Let's start. Good afternoon, everyone.

Thank you for being here with us. This is the conference call related to the full year 2025 results.

This morning, the Board of Directors has approved the great performances of the SIT the consolidated group. This conference call will be recorded, okay?

Please take note about that. I would like to introduce today's speakers.

We have with us Federico De' Stefani, Chairman and CEO, and Paul Fogolin, CFO. Paul, the floor is yours.

Thanks.

Thank you, Mara. Thank you, everybody, for taking part in this call.

I'm sharing, hopefully. That's

true.

Good. Let's go through the full year results.

I'm happy to present numbers that confirm a trend that we have been seeing during the quarters that we have met during 20 2025. In the highlights in the table, we present the full P&L of all adjusted items.

We are looking at two full years that can be compared, because we have taken out the one-off items related to restructuring costs and other non-recurring items. What we see is that turnover grew 6.5%, and especially we want to highlight that our operating results have significantly improved, and also full year we confirm what we call let's say the turnaround of our operating performance.

We have an EBIT adjusted of 16.1 million, we have earnings before tax of 10, nearly 10, and net income adjusted of over 6 million. This brings us to an EBITDA adjusted of 42.7, let's say in line in terms of margin without previous reporting, at over 13, nearly 13.5% of turnover.

We are happy to confirm also in the fourth quarter the operating results of the work that we've been doing during '24 and '25. Just to finish on net debt here on this page, we are focused on this.

We have deleveraged to 140 million, just under 140. We've been targeting this number all year long, and we are confirming it at the end of the year.

Also, I think we can be also very glad to report that for the third year in a row, we have obtained the gold rating by EcoVadis, which is the agency that we have selected to give us third-party valuation on our sustainability efforts. We have improved the valuation, and we have maintained a excellent top 5 at global level and top 1% in our industry.

Even in let's say a challenging environment for us, we've been able to benefit of the work that we have put in place also in our sustainability target. I think it was very important to put it in the highlights as well.

Moving on to our let's say reported numbers, here we have a table that has a recap of our P&L looking at reported numbers. I think that here the main thing to highlight is that all operating results are very significantly improved, of course, because of less impact of non-recurring, but we are also very glad to report a net income of 1.3 million, also at reported level.

Just a reminder, we have nearly 5 million of one-off cost, and they are all costs related to reorganization activities. Cash flow from operations was 16 million positive.

Net trade working capital at 72.5 is basically at 22.7 of our revenue, that we'll go into more detail, and as I said, the net debt is 139, after CapEx of 11.3 million. Again, we recap our adjusted results just to give in a one-pager the overview of the key financial results.

I will go to the bridge of our top line. This is a full year, as we said, 6.5% total revenues.

If we look at the business sales of Heating, it's nearly 6%, and Metering overall is also 6%. This is our full year results, let's say from a perspective of the two divisions.

If we look at geography, we see that a contribution coming from America, we know that that is basically Heating and Ventilation, nearly 30%. Europe is positive, and Italy is positive.

Of course, we'll break down this geography view also when we go into more details. Of course, here we see the impact of volumes, price, and the forex effect that was negative year on year of nearly 4 million.

The quarter, let's say I would say maybe December in particular was quite a typical, let me say. That's also good news when a trend in business is more typical instead of extraordinary.

We had a typical seasonality in the Heating, so that means December is not so exciting because everybody is doing optimization of their inventory and receiving. The pace of the quarter is a bit slower than the previous quarters, but I would say as it was in usual situation.

Anyway, that the total revenue was 5.7% increase, and again, we see the breakdown between division and geography on the fourth quarter of '25. Going into more detail, the quarter, as I said, 5.4 of the Heating year on year.

Italy slowed down a bit, but we were running very fast during the previous quarters, so that brings the full year nearly double-digit growth on the Italian market. Europe was all year underperforming the previous year, but this year with a +12%, we were able to go break-even with the full year, so that was good to see a positive number on that line as well.

The America is basically 25% increase year on year, even if the quarter was a bit slower than the previous reporting periods. Then, of course, we have the Asia and Pacific, let's say they confirm the trend with China not doing very well.

We know that all markets all related to housing and they also in our sector, we do see a weak market, and also Q4 was no exception on this. As I would say that Q4 confirmed is back to normal in some way, and so the end of the year was quite in line with our expectations.

I will go into Metering. Very happy to underline the Q4 of Water Metering, because when we were giving our outlook of the full year of this business unit, we were let's say counting on this performance as usual, and also always had an excellent fourth quarter, and also this year it was +21%, bringing the full year of the Water Metering in double digit and confirming the fundamentals and the excellent performance of this division in the group since we acquired it in 2020.

