Sabaf — Investor Presentation 2021

May 17, 2021

www.sabafgroup.com

FINANCIAL PRESENTATION

Investors meeting

Ospitaletto, 17 th May 2021

Table of contents

• I. COMPANY PROFILE
• II. I QUARTER 2021 RESULTS
• III. 2021 OUTLOOK
• IV. BUSINESS PLAN 2021 2023

COMPANY PROFILE

5

Sabaf Group Timeline and history

Sabaf Group Business diversification in three divisions

Sabaf Group Product range

• Standard Burners
• Special Burners
• Professional Burners
• Oven and Grill Burners
• Gas Valves
• Gas Oven Thermostats

• Microswitches & Accessories

• Ovens

• Dishwashers
• Washing machines
• Special applications
• Small compartments
• Catering appliances

GAS HINGES ELECTRONIC COMPONENTS

• Cooker Hoods
• Ovens
• Cookers and hobs
• Air Curtain
• Refrigerators/freezers
• Other products

Sabaf Group Market

Global leader in the segment of components for domestic gas

cooking appliances, with 400 customers in 64 different countries. A strong leadership in Europe (market share above 40%), estimated market share worldwide of about 10%

Weight of top 10 customers on total Group sales is 48% (47% in 2019)

No customer represents more than 11% of total Group sales

Long-term agreements and strong relationships with all the main players in the household appliances business, based on mutual trust, technical cooperation, co-engineering and tailor-made products

Sabaf Group Product & technology

Product Innovation: about 88 active patents

Know-how:

• ➢ Mechanical: forefront process technology internal development of special machinery, high performance molds for robotic die-casting, high speed and high precision tools not available on the market
• ➢ Electronic: strong skills in new product development

Intellectual capital: highly specialized and qualified staff (50+ R&D engineers)

Strong operational leverage: great flexibility in production volumes growth, ready to satisfy customers requests

Sabaf Group Main Shareholders

Pietro Iotti, CEO of Sabaf, owns 1.5%

Sabaf Group Stock price and Dividend

2021 DIVIDEND

• € 0.55 per share
• Ex-date: 31st May 2021
• Dividend yield: 2.4%
• Payout ratio: 45.4%

	24
	22 20
	18
	16 14
	12
	10
Jan 20	May 20

I QUARTER 2021 FINANCIAL PERFORMANCE

Business update

Performance data Income statement - I quarter 2021

€ x 000	I Q	2021	I Q	2020	% Δ 20 - 19	MONTHS 12	2020
Revenue	64 825 ,	100 0%	43 852 ,	100 0%	+47 8%	184 906 ,	100 0%
Other income	1 888 ,	9% 2	1 049 ,	4% 2		7 194 ,	9% 3
Total operatig and income revenue	66 713 ,		44 901 ,			192 100 ,
Materials	(36 947) ,	(57 0%)	(19 138) ,	(43 6%)		(82 966) ,	(44 9%)
Personnel costs	(13 886) ,	(21 4%)	(10 253) ,	(23 4%)		(43 700) ,	(23 6%)
Change in inventories	11 535 ,	8% 17	(304)	(0 7%)		6 406 ,	5% 3
Other operating costs	(12 307) ,	(19 0%)	(7 517) ,	(17 1%)		(34 743) ,	(18 8%)
EBITDA	15 108 ,	3% 23	689 7 ,	5% 17	5% +96	37 097 ,	1% 20
Depreciation	(4 132) ,	(6 4%)	(4 337) ,	(9 9%)		(16 968) ,	(9 2%)
Gains/losses fixed assets on	44	1% 0	8	0% 0		105	1% 0
Write-downs/write-backs of non-current	-	0% 0	-	0% 0		(141)	(0 1%)
EBIT	11 020 ,	0% 17	3 360 ,	7% 7	0% +228	20 093 ,	9% 10
Net financial expense	289	0 4%	(352)	(0 8%)		(780)	(0 4%)
Exchange gains and losses rate	(849)	(1 3%)	(816)	(1 9%)		(4 812) ,	(2 6%)
Profits and losses from equity investments	(46)	(0 1%)	-	0% 0		8	0% 0
EBT	10 414 ,	16 1%	2 192 ,	0% 5	375 1%	14 509 ,	8% 7
Income taxes	(1 646) ,	(2 5%)	(512)	(1 2%)		(149)	(0 1%)
PROFIT FOR THE YEAR	8 768 ,	5% 13	1 680 ,	8% 3	9% 421	14 360 ,	8% 7
Minority interests	(312)	(0 5%)	(133)	(0 3%)		(399)	(0 2%)
PROFIT ATTRIBUTABLE TO GROUP THE	8 456 ,	0% 13	1 547 ,	5% 3	6% 446	13 961 ,	6% 7

