REG - Aston Martin Lagonda - Q1 2023 financial results

Aston Martin Lagonda Global HoldingsAnnouncement

03/05/2023 07:00

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RNS Number : 1884Y  Aston Martin Lagonda Glob.Hldgs PLC  03 May 2023

3 May 2023

Aston Martin Lagonda Global Holdings plc

First quarter results for the three months to 31 March 2023

 

 

 

 - Q1 performance in-line with expectations; FY 2023 guidance maintained

- Strong demand across the portfolio; c.95% of current range GT/Sports sold
out for 2023 ahead of upcoming launches; DBX order book to the end of Q3

- Q1 revenue growth of 27% driven by strong DBX volumes and ASP growth

- First of the next generation of sports cars to be launched later this month;
production started in early Q2 and customer deliveries due to commence in Q3

 

 

  £m                         Q1 2023  Q1 2022  % change
 Total wholesale volumes(1)  1,269    1,168    9%
 Revenue                     295.9    232.7    27%
 Gross profit                101.9    84.0     21%
 Adjusted EBITDA(2)          30.2     24.4     24%
 Adjusted operating loss(2)  (47.8)   (34.3)   (39%)

 Operating loss              (50.9)   (47.7)   (7%)
 Loss before tax             (74.2)   (111.6)  34%

 Net debt(2)                 (868.1)  (956.8)  9%

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

Q1 2023 Financial highlights

·      Retails 3  (#_ftn1) outpaced wholesales(( 4  (#_ftn2) )) as
strong demand continues across the portfolio; c.95% of current range of
GT/Sports cars sold out for 2023 ahead of upcoming launches and DBX order book
to the end of Q3 2023, with the DBX707 representing more than 70% of total DBX
orders

·      Wholesale volumes increased by 9% year-on-year to 1,269 (Q1 2022:
1,168) driven by 59% year-on-year DBX volume growth, underpinned by the
DBX707. As expected, GT/Sports volumes were lower due to the ongoing
transition of sports car sales ahead of new launches later in the year

·      Revenue increased by 27% year-on-year to £296m primarily driven
by

-  favourable mix dynamics from the DBX707 and V12 Vantage, higher volumes
and strong pricing dynamics in the core portfolio

§ Q1 2023 core ASP of £180k, up 19% from £151k in Q1 2022

-  higher year-on-year Aston Martin Valkyrie programme deliveries (18
vehicles compared to 14 in Q1 2022)

§ Q1 2023 total ASP of £213k, up 18% from £181k in Q1 2022

·     Gross profit increased by 21% year-on-year to £102m (Q1 2022:
£84m), with gross margin of 34% (Q1 2022: 36%).  The increase in gross
profit was primarily driven by favourable mix and higher volumes of core
models, partially offset by higher manufacturing, logistics and other costs.

·    Adjusted EBITDA increased by 24% year-on-year to £30m (Q1 2022:
£24m), primarily driven by higher revenue and gross profit, partially offset
by higher operating expenses including reinvestments into brand and marketing
activities, as well as inflationary impacts on general costs. Adjusted EBITDA
margin of 10% (Q1 2022: 10%)

·    Operating loss of £51m included a £19m year-on-year increase in
depreciation and amortisation, driven by higher Aston Martin Valkyrie
programme deliveries and the continuing accelerated amortisation of
capitalised development costs ahead of next generation of sports cars starting
in 2023

·      Loss before tax of £74m (Q1 2022: loss of £112m) included lower
year-on-year net financing charges due to a positive non-cash FX revaluation
impact

·      Free cash outflow of £118m (Q1 2022: £25m outflow) included:

-  Working capital outflow of £54m (Q1 2022: £32m inflow) primarily driven
by higher inventories related to ordered vehicles at the end of the quarter,
as well as initiatives to improve production and supply chain resilience ahead
of upcoming vehicle launches

-  Higher year-on-year capital expenditure of £86m (Q1 2022: £67m),
primarily related to new model development, including the next-generation of
sports cars as well as development of the Company's electrification programme

·     Cash of £408m (December 2022: £583m) included a £50m repayment
of the Company's Revolving Credit Facility during Q1 2023; Net debt of £868m
(December 2022: £766m), including a positive £28m non-cash FX revaluation of
US dollar-denominated debt as the GBP strengthened against the US dollar.

