REG - Aston Martin Lagonda - 1st Quarter Results

Aston Martin Lagonda Global HoldingsAnnouncement

04/05/2022 07:15

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RNS Number : 2017K  Aston Martin Lagonda Global Hld PLC  04 May 2022

4 May 2022

Aston Martin Lagonda Global Holdings plc

First quarter results for the three months to 31 March 2022

 

 

 

- Management change announced in separate release; new CEO and CTO

 

 - Q1 performance in-line with expectations; FY 2022 guidance maintained

 - Successfully launched DBX707 ahead of Q2 deliveries; V12 Vantage sold-out

-  Strong gross margin driven by pricing, mix and Project Horizon efficiency
actions

 

  £m                         Q1 2022  Q1 2021  % change
 Total wholesale volumes(1)  1,168    1,353    (14%)
 Revenue                     232.7    224.4    4%
 Adjusted EBITDA(2)          24.4     20.7     18%
 Adjusted operating loss(2)  (34.3)   (15.3)   (124%)

 Operating loss              (47.7)   (15.3)   (212%)
 Loss before tax             (111.6)  (42.2)   (164%)

 Net debt(2)                 (956.8)  (722.9)

(1) Number of vehicles including specials; (2) For definition of alternative
performance measures please see Appendix;

Financial highlights

·   Retails 1  outpaced wholesales 2  as strong demand continues across
product lines; lower wholesales, as guided, as prepared for start of DBX707
production and continued supply chain challenges

·      Revenue increased 4% to £233m driven by

-  strong pricing dynamics throughout the core portfolio (ASP: £151k vs. Q1
2021: £149k); and

-  Aston Martin Valkyrie programme deliveries (14 vehicles)

·     Gross margin increased substantially to 36% (Q1 2021: 28%)
reflecting Valkyrie programme deliveries, Project Horizon and foreign exchange
benefit

·    Adjusted EBITDA increased to £24m due to higher priced Specials and
cost efficiency benefits from Project Horizon, partially offset by
re-investment into brand and new product launch activities

-  Increased operating loss largely due to higher depreciation and
amortisation, as guided

-  Higher net financing charge, driven by £38m YoY negative non-cash FX
reval. impact

·    Continued positive cashflow from operations of £43m; free cash
outflow 3  of £25m includes a working capital inflow of £32m offset by
capital expenditure of £67m due to investment in future product pipeline

·   Solid liquidity with cash of £404m (December 2021: £419m); Net debt
of £957m (December 2021: £892m), including the £33m impact of non-cash FX
revaluation of dollar denominated debt

Taking-off into a new era for Aston Martin

·      Retail customer demand continues to run ahead of wholesales, with
GT/Sports sold out for the year

·      DBX707, the world's most powerful luxury SUV, launched to
significant customer and media excitement; DBX orderbook up c.60% on the prior
year

·      New V12 Vantage announced, with all 333 units sold-out by launch
in March following unprecedented demand

·      Racing.Green., new ESG strategy, launched on Earth Day
reiterating electrification plans; first PHEV deliveries in 2024 and first BEV
targeted for launch in 2025

·      Strengthening the team with new senior appointments in commercial
(China), design (exteriors), engineering (Body in White, vehicle integration
and Valkyrie team), quality (suppliers) and sustainability;

-  New CFO Doug Lafferty appointed to the Board 1 May 2022

-  New Chief People Officer, Simon Smith appointed on 11 April 2022

 

Lawrence Stroll, Executive Chairman commented:

"We continue to make tremendous progress, now operating as an ultra-luxury
brand and seeing exceptional demand across our product range with sports cars
sold out for the year and DBX orders up 60%. Our most recently announced
limited-edition, the V12 Vantage, was fully sold out prior to its official
launch in March; and DBX707 is making headlines as the premier ultra-luxury
performance SUV on the market, generating strong customer interest.

We are poised to deliver good growth in 2022 and remain extremely confident in
the medium and long-term prospects as we transform Aston Martin into the
world's most desirable ultra-luxury British performance brand."

 

Outlook

We remain on our journey to achieving our medium-term targets of c.10,000
wholesales, c.£2bn revenue and c.£500m adjusted EBITDA by 2024/25.

