Aston Martin Lagonda Global Holdings plc: Preliminary results for the 12 months to 31 December 2022

1. Number of vehicles including Specials; For deinition of alternative performance measures please see Appendix

Financial Highlights

• Continued strong demand across all product lines with 80% of current range of GT/Sports cars sold out for 2023 ahead of upcoming launches and DBX order book into Q3 2023
• Despite the impact of supply chain and logistics disruptions, most notably in Q2 and Q3, wholesale volumes in 2022 grew in line with revised range:
  • Wholesale volumes increased by 4% year-on-year to 6,412 (2021: 6,178)
    • Volumes included more than 3,200 DBXs, driven by launch of the DBX707 which represented more than 50% of overall DBX volumes
  • Q4 wholesale volumes of 2,352 increased by 22% year-on-year (Q4 2021: 1,928)
• Revenue increased by 26% year-on-year to £1.4bn and Q4 revenue increased by 46% year-on-year to

£524m driven by:

• Strong pricing dynamics and favourable mix in the core portfolio:
  • FY 2022 core ASP of £177k, up 18% from £150k in FY 2021
  • Q4 2022 core ASP of £184k, up 21% from £152k in Q4 2021

• 80 Aston Martin Valkyrie programme deliveries during 2022, including 36 in Q4
• Foreign exchange tailwinds for ASPs due to GBP weakness versus major currencies

• Gross profit increased by 31% year-on-year to £451m (2021: £344m) and gross margin increased to 33% (2021: 31%), reflecting improved pricing and gross margin for core models, partially offset by the impact of lower year-on-year gross margin within In addition, year-on-year gross margin performance was impacted by approximately £20 million of supply chain recovery costs incurred in the second half of the year
• Adjusted EBITDA increased by 38% year-on-year to £190m, primarily driven by higher revenue and gross profit, partially offset by higher operating expenses including reinvestments into brand, marketing and new product launch activities, as well as inflationary impacts on general costs
• Operating loss of £142m included a £96m year-on-year increase in depreciation and amortisation, primarily driven by higher year-on-year Aston Martin Valkyrie programme deliveries and, to a lesser extent, by accelerated amortisation of capitalised development costs ahead of the next generation of sports car launches
• Loss before tax of £495m was materially impacted by a £156m negative non-cash FX revaluation of US dollar-denominated debt as the GBP weakened significantly against the US dollar during the year
• Net cash inflow from operating activities of £127m. Free cash outflow[1]of £299m included:
  • Capital expenditure of £287m, primarily related to new model development including the next generation of sports cars
  • Net cash interest payments of £139m
• Positive free cash flow in Q4 of £37m, driven by strong profitability and cash inflows from working capital following the impact of supply chain and logistics disruptions, earlier in the year
• Successfully completed $200m debt tender in October 2022
• Year-end cash of £583m (2021: £419m); Net debt of £766m (2021: £892m), including a negative £156m impact of non-cash FX revaluation of US dollar-denominated debt as the GBP weakened significantly against the US dollar during the year

FY 2022 Operational Highlights

• Product development and launches continue at pace, with breath-taking new products focused on ultra- luxury, high performance and driving intensity:
  • The critically-acclaimed DBX707, the most powerful luxury SUV on the market, unveiled in February DBX707 represented more than 50% of total DBX deliveries in 2022
  • The V12 Vantage Coupe, an iconic finale and the only time a turbocharged V12 engine has ever been fitted in a All 333 units were sold before the car’s reveal in March, and deliveries started in Q2 2022
  • The V12 Vantage Roadster, fusing ultimate performance with open-air All 249 units sold- out following unveil at Pebble Beach, and deliveries started in Q4 2022
  • The stunning, two-seater, coach-built DBR22, an ultra-exclusive concept limited to 22 units. Crowned Best of Show at the influential Chantilly Arts et Élégance Richard Mille, all examples are sold, with deliveries expected to start in 2023
  • Development upgrades to hybrid supercar Valhalla showcased to customer acclaim at Pebble Beach; more than 50% of the 999 vehicles already sold

New brand positioning and go-to-market strategy realising our iconic brand’s potential by elevating profile, increasing desire, driving awareness, and raising customer demand

