Carel Industries

Investor Presentation • Nov 4, 2021

CAREL INDUSTRIES S.p.A. 2021 – 9M 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.

4 th November 2021

9M 2021 – Financial highlights

2

2

In spite of the global tensions in the electronic materials supply chain, the company achieved very positive results also in Q3 2021 (over an already favourable Q3 2020, +7.7%): a double-digit revenue growth (~15.0%) on a like-for-like basis.

• Excluding the adverse impact of the exchange rates, and the contribution coming from the acquisition of CFM and Enginia (~9.4m€) the organic revenues growth rate in the first 9M of the year remains well above 20% (+22.5%).
• The positive trend in demand across the board that underpinned the first part of 2021 continued as well in Q3 2021. The lower magnitude of the growth in revenues in the last three months is exclusively related to the constraints imposed by global shortage of electronic material. In any case the higher backlog will be recovered in the next quarters.

• Adj. EBITDA margin equal to 21.9%, up 230 bps on 9M 2020 and 220bps 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 decreased by more than 30%: ~55m€ FFO easily covered ~14m€ increase in NWC (driven by an expected increase in inventory and higher revenues), ~14m€ capex and ~12m€ dividends.

9M 2021 – Org. rev. growth and profitability >21%

	KPIs
m€	9M 2020	9M 2021	Δ%
Revenue	248.0	310.3(1)	25.1%
Revenue FX Adj.	248.0	313.0	26.2%
Revenue (no M&A)	248.0	300.9	21.4%
EBITDA	48.5	66.0(2)	36.1%
EBITDA adj.	48.7	68.0(3)	39.6%
EBITDA Adj./Revenue	19.6%	21.9%
Net Profit	26.2	38.8	48.2%
Capex	7.8	13.8	77.0%

(1) Including ~9.4m€ from the inclusion of CFM and Enginia in the consolidation perimeter (2) Including approx 2.3m€ from the inclusion of CFM and Enginia in the consolidation perimeter (3)Excluding approx. 1.9m€ related mainly to M&A advisory costs.

• Revenue +25.1%: 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 (acquired between May and June 2021). It is above 20% also if we compare actual revenue with the results reported in the first 9M 2019 (the latter were not impacted by the COVID pandemic).
• EBITDA adj. +39.6%: The very positive results reported in revenues were reflected in the EBITDA Adj. growth rate. On a like-forlike basis the growth rate would have been ~35%. In spite of the increasing tension on the supply chain the company managed to maintain profitability (EBITDA margin) close to what achieved in H1 2021 (21.9% against 22.4%).
• Net Profit +48.2%: benefitting from the operating results. Significant improvement on 9M 2020 tax rate (20.8% against 23.0%) thanks mainly to a favourable geographic profit mix.
• Capex: higher capex including the new plant in Croatia.

9M 2021 – Revenue breakdowns

• EMEA In spite of the tight scenario due to the raw material shortage, the company managed to maintain an organic double-digit growth in Q3 (>13%).
• APAC The exceptional growth in the area benefits from a strong performance in China together with a remarkable improvement in South APAC (Q3 2021 >15%).
• Americas (North) Net of the contribution coming from M&A, Q3 confirms the growth trend already reported in H1 2021
• 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. The slowdown in the growth pace reported in Q3 is exclusively attributable to the electronic material shortage.
• Refrigeration: Even excluding the contribution coming from M&A, the growth reported in the sector would have been close to 25% thanks to a strong recovery in the investment cycle in Food retail and a significant focus on high efficiency. 4

From EBITDA to Net Profit

E-MARKET SDIR
CERTIFIED

K€	9M '20	9M '21	Δ%
EBITDA	48,523	66,042	36.1%
D&A	-13,768	-15,147
EBIT	34,755	50,894	46.4%
Financial (charges)/income	-1,095	-1,719
FX gains/losses	125	-310
Results from companies cons. with E.M.	252	509
EBT	34,035	49,375	45.1%
Taxes	-7,832	-10,283
Minorities	-14	291
Group net profit	26,190	38,801	48.2%

• 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.

• Much lower Tax-rate (20.8%), compared to 23.0% in 9M 2020. It benefits from a favorable geographic profit mix.

