McLaren Q3 (YTD) 2019 Results .November 27, 2019 2 | McLaren Q3 (YTD) 2019 Results Highlights 3 | McLaren Q3 (YTD) 2019 Results
Automotive >> Racing >> Applied Technologies
Q3 (YTD) 2019
Revenue by division Results continue to build on strong first half results: Applied Formula 1 Q3 (YTD) 2019 Group revenues £1,009m up 19% versus £847m in Q3 (YTD) 2018, Technologies 12% 4% 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
Automotive Q3 2019 LTM Revenue £1,419m with Automotive contributing 84% of Group revenue 84%
Q3 2019 LTM Reported EBITDA £188m up 80% since Q3 2018 LTM (£104m) Car volumes by region Europe Q3 (YTD) 2019 production delivered 3,760 vehicles in comparison to 3,686 in Q3 (YTD) 25% 2018 (2.0% growth) North America Rest of World Racing recovery continues, with Reported EBITDA improvement driven by increased 47% 6% th th prizemoney from finishing 6 (versus 9 in 2017) in the Constructors Championship in China 2018 and improved sponsorship revenue 5% APAC, ex. China 17% 4 | McLaren Q3 (YTD) 2019 Results
Automotive >> Racing >> Applied Technologies
Q3 (YTD) 2019
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 5 | McLaren Q3 (YTD) 2019 Results
Key Metrics - Q3 (YTD) 2018 vs Q3 (YTD) 2019
Net Leverage Net Leverage Revenue (£m) Net Debt (£m) 4.4x 3.6x +19% 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
EBITDA1 (£m) Liquidity (£m) +140%
Full year EBITDA expected to be between £165m and £180m as significant deliveries completed
Wholesale Volume F1 Championship (Units) points 4th (4.5%) th 4th place in the constructors 6 championship locked in with one 1 Reported EBITDA race to go 6 | McLaren Q3 (YTD) 2019 Results
Business Update 7 | McLaren Q3 (YTD) 2019 Results
Automotive 8 | McLaren Q3 (YTD) 2019 Results McLaren Automotive – 2019
GT . GT ULTIMATE . First deliveries made . McLaren Senna . Strong order book . All now sold and built continues to build . Final models with MSO delivered Q4 SPORTS . McLaren Senna GTR . 600LT Coupe and Spider . In production; all sold . Coupe allocation complete . Speedtail . Spider orders into Q1 2020 . Production commences Q1 2020; all sold SUPER . Elva . 720S Spider . Revealed November 2019 . 2019 order book now fully . Strong interest received allocated; orders into Q1 . Production Q4 2020 2020 9 | McLaren Q3 (YTD) 2019 Results Global Volumes – Q3 (YTD) 2019 Europe (25%) China (33%) North America +21%
RoW (31%) APAC +2%
(4%)
. 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 10 | McLaren Q3 (YTD) 2019 Results Elva – the new McLaren Ultimate Series
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 11 | McLaren Q3 (YTD) 2019 Results
Racing 12 | McLaren Q3 (YTD) 2019 Results Formula 1 World Championship
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 scoring 140 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 mutual consent, with neutral impact to the Racing business plan . Revenue targets achieved with more sponsor partnerships than any other F1 team this year; now focussed on 2020 . Well on track for start of 2020 season with MCL35 development making good progress 13 | McLaren Q3 (YTD) 2019 Results FIA Financial Regulations (Cost Cap) – 2021 and beyond
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 to complaints 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 Principles and 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 14 | McLaren Q3 (YTD) 2019 Results
Applied Technologies 15 | McLaren Q3 (YTD) 2019 Results
McLaren Applied Technologies – A new focus
. 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 Strategic Trajectory Current Long Term
High level of non-repeatable consulting Consulting only in support of product roadmap
Bespoke developments Scaling / leverage of platforms
Motorsport drives development Showcase in Motorsport, scale in other markets
4 core markets Scaling product lines cross markets
Multiple tech development areas Scale / leverage 3 core areas of technical focus 16 | McLaren Q3 (YTD) 2019 Results
McLaren Applied Technologies – Three Strategic Technical Pillars
Applied Technologies will be restructured around three key product platforms building differentiation
