Ford Motor Company

Hi, everyone. My name is Layla and I will be your conference operator today. At this time, I would like to welcome you to the Ford Motor Company fourth quarter 2025 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 and if you have joined via the webinar, please use the raise hand icon, which can be found at the bottom of your webinar application. If you have joined by phone, please dial star nine on your keypad to raise your hand. At this time, I would like to turn the call over to Lynn Antipas Tyson, Chief Investor Relations Officer.

Thank you, Layla, and welcome to Ford Motor Company's fourth quarter 2025 earnings call. With me today are Jim Farley, President and CEO, and Sherry Howe, CFO. Joining us for Q&A is Andrew Frick, President of Ford Blue and Model E, Alicia Bowler-Davis, President of Ford Pro, Kumar Gahotra, Chief Operating Officer, and Kathy O'Callaghan, CEO of Ford Credit. Jim will give a high-level overview of the business, and Sherry will provide added texture on the financials and our guidance for 2026. We'll be referencing non-GAAP measures today. These are reconciled to the most comparable U.S. GAAP measures in the appendix of our earnings deck. You can find the deck at shareholder.ford.com. Our discussion also includes forward-looking statements. Our actual results may differ. The most significant risk factors are included on page 21 of our deck. Unless otherwise noted, all comparisons are year-over-year. Company EBITs, EPS, and free cash flow are on an adjusted basis. Upcoming IR engagements include Sherry House at the Wolf Research Autotech and Semiconductor Conference in New York City tomorrow, February 11th. Now I'll turn the call over to Jim.

Thank you, Lynn. Thank you to the Ford team, to all of our dealers, to our suppliers, and all of our partners. We executed very well last year. We managed through numerous challenges that came our way, from multiple tariffs to supply chain disruptions, and delivered good results in all areas within our control at Ford. We continue to grow $187 billion of revenue We also lowered material and warranty costs and made significant progress in quality. Our U.S. market share climbed to 13.2%, our best performance in six years. I'm pleased to say we delivered TSR of 42%. On the bottom line, we generated $6.8 billion of adjusted EBIT for the full year. This includes $2 billion headwind for Novellus Fires and the net tariff impact of 2 billion. That's a $1 billion higher tariff impact than we communicated just in October due to the unexpected and late year change in tariff credits for auto parts. Without that, a full year EBIT on that one timer, without that one timer would have been $7.7 billion of EBIT. The takeaway from my perspective is we closed last year a much stronger business with a solid foundation to achieve our target of 8% adjusted EBIT target by 2029. Let's talk about that foundation. We dealt decisively with the reality of the market and shifted our focus of our EV business to a high volume, affordable end of the market. You'll hear more in a second. We made big strides in cost and quality. And yes, that means we recalled many of our old vehicles to take care of our customers. We quietly but very thoughtfully modernized the company, upgrading our talent, all of our IT tools and enterprise tools, the culture of the company, and the facilities to unleash the performance and efficiency of our team. We've looked... We're now locked in a more vibrant and profitable product and technology roadmap. No boring products is what we like to say. And boy, we can't wait for you to see our next generation. We have another wave of sophisticated and passionate vehicles for work, adventure, fun, and off-road with the tech suite that will change the experience of owning a Ford and drive our IS business. Bottom line, the earnings power of our business is accelerating, and our Ford Plus strategy distinguishes us from the competition in clear ways. First is the revenue power of Ford Pro. It's a durable commercial business. Our competitors cannot match. Global demand for super duty and transit franchise is extremely healthy. In the US, Ford Pro's class one through seven market share is over 42%. Roughly the size of our two largest competitors combined in Europe with the number one commercial brand for the 11th straight year. But crucially, we're diversifying that revenue. Software and physical services were 10% and now contributes 19% for Ford's pros EBIT, rapidly approaching our 20% target. And we continue to deepen our competitive mode Thanks to our dealers, we're specializing in investing in more and forming new partnerships like Service Titan to broaden our reach and integrate directly with the trades. Second is our strength of our diverse truck and off-road lineup in Ford Blue. We have a powerful position in pickup trucks from the affordable Maverick all the way through the F-Series, including globally the Ranger. And Ford just won the North America Truck of the Year for the sixth year in a row, an unprecedented industry feat. We also have the highest share of revenue in the U.S. pickup market, growing almost two full share points of revenue last year. Furthermore, we are translating our off-road dominance directly into the profitability of the company. Raptor, and importantly, our off-road performance trims now account for more than 20% of the US sales mix. This gives us massive earning power and with pending EPA changes, puts us in a strong position to satisfy those unfulfilled demands in the market. You see this all coming to life in improving customer loyalty and advocacy as evidenced by our higher net promoter scores. Our corporate reputation is also getting stronger. important to our dealing with policymakers our partners and of course our communities in fact time magazine named ford the most iconic company in america based on its very large survey base of its readers we also expect to achieve the seventh straight year as america's number one auto producer and we produce more than five vehicles in america for everyone that we employ This year, we anticipate a more stable policy environment for our partnership with the administration this year, especially given a reset in the emission standards. We also expect year-over-year profit improvements driven by richer Ford Bluemix, Ford Pro-Growth, and reduced Model E losses. We are also targeting another $1 billion of industrial cost improvements. And to drive strong execution, the management's compensation is directly tied to hitting key milestones for cost and quality and software for the vehicles that will come out in the next few years. Our Ford Plus plan is not just focused on short-term profitability. Let me be specific about some of the most important drivers for our long-term value creation. First, affordable EVs. We aren't just building compliance vehicles at Ford. We're launching a cost-efficient universal EV platform that will drive profitable growth in the lower price segments where the EVs have continued to thrive in America. We will launch multiple vehicles off that same platform, starting with the midsize pickup, bringing younger and more diverse customers into our brand. The universal platform also gives us a scalable hedge against a potential regulation snapback in the future. Second is Ford Energy. This is very strategic business. Our startup with a short payback period that uses our manufacturing muscle and cost advantage with our LFP batteries to diversify our revenue and de-risk the core automotive business. Third, we're controlling the electrical architecture at Ford. By bringing this in-house, we lower cost, cut our supply chain risk, and build the brain needed to enhance the user experience to differentiate and expand our integrated services profit pool. Fourth, smart partnerships. We continue to build on our partnership platform. We're looking for ways to help us move faster to get access to IP that will eventually become commoditized, and to lower our capital expenditures and improve our scale. Our recent agreements with CATL and Renault are different but good examples. And finally, our product roadmap. We're doubling down on our icons, making the next generation F-150 and Super Duty absolutely breakthroughs in terms of cost, technology, powertrain choice, and functional features. We're also expanding our off-road and performance lineups across our most important and popular franchises. At the same time, we also plan to expand our market coverage with more affordable trucks and SUVs. And we'll do it with a broad mix of powertrains, gas, different kinds of hybrids, and fully electric. Customers want choice. Overall, we entered this year with the right portfolio, the right strategy, and the discipline to execute. Sherry?