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Ford: 1st Quarter Results


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Ford 1st Quarter Earnings Results:

 

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Kudos to Ford for having a blow out quarter and revving up its share price again after being down 25% over last few months. Better yet, Ford is announcing a further production ramp up in order to keep up with demand. So looks like Ford is already off to another good quarter coming up. As long as Lincoln is kept out of conversation, all systems are go for Ford.

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I remember all the Ford bashers saying the Ford would come to regret not going through Ch. 11 and getting their debt erased. So far, it looks like the public opinion benefit of sticking it out has benefited the company more than Ch. 11 would have.

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Still no word from Ford that Lincoln is actually losing any money, so there's no reason to specifically leave them out of any conversation.

 

Good to see Europe eek out a profit and to see another $2B of debt erased.

Even after Lincoln was #1 in the J.D. Power quality survey?

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Even after Lincoln was #1 in the J.D. Power quality survey?

 

Well, at this point, Lincoln's operations are small enough and integrated into the Ford structure so deeply that mentioning them separately in an earnings release doesn't make a whole lot of sense. It really would be difficult to separate Lincoln's costs from Ford's in many cases, especially in terms of product development costs.

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Ford's guidance or outlook seems to remain positive as they maintain sales levels in the U.S. will be about 13-13.5 millon. However they may be hedging their bet by saying the rest of the year might not be as profitable as the first quarter.

 

 

." Based on lower expected profit at Ford Credit, increasing commodity costs, seasonal factors that tend to favor the first half of the year and higher investments and costs related to its longer-term growth and brand plans, quarterly results in the latter part of the year may not be as strong as the first quarter."

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A moment of silence please for the doubters....a flashback quote is in order courtesy of Matt...........QUOTE "How many different cars does a recycled platform need to spawn before you finally admit it was/is a failure? P71".....UNQUOTE. Yep the underperformance shows in the numbers..........

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Anybody have a running total on this? What is Ford's total debt now, around 15 Billion?

 

Ford's long term debt is down to $14 billion, and analysts expect that debt to be down to about $9 billion by end of this year. However, this could be a challenging year here on out with UAW contract negotiations coming up shortly, and skyrocketing commodity and fuel costs that will impact profitable truck sales. Maybe that's why today's good news didn't pop the share price that much on Wall Street . They are looking ahead and they see storm clouds. At the very least labor costs are going to go up with commodity and fuel costs. Hopefully no strike or pissed off workers in general.

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Maybe that's why today's good news didn't pop the share price that much on Wall Street

 

As I write this, Ford is up 42 cents a share, or 2.7%. Just how much are you expecting in one day after reporting modestly better than expected earnings, when the rest of the broader markets are up between 0.5-1.0%?

Edited by NickF1011
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Anybody have a running total on this? What is Ford's total debt now, around 15 Billion?

$2B in short term debt, $14.6B in long term debt.

 

In 2005, before mortgaging the company, Ford had $16.9B in debt. Essentially, Ford has erased the debt load incurred when they mortgaged the company.

Edited by RichardJensen
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Anybody have a running total on this? What is Ford's total debt now, around 15 Billion?

 

I think the numbers are:

 

Automotive Gross Cash: $21.3 billion

 

Automotive Debt: $16.6 billion

 

Gross Cash: $4.7 billion

 

This is amazing performance. Ford's debt topped out at almost $30 billion IIRC. Last year, Ford indicated they were shooting for a net cash neutral positon, but beat that goal. And now net cash positive by almost $5 billion. And all of this is happening while Ford is using cash to invest heavily in new product. Amazing.

Edited by Austin
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$2B in short term debt, $14.6B in long term debt.

 

In 2005, before mortgaging the company, Ford had $16.9B in debt. Essentially, Ford has erased the debt load incurred when they mortgaged the company.

 

Do you know where that leaves them in terms of the actual "mortgage" now? Are they now fully back in control of their own trademarks, etc or is there still a chance of them losing rights to their own name should they default?

