Aston Martin Lagonda Global Q1 2025 Earnings Report

Aston Martin Lagonda Global EPS Results

• Actual EPS: GBX 44.90
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Aston Martin Lagonda Global Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Aston Martin Lagonda Global Announcement Details

• Quarter: Q1 2025
• Date: 4/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, April 30, 2025
• Conference Call Time: 3:30AM ET

Aston Martin’s vision is to be the world’s most desirable, ultra-luxury British brand, creating the most exquisitely addictive performance cars. Founded in 1913 by Lionel Martin and Robert Bamford, Aston Martin is acknowledged as an iconic global brand synonymous with style, luxury, performance, and exclusivity. Aston Martin fuses the latest technology, time honoured craftsmanship and beautiful styling to produce a range of critically acclaimed luxury models including the Vantage, DB12, Vanquish, DBX and its first mid-engined plug-in hybrid, Valhalla. Aligned with its Racing. Green. sustainability strategy, Aston Martin is developing alternatives to the Internal Combustion Engine with a blended drivetrain approach, and plans to have a line-up of electrified sports cars and SUVs. Based in Gaydon, England, Aston Martin Lagonda designs, creates, and exports cars which are sold in more than 50 countries around the world. Its sports cars are manufactured in Gaydon with its luxury DBX SUV range proudly manufactured in St Athan, Wales. Lagonda was founded in 1899 and came together with Aston Martin in 1947 when both were purchased by the late Sir David Brown, and the company is now listed on the London Stock Exchange as Aston Martin Lagonda Global (LON:AML).

Aston Martin Lagonda Global Q1 2025 Earnings Call Transcript

Key Takeaways

• Retail sales to customers outpaced wholesale volumes by ~50%, reducing dealer stock and aligning supply with strong underlying demand.
• Core average selling price rose by ~10% in Q1 driven by the reinvigorated product portfolio and favourable mix, with further growth expected in H2.
• Three new derivatives (Vantage Roadster, Vanquish Volante and the new DBX S) were launched and the Valhalla supercar remains on track for H2 delivery, supporting sustainable growth and margin targets.
• Management trimmed 2025 wholesale volume guidance due to the recently imposed 25% US auto tariffs and is developing mitigation measures, including potential pricing adjustments.
• The company reaffirmed its targets of positive adjusted EBIT for the full year 2025 and positive free cash flow generation in H2.

Presentation

[Adrian Hallmark, CEO at Aston Martin]

Good morning, everyone. Thank you for joining the Aston Martin quarter one 2025 results call. I'm Adrian Hallmark, CEO of Aston Martin Lagonda, and alongside me today I have Doug Lafferty, CFO, who will shortly take you through quarter one financial headlines. As I outlined at the full-year results in February, we have undertaken a disciplined approach to production and stock reduction at the start of this year. This is reflected in our quarter one performance, with the wholesales broadly in line with the prior year as guided, but it's worth noting that the retail sales to customers significantly outpaced wholesale volumes by around 50%. We expect this positive trend to continue through the first half of 2025 as we destock and balance the supply with the underlying demand for our ultra-luxury, high-performance cars.

[Adrian Hallmark, CEO at Aston Martin]

Over the last couple of years, Aston Martin has been through an extremely intense period of product development and launch, and as a result, we can now offer our customers a fully reinvigorated core product portfolio, the benefits of which are demonstrated by the circa 10% increase in our quarter one core average selling price. That is just the start. Our production innovation focus, which will support sustainable, profitable growth in the future, has already resulted this year in the launch of three new derivatives of our core models. These include the Vantage Roadster, the Vanquish Volante, in addition to today's announcement of the new DBX S model, which from quarter four of this year will deliver even more power, reduced weight, and offer a more assertive and sporty design to complement our SUV product.

[Adrian Hallmark, CEO at Aston Martin]

The S name and the S range has long been associated with Aston Martin, and today's news highlights that this remains very much part of our strategy going forward, and there's more to come from this limited, oh, sorry, derivative approach. One of the key milestones for us this year is delivering our groundbreaking supercar Valhalla. We're now in the final phase of testing for this mid-engine PHEV, ahead of deliveries commencing in the second half of this year. Executing this product launch to plan will further demonstrate our improved operational executional focus, one of the key four areas that are highlighted at the full-year results earlier this year. Alongside the launch of the three new core derivatives already announced, this will support the growth both for this year and also into 2026, and support our financial targets.