Performance data Sales - Quarter Analysis

Figures in euro million

17

Performance data Sales by market

x 000 €	Q I 2021	Q I 2020
Europe	24	16	+45
(excluding	052	587	0%
Turkey)	,	,
Turkey	16	11	6%
	276	099	+46
	,	,
North America	7 301 ,	5 543 ,	7% +31
South America	9 890 ,	6 778 ,	9% +45
Africa and Middle East	3 908 ,	2 329 ,	8% +67
Asia	3	1	1%
and	398	516	+124
Oceania	,	,
Total	64	43	8%
	825	852	+47
	,	,

Performance data Sales by Division

€	Q	Q
000	I	I
x	2021	2020
Gas	44	30	1%
	589	722	+45
	,	,
Hinges	14	9	+44
	319	931	2%
	,	,
Electronic components	5 917 ,	3 199 ,	0% +85
Total	64	43	8%
	825	852	+47
	,	,

Performance data Balance Sheet

E-MARKET SDIR
CERTIFIED

€ 000 x	31/03/2021	31/12/2020	31/03/2020
Fixed assets	132 244 ,	131 543 ,	134 108 ,
Inventories	50 081 ,	39 224 ,	34 080 ,
Trade receivables	73 020 ,	63 436 ,	53 136 ,
receivables Tax	2 980 ,	2 419 ,	3 067 ,
Other receivables current	2 865 ,	3 167 ,	2 694 ,
Trade payables	(51 883) ,	(41 773) ,	(26 558) ,
Tax payables	(4 487) ,	(3 287) ,	(1 617) ,
Other payables	(12 030) ,	(10 957) ,	(9 076) ,
Net working capital	60 546 ,	52 229 ,	55 726 ,
Provisions for risks and severance indemnity	(9 271) ,	(9 643) ,	(11 751) ,
Capital Employed	183 519 ,	174 129 ,	178 083 ,
Equity Net debt	123 886 , 59 633 ,	117 807 , 56 322 ,	117 545 , 60 538 ,
Sources of finance	183 519 ,	174 129 ,	178 083 ,

Performance data Cash flow statement

€ 000 x	I Q 2021	MONTHS 12 2020	I Q 2020
Cash the beginning of the period at	13 318 ,	18 687 ,	18 687 ,
Net profit Depreciation Other income adjustments statement	8 768 , 4 132 , 1 087 ,	14 360 , 16 968 , 1 873 , -	1 680 , 4 337 , 1 116 ,
Change in working capital net - Change in inventories - Change in receivables - Change in payables	(10 857) , (9 584) , 10 110 , (10 331) ,	(3 881) , (16 507) , 14 213 , (6 175) , -	- 1 263 , (6 207) , (902) (5 846) , -
Other changes in operating items	324	(1 959) ,	(1 041) ,
Operating cash flow	3 980 ,	25 067 ,	246
of disposals Investments , net Cash Flow Free	(6 718) , (2 738) ,	(17 296) , 7 771 ,	(3 339) , (3 093) ,
Cash flow from financial activity Own shares buyback Dividends CMI Acquisition Forex	1 637 , - - - (374)	(2 136) , (2 073) , (3 924) , (3 063) , (1 944) , -	(991) (722) - - (925) -
financial flow Net	(1 475) ,	(5 369) ,	(5 731) ,
Cash the end of the period at	11 843 ,	13 318 ,	12 956 ,

Working capital

• Increase in working capital due to the increase in inventories, as a result of the need to ensure continuity of supplies and to limit the impact of changes in raw material prices
• Nevertheless lower incidence of NWC on turnover: 23.3% compared to 31.8% at 31 March 2020 and 28.2% at 31 December 2020

