Q1 2023 completion of the Sanand plant sale in India - In Q1 2024, the company signed an agreement to sell 100% of Ford Sales and Service Korea (FSSK), reporting $56 million in assets held for sale and $31 million in liabilities held for sale as of September 30, 2024[89] - In Q4 2023, the company acquired Auto Motive Power (AMP), an electric vehicle charging solutions company, with the acquisition primarily involving goodwill and technology, having no material impact on financial statements[90] - In Q1 2023, the company completed the sale of its Sanand vehicle assembly and powertrain manufacturing plants in India, and leased back the land and buildings for the powertrain facility[91] Note 16. Accumulated Other Comprehensive Income/(Loss) This note details the components and changes in accumulated other comprehensive income/(loss), including foreign currency translation, marketable securities, derivatives, and pension and other postretirement benefits, with a total accumulated other comprehensive loss of $8.989 billion as of September 30, 2024 Accumulated Other Comprehensive Income/(Loss) Components | Metric | September 30, 2023 (million USD) | September 30, 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Foreign Currency Translation | (6,018) | (5,647) | +371 | | Marketable Securities | (348) | 30 | +378 | | Derivatives | 30 | (375) | -405 | | Pension and Other Postretirement Benefits | (2,597) | (2,997) | -400 | | Total | (8,933) | (8,989) | -56 | Note 17. Variable Interest Entities This note discloses the company's maximum potential loss exposure in unconsolidated variable interest entities and details the BlueOval SK, LLC joint venture with SK On Co., Ltd. and SK Battery America, Inc., which will build and operate electric vehicle battery plants - As of September 30, 2024, the company's maximum potential loss exposure in unconsolidated variable interest entities was $5.9 billion, up from $3.7 billion as of December 31, 2023[94] - The company formed BlueOval SK, LLC (BOSK) as a joint venture with SK On Co., Ltd. and SK Battery America, Inc. to build and operate electric vehicle battery plants; as of September 30, 2024, Ford had contributed $5.5 billion to BOSK, with total committed contributions up to $6.6 billion[95] Note 18. Commitments and Contingencies This note covers the company's commitments and contingencies, including guarantees and indemnifications, litigation and claims, and warranty and field service actions, disclosing maximum potential payment and carrying values for financial guarantees, and providing estimates for reasonably possible losses from non-pattern litigation and significant field service actions, along with changes in warranty and field service action liabilities Financial Guarantees | Metric | December 31, 2023 (million USD) | September 30, 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Maximum Potential Payment for Financial Guarantees | 535 | 588 | +53 | | Carrying Value of Financial Guarantee Liabilities | 59 | 41 | -18 | - For non-pattern litigation matters, the company estimates the aggregate reasonably possible loss exceeding accrued amounts to be up to approximately $600 million[107] - For significant field service actions and customer satisfaction actions, the company estimates the aggregate reasonably possible cost exceeding accrued amounts to be up to approximately $1.5 billion[111] Warranty and Field Service Actions Ending Balance | Metric | YTD 2023 (million USD) | YTD 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Warranty and Field Service Actions Ending Balance | 10,785 | 13,314 | +2,529 | Note 19. Segment Information This note provides detailed information on reportable segments, including Ford Blue, Ford Model e, Ford Pro, Ford Next, and Ford Credit, based on how the Chief Operating Decision Maker (CODM) assesses performance, describing each segment's business scope, revenue and cost attribution principles, and financial performance for Q3 and YTD 2024 - The Ford Blue segment primarily includes sales of internal combustion engine and hybrid vehicles, service parts, accessories, and digital services for retail customers, providing hardware engineering and manufacturing capabilities for Ford Model e, and manufacturing vehicles for Ford Pro and Ford Model e[115] - The Ford Model e segment primarily includes sales of electric vehicles, service parts, accessories, and digital services for