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Ford Motor Co. Q1 2022 Earnings Call Transcription
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2022-04-27
2025-09-15
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27-Apr-2022 # Ford Motor Co. (F) Q1 2022 Earnings Call # CORPORATE PARTICIPANTS Lynn Antipas Tyson Executive Director-Investor Relations, Ford Motor Co. Douglas Field Chief EV & Digital Systems Officer, Ford Model e, Ford Motor Co. James D. Farley President, Chief Executive Officer & Director, Ford Motor Co. Hau Thai-Tang Chief Industrial Platform Officer, Ford Motor Co. John T. Lawler Chief Financial Officer, Ford Motor Co. Marion B. Harris President and Chief Executive Officer, Ford Motor Credit Company, Ford Motor Co. # OTHER PARTICIPANTS Rod Lache Analyst, Wolfe Research LLC Ryan Brinkman Analyst, JPMorgan Securities LLC John Murphy Analyst, BofA Securities, Inc. Joseph Spak Analyst, RBC Capital Markets LLC Colin Langan Analyst, Wells Fargo Securities LLC Emmanuel Rosner Analyst, Deutsche Bank Securities, Inc. Adam Michael Jonas Analyst, Morgan Stanley & Co. LLC Itay Michaeli Analyst, Citigroup Global Markets, Inc. Dan Levy Analyst, Credit Suisse Securities (USA...
27-Apr-2022 # Ford Motor Co. (F) Q1 2022 Earnings Call # CORPORATE PARTICIPANTS Lynn Antipas Tyson Executive Director-Investor Relations, Ford Motor Co. Douglas Field Chief EV & Digital Systems Officer, Ford Model e, Ford Motor Co. James D. Farley President, Chief Executive Officer & Director, Ford Motor Co. Hau Thai-Tang Chief Industrial Platform Officer, Ford Motor Co. John T. Lawler Chief Financial Officer, Ford Motor Co. Marion B. Harris President and Chief Executive Officer, Ford Motor Credit Company, Ford Motor Co. # OTHER PARTICIPANTS Rod Lache Analyst, Wolfe Research LLC Ryan Brinkman Analyst, JPMorgan Securities LLC John Murphy Analyst, BofA Securities, Inc. Joseph Spak Analyst, RBC Capital Markets LLC Colin Langan Analyst, Wells Fargo Securities LLC Emmanuel Rosner Analyst, Deutsche Bank Securities, Inc. Adam Michael Jonas Analyst, Morgan Stanley & Co. LLC Itay Michaeli Analyst, Citigroup Global Markets, Inc. Dan Levy Analyst, Credit Suisse Securities (USA) LLC # MANAGEMENT DISCUSSION SECTION Oprator: Good day, ldies and gentemen. My name Andre, and I wil e your confereceoperator tay. A thitime Iwould lke weoe you heor Motor pany quarerns cneence alAll lnhave been placedon mute o prevent any background nois. After he speaker' prepare remarks, he will be a question-and-answer session. \[Operator Instructions\] A ti Iokeurheallover ynntsyoneiv o vsR. Please go ahead. # Lynn Antipas Tyson Executive Director-Investor Relations, Ford Motor Co. Thank you, Andrea. Welcme ord Motor Company's fst quarter earnings cal With e tday are Jim Farley, resident an CO,and JohnLawlr, urChi Fancl Offi.Aso jo or QA is Ma HarEO Fort, Hau Thai-TangChi Industrial PlatforOfficer andDoug FieldChie and Digital Systes Office For Model e. Today's discussions include some non-GAAP references. These are reconciled to the most comparable US GAAPmeasus eppndiurani dk.Yo canfind deck alo with the e materials and other important content at shareholder.ford.com. Toay's discussions alsoincludeforward-looking statements about urexpectationsActual results maiff fhoaosancoucuactlul . Unle otherwie not all comparions are year over yar. Company EBT, ES, and free cash flow rn adjusted basis, and product mix is volume-weighted. With that, I'll turn the call over to Jim. James D. Farley President, Chief Executive Officer & Director, Ford Motor Co. Hello, everyone. Thank you, Lynn, and thanks for joining our first quarter 2022 earnings call. Yesterday, I was with Bi Ford and ourincredible teamat the Rouge facory, wheremy grandfather work t clrat joone or he 50 LightnigWe were also proud as a team or elivering atruly reakh . Onboard. Whilewehave work aheadto fusale poducn and filan extordinary orer bank, oth oruil Lightning customers and Ford Pro, make no mistake. This is a very important moment for us at Ford. We're W ut organization. AyknowMarw pao tict utependentusisunalFo M le reruv us llow ee assign priorities, make the most of our existing strengths, but also build new strategic muscles and, most importantly, capabilities. Ford Model e is responsible for delivering clean