Byggma ASA — Earnings Release 2021

Aug 26, 2021

Q2 2021 results 26 August 2021

[Byggma at a glance]

1

Todays presenter

2

Geir Drangsland CEO and shareholder

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 8 companies/ brands, operates 6 manufacturing facilities and distributes its products to all the leading building materials chains
• Byggma is headquartered in Vennesla and employs ~700 people in total
• The company has been listed on Oslo Stock Exchange since 1997 with ticker "BMA"

NOK 559m 2020 dividend

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

5

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

Financials

P&L Summary

NOKm	Q2 2021	Q2 2020	H1 2021	H1 2020	2020
Sales revenue	606.6	490.6	1,166.4	1,022.8	2,052.4
EBITDA	74.6	55.1	145.5	121.7	269.6
EBIT	54.3	35.9	105.3	83.6	192.6
Net financials	(5.3)	(7.9)	(2.7)	(29.4)	(32.9)
Profit before tax	49.0	28.0	102.6	54.2	159.7
Tax	(10.9)	(6.4)	(22.4)	(12.1)	(34.8)
Net profit	38.1	21.6	80.2	42.1	124.9

• Strong demand for wood based building materials
• Sales growth of 23.6% from Q2 2020 to Q2 2021
• Sales growth of 14.0% from H1 2020 to H1 2021
• Could be even higher, due to some challenges with supply shortages on some areas
• Satisfactory development on all segments
• EBIT margin of 9.0% in Q2 2021, compared to 7.3% in Q2 2020
• EBIT margin of 9.0% in H1 2021, compared to 8.2% in H1 2020
• Net financial items are largely influenced by loss on interest rate swap of MNOK 19.4 in H1 2020 and gain of MNOK 7.1 in H1 2021

8

Consolidated balance sheet

Assets (NOKm)	30 Jun 2021	30 Jun 2020	31 Dec 2020
Fixed assets	929	932	932
Intangible assets	23	27	25
Deferred tax assets	5	10	7
Long-term financial derivatives
Other long-term receivables	1
Total non-current assets	958	969	963
Inventory	279	274	263
Customer receivables	446	343	379
Short-term financial assets
Cash and cash equivalents	37	435	525
Total current assets	762	1051	1168
Total assets	1,720	2,020	2,132

• Payment of dividend in Q2 is the main driver for the movement on cash and equity
• Improved inventory turnover
• Growth in trade receivables and accounts payable due to increased sales and purchase of goods

Assets (NOKm)	30 Jun 2021	30 Jun 2020	31 Dec 2020	Equity and liabilities (NOKm)	30 Jun 2021	30 Jun 2020	31 Dec 2020
Fixed assets	929	932	932	Share capital	53	53	53
Intangible assets	23	27	25	Other equity	14	15	25
Deferred tax assets	5	10	7	Retained earnings	442	845	912
Long-term financial derivatives	-	-	-	Total equity	509	912	990
Other long-term receivables	1	1	-	Long-term debt	446	558	453
Total non-current assets	958	969	963	Long-term financial derivatives	5	17	10
Inventory	279	274	263	Deferred tax liabilities	91	85	90
Customer receivables	446	343	379	Total long-term liabilities	542	659	552
Short-term financial assets	-	-	-	Accounts payable and other short-term liabilities	442	378	409
Cash and cash equivalents	37	435	525	Tax payable	29	3	33
Total current assets	762	1051	1168	Short-term debt	196	64	144
Total assets	1,720	2,020	2,132	Short-term financial derivatives	-	4	3
				Total short-term liabilities	669	449	589
Payment of dividend in Q2 is the 	main	driver for the movement	on cash	Total liabilities	1,210	1,107	1,142
and equity				Total equity and liabilities	1,720	2,020	2,132

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

< NOK 300m NOK 300-1,000m 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 particle board, decorative interior panels, fibreboards, MDF interior walls &  ceiling panels, and I-Beams Growing position in Europe and within adjacent product areas 
	Strong underlying market	>90% of revenues in the Nordics  Large, stable and growing underlying market  The Norwegian building materials industry is a NOK 50bn market, expected to grow ~4% in 2021 
	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 9% since 2000), both organically and through acquisitions  Improving profitability, from 4% EBIT in 2018 to >9% in 2020, and with high cash conversion  High dividend capacity, with NOK 559m distributed for 2020 
	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

Appendix

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

Company / brand	Key financials (2020)	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"
		15 million running meters / year		Large potential through utilizing significant available production capacity. High international sales HIGH potential

