mclaren q3 (ytd) 2019 results · q3 (ytd) 2019 group revenues £1,009m up 19% versus £847m in q3...

McLaren Q3 (YTD) 2019 Results November 27, 2019

Highlights2 | McLaren Q3 (YTD) 2019 Results

3 | McLaren Q3 (YTD) 2019 Results

Results continue to build on strong first half results:

Q3 (YTD) 2019 Group revenues £1,009m up 19% versus £847m in Q3 (YTD) 2018, driven by Automotive volume and mix growth, Ultimate Series sales and an improvement in Racing results

Q3 (YTD) 2019 Reported EBITDA £89m up 140% versus £37m Q3 (YTD) 2018

Q3 2019 LTM Revenue £1,419m with Automotive contributing 84% of Group revenue

Q3 2019 LTM Reported EBITDA £188m up 80% since Q3 2018 LTM (£104m)

Q3 (YTD) 2019 production delivered 3,760 vehicles in comparison to 3,686 in Q3 (YTD) 2018 (2.0% growth)

Racing recovery continues, with Reported EBITDA improvement driven by increased prizemoney from finishing 6th (versus 9th in 2017) in the Constructors Championship in 2018 and improved sponsorship revenue

Q3 (YTD) 2019

Automotive >> Racing >> Applied Technologies

Revenue by division

Car volumes by region

Formula 112%

Automotive84%

Applied Technologies

4%

North America

47%

APAC, ex. China17%

China5%

Rest of World6%

Europe25%


McLaren Automotive on plan through Q3 2019:

Vehicle wholesales in Q3 (YTD) 2019 totalled 3,306 (3,463 in Q3 (YTD) 2018), marginally down 4.5%. Full year volumes still expected to be in line with 2018.

Total committed order book at Q3 (YTD) 2019 was 1,741 units (in line with prior year). McLaren Senna GTR and Speedtail Ultimate Series sold out; Super Series and Sports Series 600LT Spider sold out into Q1 2020. McLaren GT orders continue to grow strongly.

Previously teased new open top speedster Ultimate Series fully announced in November. The car, named Elva with a limited production of 399, delivers in late 2020. The order book is building and deposits on first orders now being collected

All McLaren Sennas now built and on plan to be delivered to customers during Q4 following MSO customisation

McLaren have finished 4th in the Formula 1 World Constructors’ Championship with only the Abu Dhabi GP to go. This will result in a positive step up in prizemoney in 2020

Q3 (YTD) 2019

Automotive >> Racing >> Applied Technologies


Revenue (£m)

Key Metrics - Q3 (YTD) 2018 vs Q3 (YTD) 2019

EBITDA1 (£m)

Wholesale Volume (Units)

F1 Championship points

4th place in the constructors championship locked in with one race to go

Liquidity (£m)

Net Debt (£m)

+19%

+140%

(4.5%)

1 Reported EBITDA

Net Debt includes the additional USD $100m Notes raised in Q3 2019. At Q3 2019 the £130m SSRCF was £40m drawn and the additional $24.9m Revolver Facility remained undrawn

4th

6th

Net Leverage

4.4x

Net Leverage

3.6x

Full year EBITDA expected to be between £165m and £180m as significant deliveries completed

Business Update


Automotive


McLaren Automotive – 2019


GT

GT

First deliveries made Strong order book

continues to build

SPORTS 600LT Coupe and Spider

Coupe allocation complete Spider orders into Q1

2020

SUPER

720S Spider

2019 order book now fully allocated; orders into Q1 2020

ULTIMATE

McLaren Senna

All now sold and built

Final models with MSO delivered Q4

McLaren Senna GTR

In production; all sold

Speedtail

Production commences Q1 2020; all sold

Elva

Revealed November 2019

Strong interest received

Production Q4 2020

Global Volumes – Q3 (YTD) 20199 | McLaren Q3 (YTD) 2019 Results

North America +21% China (33%)

Europe (25%)

APAC +2% RoW (31%)

Demand in North America and Asia Pacific markets remains strong

European performance weaker driven by macro economic conditions

Middle east volumes declining as a result of weakening regional economic conditions

(4%)

Elva – the new McLaren Ultimate Series


Previously teased new Ultimate Series Speedster now announced as the McLaren Elva.