Investments

The high levels of activity led the Group to bring forward to 2021 some investments originally planned for 2022, where growth is considered structural, in order to be able to guarantee continuity in supplies to customers and full production efficiency

Performance data Financial Indicators

E-MARKET SDIR
CERTIFIED

	Q I 2021	Q I 2021	MONTHS 12 2020
Change in turnover (vs year) . previous	8% +47	3% -2	6% +18
Change in - Organic turnover (vs . previous year)	8% +47	3% -2	4% +8
ROCE (return capital employed) on	24 0%	5% 7	11 5%
Net debt/EBITDA	0 99	1 97	1 52
working capital/Turnover Net	3% 23	8% 31	2% 28
debt/equity Net	1% 48	5% 51	8% 47
of Sales Outstanding Days	101	106	111
Days of Payables Outstanding	87	88	98
Days of Inventory Outstanding	95	82	97

2021 OUTLOOK

Outlook 2021

These forecasts assume a macroeconomic scenario not affected by unpredictable events. If the economic situation were to change significantly, actual figures might diverge from the forecasts.

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Revenues: 2019 – 2021E

BUSINESS PLAN 2021 - 2023

Business plan 2021 – 2023

TOTAL SALES by 2023 +62% vs. 2020 CAGR > 17.5%

• Organic CAGR >10%: around € 250 mn sales by 2023
• M&A: € 50 mn sales by 2023

KEY POINTS

EBITDA at least 19% on sales

ROI 12.5% Compared to 11.5% in 2020

+100 bps

FINANCIAL LEVARAGE ~ 2.0 Net debt/EBITDA around 2.0

INVESTMENTS in 3 years

• Organic: € 58 mn capex, of which € 46 mn for growth and € 12 mn in maintenance
• M&A: up to € 72 mn investment

DIVIDENDS in 3 years

• Total amount higher than previous years (2018 - 2020: € 16 mn)
• Lower payout to support future growth

FINANCED with:

• OPERATING CASH FLOW € 85 mn in 3 years
• NEW FINANCIAL DEBT up to € 65 mn by 2023

Business plan 2021 - 2023 Organic growth

CAGR: +10.6%

Figures in euro million

Business plan 2021 - 2023 Organic growth - Market development

MARKET	2020	2021	2022	2023	Var % 2023 vs. 2020	CAGR
EUROPE (excl. Turkey)	69.6	76.3	80.3	86.6	5% +24	7.6%
TURKEY	44.8	51.6	55.6	56.6	3% +26	8.1%
NORTH AMERICA	22.7	27.5	32.2	37.2	6% +63	17.8%
SOUTH AMERICA	27.6	29.0	30.4	32.9	9% +18	5.9%
AFRICA AND MIDDLE EAST	12.2	14.1	14.1	16.1	5% +32	9.8%
CHINA AND FAR EAST	6.8	10.3	11.5	14.2	1% +101	28.1%
INDIA	1.2	1.7	4.3	6.9	0% +468	78.4%
TOTAL	184.9	210.5	228.4	250.5	5% +35	10.6%
Growth previous vs year		9% +13	5% +8	7% +9

Figures in euro million

Business plan 2021 - 2023 Organic growth - By division

PROJECTS GAS HINGES ELECTRONICS TOTAL CAGR ADDITIONAL SALES IN 3 YEARS COMPARED TO 2020 NEW € 26.3 mn € 10.6 mn € 8.5 mn € 45.4 mn +7.6% No. 11 projects No. 5 projects No. 25 projects No. 41 projects EXISTING € 7.6 mn € 8.6 mn € 4.0 mn € 20.2 mn +3% TOTAL € 33.9 mn € 19.2 mn € 12.5 mn € 65.6 mn +10.6%

HUGE NEW PROJECTS PIPELINE

ORGANIC GROWTH +35.5% on 2020

STRONG RELATIONSHIPS WITH GLOBAL PLAYERS

Business plan 2021 - 2023 Organic growth - R&D

Product innovation will be oriented to the following areas:

GAS

• Premium flame valves
• High performances burners for better combustion efficiency
• New burners for North America market
• New models of professional burners

HINGES

• Hinges for top load washers
• Customized hinges for specific markets and customers
• Motorized hinges

ELECTRONICS

• Development of new oven controls
• Vitroceramic hobs control cards
• Completion of product range for cooker hood controls
• Feasibility study of induction cooking
• Development of products for new business sectors like medical appliances, dishwashers, dryers, heaters, etc.

