Sit — Investor Presentation 2022

Mar 22, 2022

FY 2021 – Results presentation

March 22, 2022

Highlights

• Q4 consolidated revenues are € 94,3m, in line with Q4 2020 (-4,2% at same perimeter)
• Q4 Divisional sales:
• Heating accounts €77,4m, +3,6% vs same period of 2020
• Metering with €14,9m is -17,5% vs previous year, including new water metering business (€4,5m)
• FY consolidated revenues are € 380,5m, +18,6% vs 2020 (+12,5% at same perimeter)
• In the Heating business all geographies have increased vs previous year. America is +24,3% (+27,7% at same forex) thanks to recovery in Direct Heating fireplaces and stable SWH. Asia/Pacific is +13,3% (with China +32,3%) while Italy and Rest of Europe are +26,7% and +16,5% respectively
• Consolidated EBITDA margin of 13,5%, reports €51,2m vs €43,6m (+17,4% vs PY)
• Net debt at €106,7m vs €116,0m at end of 2020
• Cash flow from operations for €27,2m after capex of €26,1m

Key financial results

€m, unless otherwise stated	FY 21	%	FY 20	%	Chg . YoY
Revenues	380 5 ,	100 0% ,	320 7 ,	100 0% ,	18 6% ,
EBITDA	51 2 ,	5% 13 ,	43 6 ,	6% 13 ,	4% 17 ,
adjusted EBITDA	51 2 ,	13 5% ,	44 6 ,	13 9% ,	14 8% ,
EBIT	24 3 ,	6 4% ,	19 6 ,	6 1% ,	24 0% ,
EBT	11 7 ,	3 1% ,	16 0 ,	5 0% ,	(26 8%) ,
Net income	8 2 ,	2 2% ,	13 2 ,	4 1% ,	(37 7%) ,
adjusted Net Income	16 3 ,	4 3% ,	13 4 ,	4 2% ,	21 6% ,
Cash flow from operations adj	27 2 ,		14 6 ,
NTWC	45 4 ,	To do	49 6 ,
financial debt Net	106 7 ,		116 0 ,

Revenues	94 3 ,	100 0% ,	93 8 ,	100 0% ,	0 6% ,
unless otherwise stated €m, EBITDA	Q4 21 9 3 ,	% 9 8% ,	Q4 20 11 2 ,	% 12 0% ,	Chg . YoY (17 5%) ,
EBITDA adjusted Revenues	9 3 94 3 , ,	9 8% 100 0% , ,	12 2 93 8 , ,	13 0% 100 0% , ,	(24 1%) 0 6% , ,
EBIT EBITDA	1 3 9 3 , ,	1 3% 9 8% , ,	4 5 11 2 , ,	4 8% 12 0% , ,	(71 7%) (17 5%) , ,
EBT adjusted EBITDA	(0 3) 9 3 , ,	(0 3%) 8% 9 , ,	2 8 12 2 , ,	3 0% 0% 13 , ,	(111 6%) (24 1%) , ,
Net income EBIT	(0 9) 1 3 , ,	(0 9%) 1 3% , ,	1 8 4 5 , ,	2 0% 4 8% , ,	(146 4%) (71 7%) , ,
Net Income adjusted EBT	0 5 (0 3) , ,	0 6% (0 3%) , ,	1 6 2 8 , ,	1 7% 3 0% , ,	(66 3%) (111 6%) , ,

• Divisional trends:
• Heating: FY +19,8%, Q4 +3,6%
• Metering: FY +12,1% , Q4 -17,5%
• EBITDA adj at €51,2m vs €44,6m improves by 14,8%
• EBIT at €24,3m (6,4% of revenues) vs €19,6m (6,1%), up 24,0%
• Net income of €8,2m vs €13,2m (includes one off tax revenue for Patent Box ruling of €1,8m and nonrecurring financial charges for €10,0 m, of which €9,0 due to FV of Warrants)
• Net income adjusted at €16,3m accounts 21,6% increase
• Cash flow from operations is €27,2m after capex for €26,1m
• NTWC of €45,4m, 11,9% of revenues vs 15,5% of previous year
• Net financial debt stands at €106,7m vs €116,0 of 2020