[Adrian Hallmark, CEO at Aston Martin]

As a reminder, they are, for this year, to be EBIT positive for the full year and free cash flow positive in the second half of this year. We remain firmly focused on continuing our transformation from a high-potential business to a high-performing one. We're making progress in all key areas of our transformation, such as cost optimization, productivity improvements, and quality enhancements. Work to date has identified a number of opportunities, and I expect to be able to share more color on these later in the year as they mature. Finally, like everyone in the global automotive sector this week and beyond, we've been monitoring events linked to the recently announced U.S. tariffs. The additional 25% tariff imposed on the automotive sector for imports into the U.S. creates a high degree of uncertainty and makes planning and forecasting somewhat more challenging.

[Adrian Hallmark, CEO at Aston Martin]

We had already prepared for the worst case, and given the phasing of our wholesales at the start of this year, we were able to limit imports of new cars into the U.S. during April and May. This provides us a window of time in which we can refine our strategy, watch the reaction of competitors and any changes to policy, and take full consideration for all of our key stakeholders before making a commitment and communication. Our initial analysis, which we communicated at the end of March, has already resulted in us making a slight reduction to our 2025 wholesale volume guidance, so we're largely prepared.

[Adrian Hallmark, CEO at Aston Martin]

We're now looking at a number of measures that we may implement to seek to reduce the impact to the business of the U.S. tariffs, and we'll outline these, including any updated pricing strategy at the appropriate time in the coming weeks and months. We strongly welcome the U.K. government's efforts to engage with the U.S. administration on negotiating a trade agreement that would benefit all stakeholders. Given the scale of tariffs on the U.K. car industry, getting an agreement in place for U.K. makers as soon as possible is and should be a top priority for government and the industry.

[Adrian Hallmark, CEO at Aston Martin]

Whilst acknowledging that the ramifications on our business, the automotive sector, and the global economy from the tariffs may make things harder going forward, we continue to expect to achieve our key financial targets for the year, being the delivery of positive adjusted EBIT for the full year and positive free cash flow generation in the second half. On that note, to take us through the detail, I'd like to hand over to Doug to talk about the quarter one financials.

[Doug Lafferty, CFO at Aston Martin]

Thanks, Adrian. Good morning, everyone. I know it's a busy morning for you all, so thanks for joining. As Adrian's mentioned, overall, our Q1 performance was in line with the guidance that we provided you in February, with our guidance for 2025 remaining unchanged since our update in March, where we made that slight reduction to our wholesale volumes linked to the imposition of the additional U.S. tariffs. Revenue and total ASP were impacted by fewer specials deliveries in Q1 as we neared the completion of the Valiant deliveries. As a result, revenue decreased by 13% and total ASP decreased by 15%. However, core ASP increased by 10%, driven by our next-generation range of vehicles, including Vanquish, and a continued strong options contribution at around 18% of core revenue.

[Doug Lafferty, CFO at Aston Martin]

With Q2 in mind, we expect a similar trend with total volumes broadly in line with the prior year, with the same impact on the financials from the mix of fewer specials. This also reflects our planned ERP rollout at Gaydon, which will impact production for around three weeks in Q2. The fewer specials deliveries are also impacting gross profit and gross margin, as expected. Additionally, we chose to invest around GBP 15 million in delivering on our excellence in product quality and customer satisfaction. The investment predominantly relates to enhancing the software of all next-generation cars in the market to ensure optimal user experience. We continue to target over 40% gross margin from all new products and expect benefits from increased personalization opportunities, with an enhanced range of options becoming available to customers from the second half of 2025 onwards.

[Doug Lafferty, CFO at Aston Martin]

As we ramp up production in H2, benefiting from additional derivatives and the contribution from Valhalla, we expect to deliver a circa 40% gross margin for the full year. Whilst adjusted EBITDA decreased year-on-year by GBP 24 million to -GBP 4 million, reflecting the gross profit movement, this was partially offset by a 13% decrease in adjusted operating expenses, excluding DNA, as we continue our focus on optimizing our cost base and driving operating leverage. Adjusted EBIT decreased by 13% to -GBP 65 million, with DNA decreasing by 22% to GBP 60 million, reflecting the lower specials volumes. The company's previously announced organizational adjustments to ensure the business is appropriately resourced for its future plans are progressing as planned, and we remain on track with our full-year guidance to deliver a reduction in adjusted operating expenses, excluding DNA, to around GBP 300 million.

