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Earnings Transcript for ARGGY - Q4 Fiscal Year 2021

Operator: Good day, and thank you for standing by. Welcome to the Aston Martin Lagonda Full Year Results 2021 Webcast. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Laurence Stroll. Please go ahead.
Lawrence Stroll: Good morning. And thank you for joining us for this Q&A on our full-year results for 2021. I hope you have had the chance to read the release and also watch my address, and the presentation of the results from Tobias and Ken, that are on the IR section of our corporate website as usual. My second year as Executive Chairman of this iconic and great company, has been another of significant progress. We have successfully transitioned our operating model to that of an ultra-luxury brand, with customer demand well ahead of supply. Our core business is strong and delivered the plan, with substantially improved profitability. We have strengthened our teams, adding more luxury and automotive experience to the Board, broadening relate vintage experience at the executive level, and substantially bolstering our operational and development teams. The return of the Aston Martin name to Formula 1 grid has dramatically increased our brand exposure, desirability, global awareness in line with our growth ambitions. The Aston Martin Valkyrie program pushes the boundaries of what is possible to bring to market outside of the Formula 1 racing environment. We inherited a challenging program. And while it is disappointing that some deliveries were rescheduled from late 2021 following an in-depth review, and now under a dedicated team, we are confident of continuing to deliver these truly extraordinary vehicles to our customers with no compromises. We have a strong pipeline of extraordinary products to come, with both the DBX707 and V12 Vantage this year, and a full new-generation of front engine sports cars for 2023. This high-performance new portfolio will command much stronger pricing and profitability compared with the past, driving delivery of our financial targets. Our course to electrification is clear, with three of our product launches in 2021 featuring hybrid technology. Our first plug-in hybrid coming in 2024, our first battery electric vehicle targeted for launch in 2025, and all car lines will have the electrified powertrain option by 2026. When I invested, I knew this transformation will take four to five years to recreate Aston Martin as the world's most desirable, ultra-luxury British performance brand. We have made strong progress already and are well on plan to achieve our ambitious goal. And with that, we are now happy to take your questions.
Unidentified Company Representative: Operator, can we poll for the Q&A please?
Operator: Thank you. The participants will now begin the question-and-answer session. The first question comes from the line of George Galliers from Goldman Sachs. Please ask your question.
George Galliers: Thank you. Thank you for taking my question. Obviously, you're very excited and enthusiastic about the refresh or the complete revamp to the product line for 2023. Can you give us any insight into what kind of price increase you're expecting as a result of that? Is the first question. And then the second question is on the DBX707. Perhaps, you could give us some indication of what the initial reaction to that vehicle has been. And then, any insights into the exact timing from a production ramp over Q2 and Q3 would be very helpful. Thank you.
Lawrence Stroll: On the pricing of the sports cars, as I mentioned, with all cars, we are delivering now, starting with the DBX707. We will be working on a minimum of 40% contribution margins. That will have an increase of -- some of the cars more some of the cars less, depending on the models of prices, has not yet been finalized for 2023. But you are correct, that's much more than a face lift. It's a full, new generation of sports cars. New exterior styling, brand new interiors, brand-new infotainments, new power units, higher horsepower, better vehicle driving dynamics. So, it's truly a new generation of sports cars for us in all three models. So, it's quite extraordinary and it's the bridge we've been waiting to get to in 2023 because as you know, front engine sports cars are the heart and D&A of this company. As far as DBX707 is concerned, we've had tremendous response from our customers. We've never received as many car orders on our configurator in the history of -- granted, it's a new model for us. But the reception is really was a response to the consumer demand, that we listen to consumer who said, "We love your DBX, but we would like it to be more aggressive. We'd like to have more horsepower. We'd like to have more performance for that certain car enthusiast customer." So, we cater with our standard DBX to a customer -- create to a more car enthusiast with the 707.
George Galliers: Great. Thank you.
