McLaren's 1st Half Results

[SSO]

McLaren released their 1st half 2020 results last week. Actually a bit better than expected. YTG also looks a lot more positive.

[PompeyReece]

You forgot to mention this blog too

https://karenable.com/mclarens-1st-half-2020-resul...

[Oaky]

https://investors.mclaren.com/sites/mclaren-ir/fil...

This?

[Oaky]

Haven’t scanned the numbers yet just looked at SSO’s article. H2 production of high margin cars doesn’t equal GP until sold and delivered which is almost certainly running way late and the credit terms thing is cash flow which isn’t an issue (this year). So 2020 is f’d.

[SSO]

PompeyReece said:

You forgot to mention this blog too

https://karenable.com/mclarens-1st-half-2020-resul...

[SSO]

Oaky said:

Haven’t scanned the numbers yet just looked at SSO’s article. H2 production of high margin cars doesn’t equal GP until sold and delivered which is almost certainly running way late and the credit terms thing is cash flow which isn’t an issue (this year). So 2020 is f’d.

McLaren has a long history of air freighting cars to get them delivered before the end of the year. I would expect more of the same coming.

[Cheib]

SSO’s blog article a great read as ever. They’ve certainly done a great job of navigating some very tricky times....those debt maturities in two years will make life interesting though. If they can get operations on a steady footing they will easily refinance and hopefully build some good momentum.

It’s staggering how badly managed both McLaren and Aston have been managed over the last two or three years....it is perhaps a very good thing as SSO points out that McLaren are being run by someone who is bringing perspectives from another business sector.

[SSO]

Cheib said:

SSO’s blog article a great read as ever. They’ve certainly done a great job of navigating some very tricky times....those debt maturities in two years will make life interesting though. If they can get operations on a steady footing they will easily refinance and hopefully build some good momentum.

It’s staggering how badly managed both McLaren and Aston have been managed over the last two or three years....it is perhaps a very good thing as SSO points out that McLaren are being run by someone who is bringing perspectives from another business sector.

Thanks.

I did meet the new McLaren Executive Chairman about a decade ago in London when he was running Diageo. He's quite impressive.

[Purso]

Thank you SSO fascinating read! Do you think that McLaren will start diluting the LT name and replace it with the R as the track/limited run model to have?

[Ferruccio]

SSO said:

Cheib said:

SSO’s blog article a great read as ever. They’ve certainly done a great job of navigating some very tricky times....those debt maturities in two years will make life interesting though. If they can get operations on a steady footing they will easily refinance and hopefully build some good momentum.

It’s staggering how badly managed both McLaren and Aston have been managed over the last two or three years....it is perhaps a very good thing as SSO points out that McLaren are being run by someone who is bringing perspectives from another business sector.

Thanks.

I did meet the new McLaren Executive Chairman about a decade ago in London when he was running Diageo. He's quite impressive.

A long way from being cash flow positive, which any business needs to be sustainable.
I’m surprised he took it on. Maybe a petrolhead? But I’ve seen a number of good business people destroy their reputation by failing to do something that was effectively impossible.
We shall see.

[SSO]

Ferruccio said:

SSO said:

Cheib said:

SSO’s blog article a great read as ever. They’ve certainly done a great job of navigating some very tricky times....those debt maturities in two years will make life interesting though. If they can get operations on a steady footing they will easily refinance and hopefully build some good momentum.

It’s staggering how badly managed both McLaren and Aston have been managed over the last two or three years....it is perhaps a very good thing as SSO points out that McLaren are being run by someone who is bringing perspectives from another business sector.

Thanks.

I did meet the new McLaren Executive Chairman about a decade ago in London when he was running Diageo. He's quite impressive.

A long way from being cash flow positive, which any business needs to be sustainable.
I’m surprised he took it on. Maybe a petrolhead? But I’ve seen a number of good business people destroy their reputation by failing to do something that was effectively impossible.
We shall see.

My guess is Walsh took it on for two reasons, he got a long history with McLaren going back to when Johnnie Walker was one of the major McLaren F1 sponsors back in the 00's (so yes a bit of a petrolhead/F1 fan), and the Bahrainis promised to make sure the financing to get the business turned around would be made available. That a probably a major payday if he gets it to a successful IPO in the next 5 years.

