Nordson Corporation Reports Fiscal Year 2021 Fourth Quarter and Record Full Year Results
Fourth Quarter:
•Sales were $599 million, a 7% year-over-year increase, 10% organic
•Operating profit was $151 million, or 25% of sales
•Earnings were $1.88 per diluted share, an 18% increase from prior year adjusted earnings per share
Full Year:
•Full year sales, operating profit, and earnings per share were all company records
•Sales were $2.4 billion, an 11% year-over-year increase
•Earnings were $7.74 per diluted share, a 41% increase from prior year adjusted earnings per share
2022 Guidance:
•Fiscal 2022 sales growth of 6% to 10% and earnings growth of 8% to 18% over the record fiscal 2021 results
•First quarter 2022 sales growth of 14% to 16% over prior year first quarter; earnings per diluted share in the range of $1.80 to $1.95
WESTLAKE, Ohio--(BUSINESS WIRE)--December 15, 2021--Nordson Corporation (Nasdaq: NDSN) today reported results for the fiscal fourth quarter ended October 31, 2021. Sales were $599 million, a 7% increase compared to the prior year’s fourth quarter sales of $559 million. The increase in fourth quarter 2021 sales included 10% organic volume growth, offset by an unfavorable 4% divestiture impact and favorable currency translation of 1%. Growth was strong in all product lines, particularly electronics and industrial end markets.
Operating profit in the quarter was $151 million, or 25% of sales, a 16% increase compared to the prior year adjusted operating profit of $130 million. Sales volume leverage, in addition to continued benefits from structural cost reduction actions taken in fiscal year 2020 and the divestiture of the screws and barrels product line on February 1, 2021, contributed to the quarterly increase. EBITDA in the quarter totaled $177 million, or 30% of sales, and represents an increase of 11% from the prior year EBITDA of $159 million.
Net income was $110 million, a 19% increase compared to the prior year adjusted earnings of $93 million. Fourth quarter diluted earnings per share were $1.88, an 18% increase over the prior year adjusted earnings of $1.59 per diluted share.
Commenting on the Company’s fiscal fourth quarter 2021 results, Nordson President and Chief Executive Officer Sundaram Nagarajan said, “The fourth quarter was a solid finish to an incredible year, where we surpassed our prior record annual performance in sales by $108 million and in operating profit by $111 million. I am very proud of the Nordson team. This growth was across a broad base of end markets and geographies, as a result of leveraging the NBS Next growth framework to fully participate in the accelerated economic recovery.”
Fourth Quarter Segment Results
Industrial Precision Solutions sales of $314 million increased 2% compared to the prior year fourth quarter, driven by an 8% organic increase, offset by a divestiture impact of 7% and a favorable currency impact of 1%. This organic sales increase was driven by steady demand across the majority of end markets and geographies served. Operating profit totaled $103 million in the quarter, or 33% of sales, an increase of 12% compared to the prior year adjusted operating profit.
Advanced Technology Solutions sales of $285 million increased 14% compared to the prior year fourth quarter, driven by an organic sales increase of 13% and a favorable currency impact of 1%. Sales growth was strong in all end markets during the current year quarter, with particularly high demand for products serving the electronics and medical end markets. Operating profit totaled $67 million in the quarter, or 24% of sales, an increase of 29% compared to the prior year adjusted operating profit.
“Our fourth quarter 2021 performance was very strong with double digit organic growth and incremental operating profit margins of 52%. Looking sequentially, gross margins were impacted by a spike in logistics costs and non-recurring cost increases associated with divisional alignment efforts around best growth opportunities. Pricing actions are being taken to
1
mitigate these negative impacts on gross margin as we move into the first half of 2022,” said Nordson Chief Financial Officer Joseph Kelley.
Fiscal 2021 Full Year Results
Sales for the fiscal year ended October 31, 2021 were $2.4 billion, an increase of 11% compared to the same period a year ago. This increase in sales was driven by an 11% increase in organic volume and a favorable currency impact of 3%, offset by a net unfavorable acquisition and divestiture impact of 3%. Full year operating profit was $615 million, or 26% of sales. Net income for the full year was $454 million and diluted earnings per share were $7.74, a 41% increase from the prior year adjusted diluted earnings per share of $5.48.
