BELIMO Holding AG

We are delighted to have you join us today, both in person in Zurich as well as via the webcast. Thank you for taking the time to be with us as we review our results and provide outlook for the future. Before we begin, let me take you through a few housekeeping notes. We will start with a series of presentations from our leadership team, followed by one Q&A session at the end. The way to ask a question depends on how you joined us today. If you are with us here in Zurich in person, please wait until the designated time and simply raise your hand. Please wait for the microphone to be provided that the people on the webcast can also hear you. For those joining us via the webcast, you can submit your questions at any time during the presentation. For those joining us via the call, you will be provided instructions via the call operator. Our webcast concludes after the Q&A session. For those joining us in person, we kindly invite you to lunch. Now, let's get started. It's my pleasure to pass on to Lars van der Hagen, the CEO of Belimo.

Thank you, Martha. Welcome also from my side here to the wither and of course, everybody who is remote here. It's a great pleasure that we introduce A great set of new numbers in the Belimo history, the 2024 results in this year that we are celebrating 50 years of Belimo and you have also those here in the room, a little gift that reflects that together to the top for 50 years with the Matterhorn on your table. For me personally also, I celebrated at the end of last year 25 years per Limo, and I'm here in my role as a CEO since 10 years. It's the 10th press conference here, so it's really nice to look back at these great numbers, these results that, of course, are possible because of our stakeholders. In particular, our more than 2,300 employees who are highly engaged and make this happen along with other stakeholders and of course all of you investors, analysts who ask tough questions so that you keep us up on our toes so that we think about our strategy, we reflect our strategy. That's also a very important aspect for the success of Belimo. After my introduction, we will move on to a deep dive into financials with us here for Markus Schur. Then we have this year a deep dive into our product platforms with Elena Cortona, our CTO. And towards the end, Markus will then give you our outlook into 2025, what we think will be happening this year. Then, of course, the Q&A sessions starts. It was a special year. Last year, we were talking and deep diving on six elements. One, of course, the strong demand in the Americas, but also the challenging situation in Germany. We did actually leverage this momentum, and this is reflected in our revenues, profits, and cash flow. Then the accelerating growth in data centers, and this was also reflected from the Belimo side in starting a specific initiative data centers. And then the demand in existing buildings to make existing buildings more energy efficient, and also the skilled labor shortage accentuated also over the last year again. But also this, what we, of course, react to being a role model as Perlimo regarding ESG, and also we have been upgraded with the MSCI rating to a triple A rating, and we also submitted, filed the science-based targets initiative last year, defining clearly our 2030 and 2050 emissions targets. This is important. I know some companies, they altered their targets or do not have specific emissions targets anymore all of a sudden. But that wouldn't be Belimo, right? We know... And we are a role model in our industry. We know that, of course, when we think long term and make us in particular, for instance, for the emissions, make us more independent of energy prices, this makes us also more successful financially in the long run. And of course, also from a cultural standpoint and so on, we are fully dedicated to these targets. Looking at the financials, they have been strong. The net sales, you know, since January with 13.2% growth. The EBIT also very nice. You have been reading this morning 19.2% EBIT margin and the 19.8% increase in free cash flow adjusted. Then successful strategy execution. So all these numbers can relate to one of our strategic initiatives. So it also demonstrates or proves that our long-term strategy works. And regarding outlook, we see this year as a positive year. Markus will go into details later about the outlook. And we continue also with our capacity expansion. Like, for instance, we did complete at the beginning of this year this – headquarters in China that's located in the Minhang district in Shanghai. That's one of the most important economic areas, the Minhang district in the world. And this building is reflecting our market leadership in China and also what we have strategies in China to expand our market leading position. It is mainly an automatic storage and retrieval system and logistics and customization building, but also has a large training center for our customers, so it's a great location to represent Belimo. Of course, it's also a sustainable building. It's a LEED Platinum, will be LEED Platinum rated building, and it's completely equipped with solar on the roof, but also with this Very innovative double facade with this glass that you see is 60% shading and is also a solar cell. So all this glass is at the same time transparent solar and makes this building together with all the Belimo field devices highly energy efficient and flagship building in the world of efficiency. Then we have also informed this morning that on our board of directors, we present at the General Assembly for election a new member, Tom Hallam. This is because Martin Zwisik decided to resign from the board next year. And most of you know him. He's our financial expert on the board. And we, therefore, we're looking for a new expert who can also succeed Martin Zwissig next year as leading, being the chair of the audit committee here with Tom Hallam. And Tom Hallam, with 16 years at Givaudan and being the CFO for a long time at Givaudan, has a very strong background in finances and can fill the big shoes, I think, that Martin Swisik will leave. So we're