Summary

Nordson Beats but Guides Lower

Nordson (NDSN) reported 2nd Quarter April 2018 earnings of $1.56 per share on revenue of $553.7 million. The consensus earnings estimate was $1.42 per share on revenue of $550.1 million. The Earnings Whisper number was $1.45 per share. Revenue grew 11.6% on a year-over-year basis.

The company said it expects third quarter GAAP earnings of $1.47 to $1.63 per share on revenue of $271.8 million to $595.3 million. The current consensus earnings estimate is $1.90 per share on revenue of $617.9 million for the quarter ending July 31, 2018.

Nordson Corp engineers, manufactures and markets differentiated products and systems used for adhesive, coating, sealant and biomaterial dispensing, fluid management, testing and inspection, curing, and surface treatment.

Earnings Release

Nordson Corporation Reports Record Second Quarter Sales, Operating Profit, Diluted Earnings per Share, and EBITDA

Sales increased 12 percent over prior year’s second quarter to $554 million
Operating profit increased 22 percent over prior year’s second quarter to $127 million and is inclusive of $4 million of incremental intangible asset amortization expense over prior year related to acquisitions
Second quarter EBITDA increased 28 percent over prior year’s second quarter to $157 million
GAAP diluted EPS increased 40 percent over prior year’s second quarter to $1.55; adjusted diluted EPS of $1.56 increased 16 percent over prior year’s second quarter
Third quarter 2018 guidance: sales expected to be in the range of up 1 percent to down 3 percent over prior year; GAAP diluted EPS in the range of $1.47 to $1.63; EBITDA in the range of $155 to $168 million

WESTLAKE, Ohio--(BUSINESS WIRE)-- Nordson Corporation (Nasdaq: NDSN) today reported results for the second quarter of fiscal year 2018. For the quarter ended April 30, 2018, sales were $554 million, a 12 percent increase over the prior year’s second quarter. This change in sales included a decrease of approximately 1 percent in organic volume, growth related to the first year effect of acquisitions of approximately 7 percent, and an increase related to the favorable effects of currency translation as compared to the prior year’s second quarter of 5 percent. Reported operating profit was $127 million, net income was $91 million, and GAAP diluted earnings were $1.55 per share. Prior year second quarter sales, operating profit, net income and GAAP diluted earnings per share were $496 million, $104 million, $65 million and $1.11, respectively. A reconciliation of GAAP diluted earnings per share to adjusted diluted earnings per share and calculations for EBITDA, adjusted EBITDA, free cash flow before dividends, and adjusted free cash flow before dividends are included in the attached financial exhibits.

“These results highlight the strategic fit of our recent acquisitions, along with the resilient performance of our base business, particularly against very challenging prior year comparisons where total company organic sales growth was 9 percent in the second quarter,” said Michael F. Hilton, Nordson President and Chief Executive Officer. “Our global team helped to deliver record second quarter sales, operating profit, diluted earnings per share, and EBITDA. Adjusted EBITDA margin improved about 100 basis points, as compared to the prior year’s second quarter adjusted EBITDA margin, to 29 percent of sales,” Hilton added.

The current quarter’s results include incremental intangible asset amortization expense of $4 million over the prior year second quarter, or $0.05 per diluted share, and charges of approximately $2 million, or $0.03 per diluted share, for short-term purchase accounting related to the step-up in value of acquired inventory and $1 million, or $0.01 per diluted share, of non-recurring restructuring charges. Additionally, a discrete tax benefit of approximately $2 million, or $0.04 per diluted share, was recognized in the quarter for excess tax benefits related to share-based payment transactions which are credited to income tax expense.

Second Quarter Segment Results

Adhesive Dispensing Systems sales increased 5 percent compared to the prior year’s second quarter, inclusive of a decrease of 2 percent in organic volume and a 7 percent increase related to the favorable effects of currency translation as compared to the prior year. Reported operating margin in the segment was 29 percent, or 30 percent on an adjusted basis to exclude non-recurring restructuring charges of $1 million related to a previously announced U.S. facility consolidation.

