Sit — Investor Presentation 2023

May 18, 2023

Informazione Regolamentata n. 20105-35-2023		Data/Ora Ricezione 18 Maggio 2023 13:58:08	Euronext Milan
Societa'	:	SIT
Identificativo Informazione Regolamentata	:	177189
Nome utilizzatore	:	SITN05 - Giulia Maso
Tipologia	:	REGEM
Data/Ora Ricezione	:	18 Maggio 2023 13:58:08
Data/Ora Inizio Diffusione presunta	:	18 Maggio 2023 13:58:09
Oggetto	:		SIT S.p.a. - Results Presentation Q1 2023.
Testo del comunicato

Vedi allegato.

Q1 2023 – Results presentation

Highlights

• Q1 consolidated revenues are €83,6m, -10,9% vs Q1 2022
• Q1 Divisional sales:
  • Heating & Ventilation accounts €62,7m, down 17,6% vs PY
  • Metering at €20,4m is +23,2%, with Smart Gas Metering at €13,7m, +33,0% and Water metering at €6,7m, +7,0% vs PY
• Heating & Ventilation is affected by strong destocking by customers after 2022 safety procurement strategies and irregular supplies of key components had caused high inventory levels throughout the industry
• Heating & Ventilation fundamentals on worldwide scale remain positive, with volatility limited to short term supply chain adjustments
• Metering: Smart Gas Metering is performing thanks to strong competitive position in the domestic market; Water Metering in line with Q1 budget with FY expected at double digit growth vs PY
• Q1 23 EBITDA adjusted of €8,3m, 9,9% of revenues is impacted mainly by volumes and cost inflation vs €14,7m, 15,6% in Q1 22
• Q1 Net income adjusted of €1,3m at 1,6% of revenues vs €5,3m, 5,6%
• Net debt at €143,1m vs €130,5m at year end vs €124,8m of PY

Key financial results

, unless otherwise stated €m	Q1 23	%	Q1 22	%	Chg YoY
Revenues	83	100	93	100	(10
	6	0%	8	0%	9%)
	,	,	,	,	,
EBITDA	8	9	14	15	(43
	3	9%	7	6%	5%)
	,	,	,	,	,
EBIT	1	1	8	8	(80
	6	9%	0	6%	1%)
	,	,	,	,	,
EBT	0	2%	14	0%	(98
	2	0	1	15	8%)
	,	,	,	,	,
Net income	1 3 ,	1 6% ,	12 4 ,	13 2% ,	(89 2%) ,
adjusted	1	1	5	5	(74
Net	3	6%	3	6%	5%)
Income	,	,	,	,	,
Cash flow from operations	(10 3) ,		(17 1) ,
NTWC	77 8 ,	To do	70 4 ,
financial debt Net	143 1 ,		124 8 ,

• Action plan on operating costs is focused on short term savings to preserve profitability and enhance cash generation

• FY consolidated revenues account 10,9% decrease
• Divisional trends:
  • Heating & Ventilation: -17,6%
  • Metering: +23,2%
• EBITDA at €8,3m vs €14,7m of PY
• EBIT at €1,6m (1,9% of revenues) vs €8,0m (8,6%)
• Net income of €1,3m vs €12,4m (with PY including FV accounting effect of Warrant for +€7,1m)
• Net income adjusted at €1,3m, 1,8% of revenues vs €5,3m, 5,6%
• Cash flow from operations is minus €10,3m after capex for €5,0m
• NTWC of €77,8m (23,0% of revenues) vs €70,4m of PY (18,5%)
• Net financial debt stands at €143.1m vs €124,8m of PY and €130,5 at end of PY

Breakdown by Division

€m, unless otherwise stated	Q1 23	%	Q1 22	%	Chg. YoY
Heating & Ventilation	62,7	75,0%	76,1	81,1%	(17,6%)
Metering	20,4	24,4%	16,5	17,6%	23,2%
Total business sales	83,0	99,4%	92,6	98,7%	(10,3%)
Other revenues	0,5	0,6%	1,2	1,3%	(57,5%)
Total revenues	83,6	100,0%	93,8	100,0%	(10,9%)

Breakdown by geography

€m, unless otherwise stated	Q1 23	%	Q1 22	%	Chg. YoY
Italy	25,0	30,0%	24,6	26,2%	1,9%
Europe (excuding Italy)	40,2	48,1%	41,4	44,2%	(3,1%)
America	12,0	14,3%	19,5	20,8%	(38,6%)
Asia/Pacific	6,4	7,6%	8,3	8,9%	(23,2%)
Total revenues	83,6	100,0%	93,8	100,0%	(10,9%)

Consolidated revenue bridge (€m)

