Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Cautionary Note on Forward-Looking Statements
Statements included or incorporated by reference herein may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on expectations, forecasts, and assumptions by our management and involve a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those stated, including, without limitation:
• Ford’s long-term success depends on delivering the Ford+ plan, including improving cost competitiveness;
• Ford’s products have been and could continue to be affected by defects that result in recall campaigns, increased warranty costs, or delays in new model launches, and the time it takes to improve the quality of our products and services and reduce the costs associated therewith could continue to have an adverse effect on our business;
• Ford is highly dependent on its suppliers to deliver components in accordance with Ford’s production schedule and specifications, and a shortage of or inability to timely acquire key components or raw materials has previously disrupted and may, in the future, disrupt Ford’s operations;
• Ford’s production, as well as Ford’s suppliers’ production, and/or the ability to deliver products to consumers could be disrupted by labor issues, public health issues, natural or man-made disasters, adverse effects of climate change, financial distress, production difficulties, capacity limitations, or other factors;
• Ford may not realize the anticipated benefits of existing or pending strategic alliances, joint ventures, acquisitions, divestitures, commercial relationships, or business strategies or the benefits may take longer than expected to materialize;
• Ford may not realize the anticipated benefits of restructuring actions and such actions may cause Ford to incur significant charges, disrupt our operations, or harm our reputation;
• Failure to develop and deploy secure digital services that appeal to customers, retain existing subscribers, and grow our subscription rates could have a negative impact on Ford’s business;
• Ford’s ability to maintain a competitive cost structure could be affected by labor or other constraints;
• Ford’s ability to attract, develop, grow, support, and reward talent is critical to its success and competitiveness;
• Operational information systems, security systems, products, and services could be affected by cybersecurity incidents, ransomware attacks, and other disruptions and impact Ford, Ford Credit, their suppliers, and dealers;
• To facilitate access to the raw materials and other components necessary for the manufacture of electrified products, Ford has entered into and may, in the future, enter into multi-year commitments to raw material and other suppliers that subject Ford to risks associated with lower future demand for such items as well as costs that fluctuate and are difficult to accurately forecast;
• With a global footprint and supply chain, Ford’s results and operations have been and could continue to be adversely affected by economic or geopolitical developments, including protectionist trade policies such as tariffs, or other events;
• Ford’s new and existing products and digital, software, and physical services are subject to market acceptance and face significant competition from existing and new entrants in the automotive and digital and software services industries, and Ford’s reputation may be harmed based on positions it takes or if it is unable to achieve the initiatives it has announced;
• Ford may face increased price competition for its products and services, including pricing pressure resulting from industry excess capacity, currency fluctuations, competitive actions, legal and policy changes, or economic or other factors, particularly for electrified vehicles;
• Inflationary pressure and fluctuations in commodity and energy prices, foreign currency exchange rates, interest rates, and market value of Ford or Ford Credit’s investments, including marketable securities, can have a significant effect on results;
• Ford’s results are dependent on sales of larger, more profitable vehicles, particularly in the United States;
• Industry sales volume can be volatile and could decline if there is a financial crisis, recession, public health emergency, or significant geopolitical event;
• The impact of government incentives on Ford’s business has been and could continue to be significant, and Ford’s receipt of government incentives could be subject to reduction, termination, or clawback;
• Ford and Ford Credit’s access to debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts could be affected by credit rating downgrades, market volatility, market disruption, regulatory requirements, asset portfolios, or other factors;
• Ford Credit could experience higher-than-expected credit losses, lower-than-anticipated residual values, or higher-than-expected return volumes for leased vehicles;
• Economic and demographic experience for pension and OPEB plans (e.g., discount rates or investment returns) could be worse than Ford has assumed;
• Pension and other postretirement liabilities could adversely affect Ford’s liquidity and financial condition;
• Ford and Ford Credit have experienced and could continue to experience unusual or significant litigation, governmental investigations, or adverse publicity arising out of alleged defects in products, services, perceived environmental impacts, or otherwise;
• Ford may need to substantially modify its product plans and facilities to respond to shifting consumer sentiment and competitive dynamics as a result of policy changes affecting, or otherwise to comply with safety, emissions, fuel economy, autonomous driving technology, environmental, and other regulations;
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
• Ford and Ford Credit could be affected by the continued development of more stringent privacy, data use, data protection, data access, and artificial intelligence laws and regulations as well as consumers’ heightened expectations to safeguard their personal information; and
• Ford Credit could be subject to new or increased credit regulations, consumer protection regulations, or other regulations.
