- Sales increase 20 percent from prior
year’s third quarter to $589 million, with all three segments
contributing to 11 percent organic growth
- Operating profit increases 24 percent
to $153 million and operating margin improves by 1 percentage point
to 26 percent, both compared to the prior year’s third quarter and
both inclusive of $6 million of intangible asset amortization
expense for fiscal 2017 acquisitions
- GAAP diluted EPS increases 19 percent
to $1.74 and adjusted diluted EPS increases 21 percent to $1.78,
both compared to the prior year’s third quarter
- EBITDA increases 29 percent to $179
million, EBITDA margin improves 2 percentage points to 30 percent,
and EBITDA per diluted share increases 27 percent to $3.08, all
compared to the prior year’s third quarter
- Free cash flow before dividends
increases 14 percent compared to the prior year’s third quarter to
$55 million
- Pro-forma 12 week order rates decrease
2 percent over same period a year ago
- Fourth quarter 2017 guidance: sales
expected to increase 4 to 8 percent over prior year; GAAP diluted
EPS in the range of $1.18 to $1.32; EBITDA in the range of $133 to
$144 million, or $2.27 to $2.46 per diluted share
Nordson Corporation (Nasdaq: NDSN) today reported results for
the third quarter of fiscal year 2017. For the quarter ending July
31, 2017, sales were $589 million, a 20 percent increase from the
prior year’s third quarter. This change in sales included an 11
percent increase in organic volume, a 10 percent increase related
to the first year effect of acquisitions, and a less than 1 percent
decrease related to the unfavorable effects of currency translation
as compared to the prior year’s third quarter. Reported operating
profit was $153 million, net income was $101 million, and GAAP
diluted earnings per share were $1.74. Prior year third quarter
sales, operating profit, net income and diluted earnings per share
were $490 million, $124 million, $84 million and $1.46,
respectively. A reconciliation of GAAP diluted EPS to adjusted
diluted EPS is included in the attached tables.
Third quarter EBITDA increased 29 percent to $179 million and
EBITDA per diluted share increased 27 percent to $3.08, both
compared to the prior year’s third quarter. Adjusted EBITDA
increased 30 percent over the prior year third quarter. Free cash
flow before dividends was $55 million in the quarter, an increase
of 14 percent over the prior year. Calculations for EBITDA,
adjusted EBITDA and free cash flow before dividends are included in
the attached tables.
“Nordson delivered the strongest quarter in its history with
excellent organic growth across the business, strong contributions
from recent acquisitions, and continued execution by our global
team,” said Nordson President and Chief Executive Officer Michael
F. Hilton. “Robust customer demand for our technology in all
segments and nearly all geographies drove organic revenue growth of
11 percent in the third quarter compared to the prior year period,
exceeding the high end of our expectations. EBITDA margin improved
two percentage points to 30 percent, and adjusted diluted earnings
per share grew by 21 percent in third quarter, both compared to the
same period a year ago. The current quarter’s reported and adjusted
diluted earnings per share include fiscal 2017 acquisition
intangible asset amortization expense of $6 million or $0.07 per
diluted share in the quarter. We remain pleased with these
acquisitions, which are performing as expected and strengthen our
position in multiple profitable growth markets. We also continued
to execute on continuous improvement initiatives across the
enterprise during the quarter employing tools from the Nordson
Business System.”
Third Quarter Segment
Results
Adhesive Dispensing Systems sales volume increased 6 percent
compared to the prior year’s third quarter. “Our team delivered
excellent results this quarter against a strong quarter a year ago
where organic growth was 4 percent,” said Hilton. “Packaging,
nonwovens and polymer product lines drove the current quarter’s
growth and all regions were positive with the exception of Europe.
This is the ninth consecutive quarter of organic growth in this
segment, reflecting the general stability of the consumer
non-durable end markets served.” Reported operating margin in the
segment improved 1 percentage point from the prior year to 28
percent in the quarter, including non-recurring restructuring
charges of approximately $1 million related to previously announced
facility consolidation.