 

Q1 2023 Operational Highlights

·     On 15 January 2023 the Company commenced a year-long global
celebration of Aston Martin's 110(th) anniversary, which will culminate in the
launch of a highly exclusive, limited-edition special model later in the year.
The anniversary will also take centre stage at this year's British Grand Prix
at Silverstone, Goodwood Festival of Speed, Pebble Beach Concours d'Elegance
and other major events across Aston Martin's key regions, as part of a global
marketing campaign entitled Intensity: 110 Years in the Making

·      The DBS 770 Ultimate, the most powerful production Aston Martin
ever, was unveiled in January 2023, with all 499 examples sold out. Deliveries
are scheduled to begin in Q3 2023

·     In January 2023 the Company announced that it is increasing
employment at its Gaydon headquarters with the creation of more than 100 new
skilled jobs in its manufacturing facility to support the launch of its next
generation of sports cars

·      In February 2023, the very first hand-built Aston Martin DBS 770
Ultimate raised CHF 750,000 for charity, taking centre stage of a glittering
auction at the Action Innocence Charity Gala in Gstaad, Switzerland

·      In February 2023, the Company invited some of the world's most
respected motoring journalists to discover the full potential of the Aston
Martin Valkyrie at the Bahrain International Circuit.  Our era-defining
hypercar met with significant acclaim and more than 70 articles have since
been published, with an online reach of 16.5 million and more than 5 million
YouTube views for video reviews of the model

·      On 27 April 2023, the Company announced further progress in its
Racing.Green. sustainability strategy, using CO(2) emission offsets to
establish carbon neutral status for its Gaydon and St Athan plants. This
follows an acceleration towards the goals established in the strategy
announced in 2022, with updated targets  now including:

-  Carbon Neutral manufacturing facilities, with 100% use of renewable
electricity

-  A new goal to achieve a 2.5% year-on-year reduction in CO2 emissions from
its manufacturing facilities 5  (#_ftn3)

-  A new goal to reduce CO(2) emissions intensity and energy consumption per
car by 2.5% year on year 6  (#_ftn4)

-  A new target to improve biodiversity at its manufacturing facilities

·     A year since its launch, the multi award-winning DBX707 continues to
attract significant media acclaim and with 60% of its owners either completely
new or returning to the brand, it is also achieving an excellent Net Promoter
Score (NPS)

·      DBX707 recently named 'Best Exclusive & Luxury Car' at the
prestigious Auto vum Joer awards in Luxembourg

·      DBX707, the world's most powerful luxury SUV, was announced as
the new Official FIA Medical Car of Formula 1®️ in conjunction with the
start of the 2023 World Championship season

·      The excellent start to the Formula 1®️ season by the Aston
Martin Aramco Cognizant Formula One® Team has driven significant brand
visibility and heightened product consideration, with a c.50% increase in web
sessions and more than 30% uplift in configuration leads on the day of the
season-opening Bahrain Grand Prix

·  The Company continued to strengthen its leadership team with new senior
appointments in operations, supply chain and electrification

 

 

Lawrence Stroll, Aston Martin Lagonda Executive Chairman commented:

"2023 is set to be one of the most exciting years in Aston Martin's history.
In addition to celebrating our 110(th) anniversary and our exciting line-up of
Specials, it will also see the start of our next generation of sports cars
which will truly reposition Aston Martin as an ultra-luxury performance brand
and enhance our growth.

"Since the start of the year, we have continued to see strong demand across
our product range, with our current range of sports cars essentially sold out
for the year. The DBX707, the first car developed under my leadership,
continues to receive broad media acclaim and, with a growing number incredibly
satisfied customers, is strengthening the DBX orderbook in our all major
markets, as well as our overall financial performance."

"Our partnership with the Aston Martin Aramco Cognizant Formula One®️ team
has continued to drive significant brand awareness and growing demand from a
new generation of customers, further amplified by its strong start to the
season."

