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DATE

Wednesday, April 29, 2026 at 5 p.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — James Duncan Farley
  • Chief Financial Officer — Sherry House
  • Chief Operating Officer — Kumar Galhotra
  • President, Ford Blue and Model e — Andrew Frick
  • President, Ford Pro — Alicia Bohler Davis
  • Chief Executive Officer, Ford Credit — Cathy O’Callaghan
  • Chief Investor Relations Officer — Lynn Antipas Tyson

TAKEAWAYS

  • Revenue -- $43.3 billion, reflecting over 6% growth despite a nearly 4% volume decline attributed to the exit of low-margin products.
  • Adjusted EBIT -- $3.5 billion; $2.2 billion excluding a one-time $1.3 billion IEPA tariff benefit (allocated $700 million to Ford Blue and $500 million to Ford Pro).
  • Full-Year Adjusted EBIT Guidance -- Raised to $8.5 billion to $10.5 billion, signaling management confidence in ongoing execution.
  • Paid Software Subscriptions (Ford Pro) -- 879,000, up 30% year over year, supporting growing recurring revenue streams.
  • Off-Road Performance Trims (Ford Blue) -- Account for 25% of U.S. sales; contributed to a 0.7-point market share gain in the off-road space.
  • F-Series Performance -- Achieved highest retail share, highest average transaction price, and lowest incentive spend per unit compared to key competitors.
  • Adjusted Free Cash Flow -- Usage of $1.9 billion, driven by unfavorable timing differences, higher net spending, and working capital changes.
  • Ford Pro EBIT -- $1.7 billion, growing margin despite production disruptions related to Novelis.
  • Ford Blue EBIT -- $1.9 billion; guidance for full-year EBIT increased by $500 million to $4.5 billion–$5 billion.
  • Ford Model e EBIT -- Loss of $777 million, representing a nearly 35% improvement in Gen 1 EBIT losses compared to previous period.
  • Ford Credit EBT -- $783 million, a $200 million increase due to higher financing margin and favorable derivative performance.
  • Material and Warranty Cost Reductions -- On track for an additional $1 billion improvement across the company in 2026.
  • Commodity Headwinds -- Forecasted to be just above $2 billion, about $1 billion higher than previous guidance, mainly from higher global aluminum prices, not including Novelis-related costs.
  • Novelis Production -- Facility restart scheduled for May; $1 billion EBIT benefit from Novelis supply recovery expected in the second half, offset by $1.5 billion–$2 billion temporary aluminum sourcing costs.
  • Paid Shareholder Distributions -- Second-quarter regular dividend of $0.15 per share declared, payable June 1 to shareholders of record on May 12.

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RISKS

  • Management stated, "Our guidance does not include the potential impacts of a sustained conflict in the Middle East or a significant downturn in the U.S. economy, which could have a material impact on industry demand."
  • Sherry House pointed to "commodity headwinds of just above $2 billion, about $1 billion higher than our previous estimate, largely due to higher aluminum pricing driven by global supply constraints."
  • About $1.5 billion–$2 billion in one-time incremental costs will be incurred for alternative aluminum sourcing until Novelis is fully operational, impacting short-term margins.
  • Adjusted free cash flow was a use of $1.9 billion in the quarter due to "unfavorable timing differences, higher net spending, and changes in working capital," representing a short-term strain on cash generation.

SUMMARY

Ford Motor Company (F 2.57%) emphasized organizational streamlining, announcing the consolidation of advanced technology, digital, and design teams with its global industrial system as it begins to roll out next-generation vehicles and software. Management projects that nearly all global vehicle volume will feature next-generation electric architectures and in-house software by 2030, highlighting a multi-year product refresh covering 80% of the North America portfolio and 70% of global volume. Strategic focus on high-margin software and physical services aims to drive revenue growth at an annualized 8% rate through the end of the decade, underpinned by rapid expansion in digital offerings, aftermarket parts, and remote services. Ford is leveraging the Skunk Works model and aggressive cost-reduction efforts by applying advanced cost modeling across key platforms; executives forecast $1 billion in further material and warranty savings during 2026. The company outlined a disciplined approach to capital—renewing $18 billion in credit facilities and repaying convertible debt—while reiterating priorities on maintaining ample liquidity and returning value to shareholders.