Advanced Technology Systems sales volume increased 42 percent
compared to the prior year’s third quarter, including an 18 percent
increase in organic volume and a 24 percent increase related to the
first year effect of acquisitions. “Organic growth in the current
quarter for this segment was outstanding and compares to a strong
quarter a year ago where organic growth was 6 percent,” said
Hilton. “All regions generated organic growth in the quarter
compared to the prior year’s quarter, most by double digits.
Customer demand for our automated dispensing, surface treatment and
test and inspection solutions remained robust across multiple
electronics end markets. Growth was also solid across multiple
product lines in our growing medical portfolio.” The quarter’s
acquisitive growth includes the LinkTech, ACE, InterSelect, PlasPak
and Vention Medical acquisitions. Reported operating margin in the
segment was 30 percent in the quarter, or 33 percent on an adjusted
basis to exclude approximately $2 million in purchase accounting
charges for the step-up in value of acquired inventory and $6
million of intangible asset amortization expense related to current
year acquisitions.
Industrial Coating Systems sales volume increased 3 percent
compared to the prior year’s third quarter. “The sales volume
increase was driven by our cold material, liquid painting and UV
curing product lines, with the Americas and Asia Pacific being
strongest regionally,” said Hilton. Reported operating margin in
the segment improved three percentage points to 20 percent in the
quarter compared to the same period a year ago due to better
product mix.
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 August 13, 2017,
measured in constant currency, decreased by 2 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 July 31, 2017 was approximately
$372 million, an increase of 10 percent compared to the same period
a year ago and inclusive of 13 percent growth due to acquisitions
offset by a 3 percent decrease in organic growth. Backlog amounts
are calculated at July 31, 2017 exchange rates.
Outlook
For the fourth quarter of fiscal 2017, sales are expected to
increase 4 percent to 8 percent compared to the fourth quarter a
year ago. This growth includes organic volume down 3 percent to
down 7 percent, 10 percent growth from the first year effect of
acquisitions, and a positive 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 21
percent and GAAP diluted earnings per share are expected to be in
the range of $1.18 to $1.32, inclusive of $6 million or $0.07 per
diluted share of fiscal 2017 acquisition intangible asset
amortization expense. EBITDA, EBITDA margin and EBITDA per diluted
share are expected to be $138 million, 26 percent and $2.37 at the
midpoint of the guidance, respectively.
“Our fourth quarter guidance reflects our backlog, current 12
week order rates, and very challenging comparisons to the same
period a year ago where we generated 13 percent organic growth,”
said Hilton. “At the low end of our guidance, Nordson is on pace to
deliver record full year performance for most metrics, including
revenue, earnings and EBITDA. At the midpoint of this guidance,
full year organic growth is 6 percent, well above most global GDP
forecasts and against a robust prior year comparison where we
delivered 7 percent organic growth. Adjusted diluted earnings per
share at this midpoint is $5.24, an increase of 12 percent compared
to fiscal 2016, and inclusive of intangible asset amortization
expense related to this year’s four acquisitions of approximately
$15 million or $0.18 per share. We expect to continue generating
strong levels of free cash, enabling us to maintain our balanced
and flexible approach to capital deployment, with de-leveraging
likely to remain the near term priority. Overall, we remain well
positioned across the diverse end markets we serve, and our global
team remains focused on creating shareholder value by offering
customers innovative technology solutions and outstanding
support.”