Breakdown by Division

, unless otherwise stated €m	FY 21	%	FY 20	%	Chg . YoY
Heating	298 3 ,	78 4% ,	249 0 ,	77 6% ,	19 8% ,
Metering	76 9 ,	2% 20 ,	68 6 ,	4% 21 ,	1% 12 ,
Total business sales	375,2	98,6%	317,6	99,0%	18,1%
Other revenues	5 4 ,	1 4% ,	3 1 ,	1 0% ,	73 9% ,
Total revenues	380,5	100,0%	320,7	100,0%	18,6%

Breakdown by geography

, unless otherwise stated €m	FY 21	%	FY 20	%	Chg . YoY
Italy	107	1%	107	6%	(0
	0	28	7	33	6%)
	,	,	,	,	,
(excuding	167	0%	128	40	30
Italy)	5	44	8	2%	0%
Europe	,	,	,	,	,
America	74	19	58	18	26
	2	5%	5	3%	8%
	,	,	,	,	,
Asia/Pacific	31	8	25	8	23
	8	4%	7	0%	6%
	,	,	,	,	,
Total revenues	380,5	100,0%	320,7	100,0%	18,6%

Consolidated revenue bridge (€m)

Breakdown by Division

€m , unless otherwise stated	Q4 21	%	Q4 20	%	Chg . YoY
Heating	77 4 ,	82 0% ,	74 7 ,	79 7% ,	3 6% ,
Metering	14 9 ,	15 8% ,	18 1 ,	19 3% ,	(17 5%) ,
Total business sales	92,3	97,8%	92,8	98,9%	(0 ,5%)
Other revenues	2 1 ,	2% 2 ,	1 0 ,	1% 1 ,	1% 107 ,
Total revenues	94,3	100,0%	93,8	100,0%	0,6%

Breakdown by geography

€m , unless otherwise stated	Q4 21	%	Q4 20	%	Chg . YoY
Italy	17	18	29	31	(40
	4	4%	3	2%	8%)
	,	,	,	,	,
(excuding	47	50	38	40	24
Italy)	1	0%	0	5%	2%
Europe	,	,	,	,	,
America	21	23	18	19	17
	7	0%	4	7%	5%
	,	,	,	,	,
Asia/Pacific	8	8	8	8	1
	2	7%	1	6%	2%
	,	,	,	,	,
Total revenues	94,3	100,0%	93,8	100,0%	0,6%

Consolidated revenue bridge (€m)

Heating sales

FY Heating sales • Divisional sales:

€m , unless otherwise stated	FY 21	%	FY 20	%	Chg . YoY
Italy	55	18	43	17	26
	7	7%	9	6%	7%
	,	,	,	,	,
(excuding	140	47	120	48	16
Italy)	1	0%	2	3%	5%
Europe	,	,	,	,	,
America	72	24	58	23	24
	0	1%	0	3%	3%
	,	,	,	,	,
Asia/Pacific	30	10	26	10	13
	5	2%	9	8%	3%
	,	,	,	,	,
Total business sales	298,3	100,0%	249,0	100,0%	19,8%

Q4 Heating sales

€m , unless otherwise stated	Q4 21	%	Q4 20	%	Chg . YoY
Italy	12	16	12	17	(1
	7	4%	8	1%	2%)
	,	,	,	,	,
(excuding	35	45	35	47	0
Italy)	4	7%	4	3%	1%
Europe	,	,	,	,	,
America	21	1%	18	5%	6%
	0	27	3	24	14
	,	,	,	,	,
Asia/Pacific	8	10	8	11	1
	4	8%	2	0%	7%
	,	,	,	,	,
Total business sales	77,4	100,0%	74,7	100,0%	3,6%

