Carel Industries

Investor Presentation • Mar 3, 2022

CAREL INDUSTRIES S.p.A. 2021 – FY Results

FY 2021 - Main events

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New Croatian plant construction kick-off

Completion of the acquisition of 51% of the share capital of CFM and 100% of the share capital of Enginia

Appointment of CAREL's new Board of Auditors and Board of Directors. One specific Director, Carlotta Rossi Luciani, was assigned tasks and powers concerning ESG.

Signing of CAREL's first Sustainability Linked Loan for an amount of 20m€

Disclosure of the first Multi-year sustainability plan - "Driven by the Future"/Sustainability in action

Disclosure on Revenues/Opex/Capex alignment with European Taxonomy (one year ahead compared to regulation requirements) ²⁰²²

FY 2021 – Financial highlights

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Q4 substantially confirmed the positive trends already reported in the first 9M 2021, resulting into an yearly record growth rate in revenues and an increase in profitability, in spite of the global tensions in the electronic materials supply chain and higher inflation.

• Excluding the adverse impact of the exchange rates, and the contribution coming from the acquisition of CFM and Enginia (~16.0m€) the organic revenues growth rate the year remains well above 20% (+21.9%).

• 2021 was charachterised by the ability of the company to take advantage of robust positive trends across the board. Thanks to its resilience CAREL managed to partly mitigate the effect of the supply chain constraints which is still impacting on a number of CAREL product families.

• Adj. EBITDA margin equal to 21.0%, up 130bps on FY 2020.

• Excellent performance driven mainly by operating leverage offsetting higher raw material costs and a slightly different product mix due to the shortage.

• Net of the M&A activity, NFP halved compared to 2020 thanks to a high cash conversion rate (60%): ~70m€ FFO easily covered ~15m€ increase in NWC (driven by an expected increase in inventory and higher revenues), ~18m€ capex and ~12m€ dividends.

FY 2021 – Results

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KPIs
m€	FY 2020	FY 2021	Δ%
Revenue	331.6	420.4	26.8%
Revenue FX Adj.	331.6	421.5	27.1%
Revenue (no M&A)	331.6	404.4	21.9%
EBITDA	65.2	85.3(2)	30.8%
EBITDA adj.	65.4	88.2(3)	35.0%
EBITDA Adj./Revenue	19.7%	21.0%
Net Profit	35.1	49.1	39.7%
Capex	13.3	18.7	40.6%

(1) Including ~16.0m€ from the inclusion of CFM and Enginia in the consolidation perimeter

(2) Including approx 4.1m€ from the inclusion of CFM and Enginia in the consolidation perimeter

(3)Excluding approx. 2.9m€ related mainly to M&A advisory costs.

• Revenue +26.8%: The growth rate remains above 20% even net of the positive contribution coming from the inclusion in the scope of consolidation of CFM and Enginia (for approximately half-year). It is above 20% also if we compare actual revenue with the results reported in 2019 (the latter were not impacted by the COVID pandemic).
• EBITDA adj. +35.0%: The very positive results reported in revenues were reflected in the EBITDA Adj. growth rate. On a like-for-like basis the growth rate would have been ~25%. 21% EBITDA adj. margin (+130bps compared to 2020), slightly lower compared to 9M 2021 due mainly to seasonal effects.
• Net Profit +39.7%: benefitting from the operating results. Significant improvement on FY 2020 tax rate (19.6% against 21.1%) thanks mainly to a favourable geographic profit mix.
• Capex: higher capex including the new plant in Croatia.
• Dividend: 0.15€ per share proposed dividend (+25% compared to 2020); ~30% pay-out ratio

FY 2021 – Revenue breakdowns

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• EMEA Very significant growth reported in one of the most important geographic areas (~22% growth on a LFL basis) in spite of the raw materials shortage phenomenon.
• APAC In the last two quarters the growth rate reported in the area started to get back to a more normalized level maintaining solid growth prospects for the future.
• Americas (North) On a LFL basis (excluding FX) Q4 growth rate close at 18% confirming the positive trend experienced during the year

• Americas (South) Strong performance in the entire region.

• HVAC: Net of the FX impact the total growth was nearly 25% (~20% organic), thanks to a very strong demand across all the applications. Q4 performance substantially aligned to first 9M in spite of a tight raw material shortage scenario

• Refrigeration: Even excluding the contribution coming from M&A, the growth reported in the sector would have been higher than 25% thanks to a strong recovery in the investment cycle in Food retail and in food service as well.

From EBITDA to Net Profit

K€	FY '20	FY '21	Δ%
EBITDA	65,194	85,302	30.8%
D&A	-18,482	-20,844
EBIT	46,713	64,457	38.0%
Financial (charges)/income	-1,489	-2,355
FX gains/losses	-921	-1,430
Gain/Loss on liabilities valuation on minorities	-	-125
Results from companies cons. with E.M.	208	508
EBT	44,511	61,055	37.2%
Taxes	-9,393	-11,967
Minorities	-5	-29
Group net profit	35,112	49,059	39.7%

• Higher D&A mainly due to the change in the scope of consolidation (CFM and Enginia) and higher capex.

• Higher financial charges due to IFRS 16 interest and accounting impact from put and call option on CFM acquisition.
• FX losses mainly related to the operations in Brazil, Croatia and China.

• Lower Tax-rate (19.6%), compared to 21.1% in FY 2020. It benefits from a favorable geographic profit mix.

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FY 2021 – NFP Bridge

• Excluding the impact of the M&A activity, NFP would have been more than halved thanks to a robust cash generation (cashconversion rate equal to 60%).
• ΔNWC +15.1m€: Substantially stable compared to 9M 2021 level. The increase compared to FY 2020 is due to : 1) a significant growth in revenues; 2) an expected increase in inventory to better cope with the global raw material shortage. FY 2021 DSO improved compared to FY 2020.