• Impactful new creative identity and Driven. brand positioning, supporting a >10% increase in sales leads, 10% increase in web and configurator sessions, as well as heightened brand desirability
• More than 60% of customers placing orders in 2022 were new to the Aston Martin brand
• Bold campaigns & optimised content strategy, including the introduction to new platforms such as TikTok, delivering a >70% increase in social media views and improved engagement
• New model launches, enhanced data management and customer targeting tools driving a 60% increase in dealership test drives
• Increasing brand salience and optimised digital user experience supporting >60% increase in sales leads generated by award-winning online configurator
• Aston Martin Aramco Cognizant Formula OneTM Team continues to connect the brand with engaged audience and raising consideration in key markets, with Aston Martin’s Formula One® global fanbase surpassing 150 million in Research shows that >95% of US customers feel Aston Martin’s presence in F1® made them more likely to consider the brand
• More than 70% of Vantage F1® Edition owners are new to the Aston Martin brand, further demonstrating the positive impact that Aston Martin’s global presence in the sport is having on its brand image and appeal to new customers

• New leadership appointments and operational improvements to support future growth:
  • New executive appointments and internal promotions, including senior leaders in engineering, commercial, procurement, human resources and operational teams
  • Changes to the organisational structure, including new operational improvements, tailored to enhance future product launches and support long-term growth with a focus on enhancing quality and driving overall effciencies
  • Cross-functional structure established for the engineering organisation, to enhance development of the next generation of high-performance and electrified vehicles covering areas such as e- Powertrain, Software & Electronics Technology, Infotainment, as well as Product & Component Development
  • Re-shaped and enhanced supply chain strategy, focused on building long-term partnerships, to improve resilience and performance

• Deepening the integration of sustainability into our business and improving our sustainability performance through our Green. strategy
  • Working towards net-zero manufacturing facilities and a 30% reduction in supply chain emissions by 2030 compared with 2020 levels
  • In 2022 new targets were set to drive year-on-year improvements in our sustainability performance including reducing CO₂ emissions and energy intensity per car each year by 2.5%. In 2022 we reduced Scope 1 CO₂ emissions by 3.9% per car compared to 2021

• In our manufacturing facilities in Gaydon and St Athan we continued our commitments to only use renewable electricity. By 2025 we aim to achieve zero single-use plastic packaging from our manufacturing facilities and to reduce our water consumption by 15% compared with 2019 levels
• In 2022 we also enhanced our gender diversity goals with a target of 25% women in leadership positions by 2025, rising to 30% by 2030
• In January 2023 we announced that we are increasing employment at our Gaydon headquarters with the creation of more than 100 new skilled jobs in our manufacturing factory to support the launch of our next generation of sports cars

Lawrence Stroll, Aston Martin Lagonda Executive Chairman commented:

“2022 saw Aston Martin continue to build on the strong foundations that have been established during my three years as Executive Chairman. While the last 12 months presented industry-wide challenges, we look to the future with renewed confidence in our ability to deliver on our vision, and the targets we have set.

“Despite the operating environment, we ended the year with significantly improved growth, margin enhancement and positive free cash flow in Q4, exiting 2022 with the strongest order book in many years.

“2022 marked the start of a thrilling new product line-up, starting with the critically acclaimed DBX707 – the most powerful luxury SUV in the world – combining ultra-luxury with high performance and, crucially, with increased profitability. The DBX707 was followed by V12 Vantage, the ultra-luxury DBR22 and, in early January of this year, the DBS 770 Ultimate – all fully sold out.

“The year saw us continue to strengthen our teams, led by Amedeo, with a focus on innovation, execution and effciency to support our longer-term growth. Furthermore, we completed a significant £654 million equity capital raise, which also saw the Public Investment Fund become a new anchor shareholder. This enabled us to take action to deleverage our balance sheet and our target remains to become sustainably free cash flow positive from 2024.

“We have made the biggest investment in our iconic brand through the launch of a bold new creative strategy and brand position that aligns Aston Martin to our future ambitions. Our high-performance DNA has been further amplified by our partnership with the Aston Martin Aramco Cognizant Formula One TM team, driving growing demand from a new generation of customers, with more than 60% new to the brand.

“As I have said before, I knew it would take multiple years to build Aston Martin into the world’s most desirable ultra-luxury British performance brand. With the heavy lifting behind us, we are now poised to see the results of this transformation, starting in 2023. In addition to celebrating our 110th anniversary and our exciting line up of Specials, it will also see the start of our next generation of front-engine sports cars which will truly reposition Aston Martin for the future.

“Over the last three years, I have consistently referenced our target to deliver around £2bn of revenue and £500m of adjusted EBITDA by 2024/25. I am extremely proud that given the strong progress we have made to transform Aston Martin into a truly ultra-luxury business, demonstrated by the trajectory of our ASP and gross margin, we are on track to meet these financial targets, but with significantly lower volumes than I originally envisaged. In addition, I remain highly confident that we will achieve our target to deliver 10,000 wholesales over the coming years, and with it, significantly enhanced financial performance.”