sheet breakthrough EV designs, software-advanced electic iuurBisselian obl u a business that's going to serve in the short term as our profit and cash engine for the entire enterprise. S ahav arha ? In M i c g hapehe near er. Ihee nd ln tecrig materls, osi er . Expect a lot of news from Ford in the future related to the vertical integration of our EV business. Second, we'e getting after our talent gap in key areas, EV engineering, software, and autonomous driving tecnology.We havea verygood start aeady, and we wll continually bevery agressiveon recruitntaent To iolo rpc be il W drafting standards as we speak and plan to roll these out this year. volumemodels in key segments where we already lead. I want o make this very cear. Some companies see to wWe il fcsn eyvole ame plat.nstaicapi ehavu relle scale and efficiency to reach and eventually exceed our $8 %$ EBIT target for EVs. I want t becear hee that s wemove orard,r Edesis will e progressv nd they' goig e a igig newcstoers For n Lincol.They will not lecicversions ur existin . Now in ers For Blueeilacclerate ur rstructuring nadress urncpetitive ost ste. We're going to attack complexity in areas such as powertrain. We can't wait. This work starts now. We will F-Series, Bronco, Super Duty, and a few others. Ano ualWe g prel qualiy . Hoent hampered by reclls and customer satisfaction actions. This has to change. We must do more to aggressively address our engineering process and improve our robustness. Nowour Ford Pro business is on track. We see healthy growth in parts sales, mechanical repairs, growth n suipios orbothchargig an telatis, ancgMos ortantl wakg urcss lives and businesses better. They're using data. They're improving their up time and their bottom line. Sp i we'e making progress on launching and scaling new products, as you can see with Lightning. That said, our maofs oweleratimoementalhanuruplaaagementprov through our entire value chain and secure supply, especially in places like semis and batteries. Wslueli ll obb generate sustainable cash flows from ourautomotive-related businesses. Our new targets include producing mohan millins in four short years byhe end o 02Tha' about 70-plus AGR.nd we ep ha by 2030, EVs will account for about $50 %$ of our global sales. We have also reset our profit ambition. We are now targeting $10 %$ company adjusted EBIT margins by 2026. No e ur oul ecr iTele p lusne onpoirdusHo p puasa pe post Wb o ne Lh, u ion IEics . Wi eliv targets quarter after quarter, year after year, earning your confidence along the way. And now I'd like to turn it to John to take you through the quarter and our outlook this year. John T. Lawler Chief Financial Officer, Ford Motor Co. Thank you, Jim. Inuy-uptn ur new and exciting opportunities fundamental to growth and value creation. In the first quarter we generated $$ 2.3$ billion in adjusted EBIT, resulting in a margin of $6 . 7 %$ The year-over-year i r h our operations outside of North America were profitable. Global wholesales were down $9 %$ ,consistent with our guidance and reflecting the continued supply chain issues. Howhi ucionNormprovanuronM, to deliver about $$ 17$ billion in revenue. Ford Credit delivered another strong quarter. EBT was $$ 900$ million, reflecting strong lease residuals and credit loss performance. Free cash flow was $$ 600$ million negative, more than explained by unfavorable timing differences and working capital deterioration due to the higherinventory levels, which included about 53,000 vehicles on wheels completed but awaiting installation of components affected by the semiconductor supply shortage. We ended the quarter with strong cash and liquidity, nearly $$ 29$ billion and $$ 45$ billion respectively. This includes our stake in Rivian, which was valued at $$ 5.1$ billion at the end of the quarter. Our strong balance sheet provides a solid foundation to continue investing in our Ford+ priorities. Now let me briefly touch on business unit performance for the quarter. North America delivered $$ 1.6$ billion of EBIT with a margin of $7 . 