• • FY +19,8%, +20,8% at same forex
• Q4 +3,6%, +1,6% at same forex
• Italy. FY accounts +26,7%, €11,7m increase vs previous year supported by Central Heating demand; main product family's performance are Mechanical controls (+€5,7m, +27,5%) Fans (+€5,6m, +38,2%) and Flues kits (+€0,8m,+40%)
• Europe. Q4 was flat bringing FY increase to €19,9m, +16,5% . Turkey grows FY €6,0m +20,4%; UK Q4 was down 18% due to missing components from other suppliers bringing FY growth to 6,2%; Central Europe maintains growth rate at +30% for new product introduction
• America. Q4 up €2,7m, +14,6%. Fireplaces grow €11,6m vs PY (+40%, +48% at same forex); SWH down €1,4m, (-6%, -4% at same forex)
• Asia/Pacific. Q4 in line with PY. China, 6,5% of divisional sales, accounts +32,3% y/y as retail market picks up

Metering sales

FY Smart Gas Metering FY Water Metering

€m, unless otherwise stated	FY 21	%	FY 20	%	Chg . YoY
Residential	51,5	90,2%	64,6	94,1%	(20 ,2%)
Commercial Industrial &	5,2	9,2%	3,8	5,5%	39,6%
Other	0,4	0,7%	0,3	0,5%	19,7%
Total business sales	57,1	100,0%	68,6	100,0%	(16 ,7%)

2021 Smart Gas Metering foreign sales are ≈7%, mostly Greece and Croatia

unless otherwise stated €m,	FY 21	%	FY 20	%	Chg . YoY
finished	9	47	7	47	23
Water	3	2%	6	5%	2%
meters,	,	,	,	,	,
Water	9	0%	7	8%	4%
meter	1	46	1	44	27
parts	,	,	,	,	,
Other	1	6	1	7	9
	3	8%	2	7%	6%
	,	,	,	,	,
Total business sales	19,8	100,0%	15,9	100,0%	24,1%

2020 Water Metering only for comparison, consolidated from 2021

Q4 Smart Gas Metering Q4 Water Metering

€m, unless otherwise stated	Q4 21	%	Q4 20	%	Chg . YoY
Residential	8,7	83,5%	17,0	94,2%	(48 ,9%)
Commercial & Industrial	1,6	15,8%	1,0	5,4%	68,3%
Other	0,1	0,8%	0,1	0,4%	15,8%
Total business sales	10,4	100,0%	18,1	100,0%	(42 ,3%)

unless otherwise stated €m,	Q4 21	%	Q4 20	%	Chg. YoY
Water finished meters,	1,6	35,5%	2,0	48,4%	(21 ,5%)
Water meter parts	2,6	57,3%	1,8	42,1%	45,2%
Other	0,3	7,2%	0,4	9,5%	(19 ,5%)
Total business sales	4,5	100,0%	4,2	100,0%	6,8%

2020 Water Metering only for comparison, consolidated from 2021

EBITDA adj bridge

Euro millions

From EBITDA to net income

, unless otherwise stated €m	FY 21	of % sales	FY 20	of % sales	Chg YoY
EBITDA	51 2 ,	13 5% ,	43 6 ,	13 6% ,	17 4% ,
of D&A impairment assets ,	26 9 ,		24 0 ,
EBIT	24 3 ,	6 4% ,	19 6 ,	6 1% ,	24 0% ,
(charges)/income financial Net	(13 7) ,		(3 1) ,
(charges)/income forex Net	1 0 ,		(0 5) ,
Other financial (charges)/income	0 0 ,		-
EBT	11 7 ,	3 1% ,	16 0 ,	5 0% ,	(26 8%) ,
Taxes	(3 5) ,		(2 8) ,
income Net	8 2 ,	2% 2 ,	13 2 ,	1% 4 ,	(37 7%) ,
(charges)/income financial adjusted Net	(3 7) ,	(1 0%) ,	(3 6) ,	(1 1%) ,	2% 2 ,
adjusted Net income	16 3 ,	4 3% ,	13 4 ,	4 2% ,	21 6% ,

