mclaren h1 2020 results...3 | mclaren h1 2020 results group h1 2020 revenues of £217m were down...
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1 | McLaren H1 2020 Results
McLaren H1 2020 ResultsAugust 26, 2020
2 | McLaren H1 2020 Results
H1 2020 – Impact on Group as a result of COVID-19 pandemic
1 - Impact of COVID-19Global Retail closures across all markets
▪ Retail sales network closed as a result of global lockdown
Production facility temporarily suspended
▪ No cars built during April and May as production centre suspension
takes effect
Automotive wholesales reduced
▪ Vehicle wholesales lower due to the above
4 - Business restart – July / AugustAutomotive
▪ MPC fully reopen in July, Series and Ultimate lines on one full shift per
day
▪ Majority of retail network now open
▪ Supply chain intact and resized to new requirements
▪ Social distancing and flexible working in place to minimise risk to
operations
Racing
▪ Commenced F1 season in July with up to 16 - 18 races planned
2 - Actions taken to counter COVID-19Reduced Capital Expenditures
▪ Match investment to current vehicles that deliver a 2020 return
▪ Invest in the all-new, flexible, lightweight vehicle architecture which will
underpin McLaren’s next generation of electrified supercars
Staff, Opex, Overhead and Liquidity
▪ Furloughed staff and completed redundancy programme
▪ Reduced Sales, Marketing, IT and Facilities spending; reduction in
Racing and Applied costs
▪ Tight cost control to protect liquidity until new funding received
3 – Resolve liquidity shortfall Multi-pronged approach to protect company
▪ Shareholder support (Equity and bank funding)
▪ Bank support (Leverage covenant waiver)
▪ Bondholders (securing amendments to indenture for future flexibility)
▪ Government support (Furlough scheme, PAYE holiday, Paycheck
Protection program (USA))
Liquidity shortfall resolved in 2020
▪ £150m funding achieved through new 12 month bridge facility in June
▪ Provides operational stability into 2021
3 | McLaren H1 2020 Results
Group
▪ H1 2020 revenues of £217m were down 68.8% vs. H1 2019
▪ H1 2020 LTM Adjusted EBITDA(1) was (£14m) - a direct result of COVID-19 lockdown, no Formula 1
racing and production suspension during H1 2020 reducing revenue generation
▪ Liquidity issue advised in Q1 due to COVID-19 impact on revenues solved via new funding of £150.0m
raised during H1 2020
Automotive
▪ Vehicle wholesales in H1 2020 totalled 584 (2,335 in H1 2019)
▪ H1 2020 production of 621 cars (2,640 H1 2019) was impacted materially as a result of the suspension of
MPC
▪ 2020 order book now confirmed, with >75% share of higher-margin Super Series and Ultimate Series cars
Racing
▪ Revenues £16.6m down vs. H1 2019 driven by lower F1 prize fund receipts due to COVID-19 impacting
season, partially offset by increased sponsorship versus the prior year
Applied
▪ Revenues £13.5m down vs. H1 2019 driven primarily by completion of two large non-recurring projects in
2019 and impact of COVID-19
(1) Adjusted EBITDA – Excluding H1 2020 exceptional financing and redundancy costs of £23.3m related to COVID-19 impact. FY2019 EBITDA is £181.9m after being
adjusted by £4.8m due to a reclassification in McLaren Applied for intangible amortisation in the final statutory accounts.
