Aston Martin Lagonda Global Holdings plc

Good morning and thank you for joining us for this call on our Q3 2023 results. I'm joined today by Amadeo and Doug. I hope you have had a chance to read the release and review the presentation of the results that are on the IR section of our corporate website. I'd like to say a few words on our continued progress before Doug takes you through some of the financial highlights prior to Q&A. As I've said before, ensuring the fundamentals of this business has been a clear focus of mine since I became executive chairman. We have had to rebuild the foundation, inject new talent across the organization, and critically, develop new models that match our vision to become the world's most profitable, desirable, ultra-luxury, high-performance brand. In this, our 110th year anniversary, we are delighted with the strategic progress we continue to make. Commencing deliveries of our next generation of sports cars is a major milestone, marking the beginning of a completely new lineup of front-engine sports cars that will reposition Aston Martin as an ultra-luxury, high-performance brand, enhance our growth, and bring higher levels of profitability. The launch of the DB12, which has been externally reviewed as potentially the best Aston Martin ever, has seen extraordinary demand. It is driving a reappraisal of Aston Martin amongst new audience, with 55% of initial DB12 customers new to the brand. And I have no doubt that when we launch our second generation new sports cars in Q1 next year, we will see a similar resounding response. We look to the future with enormous excitement, and in addition to our ongoing strategic process, we have also made significant financial progress during the first nine months of 2023. Our volumes, pricing, gross margin, and EBITDA are all showing strong improvement, which Doug will highlight shortly. Over the coming quarters, we will showcase our breathtaking lineup of new products, and we remain on track to substantially achieve our 24-25 financial targets in 24. Now, over to Doug.

Thank you, Lawrence. Good morning, everyone. As mentioned, year-to-date we've seen an improvement in our volumes, pricing, gross margins, and EBITDA as we continue to execute on our plans. We're pleased to say that our Q3 financial performance is in line with the guidance we gave at our first half 2023 results call back in July. As we look to the remainder of the year, and as mentioned in previous quarters, the profile of 2023 was to be shaped by the timing of product launches in both core and specials. With that in mind, we continue to expect a significant acceleration in our financial performance in Q4. Coming back to year-to-date 23 in some more detail, we've seen continued strong demand across existing and new product lines, with the DB12 order book now extending into Q2 24 and DBX orders also running into next year. Wholesales increased by 8% year-on-year to 4,398, primarily driven by a 23% increase in DBX volumes, which more than offset lower sports car sales given the ongoing transition within that portfolio. During Q3, we commenced deliveries of the DB12. The issues that affected the initial production ramp are now resolved, but did impact overall volume in the quarter, as well as having a knock-on effect on our full-year volume outlets. Year-to-date revenue increased by 21% year-on-year, benefiting from higher volumes of both core and specials, strong underlying pricing dynamics in the core portfolio, and favourable product mix. This was reflected in our total ASP of £219,000, up 12% year-on-year, and our core ASP up 6% over the same period. Year-to-date gross margin expanded to 36%, increasing 300 basis points year-on-year. and was over 37% to Q3, as we continue to make progress towards our 40% plus gross margin target. Adjusted EBITDA of £131 million increased by 64% year on year, primarily driven by the higher gross profit, partially offset by higher operating expenses, including reinvestments into brand and marketing activities, as well as some inflationary impacts on our general cost base. Adjusted EBITDA margin of 13% was up over 300 basis points year on year, The adjusted operating loss of £135 million reflects depreciation and amortisation increasing year-on-year as we've guided. Free cash outflow of £297 million as an improvement of £39 million year-on-year included increased capital investment year-on-year to £276 million, again in line with our full-year 2023 guidance. Working capital was an outflow driven by increased inventory to support the launch of next-generation sports car models which we expect to partially unwind in Q4. Total liquidity at the end of September stood at over £600 million, including £216 million of gross proceeds received from August's share offering. Our net debt was around £750 million at the end of Q3, broadly stable from the beginning of the year. We remain focused on reducing our leverage and retiring debt and will continue to do so in consideration of a wide range of factors, In line with the announcement in July, our objective is to repay the second lien in full. In November, we will be redeeming 50% of the outstanding second lien notes, and beyond that, we intend to undertake a full summary financing exercise during the first half of 2024. In terms of outlook for this year, our guidance, other than volumes, remains unchanged. Specifically, within the fourth quarter of 2023, we continue to expect to see a significant increase in adjusted EBITDA, primarily driven by the timing and related contribution of the new product launches, all with improved profitability. We have marginally updated our full-year volume outlook to circa 6,700 units as the impact of the initial DB12 production delay limits production capacity for the full year. Demand is very strong. This is a timing issue only, and production is now running at the rates required to meet our volume expectations for the year. So in closing, we are well positioned to deliver a strong Q4 performance as we continue to transition our portfolio with the delivery of the DB12 and our new specials. This should provide us with strong momentum heading into 2024, and we remain focused on delivering against our median term plan. With that, we'll be happy to take your questions.

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 1-1 on your telephone keypad and wait for a name to be announced. To withdraw your question, please press star 1-1 again. Please stand by, we will compile the Q&A roster. This will take a few moments. And now we're going to take our first question, and it comes from the land of Akshat Kaker from J.P. Morgan. Your line is open. Please ask your question.