Virtual Product Development Telemetry, Control and Analytics Electrification . Increasing complexity & time-to- . Physical and analytical insight to deliver . Optimisation of electrical eco-system market pressure in product business outcomes focusing on development driving demand for . Transport IoT ecosystem including . Batteries Virtual Product Development condition monitoring is booming – . Inverters . Capability and tools delivering benefit vehicles are 3rd fastest growing . Motors throughout the product lifecycle segment after phones/tablets . Sustainability concerns driving . Development is faster and less . Digitisation shows strong growth across Electrification. A major theme across expensive all sectors; decision support tools for Motorsport, Automotive . Product performance is enhanced complex / high value decisions and other Transport sectors . Assets monitored and optimised in service 17 | McLaren Q3 (YTD) 2019 Results Financials
. Q3 (YTD) 2019 18 | McLaren Q3 (YTD) 2019 Results Results – Q3 (YTD) 2019
Automotive wholesale volumes Revenue (£m) Reported EBITDA (£m)
3,461 3,306 1,009 CAGR* +28% CAGR +35% 847 CAGR +248% 89 2,020 558
37
(8)
Q3 (YTD) 2017 Q3 (YTD) 2018 Q3 (YTD) 2019 Q3 (YTD) 2017 Q3 (YTD) 2018 Q3 (YTD) 2019 Q3 (YTD) 2017 Q3 (YTD) 2018 Q3 (YTD) 2019
. Four series – GT, Sports, Super and . Revenue growth in 2019 of 22% as a . Automotive Reported EBITDA driven by Ultimate – now on sale in 2019 vs 3 in result of having the full Series range (G T, timing and volume change of Ultimate 2018 Sports, Super and Ultimate) on sale Series in Q3 . Order books for GT, Sports Series and during the year vs 2018 . Sale volumes and mix have also Super Series remain positive with strong . Racing revenue increased due to higher contributed to the growth in Automotive interest in the new GT and McLaren Elva level of prizemoney following improved Reported EBITDA . Q3 (YTD) wholesale volumes reflective of Championship result in 2018 vs 2017, . Racing Reported EBITDA reflects the market conditions being softer in some along with improved sponsorship as a increased prizemoney revenue and regions result of better performance improved sponsorship revenues
* CAGR – Compound annual growth rate 19 | McLaren Q3 (YTD) 2019 Results Q3 (YTD) 2018 – Q3 (YTD) 2019 EBITDA Bridge
+140% growth
. 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 20 | McLaren Q3 (YTD) 2019 Results Net Debt & Liquidity
. Gross debt reflects $250m and £370m 5-yr Senior Secured Notes issuance in July 2017 and $100m Q3 2019 Q3 2018 issued July/August 2019
1 . At Q3 total SSRCF was £130m (drawn £77.1m Gross debt 678 550 RCF, overdrafts and guarantees) along with a short term credit facility of $24.9m (undrawn) Cash and cash equivalents 0 (6) . Cash utilisation in Q3 (YTD) driven by ongoing Underlying net debt 678 544 investment in new models (600LT Spider, GT, Senna GTR and Speedtail) and initial 2 development spend on the MCL35 F1 car for the Net Leverage / EBITDA 3.6x 4.4x 2020 season
. Capex investment increased versus prior year due to further investment in vehicle programs 3 Undrawn liquidity and overdraft lines 73 79 . Leverage improves with growth in EBITDA Total available liquidity 73 85
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 £40m 2 Net Leverage includes reported gross debt £678m less cash and LTM Reported EBITDA of £188m 3 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 21 | McLaren Q3 (YTD) 2019 Results Free Cash Flow
£m Q3 (YTD) 2019 Q3 (YTD) 2018 Investments . Intangible investment ahead due to phasing and the continued Reported EBITDA 89 37 growth in new product development in the Automotive business. The increase is due to the phasing of the spend in the Investments (236) (192) year and the launches of the various products; Automotive is Working Capital (37) 12 launching four new products in 2019 as opposed to two in 2018 . Investment spend outlook for the full year expected to be around Tax (3) (8) £320m to £330m up on prior year following additional investment in vehicle programs to pull forward a significant vehicle launch into Interest (32) (33) 2020 and the new wind tunnel Free Cash Flow (FCF) (219) (183) Financing Notes issuance 70 0 . New Notes issued in Q3 provides headroom during the year Equity (net) 12 100 Working Capital RCF drawing / (repayment) 40 (10) . Debtors increase a result of timing of wholesales at the quarter end with collection due in Q4 FCF after financing (97) (93) . Total creditor movement is flat versus the same period last year . Working capital of £35m is expected to at least reverse by year end 22 | McLaren Q3 (YTD) 2019 Results