Advanced Technology Systems sales increased 19 percent compared to the prior year’s second quarter, including a 1 percent decrease in organic volume, a 17 percent increase related to the first year effect of acquisitions, and a 3 percent increase related to the favorable effects of currency translation as compared to the prior year. The second quarter’s acquisitive growth includes a partial month of the fiscal 2017 acquisition of InterSelect GmbH, two months of the fiscal 2017 acquisition of Vention Medical, and the fiscal 2018 acquisition of Sonoscan. Reported operating margin in the segment was 23 percent in the quarter, or 26 percent on an adjusted basis to exclude $4 million of incremental intangible asset amortization expense and $2 million of short-term purchase accounting charges related to the step-up in value of acquired inventory from the Sonoscan acquisition.

Industrial Coating Systems sales increased approximately 9 percent compared to the prior year’s second quarter, including approximately 4 percent organic growth and approximately 4 percent increase due to the favorable effects of currency translation as compared to the prior year. Reported operating margin in the segment was 18 percent.

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

“Sales growth for the quarter is reflective of a very strong prior year. I am pleased with our team’s operating performance, where each segment delivered strong operating margins, driving record total company second quarter operating profit,” said Hilton.

Backlog

Backlog for the quarter ended April 30, 2018 was approximately $460 million, an increase of 11 percent compared to the same period a year ago, inclusive of 10 percent organic growth and 1 percent growth due to acquisitions. Backlog amounts are calculated at April 30, 2018 exchange rates and include acquisitions that closed prior to the end of the second quarter of fiscal 2018.

Outlook

For the third quarter of fiscal 2018, sales are expected to be in the range of up 1 percent to down 3 percent compared to the third quarter a year ago. This outlook includes a range for organic volume to be down 2 to 6 percent, 1 percent growth from the first year effect of acquisitions, and a positive currency effect of 2 percent based on the current exchange rate environment as compared to the prior year. At the midpoint of this outlook, operating margin is expected to be approximately 23 percent. GAAP diluted earnings per share are expected to be in the range of $1.47 to $1.63, with an estimated effective tax rate of approximately 25 percent. At the midpoint of the guidance, EBITDA and EBITDA margin are expected to be $161 million and 28 percent, respectively.

“As with our recently completed quarter, we are up against very challenging comparisons to an exceptionally strong prior year third quarter, where total company organic sales growth was 11 percent,” said Hilton. “Our global team remains committed to delivering the best technology solutions while employing continuous improvement initiatives to drive bottom line results, and we expect to generate total company organic sales growth in the low single-digits on a full year basis for fiscal 2018.”

Nordson management will provide additional commentary on these results and outlook during a conference call Tuesday, May 22, 2018 at 8:30 a.m. eastern time which can be accessed at www.nordson.com/investors. 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 & Corporate Communications at (440) 414-5639 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 Ending April 30, 2018
(Unaudited)

CONSOLIDATED STATEMENT OF INCOME
	Second Quarter						Year-to-Date
	2018			2017			2018			2017

Net sales	$	553,706		$	496,137		$	1,104,130		$	903,607
Cost of sales		246,878			220,625			496,299			402,957
Selling & administrative expenses		180,123			171,981			363,403			321,201

Operating profit		126,705			103,531			244,428			179,449

Interest expense - net		(11,908	)		(7,635	)		(22,936	)		(13,003	)
Other income (expense) - net		3,322			(1,323	)		145			(1,480	)

Income before income taxes		118,119			94,573			221,637			164,966
Income taxes		26,884			30,050			25,847			50,455

Net Income	$	91,235		$	64,523		$	195,790		$	114,511



Return on sales		16	%		13	%		18	%		13	%
Return on average shareholders' equity		27	%		28	%		31	%		25	%




