• Capital markets event yesterday featured updates from company leaders on Ford’s ambitious strategy, including KPIs and financial targets for three global business segments
• Reports included financial bridges to a company adjusted EBIT margin of 10% in 2026, and to similarly timed EBIT margin targets for Ford Blue, Ford Model e and Ford Pro
• Company announced new battery raw-material definitive agreements, strengthening Ford’s sourcing to produce two million EVs by the end of 2026 – and beyond
• For full-year 2023, company maintains guidance of $9 billion to $11 billion in adjusted EBIT and about $6 billion in adjusted free cash flow

Dubai, United Arab Emirates, 25 May 2023 – Less than two quarters into full deployment, the teams behind the Ford+ growth plan’s new customer-centered business segments are redefining customer value, while at the same time reducing cyclicality, improving capital efficiency, and generating profitable growth and strong free cash flow.

That was the essential message of CEO Jim Farley, CFO John Lawler and other Ford leaders to hundreds of investors, analysts and others that attended the company’s capital markets event that took place yesterday in-person and virtually.

“The days of being all things to all people are over at Ford,” Farley said. “We’re developing and delivering connected, digital products that give customers tailored ownership experiences - opening up diverse revenue pools and unprecedented growth for us instead of jockeying for slivers of share with complex hardware in over-served vehicle categories.”

Farley said that Ford is “competing differently” and placing “big bets” through each of its three, customer-centered business segments:

• Ford Blue, with a portfolio of iconic gas-powered and hybrid vehicles, including exciting derivative versions of models like F-150 and Ranger trucks and Bronco SUVs, and a commitment to achieving high quality in every category.
• Ford Model e, a startup within Ford that’s rapidly developing innovative, updatable next-generation electric vehicles, as well as breakthrough digital platforms and software – such as the top-rated BlueCruise advanced driver-assistance technology – for adoption across all of the company’s products.
• And Ford Pro – what Farley calls Ford’s “secret weapon” – to help commercial customers lower the total cost of vehicle ownership and transform their enterprises with a leading lineup of specialized gas, hybrid and electric vehicles and increasing attach rates for productivity services, like prognostics and telematics.

Ford has fresh, in-demand products and ambitious objectives for profitable growth for each of the businesses, which are making decisions – including about how to allocate capital – based on the specific needs of their different customers.

“We want to give customers services and experiences they can’t live without – including things we haven’t yet imagined,” said Farley.

Farley and Lawler were joined by Kumar Galhotra of Ford Blue; Doug Field and Lisa Drake of Ford Model e; and Ted Cannis of Ford Pro. Collectively, they described how the company is raising its standing with millions of longtime customers around the globe – and creating appeal with millions of new ones who are often younger, more diverse and haven’t previously considered Ford.

Lawler illustrated how Ford is raising its effectiveness in the value-creation areas the company first laid out when the Ford+ plan was introduced two years ago:

• Improving product mix, anchored by highly regarded and popular nameplates
• Leading in development and delivery of high-volume electric vehicles
• Through Ford Pro, leveraging existing and emerging strengths into a comprehensive commercial business with an expanded addressable market, and
• Revolutionizing experiences for all types of customers with connected vehicles, including software and services opportunities that, over time, will broaden sources of company revenue and make it more durable.

“With the customer-centered business segments fully stood up, we’re taking giant leaps forward with big implications for how we compete and create value over the long haul,” Lawler said.

For example, Ford Model e’s growth expectations include a production capacity run-rate of two million EVs by the end of 2026 and beyond. To that end, Drake announced Ford’s latest agreements for battery raw materials.

Lawler showed bridges to a total company adjusted earnings before interest and taxes (EBIT) margin of 10% in 2026 – “a waypoint” to higher subsequent profitability.  He also provided walks to 2026 EBIT margin targets for Ford Blue (low double-digits) and Ford Pro (mid-teens), and by late 2026 for Ford Model e (8%).

“With that kind of segment-level information, investors and others can track every quarter and assign value to the progress we’re making in transforming Ford and the industry,” he said.

“It’s a transparency that they can’t get anywhere else today.”

According to Lawler, disciplined capital allocation is fundamental to the Ford+ plan, made possible by tremendous flexibility from improving operations, free cash flow generation and a strong balance sheet. The company’s intentions, he said, remain to produce an adjusted return on invested capital of about 20% over the plan period and distribute 40% to 50% of adjusted free cash flow to shareholders through dividends and antidilutive share repurchases.

Over the last several years, Lawler said, capital uses have progressively shifted from restructuring global operations to funding growth, including investments in:

• Exciting new vehicle derivatives for Ford Blue
• Greater vertical integration of battery plants and raw materials, as well as a new distribution model, within Ford Model e, and
• For Ford Pro, all-new, industry-leading Super Duty trucks and E-Transit vans, plus capabilities in software and services that help customers raise their productivity.

Ford again reiterated its expectations for full-year 2023 adjusted EBIT of $9 billion to $11 billion and adjusted free cash flow of about $6 billion. The company continues to anticipate EBIT of about $7 billion for Ford Blue, up modestly from 2022, and approaching $6 billion for Ford Pro, nearly double last year, and a full-year loss of about $3 billion for the startup Ford Model e.