Carel Industries Spa · MIL:CRL
Carel Industries Spa — Q1 2020 Earnings Presentation
36 slides from Carel Industries Spa's earnings presentation, May 8, 2020
Slide 1: 2020 – Q1 Results
CAREL INDUSTRIES S.p.A. 2020 – Q1 Results 8th May 2020 This document and all of its contents are property of CAREL. All unauthorised use, reproduction or distribution of this document or the information contained in it, by anyone other than CAREL, is severely forbidden.
Slide 2: Q1 2020 – Highlights
Q1 2020 – Highlights Thanks to the resilience of its production footprint, CAREL managed to mitigate the negative effects (between -6m€ and -7m€) caused by the temporary lockdown in China and the shutdown of the Italian plant, reporting revenues substantially in line with Q1 2019 (-1.7%). • Revenues
Slide 3: Focus on COVID-19 - Operations
Focus on COVID-19 - Operations • CAREL has 1 production plant in China, in Suzhou, accounting for approximately 30% of the Group’s total production capacity. • The plant was shut down for one week, form 3 to 10 February and gradually returned to full capacity over the following weeks. • As of today
Slide 4: Focus on COVID-19 - Initiatives
Focus on COVID-19 - Initiatives In order to mitigate the impact of COVID-19 on revenues and costs, CAREL has implemented a number of significant initiatives, the effects of which will be deployed also over the next few quarters. Revenues Costs Careful planning and implementation of cost The Group to
Slide 5: Q1 2020 – Impacted by COVID-19 pandemic
Q1 2020 – Impacted by COVID-19 pandemic KPIs Revenues Bridge (m€) m€ Q1 2019 Q1 2020 Δ% -1.7% Revenue 80.1 78.7 -1.7% ~85 78.7 Revenue FX Adj. 80.1 78.7 -1.7% 80.1 EBITDA 15.7 14.4 -8.7% (~6) EBITDA/Revenue 19.6% 18.2% Net Profit 8.9 7.6 -14.1% Revenues Revenues Lock-down impact Revenues Q1 2019 Q1
Slide 6: Q1 2020 – Revenue breakdowns
Q1 2020 – Revenue breakdowns Breakdown by region Breakdown by sector Other 2% South America 2% North America 12% HVAC 62% EMEA 78.7 78.7 74% M€ APAC 12% M€ Refrig. 34% m€ m€ m€ m€ Area Q1 2019 Q1 2020 Δ% Δ% fx Sector Q1 2019 Q1 2020 Δ% Δ% fx EMEA 56.9 58.5 2.8% 2.9% HVAC 53.0 50.5 -4.7% -4.9% APAC 1
Slide 7: From EBITDA to Net Profit
From EBITDA to Net Profit K€ Q1 '19 Q1 '20 Δ% • Slightly higher D&A mainly linked to EBITDA 15,718 14,355 -8.7% higher Capex in 2019. D&A -4,052 -4,613 EBIT 11,666 9,742 -16.5% • Higher Financial charges due to Financial (charges)/income -266 -335 increased amount of loans partially offset by a gain
Slide 8: Q1 2020 – NFP Bridge
Q1 2020 – NFP Bridge 62.1 2.4 0.4 0.8 61.9 7.3 1.1 (7.6) (4.6) m€ NFP Net Profit D&A Leasing/ NWC CAPEX Shares Others NFP FY 2019 rent fees buy-back Q1 2020 • NFP stable compared to 2019 FY level. The FFO equal to 12.2m€ covered capex and the increase in NWC. • ΔNWC +7.3m€: the increase in NWC was m
Slide 9: Closing Remarks
Closing Remarks • In spite of the temporary shutdown of two plants in Q1, which represent more than 60% of CAREL’s total production capacity, the Group’s overall strategy again proved its resiliency. Operations • The production footprint expansion plan, completed in 2019, has been and will be a key
Slide 10: Annexes
Annexes
Slide 11: Shareholding structure (>3%)
Shareholding structure (>3%) CAREL Industries S.p.A. Share Capital Treasury shares 0.2% Other Shareholders 25.3% Luigi Rossi Luciani S.a.p.a 36.2% 7 Industries B.V. 4.9% Capital Research and Management Company Luigi Nalini S.a.p.a 9.9% 23.6% 11 11 This document and all of its contents are property o
Slide 12: Income statement and Balance Sheet
Income statement and Balance Sheet Income statement Balance sheet K€ Q1 2019 Q1 2020 Delta % K€ FY 2019 Q1 2020 Delta % Revenues 80,097 78,740 -1.7% Fixed Capital 167,957 166,067 -1.1% Other revenues 609 649 6.5% Working Capital 45,232 51,591 14.1% Operative costs (64,988) (65,034) 0.1% Employees de
Slide 13: Company profile
Company profile