[SSO]

Purso said:

Thank you SSO fascinating read! Do you think that McLaren will start diluting the LT name and replace it with the R as the track/limited run model to have?

Hard to tell at this point. From what little I know of the 600LT vs. 620R, the LT is still a great road car while being highly capable on the track, the R is really a track car that you can drive home from the track but too hard to really enjoy driving on the road.

[Ferruccio]

SSO said:

Ferruccio said:

SSO said:

Cheib said:

SSO’s blog article a great read as ever. They’ve certainly done a great job of navigating some very tricky times....those debt maturities in two years will make life interesting though. If they can get operations on a steady footing they will easily refinance and hopefully build some good momentum.

It’s staggering how badly managed both McLaren and Aston have been managed over the last two or three years....it is perhaps a very good thing as SSO points out that McLaren are being run by someone who is bringing perspectives from another business sector.

Thanks.

I did meet the new McLaren Executive Chairman about a decade ago in London when he was running Diageo. He's quite impressive.

A long way from being cash flow positive, which any business needs to be sustainable.
I’m surprised he took it on. Maybe a petrolhead? But I’ve seen a number of good business people destroy their reputation by failing to do something that was effectively impossible.
We shall see.

My guess is Walsh took it on for two reasons, he got a long history with McLaren going back to when Johnnie Walker was one of the major McLaren F1 sponsors back in the 00's (so yes a bit of a petrolhead/F1 fan), and the Bahrainis promised to make sure the financing to get the business turned around would be made available. That a probably a major payday if he gets it to a successful IPO in the next 5 years.

Even with its traditionally very short memory. the market will be extremely wary after the AML debacle.

[SSO]

Ferruccio said:

SSO said:

Ferruccio said:

SSO said:

Cheib said:

SSO’s blog article a great read as ever. They’ve certainly done a great job of navigating some very tricky times....those debt maturities in two years will make life interesting though. If they can get operations on a steady footing they will easily refinance and hopefully build some good momentum.

It’s staggering how badly managed both McLaren and Aston have been managed over the last two or three years....it is perhaps a very good thing as SSO points out that McLaren are being run by someone who is bringing perspectives from another business sector.

Thanks.

I did meet the new McLaren Executive Chairman about a decade ago in London when he was running Diageo. He's quite impressive.

A long way from being cash flow positive, which any business needs to be sustainable.
I’m surprised he took it on. Maybe a petrolhead? But I’ve seen a number of good business people destroy their reputation by failing to do something that was effectively impossible.
We shall see.

My guess is Walsh took it on for two reasons, he got a long history with McLaren going back to when Johnnie Walker was one of the major McLaren F1 sponsors back in the 00's (so yes a bit of a petrolhead/F1 fan), and the Bahrainis promised to make sure the financing to get the business turned around would be made available. That a probably a major payday if he gets it to a successful IPO in the next 5 years.

Even with its traditionally very short memory. the market will be extremely wary after the AML debacle.

By the time McLaren gets to an IPO it will have been 7 years since the AML fiasco. Most of the current crop of analysts will have long moved on. I doubt many will remember or care by then.

[Cheib]

SSO said:

Ferruccio said:

SSO said:

Ferruccio said:

SSO said:

Cheib said:

SSO’s blog article a great read as ever. They’ve certainly done a great job of navigating some very tricky times....those debt maturities in two years will make life interesting though. If they can get operations on a steady footing they will easily refinance and hopefully build some good momentum.

It’s staggering how badly managed both McLaren and Aston have been managed over the last two or three years....it is perhaps a very good thing as SSO points out that McLaren are being run by someone who is bringing perspectives from another business sector.

Thanks.

I did meet the new McLaren Executive Chairman about a decade ago in London when he was running Diageo. He's quite impressive.

A long way from being cash flow positive, which any business needs to be sustainable.
I’m surprised he took it on. Maybe a petrolhead? But I’ve seen a number of good business people destroy their reputation by failing to do something that was effectively impossible.
We shall see.

My guess is Walsh took it on for two reasons, he got a long history with McLaren going back to when Johnnie Walker was one of the major McLaren F1 sponsors back in the 00's (so yes a bit of a petrolhead/F1 fan), and the Bahrainis promised to make sure the financing to get the business turned around would be made available. That a probably a major payday if he gets it to a successful IPO in the next 5 years.

