- Sales increase 13 percent from prior
year’s second quarter to $496 million, with all three segments
contributing to 9 percent organic growth
- GAAP diluted EPS is $1.11; adjusted
diluted EPS is $1.35 and an increase of 13 percent compared to the
prior year’s second quarter
- Fiscal year-to-date EBITDA increases 13
percent compared to prior year to $217 million; fiscal year-to-date
free cash flow before dividends increases 13 percent compared to
prior year to $116 million, or 101 percent of net income
- Pro-forma 12 week order rates increase
13 percent over same period a year ago
- Third quarter 2017 guidance: sales
expected to increase 15 to 19 percent over prior year, inclusive of
6 to 10 percent organic volume growth; GAAP diluted EPS in the
range of $1.51 to $1.65, or $1.57 to $1.71 on an adjusted
basis
Nordson Corporation (Nasdaq: NDSN) today reported results for
the second quarter of fiscal year 2017. For the quarter ending
April 30, 2017, sales were $496 million, a 13 percent increase from
the prior year’s second quarter. This change in sales included a 9
percent increase in organic volume, a 6 percent increase related to
the first year effect of acquisitions, and a negative 2 percent
impact related to the unfavorable effects of currency translation
as compared to the prior year’s second quarter. Reported operating
profit was $104 million, net income was $65 million, and GAAP
diluted earnings per share were $1.11. Prior year second quarter
sales, operating profit, net income and diluted earnings per share
were $438 million, $102 million, $71 million and $1.23,
respectively. A reconciliation of GAAP diluted EPS to adjusted
diluted EPS is included in the attached tables.
“These results demonstrate the underlying strength of our base
business, the strategic fit of our recent acquisitions, and strong
execution across the enterprise by our global team,” said Nordson
President and Chief Executive Officer Michael F. Hilton. “Excluding
the Vention Medical AT acquisition which was not included in our
quarterly guidance, our performance exceeded the high end of our
revenue expectations, and operating margin expanded by one
percentage point above the prior year second quarter. Second
quarter organic sales growth of 9 percent is against a very
challenging prior year comparison and is the result of organic
growth in all segments and geographies. We’re also pleased with the
four acquisitions we have added fiscal year to date, including
Vention which closed during the quarter, all of which are
performing as expected and where integration efforts are proceeding
as planned.” Diluted earnings per share as adjusted grew 13 percent
to $1.35 as compared to last year’s second quarter. Through the
first six months of the fiscal year, EBITDA increased 13 percent
compared to the prior year to $217 million, and free cash flow
before dividends increased 13 percent to $116 million, representing
strong cash conversion of 101 percent of net income. Adjusted
EBITDA increased 20 percent and adjusted free cash flow before
dividends increased 23 percent compared to the prior year.
Calculations for EBITDA, adjusted EBITDA, free cash flow before
dividends, and adjusted free cash flow before dividends are
included in the attached tables.
Second Quarter Segment
Results
Adhesive Dispensing Systems sales volume increased 5 percent
compared to the prior year’s second quarter. “This is excellent
organic growth for the segment against a challenging comparison,
where organic growth was 9 percent in the same period last year,”
said Hilton. “Packaging, general product assembly and polymer
processing product lines drove the current quarter’s growth, with
Asia Pacific and the Americas being the strongest areas
geographically.” Reported operating margin in the segment was 29
percent in the quarter.
Advanced Technology Systems sales volume increased 34 percent
compared to the prior year’s second quarter, including a 18 percent
increase in organic volume and a 16 percent increase related to the
first year effect of acquisitions. “The 18 percent organic volume
growth is a very strong level against a very challenging prior year
comparison where organic volume growth was 20 percent,” said
Hilton. “The current quarter’s organic growth was broad based and
increased by double digits across our product lines serving
electronics, medical and industrial end markets and in all
geographies except the Americas.” Reported operating margin in the
segment improved 2 percentage points from the prior year to 26
percent in the quarter, or 27 percent when excluding short-term
purchase accounting charges for the step-up in value of acquired
inventory.