Q1 Heating & Ventilation sales by geography

, unless otherwise stated €m	Q1 23	%	Q1 22	%	Chg . YoY
Italy	11	0%	14	6%	(20
	9	19	9	19	0%)
	,	,	,	,	,
(excuding	33	52	34	1%	(4
Italy)	0	6%	3	45	0%)
Europe	,	,	,	,	,
America	11	18	19	25	(38
	7	7%	0	0%	4%)
	,	,	,	,	,
Asia/Pacific	6	9	7	10	(22
	1	7%	8	3%	4%)
	,	,	,	,	,
Total business sales	62,7	100,0%	76,1	100,0%	(17 ,6%)

Q1 Heating & Ventilation sales by product family

Q1 23	%	Q1 22	%	Chg . YoY
33	53	44	57	(23
6	7%	0	8%	5%)
,	,	,	,	,
12	20	14	19	(13
9	5%	9	6%	8%)
,	,	,	,	,
9	15	8	11	9
5	2%	7	5%	2%
,	,	,	,	,
4	6%	5	3%	(14
7	7	6	7	5%)
,	,	,	,	,
9	3	2	3	(35
1	0%	9	8%	5%)
,	,	,	,	,
62,7	100,0%	76,1	100,0%	(17 ,6%)

• Divisional sales -17,6%, -18,2% at same forex
• Italy down 20,0% due to change in incentives regulations with all product segments impacted. Higher impact in Direct Heating (-23,2%) due to pellet stoves.
• Europe. Q1 down €1,4m, -4,0% vs PY. Turkey (19,5% of Divisional sales) is up €4,0m, +49%, due to Fans (+€3,1) and mechanical controls; UK, (8,6% of Divisional sales) is overall flat; Central Europe markets are down €2,2m (-17,2%) in Central Heating, with Heat Recovery Units up €0,7, +29%
• America. Q1 sales are down €7,3m, -38,4%, -41,2% at same forex
• Asia/Pacific accounts decrease for €1,8m, -22,4%, -20,2% at same forex vs PY; China and Australia, 5,7% and 2,8% of divisional sales, account a decrease vs PY due to exceptional high sales in Q1 22
• Fans grow 9,2% vs Q1 22 (+20,6% taking out the impact of pellet stoves)

Metering sales

Q1 Smart Gas Metering

, unless otherwise stated €m	Q1 23	%	Q1 22	%	Chg . YoY
Residential	11	82	8	82	32
	2	0%	5	2%	7%
	,	,	,	,	,
Commercial	2	17	1	16	39
&	4	7%	7	9%	6%
Industrial	,	,	,	,	,
Other	0	3%	0	0%	(55
	0	0	1	1	1%)
	,	,	,	,	,
Total business sales	13,7	100,0%	10,3	100,0%	33,0%

Q1 23 Smart Gas Metering foreign sales are 5,5%, mainly in Greece and Croatia , vs 9,3% of PY

Q1 Water Metering

€m , unless otherwise stated	Q1 23	%	Q1 22	%	Chg . YoY
finished	2	2%	2	1%	(9
Water	6	39	9	46	0%)
meters,	,	,	,	,	,
Water	3	52	3	47	18
meter	5	9%	0	7%	7%
parts	,	,	,	,	,
Other	0	7	0	6	35
	5	9%	4	2%	7%
	,	,	,	,	,
Total business sales	6,7	100,0%	6,2	100,0%	7,0%

Q1 Water Metering by geography

EBITDA bridge

Euro millions

From EBITDA to net income

, unless otherwise stated €m	Q1 23	of % sales	Q1 22	of % sales	Chg YoY
EBITDA	8 3 ,	9 9% ,	14 7 ,	15 6% ,	(43 5%) ,
D&A of impairment assets ,	6 7 ,		6 6 ,
EBIT	1 6 ,	1 9% ,	8 0 ,	8 6% ,	(80 1%) ,
(charges)/income financial Net	(1 7) ,		6 1 ,
forex (charges)/income Net	0 3 ,		0 0 ,
EBT	0 2 ,	0 2% ,	14 1 ,	15 0% ,	(98 8%) ,
Taxes	1 2 ,		(1 7) ,
income Net	1 3 ,	1 6% ,	12 4 ,	13 2% ,	(89 2%) ,
financial (charges)/income Net adjusted	(1 7) ,	(2 0%) ,	(1 1) ,	(1 1%) ,	55 8% ,
adjusted Net income	1 3 ,	1 6% ,	5 3 ,	5 6% ,	(74 5%) ,

• D&A for €6,7m, 8,0% of revenues vs €6,6m, 7,1%
• EBIT at €1,6m vs €8,0m
• Net financial (charges)/income of PY account income of €7,1m for FV of Warrants, expired in July 2022
• EBT of €0,2m at 0,2% of revenues
• Tax revenue for €1,2 due to deferred tax asset
• Net financial charges adjusted are €1,7m, 2,0% of revenues vs €1,1m, 1,1% of PY
• Net income adjusted is equal to €1,3m vs €5,3m of PY

