McLaren Q3 (YTD) 2019 Results November 27, 2019 2 | McLaren Q3 - - PowerPoint PPT Presentation

McLaren Q3 (YTD) 2019 Results

• November 27, 2019

Highlights

2 | McLaren Q3 (YTD) 2019 Results

3 | McLaren Q3 (YTD) 2019 Results

Results continue to build on strong first half results:

 Q3 (YTD) 2019 Group revenues £1,009m up 19% versus £847m in Q3 (YTD) 2018,

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  Q3 2019 LTM Revenue £1,419m with Automotive contributing 84% of Group revenue  Q3 2019 LTM Reported EBITDA £188m up 80% since Q3 2018 LTM (£104m)  Q3 (YTD) 2019 production delivered 3,760 vehicles in comparison to 3,686 in Q3 (YTD)

2018 (2.0% growth)

 Racing recovery continues, with Reported EBITDA improvement driven by increased

prizemoney from finishing 6th (versus 9th in 2017) in the Constructors Championship in 2018 and improved sponsorship revenue

Q3 (YTD) 2019 Automotive >> Racing >> Applied Technologies

Revenue by division Car volumes by region

Formula 1 12% Automotive 84% Applied Technologies 4% North America 47% APAC, ex. China 17% China 5% Rest of World 6% Europe 25%

4 | McLaren Q3 (YTD) 2019 Results

 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

• rders 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

Q3 (YTD) 2019 Automotive >> Racing >> Applied Technologies

5 | McLaren Q3 (YTD) 2019 Results

 Revenue (£m)

Key Metrics - Q3 (YTD) 2018 vs Q3 (YTD) 2019

 EBITDA1 (£m)  Wholesale Volume

(Units)

 F1 Championship

points

4th place in the constructors championship locked in with one race to go

 Liquidity (£m)  Net Debt (£m)

+19% +140% (4.5%)

1 Reported EBITDA

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

4th 6th

Net Leverage 4.4x Net Leverage 3.6x

Full year EBITDA expected to be between £165m and £180m as significant deliveries completed

Business Update

6 | McLaren Q3 (YTD) 2019 Results

Automotive

7 | McLaren Q3 (YTD) 2019 Results

McLaren Automotive – 2019

8 | McLaren Q3 (YTD) 2019 Results

GT

• GT
• First deliveries made
• Strong order book

continues to build SPORTS

• 600LT Coupe and Spider
• Coupe allocation complete
• Spider orders into Q1

2020 SUPER

• 720S Spider
• 2019 order book now fully

allocated; orders into Q1 2020 ULTIMATE

• McLaren Senna
• All now sold and built
• Final models with MSO

delivered Q4

• McLaren Senna GTR
• In production; all sold
• Speedtail
• Production commences Q1

2020; all sold

• Elva
• Revealed November 2019
• Strong interest received
• Production Q4 2020

Global Volumes – Q3 (YTD) 2019

9 | McLaren Q3 (YTD) 2019 Results

North America +21% China (33%) Europe (25%) APAC +2% RoW (31%)

• 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 (4%)

Elva – the new McLaren Ultimate Series

10 | McLaren Q3 (YTD) 2019 Results

 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

Racing

11 | McLaren Q3 (YTD) 2019 Results

Formula 1 World Championship

12 | McLaren Q3 (YTD) 2019 Results

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

FIA Financial Regulations (Cost Cap) – 2021 and beyond

13 | McLaren Q3 (YTD) 2019 Results

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

Applied Technologies

14 | McLaren Q3 (YTD) 2019 Results

McLaren Applied Technologies – A new focus

15 | McLaren Q3 (YTD) 2019 Results

• 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

High level of non-repeatable consulting Bespoke developments Motorsport drives development 4 core markets Multiple tech development areas Consulting only in support of product roadmap Scaling / leverage of platforms Showcase in Motorsport, scale in other markets Scaling product lines cross markets Scale / leverage 3 core areas of technical focus

