ndsn-20240131

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-7977

____________________________________________________

NORDSON CORPORATION

(Exact name of registrant as specified in its charter)

___________________________________________________

Ohio

(State or other jurisdiction of incorporation or organization)

28601 Clemens Road

Westlake, Ohio

(Address of principal executive offices)

34-0590250

(I.R.S. Employer Identification No.)

44145

(Zip Code)

(440) 892-1580

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange
On Which Registered

Common Shares, without par value

NDSN

Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Shares, without par value as of February 20, 2024: 57,192,245

Table of Contents


PART I – FINANCIAL INFORMATION			3

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)			3
Condensed Consolidated Statements of Income			3
Consolidated Statements of Comprehensive Income			4
Consolidated Balance Sheets			5
Consolidated Statements of Shareholders' Equity			6
Condensed Consolidated Statements of Cash Flows			7
Notes to Condensed Consolidated Financial Statements			8
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			21
Overview			21
Critical Accounting Policies and Estimates			21
Results of Operations			21
Financial Condition			23
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			24
ITEM 4. CONTROLS AND PROCEDURES			24

PART II – OTHER INFORMATION			25

ITEM 1. LEGAL PROCEEDINGS			25
ITEM 1A. RISK FACTORS			25
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			25
ITEM 5. OTHER INFORMATION			25
ITEM 6. EXHIBITS			26

SIGNATURE			27

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Part I – FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS (UNAUDITED)

Condensed Consolidated Statements of Income


	Three Months Ended
(In thousands, except for per share data)	January 31, 2024		January 31, 2023
Sales	$	633,193	$	610,477
Operating costs and expenses:
Cost of sales	284,766		281,610
Selling and administrative expenses	188,992		184,648

	473,758		466,258
Operating profit	159,435		144,219
Other income (expense):
Interest expense	(21,442)		(10,530)
Interest and investment income	1,044		587
Other income (expense)- net	(338)		(3,196)
	(20,736)		(13,139)
Income before income taxes	138,699		131,080
Income taxes	29,127		26,819
Net income	$	109,572	$	104,261
Average common shares	57,064		57,170
Incremental common shares attributable to equity compensation	491		592
Average common shares and common share equivalents	57,555		57,762
Basic earnings per share	$	1.92	$	1.82
Diluted earnings per share	$	1.90	$	1.81

See accompanying notes.

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Consolidated Statements of Comprehensive Income


	Three Months Ended
(In thousands)	January 31, 2024		January 31, 2023
Net income	$	109,572	$	104,261
Components of other comprehensive income (loss):
Foreign currency translation adjustments	43,943		76,821

Pension and other postretirement plan adjustments, net of tax	(459)		(576)
Total other comprehensive income	43,484		76,245
Total comprehensive income	$	153,056	$	180,506

See accompanying notes.

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Consolidated Balance Sheets


(In thousands)
Assets
Current assets:	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
Prepaid expenses and other current assets	82,992		67,970

Total current assets	1,208,112		1,229,310
Goodwill	2,805,086		2,784,201
Intangible assets - net	666,487		672,744
Property, plant and equipment - net	394,467		392,846
Operating right of use lease assets	105,348		106,176
Deferred income taxes	19,167		16,022
Other assets	48,410		50,471
Total assets	$	5,247,077	$	5,251,770

Liabilities and shareholders' equity
Current liabilities:
Current maturities of long-term debt and notes payable	$	116,585	$	115,662
Accrued liabilities	182,854		199,588
Accounts payable	103,153		106,320
Customer advanced payments	76,131		93,389
Income taxes payable	51,018		45,359
Operating lease liability - current	16,913		16,853
Finance lease liability - current	5,026		4,918

Total current liabilities	551,680		582,089
Long-term debt	1,513,871		1,621,394
Operating lease liability - noncurrent	91,725		92,412
Deferred income taxes	206,833		210,637
Postretirement obligations	51,069		50,862
Pension obligations	41,315		40,425
Finance lease liability - noncurrent	11,820		11,670
Other long-term liabilities	54,797		44,221
Shareholders' equity:
Common shares	12,253		12,253
Capital in excess of stated value	685,275		668,097
Retained earnings	4,060,070		3,989,353
Accumulated other comprehensive loss	(152,957)		(196,441)
Common shares in treasury, at cost	(1,880,674)		(1,875,202)
Total shareholders' equity	2,723,967		2,598,060
Total liabilities and shareholders' equity	$	5,247,077	$	5,251,770

See accompanying notes.