Mr. Nagarajan continued, “Looking at the second half of fiscal 2021, we achieved 15% organic sales growth and 36% adjusted profit growth compared to the second half of the prior year. Based on our strong order entry and current backlog, we anticipate carrying this second half of 2021 growth rate into the first quarter of fiscal 2022. Our teams are adapting to a very dynamic macro environment, and they are taking actions to offset cost and supply chain headwinds. The Ascend Strategy with NBS Next at its core will continue to enable us to deliver top tier growth with leading margins and returns.”
Outlook
Backlog entering the first quarter of fiscal year 2022 is approximately $800 million, a 90% increase above the prior year. The current macroeconomic environment continues to drive increased order volume and extended shipment request dates. Based on these order entry trends, backlog, and anticipated sales timing, we expect fiscal 2022 first quarter sales growth to be in the range of 14% to 16% as compared to fiscal 2021 first quarter, with adjusted earnings per diluted share in the range of $1.80 to $1.95.
On a full year basis, we expect fiscal 2022 sales growth to be in the range of 6% to 10%, with adjusted earnings per diluted share growth in the range of 8% to 18%, both as compared to fiscal 2021.
Nordson management will provide additional commentary on these results and outlook during its previously announced webcast on Thursday, December 16, 2021 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, 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 STATEMENT OF INCOME (Unaudited)
(Dollars in thousands except for per-share amounts)
Three Months Ended
Twelve Months Ended
October 31, 2021
October 31, 2020
October 31, 2021
October 31, 2020
Sales
$
599,247
$
558,525
$
2,362,209
$
2,121,100
Cost of sales
268,097
261,657
1,038,129
990,632
Gross profit
331,150
296,868
1,324,080
1,130,468
Gross margin %
55.3
%
53.2
%
56.1
%
53.3
%
Selling & administrative expenses
179,715
172,129
708,953
693,552
Assets held for sale impairment charge
—
87,371
—
87,371
Operating profit
151,435
37,368
615,127
349,545
Interest expense - net
(4,452)
(6,432)
(23,341)
(30,479)
Other expense - net
(6,874)
(4,634)
(17,610)
(17,577)
Income before income taxes
140,109
26,302
574,176
301,489
Income taxes
29,649
7,827
119,808
51,950
Net Income
$
110,460
$
18,475
$
454,368
$
249,539
Weighted-average common shares outstanding:
Basic
58,123
57,988
58,091
57,757
Diluted
58,792
58,679
58,734
58,473
Earnings per share:
Basic earnings
$
1.90
$
0.32
$
7.82
$
4.32
Diluted earnings
$
1.88
$
0.31
$
7.74
$
4.27
3
NORDSON CORPORATION
CONSOLIDATED BALANCE SHEET (Unaudited)
(Dollars in thousands)
October 31, 2021
October 31, 2020
Cash and cash equivalents
$
299,972
$
208,293
Receivables - net
489,389
471,873
Inventories - net
327,195
277,033
Other current assets
48,282
43,798
Assets held for sale
—
19,615
Total current assets
1,164,838
1,020,612
Property, plant & equipment - net
355,565
358,618
Goodwill
1,713,148
1,713,354
Other assets
557,410
582,072
$
3,790,961
$
3,674,656
Notes payable and debt due within one year
$
34,188
$
38,043
Accounts payable and accrued liabilities
411,206
311,898
Liabilities held for sale
—
13,148
Total current liabilities
445,394
363,089
Long-term debt
781,709
1,067,952
Other liabilities
404,728
484,624
