Nordson Corporation Reports Strong Second Quarter Fiscal 2022 Results and Raises Annual Earnings Guidance
Second Quarter:
•Sales were $635 million, an 8% increase over prior year
•Operating profit was $184 million, an 11% increase over prior year
•Earnings per share were $1.88 compared to $2.12 in the prior year
•Adjusted earnings were $2.43 per diluted share, a 15% increase over the prior year
Guidance:
•Updating previously issued full-year fiscal 2022 guidance: increasing adjusted earnings per diluted share growth to 18% to 21% and narrowing revenue growth to 8% to 9% over fiscal 2021
WESTLAKE, Ohio--(BUSINESS WIRE)--May 23, 2022--Nordson Corporation (Nasdaq: NDSN) today reported results for the fiscal second quarter ended April 30, 2022. Sales were $635 million, an 8% increase compared to the prior year’s second quarter sales of $590 million. The increase in second quarter 2022 sales included organic volume growth of 7% and a favorable acquisition impact of 4%, partially offset by unfavorable effects from currency translation of 3%. The organic sales increase was driven by strong demand across most end markets, offset by unfavorable impacts from COVID-related lockdowns in China.
Operating profit in the second quarter was $184 million, or 29% of sales, compared to prior year operating profit of $166 million. This 11% increase in operating profit was driven primarily by sales volume leverage. EBITDA for the second quarter of 2022 totaled $209 million, or 33% of sales.
Net income was $110 million, or $1.88 earnings per diluted share. Adjusted net income, which excludes the $41 million non-cash pension annuitization charge ($32 million after tax), was $142 million, an $18 million increase from the prior year earnings of $124 million. Second quarter 2022 adjusted diluted earnings per share were $2.43, a 15% increase over the prior year diluted earnings per share of $2.12.
“I am very proud of the Nordson team’s efforts and our impressive second quarter financial performance, despite the ongoing COVID-related lockdowns in China and foreign currency headwinds. We remain focused on the safety of our employees and delivering on the strong broad-based demand from our customers. The ongoing deployment of the NBS Next growth framework is delivering tangible results in terms of strong order entry and 70% organic incremental margins,” said Sundaram Nagarajan, president and chief executive officer.
Second Quarter Segment Results
Industrial Precision Solutions sales of $316 million increased 6% compared to the prior year second quarter, driven by a 3% organic sales increase and a favorable acquisition impact of 7%, partially offset by an unfavorable currency impact of 4%. The organic sales increase was driven by continued demand in consumer non-durable and industrial end markets, which was offset by weakness in Asia-Pacific related to the COVID shutdowns in China. Operating profit in the quarter was $102 million, or 32% of sales, a decrease of 2% compared to the prior year second quarter, as favorable sales volume leverage was offset by unfavorable sales mix compared to the prior year second quarter.
Advanced Technology Solutions sales of $319 million increased 10% compared to the prior year second quarter. Organic sales increased 11%, partially offset by an unfavorable currency impact. The organic sales increase was driven by robust demand across electronics dispense, test and inspection, and biopharma fluid component product lines. Operating profit totaled $98 million, or 31% of sales, an increase of 29% compared to the prior year second quarter operating profit.
1
Outlook
The Company continues to be encouraged as order entry remained strong throughout the second quarter with a favorable book-to-bill ratio. Backlog entering the second half of fiscal 2022 exceeds $1 billion, as the Company continues to see extended shipment request dates in conjunction with large orders from its customers in electronics, industrial and medical end markets.
For the full year, the Company is increasing its previously issued adjusted earnings guidance to growth in the range of 18% to 21% and narrowing its previously issued year-over-year revenue guidance to growth of 8% to 9% over fiscal 2021.
Fiscal 2022 third quarter revenue and adjusted earnings are forecasted to be comparable to the prior year results.
Nordson management will provide additional commentary on these results and outlook during its previously announced webcast on Tuesday, May 24, 2022 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 lara.mahoney@nordson.com.
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 such 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 current 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 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, www.twitter.com/Nordson_Corp or www.facebook.com/nordson.
2
NORDSON CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands except for per-share amounts)
Three Months Ended
Six Months Ended
April 30, 2022
April 30, 2021
April 30, 2022
April 30, 2021
Sales
$
635,403
$
589,538
$
1,244,569
$
1,116,104
Cost of sales
277,768
251,839
546,800
488,445
Gross profit
357,635
337,699
697,769
627,659
Gross margin %
56.3
%
57.3
%
56.1
%
56.2
%
Selling & administrative expenses
173,662
171,308
357,936
352,243
Operating profit
183,973
166,391
339,833
275,416
Interest expense - net
(4,942)
(6,690)
(10,127)
(13,242)
Other income (expense) - net (1)
(39,764)
(3,843)
(38,472)
(8,504)
Income before income taxes
139,267
155,858
291,234
253,670
Income taxes
29,633
31,714
61,191
51,944
Net income
$
109,634
$
124,144
$
230,043
$
201,726
Weighted-average common shares outstanding:
Basic
57,784
58,068
57,971
58,063
Diluted
58,382
58,652
58,606
58,703
Earnings per share:
Basic earnings
$
1.90
$
2.14
$
3.97
$
3.47
Diluted earnings
$
1.88
$
2.12
$
3.93
$
3.44
(1) Includes pension settlement charge of $41,221.
