Sit — Earnings Release 2022

Mar 21, 2023

FY 2022 – Results presentation

March 21, 2023

Highlights

• Q4 consolidated revenues are €102,9m, +9,1% vs Q4 2021
• Q4 Divisional sales:
• Heating accounts €80,5m, +4,1% vs PY
• Metering at €21,1m is +41,7%, with Gas metering at +47,2% and Water metering at +28,7% vs PY
• FY consolidated revenues are €393,3m, +3,4% vs 2021
• FY EBITDA adjusted of €47,1m, 12,0% of revenues vs €51,2m, 13,5% of 2021,
• Q4 EBITDA adjusted of €11,5m, 11,2% of revenues vs €9,3m, 9,8% of 2021
• FY Net income of €11,2m at 2,9% of revenues vs €8,2m, 2,2%
• FY Net income adjusted of €10,9m at 2,8% of revenues vs €16,3m, 4,3%
• Net debt at €130,5m vs €106,7m of PY

Key financial results

€m, unless otherwise stated	FY 22	%	FY 21	%	Chg . YoY
Revenues	393 3 ,	100 0% ,	380 5 ,	100 0% ,	3 4% ,
adjusted EBITDA	47 1 ,	12 0% ,	51 2 ,	13 5% ,	(8 0%) ,
EBITDA	38 2 ,	9 7% ,	51 2 ,	13 5% ,	(25 4%) ,
adjusted EBIT	19 4 ,	9% 4 ,	24 3 ,	6 4% ,	(20 1%) ,
EBIT	10 6 ,	2 7% ,	24 3 ,	6 4% ,	(56 6%) ,
EBT	13 6 ,	3 4% ,	11 7 ,	3 1% ,	15 9% ,
Net income	11 2 ,	9% 2 ,	8 2 ,	2% 2 ,	0% 36 ,
adjusted Net Income	10 9 ,	2 8% ,	16 3 ,	4 3% ,	(33 2%) ,
Cash flow from operations	(13 1) ,		27 2 ,
NTWC	73 8 ,	To do	45 4 ,
financial debt Net	130 5 ,		106 7 ,

€m, unless otherwise stated	Q4 22	%	Q4 21	%	Chg . YoY
Revenues	102 9 ,	100 0% ,	94 3 ,	100 0% ,	9 1% ,
adjusted EBITDA	11 5 ,	2% 11 ,	9 3 ,	8% 9 ,	2% 24 ,
adjusted EBIT	4 1 ,	4 0% ,	1 3 ,	1 3% ,	220 8% ,
Net Income adjusted	2 7 ,	2 6% ,	0 5 ,	0 6% ,	388 2% ,	due to dispute settlement

• FY consolidated revenues account 3,4% growth
• Divisional trends:
• Heating: +5,7%, Q4 +4,1%
• Metering: -5,7% , Q4 +41,7%
• EBITDA adjusted at €47,1m vs €51,2m of PY
• EBIT adjusted at €19,4m (4,9% of revenues) vs €24,3m (6,4%)
• Net income of €11,2m includes FV accounting effect of Warrant for +€8,7m
• Net income adjusted at €10,9m, 2,8% of revenues vs 4,3%
• Cash flow from operations is minus €13,1m after capex for €26,9m and increase in NTWC for €27,1m
• NTWC of €73,8m (18,8% of revenues) vs €45,4m of PY (11,9%) due to inventory and supply chain strategy
• Net financial debt stands at €130,5m vs €106,7m of PY

*Adjustment due to one off non-recurring accrual for €8,9m

Breakdown by Division

, unless otherwise stated €m	FY 22	%	FY 21	%	Chg . YoY
Heating	315 3 ,	80 2% ,	298 3 ,	78 4% ,	5 7% ,
Metering	72 5 ,	18 4% ,	76 9 ,	20 2% ,	(5 7%) ,
Total business sales	387,9	98,6%	375,2	98,6%	3,4%
Other revenues	5 5 ,	4% 1 ,	3 5 ,	4% 1 ,	2 2% ,
Total revenues	393,3	100,0%	380,5	100,0%	3,4%

