Ford Motor Company — 2020 Form 10-K Summary
Business context and reporting period
Fiscal year ended December 31, 2020. Ford designs, manufactures, markets, and services Ford and Lincoln vehicles and provides vehicle financing through Ford Credit. The year was materially affected by COVID-19: manufacturing was idled in many regions in late March and restarted in phases by May. Ford reported approximately 186,000 employees and 4.187 million wholesale vehicles.
Key financial metrics
| Metric | 2020 | Prior comparable period |
|---|---|---|
| Revenue | $127.144 billion | $155.900 billion in 2019; down 18% |
| Net income/(loss) attributable to Ford | $(1.279) billion | $47 million in 2019 |
| Adjusted EBIT (non-GAAP) | $2.779 billion; 2.2% margin | $6.379 billion; 4.1% margin |
| Diluted EPS / adjusted diluted EPS | $(0.32) / $0.41 | $0.01 / $1.19 in 2019 |
| Cash from operating activities | $24.269 billion consolidated | $17.639 billion in 2019 |
| Company adjusted free cash flow (non-GAAP) | $0.652 billion | $2.785 billion in 2019 |
| Company cash and liquidity, excluding Ford Credit | $30.8 billion and $46.9 billion | $22.3 billion and $35.4 billion in 2019 |
| Debt | $23.536 billion Automotive; $137.677 billion Ford Credit; $471 million Other | Automotive $14.678 billion; Ford Credit $140.029 billion; Other $600 million in 2019 |
| Total equity | $30.811 billion | $33.230 billion in 2019 |
Consolidated operating cash flow included $20.717 billion from Ford Credit; it should not be read as equivalent to cash generated by Ford’s automotive operations. Ford Credit reported 2020 EBT of $2.608 billion, net liquidity of $35.4 billion, and managed leverage of 8.3:1.
Material changes versus 2019
- Automotive wholesale units fell 22% to 4.187 million; Automotive revenue declined 19% to $115.885 billion and EBIT fell to $1.633 billion from $4.926 billion. Reported global market share decreased to 5.8% from 6.0%.
- Automotive performance reflected COVID-related lower industry volume and the F-150 changeover; higher net pricing and favorable mix partly offset the decline. Ford Credit EBT decreased $390 million, mainly due to higher credit-loss reserves and lower receivables, partly offset by stronger lease residual performance.
- Operating cash flow increased, primarily because of Ford Credit cash flows, while Company adjusted free cash flow declined. Ford issued $8 billion of unsecured debt in April 2020; Automotive debt rose by $8.9 billion year over year.
- Ford suspended its regular quarterly dividend after the first quarter to preserve cash. It paid $0.15 per share in Q1 and none in the following three quarters.
Outlook, management commentary, risks, and unusual items
- For 2021, Ford guided to adjusted EBIT of $8.0–$9.0 billion, adjusted free cash flow of $3.5–$4.5 billion, and capital spending of $6.0–$6.5 billion. Ford Credit EBT was expected to improve versus 2020, while auction values were expected to be lower. Guidance assumes no material change in the economic environment and excludes the semiconductor shortage’s impact; it includes an expected non-cash $900 million Rivian investment gain in Q1.
- Ford said supplier estimates indicated potential loss of 10%–20% of planned Q1 production from semiconductor shortages. If disruption continued through the first half, management estimated a possible $1.0–$2.5 billion reduction in full-year adjusted EBIT, net of cost recoveries and production make-up.
- 2020 included $2.246 billion of net pre-tax special-item charges, including global redesign and pension/OPEB remeasurement charges and a $610 million Takata airbag field-action charge, partly offset by a $3.454 billion gain associated with the Argo AI/VW transaction. Q4 reported revenue of $35.952 billion and a Ford-attributable net loss of $2.788 billion; quarterly results included a $1.5 billion pension/OPEB remeasurement loss, the Takata charge, and substantial Brazil-related redesign charges.
- Ford committed to exit manufacturing in Brazil in 2021. The company expected about $4.1 billion of total pre-tax charges, including $2.4 billion in 2020 and about $1.7 billion in 2021; approximately $2.5 billion of the charges were expected to be cash costs, primarily in 2021.
- Major risks include COVID-19 recurrence, semiconductor and other supplier disruptions, vehicle demand and pricing, execution of the global redesign, warranty/recall exposure, Ford Credit credit losses and residual values, capital-market access, pensions, and evolving emissions and fuel-economy rules. Ford disclosed possible Brazilian tax collateral requirements exceeding $1 billion, while describing its overall loss risk on those tax matters as remote. Reviews by EPA and Environment and Climate Change Canada concerning emissions certification remained open; DOJ and CARB had closed their inquiries.
Important facts for investors to verify
- Reconcile adjusted EBIT and adjusted free cash flow to GAAP results, and assess how much operating cash flow came from Ford Credit rather than Automotive.
- Track semiconductor-related production losses, recovery timing, and any revisions to the 2021 guidance.
- Monitor the cash costs and completion of Brazil’s manufacturing exit and the broader global redesign.
- Review Ford Credit’s allowance for credit losses, delinquencies, auction values, and funding liquidity as pandemic relief unwinds.
- Assess the scale and development of warranty and recall exposure, including the Takata matter, and the status of outstanding regulatory reviews and Brazilian tax proceedings.
- Confirm the timing and terms of any future dividend reinstatement; the filing states that future dividends are at the Board’s discretion.
PwC issued an unqualified opinion on the consolidated financial statements and concluded internal control over financial reporting was effective as of December 31, 2020.