Current Long Term Strategic Trajectory

McLaren Applied Technologies – Three Strategic Technical Pillars

16 | McLaren Q3 (YTD) 2019 Results

Applied Technologies will be restructured around three key product platforms building differentiation

Virtual Product Development Telemetry, Control and Analytics Electrification

• Increasing complexity & time-to-

market pressure in product development driving demand for Virtual Product Development

• Capability and tools delivering benefit

throughout the product lifecycle

• Development is faster and less

expensive

• Product performance is enhanced
• Assets monitored and optimised in

service

• Physical and analytical insight to deliver

business outcomes

• Transport IoT ecosystem including

condition monitoring is booming – vehicles are 3rd fastest growing segment after phones/tablets

• Digitisation shows strong growth across

all sectors; decision support tools for complex / high value decisions

• Optimisation of electrical eco-system

focusing on

• Batteries
• Inverters
• Motors
• Sustainability concerns driving
• Electrification. A major theme across

Motorsport, Automotive and other Transport sectors

Financials

17 | McLaren Q3 (YTD) 2019 Results

• Q3 (YTD) 2019

Results – Q3 (YTD) 2019

18 | McLaren Q3 (YTD) 2019 Results

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

• Four series – GT, Sports, Super and

Ultimate – now on sale in 2019 vs 3 in 2018

• Order books for GT, Sports Series and

Super Series remain positive with strong interest in the new GT and McLaren Elva

• Q3 (YTD) wholesale volumes reflective of

market conditions being softer in some regions

• Revenue growth in 2019 of 22% as a

result of having the full Series range (GT, Sports, Super and Ultimate) on sale during the year vs 2018

• Racing revenue increased due to higher

level of prizemoney following improved Championship result in 2018 vs 2017, along with improved sponsorship as a result of better performance

• Automotive Reported EBITDA driven by

timing and volume change of Ultimate Series in Q3

• Sale volumes and mix have also

contributed to the growth in Automotive Reported EBITDA

• Racing Reported EBITDA reflects the

increased prizemoney revenue and improved sponsorship revenues

2,020 3,461 3,306 Q3 (YTD) 2017 Q3 (YTD) 2018 Q3 (YTD) 2019 558 847 1,009 Q3 (YTD) 2017 Q3 (YTD) 2018 Q3 (YTD) 2019 (8) 37 89 Q3 (YTD) 2017 Q3 (YTD) 2018 Q3 (YTD) 2019

CAGR +248% CAGR +35% CAGR* +28%

* CAGR – Compound annual growth rate

Q3 (YTD) 2018 – Q3 (YTD) 2019 EBITDA Bridge

19 | McLaren Q3 (YTD) 2019 Results

• 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

+140% growth

Net Debt & Liquidity

20 | McLaren Q3 (YTD) 2019 Results

• Gross debt reflects $250m and £370m 5-yr Senior

Secured Notes issuance in July 2017 and $100m issued July/August 2019

• At Q3 total SSRCF was £130m (drawn £77.1m

RCF, overdrafts and guarantees) along with a short term credit facility of $24.9m (undrawn)

• Cash utilisation in Q3 (YTD) driven by ongoing

investment in new models (600LT Spider, GT, Senna GTR and Speedtail) and initial development spend on the MCL35 F1 car for the 2020 season

• Capex investment increased versus prior year due

to further investment in vehicle programs

• Leverage improves with growth in EBITDA

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

Q3 20 3 2019 Q3 20 3 2018 Gross debt1 678 550 Cash and cash equivalents (6) Underlying net debt 678 544 Net Leverage / EBITDA2 3.6x 4.4x

Undrawn liquidity and overdraft lines3

73 79 Tot

• tal

al av avai ailab able l liquidity 73 73 85 85

Free Cash Flow

21 | McLaren Q3 (YTD) 2019 Results Investments

• Intangible investment ahead due to phasing and the 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 outlook for the full year expected to be around