Net trade working capital

€m , unless otherwise stated	2023 03	2022 12	Q1 23 Change	2022 03	2021 12	Q1 22 Change	YoY change
Inventory	101 5 ,	91 4 ,	10 1 ,	86 2 ,	70 1 ,	16 1 ,	15 2 ,
receivables Accounts	51 1 ,	63 8 ,	(12 7) ,	59 7 ,	56 1 ,	3 7 ,	(8 7) ,
payables Accounts	(74 7) ,	(81 4) ,	6 7 ,	(75 6) ,	(80 8) ,	5 1 ,	0 9 ,
Trade Working Capital Net	77 8 ,	73 8 ,	4 1 ,	70 4 ,	45 4 ,	24 9 ,	7 5 ,
NTWC/Revenues	23 0% ,	18 8% ,	2% 4 ,	18 5% ,	9% 11 ,	6 6% ,	5% 4 ,

Non recourse factoring 16,7 13,3 3,3 14,1 14,4 (0,2) 2,5

AP adjusted/Revenues 21,3% 19,5% 1,8% 19,3% 20,1% -0,9% 2,0%

Net Trade Working Capital adjusted 97,1 91,9 5,2 86,9 64,0 22,9 10,2 NTWC adjusted/Revenues 28,7% 23,4% 5,3% 22,8% 16,8% 6,0% 5,8%

Inventory 101,5 91,4 10,1 86,2 70,1 16,1 15,2 Accounts payables (74,7) (81,4) 6,7 (75,6) (80,8) 5,1 0,9 Capex account payables (2,6) (4,8) 2,2 (2,4) (4,2) 1,8 (0,2) Net inventory adjusted 29,3 14,8 14,6 13,0 -6,4 19,4 16,4 Net inventory adjusted/Revenues 8,7% 3,8% 4,9% 3,4% -1,7% 5,1% 5,3%

Accounts receivables adjusted 67,7 77,1 -9,4 73,9 70,4 3,5 -6,1 AR adjusted/Revenues 20,0% 19,6% 0,4% 19,4% 18,5% 0,9% 0,6% Reported Q1 23 NTWC: +€4,1m YTD, +€7,5m vs PY

• Capex account payables (2,6) (4,8) 2,2 (2,4) (4,2) 1,8 (0,2) • YTD Inventory increase (+€10,1) reflects destocking impact by H&V customers and long lead time orders placed in 2022 at fixed conditions
• Accounts payables adjusted (72,1) (76,6) 4,5 (73,3) (76,6) 3,3 1,1 • YTD Account Receivables (-€12,7m) and Account payables (+€6,7m) show decrease in quarterly volumes

Cash flow and net debt

, unless otherwise stated €m	Q1 23	Q1 22
cash flow Current	9 1 ,	14 8 ,
Change in NTWC	(3 2) ,	(24 3) ,
Inventory	(9 2) ,	(15 4) ,
Accounts Receivables	13 1 ,	(3 2) ,
Payables Accounts	(7 1) ,	(5 6) ,
Other working capital	(11 2) ,	(4 5) ,
Capex , net	(5 0) ,	(3 1) ,
Cash flow from operations	(10 3) ,	(17 1) ,
Financial charges	(2 0) ,	(0 6) ,
Dividends paid	-	-
Other	(0 3) ,	(0 3) ,
Change debt in net	(12 6) ,	(18 0) ,
debt Net - BoP	130 5 ,	106 7 ,
debt Net - EoP	143 1 ,	124 8 ,

• Current cash flow of €9,1m vs €14,8m of PY • NTWC burns €3,2m vs €24,3 of PY, due to slow down in volumes in both AR and AP;

increase in Inventory for €9,2m vs €15,4m of PY

• Other working capital (-€12,0m) accounts dispute settlement with customer accrued in 2022
• Capex for €5,0m vs €3,1m of PY

Net financial position

€m, unless otherwise stated	31/03/2023	31/12/2022	31/03/2022
(Cash & cash equivalents)	(20,4)	(23,5)	(39,6)
Current debt, net	28,9	20,5	16,8
Non current debt	120,1	117,5	129,0
MTM derivatives & M&A debt	0,3	1,2	3,3
IFRS 16 - Leases	14,2	14,9	15,2
Net debt - EoP	143,1	130,5	124,8

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

• Net Debt/EBITDA adj: Q1 23 3,5x vs 2022 2,8x vs 2,5x

Final comments

• Due to overstock of the whole supply chain current market demand in Heating sector remains uncertain
• End market consumer sentiment is impacted by regulation uncertainties on incentives, inflation and high interest rates
• As of today we see in Heating & Ventilation a negative 2023FY outlook on revenues vs PY with a possibile improvement in demand by year end
• Action plan on operating costs is focused on short term savings to preserve profitability with cost reduction in corporate/discretionary costs and manufacturing optimization
• Strong focus on cash generation through working capital, capex reduction and strategic review of operating model
• Heating & Ventilation fundamentals remain positive based on global geography footprint and gas role in the energy transition
• Smart Gas Metering benefits from strong competitive position in domestic market and repricing of tenders

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.