Sit — Investor Presentation 2024

Apr 24, 2024

FY 2023 – Results presentation

Highlights

• Q4 consolidated revenues are €84,2, -18,2% vs Q4 2022
• Q4 Divisional sales:
  • Heating accounts €57,9, -28,1% vs PY
  • Metering at €24,7 is +16,8%, with Gas metering at +1,0% and Water metering +58,7% vs PY
• FY consolidated revenues are €326,3, -17,0% vs 2022
• FY EBITDA adjusted of €29,0, -38,5% vs €47,1 of PY
• FY Net income adjusted -€0,3 vs €10,9 of PY
• Impairment loss on goodwill for €17,0 accounted in H1 reporting due to megatrend in heating sector and impact on gas appliances
• Net debt at €153,7 vs €130,5 of PY
• Amendment to bank debt with 24-month extension of the original maturities and remodulation of the installments maintaining original due dates
• Loan cash injection by main shareholder for €5 million

Key financial results

unless otherwise €M, stated	FY 23	%	FY 22	%	Chg. YoY
Revenues	326,3	100,0%	393,3	100,0%	(17 ,0%)
EBITDA adjusted	29,0	8,9%	47,1	12,0%	(38 ,5%)
EBITDA	21,7	6,6%	38,2	9,7%	(43 ,3%)
EBIT adjusted	0,1	0,0%	19,4	4,9%	(99 ,6%)
EBIT	(25 ,2)	(7 ,7%)	10,6	2,7%	(338 ,9%)
EBT	(31 ,3)	(9 ,6%)	13,6	3,4%	(330 ,7%)
Net income	(23 ,4)	(7 ,2%)	11,2	2,9%	(308 ,6%)
adjusted Net Income	(0 ,3)	(0 ,1%)	10,9	2,8%	(103 ,2%)
Cash flow from operations	(14 ,9)		(13 ,1)
NTWC	79,9		73,8
financial debt Net	153,7		130,5

unless otherwise stated €M,	Q4 23	%	Q4 22	%	Chg . YoY
Revenues	84 2 ,	100 0% ,	102 9 ,	100 0% ,	(18 2%) ,
adjusted EBITDA	7,0	8 ,4%	11,5	11,2%	(38 9%) ,
adjusted EBIT	(1 ,1)	(1 3%) ,	4,1	4,0%	(127 ,4%)
adjusted Net Income	(1 2) ,	(1 ,5%)	2 ,7	2 6% ,	(146 ,4%)

• FY consolidated revenues account 17,0% decrease

• Divisional trends:
  • Heating: FY -25,8%, Q4 -28,1%
  • Metering: FY +22,2% , Q4 +16,8%
• EBITDA adj at €29,0M vs €47,1M of PY
• EBIT adj at €0,1M vs €19,4M
• Net income adj at minus €0,3M vs €10,9M
• Cash flow from operations is minus €14,9M after capex for €23,0M
• NTWC of €79,9M (24,5% of revenues) vs €73,8M (18,8%)
• Net financial debt stands at €153,7M vs 2022 of €130,5M

• Adjustments in EBIT includes impairment loss on goodwill for €17,0M and restructuring costs

Consolidated revenues – FY

€M, unless otherwise stated	FY 23	%	FY 22	%	Chg. YoY
Heating & Ventilation	234,0	71,7%	315,3	80,2%	(25,8%)
Metering	88,6	27,2%	72,5	18,4%	22,2%
Total business sales	322,6	98,9%	387,9	98,6%	(16,8%)
Other revenues	3,6	1,1%	5,5	1,4%	(33,1%)
Total revenues	326,3	100,0%	393,3	100,0%	(17,0%)

Breakdown by geography

€M, unless otherwise stated	FY 23	%	FY 22	%	Chg. YoY
Italy	97,3	29,8%	99,5	25,3%	(2,1%)
Europe (excuding Italy)	151,4	46,4%	169,4	43,1%	(10,6%)
America	47,1	14,4%	85,5	21,7%	(44,8%)
Asia/Pacific	30,4	9,3%	39,0	9,9%	(22,0%)
Total revenues	326,3	100,0%	393,3	100,0%	(17,0%)

Breakdown by Division Consolidated revenue bridge

Consolidated revenues – Q4

Breakdown by Division

€M , unless otherwise stated	Q4 23	%	Q4 22	%	Chg . YoY
Heating & Ventilation	9 57 ,	68 8% ,	80 5 ,	78 3% ,	(28 1%) ,
Metering	24 7 ,	29 3% ,	21 1 ,	20 5% ,	16 8% ,
Total business sales	82,6	98,1%	101,7	98,8%	(18 ,8%)
Other revenues	1 6 ,	1 9% ,	1 3 ,	1 2% ,	26 6% ,
Total revenues	84,2	100,0%	102,9	100,0%	(18 ,2%)