Targeted approach towards environmentally friendly production and initiatives

16

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

5.6%

The CO2 abatement from Byggmas board products corresponds to 5.6% 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

Consolidated income statement

NOKm	Q2 2021	Q2 2020	H1 2021	H1 2020	2020	2019
Sales revenue	607	491	1,166	1,023	2,052	1,783
Other revenue	6	8	12	16	23	23
Total revenue	613	499	1,178	1,039	2,075	1,806
COGS	(316)	(253)	(604)	(521)	(955)	(844)
Personnel expenses	(131)	(112)	(251)	(226)	(439)	(424)
D&A	(20)	(19)	(40)	(38)	(77)	(70)
Freight and complaints	(45)	(38)	(88)	(81)	(163)	(146)
Marketing	(19)	(20)	(35)	(36)	(93)	(91)
Other gains (losses)	2	5	1	2	1	(3)
Other OPEX	(29)	(26)	(54)	(56)	(157)	(156)
Total direct costs	(558)	(463)	(1,073)	(955)	(1,883)	(1,734)
EBIT	54.3	35.9	105.3	83.6	192.6	73
Net financials	(5.3)	(7.9)	(2.7)	(29.4)	(32.9)	(11)
Profit before tax	49.0	28.0	102.6	54.2	159.7	62
Tax	(10.9)	(6.4)	(22.4)	(12.1)	(34.8)	(13)
Net profit	38.1	21.6	80.2	42.1	124.9	49

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 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), normal price increases and other (incl. currency)

• Byggma has more than doubled its EBITDA and almost tripled its EBIT since 2018
• The strong improvement is primarily due to realization of synergies from the Smart Panel acquisition, product mix optimization and normal price increases. Byggma has seen a normal 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%
  • ̶ The company will pay out a higher dividend when possible after evaluating various growth opportunities

Consolidated cash flow statement

	Note
	nr.	30.06.2021	30.06.2020	31.12.2020
Kontantstrømmer fra driften
Kontantstrømmer fra driften		37.7	31.9	230,2
Betalte renter		-10.6	-12.4	-24.1
Mottatte renter		1.6	3.0	5.2
Betalte skatter		-4,2	-3.0	-4,2
Netto kontantstrømmer fra driften		24,5	19,4	207,1
Kontantstrømmer fra investeringsaktiviteter
Kjøp av varige driftsmidler	2	-40.0	-22.9	-59,1
Salg av varige driftsmidler		0.1	0.6	0,0
Kjøp av immaterielle eiendeler	2	-0.9	-1,6	-2.1
Lån ytet til nærstående parter		39.0	1,9	-27,2
Netto kontantstrømmer brukt til investeringsaktiviteter		-1,9	-22,0	-87,4
Kontantstrømmer fra finansieringsaktiviteter
Kjøp av egne aksjer	4	0.0	0,0	-0.1
Endring av Kassekredit		55,5	4.4	-3.4
Opptak av län		27.2	144,2	150,2
Nedbetaling av lån		-32,6	-29,7	-62,0
Utbytte betalt til selskapets aksjonærer		-558,6	0,0	-7,0
Netto kontantstrømmer brukt til finansieringsaktiviteter		508,5	110,2	77,7
Endring i kontanter, kontantekvivalenter		-485.9	107,6	197.4
Kontanter, kontantekvivalenter 1. januar.		525,2	322,6	322,6
Valutagevinst/(-tap) på kontanter og		-2.8	4,3	5,2
kontantekvivalenter
Kontanter, kontantekvivalenter		36.6	434,5	525,2
Denne består av:
Bankinnskudd og lignende		21.8	422.1	509,2
Skattettrekkskonto		14.7	12.4	16,1
Kontanter, kontantekvivalenter		36.6	434,5	525,2
Ubenyttet kassekreditt/trekkrettigheter		223.6	288.4	287,5

Byggma has a rich history characterized by successful acquisitions and product innovations

Byggma operates 8 high-end manufacturing and distribution facilities

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

Scan Lamps AS Location: Kristiansand, Agder Total area: 6,300m2 Warehouse facility: 3,500m2

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

Aneta Belysning

• Masonite Fastighet AB Location: Nordmaling, Sweden Total area: 187,585m2 Production area: 38,107m2 Year of construction: 1921-2001
• Smartpanel Location: Fredrikstad, Viken Warehouse facility: 7,100m2 Production area: 13,700m2