Breakdown by geography

€m , unless otherwise stated	22 FY	%	21 FY	%	Chg . YoY
Italy	99	25	107	28	(7
	5	3%	0	1%	1%)
	,	,	,	,	,
(excuding	169	43	167	44	1
Italy)	4	1%	5	0%	1%
Europe	,	,	,	,	,
America	85	21	74	19	15
	5	7%	2	5%	1%
	,	,	,	,	,
Asia/Pacific	39	9	31	8	22
	0	9%	8	4%	6%
	,	,	,	,	,
Total revenues	393,3	100,0%	380,5	100,0%	3,4%

Consolidated revenue bridge (€m)

Consolidated revenues – Q4

Breakdown by Division

€m , unless otherwise stated	Q4 22	%	Q4 21	%	Chg . YoY
Heating	80 5 ,	78 3% ,	77 4 ,	82 0% ,	4 1% ,
Metering	21 1 ,	20 5% ,	14 9 ,	15 8% ,	41 7% ,
Total business sales	101,7	98,8%	92,3	97,8%	10,2%
Other revenues	1 3 ,	1 2% ,	2 1 ,	2 2% ,	(39 4%) ,
Total revenues	102,9	100,0%	94,4	100,0%	9,1%

Breakdown by geography

, unless otherwise stated €m	Q4 22	%	Q4 21	%	Chg . YoY
Italy	32	6%	17	4%	5%
	5	31	4	18	87
	,	,	,	,	,
(excuding	37	36	47	50	(21
Italy)	2	2%	1	0%	1%)
Europe	,	,	,	,	,
America	22	22	21	23	5
	9	2%	7	0%	5%
	,	,	,	,	,
Asia/Pacific	10	10	8	8	25
	3	0%	2	7%	9%
	,	,	,	,	,
Total revenues	102,9	100,0%	94,4	100,0%	9,1%

Consolidated revenue bridge (€m)

Heating sales

FY Heating sales

€m , unless otherwise stated	FY 22	%	FY 21	%	Chg . YoY
Italy	56	17	55	18	0
	1	8%	7	7%	8%
	,	,	,	,	,
(excuding	138	43	140	47	(1
Italy)	0	8%	1	0%	5%)
Europe	,	,	,	,	,
America	82	26	72	24	15
	8	3%	0	1%	0%
	,	,	,	,	,
Asia/Pacific	38	12	30	10	25
	4	2%	5	2%	9%
	,	,	,	,	,
Total business sales	315,3	100,0%	298,3	100,0%	5,7%

Q4 Heating sales

, unless otherwise stated €m	Q4 22	%	Q4 21	%	Chg . YoY
Italy	11	7%	12	4%	(12
	0	13	7	16	9%)
	,	,	,	,	,
(excuding	37	9%	35	7%	5%
Italy)	0	45	4	45	4
Europe	,	,	,	,	,
America	23	28	21	27	9
	0	5%	0	1%	6%
	,	,	,	,	,
Asia/Pacific	9	11	8	10	14
	5	9%	4	8%	2%
	,	,	,	,	,
Total business sales	80,5	100,0%	77,4	100,0%	4,1%

• Divisional sales:
• Q4 +4,1%, +1,0% at same forex
• FY + 5,7%, +2,5% at same forex
• Italy. FY in line with PY. Catering segment is up €1,4m, +34,7%, and Direct Heating applications (Space Heaters) grow (€+0,6m, +40,9%); Central Heating down €1,8m, -5,3%, mainly for Integrated systems
• Europe. FY down €2,1m, -1,5% vs PY. Turkey (12,1% of Divisional sales) is up €2,8m, +7,9%, due to OEM demand in Central and Direct Heating; UK, (6,4% of Divisional sales) is down €2,2m, mainly Flues (-17%); Central Europe markets grow €3,9m, +8,0%
• America. FY sales are up €10,8m, +15,0%, +3,6% at same forex
• Asia/Pacific. accounts increase for €7,9m, +25,9%, +20,0% at same forex vs PY; China, 7,6% of divisional sales, accounts +€4,4m, +22,7%; Australia +€1,1m, +15,7%