Automotive > Racing > Applied
Revenue by division H1 2020
Car volumes by region – H1 2020
H1 2020
4 | McLaren H1 2020 Results
◼ Revenue (£m)
Key metrics – H1 2019 vs. H1 2020
◼ EBITDA1 (£m)
◼ Wholesale volume (Units, YoY)
◼ Capex (£m)
H1 2020 Capex down (25%) on H1
2019 includes investment in the all-
new, flexible, lightweight vehicle
architecture which will underpin the
next generation of electrified
supercars launching in 2021
◼ Liquidity (£m)
Liquidity increased as a result of
new £150m funding in H1 2020
◼ Net debt (£m)
(69%)
(243%)
(75%)
1 Adjusted EBITDA
At H1 2020 the £130m SSRCF
was drawn £68m
5 | McLaren H1 2020 Results
Automotive
6 | McLaren H1 2020 Results
McLaren Automotive
▪ Automotive revenues in H1 2020 of £143.1m (H1 2019 £592.4m) were materially lower due to the unprecedented adverse impact of COVID-19 and the strategic decision taken to reduce volumes in preparation of the launch of the all-new, flexible, lightweight vehicle architecture which will underpin the next generation of electrified supercars
▪ Q2 saw the entire retailer network shut down globally for two months, with a full suspension of the production facility from end of March to beginning of June. The factory is now re-open with one full shift on Series and Ultimate lines
▪ Markets commenced re-opening in May - June with China the first market to open, followed by Germany and UK. As of August, c.80% of the retailer network was fully operational and we expect this to increase to 90% over H2 2020
▪ Wholesale volumes of 584 cars was slightly ahead of our revised COVID-19 planned volume for H1 2020. The strongest regional performance was in China where H1 volumes were broadly in line with the pre-COVID-19 2020 plan. China experienced a catch-up in Q2 once COVID-19 restrictions were lifted
▪ The product mix was well balanced across series vehicles, with Sports and GT Series combined contributing to 65% of H1 2020 volume with the balance driven by Super and Ultimate Series. Speedtail wholesales were slightly behind plan due to production timing and are expected to recover fully in H2 2020
▪ Retailer network is fully intact with no permanent closures (with the exception of temporary lockdown closures in certain regions due to COVID-19) with retail sales in H1 2020 exceeding wholesales by c500 cars as demand saw retailers able to clear down existing stocks. A broad range of order bank development actions in place to build good demand for deliveries into early 2021
▪ Automotive supply chain intact and supply base running at production capacity
▪ New multi-year group partnership with Gulf Oil who will be primary fuel and lubricant supplier for the years ahead
H1 2020 Summary
7 | McLaren H1 2020 Results
McLaren Automotive
Following the unprecedented impact of COVID-19 on the business during H1 2020, our focus is on meeting our
planned 2020 volumes with a focus on the high margin vehicles including Speedtail, Elva and the new 765LT
Speedtail▪ 106 Speedtails▪ 15 delivered H1 2020▪ Balance in H2 2020
Elva▪ Around 60 planned for 2020 ▪ First deliveries in H2 2020
765LT▪ 765 total volume ▪ Order bank full for H2 2020,
strong orders into H1 2021
Focus on Ultimate and Super Series production in 2020
8 | McLaren H1 2020 Results
Volume declined globally driven by impact of COVID-19 and strategic reduction in volumes
▪ Closure of the retailer network globally for
more than two months
▪ Production Centre suspension delayed the
delivery of vehicles in H1
▪ Strategic decision to reduce H1 2020
volumes driven by:
➢ Matching production and inventory to
market demand
➢ Retailer de-stocking
➢ Preparing for 2020 new model launches
Markets commenced reopening during May/June with c80% of global retailer network now open
▪ Conservative 2020 volume forecast of 1,500,
with upside of 100-200 units following better
than expected retail sales in H1 2020
McLaren Automotive
Global volumes
North America
Europe
APAC
RoW
2,335
584
H1 2019 H1 2020
Global
1,125 240
611 157
123 32
392 72
84 83
China
9 | McLaren H1 2020 Results
Racing
10 | McLaren H1 2020 Results
Formula 1 World Championship
2020 delayed start but now racing
Formula 1
▪ Season now underway with 6 races completed
▪ 17 F1 races now confirmed for 2020 with final four races in Turkey, Bahrain (2 races) and Abu Dhabi
▪ Lando Norris achieved his first podium finishing 3rd in the Austrian Grand Prix becoming the youngestBritish driver to achieve a podium in the sport
