Aston Martin Lagonda Global : H1 Results 2022 - Press Release

29 July 2022

Aston Martin Lagonda Global Holdings plc

Interim results for the six months to 30 June 2022

• • Strong demand across the portfolio with GT/Sports sold out into 2023
  • H1 revenues increased 9% year-on-year, driven by record core ASPs
• Supply chain and logistics disruptions affecting H1 volumes and working capital,
• • • 
      with impact expected to unwind in H2
    • FY 2022 guidance reaffirmed, with positive free cash flow2 expected in H2
    • • On track to deliver medium-term targets
  • Previously announced transformational capital raise of £653m with strategic

investment by the Public Investment Fund

• Amendment to Strategic Cooperation Agreement with Mercedes-Benz AG extends
  timeframe for tranche 2 share issuance into 2024

£m	H1 2022	H1 2021	% change	Q2 2022	Q2 2021	% change
Total wholesale volumes1	2,676	2,901	(8%)	1,508	1,548	(3%)
Revenue	541.7	498.8	9%	309.0	274.4	13%
Adjusted EBITDA2	58.6	48.8	20%	34.2	28.1	22%
Adjusted operating loss2	(72.7)	(36.0)	(102%)	(38.4)	(20.7)	(86%)
Operating loss	(89.9)	(38.0)	(137%)	(42.2)	(22.7)	(86%)
Loss before tax	(285.4)	(90.7)	nm	(173.8)	(48.5)	nm
Net debt2	(1,266.4)	(791.5)		(1,266.4)	(791.5)

1 Number of vehicles including specials; 2 For definition of alternative performance measures please see Appendix;

H1 2022 Financial highlights

• Strong demand across product lines with GT/Sports cars fully sold out into 2023 and DBX orders more than 40% higher year-on-year
• Wholesale volumes decreased by 8% year-on-year to 2,676 (H1 2021: 2,901) due to supply chain and logistics disruptions, most notably impacting DBX deliveries in Q2. GT/Sports wholesales of 1,561 increased by 22% year-on-year (H1 2021: 1,280)
• Revenue increased 9% year-on-year to £542m driven by:
• • Strong pricing dynamics throughout the core portfolio, with record core ASP in Q2 2022
  • • ASP of £164k in H1 2022, up 9% vs £150k in H1 2021
    • ASP of £174k in Q2 2022, up 15% vs £151K in Q2 2021
  • Aston Martin Valkyrie programme deliveries (27 vehicles delivered, 38 assembled in H1 2022)
  • Foreign exchange tailwinds
• Gross profit increased by 31% year-on-year to £188m (H1 2021: £143m) and gross margin increased
  substantially year-on-year to 35% (H1 2021: 29%) reflecting improved pricing and mix, as well as efficiency benefits, partially offset by higher manufacturing and logistics costs
• Adjusted EBITDA increased 20% year-on-year to £59m (11% margin) primarily driven by revenue growth and higher gross profit, partially offset by higher operating expenses including reinvestments into brand, marketing and new product launch activities, as well as inflationary impact on general costs
• Operating loss of £90m included a £47m year-on-year increase in depreciation and amortisation
• Loss before tax of £285m was driven by a £134m negative non-cash FX revaluation impact
• H1 2022 free cash outflow of £234m included:

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- Capital expenditure of £138m, primarily related to new model development including the next- generation of front-engine sports cars due to launch in 2023

• • Net cash interest payments of £63m
  • Working capital outflow of £67m driven by temporary supply chain and logistics disruptions, most notably in Q2. These isolated but impactful issues pushed planned deliveries towards the end of the period, resulting in elevated receivables and more than 350 ordered vehicles awaiting final parts at the end of June, which in combination had a cash impact of more than £80m
• Cash balance of £156m (December 2021: £419m) impacted by a combination of more than £125m of short-term factors. This relates to the £46m repayment of the revolving credit facility, and more than £80m from the elevated receivables and number of vehicles held in stock, which are expected to be delivered in the second half of the year
• Net debt of £1,266m (December 2021: £892m) including £134m impact of non-cash FX revaluation of US dollar-denominated debt as the GBP weakened against the US dollar during the period
• Positive cash flow performance expected in early Q3, driven by the partial unwind of the short-term working capital dynamics referenced above

H1 2022 Operational Highlights: Taking off into a new era for Aston Martin:

• Retail customer demand continued to run ahead of wholesales in H1 2022
• DBX707, the world's most powerful luxury SUV, launched to significant customer and media excitement; DBX order intake more than 40% higher year-on-year
• New V12 Vantage announced, with all 333 units sold-out by launch in March following unprecedented demand
• Racing.Green., new ESG strategy, reiterating electrification plans;
• • First PHEV deliveries in 2024 and first BEV targeted for launch in 2025
  • Fully electrified front-engine and SUV portfolio by 2030
• Strengthened leadership team with appointments of
• • Chief Executive Officer, Amedeo Felisa appointed to the Board 4 May 2022
  • Chief Financial Officer, Doug Lafferty appointed to the Board 1 May 2022
  • Chief Technology Officer, Roberto Fedeli appointed 1 June 2022
  • Chief People Officer, Simon Smith appointed 11 April 2022

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Lawrence Stroll, Executive Chairman commented:

"We have continued to make strong progress in our vision to become the world's most desirable, ultra-luxury British performance brand during the first six months of 2022, despite supply chain challenges in Q2. The underlying fundamentals of Aston Martin have never been stronger, with robust demand across our product range, sports cars sold out into 2023 and DBX orders up by more than 40% compared to 2021. In addition, we have aligned the business for its future by assembling a very experienced team, led by Amedeo Felisa, to fully realise our potential and deliver on the targets we have set.

