September 30, 2020

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Nordson Corporation Reports Fiscal Year 2020 Third Quarter Results
  • Sales were $538 million, a 4% year-over-year decrease
  • Operating profit was $112 million, or 21% of sales
  • EBITDA was $148 million, or 28% of sales
  • Earnings were $1.49 per diluted share
  • Adjusted earnings were $1.42 per diluted share, a 12% decrease from prior year

WESTLAKE, Ohio–(BUSINESS WIRE)–Nordson Corporation (Nasdaq: NDSN) today reported results for the third quarter of fiscal year 2020. For the quarter ended July 31, 2020, sales were $538 million, a 4% decrease compared to the prior year’s third quarter sales of $560 million. The diversity of our end market exposure and broad global customer base contributed to the sales performance in the quarter. The sales decrease was primarily organic, as the benefits from the recent acquisition of Fluortek were offset by unfavorable currency impacts.

Operating profit in the quarter was $112 million, or 21% of sales. Excluding non-recurring charges associated with cost structure simplification actions and the amortization of the step-up in acquired inventory, adjusted operating profit was $120 million, a 9% decrease compared to the prior year’s adjusted operating profit. EBITDA, which is defined as adjusted operating profit plus depreciation and amortization, in the quarter totaled $148 million, or 28% of sales.

Net income was $87 million, and earnings per diluted share were $1.49. Adjusted earnings, which excludes non-recurring charges, discrete tax benefits of $12 million and a non-cash, non-operating pension settlement charge of $3 million, totaled $83 million, or $1.42 per share.

“Throughout the quarter, our team remained focused on protecting the health and safety of our employees and responding to the needs of our customers,” commented Sundaram Nagarajan, president and chief executive officer. “At the same time, we made solid progress on our long-term strategic priorities by acquiring Fluortek, a high-quality medical company, and leveraging the next generation of the Nordson Business System – the NBS Next growth framework – to prioritize investments that will drive profitable growth and identify opportunities to simplify our cost structure.”

Third Quarter Segment Results

Industrial Precision Solutions sales of $289 million decreased approximately 6% compared to the prior year’s third quarter. Stable performance of those product lines serving consumer non-durable end markets was offset by weakness in sales of product lines serving industrial end markets. Operating profit, which included $3 million in structural cost reduction actions, totaled $75 million. Adjusted operating profit was $78 million, or 27% of sales, a decrease of 13% from the prior year adjusted operating profit.

Advanced Technology Solutions sales of $249 million decreased approximately 2% compared to the prior year’s third quarter. The Fluortek acquisition increased sales approximately 2%, which was more than offset by organic volume declines and unfavorable currency impacts. Sales volume increases in test and inspection product lines serving electronics end markets and stable demand in medical product lines were offset by weakness in fluid dispense product lines serving industrial end markets. Operating profit, which included $3 million of structural cost reduction actions and the amortization of the step-up in acquired inventory, totaled $50 million. Adjusted operating profit was $53 million, or 21% of sales, which was in line with prior year profits.

Outlook

“Given the challenging macro-economic environment, I am very pleased with our performance in the quarter and the progress we are making in aligning the organization,” Nagarajan stated. “We will continue to invest in these uncertain times and remain optimistic about the potential of the highly diversified and differentiated Nordson portfolio.”

While the short-term environment remains difficult to predict, we expect fiscal fourth quarter revenue to be commensurate with to slightly better than fiscal third quarter revenue based on the current order entry trends and order backlog. Weekly order entry rates have improved from the lower levels experienced during the third quarter. Entering the fourth quarter, trailing four-week order entry is 93% of prior year levels and backlog totaled $423 million. Operating profit is forecasted to improve modestly in the fiscal fourth quarter compared to the third quarter, as cost reduction initiatives begin to deliver benefits.

Nordson management will provide additional commentary on these results and outlook during a conference call Thursday, August 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) 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 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 on its Form 10-Q 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 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.