1 %$ Now this is down year over year, as net pricing improvements were more than offset by higher commodity costs, higher warranty expense,unfavorable mi, and lower volue. The volume andm impact primarily reflects supply constraints unique to full-size pickups and large utilities. Sumeiegloaleelehoniv quarter and highest quartery margin in over0 yars. Theregion continues t focus n scalg it business for growth, especially pickup trucks and commercial vehicles. In Europe, our operations delivered an EBIT margin of $3 %$ despite a $9 %$ decline in volumes. The underlying trajectoryour business continus prov.However, teadver mpac thenear-er suplha disruption is dampening our overall results. n an halr bank n lc-rans rkRDLit rel sprvvhtltiaelott falM Ma ow beiolonliemost maomarkes.uro uildenowar ful future, expecting to reach 600,000 vehicles by the end of 2026. InChi postaoest nhe quar. Howvurst oanprov n boa yey sql basootis rhsot pro pi egMark improved 20 basis points year over year, and the all-new Zephyr is off to a fast start. In thest quarte Chi also cntinued make progresstowars ur elecrification sratgy Weoe more customerexperience centers, now 35 in total, and made other investments to modernize our direct-toconsumer network. OurInal Mark Gro po wel quart oly pofil strait sijoenttiusTegeneration Ranger mains on track, and in March weunveiled he ext generation RangerRaptor n Evest. And finally, in Mobility, we continued to make steady progress towards scaled commercialization of moving po o ari r rationalizing our portfolio with a focus on autonomous development. No Ihare with you ur current thinki about heaindr. For the u yarurguidnci unchanged. We expect to earn between $$ 123$ billion and $$ 12.5$ billion in adjusted EBIT, which is up $1 5 %$ to $2 5 %$ from 2021, with adjusted free cash flow of $$ 5.5$ billion to $$ 6.5$ billion. This reflects year-over-year growth in wholesales of $10 %$ to $1 5 %$ and assumes that semiconductor availability will improve in the second half, including the constraints that adversely impacted our ful-size pickups and large utilities in North America in Q1. Wvh reultinomheew elathealt oncens lckownshioot furhera supply chains. No lausovy t o America and collective prfitabilityoutside Nort meria. Wealsoexpect For Cre o betro ut lower than 2021, and Mobility and Corporate Other EBIT to be roughly flat. c r ewiconic produs such Brono, Brono Sort, Maveick, alng with robus neu Mustn Mach-E, E-Transit, F-150 Lightning now in production as well. Se bektt prieli e i remain dynamic. And third, we expect commodity headwinds of about $$ 4$ billion, which we expect to offset by improvements in net pricing and mix. Fourth, we anticipate other inflationary pressures to continue impacting a broad range of costs. We are asielyoktutlcisivi additional cost reductions. A ralp Ho m returned off-lease vehicles, and more normalized credit losses. Oultuarrblcytokcn -rg the power of our Ford $^ +$ plan as we continue to invest aggressively to drive growth and value creation. This includes devoting resources to customer-facing technology, connectivity, our always-on relationships with cunWn bachenl Sthat wraps upur prepar marks.We'se the balance f he time to hear your questins and adress what's on your mind, and so thank you. Operator, please open the line for questions. # QUESTION AND ANSWER SECTION : t n n il o dLaWol.Pe ahead. # Rod Lache Analyst, Wolfe Research LLC  Heverybody.Thanks or taking my question. Frst, I wanted to ask you about iflation. Price versus cos is hI hoi lowhaakigiW inyrveerpy lo ar margin targets? James D. Farley President, Chief Executive Officer & Director, Ford Motor Co. H Rod. Thank yo or you questn. Ovsly, we seeing n he city see ali, pe, g . So it's really across the board. ta not your question, but that's an opportunity. John? # John T. Lawler Chief Financial Officer, Ford Motor Co. H Ro. ro prianpoint rwehave seen pricng jus about ffe heatiary resurs w'e seen. And so w'e been aggressive with top lie.We've been balancd with he ncentives.We do epe tetnJitro eyhe ihat takee. And so I would say that we've been aggressive so far, starting last year, from a pricing standpoint. Iyhatn through the rest of this year and volumes improve, we have assumed that in the second half you would see y o R ma hedealeratransacg nearbove Maross hedustyShat has e copresi that's going to happen first on the pricing front, and we're watching that very closely. Wealso taken acins wher e an prove ur ricng y work wee dne with rdealSo e t $1 . 