Industrial Coating Systems sales volume increased 3 percent
compared to the prior year’s second quarter. “The sales volume
increase was driven by our liquid painting and container coating
product lines, with the U.S., Japan and Asia Pacific being
strongest regionally,” said Hilton. Reported operating margin in
the segment was 17 percent in the quarter.
Detailed results by operating segment and geography are included
in the attached tables.
Order Rates and Backlog
Order rates for the 12-week period ending May 14, 2017, measured
in constant currency, increased by 13 percent over the same period
a year ago. Order rates by segment and geography are provided in
the accompanying financial tables, with pro-forma growth in order
rates calculated as though fiscal year 2016 and 2017 acquisitions
were owned in both years.
Backlog for the quarter ended April 30, 2017 was approximately
$403 million, an increase of 37 percent compared to the same period
a year ago, and inclusive of 18 percent organic growth and 19
percent growth due to acquisitions. Backlog amounts are calculated
at April 30, 2017 exchange rates.
Outlook
For the third quarter of fiscal 2017, sales are expected to
increase 15 percent to 19 percent as compared to the third quarter
a year ago. This growth includes organic volume up 6 percent to up
10 percent, 10 percent growth from the first year effect of
acquisitions, and a negative currency effect of 1 percent based on
the current exchange rate environment. At the midpoint of this
outlook, operating margin is expected to be approximately 24
percent, and GAAP diluted earnings per share are expected to be in
the range of $1.51 to $1.65. This range of GAAP diluted earnings
per share includes a charge of approximately $0.03 per share for
previously announced restructuring related to facility
consolidation within our Adhesive Dispensing segment, a charge of
approximately $0.02 per share for short-term purchase accounting
related to the step-up in value of acquired inventory, and an
estimated corporate charge of $0.01 cent per share for acquisition
transaction costs. EBITDA is expected to be approximately $164
million, an increase of 18 percent over the prior year.
“We are forecasting strong third quarter organic sales volume
growth in each of our segments given the strength of our current
backlog, recent order rates and project activity,” said Hilton.
“Our recent acquisitions add to our profitable growth
opportunities, particularly Vention AT, which significantly expands
our medical platform and remains on track to deliver $0.05 to $0.10
cents EPS accretion this fiscal year, excluding transaction costs.
At the midpoint of our third quarter guidance, operating margin is
expected to be approximately 24 percent, or 25 percent excluding
the third quarter charges highlighted above. This is an excellent
outlook that builds on our record first half performance. Our
global team remains focused on creating shareholder value by
offering customers the best technology solutions and outstanding
support across the diverse end markets we serve.”
