Auto1 Group U/Adr

Good afternoon and good morning to our American friends. I'm Philip Reikersdorfer, Investor Relations at Ottawa. And welcome to our inaugural earnings release and presentation about six weeks after our IPO. Today, we'll present you the Q4 and full year 2020 financials and our official guidance. But before, Christian Bertmann, our CEO and co-founder, is going to give us a quick operational update, followed by Markus Boser, our CFO, who is going to discuss financials and guidance. After that, we'll have the opportunity to answer some questions. If you want to ask some questions, you will find a question mark on the left-hand side of your screen. If you push the question mark, you can write down a question and send it over to us, and we will go through the questions at the end of the presentation. And with that, over to Christian, our co-founder and CEO.

Yeah, thank you, Philip. Also a very big and warm welcome from me to everyone. I want to start this presentation by giving you a brief reminder about the huge opportunity we have in front of us. Our mission here at Auto One, I'll wait for the slide to come up. Thank you. Our mission here at Auto One is to build the best way to buy and sell cars online. And this mission represents, just as a quick reminder, a unique opportunity to invest. So we're operating in one of the largest markets globally, the 700 billion euro used vehicle market in Europe. And that market is now moving online at an increasing pace. We are already the number one company in this market. We have built a unique platform that combines strong brands, our own pricing and fulfillment technology, and the largest automotive data set for this market that makes all of this possible. And we are very well on our way to build the leading online car retailer with AutoHero. As a quick reminder, on the next slide, this is what we do. This is how our platform is working. With AutoOne, we have created a platform that creates superior customer experiences for everybody that uses us, be it for buying or for selling their cars. We are buying from consumers and dealers. You can see that on the left-hand side, via our C2B brands like Vierkaufenden Auto and Remarketing in a fast, easy, and reliable way. And then we're selling that inventory online to private consumers via AutoHero or to our partner dealers via AutoOne.com. The AutoOne platform, which you can see in the middle, is the operating system of the European car market. It enables everybody to trade with each other, fully digital and on transparent prices. With AutoOne, we have successfully connected the European automotive trade across borders. At the heart of our company, we truly believe in innovation as the driver of great customer experience. Innovation matters to us every day and every minute. I want to give you a quick update on how we used innovation in our different business units to quickly adapt to the COVID environment that we found ourselves in after March last year. In our C2B business unit, where we are sourcing all cars from private consumers, we introduced our new service, Sell From Home. Before Sell From Home, you would only give us a few data points on your car, like make, model, age, or mileage, and we would have given you a quick but sometimes imprecise quote. With Sell From Home, we completely redesigned our C2B sourcing product. Now, customers can fully enter their complete car data online. And as a result, selling your car is now even easier. You don't need to leave your home to get a binding price for your car. Our online prices are now very precise, and the whole transaction is fully contactless. Our customers in C2B are now happier than ever before, and this is why we rolled out our Sell From Home solution to all of our purchasing markets, which you can see on the right. And also financially, on the next slide, Sell From Home is a very interesting product because getting a binding price is now possible directly from your home we're seeing two times more online shows than we saw offline shows before. And at the same time, our drop-off conversion also more than doubled as we agree on the final price already online while you are still at home. And this increase in drop-off conversion is a strong driver of customer satisfaction in the C2B business. Also in our merchant business, we pushed growth through innovation. In remarketing, we launched the AutoOne EVA app, which stands for digital evaluation. For the first time, a true native app that runs on iOS and Android and improves the speed and precision of our partner dealers' evaluations. They love the new app because it's faster, it's more digital, and it has a much improved user experience. As a result, our remarketing business is growing strongly. On the next slide. We saw 30% unit growth throughout last year, while in the not so much COVID impacted Q3, we saw even 64% growth. Remarketing is a real growth driver for us and perfectly complements our inventory for partner dealers and auto hero. At the same time, on the next slide, our merchant gross profit per unit has seen record values throughout 2020. Our Q4 achievement of 721 euro also shows that we're able to repeat the level of Q3. This development is a reflection of improvements in our auto pricing technology, as well as smart inventory management. And of course, in Autohero, on the next slide, there's news and innovation everywhere. We started our market introduction campaigns in