[Doug Lafferty, CFO at Aston Martin]

With CapEx broadly in line with the prior year and a reduced net cash outflow from operating activities, largely driven by a guided reduction in working capital outflow, free cash outflow in Q1 2025 decreased by GBP 70 million. As mentioned at the full-year results, compared to 2024, we expect a working capital benefit from Valhalla deposit collections through the course of the year ahead of deliveries commencing. This was evidenced in Q1 with a net deposit inflow of GBP 18 million, compared with a GBP 33 million outflow in the prior year. Q2 2025 free cash outflow is expected to be broadly in line with the prior year, despite including the semi-annual loan note interest payment, which in the prior year was paid in Q1 as part of the refinancing exercise.

[Doug Lafferty, CFO at Aston Martin]

Liquidity, as we guided, was around GBP 400 million at the end of the first quarter, and this is before the expected liquidity benefit of over GBP 125 million associated with the proposed investment from the Yutri Consortium and the proposed sale of our investment in AMR, which we announced on the 31st of March. Finally, and just to reiterate what Adrian's mentioned, we'll continue to monitor global events very closely, in particular relating to the impact of the recent U.S. tariffs, and we'll try to remain as agile as we can be as the external environment continues to evolve. Despite the increased levels of uncertainty, we still expect to make significant improvements across all key financial performance metrics in 2025 as compared to 2024, including our expectation of delivering that positive adjusted EBIT for the full year and free cash flow generation in the second half.

[Doug Lafferty, CFO at Aston Martin]

With that, I'll hand back to the operator so that we can take some questions in the time that we've got remaining.

[Operator]

Thank you. If you'd like to ask a question on today's call, please press star followed by one on your telephone keypad now to enter the queue. When preparing to ask a question, please ensure you are unmuted locally. That's star followed by one. Now, our first question today comes from Harry Martin at Bernstein. Harry, please go ahead. Your line is open.

[Harry Martin, Research Analyst at Bernstein]

Hi, good morning, Adrian, and good morning, Doug. I will have three questions, if that's okay. The first one on the 10% core ASP increase, was all of that mix, or is there any sort of underlying price increases in there? If you could help split that between model mix and regional mix, that would be useful. It would be good to hear your thoughts on how core ASP growth evolves through the rest of the year as well, if that's possible. Secondly, on the U.S. tariffs, roughly how many months of dealer stock are there in the U.S. already? At what point would you communicate any price increases if they were to come? The final question I have is just on the Valhalla. What's the current status of the order book of the remaining slots to be sold?

[Harry Martin, Research Analyst at Bernstein]

You've still flagged supply chain disruptions to the launch as a major risk factor. What is your kind of line of sight here on the early models and the production into the second half of the year? Thank you very much.

[Doug Lafferty, CFO at Aston Martin]

Morning, Harry. It's Doug. I'll take the first one, and then Adrian will cover the second two. I think on the ASP for Q1, it was really the Vanquish that drove the lion's share of the improvement. We did not have any—I do not recall—I do not think we had any V12 Vanquish or DBS at the first part of last year. That is the big change in terms of the mix improvement. There is a little bit of pricing impact in there as you compound price increases from last year, and the options take slightly improved versus Q1, but the lion's share was the Vanquish. With regards to how do we expect core ASP to evolve as we move through the rest of the year, I think we expect it to continue to grow, particularly in the second half.

[Doug Lafferty, CFO at Aston Martin]

We're off to a good start, and we're seeing the benefits of the new range all being in the market now, and we'd expect to see that continue to benefit us as we move through 2025.

[Adrian Hallmark, CEO at Aston Martin]

Okay. In terms of U.S. tariffs, we will not comment in absolute units on U.S. stocks, but just to give you an indication of the approach that we took, as mentioned in the intro, we anticipated the worst case that there would be a tariff imposed in April. We had imbalanced our production and favored the U.S. at the back end of last year and the early part of this year so that we could get a reasonable amount of cars into the U.S. prior to the tariffs being applied. That gave us the opportunity to reduce production in other countries and switch back to U.S. production as we get into quarter two.

[Adrian Hallmark, CEO at Aston Martin]

What it also means is that we have a window where we can sell down the stock that's in the U.S., and we have enough stock to carry through April, May, and the early part of June. We will start shipping late May, early June when we're in a good shape and we know what we're doing with the tariff and price situation. I think it's fair to say that it's still a situation that is in free float. Whilst the tariffs have been imposed, there are lots of discussions going on about a U.K.-U.S. trade agreement, and that is possible. We're very optimistic about that, and the government we know are very focused on it. We do have already our pricing scenarios on standby.

