Nordson Corporation Reports First Quarter Fiscal 2024 Results and Narrows Annual Guidance
First Quarter:
- Sales were $633 million, a 4% increase from the prior year
- Net income was $110 million
- Earnings per diluted share were $1.90
- Adjusted earnings per diluted share were $2.21
- EBITDA was $197 million, 31% of sales
Guidance:
- Narrowing previously issued full-year fiscal 2024 revenue guidance to 4% to 7% growth over record fiscal 2023 and adjusted earnings per diluted share to the range of $10.00 to $10.50 per share
Nordson Corporation (NASDAQ:NDSN) today reported results for the fiscal first quarter ended January 31, 2024. Sales were $633 million, a 4% increase compared to the prior year's first quarter sales of $610 million. The increase in first quarter 2024 sales included a favorable acquisition impact of 5%, partially offset by an organic sales decrease of 2%. The organic sales decrease was driven by ongoing pressure in electronics product lines, partially offset by growth in medical interventional, industrial and polymer processing product lines.
Net income was $110 million, or $1.90 of earnings per diluted share, compared to prior year's first quarter net income of $104 million, or $1.81 of earnings per diluted share. Adjusted net income was $128 million, a $4 million increase from the prior year adjusted net income of $123 million. First quarter 2024 adjusted earnings per diluted share were $2.21, a 3% increase from the prior year adjusted earnings per diluted share of $2.14. The increase was driven by higher operating profit, partially offset by increased interest expense.
EBITDA in the first quarter was $197 million, or 31% of sales, compared to prior year EBITDA of $181 million, or 30% of sales. The 9% increase in EBITDA was a result of higher operating profit, driven by improved gross margins year-over-year.
Commenting on the Company's fiscal 2024 first quarter results, Nordson President and Chief Executive Officer Sundaram Nagarajan said, "Sales results were in line with our first quarter expectations. The segments delivered a strong operating performance exceeding our first quarter earnings guidance. This is a great example of our entrepreneurial teams using NBS Next to meet the needs of our customers, while also taking strategic actions that position them for future profitable growth. I am particularly pleased with the solid performance of our IPS and MFS segments during the quarter, while ATS continued to manage the ongoing weakness of the electronics end market. The ARAG acquisition integration continued to make steady progress and contributed to our sales and EBITDA margin performance in the quarter."
First Quarter Segment Results
Industrial Precision Solutions sales of $355 million increased 14% from the prior year, inclusive of an 11% acquisition impact. The organic sales increase of 2% was driven primarily by industrial coatings, polymer processing and nonwovens product lines. Operating profit was $108 million, an increase of $6 million from the prior year. EBITDA in the quarter was $126 million, or 36% of sales, a 16% increase from the prior year first quarter EBITDA of $109 million, or 35% of sales. The year-over-year increase was driven by the ARAG acquisition and higher organic sales and gross profit.
Medical and Fluid Solutions sales of $160 million increased 3% compared to the prior year first quarter. The increase was driven by growth in the medical interventional solutions product lines. Operating profit was $46 million, an increase of $7 million from the prior year. EBITDA in the quarter was $60 million, or 37% of sales, a 13% increase from the prior year first quarter EBITDA of $53 million, or 34% of sales. The increase in EBITDA was driven by both higher sales and improved gross margins.
Advanced Technology Solutions sales of $119 million decreased 18% compared to the prior year first quarter. The organic sales decrease was driven by weakness across the segment, primarily electronics dispense products serving semiconductor end markets. Operating profit was $19 million, an increase of $2 million from the prior year amount, which included acquisition-related expenses for the CyberOptics acquisition. EBITDA in the quarter was $22 million, or 19% of sales, a 28% decrease from the prior year first quarter EBITDA of $31 million, or 21% of sales. The decrease was driven by lower sales.