Nordson management will provide additional commentary on these
results and outlook during a conference call Tuesday, May 23, 2017
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 James R. Jaye, Senior Director of
Communications & Investor Relations at (440) 414-5639 or
jim.jaye@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, 2017
(Unaudited)
CONSOLIDATED
STATEMENT OF INCOME
Second Quarter Year-to-Date 2017 2016 2017 2016 Net sales $
496,137 $ 437,592 $ 903,607 $ 809,812 Cost of sales 220,625 189,187
402,957 364,500 Selling & administrative expenses
171,981 146,501 321,201
291,430 Operating profit 103,531
101,904 179,449 153,882 Interest expense - net (7,635 )
(4,812 ) (13,003 ) (10,518 ) Other income (expense) - net
(1,323 ) 1,727 (1,480 ) 2,529
Income before income taxes 94,573 98,819 164,966 145,893
Income taxes 30,050 28,218
50,455 34,131 Net Income $ 64,523
$ 70,601 $ 114,511 $ 111,762
Return on sales 13 % 16 % 13 % 14 % Return on average
shareholders' equity 28 % 41 % 25 % 33 %
Average common shares outstanding (000's) 57,545 56,952 57,445
56,975
Average common shares and common share
equivalents (000's)
58,232 57,334 58,126 57,320 Per share: Basic earnings
$ 1.12 $ 1.24 $ 1.99 $ 1.96 Diluted earnings $ 1.11 $ 1.23 $ 1.97 $
1.95 Dividends paid $ .27 $ .24 $ .54 $ .48 Total
dividends $ 15,524 $ 13,664 $ 30,999 $ 27,318
NORDSON
CORPORATION
FINANCIAL HIGHLIGHTS
(Dollars in thousands except for per-share
amounts)
CONSOLIDATED BALANCE
SHEET
April 30 October 31 2017 2016 Cash and marketable securities
$ 88,406 $ 67,239 Receivables 428,733 428,560 Inventories 275,806
220,361 Other current assets 35,900 29,415 Total
current assets 828,845 745,575 Property, plant &
equipment - net 319,973 273,129 Other assets 2,230,427
1,401,879 $ 3,379,245 $ 2,420,583 Notes payable and
debt due within one year $ 141,026 $ 40,234 Accounts payable and
accrued liabilities 315,467 291,309 Total current
liabilities 456,493 331,543 Long-term debt 1,574,191 942,771
Other liabilities 386,292 294,666 Total shareholders' equity
962,269 851,603 $ 3,379,245 $ 2,420,583
Other information:
Employees 7,213 6,104 Common shares outstanding
(000's) 57,636 57,051
NORDSON
CORPORATION
FINANCIAL HIGHLIGHTS
(Dollars in thousands)
SECOND QUARTER PERIOD Period Ending April 30, 2017
(Unaudited) Second
Quarter % Growth over 2016 Year-to-Date % Growth over 2016
SALES BY BUSINESS
SEGMENT
2017 2016 Volume Currency Total 2017 2016 Volume Currency Total
Adhesive dispensing systems $ 226,943 $ 221,030 4.8 %
-2.1 % 2.7 % $ 434,780 $ 424,469 3.8 % -1.4 % 2.4 % Advanced
technology systems 210,142 158,555 33.7 % -1.2 % 32.5 % 355,502
276,415 30.0 % -1.4 % 28.6 % Industrial coating systems
59,052 58,007 3.4 % -1.6 % 1.8 %
113,325 108,928 5.7 % -1.7 % 4.0 %
Total sales by business segment $ 496,137 $ 437,592
15.1 % -1.7 % 13.4 % $ 903,607 $ 809,812 13.1 % -1.5
% 11.6 % Second Quarter Year-to-Date
OPERATING PROFIT BY
BUSINESS SEGMENT
2017 2016 2017 2016 Adhesive dispensing systems $ 65,719 $
62,977 $ 118,775 $ 113,337 Advanced technology systems 54,306
38,731 80,669 46,704 Industrial coating systems 10,252 10,292
17,337 14,470 Corporate (26,746 ) (10,096 )
(37,332 ) (20,629 ) Total operating profit by
business segment $ 103,531 $ 101,904 $ 179,449
$ 153,882 Second Quarter % Growth over 2016
Year-to-Date % Growth over 2016
SALES BY GEOGRAPHIC
REGION
2017 2016 Volume Currency Total 2017 2016 Volume Currency Total
United States $ 156,095 $ 131,262 18.9 % - 18.9 % $ 281,616