Average common shares outstanding (000's)		57,989			57,545			57,870			57,445
Average common shares and common share equivalents (000's)		58,945			58,232			58,908			58,126

Per share:

Basic earnings	$	1.57		$	1.12		$	3.38		$	1.99
Diluted earnings	$	1.55		$	1.11		$	3.32		$	1.97

Dividends paid	$	.30		$	.27		$	.60		$	.54

Total dividends	$	17,376		$	15,524		$	34,697		$	30,999


CONSOLIDATED BALANCE SHEET
	April 30		October 31
	2018		2017

Cash and marketable securities	$	155,946	$	90,383
Receivables		512,389		505,087
Inventories		284,363		264,266
Other current assets		31,323		28,636
Total current assets		984,021		888,372

Property, plant & equipment - net		359,489		346,411
Other assets		2,195,706		2,179,756
	$	3,539,216	$	3,414,539

Notes payable and debt due within one year	$	226,587	$	326,587
Accounts payable and accrued liabilities		308,074		321,159
Total current liabilities		534,661		647,746

Long-term debt		1,312,459		1,256,397
Other liabilities		329,186		354,903
Total shareholders' equity		1,362,910		1,155,493
	$	3,539,216	$	3,414,539






Other information:


Employees				7,548

Common shares outstanding (000's)				58,092


NORDSON CORPORATION
FINANCIAL HIGHLIGHTS
(Dollars in thousands)

SECOND QUARTER PERIOD
Period Ending April 30, 2018
(Unaudited)

	Second Quarter						% Growth over 2017						Year-to-Date						% Growth over 2017
SALES BY BUSINESS SEGMENT	2018			2017			Volume		Currency		Total		2018			2017			Volume		Currency		Total


Adhesive dispensing systems	$	238,775		$	226,943		-1.7	%	6.9	%	5.2	%	$	459,639		$	434,780		-0.6	%	6.3	%	5.7	%
Advanced technology systems		250,839			210,142		16.2	%	3.2	%	19.4	%		522,540			355,502		43.7	%	3.3	%	47.0	%
Industrial coating systems		64,092			59,052		4.3	%	4.2	%	8.5	%		121,951			113,325		3.8	%	3.8	%	7.6	%

Total sales by business segment	$	553,706		$	496,137		6.6	%	5.0	%	11.6	%	$	1,104,130		$	903,607		17.4	%	4.8	%	22.2	%



	Second Quarter												Year-to-Date
OPERATING PROFIT BY BUSINESS SEGMENT	2018			2017									2018			2017

Adhesive dispensing systems	$	69,514		$	65,719								$	122,829		$	118,775
Advanced technology systems		58,306			54,306									125,574			80,669
Industrial coating systems		11,572			10,252									21,732			17,337
Corporate		(12,687	)		(26,746	)								(25,707	)		(37,332	)

Total operating profit by business segment	$	126,705		$	103,531								$	244,428		$	179,449



	Second Quarter						% Growth over 2017						Year-to-Date						% Growth over 2017
SALES BY GEOGRAPHIC REGION	2018			2017			Volume		Currency		Total		2018			2017			Volume		Currency		Total

United States	$	178,821		$	156,095		14.6	%	-		14.6	%	$	344,652		$	281,616		22.4	%	-		22.4	%
Americas		38,959			36,326		6.5	%	0.8	%	7.3	%		73,238			66,368		8.7	%	1.7	%	10.4	%
Europe		154,736			128,468		7.0	%	13.4	%	20.4	%		296,674			247,627		7.4	%	12.4	%	19.8	%
Japan		33,030			30,855		2.3	%	4.7	%	7.0	%		98,899			55,032		76.5	%	3.2	%	79.7	%
Asia Pacific		148,160			144,393		-1.3	%	3.9	%	2.6	%		290,667			252,964		10.9	%	4.0	%	14.9	%