The first new models in the extraordinary pipeline of products developed since I became Executive Chairman have also started to be delivered. Our combination of new ultra-luxury, high performance models commenced with DBX707 - the premier ultra-luxury performance SUV on the market - and the highly-desirable V12 Vantage. They will be followed by an entirely new generation of sports cars from 2023. Importantly, all our new vehicles are aligned with a minimum 40% contribution margin target, a significant increase from the past, and a key driver of our medium-term targets. In addition, production of the Aston Martin Valkyrie has continued to pick up pace, and we are on track to meet our targeted full year deliveries.

However, the first half of the year was not without its challenges. Isolated but impactful supply chain shortages, particularly in Q2, resulted in lower wholesales and significant working capital headwinds. Specifically, we ended June with more than 350 DBX707s that we had planned to deliver in Q2, still awaiting final parts, consuming tens of millions in cash and temporarily limiting our ability to meet the strong demand we have.

We have now started to deliver these vehicles in July and expect further improvements in the supply chain as we move through H2, supporting the delivery of our full year targets. As a result of the working capital build in H1 and our expected second half performance, we now expect to generate positive free cashflow in H2, resulting in a significantly higher cash balance at year end.

Earlier this month we announced a £653 million equity capital raise, which will also see the arrival of the Public Investment Fund (PIF) as a new anchor shareholder with a 16.7 percent stake. This will transform our balance sheet, significantly improve our liquidity and cashflow profile, provide greater clarity on our pathway to become sustainably free cash flow positive from 2024, as well as creating significant shareholder value.

We continue to enjoy a long-term strategic relationship with Mercedes Benz, evidenced by their further investment in the Company and our planned deployment of their technologies, accessed via tranche 1 of the Strategic Cooperation Agreement (or SCA), to support all new product ranges in our medium-term plan.

Today, we are pleased to announce a mutually-agreed amendment to the SCA, which extends the timeframe for the Company and Mercedes to agree additional technology requests by 12 months, with the corresponding tranche 2 share issuance related to the second basket of Mercedes technologies to be accessed under the SCA, including BEVs, to take place by July 2024. Importantly, the amendment does not impact our access to the technologies, subject to reaching a commercial agreement, or change the timeline for our first BEV, which we continue to target for launch in 2025."

Amedeo Felisa, CEO, commented:

"Aston Martin is an iconic global brand in a unique position to transcend ultra-luxury and high performance. The first phase of our journey is complete, building strong foundations for our future growth. Together with the extraordinary talent and teams we have across the company, we must now ensure we execute on our targets.

With the supply chain challenges that impacted our first half performance expected to ease, we are now focused on accelerating deliveries of the DBX707, continuing to ramp up Aston Martin Valkyrie production, and transitioning to our next generation of sports cars.

Leveraging my experiences, I see great potential to build on the success of Project Horizon to optimise our operational capabilities, reduce complexities and cost, which will drive sustained improvements in profitability and cashflow generation. I am pleased with the initial progress we have made so far and am excited to lead Aston Martin as we enter this next phase of our journey."

Outlook

We remain on track to achieving our medium-term targets of c.10,000 wholesales, c.£2bn revenue and c.£500m adjusted EBITDA by 2024/25.

For 2022, we continue to expect to deliver significant growth on 2021 with a c.8% increase in core volumes expected to deliver a c.50% improvement in adjusted EBITDA from the core business. The global operating environment remains uncertain, with the war in Ukraine, intermittent COVID-19 lockdowns in China, continued supply chain and logistics disruptions, and raw material cost inflation. Our teams remain focused on minimising any impact on the Company's financial performance.

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For the second half of 2022, we expect strong year-on-year wholesale volume growth, supported by easing supply chain dynamics, robust demand, as well as the production ramp-up of the DBX707 and the V12 Vantage, which both bring improved profitability compared with prior models, aligned to our 40%+ contribution margin target. In addition, price adjustments have been made across the portfolio, reflecting the strong pricing power of the Aston Martin brand.

Aston Martin Valkyrie production continues to pick up pace. We continue to expect 75-90 Aston Martin Valkyrie programme vehicles to be shipped in 2022, with 38 vehicles already assembled in the first half of the year.

