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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 3073 3145
Sales growth (%) 22,6 14,7 2,3
EBITDA 274 347 359
EBITDA margin (%) 10,2 11,3 11,4
EBIT adj 224 251 271
EBIT adj margin (%) 8,3 8,2 8,6
Pretax profit 190 214 239
EPS rep 6,31 7,12 7,92
EPS growth (%) 11,5 12,9 11,3
EPS adj 7,86 8,03 8,92
DPS 4 4,3 4,45
EV/EBITDA (x) 7,7 7,3 6,8
EV/EBIT adj (x) 9,5 10,1 9,1
P/E (x) 11,3 11,7 10,5
P/E adj (x) 9,1 10,4 9,3
EV/sales (x) 0,8 0,8 0,8
FCF yield (%) -7,4 -0,2 10,2
Dividend yield (%) 5,6 5,2 5,3
Net IB debt/EBITDA 1,6 1,7 1,5
SEKm 2018 2019e 2020e
Sales 2680 3073 3145
COGS -2000 -2280 -2334
Gross profit 680 793 811
Other operating items -406 -446 -452
EBITDA 274 347 359
Depreciation on tangibles -36 -84 -80
Depreciation on intangibles 0 0 0
EBITA 238 263 279
Goodwill impairment charges 0 0 0
Other impairment and amortisation -26 -17 -16
EBIT 212 246 263
Other financial items 0 0 0
Net financial items -22 -32 -24
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 190 214 239
Tax -38 -43 -48
Net profit 152 171 191
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 152 171 191
EPS 6,31 7,12 7,92
EPS Adj 7,86 8,03 8,92
Total extraordinary items after tax -11,5 -5 -8
Tax rate (%) -20,2 -20 -20
Gross margin (%) 25,4 25,8 25,8
EBITDA margin (%) 10,2 11,3 11,4
EBITA margin (%) 8,9 8,6 8,9
EBIT margin (%) 7,9 8 8,4
Pretax margin (%) 7,1 7 7,6
Net margin (%) 5,7 5,6 6,1
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 22,6 14,7 2,3
EBITDA growth (%) 17,9 26,6 3,4
EBIT growth (%) 9,7 16 6,8
Net profit growth (%) 10,7 12,9 11,5
EPS growth (%) 11,5 12,9 11,3
Profitability 2018 2019 2020
ROE (%) 14,5 15,2 15,8
ROE Adj (%) 18 17,2 17,8
ROCE (%) 14 13,5 12,9
ROCE Adj(%) 16,5 14,7 14,1
ROIC (%) 11,1 10,4 10,1
ROIC Adj (%) 11,7 10,6 10,4
Adj earnings numbers 2018 2019 2020
EBITDA Adj 286 352 367
EBITDA Adj margin (%) 10,7 11,5 11,7
EBITA Adj 250 268 287
EBITA Adj margin (%) 9,3 8,7 9,1
EBIT Adj 224 251 271
EBIT Adj margin (%) 8,3 8,2 8,6
Pretax profit Adj 228 236 263
Net profit Adj 189 193 215
Net profit to shareholders Adj 189 193 215
Net Adj margin (%) 7,1 6,3 6,8
SEKm 2018 2019e 2020e
EBITDA 274 347 359
Net financial items -22 -32 -24
Paid tax -38 -43 -48
Non-cash items 49 -23 -22
Cash flow before change in WC 263 249 265
Change in WC -78 -75 -12
Operating cash flow 185 175 254
CAPEX tangible fixed assets -35 -40 -38
CAPEX intangible fixed assets -20 -18 -13
Acquisitions and disposals -257 -120 0
Free cash flow -128 -3 203
Dividend paid -90 -96 -104
Share issues and buybacks -1 0 0
Other non cash items -11 -226 -29
Decrease in net IB debt -238 -167 71
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 879 963 963
Indefinite intangible assets 97 98 95
Definite intangible assets 0 0 0
Tangible fixed assets 268 474 459
Other fixed assets 80 102 124
Fixed assets 1324 1637 1641
Inventories 346 400 412
Receivables 323 391 404