  • President and CEO James Duncan Farley said, "By 2030, almost all of our global volume will feature next-generation electric architectures and in-house software," which marks a clear strategic pivot toward software-defined vehicle integration.
  • Ford is progressing with its Skunk Works-inspired universal EV (UEV) platform, launching from the Louisville Assembly Plant in 2027 to enable flexible, cost-efficient scale across propulsion types using a single architecture.
  • The management team underscored its U.S. market focus amidst global competition, with Farley saying, "we are totally dedicated to a thriving U.S. auto industry and safeguarding our country’s industrial base," and clarifying Ford's selective approach to global partnerships, including with Chinese OEMs.
  • J.D. Power ranked Ford fourth in the 2026 U.S. Customer Service Index, representing the company’s highest placement in three decades, attributed to efforts to enhance quality and the customer experience.
  • Executives reiterated full commitment to supply chain resiliency, noting contingency arrangements for critical inputs, explicit daily monitoring of materials "by grade," and rapid mitigation of aluminum supply disruptions.

INDUSTRY GLOSSARY

  • IEPA Tariff: A one-time tariff benefit adjustment attributed to tariffs paid under a specific U.S. industrial or environmental program; recognized as a discrete earnings item.
  • Novelis: Ford’s primary aluminum supplier, whose production outages led to supply chain disruptions and material cost increases, with recovery timelines impacting earnings guidance.
  • UEV Platform: Ford’s Universal EV architecture designed to scale high-volume electric vehicles and hybrids efficiently across product lines.
  • Aftersales: Revenue derived from parts, servicing, and software provided after the initial vehicle sale, forming a growing, annuity-like profit stream.

Full Conference Call Transcript

Operator: Good day, everyone. My name is Leila, and I will be your conference operator today. At this time, I would like to welcome you to the Ford Motor Company first quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, please use the raise hand function, which can be found on the black bar at the bottom of your screen. At this time, I would like to turn the call over to Lynn Antipas Tyson, chief investor relations officer.

Lynn Antipas Tyson: Thank you, Leila, and welcome to Ford Motor Company's first quarter 2026 earnings call. With me today are James Duncan Farley, President and CEO, and Sherry House, CFO. Joining us for Q&A are Andrew Frick, President of Ford Blue and Model e; Alicia Bohler Davis, President of Ford Pro; Kumar Galhotra, Chief Operating Officer; and Cathy O’Callaghan, CEO, Ford Credit. Jim will give a high-level overview of the business, and Sherry will provide added texture on the financials and guidance. We will be referring to non-GAAP measures today. These are reconciled to the most comparable U.S. GAAP measures in the appendix of our earnings deck. You can find the deck at shareholder.ford.com. Our discussion also includes forward-looking statements.

Our actual results may differ. The most significant risk factors are included on page 19 of our deck. Unless otherwise noted, all comparisons are year-over-year. Company EBIT, EPS, and free cash flow are on an adjusted basis. Upcoming IR engagements include Naveen Kumar, CFO of Ford Pro, at the Deutsche Bank Global Auto Industry Conference in New York on May 19. I will now turn the call over to Mr. Farley.

James Duncan Farley: Thank you, Lynn. And thanks to all of you for joining us. I want to thank the Ford team, all of our dealers, and our partners for a strong start to this year. Our results this quarter — $43.3 billion in revenue and $3.5 billion in adjusted EBIT — reflect sharp execution and the momentum we are building for our Ford+ plan. Accordingly, we are raising our full-year adjusted EBIT guidance to between $8.5 billion and $10.5 billion. These results are encouraging, but the bigger story is the modern Ford that is now taking shape. For five years, we have relentlessly built the foundation of Ford+.

We strengthened our industrial system, made real progress in quality and cost, and advanced our software capability and customer experience. Earlier this month, we took the next step in that evolution by establishing an end-to-end organization for product creation and industrialization. We unified our advanced technology, digital, and design teams with our global industrial system. This change aligns with the most intensive product and software rollout in our history. By 2030, almost all of our global volume will feature next-generation electric architectures and in-house software. This applies to every propulsion type as we deliver and scale high-quality software-defined vehicles. This new organization allows for fast decision-making and reduced complexity.

