Nordson Corporation Reports Fiscal Year 2021 First Quarter Results
First Quarter:
•Sales were $527 million, a 6% increase over prior year
•Operating profit was $109 million, or 21% of sales, a 39% increase over prior year
•Earnings were $1.32 per diluted share, a 48% increase over prior year
Guidance:
•Fiscal 2021 full year sales growth of 4% to 6% and full year diluted earnings per share in the range of $6.30 to $6.70
WESTLAKE, Ohio--(BUSINESS WIRE)--February 22, 2021--Nordson Corporation (Nasdaq: NDSN) today reported results for the fiscal first quarter ended January 31, 2021. Sales were $527 million, a 6% increase compared to the prior year’s first quarter sales of $495 million. Strength in consumer non-durable and industrial end markets were the primary drivers of the growth. The change in first quarter 2021 sales included an organic volume increase of 3%, a favorable effect from currency translation of 3%, and benefits from acquisitions.
Operating profit in the quarter was $109 million or 21% of sales, compared to prior year adjusted operating profit of $78 million. This 39% increase in profit was driven by leveraging sales volume growth, benefits from structural cost reduction actions taken in fiscal year 2020, and an improved sales mix. EBITDA for the first quarter of 2021 totaled $135 million, or 26% of sales.
Net income was $78 million, a 49% increase from the prior year earnings of $52 million. First quarter 2021 diluted earnings per share were $1.32, a 48% increase over the prior year earnings of $0.89 per diluted share.
“I am very pleased with the solid start to the year, particularly in our return to year-over-year organic sales growth and the significant profit margin expansion as strategic actions taken in fiscal year 2020 began delivering results. While this remains a dynamic macro-environment, we are encouraged by the order entry momentum we started to see within the quarter, particularly in product lines serving the medical and electronics end markets,” said Nordson President and Chief Executive Officer Sundaram Nagarajan. “I am very thankful for the energy and commitment of our employees, who continue to manage through the uncertainty of COVID-19 while also deploying our new NBS Next growth framework and making a strong Nordson even stronger.”
First Quarter Segment Results
Industrial Precision Solutions sales of $288 million increased approximately 9% compared to the prior year first quarter, driven by a 6% organic increase and a favorable currency impact of 3%. The organic sales increase was driven by solid demand in consumer non-durable and industrial end markets. Operating profit was $83 million, or 29% of sales compared to 21% in the prior year first quarter.
Advanced Technology Solutions sales of $238 million increased approximately 3% compared to the prior year first quarter. Acquisitions increased sales by approximately 2% and favorable currency impacts also added 2%, which was offset by an organic volume decrease of 1%. Sales growth in test and inspection and fluid dispense product lines was offset by weaker shipments in electronic dispense and medical interventional solutions product lines during the quarter. Operating profit totaled $47 million, or 20% of sales, compared to adjusted operating profit of 15% of sales in the prior year first quarter.
Outlook
On February 1, the divestiture of the screws and barrels product line was completed. This was an important strategic portfolio realignment that will lead to improved profitability.
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Order entry trends consistently improved throughout the first quarter of fiscal year 2021 across the majority of our product lines, and backlog entering the second quarter of fiscal year 2021 was approximately $495 million, an increase of 7% compared to the same period a year ago. Based on this backlog and order entry trend, and the correlation to sales timing, we expect the fiscal 2021 full year sales growth to be approximately 4% to 6% over fiscal year 2020, inclusive of a 3% headwind from the divestiture. Additionally, we are forecasting full year 2021 earnings per diluted share in the range of $6.30 to $6.70, representing 15% to 22% growth over the prior year adjusted earnings.
Nordson management will provide additional commentary on these results and outlook during its previously announced webcast on Tuesday, February 23, 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 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.