late Q4 of last year. We used TV a lot. but also other channels like YouTube and Facebook. And you can see some of the examples of the ads that we used here on the screen on the left. We're also present now more and more in European soccer. As I said, you can see the results here on the right. So we increased the number of sessions on the AutoHero platform almost 10x year on year. We are very happy with those initial results. And we can now say that we successfully introduced Autohero across Europe. We also delivered a complete new platform experience for Autohero in Q4. Our cars are presented completely immersive now. Almost all of them have a 360 degree outside and inside video available. And it's really as if you were standing right in front of your new car. The site features a complete new mobile experience, a transparent and digital purchase flow, and a brand new customer account where you can control your order. So we can see the response from our customers on the right. They almost spent double the time on the site with the new platform and together with almost 10x more sessions that we have seen on the previous page, we can say, our hero is in hyper growth mode. You can also see that in our numbers for units delivered. We grew them 77% year on year, and we're keeping our growth track for Autohero this year in a fast pace. I'm sure that you have seen our ad hoc news from yesterday. We're now expecting Autohero units delivered for Q1 to be coming in at a corridor between 7,200 and 7,900 units. And we do this hyperscaling while keeping NPS at a healthy level north of 50. And as we're building out our Autohero delivery fleet, we are expecting that NPS to grow steadily. With home delivery, we're getting a 27% higher NPS rating according to German data than with pickup. And that rounds up the very positive outlook that we have for Autohero. Now let's go over to Markus for some detailed financials.

Thanks, Christian, and welcome everybody. 2020 was a transformative year for us at Ottawa, which allowed us to demonstrate the financial success and resilience of our business model while we laid the foundations for our IPO, providing us with the capital to execute on our growth ambitions. We increased the number of remarketing units sold by 30% year on year as a result of our attractive offering as described by Christian. Additionally, Autohero cars sold really took off this past year, going to a press of 77%, as we've already seen. However, the ongoing lockdowns in Europe impacted our most sizable business, the C2B business, when viewed on a year-on-year basis. Nonetheless, a combination of our sell-from-home digitization, growth in remarketing, and in Autohero enabled us to grow the top line in the fourth quarter over the third quarter, despite the lockdown situation in Q4 throughout Europe. On the gross profit level, focused pricing and purchasing has enabled us to drive up the gross profit margin by 20 basis points to 10.1% in 2020, despite the hit in Q2 at under 7%, with the average gross profit per unit increasing to 625, up from 556, again, despite the impact of Q2. OPEX declined on a full year basis by 102 million, highlighting our agile expense management and ability to remain flexible. Improved gross profit margins and stringent expense management resulted in a dramatically improved profitability on an adjusted EBITDA basis, even in this corona struck year. While Q4 has seen lower adjusted EBITDA margins, primarily driven by investments in Autohero, both in terms of marketing and people, as well as investments at the HQ level, our adjusted EBITDA of minus 15 million on a full year basis, up 45 million from the minus 60 million in 2019, also on the back of two adjusted EBITDA positive quarters with adjusted EBITDA margin reaching up to 2.1% in Q3. Next page, please. Our strong adjusted EBITDA resulted in 2020 of negative 15.2 million as a result of active OpEx management, permitting us to compensate for the effects of the COVID-related lockdowns across Europe on gross profit. In March of last year, we rapidly took measures to reduce costs across our entire OpEx positions. In particular, we reduced employee costs by 36.7 million aided by furlough programs to support branch personnel where job applications needed to rain closed due to imposed lockdowns. Moreover, we reduced marketing expenses by approximately 35% year on year, proving that our brands are strong even without paid advertising. Internal logistics also decreased as a result of fewer sales, given that these are largely unit dependent. Other expenses decreased mainly thanks to lower equipment and office expenses. We turn the page. And we've continued to proactively manage our inventory throughout the year. During the first COVID lockdown, we stopped purchasing cars for roughly two months, selling our inventory down quickly, given the huge uncertainty. Since then, we focused on restocking to support the ongoing growth in Autohero and our merchant business, while at the same time ensuring that even as the merchant business normalizes and Autohero grows massively, we continue to have the best-in-class inventory days of sale at 23. Turn the page. In terms of operating cash, we significantly improved that. As you can see from the boxed area, we generated approximately 15.9 million euros in operating cash during 2020, proving the resilience and the success of our business model also in difficult times. Our improved profitability