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Nordic Waterproofing

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 2019 2020e 2021e
Sales 3101 3146 3230
Sales growth (%) 15,7 1,4 2,7
EBITDA 362 375 386
EBITDA margin (%) 11,7 11,9 11,9
EBIT adj 257 275 286
EBIT adj margin (%) 8,3 8,7 8,9
Pretax profit 217 238 254
EPS rep 7,2 7,89 8,42
EPS growth (%) 14,2 9,6 6,7
EPS adj 8,11 8,72 9,25
DPS 4,4 4,75 5,1
EV/EBITDA (x) 8,3 7,8 7,4
EV/EBIT adj (x) 11,7 10,7 10
P/E (x) 13,2 12 11,3
P/E adj (x) 11,7 10,9 10,2
EV/sales (x) 1 0,9 0,9
FCF yield (%) 3,4 9,6 10,1
Dividend yield (%) 4,6 5 5,4
Net IB debt/EBITDA 2,2 2 1,8
SEKm 2019 2020e 2021e
Sales 3101 3146 3230
COGS -2294 -2316 -2373
Gross profit 807 830 857
Other operating items -444 -455 -471
EBITDA 362 375 386
Depreciation on tangibles -40 -36 -36
Depreciation on intangibles 0 0 0
EBITA 273 287 298
Goodwill impairment charges 0 0 0
Other impairment and amortisation -19 -16 -16
EBIT 254 271 282
Other financial items 0 0 0
Net financial items -38 -33 -28
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 217 238 254
Tax -44 -48 -51
Net profit 173 190 203
Minority interest 1 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 173 190 203
EPS 7,2 7,89 8,42
EPS Adj 8,11 8,72 9,25
Total extraordinary items after tax -3 -4 -4
Tax rate (%) -20,3 -20 -20
Gross margin (%) 26 26,4 26,5
EBITDA margin (%) 11,7 11,9 11,9
EBITA margin (%) 8,8 9,1 9,2
EBIT margin (%) 8,2 8,6 8,7
Pretax margin (%) 7 7,6 7,9
Net margin (%) 5,6 6,1 6,3
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 15,7 1,4 2,7
EBITDA growth (%) 32,2 3,5 2,9
EBIT growth (%) 19,9 6,5 4
Net profit growth (%) 13,6 10,3 6,6
EPS growth (%) 14,2 9,6 6,7
Profitability 2019 2020 2021
ROE (%) 15,5 15,9 15,8
ROE Adj (%) 17,4 17,6 17,4
ROCE (%) 13 12 12
ROCE Adj(%) 14,2 12,9 12,9
ROIC (%) 10,9 10,5 10,8
ROIC Adj (%) 11 10,7 10,9
Adj earnings numbers 2019 2020 2021
EBITDA Adj 365 379 390
EBITDA Adj margin (%) 11,8 12 12,1
EBITA Adj 276 291 302
EBITA Adj margin (%) 8,9 9,3 9,3
EBIT Adj 257 275 286
EBIT Adj margin (%) 8,3 8,7 8,9
Pretax profit Adj 239 258 274
Net profit Adj 195 210 223
Net profit to shareholders Adj 195 210 223
Net Adj margin (%) 6,3 6,7 6,9
SEKm 2019 2020e 2021e
EBITDA 362 375 386
Net financial items -38 -33 -28
Paid tax -44 -48 -51
Non-cash items -26 -25 -25
Cash flow before change in WC 255 269 282
Change in WC -22 -1 -3
Operating cash flow 233 269 279
CAPEX tangible fixed assets -53 -41 -42
CAPEX intangible fixed assets -12 -9 -6
Acquisitions and disposals -90 0 0
Free cash flow 78 218 230
Dividend paid -96 -106 -114
Share issues and buybacks -15 0 0
Other non cash items -237 0 0
Decrease in net IB debt -320 57 61
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 969 969 969
Indefinite intangible assets 90 84 74
Definite intangible assets 0 0 0
Tangible fixed assets 371 376 382
Other fixed assets 105 130 155
Fixed assets 1678 1704 1729
Inventories 406 409 413
Receivables 500 506 517
Other current assets 8 8 8
Cash and liquid assets 247 304 365
Total assets 2839 2931 3032
