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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 3126 3219
Sales growth (%) 22,6 16,7 3
EBITDA 274 365 375
EBITDA margin (%) 10,2 11,7 11,7
EBIT adj 224 262 277
EBIT adj margin (%) 8,3 8,4 8,6
Pretax profit 190 219 238
EPS rep 6,31 7,3 7,91
EPS growth (%) 11,5 15,7 8,3
EPS adj 7,86 8,27 8,82
DPS 4 4,4 4,75
EV/EBITDA (x) 7,9 8,4 7,9
EV/EBIT adj (x) 9,6 11,7 10,7
P/E (x) 11,3 13,2 12,2
P/E adj (x) 9,1 11,6 10,9
EV/sales (x) 0,8 1 0,9
FCF yield (%) -7,4 3,3 9,1
Dividend yield (%) 5,6 4,6 4,9
Net IB debt/EBITDA 1,7 2,2 2
SEKm 2018 2019e 2020e
Sales 2680 3126 3219
COGS -2000 -2312 -2375
Gross profit 680 814 844
Other operating items -406 -449 -469
EBITDA 274 365 375
Depreciation on tangibles -36 -40 -36
Depreciation on intangibles 0 0 0
EBITA 238 276 287
Goodwill impairment charges 0 0 0
Other impairment and amortisation -26 -19 -16
EBIT 212 257 271
Other financial items 0 0 0
Net financial items -22 -38 -33
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 190 219 238
Tax -38 -45 -48
Net profit 152 175 191
Minority interest 0 1 0
Net profit discontinued 0 0 0
Net profit to shareholders 152 176 190
EPS 6,31 7,3 7,91
EPS Adj 7,86 8,27 8,82
Total extraordinary items after tax -11,5 -4,5 -6
Tax rate (%) -20,2 -20,3 -20
Gross margin (%) 25,4 26 26,2
EBITDA margin (%) 10,2 11,7 11,7
EBITA margin (%) 8,9 8,8 8,9
EBIT margin (%) 7,9 8,2 8,4
Pretax margin (%) 7,1 7 7,4
Net margin (%) 5,7 5,6 5,9
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 22,6 16,7 3
EBITDA growth (%) 17,9 33,2 2,8
EBIT growth (%) 9,7 21,3 5,5
Net profit growth (%) 10,7 15,2 9,1
EPS growth (%) 11,5 15,7 8,3
Profitability 2018 2019 2020
ROE (%) 14,5 15,7 15,9
ROE Adj (%) 18 17,8 17,7
ROCE (%) 13,7 13,2 12
ROCE Adj(%) 16,1 14,4 13
ROIC (%) 11,3 11 10,5
ROIC Adj (%) 11,9 11,2 10,7
Adj earnings numbers 2018 2019 2020
EBITDA Adj 286 370 381
EBITDA Adj margin (%) 10,7 11,8 11,9
EBITA Adj 250 281 293
EBITA Adj margin (%) 9,3 9 9,1
EBIT Adj 224 262 277
EBIT Adj margin (%) 8,3 8,4 8,6
Pretax profit Adj 228 243 260
Net profit Adj 189 198 213
Net profit to shareholders Adj 189 199 212
Net Adj margin (%) 7,1 6,3 6,6
SEKm 2018 2019e 2020e
EBITDA 274 365 375
Net financial items -22 -38 -33
Paid tax -38 -45 -48
Non-cash items 63 -26 -25
Cash flow before change in WC 277 257 270
Change in WC -92 -26 -8
Operating cash flow 185 231 262
CAPEX tangible fixed assets -35 -53 -42
CAPEX intangible fixed assets -20 -13 -10
Acquisitions and disposals -257 -90 0
Free cash flow -128 76 210
Dividend paid -90 -96 -106
Share issues and buybacks -1 -15 0
Other non cash items -22 -237 0
Decrease in net IB debt -239 -322 49
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 879 969 969
Indefinite intangible assets 97 90 84
Definite intangible assets 0 0 0
Tangible fixed assets 268 371 377
Other fixed assets 80 105 130
Fixed assets 1324 1679 1706
Inventories 346 410 418
Receivables 349 503 515
