Ford Motor Company

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 second quarter 2026 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, please use the raise hand feature at the bottom of your screen. At this time, I would like to turn the call over to Maria Richardone, Chief Investor Relations Officer.

Thank you, Layla, and welcome to Ford Motor Company's second quarter 2026 earnings call. I'm Maria Richard-Own, Ford's new chief investor relations officer. I most recently came from Lockheed Martin, where I was treasurer and head of investor relations. I joined Ford because the opportunity ahead is tremendous. Few companies today are navigating a transformation of this scale and this consequence. My focus will be straightforward, clear, consistent communication with all of you and ensuring the market understands how our differentiated strategy translates into profitable growth, capital discipline, and shareholder value. With that, let's jump in. With me today are Jim Farley, President and CEO, and Sherry House, CFO. Joining us for Q&A is Andrew Frick, president of Ford Blue and Model E, Alicia Bowler-Davis, president of Ford Pro, Kumar Galhotra, 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 guidance. We will be referencing non-GAAP measures today. are on an adjusted basis. Upcoming IR engagements include Mike Aragon, President of Integrated Services at the Goldman Sachs Communicopia and Tech Conference in San Francisco on September 8th, and the Morgan Stanley Annual Laguna Conference in Laguna Beach on September 17th. Now I will turn the call over to Jim.