This is the moment we integrate the digital soul of a vehicle — the software, all the silicon, and the user experience — with our world-class industrial execution. Among other things, this alignment will support our high-margin software and physical services revenue, which was over $15 billion last year, and we expect to grow that nearly 8% annually through the end of the decade. This services growth is driven by offering customers indispensable digital experiences and investing in aftermarket sales with a focus on customer uptime, expanding our parts catalog, and enhancing our service network. We are also leaning into the Skunk Works model to improve all of Ford.

They have done an incredible job creating the UEV platform, which represents a step change in efficiency and cost, especially for the EV market. At Ford, we are now integrating these Skunk Works breakthroughs back into our mainstream products and processes. We are applying their advanced tools and physics-based cost modeling to the highest-volume internal combustion and hybrid lines. This will reduce our costs and improve quality across the board. Our product pipeline is aggressive: between now and 2029, we will refresh 80% of our North America portfolio, and 70% of our global portfolio by volume. This includes the next-generation F-150 and Super Duty, among many others.

It also includes the launch of our universal EV platform in 2027 from our Louisville Assembly Plant in Kentucky. We are scaling that plant for significant volume to accommodate a variety of vehicles off that single platform. And speaking of electrification, our strategy remains focused on powertrain choice, not nameplate complexity. By the end of the decade, 90% of our global nameplates will offer electrified powertrains, including advanced hybrids, extended-range electric vehicles, and full EVs. Our financial health is driven by a leaner, more effective industrial system. We are on track to deliver over another $1 billion in material and warranty cost improvements this year — and we will never stop. Our focus on quality is paying off. J.D.

Power recently ranked Ford number four in the 2026 U.S. Customer Service Index, our best performance in 30 years. Finally, we remain resilient in the face of global uncertainty. Regarding the conflict in the Middle East, our priority is our team and their safety. We are monitoring the situation and working to minimize risk and find opportunities in much the same way we have navigated the pandemic, the semiconductor shortage, tariff headwinds, and others. We have the muscle memory to find cost offsets, adjust our product mix quickly, and proactively manage our supply chain in times of stress and crisis. My main message today is this: Ford is a fundamentally stronger, more modern company.

We have a foundation built on industrial fitness. We have the technology, and we now have a unified organization to not just deliver, but to compete to win. Ford is focused on execution, quality, and thrilling our customers. Over to you, Sherry.

Sherry House: Thank you, Jim, and hello, everyone. Before I walk you through the details of our performance this quarter, let me start with a few items I know are top of mind. First, in Q1, we recognized a $1.3 billion benefit related to IEPA tariffs. This one-time adjustment largely benefits Ford Blue and Ford Pro at about $700 million and $500 million, respectively. They are related to IEPA tariffs paid between March 2025 and February 2026. Second, our Novelis recovery is progressing as expected. We still expect a $1 billion improvement in EBIT year-over-year, weighted towards the second half.

This is net of $1.5 billion to $2 billion of one-time incremental costs to secure alternatively sourced aluminum until the Novelis facility is operating at full throughput later this year. Third, relative to U.S. inventory, we expect to remain within our target of 55 to 65 retail days’ supply for the year. F-Series sales remain healthy as inventory recovers from the Novelis supply disruption. America’s best-selling truck delivered year-over-year retail share improvement of 30 basis points in March, and we are carrying that momentum into Q2. Our team is effectively managing tight retail days’ supply by helping dealers fill inventory gaps while ensuring high-demand trim levels are in ample supply.

We are also producing a richer mix of product as we continue to ramp Novelis. Importantly, on average, we are spending less on incentives than our competitors. In fact, for the quarter, F-150 had the highest retail share, the highest average transaction price, and the lowest incentive spend per unit versus our key competition. Now turning to the quarter. We delivered adjusted EBIT of $3.5 billion, or $2.2 billion excluding the impact of the IEPA benefit. The strength in the quarter versus our original guidance was primarily supported by a change in calendarization of cost improvements and timing of investments, growth in software and physical services, and higher net pricing.

Our global revenue grew by over 6% despite a nearly 4% decline in volume, which was expected as we exited low-margin products like Escape in North America and Focus in Europe. In the U.S., we had our highest Q1 share of revenue in five years, led by large utilities and trucks. Adjusted free cash flow was a use of $1.9 billion in the quarter, more than explained by unfavorable timing differences, higher net spending, and changes in working capital. On a full-year basis, we expect timing differences and working capital to be favorable. Our balance sheet is strong, with $22 billion in cash and over $43 billion in liquidity, and we remain committed to our investment-grade rating.