▪ After six races McLaren is currently 4th in the 2020 F1 Constructors’ World Championship with 62 points
▪ McLaren has confirmed signing of Daniel Ricciardo from Renault with Lando Norris completing driver lineup for 2021 season
Off-track
▪ Due to the COVID-19 impact and delayed start to the season prize fund revenue will be reduced in 2020due to lower number of races held
▪ Sponsorship remains robust with the signing of two new Partners, Gulf and IQONIQ
▪ Sponsorship revenues ahead of plan for the current year helping to offset the reduced prize funds
11 | McLaren H1 2020 Results
Formula 1 and beyond
F1 Concorde update, Indy Series and Heritage cars
New Concorde agreement for 2021 – 2025
▪ The long-awaited Concorde Agreement governing the future of the sport has now been signed by allteams, reaffirming McLaren’s long-term commitment to Formula 1
▪ Financial cost cap commences in 2021 at $145m then reduces to $140m in 2022 and $135m in 2023-25
▪ The agreed technical regulations will commence from 2022
▪ McLaren will change power units from Renault to Mercedes in 2021
Indy Series
▪ The season is now underway (reduced calendar of 14 races) with 7 races completed. The team is showing strong progress with Patricio “Pato” O’Ward now 3rd and Oliver Askew 16th overall in the championship
▪ Indianapolis 500 held with Pato O’Ward finishing in 6th place out of 33 starters with Oliver Askew ending the race after a crash on lap 92 following a restart ending in 30 th place
Heritage Cars
▪ Ongoing preparation and sale of a small number of heritage fleet cars continues to support the Racingbusiness and build strong relationships with Racing fans and customers
12 | McLaren H1 2020 Results
Financials
13 | McLaren H1 2020 Results
H1 2019 – H1 2020 EBITDA Bridge
▪ H1 resulted in materially lower volumes as a result of the COVID-19 impact on Global wholesales and production impacting revenues
▪ The company has completed a restructuring process in July, resulting in a reduction in labour and other overhead costs across the group
▪ The racing season resumed at the beginning of July. Losses in Formula 1 prize money offset with improved sponsorship and H1 costs lower as a result of no F1 racing during the first half resulting in upside verses 2019
14 | McLaren H1 2020 Results
Group Cash FlowWorking Capital
▪ Net working capital outflow in H1 2020 as wholesales reduced but creditor payments still need to be settled
▪ However, debtor collection much stronger than anticipated as retail sales recovered. As a result, liquidity impact much less than anticipated
Investments
▪ H1 2020 investments decreased versus the same period last year as planned investment spend cut to offset the impact of COVID-19
▪ Capex has been reduced for the remainder of 2020
Financing
▪ £291m equity contribution from shareholders to supporting the execution of strategic plan pre-COVID-19, providing incremental liquidity
▪ £150m1 loan to McLaren Group Limited
1 McLaren Group Limited purchased ordinary share capital in McLaren Holdings Limited (Restricted group) using loan proceeds
* Unrealised FX loss H1 2020 £4.9m (H1 2019 £0.9m) included in EBITDA
15 | McLaren H1 2020 Results
H1 2019
Cash flow was severely impacted due to COVID-19 in H1 2020
Automotivewholesale
(units)
Adjusted EBITDA
(£m)
Change in NWC(£m)
Total liquidity (£m)
584
H1 19 H1 20
2,335
81
H1 19 H1 20
(97)(104)
H1 19 H1 20
62227
H1 19 H1 20
H1 2020
(115)*
▪ Initial plan was revised downward post COVID-19, given the shut-down of dealerships and the production centre suspension from March to May
▪ As a result of the adverse impact on sales, EBITDA was significantly reduced during H1 2020
▪ Two key drivers of working capital have been cash inflows from retailers, which have been helped by retailers re-opening and the higher than planned retail sales. In addition, payments to suppliers have not been as high as was initially predicted, largely because McLaren’s suppliers worked with the Group on revised payment terms and McLaren was able to build cars from stock once production recommenced
▪ Liquidity increased as new £150m funding received
* Adjusted EBITDA excludes exceptional and restructuring costs of £23.3m as a result of COVID-19
16 | McLaren H1 2020 Results
Net Debt & Liquidity