Attachment #1

NORDSON CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands except for per-share amounts)

THIRD QUARTER PERIOD
Period Ended July 31, 2020
(Unaudited)
CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

Nine Months Ended

July 31, 2020

July 31, 2019

July 31, 2020

July 31, 2019

Sales

$

538,181

$

559,746

$

1,562,575

$

1,608,775

Cost of sales

257,373

257,123

728,975

735,647

Gross margin

280,808

302,623

833,600

873,128

Gross profit %

52.2

%

54.1

%

53.3

%

54.3

%

Selling & administrative expenses

168,753

172,347

521,423

529,675

Operating profit

112,055

130,276

312,177

343,453

Interest expense – net

(6,880

)

(10,989

)

(24,047

)

(35,085

)

Other income (expense) – net

(9,668

)

210

(12,943

)

(4,546

)

Income before income taxes

95,507

119,497

275,187

303,822

Income taxes

8,526

25,569

44,123

69,404

Net Income

$

86,981

$

93,928

$

231,064

$

234,418

Weighted-average common shares outstanding:
Basic

57,693

57,395

57,679

57,463

Diluted

58,427

58,117

58,404

58,183

Earnings per share:
Basic

$

1.51

$

1.64

$

4.01

$

4.08

Diluted

$

1.49

$

1.62

$

3.96

$

4.03

Attachment #2

NORDSON CORPORATION

CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

THIRD QUARTER PERIOD
Period Ended July 31, 2020
(Unaudited)
CONSOLIDATED BALANCE SHEET

July 31, 2020

October 31, 2019

Cash and cash equivalents

$

221,783

$

151,164

Receivables – net

498,283

530,765

Inventories – net

310,557

283,399

Other current assets

50,075

45,867

Total current assets

1,080,698

1,011,195

Property, plant & equipment – net

414,982

398,895

Goodwill

1,701,914

1,614,739

Other assets

622,364

491,618

$

3,819,958

$

3,516,447

Current maturities of long-term debt

$

43,598

$

168,738

Accounts payable and accrued liabilities

303,620

308,888

Total current liabilities

347,218

477,626

Long-term debt

1,221,082

1,075,404

Other liabilities

481,746

382,372

Total shareholders' equity

1,769,912

1,581,045

$

3,819,958

$

3,516,447

NORDSON CORPORATION

CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

THIRD QUARTER PERIOD
Period Ended July 31, 2020
(Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

July 31, 2020

July 31, 2019

Cash flows from operating activities:
Net Income

$

231,064

$

234,418

Depreciation and amortization

84,164

83,331

Other non-cash items

8,751

14,699

Changes in working capital

(14,021

)

(96,017

)

Net cash provided by operating activities

309,958

236,431

Cash flows from investing activities:
Additions to property, plant and equipment

(36,096

)

(46,002

)

Acquisitions

(125,260

)

(12,110

)

Other – net

(1,836

)

193

Net cash used in investing activities

(163,192

)

(57,919

)

Cash flows from financing activities:
Issuance (repayment) of long-term debt

1,740

36,009

Repayment of finance lease obligations

(5,814

)

(4,442

)

Dividends paid

(65,737

)

(60,325

)

Issuance of common shares

46,304

17,275

Purchase of treasury shares

(51,897

)

(118,124

)

Net cash used in financing activities

(75,404

)

(129,607

)

Effective of exchange rate change on cash

(743

)

3,262

Net change in cash and cash equivalents

70,619

52,167

Cash and cash equivalents:
Beginning of period

151,164

95,678

End of period

$

221,783

$

147,845

Attachment #3

NORDSON CORPORATION

SALES BY SEGMENT AND GEOGRAPHIC REGION

(Dollars in thousands)

THIRD QUARTER PERIOD
Period Ended July 31, 2020
(Unaudited)

