Byggma ASA

Investor Presentation • May 16, 2023

Q1 2023 results 16 May 2023

Questions can be directed to ir@byggma.no

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[Byggma at a glance]

Company

Byggma is a leading Nordic supplier of building product solutions

Introduction

• Leading supplier of building product solutions in the Nordics, with a special focus on various boards, beams, windows & doors, and lighting products
• Byggma owns 7 companies/ brands, operates 6 manufacturing facilities and distributes its products to all the leading building materials chains
• Byggma is headquartered in Vennesla and employs ~720 people in total
• The company has been listed on Oslo Stock Exchange since 1997 with ticker "BMA"

NOK 70m Paid out dividend in 2022

3 Note: 1) As of 15 May 2023

Note: 2) LTM = Last twelve months (Q2 2022 – Q1 2023). EBIT contains a one-off gain on a realized forward contract of NOK 76,5m related to purchase of shares in Norske Skog ASA.

#1 market position for boards and beams in the Nordics and growing internationally

4

Highly attractive offering towards all the major building material chains in the Nordics

Financials

P&L Summary and Highlights

NOKm	Q1 2023	Q1 2022	2022	2021	2020
Sales revenue	637	700	2508	2344	2052
EBITDA	114	102	407	320	270
EBIT	92	82	325	233	193
Share of profit from associate	-16	0	0	0	0
Net financials	-21	5	-25	-9	-33
Profit before tax	55	87	299	224	160
Tax	-16	-19	-49	-48	-35
Net profit	40	68	250	176	125

• Negative sales growth of 9.1% from Q1 2022 to Q1 2023. Mainly due to lower volumes.
• EBIT margin of 14.5% in Q1 2022, compared to 11.7% in Q1 2022.
• Investment in Norske Skog ASA is from 9 March 2023 treated as investment in associate in accorcande with IAS 28. Please see note 12 in the Q1 2023 interim report for more information.
• Price increases implemented as of 1 October 2022 to compensate for increased prices on raw material and energy.
• Revenues from newly launched products as Smartpanel Wet Wall and Forestia Ergospon is expected to increase in 2023.

Consolidated balance sheet

Assets (NOK million)	31 Mar 2023 31 Mar 2021		31 Dec 2022
Fixed assets	861	814	853
Investment property	175	195	175
Intangible assets	20	21	21
Deferred tax assets	1	4	1
Long-term financial derivatives	13	11	14
Investment in associate	1 137		1 078
Other long-term receivables	0	1	0
Total non-current assets	2 208	1 046	2 143
Inventory	395	350	386
Customer and other short term receivables	416	536	379
Short-term financial assets	1	1
Cash and cash equivavelents	20	51	37
Total current assets	833	937	803
Total assets	3 041	1 983	2 946

• Solid balance and hidden reserves in real estate and land
• Equity ratio of 29.0% as at 31 March 2023

Equity and liabilities (NOK million)	31 Mar 2023 31 Mar 2021 31 Dec 2022
Share capital and share premium	53	53	53
Other equity not recognised in P&L	2	6	6
Retained earnings	826	674	786
Total equity	881	733	833
Long-term debt	826	378	832
Long-term leasing obligations	68	76	65
Long-term financial derivatives
Deferred tax liabilities	112	114	110
Total long-term liabilities	1 006	568	1 007
Accounts payable and other short-term liabilities	469	525	493
Tax payable	23	32	47
Short-term debt	642	105	546
Short-term leasing obligations	20	19	19
Short-term financial derivatives
Total short-term liabilities	1 154	682	1 106
Total liabilities*	2 160	1 250	2 113
Total equity and liabilities	3 041	1 983	2 946
* Of which interest-bearing debt (long-term and short-term)	1 556	578	1 462
Net interest-bearing debt	1 536	527	1 425
* Of which interest-bearing debt ex. leasing and sale leaseback Net interest-bearing debt ex. leasing and sale leaseback	1 243 1 223	483 432	1 163 1 126

Consolidated income statement

NOKm	YID 2023	YTD 2022	2022	2021	2020	2019	2018	2017
Sales revenue	637	700	2 508	2 344	2 052	1 783	1 655	1 619
Other revenue	6	ട	24	44	23	23	22	18
Total revenue	643	707	2 533	2 388	2 075	1 806	1 677	1 637
COGS	-302	-373	-1 196	-1 133	-955	-844	-780	-744
Personnel expenses	-124	-133	-501	-488	-439	-424	-405	-387
D&A	-22	-20	-82	-87	-77	-70	-54	-54
Freight and complaints	-47	-45	-176	-171	-163	-146	-143	-135
Marketing	-23	-23	-104	-96	-93	-91	-72	-75
Other gains (losses)	-1	-4	E3	0	1	-3	1	6
Other OPEX	-31	-26	-201	-179	-157	-156	-159	-154
Total direct costs	-551	-625	-2 208	-2 155	-1 883	-1 733	-1 612	-1 543
EBIT	92	82	325	233	193	73	65	94
Share of profit from associate	-16	0	0	0	0	0	0	0
Net financials	-21	5	-25	-9	-33	-11	-9	-10
Profit before tax	55	87	299	224	160	62	56	84
Tax	-16	-19	-49	-48	-35	-13	-9	-20
Net profit	40	68	250	176	125	49	47	64

