Bewi Asa · OSL:BEWI
Bewi Asa — Debt Investor Presentation (November 2021)
70 slides from Bewi Asa's debt investor presentation, November 2021
Slide 1: Investor presentation November 2021
Investor presentation November 2021
Slide 2: Disclaimer
Disclaimer On 3 September 2021, BEWI ASA (the “Issuer” or, together with its direct and indirect subsidiaries, the “Group”) issued senior unsecured floating rate sustainability-linked bonds in an initial aggregate amount of EUR 160,000,000 under a framework of up to EUR 250,000,000 (ISIN: SE00162763
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 – 11 2 Introduction to BEWI 12 – 21 3 Business overview 22 – 27 4 Key credit highlights 28 – 36 5 Market overview 37 – 40 6 Financials 41 – 47 7 Appendix 48 – 56 8 Risk factors 57 – 69
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 senior • Former VP Financial Control and Taxes
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 90 million of EURm 30 Sept 2021 Tap issue Pro forma subsequent bonds under the outstanding Senior Unsecured Sustainability-linked Bonds with a total fr
Slide 8: Summary of key terms
Summary of key terms Issuer BEWI ASA Status Senior Unsecured Sustainability-Linked ISIN SE0016276398 Outstanding Amount EUR 160 million Tap Issue Amount Up to EUR 90 million Maximum Issue Amount EUR 250 million Maturity Date 3 September 2026 Amortization Bullet at maturity at par value if Sustainabi
Slide 9: Overview of the Jackon transaction
Overview of the Jackon transaction The Jackon Holding and BEWI ASA transaction summary Jackon is a vertically integrated insulation and packing provider Jackon is one of Europe’s leading manufacturers of XPS and EPS • 1 October 2021: BEWI launched an offer to acquire up to 100% of the shares in Jack
Slide 10: Sustainability-linked Bond framework
Sustainability-linked Bond framework Sustainability at BEWI Sustainability-linked features • BEWI is committed to sustainability and recognizes their role as a leading • The selected Key Performance Indicator (KPI) is based on collection of used company in developing circular processes for its indus
Slide 11: 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 12: Introduction to BEWI
Chapter 2 Introduction to BEWI
Slide 13: 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 670 EUR 99 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 14: Operating through three core segments
…operating through three core segments… Packaging & RAW Insulation Components Production of white and grey expanded polystyrene (EPS) Manufacturing of standard and customised packaging Manufacturing of an extensive range of insulation and Biofoam, a fully bio-based particle foam. The raw solutions a
Slide 15: Over 40 years of history and proven 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 XPS BEWI acquires Synbra and creates Launching EPS Launch and BEWI Listing Acquisition of Acquisition of Acqu
Slide 16: Today BEWI is a listed consolidator with low leverage
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 1.3x Listed on Oslo Børs with a 99 ~NOK 8.41) billion market cap Adj. EBITDA2) (EURm) No. of M&A transactions Net d
Slide 17: Strategy and vision dedicated to innovative and efficient 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 goods for a better everyday economy growth Protecting people Protecting food A circular econom
Slide 18: 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 19: Strategic rationale for the Jackon transaction
Strategic rationale for the Jackon transaction Complementary footprint and portfolio Strategic rationale Facilities • Improve customer share-of-wallet through an improved Growth product portfolio BEWI - RAW acceleration • Cross-sell a broader set of premium solutions to a wider BEWI - Downstream • E
Slide 20: Jackon and BEWI pro-forma numbers
Jackon and BEWI pro-forma numbers Relative contribution to a combined company Combined EBITDA LTM Q3 2021 EURm1) (except employees) EURm1) ~12-15 ~153 ~10% 39 Net sales LTM Q3’21 64% 36% 1041 26% 992) EBITDA LTM Q3’212) 72%2) 28% 138 65% Employees 69% 31% ~2,9002) 3) Synergies Combined BEWI Jackon N
Slide 21: Overview of recent key events