Nordson management will provide additional commentary on these
results and outlook during a conference call Tuesday, August 22,
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)
THIRD QUARTER PERIOD Period Ending July 31, 2017 (Unaudited)
CONSOLIDATED
STATEMENT OF INCOME
Third Quarter Year-to-Date 2017 2016 2017 2016 Net sales $
589,438 $ 489,899 $ 1,493,044 $ 1,299,711 Cost of sales 263,173
216,679 666,130 581,179 Selling & administrative expenses
172,799 149,534 494,000
440,964 Operating profit 153,466
123,686 332,914 277,568 Interest expense - net (11,038 )
(4,471 ) (24,041 ) (14,989 ) Other income (expense) - net 27
(1,978 ) (1,452 ) 551
Income before income taxes 142,455 117,237 307,421 263,130 Income
taxes 40,999 33,023 91,454
67,154 Net Income $ 101,456 $
84,214 $ 215,967 $ 195,976
Return on sales 17 % 17 % 14 % 15 % Return on average
shareholders' equity 28 % 44 % 45 % 37 %
Average
common shares outstanding (000's) 57,594 57,085 57,495 57,012
Average common shares and common share
equivalents (000's)
58,259 57,616 58,171 57,419 Per share: Basic earnings
$ 1.76 $ 1.48 $ 3.76 $ 3.44 Diluted earnings $ 1.74 $ 1.46 $ 3.71 $
3.41 Dividends paid $ .27 $ .24 $ .81 $ .72 Total
dividends $ 15,550 $ 13,690 $ 46,549 $ 41,008
NORDSON
CORPORATION
FINANCIAL HIGHLIGHTS (Dollars in thousands except for per-share
amounts)
CONSOLIDATED BALANCE
SHEET
July 31 October 31 2017 2016 Cash and marketable securities
$ 110,705 $ 67,239 Receivables 498,848 428,560 Inventories 275,705
220,361 Other current assets 34,901 29,415 Total
current assets 920,159 745,575 Property, plant &
equipment - net 335,680 273,129 Other assets 2,219,515
1,401,879 $ 3,475,354 $ 2,420,583 Notes payable and
debt due within one year $ 127,540 $ 40,234 Accounts payable and
accrued liabilities 324,684 291,309 Total current
liabilities 452,224 331,543 Long-term debt 1,569,680 942,771
Other liabilities 369,019 294,666 Total shareholders' equity
1,084,431 851,603 $ 3,475,354 $ 2,420,583
Other information:
Employees 7,427 6,104 Common shares
outstanding (000's) 57,692 57,051
NORDSON
CORPORATION
FINANCIAL HIGHLIGHTS (Dollars in thousands) THIRD QUARTER
PERIOD Period Ending July 31, 2017 (Unaudited)
Third 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 $ 233,367 $ 220,800 6.0 %
-0.3 % 5.7 % $ 668,146 $ 645,269 4.5 % -1.0 % 3.5 % Advanced
technology systems 290,406 205,372 41.8 % -0.4 % 41.4 % 645,907
481,787 35.1 % -1.0 % 34.1 % Industrial coating systems
65,665 63,727 3.4 % -0.4 % 3.0 %
178,991 172,655 4.9 % -1.2 % 3.7 %
Total sales by business segment $ 589,438 $ 489,899
20.7 % -0.4 % 20.3 % $ 1,493,044 $ 1,299,711 16.0 %
-1.1 % 14.9 % Third Quarter Year-to-Date
OPERATING PROFIT BY
BUSINESS SEGMENT
2017 2016 2017 2016 Adhesive dispensing systems $ 66,451 $
60,423 $ 185,226 $ 173,760 Advanced technology systems 87,385
63,115 168,054 109,819 Industrial coating systems 13,192 10,612
30,529 25,082 Corporate (13,562 ) (10,464 )
(50,895 ) (31,093 ) Total operating profit by
business segment $ 153,466 $ 123,686 $ 332,914
$ 277,568 Third 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 $ 182,953 $ 135,067 35.5 % - 35.5 % $ 464,569
$ 383,720 21.1 % - 21.1 % Americas 41,604 30,534 35.6 % 0.7 % 36.3
% 107,971 90,823 19.7 % -0.8 % 18.9 % Europe 133,846 128,583 4.0 %
0.1 % 4.1 % 381,473 374,234 4.2 % -2.3 % 1.9 % Japan 41,472 34,709
