REG - Aston Martin Lagonda - Q1 results for three months ended 31 March 2024

Aston Martin Lagonda Global HoldingsAnnouncement

01/05/2024 07:00

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RNS Number : 7040M  Aston Martin Lagonda Glob.Hldgs PLC  01 May 2024

Aston Martin Lagonda Global Holdings plc

("Aston Martin", or "AML", or the "Company"; or the "Group")

First quarter results for the three months ended 31 March 2024

 
 
 
 
 

Launch and delivery of four new models in 2024 to drive significant growth in
H2 and beyond

Successful £1.15bn refinancing completed on new five-year terms following
rating agency upgrades

70% increase in new Revolving Credit Facility to £170m from existing lenders

2024 guidance, including positive FCF inflection in H2'24, and medium-term
targets reiterated

 £m                          Q1 2024    Q1 2023  % change
 Total wholesale volumes(1)  945        1,269    (26%)
 Revenue                     267.7      295.9    (10%)
 Gross Profit                99.7       101.9    (2%)
 Gross Margin (%)            37.2%      34.4%    280 bps
 Adjusted EBITDA(2)          19.9       30.2     (34%)
 Adjusted EBIT(2)            (57.1)     (47.8)   (19%)

 Operating loss              (58.7)     (50.9)   (15%)
 Loss before tax             (138.8)    (74.2)   (87%)

 Net debt(2)                 (1,044.2)  (868.1)  (20%)

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

 

Lawrence Stroll, Aston Martin Executive Chairman commented:

"2024 is a year of immense product transformation at Aston Martin, with the
introduction of four new models to the market before the end of the year. Our
first quarter performance reflects this expected period of transition, as we
ceased production and delivery of our outgoing core models ahead of the ramp
up in production of the new Vantage, upgraded DBX707 and our upcoming V12
flagship sports car which we've confirmed today. As part of our ongoing
programme of ultra-exclusive models, we will deliver a new Special in the
fourth quarter of the year.

"Joining the multi award winning DB12 Coupe and highly acclaimed DB12 Volante,
these 2024 launches will complete the newest core range in our segment, which
along with the continuation of our Specials, is expected to drive strong
financial delivery and positive free cash flow generation in the second half
of the year and beyond.

"In March, we were pleased to successfully complete our planned refinancing,
securing improved terms on new five-year senior secured notes. This followed
upgrades from leading credit agencies, recognising the significant progress
made by Aston Martin over recent years and the opportunity for our strategy to
continue to deliver improved performance in the years to come. This, along
with our existing lenders demonstrating their continued support through a 70%
increase in the new RCF to £170m, marked a significant step in strengthening
our balance sheet, aligning Aston Martin for a positive financial future.

"We were also delighted to announce in March that Adrian Hallmark will become
our new Chief Executive Officer later in the year. Ensuring a smooth
transition in leadership from Amedeo, Adrian will bring to Aston Martin
unrivalled experience in both the ultra-luxury and British automotive sectors
to further progress our strategy."

Aston Martin's Chief Financial Officer will host a Q&A at 8:30am (BST)
today. Details can be found on page 6 of this announcement and online at
www.astonmartinlagonda.com/investors
(http://www.astonmartinlagonda.com/investors)

Wholesale volume summary

 Number of vehicles         Q1 2024  Q1 2023  Change
 Total wholesale            945      1,269    (26%)
 Core (excluding Specials)  900      1,251    (28%)

 By region:
 UK                         154      220      (30%)
 Americas                   303      467      (35%)
 EMEA ex. UK                283      343      (17%)
 APAC                       205      239      (14%)

 By model:
 Sport/GT                   650      582      12%
 SUV                        250      669      (63%)
 Specials                   45       18       150%

Note: Sport/GT includes Vantage, DB11, DB12, and DBS

 

Aston Martin's product transformation continued at pace during Q1 2024. The
introduction of four new models in 2024 and the transitioning out of the
previous ranges remains on track, resulting in a 26% decline in total
wholesales to 945 (Q1 2023: 1,269). This was driven by:

·     Sport/GT wholesales of 650 units increased by 12% (Q1 2023: 582),
largely reflecting the cadence of DB12 volumes following the initial launch
peak in Q4 2023.

·    SUV wholesales of 250 decreased by 63% (Q1 2023: 669), reflecting a
transitional ramp down in volumes ahead of the recently announced launch of
the new model DBX707 with an upgraded interior and infotainment system to
match class-leading performance.