As for Metering, I'd say positive, 4% in the quarter, let's say 3%. Of course, we have a comparison which is not let's say favorable, because the Commercial and Industrial, if we look at the percentage, in '24 it was very much impacted by an exceptional increase in our market share because we had a competitive advantage, we were able to deliver more regular, and so we acquired a higher share.

This year it's back to normal, we have to account a reduction in the Commercial and Industrial. If we look at the Residential, +16% is very good, bringing our business sales to a positive level of 3%.

All in all, I think it was a good year also for the Gas Metering. Here's a one-page, a very short table with the essentials.

We have an increase in volumes, you saw it, of 21 million year on year, and in an increase on turnover of 6%, but we were able to maintain our working capital increase to 7, that means under 1%. Good performance, good control.

We come from '23 and '24 of volatile market in the Heating, very strong destocking that could give us also financial trouble driven by this working capital. We can confirm that we have it under control, and we have a let's say an increase which is very good in comparison to our increase in overall sales, and especially looking at the Heating.

While in the Metering, especially Gas, it's much based on tenders, it depends mainly on our backlog of tenders and that drives our inventory policy. Anyway, this is the number that we report at the end of '25.

This brings us to cash and debt. Of course, the big contribution comes from the EBITDA increase.

As I said, the increase in working capital, let's say trade working capital burns 5 million, but we already commented that, and we have other items in working capital related mainly to tax accrual and changes in provisions. Basically nothing to worry about.

That brings us to operating cash flow of 16 million positive, after CapEx of 11.3. Then under the operating line, we have the charges in interest and other items giving us a positive contribution to our net financial position of 6.6 million.

We end the year at 139.3, starting from 145.9. We are of course focused on deleveraging, and here we see 5.3 at the end of '24, 3.3 at the end of '25.

Let's say we are on track on this key KPI for us. I will leave the last slide to Federico.

Thank you, Paul. Just a a few words, first about 2025, before looking at at 2026.

I think we have been [someone speaking in

background: Excuse me...]

We have been presenting a few times the the worth that we are we have been doing in terms of working on on the new footprint, the resizing of the new organization, the focus of our R&D on on new products, mainly, the electric version, and the new businesses, new markets that we are targeting. I think 2025 results are the first proof, let's say, that we have been working in the right directions.

On sustainability, I would like to underline, Paul already mentioned, but I think being positioned in the top 1% in our industry as far as sustainability is doesn't come for free, but is the result of a lot of consistent work in that direction. Let me just express a sincere satisfaction for the '25 results.

Looking ahead, the business scenario that we see, we see that the regulatory framework is expected to support more demand, longer demand for combustion-based appliances. This allows will allow us to continue to invest in the electric application applications and in the new markets that we are targeting.

This is this is, let's say, on one side, we will continue to benefit from the gas applications. On the other side, this more clear scenario, regulatory framework is is expected to allow us more time to to introduce electric products in combination with our more traditional products.

In fact, we know that most of the electric appliances, I'm referring to heating now, most of the electric appliances are mainly aimed at new constructions, which in Europe represent more or less 10% of the total market. That's a number that has always been, more or less stable with some ups and downs, but more or less this is the percentage.

Focusing on on the US, we see that structural housing demand is expected to remain in place, will remain in place. Obviously, the kind of products that we sell in North America are mainly aimed at new homes or major refurbishments, and therefore are affected by interest rates and affordability of the product.

We also want to highlight this this market, cooker hoods, which is still limited for us, but has been growing as part, as a percentage of our turnover, total turnover. We see a significant shift towards premium segments, and therefore we are expecting, together, also in combination with changes in regulation towards more efficient products, we see a positive shift also in this market, and we want to play a role, a even higher role in this market.

If we move to the smart grids and the smart metering, gas and water metering business, we see that in general, significant investments are being made in those in those industries. That's it's the right business to be in.

We continue to see water growing more than gas. We so we we see that the '25 results, which in water, which came after another few years in a row of significant growth, will continue this year as well.

From this point of view, as most of you probably know, we have already announced an acquisition in Spain, Contidra, a distributor of water meters, therefore allowing us to enter the Spanish market and South America market, and also the sub-metering market, which is an interesting market for us. Closing is expected by the end of this month, more or less.

In this scenario, which is, as we all know, changing every day, what does SIT expect? This this this outlook does not, as it's clearly stated here, does not consider the potential risk to supply chains and energy prices, which are already, let's say, impacting every industry, every company.

Let me just say that as far as business, we're not significantly active in that in that geographical area. Our sales in that area are are meaningless.

Having said that, for '26, we expect sales to increase low single digit. Again, another year of growth in terms of sales.

