Bewi Asa · OSL:BEWI
Bewi Asa — Debt Investor Presentation (August 2021)
66 slides from Bewi Asa's debt investor presentation, August 2021
Slide 1: Investor presentation August 2021
Investor presentation August 2021
Slide 2: Disclaimer
Disclaimer This presentation material (the “Presentation”) has been prepared by BEWI ASA (the “Issuer” or, together with its direct and indirect subsidiaries, the “Group”), solely for use at investor presentations in connection with the contemplated offering by the Issuer of senior unsecured floatin
Slide 3: Disclaimer
Disclaimer Neither this Presentation nor any copy of it nor the information contained herein may be taken, transmitted or distributed directly or indirectly, to or into Canada, Australia, Japan or the United States (or to any U.S. person), or to any other jurisdiction in which such distribution woul
Slide 4: Table of contents
TABLE OF CONTENTS 1 Transaction overview 5 – 10 2 Introduction to BEWI 11 – 17 3 Business overview 18 – 23 4 Key credit highlights 24 – 32 5 Market overview 33 – 36 6 Financials 37 – 42 7 Appendix 43 – 53 8 Risk factors 54 – 66
Slide 5: Transaction overview
Chapter 1 Transaction overview
Slide 6: Today's presenters
Today’s presenters Christian Bekken Marie Danielsson CEO of BEWI ASA CFO of BEWI ASA • With BEWI Group for 19 years • With BEWI Group for 6 years • Appointed CEO in 2020 • CFO since 2015 • Christian is 2nd generation Bekken family, and has held various • Former VP Financial Control and Taxes at Hald
Slide 7: Transaction summary
Transaction summary Transaction overview and background BEWI capitalization ▪ BEWI ASA (“BEWI” or the “Company”) is contemplating to issue up to EUR 160 EURm 30 June 2021 Bond issue Pro forma million of Senior Unsecured Sustainability-linked Bonds (the “Bonds”) within a total framework of EUR 250 mi
Slide 8: Summary of key terms
Summary of key terms Issuer BEWI ASA Status Senior Unsecured Sustainability-Linked Initial Issue Amount EUR 160 million Maximum Issue Amount EUR 250 million Tenor 5 years Amortization Bullet at maturity at par value if Sustainability Performance Target has been met, otherwise at 100.75% of par value
Slide 9: Sustainability-linked Bond framework
Sustainability-linked Bond framework Sustainability at BEWI Sustainability-linked features • BEWI is committed to sustainability and recognizes their role • The selected Key Performance Indicator (KPI) is based on collection of as a leading company in developing circular processes for its used EPS1)
Slide 10: Key credit highlights
Key credit highlights A leading European player with multiple #1 local market positions High barriers to entry and economies of scale from a well-invested platform Earnings stability from revenue diversification Pioneering the industry’s change towards a circular economy Demonstrated history of valu
Slide 11: Introduction to BEWI
Chapter 2 Introduction to BEWI
Slide 12: BEWI is an innovative consolidator in Europe…
BEWI is an innovative consolidator in Europe… Key figures BEWI at a glance BEWI is a European provider of packaging, EUR 599 EUR 83 components and insulation solutions, founded in million million 1980 on the island of Frøya, of the coast of Norway net sales1) adj. EBITDA1,2) Vision 44 200 kt Protect
Slide 13: …operating through three core segments…
…operating through three core segments… Packaging & RAW Insulation Components Production of white and grey expanded Manufacturing of standard and customised Manufacturing of an extensive range of insulation polystyrene (EPS) and Biofoam, a fully bio-based packaging solutions and technical components
Slide 14: … with over 40 years of history and proven successful M&A integration
… with over 40 years of history and proven successful M&A integration 2014 2016 2017 2018 2019 2019 2020 2020 2020 2020 Merger between BEWI and Investment in extruding Acquisition of Finnish BEWI acquires Synbra and Launching EPS Launch and BEWI Acquisition of Acquisition of Acquisition of StyroChem
Slide 15: Today BEWI is a listed consolidator with low leverage positioned for the circular future