·     Specials wholesales of 45 (Q1 2023: 18), comprised of a mature
cadence of 16 Aston Martin Valkyries (Q1 2023: 18), as well as further Valour
deliveries.

As guided at FY 2023 results, retail volumes comfortably outpaced wholesale
volumes in Q1 2024, following the unwinding of the timing impact of DB12
deliveries in December 2023. Aston Martin continues to operate a demand-led
approach, aligned with its ultra-luxury high performance strategy, and expects
annual retail volumes to outpace wholesale volumes.

Aston Martin will be uniquely positioned with a fully reinvigorated core range
of models by the end of the year. DB12 continues to receive excellent reviews,
including for the recently launched DB12 Volante, resulting in DB12 orders now
extending into Q4 2024. Given the timing of new product launches in 2024, the
remainder of the order book continues to extend into Q3 2024, ahead of dealer
demonstrators arriving which are expected to drive significant future customer
demand.

Geographically, volumes in APAC (excluding China) were broadly flat with Japan
continuing to see strong demand and growth. Following the opening of the
brand's first global flagship location, Q New York, Aston Martin continued its
ultra-luxury retail strategy with the recent opening of a new landmark
showroom within the prestigious luxury hotel, The Peninsula Tokyo. Despite a
decrease in wholesale volumes across other regions during the period of
portfolio transitioning, overall volumes remained well balanced across all
regions in Q1.

 

 

 

Revenue and ASP summary

 £m                                Q1 2024  Q1 2023  % Change
 Sale of vehicles                  239.6    270.1    (11%)
          Total ASP (£k)           253      213      19%
          Core ASP (£k)            176      180      (2%)
 Sale of parts                     20.9     20.2     3%
 Servicing of vehicles             3.6      2.1      71%
 Brand and motorsport              3.6      3.5      3%
 Total revenue                     267.7    295.9    (10%)

Q1 2024 total revenue of £268m decreased by 10% (Q1 2023: £296m), primarily
due to the volume impact of the ongoing transition of Aston Martin's product
portfolio. This was partially offset by an increase in total Average Selling
Price (ASP), reflecting richer mix resulting from deliveries of Aston Martin
Valkyrie Spider's and Valour limited edition models. The slight decline in
core ASP reflects the prior year period mix benefitting from the contribution
of V12 Vantage and DBS in addition to higher SUV sales, particularly in China,
and year-on-year impact of foreign exchange. Demand for unique product
personalisation continued to drive increased contribution to core revenue.

Income statement summary

 £m                                        Q1 2024  Q1 2023
 Revenue                                   267.7    295.9
 Cost of sales                             (168.0)  (194.0)
 Gross profit                              99.7     101.9
    Gross margin %                         37.2%    34.4%

 Adjusted operating expenses(1)            (156.8)  (149.7)
 of which depreciation & amortisation      77.0     78.0
 Adjusted EBIT(2)                          (57.1)   (47.8)
 Adjusting operating items                 (1.6)    (3.1)
 Operating loss                            (58.7)   (50.9)

 Net financing expense                     (80.1)   (23.3)
  of which adjusting financing expense     (26.7)   (13.8)
 Loss before tax                           (138.8)  (74.2)
 Tax (charge)/credit                       (0.1)    0.4
 Loss for the period                       (138.9)  (73.8)

 Adjusted EBITDA(1,2)                      19.9     30.2
    Adjusted EBITDA margin                 7.4%     10.2%
 Adjusted loss before tax(1)               (110.5)  (57.3)

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

 

Despite lower revenue and volumes, gross profit was broadly flat at £100m (Q1
2023: £102m), resulting in gross margin improving 280 basis points to 37% (Q1
2023: 34%). This margin improvement reflected benefits from the portfolio
transformation and contribution from Specials. This was partially offset by
higher manufacturing, logistics and other costs ahead of the anticipated
ramp-up in production in H2'24. The Company continues to target over 40% gross
margin from all new products, aligned with the Company's ultra-luxury
strategy.

Adjusted EBITDA decreased by 34% in Q1 2024 to £20m (Q1 2023: £30m) with
adjusted EBITDA margin declining to 7% (Q1 2023: 10%). This was primarily due
to the lower volumes during the transition period and an 11% increase in
adjusted operating expenses (excluding D&A). While  SG&A costs were
flat, this was offset by the phasing of non-capitalised engineering spend,
relating mostly to our future electrification strategy.

Adjusted EBIT decreased by 19% in Q1 2024 to £(57)m (Q1 2023: £(48)m) with
depreciation and amortisation broadly flat at £77m (Q1 2023: £78m).