Other current assets 2 8 8
Cash and liquid assets 106 244 294
Total assets 2127 2844 2942
Shareholders equity 1090 1154 1239
Minority 16 15 15
Total equity 1106 1169 1254
Long-term debt 454 835 835
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 75 69 69
Other long-term liabilities 6 6 6
Short-term debt 131 71 71
Accounts payable 145 163 171
Other current liabilities 210 391 396
Total liabilities and equity 1568 1756 2127
Net IB debt 478 800 750
Net IB debt excl. pension debt 478 800 750
Capital invested 1674 2054 2089
Working capital 352 377 385
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1717 2317 2317
Net IB debt Adj 480 802 752
Market value of minority 16 15 15
Reversal of shares and participations -55 -80 -105
Reversal of conv. debt assumed equity 0 0 0
EV 2157 3053 2979
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 138 125,8 111,3
Capital invested turnover (%) 179,4 167,8 155,4
Capital employed turnover (%) 173 160,1 142,6
Inventories / sales (%) 11,3 12,1 12,9
Customer advances / sales (%) 7,3 9,1 11,7
Payables / sales (%) 4,4 4,9 5,2
Working capital / sales (%) 11,4 11,7 11,8
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 43,2 68,4 59,8
Net debt / market cap (%) 25,6 34,5 32,4
Equity ratio (%) 52 41,1 42,6
Net IB debt adj. / equity (%) 43,4 68,6 60
Current ratio (%) 165,2 186,8 193,9
EBITDA / net interest (%) 1254,9 964,2 1137,9
Net IB debt / EBITDA (%) 174,2 218,8 199,8
Interest cover (%) 1090,1 729,3 871,2
SEKm 2018 2019e 2020e
Shares outstanding adj. 24 24 24
Fully diluted shares Adj 24 24 24
EPS 6,31 7,3 7,91
Dividend per share Adj 4 4,4 4,8
EPS Adj 7,86 8,27 8,82
BVPS 45,26 47,93 51,44
BVPS Adj 8,78 7,7 11,2
Net IB debt / share 19,8 33,2 31,1
Share price 77,37 96,2 96,2
Market cap. (m) 1863 2317 2317
Valuation 2018 2019 2020
P/E 11,3 13,2 12,2
EV/sales 0,81 0,98 0,93
EV/EBITDA 7,9 8,4 7,9
EV/EBITA 9,1 11 10,4
EV/EBIT 10,2 11,9 11
Dividend yield (%) 5,6 4,6 4,9
FCF yield (%) -7,4 3,3 9,1
P/BVPS 1,58 2,01 1,87
P/BVPS Adj 8,12 12,5 8,59
P/E Adj 9,1 11,6 10,9
EV/EBITDA Adj 7,6 8,3 7,8
EV/EBITA Adj 8,6 10,9 10,1
EV/EBIT Adj 9,6 11,7 10,7
EV/cap. employed 1,3 1,4 1,3
Investment ratios 2018 2019 2020
Capex / sales 2,1 2,1 1,6
Capex / depreciation 154,7 164,1 143,1
Capex tangibles / tangible fixed assets 13,2 14,3 11,1
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 10,8 9,5

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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 Oct 2019
Swedbank Robur Fonder 9.1 % 9.1 % 31 Oct 2019
Mawer Investment Management 9.0 % 9.0 % 31 Oct 2019
Carnegie Fonder 7.1 % 7.1 % 31 Oct 2019
Länsförsäkringar Fonder 6.4 % 6.4 % 31 Oct 2019
Handelsbanken Fonder 5.0 % 5.0 % 31 Oct 2019
Catella Fonder 4.2 % 4.2 % 31 Oct 2019
Prior & Nilsson Fonder 3.8 % 3.8 % 31 Oct 2019
Tredje AP-fonden 3.6 % 3.6 % 31 Oct 2019
Canaccord Genuity Wealth Management 2.5 % 2.5 % 31 Oct 2019
Source: Holdings by Modular Finance AB