on the back of reduced operating costs, as well as $38.7 million from de-risking inventory significantly aided our cash position. Other cash flow changes mainly relate to interest and tax expenses, which were also significantly lower than in 2019. Notwithstanding the challenges of 2020, we continue to invest in the business, primarily in Autohero. Overall, we are very proud of our positive cash flow from operations during a difficult year and believe it shows our executional excellence, even in Q2, which saw the impact in our business peak around the COVID restrictions. In Q2, as you know, we received a further $255 million proceeds from convertible bond sale, with which we reduced our asset-backed loan to zero. These changes combined led us to a strong cash position at the end of the year of $157.3 million. We look forward and pro forma for the IPO. We significantly strengthen our balance sheet, making it a key element to enable us to continue our goal of being the number one online used car player in Europe. Through IPO at the beginning of February 2021, we gathered approximately 971 million euros of net IPO proceeds and repaid 232 to the convertible bond holders for the cash settled portion of the convertible. The convertible bond is now fully repaid. This results in a pro forma cash position of 896 million, excluding any other cash changes in the period since January 1st. Following the closing of our innovative asset-backed securitization at the beginning of January, we had 186 million under the new facility given the inventory level at the end of January. In addition, we have another 299 million in additional commitments, meaning that our total available capital is as high as almost 1.4 billion euros. This amount of firepower allows us to fully focus on scaling our business and on creating the best experience for our sellers and buyers alike. We wanted to highlight a key achievement in the early months of Q1, which was the closing of our new and innovative asset-backed securitization facility, which is fully available since January 29th. Under this new facility, we're able to borrow up to 90% loan to value of eligible inventory at below 2% interest rate. This ensures that we can grow our inventory to fuel the growth of Autohero in the future. As the facility is investment-grade, rated privately by two renowned rating agencies, it allows us to easily increase the commitment in the future should the needs arise. Lastly, a key feature of this first-of-its-kind facility for used cars, it is non-recourse, only secured through the inventory held. A fraction of the risk is retained by us through the junior tranche committed by Auto One Group. At the same time, the flexible revolver structure of the facility allows us to optimize the cost of carry, permitting us to fund the facility with more junior notes to put our excess cash to the best use possible. We look into the next page. In terms of Outlook, next page, please. For 2021, we will focus on delivering six key objectives. The first three in Autohero and the second three in our merchant business. We have three focus areas for Autohero. First, we want to continue Autohero's strong unit growth and continue to deliver on units. Second, we will make significant increases in the Autohero brand and building that brand, as we discussed during the IPO, to get to our 50% brand recognition for people looking to buy cars. Thirdly, we want to maintain the Autohero GPU at the current levels. Around the merchant business, we also have three focus areas. First, we want to move C2B back into growth territory. Second, we want to continue the very strong growth that we've seen in our remarketing business. And finally, maintain a strong GPU level above full year 2020, but below the record years, the second half of 2020, mainly because of the dilutive effect of the much higher remarketing growth within the merchant business. We go to the next page. So in this, our first post IPO call, we want to take these six key objectives and the model guidance we provided at the IPO and translate that into the following financial guidance for 2021. Overall, we expect between 592 and 638,000 units across the group. In the merchant segment, we expect to sell between 560 and 600,000 units. In the IPO perspectives, we indicated that for 2021, the merchant segments should sell 580,000 cars based on the lockdowns ending at the end of Q1. The extension of lockdowns adds, therefore, some risk as we see a dampening effect for people who need to drop off their cars, either by our drop-off centers or for offline centers. As a result of that, we've widened that range, but still believe that we can achieve the 580,000 for the year. In Autohero, we've seen a very positive development in Q1 as per our ad hoc yesterday. We therefore believe that we will now sell 32 to 38,000 units in Autohero for the full year 2021 compared to the 29,000 plus units we had as per the IPO perspectives. Based on these unit numbers, we believe we will generate between 3.8 and 4.2 billion euros of revenues for 2021 and 360 to 410 million of gross profit, both significant enhancements on 2020. Given our strong investment into Autohero and the brand building and operations, we see a decline in the adjusted EBITDA between minus two and minus two and a half percent. All in all, we believe that we are very well positioned to deliver a strong 2021 and growth thereafter. And with that, we can open up to Q&A.