We repaid our convertible debt without refinancing it and relaunched our anti-dilutive share repurchase program, which we completed in the quarter. Earlier this month, we successfully renewed our $18 billion corporate credit facilities for another year. Our strong liquidity position provides us the flexibility to manage in this dynamic environment and invest in higher-return growth opportunities like Ford Energy. It also allows us to pay consistent shareholder distributions. Yesterday, we announced the declaration of our second-quarter regular dividend of $0.15 per share, payable on June 1 to shareholders of record on May 12. Now turning to segment highlights. Ford Pro achieved EBIT of $1.7 billion against the backdrop of Novelis-related production disruptions.

Ford Pro continues to deliver higher margins through a powerful ecosystem of vehicles, software, and physical services. We are scaling rapidly and increasing recurring revenue, which bolsters resiliency. Paid software subscriptions grew to 879,000, a 30% year-over-year increase. By integrating innovations like Ford Pro AI, we can help commercial fleet managers instantly identify maintenance needs, leverage large data models and fuel usage to lower costs, and optimize routes, among other features, all designed to provide better predictability, productivity, and profitability our customers require. As we look ahead, the 2027 model-year order books are just starting to open, and we are seeing positive early indicators.

Ford Blue delivered $1.9 billion in EBIT, supported by the sustained sales performance of F-Series and go-to-market discipline, evidenced by Q1 incentive spend below industry average. Additionally, our off-road performance trims now account for nearly a quarter of U.S. sales, and Maverick and F-150 continue as the best-selling hybrids in their segments. Importantly, Ford Blue’s Q1 performance highlights the strength of the underlying business and, excluding IEPA, is representative of its ongoing run rate. For Ford Model e, EBIT was a loss of $777 million as we now start to benefit from the portfolio changes announced in December. In addition to investing in a leaner, more profitable portfolio, we are actively matching supply with demand globally to optimize profitability.

In the quarter, we benefited from a nearly 35% improvement in our Gen 1 losses. We also continue to step up our incremental $1 billion investment in the UEV platform and Ford Energy as we progress throughout the year ahead of their launches in 2027. As a result, we expect first quarter to be the strongest quarter for Model e this year. Ford Credit delivered a solid quarter with EBT of $783 million, up $200 million, reflecting improvements in financing margin and enabled by a high-quality book of business. Results also benefited from favorable performance on our derivatives. Our portfolio performance is strong, and we maintain a highly disciplined approach to capital, reserve, and risk management practices.

Now our 2026 outlook. For the full year, we now expect company adjusted EBIT of $8.5 billion to $10.5 billion, adjusted free cash flow of $5 billion to $6 billion, and capital expenditures of $9.5 billion to $10.5 billion, which reflects our shift toward higher-return growth opportunities, including $1.5 billion for Ford Energy this year. Our guidance does not include the potential impacts of a sustained conflict in the Middle East or a significant downturn in the U.S. economy, which could have a material impact on industry demand.

Our full-year segment outlook stays steady, with Ford Pro EBIT of $6.5 billion to $7.5 billion, Model e losses of $4 billion to $4.5 billion, Ford Credit EBT of about $2.5 billion, and for Ford Blue, we have increased our guidance by $500 million to $4.5 billion to $5 billion, driven by a stronger underlying business. Our guidance continues to assume a U.S. SAR of 16 million to 16.5 million units and flat industry pricing.

Some important puts and takes for the year: We have the $1.3 billion one-time IEPA tariff benefit, but we now expect commodity headwinds of just above $2 billion, about $1 billion higher than our previous estimate, largely due to higher aluminum pricing driven by global supply constraints. Note this excludes Novelis-related aluminum costs. The impact of ongoing tariffs is unchanged at about $1 billion and is now a part of our run-rate costs. This excludes the IEPA benefit and Novelis temporary costs. As Jim mentioned, we are on track for a $1 billion improvement in material costs and warranty reductions on top of the $1.5 billion of cost reductions we delivered in 2025.

