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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 3122 2986 3209
Sales growth (%) 16,5 -4,3 7,5
EBITDA 370 350 398
EBITDA margin (%) 11,9 11,7 12,4
EBIT adj 265 238 286
EBIT adj margin (%) 8,5 8 8,9
Pretax profit 233 199 254
EPS rep 8,22 6,63 8,42
EPS growth (%) 30,3 -19,4 27
EPS adj 9,22 7,46 9,25
DPS 4,5 4,75 5,1
EV/EBITDA (x) 7,8 8,6 7,3
EV/EBIT adj (x) 10,9 12,6 10,1
P/E (x) 11,7 15,6 12,3
P/E adj (x) 10,4 13,8 11,2
EV/sales (x) 0,9 1 0,9
FCF yield (%) 7,1 7,6 9,7
Dividend yield (%) 4,7 4,6 4,9
Net IB debt/EBITDA 1,8 1,8 1,4
SEKm 2019 2020e 2021e
Sales 3122 2986 3209
COGS -2308 -2221 -2356
Gross profit 813 765 853
Other operating items -443 -415 -455
EBITDA 370 350 398
Depreciation on tangibles -43 -48 -48
Depreciation on intangibles 0 0 0
EBITA 279 252 298
Goodwill impairment charges 0 0 0
Other impairment and amortisation -19 -17 -16
EBIT 260 235 282
Other financial items 0 0 0
Net financial items -28 -37 -28
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 233 199 254
Tax -37 -40 -51
Net profit 196 158 203
Minority interest 2 1 0
Net profit discontinued 0 0 0
Net profit to shareholders 198 160 203
EPS 8,22 6,63 8,42
EPS Adj 9,22 7,46 9,25
Total extraordinary items after tax -5 -3 -4
Tax rate (%) -15,8 -20,4 -20
Gross margin (%) 26,1 25,6 26,6
EBITDA margin (%) 11,9 11,7 12,4
EBITA margin (%) 8,9 8,4 9,3
EBIT margin (%) 8,3 7,9 8,8
Pretax margin (%) 7,5 6,7 7,9
Net margin (%) 6,3 5,3 6,3
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 16,5 -4,3 7,5
EBITDA growth (%) 35 -5,5 13,8
EBIT growth (%) 22,7 -9,6 19,8
Net profit growth (%) 28,9 -19,2 28,4
EPS growth (%) 30,3 -19,4 27
Profitability 2019 2020 2021
ROE (%) 17,3 13,1 15,7
ROE Adj (%) 19,4 14,7 17,3
ROCE (%) 13,9 11,3 13,1
ROCE Adj(%) 15,2 12,2 14
ROIC (%) 12,1 9,5 11,4
ROIC Adj (%) 12,3 9,6 11,5
Adj earnings numbers 2019 2020 2021
EBITDA Adj 375 353 402
EBITDA Adj margin (%) 12 11,8 12,5
EBITA Adj 284 255 302
EBITA Adj margin (%) 9,1 8,6 9,4
EBIT Adj 265 238 286
EBIT Adj margin (%) 8,5 8 8,9
Pretax profit Adj 257 219 274
Net profit Adj 220 178 223
Net profit to shareholders Adj 222 180 223
Net Adj margin (%) 7 6 7
SEKm 2019 2020e 2021e
EBITDA 370 350 398
Net financial items -28 -37 -28
Paid tax -37 -40 -51
Non-cash items 20 -25 -25
Cash flow before change in WC 326 248 294
Change in WC -19 -15 0
Operating cash flow 312 233 294
CAPEX tangible fixed assets -44 -33 -42
CAPEX intangible fixed assets -20 -12 -13
Acquisitions and disposals -84 0 0
Free cash flow 165 188 240
Dividend paid -96 -108 -114
Share issues and buybacks -15 0 0
Other non cash items -175 0 0
Decrease in net IB debt -176 30 75
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 952 952 952
Indefinite intangible assets 133 128 125
Definite intangible assets 0 0 0
Tangible fixed assets 273 258 252
Other fixed assets 125 149 174
Fixed assets 1598 1604 1617
Inventories 383 403 417
Receivables 357 380 379
