Ford Motor Company

Good day, everyone. My name is Ronnie, and I will be your conference operator today. At this time, I would like to welcome you to the Ford Motor Company third 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 raised hand function, which can be found on the black bar at the bottom of your screen. At this time, I would like to turn the call over to Maria Ricciardone, Chief Investment Relations Officer.

Thank you, Ronnie, and welcome to Ford Motor Company's third quarter 2026 earnings call. I'm Maria Ricciardone, Ford Chief Investor Relations Officer. With me today are Jim Farley, President and CEO, and Sherry House, CFO. Joining us for Q&A are Andrew Frick, President of Ford Blue and Model E, Alicia Boler Davis, President of Ford Pro, Kumar Galhotra, Chief Operating Officer, Kathy O'Callaghan, CEO of Ford Credit, and Dave Carroll, President of Ford Energy. 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. 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 20 of our deck. Unless otherwise noted, all comparisons are year-over-year. Company EBIT, EPS, and free cash flow are on an adjusted basis. Upcoming IR engagements include Sherry House at the Barclays Global Auto and Mobility Tech Conference in New York on November 18th. Now I'll turn the call over to Jim.

Thanks Maria. Ford delivered another strong quarter thanks to our great products, our services, and execution. I want to thank our employees and our dealers, all of our suppliers for this progress and for their commitment to Ford Plus. In the third quarter, as you know, we generated $2.7 billion in adjusted EBIT. We're raising our low end of our previous full year adjusted EVIC guidance and now expect to earn between $10.5 billion and $11 billion. Our strategy is clear. Number one, grow our auto business with a whole new generation of vehicles focused on North America, focused on transforming our EV business and global products with much less capital. Number two, aggressively expand our auto adjacencies. Software, Services, and Parts while strengthening our financing capability. And third, diversifying with Ford Energy. The objective is a more profitable, capital efficient, and resilient Ford. One that achieves 8% adjusted EBIT margins by 2029 and delivers sustained earnings, cash flow, and returns to our shareholders over time. Let's start with our vehicles. In the third quarter, we continue to focus on a portfolio that leads into our strengths, trucks, vans, and utilities. Our pickup lineup gives customers an unmatched breadth of choice between vehicles, prices, trims, and powertrains. In Q3, F-Series captured the highest retail share among all full-size truck brands and is on pace for the 50th straight year as America's best-selling truck. Maverick is America's best-selling hybrid pickup. Internationally, Ranger leads in many markets, including Australia and Europe. Early demand for the Ranger Super Duty is very strong, already number one in the heavy-duty medium-sized truck market in Australia in its first year, opening a very profitable opportunity for us. Transit continues to be the best-selling van in the U.S., Ford also leads in three-row SUVs in the U.S. with the Expedition and Explorer. We're also expanding access to customers through Ford Blue Oval Advantage, our certified pre-owned program, making Ford now the number one certified pre-owned brand in the U.S. This program builds customer loyalty and positions Ford for our affordable new vehicles that will be coming in the next couple of years to our showrooms, and it really helps our resale values. In fact, we found that these used customers are 50% more likely than typical used car buyers to purchase a new Ford. The foundation of our sustained growth is world-class quality. Of course, topping the J.D. Power's 2026 IQS study, and reduction we've seen in warranty coverages is encouraging to all of us. Excluding novellas and tariffs, we reduce warranty and material costs by $1.5 billion in 2025 and are on track to reduce another $1 billion this year. But we have much more to do, especially on long-term durability and the ownership experience. We are accelerating our industrial system, including very aggressive next-generation vehicle cost reduction targets. The goal is a world-class industrial system, one that makes cost competitiveness and quality repeatable. Our Super Duty launch in Oakville, Ontario is an important example of this discipline. The production ramp is already exceeding planned daily volume and jobs per hour rates. We reached okay to buy last week and began shipping trucks to dealerships. And the quality we're seeing is fully competitive with our existing Super Duty plant, which is number one in J.D. Powers. The added capacity will give us flexibility for future plant changeovers and support profitable growth in retail, rental, and upfitter channels. We're bringing the same discipline to the next generation F-150. Prototypes begin today. are beginning in first quarter of 27, just a couple months away. We have an incredible powertrain durability testing, which is now a five-fold increase to meet our bulletproof powertrain target at Ford. We're doubling endurance and strength testing and