McLaren H1 2019 Results · 4 | McLaren H1 2019 Results McLaren Automotive continues to deliver...

McLaren H1 2019 Results ▪August 28, 2019

Highlights

2 | McLaren H1 2019 Results


Strong positive profit growth momentum in H1 2019 supporting Automotive Track25

investment plans

◼ H1 2019 Group revenues £698m up 36% versus £511m in H1 2018, driven by

Automotive volume growth, Ultimate Series sales and an improvement in Racing results

◼ H1 2019 Reported EBITDA £81m up 553% versus £12m H1 2018

◼ H1 2019 LTM Revenue £1,443m as a result of improved Automotive wholesales during H1

2019

◼ H1 2019 LTM Reported EBITDA £204m up 50% since FY2018 (£136m)

◼ H1 2019 production delivered 2,640 vehicles in comparison to 2,504 in H1 2018 (5.4%

growth)

◼ Racing recovery continues, with Reported EBITDA improvement in the first half driven by

increased prizemoney from finishing 6th (versus 9th in 2017) in the Constructors

Championship in 2018 and improved sponsorship revenue

H1 2019

Automotive >> Racing >> Applied Technologies

Revenue by division

Car volumes by region

Racing11%

Automotive85%

Applied Technologies

4%

North America

48%

APAC, ex. China17%

China4%

Rest of World5%

Europe26%


◼ McLaren Automotive continues to deliver strong positive growth in H1 2019

◼ Vehicle wholesales in H1 2019 totalled 2,335 (2,178 in H1 2018) up 7.2%. 600LT Spider, 720S Spider and

McLaren Senna models driving volume

◼ Total committed order book at H1 2019 was 1,925 units with Ultimate Series sold out, Super Series and Sports

Series 600LT Spider sold out into Q4, McLaren GT order book building with first orders received following

launch in May

◼ New McLaren Ultimate Series vehicle announced with a limited production of 399 cars, commencing in 2020

◼ Sports and Super Series remain in demand with increasing interest in the new GT series

◼ 476 McLaren Sennas now delivered to customers with remaining vehicles delivered in early Q3 2019

◼ McLaren currently 4th in the Formula 1 World Constructors’ Championship at the summer break after 12 races

◼ McLaren announces strategic partnership with Arrow Schmidt Peterson Motorsports (Arrow SPM) and Chevrolet

racing as Arrow McLaren Racing SP for a return to IndyCar in the 2020 NTT IndyCar Series

H1 2019

Automotive >> Racing >> Applied Technologies


◼ Revenue (£m)

Key Metrics (H1 2018 vs H1 2019)

◼ EBITDA1 (£m)

◼ Wholesale Volume (Units)

◼ F1 Championship

points

Currently 4th after 12 races

◼ Liquidity (£m)

◼ Net Debt (£m)

+36%

+553%

+7% 6th4th

N.B. Proforma Net Debt represents the position had the new financing completed in July been in place at H1 2019

1 Reported EBITDA

Business Update


Automotive


McLaren Automotive – 2019 highlights


▪ New GT

▪ order book building with first orders received

following launch in May

▪ 600LT Coupe and Spider

▪ Coupe allocation now complete

▪ Spider variant orders into Q4 2019

▪ 720S Spider

▪ 2019 order book now fully allocated

▪ McLaren Senna

▪ All 500 sold out in advance

▪ 476 delivered at end of H1 2019

▪ Production complete end of August

▪ McLaren Senna GTR

▪ Commences production in H2 2019; all sold

▪ Speedtail

▪ Pre-production models progressing well - first deliveries in Q1 2020

Global Volumes - H1 2019


North America +32% China (26%)

Europe (17%)

APAC +13% RoW (4%)

▪ Demand in North America and Asia Pacific markets strong

▪ European performance good despite some overall market weakness

▪ China variance due to timing, on place to deliver the same volume as 2018

850 1,125

739 611

347 392

114 84

128 123

2,178

2,335

Global wholesale volumes

H1 2018 H1 2019

+7%

The new McLaren Ultimate Series


◼ All new Ultimate Series McLaren supercar

◼ Focused on the exhilaration of pure, open-top driving

◼ Limited to 399 examples, the two seat open cockpit

roadster offers the purest distillation of road focused

driving pleasure and an unrivaled sense of driver

connection with the surrounding environment

◼ Designed more for the road than the track with

extensive use of carbon fibre will make it the lightest

car McLaren has produced, powered by a version of

the twin-turbocharged V8 engine currently employed

in the McLaren Senna to ensure breath taking

performance

◼ Deposits commencing H2 2019

McLaren Special Operations (MSO)


