Ford Results Presentation Deck | Slidebook.io

Ford Results Presentation Deck

February 2024, 105 slides

investor presentation | Ford

agenda table of contents corporate ford credit retail lease origination and servicing strategy retail revolving extended variable utilization lease risk management appendix shareholder ford ford finance investor center | Ford

corporate delivering ford all new ranger raptor bee as | Ford

safe harbor statement and disclosures forward looking statements non financial measures additional information | Ford

ford investment thesis disruptive technology allows us to leverage foundational strengths to build new capabilities enriching customer experiences and deepening loyalty customer experience foundational strengths leading iconic leading commercial vehicle portfolio industrial prowess drives strong margins and cash flow enhanced capabilities expanded tam value creation integrated hardware and and services connectivity data analytics enables deep customer insight ford blue ford model ford pro unlocks new growth opportunities an | Ford

ford business model is designed to deliver focused innovation profit growth ford blue ford model ford pro oka | Ford

financial results revenue margin new ford platinum a | Ford

financial results segments ford blue ford model ford pro margin margin margin | Ford

full year financial results revenue margin flat expedition king ranch a a | Ford

full year financial results segments ford blue ford model ford pro margin margin margin me | Ford

cash flow cash balance liquidity | Ford

results | Ford

adjusted model pro next credit blue eel corporate total | Ford

ford blue | Ford

ford model i i | Ford

ford pro up with margin | Ford

cash flow and balance sheet | Ford

special items | Ford

model | Ford

ford credit | Ford

ford credit a strategic asset over the last years ford credit generated billion in earnings before taxes and billion in distributions | Ford

key metrics so a | Ford

yoy bridge | Ford

net receivables mix | Ford

origination metrics and credit loss drivers higher risk mix i | Ford

lease metrics a | Ford

cumulative maturities at beyond assets | Ford

funding structure adjustments for cash as net liquidity | Ford

public term funding plan | Ford

north programs ford credit has a long history in with a publicly registered program for retail contracts that began in in recent history ford credit has typically offered various asset backed securities as summarized in the table below program ticker asset class structure typical term typical offering type fordo retail amortizing a to lease amortizing a to retail revolving public public a wholesale revolving and a public fast fast retail amortizing to a a | Ford

syndicate process summary in an effort to promote maximum transparency during transaction marketing ford credit carries out a consistent syndicate process across its platforms the following are key phases of this investors will have all marketing materials including to facilitate their analysis during this time will be taken announcement the transaction will typically announce the morning following and order books will officially open guidance formal price guidance accompanied by subscription status is provided at approximately am eastern pricing subject to market conditions the transaction will typically price the following day additional timing considerations closing of classes classes may go subject upon reaching full subscription of the base size and will go subject after reaching full subscription of the only firm orders i not subject to credit will contribute to this determination and the market will be given approximately minutes notice allocations orders placed before price guidance are expected to receive higher allocations than orders placed after price guidance | Ford

cautionary note on forward looking statements | Ford

retail lease origination and servicing strategy | Ford

origination process dealers submit credit applications and proposed financing terms to ford credit ford credit obtains a credit report for the applicant and uses its proprietary origination system to complete compliance and other checks including fraud alerts and variations credit decisions are made or by an analyst and returned to dealers the origination process is not governed by strict limits and is judgment based using well established purchasing guidelines and control processes to support consistent credit decisions purchase quality guidelines set portfolio targets for lower and marginal quality contracts risk factor guidelines are applicable to specific application attributes including measures such as payment to income and debt to income ratios fico score and term for less applicants or if there is a discrepancy in the information provided by the applicant the credit analyst may verify the identity employment income residency and other applicant information using ford credit procedures before making a decision credit analysts decisions are reviewed regularly to ensure they are consistent with origination standards and credit approval authority | Ford

origination scoring models | Ford

behavioral scoring models ford credit uses proprietary behavioral scoring models to assess the probability of payment default for each receivable on its payment due date these models assess the risk of a customer defaulting using a number of variables including origination characteristics customer account history payment patterns expected net losses and periodically updated credit bureau information output of the behavioral scoring models is a proprietary score probability of default that determines how soon a customer will be contacted after a payment becomes delinquent how often the customer will be contacted during the delinquency how long the account will remain in early stage collections before it is transferred to late stage new behavioral scoring models are developed on a regular cycle plan ford credit regularly reviews the behavioral scoring models to confirm the continued statistical predictability of the variables adjustments may be made to improve the performance of the behavioral scoring models between development cycles completed launch dates of the most recently redeveloped behavioral scoring models are as follows | Ford

retail | Ford

free writing prospectus registration statement no ford credit auto receivables two the depositor ford credit auto owner trusts the issuer this document constitutes a free writing prospectus for purposes of the securities act of the depositor has filed a registration statement including a prospectus with the sec for any offering to which this communication relates before you invest you should read the prospectus in that registration statement and other documents the depositor has filed with the sec for more complete information about the depositor the issuer and such offering you may get these documents for free by visiting on the sec at sec alternatively you may request that a copy of the prospectus be sent to you by calling toll free | Ford