Today BEWI is a listed consolidator with low leverage positioned for the circular future The M&A strategy has been integral in forming the company… …into BEWI today 4.2x 3.5x 2.3x 1.6x 1.5x Listed on Oslo Børs with a EBITDA2) (EURm) 83 ~NOK 4.51) billion market cap No. of M&A transactions Net debt /
Slide 16: Since 1980 BEWI's strategy and vision have been dedicated to offering solutions
Since 1980 BEWI’s strategy and vision have been dedicated to offering solutions in innovative and efficient ways… Strategic priorities The BEWI vision A circular Profitable Protecting people and Innovation economy growth goods for a better everyday Protecting people Protecting food A circular econom
Slide 17: …with sustainability being a core focus
…with sustainability being a core focus BEWI’s approach to sustainability is based on three pillars… …and recognises the importance of our planet’s boundaries Becoming circular Actively engage in partnerships Contribute to an inclusive society BEWI Circular BEWI therefore supports the restructuring
Slide 18: Business overview
BEW/ Chapter 3 Business overview
Slide 19: BEWI has an integrated, flexible and circular value chain
BEWI has an integrated, flexible and circular value chain Procurement of raw materials and processing them into EPS beads to Raw Processing Product Products be used for production materials manufacturing are a part of EPS External conversion Packaging & RAW conversion1)1) procurement Components ~93%
Slide 20: RAW – Enabling BEWI's circular ambition and downstream stability
RAW – Enabling BEWI’s circular ambition and downstream stability Segment overview Financial profile • Segment RAW develops and produces white and grey expanded polystyrene, known as EPS beads or Styrofoam, as well as BioFoam, a fully biobased particle foam EURm Revenue Adj. EBITDA • EPS consists of
Slide 21: Packaging & Components – Providing highly integrated and specialized solutions
Packaging & Components – Providing highly integrated and specialized solutions to various industries Segment overview Financial profile • The Packaging & Components segment develops and manufactures standard and customised solutions and components for customers in many industries EURm Revenue Adj. E
Slide 22: Insulation – Positioned within both high-value add and standard products
Insulation – Positioned within both high-value add and standard products, leading the way towards greater energy efficiency Segment overview Financial profile • The Insulation segment develops and manufactures an extensive range of insulation solutions for the construction industry, such as insulati
Slide 23: BEWI Circular – Uniting manufacturing and recycling
BEWI Circular – Uniting manufacturing and recycling - saving the planet and creating quality materials at the same time 2018 – BEWI Circular founded 2020 – Expansion and ramp-up Key future Circular targets Industry leading ~EUR 10 million Recycling acquisition in the Netherlands 2024 – target recycl
Slide 24: Key credit highlights
Chapter 4 Key credit highlights
Slide 25: Key credit highlights
Key credit highlights 1. A leading European player with multiple #1 local market positions The largest vertically integrated EPS producer in Europe, >2x the size of the second largest player Multiple #1 market positions in Packaging & Components in Scandinavia, Netherlands and Portugal 44 production
Slide 26: A leading European player with multiple #1 local market positions
A leading European player with multiple #1 local market 1 positions Europe’s largest vertically integrated player... …with domestic market leadership in EPS P&C and Insulation1) European EPS beads producers – capacity (kt/year)1) Synthos 515 BASF 460 Packaging & Components Insulation Ravago 300 Mark
Slide 27: High barriers to entry and economies of scale from a well-invested platform
High barriers to entry and economies of scale from a well- 2 invested platform Significant investments Strong local presence Large customer base Long-standing customer First mover advantage in required for establishment is needed required to enable scale relationships recycling segment • Key investm
Slide 28: Earnings stability from revenue diversification