Appendix 23 | McLaren Q3 (YTD) 2019 Results
Group Overview 24 | McLaren Q3 (YTD) 2019 Results Summary Income Statement
£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)
1 Includes FX gains and losses (excluding FX on translation of USD bond), Q3 2019 £22.8m loss, Q3 2018 £5.4m loss 2 Includes FX on translation of USD bond Q3 2019 £6.9m loss, Q3 2018 £6.6m loss 25 | McLaren Q3 (YTD) 2019 Results Group Cash Flow Statement
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) 26 | McLaren Q3 (YTD) 2019 Results Reported EBITDA by company
£m Q3 (YTD) 2019 Q3 (YTD) 2018
Automotive 160 123
Racing* (65) (85)
Applied Technologies (6) (1)
Reported EBITDA 89 37
*Racing includes the sale of heritage cars, £4.2m (Q3 (YTD) 2019) and £8.3m (Q3 (YTD) 2018) 27 | McLaren Q3 (YTD) 2019 Results Current facilities as at Q3 2019 Q3 2019 Q3 2019 . On the 12 July 2019 the Group entered into additional financing Facilities Utilisation arrangements equivalent to $150.0m, consisting of: . a private placement of an additional $100.0m (5.75% due SSRCF SSRCF 2022) £130m £130m . £17m guarantees . £17m guarantees . incremental commitments under its existing super senior . £40m overdrafts . £20m overdrafts revolving credit facility of £20.0m and . £73m SSRCF . £40m SSRCF . c. $24.9m under a separate US dollar-denominated short- (Libor +3.5%) Drawn to £77m term credit facility (undrawn) Senior Notes Senior Notes . The new facilities and debt added to the liquidity headroom eq.£564m eq.£642m . £370m 5.0% . £370m 5.0% available to the Group and was raised to give flexibility over the . $350m 5.75% . $350m 5.75% next 18 to 24 months around the launch of new products Fully drawn
. The Group is now better placed to respond to changes in USD Senior USD Senior customer demand and competitor actions s/term facility s/term facility eq.£20.2m eq.£20.2m . $24.9m . $24.9m (Libor + 5.0%) Undrawn 28 | McLaren Q3 (YTD) 2019 Results One Outstanding Luxury Automotive & Technology Group
Automotive Racing Applied Technologies
Delivering advantage at the intersection of physical Offering the ultimate ownership experience Legendary racing history and digital creating the iconic sportscar 20 Formula 1 World Championships Customers in Motorsport, Automotive, Public 20,000+ road cars hand-assembled to date Transport and Health Highlights Sales and car volume split Revenue by division Car volumes by region Global leader in high-performance luxury and technology offering the ultimate ownership experience Applied Racing Europe North Technologies 11% 33% America 55 year history of innovation and technical excellence 5% 36% Group revenue and cash generation underpinned by Automotive order book and production capacity now demonstrated Rest of Latest McLaren models 600LT Spider, 720S Spider, McLaren GT and Automotive World APAC, “Speedtail” continue to demonstrate the success of McLaren product 84% 6% China ex. China 7% 18% pipeline + strength in brand FY2018 revenue - £1,257m FY2018 volume - 4,829 29 | McLaren Q3 (YTD) 2019 Results McLaren has a long history rooted in Racing & Innovation
Automotive McLaren F1 – McLaren’s McLaren SLR: total first and the world’s production <2,000 cars Racing fastest road car
Applied Technologies
2003
McLaren Marketing is formed 1995 First Formula One Drivers’ and Constructors’ Championship win 1992
McLaren wins all 11 Can- 1989 Am races Bruce McLaren Motor Racing is formed 1986 1980 1974 1972 McLaren Automotive is 1969 formed Debut win at Le Mans 24 1968 Hours 1963 McLaren Electronic Systems formed McLaren Racing is formed
Maiden F1 victory in McLaren wins Indianapolis Belgium Grand Prix 500
Success in racing created a culture of outstanding performance, excellence and innovation 30 | McLaren Q3 (YTD) 2019 Results
McLaren has a long history in Racing & innovation . 20,000th production car McLaren GT launched completed . 600LT Spider released Automotive
Racing McLaren Elva revealed for Applied Technologies the first time
2019 McLaren 570S, McLaren 2018 540C & P1 GTR launched McLaren . 15,000th production car McLaren Production P1launched; the first 2017 completed Applied awarded the FIA Centre opened hybrid hyper car in the F1 standard ECU contract world 2016 . 4,829 wholesale units Launch of 12C Coupe, in 2018 Lewis Hamilton wins Automotive first car 2015 Opening of McLaren World Championship Technology Centre 2014 McLaren Applied 2013 Technologies is formed . 10,000th production car 2012 completed 2011 Applied is the sole . 3,286 total units in McLaren Speedtail 2010 supplier of e-powertrain 2016 revealed for the first time 2008 to Formula E – with the 2007 Applied awarded the 2004 NASCAR standard ECU strongest e-machine to contract date; MES and MAT merge