Byggform Location: Slemmestad, Viken Year of construction: 1989

Experienced management team and organization

finance director in Avantor ASA

CEO

• CEO in Byggma since 2009 and chairman from 2000-2009 Currently CEO of Investor AS, main shareholder in Byggma Previous roles include CFO in Idun AS, CFO in Elkjøp and
• MSc. in Economics and Business Administration from Norwegian Business School, BI

Roy Kenneth Grundetjern Head of IT

• CIO in Byggma since 2008
• Board member of Forestia, Smartpanel and Masonite Beams
• Former experience includes position as CEO at Hunonit and various managerial positions in both private and public sectors
• BSc. In Engineering and MBA from the University of Agder

Jens Unhammer CFO

• CFO in Byggma since 2003 after joining as Finance Manager in 2000
• 12 years of experience from the Øglænd Group, including positions as finance director in Cubus AS and CFO of Fibo-Trespo AS
• MBA from the Norwegian Business School in Oslo (BI)

Richard Thompson Head of Logistics

Head of Logistics in Byggma since 2011

CEO

• Joined Byggma 20 years ago, first as Manager customer service centre and later as Head of Logistics for Hunonit and Fibo-Trespo
• Bachelor in Economics from Business Academy in Stavanger

Organization by company

Terje Sagbakken

CEO Forestia

Forestia

Erlend Jordet Knut Nilsen

CEO Huntonit

CEO

Sales Director Huntonit

VD Masonite Beams Smartpanel

Jonassen Tore Hansen

Morten L.

Market Director Lighting

Marketing Director

Product development and innovation is conducted in each separate company on a continuous basis

Board of directors

Shareholder overview per 1 August 2021

Shareholder	# shares	% ownership
Investor AS 1)	47,633,790	68.21%
Sørlands-Vekst AS 1)	10,000,000	14.32%
Investor 6 AS 1)	4,000,000	5.73%
TEG Invest AS	686,320	0.98%
Beeline AS	531,760	0.76%
Narmont AS	485,640	0.70%
Gunnar Bernhard Brandsberg	290,550	0.42%
Øystein Akselsen	259,000	0.37%
Jomaho AS	230,000	0.32%
Avanza Bank AB	200,304	0.29%
Geir Drangsland 1)	192,200	0.28%
Ingus AS	175,760	0.25%
Olav Roger Lassesen	120,000	0.16%
Nordnet Bank AB	108,632	0.16%
Jarel AS	105,000	0.15%
Asbjørn Rudolf Nerland	100,000	0.14%
Torbjørn Seielstad	96,180	0.14%
Nordnet Livsforsikring AS	80,423	0.11%
Investor 1 AS 1)	80,160	0.11%
Sum 20 largest	65,485,655	93.77%
Other	4,347,555	6.23%
Total	69,833,210	100.00%

28 Note: 1) Per 1 August 2021, CEO Geir Drangsland and related parties control 88.70% of the shares in Byggma ASA

Subsidiaries of Byggma ASA

Company	Acquisition date	Headquarter	Book value in Byggma1 (NOKm)
Aneta Belysning AB	01.01.2005	Växjö, Sweden	27,453
AS Byggform	12.09.2019	Asker	22,744
Birkeland Eiendom AS	03.06.2004	Birkeland	8,354
Byggma Eiendom AS	31.03.2003	Lyngdal	15,250
Forestia AS	01.03.2006	Braskereidsfoss	58,446
Grammaholmen Fastighet AB (owned by Masonite Fastighet AB)	29.05.2019	Rundvik, Sweden	-
Huntonit AB	01.01.1996	Stockholm, Sweden	96
Huntonit AS	25.04.1997	Vennesla	26,736
Masonite Beams AB	01.08.2006	Rundvik, Sweden	11,970
Masonite Beams AS	29.05.2020	Mo i Rana	1,765
Masonite Fastighet AB	09.09.2011	Rundvik, Sweden	4,250
RBI Interiør AB (owned by Smartpanel AS)	04.07.2018	Västra Frölunda, Sweden	-
Rolf Dolven AS (owned by Scan Lamps AS)	16.11.2004	Vennesla	-
Scan Lamps AS	06.06.2002	Kristiansand	15,355
Scan Lamps VTA AS (owned by Scan Lamps AS)	20.09.2017	Kristiansand	-
Smart Board Production AB (owned by Smartpanel AS)	13.09.2018	Västra Frölunda, Sweden	-
Smartpanel AS	28.06.2018	Fredrikstad	20,000
Uldal AS	03.06.2004	Birkeland	21,955
Total			234,374

Key takeaways