Outlook
The Company is entering the second quarter of fiscal 2024 with approximately $750 million in backlog, which continues to normalize and remain concentrated in systems businesses. Based on current visibility and order entry trends, the Company is narrowing its previously issued full-year revenue growth to 4% to 7% over record fiscal 2023 and adjusted earnings per diluted share to the range of $10.00 to $10.50 per diluted share. Second quarter fiscal 2024 sales are forecasted in the range of $645 to $670 million with adjusted earnings in the range of $2.20 to $2.35 per diluted share.
As previously announced, the Company's definition of adjusted earnings now excludes acquisition related amortization for both current and historical periods. It is not possible for the Company to identify the amount or significance of future adjustments associated with acquisition and integration costs, restructuring costs, acquisition-related amortization, certain non-operating or income tax items, or other non-routine costs that the Company adjusts in the presentation of adjusted earnings guidance. These items are dependent on future events that are not reasonably estimable at this time. Accordingly, the Company is unable to reconcile without unreasonable effort the forecasted range of adjusted earnings guidance to a comparable GAAP range.
Nordson management will provide additional commentary on these results and outlook during its previously announced webcast on Thursday, February 22, 2024, 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 [email protected].
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 these 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, including the conflict between Russia and Ukraine, acts of terror, natural disasters and pandemics, including the recent 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 an innovative precision technology company that leverages a scalable growth framework through an entrepreneurial, division-led organization to deliver top tier growth with leading margins and returns. The Company's direct sales model and applications expertise serves global customers through a wide variety of critical applications. Its diverse end market exposure includes consumer non-durable, medical, electronics and industrial end markets. 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, linkedin/Nordson, or www.facebook.com/nordson.
NORDSON CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands except for per-share amounts)
|
|||||||
|
Three Months Ended |
||||||
|
January 31, 2024 |
|
January 31, 2023 |
||||
Sales |
$ |
633,193 |
|
|
$ |
610,477 |
|
Cost of sales |
|
284,766 |
|
|
|
281,610 |
|
Gross profit |
|
348,427 |
|
|
|
328,867 |
|
Gross margin % |
|
55.0 |
% |
|
|
53.9 |
% |
|
|
|
|
||||
Selling & administrative expenses |
|
188,992 |
|
|
|
184,648 |
|
Operating profit |
|
159,435 |
|
|
|
144,219 |
|
|
|
|
|
||||
Interest expense - net |
|
(20,398 |
) |
|
|
(9,943 |
) |
Other expense - net |
|
(338 |
) |
|
|
(3,196 |
) |
Income before income taxes |
|
138,699 |
|
|
|
131,080 |
|
|
|
|
|
||||
Income taxes |
|
29,127 |
|
|
|
26,819 |
|
|
|
|
