McLaren H1 2019 Results August 28, 2019 2 | McLaren H1 2019 Results - - PowerPoint PPT Presentation

McLaren H1 2019 Results

▪August 28, 2019

Highlights

2 | McLaren H1 2019 Results

3 | 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

Racing 11% Automotive 85% Applied Technologies 4%

North America 48% APAC, ex. China 17% China 4% Rest of World 5% Europe 26%

4 | McLaren H1 2019 Results

◼ 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

5 | McLaren H1 2019 Results

◼ 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%

6th 4th

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

6 | McLaren H1 2019 Results

Automotive

7 | McLaren H1 2019 Results

McLaren Automotive – 2019 highlights

8 | McLaren H1 2019 Results

▪ New GT ▪

• rder 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

9 | McLaren H1 2019 Results

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

10 | McLaren H1 2019 Results

◼ 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)

11 | McLaren H1 2019 Results

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

12 | McLaren H1 2019 Results

Formula 1 World Championship

13 | McLaren H1 2019 Results

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 to 6th 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) have been realised with further developments to come ▪ It was confirmed that Carlos Sainz and Lando Norris will continue as McLaren F1 drivers for the 2020 FIA Formula 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 focussed

• n 2020

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

IndyCar 2020

14 | McLaren H1 2019 Results

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 over

• ther F1 teams, none of which have such a significant racing presence in North

America ▪ Whilst the commercial opportunities are significant, the cost of competing are not expected to be material due to the low cost (compared to F1) of competing in 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’s

• perations

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

Financials

15 | McLaren H1 2019 Results

▪ H1 2019

Results – H1 2019

16 | McLaren H1 2019 Results

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

• n 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

17 | McLaren H1 2019 Results ▪ 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

18 | McLaren H1 2019 Results ▪ 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

• f $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 undrawn

2 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

19 | McLaren H1 2019 Results 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

20 | McLaren H1 2019 Results

▪ 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 Notes eq.£564m

▪ £370m 5.0% ▪ $250m 5.75%

H1 2019 Debt Facilities SSRCF £130m

▪ £15m guarantees ▪ £40m overdrafts ▪ £75m SSRCF (Libor +3.5%)

H1 2019 Pro-forma Senior Notes eq.£642m

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

USD Senior s/term facility eq.£19.8m

▪ $24.9m (Libor+5.0%)

Appendix

21 | McLaren H1 2019 Results

Group Overview

22 | McLaren H1 2019 Results

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

23 | McLaren H1 2019 Results

Group Cash Flow Statement

24 | McLaren H1 2019 Results

Reported EBITDA by company

25 | McLaren H1 2019 Results

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

One Outstanding Luxury Automotive & Technology Group

26 | McLaren H1 2019 Results

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% China 7% Rest of World 6% Europe 33% Racing 11% Automotive 84% Applied Technologies 5%

McLaren has a long history rooted in Racing & Innovation

27 | McLaren H1 2019 Results Success in racing created a culture of outstanding performance, excellence and innovation

McLaren has a long history in Racing & innovation

28 | McLaren H1 2019 Results Success in racing created a culture of outstanding performance, excellence & innovation

▪ ▪ ▪ ▪ ▪ ▪

Globally recognized brand

29 | McLaren H1 2019 Results

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

• f the Year Awards

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 segments

30 | McLaren H1 2019 Results

Super Sports Motorsport Ultimate

▪ 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

• ffers

▪ 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

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