Press release

Nordson Corporation Reports Record Third Quarter Results and Raises Fiscal Year 2021 Guidance

0
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Nordson Corporation (Nasdaq: NDSN) today reported results for the fiscal third quarter ended July 31, 2021. Sales were a quarterly company record of $647 million, a 20% increase compared to the prior year’s third quarter sales of $538 million. The increase in third quarter 2021 sales included organic volume growth of 20% and favorable effects from currency translation of 4%, offset by a net unfavorable impact of acquisitions and divestitures of 4%. The organic sales increase was driven by continued demand across all end markets, including a seasonal increase of quarterly shipments into the electronics end market.

Operating profit in the quarter was $188 million, or 29% of sales, compared to prior year adjusted operating profit of $120 million. This 57% increase in adjusted operating profit was driven by sales volume leverage and benefits from structural cost reduction actions taken in fiscal year 2020, as well as the divestiture of the screws and barrels product line on February 1, 2021. EBITDA for the third quarter of 2021 totaled $215 million, or 33% of sales.

Net income was $142 million, a 71% increase from the prior year adjusted earnings of $83 million. Third quarter 2021 diluted earnings per share were $2.42, a 70% increase over the prior year adjusted diluted earnings per share of $1.42.

“In the fiscal third quarter, we continued to benefit from the robust end market demand and accelerated recovery that we experienced in our second quarter. We were particularly pleased to see strong growth return in our medical, electronics and industrial end markets. Our teams are doing an outstanding job of managing through external supply chain and labor headwinds in order to deliver on the needs of our customers. The comprehensive execution of the Ascend strategy with NBS Next growth framework at its core continues to help us deliver top tier growth with leading margins and returns,” said Sundaram Nagarajan, president and chief executive officer.

Third Quarter Segment Results

Industrial Precision Solutions sales of $345 million increased 20% compared to the prior year third quarter, driven by a 22% organic increase and a favorable currency impact of 5%, partially offset by a divestiture impact of 8%. The organic sales increase was driven by continued demand in consumer non-durable and industrial end markets, particularly in China. Operating profit was $124 million, or 36% of sales, an increase of 60% compared to the prior year third quarter adjusted operating profit.

Advanced Technology Solutions sales of $301 million increased 21% compared to the prior year third quarter. Organic sales increased 18% while favorable currency impacts added 2% and acquisitions increased sales by approximately 1%. Sales demand was strong in all product lines including those serving electronics and medical end markets, with the Americas and China leading the growth from a regional perspective. Operating profit totaled $81 million, or 27% of sales, an increase of 51% compared to the prior year third quarter adjusted operating profit.

“I am pleased with the broad-based organic growth and attractive incremental margins in both segments,” said Joseph Kelley, executive vice president and chief financial officer. “Rigorous application of the NBS Next growth framework in our divisions is helping us to focus and sustain profitable growth in our greatest opportunities.”

Outlook

Backlog entering the fourth quarter of fiscal year 2021 is approximately $700 million, or 70% above the prior year. Customer order patterns have clearly changed in terms of both volume and extended shipment request dates during this dynamic environment. Based on the continued strength in order entry and backlog, the Company is increasing its full-year revenue and earnings guidance.

The Company expects full year sales growth in fiscal 2021 to be approximately 11% to 12% over fiscal year 2020, inclusive of a 3% headwind from the second quarter 2021 divestiture of the screws and barrels product line. Additionally, the Company is now forecasting full year 2021 earnings per diluted share in the range of $7.75 to $7.95. The increased guidance midpoint represents a strong second half of 2021 with year-over-year sales growth of 14% and earnings growth of 47%. The Company is expecting to enter fiscal 2022 with a backlog approximately 70% greater than the prior year.

Nordson management will provide additional commentary on these results and outlook during its previously announced webcast on Tuesday, August 31, 2021 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) 204-9985 or lara.mahoney@nordson.com.

