Q3 2017 Results December 15, 2017 0
One outstanding luxury and technology group Highlights Global leader in high-performance luxury and technology 55 year history dominated by technical excellence Revenue visibility via automotive order book and F1 contracts Q3 2017 LTM normalized PF revenue: 1,099m Q3 2017 LTM normalized PF EBITDA: 160m Sales and car volume split Racing 25% Sales by division Applied Technologies 5% 2016: 898m 2 Automotive 70% Car volumes by region China 7% APAC ex. China 17% RoW 11% Europe 30% 2016: 3,286 units North America 35% Automotive Racing Applied Technologies 2016 Revenues: 650m 2016 Revenues: 225m 2016 Revenues: 52m Award winning high performance luxury cars Experience -led customer proposition Unique brand platform with global visibility 20 F1 World Championships Cutting-edge tech solutions and data analysis Track record of exceptional & profitable growth Notes: 1 Normalised pro-forma revenue is calculated using the same approach as normalised pro-forma EBITDA, adjusting for the impact of the SAP implementation, the 720S ramp-up and cost synergies. 2 Exclusive of intercompany transactions 1 10
McLaren Senna & McLaren BP23 overview Senna BP23 Type Ultimate Series car revealed in December 2017 Volume 500 # units sold Sold out Type Hyper-GT announced in 2016 Volume 106 # units sold Sold out Price 750k Price N/A Exp. 1 st delivery Q3 2018 Exp. 1 st delivery Early 2020 2 1
Highlights Accelerating car volumes in Q3 2017 with full production ramp-up of 720S and 570S Spider now complete as of Q4 2017 Continued strong order book, with 720S and 570S Spider sold out into Q3 and Q2 2018 respectively Production run-rate of 375 and 430 cars built in October and November respectively Exclusive new Senna model already sold out Q3 2017 group revenues of 244m (vs. 189m in Q2 2017), with the increase mainly driven by continued ramp-up of production McLaren Automotive was ranked as the number one company overall in The Sunday Times Top Track 250 league table Q3 2017 normalised EBITDA of 42m (vs. 23m in Q2 2017) and reported EBITDA of 23m LTM normalised EBITDA of 160m McLaren Racing and Fernando Alonso extend relationship into 2018 F1 Season following announced Renault engine supply partnership Large pool of active sponsorship leads and significant number in contract negotiation Continued growth in Applied Technologies underpins disruptive technology offering in attractive end markets Strong balance sheet and ample liquidity for future investment requirements 3 8
Full year 2017 outlook Strong order book position as of 30 September 2017 reflects exceptional demand for 720S, 570S Spider and Senna Modest impact on Q3 volumes from slower than anticipated production ramp-up of 570S Spider Reduced full year volume guidance of c. 3,300-3,400 cars Improved October and November production run-rate of 375 and 430 cars per month respectively Run-rate achieved supports anticipated 2018 production levels Significant Automotive volume growth expected in 2018 following full production ramp-up now achieved 2018 volumes expected to be >4,300 cars Very strong product mix expected in 2018 with the Senna expected to impact margins positively Racing and Applied Technologies expected to be broadly EBITDA neutral for FY 2017 assisted by a small number of heritage vehicle sales No impact from termination of Honda partnership in FY 2017, with 2018 impact expected to be partially mitigated through increased sponsorship revenues and reduced Racing cost base Expected FY 2017 EBITDA of 65-75m and normalised EBITDA of 160m 4 19
Sports Series Sold out into Q2 2018 Successful launch of Sports Series Spider Deliveries commenced in August 2017 It s the best sports car we ve driven in a decade. British GQ More fun and engagement than 570S. No dynamic compromise. EVO The 570S has shed its roof, but its massive talent remains intact. AUTOCAR 5
Sold out Into Q3 2018 Successful product launches sweep of awards for critically acclaimed 720S CAR Magazine: Sportscar of the Year 2017 Road & Track: Performance Car of the Year 2018 Scottish Car of the Year 2017 AUTOCAR 5-Star Car EVO: 5-Star Car Auto Express 5-Star Car BBC Top Gear: Performance Car Of The Year 2017 Women s World Car Of The Year 2017 Octane Awards 2017: Supercar of the Year 6
Revealing the extraordinary new McLaren Senna Sold out Revealed in December 2017 It s clear the Senna is something very special EVO A tremendous and savage presence in the metal This is McLaren's road-legal track monster Pistonheads There s nothing about McLaren s latest something more than a supercar that s not astonishing The Senna really is a performance geek s dream and it is all beautifully manufactured and assembled, as is the way with McLarens these day Telegraph 7
