Carel Industries

Investor Presentation • May 12, 2023

CAREL INDUSTRIES S.p.A. 2023 – Q1 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.

12th May 2023

Q1 2023 – Highlights

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For the ninth consecutive quarter CAREL reported a double digit-organic revenue growth in spite of a challenging scenario in the supply chain, keeping an EBITDA margin close to 21%.

• Organic growth stood at 11.3%, exceeding the guidance given in March thanks to an excellent management of tensions reported in the supply chain experienced in the first weeks of the year.
• Positive demand recorded in HVAC in particular in certain applications such as heat-pumps, data centre cooling and Indoor Air Quality. The expected temporary slow-down in Refrigeration demand materialized in Q1 2023 due mainly to an uncertain global economic scenario and inflation.

• EBITDA margin equal to 20.8%, above FY 2022 (20.5%) and close to Q1 2022 (21.1%).
• The continuous deployment of the effects deriving from previous price-list increases and the positive operating leverage offset higher costs on raw materials (persisting inflation, even if at a lower extent, compared to 2022).

• Q1 2023 NFP (including 3.9m€ cash-out for Eurotec) was substantially in line with FY 2022.
• ~ 20m€ NWC increase due mainly to revenue growth and higher inventory level linked mainly to the raw material shortage.

Q1 2023 – Results

m€	Q1 2022	Q1 2023	Δ%
Revenue	128.9	161.0(1)	24.8%
Organic Revenue	128.9	143.6	11.3%
EBITDA	27.2	33.4(2)	22.8%
EBITDA Revenue	21.1%	20.8%
Net Profit	16.4	18.5	13.2%
Capex	4.7	3.0	-35.3%

(1) Incl. ~17.4m€ (change in the consolidation perimeter); (2) Incl. 2.0m€ (change in the consolidation perimeter);

• Revenue +24.8%: Contribution coming from both organic and M&A activities led to a strong performance (2023 is the third consecutive year in which the Group reports a >20% revenue growth in Q1). Results are even more positive taking into consideration the challenging supply chain scenario that underpinned the first weeks of the year.
• EBITDA +22.8%: The very positive results reported in revenue were reflected in the EBITDA growth rate thanks to further deployment of previous price-list increases, along with operating leverage which helped in recovering part of the raw material cost inflation. Q1 2023 opex include two important European exhibition (ISH and Euroshop)
• Net Profit +13.2%: benefitting from the operating results. 22.1% tax-rate, in line with expectation and FY 2022, was higher on Q1 2022 (20.5%) impacted by a different country-mix and changes in regulations.
• Capex: Lower capex due to a different quarterly distribution. FY 2023 ~5% Capex/revenues expectation confirmed.

Q1 2023 – Revenue breakdowns

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EMEA 73% APAC 12% North America 13% South America 2% 161.0 M€ Area Q1 2022 Q1 2023 Δ% Δ% fx EMEA 93.3 117.2 25.7% 26.2% APAC 17.9 20.1 12.0% 13.6% Americas (North) 15.2 20.8 36.8% 32.6% Americas (South) 2.6 2.9 14.3% 9.5% Total Revenue 128.9 161.0 24.8% 24.8%

• EMEA Robust growth rate driven mainly by HVAC and M&A. LFL growth rate close to 13%.
• APAC Double digit growth led by strong performance in South APAC. China's macro-economic scenario is gradually improving.
• Americas (North) The main contribution to the strong performance in US was M&A (SENVA offsetting the impact of the raw material shortage.
• Americas (South) Positive performance both in HVAC and Refrigeration in spite of the raw material shortage.

• HVAC: Excellent growth confirmed (~20% excluding M&A), driven by a strong demand particularly in heat pumps, Indoor air quality and data centers.
• Refrigeration: As expected, the temporary raw material shortage phenomenon heavily impacted sector's performance. Sluggish demand in food service and a deceleration in the investment cycle in food retail due to inflation/macro-economic scenario

From EBITDA to Net Profit

	K€	Q1 '22	Q1 '23	Δ%
EBITDA		27,234	33,439	22.8%	• Higher D&A mainly due to the purchase price allocation amortization.
	D&A	-5,414	-7,532
EBIT		21,821	25,907	18.7%
	Financial (charges)/income	-585	-777		• Higher Financial charges due to the macro trend on interest rates.
	FX gains/losses	-79	52
EBT		21,156	25,182	19.0%	• Higher tax-rate (22.1%), compared to Q1
	Taxes	-4,345	-5,564		2022 (20.5%) due to a different Country-mix and a number of changes in regulations.
	Minorities	-425	-1,074		• Higher minorities due to strong
Group net profit		16,386	18,544	13.2%	performance reported by CFM.

