Carel Industries

Investor Presentation • May 6, 2021

CAREL INDUSTRIES S.p.A. 2021 – Q1 Results

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Q1 2021 – Financial highlights

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Q1 2021 results marked the highest quarterly organic growth rate in revenues ever reached by the Group in the last 10 years. This is true comparing results with both Q1 2020 and Q1 2019

• Excluding the adverse impact of the exchange rates, revenues growth would have been even higher, moving from 24.0% to 26.9%.

• Very positive results in every region and every sector confirming the acceleration of the growth trends already seen in the second part of 2020. In addition to this, a significant rebound in a number of industrial sectors, such as automotive (>30%) and a recovery in the food service segment (>10%), thanks also to the ability of the Group to seize important market opportunities.

• EBITDA margin equal to 22.5%, up 280bps on FY 2020 and 430bps on Q1 2020.

• Excellent performance driven by operating leverage along with the continuous deployment of the effects linked to the initiatives to contain opex taken in 2020.

• ~20m€ FFO easily covered ~12m€ increase in NWC (driven by a recurring seasonal trend in receivables and by an expected increase in inventory) and ~2m€ capex.

Q1 2021 – Outstanding KPIs growth reported

KPIs				Q1 2019-2021 Revenues (m€)
m€	Q1 2020	Q1 2021	Δ%		+21.9%
Revenue	78.7	97.6	24.0%		97.6
Revenue FX Adj.	78.7	99.9	26.9%	80.1	78.7
EBITDA	14.4	22.0	53.2%
EBITDA/Revenue	18.2%	22.5%
Net Profit	7.6	13.3	75.5%
Capex	2.4	2.0	-16.7%	Q1 2019	Q1 2020 Q1 2021

• Revenue +24.0%: A strong acceleration across the board with a reported growth trend higher than 20% in all the regions and in all the macro-segments, confirming once again the well-balanced business portfolio of the Group and its ability to manage different applications in different commercial and geographical environments. Excluding FX and no-core impacts, revenues growth rate would have reached +27.5%. Compared to Q1 2019, revenues growth rate is, as well, above 20%.
• EBITDA +53.2%: The very positive results reported in revenues were reflected in the EBITDA growth rate thanks to operating leverage and the opex containment initiatives already implemented during the pandemic.
• Net Profit +75.5%: benefitting from operating results. Stable tax-rate (19.4% in Q1 2021 vs. 19.3% in Q1 2020).
• Capex: In absolute terms, Q1 2021 were substantially in line with Q1 2020

Q1 2021 – Revenue breakdowns

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• EMEA Significant growth in all the sub-segments linked to a strong recovery in demand both in HVAC and in Refrigeration.
• APAC China's exceptional +18.3% growth in GDP drove the performance in the area. Particularly important, also, it is a double-digit recovery in South APAC, which was struck severily by the pandemic in 2020.
• Americas (North) 2020 negative trend reversed in Q1 2021, also thanks to better execution strategy. Net of FX impact the reported growth would have been close to 30%

• Americas (South) Strong performance especially in Brazil.

• HVAC recovery trend already visible in H2 2020 continued and accelerated in Q1 2021 thanks mainly to a strong recovery in the industrial sector and a further improvement in heat-pumps and Data centres applications. Flat Commercial segment while wellness applications are still suffering.

• Strong rebound in Refrigeration. The investment cycle in food retail sector, which was stagnant in 2020, picked-up again in Q1 2021 (in Europe thanks also to F-gas new milestone). Positive performance also in Food service segment. 4

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From EBITDA to Net Profit

K€	Q1 '20	Q1 '21	Δ%
EBITDA	14,335	21,995	53.4%	• D&A substantially in line with Q1
D&A	-4,613	-4,742		2020.
EBIT	9,742	17,253	77.1%
Financial (charges)/income	-335	-506		• Higher financial charges due to higher
FX gains/losses	23 -179			amount of gross debt.
EBT	9,430	16,568	75.7%	• FX losses mainly related to the operations in Brazil, Croatia and
Taxes	-1,822	-3,214		China.
Minorities	-6	-7
Group net profit	7,602	13,347	75.6%	• Tax-rate 19.4%, in line with 19.3% reported in Q1 2020.

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Q1 2021 – NFP Bridge

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• Excluding the IFRS 16 accounting impact, the NFP is equal to 17.4m€
• ΔNWC +12.7m€ due to : 1) a significant increase in revenues; 2) an expected increase in inventory to better cope with the global raw material shortage; 3) a seasonal trend in receivables. As per the latter, Q1 2021 DSO improved compared to Q1 2020.
• Cash and cash-equivalent on-hand at the end of the period >100m€

Closing Remarks

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Demand

• A significant upturn was reported in the most important economic systems. Q1 2021 GDP Growth: China +18.3%; US +6.4%. This led to a generalized increase in demand.
• HVAC: In addition to the acceleration of the positive trends reported in H2 2020 (Heat-pumps, datacenters) a strong recovery in a number of industrial applications (Automotive above all) was experienced.
• Refrigeration: the investment cycle strengthened and positive performance in food service reported.

Operations

• The persistence of the COVID-19 pandemic and a global raw material shortages caused important operating and logistic challenges: CAREL, starting already in 2020, took significant countermeasures:
• in order to increase resilience and to further implement the "mirroring production strategy", 12 new production lines were deployed (Croatia, US, China);
• shifting from a "double source" strategy to a "double-country source strategy", homologating new alternative components;
• inventory increase.

Results

• The combination of a global growth in demand, the ability of CAREL in seizing important market opportunities and its resilience and flexibility allowed the Group to achieve a 10-year record growth rate in revenues and an EBITDA margin significantly higher than 20%.

Guidance

Taking into account the excellent results reported in Q1 2021 and the positive indications deriving from the current order intake, without any further worsening of the global raw material shortage or the current COVID-19 scenario, CAREL expects to maintain a double-digit revenues growth rate in FY 2021 (+12% as a floor).

M&A

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

Annexes

Shareholding structure (>5% voting rights)

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Income statement and Balance Sheet

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Income statement Balance sheet

K€	Q1 2021	Q1 2020	Delta %
Revenues	97,623	78,740	24.0%
Other revenues	1,982	649	205.5%
Operative costs	(77,610)	(65,034)	19.3%
EBITDA	21,995	14,355	53.2%
Depreciation and impairments	(4,742)	(4,613)	2.8%
EBIT	17,253	9,742	77.1%
EBT	16,568	9,430	75.7%
Taxes	(3,214)	(1,822)	76.4%
Net result of the period	13,353	7,608	75.5%
Non controlling interest	7	6	12.4%
Group net result	13,347	7,602	75.6%

K€	Q1 2021	FY 2020	Delta %
Fixed Capital	175,066	176,413	(0.8%)
Working Capital	53,531	41,007	30.5%
Employees defined benefit plans	(8,096)	(8,189)	(1.1%)
Net invested capital	220,501	209,231	5.4%
Equity	175,574	159,621	10.0%
Net financial position (asset)	44,927	49,610	(9.4%)
Total	220,501	209,231	5.4%

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. 2015-2020 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

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

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.

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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

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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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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

Increase in share of wallet

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

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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

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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 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…

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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 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

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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

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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

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

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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