The open-cockpit two-seater celebrates the Bruce McLaren-designed 1960s McLaren-Elva sportscars

The lightest road car ever from McLaren Automotive

McLaren Active Air Management System (AAMS) is a world-first; shelters occupants by manipulating air flow while retaining their connection to the elements

Homologated for all major markets

Priced at £1,425,000 (Inc VAT), final price will depend upon level of MSO customization

Limited to 399 examples

Solid order bank with deposits now being collected

Racing


Formula 1 World Championship


4th in the Constructors Championship locked in with final race to complete

Formula 1 - on track

4th in the 2019 F1 Constructors’ World Championship now assured, with the team scoring140 points

140 points is the team’s highest total since 2014, with one race to go in Abu Dhabi Carlos Sainz finished 3rd in Brazil, marking McLaren’s first podium since Australia 2014 The team will continue the positive momentum, started following the restructure in early

2018, into the 2020 season

Formula 1- off track

Petrobras and McLaren conclude their technical and sponsorship agreement by mutualconsent, with neutral impact to the Racing business plan

Revenue targets achieved with more sponsor partnerships than any other F1 team thisyear; now focussed on 2020

Well on track for start of 2020 season with MCL35 development making good progress

FIA Financial Regulations (Cost Cap) – 2021 and beyond


New financial regulations now agreed

FIA Regulations

The financial cost cap will be introduced from the 2021 season Operational expenditure cap confirmed as USD $175m / GBP £136m The cap will be in place for at least 5 seasons Capital expenditure allowance of USD $36m / GBP £28m for a 4 year rolling period

Exclusions Power unit supply Drivers and top 3 highest paid employees including bonuses up to a capped limit Travel expenses, marketing activities, heritage asset activities HR, finance and legal activities, property costs, depreciation, finance costs, FX and tax

Compliance and enforcement FIA will undertake an independent audit of the F1 team’s accounts and reporting documentation, may

undertake comparative analysis of F1 teams reporting documentation and encourage and respond tocomplaints from Teams and whistleblowing

Penalties Financial, public reprimand, deduction of championship points, limitations on testing, reduction of cost

cap, suspension from stages of competition / entire competition, individual penalties for Team Principlesand Directors

Key dates 31 October 2019 – Financial, technical and sporting regulations approved by World Motor Sports Council 1 January 2020 – Soft implementation / dry run 1 January 2021 – Full implementation of new regulations

McLaren Applied Technologies – A new focus


Commencing in March, a strategic review of McLaren Applied Technologies long term positioning has now been completed

The strategic review focused on future growth looking at a wide-ranging assessment of market conditions, future technology demands and trend analysis in order to meet future market, customer needs and continued growth

Motorsport remains core to the business with further up scaling on core technologies

High level of non-repeatable consulting

Bespoke developments

Motorsport drives development

4 core markets

Multiple tech development areas

Consulting only in support of product roadmap

Scaling / leverage of platforms

Showcase in Motorsport, scale in other markets

Scaling product lines cross markets

Scale / leverage 3 core areas of technical focus

Current Long TermStrategic Trajectory

McLaren Applied Technologies – Three Strategic Technical Pillars


Applied Technologies will be restructured around three key product platforms building differentiation

Virtual Product Development Telemetry, Control and Analytics Electrification Increasing complexity & time-to-

market pressure in product development driving demand for Virtual Product Development

Capability and tools delivering benefit throughout the product lifecycle Development is faster and less

expensive

Product performance is enhanced

Assets monitored and optimised in service

Physical and analytical insight to deliver business outcomes

Transport IoT ecosystem including condition monitoring is booming –vehicles are 3rd fastest growing segment after phones/tablets

Digitisation shows strong growth across all sectors; decision support tools for complex / high value decisions

Optimisation of electrical eco-system focusing on

Batteries

Inverters

Motors

Sustainability concerns driving Electrification. A major theme across Motorsport, Automotive and other Transport sectors

Financials


Q3 (YTD) 2019

Results – Q3 (YTD) 2019


Automotive wholesale volumes Revenue (£m) Reported EBITDA (£m)

Four series – GT, Sports, Super and Ultimate – now on sale in 2019 vs 3 in 2018

Order books for GT, Sports Series and Super Series remain positive with strong interest in the new GT and McLaren Elva

Q3 (YTD) wholesale volumes reflective of market conditions being softer in some regions

Revenue growth in 2019 of 22% as a result of having the full Series range (GT, Sports, Super and Ultimate) on sale during the year vs 2018

Racing revenue increased due to higher level of prizemoney following improved Championship result in 2018 vs 2017,along with improved sponsorship as a result of better performance

