Carel Industries

Investor Presentation • Aug 3, 2023

CAREL INDUSTRIES S.p.A. 2023 – H1 Results

This document and all of its contents are property of CAREL. All unauthorised use, reproduction or distribution of this document or the information contained in it, by anyone other than CAREL, is severely forbidden.

3 rd August 2023

H1 2023 – Highlights

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For the tenth consecutive quarter CAREL reported a double-digit organic revenue growth, doubling revenue compared to 2020. EBITDA margin stood at 22.0%

• Organic growth stood at 13.1% (13.9% at constant exchange rate), at the top end of the guidance given in May, further accelerating the trend reported in Q1 2023.
• Positive demand recorded in HVAC (in particular in heat-pumps, data centre cooling and Indoor Air Quality) confirmed as well as the slow-down in Refrigeration investment cycle due mainly to an uncertain and worsening economic scenario.

• EBITDA margin equal to 22.0%, higher than H1 2022 (21.5%) and Q1 2023 (20.8%).
• The positive operating leverage, a better product mix and the continuous deployment of the effects deriving from previous price-list increases offset higher costs on raw materials (persisting inflation, even if at a lower extent, compared to 2022).

• H1 2023 NFP slightly higher compared to FY 2022 including:
• ~36m€ NWC increase due mainly to revenue growth and higher inventory level linked mainly to the raw material shortage.
• ~20m€ dividends
• ~4m€ M&A

M&A – 2023 – Kiona

• Company profile: Kiona is a leading Norway-based Software as a Service ("SaaS") provider of property technologies solutions for energy consumption optimization and building digitalization in retail & industrial refrigeration, public, commercial and multiresidential facilities.
• Rationale: The transaction serves as a strategic move to further strengthen CAREL's positioning as a global leader in the HVAC-R industry, addressing the increasing digitalization and shift towards servitization of the sector, as Kiona is expected to materially enhance and accelerate the development of CAREL's software and digital services offering.
• Transaction structure: Carel Industries S.p.A will acquire 82.4% of Kiona. The acquisition consideration implies a 100% Enterprise Value of NOK 2.35 billion (c. €210m). Each of the founder & CEO and other minor shareholders will retain a significant portion of their stake, which on an aggregate basis will account for a c. 17.6% minority stake subject to a 3-years lock up period followed by a put and call option scheme.

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• Key Data:

• Enterprise value (100%) = 2.35bn NOK (~210m€)
• 2023 exp. Revenues = ~285m NOK (~25m€)
• 2023 ex. EBITDA margin = 20%-25%
• Employees = ~150

• Industrial fitting:

• Increasing R&D fire-power in digital solutions by joining CAREL and Kiona teams.
• Strengthening CAREL capabilities to develop and sell digital services.
• Opening new commercial opportunities for Kiona
• Developing technological synergies between the Kiona system at the installation level and the CAREL controls on the HVAC/R units

• Financial Data:

• ~8.4x Rev./EBITDA on 2023 Exp. revenue
• 100% Enterprise Value of NOK 2.35 billion (c. €210m)

H1 2023 – Results

m€	H1 2022	H1 2023	Δ%
Revenue	261.3	330.3(1)	26.4%
Organic Revenue	261.3	297.6	13.9%
EBITDA	56.1	72.6(2)	29.4%
EBITDA Revenue	21.5%	22.0%
Net Profit	34.8	40.3	15.7%
Capex	8.9	7.9	-11.2%

(1) Incl. ~34.8m€ (change in the consolidation perimeter); (2) Incl. 4.2m€ (change in the consolidation perimeter);

• Revenue +26.4%: In Q2 2023 reported organic growth equal to ~16%, approximately 5% higher on Q1 2023 (~11%), thanks mainly to a recovery in refrigeration sector and confirmed positive trends in HVAC (heat-pumps, Data Centres, IAQ). In H1 2023 Change-in-perimeter contribution equal to 34.8m€ and negative FX impact for 2.1m€
• EBITDA +29.4%: The very positive results reported in revenue were reflected in the EBITDA growth rate. The increase in EBITDA margin was due to the operating leverage effect, to a better products mix (benefitting from the easing in raw material shortage scenario) and further deployment of previous price-list increases.
• Net Profit +15.7%: benefitting from the operating results. 22.5% tax-rate, in line with expectation and Q1 2023, was slightly higher on H1 2022 (21.4%) impacted by a different country-mix and changes in regulations.
• Capex: Slightly Lower capex due to a different quarterly distribution. FY 2023 ~5% Capex/revenues expectation confirmed.