Thank you, Maria. I want to start by thanking our extended four team. all of our dealers and our suppliers for their commitment to delivering on our Ford Plus plan. I especially want to highlight all the Ford team members who work so effectively through the novellas disruption. I also want to recognize our team in Canada, along with our labor partners, Unifor, under the leadership of Lana Payne for reaching a ratified three-year agreement covering all of our Canadian employees. Our business in Canada and our manufacturing operations in Oakville are really important to our future at Ford. And this agreement also underscores how important USMCA is to our future at Ford. And the opportunity we have to build a framework that levels the playing field for North American manufacturers just like Ford against the mass imports from Japan and South Korea that carry a huge currency advantage. In the quarter, we delivered a strong performance, generating 48.3 billion in revenue and 2.5 billion in adjusted EBIT. We're also raising and narrowing our full year adjusted EBIT guidance to between 10 billion and 11 billion, a $1 billion raise at the midpoint. The most important part of the quarter is the growing evidence that our strategy is working. Ford's becoming a more profitable, more disciplined, and generally different company. Our Ford Plus plan focuses on three complementary areas. Of course, we have first our core auto operations, our retail and commercial vehicles that are becoming more profitable and more dependable. Second, we have the software and physical services layer, which is growing, margin accretive, and built in everything we do at Ford. And third, adjacency businesses such as Ford Energy that open all new sources of profit for the company. We play only where we have real competitive advantage or we can build one. And we're ruthless about where we put our money. Every dollar must earn durable returns and drive profitable growth. So let's talk through each of these areas. On core automotive operations, Our execution is underpinned by a fundamentally stronger industrial system. For more than three years, we've been relentless about building top quality and that work is showing up. In our home market, Ford finished number one among all mainstream brands, J.D. Power's 2026 initial quality study. We see this win as a first down payment on a much more consequential virtuous circle. Going from initial quality to long-term durability, lowering our warranty costs even further, fewer recalls, stronger customer loyalty, more pricing power, and for our conquest and growth, improved resale value. Ford's quality renaissance goes hand-in-hand with our equally intense drive to improve our cost structure. We have significantly reduced our warranty and material costs since 2024, and we continue to optimize costs as we enter a heavy new product launch period over the next three years. Turning to the products themselves, we're reinforcing our strength in our trucks, our vans, our personality utility and off-roaders. iconic brands and distinctive products delivering real price and power. We can see it in the quarter. In Ford Blue, F-Series remains the number one truck brand, outselling the closest competitor by more than 80,000 units in the first half of this year, and it's on track for 50 straight years at the top. That's five decades of trust and capability with our customers, and we intend to extend our lead. but it's not just F-Series that makes our truck business strong. We continue to grow our customer base across our entire lineup that spans every price point in the US truck market from our Maverick all the way through the top end of our Super Duty. And there's much more to come soon, including an all new F-Series and an all new Super Duty. We also continue to see momentum with our off-road enthusiast vehicles. In fact, They now make up 25% of our U.S. sales in the second quarter. We made a huge bet on Bronco, Tremor, and Raptor and has paid off with higher growth and higher margins. And these vehicles are bringing new customers to Ford. They're younger, more affluent, and more geographically diverse. And we are investing to grow our leadership in this space. Stay tuned. Hybrids are another strength for Ford we plan to build on. The F-150 hybrid leads among full-size trucks, and the Maverick hybrid achieved record sales in the first half to become America's best-selling hybrid pickup. We plan to extend our hybrids across our entire lineup over the next several years. On the commercial side, Ford Pro is the cornerstone of our global business and holds commercial vehicle market share leadership in both North America and Europe. And the Oakville expansion I referred to earlier is on track to launch in the fourth quarter of this year, adding up to 100,000 units of additional Super Duty capacity. We're investing in Super Duty production to increase our manufacturing flexibility, to add resilience, and to meet pent-up demand. These investments will help drive Pro's future financial performance. And turning to Model E, we're aggressively driving down Gen 1 costs and will become a major scaled competitor as we invest in affordable, versatile EVs. The Louisville plant changeover for the new UEV platform is well underway at Ford. You may have seen prototypes now of our first vehicles off the UEV platform testing on roads across the U.S. Customer deliveries will begin next year. The first UEV product will compete in the affordable heart of the U.S. EV market where we'll offer customers a wholly new proposition that we can't find in the market today. It starts around $30,000. It has more cabin room than the Toyota RAV4, plus it has a pickup truck bed. It has bidirectional charging capability, incredibly fun to drive, and personalized technology in the experience. In fact, we just announced Apple last week, as you know, will be the embedded map provider for every UEV platform vehicle. And we are very excited to show you much more about our move to be among the leaders in the EV space. In Europe, as you saw last week, we announced our agreement with Geely, which will bring speed and capital efficiency to our European operations. The second area of our Ford Plus plan is software and physical services, including our parts business. These businesses have significant room to grow, are central to our 8% margin target by 2029, and the idea is really simple. Combine our digital services, our large dealer network, our physical services into one seamless experience, building a flywheel across software, vehicles, and parts. On software, we're turning a one-time sale into a lifetime relationship, as we said. We now have over 14 million connected vehicles. That's an enormous base to grow from. Our goal is to activate that base, driving real digital usage and convert engagement into reoccurring high-margin revenues. Our services aren't just digital, they're also physical. We continue to grow our parts business. For example, we're expanding our parts catalog. We're growing our sales to US wholesalers and co-investing with our dealers to increase service base and our mobile fleet. Customers love our mobile service. We have over 5,000 mobile service vans and trucks on the road and we see net promoter scores much higher for remote service, leading to higher loyalty. In fact, in Q2, we delivered 1.5 million remote services at Ford, 1.1 million just in the US. Finally, we're making progress on our adjacent businesses. Earlier this year, we launched Ford Energy, reporting through Model E. It's a strategic business for us at Ford, but one with a very short payback. Ford Energy can win because it's built on capabilities few companies can match. Tariff resilient, world-class U.S. manufacturing, leading battery technology, an iconic American brand that is already familiar to communities who are most in need for grid support and infrastructure upgrades, and of course the ability to leverage our vast auto service expertise. By late next year, we expect to reach 20 gigawatt hours of annual capacity for Ford Energy, and we have potential to expand beyond that. We believe this will position Ford Energy among the leading energy storage manufacturers in North America. Scale matters in this business. It drives efficiency, improves the levelized cost of energy, and creates a competitive advantage that is hard to match without the scale of global auto to leverage. We're building a business that can integrate further into energy ecosystem, and that aspires to create value far beyond the sale of our DC blocks. Our agreement with EDF Power Solutions North America is a good step to serve a broad and enduring customer base. We're in talks with a wide range of strategic customers and look forward to sharing more with you at the right time. As you can see, Ford is becoming a more disciplined, higher return company We have strong automotive business with an increased fit industrial system. To complement that business, we're scaling high margin software and physical services around a seamless customer experience while leveraging Ford credit. And adjacent to all of that, we're building new businesses like Ford Energy, where we can establish a competitive advantage. Over to you, Sherry.