We continue to expect a net $1 billion improvement from the Novelis recovery. And as I mentioned earlier, about $1 billion of incremental investment in Model e to support the ramp of the UEV platform and Ford Energy. Our Q1 performance highlights the benefits of our Ford+ priorities: rigorously optimizing revenue across every segment through leading products and high-growth services, improving operating leverage, and exercising smart, accretive capital allocation decisions. The increase in our full-year adjusted EBIT guidance underscores these benefits. We will now open the call for questions.

Operator: If you would like to ask a question, please use the raise hand function, which can be found on the bar at the bottom of your screen. To leave time for as many questions as possible, please limit to one question. Your first question will come from Joseph Robert Spak with UBS. Your line is now open. Please go ahead.

Joseph Robert Spak: Good afternoon, everyone. Sherry, maybe to pick up on the commodity increase — you mentioned about $1 billion. Just trying to contextualize what you are assuming here because I think in the past you talked about, call it, an $8 billion steel and aluminum buy, with 40% of that aluminum. There has been some hedging, and this is really only nine months. I know prices have really gone up, but it looks like a pretty big number. So I just want to help understand what you are thinking for the balance of the year, and then how you would advise investors to think about that rate heading into 2027.

And then is there any update you could provide on the Novelis timeline? I think there was some preliminary thought it could come online in the summer. Are we on track there? If that happens, how are you thinking about that headwind you mentioned? I am just trying to figure out the phasing and timing because my prior assumption was that most of that Novelis headwind would have been more in the first half if it was expected to ramp through the year. Maybe you could help us with some of that cost phasing.

Sherry House: Sure. It is hard to predict 2027 at this point given the commodity volatility, but let me tell you what we are seeing near term. With respect to steel and aluminum, even before the Middle East situation started, we were already seeing global industry shortages. Then you had the Middle East conflict, and you also have to remember Ford has the aluminum supply shortage with respect to our primary aluminum supplier, which is Novelis. These costs we are discussing are not related to Novelis — we package those separately and talk about those separately. When I talk about a $1 billion year-over-year improvement due to Novelis, that includes all the tariff costs.

The $2 billion commodity headwind is related to our exposures in aluminum and steel predominantly, based on current forward curves and our contract structures.

Kumar Galhotra: Joe, your assumption is correct. We are still expecting the hot mill to restart in May. There are two aspects to bringing any mill back online: the restart itself and then the ramp-up. All the enablers for both aspects are on track. In the event the relaunch does not go according to plan, we have contingency plans in place. That means we have additional aluminum supply to ensure our plant production schedules are not interrupted. So the mill should be back online, and if we have any hiccups, we have contingency plans for the rest of the year.

James Duncan Farley: And, Joe, as you would expect, we ship by grade, we have several grades by step in the process, and we track it every day. We know exactly the situation we have and the float we have. We have also learned how to back up the aluminum supply, as Kumar said, in case the mill ramps slower or the actual start date is later.

Joseph Robert Spak: Thank you.

Operator: Your next question will come from Dan Meir Levy with Barclays. Dan, I see you have unmuted. Please go ahead.

Dan Meir Levy: Okay. Thanks for taking the questions. We note within the guidance that effectively the IEPA refund is being offset by the raw materials, so really the net of the guidance improvement is coming from improved operations. Maybe you can unpack the improved operations beyond the warranty and material, which look consistent. How much runway do you have on this, and can this offset any increases in raw materials you might see in 2027 given the staggering of costs that are going to be hitting?

Sherry House: As we look at what is behind our $1 billion raise versus prior guidance, software and physical services are among the biggest components. The Ford Pro business continues to have very high paid subscribers — now at 879,000, up 30% year-over-year — and the enterprise is doing well across physical services and software. Another item that was really big for us in Q1 was net pricing. As we said, our share of revenue was the highest in five years, led by full-size utilities and trucks. We also had timing differences in cost — some items hit in Q1 that we were expecting to hit in Q2 — which was favorable.

We took all that underlying performance into consideration and felt that $500 million was the amount to pull through for the full year, which is why our guidance reflects that.

Operator: Your next question will come from Andrew Percoco with Morgan Stanley.

Andrew Percoco: Great. Thanks so much for taking the question. I did want to come back to the guidance, and maybe I am missing some moving pieces. Looking at your first-quarter performance — $3.5 billion of adjusted EBIT — you had been essentially signaling sequentially flat, which would have been like $1.1 billion for the first quarter. So you essentially beat by $2.5 billion in the first quarter, of which a little over $1 billion is from IEPA. Even though that is offset by some incremental cost headwinds on the commodity side, it would imply downside or some incremental costs elsewhere if your guide is only increasing by $500 million.