[Adrian Hallmark, CEO at Aston Martin]

I'm not going to say what they are, but I will say we're not going to pass on the full effect, and we're not going to absorb the full effect. There will be a mixed approach to that, but we're not going to declare it until we have to, and that's probably mid to late May. We can also take the opportunity there to watch what competition do, as well as see if the tariffs stay as originally forecast. Rest assured, we have made the volume adjustments for the tariff-affected cars for the rest of the year, so that's where the volume came out of. We do have a clear plan for what that could do in terms of volume effect, which we've done now. Whilst it's still volatile and anything could change, we're well prepared. Price increases we will declare sometime late May, you could expect.

[Adrian Hallmark, CEO at Aston Martin]

As far as Valhalla is concerned, the order book is strong. We're covered through 100% of this year and about 90% of next year, maybe a little more today because it changes every year. We have a few cars left to sell at the end of the life of the car, which is in two years' time. Literally, the cars are, as we speak, being shipped around the world to go into static display for customers to be able to see them. We've already had the second deposits from customers, and we're now loading those cars into production schedule so that they're ready for launch in the second half of this year. Finally, the supply chain that you mentioned, it's not so much supply chain issues with Valhalla. It's the product readiness because it is a highly complex program, but we are finished with the hardware.

[Adrian Hallmark, CEO at Aston Martin]

We're working on the detailed attributes and finesse of the way the car drives and the way all the systems interact. It's the fine-tuning stage of the program, and it's on track. Complicated car, we're reliant upon it for this year. It will be another benchmark for the company and for the industry in price and performance and technology. We're in great shape with the order book and in really, really good shape with the project itself, normal project issues aside.

[Harry Martin, Research Analyst at Bernstein]

That's very clear. Thank you.

[Operator]

The next question comes from Arya Ghassemieh from Barclays. Arya, your line is open. Please go ahead.

[Arya Ghassemieh, Equity Research Analyst at Barclays]

Morning. Thanks for taking our questions also. First question is on the order book. At the full-year results stage, I believe you talked quite a bit about the need for order book simulation and improving the quality of the order book as well. Could you update us, please, on your progress here and how your initiatives are going? If you could give a bit more color also on how the order book is shaping by model, that would be very helpful. The second question is on dealer inventory. It was encouraging to see retail outpacing wholesale so strongly in the first quarter. Just wondering if you could maybe quantify how much more inventory reduction work you need to do in the coming quarters and how retail might trend relative to wholesale for the rest of the year. Thank you.

[Adrian Hallmark, CEO at Aston Martin]

Okay. In terms of order book, we won't go through the order book by model. Needless to say that we're still around five months on average, and that's weighted average. The Valhalla is a lot longer. It's probably 17 months. Vanquish is the second highest, and we have an enormous order book for that. Also, excess demand for some of the derivatives, specifically the Volante, that's not even launched yet. There's still a job to do to get us to a position where we're six months plus on all models. Without going through the detail, we're still working on that. The stock reduction activity and the production balancing activity that I've already mentioned, which we've already made great strides on, will continue through the first half of this year.

[Adrian Hallmark, CEO at Aston Martin]

It is already baked into our plans that we have already declared in February and are reinforcing today. In terms of dealer inventory, you can do the maths. You probably already have. We have delivered just under 1,000 wholesales in the first quarter. The retails were almost 50% higher than that. You can work out what that equates to. That directly is the reduction in dealer stock, which is significant. We expect to see that continue, not at the same rate of reduction, but still reducing as we get to the half-year point and then stabilizing at that new level for the rest of the year as we introduce new derivatives into the product portfolio.

[Adrian Hallmark, CEO at Aston Martin]

What I would say, just to give you a flavor of this, if we maintain that midpoint stock level throughout the back end of the year, you can imagine that by adding in the Volante, the Roadster, and Valhalla, even though they will flow through, the core stock levels of the existing cars that we have today will be significantly lower than they are today. Whilst the number may drop down and stay stable, the mix will move towards those new derivatives, and the core products will reduce further. This will further enhance the coverage per model from that five-month average position. I hope that gives you enough flavor.

[Arya Ghassemieh, Equity Research Analyst at Barclays]

Great. Thank you very much.

[Operator]

The next question comes from Akshat Kacker from JP Morgan. Your line is now open. Please go ahead.

[Akshat Kacker, Equity Research VP at JPMorgan]

Thank you. Morning, Adrian and Doug. I have three questions to you. The first one is a clarification on the order book. You say it extends up to five months. Now, when I think about your wholesale and production run rates, it is expected to look very different in the first half of this year versus where you were in the second half of the last year. Can I confirm, when you say up to five months, is that based on the current production run rate, or is that on your expected ramp in the second half? Also, when you comment on retails running 50% over your current wholesales, could you give us more details on the region there? How is that different in China versus Europe and the U.S., please? That's the first question. The second question is around capital investments.

