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Nordson Corporation Reports Fiscal Year 2020 Second Quarter Results
[May 20, 2020]

Nordson Corporation Reports Fiscal Year 2020 Second Quarter Results


Nordson Corporation (Nasdaq: NDSN) today reported results for the second quarter of fiscal year 2020. For the quarter ended April 30, 2020, sales were $529 million, a 4 percent decrease compared to the prior year's second quarter sales of $551 million. This change in second quarter 2020 sales included a decrease in organic volume of approximately 3 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 second quarter of approximately 1 percent.

In the second quarter of fiscal year 2020, reported operating profit was $125 million, net income was $92 million, and GAAP diluted earnings per share were $1.58. Prior year's second quarter sales, operating profit, net income and GAAP diluted earnings per share were $551 million, $129 million, $92 million and $1.58, respectively. Adjusted diluted earnings per share was $1.58 in the second quarter of fiscal year 2020 compared to $1.54 in the prior year's second quarter. 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.

Commenting on the company's fiscal second quarter 2020, Sundaram Nagarajan, Nordson President and Chief Executive Officer, said, "In the second quarter, our team focused on two critical priorities - protecting the health and safety of our employees and responding to the needs of our customers. I am so thankful for their incredible commitment. One of the core strengths of Nordson is the diversity of the end markets and geographies we serve, and this diversity clearly contributed to our performance in the quarter."

Second Quarter Segment Results

On March 30, 2020, the company announced a strategic business realignment that will better position Nordson for its next chapter of profitable growth. The company has reorganized into two segments: Industrial Precision Solutions (IPS) and Advanced Technology Solutions (ATS). The new IPS segment combines the company's previous Adhesive Dispensing Systems and Industrial Coating Systems segments.

Industrial Precision Solutions sales decreased approximately 6 percent compared to the prior year's second quarter, inclusive of a decrease in organic volume of approximately 4 percent and a decrease of 2 percent related to the unfavorable effects of currency translation as compared to the prior year. Relatively strong sales performance of those product lines serving consumer non-durable end markets was offset by weakness in sales of product lines serving industrial end markets. Reported operating margin in the segment was 27 percent in the quarter, as compared to 28 percent in the prior year's second quarter. As compared to the prior year, the current year's second quarter operating margin was negatively impacted by lower sales volume.

Advanced Technology Solutions sales decreased approximately 1 percent compared to the prior year's second quarter, inclusive of a decrease in organic volume of 1 percent, an increase of less than 1 percent related to the first year effect of acquisitions, and a decrease of 1 percent related to the unfavorable effects of currency translation as compared to the prior year. The second quarter's acquisitive growth includes the fiscal 2019 acquisition of Optical Control GmbH. Sales volume increases in product lines serving medical end markets and fluid dispense product lines serving electronics end markets were offset by weakness in test and inspection product lines and fluid dispense product lines serving industrial end markets. Reported operating margin in the segment was 24 percent in the current quarter, as compared to 23 percent in the prior year's second quarter. The improvement in fiscal 2020 second quarter operating margin was primarily driven by product mix.

Detailed results by operating segment and geography are included in the attached financial exhibits.

At the end of the second quarter, the company had a cash balance of $306 million, and the full $850 million available on its revolving credit facility. The company returned value to shareholders by investing $38 million to repurchase approximately 300 thousand shares and paying $22 million in dividends during the quarter.

Outlook

Backlog for the quarter ended April 30, 2020, was approximately $456 million, an increase of 6 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 April 30, 2020 exchange rates.

Due to the uncertainties of the duration and impact of the COVID-19 pandemic, the company is suspending its previously announced annual guidance for fiscal 2020.

Nagarajan said, "Though our performance through the first half of the year has been solid considering the impact of COVID-19 on the global end markets we serve, and we have a strong backlog heading into the second half of the year, we have seen a softening in order trends over the last six weeks. This is a dynamic environment, making it difficult to accurately forecast the impact this pandemic will have on our business for the remainder of the fiscal year. We have a solid foundation, fortified by the diversity of our business and our strong balance sheet. We will stay focused on the health and safety of our employees and the success of our customers, and we will continue to progress our long-term strategic priorities of accelerating organic growth, diversifying through acquisition, leveraging the Nordson Business System and focusing on talent development."