R&D activities will focus on ad hoc solutions to meet the needs of individual markets and on the design of customized products

RESEARCH &

DEVELOPEMENT

More than 50 R&D engineers in force

Business plan 2021 - 2023 Organic growth - New facilities

Business plan 2021 - 2023 Organic growth - Sustainability

Sabaf's strategy and governance model are aimed towards ensuring long-term sustainable growth. For Sabaf, sustainability is primarily based on sharing values with its stakeholders; compliance with common values increases mutual trust and encourages knowledge development. " "

1 Area KPI Development of resources and skills Hours of training per capita Health and safety Accident frequency rate Accident severity rate Eco-efficiency and Emissions into the atmosphere tCO2eq emissions on sales SDGs 2 3

SABAF GROUP VISION

«We believe in a world in which all people's basic needs, such as home, food and reliable energy, are fulfilled in an environmentally sustainable way.

We promote a company that improves the quality of the environment and the communities where we live and work»

BUSINESS PLAN KPI

Business plan 2021 - 2023 Growth by acquisitions - M&A Strategy

M&A as a tool for achieving longterm targets through:

• the acquisition of know-how and technologies
• the expansion of the product offer
• the opening to new markets
• the risk diversification
• the ability to scale the business quickly

Growth of the competitive advantage by differentiating the Sabaf value proposition from competitors

Preservation of the identity of acquired companies, which maintain their brand, local supply chain and workforce

Retention of talents and soft skills

Achievement of significant commercial and industrial synergies

From an entrepreneurial to an industrial approach

Joint effort for growth and positives influence on margins

Preferably seller is taken onboard as a director and/or minority shareholder

INVESTMENT SECTORS

Business plan 2021 - 2023 Growth by acquisitions - Target profile

M&A TEAM

TARGET PARAMETERS

TURNOVER	€ 5 - 70 mn sales
EBITDA	Steady positive results over past years No turnarounds
SHAREHOLDING	Preference for entrepreneurial ownership
EBITDA MULTIPLES	Non-dilutive
	Dedicated to scouting and development of business contacts, creation of an internal

Data Base, analysis and evaluation of opportunities, management of negotiations

Business plan 2021 - 2023 Summary - Targets

Around € 300 mn sales

Total growth: 62% by 2023 vs. 2020 (Organic and by acquisitions growth) (CAGR 17.5%)

Total investments € 130 mn of which:

• ✓ € 58 mn organic growth
• ✓ € 72 mn growth by acquisitions ROI > 12.5%

✓ Dividends: € 20 mn

Investments and dividends, for a total amount of € 150 mn financed with:

• ✓ Operating cash flow: € 85 mn
• ✓ New financial debt: € 65 mn

Sustainability targets:

• ✓ Hours of training per capita
• ✓ Accident frequency and severity rates
• ✓ CO2 emissions reduction

COMPARED TO 11.5% IN 2020

DISCLAIMER

Certain information included in this document is forward looking and is subject to important risks and uncertainties that could cause actual results to differ materially.

The Company's business is in the domestic appliance industry, with special reference to the gas cooking sector, and its outlook is predominantly based on its interpretation of what it considers to be the key economic factors affecting this business. Forwardlooking statements with regard to the Group's business involve a number of important factors that are subject to change, including: the many interrelated factors that affect consumer confidence and worldwide demand for durable goods; general economic conditions in the Group's markets; actions of competitors; commodity prices; interest rates and currency exchange rates; political and civil unrest; and other risks and uncertainties.

Pursuant to Article 154/2, paragraph 2 of the Italian Consolidated Finance Act (Testo Unico della Finanza), the company's Financial Reporting Officer Gianluca Beschi declares that the financial disclosure contained in this financial presentation corresponds to the company's records, books and accounting entries.

For further information, please contact

Gianluca Beschi - +39.030.6843236 gianluca.beschi@sabaf.it