We cannot be certain that any expectation, forecast, or assumption made in preparing forward-looking statements will prove accurate, or that any projection will be realized. It is to be expected that there may be differences between projected and actual results. Our forward-looking statements speak only as of the date of their initial issuance, and we do not undertake, and expressly disclaim to the extent permitted by law, any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events, or otherwise. For additional discussion, see “Item 1A. Risk Factors” in our 2025 Form 10-K Report, as updated by our subsequent Quarterly Reports on Form 10‑Q and Current Reports on Form 8-K.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
NON-GAAP FINANCIAL MEASURES THAT SUPPLEMENT GAAP MEASURES
We use both generally accepted accounting principles (“GAAP”) and non-GAAP financial measures for operational and financial decision making, and to assess Company and segment business performance. The non-GAAP measures listed below are intended to be considered by users as supplemental information to their equivalent GAAP measures, to aid investors in better understanding our financial results. We believe that these non-GAAP measures provide useful perspective on underlying operating results and trends, and a means to compare our period-over-period results. These non-GAAP measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. These non-GAAP measures may not be the same as similarly titled measures used by other companies due to possible differences in method and in items or events being adjusted.
• Company Adjusted EBIT (Most Comparable GAAP Measure: Net Income/(Loss) Attributable to Ford) – Earnings before interest and taxes (“EBIT”) excludes interest on debt (excluding Ford Credit Debt), taxes, and pre-tax special items. This non-GAAP measure is useful to management and investors because it focuses on underlying operating results and trends, and improves comparability of our period-over-period results. Our management excludes special items from its review of the results of the operating segments for purposes of measuring segment profitability and allocating resources. Our categories of pre-tax special items and the applicable significance guideline for each item (which may consist of a group of items related to a single event or action) are as follows:
Pre-Tax Special Item Significance Guideline
∘ Pension and OPEB remeasurement gains and losses ∘ No minimum
∘ Personnel expenses, supplier- and dealer-related costs, and facility-related charges stemming from our efforts to match production capacity and cost structure to market demand and changing model mix ∘ Generally $100 million or more
∘ Other items that we do not generally consider to be indicative of earnings from ongoing operating activities ∘ $500 million or more for individual field service actions; generally $100 million or more for other items
• Company Adjusted EBIT Margin (Most Comparable GAAP Measure: Company Net Income/(Loss) Margin) – Company adjusted EBIT margin is Company adjusted EBIT divided by Company revenue. This non-GAAP measure is useful to management and investors because it allows users to evaluate our operating results aligned with industry reporting.
• Adjusted Earnings/(Loss) Per Share (Most Comparable GAAP Measure: Earnings/(Loss) Per Share) – Measure of Company’s diluted net earnings/(loss) per share adjusted for impact of pre-tax special items (described above), tax special items, and restructuring impacts in noncontrolling interests. The measure provides investors with useful information to evaluate performance of our business excluding items not indicative of earnings from ongoing operating activities.
• Adjusted Effective Tax Rate (Most Comparable GAAP Measure: Effective Tax Rate) – Measure of Company’s tax rate excluding pre-tax special items (described above) and tax special items. The measure provides an ongoing effective rate which investors find useful for historical comparisons and for forecasting.
• Company Adjusted Free Cash Flow (Most Comparable GAAP Measure: Net Cash Provided By/(Used In) Operating Activities) – Measure of Company’s operating cash flow excluding Ford Credit’s operating cash flows. The measure contains elements management considers operating activities, including Company excluding Ford Credit capital spending, Ford Credit distributions to its parent, and settlement of derivatives. The measure excludes cash outflows for funded pension contributions, restructuring actions, and other items that are considered operating cash flows under U.S. GAAP. This measure is useful to management and investors because it is consistent with management’s assessment of the Company’s operating cash flow performance.