£320m to £330m up on prior year following additional investment in vehicle programs to pull forward a significant vehicle launch into 2020 and the new wind tunnel Financing

• New Notes issued in Q3 provides headroom during the year

Working Capital

• Debtors increase a result of timing of wholesales at the quarter end

with collection due in Q4

• Total creditor movement is flat versus the same period last year
• Working capital of £35m is expected to at least reverse by year end

£m £m Q3 ( 3 (YTD) 20 2019 Q3 ( 3 (YTD) 20 2018 Reported EBITDA 89 37 Investments (236) (192) Working Capital (37) 12 Tax (3) (8) Interest (32) (33) Fr Free C Cash Fl Flow ( (FC FCF) F) (21 219) (183) 3) Notes issuance 70 Equity (net) 12 100 RCF drawing / (repayment) 40 (10) FCF a after f fina nanc ncing ng (9 (97) (93) 3)

Appendix

22 | McLaren Q3 (YTD) 2019 Results

Group Overview

23 | McLaren Q3 (YTD) 2019 Results

Summary Income Statement

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

24 | McLaren Q3 (YTD) 2019 Results £m £m Q3 ( Q3 (YTD) 201 2019 Q3 ( Q3 (YTD) 201 2018 Turnover 1,009 847 Cost of Sales (729) (645) Gross profit 280 202 Administrative expenses1 (213) (182) Other operating income 22 17 Rep eported E ed EBITDA 89 89 37 37 Depreciation and amortisation (119) (106) EBIT IT (30) 30) (69) 69) Net finance costs2 (38) (35) Prof

• fit b

t befor

• re ta

tax (68) 8) (104) 4) Taxation 9 8 Prof

• fit a

t afte ter T Tax (6 (60) (96) 96)

Group Cash Flow Statement

25 | McLaren Q3 (YTD) 2019 Results

Q3 ( 3 (YTD) 20 2019 Q3 ( 3 (YTD) 20 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 Net ( (dec decrea ease) e)/increa ease i e in c cash a and c d cash equ equivalen ents (9 (97) (93) 3)

Reported EBITDA by company

26 | McLaren Q3 (YTD) 2019 Results

*Racing includes the sale of heritage cars, £4.2m (Q3 (YTD) 2019) and £8.3m (Q3 (YTD) 2018)

£m £m Q3 ( 3 (YTD) 20 2019 Q3 ( 3 (YTD) 20 2018 Automotive 160 123 Racing* (65) (85) Applied Technologies (6) (1) Rep eported E ed EBITDA DA 89 89 37 37

Current facilities as at Q3 2019

27 | McLaren Q3 (YTD) 2019 Results

• On the 12 July 2019 the Group entered into additional 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 £130m

• £17m guarantees
• £40m overdrafts
• £73m SSRCF

(Libor +3.5%)

Senior Notes eq.£564m

• £370m 5.0%
• $350m 5.75%

Q3 2019 Facilities SSRCF £130m

• £17m guarantees
• £20m overdrafts
• £40m SSRCF

Drawn to £77m

Q3 2019 Utilisation Senior Notes eq.£642m

• £370m 5.0%
• $350m 5.75%

Fully drawn

USD Senior s/term facility eq.£20.2m

• $24.9m

Undrawn

USD Senior s/term facility eq.£20.2m

• $24.9m

(Libor + 5.0%)

One Outstanding Luxury Automotive & Technology Group

28 | McLaren Q3 (YTD) 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 FY2018 revenue - £1,257m FY2018 volume - 4,829

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

29 | McLaren Q3 (YTD) 2019 Results

McLaren SLR: total production <2,000 cars

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

Racing Applied Technologies Automotive

19 1980 19 1972 1969 969 1968 968 19 1989 1992 992 1995 995 2003 003 19 1974 19 1986 1963 963