For 2022, we expect to deliver significant growth on 2021 with a c.8% increase
in core volumes expected to deliver a c.50% improvement in adjusted EBITDA
from the core business. We will deliver the first two vehicles from the new
management team, DBX707 and the V12 Vantage, with improved profitability
compared with prior models as well as price adjustments across the full
portfolio, given the pricing power of the brand.

In addition, 75-90 Aston Martin Valkyrie programme vehicles remain on track
for shipment.

The global operating environment remains uncertain with the war in Ukraine,
ongoing global COVID-19 lockdowns, most notably in China, continued supply
chain and logistics disruptions, and raw material cost inflation. Our teams
remain focused on minimising any impact on the Company.

2022 guidance unchanged - updated to reflect prevailing exchange rates:

•           Wholesales: growth to > 6,600 units

•           Adjusted EBITDA margin:  c.350-450bps expansion

•           Capex and R&D: c.£300m

•           Depreciation and amortisation: c.£315m-£330m

Reflecting Aston Martin Valkyrie programme shipments and a full year of
accelerated depreciation of capitalised development costs ahead of next
generation GT/sports vehicles in 2023

•           Interest costs updated for FX movements (assuming
£:$1.32, versus previous assumption of £:$1.35):

·      c.£195m (P&L), £25m higher than original guidance of £170m
largely driven by non-cash FX reval. of dollar denominated debt in Q1

·      c. £130m (cash), £5m higher than original guidance of £125m

 

 

 

The financial information contained herein is unaudited.

All metrics and commentary in this announcement exclude adjusting items unless
stated otherwise and certain financial data within this announcement have been
rounded.

 

 

 

 

 

 

 

 

 

 

Enquiries

 

 Investors and Analysts
 Sherief Bakr        Director of Investor Relations              +44 (0)7789 177547

sherief.bakr@astonmartin.com
 Holly Grainger      Deputy Head, Investor Relations             +44 (0)7442 989551

holly.grainger@astonmartin.com
 Brandon Henderson   Senior Manager, Investor Relations          +44 (0)7585 326704

brandon.henderson@astonmartin.com
 Media
 Kevin Watters       Director of Communications                  +44 (0)7764 386683

kevin.watters@astonmartin.com
 Paul Garbett        Head of Corporate and Brand Communications  +44 (0)7501 380799

paul.garbett@astonmartin.com
 Grace Barnie        Corporate Communications Manager            +44 (0)7880 903490

grace.barnie@astonmartin.com

 Tulchan Communications
 Harry Cameron and Simon Pilkington                              +44 (0)20 73534200

 

 

 

·      There will be a call for investors and analysts today at 08:30am

·      The conference call can be accessed live via the corporate
website  https://www.astonmartinlagonda.com/investors/calendar
(https://www.astonmartinlagonda.com/investors/calendar)

·      A replay facility will be available on the website later in the
day

 

No representations or warranties, express or implied, are made as to, and no
reliance should be placed on, the accuracy, fairness or completeness of the
information presented or contained in this release. This release contains
certain forward-looking statements, which are based on current assumptions and
estimates by the management of Aston Martin Lagonda Global Holdings plc
("Aston Martin Lagonda"). Past performance cannot be relied upon as a guide to
future performance and should not be taken as a representation that trends or
activities underlying past performance will continue in the future. Such
statements are subject to numerous risks and uncertainties that could cause
actual results to differ materially from any expected future results in
forward-looking statements. These risks may include, for example, changes in
the global economic situation, and changes affecting individual markets and
exchange rates.

 

Aston Martin Lagonda provides no guarantee that future development and future
results achieved will correspond to the forward-looking statements included
here and accepts no liability if they should fail to do so. Aston Martin
Lagonda undertakes no obligation to update these forward-looking statements
and will not publicly release any revisions that may be made to these
forward-looking statements, which may result from events or circumstances
arising after the date of this release.

 

This release is for informational purposes only and does not constitute or
form part of any invitation or inducement to engage in investment activity,
nor does it constitute an offer or invitation to buy any securities, in any
jurisdiction including the United States, or a recommendation in respect of
buying, holding or selling any securities.