MSO is a rapidly growing segment of the Automotive business

driving up average selling price and customer appetite across all

Series

▪ MSO is able to offer the complete tailoring of any McLaren model

MSO Defined

▪ This range of series options forms the first of the five tiers of

personalisation offered by MSO, and is offered through McLaren retailers

MSO Bespoke

▪ MSO Bespoke offers a near limitless level of tailoring to its customers. It

may be a unique exterior paint, or a personalised interior with custom

leather and stitching colours or unique carbon fibre customisation

Series Models % of cars with MSO content

Sports 570S, 570S Spider, 600LT, 600LT Spider >60%

Super 720S, 720S Spider >65%

Ultimate McLaren Senna >75%

Racing


Formula 1 World Championship


Delivering improved performance on track

Formula 1 - on track

▪ A good first half of season – currently 4th with 82 points in the constructors championship compared to6th and 52 points in 2018 after 12 races

▪ The car remains competitive on track and the gap to the fastest cars lessens during 1st half of season

▪ Improvements in reliability and operational competitiveness (pit stops / launches / race strategy) havebeen realised with further developments to come

▪ It was confirmed that Carlos Sainz and Lando Norris will continue as McLaren F1 drivers for the 2020 FIAFormula 1 season

Formula 1- off track

▪ Key management positions now filled with a focus on development and improvement of methodologies,production and digital transformation to further support the forward steps made in 2019

▪ On track improvement coupled with reducing losses from F1

▪ Revenue targets achieved with more sponsor partnerships than any other F1 team this year, now focussedon 2020

Sporting environment

▪ New F1 financial (cost cap of $175m) and technical regulations for 2021 onwards due to be signed inOctober 2019

IndyCar 2020


Arrow McLaren Racing SP

IndyCar 2020

▪ McLaren will return in 2020 to IndyCar for the full season

▪ This new venture will give Racing a significant commercial advantage overother F1 teams, none of which have such a significant racing presence in NorthAmerica

▪ Whilst the commercial opportunities are significant, the cost of competing arenot expected to be material due to the low cost (compared to F1) of competingin IndyCar and the sponsorship arrangements the team already have in place

▪ Strategic partnership with Arrow Schmidt Peterson Motorsports (Arrow SPM)and Chevrolet

▪ McLaren last competed in IndyCar in 1979

▪ The partnership will be named Arrow McLaren Racing SP

▪ The partnership will see the infrastructure of Arrow SPM underpin the team’soperations

▪ McLaren Racing will add the technical expertise, commercial experience andmarketing strength to enable the new entity to perform at the highestcompetitive level and regularly challenge for wins and the series title

Financials


▪ H1 2019

Results – H1 2019


Automotive wholesale volumes Revenue (£m) Reported EBITDA (£m)

▪ All three series - Sports, Super and Ultimate - on sale during the first half

▪ Order books for Sports Series and Super Series remain strong with dealer allocations continuing to reflect customer demand

▪ Strong H1 for deliveries and on track to deliver a similar number of units to last year

▪ Revenue growth of 36% as a result of having the full Series range (Sports, Super and Ultimate) on sale in H1 2019 vs H1 2018

▪ Racing revenue increased due to higher level of prizemoney, reflecting the improved Formula One Constructors’ Championship position in 2018

▪ Improvement in Automotive Reported EBITDA H1 2019 driven by Ultimate Series on sale in H1 2019

▪ Sale volumes and mix have also contributed to the growth in Automotive Reported EBITDA

▪ Racing Reported EBITDA reflects the increased revenue versus the prior year

2,178

2,335

H1 2018 H1 2019

511

698

H1 2018 H1 2019

12

81

H1 2018 H1 2019

H1 2018 – H1 2019 Reported EBITDA Bridge


▪ Automotive Reported EBITDA growth driven by strong sales volumes, model mix and regional mix impacts along with all three series on sale in H1 2019, whereas predominantly only Sports and Super Series on sale in H1 2018