Total shareholders' equity
2,159,130
1,758,991
$
3,790,961
$
3,674,656
4
NORDSON CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
Twelve Months Ended
October 31, 2021
October 31, 2020
Cash flows from operating activities:
Net Income
$
454,368
$
249,539
Depreciation and amortization
103,883
113,302
Impairment loss on assets held for sale
—
87,371
Other non-cash items
32,356
5,278
Changes in working capital
29,011
45,113
Other - principally pension plan
(73,691)
1,818
Net cash provided by operating activities
545,927
502,421
Cash flows from investing activities:
Additions to property, plant and equipment
(38,303)
(50,535)
Acquisitions
—
(142,414)
Other - net
5,134
(1,160)
Net cash used in investing activities
(33,169)
(194,109)
Cash flows from financing activities:
Repayment of long-term debt
(289,416)
(153,816)
Repayment of finance lease obligations
(6,624)
(7,605)
Dividends paid
(97,683)
(88,347)
Issuance of common shares
31,780
50,853
Purchase of treasury shares
(60,970)
(52,614)
Net cash used in financing activities
(422,913)
(251,529)
Effect of exchange rate change on cash
1,834
346
Net change in cash and cash equivalents
91,679
57,129
Cash and cash equivalents:
Beginning of period
208,293
151,164
End of period
$
299,972
$
208,293
5
NORDSON CORPORATION
SALES BY GEOGRAPHIC SEGMENT (Unaudited)
(Dollars in thousands)
Three Months Ended
Sales Variance
October 31, 2021
October 31, 2020
Organic
Acquisitions / Divestitures
Currency
Total
SALES BY SEGMENT
Industrial precision solutions
$
314,307
$
308,385
8.0
%
(6.6)
%
0.5
%
1.9
%
Advanced technology solutions
284,940
250,140
13.3
%
—
%
0.6
%
13.9
%
Total sales
$
599,247
$
558,525
10.4
%
(3.7)
%
0.6
%
7.3
%
SALES BY GEOGRAPHIC REGION
United States
$
199,532
$
194,701
7.8
%
(5.3)
%
—
%
2.5
%
Americas
51,038
35,452
47.2
%
(5.9)
%
2.7
%
44.0
%
Europe
163,592
142,082
17.6
%
(2.7)
%
0.2
%
15.1
%
Japan
27,659
36,248
(16.0)
%
(3.5)
%
(4.2)
%
(23.7)
%
Asia Pacific
157,426
150,042
4.6
%
(2.0)
%
2.3
%
4.9
%
Total sales
$
599,247
$
558,525
10.4
%
(3.7)
%
0.6
%
7.3
%
Twelve Months Ended
Sales Variance
October 31, 2021
October 31, 2020
Organic
Acquisitions / Divestitures
Currency
Total
SALES BY SEGMENT
Industrial precision solutions
$
1,246,947
$
1,143,423
11.7
%
(6.0)
%
3.4
%
9.1
%
Advanced technology solutions
1,115,262
977,677
10.9
%
1.3
%
1.9
%
14.1
%
Total sales
$
2,362,209
$
2,121,100
11.3
%
(2.6)
%
2.7
%
11.4
%
SALES BY GEOGRAPHIC REGION
United States
$
789,303
$
755,642
8.3
%
(3.8)
%
—
%
4.5
%
Americas
179,807
141,473
24.4
%
0.9
%
1.8
%
27.1
%
Europe
617,492
536,636
11.4
%
(2.0)
%
5.7
%
15.1
%
Japan
107,572
126,601
(11.0)
%
(3.5)
%
(0.5)
%
(15.0)
%
Asia Pacific
668,035
560,748
16.7
%
(1.8)
%
4.2
%
19.1
%
Total sales
$
2,362,209
$
2,121,100
11.3
%
(2.6)
%
2.7
%
11.4
%
6
NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - ADJUSTED OPERATING PROFIT AND EBITDA (Unaudited)
(Dollars in thousands)
Three Months Ended
Twelve Months Ended
October 31, 2021
October 31, 2020
October 31, 2021
October 31, 2020
SALES BY SEGMENT
Industrial precision solutions
$
314,307
$
308,385
$
1,246,947
$
1,143,423
Advanced technology solutions
284,940
250,140
1,115,262
977,677
Total sales
$
599,247
$
558,525
$
2,362,209
$
2,121,100
OPERATING PROFIT
Industrial precision solutions
$
102,677
$
425
$
414,192
$
208,028
Advanced technology solutions
67,104
50,674
271,660