Automotive Reported EBITDA driven by timing and volume change of Ultimate Series in Q3

Sale volumes and mix have also contributed to the growth in Automotive Reported EBITDA

Racing Reported EBITDA reflects the increased prizemoney revenue and improved sponsorship revenues

2,020

3,461 3,306

Q3 (YTD) 2017 Q3 (YTD) 2018 Q3 (YTD) 2019

558

847

1,009

Q3 (YTD) 2017 Q3 (YTD) 2018 Q3 (YTD) 2019

(8)

37

89

Q3 (YTD) 2017 Q3 (YTD) 2018 Q3 (YTD) 2019

CAGR +248%CAGR +35%CAGR* +28%

* CAGR – Compound annual growth rate

Q3 (YTD) 2018 – Q3 (YTD) 2019 EBITDA Bridge


Automotive Reported EBITDA growth driven by strong sales volumes in the US and Asia markets, model mix and regional mix impacts

Automotive sales, marketing, administration and FX costs increased as a result of all four series in production versus three in 2018, higher volumes and FX revaluation losses due to a weaker pound offset in revenue

Racing driven by higher prize money following the improved 2018 Championship result and better than planned sponsorship revenues

Heritage cars negative in reflecting a lower number of heritage car sales in 2019 versus same period in the prior year

+140% growth

Net Debt & Liquidity


Gross debt reflects $250m and £370m 5-yr Senior Secured Notes issuance in July 2017 and $100m issued July/August 2019

At Q3 total SSRCF was £130m (drawn £77.1m RCF, overdrafts and guarantees) along with a short term credit facility of $24.9m (undrawn)

Cash utilisation in Q3 (YTD) driven by ongoing investment in new models (600LT Spider, GT, Senna GTR and Speedtail) and initialdevelopment spend on the MCL35 F1 car for the 2020 season

Capex investment increased versus prior year due to further investment in vehicle programs

Leverage improves with growth in EBITDA

1 Gross debt is equal to Senior Secured Notes (SSNs) outstanding of £645m plus £6m accrued interest. The SSNs includes £22m capitalised fees and revaluation FX loss £9m, SSRCF drawn to £40m2 Net Leverage includes reported gross debt £678m less cash and LTM Reported EBITDA of £188m3 Consists of RCF £130m less committed Ancillary Lines £17.1m (bank guarantees) and SSRCF £40m plus Senior USD undrawn s/term facility of $24.9m

Q3 2019 Q3 2018

Gross debt1 678 550

Cash and cash equivalents 0 (6)

Underlying net debt 678 544

Net Leverage / EBITDA2 3.6x 4.4x

Undrawn liquidity and overdraft lines3 73 79

Total available liquidity 73 85

Free Cash Flow


Investments Intangible investment ahead due to phasing and the continued

growth in new product development in the Automotive business. The increase is due to the phasing of the spend in the year and the launches of the various products; Automotive is launching four new products in 2019 as opposed to two in 2018

Investment spend outlook for the full year expected to be around £320m to £330m up on prior year following additional investment in vehicle programs to pull forward a significant vehicle launch into 2020 and the new wind tunnel

Financing New Notes issued in Q3 provides headroom during the year

Working Capital Debtors increase a result of timing of wholesales at the quarter end

with collection due in Q4 Total creditor movement is flat versus the same period last year Working capital of £35m is expected to at least reverse by year end

£m Q3 (YTD) 2019 Q3 (YTD) 2018

Reported EBITDA 89 37

Investments (236) (192)

Working Capital (37) 12

Tax (3) (8)

Interest (32) (33)

Free Cash Flow (FCF) (219) (183)

Notes issuance 70 0

Equity (net) 12 100

RCF drawing / (repayment) 40 (10)

FCF after financing (97) (93)

Appendix


Group Overview


Summary Income Statement

1 Includes FX gains and losses (excluding FX on translation of USD bond), Q3 2019 £22.8m loss, Q3 2018 £5.4m loss2 Includes FX on translation of USD bond Q3 2019 £6.9m loss, Q3 2018 £6.6m loss


£m Q3 (YTD) 2019 Q3 (YTD) 2018

Turnover 1,009 847

Cost of Sales (729) (645)

Gross profit 280 202

Administrative expenses1 (213) (182)

Other operating income 22 17


Depreciation and amortisation (119) (106)

EBIT (30) (69)

Net finance costs2 (38) (35)

Profit before tax (68) (104)

Taxation 9 8

Profit after Tax (60) (96)

