Nordson Corporation (Nasdaq: NDSN) today reported results for the first quarter of fiscal year 2020. For the quarter ended January 31, 2020, sales were $495 million, a 1 percent decrease compared to the prior year’s first quarter sales of $498 million. This change in first quarter 2020 sales included a decrease in organic volume of less than 1 percent, growth from the first year effect of acquisitions of less than 1 percent, and a decrease related to the unfavorable effect of currency translation as compared to the prior year’s first quarter of approximately 1 percent.
In the first quarter of fiscal year 2020, reported operating profit was $75 million, net income was $52 million, and GAAP diluted earnings per share were $0.89, inclusive of $0.04 per share charge related to restructuring and a $0.04 per share benefit related to discrete tax items. Prior year first quarter sales, operating profit, net income and GAAP diluted earnings per share were $498 million, $84 million, $49 million and $0.83, respectively. A reconciliation of GAAP diluted earnings per share to adjusted diluted earnings per share and calculations for EBITDA and free cash flow before dividends are included in the attached financial exhibits.
First Quarter Segment Results
Adhesive Dispensing Systems sales decreased 2 percent compared to the prior year’s first quarter, inclusive of a decrease in organic volume of 1 percent and a decrease of 1 percent related to the unfavorable effects of currency translation as compared to the prior year. Reported operating margin in the segment was 23 percent in the quarter.
Advanced Technology Systems sales decreased approximately 1 percent compared to the prior year’s first quarter, inclusive of a decrease in organic volume of 2 percent, an increase of 1 percent related to the first year effect of acquisitions, and a decrease of less than 1 percent related to the unfavorable effects of currency translation as compared to the prior year. The first quarter’s acquisitive growth includes the fiscal 2019 acquisition of Optical Control GmbH. Reported operating margin in the segment was 14 percent in the quarter, or 15 percent when excluding approximately $3 million of restructuring charges.
Industrial Coating Systems sales increased 9 percent compared to the prior year’s first quarter, inclusive of organic volume growth of 9 percent and a decrease of less than 1 percent related to the unfavorable effect of currency translation as compared to the prior year. Reported operating margin in the segment was 14 percent in the quarter.
Detailed results by operating segment and geography are included in the attached financial exhibits.
Commenting on the company’s fiscal first quarter 2020 results, Sundaram Nagarajan, Nordson President and Chief Executive Officer, said, “Our first quarter performance for both sales and operating margin was in line with expectations and reflects our normal seasonality. Our spending is generally consistent throughout the year due to our direct sales model and strong customer focus, resulting in lower operating margin in our first fiscal quarter.”
Backlog
Backlog for the quarter ended January 31, 2020 was approximately $430 million, a decrease of 1 percent compared to the same period a year ago. Impact from the fiscal 2019 acquisition of Optical Control GmbH was not significant. Backlog amounts are calculated at January 31, 2020 exchange rates.
Commenting on the company’s fiscal 2020 outlook, Nagarajan said, “We remain on track with fiscal 2020 guidance, where we expect organic sales growth in the range of 1 to 3 percent compared to fiscal 2019. With our typical seasonality, we expect our second half of the fiscal year to drive this growth.”
Nordson management will provide additional commentary on these results and outlook during a conference call Thursday, February 20, 2020 at 8:30 a.m. eastern time which can be accessed at https://investors.nordson.com. For persons unable to listen to the live broadcast, a replay will be available for 14 days after the event. Information about Nordson’s investor relations and shareholder services is available from Lara Mahoney, Vice President, Investor Relations and Corporate Communications at (440) 414-5639 or lara.mahoney@nordson.com.
Except for historical information and comparisons contained herein, statements included in this release may constitute “forward-looking statements,” as defined by the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors, as discussed in the company’s filing with the Securities and Exchange Commission that could cause actual results to differ.
Nordson Corporation engineers, manufactures and markets differentiated products and systems used for the precision dispensing of adhesives, coatings, sealants, biomaterials, polymers, plastics and other materials, fluid management, test and inspection, UV curing and plasma surface treatment, all supported by application expertise and direct global sales and service. Nordson serves a wide variety of consumer non-durable, durable and technology end markets including packaging, nonwovens, electronics, medical, appliances, energy, transportation, construction, and general product assembly and finishing. Founded in 1954 and headquartered in Westlake, Ohio, the company has operations and support offices in more than 35 countries. Visit Nordson on the web at http://www.nordson.com, @Nordson_Corp, or www.facebook.com/nordson.