191,602
Corporate
(18,346)
(13,731)
(70,725)
(50,085)
Total operating profit
$
151,435
$
37,368
$
615,127
$
349,545
OPERATING PROFIT ADJUSTMENTS (1)
Industrial precision solutions
$
—
$
91,419
$
—
$
94,896
Advanced technology solutions
—
1,424
—
7,807
Corporate
—
—
—
1,387
Total adjustments
$
—
$
92,843
$
—
$
104,090
ADJUSTED OPERATING PROFIT (NON-GAAP)
% of Sales
% of Sales
% of Sales
% of Sales
Industrial precision solutions
$
102,677
33
%
$
91,844
30
%
$
414,192
33
%
$
302,924
26
%
Advanced technology solutions
67,104
24
%
52,098
21
%
271,660
24
%
199,409
20
%
Corporate
(18,346)
(13,731)
(70,725)
(48,698)
Total operating profit - adjusted
$
151,435
25
%
$
130,211
23
%
$
615,127
26
%
$
453,635
21
%
DEPRECIATION & AMORTIZATION
Industrial precision solutions
$
6,259
$
9,951
$
25,673
$
38,939
Advanced technology solutions
16,987
16,710
68,426
64,543
Corporate
2,404
2,477
9,784
9,820
Total depreciation & amortization
$
25,650
$
29,138
$
103,883
$
113,302
EBITDA (NON-GAAP) (2)
Industrial precision solutions
$
108,936
35
%
$
101,795
33
%
$
439,865
35
%
$
341,863
30
%
Advanced technology solutions
84,091
30
%
68,808
28
%
340,086
30
%
263,952
27
%
Corporate
(15,942)
(11,254)
(60,941)
(38,878)
Total EBITDA
$
177,085
30
%
$
159,349
29
%
$
719,010
30
%
$
566,937
27
%
(1) Represents assets held for sale impairment charge, costs and adjustments related to cost structure simplification actions, and charges associated with our 2020 acquisition.
(2) Adjusted operating profit and EBITDA are non-GAAP measures used by management to evaluate the Company's ongoing operations. Adjusted operating profit is defined as operating profit plus certain adjustments, such as the assets held for sale impairment charge, cost structure simplification actions, and non-cash inventory charges related to acquisitions. 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
Twelve Months Ended
October 31, 2021
October 31, 2020
October 31, 2021
October 31, 2020
GAAP AS REPORTED
Operating profit
$
151,435
$
37,368
$
615,127
$
349,545
Other / interest expense - net
(11,326)
(11,066)
(40,951)
(48,056)
Net income
110,460
18,475
454,368
249,539
Diluted earnings per share
$
1.88
$
0.31
$
7.74
$
4.27
Shares outstanding - diluted
58,792
58,679
58,734
58,473
OPERATING PROFIT ADJUSTMENTS
Inventory step-up amortization
$
—
$
1,298
$
—
$
2,527
Severance and other
—
4,174
—
14,192
Assets held for sale impairment charge
—
87,371
—
87,371
NON-OPERATING EXPENSE ADJUSTMENTS
Pension settlement loss
$
—
$
—
$
—
$
2,508
Total adjustments
$
—
$
92,843
$
—
$
106,598
Adjustments net of tax
$
—
$
76,390
$
—
$
87,214
Other discrete tax items
$
—
$
(1,820)
$
—
$
(16,311)
EPS effect of adjustments and other discrete tax items
$
—
$
1.27
$
—
$
1.21
NON-GAAP MEASURES-ADJUSTED PROFITABILITY
Operating profit (1)
$
151,435
$
130,211
$
615,127
$
453,635
Operating profit % of sales
25.3
%
23.3
%
26.0
%
21.4
%
Net income (2)
$
110,460
$
93,045
$
454,368
$
320,442
Diluted earnings per share (3)
$
1.88
$
1.59
$
7.74
$
5.48
(1) Adjusted operating profit is defined as operating profit plus certain adjustments such as the assets held for sale impairment charge, cost structure simplification actions and non-cash inventory charges related to acquisitions. 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 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.