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As I write this, Ford is up 42 cents a share, or 2.7%. Just how much are you expecting in one day after reporting modestly better than expected earnings, when the rest of the broader markets are up between 0.5-1.0%?

 

Uh, ONE or TWO pennies/share is a MODEST uptick in earnings, and 11 cents over expectations is a BLOW OUT report. $600 million more than expectations is a hell of a lot more money even for Ford. In fact, 30% more than expected.

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Uh, ONE or TWO pennies/share is a MODEST uptick in earnings, and 11 cents over expectations is a BLOW OUT report. $600 million more than expectations is a hell of a lot more money even for Ford. In fact, 30% more than expected.

 

Expected by who though? Analysts. Ford offers no earnings guidance, so their earnings expectations have been ridiculously inaccurate for the past several years -- a fact that the market has already accounted for. You're still not going to see a giant increase in Ford shares in a single day, especially when good earnings were already "in the bag" far prior to today's trading. Today we simply found out how good, and investors are rewarding them, by outperforming the general markets by OVER 150%!!!!!!!!!!!!! (Wow, playing with percentages is neat, huh?)

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Do you know where that leaves them in terms of the actual "mortgage" now? Are they now fully back in control of their own trademarks, etc or is there still a chance of them losing rights to their own name should they default?

 

I can't answer that question, but I don't think Ford cares since Ford is now so much more in control of their finances. And, since the risk of default has been reduced considerably, holding the rights to the trademarks certainly isn't worth much of anything to the lenders (whereas there probably was some imputed rate discount associated originally). Ford is doing the same thing that we as individuals do; they are rotating their debt to pay down debt with the highest interest rate. As Ford's borrowing rate is approaching investment grade (with or without the official ratings), Ford is floating new debt so they can retire higher interest rate loans.

 

Lewis Booth might not come off as the most personable guy in presentations. But he is exceptionally bright (as well as being a nice guy) and he will continue to manage the pursestrings in a very professional matter.

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Do you know where that leaves them in terms of the actual "mortgage" now? Are they now fully back in control of their own trademarks, etc or is there still a chance of them losing rights to their own name should they default?

I'm assuming that if they're carrying any of that debt it's by choice (e.g. cheaper than debt they've retired), and thus not a concern.

 

I wonder if Ford will regain its investment grade rating next year.... Seems doubtful that it will happen before the next UAW contract.

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I'm assuming that if they're carrying any of that debt it's by choice (e.g. cheaper than debt they've retired), and thus not a concern.

 

I wonder if Ford will regain its investment grade rating next year.... Seems doubtful that it will happen before the next UAW contract.

 

I can't remember the review calendar, but I think the earliest Ford could get reviews by the agencies would be early next year? I have also read/heard that achieving investment grade is one Ford's top management objectives this year. I'm not so sure how much of a change it will make in Ford's borrowing costs. It seems to me that lenders are already lowering Ford's cost of borrowing beyond the present rating based on Ford's performance and cash position. I'm sure there will be some further interest cost benefit if achieved, and maybe some bump in the stock price.

 

Just to think, it was only a couple of years ago that I was able to purchase Ford Credit notes at fire sale prices that gave me 25% yield to maturity. Now I'd be lucky to get less than 5% if I could find them.

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I'm waiting for someone to do a side by side comparison of IBM's turnaround under Gerstner and Ford's turnaround under Mulally---while IBM did something Ford didn't (they diversified away from manufacturing)--there are some striking similarities.

 

Gerstner is credited with bringing a customer focus to IBM and tearing down the silos that impeded IBM's ability to respond quickly to changing markets and to function well in a cost competitive environment. Mulally has done similar things for Ford.

 

Both companies were loaded with talent that was not efficiently utilized before their restructuring, and as a result, both companies came out of their restructuring efforts as nimble competitors that were almost immediately among the leaders in their industries.

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But according to backward thinkers, Ford was supposed to lose buyers, since "the Panthers are being dropped".

 

Turns out, Ford made great profits, even though the Grand Marquis was out of production; looks like the D3 platform is helping pay the bills now.

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