3 Earnings stability from revenue diversification Competitive advantage through broad diversification Diversified across countries1) Diversified across segments2) Diversified across end-markets3) Norway Other 20% Other Packaging Food packaging 25% and Components 22% 22% Packaging & Components RAW 35
Slide 29: Pioneering the industry's change towards a circular economy
4 Pioneering the industry’s change towards a circular economy Strategic sustainability approach established… …to reach key 2030 targets Approach to sustainability is based on three pillars Becoming circular • 50% recycled or non-fossil raw materials • 50% non-fossil energy sources • 50% of transport
Slide 30: Demonstrated history of value creation through M&A combined with decreasing leverage
Demonstrated history of value creation through M&A combined 5 with decreasing leverage over time M&A together with a substantial de-leveraging has been an integral part of the BEWI growth journey… …and is driven by five main factors Annual net sales (EURm) NIBD/Adj. EBITDA excl. IFRS 16 Geographical
Slide 31: Listed company with an experienced management team backed by long-term family ownership
Listed company with an experienced management team backed 6 by long-term family ownership Experienced management and board of directors brings a deep understanding of the industry • Listed on Oslo Stock Exchange with a market cap of NOK 4.51) billion • All of the current management team have been an
Slide 32: Attractive growth outlook underpinned by multiple global secular trends
Attractive growth outlook underpinned by multiple global 7 secular trends and a focused strategy Several secular global megatrends driving … … strong market growth ✓ Increasing global Increasing demand for fresh food demand for RAW Packaging & Components Insulation European EPS market European EPS m
Slide 33: Market overview
Chapter 5 Market overview
Slide 34: BEWI serves a wide number of industries…
BEWI serves a wide number of industries… Packaging & Components Insulation Food Pharmacutical Automotive Hobby & Leisure Residential housing Thermal insulation Leading supplier of EPS is an ideal choice for ~700,000 Volvo cars was BioFoam® as granulates ~50,000 tanks produced ~25% of all insulation
Slide 35: …and is exposed to steadily growing underlying end-markets
…and is exposed to steadily growing underlying end-markets Packaging & Components Insulation FISH FARMING AUTOMOTIVE CONSTRUCTION MARKET • BEWI is largely exposed to the fish farming industry, • ~5% of BEWI’s sales are derived from the • ~25% of all insulation materials in Western Europe being one o
Slide 36: BEWI is present in all major EPS end-markets, and has expansion opportunities
BEWI is present in all major EPS end-markets, and has unexplored and attractive expansion opportunities in major European economies Large potential for BEWI to both unlock new markets and increase existing market shares European EPS market by end-segment1) European EPS market by geography1) European
Slide 37: Financials
BEW/ Chapter 6 Financials
Slide 38: Stable organic growth in revenue combined with strong EBITDA development
BEWI has demonstrated stable organic growth in revenue combined with a strong EBITDA development… Net sales Adj. EBITDA1) EURm EURm CAGR: 2018-Q2 2021 LTM: ~20% CAGR: 2018-Q2 2021 LTM: ~48% 599 83 463 430 65 381 52 31 2018 2019 2020 Q2 2021 LTM 2018 2019 2020 Q2 2021 LTM • For the last twelve months
Slide 39: Integrated value chain ensuring solid financial group resilience
…and has an integrated value chain ensuring solid financial group resilience RAW Packaging & Components Insulation Net sales Net sales Net sales EURm EURm EURm 261 230 233 207 174 191 180 147 158 139 121 112 2018 2019 2020 Q2 2021 LTM 2018 2019 2020 Q2 2021 LTM 2018 2019 2020 Q2 2021 LTM Adj. EBITDA
Slide 40: Seasonal but stable NWC and low capex ensures high cash conversion
Seasonal but annually stable NWC and low capex requirements ensures high cash conversion Working capital Capex Cash conversion Working capital Acquired entities Cash flow from operations Capex CAPEX EURm EURm 22.9 19.4 19.9 20.4 ~70% 10.8 7.6 7.4 40.8 1.4 13.9 0.3 35.1 17.6 33.0 -3.4 -2.6 -3.5 -4.9