▪ Automotive sales, marketing and administration costs increased as a result of all three series in production and higher volumes versus prior year

▪ Racing Reported EBITDA 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 H1 2019 versus prior year

+553% growth

Net Debt & Liquidity


▪ Gross debt reflects $250m and £370m 5-yr Senior Secured Notes issuance in July 2017

▪ Proforma H1 2019 Gross debt reflects the position as if at that time the new July financing of $100m Senior Secured Notes was drawn and the SSRCF was undrawn

▪ During July, new facilities were entered into increasing the SSRCF to £130m along with a short term credit facility of $24.9m (undrawn)

▪ Cash utilisation in H1 driven by investment in new models (720S Spider, 600LT Spider, new GT and Speedtail) and the development of the Formula 1 car for 2019 season

▪ Capex investment in Q2 2019 inline with prior year and lower than Q1 2019, on track to invest the same amount as 2018

1 Gross debt is equal to Senior Secured Notes (SSNs) outstanding of £564m plus £12m accrued interest. The SSNs includes £14m capitalised fees and revaluation FX loss £3m and drawn SSRCF of £50m , Pro-forma includes new $100m Notes adjusted for transaction fees, SSRCF undrawn2 Net Leverage includes reported gross debt £615m less cash of £16.5m and LTM Reported EBITDA of £204m, Pro-forma includes new $100m Notes, cash £37m 3 Consists of RCF £110m less committed Ancillary Lines £14.5m (bank guarantees) and SSRCF £50m, Pro-forma £130m SSRCF less Ancillary Lines (bank guarantees) plus Senior USD undrawn s/term facility of $24.9m

Free Cash Flow


Investments

▪ Intangible assets in 2019 increased due to 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 will be similar to 2018

Financing

▪ New equity received during H1 2019 completes majority of new investment by Nidala (BVI) Limited first announced in H1 2018

Working Capital

▪ Debtors increased as a result of timing of wholesales in the quarter including a significant number of Ultimate Series cars compared to the comparative period

▪ Creditors are lower despite trade creditors being marginally up due to timing of spend. Offsetting this increase is a lower trade finance balance than last year due to sales mix, with US and Ultimate series cars not currently trade financed

▪ Expect working capital to be flat by the end of the year

New facilities – July 2019


▪ On the 12 July 2019 the Group entered into 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£110m

▪ £15m guarantees▪ £40m overdrafts▪ £55m SSRCF

(Libor +3.5%)

Senior Noteseq.£564m

▪ £370m 5.0%▪ $250m 5.75%

H1 2019Debt Facilities

SSRCF£130m

▪ £15m guarantees▪ £40m overdrafts▪ £75m SSRCF

(Libor +3.5%)

H1 2019Pro-forma

Senior Noteseq.£642m

▪ £370m 5.0%▪ $250m 5.75%▪ $100m 5.75%

USD Senior s/term facility

eq.£19.8m▪ $24.9m

(Libor+5.0%)

Appendix


Group Overview


Summary Income Statement

1 Includes FX gains and losses (excluding FX on translation of USD bond), H1 2019 £12m loss, H1 2018 £1m gain. 2 Includes FX on translation of USD bond


Group Cash Flow Statement


Reported EBITDA by company


*Racing includes the sale of heritage cars, £3.9m (H1 2019) and £9.2m (H1 2018)

One Outstanding Luxury Automotive & Technology Group


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

North America

36%

APAC, ex. China

18%

China7%

Rest of World

6%

Europe33%

Racing11%

Automotive84%

Applied Technologies

5%

McLaren has a long history rooted in Racing & Innovation


Success in racing created a culture of outstanding performance, excellence and innovation

McLaren has a long history in Racing & innovation


Success in racing created a culture of outstanding performance, excellence & innovation

▪

▪

▪

▪

▪

▪

Globally recognized brand


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

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

Automotive operates in distinct segments30 | McLaren H1 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▪ 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

McLaren H1 2019 Results · 4 | McLaren H1 2019 Results McLaren Automotive continues to deliver...

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