25.4 % -5.9 % 19.5 % 96,504 83,578 16.1 % -0.6 % 15.5 % Asia
Pacific 189,563 161,006 17.9 % -0.2 %
17.7 % 442,527 367,356 21.6 % -1.1 %
20.5 % Total Sales by Geographic Region $ 589,438 $
489,899 20.7 % -0.4 % 20.3 % $ 1,493,044 $ 1,299,711
16.0 % -1.1 % 14.9 %
Third Quarter Year-to-Date
FREE CASH FLOW
BEFORE DIVIDENDS
2017 2016 2017 2016 Net income $ 101,456 $ 84,214 $ 215,967
$ 195,976 Depreciation and amortization 25,954 17,662 65,366 52,824
Other non-cash charges (8,592 ) 4,455 3,041 13,213 Changes in
operating assets and liabilities (41,991 ) (38,485 )
(68,183 ) (67,279 ) Net cash provided by operating
activities 76,827 67,846 216,191 194,734 Additions to
property, plant and equipment (22,295 ) (19,931 ) (49,324 ) (45,452
) Proceeds from the sale of property, plant and equipment
308 173 3,906 1,044
Free cash flow before dividends $ 54,840 $
48,088 $ 170,773 $ 150,326 Adjustments:
Acquisition costs and adjustments, net of tax(1) 1,597
- 12,564 1,325
Free cash flow before dividends, adjusted $ 56,437 $ 48,088
$ 183,337 $ 151,651
(1) Represents one-time costs, net of tax,
associated with our 2017 and 2016 acquisitions, including the step
up in the value of acquired inventory and acquisition transaction
costs that are required to be expensed as incurred.
NORDSON
CORPORATION
ORDER RATES FOR 12-WEEK PERIOD ENDING AUGUST 13, 2017 CHANGE FROM
PRIOR YEAR
BUSINESS
SEGMENT
% CHANGE
GEOGRAPHY
% CHANGE
Adhesive dispensing systems -1 % United States -6 % Advanced
technology systems -3 % Americas 5 % Industrial coating systems -4
% Europe 12 % Japan -20 % Total -2 % Asia Pacific -6 % Total
-2 % 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)
THIRD QUARTER PERIOD
Period Ending July 31, 2017
(Unaudited) EBITDA and EBITDA per diluted share Third
Quarter Year-to-Date 2017 2016 2017 2016 Net income $
101,456 $ 84,214 $ 215,967 $ 195,976 Adjustments: Depreciation and
amortization expense 25,954 17,662 65,366 52,824 Interest expense,
net 11,038 4,471 24,041 14,989 Income taxes 40,999
33,023 91,454 67,154 EBITDA $ 179,447 $ 139,370 $
396,828 $ 330,943 Adjustments: Acquisition costs and adjustments
(1) 2,252 - 17,898 1,888 EBITDA As
Adjusted $ 181,699 $ 139,370 $ 414,726 $ 332,831 EBITDA per
diluted share $ 3.08 $ 2.42 $ 6.82 $ 5.76 EBITDA As Adjusted per
diluted share $ 3.12 $ 2.42 $ 7.13 $ 5.80
(1) Represents one-time costs associated
with our 2017 and 2016 acquisitions, including the step up in the
value of acquired inventory and acquisition transaction costs that
are required to be expensed as incurred.
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. Third
Quarter Year-to-Date 2017 2016 2017 2016
Diluted EPS as reported (U.S. GAAP) $ 1.74 $ 1.46 $ 3.71 $ 3.41
Short-term inventory purchase accounting adjustments 0.02 -
0.05 0.02 Acquisition costs 0.01 - 0.17 - Severance and
restructuring 0.01 0.02 0.02 0.05 Litigation settlement - - - (0.01
) Discrete tax items - (0.03 ) 0.04 (0.19 ) Other pre-tax items
related to discrete tax benefits - 0.02
- (0.01 ) Diluted EPS as adjusted (Non-GAAP) $ 1.78 $
1.47 $ 3.99 $ 3.27 Adjusted Diluted 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 financial
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/20170821005771/en/
Nordson CorporationJames R. Jaye, 440-414-5639Senior Director,
Communications & Investor RelationsJim.Jaye@nordson.com
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