|
||||
Net income |
$ |
109,572 |
|
|
$ |
104,261 |
|
|
|
|
|
||||
Weighted-average common shares outstanding: |
|
|
|
||||
Basic |
|
57,064 |
|
|
|
57,170 |
|
Diluted |
|
57,555 |
|
|
|
57,762 |
|
|
|
|
|
||||
Earnings per share: |
|
|
|
||||
Basic earnings |
$ |
1.92 |
|
|
$ |
1.82 |
|
Diluted earnings |
$ |
1.90 |
|
|
$ |
1.81 |
|
NORDSON CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)
|
|||||||
|
January 31, 2024 |
|
October 31, 2023 |
||||
Cash and cash equivalents |
$ |
136,201 |
|
$ |
115,679 |
||
Receivables - net |
|
537,702 |
|
|
|
590,886 |
|
Inventories - net |
|
451,217 |
|
|
|
454,775 |
|
Other current assets |
|
82,992 |
|
|
|
67,970 |
|
Total current assets |
|
1,208,112 |
|
|
|
1,229,310 |
|
|
|
|
|
||||
Property, plant and equipment - net |
|
394,467 |
|
|
|
392,846 |
|
Goodwill |
|
2,805,086 |
|
|
|
2,784,201 |
|
Other assets |
|
839,412 |
|
|
|
845,413 |
|
|
$ |
5,247,077 |
|
|
$ |
5,251,770 |
|
|
|
|
|
||||
Notes payable and debt due within one year |
$ |
116,585 |
|
|
$ |
115,662 |
|
Accounts payable and accrued liabilities |
|
435,095 |
|
|
|
466,427 |
|
Total current liabilities |
|
551,680 |
|
|
|
582,089 |
|
|
|
|
|
||||
Long-term debt |
|
1,513,871 |
|
|
|
1,621,394 |
|
Other liabilities |
|
457,559 |
|
|
|
450,227 |
|
Total shareholders' equity |
|
2,723,967 |
|
|
|
2,598,060 |
|
|
$ |
5,247,077 |
|
|
$ |
5,251,770 |
|
|
|
|
|
||||
NORDSON CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (Dollars in thousands)
|
|||||||
|
Three Months Ended |
||||||
|
January 31, 2024 |
|
January 31, 2023 |
||||
Cash flows from operating activities: |
|
|
|
||||
Net income |
$ |
109,572 |
|
|
$ |
104,261 |
|
Depreciation and amortization |
|
33,544 |
|
|
|
26,434 |
|
Other non-cash items |
|
6,552 |
|
|
|
6,224 |
|
Changes in working capital |
|
14,614 |
|
|
|
(58,371 |
) |
Other |
|
8,074 |
|
|
|
44,789 |
|
Net cash provided by operating activities |
|
172,356 |
|
|
|
123,337 |
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
||||
Additions to property, plant and equipment |
|
(7,530 |
) |
|
|
(9,302 |
) |
Acquisition of businesses, net of cash acquired |
|
— |
|
|
|
(377,843 |
) |
Other - net |
|
1,805 |
|
|
|
9 |
|
Net cash used in investing activities |
|
(5,725 |
) |
|
|
(387,136 |
) |
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
||||
Issuance (repayment) of long-term debt |
|
(107,195 |
) |
|
|
252,278 |
|
Repayment of finance lease obligations |
|
(1,488 |
) |
|
|
(1,318 |
) |
Dividends paid |
|
(38,855 |
) |
|
|
(37,199 |
) |
Issuance of common shares |
|
14,418 |
|
|
|
8,807 |
|
Purchase of treasury shares |
|
(7,371 |
) |
|
|
(6,875 |
) |
Net cash provided (used) in financing activities |
|
(140,491 |
) |
|
|
215,693 |
|
|
|
|
|
||||
Effect of exchange rate change on cash: |
|
(5,618 |
) |
|
|
6,643 |
|
Net change in cash and cash equivalents |
|
20,522 |
|
|
|
(41,463 |
) |
|
|
|
|
||||
Cash and cash equivalents: |
|
|
|
||||
Beginning of period |
|
115,679 |
|
|
|
163,457 |
|
End of period |
$ |
136,201 |
|
|
$ |
121,994 |
|
|
|
|
|
||||
NORDSON CORPORATION
SALES BY GEOGRAPHIC SEGMENT (Unaudited) (Dollars in thousands)
|
|||||||||||||||||||
|