looking forward to that election, of course, then at the General Assembly. Then always I like to look back a little bit in history at Perlimo, the last 20 years, because things take time. And it's always nice to reflect on the sales development over the years, but also, for instance, the profitability development over the years. So we had... In the beginning of this phase, EBIT corridor of 14% to 16% beginning 2004 in these years. We then in the mid section here of the chart, we increased that to 16% to 18%. Last year, we put that to 18 to 20, that range. So you see all this long-term improvement of EBIT margin over the years and, of course, a very consistent development of this organic annual growth rate that has been 9.7% over the last 20 years in local currencies. Our foundation... is built on three megatrends, urbanization, this is a long-term trend that will be lasting for decades, climate change as well, and digitalization where we're gonna deep dive a bit today. Looking at our strategic growth strategies, we've always talked about these growth strategies over the last years. We started with a specific growth strategy in 2016. That was because 2011 to 2016, we've seen a growth rate of only 5.6%. That was... Also, because the economic environment, that was still the aftermath of the financial crisis 2008. Remember, that took quite a long time, about seven, eight years to recover, really. And then we said we have to really make sure that we grow at Belimo, and we implemented the growth strategy, the first phase, until 21, where we had then an average growth of 8.8%. We implemented the second phase in 22, and there now we have the three years on record, so 11.9, 7.2, and 13.1% annual growth rate in local currencies. So really nice demonstration or confirmation that this strategy works. Our six strategic initiatives listed on the right of the slide, there we have two that focus on digitalization. One is that of the data centers, and the second one is that of digital ecosystem. I'd like now to talk a bit about the digital ecosystem, where actually then Elena Cortona will deep dive afterwards. So I now basically talk about the icing of the cake. and then Elena will talk about how she was baking the cake. We have over the last years developed also many products that will be introduced into the market this year. This year we have a firework of new products that will be introduced and I want to show you some of these products and how they relate to our platform. Let's start again with the main purpose of Belimo that is having good indoor air quality. We are more than 90% of the time in buildings. And we eat about one kilogram of food every day. Chocolate, for instance. Two liters of water we drink, or whatever you drink, and we breathe 12,000 liters of air, 12,000 liters of air per day. So the air is absolutely crucial that we have good air. And slowly, legislation also follows. For instance, now in California, the new California energy codes, they require public spaces to be ventilated with a demand control ventilation system that means a variable air volume system that needs palimo actuators and sensors but also to control it by the indoor air quality the co2 levels And for that, we have upgraded our sensor range of room sensors with a new software that allows the tracing of CO2 that's required, that now CO2 is not only controlled for, that's a requirement, but also that you can trace it, that you can look back, was there the right CO2 level, for instance, two weeks back or three weeks back. So that's a new requirement. in California, but that probably is pioneering building codes in the whole world. It's a great thing. And the beauty is we just had to upgrade our software, our firmware of the product and the app so that this can be made happen and can be made available to our customers. our competition likely has to change the product, redesign the product, also from a hardware standpoint, which is a good example of the digital platform. This, of course, is not only in schools and public spaces, but also where we are focused in the non-residential building space, so laboratories, hospitals, pharma environments, and so on. Another great sensor innovation is the new Delta P sensor on the new platform that's more accurate, more precise, and part of a new platform fully integrated into actuator and valve platforms. So it's the second generation of Delta P sensors. So as we launched sensors in 2018 for the first time, this is now the second generation that helps us to increase our market share in sensors. This one also we are planning high volumes. We also have a cost advantage with this new product and we're going to offer it actually at a very attractive price into the market to really gain volume in the sensors business. For this important application that's often used for filter monitoring in air handling units like here, where it's important to know when you have to replace a filter, not too early, because then you have costs for the filters and for the labor to replace filters, but also not too late, because otherwise you have higher energy costs. Another sensor innovation is expansion of our product range from our toxic gas sensors. That is a product range that comes from the acquisition of Opera a couple years ago in Montreal, the company. This is to measure refrigeration gases, for instance, in chiller applications or split-unit applications. We have to make sure that if refrigeration gas leaks, that it can be detected. We have a complete range of UL-certified refrigeration gas sensors that we introduced this year into the market. GM actuator, a 40-newton-meter actuator. That's the third generation of this product at Belimo. It's the first damper actuator in the new platform. It's an amazing product. It's more quiet and more energy efficient. This product today, the current version, requires four and a half watts of energy consumption during operations. The new one, two, so that's less than half. And when it stands still, the current one is 2 watts and the new one is 0.5 watts. So it's unbelievably matching. Compare it to your bedside table lamp. In the past, you