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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 3172 3238
Sales growth (%) 16,5 1,6 2,1
EBITDA 370 396 407
EBITDA margin (%) 11,9 12,5 12,6
EBIT adj 265 284 295
EBIT adj margin (%) 8,5 8,9 9,1
Pretax profit 233 247 263
EPS rep 8,22 8,17 8,72
EPS growth (%) 30,3 -0,6 6,6
EPS adj 9,22 9 9,55
DPS 4,5 4,75 5,1
EV/EBITDA (x) 7,8 5,7 5,3
EV/EBIT adj (x) 10,9 7,9 7,2
P/E (x) 11,7 8,9 8,4
P/E adj (x) 10,4 8,1 7,7
EV/sales (x) 0,9 0,7 0,7
FCF yield (%) 7,1 12,6 13,7
Dividend yield (%) 4,7 6,5 7
Net IB debt/EBITDA 1,8 1,5 1,3
SEKm 2019 2020e 2021e
Sales 3122 3172 3238
COGS -2308 -2327 -2370
Gross profit 813 845 868
Other operating items -443 -449 -461
EBITDA 370 396 407
Depreciation on tangibles -43 -48 -48
Depreciation on intangibles 0 0 0
EBITA 279 296 307
Goodwill impairment charges 0 0 0
Other impairment and amortisation -19 -16 -16
EBIT 260 280 291
Other financial items 0 0 0
Net financial items -28 -33 -28
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 233 247 263
Tax -37 -49 -53
Net profit 196 197 210
Minority interest 2 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 198 197 210
EPS 8,22 8,17 8,72
EPS Adj 9,22 9 9,55
Total extraordinary items after tax -5 -4 -4
Tax rate (%) -15,8 -20 -20
Gross margin (%) 26,1 26,6 26,8
EBITDA margin (%) 11,9 12,5 12,6
EBITA margin (%) 8,9 9,3 9,5
EBIT margin (%) 8,3 8,8 9
Pretax margin (%) 7,5 7,8 8,1
Net margin (%) 6,3 6,2 6,5
Growth rates Y/Y 2019 2020 2021
Sales growth (%) 16,5 1,6 2,1
EBITDA growth (%) 35 6,8 2,9
EBIT growth (%) 22,7 7,4 4,1
Net profit growth (%) 28,9 0,7 6,6
EPS growth (%) 30,3 -0,6 6,6
Profitability 2019 2020 2021
ROE (%) 17,3 15,9 15,8
ROE Adj (%) 19,4 17,5 17,3
ROCE (%) 13,9 13,3 13,2
ROCE Adj(%) 15,2 14,2 14,2
ROIC (%) 12,1 11,3 11,7
ROIC Adj (%) 12,3 11,5 11,8
Adj earnings numbers 2019 2020 2021
EBITDA Adj 375 400 411
EBITDA Adj margin (%) 12 12,6 12,7
EBITA Adj 284 300 311
EBITA Adj margin (%) 9,1 9,4 9,6
EBIT Adj 265 284 295
EBIT Adj margin (%) 8,5 8,9 9,1
Pretax profit Adj 257 267 283
Net profit Adj 220 217 230
Net profit to shareholders Adj 222 217 230
Net Adj margin (%) 7 6,8 7,1
SEKm 2019 2020e 2021e
EBITDA 370 396 407
Net financial items -28 -33 -28
Paid tax -37 -49 -53
Non-cash items 20 -24 -24
Cash flow before change in WC 326 289 302
Change in WC -19 -11 -5
Operating cash flow 312 278 297
CAPEX tangible fixed assets -44 -41 -42
CAPEX intangible fixed assets -20 -16 -13
Acquisitions and disposals -84 0 0
Free cash flow 165 221 242
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 62 78
Balance Sheet (SEKm) 2019 2020 2021
Goodwill 952 952 952
Indefinite intangible assets 133 133 130
Definite intangible assets 0 0 0
Tangible fixed assets 273 266 260
Other fixed assets 125 148 173
Fixed assets 1598 1613 1627
Inventories 383 390 395
Receivables 357 365 372
