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

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Second Quarter:

  • Quarterly sales, operating profit, and earnings per share were all company records

  • Sales were $590 million, an 11% increase over prior year

  • Operating profit was $166 million, a 33% increase over prior year

  • Earnings were $2.12 per diluted share, a 34% increase over prior year

Guidance:

  • Increased prior fiscal 2021 full year earnings guidance range by approximately 13% to $7.20 to $7.50 per diluted share

Nordson Corporation (Nasdaq: NDSN) today reported results for the fiscal second quarter ended April 30, 2021. Sales were a quarterly company record of $590 million, an 11% increase compared to the prior year’s second quarter sales of $529 million. Robust growth in electronics and consumer non-durable end markets, as well as strengthening medical and industrial end markets, were the primary drivers of this performance. The change in second quarter 2021 sales included an organic volume increase of 10%, a favorable effect from currency translation of 4%, offset by the net unfavorable impact of acquisitions and divestitures. When excluding the divested screws and barrels product line in the prior year for comparability purposes, sales growth would have been 15% in the current year quarter.

Operating profit in the quarter was $166 million, or 28% of sales, compared to prior year adjusted operating profit of $125 million. This 33% increase in adjusted operating profit was driven by sales volume leverage, improved sales mix, and benefits from structural cost reduction actions taken in fiscal year 2020 and the recent screws and barrels product line divestiture. EBITDA for the second quarter of 2021 totaled $192 million, or 33% of sales.

Net income was $124 million, a 35% increase from the prior year adjusted earnings of $92 million. Second quarter 2021 diluted earnings per share were $2.12, a 34% increase over the prior year diluted earnings per share of $1.58.

"Broader end market demand accelerated in the quarter more quickly and to a higher level than we previously anticipated. I am very pleased with the dedication and agility of our teams as we delivered record revenue and operating results in the quarter," said Nordson President and Chief Executive Officer Sundaram Nagarajan. "Based on our backlog and order trends, we expect this strength to continue and are raising our sales and earnings guidance for the full year fiscal 2021. Our priorities remain consistent – protect the health and safety of our employees, fully participate in the market recovery by meeting the needs of our customers, and deploy the Ascend Strategy. With this clear focus, we will continue to progress toward our long-term objectives of delivering top-tier growth with leading margins and returns."

Second Quarter Segment Results

Industrial Precision Solutions sales of $299 million increased approximately 6% compared to the prior year second quarter, driven by an 8% organic increase and a favorable currency impact of 5%, offset 7% by a divestiture. The organic sales increase was driven by strong global demand in consumer non-durable and industrial end markets. When excluding the divested screws and barrels product line in the prior year for comparability purposes, sales growth would have been 13% in the current year quarter. Operating profit was $104 million, or 35% of sales, an increase of 36% compared to the prior year second quarter.

Advanced Technology Solutions sales of $291 million increased approximately 18% compared to the prior year second quarter. Organic sales increased 13% while favorable currency impacts added 3% and acquisitions increased sales by approximately 2%. This strong sales growth was driven by test and inspection product lines for electronics end markets and fluid management product lines for medical and industrial end markets. Operating profit totaled $77 million, or 26% of sales, an increase of 30% compared to the prior year second quarter.

"The strong incremental margins and record quarterly profitability reflects the execution of the NBS Next growth framework, including favorable mix improvement with the divestiture of the screws and barrels product line," said Nordson Chief Financial Officer Joseph Kelley. "The continued deployment and execution of the overall Ascend Strategy is designed to deliver sales growth with attractive incremental profit margins."

Outlook

Order entry trends consistently improved throughout the second quarter of fiscal year 2021 across most of our product lines, and remain strong entering the third quarter. Based on the current backlog, order entry trends, and the correlation to shipment timing, we expect the fiscal 2021 full year sales growth to be approximately 8% to 10% over fiscal year 2020, inclusive of a 3% headwind from the second quarter divestiture of the screws and barrels product line. Additionally, we are forecasting full year 2021 earnings per diluted share in the range of $7.20 to $7.50, representing 31% to 37% growth over the prior year adjusted earnings.

