Good afternoon and welcome, everyone, to this conference call. This conference call is related to the comments of the management of SIT related to Q1 2026.

The Board of Directors this morning approved the results, and we have with us Federico de' Stefani, Chairman, and Paul Fogolin, CFO. The conference call is recorded, okay?

I leave the floor to Paul Fogolin.

Thank you, Mara, and thank you, everybody, for joining this afternoon. Let me just share the presentation, and we can start an overview of the first quarter.

Let's say that these are the highlights. As you can see, we are kind of going back to a norm of representation of our performance.

We think that the situation that we went through in '23 and '24 is over. Now we are back to, let's say, more straightforward presentation without highlighting too many adjustments, too many extraordinary data, and so on, because we think that the moment that we are entering has put this behind.

Let's go. The number is €72.4 million of consolidated revenues, that's 3.3%, that's nearly 5% at the same like-for-like foreign exchange.

All divisions were positive: Heating & Ventilation 1.5%, nearly 51; Metering at €20 million at 8 plus 8 3%; Gas Metering 5.8% and Water Metering double-digit growth versus the first quarter of '25. The Q1 EBITDA is 8.4, that's 50% higher than last year at nearly 12% of revenues.

EBIT is positive at 3.4%. Last year, we had an operating loss, we are actually turning around the business, the performance, and we have a net income also in the first quarter.

Net debt is in line with the end of the '25 full year reporting at 139.2, and it is much better than the 147 of the same period of last year. All in all, let's go into some details.

In this page, I think the main thing that we want to highlight is the graph that we are representing here, because, of course, there are some details on the revenues and the cost lines and margins of the reported period. We wanted to put in perspective the 12 months that are ending on this quarter, where we account €44 million of EBITDA adjusted at 13.7.

That's an improvement also versus the numbers that we reported a couple of weeks ago, which was the full year of '25, that was just under 43. We are very proud of this result, and it puts in perspective the data, especially if we look at one year ago, but also looking back 3 months ago.

This is a graph that we are quite proud to present. It is the highlight that we put in this page exactly for this.

Then, of course, we can go into details. As I said, we are improving in all lines, in all margins.

I think also that net income is positive, and that in the first quarter is typically a result that we don't because it is a low seasonality for us, let's put it that way. At the end, this quarter has to be read also with this in mind.

We do report some adjusted numbers just for completeness, but they are minor and they are, let's say, a carryover of activities that were initiated at the end of '25. I go ahead.

Looking at the top line, as I said, all divisions are positive. Here we have positive even after forex effects of 1.1 negative and some negative pricing.

It's a good result, and as I already commented, we are at 3.3% increase versus last year, the first quarter. Geographies, I prefer commenting them on the single division, let me go straight to that slide.

Here it is, the Heating & Ventilation by geographies. We do have, all in all, 3.7% increase at a like-for-like forex.

Q1 in Italy is down, let's say the market is a bit weak and especially in central heating, but we do have positive performance in other segments of the market, especially direct heating and other ventilation applications. While Europe has a strong first quarter, we have a very good impact on the Turkey.

We know that there we have big OEMs and also a local market, and all in all, it's a very positive quarter, while, let's say, the other broader markets are more in line with the previous year. As for America, let's say that if we look at the numbers on a like-for-like forex, it's in line, so that -8.7% is mainly a translation effect.

We do have Asia-Pacific weak, still weak, and we have several quarters where the performance is not positive in this. At the end, as I said, it's 1.5 or 3.7 if we look at it in terms of volumes.

Let's look at the Metering and break down the Smart versus the Water Metering. We do have a mix here that is more positive on the commercial and industrial, and the overall business unit is performing at nearly 6% increase.

The Water Metering double digit, it's in the, let's say, positive trend that we already had in the last quarter. We recall that was a very good quarter in 20 end of '25, and also in this first quarter of '26, +12%.

We are satisfied with this performance of the top line. Looking at working capital, as I already highlighted 15 days ago when we spoke last time, we are normalizing our seasonality.

We are normalizing the seasonality of our stock of inventory. This increase in inventory follows the order intake, which is improving, and that is perfectly in line with our industry, while, let's say that the dynamic there is consistent with our order book and sales forecast.

As for account and receivables, nothing particular to highlight, let's say that this performance for us is important because it is normalizing in line with our business, with our industry. This brings us to cash flow.

Of course, we are highlighting the improvement in current cash flow, in EBITDA, that's the performance in working capital we just commented, and we do have some other items that absorbed some cash, though all normal management, all accounting and VAT issues, nothing abnormal. CapEx, in line with our plan, 2.5 million, and that brings us to an operating cash flow of 1.4 positive and a net debt that changes for 1,000 €100,000, basically flat.

That's, if we look at our historical performance, a good performance knowing that normally the seasonality in this part of the year makes us, let's say, absorb cash flow. The debt is 139, leverage at 3.2, improving against both the end of the year and the last year.

Let's go to the last page, our final remark, or our outlook. We report here basically the same outlook.

We reaffirm it, even if, of course, the market volatility is high. What happened in between our last meeting, we do have a manifestation of inflationary pressure which is becoming evident, let's say, in several markets.

Of course, this is an event that could impact our demand, not only our demand, it could impact the general economic performance. This is basically the only thing that we add to the last meeting, because in terms of our outlook of our business, we maintain our outlook.

