SBE-Varvit — Earnings Release 2023

Mar 22, 2024

PRESS RELEASE

THE BOARD OF DIRECTORS APPROVED THE CONSOLIDATED RESULTS FOR 2023, THE FIRST FINANCIAL STATEMENTS AS A LISTED COMPANY

REVENUES, EBITDA AND NET PROFIT SUBSTANTIALLY IN LINE WITH 2022, IN A CHALLENGING MARKET CONTEXT

PROPOSED DIVIDEND OF €0.18 PER SHARE

CALLING OF THE GENERAL SHAREHOLDERS' MEETING TO BE HELD ON 19 APRIL 2024

Vescovini: "The current market phase is particularly complex. However, it can also bring opportunities that a Group like ours can seize."

2023 Highlights:

• Revenues: €395.8 million, +0.9% compared to €392.4 million for 2022;
• Adjusted EBITDA¹ : €105.1 million, -3.1% compared to 2022 EBITDA (€108.5 million);
• Adjusted EBITDA margin at 26.6% (vs EBITDA margin at 27.6% in 2022);
• Net profit: €57.8 million, +5.9% compared to €54.6 million in 2022;
• Net Financial Position: positive (net cash) at €54.8 million, compared to €(4.6) at June 30, 2023;
• Investments at €53.2 million compared to €55.0 million in 2022;
• Proposed dividend: €21 million (€0.18 per share).

Reggio Emilia, 18 March 2024 – The Board of Directors of SBE-Varvit S.p.A. ("SBEV", the "Group" or the "Company"), company active in the production, distribution and commercialisation of fastening components, listed on Euronext Growth Milan market (Ticker: VARV) approved the consolidated operating and financial results at 31 December 2023.

The Chairman of the Board of Directors, Alessandro Vescovini, stated:

"Our financial results for 2023 are stable compared to the previous year and consistent with our expectations, confirming our Group's solidity and reliability.

For SBE-Varvit, 2023 was a year of fundamental importance, marked by its IPO on Euronext Growth Milan. This was a crucial step in our strategic journey, the beginning of a new chapter in the Group's growth, as it pursues increased production capacity and technological innovation.

We believe that the current challenging market environment, in which uncertain macroeconomic factors are at work, presents considerable opportunities for SBE-Varvit. Our goal is to gain the trust of new customers through our recognized ability to provide high-quality products that are indispensable to a wide range of applications. This strong focus on quality has also met with particular appreciation from our investors, with whom we share the Group's future prospects.

We look to the future with determination, concentrating on the pursuit of growth as we move towards completing our investment plan and capitalising on emerging opportunities, though aware that the complex period in front of us will present various challenges to be overcome."

Revenues

Revenues amounted to €395.8 million in 2023, with a 0.9% increase compared to the previous year, in spite of the downtrend in the reference market. Sales volumes were up compared to the previous year, while sales prices declined due to the indexing mechanism included in contracts with customers.

¹ Net of non-recurring charges/income

Adjusted EBITDA

Adjusted EBITDA amounted to €105.1 million in 2023 (Adjusted EBITDA margin: 26.6%) compared to an EBITDA equal to €108.5 million in the previous year. The adjustment, which totalled approximately €8.1 million, includes the costs of the IPO process (€3.1 million) and other non-recurring costs incurred in connection with the delayed start-up of the Acerra facility (€5 million), which became operational in January 2024.

Net financial result

Net financial result amounted to €(2.3) million in 2023 compared to €(6.9) million for the previous year. Financial charges refer to foreign exchange losses of €0.7 million, interest expense on loans of €1.4 million and, for the remainder, interest on the discounting of the financial liability for the purchase of the residual interests of 26.39% in VGV S.r.l., the contract for which was transferred to the parent company, Vescovini Group S.p.A., on 7 September 2023.

Income taxes

Income taxes amounted to €2.7 million in 2023 compared to €16.4 million for the previous year. The change reflects the decline in income before taxes of €10 million and, above all, the benefit of applying the Patent Box rules, which although including benefits relating to previous years, manifested all of its effects in 2023.

Net result

Net profit amounted to €57.8 million in 2023 compared to €54.6 million in the previous year.

Investments and acquisitions

Cash outflows for investments in property, plant, equipment and intangible assets amounted to €53.2 million in 2023 compared to €55.0 million in the previous year. Investments focused mainly on activities aimed at stepping up industrial efficiency and improving the existing plants in technological terms, in addition to strengthening the Group's production capacity. The spin-off by the Group's real-estate company (Varvit Immobiliare S.r.l.) of the industrial complex in Reggio Emilia and the other Monfalco properties to SBE-Varvit entered into effect in December 2023. The transaction, which increased the company's equity by €9.8 million, did not have any effect on minority interests as it took place without an increase in share capital.

