Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News Ford.
Speaker 2: Those shares higher in after hours, trading up about four percent.
Speaker 2: Adjusted EPs beating estimates at forty nine cents a share,
Speaker 2: total revenue beating estimates at roughly about forty three billion
Speaker 2: dollars in the company standing behind it's full year forecast.
Speaker 2: John Lawler joining us right now, the chief financial officer
Speaker 2: over at Ford and John, on the surface, these numbers
Speaker 2: look pretty good, as you know, still a lot of
Speaker 2: questions and concerns about cost cutting. How much more should
Speaker 2: investors expect?
Speaker 3: Well, we had a really solid quarter, and you know,
Speaker 3: we didn't expand our guidance range of justiny bit between
Speaker 3: ten and twelve billion, but we have indicated that we're
Speaker 3: our trajectory is towards the high end of that guidance.
Speaker 3: So you know, it looks like we're on track for
Speaker 3: a really solid year this year.
Speaker 2: I'd be remiss in not asking you about a lot
Speaker 2: of the concerns right now going on in the EV space.
Speaker 2: The model E business at Ford was at least the
Speaker 2: worst performing of the major businesses. We got earnings out
Speaker 2: of a couple of your competitors, including GM and Tesla,
Speaker 2: and at least on the EV side, things weren't much better.
Speaker 2: Do you see any hope of improvement in that business
Speaker 2: this year?
Speaker 3: Well, you know, we're segmented, so we're different than many
Speaker 3: of our competitors, at least the traditional OEM. So you
Speaker 3: have the transparency about where we're at with our electric
Speaker 3: vehicle business relative to our commercial business in our internal
Speaker 3: combustion engine business, So you have the transparency. Look, we
Speaker 3: know that we need to have the electric business stand
Speaker 3: on its own. It needs to be profitable, it needs
Speaker 3: to provide a return on the invested capital, and we're
Speaker 3: working diligently to get there. And you know, we have
Speaker 3: a lot of hopes, and we know that our second
Speaker 3: generation in vehicles that will be coming out in a
Speaker 3: couple of years are going to be a big step
Speaker 3: forward and bring us to the point where we will
Speaker 3: be profitable. So we won't launch them if we're not profitable.
Speaker 3: So you know, we've got to make the best of
Speaker 3: it through this period here until we get to the
Speaker 3: second generation vehicles, and we'll continue to manage that and
Speaker 3: optimize across the company.
Speaker 4: Well, John, I mean, hypothetically speaking, what would it take
Speaker 4: for you to maybe say, okay, we're going to make
Speaker 4: this segment much smaller than it was. We know that
Speaker 4: EV adoption has been really slowing down and really below
Speaker 4: what a lot of people, especially.
Speaker 1: The automakers, had expected.
Speaker 4: How committed are you to the EV space when you
Speaker 4: look five ten years out, Well.
Speaker 3: Look EV's. You know, it's not a matter of if,
Speaker 3: it's a matter of how fast they are. The future.
Speaker 3: We will be going there, the industry will be going there.
Speaker 3: It's just I don't think we should question that. It's
Speaker 3: the pace of change, in the pace of adoption, and
Speaker 3: so we're going to write size in the near term
Speaker 3: to match our capacity and the investments to where the
Speaker 3: consumer is, and then we'll accelerate as the consumer accelerates.
Speaker 3: But make no mistake that evs are important because they're
Speaker 3: a big part of what all automotive companies need to
Speaker 3: do to meet compliance for greenhouse gases and zero emission vehicles.
Speaker 3: So they're a big part of what we all need
Speaker 3: to do to hit those compliance regulation requirements that we have.
Speaker 4: Let's talk about the price tag, because I think a
Speaker 4: lot of consumers, in addition to maybe some range anxieties,
Speaker 4: the perception is that EV's are a lot more expensive
Speaker 4: than what I could get from some of those traditional engines.
Speaker 1: So when it comes to your plans for that twenty.
Speaker 4: Five thousand dollars more affordable EV, it seems like it's
Speaker 4: going to take until late twenty twenty six.
Speaker 1: Why is it going to take that long to develop?
Speaker 3: Well, it's a completely new platform and it's a new
Speaker 3: way and a new approach of how you develop a vehicle.