Operator: Thank you. The next question comes from the line of Charles Coldicott from Redburn, please ask your question.
Charles Coldicott: Good morning. Thank you for taking my questions. I had two on cash flow, actually. So firstly, on the Valkyrie, deliveries of 75 to 90 units this year, I think that's less than you'd previously expected. Given that you've taken most of the cash for those cars in deposits already, how much cash will that save you this year by not building on delivering as many Valkyries as you'd expected. And then --
Lawrence Stroll:
Charles Coldicott: Yeah?
Lawrence Stroll: Sure. Ask your next question and I'll come back to the first one.
Charles Coldicott: And then thinking about the cash flow more broadly for this year as a cash burn of a £123 million last year obviously, the Core EBITDA will be up significantly this year, but so will Capex. So, is it fair to assume that cash burn is going to be similar in 2022 to what it was in 2021? And also thinking about 2023 and the target being cash flow break-even. What are the major changes next year?
Kenneth Gregor: Yeah, Charles, in terms of your second question, it helps answer the first for me. Broadly, yes, you're right. I'm looking at the cash burn being similar to slightly better for 2022 as it was to 2021, for exactly the reasons you said, because we're expecting the EBITDA to be higher but so too is the Capex. And within that on the working capital movements, I'm expecting the core working capital to be somewhat positive. And I'm expecting the bulk related deposits to have a modest net unwind. Yes, some unwinds happening of course, related to the 70 to 90. Yes, a bit lower than it would've been if it were higher. With that unwind, mostly offset with fresh deposits on Valkyrie Spider, second deposits on the Valkyrie Spider, and new deposits on Valhalla, balancing that output.
Charles Coldicott: Okay. Thank you.
Kenneth Gregor: Thank you.
Operator: Thank you. The next question comes from the line of Philippe Houschois. Please, can you confirm your company.
Philippe Houchois: Yes. Good morning. It's Philippe Houschois, Jefferies. Good morning, all. Just a quick question on your guidance. When you talk about the accelerated depreciation of the aging models, we're clear that this will be part of your reported profit. It's not going to be treated as an exceptional below the line; is that correct?
Kenneth Gregor: Yeah, true. It's just regular D&A.
Philippe Houchois: Right. And can you comment more generally about -- I understand, although we don't have the numbers, but your wholesales were below your retail, again, in 2021. You could maybe quantify the amount by which you de -stocked? And comment about your inventory levels from here. I understand it's generally low compared to history definitely, but also maybe compared to where you'd like to see.
Lawrence Stroll: Our inventories have never been better, ours and the dealers for that matter. With retail, to answer your first question, approximately 400 vehicles more than the wholesale. Might be the first time in this company's history to retail more than we wholesale, which was the first step towards what I put in place when I became Chairman. As you've to align demand with supply, we very, very successfully have done that. And as I mentioned, our inventories as well. By the way, in the fourth quarter, we even had to ramp up our inventories a bit more in order to get the dealers more stock because their inventory levels were too low. So, we've never been in a better place, and that's part and parcel of only manufacturing vehicles to order, which is what I said when I took over almost 2 years ago.
Philippe Houchois: And if I can ask to squeeze in the last one, please. The line I look at the most in your P&L is the gross margin, and a bit disappointed that hasn't really improved in Q4. And I think that we need to get to 40% as a sustainable level for the probability of Aston Martin. So, what's the road map? Can we expect the gross margin to improve in ‘22 considering that at the same time, you have some aging products, or is it really dependent on the mid-engine and the new family of ?
Lawrence Stroll: The first new car under this team's leadership, is the DBX707. That is the first car that will come with a minimum. It will be more than that. A minimum of 40% contribution margins. Every car that we produce from now on going forward, will have that same minimum.
Philippe Houchois: Right. Thank you very much.
Operator: Thank you. The next question comes from the line of Puskal Kendalkar from HSBC. Please ask your question.