 

Amedeo Felisa, Aston Martin Lagonda Chief Executive Officer commented:

"Over the course of the first three months of the year, we have continued to
build on the progress we have made to meet strong customer demand and deliver
on our targets. Our Q1 performance was in line with expectations, with strong
growth in DBX deliveries led by the critically acclaimed DBX707 - the world's
most powerful luxury SUV.

"The transition of our portfolio, led by the DBX707, is accelerating, with the
first of the next generation of sports cars coming off the production line in
Gaydon ahead of its unveiling later this month. We remain on track to deliver
a number of thrilling new Specials in the second half of the year. Our new
portfolio will also bring significant improvements in profitability, with all
new models, from the DBX707 onwards, continuing to target a 40%+ gross margin.

"We have also further strengthened our organisation, promoting internal talent
and hiring new leaders to enhance our execution capabilities, focus our
investments in areas that will continue to differentiate the Aston Martin
driving experience, and deliver on our goals."

 

Outlook

We remain on our way to achieving our target of c.10,000 wholesales, aligned
with our ultra-luxury strategy. In addition, we are well on track to deliver
our medium-term financial targets of c.£2bn revenue and c.£500m adjusted
EBITDA in 2024/25.

For 2023 our expectations are unchanged since our FY 2022 results announcement
on 1(st) March;

·    We expect to deliver significant growth in profitability compared to
2022, primarily driven by an increase in volumes and higher gross margin in
both Core and Special vehicles. We expect significant year-on-year growth and
positive free cash flow in the second half of the year.

·     For the first half of 2023, we expect our adjusted EBITDA and free
cash flow performance to be similar to the first half of 2022. This is driven
by expectations of strong year-on-year growth in DBX volumes whilst commencing
the transition of sports cars sales ahead of new launches later in the year,
as well as investments to support our future growth.

·      We expect the second half of 2023 to see the delivery of a number
of new products across the Core and Specials ranges, all with improved
profitability. In addition to the ramp up of the already sold-out DBS 770
Ultimate, we continue to expect deliveries of the first of our next generation
of sports cars to commence in Q3.

·     Within Specials, we plan to commence deliveries of the sold-out
Aston Martin Valkyrie Spider and the ultra-luxury DBR22 in the second half of
the year. Finally, and in conjunction with our historic 110(th) anniversary,
we plan to launch a new, strictly limited, exclusive Aston Martin model, with
deliveries commencing in Q4.

·      We expect to increase investment in brand and new product launch
activities during the year. This will also allow us to continue to elevate our
ultra-luxury performance brand positioning and to support the acceleration of
our longer-term growth.

·      Although the operating environment remains volatile, including
ongoing inflationary pressures and pockets of supply chain disruptions, our
teams continue to work in partnership with our suppliers to mitigate any
impact on our performance in 2023.

·      We expect 2023 to be the peak year of capital expenditure, with
capital expenditure readjusting from next year to support both the development
and the delivery of our future product range, as well as our target of
becoming sustainably free cash flow positive from 2024.

 

2023 guidance unchanged:

·      Wholesales: year-on-year growth to c.7,000 units

·      Adjusted EBITDA margin: year-on-year expansion, up to c.20%
adjusted EBITDA margin

·      Capex and R&D: c.£370m

·      Depreciation and amortisation: c.£350m-£370m

·      Interest costs: c.£120m (cash) assuming current exchange rates
prevail for 2023

 

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.

 

 

 

Investors and Analysts

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

 
 
 
 
      sherief.bakr@astonmartin.com

Holly Grainger             Deputy Head of Investor
Relations
+44 (0)7442 989551

 
holly.grainger@astonmartin.com

Media

Kevin
Watters
Director of
Communications
                        +44 (0)7764 386683

 
                        kevin.watters@astonmartin.com

Paul
Garbett
Head of Corporate & Brand Communications             +44
(0)7501 380799

 
 
 
paul.garbett@astonmartin.com

 

Teneo

Harry Cameron and Simon Pilkington
 
                        +44 (0)20 7353 4200

 

 

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

·      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

Retail sales to end customers outpaced wholesales in Q1. Total wholesales of
1,269 increased by 9% year-on-year (Q1 2022: 1,168) driven by significantly
higher DBX volumes. As expected, Sports/GT volumes were lower than the
comparative period due to the ongoing transition of sports car sales ahead of
new launches later in the year. Total wholesales included 18 Specials (Q1
2022: 19), all of which were Aston Martin Valkyries.  DBX volumes increased
by 59% year-on-year, driven by the DBX707, the world's most powerful luxury
SUV. The DBX707 is now clearly established as a benchmark in the ultra-luxury
SUV segment with strong volume growth in the majority of our key markets.

