Metalfrio S A : Dados Econômico-Financeiros

Metalfrio Solutions S.A.

Financial Statements December 31, 2021

(A free translation of the original financial statements in Portuguese, prepared in accordance with the International Financial Reporting Standards (IFRS), with the accounting practices adopted in Brazil and rules of the Brazilian Securities and Exchange Commission - CVM)

Metalfrio Solutions S.A.
Financial Statements
Years ended December 31, 2021
Contents
Management report
3 - 9
Independent auditors' report on the
financial statements
10 - 13
Balance sheets
14
Statements of income
15
Statements of comprehensive income
16
Statements of changes in shareholders' equity
17 - 18
Statements of cash flows
19
Statements of added value
20
Notes to the financial statement
21 - 104
Other information
105 - 106

2

MANAGEMENT REPORT

Fourth Quarter 2021 and Full Year Results March 30th, 2022

São Paulo, Brazil, March, 30th 2022 - Metalfrio Solutions S.A. (FRIO3) ("Metalfrio"), the world's leading cold solutions provider, announces its results for the fourth quarter of 2021 ("4Q21") and full year of 2021 ("FY21"). Financial and operational information given are in accordance with accounting practices adopted in Brazil and International Financial Reporting Standards (IFRS), in Brazilian Reais (R$). Comparisons are with the fourth quarter of 2020 ("4Q20") and full year of 2020 ("FY20") or as indicated.

• • Revenues increased by 45% in 4Q21 to R$559 million and 42% in FY21 to R$2,046 million benefiting from new customers acquired during the pandemic in all geographies (diversifying our customer base), strong recovery in the Brazilian market and consistent growth in EMEA.

• • Revenues from Services increased 36% to R$76 million in 4Q21, compared to R$56 million in 4Q20, as a result of margin accreditive commercial adjustments implemented during the second half of 2021. Full year Services' revenues grew by 15.7% to R$279 million accounting for 13.6% of Total Revenues

• • EBITDA in 4Q21 increased by 185% to R$90 million compared to R$32 million 4Q20. EBITDA FY21 reached an all-time high of R$230 million, an increase of 76% vs FY20, (FY21 Adjusted EBITDA was R$232 million).

• • Net Loss of R$43 million in 4Q21 and a Net Loss of

  R$56 million in FY21 vs Net Loss of R$140 million in FY20 as a result of higher Operational Profit and lower Financial Expenses.

Commenting on the results, the Company stated:

"2021 was an impressive year for Metalfrio on the operational side, surpassing R$2 billion Revenues and also EBITDA at historic levels well above the previous best.

After a very challenging 2020 where Metalfrio adjusted to the impacts of the Covid pandemic, in 2021 Metalfrio was able to reap the benefits of a better sales mix, with a robust and broader customer portfolio and a consistent commercial policy.

2021 was marked by significant inflationary pressure and continued supply chain challenges. To navigate in the challenging environment of commodity super cycle, supply chain bottlenecks and unprecedented logistics headwinds, Metalfrio promptly adjusted its supplier base, pursued cost reduction programs complemented with a reviewed commercial policy, continuous pursuit of new customers, and optimization of product mix As a result, the Company increased its EBITDA by 76% vs an increase of 42% in Revenues, improving its EBITDA Margin to 11.3%.

Metalfrio's strategy includes integrating products and services related to commercial refrigeration, such as, logistics, field maintenance, refurbishment, parts' sales, equipment rental and IoT Connectivity solutions. Together with the broadest geographical footprint in this segment, well-invested manufacturing facilities and a consistent operational results track-record well-ahead of its peers, Metalfrio is well-placed for continued profitable growth.

Going forward Metalfrio is seeking routes to accelerate its balance sheet deleveraging and capital structure optimization."

(R$ million)	4Q21	4Q20	% Var	FY2021	FY2020	% Var
Net Revenues	559.1	386.6	44.6	2,046.4	1,445.2	41.6
Gross Profit	123.4	63.8	93.5	350.9	252.2	39.1
Gross Margin	22.1%	16.5%	17.1%	17.4%
EBITDA	90.0	31.6	184.5	230.2	130.7	76.1
Adj. EBITDA	90.2	37.0	143.7	232.0	151.3	53.3
Adj. EBITDA Margin	16.1%	9.6%	11.3%	10.5%

Net Revenue

Consolidated Net Revenues increased 45% in the fourth quarter to R$559 million, setting a new record level for 4Q sales, benefitting from higher volumes, price adjustments and sales in hard currencies. For the full year, revenues increased by 42% to R$2,046 million surpassing the R$2 billion barrier for the first time. The Net Revenue 2013-21 CAGR of 12% demonstrates the ability of Metalfrio to understand early demand trends and successfully adjust to the volatility of the markets to deliver consistent growth.

