Ford's Awful Earnings Will Only Get Worse

Cars and Drivers

Published: April 29, 2020 7:53 am

When Ford Motor Co. (NYSE: F) reported first-quarter 2020 results after markets closed Tuesday, the automaker posted an adjusted diluted per-share loss of $0.23 on revenues of $34.3 billion. In the same period a year ago, the company reported earnings per share (EPS) of $0.44 on revenues of $40.3 billion. Analysts were looking for loss per share of $0.06 and revenues of $34.5 billion.

While the first quarter’s results were bad, the company’s outlook for the second quarter is worse. Ford’s adjusted EBIT loss in the first quarter totaled $600 million. In an outlook statement, Chief Financial Officer Tim Stone said the company expects an adjusted EBIT loss of more than $5 billion in the second quarter.

At the end of the quarter, Ford had $35.1 billion in liquidity lined up and $46.4 billion in cash and equivalents, including marketable securities. Stone said the company’s cash “is sufficient to take us through the end of the year.” On a GAAP basis, Ford’s first-quarter net loss totaled $2.0 billion. Adjusted free cash flow in the quarter was negative $2.2 billion.

During the quarter, Ford fully drew down its existing credit lines and issued new junk-rated, unsecured debt of $8 billion. The company also suspended its dividend and share buybacks.

Ford halted global production in March and plans a phased restart of production in Europe next week. Production in China was restarted in February, and about one-third of Ford vehicles sold during March were sold online, according Chief Operating Officer Jim Farley, who said that “[t]he actions we took in China have become a best practice for us.” Online sales in the United States have not been as successful for dealers.

Ford did not supply guidance, but the consensus estimates for the second quarter are worse than awful. Analysts are looking for a loss per share of $0.88 and revenues of $17.99 billion. In the second quarter of 2019, Ford posted EPS of $0.28 and revenues of $35.76 billion, essentially double estimated revenues for the current quarter.

Ford stock traded down about 4.7% in Wednesday’s premarket session, at $5.13 in a 52-week range of $3.96 to $10.56. The 12-month price target on the stock is $6.09.