Byggma is set to continue demonstrated growth through identified growth avenues

Large growth potential for further consolidation within building material products

Several attractive M&A targets has been identified

Breakdown of identified M&A targets (# targets) Byggma M&A strategy and track record

Adjacent products New products

NOK 1,000-3,000m > NOK 3,000m

By

By revenue

(2019)

product

offering

• Adjacent products include wood fibreboards, particle and MDF boards, and wall panel
• New products include wind- and moisture barriers for roofs and walls, surface products, timber, decking and cladding panels
• Majority of the targets have revenues in the range of NOK 100-1,000m
• 4 targets have revenues exceeding NOK 1bn

Fragmented building material product market with large M&A potential

• Byggma has a strong M&A track record having completed 9 acquisitions since IPO in 1997
  • ̶ The acquisitions have been highly successful and allowed Byggma to strengthen its position in established markets as well as expand the product offering and make Byggma a diversified provider of building material solutions
  • ̶ Company integration has been a core focus and Byggma has successfully grown the companies' topline and profitability post implementation
• The Nordic building material market is highly fragmented with large potential for consolidation
• Going forward, Byggma intends to be a part of a wider industry consolidation and has identified a shortlist of 11 potential M&A targets with a combined revenue of approx. NOK 17.6bn1
• The shortlist includes companies with supplementary product offering as well as new product segments with significant potential for synergy realization
  • ̶ Revenue synergies from capitalizing on Byggma's well-established and experienced sales and distribution channels to grow the revenues of the acquired companies
  • ̶ Cost synergies from utilizing Byggma's organisation and operational experience

Investment highlights

	Market leading position	The leading Nordic provider of woodchip boards, decorative interior panels, wood fibre boards, MDF  interior walls & ceiling panels, and I-Beams Growing position in Europe and within adjacent product areas  Sales agreements with all major building materials chains 
	Strong underlying market	>80% of revenues in the Nordics  Large, stable and growing underlying market  The Norwegian building materials industry is a NOK 50bn market 
	Strong brands and broad portfolio of sustainable products	Recognized brands and continuous focus on product development  Diversified portfolio from commodity products to highly refined products  Utilizing renewable raw materials to provide sustainable building material solutions 
	Long history of growth	Long history of revenue growth (CAGR of >10% since 2000), both organically and through acquisitions  Improving profitability, from >9% EBIT in 2020 to >13%* in 2022, and with high cash conversion  High dividend capacity, with NOK 70m paid in 2022. Policy of 30-50% of net income going forward. 
	Well positioned for further growth and cash generation	Well defined growth strategy within all business areas, both organic and inorganic  Large potential from transition to higher share of innovative and value-added products with higher average  sales price Set to leverage on demonstrated M&A capabilities – with several targets identified 

Large potential from recent product innovations

13 Note: 1) Product launched in October 2020; 2) Product launched in September 2020

Segment information

Sales revenue (NOKm)	Q1 2023	Q1 2022	2022	2021	2020
Panel sales to external customers	438	491	1 662	1 588	1 450
Beam sales to external customers	98	111	457	418	293
Window sales to external customers	72	71	291	229	214
Lighting sales to external customers	29	28	98	110	95
Net sales revenues for the Group	637	700	2 508	2344	2 052

Operating profit (NOKm)	Q1 2023	Q1 2022	2022	2021	2020
Panel	67	45	161	140	163
Beam	14	22	70	55	26
Window	4	7	19	11	്ര
Lighting	0	1	-6	5	5
Real Estate	11	12	24	41	0
Group / eliminations	-3	-5	57	-18	-7
Operating profit for the Group	92	82	325	233	193

Byggma still has ample available production capacity and high growth potential from value-added products

Company / brand	Key financials (2021)	Nominal production capacity	Available capacity	Growth potential	Other potential
		300,000 m3 / year		Large potential from transitioning to higher share of innovative/ value-added products with higher average HIGH sales price	Production capacity can be expanded by ~10% by extending the manufactoring line
		60,000 ton / year		Growth potential both through available production capacity and innovative, higher priced products such as "Proff Vegg" HIGH
		m2 3.5 million / year		Growth potential both through available production capacity and innovative, higher priced products such as HIGH "Fuktbestandig"	Wet Wall production to ramp up in 2022
		15 million running meters / year		Large potential through utilizing significant available production capacity. High international sales HIGH potential

15 Note 1: The numbers for Huntonit includes the beam revenue and costs still legally belonging to Huntonit AS for 2021

Note 2: The numbers for Masonite Beams include all revenue and costs related to the Beam segment, including the beam revenue and costs still legally belonging to Huntonit AS

Targeted approach towards environmentally friendly production and initiatives

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Byggma's manufacturing and product offering contribute to a more environmentally friendly society

5.8%

The CO2 abatement from Byggmas board products corresponds to 5.8% of the Norway's total road traffic emission

47%

Masonite's I-beam systems use 47% less raw material compared to massive tree constructions

