Ford Motor Company — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Figures are unaudited; dollar amounts are U.S. dollars.
Business context and results
Ford operates Automotive, Mobility, and Ford Credit segments. Results were affected by semiconductor and other supplier constraints, inflation and higher commodity and freight costs, and Russia’s invasion of Ukraine. Vehicle production constraints contributed to lower wholesales and unfavorable product mix.
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $34.5 billion | $36.2 billion |
| Operating income | $1.34 billion | $2.46 billion |
| Net income/(loss) attributable to Ford | $(3.11) billion | $3.26 billion |
| Diluted GAAP EPS | $(0.78) | $0.81 |
| Adjusted EBIT (non-GAAP) | $2.33 billion | $3.91 billion |
| Adjusted EBIT margin (non-GAAP) | 6.7% | 10.8% |
| Operating cash flow | $(1.08) billion | $4.49 billion |
| Adjusted free cash flow (non-GAAP) | $(0.58) billion | $(0.38) billion |
Financial position and segment performance
At March 31, Ford reported $21.0 billion of cash and cash equivalents and $20.2 billion of marketable securities. Company cash excluding Ford Credit was $28.8 billion, or $23.6 billion excluding Rivian securities; corresponding liquidity was $44.6 billion and $39.4 billion. Company debt excluding Ford Credit was $20.1 billion, down $0.3 billion from year-end 2021. Ford Credit debt was $115.5 billion. Total assets were $253.0 billion and total equity was $45.1 billion.
Automotive EBIT was $1.89 billion, down $1.51 billion year over year; margin declined to 5.9% from 10.1%. Lower volume and mix and higher costs outweighed higher net pricing. Ford Credit EBT was $928 million, down $34 million; net receivables were $117.4 billion, loss-to-receivables was 8 basis points, and net liquidity available was $28.4 billion. Mobility recorded a $242 million EBIT loss.
Material changes and unusual items
The GAAP net loss primarily reflected a $5.4 billion pre-tax mark-to-market loss on Ford’s Rivian investment. Total pre-tax special-item charges were $5.9 billion, including the Rivian loss, a $138 million charge related to suspension of Russia operations and asset write-off, a $135 million charge for prior-year patent matters, and restructuring and other items. Adjusted EBIT excludes special items and is a non-GAAP measure.
Automotive wholesales fell 9% year over year to 966,000 units; revenue declined 4%. Inventory rose to $14.6 billion, including about 53,000 completed vehicles awaiting semiconductor-related components and additional quality review. Ford declared $408 million of dividends in the quarter. It agreed to sell Ford Romania to Ford Otosan and completed the Spin sale on April 1, 2022.
Outlook, risks and contingencies
Ford reaffirmed 2022 guidance: adjusted EBIT of $11.5–$12.5 billion, adjusted free cash flow of $5.5–$6.5 billion, capital spending of about $7.0 billion, and pension contributions of $0.7–$0.8 billion. Ford Credit EBT was expected to remain strong but below 2021. Assumptions include improved semiconductor availability in the second half, full-year wholesales up 10%–15% from 2021, continued strong pricing, and commodity costs about $4 billion higher year over year. Additional redesign actions could add to projected charges and cash effects.
Key risks include semiconductor and other supply disruptions, COVID-related lockdowns in China, commodity and inflationary pressures, and possible spillovers from the Ukraine conflict. Ford estimated reasonably possible litigation losses in excess of accruals of up to about $2.1 billion for material matters, primarily indirect tax, customs, and regulatory matters; additional reasonably possible costs for material field service and customer satisfaction actions were up to about $700 million. Ford stated its overall risk of loss on outstanding Brazilian tax assessments was remote, but potential collateral, if required, could exceed $1 billion. Management reported disclosure controls as effective and no material change in internal control during the quarter.
Important facts for investors to verify
- How much of the GAAP loss and reported cash/liquidity movement reflects Rivian’s share-price decline versus ongoing operations.
- Whether semiconductor availability, vehicle production, and the 10%–15% wholesale growth assumption are tracking to plan.
- Whether higher commodity, freight, warranty, and inflation costs are offset by pricing and mix.
- Progress toward adjusted EBIT, adjusted free cash flow, capital spending, and restructuring guidance; these are non-GAAP measures and depend on stated assumptions.
- Ford Credit’s liquidity, funding access, credit-loss trends, and sensitivity to inflation and used-vehicle values.
- Developments in the disclosed litigation, warranty, Brazilian tax, Russia-related, and restructuring exposures.