We see profitability to continue to benefit from improved operating leverage. As we already mentioned, we have been working, and we will continue to work, with focus of reducing costs, optimizing the industrial footprint.

As it is stated here, the result will be a significant increase in the expected net income and a further reduction in net debt, which continues to be our priority also for 2026. Now I think we'll we'll leave the floor to to Q&A.

If you want to have, let's say, a space if you have questions, please raise your hand.

Giada?

Giada Cattaneo.

Yes, thank you for taking my questions. The first one is on your customer sentiment, especially on non-residential customers, if they are still willing to innovate, to invest in cooperation with you, or are you observing quite a wait-and-see attitude recently?

The second question is, do you continue to see the American market quite tonic? Fireplaces, storage water heaters, boilers, etc., etc., as you clearly mentioned in your presentation.

The third question is the impact of the Iran war, if you have accessed any sensitivity on your raw material costs, aluminum or even energy costs. That's it from my side.

Thank you.

Thank you, Giada.

Giada, just to be more clear, when you mean non-residential customers, do you have anything in particular in mind? Because we know that non-residential, this is probably linked to your second question, we are mainly in non-residential in North America.

In Europe, majority, the vast majority of our sales are in residential. My question, if you can just specify a bit better what you mean with non-residential customers.

No, in general your customers in the US and in Europe.

Okay. What we're seeing, let's speak about Europe first.

We see Europe to be in line with the 2025 trend. We see geographically in Europe, we see Turkey as a market that is expected to grow this year.

This is, as we know, our sales to Turkey are 50% more or less for local consumption and 50% for export. We see Turkish market has been quite active.

We see the Italian market with the new Conto Termico, which is expected to give a boost to both residential and non-residential sales. We see recovery in Germany mainly on heat pumps, not so much in gas.

Germany, France, we expect more heat pumps to grow more than 2025. As far as North America, we expect some growth.

We know that in '25, we have been growing significantly in North America. Probably the growth, what I say, it's going to be tough to continue to grow with the same speed, but we expect North America to continue to even further growth compared to '25, even though the pace would probably not be as high as it was in '25.

As we mentioned, in North America, we are present in storage water heaters, boilers, and also in fireplaces. Fireplaces sales are mainly related to new homes or major refurbishments contracts, and therefore interest rates are going to affect that market.

That's nothing different from what has happened in the past. With regard to your question about Iran war, Paul, you want to take this one?

I can take this one. Yes, we are monitoring with sensitivity the impact of energy, logistics, and raw materials.

We are seeing already, of course, increase in costs on the markets, let's say not yet on our supply purchasing pricing list. What we don't want to overreact, because what we are thinking of is passing through this impact.

We want to have a fair valuation of this impact and passing it through to the market. To do this, we would take the time that it needs.

There could be some delay between to implement a price increase takes some time, let's say quarter-on-quarter there could be differences, but our aim is to not overreact on one side, but to be able to translate to the customers this increase eventually. This is our position on this impact.

Another flavor to add is that in certain days, because it's a daily situation, certain days you are worried not only of costs and prices, but you are worried of availability of transport

and

availability. Other times it's a more of a cost issue.

It's something to keep under control. This is basically our view at the moment.

We don't want really to share numbers in this moment, but we have the situation under scrutiny.

We have set up a task force that means at least once a week to analyze the impact in terms of, like Paul said, impact on raw material, energy, and especially availability of components. We're strictly monitoring the situation.

Thank you, Federico. Thank you, Paul.

I don't know if there are any additional questions. I don't think so.

Yes, Andrea Bonfà. Andrea?

Hi.

Hi, good afternoon. Can you hear me?

Yes, very well.

Hi, good afternoon, and thank you, too, for taking my question. Very quickly, I was looking at your results, and you got a nominal high tax rate.

Can you remind us what are the technicalities behind that ratio? I understand that you got some geographical areas which are loss-making, and you cannot offset it with the Italian operation, or vice versa.

Exactly. Exactly that.

Basically, the tax that we are paying is because they're coming from foreign subsidiaries and is not able to offset it at group level, basically, while on the Italian companies, we have the group taxing perimeter, and there is no direct corporate tax on that. You got the point correctly.

Okay. Thank you very much.

Thank you, Andrea. Let's see if there is any additional question.

No, I don't see any. Thank you very much indeed for being with us for this conference call.

We will speak again for the first quarter results, and hopefully we will be in Milan for a meeting with some of people that could be interest in the coming weeks to the SIT equity story and to meet with the management. Thank you, and speak to you soon.

Thank you all.

Goodbye, thank you.

Thank you.

Thank you very much.

Thank you, bye.

Ciao.