3
NORDSON CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)
April 30, 2022
October 31, 2021
Cash and cash equivalents
$
120,892
$
299,972
Receivables - net
499,535
489,389
Inventories - net
383,215
327,195
Other current assets
56,197
48,282
Total current assets
1,059,839
1,164,838
Property, plant & equipment - net
357,561
355,565
Goodwill
1,821,091
1,713,148
Other assets
557,852
557,410
$
3,796,343
$
3,790,961
Current maturities of long-term debt and notes payable
$
310,892
$
34,188
Accounts payable and accrued liabilities
411,606
411,206
Total current liabilities
722,498
445,394
Long-term debt
479,703
781,709
Other liabilities
403,526
404,728
Total shareholders' equity
2,190,616
2,159,130
$
3,796,343
$
3,790,961
4
NORDSON CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
Six Months Ended
April 30, 2022
April 30, 2021
Cash flows from operating activities:
Net income
$
230,043
$
201,726
Depreciation and amortization
50,355
51,336
Other non-cash items (1)
51,449
14,858
Changes in working capital
(85,070)
20,206
Other
(32,276)
(40,412)
Net cash provided by operating activities
214,501
247,714
Cash flows from investing activities:
Additions to property, plant and equipment
(24,776)
(18,743)
Acquisition of businesses, net of cash acquired
(171,613)
—
Other - net
15
5,062
Net cash used in investing activities
(196,374)
(13,681)
Cash flows from financing activities:
Issuance (repayment) of long-term debt
1,654
(250,101)
Repayment of finance lease obligations
(2,620)
(3,399)
Dividends paid
(59,301)
(45,342)
Issuance of common shares
7,798
18,783
Purchase of treasury shares
(140,466)
(30,274)
Net cash used in financing activities
(192,935)
(310,333)
Effect of exchange rate change on cash
(4,272)
1,327
Net change in cash and cash equivalents
(179,080)
(74,973)
Cash and cash equivalents:
Beginning of period
299,972
208,293
End of period
$
120,892
$
133,320
(1) Includes pension settlement charge of $41,221.
5
NORDSON CORPORATION
SALES BY GEOGRAPHIC SEGMENT (Unaudited)
(Dollars in thousands)
Three Months Ended
Sales Variance
April 30, 2022
April 30, 2021
Organic
Acquisitions / Divestitures
Currency
Total
SALES BY SEGMENT
Industrial precision solutions
$
316,434
$
298,775
2.8
%
7.1
%
(4.0)
%
5.9
%
Advanced technology solutions
318,969
290,763
11.3
%
—
%
(1.6)
%
9.7
%
Total sales
$
635,403
$
589,538
7.0
%
3.6
%
(2.8)
%
7.8
%
SALES BY GEOGRAPHIC REGION
United States
$
218,508
$
202,924
3.9
%
3.8
%
—
%
7.7
%
Americas
55,244
44,914
20.8
%
1.9
%
0.3
%
23.0
%
Europe
172,256
156,451
14.4
%
3.7
%
(8.0)
%
10.1
%
Japan
25,443
27,852
(5.0)
%
6.3
%
(10.0)
%
(8.7)
%
Asia Pacific
163,952
157,397
1.8
%
3.3
%
(0.9)
%
4.2
%
Total sales
$
635,403
$
589,538
7.0
%
3.6
%
(2.8)
%
7.8
%
Six Months Ended
Sales Variance
April 30, 2022
April 30, 2021
Organic
Acquisitions / Divestitures
Currency
Total
SALES BY SEGMENT
Industrial precision solutions
$
640,367
$
587,191
7.3
%
5.3
%
(3.5)
%
9.1
%
Advanced technology solutions
604,202
528,913
15.4
%
—
%
(1.2)
%
14.2
%
Total sales
$
1,244,569
$
1,116,104
11.2
%
2.7
%
(2.4)
%
11.5
%
SALES BY GEOGRAPHIC REGION
United States
$
409,885
$
388,240
3.3
%
2.3
%
—
%
5.6
%
Americas
103,769
81,052
27.7
%
0.7
%
(0.4)
%
28.0
%
Europe
328,241
291,602
15.5
%
3.8
%
(6.7)
%
12.6
%
Japan
51,001
54,967
(0.9)
%
3.2
%
(9.5)
%
(7.2)
%
Asia Pacific
351,673
300,243
14.8
%
2.8
%
(0.5)
%
17.1
%
Total sales
$
1,244,569
$
1,116,104
11.2
%
2.7
%
(2.4)
%
11.5
%
6
NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - ADJUSTED OPERATING PROFIT AND EBITDA (Unaudited)
(Dollars in thousands)
Three Months Ended
Six Months Ended
April 30, 2022
April 30, 2021
April 30, 2022
April 30, 2021
SALES BY SEGMENT