retail customers, focusing on electric vehicles, digital vehicle technology, and software development, operating in North America, Europe, and China[116] - The Ford Pro segment primarily includes sales of Ford and Lincoln vehicles, service parts, accessories, and services to commercial, government, and rental customers, focusing on selling internal combustion engine, hybrid, and electric vehicles, and providing digital and physical services to optimize and maintain fleets[117] Third Quarter Pre-Tax Earnings/(Loss) by Segment | Segment | Q3 2023 Pre-Tax Earnings/(Loss) (million USD) | Q3 2024 Pre-Tax Earnings/(Loss) (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Ford Blue | 1,718 | 1,627 | -91 | | Ford Model e | (1,329) | (1,224) | +105 | | Ford Pro | 1,654 | 1,814 | +160 | | Ford Next | (17) | (10) | +7 | | Ford Credit | 358 | 544 | +186 | | Corporate Other | (186) | (201) | -15 | | Interest on Debt | (324) | (272) | +52 | | Special Items | (487) | (1,409) | -922 | | Total | 1,387 | 869 | -518 | Management's Discussion and Analysis of Financial Condition and Results of Operations This chapter discusses the company's financial condition and operating results as of September 30, 2024, including recent developments, segment performance, liquidity, capital resources, credit ratings, outlook, and cautionary statements for forward-looking information, reporting a Q3 net income decrease but adjusted EBIT growth, and disclosing EV market adjustments and related expenses Third Quarter Financial Highlights | Metric | Q3 2023 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue (million USD) | 43,801 | 46,196 | +5% | | Net Income Attributable to Ford Motor Company (million USD) | 1,199 | 892 | -307 | | Net Income Margin (%) | 2.7% | 1.9% | -0.8 ppts | | Diluted Earnings Per Share | 0.30 | 0.22 | -0.08 | | Company Adjusted EBIT (million USD) | 2,198 | 2,550 | +352 | | Company Adjusted EBIT Margin (%) | 5.0% | 5.5% | +0.5 ppts | | Adjusted Diluted Earnings Per Share | 0.39 | 0.49 | +0.10 | - In Q3 2024, the company recorded $1.4 billion in pre-tax special item charges, primarily including asset write-downs and other costs related to the cancellation of a previously planned all-electric three-row SUV program, pension curtailment costs and remeasurement losses, and ongoing restructuring actions in Europe[136] - As of September 30, 2024, the company's cash was $27.9 billion, liquidity was $46.1 billion, and total balance sheet cash, cash equivalents, marketable securities, and restricted cash (including Ford Credit and held-for-sale entities) was $37.2 billion[173][176] Recent Developments This section discusses recent EV market developments, noting lower-than-expected industry EV adoption and resulting adjustments to company spending, production, and product launch plans, with $1.1 billion in Q3 2024 charges, including $979 million for a canceled all-electric three-row SUV project, and anticipates potential future additional costs - The company observed lower-than-expected industry electric vehicle adoption rates and recent pricing pressure, leading to adjustments in spending, production, and product launch plans[131] - In Q3 2024, the company recorded approximately $1.1 billion in charges for adjusting its electric vehicle strategy, with $979 million related to the cancellation of a previously planned all-electric three-row SUV program[131] - The company anticipates additional charges and cash expenditures related to the canceled project could be up to approximately $900 million, with most expected to be recorded in the first half of 2025[131] Results of Operations This section analyzes the company's operating results for Q3 and YTD 2024, including net income, adjusted EBIT, and margins, with detailed performance attribution by Ford Blue, Ford Model e, Ford Pro, Ford Next, and Ford Credit segments, explaining changes in revenue, EBIT, and key metrics Third Quarter Operating Results | Metric | Q3 2023 (million USD) | Q3 2024 (million USD) | Change (million USD) | | :--- | :--- | :--- | :--- | | Net Income Attributable to Ford Motor Company | 1,199 | 892 | -307 | | Company Adjusted EBIT | 2,198 | 2,550 | +352 | | Diluted Earnings Per Share | 0.30 | 0.22 | -0.08 | | Adjusted Diluted Earnings Per Share | 0.39 | 0.49 | +0.10 | - In Q3 2024, net income decreased by $307 million year-over-year, primarily due to special items from the canceled three-row SUV EV