Breakdown by geography

, unless otherwise stated €M	Q4 23	%	Q4 22	%	Chg . YoY
Italy	23	28	32	31	(26
	8	3%	5	6%	7%)
	,	,	,	,	,
(excuding	38	0%	37	2%	1%
Italy)	8	46	2	36	4
Europe	,	,	,	,	,
America	13	5%	22	22	(42
	1	15	9	2%	8%)
	,	,	,	,	,
Asia/Pacific	8	10	10	10	(17
	5	1%	3	0%	4%)
	,	,	,	,	,
Total revenues	84,2	100,0%	102,9	100,0%	(18 ,2%)

Consolidated revenue bridge

Heating & Ventilation sales

Q4 sales by geography

€M, unless otherwise stated	Q4 23	%	Q4 22	%	Chg . YoY
Italy	8	14	11	13	(26
	1	1%	0	7%	1%)
	,	,	,	,	,
(excuding	27	7%	37	9%	(25
Italy)	6	47	0	45	3%)
Europe	,	,	,	,	,
America	12	2%	23	5%	(46
	3	21	0	28	5%)
	,	,	,	,	,
Asia/Pacific	9	0%	9	9%	0%
	8	17	5	11	3
	,	,	,	,	,
Total business sales	57,9	100,0%	80,5	100,0%	(28 ,1%)

FY sales by geography

€M, unless otherwise stated	FY 23	%	FY 22	%	Chg . YoY
Italy	36	15	56	17	(34
	7	7%	1	8%	6%)
	,	,	,	,	,
(excuding	119	51	138	43	(13
Italy)	6	1%	0	8%	3%)
Europe	,	,	,	,	,
America	44	19	82	26	(46
	8	1%	8	3%	0%)
	,	,	,	,	,
Asia/Pacific	32	1%	38	12	(14
	9	14	4	2%	2%)
	,	,	,	,	,
Total business sales	234,0	100,0%	315,3	100,0%	(25 ,8%)

• Divisional sales
  • Q4 -28,1%, -27,1% at same forex
  • FY -25,8%, -25,1% at same forex
• Italy, FY down 34,6% due to change in incentives regulations with all product segments impacted. Higher impact in Direct Heating (-62,1%) due to pellet stoves.
• Europe. FY down €18,4M, -13,3% vs PY. Turkey (18,1% of Divisional sales) is up €4,2M, +10,9%, due to fans and mechanical controls; UK, (8,5% of Divisional sales) is overall in line with PY with flues (+25,6% YTD); Central Europe markets are down 28,5% mainly in Central Heating with Heat Recovery Units in line with previous year (+1,0%)
• America. FY sales are down €38,1M, -46,0%. Impact in both Direct Heating and SWH applications.
• Asia/Pacific FY accounts decrease for €5,4M, -14,2%, -9,2% at same forex vs PY; China posted a Q4 at -2,2% bringing FY down €2,8M, -11,6%, -5,5% at same forex vs PY; Australia, 2,5% of divisional sales, accounts a decrease of €2,3M, -27,9%, -23,3% at same forex

Q4 Smart Gas Metering Q4 Water Metering

€M, unless otherwise stated	Q4 23	%	Q4 22	%	Chg. YoY
Residential	12,2	78,9%	12,6	82,2%	(3 ,0%)
Commercial Industrial &	3,2	20,8%	2,7	17,4%	21,1%
Other	0,0	0,3%	0,1	0,4%	(27 ,6%)
Total business sales	15,5	100,0%	15,4	100,0%	1,0%

unless otherwise stated €M,	Q4 23	%	Q4 22	%	Chg. YoY
finished Water meters,	4,5	49,0%	1,9	33,5%	132,3%
Water meter parts	3,7	40,4%	3,3	57,1%	12,3%
Other	1,0	10,6%	0,5	9,4%	78,7%
Total business sales	9,1	100,0%	5,8	100,0%	58,7%

FY Smart Gas Metering FY Water Metering

unless otherwise stated €M,	FY 23	%	FY 22	%	Chg. YoY
Residential	48,8	81,3%	39,6	81,9%	23,2%
Commercial Industrial &	11,0	18,4%	8,5	17,5%	30,2%
Other	0,2	0,3%	0,3	0,6%	(35 ,4%)
Total business sales	60,0	100,0%	48,4	100,0%	24,0%

€M, unless otherwise stated	FY 23	%	FY 22	%	Chg. YoY
Water finished meters,	11,6	40,6%	9,5	39,4%	22,2%
Water meter parts	14,3	50,0%	12,7	52,7%	12,4%
Other	2,7	9,4%	1,9	7,9%	41,1%
Total business sales	28,6	100,0%	24,2	100,0%	18,5%

2023 Foreign sales are ≈4%, mostly Greece and Croatia 2023 geography breakdown: Portugal 19,0%, Spain 36,2%, Rest of Europe 34,7%, Americas 7,3%, Asia/Pacific 2,7%