Speaker 3: We have a team out in California. We call it
Speaker 3: our skunk works team. Individuals that have designed EV's, successful EV's,
Speaker 3: profitable evs with other companies are there. It's a whole
Speaker 3: new approach. It's a brand new, ground up platform and
Speaker 3: they're taking you know, they're taking those learnings and they're
Speaker 3: applying it here. And it takes a couple of years
Speaker 3: to develop a complex vehicle like that, and that's what
Speaker 3: they're doing.
Speaker 2: All right. Well, there's a lot of work, certainly to
Speaker 2: do on the EV side. I am curious John, if
Speaker 2: you can talk a little bit about the commercial line
Speaker 2: that you have over there Ford Pro, that unit that
Speaker 2: appeared to be kind of the standout in the most
Speaker 2: recent quarter. What exactly is driving that? And more importantly, John,
Speaker 2: is any of that going to be transferable to the
Speaker 2: consumer side of the business.
Speaker 3: Well, it's an incredible business in Ford Pro. We have
Speaker 3: motes from our products. We have motes from the fact
Speaker 3: that we provide software services that help our commercial customers
Speaker 3: improve productivity and uptime and it makes their business stronger.
Speaker 3: And the learnings that we have there are transferable to
Speaker 3: the retail side, and we're doing that today, especially around
Speaker 3: service and the conveniences that we've learned about from the
Speaker 3: commercial customers. So it's a really strong business. We've talked
Speaker 3: about it being a strong business, and we've talked about
Speaker 3: the earnings potential and I think you see that clearly
Speaker 3: in the first quarter with a print of adjusted EBIT
Speaker 3: of three billion dollars.
Speaker 2: And that gets to this idea too, because I mean,
Speaker 2: when you look at some of the features that go
Speaker 2: into a lot of the commercial vehicles and the idea
Speaker 2: that at some point, at least when the cost is feasible,
Speaker 2: that could transfer there. There's been a lot of discussion
Speaker 2: here about Ford kind of upping its software game, basically
Speaker 2: getting beyond just obviously what you do best, which is
Speaker 2: the actual building up the cars themselves. When it comes
Speaker 2: to the software and the tech side of this year.
Speaker 2: Have you done hiring in that space, Have you done
Speaker 2: any sort of made so, any sort of attempt to
Speaker 2: actually beef up that business if you will. I know
Speaker 2: it's not technically a standalone business.
Speaker 3: But you know what I mean absolutely, Over the last
Speaker 3: few years, we've been hiring. We've been bringing in experts
Speaker 3: from the outside, consumer product software experts, etc. And that's
Speaker 3: a real big part of what we've seen with the
Speaker 3: Ford Pro story. If you look at it over the
Speaker 3: last twelve months, about thirteen percent of their EBITs come
Speaker 3: from software and physical services, and we expect that to
Speaker 3: grow to twenty percent of their adjusted EBIT in a
Speaker 3: few years. So we have a team in place. We
Speaker 3: have a great team we've recruited from the outside with
Speaker 3: some folks that we had inside building out those services
Speaker 3: that are pro customers love because make some more productive,
Speaker 3: it improves their business.
Speaker 1: And I also want to.
Speaker 4: Talk about some of your other models, specifically your gas
Speaker 4: powered models. I'm thinking about the Bronco for example. I'm
Speaker 4: thinking about the Maverick in addition to the.
Speaker 1: F one fifties.
Speaker 4: But I feel like I've seen so many Broncos on
Speaker 4: the road. How are you thinking about output levels in
Speaker 4: those areas. Again, those gas powered vehicles.
Speaker 3: Well, we have incredible brands across our company between F Series, Bronco, Mustang,
Speaker 3: you name it, and demand's very strong. Demand's very strong
Speaker 3: for all of those vehicles. So we're meeting that demand.
Speaker 3: We're continuing to produce. We're working on, you know, getting
Speaker 3: as much out of our factors as we can, and
Speaker 3: you see that in our results. We just launched the
Speaker 3: brand new F one fifty in the first quarter here.
Speaker 3: It's now selling very well, so there's a lot of
Speaker 3: upside there in the blue business through the rest of
Speaker 3: the year.
Speaker 4: All right, John, really appreciate your time today. On the
Speaker 4: heels of that earnings release are thanks of course.
Speaker 1: To John Lawler. He is Ford's chief financial officer.