12%

Huntonit's specific energy consumption has been reduced by 12% over the last 5 years

48%

Forestia's new closed cooling system has contributed to 48% reduction in use of cooling water

Byggma takes an active role towards sustainability and responsible production

Byggma's main goal is to develop and deliver sustainable solutions based on renewable raw materials and unique competense. Sustainability is, and has always been, a core element in Byggma's business model and a natural part of its overarching goal. Management and Board of Directors in Byggma wish for sustainability to be a natural part of operations and innovation in the Byggma group

Leading Nordic presence, with growing international customer base

Strong topline and profitability improvements last few years

• Organic growth from 2015-2018, while the growth from 2018 is a combination of organic growth initiatives and the acquisition of Smartpanel (2018) and Byggform (2019), adding NOK 117m in revenues in 2019, and NOK 34m in 2020 (full-year effect of the Byggform acquisition)
• The growth in 2020 and 2021 is partly related to realized market synergies from increased market share following the Smart Panel acquisition. Other growth drivers include change in product mix, volume increase (partly off-set by a drop in Europe), price increases and other (incl. currency)

Byggma has more than doubled its EBITDA and more than tripled its EBIT since 2019

• The strong improvement is primarily due to realization of synergies from the Smartpanel acquisition, product mix optimization and normal price increases. Byggma has seen an increase in raw material prices and experienced unfavorable currency development, but has been able to offset this by increase prices to end users and ultimately improve the margins
• In 2019, the EBITDA and EBIT have been adjusted for normalizations following the acquisition of Smartpanel in 2018

Robust cash conversion ratio

• Byggma has a history of strong cash flow generation over the last years which is set to continue going forward
• This has allowed the company to invest significantly in product innovation in addition to increased manufacturing capacity and efficiency
• Since 2016, annual Capex amounts to approx. NOK 100m while maintaining an attractive dividend capacity
• If desired, Byggma can manage annual maintenance Capex in the range of NOK 30- 50m and hence generate even stronger free cash flows going forward
• Byggma has targeted a long-term dividend payout ratio of minimum 30%-50%
  • ̶ The company will pay out a higher dividend when possible after evaluating various growth opportunities

Consolidated cash flow statement

NOKm	YTD 2023	YTD 2022	2022	2021	2020	2019	2018	2017
Operating activities
Cash flow from operations	21	42	388	193	230	102	94	205
Interest paid	-20	-6	-38	-23	-24	-21	-19	-17
Interest received	4	1	ട്	3	ട്	7	7	ଚି
Taxes paid	-25	-10	-41	-34	-4	-9	-28	-13
Cash flow from operating activities	-21	27	315	139	207	79	53	181
Investing activities
Purchase of subsidiaries			0	0	0	-21	0	0
Purchase of fixed assets	-13	-16	-128	-89	-59	-90	-98	-107
Sale of fixed assets	0	1	15	0	O	1	1	5
Purchase of non-tangible assets	O	-1	-2	-2	-2	-2	-7	-10
Purchase of associated company	-64	O	-1 016	0	0	0	0	0
Group loans	O	0	0	39	-27		0	0
Cash flow from investing activities	-77	-16	-1 132	-52	-87	-113	-104	-112
Financing activities
Repurchase of shares	O	O	0	O	O	-4	-11	0
Dividend paid	0	0	-70	-559	-7	-7	-7	-36
Cash flow distributed to shareholders			-70	-559	-7	-11	-18	-36
Change in overdrafts	93	-17	73	16	-3	4	0	0
New debt raised	8	2	814	72	150	50	149	39
Debt down payment	-21	-15	-88	-67	-62	-49	-63	-34
Loan from related parties	0	0	54	0	0	0	0	0
Change in interest bearing receivables	0	0	0	0	0	-12	0	0
Cash flow from external financing	80	-30	854	20	85	-7	86	6
Cash flow from financing activities	80	-30	784	-538	78	-18	68	-30
Change in cash and cash equivalents	-18	-19	-33	-451	197	-52	17	38
Currency gains (losses)	1	-1	-1	-4	5	-3	1	1

Byggma operates 8 high-end manufacturing and distribution facilities

Huntonit Eiendom AS Location: Vennesla, Agder Total area: 78,112m2 Production area: 19,664m2 Year of construction: 1948-1988

Uldal AS (Birkeland Eiendom AS) Location: Birkenes, Agder Total area: 15,100m2 Production area: 4,930m2 Year of construction: 1967-1991

Forestia Eiendom AS Location: Våler, Innlandet Total area: 321,460m2 Production area: 21,079m2 Year of construction: 1969-1987 and 1997

Aneta Lighting AS Location: Kristiansand, Agder Total area: 6,300m2 Warehouse facility: 3,500m2

Aneta Lighting AB Location: Växjö, Sweden Total area: 31,728m2 Warehouse facility: 6,500m2 Year of construction: 1970 and 1979

Masonite Fastighet AB Location: Nordmaling, Sweden Total area: 187,585m2 Production area: 38,107m2 Year of construction: 1921-2001

Smartpanel AS Location: Fredrikstad, Viken Warehouse facility: 7,100m2 Production area: 13,700m2

Key takeaways