had a light bulb with 40 watts. Today, you have an LED with 8 watts. And this requires, when running, 2 watts. So a quarter of your lamp. And that's 40 newton meters. So... You use it on dampers like this, large dampers, couple square meters large, and equipment like this air handling unit, for instance. So quite amazing. So this low power consumption is not only an advantage that it consumes less energy, but it also requires smaller wires for the installation, smaller... fuses and so on has several advantages in the industry and it's leading in the industry actually the current actuator is already the best in class so this is then basically overtaking our own standard and making it even better with the gm actuator then on the butterfly valve and the small one here the gr actuator you see the similarities the modularity then We last year introduced, with a little movie you've seen, our JR butterfly valve actuator. Here now we expand the big valve on the right side. QR and YR range, these are large valves, DN450, so for plant applications. Also very energy efficient, about 25 watts of power consumption has this product versus competition, about 150 to 200 watts. Unbelievable. energy efficient and in these big sizes dn450 in a cooling application for instance in florida that would be about six megawatt of thermal energy that goes through such a valve that's about two million of energy costs per year that's controlled by such a valve very important application and absolutely market leading product range that we have with this Also, the QR and the wire, they will be made in the U.S. in our plant in Danbury, Connecticut, for the whole world. So we manufacture it in Danbury, Connecticut. So some lucky politicians there in the U.S. Then the application here of these products, typically on chillers, for instance, like here on a rooftop. Then another innovation in the market, we talked about it in the last years, we have, with Belimo Innovation, started up Bereva, Belimo refrigeration valve, startup for electronic expansion valves. We have now integrated the company fully into Belimo, and we have the Belimo expansion valve range now, and we have first successes here in the application of a heat pump from Carrier Fisman that's a mid-size heat pump, 40 kilowatts. It's the best in class, actually, in the market now. And we are proud, of course, that the Carrier Group is using our electronic expansion valve for refrigeration since Willys Carrier 1902 invented the air conditioning circuit. And nice when the inventor, of course, and still one of the market-leading companies in chiller and heat pump design in the world, using Belimo expansion valves in the refrigeration circuit. Then data center specific product range of characterized control valves. We developed stainless steel application. It was a requirement in China, so we developed it fast with our Chinese R&D team over the last nine months. It's used on the secondary loop where we cool actually the service, the direct chip cooling typically. And another innovation, it does not stop The BF high torque damper actuator for fire and smoke applications. This as well, fire and smoke applications with our new M600 chip and more direct digital interface into the product. It's an important product range. Fire and smoke damper actuators accounts for more than 100 million in sales for Belimo worldwide. And finally, a retrofit product with our initiative Retrofit Plus. We developed a small valve actuator where we can retrofit short stroke valves from the competition. There are tens of millions of these valves installed and they can be now retrofitted and improved easily with the Belimo actuator. And these are all modular, all a modular platform. And therefore, we can use our app on the components and have a really consistent range. And that's the uniqueness, being consistent across the range, so not having all these single products. If you look at our... competitors it's typically a product range that's made up of many different components that are not consistent regarding interfaces and regarding the use of these products so we are very proud introducing these products this year and we look forward to that again gaining and continuing on the momentum so now With this, I would like to leave the stage to Markus Schuch. He will deep dive into the finances.

Please, Markus. Okay. Thanks a lot, Lars. And a warm welcome also from my side. It's a great honor and pleasure to present the financials and give some more insights into the results of 2024. 2024 was a highly successful year for Belimo, despite some challenges in some of our key markets. We achieved a sales growth of 13.1% in local currency or almost 10% in Swiss francs. This gives a total amount then of 943.9 million Swiss francs. Americas developed into the largest region and generated 46% of net sales, followed by EMEA with about 41% and Asia-Pacific with about 13%. From a business line perspective, Control Valve has become our largest business line with close to 50% of turnover, followed by Damper Actuator with 46% and Sensormeter, our youngest business line, already contributing with 5% to our global turnover. If you have a closer look into the composition of growth, we can see that last year, volume and mix contributed was 9.8% towards the growth. And then price increases elevated sales by about 2.9%, which gives them together with the others, a total sales growth of 13.1% organic in local currency. FX had a negative impact of 3.2%, and this gives then the reported sales growth of 9.9% in our reporting currency in Swiss francs. Let's have a closer look into the development of our various business line. So we can see that damper actuator showed a growth of 9.7%. This is significantly up from last year. And there also data center projects had an important aspect into this strong growth. Control valve grew by 15.4% and this further increased the importance of this business line and is accounting now for 50% of our global turnover. Sensormeter, it's our youngest business line. They generated the highest growth rate of 25% and that shows a steady adoption at our customers and the success of