Other current assets 2 2 2
Cash and liquid assets 197 227 302
Total assets 2536 2615 2717
Shareholders equity 1196 1247 1335
Minority 14 13 13
Total equity 1210 1259 1348
Long-term debt 695 695 695
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 91 91 91
Other long-term liabilities 6 6 6
Short-term debt 44 44 44
Accounts payable 150 179 193
Other current liabilities 229 229 229
Total liabilities and equity 2536 2615 2717
Net IB debt 653 624 548
Net IB debt excl. pension debt 653 624 548
Capital invested 1960 1980 1993
Working capital 362 376 376
EV breakdown 2019 2020 2021
Market cap. diluted (m) 2317 2485 2485
Net IB debt Adj 653 624 548
Market value of minority 14 13 13
Reversal of shares and participations -102 -127 -152
Reversal of conv. debt assumed equity 0 0 0
EV 2882 2994 2894
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 133,9 115,9 120,4
Capital invested turnover (%) 172,3 151,6 161,5
Capital employed turnover (%) 166,5 143,2 149
Inventories / sales (%) 11,7 13,2 12,8
Customer advances / sales (%) 6,8 7,5 7
Payables / sales (%) 4,7 5,5 5,8
Working capital / sales (%) 11,3 12,4 11,7
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) 54 49,5 40,7
Net debt / market cap (%) 32,2 25,1 22,1
Equity ratio (%) 47,7 48,2 49,6
Net IB debt adj. / equity (%) 54 49,5 40,7
Current ratio (%) 221,4 223,5 236,1
EBITDA / net interest (%) 1337,3 953,1 1421,1
Net IB debt / EBITDA (%) 176,4 178,3 137,7
Interest cover (%) 1008,6 687,4 1064
SEKm 2019 2020e 2021e
Shares outstanding adj. 24 24 24
Fully diluted shares Adj 24 24 24
EPS 8,22 6,63 8,42
Dividend per share Adj 4,5 4,8 5,1
EPS Adj 9,22 7,46 9,25
BVPS 49,64 51,77 55,43
BVPS Adj 10,11 12,24 15,91
Net IB debt / share 27,1 25,9 22,8
Share price 84,31 103,2 103,2
Market cap. (m) 2030 2485 2485
Valuation 2019 2020 2021
P/E 11,7 15,6 12,3
EV/sales 0,92 1 0,9
EV/EBITDA 7,8 8,6 7,3
EV/EBITA 10,3 11,9 9,7
EV/EBIT 11,1 12,7 10,3
Dividend yield (%) 4,7 4,6 4,9
FCF yield (%) 7,1 7,6 9,7
P/BVPS 1,94 1,99 1,86
P/BVPS Adj 9,51 8,43 6,49
P/E Adj 10,4 13,8 11,2
EV/EBITDA Adj 7,7 8,5 7,2
EV/EBITA Adj 10,1 11,7 9,6
EV/EBIT Adj 10,9 12,6 10,1
EV/cap. employed 1,4 1,4 1,3
Investment ratios 2019 2020 2021
Capex / sales 2 1,5 1,7
Capex / depreciation 147,4 94,3 113,7
Capex tangibles / tangible fixed assets 16,1 12,7 16,6
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 15,8 18,4 19,1

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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 13.0 % 13.0 % 30 Jun 2020
Swedbank Robur Fonder 8.8 % 8.8 % 30 Jun 2020
Mawer Investment Management 8.4 % 8.4 % 31 May 2020
Carnegie Fonder 6.9 % 6.9 % 30 Jun 2020
Handelsbanken Fonder 6.4 % 6.4 % 30 Jun 2020
Länsförsäkringar Fonder 6.4 % 6.4 % 30 Jun 2020
Alcur Fonder 5.0 % 5.0 % 7 May 2020
Tredje AP-fonden 4.5 % 4.5 % 30 Jun 2020
Prior & Nilsson Fonder 3.5 % 3.5 % 30 Jun 2020
Canaccord Genuity Wealth Management 2.4 % 2.4 % 30 Jun 2020
Source: Holdings by Modular Finance AB