Metering sales

FY Smart Gas Metering FY Water Metering

unless otherwise stated €m,	FY 22	%	FY 21	%	Chg . YoY
Residential	39 6 ,	81 9% ,	51,5	90 2% ,	(23 ,1%)
Commercial Industrial &	8 ,5	17,5%	5,2	9 2% ,	61 8% ,
Other	0 3 ,	0 6% ,	0 ,4	0 ,7%	(25 3%) ,
Total business sales	48,4	100,0%	57,1	100,0%	(15 ,4%)

2022 Smart Gas Metering foreign sales are 7,5%, in Greece, Croatia, Central Europe and UK

€m, unless otherwise stated	FY 22	%	FY 21	%	Chg . YoY
finished Water meters,	9 ,5	39 ,4%	9 3 ,	47,2%	2 ,1%
Water meter parts	12 ,7	52 ,7%	9 ,1	46 0% ,	39 9% ,
Other	1,9	7,9%	1,3	6 8% ,	41,3%
Total business sales	24,2	100,0%	19,8	100,0%	22,2%

2022 geography breakdown: Portugal 24,6%, Spain 30,0%, Rest of Europe 32,5%, Americas 7,0%, Asia/Pacific 6,0%

Q4 Smart Gas Metering Q4 Water Metering

€m, unless otherwise stated	Q4 22	%	Q4 21	%	Chg. YoY
Residential	12,6	82,2%	8,7	83,5%	45,0%
Commercial & Industrial	2,7	17,4%	1,6	15,8%	62,0%
Other	0,1	0,4%	0,1	0,8%	(16 ,9%)
Total business sales	15,4	100,0%	10,4	100,0%	47,2%

unless otherwise stated €m,	Q4 22	%	Q4 21	%	Chg . YoY
finished Water meters,	1,9	33,5%	1,6	35,5%	21,2%
Water meter parts	3,3	57,1%	2,6	57,3%	28,4%
Other	0,5	9,4%	0,3	7,2%	68,0%
Total business sales	5,8	100,0%	4,5	100,0%	28,7%

EBITDA adjusted bridge

Euro millions

, unless otherwise stated €m	FY 22	% of sales	FY 21	% of sales	Chg . YoY
EBITDA	38 2 ,	9 ,7%	51 2 ,	13 ,5%	(25 4%) ,
D&A impairment of assets ,	27 7 ,		26 9 ,
EBIT	10 6 ,	2 ,7%	24 3 ,	6 4% ,	(56 6%) ,
financial (charges)/income Net	4 5 ,		(13 7) ,
forex (charges)/income Net	(1 3) ,		1 0 ,
EBT	13 6 ,	3 4% ,	11 ,7	3 1% ,	15 9% ,
Taxes	(2 4) ,		(3 5) ,
income Net	11 2 ,	9% 2 ,	8 2 ,	2% 2 ,	0% 36 ,
Ebitda adjusted	47 1 ,	12 0% ,	51 2 ,	13 ,5%	(8 0%) ,
Ebit adjusted	19 4 ,	4 9% ,	24 3 ,	6 4% ,	(20 1%) ,
(charges)/income financial adjusted Net	(4 2) ,	(1 1%) ,	(3 ,7)	(1 0%) ,	14 6% ,
income adjusted Net	10 9 ,	2 8% ,	16 3 ,	4 3% ,	(33 2%) ,

• D&A for €27,7m, 7,0% of revenues vs €26,9m, 7,1%
• Net financial (charges)/income account changes in FV of Warrants for income of €8,7m expired in 2022
• EBT of €13,6m at 3,4% of revenues
• FY21 taxes includes one off revenue for Patent Box ruling for €1,8m
• Net income of €11,2m at 2,9% of revenues vs 2,2% of previous year
• Net financial charges adjusted are 1,1% of revenues vs 1,0% of PY

• Net income adjusted is equal to €10,9m

• 2022 adjustment due to one off non-recurring accrual for €8,9m for dispute settlement and FV revenues for warrant €8,7

• 2021 adjustment includes FV charge for warrant €7,6, refinancing charges €1,0 and patent box tax revenue €1,8