H1 2023 – Revenue breakdowns

• EMEA Q1 2023 positive trends confirmed also in Q2 2023. LFL growth rate close to 14%.
• APAC Significant acceleration in Q2 2023 mainly thanks to an excellent performance in India and South Korea plus a number of commercial opportunities seized. China's macro-economic scenario still weak.
• Americas (North) The main contribution to the strong performance in US was M&A (SENVA) together with a strong demand in Data Centers and IAQ.
• Americas (South) The positive performance reported in Brazil in Q2 2023 did not offset the impact of the macro-economic scenario in other regions.

• HVAC: Excellent growth confirmed (~20% excluding M&A), driven by a strong demand particularly in heat pumps, Indoor air quality and data centers.
• Refrigeration: Recovery in revenues in Q2 2023 mainly linked to the easing of the electronic material shortage experienced in the first weeks of the year. Weak demand in food service and a deceleration in the investment cycle in food retail confirmed. 5

From EBITDA to Net Profit

K€	H1 '22	H1 '23	Δ%
EBITDA	56,106	72,606	29.4%
D&A	-11,168	-15,099
EBIT	44,938	57,507	28.0%
Financial (charges)/income	-1,540	-2,647
FX gains/losses	-153	-341
Companies consolidated with eq. method	2,363	290
EBT	45,608	54,809	20.2%
Taxes	-9,756	-12,359
Minorities	-1,044	-2,173
Group net profit	34,809	40,277	15.7%

• Higher D&A mainly due to the purchase price allocation amortization.
• Higher Financial charges due to the macro trend on interest rates.
• Lower net gain deriving from associates (equity method) due to an extraordinary item reported in H1 2022
• Higher tax-rate (22.5%), compared to H1 2022 (21.4%) due to a different Countrymix and a number of changes in regulations.
• Higher minorities due to strong performance reported by CFM.

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H1 2023 – NFP Bridge

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• ΔNWC +35.7m€: due to higher DSO (seasonality and higher revenues) and an increase in inventory (~25m€) mainly linked to the raw material shortage.
• Dividends paid equal to 19.7m€
• Approximately 30% of the total H1 2023 NFP is related to IFRS 16 accounting effect.

Closing Remarks

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H1 2023 Results

• Q2 2023 was the 10th consecutive quarter reporting a double-digit organic growth. Such a level of consistency proves, once again, the resilience of the wide business portfolio of the Group, covering several applications and geographic areas subject to different cycles and different macroeconomic scenarios.
• H1 2023 marked a doubling in revenue compared to 2020 results thanks to the balanced mix of CAREL's development strategy based both on organic and M&A growth drivers.

M&A and capital allocation

• In July CAREL signed a binding agreement to acquire 82.4% of Kiona, bringing the total of M&A transactions since the IPO to 11. .
• With the aim of retaining a flexible capital structure in order to be able to continue pursuing future growth opportunities, CAREL BoDs resolved to call an EGM for a possible capital increase.
• The positive trends reported in H1 2023 in data centers and IAQ are expected to continue in H2 2023.

• In heat pumps, despite the presence of a solid structural trend, a temporary deceleration in the growth rate is possible over the next few quarters due mainly to the macro-economic scenario and regulation uncertainty.
• In Refrigeration the weak demand in H1 2023 should gradually recover in the coming quarters.

Guidance

Taking the above into account, the Group forecasts a significant growth also in the second half of the year, albeit with a less exuberant trend than in the first: in the first 9M 2023, the Group expects to report a revenue growth rate (LFL, constant exchange rate) not far from what reported in H1 2023. Organic growth is also expected for the fourth quarter, the extent of which is however difficult to quantify at the moment, in consideration of the volatility of the markets and the uncertainty on macroeconomic scenario .

Annexes

Shareholding structure (>3% voting rights)

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Income statement and Balance Sheet

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Income statement Balance sheet

K€	H1 2023	H1 2022	Delta %
Revenues	330,309	261,346	26.4%
Other revenues	2,612	2,023	29.1%
Operating costs	(260,315)	(207,262)	25.6%
EBITDA	72,606	56,106	29.4%
Depreciation and impairments	(15,099)	(11,168)	35.2%
EBIT	57,507	44,938	28.0%
EBT	54,809	45,608	20.2%
Taxes	(12,359)	(9,756)	26.7%
Net result of the period	42,450	35,853	18.4%
Non controlling interest	2,173	1,044	>100%
Group net result	40,277	34,809	15.7%

K€	H1 2023	FY 2022	Delta %
Fixed Capital	306,509	300,499	2.0%
Working Capital	119,239	89,926	32.6%
Employees defined benefit plans	(8,279)	(8,129)	1.9%
Net invested capital	417,469	382,296	9.2%
Equity	234,492	221,247	6.0%
Non currrent liabilities	75,347	65,208	15.5%
Net financial position (asset)	107,630	95,841	12.3%
Total	417,469	382,296	9.2%

Company Profile

Leading provider of advanced control solutions for HVAC/R

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This document and all of its contents are property of CAREL. All unauthorised use, reproduction or distribution of this document or the information contained in it, by anyone other than CAREL, is severely forbidden.