Amedeo Felisa, Aston Martin Lagonda Chief Executive Oicer commented:

“Having navigated a challenging operating environment throughout 2022, I am pleased with how we ended the year. We delivered in line with expectations, took actions to address the short-term impacts of supply chain issues, and continued to make progress in a number of key areas that will support our ability to meet strong customer demand and deliver our growth ambitions.

“A top priority has been to improve our execution capabilities, leveraging my experience and the exceptional talent we have to implement changes throughout the organisation. This has included measures to address short-term issues, such as the supply chain disruption on DBX707 deliveries, as well as more structural changes to support future product launches, focused on innovation, quality and overall effciencies.

“We enter our 110th anniversary year ready to write a new chapter in our proud history. Building on the strong product momentum we created in 2022, this year will see us begin the transformation to our game-changing, next generation of front-engine sports cars. This transition is also expected to deliver significant improvements in profitability in the second half of the year, with all new models continuing to target a 40%+ gross margin.

“I also want to thank our people for what we have achieved. They continue to demonstrate an unwavering commitment and passion for our iconic company. At the start of 2023, we introduced a new set of company values, grounded by the powerful principle that ‘No one builds an Aston Martin on their own’. Combined with our iconic brand, the market opportunity, and our focus on consistently executing our ultra-luxury strategy, I have great confidence in Aston Martin delivering on our shared ambitions.”

Outlook

We remain on our way to achieving our target of c.10,000 wholesales, aligned with our ultra-luxury strategy. In addition, we are well on track to deliver our medium-term financial targets of c.£2bn revenue and c.£500m adjusted EBITDA in 2024/25.

For 2023 we expect to deliver significant growth in profitability compared to 2022, primarily driven by an increase in volumes and higher gross margin in both Core and Special vehicles. More specifically, we expect significant year- on-year growth and positive free cash flow in the second half of the year.

For the first half of 2023, we expect our adjusted EBITDA and free cash flow performance to be similar to the first half of 2022. This is driven by expectations of strong year-on-year growth in DBX volumes, commencing the transition of sports cars sales ahead of new launches later in the year, as well as investments to support our future growth.

Within the first half of 2023, we expect broadly similar free cash flow outcomes between Q1 2023 and Q2 2023 driven by the expected phasing of deliveries, capital expenditure and working capital dynamics in Q1 2023, and the timing of cash interest payments related to our Senior Secured Notes in Q2 2023.

The second half of 2023 is expected to see delivery of a number of new products across the Core and Specials ranges, all with improved profitability. In addition to the ramp up of the already sold-out DBS 770 Ultimate, we expect deliveries of the first of our next generation of sports cars to commence in Q3.

Within Specials, we plan to commence deliveries of the sold-out Aston Martin Valkyrie Spider and the ultra-luxury DBR22 in the second half of the year. Finally, and in conjunction with our historic 110th anniversary, we plan to launch a new, strictly limited, exclusive Aston Martin model, with deliveries commencing in Q4.

We expect to increase investment in brand and new product launch activities during the year. This will also allow us to continue to elevate our ultra-luxury performance brand positioning and to support the acceleration of our longer-term growth.

Although the operating environment remains volatile, including ongoing inflationary pressures and pockets of supply chain disruptions, our teams continue to work in partnership with our suppliers to mitigate any impact on our performance in 2023.

Capital expenditure is expected to increase year-on-year, primarily driven by:

• a rephasing of deferred spend from 2022,
• the impact of significantly higher year-on-year inflation,
• incremental investments related to the new, strictly limited, exclusive Aston Martin model referenced above, which will accelerate our growth in Q4 and into 2024
• increasing investments in our electrified portfolio, alongside the final year of significant expenditure associated with our Internal Combustion Engine (ICE) portfolio

We expect 2023 to be the peak year of capital expenditure, with capital expenditure readjusting from next year to support both the development and the delivery of our future product range, as well as our target of becoming sustainably free cash flow positive from 2024.

2023 guidance:

• Wholesales: year-on-year growth to 7,000 units
• Adjusted EBITDA margin: year-on-year expansion, up to 20% adjusted EBITDA margin
• Capex and R&D: £370m
• Depreciation and amortisation: £350m-£370m
• Interest costs: £120m (cash) assuming current exchange rates prevail for 2023

SOURCE: Aston Martin