Slide 41: BEWI reports stable leverage measures despite M&A agenda
BEWI reports stable leverage measures despite M&A agenda and growth initiatives Leverage: Net debt / EBITDA1) Leverage excl. IFRS 16 Leverage incl. IFRS 16 Target < 2.5x excl. IFRS 16 3.1x 3.0x 3.0x 2.9x 2.9x 2.8x 2.8x 2.7x 2.7x 2.7x 2.6x 2.6x 2.6x 2.4x 2.4x 2.3x 2.2x 1.8x 1.6x 1.5x Q1 '19 Q2 '19 Q3
Slide 42: Long-term financial targets
Long-term financial targets • Mix of organic, incl. greenfield projects, and M&A growth Revenue growth >10% • 45% CAGR between 2012 and 2019, largely driven by acquisitions • Significant changes in raw material prices may impact the ability to achieve the target EBITDA margin • Underlying EBITDA tar
Slide 43: Appendix
BEW/ Chapter 7 Appendix
Slide 44: Listed on OSE with a NOK ~4.5bn market cap and supportive shareholders
Listed on OSE with a NOK ~4.5bn market cap and supportive shareholders Market cap development Top 20 shareholders NOKm # Investor # of shares % 5 000 Market cap (NOKm) Volume (m shares) 1 Frøya Invest AS 88,333,152 56.40% m shares 2.0 2 Kverva Industrier As 15,292,424 9.76% 3 Verdane Etf Iii Spv K/S
Slide 45: Experienced board of directors
Experienced board of directors Gunnar Syvertsen Kristina Schauman Stig Waernes Anne-Lise Aukner Rik Dobbelaere Chairman Board Member Board Member Board Member Board Member • Education: M.Sc. • Education: M.Sc. Business • Education: Degree in • Education: Law degree • Education: M.Sc. Engineering fro
Slide 46: P&L statement
P&L statement Consolidated condensed interim statement of income EURm 2018 2019 2020 H1 2021 Net sales 380.8 429.9 462.6 347.0 Other operating income 1.5 0.9 0 0.0 Total operating income 382.3 430.8 462.6 347.0 Raw materials and consumables -207.9 -198.1 -181.1 -148.5 Goods for resale -8.5 -13.8 -35
Slide 47: Balance sheet statement
Balance sheet statement Consolidated condensed interim statement of financial position Assets Equity and liabilities EURm 31.12.2018 31.12.2019 31.12.2020 30.06.2021 EURm 31.12.2018 31.12.2019 31.12.2020 30.06.2021 Non-currents assets Equity Intangible assets Share capital 0.1 0.1 14 14.7 Goodwill 7
Slide 48: Cash flow statement
Cash flow statement Consolidated condensed interim statement of cash flows EURm 2018 2019 2020 H1 2021 Operating income (EBIT) 13.8 20.3 39.5 29.1 Adjustment for non-cash items etc. 7.9 26.9 19.1 15.5 Net financial items -4.7 -10.1 -10.1 -6.0 Income tax paid -4.6 -6.9 -12 -6.3 Cash flow from operati
Slide 49: Group legal structure
Group legal structure BEWI ASA BEWiSynbra Group Logine spółka zoo AB (publ) 54.21% shares / 65.66% votes Genevad Holding AB BEWi M-Plast Oy IZOBLOK S.A. IZOBLOK GmbH 75% 49% Bewi Insulation Jablite Group Ltd Subsidiaries BEWi Drift Holding AS Subsidiaries Genevad Netherlands De Wijs-van Subsidiaries
Slide 50: Currency exposure overview
Currency exposure overview P&L – net currency exposure BEWi Drift Holding AS • The major FX exposure comes from the company’s trading operations Upstream Downstream Customer • This is currently managed by utilizing a non-fixed price list to customers EUR 24,400k SEK • However, there are continuous e
Slide 51: EPS have attractive product characteristics that reduce waste and energy consumption
EPS have attractive product characteristics that enable reduced waste and energy consumption Characteristics of EPS EPS products have characteristics that can contribute to major environmental gains Example of environmental gains from EPS products Durable Versatile Reduced food waste Lower energy co
Slide 52: Higher styrene prices and shortage of EPS raw material drive upstream margin expansion
Higher styrene prices and shortage of EPS raw material, combined with strong demand has driven an upstream margin expansion Historic GAP between styrene and EPS prices1) Recent shortage has pushed EPS prices up EUR • Sharp increase in styrene prices in Q1, prices continued upwards in Q2 700 • Lower
Slide 53: IZOBLOK acquisition - a case study of BEWI's M&A strategy