Nordson management will provide additional commentary on these results and outlook during its previously announced webcast on Tuesday, May 25, 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 a global designer and manufacturer of innovative precision technologies for critical customer applications in consumer non-durable, medical, electronics and industrial end markets. The Company’s products are supported by application expertise and direct global sales and service. 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

Six months ended

April 30, 2021

April 30, 2020

April 30, 2021

April 30, 2020

Sales

$

589,538

$

529,478

$

1,116,104

$

1,024,394

Cost of sales

251,839

239,880

488,445

471,602

Gross profit

337,699

289,598

627,659

552,792

Gross margin %

57.3

%

54.7

%

56.2

%

54.0

%

Selling & administrative expenses

171,308

164,569

352,243

352,670

Operating profit

166,391

125,029

275,416

200,122

Interest expense - net

(6,690

)

(8,015

)

(13,242

)

(17,167

)

Other expense - net

(3,843

)

(429

)

(8,504

)

(3,275

)

Income before income taxes

155,858

116,585

253,670

179,680

Income taxes

31,714

24,506

51,944

35,597

Net income

$

124,144

$

92,079

$

201,726

$

144,083

Weighted-average common shares outstanding:

Basic

58,068

57,677

58,063

$

57,672

Diluted

58,652

58,260

58,703

58,392

Earnings per share:

Basic earnings

$

2.14

$

1.60

$

3.47

$

2.50

Diluted earnings

$

2.12

$

1.58

$

3.44

$

2.47

NORDSON CORPORATION

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in thousands)

April 30, 2021

October 31, 2020

Cash and cash equivalents

$

133,320

$

208,293

Receivables - net

470,622

471,873

Inventories - net

295,841

277,033

Other current assets

49,642

43,798

Assets held for sale

19,615

Total current assets

949,425

1,020,612

Property, plant & equipment - net

362,622

358,618

Goodwill

1,720,990

1,713,354

Other assets

561,873

582,072

$

3,594,910

$

3,674,656

Current maturities of long-term debt

$

38,043

$

38,043

Accounts payable and accrued liabilities

347,224

311,898

Liabilities held for sale

13,148

Total current liabilities

385,267

363,089

Long-term debt

829,044

1,067,952

Other liabilities

430,242

484,624

Total shareholders' equity

1,950,357

1,758,991

$

3,594,910

$

3,674,656

NORDSON CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(Dollars in thousands)

Six Months Ended

April 30, 2021

April 30, 2020

Cash flows from operating activities:

Net income

$

201,726

$

144,083

Depreciation and amortization

51,336

55,664

Other non-cash items

14,858

2,504

Changes in working capital

31,244

4,276

Other long-term assets and liabilities

(51,450

)

11,652

Net cash provided by operating activities

247,714

218,179

Cash flows from investing activities:

Additions to property, plant and equipment

(18,743

)

(25,835

)

Other - net

5,062

(1,896

)

Net cash used in investing activities

(13,681

)

(27,731

)

Cash flows from financing activities:

Issuance (repayment) of long-term debt

(250,101

)

39,822

Repayment of finance lease obligations

(3,399

)

(3,548

)

Dividends paid

(45,342

)

(43,878

)

Issuance of common shares

18,783

18,547

Purchase of treasury shares

(30,274

)

(41,930

)

Net cash used in financing activities

(310,333

)

(30,987

)

Effect of exchange rate change on cash

1,327

(4,370

)

Net change in cash and cash equivalents

(74,973

)

155,091

Cash and cash equivalents:

Beginning of period

208,293

151,164

End of period

$

133,320

$

306,255

NORDSON CORPORATION

SALES BY GEOGRAPHIC SEGMENT (Unaudited)

(Dollars in thousands)