Pushkar Tendolkar: Hello, good morning. This is Puskal, from HSBC. I have two questions. The first one is regarding the Valkyrie shipment indication of 75 to 90 units for this year. At the Q3 call, you had indicated a run rate of three Valkyrie s a week, which at best would mean around 150 cars in 2022 while you now indicate only around half of that as shipments. So please could you just comment around this disparity? And then the second one is on the EBITDA margin guidance. How watertight is this guidance and has room for error been built into it, considering that the main purpose now should be to restore confidence in the company's ability to achieve its targets after the miss last year? Thank you.
Lawrence Stroll: Let me do it. Firstly, the miss last year was caused by one issue only, which was the Valkyrie. Let me be crystal clear. All these Valkyries are sold. They have deposits, both Coops and Spiders. We have received no cancellations. So, by delivering them slightly later, is simply a timing issue. And the timing issue arise because we want to deliver these vehicles with no compromises. I think you're having trouble understanding, this is the most complex vehicle ever made to be driven on the road. Being the owner of a Formula 1 team, I can testify, that it's more complicated than building my Formula 1 car. So, we want to deliver them to perfection. They're all sold. They all have deposits. We're taking our time to deliver them perfectly. We've assembled a new group of Formula 1 mechanics to actually manufacture and put in place this and produce these cars. So, it is a project that we are extremely proud of, very ambitious. We're the only ones to undertake such a project. And that was our only miss last year. On much more fundamental importance on the core program, which was almost 6,000 vehicles, we were exactly on target. As far as the second question, I'll let Ken respond. It was a financial, I don't remember what it was.
Kenneth Gregor: Second question.
Unidentified Company Representative:
Kenneth Gregor: to the margin. Clearly, yes, we've sort to strike our guidance at the level that we can meet for 2022. And as we've done that, we felt that the margin expansion that we're looking to achieve, supported by the new product introductions of the DBX707, which Lawrence already talked about on the call and the V12 Vantage, both of which give us a good opportunity to move the EBITDA margin forward.
Pushkar Tendolkar: Thank you.
Operator: Thank you so much. The next question comes from the line of Gabriel Adler from Citi. Please ask your question.
Gabriel Adler: Hi. Thanks for taking my question. Can you talk a little bit about your expectations for core ASP this year? Obviously, the lineup for refresh in 2023 is going to be very supportive for this. But what should we be expecting in 2022 in terms of ASP improvement from DBX707 and general price increases, given your comments around the inventory situation earlier?
Kenneth Gregor: We're -- I mean, first off, I'd say we're pleased to see the ASP improve into 2021 to around about a 150 thousand pounds per units. And although we're not providing specific guidance on the ASP for 2022, the new products that I've just talked about, give us the opportunity to think about improving that forward by circa 10% plus double-digit -- in double-digit number in 2022. That's certainly what we're going to be looking forward to. It depends a bit on product mix of course, et c. But with the 707, the V12 Vantage, those products give us a good opportunity to move the overall margin of the business forward. And of course, that needs to be driven by the top line.
Gabriel Adler: Great. Thank you.
Kenneth Gregor: Thank you.
Operator: Thank you. The next question comes from the line of Thomas Besson from Kepler Cheuvreux, please ask your question.
Thomas Besson: I guess it's me. So, it's Thomas Besson, of Kepler Cheuvreux. I have two questions, please. The first relates to deposits. Could you please just comment on the level of deposits at the end of’21, how it compares with the end of 2020. Was it therefor an inflow or an outflow, and whether we should expect an inflow or outflow in ‘22? That's the first question. The second, looking at the prospects of complete generation change for sports car, if I understand correctly, between Q2 and Q3 next year, could you just help us understand, how you managed to maintain interests along the existing three vehicles? And whether we should expect pricing to hold or to eventually weigh in a bit on these vehicles into their replacement. Thank you.