IZOBLOK acquisition - a case study of BEWI’s highly effective M&A strategy IZOBLOK at a glance Rationale for the acquisition • BEWI acquired a majority stake in Q1 2021 and the deal closed in July Expansion to increase presence in the automotive components industry 2021 Adds upstream capabilities to
Slide 54: Risk factors
BEW/ Chapter 8 Risk factors
Slide 55: Risk factors
Risk factors An investment in corporate bonds always involves a certain degree of risk. A number of factors affect and may come to affect BEWI ASA (the “Issuer”) and its direct and indirect subsidiaries’ (together with the Issuer, the “Group”) operations, earnings, financial position, future prospec
Slide 56: Risk factors
Risk factors Limitations on freedom of operation Within certain markets, the Group has and may in the future have, a significant market share (e.g. within Insulation in the Netherlands and Packaging in Sweden, Denmark and Norway). As a result, there is a risk that applicable competition rules and re
Slide 57: Risk factors
Risk factors Negative publicity Negative publicity leading to a negative social perception towards the use of refined fossil fuels and/or the EPS industry in general or the use of EPS materials in packaging and components in particular could have a negative impact, not only on the reputation of the
Slide 58: Risk factors
Risk factors The manufacturing of the Group's products includes multiple technical processes and is reliant on complex machinery. The plants are subject to the risk of breakdowns, government shutdowns or suspensions, inefficiencies, operational human errors, sabotage, technical failures, fires, equi
Slide 59: Risk factors
Risk factors Dependence on development of new materials, production processes and technologies The Group depends on its continued ability to develop new, improved, or more cost-effective materials for end-market applications, methods of production, technologies, and to successfully commercialise and
Slide 60: Risk factors
Risk factors If the Commission concludes that Synbra was engaged in anti-competitive behaviour under the Styrene Monomer Investigation, the Commission may impose a fine on Synbra. Such potential fine is calculated in accordance with the Commission’s guidelines on the method of setting fines and in g
Slide 61: Risk factors
Risk factors Regulations, standards and health and safety regulations In 2019 the substance styrene, which is one of the raw material chemicals used by the Group, was classified by the International Agency for Research on Cancer as group 2A meaning that it is probably carcinogenic to humans. Althoug
Slide 62: Risk factors
Risk factors RISKS RELATED TO THE ISSUER’S FINANCIAL SITUATION The Group may have difficulty accessing financing in sufficient time, on acceptable terms, or at all The Group primarily finances its operations through equity, own cash flow and interest-bearing debt, mainly consisting of the Bonds and
Slide 63: Risk factors
Risk factors RISKS RELATED TO THE NATURE OF THE BONDS Credit risk Investments in the Bonds carry a credit risk relating to the Issuer and the Group. Investors’ ability to receive payment under the Terms and Conditions is therefore dependent on the Group's capability and willingness to meet its payme
Slide 64: Risk factors
Risk factors Additional debt The Issuer and/or any other Group Company may incur additional debt, provided that such debt constitutes Permitted Debt pursuant to the Terms and Conditions and provide security for such indebtedness (provided that such security constitutes Permitted Security pursuant to
Slide 65: Risk factors
Risk factors Risks related the admission of the Bonds to trading on a regulated market The issuer intends to list the Bonds within 30 days after the First Issue Date on Nasdaq Stockholm or any other regulated market (as defined in Directive 2014/65/EU on markets in financial instruments) in Sweden a
Slide 66: Risk factors
Risk factors European Benchmark Regulation The interest on the Bonds is determined based on a floating interest rate of 3-month EURIBOR plus a margin. The process for determining EURIBOR and other interest rate benchmarks is subject to a number of statutory rules and other regulations. EURIBOR const