Net Revenues FY21

South America

(R$ million)	4Q21	4Q20	% Var	FY21	FY20	% Var
South America	239.7	191.7	25.0	797.5	556.6	43.3
Central and North America	57.0	34.0	67.6	210.1	158.2	32.8
Europe, M. East and Africa	262.4	160.8	63.2	1.038.9	730.4	42.2
Total	559.1	386.6	44.6	2,046.4	1,445.2	41.6

Europe, Middle East and Africa (EMEA)

Sales in 4Q21 reached R$240 million (an increase of 25% versus 4Q20) as the region continued experiencing significant growth in distribution channel as well as in non-Key Accounts - the most important growth driver in 2021. In 4Q21 a major brewery resumed its placement program which contributed to a significant growth in the period. For FY21, sales to Key Accounts remained broadly flat as the increase in some accounts in the latter part of the year compensated for the lower activity earlier. Notably, the doubling in the non-Key Account portfolio enabled sales to grow considerably, and non-Key Accounts representing for the first time most of full year Product Revenues. Services continued the consistent growth pattern increasing by 15% in 2021. It is important to note that this activity is less impacted by the commodity price volatility.

Central & North America

In4Q21, the region experienced a 68% increase in Revenues vs 4Q20 supported mainly by a significant increase in sales to Coca-Cola Bottlers in the US as they resumed their investment program in the latter part of the year.

For the full year 2021 Revenues increased by 33% as a result of the rebound of key accounts including gains in the ice-cream segment, robust shipment to the Mexican distributor business and sustained Services activity.

Despite the Turkish Lira devaluation, sales 4Q21 in EMEA increased by more than 63% compared with 4Q20, underpinned by sales in hard currency, significant increase in sales of high value-add products to key accounts as placement programs begun to resume.

For the full year, Revenues increased by 42% to R$1,039 million with significant contribution of sales in hard currency and the positive impact of high value-add products in 4Q21 mitigating the adverse effect of the 3Q21 product mix with higher participation of horizontal standard products.

Important to note that for the full year, Revenues increased consistently across the geographies served. The ability to execute in more than 90 countries with distinct product requirements, is a testament to the ability to understand and capture demand trends whilst managing production complexities competitively in our Turkish facility which is probably the most efficient in the industry.

CAGR 11%

Gross Profit (R$ million) & Gross Margin

Gross Profit for the fourth quarter increased by 94% compared to 4Q20, totaling R$123 million supported mainly by the increase in EMEA region. For the full year the Gross Profit increased by 39%, still lower than the increase of 42% in Revenues, mainly due to the negative effect of Gross Profit in 1Q21, affected by the inflationary pressure of raw materials resulting in a lower Gross Profit Margin (14,8%).

FY21 Gross Margin remained broadly flat when compared with the previous year at 17.1% and 17.5%, respectively. Important to note that Gross Profit Margin in 4Q21 at 22.1% was 5.5% higher than previous year, as a result of commercial policy, product mix and operational leverage tailwinds.

Operating Expenses (SG&A)

SG&A expenses for the full year increased 22% to R$239 million. Most of the increase is related with selling expenses including freight as consequence of higher sales. As percentage of Revenues, SG&A decreased to 11.7% from 13.6%, a decrease noted in all regions as consequence of the positive operating leverage.

EBITDA & EBITDA Margin

EBITDA for the fourth quarter increased by 185% to R$90 million, as a result of improvement in all the regions, especially in EMEA. For the full year EBITDA increased by 76% (Adjusted EBITDA increased by 53%).

EBITDA Margin increased to 11.3% in FY21 from 9.0% in FY20 (Adj EBITDA Margin at 11.3% and 10.5%in FY21 and FY20, respectively) as a result mainly of a reduction of almost 2% in SG&A Expenses.

Despite varied market conditions, the execution track record of the Metalfrio team remains strong with the 2013-2021 adjusted EBITDA CAGR of 30% together with a consistent ability to improve margin.

Reconciliation of EBITDA and Adjusted EBITDA

EBITDA (R$ million)

Operating result

Depreciation and amortizationEBITDA

Other extraordinary expenses/(income) (i)

Adjusted EBITDA

14.7 16.9 31.6 5.4 37.0

25.5 16.0 41.5 0.8 42.3

50.1 16.6 66.6 0.5 67.1

16.8 15.4 32.1 0.3 32.4

71.1 18.9 90.0 0.2 90.2

382.4% 11.9% 184.5% 143.7%

i.

Extraordinary expenses in 2020 and 2021 are mainly related to due to COVID-19.