Lawrence Stroll: On the second question first, it is quite incredible and it shows the power of this brand. Sports cars are already sold out into the fourth quarter -- beginning of the fourth quarter of this year. That shows how strong our demand is for the D&A and the history of the company. So, we continue to remain very strong order book and full market price. No -- less VM, no markdowns, so this shows what we put in place at the beginning of aligning supply with demand and only manufacturing vehicles to order. So, the sports cars continued to be strong, as I say, sold out right until the beginning of fourth quarter of this year. So, we have no problems and concerns about the ban until we deliver the new model as you rightfully say, in importers next year.
Kenneth Gregor: And on your first question, it's in the RNS. And we had a £340 million deposit balance at the end of 2021. That was a net £ 70 million inflow in the year. A bit more than we expected, largely because of the pace of our three deliveries, as we already discussed in 2021, and the strong inflow that we saw on Valkyrie Spider, the strong customer reaction also to Valhalla helped drive that inflow in 2021 to the level I just said. For 2022, as I said earlier on the call, I expect -- I -- I expect probably a net modest unwind of the overall deposit balance with Bell Creek. Unwind of deposits relating to Bell Creek that we delivered in the year being mostly offset by the second deposits on the spiders and further customer interest in Valhalla.
Thomas Besson: Thank you very much. Can I squeeze and introduce question please?
Kenneth Gregor: Sure.
Thomas Besson: Thank you. I just wanted to check whether your volume guidance so above 6600 for the year, given the strengths of sports cars you're mentioning implies that those categories are going to rise in 2022 sports cars and DBX, or whether we should assume that 100% of the increase in volume in ‘22 comes from DBX notably the newer model.
Kenneth Gregor: Yeah, we're not providing a split of the volume expectations this year. I think Lawrence has already said, we're really pleased with the underlying demand for sports cars. This year we also have V12 Vantage edition that's coming. It will be part of the sports car mix. But yes, at the same time, we do expect most of the growth in volume in the year to come from DBX, obviously driven by both the 707. That's -- the launch is underway, and the Straight-Six derivative which we launched in China, backend of last year, and deliveries commencing this year.
Thomas Besson: Great, many thanks.
Kenneth Gregor: Thank you.
Operator: Thank you very much. The next question comes from the line of Horst Schneider from Bank of America. Please ask your question.
Horst Schneider: Yes. Good morning. I'm Horst Schneider from Bank of America. Thanks for taking my question too. I just have got one less, please. And that refers to this arrangement that you have got with Mercedes-Benz AG, because you say in the release, there are currently no plans to issue additional shares to Mercedes until early 2023. I remember you had a put option in place where Mercedes gets compensation if the share price falls below a certain level. Could you maybe remind us of this agreement? What is now the strike price? What compensation payment you have to make if the price remains as it is right now? I know a lot can change in the year, but I'm getting it also right there's no payment going to be made this year. Thank you.
Tobias Moers: That's a very reasonable question. Thanks for that. There are no payments to do this year. What we see is a timing change. So, when we drafted the whole agreement with procedures back in the days, it wasn't 20. What about premature? So, with new assessments about the technology, we pushed it a bit further down the road and in our expectation, there is never going to happen a payment. We're clear.
Horst Schneider: Okay. Alright. Thank you.
Kenneth Gregor: Welcome.
Operator: Thank you. The next question comes from the line of Daniel Roeska from Bernstein Research. Please ask your question.
Daniel Roeska: Good morning, gentlemen. Lawrence, to the F team, first of all, congrats on a big step in the right direction. Maybe two strategic ones and a tactical one. First of all, could you give us some more details on the progress of your electrification journey? I saw that on some of the latter slides, what pieces of the puzzle are in place, and which areas are you still working on? And then secondly, competitors of yours are spending a lot more time talking about how to integrate the digital lifestyle of their consumers into the cars. But has your thinking on how that relates to a luxury brand like Aston, changed or evolved over the past year? How do you see that question of digital lifestyle coming into the car for your brand and how it shapes the luxury image? And just tactically, maybe very short, I'm sure there's some leeway built into the guidance for material costs and logistics this year. Could you give us the color what margin headwind it is that you're expecting this year from those external cost increases? Thanks.