Can you help break down those moving pieces in case I am missing anything in that bridge? And then, Jim, there have been headlines around potential partnerships between Ford and some Chinese OEMs. More broadly, there is a lot of focus on vehicles coming out of China potentially making their way into the U.S. Can you give us your updated thoughts on what that could look like and any involvement you might be interested in?

Sherry House: I do not think you are missing anything in the bridge. As I said, there were three components really driving the performance, and we are pulling through the amount that is sustainable. Some of it was timing differences, and we did not want to put timing differences into a guidance raise.

James Duncan Farley: I am glad there is a lot of focus on this. As America’s largest auto producer, we are totally dedicated to a thriving U.S. auto industry and safeguarding our country’s industrial base. That is not just economic vitality; it is also national security. China, Japan, and South Korea have prioritized their domestic auto industries and manufacturing for the same reasons. We leverage global partnerships and even IP sharing — including with Chinese OEMs — to grow our business around the world, but we are fully committed to a level playing field in the U.S. and to safeguarding our home market because of the importance of the auto industry and our industrial base.

Ford continues to be a global company — we want the rights to win around the globe, and we need IP and partnerships outside the U.S. to do that. In the U.S. itself, we are extremely protective, as we should be, just as China, South Korea, and Japan are. What that means in specific policies will play out in our strategy as a company, but as America’s number one auto producer, you can understand our perspective.

Operator: Your next question will come from Bank of America.

Analyst: Hi. Thanks for taking my question. In the materials, I thought it was interesting — you said the off-road performance trims account for 25% of the overall sales mix. Can you give us more on the strategy here and how this has trended historically? Is the strategy to prioritize some of these higher-margin trims while production remains constrained? And maybe remind us on the profitability of some of these off-road trims versus company average. Thanks. And as a follow-up on commodities, can you remind us how you are hedged across the various commodities?

With the $2 billion commodity headwind, does this assume that prices stay where they are today, so if they were to come down this would provide some cushion in the guide?

Andrew Frick: Thanks for the question. Yes, that is part of our strategy, and it is a big reason our Blue business is doing well. If you look at our wholesales in the first quarter, they were relatively flat, but we had an improved mix of Explorer and Expedition, we phased out Escape and are in sell-down there, and our F-Series remains strong. We grew our share in the off-road space — 25% of our volume — and our share actually grew by 0.7 points. That is because we are able to lean into series like Tremor and Raptor across multiple vehicles and really drive those mixes.

It is relatively more profitable, and it all plays back to our overall strategy of leaning into our profit pillars and winning with passion products.

James Duncan Farley: No boring products.

Sherry House: On commodities, our guidance assumes prices stay where they are today — and as you know, forward curves are up. We use a range of contract types: some are fixed, some are multi-year, many are indexed with a quarter lag. We also utilize hedges where appropriate and manage the portfolio holistically. If prices go up substantially from here, we would share that update, and if they go down, that would be a net positive.

Analyst: Perfect. Incredibly helpful. Best of luck going forward.

Operator: Your next question will come from Mark Trevor Delaney with Goldman Sachs.

Mark Trevor Delaney: Good afternoon. Thank you for taking the questions. I was hoping to start on the comments the company spoke about in its prepared remarks on software and physical services. I think you said you expect the $15 billion of revenue coming from those areas to grow at a nearly 8% rate annually through the end of the decade, which is a pretty good outlook. Can you help investors better understand what is driving that degree of revenue growth over the coming years, and more importantly, what that means for EBIT?

And then on the pickup market: Ford has a very strong franchise with the F-Series, and you have spoken to adding more product with the UEV-based pickup model and the ICE truck coming out of Tennessee. Competitors are leaning into that segment more as well. As you think about all the new models coming into the pickup space, how do you see the segment evolving?

James Duncan Farley: This has been a critical part of our path to 8%, and we have been planning it for many years. We have invested heavily in our advanced electric architectures, and our dealers have invested heavily in service capacity. Our focus is on two key areas driving the business. First is our aftersales parts business. We see growth in Pro; our dealers are massively investing in capacity for Pro. We are also becoming far more successful wholesaling parts from our dealers to third-party repair shops throughout the U.S. We will expand our parts catalog in terms of price and diversity, and we will focus on not just Ford parts but multimake parts.