Group Cash Flow Statement


Q3 (YTD) 2019 Q3 (YTD) 2018

Net cash flows from operating activities 51 43

Net cash flows from investing activities (236) (192)

Net cash flows from financing activities 88 56

Net (decrease)/increase in cash and cash equivalents (97) (93)

Reported EBITDA by company


*Racing includes the sale of heritage cars, £4.2m (Q3 (YTD) 2019) and £8.3m (Q3 (YTD) 2018)

£m Q3 (YTD) 2019 Q3 (YTD) 2018

Automotive 160 123

Racing* (65) (85)

Applied Technologies (6) (1)


Current facilities as at Q3 2019


On the 12 July 2019 the Group entered into additional financing arrangements equivalent to $150.0m, consisting of: a private placement of an additional $100.0m (5.75% due

2022) incremental commitments under its existing super senior

revolving credit facility of £20.0m and c. $24.9m under a separate US dollar-denominated short-

term credit facility (undrawn)

The new facilities and debt added to the liquidity headroom available to the Group and was raised to give flexibility over the next 18 to 24 months around the launch of new products

The Group is now better placed to respond to changes in customer demand and competitor actions

SSRCF£130m

£17m guarantees £40m overdrafts £73m SSRCF

(Libor +3.5%)

Senior Noteseq.£564m

£370m 5.0% $350m 5.75%

Q3 2019Facilities

SSRCF£130m

£17m guarantees £20m overdrafts £40m SSRCF Drawn to £77m

Q3 2019Utilisation

Senior Noteseq.£642m

£370m 5.0% $350m 5.75%Fully drawn

USD Senior s/term facility

eq.£20.2m $24.9mUndrawn

USD Senior s/term facility

eq.£20.2m $24.9m (Libor + 5.0%)

One Outstanding Luxury Automotive & Technology Group


Sales and car volume split

Global leader in high-performance luxury and technology offering the ultimate ownership experience

55 year history of innovation and technical excellence

Group revenue and cash generation underpinned by Automotive order book and production capacity now demonstrated

Latest McLaren models 600LT Spider, 720S Spider, McLaren GT and “Speedtail” continue to demonstrate the success of McLaren product pipeline + strength in brand

Highlights

Automotive Racing Applied Technologies

Offering the ultimate ownership experience creating the iconic sportscar

20,000+ road cars hand-assembled to date

Legendary racing history

20 Formula 1 World Championships

Delivering advantage at the intersection of physical and digital

Customers in Motorsport, Automotive, Public Transport and Health

Revenue by division Car volumes by region

FY2018 revenue - £1,257m FY2018 volume - 4,829

North America

36%

APAC, ex. China

18%China

7%

Rest of World

6%

Europe33%

Racing11%

Automotive84%


5%

McLaren has a long history rooted in Racing & Innovation


McLaren SLR: total production <2,000 cars

Success in racing created a culture of outstanding performance, excellence and innovation

Racing


Automotive

1980

19721969

1968

1989

1992

1995

2003

1974

1986

1963

Bruce McLaren Motor Racing is formed

Maiden F1 victory in Belgium Grand Prix

McLaren wins all 11 Can-Am races

First Formula One Drivers’ and Constructors’ Championship win

McLaren wins Indianapolis 500

McLaren Racing is formed

McLaren Marketing is formed

McLaren F1 – McLaren’s first and the world’s

fastest road car

McLaren Electronic Systems formed

McLaren Automotive is formed Debut win at Le Mans 24

Hours

McLaren has a long history in Racing & innovation30 | McLaren Q3 (YTD) 2019 Results

Success in racing created a culture of outstanding performance, excellence & innovation

Racing


Automotive

2012

12C Spider launched

Applied awarded the NASCAR standard ECU

contract

Launch of 12C Coupe, Automotive first car

McLaren Production Centre opened

Opening of McLaren Technology Centre

McLaren Applied Technologies is formed

McLaren Automotive founded as an

independent company

20102008

Applied awarded the FIA F1 standard ECU contract

Lewis Hamilton wins World Championship

2007

Applied awarded the Indy Car ECU contract

McLaren 570S, McLaren 540C & P1 GTR launched

10,000th production car completed 3,286 total units in

2016

720S launched

2014

McLaren 650S launched

Applied is the sole supplier of e-powertrain to Formula E – with the strongest e-machine to

date;MES and MAT merge

McLarenP1 launched; the first

hybrid hyper car in the world

2015

2016

2017

2011

2013

2004

McLaren Senna, released

2018

15,000th production car completed 4,829 wholesale units

in 2018

McLaren Speedtail revealed for the first time

600LT launched

720S Spider released, Senna GTR announced

2019

20,000th production car completed 600LT Spider released

McLaren GT launched

McLaren Elva revealed for the first time

Globally recognized brand 31 | McLaren Q3 (YTD) 2019 Results

World-class car platform built on a foundation of racing success

Successful racing performance led to a culture of innovation & excellence, enabling success in cars