• D&A is 7,1% of revenues vs 7,5% of previous year; includes additional Janz PPA amortisation of €1,5m
• EBIT of €24,3m at 6,4% of revenues, +24,0%
• Net financial charges include change in FV of Warrants for €9,0m; unwinding of IRS for €0,6m and write off of amortized cost for € 0,4m due to Q3 refinancing
• Net forex income of €1,0m vs €0,5m charges of PY
• FY21 taxes includes one off revenue for Patent Box ruling for €1,8m, net
• Net financial charges adjusted are net of FV accounting effects of equity instruments and refinancing effects
• Net income adjusted at €16,3m at 4,3% vs 4,2% of previous year, +21,6%

Cash flow, net debt, net trade working capital

Change in net debt

€m, unless otherwise stated	FY 21	FY 20
Current cash flow	52,2	44,2
Change in NTWC	4,8	(10 ,5)
Inventory	(13 0) ,	(2 9) ,
Receivables Accounts	9 9 ,	(6 1) ,
Payables Accounts	7 9 ,	(1 6) ,
Other working capital	(3 ,7)	(6 ,4)
Capex, net	(26 ,1)	(12 ,7)
Cash flow from operations current	27,2	14,6
M&A	-	(28 ,4)
Cash flow from operations	27,2	(13 ,8)
Financial charges	(3 7) ,	(3 0) ,
Dividends paid	(6 9) ,	(3 5) ,
IFRS 16 - Leases	(3 0) ,	(11 9) ,
Other	(4 4) ,	(5 4) ,
Change debt in net	9,3	(37 ,6)
debt Net - BoP	116,0	78,4
Net debt - EoP	106,7	116,0

Net trade working capital

€m , unless otherwise stated	2021 12	2020 12	YoY Change
Inventory	70 1 ,	56 5 ,	13 7 ,
receivables Accounts	56 1 ,	65 4 ,	(9 3) ,
Accounts payables	(80 8) ,	(72 2) ,	(8 5) ,
Trade Working Capital Net	45 4 ,	49 6 ,	-4 2 ,
NTWC/Revenues	11 9% ,	15 5% ,	-3 5% ,

• Reported 2021 NTWC decrease of €4,2m vs PY.
• Increase in Inventory and AP due to procurement strategy and shortages

Net financial position

unless otherwise stated €m,	31/12/2021	31/12/2020
(Cash equivalents) & cash	(46 ,7)	(42 3) ,
debt Current , net	20 ,1	46 ,4
debt Non current	114,0	91 9 ,
derivatives debt MTM & M&A	3 ,4	4,4
IFRS 16 - Leases	15,9	15,7
debt Net - EoP	106,7	116,0

• Net Debt/EBITDA: 2,08x vs 2,60x

• Debt portfolio was refinanced in 2021 (€40m 10y bond and €90m 5y loan) – all ESG linked

Update on Russia/Ukraine crisis

• Impact of the Russian/Ukraine war on SIT operations is carefully monitored
• Sales.
• SIT accounted 2021 sales in Russia and Ukraine for almost 5% of consolidated revenues, all referred to the Heating Division
• The Group does not hold direct assets in these countries. SIT sales coverage is provided through local distributors managed by employees of the Cech subsidiary based in Moscow.
• Supply chain.
• Supplier based in Ukraine, close to Slovakian border, part of US multinational group, currently provides ≈25% of assembled electronic boards for the Heating business
• Contingency plan to exit from Ukraine is in place to accelerate insourcing and move production to suppliers located in other low cost areas
• Support initiatives to Ukrainian population and SIT customer's families has been launched

Final comments

• Due to increased uncertainties concerning supply chain constraints, cost inflation, impact of Russia/Ukraine crisis, it is currently not appropriate to provide precise forecasts for the current year.
• We remain confident on the fundamental positive trends underlying SIT business growth, market and technological leadership and operational excellence
• Energy transition to lower emissions and H2 ready applications
• Higher efficiency applications also supported by incentives
• Water consumption management/metering
• Domestic market gas metering replacement roll-out
• Passthrough of increased costs

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.

This document does not constitute an offer or invitation to purchase or subscribe for any shares and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.

By attending or reading this presentation you agree to be bound by the foregoing terms.