overview ford credit has been originating retail installment sales contracts since and its retail contracts since ford credit has had an active publicly registered program for retail contracts since and has issued asset backed securities in more than transactions under this program ford credit offers retail asset backed securities through various channels publicly registered transactions rule a transactions other private transactions collateral composition has trended in line with the industry and ford credit strategy pools selected randomly from ford credit eligible portfolio receivables with original terms up to months have been included in widely distributed retail transactions since structural elements have remained consistent minimal adjustments over the past years | Ford

originations and share number of retail receivables originated financing share retail installment and lease | Ford

portfolio credit metrics a we | Ford

pool metrics new used car light truck utility | Ford

pool metrics | Ford

structure overview hard credit | Ford

retail pool performance cumulative net losses | Ford

revolving extended variable utilization | Ford

overview since may ford credit has offered revolving extended variable utilization transactions at present more than billion in outstanding notes features a year revolving period rev has a year tenor and subsequent soft bullet maturity rev is the most recent issuance with class a notes of billion ten transactions have already been redeemed each at its the expected final payment date notes consist of a rated senior and three subordinated classes of notes notes are backed by retail auto receivables originated by ford credit comparable to the receivables in its publicly registered retail program during the revolving period monthly collections are deposited in an accumulation account and are available to purchase additional receivables notes may be backed by a combination of receivables and cash pool concentration limits safeguard the quality of the collateral backing the notes the notes are expected to be redeemed in full at the end of the revolving period step up or make whole amounts may otherwise be payable | Ford

initial pool comparison | Ford

key collateral attributes | Ford

structure overview reserve account | Ford

pool composition tests ford credit aims to its portfolio of receivables consistently across its and public retail transactions pool composition tests are subject to occasional modification in the context of new transactions pool composition tests are applied to the entire pool when the trust purchases or sells receivables and mitigate the risk of adverse changes in the receivables composition over time two levels of pool composition tests impact the amount of credit enhancement failure of any of the more stringent floor credit enhancement composition tests results in increased credit enhancement failure of any of the pool composition tests requires the to identify ineligible receivables so that the remaining receivables satisfy the tests providing dollar for dollar credit enhancement for ineligible receivables | Ford

net loss delinquency ratios net loss ratio delinquency ratio | Ford

credit enhancement levels upon each monthly receivables purchase credit enhancement levels are established based upon the compliance of various composition and net losses tests achieved by varying the discount rate for yield supplement total hard credit enhancement is consistent with prior year rev transactions test | Ford

credit enhancement levels | Ford

amortization events amortization period will begin if any of the following events occur on any payment date during the revolving period a the trust fails to pay interest due on the notes within five days of the payment date the required amount is not in the reserve account the required amount is not in the negative carry account or the required amount is not in the accumulation account notes are not paid in full on the expected final payment date three month rolling average net losses as a percentage of aggregate principal balance of receivables exceeds three month rolling average percentage of aggregate principal balance of receivables that are days or more delinquent exceeds adjusted pool balance is less than of the principal amount of the notes a termination event occurs and is continuing an event of default occurs and is continuing in which case notes will be accelerated during an amortization no amounts are paid to the residual interest available funds are used to pay trust expenses interest principal until paid in full and any make whole or step up amounts due the trust will not purchase additional receivables | Ford

note redemption step up and make whole no | Ford

collateral performance reporting reporting available at monthly investor reports summary pool stratifications on the entire pool after giving effect to purchases or sales receivables purchase sale date and balance collateral composition test results and amortization event compliance updated yield supplement schedule reporting includes detail of receivables having received a payment extension during the collection period quarterly supplements summary stratifications for each quarterly vintage of additional receivables sold to the trust static pool performance consistent with publicly registered retail program i prepayments delinquencies cumulative net losses for the initial pool and separately for each quarterly vintage of additional receivables sold to the trust quarterly statistical information on the managed portfolio | Ford

lease | Ford

overview ford credit has been leasing vehicles since and its lease contracts since ford credit current lease platform was established in and more than lease transactions have been completed ford credit has offered lease asset backed securities through various channels publicly registered transactions rule a transactions other private transactions collateral composition has trended in line with the industry and ford credit strategy we what we originate structural elements such as priority of payments have remained consistent over time | Ford

business updates number of leases originated used vehicle value index | Ford

portfolio credit metrics | Ford

pool metrics original term as of value | Ford

pool metrics model diversification a model concentrations top top top model concentrations top top top | Ford

pool performance | Ford

structure overview | Ford

residual maturity enhancement build bill | Ford

significance of value | Ford

break even analysis break even for a compared to historical pool performance cumulative return rate cumulative residual loss gain a a | Ford