project, partially offset by growth in company adjusted EBIT and lower taxes[141] - Company adjusted EBIT increased by $352 million year-over-year, driven by growth in Ford Credit and Ford Pro EBIT, and a reduced Ford Model e EBIT loss, partially offset by a decline in Ford Blue EBIT[141] Ford Blue Segment The Ford Blue segment saw a 2% decrease in wholesale volume and a 3% increase in revenue in Q3 2024, but EBIT declined by $91 million year-over-year to $1.627 billion, with an EBIT margin of 6.2%, primarily due to unfavorable exchange rates and higher manufacturing costs, partially offset by lower warranty costs and higher net pricing Ford Blue Segment Performance | Metric | Q3 2023 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Wholesale Volume (thousand units) | 736 | 721 | -15 | | Revenue (million USD) | 25,587 | 26,238 | +651 | | EBIT (million USD) | 1,718 | 1,627 | -91 | | EBIT Margin (%) | 6.7% | 6.2% | -0.5 ppts | - Ford Blue segment EBIT decreased by $91 million in Q3 2024, primarily impacted by unfavorable exchange rates and higher manufacturing costs, partially offset by lower warranty costs and higher net pricing[146] Ford Model e Segment The Ford Model e segment experienced an 11% decrease in wholesale volume and a 33% decrease in revenue in Q3 2024, with an EBIT loss of $1.224 billion, though the loss improved by $105 million year-over-year, primarily due to cost reductions (including battery raw materials and warranty costs), partially offset by unfavorable net pricing reflecting increased EV market competition Ford Model e Segment Performance | Metric | Q3 2023 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Wholesale Volume (thousand units) | 36 | 32 | -4 | | Revenue (million USD) | 1,758 | 1,173 | -585 | | EBIT (million USD) | (1,329) | (1,224) | +105 | | EBIT Margin (%) | (75.6)% | (104.4)% | -28.8 ppts | - Ford Model e segment EBIT loss improved by $105 million in Q3 2024, primarily driven by cost reductions, including battery-related raw material costs, other material costs, and lower warranty costs, partially offset by unfavorable net pricing[149] - Revenue decreased by 33%, reflecting a more competitive electric vehicle demand environment, including new entrants, leading to lower net pricing and reduced wholesale volume[148] Ford Pro Segment The Ford Pro segment saw a 9% increase in wholesale volume and a 13% increase in revenue in Q3 2024, with EBIT growing by $160 million year-over-year to $1.814 billion, achieving an EBIT margin of 11.6%, primarily driven by favorable market factors, partially offset by higher warranty costs and growth-related structural costs Ford Pro Segment Performance | Metric | Q3 2023 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Wholesale Volume (thousand units) | 314 | 342 | +28 | | Revenue (million USD) | 13,829 | 15,655 | +1,826 | | EBIT (million USD) | 1,654 | 1,814 | +160 | | EBIT Margin (%) | 12.0% | 11.6% | -0.4 ppts | - Ford Pro segment EBIT increased by $160 million in Q3 2024, primarily driven by favorable market factors, partially offset by higher warranty costs and growth-related structural costs[152] - Revenue growth of 13% reflects increased wholesale volume, a favorable product mix, and higher net pricing from continued strong demand for certain core Ford Pro products[151] Ford Next Segment The Ford Next segment primarily includes expenses and investments for emerging business initiatives, reporting an EBIT loss of $10 million in Q3 2024, an improvement of $7 million year-over-year - Ford Next segment EBIT loss was $10 million in Q3 2024, an improvement of $7 million compared to the prior year period[155] Ford Credit Segment The Ford Credit segment's total net finance receivables grew 13% year-over-year to $142.2 billion in Q3 2024, with pre-tax earnings (EBT) increasing by $186 million to $544 million, driven by higher financing margins and receivables, partially offset by lower expected auction values and higher return rates on existing operating leases, while the loss-to-receivables ratio (LTR) rose to 57 basis points Ford Credit Segment Performance | Metric | Q3 2023 | Q3 2024 | Change | | :--- | :--- | :--- | :--- | | Total Net Finance Receivables (billion USD) | 126.3 | 142.2 | +15.9 | | Loss-to-Receivables Ratio (bps) | 38 | 57 | +19 | | Auction Values (USD) | 31,685 | 31,265 | -1% | | EBT (million USD) | 358 | 544 | +186 | | ROE (%) | 7.8% | 14.1% | +6.3 ppts | - Ford Credit's Q3 2024 EBT increased by $186 million, primarily driven by higher financing margins and receivables, partially offset by lower expected auction values and higher return rates on existing operating leases[159] - The US Loss-to-Receivables Ratio (LTR) for Q3 2024 was 57 basis points, an increase year-over-year, reflecting increased loss severity and a higher number of vehicles repossessed[158] Corporate Other The Corporate Other segment primarily includes corporate governance expenses, pension and OPEB income/expense, interest income, and gains/losses on cash, cash equivalents, and marketable securities, reporting an EBIT loss of $201 million in Q3 2024, an increase from the $186 million loss in the prior year period - In Q3 2024, the Corporate Other segment reported an EBIT loss of $201 million, compared to a loss of $186 million in the prior year period[166] Interest on Debt This section discloses the company's (excluding Ford Credit) interest expense on debt, which was $272 million in Q3 2024, a year-over-year decrease of $52 million - In Q3 2024, the company's (excluding Ford Credit) interest expense on debt was $272 million, a decrease of $52 million year-over-year[167] Taxes This section provides information on the company's income tax provision/(benefit) and effective tax rates, reporting an income tax benefit of $27 million in Q3 2024, with a negative 3.1% effective tax rate and an adjusted effective tax rate of 13.9% Third Quarter Tax Information | Metric | Q3 2024 | | :--- | :--- | | Income Tax Provision/(Benefit) | $27 million benefit | | Effective Tax Rate | -3.1% | | Adjusted Effective Tax Rate | 13.9% | - In Q3 2024, the company recognized a tax benefit, primarily related to the write-down of certain product-specific manufacturing and supplier tooling assets[168] Liquidity and Capital Resources This section details the company's liquidity position and capital resource management strategies, including cash, liquidity, debt levels, and leverage ratios for the company (excluding Ford Credit) and Ford Credit, emphasizing a commitment to maintaining a strong balance sheet to navigate potential stress scenarios and support business growth, and disclosing significant cash requirements and financing plans Company (excluding Ford Credit) Liquidity and Debt | Metric | December 31, 2023 (billion USD) | September 30, 2024 (billion USD) | Change (billion USD) | | :--- | :--- | :--- | :--- | | Company Cash (excluding Ford Credit) | 28.8 | 27.9 | -0.9 | | Company Liquidity (excluding Ford Credit) | 46.4 | 46.1 | -0.3 | | Company Debt (excluding Ford Credit) | (19.9) | (20.6) | -0.7 | | Net Cash (excluding Debt) | 8.9 | 7.3 | -1.6 | - As of September 30, 2024, the company (excluding Ford Credit) had $27.9 billion in cash and $46.1 billion in liquidity, with approximately 84% of cash held by consolidated entities domiciled in the United States[176] - Company adjusted free cash flow in Q3 2024 was $3.2 billion, an increase of $2.0 billion year-over-year, primarily driven by changes in working capital, improved adjusted EBIT, and Ford Credit dividends[191] Company excluding Ford Credit This section details the company's (excluding Ford Credit) liquidity, significant cash requirements, cash changes, and available credit facilities, with a goal to maintain over $20 billion in cash and ample liquidity to address economic downturns and investment needs, reporting significant growth in adjusted free cash flow and a decrease in capital expenditures in Q3 2024 - The company aims to maintain a company cash balance of $20 billion or more, plus substantial additional liquidity, to address economic downturns and investment needs[177] - The company's significant cash requirements include capital expenditures, raw material purchases, regulatory compliance credit purchases, marketing incentives, warranty and field service payments, debt repayments, pension contributions, employee compensation and benefits, operating lease payments, business restructuring, and strategic acquisitions and investments[180] Company Adjusted Free Cash Flow | Metric | Q3 2023 (billion USD) | Q3 2024 (billion USD) | Change (billion USD) | | :--- | :--- | :--- | :--- | | Company Adjusted EBIT (excluding Ford Credit) | 1.8 | 2.0 | +0.2 | | Capital Expenditures | (2.2) | (2.0) | +0.2 | | Working Capital Changes | (1.1) | 0.8 | +1.9 | | Company Adjusted Free Cash Flow | 1.2 | 