Overview of recent key events Issuance of five-year senior Acquisition of UK based recycling Acquisition of Belgian insulation Tap issue of five-year senior unsecured SLB’s of EUR 160m company Volker Gruppe company Kemisol Group unsecured SLB’s 3 September 6 October 29 October Ongoing The proceeds w
Slide 22: Business overview
BEW/ Chapter 3 Business overview
Slide 23: 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 be Raw materials Processing Product Products used for production are a part of manufacturing RAW EPS conversion EPS 1) External Packaging & conversion1) procurement Components
Slide 24: RAW – Enabling 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 EURm as BioFoam, a fully biobased particle foam Net sales2) Adj. EBITDA2) • EPS consis
Slide 25: Packaging & Components – 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 EURm components for customers in many industries Net sales4) Ad
Slide 26: Insulation – 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 EURm industry, such as ins
Slide 27: 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 established 2020 – Expansion and ramp-up Key future Circular targets Industry leading ~EUR 10 million Recycling acquisition in the Netherlands 2024 – target re
Slide 28: Key credit highlights
Chapter 4 Key credit highlights
Slide 29: 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 441) producti
Slide 30: A leading European player with multiple #1 local market positions
1 A leading European player with multiple #1 local market 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 31: High barriers to entry and economies of scale
2 High barriers to entry and economies of scale from a well-invested platform Significant investments required for Strong local presence Large customer base required to Long-standing customer First mover advantage in recycling establishment is needed enable scale relationships segment • Key investme
Slide 32: 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 21% Other Packaging 26% and Components 21% Food packaging Packaging & 28% Components RAW 35
Slide 33: Pioneering the 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 Becoming • 50% of
Slide 34: History of value creation through M&A and decreasing leverage
Demonstrated history of value creation through M&A combined with decreasing 5 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 sales1) (EURm) NIBD/Adj. EBITDA excl. IFRS 16 Geographic
Slide 35: Experienced management team backed by long-term family ownership
Listed company with an experienced management team backed by long-term 6 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 8.41) billion • All of the current management team have been a
Slide 36: Attractive growth outlook underpinned by global secular trends
Attractive growth outlook underpinned by multiple global secular trends and a 7 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 37: Market overview
Chapter 5 Market overview
Slide 38: 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 for ~50,000 tanks produced ~25% of all insulat
Slide 39: Exposed to steadily growing 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, being • ~6% of BEWI’s sales are derived from the automotive • ~25% of all insulation materials in Western E
Slide 40: Present in all major EPS end-markets with 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 41: Financials
ay BEW/ Chapter 6 Financials
Slide 42: Stable organic revenue growth and 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-Q3 2021 LTM: ~23% CAGR: 2018-Q3 2021 LTM: ~53% 99 670 463 65 430 381 52 31 2018 2019 2020 Q3 2021 LTM 2018 2019 2020 Q3 2021 LTM • For the last twelve months
Slide 43: Integrated value chain ensuring financial resilience
…and has an integrated value chain ensuring solid financial group resilience RAW Packaging & Components Insulation Net sales1) Net sales1) Net sales1) EURm EURm EURm 305 262 184 230 207 139 147 191 180 121 158 112 2018 2019 2020 Q3 2021 LTM 2018 2019 2020 Q3 2021 LTM 2018 2019 2020 Q3 2021 LTM Adj.
Slide 44: Stable NWC and low capex ensure high cash conversion
Seasonal but annually stable NWC and low capex requirements ensures high cash conversion Working capital Capex Cash conversion Cash flow from operations Capex EURm EURm 31.2 61.2 ~70% 58.2 22.9 19.4 19.9 10.8 37.9 36.5 35.1 7.6 7.4 33.0 1.4 0.3 -3.4 -2.6 -4.9 -4.9 -3.5 -4.9 25.1 26.1 -6.9 -7.2 avg.