Total Sales by Geographic Region	$	553,706		$	496,137		6.6	%	5.0	%	11.6	%	$	1,104,130		$	903,607		17.4	%	4.8	%	22.2	%




	Second Quarter												Year-to-Date
FREE CASH FLOW BEFORE DIVIDENDS	2018			2017									2018			2017

Net income	$	91,235		$	64,523								$	195,790		$	114,511
Depreciation and amortization		27,431			20,915									53,716			39,412
Other non-cash charges		4,690			5,926									(33,203	)		11,633
Changes in operating assets and liabilities		(20,323	)		(28,243	)								(3,992	)		(21,284	)
Net cash provided by operating activities		103,033			63,121									212,311			144,272

Additions to property, plant and equipment		(16,368	)		(16,950	)								(33,049	)		(27,029	)
Proceeds from the sale of property, plant and equipment		167			98									235			3,598

Free cash flow before dividends	$	86,832		$	46,269								$	179,497		$	120,841

Adjustments:
Acquisition costs and adjustments, net of tax⁽¹⁾		1,832			10,986									2,620			11,093
Free cash flow before dividends, adjusted	$	88,664		$	57,255								$	182,117		$	131,934

⁽¹⁾Represents costs and adjustments associated with our 2018 and 2017 acquisitions, including accounting adjustments to inventory that were charged to cost of sales when the inventory was sold; and transaction-related costs comprising of acquisition fees, legal, financial and tax due diligence expenses, and valuation costs that are required to be expensed as incurred.


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

SECOND QUARTER PERIOD
Period Ending April 30, 2018
(Unaudited)


EBITDA	Second Quarter				Year-to-Date
	2018		2017		2018		2017

Net income	$	91,235	$	64,523	$	195,790	$	114,511
Adjustments:
Depreciation and amortization expense		27,431		20,915		53,716		39,412
Interest expense, net		11,908		7,635		22,936		13,003
Income taxes		26,884		30,050		25,847		50,455
EBITDA	$	157,458	$	123,123	$	298,289	$	217,381
Adjustments:
Acquisition costs and adjustments ⁽¹⁾		2,431		15,480		3,484		15,646
EBITDA As Adjusted	$	159,889	$	138,603	$	301,773	$	233,027

EBITDA per diluted share	$	2.67	$	2.11	$	5.06	$	3.74
EBITDA As Adjusted per diluted share	$	2.71	$	2.38	$	5.12	$	4.01

EBITDA and EBITDA per diluted share are non-GAAP financial measures used by management to evaluate the Company's ongoing operations. EBITDA is defined as earnings before interest, taxes, depreciation and amortization and EBITDA As Adjusted is defined as EBITDA plus certain acquisition costs and adjustments. EBITDA per diluted share is defined as EBITDA divided by the Company's diluted weighted average shares outstanding. EBITDA As Adjusted per diluted share is defined as EBITDA As Adjusted divided by the Company's diluted weighted average shares outstanding.


	Second Quarter					Year-to-Date
	2018			2017		2018			2017

Diluted EPS as reported (U.S. GAAP)	$	1.55		$	1.11	$	3.32		$	1.97

Short-term inventory purchase accounting adjustments		0.03			0.03		0.04			0.03
Acquisition costs		-			0.16		-			0.16
Severance and restructuring		0.01			0.01		0.03			0.01
U.S. Tax Reform discrete item		-			-		(0.37	)		-
Other discrete tax items		(0.04	)		0.04		(0.12	)		0.04

Diluted EPS as adjusted (Non-GAAP)	$	1.56		$	1.35	$	2.90		$	2.21

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. Our calculations of non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies. Amounts may not add due to rounding.

View source version on businesswire.com: https://www.businesswire.com/news/home/20180521006015/en/

Nordson Corporation
Lara Mahoney, 440-414-5639
Vice President,
Investor Relations & Corporate Communications
Lara.Mahoney@nordson.com

Source: Nordson Corporation