 

Sales & Revenue analysis

Total wholesales were lower than the comparative period, as prepared for start
of production of DBX707 at St Athan and continued to navigate a challenging
operating environment. Wholesales were 1,168 units and included 19 Specials
compared with one Special in Q1 2021. DBX represented 37% of the core mix
ahead of DBX707 deliveries in Q2 2022. DBX is expected to represent over 50%
of wholesales going forwards.

By geography, Americas, down 16%, and APAC, down 26%, were impacted by
transportation delays. Our home market of the UK was impacted the least by
supply chain disruptions, down 3% compared to last year.

Revenues were £233m, up 4% over the comparative period, driven mainly by
increased high-value Specials and strong pricing dynamics.

Retail sales to end customers outpaced wholesales and with price increases
across the range implemented during late 2021, core average selling price
(ASP) improved over the comparative period to £151k (Q1 2021: £149k). Total
ASP of £181k (Q1 2021: £151k) benefited from the increased number and higher
price of Specials.

 

Income statement

Adjusted EBITDA was £24m with a margin of 10% (Q1 2021: £21m with a 9%
margin). The operating loss of £48m (Q1 2021: £15m) reflected:

·     revenue growth, increased Specials, Project Horizon and foreign
exchange benefits contributing to a gross margin of 36%, a significant
expansion over the comparative period (Q1 2021: 28%)

·     increased brand and key product launch investment, particularly
DBX707

·    higher depreciation and amortisation (up £23m year-on-year)
principally due to Aston Martin Valkyrie programme deliveries and accelerated
depreciation of capitalised development costs ahead of next generation
GT/Sports vehicles in 2023

·     a £5m benefit from exchange rate movements.

Adjusting operating items of £13m predominantly related to the pension scheme
closure accrual disclosed at the full year 2022 results (Q1 2021: nil).

Net financing costs of £64m were up from £27m in the comparative period,
comprising of interest on Senior Secured Notes outstanding and an FX charge of
£33m (Q1 2021 included a £5m FX benefit). The £11m adjusting finance credit
was due to fair value movements of outstanding warrants (Q1 2021: £5m
credit). The loss before tax was £113m (Q1 2021: £42m).

 

Cash flow and net debt

Net cash inflow from operating activities was £43m (Q1 2021: £72m inflow),
driven primarily by a working capital inflow of £32m. The largest driver was
a £67m payables inflow reflecting deferred income due to logistics
disruptions and ramp-up in development and timing of development costs. Demand
for limited-edition models remains strong with an £12m inflow from customer
deposits.

Capital expenditure of £67m was up £19m over the comparative period, with
investment expected to increase through the year. This will be focused on the
development of the future product pipeline including full refreshes of
front-engine products as well as development of the mid-engine programmes.

Free cash outflow of £25m; (Q1 2021: inflow of £24m), reflected the
increased investment for the future. Cash at 31 March 2022 was £404m (31
December 2021: £419m) and includes an £18m increase in inventory financing
in the period. Interest on all outstanding notes is paid in Q2 and Q4.

Net debt of £957m was up from £892m at 31 December 2021 including the £33m
impact of non-cash FX revaluation of dollar denominated debt.

 

 

APPENDICES

Wholesale number of vehicles

                            Q1 2022  Q1 2021  Change
 Total                      1,168    1,353    (14%)
 Core (excluding Specials)  1,149    1,352    (15%)

 By region:
 UK                         264      272      (3%)
 Americas                   361      431      (16%)
 EMEA ex. UK                271      284      (5%)
 APAC                       272      366      (26%)

 By model:
 Sport                      381      312      22%
 GT                         347      289      20%
 SUV                        421      746      (44%)
 Other                       -       5        n.m.
 Specials                   19       1        n.m.