Geographically, the Americas was the strongest and the largest region,
representing 37% of wholesales in the quarter, driven by strong year-on-year
DBX growth. EMEA also saw strong growth in Q1, driven by higher DBX and V12
Vantage volumes. Our home market, the UK saw lower year-on-year volumes driven
by the transition of sports cars sales ahead of new launches later in the
year, which more than offset higher year-on-year DBX volumes. Finally, APAC
volumes were down modestly year-on-year, but this continues to be a region
where we see significant opportunity for long-term growth.

Q1 revenue of £296m increased by 27% year-on-year, primarily driven by strong
pricing and mix dynamics as well as higher Aston Martin Valkyrie deliveries.
Total average selling price (ASP) of £213k (Q1 2022: £181k), increased by
18% compared to Q1 2022 with core ASP increasing by 19% to £180k (Q1 2022:
£151k).

Income statement

Gross profit of £102m increased by £18m, or 21%, year-on-year, primarily
driven by favourable mix and higher volumes of core models, partially offset
by higher manufacturing, logistics and other costs. This translated to a gross
margin of 34%, a decline of approximately 170 basis points compared to Q1
2022, primarily due to higher manufacturing, logistics and other costs,
which more than more offset higher year-on-year gross margin within the core
range of vehicles.

The Company continues to target a 40%+ gross margin from its future products.

Adjusted EBITDA of £30m increased by £6m, or 24% year-on-year. This
translated to an adjusted EBITDA margin of 10%, consistent with the prior year
period. The year-on-year increase in adjusted EBITDA was primarily due to
higher year-on-year gross profit, as described above, partially offset by
increased investments in brand and marketing initiatives to support our future
growth as well as higher general costs.

Adjusting operating items of £3m (Q1 2022: £13m) predominantly related to
ERP implementation costs.

Net financing costs of £23m were down from £64m in the comparative period,
comprising of interest on Senior Secured Notes and a non-cash FX benefit of
£28m (Q1 2021 included a £33m FX charge). The £14m adjusting financing
items was due to fair value movements of outstanding warrants (Q1 2021: £11m
credit). The loss before tax was £74m in Q1 2023, an improvement of £38m
year-on-year (Q1 2022: £112m).

Cash flow and net debt

Cash flow from operating activities was an outflow of £33m (Q1 2022: £43m
inflow). The year-on-year change in cash flow from operating activities was
primarily due to adverse movements in working capital. Cash flow from
operating activities in Q1 2023 included a £54m outflow related to movements
in working capital (compared with a £32m inflow in Q1 2023). The largest
driver was a £48m increase in inventories primarily driven by higher levels
ordered vehicles at the end of the quarter, as well as initiatives to improve
production and supply chain resilience ahead of upcoming vehicle launches.

Demand for Specials remained strong in Q1, with deposit intake for Valhalla
and the ultra-luxury DBR22. However, this was offset by higher deliveries of
Aston Martin Valkyrie programme vehicles, resulting in a net £20m outflow
from customer deposits during the quarter. (Q1 2022: £12m inflow)

Capital expenditure of £86m was up £19m over the comparative period, with
investment focused on the future product pipeline, particularly the next
generation of sports cars, as well as development of the Company's
electrification programme.

Free cash flow was an outflow of £118m; (Q1 2022: outflow of £25m),
primarily due to the changes in working capital-related cashflows described
above and, to a lesser extent, by the year-on-year increase in capital
expenditure. Cash at 31 March 2023 was £408m (31 December 2022: £583m) and
includes a £50m repayment of the Company's Revolving Credit Facility during
Q1 2023. Net debt of £868m increased from £766m at 31 December 2022.