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Consolidated Statements of Shareholders’ Equity


	Three Months Ended January 31, 2024
(In thousands, except for share and per share data)	Common Shares		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Common Shares in Treasury, at cost		TOTAL
November 1, 2023	$	12,253	$	668,097	$	3,989,353	$	(196,441)	$	(1,875,202)	$	2,598,060
Shares issued under company stock and employee benefit plans	—		12,519		—		—		1,899		14,418
Stock-based compensation	—		4,659		—		—		—		4,659
Purchase of treasury shares	—		—		—		—		(7,371)		(7,371)
Dividends declared ($0.68 per share)	—		—		(38,855)		—		—		(38,855)
Net income	—		—		109,572		—		—		109,572

Other Comprehensive Income (Loss):
Foreign currency translation adjustments	—		—		—		43,943		—		43,943
Defined benefit pension and post-retirement plan adjustments	—		—		—		(459)		—		(459)
January 31, 2024	$	12,253	$	685,275	$	4,060,070	$	(152,957)	$	(1,880,674)	$	2,723,967


	Three Months Ended January 31, 2023
(In thousands, except for share and per share data)	Common Shares		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Common Shares in Treasury, at cost		TOTAL
November 1, 2022	$	12,253	$	626,697	$	3,652,216	$	(207,782)	$	(1,789,009)	$	2,294,375
Shares issued under company stock and employee benefit plans	—		7,032		—		—		1,775		8,807
Stock-based compensation	—		7,071		—		—		—		7,071
Purchase of treasury shares	—		—		—		—		(6,875)		(6,875)
Dividends declared ($0.65 per share)	—		—		(37,199)		—		—		(37,199)
Net income	—		—		104,261		—		—		104,261

Other Comprehensive Income (Loss):
Foreign currency translation adjustments	—		—		—		76,821		—		76,821
Defined benefit pension and post-retirement plan adjustments	—		—		—		(576)		—		(576)
January 31, 2023	$	12,253	$	640,800	$	3,719,278	$	(131,537)	$	(1,794,109)	$	2,446,685

See accompanying notes.

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Condensed Consolidated Statements of Cash Flows


(In thousands)	Three Months Ended
Cash flows from operating activities:	January 31, 2024		January 31, 2023
Net income	$	109,572	$	104,261
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,544		26,434
Non-cash stock compensation	4,659		6,239
Deferred income taxes	1,642		(278)
Other non-cash expense	243		253
Loss on sale of property, plant and equipment	8		10
Changes in operating assets and liabilities	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)

Proceeds from sale of property, plant and equipment	22		9
Other	1,783		—
Acquisition of business, net of cash acquired	—		(377,843)
Net cash used in investing activities	(5,725)		(387,136)
Cash flows from financing activities:
Proceeds from issuance of debt	805		566,978
Repayment of debt	(108,000)		(314,700)
Repayment of finance lease obligations	(1,488)		(1,318)
Issuance of common shares	14,418		8,807
Purchase of treasury shares	(7,371)		(6,875)
Dividends paid	(38,855)		(37,199)
Net cash provided (used) in financing activities	(140,491)		215,693

Effect of exchange rate changes on cash	(5,618)		6,643
Decrease in cash and cash equivalents	20,522		(41,463)
Cash and cash equivalents at beginning of period	115,679		163,457
Cash and cash equivalents at end of period	$	136,201	$	121,994

See accompanying notes.

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Notes to Condensed Consolidated Financial Statements

January 31, 2024

NOTE REGARDING AMOUNTS AND FISCAL YEAR REFERENCES

In this Quarterly Report on Form 10-Q, all amounts related to United States dollars and foreign currency and to the number of Nordson Corporation’s common shares, except for per share earnings and dividend amounts, are expressed in thousands. Unless the context otherwise indicates, all references to “we” or the “Company” mean Nordson Corporation.

Unless otherwise noted, all references to years relate to our fiscal year ending October 31.

Significant accounting policies

Basis of presentation. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles in the United States ("U.S. GAAP") for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended January 31, 2024 are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the Consolidated Financial Statements and notes included in our Annual Report on Form 10-K for the year ended October 31, 2023.

Consolidation. The Condensed Consolidated Financial Statements include the accounts of Nordson Corporation and its 100%-owned and controlled subsidiaries. Investments in affiliates and joint ventures in which our ownership is 50% or less or in which we do not have control but have the ability to exercise significant influence, are accounted for under the equity method. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates. The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements. Actual amounts could differ from these estimates.