Other current assets 2 2 2
Cash and liquid assets 197 260 337
Total assets 2536 2630 2733
Shareholders equity 1196 1284 1379
Minority 14 15 15
Total equity 1210 1298 1394
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 150 155 162
Other current liabilities 229 229 229
Total liabilities and equity 2536 2630 2733
Net IB debt 653 591 513
Net IB debt excl. pension debt 653 591 513
Capital invested 1960 1986 2004
Working capital 362 373 378
EV breakdown 2019 2020 2021
Market cap. diluted (m) 2317 1761 1761
Net IB debt Adj 653 591 513
Market value of minority 14 14 14
Reversal of shares and participations -102 -126 -150
Reversal of conv. debt assumed equity 0 0 0
EV 2882 2239 2137
Capital efficiency (%) 2019 2020 2021
Total assets turnover (%) 133,9 122,8 120,8
Capital invested turnover (%) 172,3 160,8 162,3
Capital employed turnover (%) 166,5 150,7 147,4
Inventories / sales (%) 11,7 12,2 12,1
Customer advances / sales (%) 6,8 7 6,9
Payables / sales (%) 4,7 4,8 4,9
Working capital / sales (%) 11,3 11,6 11,6
Financial risk and debt service 2019 2020 2021
Net debt / equity (%) 54 45,5 36,8
Net debt / market cap (%) 32,2 33,6 29,1
Equity ratio (%) 47,7 49,4 51
Net IB debt adj. / equity (%) 54 45,5 36,8
Current ratio (%) 221,4 237,2 254,1
EBITDA / net interest (%) 1337,3 1198,6 1453,2
Net IB debt / EBITDA (%) 176,4 149,3 126,1
Interest cover (%) 1008,6 895,6 1096
SEKm 2019 2020e 2021e
Shares outstanding adj. 24 24 24
Fully diluted shares Adj 24 24 24
EPS 8,22 8,17 8,72
Dividend per share Adj 4,5 4,8 5,1
EPS Adj 9,22 9 9,55
BVPS 49,64 53,31 57,28
BVPS Adj 10,11 13,78 17,75
Net IB debt / share 27,1 24,5 21,3
Share price 84,31 73,1 73,1
Market cap. (m) 2030 1761 1761
Valuation 2019 2020 2021
P/E 11,7 8,9 8,4
EV/sales 0,92 0,71 0,66
EV/EBITDA 7,8 5,7 5,3
EV/EBITA 10,3 7,6 7
EV/EBIT 11,1 8 7,3
Dividend yield (%) 4,7 6,5 7
FCF yield (%) 7,1 12,6 13,7
P/BVPS 1,94 1,37 1,28
P/BVPS Adj 9,51 5,3 4,12
P/E Adj 10,4 8,1 7,7
EV/EBITDA Adj 7,7 5,6 5,2
EV/EBITA Adj 10,1 7,5 6,9
EV/EBIT Adj 10,9 7,9 7,2
EV/cap. employed 1,4 1 1
Investment ratios 2019 2020 2021
Capex / sales 2 1,8 1,7
Capex / depreciation 147,4 118,9 114,7
Capex tangibles / tangible fixed assets 16,1 15,5 16,2
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 15,8 18 18,4

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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 % 29 Feb 2020
Swedbank Robur Fonder 9.1 % 9.1 % 29 Feb 2020
Mawer Investment Management 8.9 % 8.9 % 29 Feb 2020
Länsförsäkringar Fonder 7.0 % 7.0 % 31 Mar 2020
Carnegie Fonder 6.8 % 6.8 % 29 Feb 2020
Handelsbanken Fonder 5.9 % 5.9 % 29 Feb 2020
Prior & Nilsson Fonder 4.2 % 4.2 % 29 Feb 2020
Tredje AP-fonden 4.0 % 4.0 % 29 Feb 2020
Alcur Fonder 2.6 % 2.6 % 29 Feb 2020
Canaccord Genuity Wealth Management 2.3 % 2.3 % 29 Feb 2020
Source: Holdings by Modular Finance AB