Industrial precision solutions
$
316,434
$
298,775
$
640,367
$
587,191
Advanced technology solutions
318,969
290,763
604,202
528,913
Total sales
$
635,403
$
589,538
$
1,244,569
$
1,116,104
OPERATING PROFIT
Industrial precision solutions
$
102,196
$
104,283
$
204,384
$
187,686
Advanced technology solutions
98,458
76,585
174,785
123,786
Corporate
(16,681)
(14,477)
(39,336)
(36,056)
Total operating profit
$
183,973
$
166,391
$
339,833
$
275,416
OPERATING PROFIT ADJUSTMENTS (1)
Industrial precision solutions
$
—
$
—
$
1,563
$
—
ADJUSTED OPERATING PROFIT (NON-GAAP) (2)
% of Sales
% of Sales
% of Sales
% of Sales
Industrial precision solutions
$
102,196
32%
$
104,283
35%
$
205,947
32%
$
187,686
32%
Advanced technology solutions
98,458
31%
76,585
26%
174,785
29%
123,786
23%
Corporate
(16,681)
(14,477)
(39,336)
(36,056)
Total operating profit - adjusted
$
183,973
29%
$
166,391
28%
$
341,396
27%
$
275,416
25%
DEPRECIATION & AMORTIZATION
Industrial precision solutions
$
6,916
$
6,468
$
14,358
$
13,451
Advanced technology solutions
15,825
16,421
31,635
32,965
Corporate
2,224
2,427
4,362
4,920
Total depreciation & amortization
$
24,965
$
25,316
$
50,355
$
51,336
EBITDA (NON-GAAP) (2)
Industrial precision solutions
$
109,112
34%
$
110,751
37%
$
220,305
34%
$
201,137
34%
Advanced technology solutions
114,283
36%
93,006
32%
206,420
34%
156,751
30%
Corporate
(14,457)
(12,050)
(34,974)
(31,136)
Total EBITDA
$
208,938
33%
$
191,707
33%
$
391,751
31%
$
326,752
29%
(1) Represents non-cash inventory charges associated with the NDC acquisition.
(2) Adjusted operating profit and EBITDA are non-GAAP measures used by management to evaluate the Company's ongoing operations and non-cash inventory charges related to the NDC acquisition. Adjusted operating profit is defined as operating profit plus certain adjustments, such as non-cash inventory charges associated with the NDC acquisition. EBITDA is defined as adjusted operating profit plus depreciation and amortization.
7
NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - PROFITABILITY (Unaudited)
(Dollars in thousands)
Three Months Ended
Six Months Ended
April 30, 2022
April 30, 2021
April 30, 2022
April 30, 2021
GAAP AS REPORTED
Operating profit
$
183,973
$
166,391
$
339,833
$
275,416
Other / interest expense - net
(44,706)
(10,533)
(48,599)
(21,746)
Net income
109,634
124,144
230,043
201,726
Diluted earnings per share
$
1.88
$
2.12
$
3.93
$
3.44
Shares outstanding - diluted
58,382
58,652
58,606
58,703
OPERATING PROFIT ADJUSTMENTS
Inventory step-up amortization
$
—
$
—
$
1,563
$
—
NON-OPERATING EXPENSE ADJUSTMENTS
Pension settlement loss
$
41,221
$
—
$
41,221
$
—
Total adjustments
$
41,221
$
—
$
42,784
$
—
Adjustments net of tax
$
32,450
$
—
$
33,795
$
—
EPS effect of adjustments
$
0.56
$
—
$
0.58
$
—
NON-GAAP MEASURES-ADJUSTED PROFITABILITY
Operating profit (1)
$
183,973
$
166,391
$
341,396
$
275,416
Operating profit % of sales
29.0
%
28.2
%
27.4
%
24.7
%
Net income (2)
$
142,084
$
124,144
$
263,838
$
201,726
Diluted earnings per share (3)
$
2.43
$
2.12
$
4.50
$
3.44
(1) Adjusted operating profit is defined as operating profit plus certain adjustments such as non-cash inventory charges related to the NDC acquisition. Adjusted operating profit as a percentage of sales is defined as adjusted operating profit divided by sales.
(2) Adjusted net income is defined as net income plus tax effected adjustments and other discrete tax items.
(3) Adjusted earnings per share is defined as GAAP EPS adjusted for tax effected adjustments and other discrete tax items.
Management uses these non-GAAP measures 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.