We expect a consolidated increase low single digit. We still have the possibility of benefit from our operating leverage, which will maintain the growth in earnings that we outlooked the last meeting, and also we want to have it transferred to the last line and in our net income, which will improve.

Positive cash generation is one of our key drivers of our performance, of our management, we will reduce further our net debt in line with our previous forecast. Of course, this is what we see at the moment.

Situation in the Middle East could change. We are, of course, under monitoring of all impacts, but at the moment, we feel comfortable to maintaining this outlook.

This is my presentation, quite quick and based on the main points, and we are available for any Q&A from your side. Thank you.

Giada Cabrino, the floor is yours.

Thank you so much. Good afternoon, everybody.

I have a couple of questions. If you could provide us with an outlook on residential gas boiler sector and your positioning versus your competitors.

Have you seen anything changed over the last months? If you still expect this sector to amount for around the 38% of your sales as you mentioned in full year '25 press release?

The second question is related to the America performance. Is this flat performance just temporarily or do you expect, I don't know, quite a good year, a weak year?

The last question is about your net debt at year end. Your expectation, substantial improvement or a little bit, just to understand a little bit more.

Okay. Thank you so much.

Thank you, Giada.

Thank you, Giada. I'll take the first two questions, leaving the third one to to Paul.

Outlook about the on, sorry, residential gas boilers market. We see We are seeing generally, let's say, we are not seeing any significant changes compare to last year, compared to the last last months.

We are seeing some markets performing better than others. Germany, Turkey, for example, are a couple of countries, markets where due to recoveries and due to, sorry, due to incentives, there is some more important recoveries than in the other markets.

That's valid for both heat pumps, but your question is more related to gas boilers, we're seeing also in this market also for boilers some increases. Turkey, for example.

Turkey is a purely gas boilers market. Heat pumps are not significant, not relevant at all in Turkey, and that's that market has been performing well, and is expected to continue for at least for H1 this year.

We're seeing Italy a little bit more struggling in terms of boilers, and the UK, slightly negative, slightly. We know that the UK is the biggest European market for for boilers.

Giada, I'm giving you what we are seeing because the EHI, European Heating Industry, industry numbers have not been distributed yet. There are some local associations like BDH in Germany that has announced numbers, but let's say they did the the overall European numbers are not out yet, they will be very shortly in the next few days.

My my comment is based on a mix of national association's official numbers and what what we are seeing. With regard to the 38%, yes, we we we see that percentage to be, let's say, also reference for this year.

We are hoping to to to do even better in terms of being able to reduce that percentage by increasing the sales of other products, other into other markets. For example, cooker hoods, pellets are doing particularly well.

Yes, we that's the the number that we are seeing for this year. We potentially we could do even better.

With regard to your question about North America, yes, we've seen a a flatter performance at the same forex. Don't forget that we our comparison compared to our comparison with Q1 '25 shows that in 20 Q1 '25 we had a significant increase, it was a very strong quarter.

The the comparison is with a Q1 '25 that has been that showed a great performance. Again, Q1 flat, but we are still seeing our outlook for North America is still positive in terms of some growth.

I remind you or remind you all that we are active in in three businesses: storage water heaters, gas storage water heaters, where we our aim is to increase our market share. We have more or less 15, 1-5% market share, our target in 2026 onwards is to increase this share.

We're also present in a second business, which is fireplaces, and our target is to grow with the market. We're seeing still seeing potential for some growth also in that market.

Boilers is our third market. North American boilers are having some challenges, let's say some facing some competition from particularly Korean players, but we are, let's say, stronger on both on both North American, and we're also aiming at increasing our market share in the in the imported boilers, mainly from Korea.

Yes, we are we still see some potential for some for some growth also in North America. The third question, I leave it to Paul.

Net debt.

Net debt. Giada, yes, we are going to reduce.

Let's say in terms of leverage, we want to go under 3 times. That's one way of seeing it.

Terms of absolute numbers, we should target under €130 million. Giving you some quite strict guidance on this number.

I think it's significant, because it's as we wrote in our outlook. It's a further reduction, and this is one of our, let's say, drivers, performance in this period.

Taking in consideration that this is a year where you are forecasting to grow,

and so

the working capital should absorb cash,

no? Exactly, yes.

That's right. Highlighting it.

Very clear. Thank you.

Thank you, Giada. We think to have answered to the three questions Giada made, I don't know if someone else would like to ask something, even in Italian, no problem.

Ottavio, I know that you have always a lot of questions. Do you want to ask something?

Just one.

Actually, no. I think it's okay for me.

It's enough.

[laughs]

No problem. Thank you very much anyway.

Thank you so much.

Okay.

By the way, we're going to be in Milan, right?

I'm going to say. I don't know if in the meantime there are other questions, We have time to answer.

I want to say that the management will be in Milan on the 13th for a roadshow that is organized by Banca Intesa. Please refer to Laura or to the people, let's say Francesco, who are there, okay, if you want to have a meeting with us.

Let's see if there are other questions. No.

Okay. No questions.

Good.

Okay.

Thank you very much indeed for the time that you dedicated to us, to SIT, and speak to you soon. Thanks.

Bye-bye.

Grazie. Ciao.

Thank you. Bye.

Thank you. Bye.