Nordson management will provide additional commentary on these results and outlook during a conference call Thursday, May 21, 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.

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)

 
SECOND QUARTER PERIOD
Period Ended April 30, 2020
(Unaudited)
 
CONSOLIDATED STATEMENT OF INCOME
Second Quarter Year-to-Date

 

 

2020

 

2019

 

2020

 

2019

 
Sales

$529,478

$ 551,119

$ 1,024,394

$ 1,049,029

Cost of sales

239,880

249,590

471,602

478,524

Selling & administrative expenses

164,569

172,633

352,670

357,328

 
Operating profit

125,029

128,896

200,122

213,177

 
Interest expense - net

(8,015)

(12,047)

(17,167)

(24,096)

Other expense - net

(429)

(568)

(3,275)

(4,757)

 
Income before income taxes

116,585

116,281

179,680

184,324

Income taxes

24,506

24,358

35,597

43,834

 
Net Income

$ 92,079

$ 91,923

$ 144,083

$ 140,490

 
 
 
 
Return on sales

17%

17%

14%

13%

Return on average shareholders' equity

22%

26%

18%

20%

 
 
 
 
 
Average common shares outstanding (000's)

57,677

57,288

57,672

57,498

Average common shares and

common share equivalents (000's)

58,260

58,056

58,392

58,217

 
Per share:
 
Basic earnings

$ 1.60

$ 1.60

$ 2.50

$ 2.44

Diluted earnings

$ 1.58

$ 1.58

$ 2.47

$ 2.41

 
Dividends paid

$ .38

$ .35

$ .76

$ .70

 
Total dividends

$ 21,963

$ 20,029

$ 43,878

$ 40,239

 
 

NORDSON CORPORATION
FINANCIAL HIGHLIGHTS
(Dollars in thousands except for per-share amounts)

 
 
CONSOLIDATED BALANCE SHEET
 

April 30
2020

October 31
2019

 
Cash and cash equivalents

$

306,255

$

151,164

Receivables - net

 

474,913

 

530,765

Inventories - net

 

312,118

 

283,399

Other current assets

 

49,990

 

45,867

Total current assets

 

1,143,276

 

1,011,195

 
Property, plant & equipment - net

 

400,103

 

398,895

Other assets

 

2,199,525

 

2,106,357

$

3,742,904

$

3,516,447

 
Notes payable and debt due within one year

$

43,598

$

168,738

Accounts payable and accrued liabilities

 

316,591

 

308,888

Total current liabilities

 

360,189

 

477,626

 
Long-term debt

 

1,237,225

 

1,075,404

Other liabilities

 

492,996

 

382,372

Total shareholders' equity

 

1,652,494

 

1,581,045

$

3,742,904

$

3,516,447

 
 
Other information:
 
Employees

7,558

7,579

 
'Common shares outstanding (000's)

57,567

57,600

 

NORDSON CORPORATION
FINANCIAL HIGHLIGHTS
(Dollars in thousands)

SECOND QUARTER PERIOD
Period Ended April 30, 2020
(Unaudited)

 

 

Second Quarter

 

% Growth over 2019

 

 

Year-to-Date

% Growth over 2019

SALES BY BUSINESS SEGMENT

2020

 

2019

 

Volume

 

Currency

 

Total

 

 

2020

 

2019

 

Volume

 

Currency

 

Total

 
 
Industrial precision solutions

$

282,274

$

301,824

-4.5%

-2.0%

-6.5%

$

546,073

$

565,277

-1.9%

-1.5%

-3.4%

Advanced technology solutions

 

247,204

 

249,295

-0.2%

-0.6%

-0.8%

 

478,321

 

483,752

-0.6%

-0.5%

-1.1%

 
Total sales by business segment

$

529,478

$

551,119

-2.5%

-1.4%

-3.9%

$

1,024,394

$

1,049,029

-1.3%

-1.0%

-2.3%

 
 
 

Second Quarter

 

 

 

 

 

 

 

 

Year-to-Date

OPERATING PROFIT BY BUSINESS SEGMENT

2020

 

2019

 

 

 

 

 