Certain statements contained in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “anticipates,” “believes,” “projects,” “forecasts,” “outlook,” “guidance,” “continue,” “target,” or the negative of such terms or comparable terminology. These statements reflect management’s current expectations and involve a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, U.S. and international economic conditions; financial and market conditions; currency exchange rates and devaluations; possible acquisitions including the Company’s ability to successfully integrate acquisitions; the Company’s ability to successfully divest or dispose of businesses that are deemed not to fit with its strategic plan; the effects of changes in U.S. trade policy and trade agreements; the effects of changes in tax law; and the possible effects of events beyond our control, such as political unrest, acts of terror, natural disasters and pandemics, including the current coronavirus (COVID-19) pandemic and the other factors discussed in Item 1A (Risk Factors) in the Company’s most recently filed Annual Report on Form 10-K and in its Forms 10-Q filed with the Securities and Exchange Commission, which should be reviewed carefully. The Company undertakes no obligation to update or revise any forward-looking statement in this press release.

Nordson Corporation is an innovative precision technology company that leverages a scalable growth framework to deliver top tier growth with leading margins and returns. The Company’s direct sales model and applications expertise serves global customers through a wide variety of critical applications. Its diverse end market exposure includes consumer non-durable, medical, electronics and industrial end markets. Founded in 1954 and headquartered in Westlake, Ohio, the Company has operations and support offices in over 35 countries. Visit Nordson on the web at www.nordson.com, www.twitter.com/Nordson_Corp or www.facebook.com/nordson.

 

NORDSON CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollars in thousands except for per-share amounts)

 

 

Three months ended

 

Nine months ended

 

July 31, 2021

 

July 31, 2020

 

July 31, 2021

 

July 31, 2020

 

 

 

 

 

 

 

 

Sales

$

646,858

 

 

$

538,181

 

 

$

1,762,962

 

 

$

1,562,575

 

Cost of sales

281,587

 

 

257,373

 

 

770,032

 

 

728,975

 

Gross profit

365,271

 

 

280,808

 

 

992,930

 

 

833,600

 

Gross margin %

56.5

%

 

52.2

%

 

56.3

%

 

53.3

%

 

 

 

 

 

 

 

 

Selling & administrative expenses

176,995

 

 

168,753

 

 

529,238

 

 

521,423

 

Operating profit

188,276

 

 

112,055

 

 

463,692

 

 

312,177

 

 

 

 

 

 

 

 

 

Interest expense – net

(5,647

)

 

(6,880

)

 

(18,889

)

 

(24,047

)

Other expense – net

(2,232

)

 

(9,668

)

 

(10,736

)

 

(12,943

)

Income before income taxes

180,397

 

 

95,507

 

 

434,067

 

 

275,187

 

 

 

 

 

 

 

 

 

Income taxes

38,215

 

 

8,526

 

 

90,159

 

 

44,123

 

 

 

 

 

 

 

 

 

Net income

$

142,182

 

 

$

86,981

 

 

$

343,908

 

 

$

231,064

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

58,112

 

 

57,693

 

 

58,080

 

 

$

57,679

 

Diluted

58,735

 

 

58,427

 

 

58,714

 

 

58,404

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic earnings

$

2.45

 

 

$

1.51

 

 

$

5.92

 

 

$

4.01

 

Diluted earnings

$

2.42

 

 

$

1.49

 

 

$

5.86

 

 

$

3.96

 

 

NORDSON CORPORATION

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in thousands)

 

 

July 31, 2021

 

October 31, 2020

 

 

 

 

Cash and cash equivalents

$

174,235

 

 

$

208,293

 

Receivables – net

516,685

 

 

471,873

 

Inventories – net

303,977

 

 

277,033

 

Other current assets

50,866

 

 

43,798

 

Assets held for sale

 

 

19,615

 

Total current assets

1,045,763

 

 

1,020,612

 

 

 

 

 

Property, plant & equipment – net

358,208

 

 

358,618

 

Goodwill

1,718,565

 

 

1,713,354

 

Other assets

547,544

 

 

582,072

 

 

$

3,670,080

 

 

$

3,674,656

 

 

 

 

 

Current maturities of long-term debt and notes payable

$

31,385

 

 

$

38,043

 

Accounts payable and accrued liabilities

389,437

 

 

311,898

 

Liabilities held for sale

 

 

13,148

 

Total current liabilities

420,822

 

 

363,089

 

 

 

 

 

Long-term debt

789,731

 

 

1,067,952

 

Other liabilities

396,349

 

 

484,624

 

Total shareholders’ equity

2,063,178

 

 

1,758,991

 

 

$

3,670,080

 

 

$

3,674,656

 

 

 

 