5 %$ to cover e floor plan,he carryig costsWee duste that about days, actual cos o 75 days. So that's been a benefit that's flowing through our pricing as well SwnamiWeravolrsl amlativntivW olaWah u si uWegy e I would say though that when we step back and we lok at the pricing relative to 2020 model year what w've taken sinch0model yarw'havceasentivecnsderably fft that pricg.O aavogav up into like $1 5 % - 1 6 %$ to offset that pricing. And that's back in a time when we had extremely high inventories and we had a very push-through process, and we're not going to go back to that. We're going to be very disciplined with our inventory. James D. Farley President, Chief Executive Officer & Director, Ford Motor Co. As a percent of revenue. John T. Lawler Chief Financial Officer, Ford Motor Co.  Yeah, as a percent of revenue. And so we're working costs, we're working all the angles. # Rod Lache Analyst, Wolfe Research LLC  pressures there? It looks you've been posting pretty solid results there recently. John T. Lawler Chief Financial Officer, Ford Motor Co. WouW t hat evn tho e wee y hat uroed pos beterhan epe qarrr continuing to do well in commercial vehicles. We launched the E-Transit which has been very well received. Mustang Mach-E has been very wel ceived as wel. S we do expect the business inEurope tocont t improve in the second half as the rate and flow of supply improve for them as well. # Rod Lache Analyst, Wolfe Research LLC  Thank you. Operator:The next question comes from John Murphy of Bank of America Merril Lynch. Please go ahead. # John Murphy Analyst, BofA Securities, Inc.  G evenig, everybody. I just wante to sk queston ort n the rowt se, Jim.The Li et yave e curious if you think that is just sort of a surge here at the launch of the truck, or is this sort of $1 5 %$ to $20 %$ ieaa hi ilBvyh powerful potentially to your earnings. A 1An or beig eve ltt ooyou epec e ame kin th with he -0ndF350 Lightning, which will launch in two or three years? # James D. Farley President, ChiefExecutive Officer & Director, Ford Motor Co. Io anyy e.liak Do av ca r Weyeci I' 0e ha et nI y po.il oha ay iv in is different about the truck. So I think it's very clearly, so far, incremental. Nowhn w iol p, 0,0un hat mayhae d we' hat we orrbank again o the next model yar this ser. Doug o you want thighlight theoportunits you e maybe on F-150 Lightning, but more generically on our next product? # Douglas Field Chief EV & Digital Systems Officer, Ford Model e, Ford Motor Co. T h o uoo a tracked and optimized. Anonth new programs,changes inaerodynamics anddrive n optimization,we'eseeing dozens miles ipvement irhat'drs nee secaseshouan olar ateyhat wek out. Fly I internal combustion vehicles, and you could take advantage of that and really change the number of (0:2:400:27:53. I ex Sc eoi havheaiae aay good ground to make up on margin. James D. Farley President, Chief Executive Officer & Director, Ford Motor Co. John, so far... John Murphy Analyst, BofA Securities, Inc. Actually one follow-up.   Go ahead, John. John Murphy Analyst, BofA Securities, Inc.  No. Keep going, Jim. Sorry. I had a follow-up on something else. # James D. Farley President, ChiefExecutive Officer & Director, Ford Motor Co. I u wan uhrplgoy p iu u u u ao al u heavy batteries. That doesn't make sense. # John Murphy Analyst, BofA Securities, Inc.  $21 %$ incas ventoryhebalanc hee fomhourt quarterthe quartr resably o rhiusyJo proaility boostmay e rom thesevehices flowng out.Could you just kind eplain sort how ahh finished? # John T. Lawler Chief Financial Officer, Ford Motor Co. Jo most part the vehices on wheels, the3,unitsWehavehe cost those inur esuls, ut wehave start shipping those out. On thereasons why we bilt thos Jon,because themodiatins we neet mak we'e ery cnnt alpwouav units if we hadn't built them and set them aside until the chips are available. # John Murphy Analyst, BofA Securities, Inc.  IJT ru u . I' cadence of earnings for the course of the year. T arstT backed out. That's in inventory. John Murphy Analyst, BofA Securities, Inc.  