Kenneth Gregor: I think in terms of the margin accretion I think the talks about in the short-term, we were thinking about products in front of us and the DBX707 in the V12 Vantage. And the next-generation of our sports cars all giving us the opportunity to move the price points of our vehicles northwards really supported by the product substance that we're putting behind those fresh generation of new products. And as we look forward to electrification, we are thinking about it in terms of the brand development that we're doing combined with product substance within their looking clearly therefore, to sustain the margin improvements that we're going to build over the next two years through into our electrified products.
Tobias Moers: I'll take the other one. So, electrification journey, yeah, it's clear, our plug-in hybrid first one in early 2024. As you know Valhalla has a mid-engine program phasal plug-in hybrid. They all actually launched honestly, the straight takes in China, which is a mild hybrid. And then we go further down the road. So, we have a bespoke electrification program for Valhalla. When it comes to the drivetrain, the battery is a share battery, and we have a clear understanding how we're going to electrify as a plug-in hybrid, a DBX, and probably as well our Classico sports car portfolio as well as a variant. It's not all of them, but they're for sure as a variant in there. And as you know, 25 we're about to launch and this is the clear target for us. The first electric-driven vehicle with Aston Martin. Digital lifestyle, that's a very good question. This is a very good discussion anyway in the automotive industry -- in that industry. I'm not talking about digital lifestyle. It's all about -- for us as a brand in the ultra-luxury world, it's all about customer experience and that's getting even more important when you come or when you get into the journey of fully electric or BEV full electrified cars. The brand plays a major role in the future and therefore, the customer journey is much more important as of today, and the per customer experience. What you're going to see from us, and that starts next year, with the new generation sports cars, we’re not going to use anymore Mercedes, infotainment, HMI. So, we started that journey exactly regarding this issue. Exactly because we know that it's very strategic for us for the future. So, you're going to see our connected environment, our environment, our air. So, everybody takes it that way, I'll put it that way, kind of the ecosystem -- the digital ecosystem we're going to mark and account with our own back-end, with our own HMI to get on that journey in regards to the customer experience which it's much more important in the future than it has been probably back in the days.
Daniel Roeska: Perfect. Thanks.
Tobias Moers: You're welcome.
Operator: Thank you. The next question comes from the line of Charles Coldicott from Redburn. Please ask your question.
Charles Coldicott: Hey, sorry. I was on mute. Just had a couple of follow-ups. Firstly, on the order book, I think you mentioned that the sports cars are now six to seven months’ worth of orders you've got. I had in mind that previously, the average for the group was three to four months. So, has that increased significantly? And I think Tobias, you've said before that you don't want the order book to get too long. Can you just remind us what you think the right sort of length of order book is for a luxury brand like Aston? And then the second question I just wanted to ask was on the DBX, you've got the more powerful version now with the 707. What do you think the DBX volume should be this year as a result? And beyond that, what will be the most important levers in getting you up to 5,000 to 6,000 units of the DBX per year?
Tobias Moers: Coming to the order book. It is a fun -- it is a good question regarding the order book of sports cars, but that shows exactly the momentum of the brand. And we really got sorted out with the order book for the sports cars this year. And you have to consider, we know that we're going to have an uplift off there. We have a new generation of sports cars with us next year. So, we are careful with our initial assumption, how many cars we're going to deliver to the market. More important for that order book is, how many retail orders you see. And this is a new high. I think, ever since the company exists, what we see as retail type order. So, customers ordering car with us. That's almost there what we targeted. So, we have a good order book for sports cars. It is, I think 8, 9 months, could be 12 months. That's perfect. If it's going to be longer, sometimes you have an issue that the customer probably not going to wait anymore in their world of sports cars. It's different for or special for other cars. What was the other one?