▪ Gross debt reflects $250m and £370m 5-yr Senior Secured Notes issued in July 2017 and $100m issued July/August 2019
▪ RCF fully drawn at end of quarter, overdrafts undrawn
▪ The group liquidity position was strengthened at the end of H1 2020 through a £150m 12 month bridging loan with NBB
▪ This additional short-term financing is the first part of a three-phase strategy to 1. Strengthen the balance sheet in the aftermath of COVID-19
2. To raise new equity and repay the bridging loan
3. Refinancing of the group borrowings (RCF and Notes)
1 Gross debt is equal to Senior Secured Notes (SSNs) outstanding of £645m plus £14.5m accrued interest. The SSNs includes £16.9m capitalised fees and revaluation FX loss of £8.0m. Following change in presentation H1 2020 excludes drawn RCF £67.7m shown in Bank loans and overdrafts whereas prior year H1 2019 includes drawn RCF £50.0m 2 Net Leverage includes reported gross debt less cash and LTM Adjusted EBITDA loss of (£14.0m) (H1 2020) / profit £204m (H1 2019)3 Represents £40m undrawn Overdraft facilities. As at H1 2020 the RCF was drawn at £68m
17 | McLaren H1 2020 Results
A cautious outlook for 2020
Guidance for 2020 / 2021
▪ FY2020 volumes projected to be around 1,700
▪ c. 75% of the order book for H2 2020 represents limited Super and Ultimate Series model vehicles (Speedtail, Elva, 765LT) which have a
significant contribution per car
▪ Capex reduced to £220m for full year 2020, with £121m spent in H1 protecting models due to be delivered in H2 2020
▪ Capex focussed on two categories:
▪ Capex for Speedtail, Elva, and 765LT being delivered in H2 2020 and H1 2021
▪ Capex for the 2021 new lightweight platform, enabling a strong recovery potential in 2021
▪ Revenue for FY2020 is projected to be £750m - £800m (FY2019 £1,485m) driven by lower wholesale volumes
▪ FY2020 Group Adjusted EBITDA projected to be in the range of £25m to £50m loss (FY2019 £181.9m profit) following the impact of
COVID-19 and reduction in wholesale volumes
▪ The working capital outflow for H2 2020 is projected to be c£150m
▪ 2021 volumes projected from 3,250 to 3,500 cars as global wholesales recover
Volumes
Capex
Revenue / EBITDA /
NWC
18 | McLaren H1 2020 Results
Appendix
19 | McLaren H1 2020 Results
Summary Income Statement
1 Includes FX gains and losses (excluding FX on translation of USD bond) H1 2020 £15.8m loss, H1 2019 £12.7m loss, H1 2020 £23.3m exceptional restructuring costs 2 Includes FX on translation of USD bond H1 2020 £19.0m loss, H1 2019 £0.9m loss
20 | McLaren H1 2020 Results
Group Cash Flow Statement
Adjusted EBITDA by company
*Racing includes the sale of heritage cars, £1.0m (H1 2020) and £3.3m (H1 2019)** Adjusted EBITDA excludes exceptional and restructuring costs in H1 2020 of £23.3m
21 | McLaren H1 2020 Results
One outstanding luxury automotive & technology group
FY2019 Sales and car wholesale volumes
◼ 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 McLaren GT, 620R, 765LT, Elva continue to
demonstrate the success of McLaren product pipeline and strength in
brand
Highlights
Automotive Racing Applied
◼ Offering the ultimate ownership experience
creating the iconic supercar
◼ 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 Wholesale volumes by region
22 | McLaren H1 2020 Results
McLaren has a long history rooted in racing & innovation
Success in racing created a culture of outstanding performance, excellence and innovation
23 | McLaren H1 2020 Results
McLaren has a long history in racing & innovation
Success in racing created a culture of outstanding performance, excellence & innovation
▪
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▪
▪
▪
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24 | McLaren H1 2020 Results
Globally recognised brand
World-class car platform built on a foundation of racing successSuccessful racing performance led to a culture of innovation & excellence, enabling success in cars
The only company to win each of the 4 classic competitions: Formula One, Le Mans, Indianapolis and Can-Am
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 YearEVO 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
25 | McLaren H1 2020 Results
Automotive operates in distinct segments
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, 765LT
▪ 540C, 570S, 570S Spider, 570GT,
600LT, 600LT Spider, 620R▪ 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
26 | McLaren H1 2020 Results