Okay, got it. Thank you very much. Operator: The next question comes from Colin Langan of Wells Fargo. Please go ahead. # Colin Langan Analyst, Wells Fargo Securities LLC  Great, thanks or taking my questions. As you mentioned, E battery costs have realy dramatically increase. Has that changed your EV strategy at al? Do you think you're going to need to maybe raise the pricing the Lightnig and the Mac-?And what an you about mayeswitc different heistris, llout oe hybrids? How can you address it raw materials stay at these very high levels for those battery materials? James D. Farley President, ChiefExecutive Officer & Director, Ford Motor Co. Ta you r your qest. le and o ht nowis ey bust or v t l o eo gi h ot Do vey iportant,Col I want to ephasiz, which i battery hemistry.We beleve very strongly t For ha ch y n i nkl the customer. Doug, do you want to add anything? # Douglas Field Chief EV & Digital Systems Officer, Ford Model e, Ford Motor Co. No Forer r n hi ui phosphatcour enowomhedust s ehinghat takesyoawayomeepnde dependent on the specific materials that everyone seems to be fighting over in the market. James D. Farley President, ChiefExecutive Officer & Director, Ford Motor Co. So in the short term - go ahead with your question. Sorry, Colin. # Colin Langan Analyst, Wells Fargo Securities LLC  Ye, I was st going ay you ent you' able L hat' te plan How quickly n you si Becaue icke is like now and I was just kindwondeg how fexible ad how quick you coulapt for that 2 million target by 2025. James D. Farley President, Chief Executive Officer & Director, Ford Motor Co. Y'been orkig L or qui sete let'just leave t hat. What mean bya , l t ha i move quickly. # Colin Langan Analyst, Wells Fargo Securities LLC GtAnd just questnyoument in ourcet o warrny cst hat ws go e James D. Farley President, Chief Executive Officer & Director, Ford Motor Co. Hau? # Hau Thai-Tang Chief Industrial Platform Officer, Ford Motor Co.  Yeah, Colin, thanks for the question. When we had our Capital Markets Day event, we signaled that we were targeting $$ 1$ billion to $$ 2$ billion of warranty opportunity by the mid-decade. In 2021, we delivered $$ 1.4$ billion of that, so roughly $70 %$ of that total opportunity. When you look at Qf ths year we had a deterioratin.Someo that was just a non-repeat f itms that we ual elnate waste within thecompanyanet somefhose commodiy ad headwind costs tht weiscused earlier. Colin Langan Analyst, Wells Fargo Securities LLC  Got it. Thanks for taking my question. Operator: The next question comes from Adam Jonas of Morgan Stanley. Please go ahead. Adam Michael Jonas Analyst, Morgan Stanley & Co. LLC  Hey, everybody. Is Lisa Drake on the call? James D. Farley President, ChiefExecutive Officer & Director, Ford Motor Co. A No, but Doug's here. Adam Michael Jonas Analyst, Morgan Stanley & Co. LLC I hope she's doing well.  James D. Farley President, Chief Executive Officer & Director, Ford Motor Co. Okay. I'll pass that on to her. A # Adam Michael Jonas Analyst, Morgan Stanley & Co. LLC o p l m w o oul wu yee now, Jim? # James D. Farley President, Chief Executive Officer & Director, Ford Motor Co. The message would be we need to work together and find good deals. That's what the message would b. That hat kWhickhWe want r wrk or them and o . Annmber o we want move somef te proessig o Nort Amer, ad w' willin vest capital tmovehe rosiprecuror workfromoversas ort Ameriaorvay reasons. Doug, would you edit that list? Douglas Field Chief EV & Digital Systems Officer, Ford Model e, Ford Motor Co.  No, I think that's the right list. Adam Michael Jonas Analyst, Morgan Stanley & Co. LLC  Th nusyoit yg ste an weseeig some pretty crazy changes in the marke Just forhe recor, ay sg pressure powerfully can comment on as an economic indicator for this audience? Thanks. # Marion B. Harris President and Chief Executive Officer, Ford Motor Credit Company, Ford Motor Co. Hy Ad. I Marion Harris Tehornser o We' eei eg ndeucshe car values which we expect to remain strong for some period of time. A h achange in auction values by segment.And we'e ot seing anyffrences in prices or price movments for al . Adam Michael Jonas Analyst, Morgan Stanley & Co. LLC  Thanks, Marion. Operator: The next question comes from Dan Levy of Credit Suisse. Please go ahead.  