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Nordic Waterproofing

Protecting and waterproofing roofs

Nordic Waterproofing is a market-leading supplier of products used to protect and waterproof roofs. It was founded in 2011 as a merger of Trelleborg’s and Lemminkäinen’s waterproofing operations and was listed on OMXS Mid Cap in June 2016. The market is highly consolidated in terms of suppliers, while the customer base is fragmented. The company both supplies (through its Products & Solutions division) and installs (through its Installation Services division) waterproofing products using the materials bitumen and EPDM, but also PVC. Recent acquisitions have also been into prefabricated façade elements and green roofing products.

High barriers to entry, the price-to-weight ratio of waterproofing products benefits local players, while NWG’s economies of scale are also beneficial. Besides a strong balance sheet with plenty of attractive M&A opportunities, the core business offers a high cash flow conversion.

Bitumen and synthetic rubber costs have an impact on the company’s margin. Although the product renewal in the roofing industry is low and the pace of technology advances is small, new product introductions have historically resulted in some small provisions. Furthermore, M&A activity always brings the risk of lower than expected operational synergies and performance of acquired businesses.

SEKm 2018 2019e 2020e
Sales 2680 3003 3092
Sales growth (%) 22,6 12 3
EBITDA 274 351 365
EBITDA margin (%) 10,2 11,7 11,8
EBIT adj 224 264 281
EBIT adj margin (%) 8,3 8,8 9,1
Pretax profit 190 227 248
EPS rep 6,31 7,53 8,23
EPS growth (%) 11,5 19,5 9,3
EPS adj 7,86 8,61 9,4
DPS 4 4,3 4,45
EV/EBITDA (x) 7,7 7 6,4
EV/EBIT adj (x) 9,5 9,3 8,3
P/E (x) 11,3 10,6 9,7
P/E adj (x) 9,1 9,2 8,5
EV/sales (x) 0,8 0,8 0,8
FCF yield (%) -7,4 0,7 11
Dividend yield (%) 5,6 5,4 5,6
Net IB debt/EBITDA 1,6 1,7 1,4
SEKm 2018 2019e 2020e
Sales 2680 3003 3092
COGS -2000 -2213 -2282
Gross profit 680 790 809
Other operating items -406 -439 -444
EBITDA 274 351 365
Depreciation on tangibles -36 -81 -80
Depreciation on intangibles 0 0 0
EBITA 238 270 285
Goodwill impairment charges 0 0 0
Other impairment and amortisation -26 -16 -16
EBIT 212 254 269
Other financial items 0 0 0
Net financial items -22 -27 -21
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 190 227 248
Tax -38 -45 -50
Net profit 152 182 199
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 152 181 198
EPS 6,31 7,53 8,23
EPS Adj 7,86 8,61 9,4
Total extraordinary items after tax -11,5 -10 -12
Tax rate (%) -20,2 -20 -20
Gross margin (%) 25,4 26,3 26,2
EBITDA margin (%) 10,2 11,7 11,8
EBITA margin (%) 8,9 9 9,2
EBIT margin (%) 7,9 8,5 8,7
Pretax margin (%) 7,1 7,6 8
Net margin (%) 5,7 6 6,4
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 22,6 12 3
EBITDA growth (%) 17,9 28 4,1
EBIT growth (%) 9,7 19,7 6
Net profit growth (%) 10,7 19,6 9,4
EPS growth (%) 11,5 19,5 9,3
Profitability 2018 2019 2020
ROE (%) 14,5 16 16,2
ROE Adj (%) 18 18,3 18,5
ROCE (%) 14 13,9 13,1
ROCE Adj(%) 16,5 15,3 14,5
ROIC (%) 11,1 10,8 10,4
ROIC Adj (%) 11,7 11,2 10,8
Adj earnings numbers 2018 2019 2020
EBITDA Adj 286 361 377
EBITDA Adj margin (%) 10,7 12 12,2
EBITA Adj 250 280 297
EBITA Adj margin (%) 9,3 9,3 9,6
EBIT Adj 224 264 281
EBIT Adj margin (%) 8,3 8,8 9,1
Pretax profit Adj 228 253 276
Net profit Adj 189 208 227
Net profit to shareholders Adj 189 207 226
Net Adj margin (%) 7,1 6,9 7,3
SEKm 2018 2019e 2020e
EBITDA 274 351 365
Net financial items -22 -27 -21
Paid tax -38 -45 -50
Non-cash items 49 -22 -21
Cash flow before change in WC 263 257 274
Change in WC -78 -66 -14
Operating cash flow 185 190 261
CAPEX tangible fixed assets -35 -39 -37