 

 

NORDSON CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(Dollars in thousands)

 

 

Nine Months Ended

 

July 31, 2021

 

July 31, 2020

Cash flows from operating activities:

 

 

 

Net income

$

343,908

 

 

$

231,064

 

Depreciation and amortization

78,233

 

 

84,164

 

Other non-cash items

18,947

 

 

8,751

 

Changes in working capital

12,565

 

 

2,455

 

Pension and postretirement plans

(82,604

)

 

(24,657

)

Other long-term assets and liabilities

4,407

 

 

8,181

 

Net cash provided by operating activities

375,456

 

 

309,958

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Additions to property, plant and equipment

(28,073

)

 

(36,096

)

Acquisitions

 

 

(125,260

)

Other – net

5,076

 

 

(1,836

)

Net cash used in investing activities

(22,997

)

 

(163,192

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Issuance (repayment) of long-term debt

(292,290

)

 

1,740

 

Repayment of finance lease obligations

(5,111

)

 

(5,814

)

Dividends paid

(68,021

)

 

(65,737

)

Issuance of common shares

24,136

 

 

46,304

 

Purchase of treasury shares

(46,840

)

 

(51,897

)

Net cash used in financing activities

(388,126

)

 

(75,404

)

 

 

 

 

Effect of exchange rate change on cash

1,609

 

 

(743

)

Net change in cash and cash equivalents

(34,058

)

 

70,619

 

 

 

 

 

Cash and cash equivalents:

 

 

 

Beginning of period

208,293

 

 

151,164

 

End of period

$

174,235

 

 

$

221,783

 

 

 

 

 

 

NORDSON CORPORATION

SALES BY GEOGRAPHIC SEGMENT (Unaudited)

(Dollars in thousands)

 

 

Three Months Ended

 

Sales Variance

 

July 31,

2021

 

July 31,

2020

 

Organic

 

Acquisitions /

Divestitures

 

Currency

 

Total

SALES BY SEGMENT

 

 

 

 

 

 

 

 

 

 

 

Industrial precision solutions

$

345,449

 

$

288,965

 

22.4

%

 

(8.0

)%

 

5.1

%

 

19.5

%

Advanced technology solutions

301,409

 

249,216

 

17.8

%

 

0.8

%

 

2.3

%

 

20.9

%

Total sales

$

646,858

 

$

538,181

 

20.2

%

 

(3.8

)%

 

3.8

%

 

20.2

%

 

 

 

 

 

 

 

 

 

 

 

 

SALES BY GEOGRAPHIC REGION

 

 

 

 

 

 

 

 

 

 

 

United States

$

201,531

 

$

183,508

 

15.7

%

 

(5.9

)%

 

%

 

9.8

%

Americas

47,717

 

38,265

 

22.0

%

 

(2.3

)%

 

5.0

%

 

24.7

%

Europe

162,298

 

132,107

 

17.5

%

 

(2.1

)%

 

7.5

%

 

22.9

%

Japan

24,946

 

31,226

 

(13.3

)%

 

(4.8

)%

 

(2.0

)%

 

(20.1

)%

Asia Pacific

210,366

 

153,075

 

34.0

%

 

(2.3

)%

 

5.7

%

 

37.4

%

Total sales

$

646,858

 

$

538,181

 

20.2

%

 

(3.8

)%

 

3.8

%

 

20.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

Sales Variance

 

July 31,

2021

 

July 31,

2020

 

Organic

 

Acquisitions /

Divestitures

 

Currency

 

Total

SALES BY SEGMENT

 

 

 

 

 

 

 

 

 

 

 

Industrial precision solutions

$

932,640

 

$

835,038

 

13.0

%

 

(5.8

)%

 

4.5

%

 

11.7

%

Advanced technology solutions

830,322

 

727,537

 

10.0

%

 

1.8

%

 

2.3

%

 

14.1

%

Total sales

$

1,762,962

 

$

1,562,575

 

11.6

%

 

(2.2

)%

 

3.4

%

 

12.8

%

 

 

 

 

 

 

 

 

 

 

 

 

SALES BY GEOGRAPHIC REGION

 

 

 

 

 

 

 

 

 

 

 

United States

$

589,771

 

$

560,941

 

8.5

%

 

(3.4

)%

 

%

 

5.1

%

Americas

128,769

 

