Carel Industries

Earnings Release • Nov 13, 2018

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13th November 2018

9M 2018 - Overview

The positive trend in revenue, already reported in the 1H 2018, is substantially confirmed also in the first nine months of the year: +8.4% (+10.7% net of FX impact). The same positive trend is confirmed also for profitability: EBITDA Margin adj. equal to 20.9% leading to 9.4% growth in EBITDA adj.; Net Profit adj. +15.6%.

All the geographic areas reported a growth in revenue, confirming the resiliency of the Group's business portfolio

Carel's footprint expansion project is on track: strong increase in capex (>100%) compared to the same period 2017. ~20m€ of additional cumulated capex (compared to the historical average) in 2018-2019 are confirmed.

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9M 2018 – Significant growth in all the adj. operating KPIs confirmed

m€	9M 2017	9M 2018	Δ%
Revenue	192.2	208.4	8.4%
Revenue FX Adj.(1)	192.2	212.8	10.7%
EBITDA	39.9	38.3	-4.1%
EBITDA Adj.(2)	39.9	43.6	9.4%
EBITDA adj./Revenue	20.8%	20.9%
Net Profit	24.9	24.8	-0.3%
Net Profit Adj.(2)	24.9	28.8	15.6%
Capex	5.5	11.8	>100%

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• Revenue +8.4% (+10.7% Adj): The growth in revenue (which would have been +10.4% net of FX impact) stemmed from positive performance in all the geographic areas in which the Group operates.
• EBITDA adj. +9.4%: the increase in revenues together with a stable profitability (>20%) led to a further organic growth (+4.1m€)
• Net Profit adj. +15.6%: The bottom line is positively impacted by the operating results together with a lower tax-rate compared to 2017
• (1)Net of FX impact (2)Net of IPO non-recurring costs • Capex >100%: International footprint expansion plan on track, resulting in a Capex growth higher than 100%

9M 2018 – Revenue breakdowns

• Net of FX impact, revenue grew in all the geographic areas:
• accelerating growth in North America (compared to 1H 2018)

• inverting the negative trend reported in South APAC in 1H 2018.

• Net of the expected sales reduction in the lowprofitability no-core sector, the growth would have been 9.7% (+12.0% excl. FX impact).

• Significant growth in the refrigeration sector both in absolute (+11m€) and in percentage terms (+19.2%)* (*)Net of FX impact

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From EBITDA to Net Profit

K€	9M '17	9M '18	Δ%
EBITDA	39,893	38,275	-4.1%
D&A/Impairment	-5,896	-6,409
EBIT	33,997	31,867	-6.3%
Financial (charges)/income	438	107
FX gains/losses	-726	-227
Companies cons with e.m.	-117	15
EBT	33,592	31,762	-5.4%
Taxes	-8,724	-6,964
Minorities	-37	-45
Group net profit	24,831	24,753	-0.3%

• Higher D&A mainly linked to the Carel's footprint expansion project (Croatia, Italy, US)
• Financial income affected by the disinvestment in life insurance for approximately 35m€.
• Increase in value of an equity stake held by Alfaco
• Lower tax-rate (approx. 22% against 26% in 9M 2018) due to lower US tax-rate, Italian tax incentive effects and absence of dividend paid by Chinese subsidiary.

9M 2018 – (NFP)/Cash Bridge

• Positive FCF generation (+5.2m€): FFO equal to ~32.4m€ thanks to very positive operating results.
• NWC +15.4m€ due to higher inventory level, caused by global electronic shortage/lead time extension, which reached their peaks in Q3 2018. An improvement is expected starting from Q4 2018.

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• Strong increase in Capex (>100%) compared to last year, devoted to footprint expansion project.
• 30m€ extraordinary dividend.

Closing Remarks

We confirm our expectations for full year 2018, in terms of growth in revenues, which should be in line with what reported in the first half of this year.

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Annexes

Shareholding structure

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.

Income statement and Balance Sheet

Income statement Balance sheet

K€	9M_2017	9M_2018	Var. %
Revenues	192,187	208,401	8.4%
Other revenues	957	1,125	17.6%
Operative costs	(153,251)	(171,251)	11.7%
Operative costs adj	(153,251)	(165,884)	8.2%
EBITDA	39,893	38,275	-4.1%
EBITDA ADJ	39,893	43,643	9.4%
Depreciation and impairments	(5,896)	(6,409)	8.7%
EBIT (Risultato Operativo)	33,997	31,867	-6.3%
EBT (earn before taxes)	33,592	31,762	-5.4%
Taxes	(8,724)	(6,964)	-20.2%
Net result of the period	24,868	24,798	-0.3%
Non controlling interest	37	45	22.0%
Group net result	24,831	24,753	-0.3%

K€	FY_2017	9M_2018	Var. %
Fixed Assets	37,411	42,483	13.6%
Working Capital	46,353	59,884	29.2%
Employees defined benefit plans	(5,687)	(5,679)	-0.1%
Net invested capital	78,077	96,688	23.8%
Equity	118,316	111,632	-5.6%
Net financial position (asset)	(40,239)	(14,944)	-62.9%
Total	78,077	96,688	23.8%

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