|
NORDSON CORPORATION |
|||||||||
|
FINANCIAL HIGHLIGHTS |
|||||||||
|
(Dollars in thousands except for per-share amounts) |
|||||||||
| FIRST QUARTER PERIOD | |||||||||
| Period Ended January 31, 2020 | |||||||||
| (Unaudited) | |||||||||
| CONSOLIDATED STATEMENT OF INCOME | |||||||||
|
First Quarter |
|||||||||
|
2020 |
|
2019 |
|||||||
| Sales |
$ |
494,916 |
|
$ |
497,910 |
|
|||
| Cost of sales |
|
231,722 |
|
|
228,934 |
|
|||
| Selling & administrative expenses |
|
188,101 |
|
|
184,695 |
|
|||
| Operating profit |
|
75,093 |
|
|
84,281 |
|
|||
| Interest expense – net |
|
(9,152 |
) |
|
(12,049 |
) |
|||
| Other expense – net |
|
(2,846 |
) |
|
(4,189 |
) |
|||
| Income before income taxes |
|
63,095 |
|
|
68,043 |
|
|||
| Income taxes |
|
11,091 |
|
|
19,476 |
|
|||
| Net Income |
$ |
52,004 |
|
$ |
48,567 |
|
|||
| Return on sales |
|
11 |
% |
|
10 |
% |
|||
| Return on average shareholders’ equity |
|
13 |
% |
|
14 |
% |
|||
| Average common shares outstanding (000’s) |
|
57,668 |
|
|
57,702 |
|
|||
| Average common shares and | |||||||||
| common share equivalents (000’s) |
|
58,524 |
|
|
58,372 |
|
|||
| Per share: | |||||||||
| Basic earnings |
$ |
.90 |
|
$ |
.84 |
|
|||
| Diluted earnings |
$ |
.89 |
|
$ |
.83 |
|
|||
| Dividends paid |
$ |
.38 |
|
$ |
.35 |
|
|||
| Total dividends |
$ |
21,915 |
|
$ |
20,210 |
|
|||
|
NORDSON CORPORATION |
||||||||
|
FINANCIAL HIGHLIGHTS |
||||||||
|
(Dollars in thousands) |
||||||||
| CONSOLIDATED BALANCE SHEET | ||||||||
|
January 31 |
|
October 31 |
||||||
|
2020 |
|
2019 |
||||||
| Cash and cash equivalents |
$ |
115,097 |
$ |
151,164 |
||||
| Receivables – net |
|
471,626 |
|
530,765 |
||||
| Inventories – net |
|
294,768 |
|
283,399 |
||||
| Other current assets |
|
48,833 |
|
45,867 |
||||
| Total current assets |
|
930,324 |
|
1,011,195 |
||||
| Property, plant & equipment – net |
|
400,636 |
|
398,895 |
||||
| Other assets |
|
2,219,907 |
|
2,106,357 |
||||
|
$ |
3,550,867 |
$ |
3,516,447 |
|||||
| Notes payable and debt due within one year |
$ |
43,598 |
$ |
168,738 |
||||
| Accounts payable and accrued liabilities |
|
299,723 |
|
308,888 |
||||
| Total current liabilities |
|
343,321 |
|
477,626 |
||||
| Long-term debt |
|
1,074,314 |
|
1,075,404 |
||||
| Other liabilities |
|
498,958 |
|
382,372 |
||||
| Total shareholders’ equity |
|
1,634,274 |
|
1,581,045 |
||||
|
$ |
3,550,867 |
$ |
3,516,447 |
|||||
| Other information: | ||||||||
| Employees |
|
7,606 |
|
7,579 |
||||
| Common shares outstanding (000’s) |
|
57,847 |
|
57,600 |
||||
| NORDSON CORPORATION | |||||||||||||||||
|
FINANCIAL HIGHLIGHTS |
|||||||||||||||||
|
(Dollars in thousands) |
|||||||||||||||||
| FIRST QUARTER PERIOD | |||||||||||||||||
| Period Ended January 31, 2020 | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
|
First Quarter |
|
% Growth over 2019 |
|||||||||||||||
| SALES BY BUSINESS SEGMENT |
2020 |
|
2019 |
|
Volume |
|
Currency |
|
Total |
||||||||
| Adhesive dispensing systems |
$ |
207,225 |
|
$ |
211,517 |
|
-1.1 |
% |
-0.9 |
% |
-2.0 |
% |
|||||
| Advanced technology systems |
|
231,117 |
|
|
234,458 |
|
-1.1 |
% |
-0.3 |
% |
-1.4 |
% |
|||||
| Industrial coating systems |
|
56,574 |
|
|
51,935 |
|
9.2 |
% |
-0.3 |
% |
8.9 |
% |
|||||
| Total sales by business segment |
$ |
494,916 |
|
$ |
497,910 |
|
0.0 |
% |
-0.6 |
% |
-0.6 |
% |
|||||
|
First Quarter |
|||||||||||||||||
| OPERATING PROFIT BY BUSINESS SEGMENT |
2020 |
|
2019 |
||||||||||||||
| Adhesive dispensing systems |
$ |
48,618 |
|
$ |
47,892 |
|
|||||||||||
| Advanced technology systems |
|
32,287 |
|
|
40,785 |
|
|||||||||||
| Industrial coating systems |
|
7,786 |
|
|
7,516 |
|
|||||||||||
| Corporate |
|
(13,598 |
) |
|
(11,912 |
) |
|||||||||||
| Total operating profit by business segment |
$ |
75,093 |
|
$ |
84,281 |
|
|||||||||||
|
First Quarter |