Note: Sport includes Vantage, GT includes DB11 and DBS, SUV includes DBX and
Other includes prior generation models

 

Summary Income Statement

 £m                                        Q1 2022  Q1 2021
 Revenue                                   232.7    224.4
 Cost of sales                             (148.7)  (161.1)
 Gross profit                              84.0     63.3
    Gross margin %                         36.1%    28.2%

 Operating expenses(1)                     (118.3)  (78.6)
 of which depreciation & amortisation      58.7     36.0
 Adjusted operating loss(2)                (34.3)   (15.3)
 Adjusting operating items                 (13.4)   -
 Operating loss                            (47.7)   (15.3)

 Net financing expense                     (63.9)   (26.9)
    of which adjusting financing income    10.8     5.4
 Loss before tax                           (111.6)  (42.2)
 Taxation                                  (0.4)    0.4
 Loss for the period                       (112.0)  (41.8)

 Adjusted EBITDA(1,2)                      24.4     20.7
    Adjusted EBITDA margin                 10.5%    9.2%
 Adjusted loss before tax(1)               (109.0)  (47.6)

1 Excludes adjusting items; 2 Alternative Performance Measures are defined in
the Appendix

 

 

 

Summary Cash Flow

 £m                                                           Q1 2022  Q1 2021
 Cash generated from/(used in) operating activities           43.2     72.2
 Cash used in investing activities (excl. interest received)  (66.7)   (47.6)
 Net cash interest paid                                       (1.9)    (0.4)
 Free cash inflow/(outflow)                                   (25.4)   24.2
 Cash inflow from financing activities (excl. interest)       5.9      64.4
 (Decrease)/Increase in net cash                              (19.5)   88.6
 Effect of exchange rates on cash and cash equivalents        4.4      (2.6)
 Cash balance                                                 403.8    575.4

 

Net Debt Overview

 £m                                     31-Mar-22   31-Dec-21   31-Mar-21
 Loan notes*                            (1,113.7)*  (1,074.9)*  (1,040.5)
 Inventory financing                    (37.8)      (19.7)      (39.0)
 Bank loans and overdrafts              (108.1)     (114.3)     (118.6)
 Lease liabilities (IFRS 16)            (102.9)     (103.4)     (101.7)
 Gross debt                             (1,362.5)   (1,312.3)   (1,299.8)
 Cash balance                           403.8       418.9       575.4
 Cash not available for short term use  1.9         1.8         1.5
 Net debt                               (956.8)     (891.6)     (722.9)

*Includes £15m issued as PIK interest

Summary Balance Sheet

 £m                       31-Mar-22  31-Dec-21  31-Mar-21
 Non-current assets       1,982.6    1,974.6    1,919.9
 Current assets           911.2      867.9      947.5
 Total assets             2,893.8    2,842.5    2,867.4
 Current liabilities      1,029.1    905.2      855.7
 Non-current liabilities  1,310.8    1,276.9    1,248.2
 Total liabilities        2,339.9    2,182.1    2,103.9
 Total equity             553.9      660.4      763.5

 

Alternative performance measures

In the reporting of financial information, the Directors have adopted various
Alternative Performance Measures ("APMs"). APMs should be considered in
addition to IFRS measurements. The Directors believe that these APMs assist in
providing useful information on the underlying performance of the Group,
enhance the comparability of information between reporting periods, and are
used internally by the Directors to measure the Group's performance.

·      Adjusted operating loss is loss from operating activities before
adjusting items

·      Adjusted EBITDA removes depreciation, loss/(profit) on sale of
fixed assets and amortisation from adjusted operating loss

·      Adjusted operating margin is adjusted operating (loss)/profit
divided by revenue

·      Adjusted EBITDA margin is adjusted EBITDA (as defined above)
divided by revenue

·      Adjusted Earnings Per Share is loss after income tax before
adjusting items, divided by the weighted average number of ordinary shares in
issue during the reporting period

·      Net Debt is current and non-current borrowings in addition to
inventory financing arrangements, lease liabilities recognised following the
adoption of IFRS 16, less cash and cash equivalents, cash held not available
for short-term

·      Free cashflow is represented by cash (outflow)/inflow from
operating activities plus the cash used in investing activities (excluding
interest received) plus interest paid in the year less interest received.

 

 1  Dealers' sales to customers (some Specials are direct to customer)

 2  Company sales to dealers (some Specials are direct to customer)

 3  Operating cashflow less capital investment and net cash interest; note
cash interest payments are in Q2 and Q4

 

 

 

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