CAPEX intangible fixed assets -20 -18 -12
Acquisitions and disposals -257 -120 0
Free cash flow -128 14 211
Dividend paid -90 -96 -104
Share issues and buybacks -1 0 0
Other non cash items -19 -67 -29
Decrease in net IB debt -238 -150 79
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 879 963 963
Indefinite intangible assets 97 99 95
Definite intangible assets 0 0 0
Tangible fixed assets 268 476 461
Other fixed assets 80 101 122
Fixed assets 1324 1638 1641
Inventories 346 390 405
Receivables 323 384 399
Other current assets 29 36 37
Cash and liquid assets 106 222 301
Total assets 2127 2671 2782
Shareholders equity 1090 1175 1270
Minority 16 16 16
Total equity 1106 1191 1286
Long-term debt 416 743 743
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 75 69 69
Other long-term liabilities 44 48 48
Short-term debt 131 71 71
Accounts payable 145 165 176
Other current liabilities 210 384 389
Total liabilities and equity 1568 1756 2127
Net IB debt 440 589 511
Net IB debt excl. pension debt 440 589 511
Capital invested 1693 2074 2090
Working capital 371 438 451
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1717 1915 1915
Net IB debt Adj 440 589 511
Market value of minority 16 16 16
Reversal of shares and participations -55 -76 -97
Reversal of conv. debt assumed equity 0 0 0
EV 2117 2444 2345
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 138 125,2 113,4
Capital invested turnover (%) 176,2 159,4 148,5
Capital employed turnover (%) 177,3 164,2 150,7
Inventories / sales (%) 11,3 12,3 12,9
Customer advances / sales (%) 5,3 5,4 5,6
Payables / sales (%) 4,4 5,2 5,5
Working capital / sales (%) 12,4 13,5 14,4
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 39,8 49,5 39,7
Net debt / market cap (%) 23,6 30,8 26,7
Equity ratio (%) 52 44,6 46,2
Net IB debt adj. / equity (%) 39,8 49,5 39,7
Current ratio (%) 165,2 166,7 179,7
EBITDA / net interest (%) 1254,9 1295,4 1739,9
Net IB debt / EBITDA (%) 160,3 167,9 139,8
Interest cover (%) 1090,1 996,5 1358,9
SEKm 2018 2019e 2020e
Shares outstanding adj. 24 24 24
Fully diluted shares Adj 24 24 24
EPS 6,31 7,53 8,23
Dividend per share Adj 4 4,3 4,5
EPS Adj 7,86 8,61 9,4
BVPS 45,26 48,79 52,73
BVPS Adj 8,78 8,81 12,74
Net IB debt / share 18,3 24,5 21,2
Share price 77,37 79,5 79,5
Market cap. (m) 1863 1915 1915
Valuation 2018 2019 2020
P/E 11,3 10,6 9,7
EV/sales 0,79 0,81 0,76
EV/EBITDA 7,7 7 6,4
EV/EBITA 8,9 9 8,2
EV/EBIT 10 9,6 8,7
Dividend yield (%) 5,6 5,4 5,6
FCF yield (%) -7,4 0,7 11
P/BVPS 1,58 1,63 1,51
P/BVPS Adj 8,12 9,03 6,24
P/E Adj 9,1 9,2 8,5
EV/EBITDA Adj 7,4 6,8 6,2
EV/EBITA Adj 8,5 8,7 7,9
EV/EBIT Adj 9,5 9,3 8,3
EV/cap. employed 1,3 1,2 1,1
Investment ratios 2018 2019 2020
Capex / sales 2,1 1,9 1,6
Capex / depreciation 154,7 70,4 61,8
Capex tangibles / tangible fixed assets 13,2 8,2 8,1
Capex intangibles / definite intangibles N/A N/A N/A
Depreciation on intangibles / definite intangibles N/A N/A N/A
Depreciation on tangibles / tangibles 13,4 17 17,4

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Nordic Waterproofing - Presentation från Remiums kapitalmarknadsdag 27/11 2017

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Main shareholders

Nordic Waterproofing

Main shareholders Share capital % Voting shares % Verified
Svolder 12.0 % 12.0 % 30 Jun 2019
Mawer Investment Management 11.1 % 11.1 % 31 May 2019
Swedbank Robur Fonder 9.1 % 9.1 % 30 Jun 2019
Carnegie Fonder 8.3 % 8.3 % 30 Jun 2019
Länsförsäkringar Fonder 5.8 % 5.8 % 30 Jun 2019
Catella Fonder 4.1 % 4.1 % 30 Jun 2019
Handelsbanken Fonder 3.8 % 3.8 % 30 Jun 2019
Tredje AP-fonden 3.6 % 3.6 % 30 Jun 2019
Canaccord Genuity Wealth Management 2.5 % 2.5 % 30 Jun 2019
Prior & Nilsson Fonder 2.5 % 2.5 % 30 Jun 2019
Source: Holdings by Modular Finance AB