Ford Motor Company

Good day, ladies and gentlemen. My name is Erica, and I will be your conference operator today. At this time, I would like to welcome you to the Ford Motor Company third quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, you will need to press star 1 on your telephone. At this time, I would like to turn a call over to Lynn Antipas Tyson, Executive Director of Investor Relations.

Thank you, Erica. Welcome to Ford Motor Company's third quarter 2021 earnings call. With me today are Jim Farley, our President and CEO, and John Lawler, our Chief Financial Officer. Also joining us for Q&A is Marion Harris, CEO of Ford Credit. Today's discussions include some non-GAAP references. These are reconciled to the most comparable U.S. GAAP measures in the appendix of our earnings deck. You can find the deck along with the rest of our earnings materials and other important content at Shareholder.Ford.com, including some updated videos and proof points around our Ford Plus plan for growth. Today's discussion also includes forward-looking statements about our expectations. Actual results may differ from those stated. The most significant factors that could cause actual results to differ are included on page 23. Unless otherwise noted, all comparisons are year-over-year. Company EBIT, EPS, and free cash flow are on an adjusted basis. Product mix is volume-weighted. A quick update on our IR events for the balance of the year. We have five. On Monday the 1st, November 1st, Wolf will host a fireside chat with John Lawler and Hao-Tai Tang, our Chief Product Platform and Operations Officer. On the 18th of November, Barclays will host a virtual fireside chat with Ted Canis, our CEO of Ford Pro. In December, on the 3rd, Goldman Sachs will host a virtual fireside chat with Lisa Drake, our Chief Operating Officer for North America. On the 3rd, Credit Suisse will host a fireside chat with Hao-Tai Tang. And finally, on the 9th, Deutsche Bank will host a virtual fireside chat with Alex Purdy, our Director of Business Operations, Enterprise Connectivity. Now I'll turn the call over to Jim Farley.

Thank you, Lynn. Hello, everyone, and thanks for joining us today. Well, this month marks one year since we began executing our Ford Plus plan. It creates growth, value, and it allows us to win in the merging area of electric and connected vehicles. We build a strong team that combines top leaders from Ford with world-class talent recruited from outside of our company Specific talent, specific people that are largely outside of our industry. This leadership team is committed to this plan, and we're accelerating our progress. Now, Ford Plus is not a tagline. It's not advertising. It's a larger, more ambitious way to think about our business and how we bring value to our customers. We're creating iconic and distinctive products that only Ford can do. increasingly always-on relationships with our customers and ever-improving user experiences, all while creating value for our shareholders. We're fully vested in this future, and we're taking big swings. Key to the plan is harnessing the power of connectivity. We're designing a new generation of fully networked vehicles, not delegated to our supply chain, but done inside the company to revolutionize the experience of owning, and operating Ford vehicle. That's embedded technology to unleash unlimited innovation. We're scaling the number of vehicles capable of over-their updates. We'll be moving from 1 million vehicles today to 33 million by 2028. That's scale. At the same time, we're moving aggressively to lead the electric vehicle revolution, substantially expanding our battery production as we speak today in the U.S., In fact, we already announced plans that will give us enough battery production to meet our mid-decade goal of 141 gigawatts, which is enough to build more than 1 million battery electric vehicles a year, and I think we'll need more. Our $7 billion investment in Blue Oval City in Tennessee and the Blue Oval SK Battery Park in Kentucky sets a new standard for scale, sustainability, advanced manufacturing, and training the next generation of technology leaders. At the same time, the billion dollars of investment in our electrified center in Cologne, Germany, will allow us to go all electric soon. That center will be all electric by 2023. We're making final preparations to launch the F-150 Lightning, the defining zero-emission version of America's best-selling vehicle for the past 40-plus years. Our all-electric Mustang Mach-E is a hit with customers not just in the U.S., but around the world, bringing a stunning number of new customers to the Ford brand. Over 90 percent of the Mach-E owners say they would recommend a Mach-E to other customers, critical as a new generation of battery electric customers make new brand choices. Our challenge now is to break production constraints and increase availability to meet this incredible demand, both in North America and in Europe and also in China, the biggest EV market in the world, where we are just starting production of Mach-E. We believe the global demand just for Mustang Mach-E could approach about 200,000 vehicles a year. We've created a new organization, Ford Pro, to change and power the future of work with compelling commercial vehicles distribution and services while growing revenues to Ford. In a few weeks, we will start production of the new E-Transit, an electric version of the world's best-selling commercial van. And in the third quarter alone, Ford Live, Europe's new connected uptime center, which I wish you could all see, for our commercial customers, helps customers in the UK secure additional uptime, preventing about $8 million of lost revenue and associated cost for our valuable customers. We're reinventing icons like Bronco and creating new ones like Maverick. In fact, the all-new Maverick, 42 miles per gallon, I might add, is the first standard hybrid pickup in the United States. It's also America's most fuel-efficient hybrid pickup This is the strongest, most compelling lineup I've ever seen from any mass market brand in my career. And we are creating a spring-loaded future as we emerge from the chip shortages and COVID constraints. And we continue to make important strides in the technology and go-to-market strategy for autonomous vehicles. In the second quarter, we told you about a new partnership with Argo AI and Lyft. And in the third quarter, we announced a new partnership with Argo AI and Walmart. This is Walmart's first ever multi-city autonomous delivery service, and it will be anchored in cities where we already have operations. Not the easiest miles in one city, but multiple cities and hard miles. In addition to making real progress on autonomy vehicles, operating domains, SDS, we fully support Argo AI's aspiration to access public capital. To build this future and generate the margins and cash flow we need to fund Ford Plus, we had to turn around our automotive operations and improve our competitiveness. Our results in the third quarter show we are making significant progress. In fact, company-wide, we achieved an 8.4% EBIT margin. including 10.1% in North America. Those margins, I'll remind you, are in line with our targets for 2023. More importantly, our operations outside of North America are likely to post the best performance in four years. Please note the performance in South America, largely driven by our success of our global redesign. We've been able to achieve this while thoughtfully managing our supply chain for short-term sustained sustainable improvements, including semiconductors, and prioritizing high-demand and high-profit vehicles. Now, before I turn over to John, a few thoughts. I believe we have the right plan to drive growth and unlock unprecedented value. You are already seeing a favorable change in the slope of our earnings and cash flow. There is more to come. Given the strength of our business this year, we are increasing our full-year adjusted EBIT guidance to between $10.5 billion and $11.5 billion. As we plan in earnest for next year, we're excited and energized about the opportunity in front of us and clear that we have so much more work to do to deliver on Ford's potential. The word I would leave you with is focus. The competitive environment has never been more interesting and tough, and we intend to live up to our promise to compete like a challenger. focusing on our top priorities to unlock Ford Plus growth with customers at the very center of everything we do. Now I'll turn it over to John, who'll take you through our results for the quarter, our outlook for the full year, our capital allocation priorities, and our expectations heading into next year. John? Thank you, Jim.