Slide 14: Leading provider of advanced control solutions for HVAC/R
Leading provider of advanced control solutions for HVAC/R Key financials – 2019A • HVAC: Industrial, Residential, Growing key Commercial markets • Refrigeration: Food Retail and Revenue Adj. EBITDA EBITDA margin Net income Food Service €327m €64m ~19% €35m Leadership in • Control solutions premium +
Slide 15: We operate in attractive niches across a wide range of end-markets
We operate in attractive niches across a wide range of end-markets… HVAC Refrigeration Industrial Residential Commercial Food Retail Food Service Data Centers Residential Shopping Centers Convenience Stores Restaurant Chains Industry and Process Office Space Hypermarkets Refrigerated Merchandisers P
Slide 16: One-stop-shop portfolio of components and platforms
…through a one-stop-shop portfolio of components and platforms Programmable controls HMI and unit terminals Parametric controls Heat exchangers Isothermal humidifiers Electronic controls easily programmable and User interfaces for units and systems Entry level electronic controllers Heat exchangers
Slide 17: Long track record of profitable organic growth
Long track record of profitable organic growth Revenue (€m) 327 280 231 255 203 1990s 2000A 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014A 2015A 2016A 2017A 2018A 2019A Adj. EBITDA (€m) 64 55 51 43 38 1990s 2000A 2001A 2002A 2003A 2004A 2005A 2006A 2007A 2008A 20
Slide 18: Well-articulated strategies to continue the growth track record
Well-articulated strategies to continue the growth track record • Consolidation of HVAC market leadership • Growth in Refrigeration driven by technology leadership • Upselling and cross-selling HVAC Refrigeration • Global penetration to consolidate to represent the its market leadership engine of gr
Slide 19: Leading provider of advanced energy efficient control solutions
Leading provider of advanced energy efficient control solutions 1 High-tech leader in attractive niches of the HVAC/R industry 2 Attractive above market growth supported by secular trends Positioning and technological innovation capability hard to 3 replicate Highly efficient global operations servi
Slide 20: High-tech leader in attractive niches of the HVAC/R industry
1 High-tech leader in attractive niches of the HVAC/R industry Focus on attractive niches… …resulting in leadership positioning …CONSOLIDATED …INNOVATION-ORIENTED High value applications IN HVAC PREMIUM NICHES IN REFRIGERATION Deep knowledge of final applications is 33%1 #1 SIGNIFICANT ROOM FOR key
Slide 21: Attractive market growth supported by secular trends
2 Attractive market growth supported by secular trends Secular trends… …supporting attractive market growth Reference HVAC Market Market value (€m)1 GROWING • Improvement in LIVING STANDARDS POPULATION increasing demand for HVAC/R • Focus on WASTE REDUCTION in CHANGE IN food sector CONSUMER • Increa
Slide 22: Growth is driven by market trends and focused strategic actions
2 Growth is driven by market trends and focused strategic actions… Growth drivers SECULAR TRENDS Market Increasing the market of the applications addressed by CAREL trends NICHES EXPANSION Secular Leverage of deep knowledge of final trends applications to expand to adjacent niches Expansion to Incre
Slide 23: …and favoured by up-selling and cross-selling
2 …and favoured by up-selling and cross-selling FROM PRODUCT PLATFORMS TO INTEGRATED ELECTRONIC SOLUTIONS… PRODUCT PLATFORMS SYSTEMS From a COMBINATION OF PRODUCTS FROM DIFFERENT PLATFORMS To an ECOSYSTEM TO QUICKLY ADOPT NEW TECHNOLOGIES …IN THE HVAC AND REFRIGERATION MARKETS HVAC Refrigeration Exa
Slide 24: Positioning and innovation capability hard to replicate
3 Positioning and innovation capability hard to replicate ~6% OF REVENUE1 13% OF TOTAL WORKFORCE Invested annually in R&D dedicated to R&D 3 R&D CENTRES PROPRIETARY SOFTWARE COMBINING 5 DOMAINS Vast library of proprietary software modules UNIQUE 01100 • Hardware & Firmware developed over the past 10