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Q1 2023 – NFP Bridge

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• Stable NFP compared to FY 2022.
• ΔNWC +21.4m€: due to higher DSO (linked to seasonality, higher revenues and raw material shortage) and an increase in inventory (~11m€) also in this case linked to the raw material shortage.
• Approximately 35% of the total Q1 2023 NFP is related to IFRS 16 accounting effect.

Closing Remarks

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• Q1 2023 was the 9 th consecutive quarter reporting a double-digit organic growth. This result, achieved in presence of a challenging electronic material shortage and a deceleration in the refrigeration sector, confirms once again the resilience of the wide business portfolio of the Group, covering several applications and geographic areas subject to different cycles and different macro-economic scenarios.

M&A and Integration

• Carel relentless M&A activity continued also in Q1 2023 with the acquisition of Eurotec, a distributor, system integrator and long-time commercial partner of CAREL based in Auckland in New Zealand.
• Several workstreams have been opened in order to quickly integrate the companies acquired in 2022, with an initial focus on coordinating purchasing and production.

• Challenges: Even if in constant and gradual improvement, electronic material shortage is still an issue, in particular in certain applications. On top of this, inflation rate, the geopolitical tensions and the restrictive monetary policy adopted by the Fed and ECB are all elements having already an impact on the most cyclical applications in which CAREL operates (Industrial HVAC; Commercial Refrig.)
• Opportunities: Transition to low GWP refrigerants is already gaining traction also outside Europe (Kigali Amendment ratification by China and India and authorized by the US Senate). Booming Heat pumps market, in particular in Europe due to he REPowerEU regulation.

Guidance

Taking into consideration the above-mentioned situation the Group maintains a positive and optimistic outlook for the rest of the year: an improvement in the supply chain is expected and the slow-down in refrigeration demand should be temporary. In H1 2023 CAREL expects to report a low to mid teens percentage revenue growth (LFL, current exchange rate).

Annexes

Shareholding structure (>3% voting rights)

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Income statement and Balance Sheet

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Income statement Balance sheet

K€	Q1 2023	Q1 2022	Delta %
Revenues	160,982	128,949	24.8%
Other revenues	1,276	914	39.6%
Operating costs	(128,819)	(102,629)	25.5%
EBITDA	33,439	27,234	22.8%
Depreciation and impairments	(7,532)	(5,414)	39.1%
EBIT	25,907	21,821	18.7%
EBT	25,182	21,156	19.0%
Taxes	(5,564)	(4,345)	28.1%
Net result of the period	19,618	16,811	16.7%
Non controlling interest	1,074	425	>100%
Group net result	18,544	16,386	13.2%

K€	Q1 2023	FY 2022	Delta %
Fixed Capital	297,665	300,499	(0.9%)
Working Capital	109,817	89,926	22.1%
Employees defined benefit plans	(8,180)	(8,129)	0.6%
Net invested capital	399,302	382,296	4.4%
Equity	233,480	221,247	5.5%
Non currrent liabilities	65,351	65,208	0.2%
Net financial position (asset)	100,471	95,841	4.8%
Total	399,302	382,296	4.4%

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.

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

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Source: Company information as of Mar-22

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

² Attractive market growth supported by secular trends

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Source: Company information

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

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FROM PRODUCT PLATFORMS TO INTEGRATED ELECTRONIC SOLUTIONS…

…IN THE HVAC AND REFRIGERATION MARKETS

Positioning and innovation capability hard to replicate 3

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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

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Well-established relationships oriented to preserve and enhance the CUSTOMER LIFE-TIME VALUE

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

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

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

• 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.

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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.