Slide 45: 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 1.9x 1.8x 1.6x 1.5x 1.3x Q1 '19
Slide 46: An even stronger foundation for further growth
An even stronger foundation for further growth Operating in a large and BEWI + Jackon set to be the fragmented market leading consolidator in Europe Solid underlying growth in Growing organically with a several business segments strong focus on innovation Sustainability challenges Moving towards an
Slide 47: Set to continue growth journey next five years
Set to continue growth journey next five years >2x ~20% <2.5x 30-50% Adj. EBITDA ROCE1) NIBD/Adj. EBITDA Dividend Through organic growth Increase towards 20% Leverage target Of underlying net profit and acquisitions by 2026 unchanged going forward Note: 1) 12-months rolling EBITA / (Average NIBD + a
Slide 48: Appendix
BEW/ Chapter 7 Appendix
Slide 49: Listed on OSE with NOK ~8.4bn market cap
Listed on OSE with a NOK ~8.4bn market cap and supportive shareholders Market cap development Top 20 shareholders NOKm # Investor # of shares % Market cap (NOKm) Volume (m shares) m shares 10,000 1 FRØYA INVEST AS 88,333,152 56.40 % 7.0 9,500 2 KVERVA INDUSTRIER AS 15,292,424 9.76 % 6.5 3 VERDANE SK
Slide 50: 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. Engineering • Education: M.Sc. Business • Education: Degree in auditing • Education: Law degree from • Educat
Slide 51: P&L statement
P&L statement Consolidated condensed interim statement of income EURm 2018 2019 2020 YTD Q3 2021 Net sales 380.8 429.9 462.6 540.0 Other operating income 1.5 0.9 0.0 0.0 Total operating income 382.3 430.8 462.6 540.0 Raw materials and consumables -207.9 -198.1 -181.1 -221.0 Goods for resale -8.5 -13
Slide 52: Balance sheet statement
Balance sheet statement Consolidated condensed interim statement of financial position Assets Assets Equity Equityand andLiabilities liabilities EURm 31.12.2018 31.12.2019 31.12.2020 30.09.2021 EURm 31.12.2018 31.12.2019 31.12.2020 30.09.2021 Non-currents assets Equity Intangible assets Share capita
Slide 53: Cash flow statement
Cash flow statement Consolidated condensed interim statement of cash flows EURm 2018 2019 2020 YTD Q3 2021 Operating income (EBIT) 13.8 20.3 39.5 54.0 Adjustment for non-cash items etc. 7.9 26.9 19.1 22.1 Net financial items -4.7 -10.1 -10.1 -13.9 Income tax paid -4.6 -6.9 -12.0 -7.0 Cash flow from
Slide 54: Group legal structure
Group legal structure BEWI ASA BEWiSynbra Group AB Logine spółka zoo (publ) 54.66% shares / 66% votes Genevad Holding AB BEWi M-Plast Oy IZOBLOK S.A. IZOBLOK GmbH 75% 49% De Wijs-van Loon Bewi Insulation Norway Jablite Group Ltd Subsidiaries BEWi Drift Holding AS Subsidiaries Genevad Netherlands Sub
Slide 55: EPS product characteristics enabling reduced 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 56: Higher styrene prices and EPS shortage driving 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 • Sharp increase in styrene prices in Q1, prices continued upwards in Q2 and stabilized E
Slide 57: Risk factors
Chapter 8 Risk factors
Slide 58: 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 59: 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 60: 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 61: 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 62: 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 63: 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 64: 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 65: 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 66: 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 67: 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 68: Risk factors
Risk factors Admission of the Bonds to trading on a regulated market The Issuer intends to list the Bonds within 30 days after the Issue Date on Nasdaq Stockholm or any other regulated market (as defined in Directive 2014/65/EU on markets in financial instruments) in Sweden after the prospectus for
Slide 69: 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
Slide 70: BEWI – for a better everyday
Be W/ for a better everyday