Adjusted net financing costs of £53m (Q1 2023: £10m), increased primarily
due to the year-on-year impact of US dollar debt revaluations, and accelerated
amortisation of fees related to prior loan notes as a result of the successful
refinancing. The £27m net adjusting finance charge (Q1 2023: £14m) was
largely due to movements in fair value of outstanding warrants, and the
redemption premiums associated with the refinancing of the senior secured
notes.

The adjusted loss before tax of £111m (Q1 2023: £57m loss), reflects the
lower adjusted EBIT and increased adjusted net finance costs.

Cash flow and net debt summary

 £m                                                                Q1 2024  Q1 2023
 Cash (used in) operating activities                               (61.5)   (33.0)
 Cash used in investing activities (excl. interest)                (86.3)   (85.3)
 Net cash interest paid                                            (42.6)   -
 Free cash outflow                                                 (190.4)  (118.3)
 Cash inflow/(outflow) from financing activities (excl. interest)  27.9     (54.2)
 (Decrease)/increase in net cash                                   (162.5)  (172.5)
 Effect of exchange rates on cash and cash equivalents             (0.3)    (3.0)
 Cash balance                                                      229.6    407.8
 Available facilities                                              165.6    53.0
 Total cash and available facilities                               395.2    460.8

Net cash outflow from operating activities was £62m (Q1 2023: £33m). The
year-on-year increase in cash flow used in operating activities was primarily
driven by a £10m decrease in adjusted EBITDA, as explained above, and a
working capital outflow of £74m (Q1 2023: £54m outflow). The largest drivers
of working capital outflow were:

·   £33m decrease (Q1 2023: £20m decrease) in deposits held, due to the
increased volume of Specials delivered compared to the prior period,

·      £59m decrease in payables following reduction from peak
production volumes in Q4 2023,

·      £25m increase in inventories (Q1 2023: £48m increase) ahead of
new Vantage production,

·   which was partially offset by a decrease in receivables of £43m (Q1
2023: £23m decrease) following collections from the prior quarter.

Capital expenditure of £86m was broadly flat compared to the comparative
period (Q1 2023: £85m), 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 outflow of £190m in Q1 2024 (Q1 2023: £118m outflow), was due to
the increase in cash outflow from operating activities as detailed above, as
well as the cash interest payment of £43m, brought forward from the previous
Q2 payment date as part of the Company's refinancing exercise.

 

 £m                               31-Mar-24  31-Dec-23  31-Mar-23
 Loan notes                       (1,140.5)  (980.3)*   (1,080.8)*
 Inventory financing              (38.0)     (39.7)     (39.0)
 Bank loans and overdrafts        0.0        (89.4)     (57.7)
 Lease liabilities (IFRS 16)      (95.3)     (97.3)     (98.4)
 Gross debt                       (1,273.8)  (1,206.7)  (1,275.9)
 Cash balance                     229.6      392.4      407.8
 Net debt                         (1,044.2)  (814.3)    (868.1)

*Includes £41m and £31m issued as PIK interest as at 31-Dec-23 and
31-Mar-23, respectively

Compared with 31 December 2023, gross debt marginally increased to £1,274m
(31 December 2023: £1,207m) as a result of the successful refinancing where,
following upgrades from leading credit agencies, the Group priced on improved
terms senior secured notes of $960m at 10.000% and £400m at 10.375% due in
2029. In addition, existing lenders entered into a new super senior revolving
credit facility agreement, increasing their binding commitments by c. £70
million to £170 million. This new facility provides the Company with
additional liquidity as it continues to accelerate its growth strategy, with
total cash and available facilities of £395m on 31 March 2024, in line with
the position at 31 December 2023. As announced in March 2024, the proceeds
from the offering of the notes, together with cash on the balance sheet, were
used to redeem in full the existing senior secured notes and second lien split
coupon notes, to repay in full the borrowings under the previous revolving
credit facility and make the early interest payment in March that was due in
April 2024.

Net debt of £1,044m increased from £868m as at 31 March 2023. Given the
robust EBITDA performance in last twelve-month period, the net leverage ratio
decreased year-on-year to 3.5x (Q1 2023: 4.4x).

Outlook

We remain on track to deliver our FY 2024 financial targets announced at our
FY 2023 results on 28 February 2024, as we deliver another year of significant
strategic and financial progress, continuing the ongoing product portfolio
transformation:

·    Enhanced profitability and EBITDA will be driven by high single-digit
percentage wholesale volume growth

·    Gross margin further improving to achieve our longstanding target of
c. 40%

·    EBITDA margin expansion continuing into the low 20s%.