Three Months Ended

Sales Variance

SALES BY SEGMENT

July 31, 2020

July 31, 2019

Organic

Acquisition

Currency

Total

Industrial precision solutions

$

288,965

$

306,648

-4.5

%

-1.3

%

-5.8

%

Advanced technology solutions

249,216

253,098

-3.3

%

1.8

%

-1.5

%

Total sales

$

538,181

$

559,746

-4.0

%

0.8

%

-0.7

%

-3.9

%

Three Months Ended

Sales Variance

SALES BY GEOGRAPHIC REGION

July 31, 2020

July 31, 2019

Organic

Acquisition

Currency

Total

United States

$

183,508

$

190,460

-4.4

%

0.8

%

-3.6

%

Americas

38,265

47,040

-17.5

%

4.2

%

-5.4

%

-18.7

%

Europe

132,107

143,449

-7.6

%

0.3

%

-0.6

%

-7.9

%

Japan

31,226

30,488

0.6

%

0.4

%

1.4

%

2.4

%

Asia Pacific

153,075

148,309

3.7

%

0.3

%

-0.8

%

3.2

%

Total sales

$

538,181

$

559,746

-4.0

%

0.8

%

-0.7

%

-3.9

%

Nine Months Ended

Sales Variance

SALES BY SEGMENT

July 31, 2020

July 31, 2019

Organic

Acquisition

Currency

Total

Industrial precision solutions

$

835,038

$

871,925

-2.8

%

-1.4

%

-4.2

%

Advanced technology solutions

727,537

736,850

-2.1

%

1.1

%

-0.3

%

-1.3

%

Total sales

$

1,562,575

$

1,608,775

-2.5

%

0.5

%

-0.9

%

-2.9

%

Nine Months Ended

Sales Variance

SALES BY GEOGRAPHIC REGION

July 31, 2020

July 31, 2019

Organic

Acquisition

Currency

Total

United States

$

560,941

$

551,510

1.2

%

0.5

%

1.7

%

Americas

106,021

123,159

-12.0

%

1.8

%

-3.7

%

-13.9

%

Europe

394,554

425,650

-6.0

%

0.5

%

-1.8

%

-7.3

%

Japan

90,353

89,566

-1.1

%

0.3

%

1.7

%

0.9

%

Asia Pacific

410,706

418,890

-1.3

%

0.3

%

-1.0

%

-2.0

%

Total sales

$

1,562,575

$

1,608,775

-2.5

%

0.5

%

-0.9

%

-2.9

%

Attachment #4

NORDSON CORPORATION

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

(Dollars in thousands)

THIRD QUARTER PERIOD
Period Ended July 31, 2020
(Unaudited)

Three Months Ended

Nine Months Ended

July 31, 2020

July 31, 2019

July 31, 2020

July 31, 2019

SALES BY SEGMENT
Industrial precision solutions

$

288,965

$

306,648

$

835,038

$

871,925

Advanced technology solutions

249,216

253,098

727,537

736,850

Total sales

$

538,181

$

559,746

$

1,562,575

$

1,608,775

OPERATING PROFIT
Industrial precision solutions

$

74,744

$

88,811

$

207,603

$

229,702

Advanced technology solutions

49,952

53,562

140,928

150,882

Corporate

(12,641

)

(12,097

)

(36,354

)

(37,131

)

Total operating profit

$

112,055

$

130,276

$

312,177

$

343,453

OPERATING PROFIT ADJUSTMENTS (1)
Industrial precision solutions

$

2,813

$

543

$

3,477

$

1,809

Advanced technology solutions

3,413

835

6,383

835

Corporate

1,387

1,387

192

Total adjustments

$

7,613

$

1,378

$

11,247

$

2,836

ADJUSTED OPERATING PROFIT (NON-GAAP)

% of Sales

% of Sales

% of Sales

% of Sales

Industrial precision solutions

$

77,557

27

%

$

89,354

29

%

$

211,080

25

%

$

231,511

27

%

Advanced technology solutions

53,365

21

%

54,397

21

%

147,311

20

%

151,717

21

%

Corporate

(11,254

)