Three Months Ended |
|
Sales Variance |
||||||||||||||||
|
January 31, 2024 |
|
January 31, 2023 |
|
Organic |
|
Acquisitions |
|
Currency |
|
Total |
||||||||
SALES BY SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Industrial Precision Solutions |
$ |
354,547 |
|
$ |
311,546 |
|
2.3 |
% |
|
10.6 |
% |
|
0.9 |
% |
|
13.8 |
% |
||
Medical and Fluid Solutions |
|
159,526 |
|
|
|
154,287 |
|
|
3.1 |
% |
|
— |
% |
|
0.3 |
% |
|
3.4 |
% |
Advanced Technology Solutions |
|
119,120 |
|
|
|
144,644 |
|
|
(17.6 |
)% |
|
— |
% |
|
— |
% |
|
(17.6 |
)% |
Total sales |
$ |
633,193 |
|
|
$ |
610,477 |
|
|
(2.2 |
)% |
|
5.4 |
% |
|
0.5 |
% |
|
3.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
SALES BY GEOGRAPHIC REGION |
|
|
|
|
|
|
|
|
|
|
|
||||||||
Americas |
$ |
274,012 |
|
|
$ |
264,878 |
|
|
(0.3 |
)% |
|
3.1 |
% |
|
0.6 |
% |
|
3.4 |
% |
Europe |
|
179,310 |
|
|
|
162,939 |
|
|
(7.0 |
)% |
|
14.2 |
% |
|
2.8 |
% |
|
10.0 |
% |
Asia Pacific |
|
179,871 |
|
|
|
182,660 |
|
|
(0.5 |
)% |
|
0.7 |
% |
|
(1.7 |
)% |
|
(1.5 |
)% |
Total sales |
$ |
633,193 |
|
|
$ |
610,477 |
|
|
(2.2 |
)% |
|
5.4 |
% |
|
0.5 |
% |
|
3.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - NET INCOME TO EBITDA (Unaudited) (Dollars in thousands)
|
|||||||
|
Three Months Ended |
||||||
|
January 31, 2024 |
|
January 31, 2023 |
||||
Net income |
$ |
109,572 |
|
$ |
104,261 |
||
Income taxes |
|
29,127 |
|
|
|
26,819 |
|
Interest expense - net |
|
20,398 |
|
|
|
9,943 |
|
Other expense - net |
|
338 |
|
|
|
3,196 |
|
Depreciation and amortization |
|
33,544 |
|
|
|
26,434 |
|
Inventory step-up amortization (1) |
|
2,944 |
|
|
|
4,306 |
|
Acquisition-related costs (1) |
|
597 |
|
|
|
5,989 |
|
EBITDA (non-GAAP) (2) |
$ |
196,520 |
|
|
$ |
180,948 |
|
(1) |
Represents fees, severance and non-cash inventory charges associated with acquisitions. |
(2) |
EBITDA is a non-GAAP measure used by management to evaluate the Company's ongoing operations. EBITDA is defined as operating profit plus certain adjustments, such as severance, fees and non-cash inventory charges associated with acquisitions, plus depreciation and amortization. |
NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - EBITDA (Unaudited) (Dollars in thousands)
|
|||||||||||
|
Three Months Ended |
||||||||||
|
January 31, 2024 |
|
January 31, 2023 |
||||||||
SALES BY SEGMENT |
|
|
|
|
|
|
|
||||
Industrial Precision Solutions |
$ |
354,547 |
|
|
|
|
$ |
311,546 |
|
|
|
Medical and Fluid Solutions |
|
159,526 |
|
|
|
|
|
154,287 |
|
|
|
Advanced Technology Solutions |
|
119,120 |
|
|
|
|
|
144,644 |
|
|
|
Total sales |
$ |
633,193 |
|
|
|
|
$ |
610,477 |
|
|
|
|
|
|
|
|
|
|
|
||||
OPERATING PROFIT |
|
|
|
|
|
|
|
||||
Industrial Precision Solutions |
$ |
108,364 |
|
|
|
|
$ |
102,319 |
|
|
|
Medical and Fluid Solutions |
|
46,100 |
|
|
|
|
|
39,384 |
|
|
|
Advanced Technology Solutions |
|
19,038 |
|
|
|
|
|
16,963 |
|
|
|
Corporate |
|
(14,067 |
) |
|
|
|
|
(14,447 |
) |
|
|
Total operating profit |
$ |
159,435 |
|
|
|
|
$ |
144,219 |
|
|
|
|
|
|
|
|
|
|
|
||||
OPERATING PROFIT ADJUSTMENTS (1) |
|
|
|
|
|||||||
Industrial Precision Solutions |
$ |
3,541 |