3.2 | +2.0 | - As of September 30, 2024, the company (excluding Ford Credit) had total committed credit facilities of $20.2 billion, with most available for drawdowns[196] Ford Credit Segment The Ford Credit segment maintained a strong balance sheet and diversified funding structure, with liquidity reaching $29.6 billion as of September 30, 2024, an increase of $3.9 billion from the beginning of the year, and this section details its funding strategy, public term issuance program, and leverage ratio targets - As of September 30, 2024, Ford Credit's liquidity was $29.6 billion, an increase of $3.9 billion from the beginning of the year, primarily reflecting strong access to public funding markets, leading to reduced utilization of committed asset-backed funding facilities[202][209] - Ford Credit's full-year 2024 public term funding issuance is projected to be between $30 billion and $35 billion, with $29 billion completed as of October 25, 2024[206] Ford Credit Funding Structure | Funding Structure | September 30, 2023 (billion USD) | December 31, 2023 (billion USD) | September 30, 2024 (billion USD) | | :--- | :--- | :--- | :--- | | Term Unsecured Debt | 50.7 | 54.1 | 61.7 | | Term Asset-Backed Securities | 55.9 | 58.0 | 56.3 | | Retail Deposits/Ford Interest Advantage | 16.3 | 17.2 | 18.7 | | Equity | 12.6 | 13.4 | 14.0 | | Cash | (11.4) | (10.9) | (8.6) | | Total Net Finance Receivables | 126.3 | 133.2 | 142.2 | | Securitized Funding as % of Total Debt | 45.5% | 44.9% | 41.2% | - As of September 30, 2024, Ford Credit's on-balance sheet leverage ratio was 9.7:1, within its target range of 9:1 to 10:1[214] Total Company This section provides information on the company's overall pension plan funding status and adjusted Return on Invested Capital (ROIC), reporting an unfunded pension plan status of $1.3 billion and an adjusted ROIC of 11.4% as of September 30, 2024 - As of September 30, 2024, the company's pension plans had an unfunded status of $1.3 billion[216] Adjusted Return on Invested Capital (ROIC) | Metric | Four Quarters Ended September 30, 2023 | Four Quarters Ended September 30, 2024 | | :--- | :--- | :--- | | Adjusted ROIC (%) | 15.1% | 11.4% | Credit Ratings This section outlines the short-term and long-term debt credit ratings for the company and Ford Credit, provided by major credit rating agencies DBRS, Fitch, Moody's, and S&P, noting no rating actions since the last quarterly report - The company and Ford Credit's short-term and long-term debt are rated by four credit rating agencies: DBRS, Fitch, Moody's, and S&P[220] - No rating actions have been taken by these agencies since the filing of the June 30, 2024 quarterly report[222] Credit Ratings Overview | Rating Agency | Ford Issuer Default/Corporate/Issuer Rating | Ford Long-Term Unsecured Senior Debt | Outlook/Trend | Ford Credit Long-Term Unsecured Senior Debt | Ford Credit Short-Term Unsecured Debt | | :--- | :--- | :--- | :--- | :--- | :--- | | DBRS | BBB (low) | BBB (low) | Stable | BBB (low) | R-2 (low) | | Fitch | BBB- | BBB- | Stable | BBB- | F3 | | Moody's | N/A | Ba1 | Stable | Ba1 | NP | | S&P | BBB- | BBB- | Stable | BBB- | A-3 | Outlook This section provides the company's full-year 2024 financial guidance, including adjusted EBIT, adjusted free cash flow, and capital expenditures, along with EBIT expectations for each business segment, projecting approximately $10 billion in adjusted EBIT and $7.5 billion to $8.5 billion in adjusted free cash flow 2024 Guidance | Metric | 2024 Guidance | | :--- | :--- | | Adjusted EBIT | Approximately $10 billion | | Adjusted Free Cash Flow | $7.5 billion - $8.5 billion | | Capital Expenditures | $8.0 billion - $8.5 billion | | Ford Credit EBT | Approximately $1.6 billion | - The company expects 2024 EBIT for the Ford Pro segment to be approximately $9 billion, Ford Blue segment EBIT to be approximately $5 billion, and Ford Model e segment EBIT loss to be approximately $5 billion[226] - The 2024 outlook assumes flat to modest US industry growth (16 million to 16.5 million units), declining industry pricing, and a $2 billion reduction in material, freight, and manufacturing costs[226] Cautionary Note on Forward-Looking Statements This section warns investors that forward-looking statements in the report are based on management's expectations, forecasts, and assumptions, and involve risks, uncertainties, and other factors that could cause