Slide 25: Leadership position in HVAC OEM premium niches
3 Leadership position in HVAC OEM premium niches… Leadership positioning in premium …with no perfect comparable niches… Chiller European Market Share1 OEM Large 33% proprietary diversified EM / Low cost 26% solutions competitors competitors 14% 8% 6% Vertical niche approach Innovation p
Slide 26: …and leading in innovation in the refrigeration market
3 …and leading in innovation in the refrigeration market Leveraging on HVAC experience… …CAREL is a leader in innovation Large diversified EM / Low cost competitors competitors 2014 HEOS SISTEMA Waterloop system with DC tech for refrigeration Vertical niche approach Innovation pace & 2015
Slide 27: Highly efficient global operations serving locally diversified customers
4 Highly efficient global operations serving locally… NORTH AMERICA WESTERN EUROPE NORTH APAC GLOBAL PRODUCTION FOOTPRINT 1 5 Plant Plants 123* 926 Employees Employees DIRECT AND HIGHLY SKILLED SALES NETWORK 54* 192 Sales force Sales force 1 80 x3 Plant Sales force 1 3 BEST POSITIONED TO CAPTURE R&D
Slide 28: …diversified blue-chip customers
4 …diversified blue-chip customers HVAC REFRIGERATION GLOBAL BLUE-CHIP APAC 15% EMEA >6,700 c. 5% South America 69% Customers 3% BROAD & HIGHLY from first customer1 DIVERSIFIED In c. 100 c. 20% North America 13% countries worldwide from top-15 customers2 2019A revenue LONG-TERM ~80% ~70% BUSINESS of
Slide 29: Track record of profitable organic growth
5 Track record of profitable organic growth Organic double-digit growth Strong profitability High conversion to net income Cash generative business Revenue1 (€m) EBITDA1 (€m) Net Income1 (€m) Operating cash2 (€m) 327 35.0 63.1 45.0 31.2 30.7 280 39.8 255 50.9 47.0 25.1 231 43.0 27.7 21.4 203 37.5 23
Slide 30: Global expansion, innovation and services
6 A Global expansion, innovation and services Pursuing additional Consolidation of opportunities leadership positions improving services in HVAC offer with IoT and Growth in advanced Refrigeration monitoring solutions Geographical Cross-selling and up- expansion through selling exploiting the introd
Slide 31: Pursuing external growth through disciplined bolt-on M&A
6 Pursuing external growth through disciplined bolt-on C M&A CAREL has performed detailed analyses and scouting of potential targets, thus promoting an opportunistic approach with a focus on 3 MAIN EXPANSION AREAS: A B C COMPLEMENTING GEOGRAPHICAL Potential selected CORE-BUSINESS EXPANSION acquisiti
Slide 32: M&A
M&A
Slide 33: M&A - Recuperator
M&A - Recuperator • Key Data: Cash-out for equity = 25.7m€ Company positive net-cash = 6.9m€ 2017 Revenues = 16.4m€ EBITDA = 1.7m€ Employees = ~60 • Industrial fitting: Small-size Company Complementary products Carel’s commercial strength Cross-selling • Financial fitting: ~11x E
Slide 34: M&A - HygroMatik
M&A - HygroMatik • Key Data: Cash-out for equity = 56.1m€ Enterprise Value = 59.0m€ 2017 Revenues = 15.0m€ EBITDA = 4.7m€ Employees = ~60 • Industrial fitting: Small-size Company Interesting geographic positioning Strong in after-sale services Cross-selling • Financial fitting: ~
Slide 35: Disclaimer
Disclaimer This document has been prepared by CAREL Industries S.p.A for use during meetings with investors and financial analysts and is solely for information purposes. The information set out here in has not been verified by an independent audit company. Neither the Company nor any of its subsidi
Slide 36: This document and all of its contents are property of CAREL. All unauthorised use,
36 This document and all of its contents are property of CAREL. All unauthorised use, reproduction or distribution of this document or the information contained in it, by anyone other than CAREL, is severely forbidden.