Change in net working capital

Net working capital rose by €11.5 million in 2023. The change was a result of €6 million of receivables towards the Common parent for tax prepayments and, to a lesser extent, the difference between the decrease in trade receivables of €9.7 million and trade payables of €14.6 million. Inventories remained nearly unchanged compared to 2022, declining slightly less than €1 million to €139.9 million.

Net Financial Position

The Group's net financial position was positive at €54.8 million at the end of 2023 compared to €(4.6) million at 30 June 2023. In addition to the cash normally generated by operating activity, the main increases were due to the elimination of the financial liability for the purchase of the residual interests in VGV S.r.l. for €23.5 million and the elimination of payables for rights of use as a result of the spin-off transaction described above.

Proposed allocation of the result for the year

The Board of Directors, in accordance with the cornerstone agreement, resolved to propose to the Shareholders' Meeting of SBE-Varvit S.p.A. the payment of a dividend of €21,060,000, or €0.18 per share, for both ordinary and class A shares.

The proposal envisages May 20, 2024 as ex-date, May 21, 2024 as record date and May 22, 2024 as payment date.

The remaining part of the net profit for the year will be allocated to the Extraordinary reserve.

Calling of the Ordinary Shareholders' Meeting

The draft Financial Statements at 31 December 2023 will be submitted to the Shareholders' Meeting of the Company that will be held, as already announced, on 19 April 2024, in single call.

Outlook

In 2023, the SBE-Varvit Group proved its ability to operate successfully and achieve excellent results, even in challenging economic contexts.

In fact, our markets of reference showed a trend towards a general slowdown that began in December and continued into the first few months of 2024, and we believe this trend may persist for part of the year. Nonetheless, the businesses acquired, along with the constant increase in market share, will help considerably mitigate the impact of the ongoing downturn and will result, according to our forecasts, in a decline at the sales level of between -5% and -9% on 2023, with margins remaining between 25% and 28%.

In addition, 2024 will be an important year in view of completing the investment plan and exoanding the headcount, as planned in order to further increase production capacity and technology level.

* * *

This press release contains forward-looking statements. These statements are based on the SBE-Varvit Group's current expectations and projections regarding future events and are, by their very nature, subject to a number of risks and uncertainties. These statements refer to events and depend on circumstances that may or may not occur or take place in the future, and, as such, undue reliance should not be made on them. Actual performance could differ significantly from the contents of such statements due to a variety of factors, including constant volatility and a further deterioration of capital and financial markets, changes in macroeconomic conditions and economic growth and other changes in business conditions, changes in the law and institutional context (in Italy and internationally), and many other factors, most of which are beyond the Group's control.

* * *

Furhter information

SBE-Varvit is active in the production, distribution and commercialization of a wide and diversified range of fastening components including screws, bolts, nuts, cold and hot formed products, fasteners and highly engineered mechanical components. The Company is characterised by its integrated and vertical offer, through which it can constantly monitor each stage of the production process and disintermediate the market. The Issuer's business model is indeed centred on the disintermediation of every stage of the production and distribution process, with the main objective of shortening the distance between producer and end customer as much as possible, reducing the distributors' role to a minimum. The Issuer's products are intended to be marketed in various markets including agricultural machinery, construction machinery, industrial machinery, commercial vehicles, personal mobility, wind power and infrastructure, totalling more than 5,000 customers. SBE-Varvit operates through seven production units located in Italy (in Monfalcone, Grugliasco, Tolmezzo, San Giuliano Milanese, Montirone and Acerra) and one located in Serbia (in Sabac) and through five highly automated warehouses in Italy, Serbia and the United States.

For more information: www.sbe.it

CONTACTS Investor Relator Alessandro Caronti – investor@varvit.com +39 0522 5088

Euronext Growth Advisor Equita SIM S.p.A. sbe-varvit@equita.eu

IR & Media Barabino&Partners Ufficio: +39 02/72.02.35.35 Ferdinando De Bellis – f.debellis@barabino.it +39 339 18 72 266 Agota Dozsa – a.dozsa@barabino.it +39 338 74 24 061 Virginia Bertè – v.berte@barabino.it +39 342 97 87 585

STATEMENT OF PROFIT OR LOSS

	Al 31 dicembre
(Values in €'000)	2023	2022
Revenue	395.821	392.449
Other income	6.716	9.169
Raw materials and consumables	(171.863)	(181.385)
Changes in finished goods and semi-finished products	4.269	18.806
Services	(83.339)	(78.833)
Employee benefits	(52.451)	(48.441)
Other costs	(1.969)	(2.800)
Impairment losses on trade receivables	(147)	(480)
EBITDA	97.037	108.485
Amortisation and depreciation	(34.176)	(30.541)
EBIT	62.861	77.944
Financial Income	1.597	1.285
Financial expense	(3.883)	(8.236)
Pre-Tax Profit	60.575	70.993
Income taxes	(2.737)	(16.408)
Profit for the year	57.838	54.585
Attributable to:
The owners of the parent	2.572	2.541
To non-controlling interests	55.266	52.044

