Key Takeaways

  • Ford's auto volume fell during Q2 FY 2021 due to a semiconductor shortage.
  • Despite the slump in volume, Ford beat expectations on both adjusted EPS and revenue.
  • U.S. customer-sold retail order bank for Ford vehicles was seven times that of Q2 FY 2020.
Ford Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Predictions
Adjusted Earnings Per Share Beat $0.13 -$0.10
Revenue (billions) Beat $26.8 $24.7
Total U.S. Truck Sales N/A 235,848 N/A

Source: Predictions based on analysts' consensus from Visible Alpha

Ford Financial Results: Analysis

Ford Motor Company (F) solidly surpassed analyst predictions when it released its Q2 FY 2021 earnings report on July 28. Ford posted adjusted earnings per share (EPS) of $0.13, far surpassing analyst predictions of -$0.10 for the quarter. The company also beat on revenue, reporting $26.8 billion in total revenue versus analyst predictions of $24.7 billion. At year-over-year (YOY) growth of about 38%, revenue climbed at its fastest pace in at least four years.

Ford's Key Metric: U.S. Truck Sales

A key metric for Ford is sales of its trucks in the U.S., one of the company's largest markets. Trucks are highly profitable for the company. Although Ford has not published a specific number for total U.S. truck sales for Q2 FY 2021, publicly available data from the company show that U.S. truck sales declined by almost 1% YOY.

Nonetheless, Ford said in its Q2 earnings report that it did better than expected with overall auto volume for the quarter given the ongoing global semiconductor chip shortage that has hindered production. The company's combined U.S. customer-sold retail order bank for all Ford vehicles was seven times larger than for Q2 FY 2020. President and CEO Jim Farley said the company was "spring loaded" for a rebound when semiconductor supplies stabilize to meet demand.

Ford's Guidance and Stock Performance

Ford raised its guidance for FY 2021 adjusted EBIT by roughly $3.5 billion to a range of $9 billion to $10 billion. The company expects volume to increase by roughly 30% sequentially from H1 to H2 FY 2021, although it will likely be offset by higher commodity costs and investments in the company's Ford+ plan. Ford also raised FY 2021 adjusted free cash flow guidance to between $4 billion and $5 billion.

Ford shares were up about 2.5% during after-hours trading immediately following the earnings release. Overall, the company's stock has significantly outperformed the broader market over the past year. Ford stock has provided one-year trailing total returns of 97.7% versus 36.7% for the S&P 500 as of July 28.

Ford (F) Earnings Call Recap

Farley told analysts that Ford is "seeing signs of improvement in the flow of chips now in the third quarter," although he cautioned that the "situation remains fluid." To compensate for the ongoing shortage, Ford has engaged directly with chip manufacturers and has stockpiled certain critical parts, dual-sourcing some and integrating interchangeability in design when possible.

Next Earnings Report

Ford's next earnings report is estimated to be released on Oct. 28, 2021.