Kenneth Gregor: falling.
Unidentified Company Representative: Falling.
Tobias Moers: From -- if we see such a tremendous 5,000, 6,000 demand on the marketplace, this company is always able to produce that because we are not limited in our infrastructure when it comes to production days, no limitation for us because everything is baked into days was set up in a high level of capacity. So, as you all last year we consolidate a lot of our site to be more efficient. And this is what pays off now.
Charles Coldicott: Thanks.
Operator: Thank you. The next question comes from the line of Jose Asumendi from JPMorgan. Please ask your question.
Jose Asumendi: Thank you. Jose Asumendi, JPMorgan. Three questions please, Ken. Can you speak please a little bit around Capex and the delta of Capex between ‘22 and’2? What are the big projects that are driving this increase in Capex? And then where are we in the cycle? Are we still kicking ‘22 or is it’23? Second, Tobias, can you speak a little bit more about this excellent ASP that you're running for the business. We heard about some of the drivers. I believe you mentioned 10% improvement on ASP in ‘22 vs’21. Where do we stand on the cycle? Can you improve the ASP of the business beyond 2022 and make it structural? What are you thinking? How can you do these? This is obviously the biggest delta, obviously to generate cash and bring higher earnings. And then Lawrence, on strategy. I mean, you put a fantastic team together on the management side. Can you just remind us, what is your number 1 priority, and is there anything on the strategy side that currently you're missing, that you would like to add to the company for the ? Thank you.
Lawrence Stroll: All starts when it goes to the actual , As far as strategy is concerned, I'm beyond proud and happy and pleased to say we are exactly on plan. There were five milestones, as you are aware, that they had to accomplish when I took over, from the refinancing, to deleveraging the inventory, to Mercedes joining us as a partner, and successfully delivering the DBX first full year last year. And most important, from a marketing point of view, launching our own Formula 1 team. And the launching of that team has shown in the sales and the demand for the product, and the desirability for the brand, it's truly been incredible. So strategically, I'm exact thrilled and exactly on plan of where we want to be. And now we will have the launch of all our new front engine sports cars next year and the launch of our opening price point mid-engine after we deliver our Valhalla. Again, this is technology some of it taken from our Formula 1 team. So strategically speaking, we couldn't be happier. If anything, we're really ahead of plan based on retail outperforming wholesale significantly last year.
Kenneth Gregor: On the Capex side, that the biggest driver going into 2022 compared to 2021, is really the investments in the next-generation of our sports cars. That's the biggest single element of spending in 22’ and the reason, the biggest reason for the growth. Also of course in ‘22, we've got spending connected with our electrification program that we talked about earlier in the call and also the mid-engine program. So, all of those things driving some of the growth from’21 into ‘22. Should I go on?
Tobias Moers: Yeah.
Kenneth Gregor: On the ASP development, I think as we look forward, it's clearly a journey that helps drive the market growth that we're targeting. And so, as we step forward into ‘22, we've talked about a couple of the drivers, the 707 V12 Vantage. give us the opportunity to move the overall ASP forward. I think as we look then into 2023, the next-generation of the sports cars gives us the opportunity to think about further pricing for the extra products substance that's going into those vehicles as we take them to the marketplace. So bit early to say exactly where that goes, but we do see the opportunity for further development.
Tobias Moers: That's a clear strategy to improve ASP further on. So, we have the double-digits now in ‘22, and we have a clear strategy with the new generation of sports cars. And as Lawrence and everybody in the company is clear in the strategy, that we have to achieve 40% contribution margin, and each and every single product, you can imagine that this is a given target and a given strategy to improve is ASP further on.
Jose Asumendi: Thank you very much.
Operator: Thank you. The next question comes from the line of Christoph Laskawi from Deutsche Bank. Please ask your question.