Revenue recognition. A contract exists when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of the consideration is probable. Revenue is recognized when performance obligations under the terms of the contract with a customer are satisfied. Generally, our revenue results from short-term, fixed-price contracts and primarily is recognized as of a point in time when the product is shipped or at a later point when the control of the product transfers to the customer. Revenue for undelivered items is deferred and included within Accrued liabilities in our Consolidated Balance Sheets. Revenues deferred as of January 31, 2024 and 2023 were not material.

However, for certain contracts related to the sale of customer-specific products within our Medical and Fluid Solutions segment, revenue is recognized over time as we satisfy performance obligations because of the continuous transfer of control to the customer. The continuous transfer of control to the customer occurs as we enhance assets that are customer controlled and we are contractually entitled to payment for work performed to date plus a reasonable margin.

As control transfers over time for these products or services, revenue is recognized based on progress toward completion of the performance obligations. The selection method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We have elected to use the input method – costs incurred for these contracts because it best depicts the transfer of products or services to the customer based on incurring costs on the contract. Under this method, revenues are recorded proportionally as costs are incurred. Contract assets recognized are recorded in Prepaid expenses and other current assets and contract liabilities are recorded in Accrued liabilities in our Consolidated Balance Sheets and were not material on January 31, 2024 and October 31, 2023. Revenue recognized over time represented approximately less than ten percent of our overall consolidated revenues at January 31, 2024 and October 31, 2023.

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or services. Taxes, including sales and value add, that we collect concurrently with revenue-producing activities are excluded from revenue. As a practical expedient, we may exclude the assessment of whether goods or services are performance obligations, if they are immaterial in the context of the contract, and combine these with other performance obligations. While payment terms and conditions vary by contract type, we have determined that our contracts generally do not include a significant financing component. We have elected to apply the practical expedient to treat all shipping and handling costs as fulfillment costs as a significant portion of these costs are incurred prior to transfer of control to the customer. We have also elected to apply the practical expedient to expense sales commissions as they are incurred as the amortization period resulting from capitalizing the

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costs is one year or less. These costs are recorded within Selling and administrative expenses in our Condensed Consolidated Statements of Income.

We offer assurance-type warranties on our products as well as separately sold warranty contracts. Revenue related to warranty contracts that are sold separately is recognized over the life of the warranty term and are not material. Certain arrangements may include installation, installation supervision, training, and spare parts, which tend to be completed in a short period of time, at an insignificant cost, and utilizing skills not unique to us, and, therefore, these items are typically regarded as inconsequential or not material.

We disclose disaggregated revenues by operating segment and geography in accordance with the revenue standard and on the same basis used internally by the chief operating decision maker for evaluating performance of operating segments and for allocating resources. Refer to our Operating segments Note for details.

Earnings per share. Basic earnings per share are computed based on the weighted-average number of common shares outstanding during each year, while diluted earnings per share are based on the weighted-average number of common shares and common share equivalents outstanding. Common share equivalents consist of shares issuable upon exercise of stock options computed using the treasury stock method, as well as restricted shares and deferred stock-based compensation. Options whose exercise price is higher than the average market price are excluded from the calculation of diluted earnings per share because the effect would be anti-dilutive. Options excluded from the calculation of diluted earnings per share for the three months ended January 31, 2024 and 2023 were 74 and 144, respectively.

Recently issued accounting standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires enhanced disclosures about significant segment expenses and enhanced disclosures in interim periods. The guidance in ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023 and interim reporting periods in fiscal years beginning after December 31, 2024, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-07 will have on its consolidated financial statements and disclosures and anticipates adoption in 2025.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to improve income tax disclosure requirements by requiring specific disclosure in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The guidance in ASU 2023-09 will be effective for annual reporting periods in fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact that the adoption of ASU 2023-09 will have on its consolidated financial statements and disclosures and anticipates adoption in fiscal 2026.

Acquisitions

Business acquisitions have been accounted for using the acquisition method, with the acquired assets and liabilities recorded at estimated fair value on the dates of acquisition. The cost in excess of the net assets of the business acquired is included in goodwill. Operating results since the respective dates of acquisitions are included in the Condensed Consolidated Statements of Income.

