FORD MOTOR CO Q3 FY2024 earnings call

Jim Farley emphasized the company's strategic strengths such as a lean international business, a fresh and appealing product lineup, a diversified powertrain strategy, and a robust software and repair business in Ford Pro. The company has made progress in EV cost reduction, having cut $1 billion in EV costs this year and is focused on developing second-generation electric vehicles. Ford Pro combines product strength with software and repair services, with paid subscriptions showing growth. Ford Blue has a new and diverse lineup with key US launches scheduled. The company is working on reducing warranty costs through over-the-air (OTA) updates and enhancing quality.

Ford Pro delivered nearly $16 billion in revenue during the quarter, a 13% increase. Its EBIT was $1.8 billion with a margin of 11.6%. Ford Model e reported a loss of $1.2 billion, but achieved $500 million in year-over-year cost improvements. Ford Blue saw a 3% revenue increase, with an EBIT of $1.6 billion and a margin of 6.2%. Ford Credit generated an EBT of $544 million, up $186 million compared to the same period last year.

The company now expects full-year company-adjusted EBIT to be approximately $10 billion. Adjusted free cash flow is projected to be between $7.5 billion and $8.5 billion, with CapEx ranging from $8 billion to $8.5 billion. Ford Pro is anticipated to have an EBITDA of about $9 billion. Model e is expected to have a loss of around $5 billion, and Ford Blue is projected to have an EBIT of $5 billion. Ford Credit's EBT is expected to be about $1.6 billion.

Higher-than-expected warranty costs, inflation impacts at Ford Otosan in Turkey, supplier disruptions affecting volume in the second half, and market pricing pressure.

Q: Mark Delaney from Goldman Sachs inquired about the moderation in Pro EBIT and confidence in the mid-teens margin for the Pro segment.

A: John Lawler responded that seasonality was a factor in the third - quarter moderation and that the Pro business remains strong with continued demand for Super Duty and Transit.

Q: John Murphy from Bank of America asked about warranty certainty and pricing.

A: John Lawler discussed warranty leading indicators and Jim Farley talked about pricing mix.

Q: Adam Jonas from Morgan Stanley asked about the impact of China and the $600 million contribution.

A: John Lawler and Jim Farley addressed China's profitability and export strategy.

Q: Daniel Röska from AllianceBernstein asked about Ford+ stepping stones and shareholder distribution.

A: Jim Farley and John Lawler discussed the company's strategy and capital allocation.

Q: Joseph Spak from UBS asked about European compliance and the cost gap.

A: John Lawler and Jim Farley addressed European compliance and progress on the cost gap.