% Growth over 2019 |
||||||||||||||||
| SALES BY GEOGRAPHIC REGION |
2020 |
|
2019 |
|
Volume |
|
Currency |
|
Total |
||||||||
| United States |
$ |
188,500 |
|
$ |
170,350 |
|
10.7 |
% |
– |
|
10.7 |
% |
|||||
| Americas |
|
31,083 |
|
|
32,437 |
|
-3.9 |
% |
-0.3 |
% |
-4.2 |
% |
|||||
| Europe |
|
126,391 |
|
|
132,675 |
|
-2.8 |
% |
-1.9 |
% |
-4.7 |
% |
|||||
| Japan |
|
27,552 |
|
|
29,047 |
|
-6.5 |
% |
1.4 |
% |
-5.1 |
% |
|||||
| Asia Pacific |
|
121,390 |
|
|
133,401 |
|
-8.5 |
% |
-0.5 |
% |
-9.0 |
% |
|||||
| Total Sales by Geographic Region |
$ |
494,916 |
|
$ |
497,910 |
|
0.0 |
% |
-0.6 |
% |
-0.6 |
% |
|||||
| NORDSON CORPORATION | ||||||||
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
||||||||
|
(Dollars in thousands except for per-share amounts) |
||||||||
|
FIRST QUARTER ENDED |
||||||||
| Period Ended January 31, 2020 | ||||||||
| (Unaudited) | ||||||||
| EBITDA |
First Quarter |
|||||||
|
2020 |
2019 |
|||||||
| Net income |
$ |
52,004 |
|
$ |
48,567 |
|
||
| Adjustments: | ||||||||
| Depreciation and amortization expense |
|
28,618 |
|
|
27,748 |
|
||
| Interest expense – net |
|
9,152 |
|
|
12,049 |
|
||
| Income taxes |
|
11,091 |
|
|
19,476 |
|
||
| EBITDA |
$ |
100,865 |
|
$ |
107,840 |
|
||
| EBITDA per diluted share |
$ |
1.72 |
|
$ |
1.85 |
|
||
| EBITDA and EBITDA per diluted share are non-GAAP financial measures used by management to evaluate the Company’s ongoing operations. Therefore, the Company believes these financial measures provide useful information to investors. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA per diluted share is defined as EBITDA divided by the Company’s diluted weighted average shares outstanding. | ||||||||
|
First Quarter |
||||||||
|
2020 |
2019 |
|||||||
| Diluted EPS as reported (U.S. GAAP) |
$ |
0.89 |
|
$ |
0.83 |
|
||
| Severance and restructuring |
|
0.04 |
|
|
0.02 |
|
||
| U.S. Tax Reform discrete item |
|
– |
|
|
0.08 |
|
||
| Other discrete tax items |
|
(0.04 |
) |
|
(0.02 |
) |
||
| Diluted EPS as adjusted (Non-GAAP) |
$ |
0.89 |
|
$ |
0.92 |
|
||
| Adjusted EPS is not a measurement of financial performance under GAAP, and should not be considered as an alternative to EPS determined in accordance with GAAP. Management believes that EPS as adjusted to exclude the items in the table above assist in understanding the results of Nordson Corporation. Amounts may not add due to rounding. | ||||||||
| Free Cash Flow Before Dividends |
First Quarter |
|||||||
|
2020 |
2019 |
|||||||
| Net income |
$ |
52,004 |
|
$ |
48,567 |
|
||
| Depreciation and amortization |
|
28,618 |
|
|
27,748 |
|
||
| Other non-cash charges |
|
7,167 |
|
|
6,340 |
|
||
| Changes in operating assets and liabilities |
|
28,486 |
|
|
(25,808 |
) |
||
| Net cash provided by operating activities |
|
116,275 |
|
|
56,847 |
|
||
| Additions to property, plant and equipment |
|
(13,880 |
) |
|
(14,121 |
) |
||
| Proceeds from the sale of property, plant and equipment |
|
65 |
|
|
260 |
|
||
| Free cash flow before dividends |
$ |
102,460 |
|
$ |
42,986 |
|
||
| Free cash flow before dividends, a non-GAAP financial measure, is defined as net cash provided by operating activities less purchased property, plant and equipment and proceeds from the sale of property, plant and equipment. It is a financial measure used by management to assess its ability to generate cash in excess of its operating needs. Therefore, the Company believes this financial measure provides useful information to investors. Free cash flow before dividends is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for, operating cash flows or other financial measures prepared in accordance with GAAP. Our calculations of non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies. | ||||||||
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