$ 248,653 13.3 % - 13.3 % Americas 36,326 33,582 8.3 % -0.1 % 8.2 %
66,368 60,289 11.7 % -1.6 % 10.1 % Europe 128,468 125,933 6.6 %
-4.6 % 2.0 % 247,627 245,651 4.4 % -3.6 % 0.8 % Japan 30,855 29,366
4.9 % 0.2 % 5.1 % 55,032 48,869 9.4 % 3.2 % 12.6 % Asia Pacific
144,393 117,449 24.2 % -1.3 % 22.9 %
252,964 206,350 24.4 % -1.8 % 22.6 %
Total Sales by Geographic Region $ 496,137 $ 437,592
15.1 % -1.7 % 13.4 % $ 903,607 $ 809,812 13.1
% -1.5 % 11.6 %
Second Quarter Year-to-Date
FREE CASH FLOW
BEFORE DIVIDENDS
2017 2016 2017 2016 Net income $ 64,523 $ 70,601 $ 114,511 $
111,762 Depreciation and amortization 20,915 17,952 39,412 35,162
Other non-cash charges 5,926 4,566 11,633 8,758 Changes in
operating assets and liabilities (30,007 ) (14,768 )
(26,192 ) (28,794 ) Net cash provided by operating
activities 61,357 78,351 139,364 126,888 Additions to
property, plant and equipment (16,950 ) (14,428 ) (27,029 ) (25,521
) Proceeds from the sale of property, plant and equipment 98
784 3,598 871
Free cash flow before dividends $ 44,505 $ 64,707
$ 115,933 $ 102,238 Adjustments:
Acquisition costs and adjustments, net of tax(1) 10,986
246 11,093 1,325
Free cash flow before dividends, adjusted $ 55,491 $ 64,953
$ 127,026 $ 103,563
(1) Represents costs and adjustments
associated with our fiscal 2017 and 2016 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
ORDER RATES FOR 12-WEEK PERIOD ENDING MAY 14, 2017 CHANGE FROM
PRIOR YEAR
BUSINESS
SEGMENT
% CHANGE
GEOGRAPHY
% CHANGE
Adhesive dispensing systems 1 % United States 6 % Advanced
technology systems 30 % Americas 33 % Industrial coating systems 4
% Europe -3 % Japan 61 % Total 13 % Asia Pacific 25 % Total
13 % Notes: 1. Numbers in this table are unaudited and
exclude the effects of currency movements.
2. Pro-forma changes in order rates were
calculated as though our 2017 and 2016 acquisitions were owned in
both years.
NORDSON
CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES
(Dollars in thousands except for per-share
amounts)
SECOND QUARTER PERIOD
Period Ending April 30, 2017
(Unaudited) EBITDA Second Quarter Year-to-Date 2017
2016 2017 2016 Net income $ 64,523 $ 70,601 $ 114,511 $
111,762 Adjustments: Depreciation and amortization expense 20,915
17,952 39,412 35,162 Interest expense, net 7,635 4,812 13,003
10,518 Income taxes 30,050 28,218 50,455
34,131 EBITDA $ 123,123 $ 121,583 $ 217,381 $ 191,573
Adjustments: Acquisition costs and adjustments (1) 15,480
350 15,646 1,888 EBITDA As Adjusted $ 138,603
$ 121,933 $ 233,027 $ 193,461
(1) Represents costs and adjustments
associated with our 2017 and 2016 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.
Second Quarter Year-to-Date 2017 2016 2017
2016 Diluted EPS as reported (U.S. GAAP) $ 1.11 $
1.23 $ 1.97 $ 1.95 Short-term inventory purchase accounting
adjustments 0.03 - 0.03 0.02 Acquisition costs 0.16 - 0.16 -
Severance and restructuring 0.01 0.02 0.01 0.03 Litigation
settlement - (0.01 ) - (0.01 ) Discrete tax items 0.04 (0.02 ) 0.04
(0.16 ) Other pre-tax items related to discrete tax benefits
- (0.03 ) - (0.03 ) Diluted EPS as
adjusted (Non-GAAP) $ 1.35 $ 1.19 $ 2.21 $ 1.80
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 this non-GAAP measure may not be
comparable to the calculations of similarly titled measures
reported by other companies.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170522006174/en/
Nordson CorporationJames R. Jaye, 440-414-5639Senior Director,
Communications & Investor RelationsJim.Jaye@nordson.com
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