Hi good evening.Thank you for taking the question. First question is just on the guidance. We know you're maintaining the guide of $$ 123$ billion to $$ 12.5$ billion, but you've also said you're guiding to now $$ 2$ billion to $$ 2.5$ bli hiewatsuro ovtCh ovnt.Anthen tako puao ns aopayh offsets that will allow you to maintain your guide despite those incremental headwinds? # John T. Lawler Chief Financial Officer, Ford Motor Co. Dah he heheue Ws a ha S we need fidmore effncs. We need prove producy.nd Jim an he team and weare wk very hard on that. It's a priority for us. So theother thing that wehave is in the second ha f the year wedo have volumes mprovig basedon the h n about how you're seeing that and what we've been doing to manage that? # Hau Thai-Tang Chief Industrial Platform Officer, Ford Motor Co. Tak, JoS as Jonment in his arksin March wehad he hihest prdun un rat that ' freight to pull ahead some of the available supply. In paralle, the design actions that we've taken over the past year odesign our way out some thee ctn gs wa hpl ho h us the increased confidence around the guidance that John highlighted. # John T. Lawler Chief Financial Officer, Ford Motor Co. Th ha ar encouraging for us. We just can't build enough of them, and we see that demand continuing. Dan Levy Analyst, Credit Suisse Securities (USA) LLC  And the mix assumption within this? John T. Lawler Chief Financial Officer, Ford Motor Co.  The mi assptn is hat w evert back anoral ate mi that we woul expect o .We we ue alk aou it than m than han I anAnd heteaas orkrg that we belvewv that resolve. So we should see a more normal run rate of our mix as we move forward. James D. Farley President, ChiefExecutive Offcer & Director, Ford Motor Co. Hau, do you want to comment on that specific commodity? Because I think it is really material. # Hau Thai-Tang Chief Industrial Platform Officer, Ford Motor Co. S w had a wipermodule that was deploye onur most profitable vehice s, s Jon ente urre picku tucks nlits North meri o wehad mi ability od ay imanageen and fe w pa ss beoW yn on wheels with that commodity. # Dan Levy  Analyst, Credit Suisse Securities (USA) LLC Grat.And then my second question is just as we think about the costs that ar comig onlie, I think you'e v esowrmenal ro oeebustion usiness ndin yorowh, tha avocosth intestmaye ou n giv enehow ou'o yourgrowt ivestents., Iassme yogoin nvest ihat gardes what henderlying a emen utmaybe you an gives sens herehegrowtivestment hat emaye discetnar hat you can,you need t pull backndey,how you think about hergrowtivestent? # James D. Farley President, Chief Executive Officer & Director, Ford Motor Co. need to invest in a fully networked advanced electric architecture. We need to invest in Level 2 and Level 3 auyWeeevsew porfoliohangigurndutstovehele el y invest in Level 4 autonomy. Soat this point in ti, Idon't ernally eeany ieinay. Our For plan is o sec abot whe t prucivity o ur base busness. That's really where wee ocuse nd o courseis plid that s a management team we need to make these investments as efficiently as we can for al this new technology and growth. I hope that makes sense to you. # Dan Levy Analyst, Credit Suisse Securities (USA) LLC  That's helpful, thank you. Operator: The next question comes from Mark Delaney of Goldman Sachs. Please go ahead. \[72HMH-E Mark Delaney\]: Good afternoon and thank you very much for taking the questins. The frst is I l , including Ford Blue and Model e. I'm hoping to better understand how employee reception has been. A a n b engineering talent. And are there any anecdotes or data points you can share? James D. Farley President, Chief Executive Officer & Director, Ford Motor Co. I t es bee o oweorkar we aWe what we needed to communicate to the employees and why this is necessary and why it makes sense. So I think tetns beegThe po he p igoeoethas y I n datactually inycments n what we'e ce Mar n a lothas hangeDo to you. # Douglas Field Chief EV & Digital Systems Officer, Ford Model e, Ford Motor Co. TWehi o I at pr ut o e w go best advantage of Ford's deep capabilities that I haven't had access to in any of my prior roles. So the zatn s tu wheorMoela' an 't buil cars yeelvesWey pla hat dgret work \[eible\] (0:4:33-0:4:4hee eependencheh ly helps the team work, I think. t. hheera e wor n at uhe that is such a rich product like a vehicle is really attracting some great people. us forward. There are great people here. Q \[072HMH-E Mark Delaney\]: That's really helpful. My second question was on the volume outlook for $10 %$ to $1 5 %$ wholesale growth, which the company has maintained even though we've had unfortunately the war and also the new COIestrions pop u hoImhopin tobettdestand how For is ilanaging $10 %$ to $1 5 %$ growth, and to what extent is the company taking incremental actions to find different suppliers that pa'epavat ohoor $10 %$ to $1 5 %$ growth, or is it perhaps more about Ford suppliers not being overly impacted by these recent events? Thank you. # James D. Farley President, Chief Executive Officer & Director, Ford Motor Co. Thank you. It really comes down to the commodities, semiconductor-related commodities, that have been hastriging u.Weviusly spendin otmonen pi ight anoherthins t worku l I don't know if you want to add anything specifically. Hau Thai-Tang Chief Industrial Platform Officer, Ford Motor Co. Mark, so the two hotspots that you highlighted, Ukraine and Russia, I think we'e done a really good joo managing that and minimizing any large significant production risk, mostly because of our global sourcing patterns. And we're able to get parts from other areas of the world. In ters o China, we'e scanning theShanghai area. We have about 0Tr supplirs there. Our focus pro pivhices nd Jient aly evagiepeditrit.We cr s p i those suppliers get partially operational. So those actions, we think, will really help us. And as Jim mentioned, what's going to be gating us is semiconductors. A lot of these constraints are nested within that, so it comes down to the work that we're doing on the semiconductor supply. Operator: The next question comes from Ryan Brinkman of JPMorgan. Please go ahead. # Ryan Brinkman  Analyst, JPMorgan Securities LLC Hi hanksrakg es.eareIhi8ay cku expnyouten Riv are you thinking about theoptions available to you in terms of this investment going orward? Are you maye more inclined toretain some or f the stake given therecent decline in Rivian shares?And iyou wereto monetize it, how are you thinking about the use of any potential proceeds? Could you maybe use them to aenvo and so would perhaps look to prioritize otheropportunities? I don't know, maybe shareholder-friendly actions? How are you thinking about these options? John T. Lawler Chief Financial Officer, Ford Motor Co. Unfortunately, at this point, we're not going to comment on Rivian. # Ryan Brinkman Analyst, JPMorgan Securities LLC  l A u y t W u Miami? James D. Farley President, Chief Executive Officer & Director, Ford Motor Co. Thyo Wel lArgoan Byn alesky\] cak grt p lly e D Level 4 autonomy. We're very happy with the technical progress. Nubeoeally eayifnhahe Lve /Lve n Levl s psYe, ll which we do not want them distracted at all. Avet capital markets is very critical to give us the flexibility to continue to fund this for many years to come. u tat wold eyatheeplymenArgo'stnologyAn wegett morendmont as a company, maybe a bit o a strategicshift on goods movement. Is aligned with our commercial vhicle bus eheetmomoi ialy.I that's a material update for Argo, and hopefully that helps you. # Ryan Brinkman Analyst, JPMorgan Securities LLC  That's very helpful. Thank you. Operator: The next question comes from Joseph Spak of RBC Capital Markets. Please go ahead. # Joseph Spak Analyst, RBC Capital Markets LLC  Thanks so much. Couple questions on cash; I noticed CapEx is now $$ 7$ billion. I think it was $$ 7$ billion to $$ 8$ billion re cash fow am sil he am the elt antain heee cash f capital? And then while we're on cash, looks like redesign cash is now $$ 1$ billion lower this year versus prior, and I think oyoupc n s weowan o us aou ha goig # John T. Lawler Chief Financial Officer, Ford Motor Co. SuOheeec hat eor es ac a ro with some of the counterparties we're working with. l standpoint. The other point, I think the question was around — remind me what it was. # Joseph Spak Analyst, RBC Capital Markets LLC  The lower CapEx versus prior. # John T. Lawler Chief Financial Officer, Ford Motor Co.  Ye the loweraEx, hat flects haenurntendeinvesment neleriiatin oruly o n lWehavhepi aWe t'y he u most part. Joseph Spak Analyst, RBC Capital Markets LLC  And then just the ree cash flow remained the same is a litte bit more a working capital drag then? John T. Lawler Chief Financial Officer, Ford Motor Co.  