106,021

 

16.8

%

 

3.2

%

 

1.5

%

 

21.5

%

Europe

453,900

 

394,554

 

9.2

%

 

(1.9

)%

 

7.7

%

 

15.0

%

Japan

79,913

 

90,353

 

(9.0

)%

 

(3.6

)%

 

1.0

%

 

(11.6

)%

Asia Pacific

510,609

 

410,706

 

21.1

%

 

(1.7

)%

 

4.9

%

 

24.3

%

Total sales

$

1,762,962

 

$

1,562,575

 

11.6

%

 

(2.2

)%

 

3.4

%

 

12.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

NORDSON CORPORATION

RECONCILIATION OF NON-GAAP MEASURES – ADJUSTED OPERATING PROFIT AND EBITDA (Unaudited)

(Dollars in thousands)

 

 

Three months ended

 

Nine months ended

 

July 31, 2021

 

July 31, 2020

 

July 31, 2021

 

July 31, 2020

SALES BY SEGMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial precision solutions

$

345,449

 

 

 

 

$

288,965

 

 

 

 

$

932,640

 

 

 

 

$

835,038

 

 

 

Advanced technology solutions

301,409

 

 

 

 

249,216

 

 

 

 

830,322

 

 

 

 

727,537

 

 

 

Total sales

$

646,858

 

 

 

 

$

538,181

 

 

 

 

$

1,762,962

 

 

 

 

$

1,562,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING PROFIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial precision solutions

$

123,829

 

 

 

 

$

74,744

 

 

 

 

$

311,515

 

 

 

 

$

207,603

 

 

 

Advanced technology solutions

80,769

 

 

 

 

49,952

 

 

 

 

204,556

 

 

 

 

140,928

 

 

 

Corporate

(16,322

)

 

 

 

(12,641

)

 

 

 

(52,379

)

 

 

 

(36,354

)

 

 

Total operating profit

$

188,276

 

 

 

 

$

112,055

 

 

 

 

$

463,692

 

 

 

 

$

312,177

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING PROFIT ADJUSTMENTS (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial precision solutions

$

 

 

 

 

$

2,813

 

 

 

 

$

 

 

 

 

$

3,477

 

 

 

Advanced technology solutions

 

 

 

 

3,413

 

 

 

 

 

 

 

 

6,383

 

 

 

Corporate

 

 

 

 

1,387

 

 

 

 

 

 

 

 

1,387

 

 

 

Total adjustments

$

 

 

 

 

$

7,613

 

 

 

 

$

 

 

 

 

$

11,247

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADJUSTED OPERATING PROFIT (NON-GAAP) (2)

 

 

% of

Sales

 

 

 

% of

Sales

 

 

 

% of

Sales

 

 

 

% of

Sales

Industrial precision solutions

$

123,829

 

 

36

%

 

$

77,557

 

 

27

%

 

$

311,515

 

 

33

%

 

$

211,080

 

 

25

%

Advanced technology solutions

80,769

 

 

27

%

 

53,365

 

 

21

%

 

204,556

 

 

25

%

 

147,311

 

 

20

%

Corporate

(16,322

)

 

 

 

(11,254

)

 

 

 

(52,379

)

 

 

 

(34,967

)

 

 

Total operating profit – adjusted

$

188,276

 

 

29

%

 

$

119,668

 

 

22

%

 

$

463,692

 

 

26

%

 

$

323,424

 

 

21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEPRECIATION & AMORTIZATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial precision solutions

$

5,964

 

 

 

 

$

9,865

 

 

 

 

$

19,414

 

 

 

 

$

28,990

 

 

 

Advanced technology solutions

18,474

 

 

 

 

16,266

 

 

 

 

51,439

 

 

 

 

47,832

 

 

 

Corporate

2,460

 

 

 

 

2,369

 

 

 

 

7,380

 

 

 

 

7,342

 

 

 

Total depreciation & amortization

$

26,898

 

 

 

 

$

28,500

 

 

 

 

$

78,233

 

 

 

 

$

84,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA (NON-GAAP) (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial precision solutions

$

129,793

 

 

38

%

 

$

87,422

 

 

30

%

 

$

330,929

 

 

35

%

 

$

240,070

 

 

29

%

Advanced technology solutions

99,243

 

 

33

%

 

69,631

 

 

28

%

 

255,995

 

 

31

%

 

195,143

 

 

27

%

Corporate

(13,862

)

 

 

 

(8,885

)

 

 

 

(44,999

)

 

 

 

(27,625

)

 

 

Total EBITDA

$

215,174

 

 

33

%

 

$

148,168

 

 

28

%

 

$

541,925

 

 

31

%

 

$

407,588

 

 

26

%

(1)

Represents costs and adjustments related to cost structure simplification actions, and charges associated with our 2020 acquisition.