residual value models and vehicle residual values for new originations are set quarterly for each vehicle line at various lease terms and mileage allowances ford credit uses proprietary models and leverages its relationship with ford to establish residual values based on a number of predictive factors including wholesale price planned production volume incentives rental and fleet sales consumer acceptance life cycle recent seasonal auction trends and economic factors ford credit works with the vehicle department of ford to manage the disposition of returned vehicles and seeks to maximize net sale proceeds which equal gross auction proceeds less auction fees and costs for reconditioning and transporting the vehicles vehicles returned at lease end are sold through accelerate an upstream application and ford sponsored physical auctions prior to transporting a vehicle to physical auction vehicles are offered for sale to participating dealerships through accelerate ford credit employs proprietary models to establish a market price for vehicles based on recent auction experience and adjusts for miles condition any excess wear and use and option packages ford dealers to purchase returned lease vehicles through accelerate certify those vehicles and sell them to customers under a certified owned program of eligible vehicles were purchased through accelerate through | Ford

| Ford

portfolio overview ford credit has been financing dealer vehicle inventory since and receivables since ford goal is to maintain a profitable network of ford and dealerships that deliver an innovative and engaging sales and service experience for customers as of in the ford and had approximately dealers over the past five years ford credit financed to of ford and dealer new vehicle inventory receivables are secured primarily by the financed vehicles and payment is required when the vehicle is sold ford credit portfolio has historically experienced very low losses primarily driven by strong risk management practices and servicing continuous dealer monitoring of financial health payment performance vehicle collateral status and risk based on site inventory audits use of proprietary risk rating assessment and behavioral scoring models risk management practices which include intensifying risk management actions as dealer risk increases leveraging access to dealer information through ford relationship | Ford

overview ford credit current trust was established in as a master trust similar to a revolving credit card trust and has issued more than series ford credit typically offers asset backed securities through various channels publicly registered transactions rule a transactions other private transactions | Ford

performance overview | Ford

structure overview | Ford

program modernization a | Ford

key series triggers enhancement step up trigger if average monthly principal payment rate for the three preceding collection periods is less than subordination or reserve fund increases by four percentage points during periods when the exceeds certain principal collections may be used for potential shortfalls in interest or fees amortization triggers average monthly principal payment rate for the three preceding collection periods is less than cash balance in the excess funding account exceeds of the adjusted invested amount of all series for three consecutive months available subordinated amount is less than the required subordinated amount bankruptcy insolvency or similar events relating to the depositor the issuer ford credit or ford motor company | Ford

outstanding series private variable funding notes are used to manage seasonal fluctuations of trust balance and provide an additional source of liquidity trust balance total capacity of billion total trust balance of billion | Ford

recent business environment impact i go go | Ford

recent history of | Ford

risk management | Ford

underwriting and credit review process a dealership seeking to finance its vehicle inventory with ford credit must submit a request for financing along with its financial and other information ford credit performs a thorough review of the dealer or dealer group including business legal and operations structure including number of manufacturer franchises credit information financial statements or tax returns types of vehicles in the dealer inventory and specialty services provided by the dealer for certain vehicles or customers such as fleet ford credit evaluates the dealer financial resources and the amount and types of financing requested the financing extended to a dealer is tailored to suit the business and operational needs of the dealer and depends on the financial strength and nature of the dealer business the financed vehicles are the primary collateral for dealer loans however for many dealers ford credit also obtains personal guarantees and secondary collateral in the form of additional dealer assets including dealer adjusted net worth and real estate equity due to the ongoing nature of financing arrangements ford credit periodically performs a credit review of each dealer at least biennially following the similar process utilized to evaluate new dealer account originations monthly financial performance data provides ongoing supplemental dealer monitoring | Ford

dealer risk rating assessment | Ford

dealer monitoring strategy dealers monitor monthly accounts rating mar no further action mar directed action plans watch report status liquidation | Ford

audits monitoring status processes inventory audits dealer monitoring dealer status procedures | Ford

benefits of being a captive finance company ford north vehicle information system dealer ford credit dealer receivables system | Ford

appendix | Ford

appendix portfolio performance | Ford

appendix legal trust structure | Ford

appendix company key metrics see rare be bee | Ford

appendix company key metrics bed | Ford

appendix company results | Ford

appendix company full year adjusted model pro next credit lie volume mix net pricing cost other | Ford

appendix company quarterly results | Ford

appendix company net income loss reconciliation to adjusted | Ford

appendix company net cash provided by used in operating activities reconciliation to company | Ford

appendix company earnings loss per share reconciliation to adjusted earnings loss per share | Ford

appendix company adjusted | Ford

appendix ford credit by segment reflects earnings before taxes provision for benefit from taxes as | Ford

appendix ford credit financing shares and contract placement volume | Ford

appendix ford credit financing shares and contract placement volume | Ford

appendix company non financial measures that supplement measures | Ford

appendix company non financial measures that supplement measures | Ford

appendix company definitions and calculations | Ford

appendix ford credit definitions and calculations | Ford

appendix ford credit definitions and calculations | Ford

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