Yeah, it's more of a working capital. Yeah, absolutely. Joseph Spak Analyst, RBC Capital Markets LLC  ha more advantageous pricing. an you just parse some f the Ford Credit comentaryalitt bit Because th before you said it was going to be about $$ 1.5$ billion lower, and now there's some language that says strong but lower. So is some of that also coming from some of that makeup, you will, also coming from Ford Credit? # Marion B. Harris President and Chief Executive Officer, Ford Motor Credit Company, Ford Motor Co. YJu prWh il u hhara aon awea otmospental eaion eeesin than woulin e the lease portfolio. Joseph Spak Analyst, RBC Capital Markets LLC  Okay. Did your expectation change versus what you communicated three months ago there for this year? Marion B. Harris President and Chief Executive Officer, Ford Motor Credit Company, Ford Motor Co.  No. Joseph Spak Analyst, RBC Capital Markets LLC  Okay, thank you. Operator: The next question comes from Emmanuel Rosner of Deutsche Bank. Please go ahead. # Emmanuel Rosner Analyst, Deutsche Bank Securities, Inc.  Than you very much. So, John, ast quarter you provided a very helpful walk twards the 0 adusteEBT w someheargest put takwashopig you could mayeas somheuckes obviously commodities was expected to be $$ 1.5$ billion to $$ 2$ billion drag, now it's $$ 4$ billion. What is now the market factors versus the $$ 6$ billion from last time? Ford Credit was going to be $$ 1.5$ billion drag. I seem to uerstandfromheast question hat this has'hangenyotherchanges besismarkeactorsc you just quantify them? # John T. Lawler Chief Financial Officer, Ford Motor Co. Yea, o I think what you see there is exactly that. There's no change to Ford Credit. We are seeing higher offts as well.So I think it largely emains what we had talked about last time. We're just seeing higher inflationary pressures and higher pricing flow through. # Emmanuel Rosner Analyst, Deutsche Bank Securities, Inc.  Okay. So versus the $$ 5.5$ billion to $$ 6.5$ billion in volume/mix price benefit from last time, we could basically add $$ 2$ billion to $$ 2.5$ billion to that which is the pricing offset - the cost offset? # John T. Lawler Chief Financial Officer, Ford Motor Co. No, I don't think that it's as high as $$ 2.5$ billion, Emmanuel. There's growth in there, but it's not as high as that. I o l through, but it's not as large as that, as what you had just indicated. # Emmanuel Rosner Analyst, Deutsche Bank Securities, Inc.  z is that largely left as is for this year? James D. Farley President, ChiefExecutive Officer & Director, Ford Motor Co. o. WWv Ta pr r For I vyWehav investments in building out our service porfolio for Ford Pro. We're not holding back on any of that. T l sai rlcpletey edesn urmanacuri press r .Wehavporunit marketingn se, l exactly what we need to do. Emmanuel Rosner Analyst, Deutsche Bank Securities, Inc.  Understood, thank you. Operator: Our last question comes from Itay Michaeli of Citi. Please go ahead. Itay Michaeli Analyst, Citigroup Global Markets, Inc.  Gr ans.G eveg evedyJust quicnes hanks uzig m.F,y end of your full-year guidance range. And a second morehousekeeping question is whether you can provide what you anticpate the Ford Motor Cret dividends to be back up to the parent. # John T. Lawler Chief Financial Officer, Ford Motor Co. We're not going to parse out the guidance. It's $$ 123$ billion to $$ 12.5$ billion. It's a dynamic environment. We're wge i ghe w guidance, it's $$ 123$ billion to $$ 12.5$ billion. # Marion B. Harris President and Chief Executive Officer, Ford Motor Credit Company, Ford Motor Co. Atheivenivn cneal rofi balanhee l An earn po nhW' just given where weareon vehice consraints.So themajority o profits, wedon't have a specine. # James D. Farley President, ChiefExecutive Officer & Director, Ford Motor Co. Juakv a' ha u second half is really critical for the company. Itay Michaeli Analyst, Citigroup Global Markets, Inc.  That's all very helpful. Thank you. Operator: This concludes the Ford Motor Company first quarter 02 earnings conference cal. Thank you for your participation, you may now disconnect. # Disclaimer Callsteet THE IOAL BUINEIATATIIALUDI WARANTITABURALEET IDIC AITAAA SEA other trademarks mentioned are trademarks of their respective companies. All rights reserved.
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