Cash flow, net debt, net trade working capital

Change in net debt

€m , unless otherwise stated	FY 22	FY 21
cash flow Current	46 ,4	52 2 ,
Change in NTWC	(27 ,1)	4,8
Inventory	(19 7) ,	(13 0) ,
Receivables Accounts	(6 7) ,	9 9 ,
Payables Accounts	(0 7) ,	7 9 ,
Other working capital	(5 ,5)	(3 ,7)
Capex , net	(26 9) ,	(26 ,1)
Cash flow from operations	(13 ,1)	27 2 ,
Financial charges	(3 3) ,	(3 7) ,
Dividends paid	(7 3) ,	(6 9) ,
IFRS 16 - Leases	(2 0) ,	(3 0) ,
Other	2 0 ,	(4 4) ,
Change in debt net	(23 8) ,	9 3 ,
debt Net - BoP	106 ,7	116 0 ,
debt Net - EoP	130 ,5	106 ,7

Net trade working capital

€m, unless otherwise stated	2022.12	2021.12	YoY change
Inventory	91 4 ,	70 1 ,	21 2 ,
receivables Accounts	63 8 ,	56 1 ,	7 7 ,
payables Accounts	(81 4) ,	(80 8) ,	(0 6) ,
Trade Working Capital Net	73,8	45,4	28,3
NTWC/Revenues	18,8%	11,9%	6,8%

• Increase in Inventory due to procurement strategy to address shortage issues and maintain customer service levels

Net financial position

€m, unless otherwise stated	31/12/2022	31/12/2021
(Cash cash equivalents) &	(23 ,5)	(46 ,7)
Current debt , net	20,5	20,1
debt Non current	117,5	114,0
derivatives debt MTM & M&A	1,2	3,4
IFRS 16 - Leases	14,9	15,9
debt Net - EoP	130,5	106,7

• 90% of debt portfolio is at fixed rate since origination

• Net Debt/EBITDA adj: 2022 2,8x vs 2021 2,1x

Final comments

• The first months of 2023 confirm the impact of external factors that are affecting the possibility of making reliable forecasts of yearly sales trends
• The safety procurement strategies occurred in 2022 in the Heating market supply chains resulted in high inventory levels, whose destocking timing cannot be predicted at the moment
• Geographically, expectations in some areas are positive while uncertainty remains in the markets directly and indirectly affected by the Russia/Ukraine conflict
• During the year, the planned production footprint will become fully operational from which an improvement in performances are expected, with greater contribution of the Tunisian plant
• SIT fundamentals are positive given the proactive role in the opportunities provided by the energy transition

Regulatory statement

The manager responsible for the preparation of the company's accounts, Paul Fogolin, hereby declares, as per article 154 bis, paragraph 2, of the "Testo Unico della Finanza", that all information related to the company's accounts contained in this presentation are fairly representing the accounts and the books of the company.

Paul Fogolin Chief Financial Officer paul.fogolin@sitgroup.it

Investor Relations Mara Di Giorgio +39 335 773 7417 investorrelations@sitgroup.it

Disclaimer

This presentation has been prepared by SIT S.p.A. only for information purposes and for the presentation of the Group's results and strategies.

For further details on the SIT Group, reference should be made to publicly available information.

Since at the moment there is no existing reliable market research which provide the required level of detail, nor any official data, the statements of key information, the assessments concerning the positioning of SIT Group and the assessments regarding the market and the market segments of the reference market are based exclusively on assessments carried out by SIT's management, in accordance to its own knowledge of the market and its analysis of the data gathered. For such reason, these statements and assessments may not be updated and/or may also be quite approximate. Due to the lack of reliable and standardized data and of market data provided by third parties, these assessments are necessarily subjective and are provided, unless otherwise specified, by SIT on the basis of the analysis of the data it, as a company, has gathered. These evaluations and the performance of the industries in which SIT operates could prove to be different from those assumed due to the known and unknown risks, the uncertainties and other causes.

Statements contained in this presentation, particularly those regarding any SIT Group possible or assumed future performance, are or may be forward looking statements and in this respect they involve some risks and uncertainties.

Any reference to past performance of the SIT Group shall not be taken as an indication of future performance.

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