Nordic Waterproofing Holding AB (publ)

Good morning and welcome everyone to the Nordic waterproofing WebEx presentation after the first quarter here. Let me start with reminding everybody that this presentation is being recorded and the names are visible for the participants. And let me then start with introducing our CEO and president Martin Ellis and I'll hand over to you Martin for the presentation here.

Thank you very much buddy. Welcome all. Thank you for participating. We have seen in our bot we had a subdued quarter due to harsh weather, unusually hot weather and somewhat weaker demand in both Finland and Norway. Moving on to page two. Our net sales decreased to 804 sec compared to 911 in the quarter last year. 1% of the net sales decreased to 804 sec compared to .1% plus 1% comes from acquisitions. There were no currency effects from the sec and it boils down to a 13% reduction in organic development. EBITDA decreased to 17 million sec compared to 13. Last year operating profit also decreased to 21 million loss compared to 11 million loss last year. Let me remind you that the first quarter is always the small quarter and usually translates into a loss at EBITDA level. In the 21 million loss, there is included a 6.4 million charge for costs related to the mandatory bid by Kingspan. The cash flow from operating activities was minus 83 million compared to minus 58 million last year. The reason for that being mainly an increase of our working capital from an extremely low level at the end of December last year. Net debt now stands at 861 million, which is down compared to the same period last year. It was a billion 58 million then and slightly upper compared to the 749 million we had at the end of last year. Moving on to page 3. Demand was impacted obviously first of all by the harsh weather, but also by a slowdown in commercial new build. We have seen renovation still remaining stable and residential new build continued quite deeply depressed in all of our geography. Obviously linked to the high level of interest rates. Bitumen based waterproofing operations were, as I said, heavily impacted by the weather and the market situation in terms of underlying demand is most challenging in Finland and Norway, whereas Denmark and Sweden are relatively stable. Sales for EPDM products, the synthetic rubber empowered last year and especially our Belgian subsidiary district Pons who had a bit of a slow end of the year. Last year I had a positive development. Prefab wood based elements, high exposure to residential new build and other businesses and managed to have a flat development in sales in Denmark but had a negative development in Norway. Overall profitability level of this business unit improved. But obviously still at the non satisfactory level. Our green infrastructure business unit had a decrease in sales due to less roof park projects this year, but it's a seasonally extremely low quarter for that business. Installation services there we had a major effect in terms of our roofing business in Finland having lower sales, lower general demand and also a drop in margins due to the inefficiency which harsh winter generates. The flooring for cruise ships continues to show excellent performance. All the books for installation services continue to be on par with previously in Finland and Denmark and are slightly weaker in Norway. Moving on to page 4. Faced with the generally somewhat lower demand, we have started implementing and negotiating contingency measures. And we have also started to implement the high interest environment. This definitely after a bit of a time lag will have obviously a positive effect on our bottom line. We continue to see flat, slightly deflated, in some cases also slightly increasing costs for most of our input materials, but I would say the general picture is flat. In the high interest environment I mentioned, we have sharpened the focus on our debt level and adjusted multiples where we are prepared to pay for acquisitions. Our largest shareholder, Kingspan, completed a mandatory offer of 160 SEK per share with an acceptance of .8% of the total share capital. Over to you, Balle, for some more detailed