Note: financial data refer to consolidated accounts of CAREL Industries S.p.a. 2015-2022 IFRS. Comparability might be affected by change in consolidation perimeter

We operate in attractive niches across a wide range of end-markets…

Source: Company information as of Mar-22

…through a one-stop-shop portfolio of components and platforms

Distinctive ability to meet customers' demand for tailored integrated solutions using standard platforms

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Source: Company information as of Mar-22 Note: 1) developed with partners

Well-articulated strategies to continue the growth track record

• Consolidation of HVAC market leadership
• Growth in Refrigeration driven by technology leadership
• Upselling and cross-selling
• Global penetration
• Connectivity, IoT and AI capabilities already developed
• Advanced monitoring and optimization services to end customers to represent one of CAREL's organic growth drivers
• Maintain innovation leadership
• Deliver strong profitability
• Leveraging the current production capacity, further enhancing flexibility
• Develop talent
• Disciplined bolt-on M&A activity focused on complementing corebusiness in Europe, on expanding in US and APAC and on adjacent capabilities, leveraging on solid balance sheet

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CAREL general strategy for 2023-2026 will be oriented to the research for new innovative technological solutions with a major focus on energy saving, transition to natural refrigerants, widening high-efficiency solutions offer and geographical expansion

Source: Company information as of Mar-23

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Leading provider of advanced energy efficient control solutions

¹ High-tech leader in attractive niches of the HVAC/R industry

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In Europe

Source: Company information as of Mar-2023, BSRIA (Dec.-21)

Note: 1) the rest of the market is mainly driven by proprietary solutions 2) tested by third-party laboratory compared to Top-ten EU benchmarks; 3) compared to average semi-hermetic

This document and all of its contents are property of CAREL. All unauthorised use, reproduction or distribution of this document or the information contained in it, by anyone other than CAREL, is severely forbidden.

² Attractive market growth supported by secular trends

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Source: Company information

This document and all of its contents are property of CAREL. All unauthorised use, reproduction or distribution of this document or the information contained in it, by anyone other than CAREL, is severely forbidden.

Growth is driven by market trends and focused strategic actions… 2

wallet

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innovations, such as energy saving features, digitalisation and environmental focus

…and favoured by up-selling and cross-selling 2

FROM PRODUCT PLATFORMS TO INTEGRATED ELECTRONIC SOLUTIONS…

…IN THE HVAC AND REFRIGERATION MARKETS

Positioning and innovation capability hard to replicate 3

This document and all of its contents are property of CAREL. All unauthorised use, reproduction or distribution of this document or the information contained in it, by anyone other than CAREL, is severely forbidden.

Leadership position in HVAC OEM premium niches… 3

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Source: Management elaborations based on BSRIA data for the year 2021

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…and leading in innovation in the refrigeration market 3

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Source: Company info; Management elaborations

4 Highly efficient global operations serving locally…

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4 …diversified blue-chip customers

Source: Company information as of March.23;

Note: 1) as% of 2022 Revenues 2) as of 2021 revenues for each market 3) Top 40 customers accounting for approx. 50% of total revenue for each market

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Track record of profitable growth

Resulting in a solid balance sheet and strong value creation to shareholders

Source: Company information as of Mar-23

Note: 2015-2022 IFRS

Note: 1) Including the contribution from M&A and the impact of the non recurring IPO Costs (~8m€ in 2018) 2) Operating cash calculated as cash flow from operations – Net Capex;

Global expansion, innovation and services 6 A

Pursuing additional opportunities improving services offer with IoT and advanced monitoring solutions

Cross-selling and upselling exploiting high-efficiency trends

Consolidation of leadership positions in HVAC Growth in Refrigeration

Geographical expansion through the introduction of innovative solutions in new geographies

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Pursuing external growth through disciplined bolt-on M&A 6 B

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CAREL has performed detailed analyses and scouting of potential targets, thus promoting an opportunistic approach with a focus on 3 MAIN EXPANSION AREAS:

M&A

M&A – 2022 – Senva

• Company profile: SENVA is a US company located in Oregon specialising in the design and manufacture of a wide range of sensors, mainly in the air-conditioning and ventilation sectors, and with a significant presence in indoor air quality.
• Rationale: the acquisition of SENVA is a further step towards the process of external growth through complementary products in reference applications that began in 2018. As in the case of Arion's acquisition (April 2022), the focus in the sensors segment is key to making products more efficient and more connected to their ecosystem, while also facilitating the activation of digital services. Furthermore, Numerous synergies can be achieved through the integration of CAREL and SENVA
• Transaction structure: Carel Industries S.p.A acquires all SENVA Inc.'s business through a SPV held by Carel USA Inc., Carel Industries S.p.A.'s US subsidiary. That acquisition is valued at USD 34 million. CAREL will also make an additional payment of up to USD 4 million tied to certain EBITDA results, for a total potential acquisition value of USD 38 million.

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• Key Data:

• Enterprise value (100%) = 34-38m€
• 2021 Revenues = ~13m USD
• EBITDA (TTM) = 3.1m USD

• Employees = ~65

• Bolt-on acquisition

• Strong complementarity with CAREL's product line-up
• Strong cross-selling and channel/geographical expansion opportunities
• Financial fitting:
• ~12x EV/EBITDA
• Low impact on Carel's NFP

M&A – 2022 – Klingenburg

• Company profile: Klingenburg GmbH and Klingenburg International Sp. Z.o.o. are leading producers of a wide range of products used mainly for heat recovery in ventilation and humidification systems, adiabatic cooling and air purification.
• Rationale: The transaction rationale is mainly attributable to the high degree of complementarity between Recuperator and Klingenburg in relation to the respective technologies of specialisation (plate exchangers for Recuperator and rotary for Klingenburg) and to the application areas. Furthermore it will strengthen CAREL's profile as a supplier of complete control solutions with high added value in the conditioning and refrigeration industry, with energy efficiency as one of their main characteristics.
• Transaction structure: The transaction, through which CAREL Industries S.p.A. takes over control of Klingenburg GmbH and Klingenburg International Sp. Z.o.o. via the acquisition of 100% of the share capital of the German and Polish companies, took place in response to an Enterprise Value of Euro 12.0 million (adjusted for approximately 2 million deferred capex).

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• Key Data:

• Enterprise value (100%) = 12m€
• 2021 Revenues = ~30m€
• EBITDA = 2.4m€

• Employees = ~200

• Bolt-on acquisition

• Strong complementarity with Recuperator's product line-up
• Strong cross-selling and geographical expansion opportunities
• Financial fitting:
• ~5x EV/EBITDA
• Low impact on Carel's NFP

M&A – 2022 – Sauber

• Company profile: Sauber is based in Porto Mantovano (Mantua) and is active mainly in the sector of on-field installation and maintenance services for HVAC/humidification systems in commercial and residential buildings, with a strong focus on energy saving and optimization.
• Rationale: the transaction can be traced back to the implementation of one of the main pillars of CAREL's strategy of strengthening its services area (digital, onfield and consulting) both by internal activities and through acquisitions.
• Transaction structure: Carel takes over control of Sauber through the acquisition of 70% of its share capital. The acquisition of the remaining 30%, the valuation of which is tied to Sauber future results, is governed by a cross-option mechanism between the parties, exercisable in 2025.

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• Key Data:

• Equity value (70%) = 3.6m€
• 2021 Revenues = 7.6m€
• EBITDA = 0.8m€

• Employees = ~55

• Bolt-on acquisition

• Strong know-how in on-field services and energy savings
• Strong possible synergies with Iot/Digital services provided by CAREL
• Financial fitting:
• ~7x EV/EBITDA
• Low impact on Carel's NFP

M&A – 2022 – Arion

• Company profile: Arion is the joint venture based in Bolgare (Bergamo Province - Italy), established in 2015 between CAREL and Bridgeport S.p.A. with the aim of developing sensor technology expressly dedicated to the air conditioning and refrigeration sectors.
• Rationale: The transaction is consistent with the Group's long-term strategy since the use of increasingly advanced sensors will make the equipment more efficient, more reliable and more connected with the eco-system in which they are inserted, also facilitating the activation of digital services.
• Transaction structure: Carel acquired a further 30% of the share capital of Arion reaching a 70% stake.