Three Months Ended

Sales Variance

April 30,

2021

April 30,

2020

Organic

Acquisitions /

Divestitures

Currency

Total

SALES BY SEGMENT

Industrial precision solutions

$

298,775

$

282,274

8.3

%

(7.3

)%

4.8

%

5.8

%

Advanced technology solutions

290,763

247,204

12.7

%

2.4

%

2.5

%

17.6

%

Total sales

$

589,538

$

529,478

10.4

%

(2.8

)%

3.7

%

11.3

%

SALES BY GEOGRAPHIC REGION

United States

$

202,924

$

188,933

12.1

%

(4.7

)%

%

7.4

%

Americas

44,914

36,673

15.1

%

5.4

%

2.0

%

22.5

%

Europe

156,451

136,056

8.3

%

(2.3

)%

9.0

%

15.0

%

Japan

27,852

31,575

(8.5

)%

(4.0

)%

0.7

%

(11.8

)%

Asia Pacific

157,397

136,241

13.6

%

(2.5

)%

4.4

%

15.5

%

Total sales

$

589,538

$

529,478

10.4

%

(2.8

)%

3.7

%

11.3

%

Six Months Ended

Sales Variance

April 30,

2021

April 30,

2020

Organic

Acquisitions /

Divestitures

Currency

Total

SALES BY SEGMENT

Industrial precision solutions

$

587,191

$

546,073

8.0

%

(4.7

)%

4.2

%

7.5

%

Advanced technology solutions

528,913

478,321

6.0

%

2.3

%

2.3

%

10.6

%

Total Sales

$

1,116,104

$

1,024,394

7.0

%

(1.3

)%

3.3

%

9.0

%

SALES BY GEOGRAPHIC REGION

United States

$

388,240

$

377,433

5.0

%

(2.1

)%

%

2.9

%

Americas

81,052

67,756

13.8

%

6.3

%

(0.5

)%

19.6

%

Europe

291,602

262,447

4.8

%

(1.6

)%

7.9

%

11.1

%

Japan

54,967

59,127

(6.7

)%

(2.9

)%

2.6

%

(7.0

)%

Asia Pacific

300,243

257,631

13.5

%

(1.4

)%

4.4

%

16.5

%

Total Sales

$

1,116,104

$

1,024,394

7.0

%

(1.3

)%

3.3

%

9.0

%

NORDSON CORPORATION

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

(Dollars in thousands)

Three months ended

Six months ended

April 30, 2021

April 30, 2020

April 30, 2021

April 30, 2020

SALES BY SEGMENT

Industrial precision solutions

$

298,775

$

282,274

$

587,191

$

546,073

Advanced technology solutions

290,763

247,204

528,913

478,321

Total sales

$

589,538

$

529,478

$

1,116,104

$

1,024,394

OPERATING PROFIT

Industrial precision solutions

$

104,283

$

76,454

$

187,686

$

132,858

Advanced technology solutions

76,585

58,689

123,786

90,976

Corporate

(14,477

)

(10,114

)

(36,056

)

(23,712

)

Total operating profit

$

166,391

$

125,029

$

275,416

$

200,122

OPERATING PROFIT ADJUSTMENTS (1)

Industrial precision solutions

$

$

364

$

$

664

Advanced technology solutions

2,970

Corporate

Total adjustments

$

$

364

$

$

3,634

ADJUSTED OPERATING PROFIT (NON-GAAP) (2)

% of

Sales

% of

Sales

% of

Sales

% of

Sales

Industrial precision solutions

$

104,283

35

%

$

76,818

27

%

$

187,686

32

%

$

133,522

24

%

Advanced technology solutions

76,585

26

%

58,689

24

%

123,786

23

%

93,946

20

%

Corporate

(14,477

)

(10,114

)

(36,056

)

(23,712

)

Total operating profit - adjusted

$

166,391

28

%

$

125,393

24

%

$

275,416

25

%

$

203,756

20

%

DEPRECIATION & AMORTIZATION

Industrial precision solutions

$

6,468

$

9,296

$

13,451

$

19,125

Advanced technology solutions

16,421

15,245

32,965

31,565

Corporate

2,427

2,505

4,920

4,974

Total depreciation & amortization

$

25,316

$

27,046

$

51,336

$

55,664

EBITDA (NON-GAAP) (2)

Industrial precision solutions

$

110,751

37

%

$

86,114

31

%

$

201,137

34

%

$

152,647

28

%

Advanced technology solutions

93,006

32

%

73,934

30

%

156,751

30

%

125,511

26

%

Corporate

(12,050

)

(7,609

)

(31,136

)

(18,738

)

Total EBITDA

$

191,707

33

%

$

152,439

29

%

$

326,752

29

%

$

259,420

25

%

(1)

Represents costs and adjustments related to cost structure simplification actions.

(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

Six Months Ended

April 30, 2021

April 30, 2020

April 30, 2021

April 30, 2020

GAAP AS REPORTED

Operating profit

$

166,391

$

125,029

$

275,416

$

200,122

Other / interest expense - net

(10,533

)

(8,444

)

(21,746

)

(20,442

)

Net income

124,144

92,079

201,726

144,083

Diluted earnings per share

$

2.12

$

1.58

$

3.44

$

2.47

Shares outstanding - diluted

58,652

58,260

58,703

58,392

OPERATING PROFIT ADJUSTMENTS

Severance and other

$

$

364

3,634

Adjustments net of tax

$

$

287

$

$

2,860

Other discrete tax items

$

$

(138

)

$

$

(2,675

)

EPS effect of adjustments and other discrete tax items

$

$

$

$

NON-GAAP MEASURES-ADJUSTED PROFITABILITY

Operating profit (1)

$

166,391

$

125,393

$

275,416

$

203,756

Operating profit % of sales

28.2

%

23.7

%

24.7

%

19.9

%

Net income (2)

$

124,144

$

92,228

$

201,726

$

144,268

Diluted earnings per share (3)

$

2.12

$

1.58

$

3.44

$

2.47

(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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210524005767/en/

Contacts

Lara Mahoney
Vice President,
Investor Relations & Corporate Communications
440.204.9985
Lara.Mahoney@nordson.com