Release Date: July 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aston Martin Lagonda Global Holdings PLC (AMGDF, Financial) successfully delivered two new models on time in the first half of 2024, receiving significant acclaim and strong customer demand.
- The DB12 model is sold out for 2024, with orders extending into 2025, indicating strong market reception.
- The company achieved a significant improvement in gross margin to 38.6% in the first half of 2024, approaching their full-year target of circa 40%.
- Aston Martin Lagonda Global Holdings PLC (AMGDF) secured improved five-year terms following credit rating agency upgrades, enhancing liquidity through a new increased revolving credit facility (RCF).
- The company is on track to generate positive free cash flow in the second half of 2024 and sustainably thereafter, supported by a significant volume ramp-up.
Negative Points
- First half total wholesales decreased by 32% to 1,998 units due to the product portfolio transition.
- Revenue decreased by 11% compared to the first half of 2023, impacted by the planned core portfolio transition and foreign exchange headwinds.
- Adjusted EBITDA of GBP62 million decreased by 23%, resulting in a 160 basis point margin dilution to 10.3%.
- Net debt position increased to GBP1.19 billion following the refinancing in Q1, with a net leverage ratio of 4.2 times.
- China's wholesale volumes decreased by 72% compared to H1 2023, reflecting market dynamics and the timing of new model deliveries.
Q & A Highlights
Q: Can you give us some insight into the recent order momentum for the DB12 and how the order book developed over the 12 months? Should we expect a similar pattern for the Vantage and the new Vanquish?
A: The DB12 has gained significant traction, selling out for the balance of this year with orders extending into next year. The strong journalist reviews have driven customer interest. We expect similar momentum for the Vantage and Vanquish once demonstrators are available at dealerships.
Q: What is your outlook for the Chinese market given the current pressures?
A: Our sales decrease in China is more due to product portfolio transition rather than market difficulties. We expect China to be one of our most important markets going forward, despite current challenges.
Q: Can you discuss the phasing of Q3 and Q4 in terms of wholesale revenue, gross margin, and free cash flow?
A: Q3 wholesales will be materially higher than Q2, but Q4 will be the largest quarter. Core ASP will continue to increase, with Q4 being the high point due to Vanquish deliveries. Gross margin will fluctuate, with fewer Specials in Q3 and more in Q4.
Q: What are the most pressing tasks for the new CEO, Adrian Hallmark?
A: Adrian will step into Amedeo's shoes and continue with the current agenda. His wealth of experience will bring new vision and ideas, but it will be business as usual and continuity.
Q: Can you confirm that all core models will achieve a minimum 40% gross margin?
A: Yes, the 40% gross margin target applies to all core models. The first half of the year was less efficient due to lower volumes, but we expect core margins to improve as volumes ramp up in the second half.
Q: When do you expect to have a good sense of real customer demand for the new Vantage and DBX?
A: Dealers are just receiving Vantage demonstrators, which will significantly ramp up customer demand in Q3 and Q4. For the Vanquish, dealers will start receiving cars in Q4, with demand ramping up later in Q4 and into 2025.
Q: How should we think about the revenue contribution from Specials in 2025?
A: The focus will shift to Valhalla deliveries in early 2025. We have a plan for future Specials, and they will continue to be an important part of our mix. Core car phasing will be smoother in 2025 compared to this year.
Q: Can you provide more details on the current conversations with dealers ahead of the product ramp?
A: Dealers are excited about the new portfolio. There are no additional incentives; the demand for critically acclaimed vehicles is driving customer interest.
Q: Will you consider adjusting the governance of Aston Martin with the new CEO coming in?
A: No, the governance structure will remain the same as it has been with Amedeo. If it isn't broken, we don't need to fix it.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