(12,097

)

(34,967

)

(36,939

)

Total operating profit – adjusted

$

119,668

22

%

$

131,654

24

%

$

323,424

21

%

$

346,289

22

%

DEPRECIATION & AMORTIZATION
Industrial precision solutions

$

8,588

$

8,699

$

25,732

$

25,671

Advanced technology solutions

17,738

17,581

51,980

51,785

Corporate

2,174

1,563

6,452

5,875

Total depreciation & amortization

$

28,500

$

27,843

$

84,164

$

83,331

EBITDA (NON-GAAP) % of Sales % of Sales % of Sales % of Sales
Industrial precision solutions

$

86,145

30

%

$

98,053

32

%

$

236,812

28

%

$

257,182

29

%

Advanced technology solutions

71,103

29

%

71,978

28

%

199,291

27

%

203,502

28

%

Corporate

(9,080

)

(10,534

)

(28,515

)

(31,064

)

Total EBITDA

$

148,168

28

%

$

159,497

28

%

$

407,588

26

%

$

429,620

27

%

(1) Represents charges associated with our 2020 and 2019 acquisitions, and costs and adjustments related to cost structure simplification actions.
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, and non-cash inventory charges related to acquisitions. EBITDA is defined as adjusted operating profit plus depreciation and amortization.

Attachment #5

NORDSON CORPORATION

RECONCILIATION OF NON-GAAP MEASURES – PROFITABILITY

(Dollars in thousands)

THIRD QUARTER PERIOD
Period Ended July 31, 2020
(Unaudited)

Three Months Ended

Nine Months Ended

GAAP AS REPORTED

July 31, 2020

July 31, 2019

July 31, 2020

July 31, 2019

Operating profit

$

112,055

$

130,276

$

312,177

$

343,453

Other / interest income (expense) – net

(16,548

)

(10,779

)

(36,990

)

(39,631

)

Net income

86,981

93,928

231,064

234,418

EPS diluted

$

1.49

$

1.62

$

3.96

$

4.03

Shares outstanding – diluted

58,427

58,117

58,404

58,183

OPERATING PROFIT ADJUSTMENTS
Inventory step-up amortization

$

1,229

$

188

$

1,229

$

188

Severance and other

6,384

1,190

10,018

2,648

NON-OPERATING EXPENSE ADJUSTMENTS
Pension settlement loss

$

2,508

$

$

2,508

$

Total adjustments

$

10,121

$

1,378

$

13,755

$

2,836

Adjustments net of tax

$

7,966

$

1,071

$

10,825

$

2,195

Other discrete tax items

$

(11,816

)

$

(1,068

)

$

(14,491

)

$

740

EPS effect of adjustments and other discrete tax items

$

(0.07

)

$

0.00

$

(0.06

)

$

0.05

NON-GAAP MEASURES – ADJUSTED PROFITABILITY
Operating profit

$

119,668

$

131,654

$

323,424

$

346,289

Operating profit % of sales

22.2

%

23.5

%

20.7

%

21.5

%

Net income

$

83,131

$

93,931

$

227,398

$

237,353

EPS diluted

$

1.42

$

1.62

$

3.89

$

4.08

Adjusted operating profit is defined as operating profit plus certain adjustments such as cost structure simplification actions and non-cash inventory charges related to acquisitions. Adjusted operating profit as a percentage of sales is defined as adjusted operating profit divided by sales.
Adjusted net income is defined as net income plus tax effected adjustments and other discrete tax items.
Adjusted EPS is defined as GAAP EPS adjusted for tax effected adjustments and other discrete tax items.
Management does not consider the effects of the adjustments identified above in evaluating the core operational activities of the Company. 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.

Contacts

Lara Mahoney

Vice President,

Investor Relations & Corporate Communications

440.204.9985

Lara.Mahoney@nordson.com

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