Ford Motor Company today provided selected preliminary first-quarter 2020 and other balance sheet data, as it considers possible additional financing actions while the coronavirus pandemic stalls commerce around the world.
“We continue to opportunistically assess all funding options to further strengthen our balance sheet and increase liquidity to optimize our financial flexibility,” said Tim Stone, Ford’s CFO. “We also are identifying additional operating actions to enhance our cash position.”
In March, Ford suspended its $0.6 billion regular quarterly dividend and antidilutive share repurchase program. Stone said the company is taking other steps to preserve cash, including by lowering operating costs, reducing capital expenditures and deferring portions of executive salaries.
As of April 9, the company had about $30 billion in cash on its balance sheet, including $15.4 billion of proceeds from borrowings last month against two existing credit lines.
Presently, only Ford’s joint ventures in China, where coronavirus risks developed earlier and are now moderating, are producing and wholesaling vehicles. The company is considering a scenario for a phased restart of its manufacturing plants, supply network and other dependent functions beginning in the second quarter, with enhanced safety standards in place to protect workers. Any decisions on resumptions will be made in cooperation with local unions, suppliers, dealers and other stakeholders.
“However, we believe we have sufficient cash today to get us through at least the end of the third quarter with no incremental vehicle production and wholesales or financing actions,” said Stone.
He added that Ford’s first-quarter vehicle wholesales were down 21 percent from a year ago, largely as a result of lower production and demand related to the coronavirus. Ford currently expects to report revenue of about $34 billion and first-quarter adjusted earnings before interest and taxes of about negative $0.6 billion, which excludes about $0.3 billion of special-item charges. The company has not yet calculated its tax rate for the first quarter and is not able to provide its preliminary net loss or loss per share, but anticipates valuation allowance adjustments against deferred-tax assets of about $0.9 billion.
Ford Credit continues to be an important source of support for customers and dealers during this crisis. Ford Credit’s balance sheet is inherently liquid, reflecting a policy that ensures cumulative debt maturities have a longer tenor than cumulative asset maturities. This means Ford Credit is generating liquidity as its wholesale and consumer financing requirements have declined because of the crisis.
Ford Credit remained above its $25 billion liquidity target with $28 billion at the end of the first quarter, and has access to diversified funding sources.
Ford has not yet completed the close of its first-quarter 2020 books and the preliminary financial data have not been subject to review or other procedures by the company’s independent auditor. The company’s announcement of first-quarter financial results, including estimates of the economic effects of the coronavirus pandemic on the business, is planned for April 28. In March, Ford withdrew all guidance for 2020 financial performance it had given on Feb. 4.
SOURCE: Ford Motor Company