Applied awarded the Indy McLaren Automotive 600LT launched Car ECU contract founded as an McLaren Senna, released independent company McLaren 650S launched 12C Spider launched
720S launched 720S Spider released, Senna GTR announced Success in racing created a culture of outstanding performance, excellence & innovation 31 | McLaren Q3 (YTD) 2019 Results 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
8 GT 12 F1 182 8 F1 Legendary Debut win at Racing 20 World drivers' Grand constructors’ 50 year racing Le Mans Champion- Championships champion- Prix wins champion- heritage 24 Hours ships in ships ships 2017
The only company to win each of the 4 classic competitions: Formula One, Le Mans, Indianapolis and Can-Am
12C P1 650S 675LT 570S 720S
Launched year: 2011 Launched year: 2013 Launched year: 2014 Launched year: 2015 Launched year: 2015 Launched year: 2017
2012 2013 2015 2016 2016 2017 Cumulative McLaren car volume car McLaren Cumulative Dewar Trophy for Outstanding British Best Ranked #1 in car reviews of 2012 EVO Middle East Car of the Year: Five Star Award Technical Achievement China Performance Car of the Year Performance Car Jalopnik Supercar of the Year 675LT Coupé AUTOCAR & EVO Royal Automobile Club Auto Express New Cars Awards & Evo2012 2013 2014 2016 2015 2017
James May’s Car of the Year Jeremy Clarkson’s Car of the Year Supercar of the Year Car of the Year Best Car on Sale – Best Every Day Supercar Performance Car of the Year BBC Top Gear Magazine BBC Top Gear Magazine AUTOCAR ASEAN CAR Magazine (675LT Spider) BBC Top Gear BBC Top Gear & Road and Track
2012 2013 2014 2016 2016 2017
Best Sports Car Over £120,000 Hypercar of the Year Performance Car of the Year Hardcore Car of the Year: Best Car on Sale Super Car of the Year What Car? BBC Top Gear Magazine Auto Express Top Gear (675LT Spider AUTOCAR Octane & EVO
2012 2013 2014 2016 2017 1 Hypercar of Middle East Car Car of the Year Best of the Best Sport Car of the Year the Year of the Year Awards Middle East Motor Awards Red Dot Design Award CAR Magazine GQ Best Supercar
Every model won multiple prestigious awards for unique technology and design 32 | McLaren Q3 (YTD) 2019 Results Automotive operates in distinct segments
Sports Grand Tourer Super Ultimate Motorsport
. Brings McLaren’s advanced . Positioned alongside our . Super Series is the core of . High performance cars . Track cars built for racing established Sports, Super and technologies to the McLaren's range with the . Built on the same basis as . Based on road car models Ultimate Series, this is a new sportscar arena, a lower best technology available the Super series with but without road car Description McLaren for a new audience additional ground-breaking price point . Derivatives include Coupe, regulations and built to a providing an alternative to technology . Derivatives include Coupe, Spider and LT limited racing specification existing products . Further track-only products Spider, LT limited editions editions offers . 540C, 570S, 570S Spider, . 650S, 650S Spider, 720S, . P1TM & GTR, McLaren Senna, Models . new GT . 650S GT3, 570S GT4 and 570GT, 600LT, 600LT Spider 720S Spider Senna GTR, Speedtail, Elva 570S Sprint, 720S GT3
. Best power-to-weight ratio of . Attributes of competition . High performance super . Includes the first hybrid . Strictly limited editions for sports car range in their class levels of performance and cars with track hyper car in the world racing only Features . Lightweight construction with continent crossing capability, performance . Strictly limited production, carbon chassis (75kg) yet lighter, faster, more sold out years in advance engaging . MonoCage II carbon body
Purpose . Road . Luxury Grand Touring . Road / track . Road / track . Track
Price range . £125-200k . >£160k . £200-300k . >£500k . £200-400k
MSO1 Experiences Ownership
Bespoke customisation options Pure McLaren track experience Expert advice and support Limited editions and one-off models Pure GT racing series Unique service cover Lifestyle and heritage 1 McLaren Special Operations