our penetration and cross-selling strategy. Let's have a closer look into the regional development. So EMEA achieved organic growth of 5.9% in local currency or 3.7% in Swiss franc. This is a very strong performance given the difficult market situation in EMEA and especially in Germany, the largest market in EMEA. This success was possible by strong focus on the renovation and retrofit market, and this could compensate the missing projects on the new construction. A further contribution came from the data center projects and the end of this docking in the OEM channel. Looking at the Americas, Americas generated exceptional strong growth of 19.8% in local currency, or 16.1% in Swiss Franc, and becoming with this the largest region of Belimo. This very strong result was possible due to a generally favorable economy and high focus on attractive and high growth segments. pharmaceutical production, semiconductor industry, renovation, and above all, obviously, data centers. Data centers accounted for about one-third of the growth in America. We are extremely well positioned in the data center segment, both in the traditional air-based cooling as well as in the emerging liquid cooling application. Lastly, Asia-Pacific generated growth of 14.6% in local currency or 10.2% in Swiss francs. All our key markets contributed to this strong performance. We achieved double-digit growth in China despite an overall very challenging market situation. Again, this was possible by focusing on the attractive segments. And India developed extremely well, improving there our market position and further also positioning central HVAC as the standards for high-end building. Moving further down the profit and loss statement, driven by the extremely strong top line performance, we were also able to further expand our operational profitability and increase EBIT by 19% to 181.1 million Swiss francs. This corresponds to an EBIT margin of 19.2%, a strong up from last year's 17.8%. We were able to compensate the negative FX development and also absorb the significant investment into our growth strategy. Looking at our personnel cost, so if the personnel cost increased by 9.3%, that's in line with our top line growth. The higher cost was driven by the increase of headcount and some salary increases. In the reporting period, we added an incremental 102 full-time equivalents to our workforce and increased the employee base to 2,361 full-time equivalents. From a regional split, 58% of our employees work in EMEA, 25% in the Americas, and 17% in Asia Pacific. And from a functional split, 41% of the employee base work in sales and marketing, 38% in production, 13% in innovation, and 8% in administration and general management. From a functional currency point of view, 53% of the personnel costs are denominated in Swiss francs and 47% in all other currencies. Our R&D expenses amounted to 73 million in the reporting period, and that corresponds to about 7.7% of turnover. This shows a normalization of our innovation investments towards the long-term target level. Moving to the net profit, so our net income increased by 7.2% to 146.7 million Swiss francs, or 15.5% of net sales. If we normalize for the one-time tax effect of 17 million we were able to book last year, the increase is actually 22.6%. This increase was driven by the strong operational performance and an improved financial result. Last year, we had to absorb FX losses of 8.6 million, while this year the FX results were slightly positive. On the tax side, we had income taxes of 29.4 million, and this corresponds to an effective tax rate of 16.7%. This is slightly below our long-term expected effective tax rate of slightly ahead of 17%. This was due to some favorable effects in the U.S. And lastly, earnings per share increased to 11 Swiss francs and 94 cents per share. From a cash flow perspective, cash flow from operating activities increased to 195 million. And this was driven by the strong performance and the normalization of the working capital level. Free cash flow normalized for the term deposit increased by 20 million Swiss francs to 133 million. And this is despite an elevated cap expense of 63 million. That's in conjunction with our capacity expansion projects. We're growing heavily, therefore we also need to increase our capacity, and at the moment we're doubling the mainly logistics and customizing capacity across all our main sites, and therefore there are buildings and additional capacity to also support the growth there. Looking at our two half years, we see a stable development of sales across the two half years, despite a shorter second half year due to the short December and some FX headwind. And this shows the strong sales momentum we enjoy and the development of the sales. Profit-wise, the second half year is always a bit lower, and that is in line with the steady buildup of resources throughout the year. Balance sheet. So the balance sheet remains extremely stable. So we have got a reassuring equity ratio of 76%. Regarding working capital, the working capital is 251 million. That's up 9 million from last year. And with this year, we were adding another set of strong numbers with a free cash flow of 14.1% of net sales and impressive capital returns. The return on invested capital is 25.7% and the return on equity even 26.4%, despite the missing support from the tax effects from last year, higher than last year. Driven by this very strong performance, the Board of Directors is proposing an increased dividend of 9.5 Swiss francs per share. This is a continuation of our dividend policy and corresponds to a payout ratio of close to 80% or a total of 117 million Swiss francs. Regarding dividend yield, this is 1.6% based on the year-end closing of 599.5 Swiss francs per ordinary share. Lastly, this table highlights the attractive long-term performance of the Belimo share. Total shareholder return over the last five years was 75.6%. Out of this, 11% was due to the dividend and 65% due to the strong share price development. With this, I'm at the end of the financial part, and I will hand over to Elena for a deep dive into our digital ecosystem.