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60% Cash conversion

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• Approximately half of the total FY 2021 NFP is related to IFRS 16 accounting effect.

Sustainability, Digitalization and Closing Remarks

Focus – Sustainability plan

ACT FOR THE PLANET

22 GOALS DIVIDED INTO:

ENVIRONMENTAL POLICIES

• Environmental pollution and climate change
• Energy efficiency and sustainable products
• Reduction of waste and resort to responsible disposal methods

INNOVATION AND TECHNOLOGY

• R&D and product innovation
• Quality and safety of products and services

ACT FOR PEOPLE

22 GOALS DIVIDED INTO:

PEOPLE

• Respect for human rights
• Diversity, equal opportunities and inclusion
• Professional training & development
• Health and safety at work
• Attraction, development and retention of talents
• Engagement of, listening to & satisfaction of employees
• Well-being, life-work balance and protection of employment

COMMUNICATION

• Involvement, listening to & satisfaction of customers

SUSTAINABLE DEVELOPMENT OF LOCAL COMMUNITIES

• Local communities and relationship with the area

11 GOALS DIVIDED INTO:

SUSTAINABLE STRATEGY AND GOVERNANCE

• Governance and integrity of business
• Privacy, data security and protection
• Responsible supply chain management
• Prevention of and fight against corruption

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Focus - Digitalization

In the last few years CAREL has adopted a Digitalization Roadmap to foster its transition towards a digital Enterprise

The financial resource requested by the Digitalization Roadmap will be approximately 5m€ in 2022

Closing Remarks

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• 2021 FY results marked a record in CAREL history both in terms of revenues growth and profitability proving one more time the sensibility of CAREL organic development strategy followed over the year.
• 2 M&A transaction completed for a cash out of approximately 35 m€

• In the last year the company accelerated its effort in ESG topics:

• A new threefold Governance including BoDs at a strategic level, Risk Control and sustainability committee at an advisory level and ESG team at an operational level

• CAREL's first sustainability plan "Driven by the future Sustainability in action".

• Good results in EU Taxonomy analysis (~60% of the analysed revenues and 49.5% of capex are "aligned")

• Opportunities: Strong underlying trends accelerated by regulation (Fgas, Kigali Amendment, Green deal) and scenario (higher demand for energy efficiency and indoor air quality).

• Challenges: Persisting electronic material shortage, geopolitical tensions, COVID-19 Pandemic

Significant elements of uncertainty related to COVID-19 pandemic, electronic material shortage and recent geopolitical tensions persist, therefore it is still too early to give a precise guidance for Year end. Nonetheless, taken into account the positive trends in demand reported in the first weeks of 2022, the Group expects to report a double-digit growth in revenues (on a like for like basis) at the end of Q1

Annexes

Shareholding structure (>5% voting rights)

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Income statement and Balance Sheet

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Income statement Balance sheet

K€	FY 2021	FY 2020	Delta %
Revenues	420,418	331,610	26.8%
Other revenues	5,779	3,704	56.0%
Operative costs	(340,895)	(270,120)	26.2%
Operative costs adj.	(337,975)	(269,948)	25.2%
EBITDA	85,302	65,194	30.8%
EBITDA Adj.	88,222	65,366	35.0%
Depreciation and impairments	(20,844)	(18,482)	12.8%
EBIT	64,457	46,713	38.0%
EBT	61,055	44,511	37.2%
Taxes	(11,967)	(9,393)	27.4%
Net result of the period	49,088	35,118	39.8%
Non controlling interest	29	5	n.r
Group net result	49,059	35,112	39.7%

K€	FY 2021	FY 2020	Delta %
Fixed Capital	230,630	176,413	30.7%
Working Capital	55,591	41,007	35.6%
Employees defined benefit plans	(8,612)	(8,189)	5.2%
Net invested capital	277,610	209,231	32.7%
Equity	169,875	159,621	6.4%
Non currrent liabilities	49,894	-	n.r.
Net financial position (asset)	57,841	49,610	16.6%
Total	277,610	209,231	32.7%

Company Profile

Leading provider of advanced control solutions for HVAC/R

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Note: financial data refer to consolidated accounts of CAREL Industries S.p.a. 2015-2021 IFRS. Comparability might be affected by change in consolidation perimeter

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

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

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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 2020-2023 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-22

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Leading provider of advanced energy efficient control solutions

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

Source: Company information as of Mar-18, BSRIA (Mar-17)

Note: 1) 2016 market shares calculated on # of units based on BSRIA market data and management elaborations; 2) close control units for data centers in US, UK and Italy; 3) tested by third-party laboratory compared to Topten EU benchmarks; 4) 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

digitalisation and environmental focus

wallet

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…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

Leadership position in HVAC OEM premium niches… 3

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Source: Management elaborations based on BSRIA data for the year 2016 (based on report dated Mar-17) Note: 1) Total other minor proprietary c.13%; 2) Total other minor proprietary c.8%

…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…

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 Dec.21;

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

⁵ Track record of profitable organic growth

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

Source: Company information as of Mar-22 Note: 2015-2020 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 - 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 C

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

COMPLEMENTING CORE-BUSINESS

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through the acquisition of complementary products / services, competences and niche markets, and increasing its presence in European markets

GEOGRAPHICAL EXPANSION ABROAD, mainly US and APAC B

Potential selected acquisitions in NEW APPLICATIONS (e.g. industrial refrigeration, building automation, etc.)

C

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.

M&A

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

• Industrial fitting:

• 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

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• 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