STATEMENT OF FINANCIAL POSITION

	Al 31 dicembre
(Values in €'000)	2023	2022
Assets	558.882	509.234
Non-current assets	222.096	192.574
Property, plant and equipment	192.122	155.466
Intangible assets	964	1.003
Goodwill	12.110	12.110
Right-of-use assets	11.892	19.483
Non-current financial assets	266	261
Other non-current assets	2.292	2.106
Deferred tax assets	2.450	2.145
Current assets	336.786	316.660
Trade receivables	83.943	93.665
Inventories	139.954	140.703
Other current assets	23.679	17.623
Current tax assets	1.657	-
Current financial assets	17.957	15.522
Cash and cash equivalents	69.596	49.147
Equity and liabilities	558.882	509.234
Equity	403.342	310.906
Share capital	3.096	3.096
Legal reserve	622	622
Other reserves	334.974	248.309
Profit (Loss) for the year	55.266	52.044
Total equity	393.958	304.071
Equity attributable to non-controlling interests	9.384	6.835
Total non-current liabilities	40.152	67.879
Non-current financial liabilities	9.655	34.734
Non-current lease liabilities	7.919	15.183
Employee benefits	4.878	4.118
Provisions	2.055	1.954
Deferred tax liabilities	6.363	7.072
Other non-current liabilities	9.282	4.818
Current liabilities	115.388	130.449
Current financial liabilities	12.939	12.321
Current lease liabilities	2.283	3.738
Employee benefits	9.290	8.539
Trade payables	80.427	95.044
Current tax liabilities	-	177
Other current liabilities	10.449	10.630

STATEMENT OF CASH FLOWS

(Values in €'000)	2023	2022
Profit for the year	57.838	54.585
Adjustments for:
– Depreciation of property, plant and equipment	30.558	27.263
– Amortisation of intangible assets	563	446
– Depreciation of right-of-use assets	3.055	2.832
– Accruals for provisions and employee benefits	2.623	2.273
– Remeasurement of financial liabilities for contractual obligations	-	4.147
– Net financial expense	2.199	3.127
– Gain on sale of property, plant and equipment	(142)	111
– Income taxes	2.737	16.408
Cash flows from operating activities	99.431	111.192
Changes in:
– Inventories	749	(36.441)
– Trade receivables	9.722	(20.346)
– Other current assets and liabilities	(172)	(21.821)
– Trade payables	(21.134)	17.404
– Utilisation of provisions and employee benefits	(2.014)	(1.907)
Cash generated from operating activities	86.582	48.081
Interest paid	(1.462)	(920)
Income taxes paid	(2.809)	(2.074)
Net cash flows generated by operating activities (A)	82.311	45.087
Cash flows from investing activities
Interest received	877	146
Proceeds from sale of property, plant and equipment	245	1.135
Proceeds from sale of financial assets	7.851	16.964
Cash transferred in the demerger transaction
Acquisition of subsidiary, net of cash acquired
Acquisition of property, plant and equipment	(52.682)	(54.538)
Acquisition of intangible assets	(529)	(495)
Acquisition of other financial assets	(10.092)	(7.366)
Net cash flows used in investing activities (B)	(54.330)	(44.154)
Cash flows from financing activities
Acquisition of subsidiary, net of cash acquired	(2.311)	(6.494)
Proceeds from financial liabilities	6.640	12.017
Repayments of financial liabilities	(7.648)	(13.442)
Payment of lease liabilities	(4.213)	(2.407)
Net cash flows used in financing activities (C)	(7.532)	(10.326)
Net decrease (increase) in cash and cash equivalents (A)+(B)+(C)	20.449	(9.393)
Opening cash and cash equivalents as of 1st January	49.147	58.350
Closing cash and cash equivalents as of 31st December	69.596	49.147

RECLASSIFIED STATEMENT OF FINANCIAL POSITION

	Al 31 dicembre
(Values in €'000)	2023	2022
Intangible assets	964	1.003
Property, plant and equipment	192.122	155.466
Goodwill	12.110	12.110
Right-of-use assets	11.892	19.483
Non-current financial assets	266	261
Deferred tax assets	2.450	2.145
Other non-current assets	2.292	2.106
Provisions	(2.055)	(1.954)
Employee benefits	(4.878)	(4.118)
Other non-current liabilities	(9.282)	(3.016)
Non-current tax liabilities	(6.363)	(7.072)
Net fixed assets	199.518	176.414
Trade receivables	83.943	93.665
Inventories	139.954	140.703
Current tax assets	1.657	-
Other current assets	23.679	17.623
Trade payables	(80.427)	(95.044)
Employee benefits	(9.290)	(8.539)
Current tax liabilities	-	(177)
Other current liabilities	(10.449)	(10.630)
Net working capital	149.067	137.601
Uses of funds	348.585	314.015
Equity	403.342	310.906
Net financial position (cash positive)	(54.757)	3.109
Sources of funds	348.585	314.015