actual results to differ materially, including supply chain dependencies, EV raw material commitments, Ford+ strategy execution, product defects, strategic alliances, restructuring, cybersecurity, labor issues, market competition, inflation, exchange rate fluctuations, credit ratings, government incentives, credit losses, pension liabilities, and regulatory changes - Forward-looking statements are based on management's expectations, forecasts, and assumptions, involving risks, uncertainties, and other factors that could cause actual results to differ materially from those stated[228] - Key risk factors include reliance on suppliers, EV raw material commitments, Ford+ strategy execution, product defects, strategic alliances, restructuring actions, cybersecurity incidents, labor issues, market competition, inflation, exchange rate fluctuations, credit ratings, government incentives, credit losses, pension liabilities, and regulatory changes[228] Non-GAAP Financial Measures That Supplement GAAP Measures This section explains the company's use of non-GAAP financial measures, such as company adjusted EBIT, adjusted EBIT margin, adjusted EPS, adjusted effective tax rate, and company adjusted free cash flow, and how these metrics supplement GAAP measures to help management and investors better understand operating performance and trends - The company uses non-GAAP measures, such as company adjusted EBIT, adjusted EPS, and adjusted free cash flow, to supplement GAAP measures, providing useful perspectives on underlying operating performance and trends and enhancing comparability across periods[231] - Company adjusted EBIT excludes interest on debt (excluding Ford Credit debt), income taxes, and special items before tax, to focus on underlying operating performance and trends[232] - Company adjusted free cash flow excludes Ford Credit operating cash flow, funded pension contributions, restructuring actions, and other items considered GAAP operating cash flow, to reflect management's assessment of the company's operating cash flow performance[237] Non-GAAP Financial Measure Reconciliations This section provides detailed reconciliation tables between GAAP and non-GAAP financial measures, including net income to adjusted EBIT, earnings per share to adjusted earnings per share, effective tax rate to adjusted effective tax rate, and net cash flow from operating activities to company adjusted free cash flow Third Quarter GAAP to Non-GAAP Reconciliations | Metric | Q3 2023 (million USD) | Q3 2024 (million USD) | | :--- | :--- | :--- | | Net Income Attributable to Ford Motor Company (GAAP) | 1,199 | 892 | | Adjusted EBIT (Non-GAAP) | 2,198 | 2,550 | | Diluted Earnings Per Share (GAAP) | 0.30 | 0.22 | | Adjusted Diluted Earnings Per Share (Non-GAAP) | 0.39 | 0.49 | | Net Cash Flow from Operating Activities (GAAP) | 4,591 | 5,502 | | Company Adjusted Free Cash Flow (Non-GAAP) | 1,225 | 3,187 | Year-to-Date GAAP to Non-GAAP Reconciliations | Metric | YTD 2023 (million USD) | YTD 2024 (million USD) | | :--- | :--- | :--- | | Net Income Attributable to Ford Motor Company (GAAP) | 4,873 | 4,055 | | Adjusted EBIT (Non-GAAP) | 9,363 | 8,070 | | Diluted Earnings Per Share (GAAP) | 1.21 | 1.01 | | Adjusted Diluted Earnings Per Share (Non-GAAP) | 1.73 | 1.46 | | Net Cash Flow from Operating Activities (GAAP) | 12,426 | 12,395 | | Company Adjusted Free Cash Flow (Non-GAAP) | 4,837 | 5,945 | Supplemental Information This section provides supplemental consolidated financial information, other financial data, and US sales data by type, including detailed breakdowns of revenue, costs, operating earnings, pre-tax earnings, and net income attributable to Ford Motor Company for the company (excluding Ford Credit) and Ford Credit, as well as US sales and wholesale volumes for electric, hybrid, and internal combustion engine vehicles Third Quarter Supplemental Financial Information | Metric | Company (excluding Ford Credit) (million USD) | Ford Credit (million USD) | Consolidated (million USD) | | :--- | :--- | :--- | :--- | | Q3 2024 Revenue | 43,069 | 3,127 | 46,196 | | Q3 2024 Pre-Tax Earnings/(Loss) | 325 | 544 | 869 | | Q3 2024 Net Income Attributable to Ford Motor Company | 399 | 493 | 892 | Year-to-Date Supplemental Financial Information | Metric | Company (excluding Ford Credit) (million USD) | Ford Credit (million USD) | Consolidated (million USD) | | :--- | :--- | :--- | :--- | | YTD 