Other current assets 29 37 37
Cash and liquid assets 106 206 277
Total assets 2127 2669 2771
Shareholders equity 1090 1165 1252
Minority 16 16 16
Total equity 1106 1181 1268
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 145 169 179
Other current liabilities 210 388 392
Total liabilities and equity 1568 1756 2127
Net IB debt 440 606 535
Net IB debt excl. pension debt 440 606 535
Capital invested 1693 2081 2096
Working capital 371 446 458
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1717 2004 2004
Net IB debt Adj 440 606 535
Market value of minority 16 16 16
Reversal of shares and participations -55 -77 -99
Reversal of conv. debt assumed equity 0 0 0
EV 2117 2548 2455
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 138 128,2 115,6
Capital invested turnover (%) 176,2 162,9 150,6
Capital employed turnover (%) 177,3 168,5 154,3
Inventories / sales (%) 11,3 12,1 12,9
Customer advances / sales (%) 5,3 5,3 5,6
Payables / sales (%) 4,4 5,1 5,5
Working capital / sales (%) 12,4 13,3 14,4
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 39,8 51,3 42,2
Net debt / market cap (%) 23,6 30,2 26,7
Equity ratio (%) 52 44,2 45,8
Net IB debt adj. / equity (%) 39,8 51,3 42,2
Current ratio (%) 165,2 164,6 176,1
EBITDA / net interest (%) 1254,9 1093,6 1495,8
Net IB debt / EBITDA (%) 160,3 174,6 149
Interest cover (%) 1090,1 829 1162,4
SEKm 2018 2019e 2020e
Shares outstanding adj. 24 24 24
Fully diluted shares Adj 24 24 24
EPS 6,31 7,12 7,92
Dividend per share Adj 4 4,3 4,5
EPS Adj 7,86 8,03 8,92
BVPS 45,26 48,38 52
BVPS Adj 8,78 8,39 12,01
Net IB debt / share 18,3 25,2 22,2
Share price 77,37 83,2 83,2
Market cap. (m) 1863 2004 2004
Valuation 2018 2019 2020
P/E 11,3 11,7 10,5
EV/sales 0,79 0,83 0,78
EV/EBITDA 7,7 7,3 6,8
EV/EBITA 8,9 9,7 8,8
EV/EBIT 10 10,4 9,3
Dividend yield (%) 5,6 5,2 5,3
FCF yield (%) -7,4 -0,2 10,2
P/BVPS 1,58 1,72 1,6
P/BVPS Adj 8,12 9,92 6,93
P/E Adj 9,1 10,4 9,3
EV/EBITDA Adj 7,4 7,2 6,7
EV/EBITA Adj 8,5 9,5 8,6
EV/EBIT Adj 9,5 10,1 9,1
EV/cap. employed 1,3 1,3 1,2
Investment ratios 2018 2019 2020
Capex / sales 2,1 1,9 1,6
Capex / depreciation 154,7 69,5 62,9
Capex tangibles / tangible fixed assets 13,2 8,4 8,2
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 17,7 17,4

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

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Main shareholders

Nordic Waterproofing

Main shareholders Share capital % Voting shares % Verified
Svolder 12.4 % 12.4 % 31 Aug 2019
Mawer Investment Management 9.2 % 9.2 % 31 Aug 2019
Swedbank Robur Fonder 9.1 % 9.1 % 31 Aug 2019
Carnegie Fonder 7.1 % 7.1 % 31 Aug 2019
Länsförsäkringar Fonder 6.2 % 6.2 % 31 Aug 2019
Handelsbanken Fonder 4.3 % 4.3 % 31 Aug 2019
Catella Fonder 4.2 % 4.2 % 31 Aug 2019
Prior & Nilsson Fonder 4.2 % 4.2 % 31 Aug 2019
Tredje AP-fonden 3.6 % 3.6 % 31 Aug 2019
Canaccord Genuity Wealth Management 2.5 % 2.5 % 31 Aug 2019
Source: Holdings by Modular Finance AB