As expected, given the product transformation and launch timings of four new
models in 2024:

·   Wholesale volumes will be heavily weighted to the second half of the
year, resulting in significant H2'24 growth in gross profit and EBITDA
compared with the prior year period

·     Q2'24 performance expected to be broadly similar to Q1'24

The following timelines are all on track and are anticipated to be as follows
for our new models in 2024:

·     Vantage and DBX707 - deliveries before the end of Q2'24 with
production ramping up through H2'24A

·     New V12 flagship - deliveries scheduled to begin in Q4'24

·     New ultra-exclusive Special - deliveries scheduled in Q4'24.

Continued capital investment in new product developments to support our growth
strategy is expected to total c. £350m in 2024, broadly even across the first
and second half of the year. FCF is expected to materially improve in 2024
compared with the prior year, achieving our targeted inflection point for
positive FCF generation in H2'24, primarily driven by the timing of wholesale
volumes.

Through disciplined strategic delivery, we expect to continue deleveraging,
towards our net leverage ratio target of c. 1.5x in 2024/25. Following our
successful refinancing in Q1'24, we now expect net cash interest of c. £120m
in FY24 1  (#_ftn1) . Depreciation and amortisation forecast remains at c.
£400m in FY24.

The Group's medium-term outlook for 2027/28, remains unchanged.

 

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.

 1  Assuming current exchange rates prevail for 2024

 

Enquiries

 

Investors and Analysts

James Arnold                        Head of Investor
Relations
+44 (0) 7385 222347

 
 
 
james.arnold@astonmartin.com

Ella South                              Investor
Relations Analyst
          +44 (0) 7776 545420

 
 
 
 ella.south@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

FGS Global

James Leviton and Jenny Bahr
 
        +44 (0) 20 7251 3801

 

Q&A details

 
 

·      There will be a Q&A today at 08:30am BST:
https://app.webinar.net/9LzoY2dm2NG (https://app.webinar.net/9LzoY2dm2NG)

·      The Q&A can be accessed live via the corporate website:
https://www.astonmartinlagonda.com/investors/results-and-presentations
(https://www.astonmartinlagonda.com/investors/results-and-presentations)

·      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.

Alternative Performance Measure

 £m                           Q1 2024  Q1 2023
 Loss before tax              (138.8)  (74.2)
 Adjusting operating expense  1.6      3.1
 Adjusting finance expense    35.7     13.8
 Adjusting finance (income)   (9.0)    -
 Adjusted EBT                 (110.5)  (57.3)
 Adjusted finance (income)    (2.7)    (2.4)
 Adjusted finance expense     56.1     11.9
 Adjusted EBIT                (57.1)   (47.8)
 Reported depreciation        20.7     18.9
 Reported amortisation        56.3     59.1
 Adjusted EBITDA              19.9     30.2

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 EBIT 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 EBIT 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 and cash held not available for
short-term use

-     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.

About Aston Martin Lagonda:

Aston Martin's vision is to be the world's most desirable, ultra-luxury
British brand, creating the most exquisitely addictive performance cars.

Founded in 1913 by Lionel Martin and Robert Bamford, Aston Martin is
acknowledged as an iconic global brand synonymous with style, luxury,
performance, and exclusivity. Aston Martin fuses the latest technology, time
honoured craftsmanship and beautiful styling to produce a range of critically
acclaimed luxury models including the Vantage, DB12, DBS, DBX and its first
hypercar, the Aston Martin Valkyrie. Aligned with its Racing. Green.
sustainability strategy, Aston Martin is developing alternatives to the
Internal Combustion Engine with a blended drivetrain approach between 2025 and
2030, including PHEV and BEV, with a clear plan to have a line-up of electric
sports cars and SUVs.

Based in Gaydon, England, Aston Martin Lagonda designs, creates, and exports
cars which are sold in more than 50 countries around the world. Its sports
cars are manufactured in Gaydon with its luxury DBX SUV range proudly
manufactured in St Athan, Wales. The company is on track to deliver net-zero
manufacturing facilities by 2030.

Lagonda was founded in 1899 and came together with Aston Martin in 1947 when
both were purchased by the late Sir David Brown, and the company is now listed
on the London Stock Exchange as Aston Martin Lagonda Global Holdings plc.

(#_ftnref1)

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