figures. Yeah, OK, thank you Martin. So as we said, net sales decreased about 100 million SEK from 9-11 to 8-04. On a rolling 12 basis, we continue to be close to 4.5 billion SEK. Organic development minus 13 and basically all that is volume. Price impact in the quarter was pretty close to zero. Then acquisitions 1% and currency had no impact. EBTA decreased from 30 to 17 and EBIT from minus 11 to minus 21 here. On a rolling 12 basis, EBTA stands at .4% and as Martin said, the advisory cost related to the mandatory offer was a bit more than 6 million in the quarter having that impact. If I move on to slide 6, we can see that cross margin for the quarter was actually up from last year from 22.1 to 23.7. This is mainly driven by the areas within products and solutions. Net financial items were unchanged at minus 14, where of interest cost now stands at minus 13 million in the quarter. An EBIT margin for the quarter was then negative at minus 2.6 and during the last 12 months we stand at .5% EBIT margin. Moving on to slide 7, I would say that we continue to have a solid balance sheet that allows us to do selective acquisitions whenever something interesting comes up. The interest bearing net depth increased to 834 million from the 724 at the beginning of the year and it's worth remembering the first quarter is seasonally weak for our cash flow. However, we are well below the value where we were a year ago at 997. The equity asset ratio is strong at 50.2%, about 50% and the net debt EBIT ratio at 1.9 remains well below the covenant for our financing agreement here. Moving on to slide 8, the rose is pretty much flat in the quarter, stands at 10.0 now, started the year at 10.2 and capital employee development has flattened out as you can see in the recent quarters here and the change in rose is basically driven by operating results. Cash flow from operations has been at a good level at 478 on the rolling 12, last 12 months here versus 317 for the 12 months before that and it's a good level. Cash conversion continued to be above 100%, which is not necessarily the long term level we will be at, but it's been there as well last year. And of course going forward we closely monitor our operating receivables in all our businesses, considering the business climate that we see on most of our markets. Moving on to slide 9 and looking into products and solutions, when net sales decreased 11% from 701 to 627, all the development is organic, no impact from currency or acquisitions. Some of the areas within products and solutions managed to keep a flat development of sales in this environment like like Zaleco and Telsinget, Denmark and the membrane business in Sweden. Net sales for products and solutions on a rolling 12 basis currently stands at 3.2 billion SEK. EBITDA increased for the area from 52 to 61 as did operating profit EBIT from 22 to 31 and the EBITDA margin increased and now stands at 9.7%. And yeah, versus 7.5 in the first quarter last year. Generally the different businesses here maintained or even improve their margins in the quarter here. We see an improved EBITDA for the Telsinget group, but there was also an impact of the one of last year in the first quarter that is a large part of that increase. And for the latest 12 months for this area, we are at .7% EBITDA margin. Then moving on to slide 10 where we can see installation services where we had a net sales of 202 million and decreased with 16%. Organic development minus 21 and impact on acquisition 5%. EBITDA decreased to minus 24 versus minus 12 and EBITDA to minus 32 versus minus 22. The EBITDA margin was obviously negative in the quarter as well with minus .8% and at the latest 12 months the margin now stands at .2% with our roofing activities in Finland. So reduced profit levels due to the operational efficiency from the harsh weather, but as well as a weaker market. The result from our Norwegian entity was on par with last year and we saw a good result in the Danish franchise network. However, not on the level with a strong first quarter last year. Then moving on to slide 11, I pass it back to you Martin. Yes, thank you very much

Palle. So just a summary of our main target sales growth. Obviously there hasn't been a sales growth in this quarter, but we believe that in terms of our share of markets and given the downturn in general demands, we are certainly holding our positions in terms of market share. In terms of profitability, we have missed our 13% Rosi threshold also in this quarter, but we retain a really strong capital structure where we are well below our three times that on EBITDA target ratio. In terms of dividend policy, we have also a situation where the board proposes a five sec per share dividend to the General Assembly today and that would be in excess clearly of the 50% of net profit, which is our target. So now looking very much forward to your questions.

Yes, thank you very much Martin. Then let me say I will open up for questions and I ask the participants either raise your hand in the meeting here or send a question in the Q&A feed. You can also mail me and if you're on the phone you need to press star 5 to raise your hand for a question.

Yes, then the first question

here comes from Sofia Zolling at Carnegie and Sofia I've unmuted you and you need to unmute yourself.

OK, thank you. Can you hear me?

Yes, it's loud and clear.

Yes, thank you. Thank you for your presentation. So my first question is related to the market demand in Finland. You mentioned that we should expect a continued downturn in Finland, but you also mentioned that your order books were on par with last year. So could you like give us more details on where you see the weaker demand in Finland? Is it in any particular customer segment? Is it mainly due to the new construction market or more related to both new construction and renovation market in Finland? That's my first question.

Yeah, thank you very much Sofia. So the order book I would say is sort of. It's a good indicator of course, but it's not absolutely what reflects the general market situation. So we do expect a very slow six months to come in Finland. There are some indications that after that there could be a pickup. So if you look at people who are very upstream in the construction process, they seem to see a slight slight positive effect recently, but we are clearly preparing for a relatively low level of activity. Obviously very much focused on new built residential and new built and to some extent commercial new built. So this is the situation we see and it's I would say it's a general. It concerns all of our segments.

Yeah, OK, and the renovation market in Finland. Is that something that you see is more more stable as in the other Nordic regions or do you see that as a weaker renovation market than the other Nordic regions? Yes,

I think overall renovation remains fairly stable throughout, but Finland right now seems to be the weakest spot and we do see a reduction in demand. They are also people trying to push forward projects because of the higher financing cost.

Alright, OK, and what do you expect in terms of price increases ahead within your different product segments? Do you expect to be able to increase prices at least a low point or do you expect to decrease prices?

Yeah, we do not expect to be able to increase prices right now in the foreseeable future, and we're obviously fighting very hard to keep our price level where it is. We might see a slight erosion in sales prices going forward, and that obviously will depend very much on the demand level. If demand levels remain stable, then obviously we will probably be able to avoid that. If demand reduces further in volume, it's difficult to say how much prices come down, but they probably will come down slightly.

Alright, OK, thank you. Thank you very much Sophia.

If

there are

further questions, please either raise your hand or or send that to me in an email.

I'm just gonna check that. OK, if there are no further questions, I think we will wrap

up the meeting so we want to send some last words, Martin.

Yeah, well, thank you all for participating and look forward to being with you. In three months time.

Just

OK, thank you very much. A good one.