[Akshat Kacker, Equity Research VP at JPMorgan]

Obviously, needless to say that we are in a very uncertain economic environment, and it's very volatile out there. How much flexibility do you have in the CapEx spend in the business, given you are through all the major product refreshes and even electrification targets might be pushed back? The last question is on the software-related product quality issues you've had. Are you confident that has been resolved going forward? Also, if there would be any more financial impact from recall on the vehicles on the road or in dealer stock, please? Thank you so much.

[Adrian Hallmark, CEO at Aston Martin]

Right. I'll kick off. I counted four questions there, but we'll still answer them. First of all, the order book, five months, it is absolutely based around the forward build schedule, not the backward sales rate. Yeah, it's always forward-looking. In terms of retails, we won't go through the regional mix. What I will say is three things. Number one, China, we're not overly dependent on China. We were never more than 10%, and it's dropped even further as a result of the situation economically there in the past 12 to 18 months. We see no immediate signs of recovery in China, but that's already baked into our planning. The good news is we are at least delivering what we've written down. Most of the world markets are on track.

[Adrian Hallmark, CEO at Aston Martin]

In fact, the U.S. has been one of the highlights in the first quarter, performing better than we had predicted in retail terms. That is before the tariffs were announced. It is not a gold rush to get in before the tariff level. I will not give you the April figures, but in April, again, on the non-tariff cars, the retail rate is consistent with what we have seen in the first quarter. Apart from China, which is still awaiting recovery, we are on track with our forecasts that we have written down, and we are in pretty good shape as we move forward. I will jump to the software topic and then hand over to Doug for the CapEx question.

[Adrian Hallmark, CEO at Aston Martin]

We have launched the software campaign, which was both to improve functionality of the car, things like the size of font on screens to make it more legible, the ability to switch off certain systems with two keystrokes instead of six, etc., etc., and the ease of connecting Apple CarPlay. We also have baked in some significant software quality improvements to improve the function of the car. This is what drove the incremental cost that Doug already mentioned in February. We are now 70% complete with that software update, which is 10 to 12 hours per car. Enormous. The result of that is fantastic. We have seen the net promoter score jump up to and even above, in some regions, stretch target as a result of satisfaction with the change that we have made on software.

[Adrian Hallmark, CEO at Aston Martin]

Software was the only real issue that we had in quality terms with these new launches. This is a step change, and it's worked.

[Doug Lafferty, CFO at Aston Martin]

Yeah. So just on the CapEx question, Akshat, yeah, look, we've got flexibility, but of course, you've got to keep in mind that if you utilize that flexibility at some point down the line, it's going to impact your product portfolio. There's a good degree of flexibility in terms of CapEx if we needed to react to a situation that was more crisis, let's say. Obviously, if you start pulling investment in future product pipeline, then at some point down the road, in a given number of months or years, it's going to impact your ability to generate revenue from new products. There is flexibility, but you've got to balance it with how does the portfolio and the pipeline look in the future. Equally, in the cost space, there's still a little bit of flexibility. Again, when you look at mitigations, you go to discretionary spend.

[Doug Lafferty, CFO at Aston Martin]

Of course, most of our discretionary spend is really an investment anyway. It is not like we are particularly frivolous with the money that we invest through SG&A. Of course, if needed, there is also opportunity there to turn some taps off. That is not what we are intending to do. We are intending to continue to invest the CapEx that we plan to do this year. As you know, part of our plan was to reduce SG&A anyway in a sort of measured way, including, as I said earlier, the impacts from adjusting the organization and what we need for the future. I hope that answers the question. Flexibility, yes, but at the moment, we are fully focused on delivering what we expected to deliver this year.

[Akshat Kacker, Equity Research VP at JPMorgan]

That's very helpful. Thank you.

[Adrian Hallmark, CEO at Aston Martin]

On that note, I think we're just about on time. Thank you, everybody, for attending. Thanks, Doug, for the insights. Let's see how the tariff situation develops. Thank you for your time, everybody.

[Doug Lafferty, CFO at Aston Martin]

Thanks, everyone.

[Operator]

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.

Participants

Analysts

• Doug Lafferty, CFO at Aston Martin
• Arya Ghassemieh, Equity Research Analyst at Barclays
• Akshat Kacker, Equity Research VP at JPMorgan
• Harry Martin, Research Analyst at Bernstein
• Adrian Hallmark, CEO at Aston Martin