Release Date: October 30, 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 launched the Vanquish in September, marking the sixth class-leading product launch in 16 months, revitalizing their product range.
- The company received overwhelmingly positive feedback from international automotive media for the Vanquish, validating its claim of delivering segment-leading products.
- The order book extends well into Q1 2025 across all model lines, indicating strong demand and future sales potential.
- The company is focused on maximizing the commercial potential of its brand and new models, aiming for higher gross and EBITDA margins in the midterm.
- Q3 financial performance showed improvement with wholesale volumes up 14%, revenue up 8%, and gross profits increased by 7% compared to the prior year.
Negative Points
- Continued volatility in global supply chains and macroeconomic challenges, particularly in China, have impacted the company's performance in 2024.
- The company had to adjust production plans due to component shortages, affecting the smoothness of operations.
- Liquidity concerns remain as the company expects further cash outflow in Q4, despite improved free cash flow trends.
- The order book only extends into Q1 2025, which is shorter than the desired 6 to 8 months coverage, indicating potential challenges in sustaining demand.
- The company's personalization options are currently limited compared to competitors, which could impact revenue potential from upselling.
Q & A Highlights
Q: Given your experience at Bentley, why do you think Bentley achieves higher volumes than Aston Martin with a seemingly smaller product lineup?
A: Adrian Hallmark, Executive Chairman, explained that Bentley's SUV, the Bentayga, has been in the market longer than Aston Martin's DBX, which affects nameplate awareness. Bentley's product range is more focused, while Aston Martin offers a broader range with diverse price points. Despite these differences, Aston Martin sees potential for growth, especially with the DBS model.
Q: How comfortable are you with the current liquidity given the cash flow situation?
A: Douglas Lafferty, CFO, stated that liquidity is expected to remain around £300 million by year-end, which is within their acceptable range. Despite expected outflows in Q4, the business is operating at a free cash flow positive point of view, excluding deposit unwind and interest payments.
Q: What are the 2025 ambitions, and what level of volume and pricing is required to achieve them?
A: The company aims for £500 million in EBITDA by 2025, expecting volume increases due to a full year of production for refreshed models like the DBX and the launch of Valhalla. The stable production plan and incremental launches support this target.
Q: What is the strategy for personalizations, and how important will they be for achieving midterm margin ambitions?
A: Adrian Hallmark emphasized the potential in increasing personalization options, which are currently lower than competitors. The company plans to systematically launch more content and enhance bespoke offerings, aiming to increase revenue per car and customer satisfaction.
Q: Why does the order book only extend into Q1 2025, and what are the impediments to further growth?
A: The gap between product launches and customer engagement is longer than desired, affecting order book length. The company plans to shorten this gap and focus more on localized demand creation to improve order book strength.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
