McLaren Q3 (YTD) 2019 Results November 27, 2019
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%
4 | McLaren Q3 (YTD) 2019 Results
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
5 | McLaren Q3 (YTD) 2019 Results
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
6 | McLaren Q3 (YTD) 2019 Results
Automotive
7 | McLaren Q3 (YTD) 2019 Results
McLaren Automotive – 2019
8 | McLaren Q3 (YTD) 2019 Results
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
10 | McLaren Q3 (YTD) 2019 Results
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
11 | McLaren Q3 (YTD) 2019 Results
Formula 1 World Championship
12 | McLaren Q3 (YTD) 2019 Results
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
13 | McLaren Q3 (YTD) 2019 Results
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
Applied Technologies
14 | McLaren Q3 (YTD) 2019 Results
McLaren Applied Technologies – A new focus
15 | McLaren Q3 (YTD) 2019 Results
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
16 | McLaren Q3 (YTD) 2019 Results
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
17 | McLaren Q3 (YTD) 2019 Results
Q3 (YTD) 2019
Results – Q3 (YTD) 2019
18 | McLaren Q3 (YTD) 2019 Results
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
19 | McLaren Q3 (YTD) 2019 Results
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
20 | McLaren Q3 (YTD) 2019 Results
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
21 | McLaren Q3 (YTD) 2019 Results
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
22 | McLaren Q3 (YTD) 2019 Results
Group Overview
23 | McLaren Q3 (YTD) 2019 Results
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
24 | McLaren Q3 (YTD) 2019 Results
£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
Reported EBITDA 89 37
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
25 | McLaren Q3 (YTD) 2019 Results
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
26 | McLaren Q3 (YTD) 2019 Results
*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)
Reported EBITDA 89 37
Current facilities as at Q3 2019
27 | McLaren Q3 (YTD) 2019 Results
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
28 | McLaren Q3 (YTD) 2019 Results
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%
Applied Technologies
5%
McLaren has a long history rooted in Racing & Innovation
29 | McLaren Q3 (YTD) 2019 Results
McLaren SLR: total production <2,000 cars
Success in racing created a culture of outstanding performance, excellence and innovation
Racing
Applied Technologies
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
Applied Technologies
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