182Grand

Prix wins

Legendary50 year racing

heritage

20 WorldChampionships

Debut win atLe Mans

24 Hours

12 F1drivers'

champion-ships

8 F1constructors’

champion-ships

The only company to win each of the 4 classic competitions: Formula One, Le Mans, Indianapolis and Can-Am

8 GT Racing

Champion-ships in

2017

Cumulative M

cLaren car volume

1

Every model won multiple prestigious awards for unique technology and design

2012 2013 2015 2016 2016 2017

Ranked #1 in car reviews of 2012Jalopnik

Dewar Trophy for Outstanding British Technical AchievementRoyal Automobile Club

China Performance Car of the Year EVO Middle East Car of the Year:Supercar of the Year 675LT Coupé

BestPerformance Car

Auto Express New Cars Awards

Five Star AwardAUTOCAR & EVO

& Evo2012 2013 2014 2016 2015 2017

James May’s Car of the YearBBC Top Gear Magazine

Jeremy Clarkson’s Car of the YearBBC Top Gear Magazine

Supercar of the YearAUTOCAR ASEAN

Car of the YearCAR Magazine (675LT Spider)

Best Car on Sale – Best Every Day SupercarBBC Top Gear

Performance Car of the YearBBC Top Gear & Road and Track

2012 2013 2014 2016 2016 2017

Best Sports Car Over £120,000What Car?

Hypercar of the YearBBC Top Gear Magazine

Performance Car of the YearAuto Express

Hardcore Car of the Year:Top Gear (675LT Spider

Best Car on SaleAUTOCAR

Super Car of the YearOctane & EVO

2012 2013 2014 2016 2017

Car of the YearMiddle East Motor Awards

Hypercar ofthe Year

GQ

Middle East Carof the Year Awards

Best Supercar

Best of the BestRed Dot Design Award

Sport Car of the YearCAR Magazine

12C P1 650S 675LT 570S 720S

Launched year: 2011 Launched year: 2013 Launched year: 2014 Launched year: 2015 Launched year: 2015 Launched year: 2017

Automotive operates in distinct segments32 | McLaren Q3 (YTD) 2019 Results

SuperSports MotorsportUltimate

Super Series is the core of McLaren's range with the best technology available

Derivatives include Coupe, Spider and LT limited editions

Brings McLaren’s advanced technologies to the sportscar arena, a lower price point

Derivatives include Coupe, Spider, LT limited editions

Track cars built for racing

Based on road car models but without road car regulations and built to a racing specification

High performance cars Built on the same basis as

the Super series with additional ground-breaking technology

Further track-only products offers

650S, 650S Spider, 720S, 720S Spider

540C, 570S, 570S Spider, 570GT, 600LT, 600LT Spider

650S GT3, 570S GT4 and 570S Sprint, 720S GT3

P1TM & GTR, McLaren Senna, Senna GTR, Speedtail, Elva

High performance super cars with track performance

MonoCage II carbon body

Best power-to-weight ratio of sports car range in their class

Lightweight construction with carbon chassis (75kg)

Strictly limited editions for racing only

Includes the first hybrid hyper car in the world

Strictly limited production, sold out years in advance

Description

Models

Features

Purpose

Price range

Road / track Road Track Road / track

£200-300k £125-200k £200-400k >£500k

Bespoke customisation options Limited editions and one-off models

Pure McLaren track experience Pure GT racing series Lifestyle and heritage

Expert advice and support Unique service cover

MSO1 Experiences Ownership

1 McLaren Special Operations

Grand Tourer

Positioned alongside our established Sports, Super and Ultimate Series, this is a new McLaren for a new audience providing an alternative to existing products

new GT

Attributes of competition levels of performance and continent crossing capability, yet lighter, faster, more engaging

Luxury Grand Touring

>£160k

mclaren q3 (ytd) 2019 results · q3 (ytd) 2019 group revenues £1,009m up 19% versus £847m in q3...

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