• Adjusted ROIC – Calculated as the sum of adjusted net operating profit/(loss) after cash tax from the last four quarters, divided by the average invested capital over the last four quarters. Adjusted Return on Invested Capital (“Adjusted ROIC”) provides management and investors with useful information to evaluate the Company’s after-cash tax operating return on its invested capital for the period presented. Adjusted net operating profit/(loss) after cash tax measures operating results less special items, interest on debt (excluding Ford Credit Debt), and certain pension/OPEB costs. Average invested capital is the sum of average balance sheet equity, debt (excluding Ford Credit Debt), and net pension/OPEB liability.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
When we provide guidance for adjusted EBIT, adjusted earnings/(loss) per share, and adjusted effective tax rate, we do not provide guidance for their respective most comparable GAAP measures as those GAAP measures will include potentially significant special items that have not yet occurred and are difficult to predict with reasonable certainty prior to year-end, including gains and losses on pension and OPEB remeasurement, and other items that are difficult to quantify. When we provide guidance for Company adjusted free cash flow, we do not provide guidance for its most comparable GAAP measure (net cash provided by/(used in) operating activities) as the GAAP measure will include items that are difficult to quantify or predict with reasonable certainty, including cash flows related to the Company’s exposures to foreign currency exchange rates and certain commodity prices (separate from any related hedges), Ford Credit's operating cash flows, and cash flows related to special items, including separation payments, each of which individually or in the aggregate could have a significant impact to our net cash provided by/(used in) our operating activities.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Non-GAAP Financial Measure Reconciliations
The following tables show our Non-GAAP financial measure reconciliations.
Net Income/(Loss) Reconciliation to Adjusted EBIT ($M)
First Quarter
2025 2026
Net income/(loss) attributable to Ford (GAAP) $ 471 $ 2,548
Income/(Loss) attributable to noncontrolling interests 2 3
Net income/(loss) $ 473 $ 2,551
Less: (Provision for)/Benefit from income taxes (148) (361)
Income/(Loss) before income taxes $ 621 $ 2,912
Less: Special items pre-tax (110) (226)
Income/(Loss) before special items pre-tax $ 731 $ 3,138
Less: Interest on debt (288) (350)
Adjusted EBIT (Non-GAAP) $ 1,019 $ 3,488
Memo:
Revenue ($B) $ 40.7 $ 43.3
Net income/(loss) margin (GAAP) (%) 1.2 % 5.9 %
Adjusted EBIT margin (Non-GAAP) (%) 2.5 % 8.1 %
Earnings/(Loss) per Share Reconciliation to Adjusted Earnings/(Loss) per Share
First Quarter
2025 2026
Diluted After-Tax Results ($M)
Diluted after-tax results (GAAP) $ 471 $ 2,548
Less: Impact of pre-tax and tax special items (81) (150)
Adjusted net income/(loss) – diluted (Non-GAAP) $ 552 $ 2,698
Basic and Diluted Shares (M)
Basic shares (average shares outstanding) 3,968 3,991
Net dilutive options, unvested restricted stock units, and unvested restricted stock shares 43 80
Diluted shares 4,011 4,071
Earnings/(Loss) per share – diluted (GAAP) $ 0.12 $ 0.63
Less: Net impact of adjustments (0.02) (0.03)
Adjusted earnings/(loss) per share – diluted (Non-GAAP) $ 0.14 $ 0.66
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Effective Tax Rate Reconciliation to Adjusted Effective Tax Rate
First Quarter
2025 2026 Memo:
FY 2025
Pre-Tax Results ($M)
Income/(Loss) before income taxes (GAAP) $ 621 $ 2,912 $ (11,830)
Less: Impact of special items (110) (226) (17,356)
Adjusted earnings before taxes (Non-GAAP) $ 731 $ 3,138 $ 5,526
Taxes ($M)
(Provision for)/Benefit from income taxes (GAAP) $ (148) $ (361) $ 3,668
Less: Impact of special items 29 76 4,775