EBITDA adjusted bridge

Euro millions

From EBITDA to Net income – FY

€M , unless otherwise stated	FY 23	of % sales	FY 22	of % sales	Chg YoY
EBITDA	21 7 ,	6% 6 ,	38 2 ,	7% 9 ,	(43 3%) ,
of D&A impairment assets ,	46 9 ,		27 7 ,
EBIT	(25 2) ,	-7 7% ,	10 6 ,	2 7% ,	(338 9%) ,
financial (charges)/income Net	(6 9) ,		4 5 ,
(charges)/income forex Net	0 8 ,		(1 3) ,
EBT	(31 3) ,	-9 6% ,	13 6 ,	3 4% ,	(330 7%) ,
Taxes	7 9 ,		(2 4) ,
income Net	(23 4) ,	2% -7 ,	2 11 ,	2 9% ,	(308 6%) ,
Ebitda adjusted	29 0 ,	8 9% ,	47 1 ,	12 0% ,	(38 5%) ,
Ebit adjusted	0 1 ,	0 0% ,	19 4 ,	4 9% ,	(99 6%) ,
(charges)/income financial adjusted Net	(6 9) ,	(2 1%) ,	(4 2) ,	(1 1%) ,	2% 62 ,
Net income adjusted	(0 3) ,	(0 1%) ,	10 9 ,	2 8% ,	(103 2%) ,

• D&A for €28,7M, 9,2% of revenues vs €27,7M, 7,0%
• Impairment of goodwill for €17,0M
• EBIT of minus €25,2M vs €10,6M of PY
• Net financial (charges) €56,9M vs net financial income of €4,5 in PY due to changes in FV of Warrants expired on July 22
• EBT of minus €31,4M vs €13,6M of PY (both include one off items)
• FY 23 taxes revenue for deferred tax assets
• Net income of minus €23,4M vs €11,2M of PY
• Adjustments in FY23 refer to impairment losses and restructuring costs
• Adjustments in FY22 refer to change in FV of Warrants

Cash flow, net debt, net trade working capital

, unless otherwise stated €M	FY 23	FY 22
cash flow Current	27 5 ,	46 4 ,
Change in NTWC	(4 8) ,	(27 1) ,
Inventory	9 4 ,	(19 7) ,
Receivables Accounts	1 0 ,	(6 7) ,
Payables Accounts	(15 1) ,	(0 7) ,
Other working capital	(14 6) ,	(5 5) ,
Capex , net	(23 0) ,	(26 9) ,
Cash flow from operations	(14 9) ,	(13 1) ,
Financial charges	(7 2) ,	(3 3) ,
Dividends paid	-	(7 3) ,
IFRS 16 - Leases	(1 8) ,	(2 0) ,
Other	0 7 ,	2 0 ,
Change in debt net	(23 2) ,	(23 8) ,
debt Net - BoP	130 5 ,	106 7 ,
debt Net - EoP	153 7 ,	130 5 ,

€M , unless otherwise stated	2023 12	2022 12	YoY change
Inventory	83 3 ,	91 4 ,	(8 0) ,
receivables Accounts	63 5 ,	63 8 ,	(0 3) ,
payables Accounts	(66 9) ,	(81 4) ,	14 5 ,
Trade Working Capital Net	79 9 ,	73 8 ,	6 2 ,
NTWC/Revenues	24 5% ,	18 8% ,	5 7% ,

Non recourse factoring 7,4 13,3 (6,0) Accounts receivables adjusted 70,9 77,1 (6,2) • Inventory decrease of €8,0 thanks to Heating & Ventilation -€10,0 with normalization of supply chain supporting destocking target, while Gas Metering is building up stock (+€2,5) for planned production in first part of 2024

19,6%

2,1%

unless otherwise stated €m,	31/12/2023**	31/12/2023*	31/12/2022
(Cash equivalents) & cash Capex payables account	(13 7) (6 6) , ,	(8 7) (4 8) , ,	(23 5) (1 8) , ,
Current debt , net payables adjusted Accounts	26 6 (60 3) , ,	50 9 (76 6) , ,	20 5 16 3 , ,
debt Non current adjusted/Revenues AP	127 1 18 5% , ,	97 8 19 5% , ,	117 5 0% -1 , ,
derivatives & M&A debt MTM	0 2 ,	0 2 ,	1 2 ,
IFRS 16 - Leases Trade Working Capital adjusted Net	13 5 , 93 9	13 5 , 91 9	9 14 , 2 0
debt Net - EoP adjusted/Revenues NTWC	, 153,7 28 8% ,	, 153,7 23 4% ,	, 130,5 5 4% ,

• * Net Debt reported

AR adjusted/Revenues

• ** Net Debt pro-forma, amended agreements include covenant reset and shareholder loan

21,7%

Final comments and outlook

Looking forward we have different visibility on the two Divisions:

• Metering provides positive outlook thanks to awarded tenders and positive cycle
• Heating & Ventilation is expected to recover by year-end showing a quarter-on-quarter improvement
• Management focus KPI is on EBITDA and NFP

FY 2024 outlook

• Metering business top line expected further increase at high single digit increase
• Heating & Ventilation is expected to recover over the course of the year, with the first quarter still down double digit and the second quarter expected to be down single digit, compared to the previous year. Visibility on H2 24 suggests an improvement as compared to the first part of the year
• EBITDA improvement will come from carry over of structural cost reductions (€2,0) and manufacturing footprint reorganization (€2,5)
• Consolidated EBITDA margin expected to improve between 100 e 200 bps
• Capex planned between €20 €25M
• Net debt expected between €140 €147

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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