Carel Industries

Investor Presentation • May 8, 2020

CAREL INDUSTRIES S.p.A. 2020 – Q1 Results

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8 th May 2020

Q1 2020 – Highlights

Thanks to the resilience of its production footprint, CAREL managed to mitigate the negative effects (between -6m€ and -7m€) caused by the temporary lockdown in China and the shutdown of the Italian plant, reporting revenues substantially in line with Q1 2019 (-1.7%).

• Revenues were substantially in line (-1.7%) with what reported in Q1 2019 in spite of the temporary shutdown of a significant part of CAREL's production facilities accounting for more than 60% of its total production capacity.

• This result is mainly linked to the strategy that the Group has always followed, resulting in the capability to manufacture 90% of CAREL's product platforms in at least 2 plants.

• EBITDA margin equal to 18.2%, ~130bp less than FY 2019 adj., mainly due to the revenue trend and the consequent lack of the positive effect from operating leverage.

• CAREL has implemented a number of initiatives to contain opex, the effects of which will be fully deployed in the next few quarters.

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• Stable NFP compared to FY 2019, in spite of an expected increase in NWC.

Focus on COVID-19 - Operations

• CAREL has 1 production plant in China, in Suzhou, accounting for approximately 30% of the Group's total production capacity.
• The plant was shut down for one week, form 3 to 10 February and gradually returned to full capacity over the following weeks.
• As of today the plant is running at 115% on planned capacity and this percentage is going to rise in the next few weeks.
• CAREL has 1 production hub in Italy (plus a plant owned by its subsidiary Recuperator, located near Milan), accounting for approximately 30%-40% of the CAREL's entire production.
• The production hub slowed-down and ceased operations for approximately 10 days at the end of March due to the restrictions imposed as a result of the COVID-19 pandemic.
• Production resumed on 7 April at a limited capacity pertaining to essential activities only, as indicated by the Government. The hub got back to 100% capacity starting from 4 of May.

• Recuperator plant continued operating during the emergency for the essential activities only and reached 100% capacity starting from the 4 May.

• Currently, the Group's total available production capacity is more than 100% of the previously-planned level.

• The temporary shutdown of the Chinese and Italian plants resulted in a backlog, which will be partly recovered in the following months.

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Focus on COVID-19 - Initiatives

In order to mitigate the impact of COVID-19 on revenues and costs, CAREL has implemented a number of significant initiatives, the effects of which will be deployed also over the next few quarters.

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Q1 2020 – Impacted by COVID-19 pandemic

KPIs			Revenues Bridge (m€)
m€	Q1 2019	Q1 2020	Δ%
Revenue	80.1	78.7	-1.7%			-1.7%
Revenue FX Adj.	80.1	78.7	-1.7%	80.1	~85		78.7
EBITDA	15.7	14.4	-8.7%			(~6)
EBITDA/Revenue	19.6%	18.2%
Net Profit	8.9	7.6	-14.1%	Revenues	Revenues	Lock-down impact	Revenues
Capex	4.9	2.4	n.r.	Q1 2019	Q1 2020 (no lock-down)		Q1 2020

• Revenue -1.7%: the slight reduction in revenues is fully attributable to the temporary lockdown in China and to the temporary shutdown of the Italian plant. Part of the back-log will be recovered in the next few months.
• EBITDA -8.7%: the decrease in EBITDA derives from the performance reported in revenues, combined with the lack of the positive effects usually coming from the operating leverage. The latter is particularly evident in Q1, as this is the quarter in which the annualization of the 2019 hires has the most impact.
• Net Profit -14.1%: the decline in net profit is due to operating results (lower revenues/higher D&A).
• Capex: Capex reduction in line with expectation, as the expansion of the production footprint was completed at the end of 2019.

Q1 2020 – Revenue breakdowns

• Sector Q1 2019 Q1 2020 Δ% Δ% fx HVAC 53.0 50.5 -4.7% -4.9% Refrig. 25.8 27.1 4.9% 5.4% Core Revenue 78.9 77.6 -1.6% -1.6% No core 1.2 1.1 -8.8% -8.8% Total Revenue 80.1 78.7 -1.7% -1.7% HVAC 62% Refrig. 34% Other 2% 78.7 M€ m€ m€ m€ m€
• EMEA Driven mainly by a strong recovery in refrigeration and significant performance in Eastern Europe.
• APAC Approx. -3m€ deriving from the lock-down in China.
• Americas North Performance was driven by the combination of a period of expected consolidation (after the outstanding results in 2019) and the slow-down in the US economy due to COVID-19.

• Americas (South) Positive performance net of the FX impact.

• The trend in HVAC sector was heavily impacted by the shutdown of the Italian plant.

• Very positive trend in Refrigeration sector in Europe, after a significant slow-down in Q2 and Q3 2019.