Even with its traditionally very short memory. the market will be extremely wary after the AML debacle.

By the time McLaren gets to an IPO it will have been 7 years since the AML fiasco. Most of the current crop of analysts will have long moved on. I doubt many will remember or care by then.

The AML fiasco was largely driven by a ludicrous multiple which unfortunately quite a lot of people fell for. You can only IPO a company for a ludicrous multiple if there are a legion of gullible investors. Admittedly even at a market cap of half what it was IPO’d for it would still have been painful....but as SSO says people have short memories and an IPO which also enabled the company to deleverage would be very different. Aston would be in a very different situation if some of that IPO money had been used to do that.

[Ferruccio]

Cheib said:

SSO said:

Ferruccio said:

SSO said:

Ferruccio said:

SSO said:

Cheib said:

SSO’s blog article a great read as ever. They’ve certainly done a great job of navigating some very tricky times....those debt maturities in two years will make life interesting though. If they can get operations on a steady footing they will easily refinance and hopefully build some good momentum.

It’s staggering how badly managed both McLaren and Aston have been managed over the last two or three years....it is perhaps a very good thing as SSO points out that McLaren are being run by someone who is bringing perspectives from another business sector.

Thanks.

I did meet the new McLaren Executive Chairman about a decade ago in London when he was running Diageo. He's quite impressive.

A long way from being cash flow positive, which any business needs to be sustainable.
I’m surprised he took it on. Maybe a petrolhead? But I’ve seen a number of good business people destroy their reputation by failing to do something that was effectively impossible.
We shall see.

My guess is Walsh took it on for two reasons, he got a long history with McLaren going back to when Johnnie Walker was one of the major McLaren F1 sponsors back in the 00's (so yes a bit of a petrolhead/F1 fan), and the Bahrainis promised to make sure the financing to get the business turned around would be made available. That a probably a major payday if he gets it to a successful IPO in the next 5 years.

Even with its traditionally very short memory. the market will be extremely wary after the AML debacle.

By the time McLaren gets to an IPO it will have been 7 years since the AML fiasco. Most of the current crop of analysts will have long moved on. I doubt many will remember or care by then.

The AML fiasco was largely driven by a ludicrous multiple which unfortunately quite a lot of people fell for. You can only IPO a company for a ludicrous multiple if there are a legion of gullible investors. Admittedly even at a market cap of half what it was IPO’d for it would still have been painful....but as SSO says people have short memories and an IPO which also enabled the company to deleverage would be very different. Aston would be in a very different situation if some of that IPO money had been used to do that.

Investors bought a plan.
What’s McLaren’s plan going to look like?

[Cheib]

Ferruccio said:

Investors bought a plan.
What’s McLaren’s plan going to look like?

Investors bought into a plan for Aston which didn’t really bear scrutiny. You’d hope McLaren’s would involve a credible deleveraging event.....until the can get leverage under control things will be precarious for them.

[SSO]

Cheib said:

Ferruccio said:

Investors bought a plan.
What’s McLaren’s plan going to look like?

Investors bought into a plan for Aston which didn’t really bear scrutiny. You’d hope McLaren’s would involve a credible deleveraging event.....until the can get leverage under control things will be precarious for them.

After the last six months, I would hope McLaren management has gotten the message very clearly on the need to deleverage.

[Ferruccio]

SSO said:

Cheib said:

Ferruccio said:

Investors bought a plan.
What’s McLaren’s plan going to look like?

Investors bought into a plan for Aston which didn’t really bear scrutiny. You’d hope McLaren’s would involve a credible deleveraging event.....until the can get leverage under control things will be precarious for them.

After the last six months, I would hope McLaren management has gotten the message very clearly on the need to deleverage.

Trouble is equity costs more than debt ultimately.

[Cheib]

Ferruccio said:

SSO said:

Cheib said:

Ferruccio said:

Investors bought a plan.
What’s McLaren’s plan going to look like?

Investors bought into a plan for Aston which didn’t really bear scrutiny. You’d hope McLaren’s would involve a credible deleveraging event.....until the can get leverage under control things will be precarious for them.

After the last six months, I would hope McLaren management has gotten the message very clearly on the need to deleverage.

Trouble is equity costs more than debt ultimately.

Ultimately equity becomes worthless if you can’t service debt.