|
|
|
|
$ |
— |
|
|
|
Advanced Technology Solutions |
|
— |
|
|
|
|
|
10,295 |
|
|
|
Total adjustments |
$ |
3,541 |
|
|
|
|
$ |
10,295 |
|
|
|
|
|
|
|
|
|
|
|
||||
DEPRECIATION & AMORTIZATION |
|
|
|
|
|
|
|||||
Industrial Precision Solutions |
$ |
14,380 |
|
|
|
|
$ |
6,845 |
|
|
|
Medical and Fluid Solutions |
|
13,705 |
|
|
|
|
|
13,625 |
|
|
|
Advanced Technology Solutions |
|
3,441 |
|
|
|
|
|
3,812 |
|
|
|
Corporate |
|
2,018 |
|
|
|
|
|
2,152 |
|
|
|
Total depreciation & amortization |
$ |
33,544 |
|
|
|
|
$ |
26,434 |
|
|
|
|
|
|
|
|
|
|
|
||||
EBITDA (NON-GAAP) (2) |
|
|
|
|
|
|
|
||||
Industrial Precision Solutions |
$ |
126,285 |
|
|
36% |
|
$ |
109,164 |
|
|
35% |
Medical and Fluid Solutions |
|
59,805 |
|
|
37% |
|
|
53,009 |
|
|
34% |
Advanced Technology Solutions |
|
22,479 |
|
|
19% |
|
|
31,070 |
|
|
21% |
Corporate |
|
(12,049 |
) |
|
|
|
|
(12,295 |
) |
|
|
Total EBITDA |
$ |
196,520 |
|
|
31% |
|
$ |
180,948 |
|
|
30% |
|
|
|
|
|
|
|
|
||||
(1) |
Represents fees, severance and non-cash inventory charges associated with acquisitions. |
(2) |
EBITDA is a non-GAAP measure used by management to evaluate the Company's ongoing operations. EBITDA is defined as operating profit plus certain adjustments, such as severance, fees and non-cash inventory charges associated with acquisitions, plus depreciation and amortization. |
NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - ADJUSTED NET INCOME AND EARNINGS PER SHARE (Unaudited) (Dollars in thousands)
|
|||||||
|
Three Months Ended |
||||||
|
January 31, 2024 |
|
January 31, 2023 |
||||
GAAP AS REPORTED |
|
|
|
||||
Operating profit |
$ |
159,435 |
|
|
$ |
144,219 |
|
Other / interest expense - net |
|
(20,736 |
) |
|
|
(13,139 |
) |
Net income |
|
109,572 |
|
|
|
104,261 |
|
Diluted earnings per share |
$ |
1.90 |
|
|
$ |
1.81 |
|
|
|
|
|
||||
Shares outstanding - diluted |
|
57,555 |
|
|
|
57,762 |
|
|
|
|
|
||||
OPERATING PROFIT ADJUSTMENTS |
|
|
|
||||
Inventory step-up amortization |
$ |
2,944 |
|
|
$ |
4,306 |
|
Acquisition-related costs |
|
597 |
|
|
|
5,989 |
|
|
|
|
|
||||
ACQUISITION AMORTIZATION OF INTANGIBLES |
$ |
19,387 |
|
|
$ |
13,872 |
|
|
|
|
|
||||
Total adjustments |
$ |
22,928 |
|
|
$ |
24,167 |
|
|
|
|
|
||||
Adjustments net of tax |
$ |
18,113 |
|
|
$ |
19,223 |
|
EPS effect of adjustments and other discrete tax items |
$ |
0.31 |
|
|
$ |
0.33 |
|
|
|
|
|
||||
NON-GAAP MEASURES-ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE |
|
|
|
||||
Adjusted Net income (1) |
$ |
127,685 |
|
|
$ |
123,484 |
|
Adjusted Diluted earnings per share (2) |
$ |
2.21 |
|
|
$ |
2.14 |
|
(1) |
Adjusted net income is a non-GAAP measure defined as net income plus tax effected adjustments and other discrete tax items. |
(2) |
Adjusted earnings per share is a non-GAAP measure defined as GAAP EPS adjusted for tax effected adjustments and other discrete tax items. |
|
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Management uses certain non-GAAP measures, such as adjusted net income, adjusted EPS and EBITDA, 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. |
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