Adjusted (provision for)/benefit from income taxes (Non-GAAP) $ (177) $ (437) $ (1,107)
Tax Rate (%)
Effective tax rate (GAAP) 23.8 % 12.4 % 31.0 %
Adjusted effective tax rate (Non-GAAP) 24.2 % 13.9 % 20.0 %
Net Cash Provided by/(Used in) Operating Activities Reconciliation to Company Adjusted Free Cash Flow ($M)
First Quarter
2025 2026
Net cash provided by/(used in) operating activities (GAAP) $ 3,679 $ 1,316
Less: Items not included in company adjusted free cash flows
Ford Credit operating cash flows $ 4,106 $ 3,337
Funded pension contributions (234) (178)
Restructuring (including separations) (a) (163) (734)
Ford Credit tax payments/(refunds) under tax sharing agreement — 33
Other, net (141) (541)
Add: Items included in company adjusted free cash flows
Company excluding Ford Credit capital spending $ (1,790) $ (2,357)
Ford Credit distributions 200 950
Settlement of derivatives 1 134
Company adjusted free cash flow (Non-GAAP) $ (1,478) $ (1,874)
_________
(a) Restructuring excludes cash flows reported in investing activities.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
SUPPLEMENTAL INFORMATION
The tables below provide supplemental consolidating financial information, other financial information, and U.S. sales by type. Company excluding Ford Credit includes our Ford Blue, Ford Model e, and Ford Pro reportable segments, Corporate Other, Interest on Debt, and Special Items. Eliminations, where presented, primarily represent eliminations of intersegment transactions and deferred tax netting.
Selected Income Statement Information. The following table provides supplemental income statement information (in millions):
For the period ended March 31, 2026
First Quarter
Company excluding Ford Credit Ford Credit Consolidated
Revenues $ 39,819 $ 3,434 $ 43,253
Total costs and expenses 38,118 2,806 40,924
Operating income/(loss) 1,701 628 2,329
Interest expense on Company debt excluding Ford Credit 350 — 350
Other income/(loss), net 631 142 773
Equity in net income/(loss) of affiliated companies 147 13 160
Income/(Loss) before income taxes 2,129 783 2,912
Provision for/(Benefit from) income taxes 253 108 361
Net income/(loss) 1,876 675 2,551
Less: Income/(Loss) attributable to noncontrolling interests 3 — 3
Net income/(loss) attributable to Ford Motor Company $ 1,873 $ 675 $ 2,548
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Selected Balance Sheet Information. The following tables provide supplemental balance sheet information (in millions):
March 31, 2026
Assets Company excluding Ford Credit Ford Credit Eliminations Consolidated
Cash and cash equivalents $ 9,725 $ 7,924 $ — $ 17,649
Marketable securities 12,054 785 — 12,839
Ford Credit finance receivables, net — 46,185 — 46,185
Trade and other receivables, net 8,375 8,852 — 17,227
Inventories 16,537 — — 16,537
Other assets 4,591 1,301 — 5,892
Receivable from other segments 733 2,148 (2,881) —
Total current assets 52,015 67,195 (2,881) 116,329
Ford Credit finance receivables, net — 60,322 — 60,322
Net investment in operating leases 1,953 27,030 — 28,983
Net property 37,756 335 — 38,091
Equity in net assets of affiliated companies 2,595 142 — 2,737
Deferred income taxes 21,578 695 — 22,273
Other assets 11,791 1,908 — 13,699
Receivable from other segments 51 — (51) —
Total assets $ 127,739 $ 157,627 $ (2,932) $ 282,434
Liabilities
Payables $ 25,052 $ 987 $ — $ 26,039
Other liabilities and deferred revenue 27,312 2,537 — 29,849
Debt payable within one year 3,268 47,523 — 50,791
Payable to other segments 2,881 — (2,881) —
Total current liabilities 58,513 51,047 (2,881) 106,679
Other liabilities and deferred revenue 28,930 1,231 — 30,161
Long-term debt 16,327 90,008 — 106,335
Deferred income taxes 952 823 — 1,775
Payable to other segments — 51 (51) —
Total liabilities $ 104,722 $ 143,160 $ (2,932) $ 244,950
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Selected Cash Flow Information. The following tables provide supplemental cash flow information (in millions):