2023 Acquisitions

On August 24, 2023, the Company completed the acquisition of the ARAG Group and its subsidiaries ("ARAG Group" or "ARAG") pursuant to the terms of the Sale and Purchase Agreement, dated as of June 25, 2023, by and among the Company, its Italian subsidiary, Capvis Equity V LP, DRIP Co-Investment, and certain individuals. ARAG is a global market and innovation leader in the development, production and supply of precision control systems and smart fluid components for agricultural spraying. ARAG operates as a division of our Industrial Precision Solutions segment. In anticipation of the acquisition, the Company entered into a €760,000 senior unsecured term loan facility with a group of banks in August 2023 (the "364-Day Term Loan Facility"). The all-cash ARAG acquisition of approximately €957,000, net of the repayment of approximately €30,300 of debt of the acquired companies, was funded using borrowings under the 364-Day Term Loan Facility and the Company's revolving credit facility. The 364-Day Term Loan Facility was subsequently paid off in September 2023 with the net proceeds of a senior notes offering. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $687,200 and identifiable intangible assets of $353,500 were recorded. The identifiable intangible assets consist primarily of $27,500 of tradenames (amortized over nine years), $31,000 of technology (amortized over five years), and $295,000 of customer relationships (amortized over twenty-two years). Goodwill associated with the acquisition was not tax deductible. As of January 31, 2024, the purchase price allocation remains preliminary as we complete our assessment principally of income taxes. The financial results of the ARAG Group acquisition are not expected to have a material impact on our Consolidated Financial Statements.

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The assets and liabilities acquired were as follows:


	August 24, 2023
Cash	$	32,966
Receivables - net	29,765
Inventories - net	52,130
Goodwill	687,200
Intangibles	353,500
Other assets	57,238
Total Assets	$	1,212,799

Accounts payable	$	18,915
Deferred income taxes	100,057
Other liabilities	15,924
Total Liabilities	$	134,896

On November 3, 2022, we acquired 100% of CyberOptics Corporation ("CyberOptics"). CyberOptics is a leading global developer and manufacturer of high-precision 3D optical sensing technology solutions. The CyberOptics acquisition expanded our test and inspection platform, providing differentiated technology that expands our product offering in the semiconductor and electronics industries and is reported in our Advanced Technology Solutions segment. We acquired CyberOptics for an aggregate purchase price of $377,843, net of cash of approximately $40,890, funded using borrowings under our revolving credit facility and cash on hand. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $285,330 and identifiable intangible assets of $58,600 were recorded. The identifiable intangible assets consist primarily of $15,200 of tradenames (amortized over fifteen years), $14,600 of technology (amortized over seven years), and $28,800 of customer contracts (amortized over twelve years). Goodwill associated with the acquisition was not tax deductible. As of January 31, 2024, the purchase price allocation is final. The results of CyberOptics are not material to our Consolidated Financial Statements.

The assets and liabilities acquired were as follows:


	November 3, 2022
Cash	$	40,890
Receivables - net	21,364
Inventories - net	33,639
Goodwill	285,330
Intangibles	58,600
Other assets	13,768
Total Assets	$	453,591

Accounts payable	$	8,109
Deferred income taxes	14,826
Other liabilities	11,923
Total Liabilities	$	34,858

Receivables

Our allowance for credit losses is principally determined based on aging of receivables. Receivables are exposed to credit risk based on the customers' ability to pay which is influenced by, among other factors, their financial liquidity. We perform ongoing customer credit evaluation to maintain sufficient allowances for potential credit losses. Our segments perform credit evaluation and monitoring to estimate and manage credit risk through the review of customer information, credit ratings, approval and monitoring of customer credit limits, and assessment of market conditions. We may also require prepayments or bank guarantees from customers to mitigate credit risk. Our receivables are generally short-term in nature with a majority of receivables outstanding less than 90 days. Accounts receivable balances are written-off against the allowance if deemed uncollectible.

Accounts receivable are net of an allowance for credit losses of $10,460 and $10,015 on January 31, 2024 and October 31, 2023, respectively. The provision for losses on receivables was $80 and $348 for the three months ended January 31, 2024 and 2023,

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respectively. The remaining change in the allowance for credit losses is principally related to net write-off/recoveries of uncollectible accounts as well as currency translation.

Inventories

Components of inventories were as follows:


	January 31, 2024		October 31, 2023
Finished goods	$	253,283	$	233,552
Raw materials and component parts	206,590		211,874
Work-in-process	72,645		86,474
	532,518		531,900

SEC Form 10-Q filed by Nordson Corporation