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• Key Data:

• Equity value (30%) = 1.2m€
• 2021 Revenues = 2.7m€
• 2020 EBITDA = 0.5m€
• Employees = 6
• Industrial fitting:
• Bolt-on acquisition
• Enabler of digital services
• Focus on those applications presenting higher growth trends
• Secure supply-chain in critical technology
• Financial fitting:
• ~7x EV/EBITDA Low impact on Carel's NFP

M&A – 2021 – CFM

• Company profile: a long-standing distributor and partner in Turkey as well as a provider of digital and on-field services and complete high added value solutions dedicated to OEMs, contractors and end users in the Turkish HVAC (Heating, Ventilation and Air conditioning) and Refrigeration market.
• Transaction structure: Carel takes control of CFM through the acquisition of 51% of the share capital of the company The acquisition of the remaining 49% of CFM, the valuation of which is tied to CFM future results, is governed by a crossoption mechanism between the parties, exercisable between 2024 and 2027.

• Key Data:

• Enterprise value (51%) = 23.1m€
• 2020 Revenues = 14.5m€
• EBITDA = 5.0m€
• Employees = ~34

• Industrial fitting:

• Bolt-on acquisition
• Footprint expansion outside Western Europe
• Strong know-how in digital and onfield services
• Financial fitting:
• ~9x EV/EBITDA
• Low impact on Carel's NFP

M&A – 2021 – Enginia

• Company profile: Enginia has been operating in the AHU sector since 1997 and has grown year after year to become a recognized leader, particularly as regards the manufacture production of dampers for air handling units.
• Rationale: expansion of the product portfolio in the HVAC market, consolidating CAREL's role as a supplier of complete solutions to manufacturers of air handling units through advanced solutions in terms of performance and energy efficiency.
• Transaction structure: Carel, through its subsidiary Recuperator, acquired 100% of the share capital of Enginia.

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• Key Data:

• Enterprise value* = 12.4m€
• 2020 Revenues = 12.3m€
• 2020 EBITDA = 1.5m€

• Employees = 46

• Bolt-on acquisition

• Completing CAREL's product range for AHU
• Significant synergies with CAREL/Recuperator
• Financial fitting:
• ~8x EV/EBITDA* Low impact on Carel's NFP

M&A – 2018 – Recuperator

• Key Data:

• Cash-out for equity = 25.7m€
• Company positive net-cash = 6.9m€
• 2017 Revenues = 16.4m€
• EBITDA = 1.7m€
• Employees = ~60

• Industrial fitting:

• Small-size Company
• Complementary products
• Carel's commercial strength
• Cross-selling

• Financial fitting:

• ~11x EV/EBITDA vs. CAREL's ~15x
• Net-Cash in the BS
• Low impact on Carel's NFP

M&A – 2018 – HygroMatik

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• Key Data:

• Cash-out for equity = 56.1m€
• Enterprise Value = 59.0m€
• 2017 Revenues = 15.0m€
• EBITDA = 4.7m€
• Employees = ~60

• Industrial fitting:

• Small-size Company
• Interesting geographic positioning
• Strong in after-sale services

Cross-selling

• Financial fitting:

• ~12.5x EV/EBITDA vs. CAREL's ~15x
• HygroMatik NFP substantially neutral.

Disclaimer

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This document has been prepared by CAREL Industries S.p.A for use during meetings with investors and financial analysts and is solely for information purposes. The information set out here in has not been verified by an independent audit company.

Neither the Company nor any of its subsidiaries, affiliates, branches, representative offices (the "Group"), as well as any of their directors, officers, employees, advisers or agents (the "Group Representatives") accepts any responsibility for/or makes any representation or warranty, express or implied, as to the accuracy, timeliness or completeness of the information set out herein or any other related information regarding the Group, whether written, oral or in visual or electronic form, transmitted or made available.

This document may contain forward-looking statements about the Company and/or the Group based on current expectations and opinions developed by the Company, as well as based on current plans, estimates, projections and projects of the Group. These forward-looking statements are subject to significant risks and uncertainties (many of which are outside the control of the Company and/or the Group) which could cause a material difference between forward-looking information and actual future results.

The information set out in this document is provided as of the date indicated herein. Except as required by applicable laws and regulations, the Company assumes no obligation to provide updates of any of the aforesaid forward-looking statements.

Under no circumstances shall the Group and/or any of the Group Representatives beheld liable (for negligence or otherwise) for any loss or damage howsoever arising from any use of this document or its contents or otherwise in connection with the document or the aforesaid forward looking statements. This document does not constitute an offer to sell or a solicitation to buy or subscribe to Company shares and neither this entire document or a portion of it may constitute a recommendation to effect any transaction or to conclude any legal act of any kind whatsoever.

This document may not be reproduced or distributed, in whole or in part, by any person other than the Company. By viewing and/or accepting a copy of this document, you agree to be bound by the foregoing limitations

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This document and all of its contents are property of CAREL. All unauthorised use, reproduction or distribution of this document or the information contained in it, by anyone other than CAREL, is severely forbidden.