 

 

APPENDICES

Wholesale number of vehicles

                            Q1 2023  Q1 2022  Change
 Total                      1,269    1,168    9%
 Core (excluding Specials)  1,251    1,149    9%

 By region:
 UK                         220      264      (17%)
 Americas                   467      361      29%
 EMEA ex. UK                322      271      19%
 APAC                       260      272      (4%)

 By model:
 GT/Sport                   582      728      (20%)
 SUV                        669      421      59%
 Specials                   18       19       (5%)

Note: GT/Sport includes Vantage, DB11 and DBS

 

Summary Income Statement

 £m                                                  Q1 2023  Q1 2022
 Revenue                                             295.9    232.7
 Cost of sales                                       (194.0)  (148.7)
 Gross profit                                        101.9    84.0
    Gross margin %                                   34.4%    36.1%

 Operating expenses 7  (#_ftn5)                      (149.7)  (118.3)
 of which depreciation & amortisation                78.0     58.7
 Adjusted operating loss 8  (#_ftn6)                 (47.8)   (34.3)
 Adjusting operating items                           (3.1)    (13.4)
 Operating loss                                      (50.9)   (47.7)

 Net financing expense                               (23.3)   (63.9)
    of which adjusting financing (expense) income    (13.8)   10.8
 Loss before tax                                     (74.2)   (111.6)
 Taxation                                            0.4      (0.4)
 Loss for the period                                 (73.8)   (112.0)

 Adjusted EBITDA(7,8)                                30.2     24.4
    Adjusted EBITDA margin                           10.2%    10.5%
 Adjusted loss before tax(7)                         (57.3)   (109.0)

 

 

 

Summary Cash Flow

 £m                                                                Q1 2023  Q1 2022
 Cash generated from/(used in) operating activities                (33.0)   43.2
 Cash used in investing activities (excl. interest received)       (85.3)   (66.7)
 Net cash interest paid                                            -        (1.9)
 Free cash outflow                                                 (118.3)  (25.4)
 Cash (outflow)/inflow from financing activities (excl. interest)  (54.2)   5.9
 (Decrease)/Increase in net cash                                   (172.5)  (19.5)
 Effect of exchange rates on cash and cash equivalents             (3.0)    4.4
 Cash balance                                                      407.8    403.8

 

Net Debt Overview

 £m                                     31-Mar-23   31-Dec-22  31-Mar-22
 Loan notes*                            (1,080.8)*  (1,104.0)  (1,113.7)
 Inventory financing                    (39.0)      (38.2)     (37.8)
 Bank loans and overdrafts              (57.7)      (107.1)    (108.1)
 Lease liabilities (IFRS 16)            (98.4)      (99.8)     (102.9)
 Gross debt                             (1,275.9)   (1,349.1)  (1,362.5)
 Cash balance                           407.8       583.3      403.8
 Cash not available for short-term use  0.0         0.3        1.9
 Net debt                               (868.1)     (765.5)    (956.8)

*Includes £31m issued as PIK interest

Summary Balance Sheet

 £m                       31-Mar-23                                   31-Dec-22  31-Mar-22
 Non-current assets                      1,967.3                      1,978.9    1,982.6
 Current assets                              985.0                    1,125.4    911.2
 Total assets                            2,952.3                      3,104.3    2,893.8
 Current liabilities                         993.9                    1,041.9    1,029.1
 Non-current liabilities                 1,260.7                      1,289.9    1,310.8
 Total liabilities                       2,254.6                      2,331.8    2,339.9
 Total equity                                697.7                    772.5      553.9

 

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

·      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.

 3  (#_ftnref1) Dealers' sales to customers (some Specials are direct to
customer)

 4  (#_ftnref2) Company sales to dealers (some Specials are direct to
customer)

(#_ftnref3)

(#_ftnref4) 5, 6  Scope 1 CO(2) emissions

 

 7  (#_ftnref5) Excludes adjusting items

 8  (#_ftnref6) Alternative Performance Measures are defined in the Appendix

 

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