Christoph Laskawi: Hey, good morning. It's Christoph from Deutsche. Thank you for taking my questions. The first one would be on headwinds essentially for raw materials and input costs. Most of the suppliers are currently negotiating with the OEMs on what we've seen as one, price inflation, et c. So, the question would be, do you see the same discussions right now? And is there a certain risk you put to that for say, the second half gross margins and given you just alluded on the ASP strategy quite in detail, the question will be, in case we were to see quite a bit of a demand from slides in the second half, I would assume you have enough flex in pricing to just address the new launches that you plan for’23 in order to show the gross margin that you've just highlighted. And then as a second part of question. Just on the core business profitability, is it fair to assume that that is around high single-digits right now and the 50% uptick in ‘22 should put it closer to double-digits or in double-digits? Thank you.
Tobias Moers: Headwind for regarding supply chain, yeah, absolutely. We faced that as well, like everybody. But we have -- you gave us the clear task and we are on a journey there to reduce our costs further on this year. We are likewise either to overcompensate that. There is no -- there is always a danger so on for a margin, but this is not business. And we're pretty confident that we can achieve that, that we can overcompensate in everything, what is comes in as raw material, price lift. We face that every day with every supplier, almost. But it's a normal business. That's our industry and every industry at the moment face the same issues.
Kenneth Gregor: And on the second question on the core margin, I think, you're talking about -- we're not giving a split of the profitability of the business between core and specials, we just wanted to provide a bit of texture. But for sure, the sort of direction of travel that you're describing is not far on.
Christoph Laskawi: Thank you. And if I can sneak in one follow-up on ASP development across the regions. Seeing the strong demand that you have in North America and Asia, particularly, and those have been typically the markets where you achieved the highest ASP. Can we assume that your pricing power there will be uplifted? You can get into the market is out-sizing the uplift you see in Europe, or should it be pretty evenly distributed?
Tobias Moers: It is similar. We see the same opportunities in Europe.
Christoph Laskawi: Thank you.
Tobias Moers: Thank you.
Operator: Thank you. The next question comes from the line of Stephanie Vincent from JPMorgan, please ask your question.
Stephanie Vincent: Thank you so much for taking my questions. Just given the news yesterday about a competitor IPO, as well as their potential entry into Formula 1. I didn't know if you had any, I guess, qualitative comments that you'd like to make given some of the news flow about them in F1 over the past few months? And then my second question was, Lawrence, you made some comments about addressing high-cost debts. Currently the RCF is drawn, given your view that you'll return to profitability and better free cash flow position I guess from 2023 onwards. Any further comments that you'd like to make there, or the management team? And then finally, on the deferred tax asset balance. Obviously, this has risen over the past couple of years, do we have any indication how this is going to wind down over time? Thank you.
Kenneth Gregor: So, I'll take the last one,
Tobias Moers: You take the last one on.
Kenneth Gregor: Stephanie. Good morning. On the deferred tax assets, we expect that to wind down through the next 5 to good no much latter part of the decade, let's put it that way.
Tobias Moers: And as far as refinancing the debt, you're correct. As I said yesterday, this is very much on our radar. We will be addressing that as the bonds become callable over the next two years.
Stephanie Vincent: Thank you.
Tobias Moers: Welcome.
Operator: Thank you.
Tobias Moers: I think we don't have any more questions. Lawrence, do you have a closing remark or two?
Lawrence Stroll: No. Once again, just to repeat, I'm very proud with first full-year together as an organization, last year. We delivered as promised on all our core numbers. The fundamentals of the business are in place. We have two exciting launches this year, and the very exciting next-generation of our sports cars next year. Our future is mapped out. As we always said, it was from the beginning. And now, it's simply a matter of executing on that and we've shown we're extremely good at executing on those plans. We're looking forward for extremely exciting times. And as I leave you, I will head to Barcelona where our Formula 1 team currently just took to the track and started testing. Thank you.
Operator: That does conclude our conference for today. Thank you for participating. You may all disconnect. Have a nice day.