BusinessWire

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