 

 

 

2020

 

2019

 
Industrial precision solutions

$

76,454

$

85,481

$

132,858

$

140,890

Advanced technology solutions

 

58,689

 

56,535

 

90,976

 

97,320

Corporate

 

(10,114)

 

(13,120)

 

(23,712)

 

(25,033)

 
Total operating profit by business segment

$

125,029

$

128,896

$

200,122

$

213,177

 
 
 

Second Quarter

% Growth over 2019

 

 

Year-to-Date

% Growth over 2019

SALES BY GEOGRAPHIC REGION

2020

 

2019

 

Volume

 

Currency

 

Total

 

 

2020

 

2019

 

Volume

 

Currency

 

Total

 
United States

$

188,933

$

190,699

-0.9%

-

-0.9%

$

377,433

$

361,050

4.5%

-

4.5%

Americas

 

36,673

 

43,682

-11.6%

-4.4%

-16.0%

 

67,756

 

76,119

-8.3%

-2.7%

-11.0%

Europe

 

136,056

 

149,526

-6.1%

-2.9%

-9.0%

 

262,447

 

282,200

-4.6%

-2.4%

-7.0%

Japan

 

31,575

 

30,031

2.8%

2.3%

5.1%

 

59,127

 

59,078

-1.8%

1.9%

0.1%

Asia Pacific

 

136,241

 

137,181

0.9%

-1.6%

-0.7%

 

257,631

 

270,582

-3.7%

-1.1%

-4.8%

 
Total Sales by Geographic Region

$

529,478

$

551,119

-2.5%

-1.4%

-3.9%

$

1,024,394

$

1,049,029

-1.3%

-1.0%

-2.3%

 

NORDSON CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Dollars in thousands except for per-share amounts)

 
SECOND QUARTER PERIOD
Period Ended April 30, 2020
(Unaudited)
 
 
EBITDA Second Quarter Year-to-Date

2020

 

2019

 

2020

 

2019

 
Net income

$

92,079

 

$

91,923

 

$

144,083

 

$

140,490

 

Adjustments:
Depreciation and amortization expense

 

27,046

 

 

27,740

 

 

55,664

 

 

55,488

 

Interest expense, net

 

8,015

 

 

12,047

 

 

17,167

 

 

24,096

 

Income taxes

 

24,506

 

 

24,358

 

 

35,597

 

 

43,834

 

EBITDA

$

151,646

 

$

156,068

 

$

252,511

 

$

263,908

 

 
EBITDA per diluted share

$

2.60

 

$

2.69

 

$

4.32

 

$

4.53

 

 
 
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.
 
 
Second Quarter Year-to-Date

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 
Diluted EPS as reported (U.S. GAAP)

$

1.58

 

$

1.58

 

$

2.47

 

$

2.41

 

 
Severance and restructuring

 

-

 

 

-

 

 

0.05

 

 

0.02

 

U.S. Tax Reform discrete item

 

-

 

 

-

 

 

-

 

 

0.08

 

Other discrete tax items

 

-

 

 

(0.04

)

 

(0.05

)

 

(0.05

)

 
Diluted EPS as adjusted (Non-GAAP)

$

1.58

 

$

1.54

 

$

2.47

 

$

2.46

 

 
 
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 Second Quarter Year-to-Date

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 
Net income

$

92,079

 

$

91,923

 

$

144,083

 

$

140,490

 

Depreciation and amortization

 

27,046

 

 

27,740

 

 

55,664

 

 

55,488

 

Other non-cash charges

 

(4,663

)

 

4,157

 

 

2,504

 

 

10,497

 

Changes in operating assets and liabilities

 

(12,558

)

 

(18,755

)

 

15,928

 

 

(44,563

)

Net cash provided by operating activities

 

101,904

 

 

105,065

 

 

218,179

 

 

161,912

 

 
Additions to property, plant and equipment

 

(11,955

)

 

(12,482

)

 

(25,835

)

 

(26,603

)

Proceeds from the sale of property, plant and equipment

 

39

 

 

724

 

 

104

 

 

984

 

 
Free cash flow before dividends

$

89,988

 

$

93,307

 

$

192,448

 

$

136,293

 

 
 
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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