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From EBITDA to Net Profit

K€	Q1 '19	Q1 '20	Δ%
EBITDA	15,718	14,355	-8.7%
D&A	-4,052	-4,613
EBIT	11,666	9,742	-16.5%
Financial (charges)/income	-266	-335
FX gains/losses	-435	23
EBT	10,965	9,430	-14.0%
Taxes	-2,095	-1,822
Minorities	-17	-6
Group net profit	8,854	7,602	-14.1%

• Slightly higher D&A mainly linked to higher Capex in 2019.

• Higher Financial charges due to increased amount of loans partially offset by a gain in foreign exchanges (loss in previous quarter)
• 19.3% tax rate, in line with Q1 2019. By the end of the year, the company confirms an expected tax-rate close to 20%, benefitting also from the renewal of the acknowledgment as High-Tech Enterprise by the Chinese Authorities.

Q1 2020 – NFP Bridge

• NFP stable compared to 2019 FY level. The FFO equal to 12.2m€ covered capex and the increase in NWC.
• ΔNWC +7.3m€: the increase in NWC was mainly due to the seasonal trend in receivables.
• At the end of the Quarter the Group has available Cash & Cash Equivalent and available credit lines for about 90m€.

Closing Remarks

Operations	• In spite of the temporary shutdown of two plants in Q1, which represent more than 60% of CAREL's total production capacity, the Group's overall strategy again proved its resiliency. • The production footprint expansion plan, completed in 2019, has been and will be a key element in balancing and mitigating the impact of possible further lockdowns in the future.
Demand	• Q1 2020 revenues were only slightly impacted by a global slow-down in demand due to COVID-19 pandemic. • A further deterioration is expected in Q2 2020, with a high level of uncertainty and volatility.
Initiatives	• The Group put in place several initiatives to: - mitigate the impact of the pandemic on revenues - reduce opex and limit non-essential capex - improve the liquidity level and its already solid financial profile
Guidance	COVID-19 pandemic limits the visibility on CAREL's 2020 FY expectations. In any case, a further deterioration in demand is foreseeable in Q2 2020, which, combined with the prolonged effect in April of the shutdown of Carel's Italian plant,

should lead to a single-digit reduction in 1H 2020 revenues on 1H 2019.

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Annexes

Shareholding structure (>3%)

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Income statement and Balance Sheet

Income statement Balance sheet

K€	Q1 2019	Q1 2020	Delta %
Revenues	80,097	78,740	-1.7%
Other revenues	609	649	6.5%
Operative costs	(64,988)	(65,034)	0.1%
EBITDA	15,718	14,355	-8.7%
Depreciation and impairments	(4,052)	(4,613)	13.8%
EBIT (Risultato Operativo)	11,666	9,742	-16.5%
EBT (earn before taxes)	10,965	9,430	-14.0%
Taxes	(2,095)	(1,822)	-13.0%
Net result of the period	8,871	7,608	-14.2%
Non controlling interest	(17)	(6)	-64.8%
Group net result	8,854	7,602	-14.1%

K€	FY 2019	Q1 2020	Delta %
Fixed Capital	167,957	166,067	-1.1%
Working Capital	45,232	51,591	14.1%
Employees defined benefit plans	(7,844)	(7,777)	-0.9%
Net invested capital	205,345	209,881	2.2%
Equity	143,220	148,030	3.4%
Net financial position (asset)	62,124	61,851	-0.4%
Total	205,345	209,881	2.2%

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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. 2015-2019 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…

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Source: Company information as of Mar-20

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

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Source: Company information as of Mar-20 Note: 1) developed with partners

Long track record of profitable organic growth

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of local distributors

Legend: R&D centre Plants Acquisitions

Source: Company information as of Mar-19

Note: financial data refer to consolidated accounts of CAREL Industries S.p.a. for the period 2011A-2018A (IFRS 2015A- 2018A; ITA GAAP 2011A-2014A) and CAREL S.p.a. for the period 2000A-2010A (ITA GAAP). Comparability might be affected by change in reporting standard and 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.

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
• Invest in 2018/19 in capacity globally and in Industry 4.0, with labor efficiency benefits in future years
• 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 2018-20 will be oriented to the research for new innovative technological solutions with a major focus on energy saving, widening high-efficiency solutions offer and geographical expansion

Source: Company information as of Mar-18

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

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² Attractive market growth supported by secular trends

Note: 1) Based on management elaboration on BSRIA data on Rooftop, Chillers, AHU and Datacenters applications, based on report dated Mar-2018; 2) Based on management elaboration on PlanetRetail data on Food Retail and Food Service segments

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

wallet

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

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

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Source: Company information as of Dec.19;

Note: 1) as% of 2018 Revenues 2) as of 2018 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-20

Note: 2015-2019 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

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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

• 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

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HygroMatik NFP substantially neutral.

Disclaimer

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.

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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

Disclaimer

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.

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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