9M 2021 – NFP Bridge

6

• Excluding the impact of the M&A activity, NFP would have decreased by more than 30% thanks to a robust cash generation.
• ΔNWC +13.7m€: Substantially stable compared to H1 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. 9M 2021 DSO improved compared to 9M 2020.
• More than one third of the total 9M 2021 NFP is related to IFRS 16 accounting effect.

Closing Remarks

7

7

• The same positive trends reported in the first half of the year drove the demand, with the same intensity, in Q3:

• HVAC - heat pumps, data centres and indoor air quality segments continued to grow.
• Refrigeration the strong recovery in the investment cycle in Food Retail, helped also by regulation, is confirmed. Positive performance in Food Service.
  • COVID Pandemic and the current spike in the price of energy commodities are increasing the sensitivity for high-efficiency solutions.

• As expected, tensions in the supply chain intensified in Q3. The impact on CAREL activities would have been heavier if the Company had not taken a number of significant countermeasures in the last 12 months: deployment of new production lines; chip-pivoting and homologation of alternative components; inventory increase.
• COVID-19 inducted new lockdowns in South Asia in Q3 resulted in higher tensions in the electronic material shortage scenario.

Results

• In spite of the difficult supply chain conditions, the company managed to achieve in Q3 a ~15% LFL growth rate in revenues, keeping a 21% EBITDA adj. margin. This is even more remarkable considering that Q3 2020 already reported a 7.7% growth on previous year.

Guidance

Taking into account the very positive trend in demand along with a tight supply chain scenario CAREL moves its previous revenues growth rate guidance for FY 2021 from 15%-20% to 17%-19% (excluding any contribution from M&A).

Annexes

Shareholding structure (>5% voting rights)

9

Income statement and Balance Sheet

10

10

Income statement Balance sheet

K€	9M 2021	9M 2020	Delta %
Revenues	310,309	247,955	25.1%
Other revenues	3,409	2,157	58.0%
Operative costs	(247,677)	(201,589)	22.9%
Operative costs adj.	(245,763)	(201,444)	22.0%
EBITDA	66,042	48,523	36.1%
EBITDA Adj.	67,956	48,668	39.6%
Depreciation and impairments	(15,147)	(13,768)	10.0%
EBIT	50,894	34,755	46.4%
EBT	49,375	34,035	45.1%
Taxes	(10,283)	(7,832)	31.3%
Net result of the period	39,092	26,204	49.2%
Non controlling interest	291	14	n.r.
Group net result	38,801	26,190	48.2%

K€	9M 2021	FY 2020	Delta %
Fixed Capital	231,324	176,413	31.1%
Working Capital	52,694	41,007	28.5%
Employees defined benefit plans	(8,338)	(8,189)	1.8%
Net invested capital	275,681	209,231	31.8%
Equity	157,788	159,621	(1.1%)
Non currrent liabilities	49,364	-	n.r.
Net financial position (asset)	68,529	49,610	38.1%
Total	275,681	209,231	31.8%

M&A - 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 - 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.

12

12

• 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

*The transaction included the real estate complex that houses the company's headquarters, which was valued separately.

Company profile

Leading provider of advanced control solutions for HVAC/R

14

Note: financial data refer to consolidated accounts of CAREL Industries S.p.a. 2015-2020 IFRS. Comparability might be affected by change in consolidation perimeter

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…

Source: Company information as of Mar-21

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

Source: Company information as of Mar-21 Note: 1) developed with partners

16

Long track record of profitable organic growth

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.

Branches

Plants

17

of local distributors

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

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-21

A

B

C

Leading provider of advanced energy efficient control solutions

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

20

20

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

21

21

Source: Company information

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

Increase in share of wallet

products driven by break-through innovations, such as energy saving features, digitalisation and environmental focus

22

…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

25

25

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

26

26

Source: Company info; Management elaborations

4 Highly efficient global operations serving locally…

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.

4 …diversified blue-chip customers

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

Source: Company information as of Dec.20;

Note: 1) as% of 2020 Revenues 2) as of 2020 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

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

Source: Company information as of Mar-21

Note: 2015-2020 IFRS

Note: 1) Including the contribution from Hygromatik and Recuperator 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

A

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

M&A

M&A - 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 - HygroMatik

34

34

• 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

35

35

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

36

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.