(2)

Adjusted operating profit and EBITDA are non-GAAP measures used by management to evaluate the Company’s ongoing operations. Adjusted operating profit is defined as operating profit plus certain adjustments, such as cost structure simplification actions. EBITDA is defined as adjusted operating profit plus depreciation and amortization.

 
 

NORDSON CORPORATION

RECONCILIATION OF NON-GAAP MEASURES – PROFITABILITY (Unaudited)

(Dollars in thousands)

 

 

Three Months Ended

 

Nine Months Ended

 

July 31, 2021

 

July 31, 2020

 

July 31, 2021

 

July 31, 2020

GAAP AS REPORTED

 

 

 

 

 

 

 

Operating profit

$

188,276

 

 

$

112,055

 

 

$

463,692

 

 

$

312,177

 

Other / interest expense – net

(7,879

)

 

(16,548

)

 

 

(29,625

)

 

 

(36,990

)

Net income

142,182

 

 

86,981

 

 

 

343,908

 

 

 

231,064

 

Diluted earnings per share

$

2.42

 

 

$

1.49

 

 

$

5.86

 

 

$

3.96

 

 

 

 

 

 

 

 

 

Shares outstanding – diluted

58,735

 

 

58,427

 

 

 

58,714

 

 

 

58,404

 

 

 

 

 

 

 

 

 

OPERATING PROFIT ADJUSTMENTS

 

 

 

 

 

 

 

Inventory step-up amortization

$

 

 

$

1,229

 

 

$

 

 

$

1,229

 

Severance and other

$

 

 

$

6,384

 

 

$

 

 

$

10,018

 

 

 

 

 

 

 

 

 

NON-OPERATING EXPENSE ADJUSTMENTS

 

 

 

 

 

 

 

Pension settlement loss

$

 

 

$

2,508

 

 

$

 

 

$

2,508

 

 

 

 

 

 

 

 

 

Total adjustments

$

 

 

$

10,121

 

 

$

 

 

$

13,755

 

 

 

 

 

 

 

 

 

Adjustments net of tax

$

 

 

$

7,966

 

 

$

 

 

$

10,825

 

Other discrete tax items

$

 

 

$

(11,816

)

 

$

 

 

$

(14,491

)

EPS effect of adjustments and other discrete tax items

$

 

 

$

(0.07

)

 

$

 

 

$

(0.06

)

 

 

 

 

 

 

 

 

NON-GAAP MEASURES-ADJUSTED PROFITABILITY

 

 

 

 

 

 

 

Operating profit (1)

$

188,276

 

 

$

119,668

 

 

$

463,692

 

 

$

323,424

 

Operating profit % of sales

29.1

%

 

22.2

%

 

 

26.3

%

 

 

20.7

%

Net income (2)

$

142,182

 

 

$

83,131

 

 

$

343,908

 

 

$

227,398

 

Diluted earnings per share (3)

$

2.42

 

 

$

1.42

 

 

$

5.86

 

 

$

3.89

 

(1)

Adjusted operating profit is defined as operating profit plus certain adjustments such as cost structure simplification actions.

Adjusted operating profit as a percentage of sales is defined as adjusted operating profit divided by sales.

(2)

Adjusted net income is defined as net income plus tax effected adjustments and other discrete tax items.

(3)

Adjusted earnings per share is defined as GAAP EPS adjusted for tax effected adjustments and other discrete tax items.

Management uses these non-GAAP measures internally to make strategic decisions, forecast future results, and evaluate the Company’s current performance. Given management’s use of these non-GAAP measures, the Company believes these measures are important to investors in understanding the Company’s current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in the Company’s core business across different time periods. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures to other companies’ non-GAAP financial measures, even if they have similar names. Amounts may not add due to rounding.