Shareholders equity 1152 1236 1324
Minority 15 15 16
Total equity 1167 1251 1340
Long-term debt 835 835 835
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 69 69 69
Other long-term liabilities 6 6 6
Short-term debt 71 71 71
Accounts payable 161 167 174
Other current liabilities 389 392 397
Total liabilities and equity 1756 2127 2839
Net IB debt 797 740 679
Net IB debt excl. pension debt 797 740 679
Capital invested 2049 2076 2105
Working capital 373 374 377
EV breakdown 2019 2020 2021
Market cap. diluted (m) 2281 2281 2281
Net IB debt Adj 799 742 681
Market value of minority 15 15 15
Reversal of shares and participations -80 -105 -130
Reversal of conv. debt assumed equity 0 0 0
EV 3015 2933 2847
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 124,9 109 108,3
Capital invested turnover (%) 166,6 152,5 154,5
Capital employed turnover (%) 158,9 139,5 137,9
Inventories / sales (%) 12,1 13 12,7
Customer advances / sales (%) 9,2 11,8 11,7
Payables / sales (%) 4,9 5,2 5,3
Working capital / sales (%) 11,7 11,9 11,6
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) 68,3 59,1 50,7
Net debt / market cap (%) 39,3 32,4 29,8
Equity ratio (%) 41,1 42,7 44,2
Net IB debt adj. / equity (%) 68,5 59,3 50,9
Current ratio (%) 186,9 195 203,1
EBITDA / net interest (%) 956,5 1136,5 1378,1
Net IB debt / EBITDA (%) 220 197,3 176,1
Interest cover (%) 721,6 869,9 1063,9
SEKm 2019 2020e 2021e
Shares outstanding adj. 24 24 24
Fully diluted shares Adj 24 24 24
EPS 7,2 7,89 8,42
Dividend per share Adj 4,4 4,8 5,1
EPS Adj 8,11 8,72 9,25
BVPS 47,84 51,33 54,99
BVPS Adj 7,6 11,09 14,76
Net IB debt / share 33,1 30,7 28,2
Share price 84,31 94,7 94,7
Market cap. (m) 2030 2281 2281
Valuation 2019 2020 2021
P/E 13,2 12 11,3
EV/sales 0,97 0,93 0,88
EV/EBITDA 8,3 7,8 7,4
EV/EBITA 11 10,2 9,6
EV/EBIT 11,9 10,8 10,1
Dividend yield (%) 4,6 5 5,4
FCF yield (%) 3,4 9,6 10,1
P/BVPS 1,98 1,85 1,72
P/BVPS Adj 12,46 8,54 6,42
P/E Adj 11,7 10,9 10,2
EV/EBITDA Adj 8,3 7,7 7,3
EV/EBITA Adj 10,9 10,1 9,4
EV/EBIT Adj 11,7 10,7 10
EV/cap. employed 1,4 1,3 1,2
Investment ratios 2019 2020 2021
Capex / sales 2,1 1,6 1,5
Capex / depreciation 162,8 139,8 134,6
Capex tangibles / tangible fixed assets 14,2 10,9 11
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 10,8 9,6 9,4

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Media

Nordic Waterproofing - Interview with CEO Martin Ellis
Nordic Waterproofing - Company presentation with CEO Martin Ellis

Main shareholders - Nordic Waterproofing

Main shareholders Share capital % Voting shares % Verified
Svolder 12.9 % 12.9 % 31 Dec 2019
Swedbank Robur Fonder 9.1 % 9.1 % 31 Dec 2019
Mawer Investment Management 9.0 % 9.0 % 30 Nov 2019
Carnegie Fonder 7.1 % 7.1 % 31 Dec 2019
Länsförsäkringar Fonder 6.6 % 6.6 % 31 Dec 2019
Handelsbanken Fonder 5.5 % 5.5 % 31 Dec 2019
Catella Fonder 4.3 % 4.3 % 31 Dec 2019
Prior & Nilsson Fonder 3.9 % 3.9 % 31 Dec 2019
Tredje AP-fonden 3.6 % 3.6 % 31 Dec 2019
Canaccord Genuity Wealth Management 2.3 % 2.3 % 31 Dec 2019
Source: Holdings by Modular Finance AB