2024 Revenue | 127,770 | 9,011 | 136,781 | | YTD 2024 Pre-Tax Earnings/(Loss) | 3,706 | 1,213 | 4,919 | | YTD 2024 Net Income Attributable to Ford Motor Company | 3,073 | 982 | 4,055 | US Sales and Wholesale Volume by Vehicle Type | Vehicle Type | US Sales Volume | US Wholesale Volume | | :--- | :--- | :--- | | Electric Vehicles | 23,509 | 17,390 | | Hybrid Vehicles | 48,101 | 54,023 | | Internal Combustion Engine Vehicles | 432,429 | 455,042 | | Total | 504,039 | 526,455 | Accounting Standards Issued But Not Yet Adopted This section refers to the discussion of accounting standards issued but not yet adopted in Note 2 to the financial statements Quantitative and Qualitative Disclosures About Market Risk This section discloses foreign exchange risk and commodity price risk for the company (excluding Ford Credit), and interest rate risk for Ford Credit, with the company using derivatives to manage these risks and quantifying the potential impact of market changes on fair value and pre-tax cash flow - As of September 30, 2024, the company's (excluding Ford Credit) net fair value of foreign currency forward contracts was negative $396 million, and net fair value of commodity forward contracts was $41 million[260][261] - Ford Credit estimates that a one percentage point instantaneous decrease in all interest rates would reduce its pre-tax cash flow by $103 million over the next 12 months as of September 30, 2024[262] Controls and Procedures This section confirms the CEO and CFO's assessment of the effectiveness of disclosure controls and procedures, and states that no significant changes in internal controls occurred during the reporting period - The company's Chief Executive Officer and Chief Financial Officer have evaluated and determined that the company's disclosure controls and procedures were effective as of September 30, 2024[263] - No significant changes in internal controls occurred during the quarter ended September 30, 2024[264] Part II - Other Information Item 1. Legal Proceedings This section discloses legal proceedings faced by the company, including environmental and Brazilian tax matters, noting significant tax assessments from Brazilian state and federal authorities, with the company deeming the overall risk of loss to be remote but potentially requiring over $1 billion in collateral - The company faces significant tax assessments from the State of São Paulo and Brazilian federal tax authorities, concerning state and federal tax incentives received by Ford Brazil operations in Bahia[267] - The company has appealed all outstanding assessments and believes the overall risk of loss is remote, but may be required to provide over $1 billion in collateral, potentially in the form of fixed assets, surety bonds, and/or letters of credit, if required[268] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section discloses the company's common stock repurchases in Q3 2024 as part of an anti-dilutive stock repurchase program, aimed at offsetting the dilutive effect of equity awards granted in 2024 - In Q3 2024, the company repurchased 2.95 million shares of Ford common stock at an average price of $10.95 per share, as part of an anti-dilutive stock repurchase program[270][271] - As of September 30, 2024, 30.27 million shares remained available for repurchase under the program[271] Item 5. Other Information This section states that no directors or officers adopted, modified, or terminated "Rule 10b5-1 trading arrangements" or "non-Rule 10b5-1 trading arrangements" during Q3 2024 - In Q3 2024, no directors or officers of the company adopted, modified, or terminated "Rule 10b5-1 trading arrangements" or "non-Rule 10b5-1 trading arrangements"[272] Item 6. Exhibits This section lists the exhibits filed with the report, including an amendment to the Tax Abatement Retention Plan, CEO and CFO certifications, and interactive data files (XBRL format) - Exhibits include the Fifth Amendment to the Tax Abatement Retention Plan, CEO and CFO certifications under Rule 15d-14(a) and Section 1350, and interactive data files in Inline XBRL format[274] Signature This section is the report's signature, signed by the company's Chief Accounting Officer on behalf of Ford Motor Company, as required by the Securities Exchange Act of 1934 - This report is signed by Mark Kosman, Chief Accounting Officer, on behalf of Ford Motor Company, dated October 28, 2024[276]