Historical financials overview Pro forma normalised Group Revenue 1 ( m) Revenues Adjustments 735 728 185 898 914 2014A 2015A 2016A LTM 3Q17 Automotive volume (units) 1,099 Track record of sustained revenue growth YTD 2017 revenue impacted by planned shut down in automotive production (SAP implementation), anticipated gap in Super Series line-up and slower than anticipated production ramp-up of 720S and 570S Spider Pro forma normalised Group EBITDA ( m) Margin 2 EBITDA 13.5% 16.3% 16.5% 14.6% 2 Automotive margin 2 24.0% 22.1% 21.8% Adjustments 99 119 148 2014A 2015A 2016A LTM 3Q17 Continued growth in normalised EBITDA Reduced Automotive margin reflects increased cost base to support operational ramp-up in production Racing margin impacted by increased cost of Formula 1 car driven by regulation changes for 2017 Underlying net debt 3 ( m) 18.9% 2 160 88 72 3,286 3,198 503 1,649 1,612 2014A 2015A 2016A LTM 3Q17 Strong volume performance despite 720S and 570S Spider not being delivered until June 2017 and August 2017 respectively Full production ramp-up of 720S and 570S Spider now complete in Q4 2017 Sep 2017 Net debt position reflects July 2017 bond issuance of 564m and 61m cash position Note: 1 Inclusive of intercompany transactions at revenue level for 2014 and 2015, exclusive of intercompany transactions for 2016 (c. 28m) and LTM normalised PF 3Q17 revenue (calculated using the same approach as normalised PF EBITDA, adjusting for the impact of the SAP implementation, the 720S ramp-up and cost synergies) 2 LTM Group margin based on normalised revenues and EBITDA of 1,099m and 160m; LTM Automotive margin based on normalised automotive revenues and EBITDA of 791m and 140m 3 Reported net debt of 481m includes reported gross debt of 542m (underlying gross debt of 564m, 22m of capitalised fees, 7m of accrued interest and 6m of FX gains) and cash of 61m 8 39
Q3 2017 summary Automotive volumes Group revenue ( m) Group normalised EBITDA ( m) 804 834 212 244 42 193 727 20 23 Q3 2016A Q2 2017A Q3 2017A Q3 2016A Q2 2017A Q3 2017A Q3 2016A Q2 2017A Q3 2017A Strong volume performance despite slower than anticipated production ramp-up of 720S June 2017 Strong Super Series and Sports Series order book and dealer allocations reflects exceptional customer demand 720S sold out into Q3 2018 Stronger y-o-y Q3 Automotive revenues driven by wholesale volume growth Continued revenue growth vs Q2 2017 reflects continued ramp-of 720S production Growth in Racing revenues with increased price fund partially offset by lower sponsorship revenue Applied Technology revenue up 28% y-o-y Profitability in-line with plan driven by timing of model launches and production ramp-up Sales mix impact driven by Super Series mix changes, with sales of 720S only in Q3 17 versus 675LT only in Q3 16 SG&A increase resulting from operational ramp-up Racing EBITDA growth driven by increased prize money for 2016 Constructors Championship supplemented by the profit on sale of a number of heritage cars, partially offset by a drop in sponsorship income 9 9
Normalised EBITDA bridge Normalised EBITDA bridge 66m 6m 160m 72m 16m Q3 2017 LTM EBITDA Impact of SAP implementation Impact of ramp up (Q1,Q2 and Q3) Cost synergies Normalised Q3 2017 LTM EBITDA Developing Normalised EBITDA LTM Q3 2017 Reported (and unadjusted) LTM Q3 2017 EBITDA SAP Implementation One-off ramp-up effects in Q1, Q2 and Q3 Cost synergies in Q3 Normalised EBITDA at LTM Q3 2017 Adjustment for lost volumes in January 2017 when a new SAP system was installed at McLaren Technology Centre, and production was shut down during the implementation period Reflects impact of production gap due to timing of new 720S and 570S Spider launch compared to other models Reflects McLaren transition to a complete product line-up following product portfolio build up during recent years Representing 50% of 12m run-rate cost synergies to be achieved by 2018 mainly by removing duplicate cost post business integration Reflects Company s underlying LTM performance 10 40
Automotive Racing Applied Technologies Automotive volume by region (year-to-date) North America (35%) Europe (36%) 696 709 710 720 China (4%) 137 YTD 2016 YTD 2017 YTD 2016 YTD 2017 72 YTD 2016 YTD 2017 Global RoW (9%) APAC (ex. China) (17%) 369 335 2,091 2,020 179 184 YTD 2016 YTD 2017 YTD 2016 YTD 2017 Strong customer demand with a 4% reduction in YTD volumes reflecting lower supply driven by production rampup following SAP go-live and 720S launch timing Regional sales mix in line with prior year YTD 2016 YTD 2017 Legislative delays resulting in shift in allocations of 720S and 570S Spider from China, sales expected to recommence in China in March 2018 APAC & China further impacted by longer production lead times 11 11
Automotive Racing Applied Technologies Production ramp-up now complete with run-rate levels of 375-400 cars per month 2017 average 4-week rolling production volume 450 400 3,300-3,400 >4,300 350 300 250 200 150 100 50 0 Week 4 Week 8 Week 12 Week 16 Week 20 Week 24 Week 28 Week 32 Week 36 Week 40 Week 44 Week 48 SAP implementation 720S launch 570S Spider launch 720S ramp-up complete 570S Spider ramp-up complete FY2017E FY2018E No new product launches in 2018 with the Senna being produced on a separate product line which will not impact overall production 12 1