For the period ended March 31, 2026
First Quarter
Cash flows from operating activities Company excluding Ford Credit Ford Credit Eliminations Consolidated
Net income/(loss) $ 1,876 $ 675 $ — $ 2,551
Depreciation and tooling amortization 1,168 715 — 1,883
Other amortization 12 (470) — (458)
Provision for credit and insurance losses (2) 175 — 173
Pension and OPEB expense/(income) (136) — — (136)
Equity method investment (earnings)/losses and impairments in excess of dividends received (15) (13) — (28)
Foreign currency adjustments (115) 11 — (104)
Net realized and unrealized (gains)/losses on cash equivalents, marketable securities, and other investments (10) 4 — (6)
Stock compensation 105 5 — 110
Provision for/(Benefit from) deferred income taxes 78 (14) — 64
Decrease/(Increase) in finance receivables (wholesale and other) — 1,181 — 1,181
Decrease/(Increase) in intersegment receivables/payables (272) 272 — —
Decrease/(Increase) in accounts receivable and other assets (1,478) (64) — (1,542)
Decrease/(Increase) in inventory (1,361) — — (1,361)
Increase/(Decrease) in accounts payable and accrued and other liabilities (1,098) (109) — (1,207)
Other 265 (69) — 196
Interest supplements and residual value support to Ford Credit (1,038) 1,038 — —
Net cash provided by/(used in) operating activities $ (2,021) $ 3,337 $ — $ 1,316
Cash flows from investing activities
Capital spending $ (2,357) $ (19) $ — $ (2,376)
Acquisitions of finance receivables and operating leases — (12,095) — (12,095)
Collections of finance receivables and operating leases — 11,439 — 11,439
Purchases of marketable securities and other investments (1,629) (114) — (1,743)
Sales and maturities of marketable securities and other investments 3,875 107 — 3,982
Settlements of derivatives 134 (100) — 34
Other (11) (1) — (12)
Investing activity (to)/from other segments 950 — (950) —
Net cash provided by/(used in) investing activities $ 962 $ (783) $ (950) $ (771)
Cash flows from financing activities
Cash payments for dividends and dividend equivalents $ (607) $ — $ — $ (607)
Purchases of common stock (311) — — (311)
Net changes in short-term debt 53 (2,135) — (2,082)
Proceeds from issuance of long-term debt — 12,565 — 12,565
Payments of long-term debt (2,287) (13,294) — (15,581)
Other (120) (36) — (156)
Financing activity to/(from) other segments — (950) 950 —
Net cash provided by/(used in) financing activities $ (3,272) $ (3,850) $ 950 $ (6,172)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash $ (76) $ (44) $ — $ (120)
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)
Selected Other Information.
Equity. At March 31, 2026, total equity attributable to Ford was $37.5 billion, an increase of $1.5 billion compared with December 31, 2025. The detail for this change is shown below (in billions):
Increase/
(Decrease)
Net income/(loss) $ 2.5
Shareholder distributions (a) (0.9)
Other comprehensive income/(loss), net (0.2)
Common stock issued (including share-based compensation impacts) —
Other 0.1
Total $ 1.5
_______
(a) Includes cash dividends, dividend equivalents, and anti-dilutive share repurchases.
U.S. Sales by Type. The following table shows first quarter 2026 U.S. sales volume and U.S. wholesales segregated by electric, hybrid, and internal combustion vehicles. U.S. sales volume represents primarily sales by dealers, sales to the government, and leases to Ford management, and is based, in part, on estimated vehicle registrations and includes medium and heavy trucks.
U.S. Sales U.S. Wholesales
Electric Vehicles 6,860 6,249
Hybrid Vehicles 41,159 33,696
Internal Combustion Vehicles 409,296 406,993
Total Vehicles 457,315 446,938
ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED
For a discussion of recent accounting standards, see Note 2 of the Notes to the Financial Statements.
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