Second, we have become very effective at remote service: almost 20% of all Ford’s repairs are now done outside the dealership at our customers’ locations. Pro customers especially value this because they do not have to come into the dealership. This has expanded our aftersales revenue. Inside the company, we are very focused on improving our repair order duration — that drives higher throughput for dealers with very high margins. When you look at the margins of the parts and software businesses, this $15 billion that will be growing at 8% a year is highly profitable. It also has a different revenue risk profile than our vehicle business — it is more of an annuity over many years.

On pickups, the market continues to broaden. Car buyers are moving into trucks, and even utility buyers are moving into trucks. We think that trend will continue, especially with the type of packaging we will be able to provide. It worked on Maverick, and we are really excited about the UEV pickup and its packaging to appeal not just to truck buyers but to source from SUV buyers as well. So we see the pickup market growing across segments and price points on the retail side.

Alicia Bohler Davis: On the commercial side, similar to what Andrew said, we have commercial buyers that purchase pickup trucks from Maverick size all the way up to our F-750. We have products in those segments and diverse powertrains, and we see that continuing to grow. We continue to have strong orders for 2026 from fleet customers, and we just opened our 2027 model-year order books. We are seeing positive early indicators. Demand is strong, and we are making sure we have offerings from the very beginning — Maverick all the way up to the higher pickup trucks.

James Duncan Farley: We like to future-proof our truck business. To do that, we offer customers more choice on the powertrain side and tie the powertrains to other benefits truck customers want, like hybrids with Pro Power Onboard. Protecting the franchise is not just about having an affordable electric pickup or hybrids throughout our lineup; it is also about having a flow of customers that move through our lineup over time. On the Pro side, it helps with adjacency sales, and on the retail side, Maverick and future UEV sales are a juggernaut for loading our whole pickup business over time. We have not seen competitors invest like we have. Another overlooked part of Ford’s pickup strategy is our global strategy.

Ford is number one or number two in most pickup markets around the globe. There are large pickup markets in Thailand, Africa, the Middle East, and South America. Ranger is number one or number two in each of those segments, and we are future-proofing those lineups now with different powertrains and more affordable options. This is critical because we are seeing new competition in those markets from the Chinese. Our pickup strategy is global — we are future-proofing it against oil shocks, powertrain shifts, and price points.

Operator: Your next question will come from Emmanuel Rosner with Wolfe Research.

Emmanuel Rosner: Thank you so much. Could you give us a sense of the expected cadence of earnings over the rest of the year, and in particular, the drivers of the much lower pace of earnings over the rest of it? Having done $3.5 billion in the first quarter, you are guiding at the midpoint for $6 billion combined over the next three, which is quite low by historical standards. I understand commodities will get sequentially quite a bit worse, but I would have thought the Novelis costs would start going away in the second half. Maybe some of the puts and takes and the cadence, please.

And as a second question on free cash flow: why was free cash flow almost a $2 billion burn when EBIT was quite robust even excluding IEPA? And in the guidance, you are not flowing through the improved EBIT fully to the full-year free cash flow guidance, even though it seems to be driven by better underlying performance. Why is that?

Sherry House: On cadence, as you move into the next quarters, a few things to consider. First, you will not have a repeat of the $1.3 billion IEPA benefit. Second, we expect a positive from Novelis as volumes recover and alternative sourcing costs taper in the back half. Third, we will be hit more by commodities toward the end of the year, as noted earlier. And we are increasing investment in our launches — our battery-electric stationary storage business, the UEV platform, and Oakville in Canada. These have P&L expenses and cash elements beyond just CapEx as we exit the year. So, net: non-repeat of IEPA and higher commodities and launch costs, partially offset by Novelis recovery.

Cadence-wise, we expect fairly consistent levels in Q2, Q3, and Q4 relative to the full-year guide. On free cash flow, with respect to the $1.9 billion usage in the quarter, it was more than explained by unfavorable timing differences, higher net spending, and working capital changes; for the full year, we expect timing and working capital to turn favorable, which is why our full-year FCF guidance remains $5 billion to $6 billion despite the EBIT raise.