Automotive Racing Applied Technologies Renault partnership positions McLaren Racing for successful 2018 season McLaren and Fernando Alonso extend relationship Early momentum in winning and re-signing sponsorships Alonso committed to McLaren team for 2018 FIA Formula 1 World Championship Underpins McLaren Group s ambitions for future racing success Competitive position further enhanced through Renault engine supply partnership Several hundred active leads with a significant number of sponsorship contracts under negotiation Further sponsorship announcements targeted ahead of 2018 season 13 15
Cutting edge technology solutions gaining increased traction in large and diverse growth markets Automotive Racing Applied Technologies New Contracts won Revenue Public Transport Three new multi-year connected fleet contracts tendered for Health Human condition monitoring contract tendered for in Singapore 42 Motorsport awarded standard supply contract of sensors for Formula 1 by the FIA 33 First McLaren Deloitte customer signed up to validate partnerships first proof of concept product Operational progress Development of next generation Formula E Battery being validated ready for manufacture of test products Development of 3 rd generation Formula 1 Standard ECU, for race seasons 2019 to 2021 [DUMMY DATA] YTD 2016 YTD 2017 Configuration of intelligent seat sensors for Virgin Trains East Coast rail fleet Motorsport Automotive Public Transport Health & Wellness 14 16
Q3 2017 Net debt / liquidity position Q3 2017 Gross debt 1 564 Gross debt reflects $250m and 370m 5-yr Senior Secured Notes issuance in July 2017 Cash & cash equivalents (61) 90m undrawn RCF Underlying net debt 2 503 Ample liquidity for future investment requirements Underlying net debt 2 / EBITDA 3.1x Undrawn committed credit lines 90 Total available liquidity 151 1 Reported gross debt of 542m includes underlying gross debt of 564m, 22m of capitalised fees, 7m of accrued interest and 6m of FX gains 2 Reported net debt of 481m includes reported gross debt of 542m and cash of 61m 15 19
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Q3 2016 2017 revenue bridge Automotive Racing and Applied Technologies Combination adjustments 244 212 3 22 70 92 157 160 (14) (7) Q3 2016 Automotive Racing & Applied Technologies Q3 2017 Automotive revenues driven by wholesale volume growth Racing revenue driven by increased prize money for 2016 Constructors Championship supplemented by other revenues, partially offset by a drop in sponsorship income Applied Technologies revenues driven by increased product unit sales made to Honda Motorsport on their Formula One programme, additional sensor and ECU sales to other F1 customers and growth in service revenues 17 1
Summary Income Statement Q3 2017 m Q3 2017 Q3 2016 Turnover 244 212 Cost of sales (192) (146) Gross profit 52 66 Administrative expenses (36) (26) EBITDA 23 20 Depreciation & amortisation (22) (20) EBIT 1 23 Net finance costs (2) (25) Profit before tax (1) (2) Taxation (9) (1) Profit after tax (10) (4) 18 22
Summary Income Statement YTD 2017 m YTD 2017 YTD 2016 Turnover 564 571 Cost of sales (457) (399) Gross profit 106 172 Administrative expenses (128) (117) EBITDA (8) 16 Depreciation & amortisation 55 57 EBIT (66) 6 Net finance costs (5) (53) Profit before tax (70) (47) Taxation 8 7 Profit after tax (63) (40) 19 22
Cash Flow Statement YTD 2017 vs. 2016 Group cash flow statement m YTD 2017 YTD 2016 Net cash flows from operating activities 13 51 Net cash outflow from investing activities (138) (72) Net cash inflow from financing activities 157 11 Net increase/(decrease) in cash and cash equivalents 32 (10) 20 23
McLaren model portfolio Presented Dec 10, 2017 570 S and 570 S Spider 720S Senna All the performance of the Coupé plus the extra exhilaration of open-air driving. The 570S Spider brings you closer to the elements in a design that s equally stunning with the roof up or down The McLaren 720S embodies our relentless quest to push the limits of possibility. Lighter, stronger, faster. It s all of these and more. But how it makes you feel is altogether something else. Prepare to push the limits of what you thought possible in a supercar The McLaren Senna is the most track-focused road car we have ever built, and it will set the fastest lap times of any McLaren to date. One that is legalised for road use, but not sanitised to suit it. Nothing else matters but to deliver the most intense driving experience around a circuit 570 GT 540 C The 570GT adds extra comfort and practicality to breath-taking performance. Every bit a McLaren, it s optimised for the road and makes the ultimate sports car experience one that s perfect for daily use, longer journeys and weekends away It s the ultimate sports car experience. Completely driver-centric and performance oriented, the 540C Coupé is equally at home on the track as it is on the open road. Being light weight with a high power to weight ratio, it delivers a super car punch that would shame many more expensive rivals 21 1