increasing full vehicle test mileage by nearly 60% to almost 4 million miles. The F-150 will be the most extensively tested truck ever at Ford, and we will apply this exact same approach across our company. Alongside strengthening our best franchises, we're opening new paths to grow at more affordable price points. Next year, we will be launching our affordable mid-size pickup for international markets. We expect the base material cost for this truck to be 20% lower than today's Ranger. Just as Maverick has done in the U.S., this truck is designed bring new customers into the Ford truck lineup internationally at a cost structure that allows us to compete, in this case, with the Chinese. And in Louisville, we are preparing the launch of the FABIP, our first vehicle off the UEV platform. Rigorous testing and early supplier preparation are central to that effort. The launch remains on track for fourth quarter next year. Yet, yesterday, I had the opportunity to drive our prototype, Wow, it completely blew me away. Zero to 60, huge room inside, and the hands-free ADAS experience was like something I've never experienced. Fandom is really a breakthrough product. It's highly capable, innovative, affordable, and that EV product will be available to more Americans way ahead of our competition. This will require high-level execution and by our team to deliver on time and at cost. And the MSRP under $30,000 and the low cost of ownership is perfect for today's market. Fathom will offer something brand new for U.S. EV customers. An advanced zonal electrical architecture for its first 48-volt low-voltage system along with a sophisticated advanced driver assist capability such as hands-free driving. An incredible real-world drive performance feel and a lot of fun to drive. And bi-directional charging so you can power your home with a fathom when rates are high or during an outage. And there's so much more to this product that we're excited to share with you. Switching gears to our growing auto services business, software services, parts, and financing. Now these auto adjacencies deepen our customers' relationship with us and create downstream value by enabling us to earn more over the life of each vehicle. Both software services and parts businesses achieved record revenue in the third quarter at highly accretive margins. An important linkage exists here between software and parts. Connected services help us anticipate maintenance over time. including a whole new software product called Prognostics at Ford bringing customers to our remote service vans almost 5,000 of them now and our dealer network to keep their vehicles running 24-7. We found that when a retail customer combines a software subscription with regular service the retention of the customer especially for parts is about nine points higher. In part specifically, we grew our U.S. wholesale business to third-party independent repair shops, and we've expanded a lot in Europe. A broader motorcraft catalog also allows us to serve fleet customers of competitive brands and owners of much older Ford vehicles. And Ford Credit has had a great third quarter. Notably, together with Ford Pro, Credit launched Ford Pro Leasing in the third quarter. It's a big deal for PRO. Adding commercial leasing to our fleet management, software, and maintenance offerings will help us grow our PRO digital fleet management portfolio, which we will expect to be over 100,000 units by year-end. Many of those are non-Ford vehicles. Turning to Ford Energy, the investment thesis is very clear. Ford is going to solve a meaningful customer problem build on Ford's advantage and offer a credible path to material earnings with attractive returns in the short term. Our starting point is U.S. manufactured grid-scale battery storage for companies building America's new power infrastructure and data centers. These customers need a domestic partner with the manufacturing know-how and scale and staying power to support them throughout the product's life. We are progressing on two fronts, preparing our manufacturing capacity and securing customers. At our battery plant in Kentucky, we have met every single operating milestone so far. We have completed trial runs of electrode mixing, the first step in producing prismatic LFP battery cells, using the exact same process as our battery plant in Marshall, Michigan. We remain on track to bring 20 gigawatt hours of annual capacity online by the end of next year. Commercial progress is encouraging and demand remains very strong. Executed contracts and late stage negotiations together already currently account for more than 80% of Ford Energy's 2028 capacity. We are building a diverse customer base across solar, grid support and data centers and we expect our 2028 capacity to be fully committed by Q1 of next year. Pricing signals remain consistent with our investment assumptions. Negotiation for 29 and 30 capacity are already advancing with customers engaged way ahead of our initial expectations. The DC block gives us a practical starting point to build a broader capability. We expect attractive returns with short payback period, as I said. Sherry now is going to take you through our financial performance.