In addition, we expect free cash flow to be positive in the second half of 2022 as higher profitability and cash inflows from more normalised working capital dynamics are expected to offset cash interest payments and planned capital expenditures. This is expected to support a year end cash balance in excess of £200m, before the net proceeds from the proposed equity capital raise of £653m. With up to half of the net proceeds from the proposed equity capital raise expected to be used to repay debt, we continue to expect a pro-forma cash balance of £500-£600m.

2022 guidance unchanged- updated to reflect prevailing exchange rates:

• Wholesales: growth to > 6,600 units
• Adjusted EBITDA margin: c.350-450bps expansion
• Capex and R&D: c.£300m
• Depreciation and amortisation: c.£315m-£330m
  Reflecting Aston Martin Valkyrie programme shipments and a full year of accelerated depreciation of capitalised development costs ahead of next generation GT/Sports vehicles in 2023
• Interest costs1 updated for FX movements (assuming £1:$1.21, versus previous assumption of
  £1:$1.32):
• • c.£290m (P&L), £95m higher than previous guidance of c.£195m largely driven by non-cash FX revaluation of dollar-denominated debt in H1
  • c.£130m (cash), unchanged from previous guidance

All metrics and commentary in this announcement exclude adjusting items unless stated otherwise and certain financial data within this announcement have been rounded.

Enquiries
Investors and Analysts
Sherief Bakr	Director of Investor Relations	+44	(0) 7789 177547
		[e-mail]
Holly Grainger	Deputy Head of Investor Relations	+44	(0)7442 989551
		[e-mail]
Media
Kevin Watters	Director of Communications	+44	(0)7764 386683
		[e-mail]
Paul Garbett	Head of Corporate & Brand Communications	+44	(0)7501 380799
		[e-mail]
Grace Barnie	Corporate Communications Manager	+44	(0)7880 903490
		[e-mail]
Tulchan Communications
Harry Cameron and Simon Pilkington	+44	(0)20 7353 4200

• Presentations from Amedeo Felisa, CEO and Doug Lafferty, CFO are available on the corporate website from 07.00am BST and there will be a call for investors and analysts today at 08:30am BST
• The conference call can be accessed live via the corporate websitehttps://www.astonmartinlagonda.com/investors/calendar
• A replay facility will be available on the website later in the day
• Interim Results for the nine months to 30 September 2022 will be announced on 2 November 2022

1 Assuming current exchange rates prevail for FY22. Note: interest payments are made in Q2 and Q4

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No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness or completeness of the information presented or contained in this release. This release contains certain forward -looking statements, which are based on current assumptions and estimates by the management of Aston Martin Lagonda Global Holdings plc ("Aston Martin Lagonda"). Past performance cannot be relied upon as a guide to future performance and should not be taken as a representation that trends or activities underlying past performance will continue in the future. Such statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from any expected future results in forward- looking statements. These risks may include, for example, changes in the global economic situation, and changes affecting individual markets and exchange rates.

Aston Martin Lagonda provides no guarantee that future development and future results achieved will correspond to the forward- looking statements included here and accepts no liability if they should fail to do so. Aston Martin Lagonda undertakes no obligation to update these forward-looking statements and will not publicly release any revisions that may be made to these forward-looking statements, which may result from events or circumstances arising after the date of this release.

This release is for informational purposes only and does not constitute or form part of any invitation or inducement to engage in investment activity, nor does it constitute an offer or invitation to buy any securities, in any jurisdiction including the United States, or a recommendation in respect of buying, holding or selling any securities.

Nothing in this announcement should be interpreted as a term or condition of the Rights Issue or Capital Raise. Any decision to purchase, subscribe for, otherwise acquire, sell or otherwise dispose of any nil paid rights, fully paid rights or new shares must be made only on the basis of the information contained in the prospectus related to the rights issue once published. Copies of that prospectus will, following publication, be available on the Company's website at www.astonmartinlagonda.com.

This announcement does not contain or constitute an offer for sale or the solicitation of an offer to purchase securities in the United States. The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), or with any securities regulatory authority of any state or jurisdiction of the United States, and may not be offered or sold in the United States absent registration under the Securities Act or an available exemption from, or transaction not subject to, the registration requirements of the Securities Act. There will be no public offer of the securities in the United States. None of the securities, this announcement or any other document connected with the Rights Issue or Capital Raise has been or will be approved or disapproved by the United States Securities and Exchange Commission or by the securities commissions of any state or other jurisdiction of the United States or any other regulatory authority, and none of the foregoing authorities or any securities commission has passed upon or endorsed the merits of the offering of the securities or the accuracy or adequacy of this announcement or any other document connected with the Rights Issue or Capital Raise. Any representation to the contrary is a criminal offence in the United States.

This announcement is for information purposes only and is not intended to and does not constitute or form part of any offer o r invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, any securities or to take up any entitlements to any securities in any jurisdiction. No offer or invitation to purchase or subscribe for, or any solicitation to purchase or subscribe for, any securities or to take up any entitlements to any securities will be made in any jurisdiction in which such an offer or solicitation is unlawful.

No securities have been nor will be registered under the Securities Act or under any securities laws of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from or in a transaction not subject to the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There will be no public offer of any securities in the United States.

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