Bruce McLaren Motor Racing is formed Maiden F1 victory in Belgium Grand Prix McLaren wins all 11 Can- Am races First Formula One Drivers’ and Constructors’ Championship win McLaren wins Indianapolis 500 McLaren Racing is formed McLaren Marketing is formed McLaren F1 – McLaren’s first and the world’s fastest road car McLaren Electronic Systems formed McLaren Automotive is formed Debut win at Le Mans 24 Hours

McLaren has a long history in Racing & innovation

30 | McLaren Q3 (YTD) 2019 Results Success in racing created a culture of outstanding performance, excellence & innovation

Racing Applied Technologies Automotive

2012 12

12C Spider launched Applied awarded the NASCAR standard ECU contract Launch of 12C Coupe, Automotive first car McLaren Production Centre opened Opening of McLaren Technology Centre McLaren Applied Technologies is formed McLaren Automotive founded as an independent company

2010 10 2008 008

Applied awarded the FIA F1 standard ECU contract Lewis Hamilton wins World Championship

2007 007

Applied awarded the Indy Car ECU contract McLaren 570S, McLaren 540C & P1 GTR launched

• 10,000th production car

completed

• 3,286 total units in

2016 720S launched

2014 14

McLaren 650S launched Applied is the sole supplier of e-powertrain to Formula E – with the strongest e-machine to date; MES and MAT merge McLaren P1launched; the first hybrid hyper car in the world

2015 15 2016 16 2017 17 2011 11 2013 13 2004 004

McLaren Senna, released

2018 18

• 15,000th production car

completed

• 4,829 wholesale units

in 2018 McLaren Speedtail revealed for the first time 600LT launched 720S Spider released, Senna GTR announced

2019 19

• 20,000th production car

completed

• 600LT Spider released

McLaren GT launched McLaren Elva revealed for the first time

Globally recognized brand

31 | McLaren Q3 (YTD) 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

18 182 Gr Grand d Prix ix w win ins Leg egen enda dary 50 y year r ra raci cing her eritage e 20 W Worl rld Cha Champions nshi hips Debu ebut w win a at Le Le M Man ans 24 Ho Hours 12 12 F1 F1 dr driver ers' champion ion- ships s 8 F1 F1 constru ructors rs’ champion ion- ships

The only company to win each of the 4 classic competitions: Formula One, Le Mans, Indianapolis and Can-Am

8 GT GT Ra Racing Cha Champion- ships i s in 2017 17

Cumulative McLaren car volume1

Every model won multiple prestigious awards for unique technology and design

2012 2012 2013 2013 2015 2015 2016 2016 2016 2016 2017 2017 Ranked #1 in car reviews of 2012 Jalopnik Dewar Trophy for Outstanding British Technical Achievement Royal Automobile Club China Performance Car of the Year EVO Middle East Car of the Year: Supercar of the Year 675LT Coupé Best Performance Car Auto Express New Cars Awards Five Star Award AUTOCAR & EVO & E Evo2012 2012 2013 2013 2014 2014 2016 2016 2015 2015 2017 2017 James May’s Car of the Year BBC Top Gear Magazine Jeremy Clarkson’s Car of the Year BBC Top Gear Magazine Supercar of the Year AUTOCAR ASEAN Car of the Year CAR Magazine (675LT Spider) Best Car on Sale – Best Every Day Supercar BBC Top Gear Performance Car of the Year BBC Top Gear & Road and Track 2012 2012 2013 2013 2014 2014 2016 2016 2016 2016 2017 2017 Best Sports Car Over £120,000 What Car? Hypercar of the Year BBC Top Gear Magazine Performance Car of the Year Auto Express Hardcore Car of the Year: Top Gear (675LT Spider Best Car on Sale AUTOCAR Super Car of the Year Octane & EVO 2012 2012 2013 2013 2014 2014 2016 2016 2017 2017 Car of the Year Middle East Motor Awards Hypercar of the Year GQ Middle East Car

• f the Year Awards

Best Supercar Best of the Best Red Dot Design Award Sport Car of the Year CAR 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 segments

32 | McLaren Q3 (YTD) 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, Elva

• 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