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Attachment 1
NORDSON CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands except for per-share amounts)
Three months ended
January 31, 2021
January 31, 2020
Sales
$
526,566
$
494,916
Cost of sales
236,606
231,722
Gross profit
289,960
263,194
Gross margin %
55.1
%
53.2
%
Selling & administrative expenses
180,935
188,101
Operating profit
109,025
75,093
Interest expense - net
(6,552)
(9,152)
Other expense - net
(4,661)
(2,846)
Income before income taxes
97,812
63,095
Income taxes
20,230
11,091
Net income
$
77,582
$
52,004
Weighted-average common shares outstanding:
Basic
58,059
57,668
Diluted
58,755
58,524
Earnings per share:
Basic earnings
$
1.34
$
0.90
Diluted earnings
$
1.32
$
0.89
3
Attachment 2
NORDSON CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)
January 31, 2021
October 31, 2020
Cash and cash equivalents
$
225,738
$
208,293
Receivables - net
455,376
471,873
Inventories - net
282,440
277,033
Other current assets
45,124
43,798
Assets held for sale
19,451
19,615
Total current assets
1,028,129
1,020,612
Property, plant & equipment - net
358,670
358,618
Goodwill
1,722,824
1,713,354
Other assets
573,778
582,072
$
3,683,401
$
3,674,656
Current maturities of long-term debt
$
38,043
$
38,043
Accounts payable and accrued liabilities
307,355
311,898
Liabilities held for sale
14,211
13,148
Total current liabilities
359,609
363,089
Long-term debt
981,284
1,067,952
Other liabilities
485,325
484,624
Total shareholders' equity
1,857,183
1,758,991
$
3,683,401
$
3,674,656
4
Attachment 3
NORDSON CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
Three Months Ended
January 31, 2021
January 31, 2020
Cash flows from operating activities:
Net income
$
77,582
$
52,004
Depreciation and amortization
26,020
28,618
Other non-cash items
10,271
7,167
Changes in working capital
29,416
28,486
Net cash provided by operating activities
143,289
116,275
Cash flows from investing activities:
Additions to property, plant and equipment
(7,917)
(13,881)
Other - net
22
65
Net cash used in investing activities
(7,895)
(13,816)
Cash flows from financing activities:
Repayment of long-term debt
(100,000)
(125,951)
Repayment of finance lease obligations
(1,734)
(2,421)
Dividends paid
(22,672)
(21,915)
Issuance of common shares
7,438
16,379
Purchase of treasury shares
(5,310)
(4,311)
Net cash used in financing activities
(122,278)
(138,219)
Effect of exchange rate change on cash
4,329
(307)
Net change in cash and cash equivalents
17,445
(36,067)
Cash and cash equivalents:
Beginning of period
208,293
151,164
End of period
$
225,738
$
115,097
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Attachment 4
NORDSON CORPORATION
SALES BY GEOGRAPHIC SEGMENT (Unaudited)
(Dollars in thousands)
Three Months Ended
Sales Variance
January 31, 2021
January 31, 2020
Organic
Acquisitions
Currency
Total
SALES BY SEGMENT
Industrial precision solutions
$
288,416
$
263,799
5.9
%
—
%
3.4
%
9.3
%
Advanced technology solutions
238,150
231,117
(1.3)
%
2.2
%
2.1
%
3.0
%
Total sales
$
526,566
$
494,916
2.6
%
1.0
%
2.8
%
6.4
%
SALES BY GEOGRAPHIC REGION
United States
$
185,316
$
188,500
(2.8)
%
1.1
%
—
%
(1.7)
%
Americas
36,138
31,083
9.9
%
9.8
%
(3.4)
%
16.3
%
Europe
135,151
126,391
0.3
%
—
%
6.6
%
6.9
%
Japan
27,115
27,552
(6.3)
%
—
%
4.7
%
(1.6)
%
Asia Pacific
142,846
121,390
13.4
%
—
%
4.3
%
17.7
%
Total sales
$
526,566
$
494,916
2.6
%
1.0
%
2.8
%
6.4
%
6
Attachment 5
NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - ADJUSTED OPERATING PROFIT AND EBITDA (Unaudited)
(Dollars in thousands)
Three months ended
January 31, 2021
January 31, 2020
SALES BY SEGMENT
Industrial precision solutions
$
288,416
$
263,799
Advanced technology solutions
238,150
231,117
Total sales
$
526,566
$
494,916
OPERATING PROFIT
Industrial precision solutions
$
83,403
$
56,404
Advanced technology solutions
47,201
32,287
Corporate
(21,579)
(13,598)
Total operating profit
$
109,025
$
75,093
OPERATING PROFIT ADJUSTMENTS (1)
Industrial precision solutions
$
—
$
299
Advanced technology solutions
—
2,970
Corporate
—
—
Total adjustments
$
—
$
3,269
ADJUSTED OPERATING PROFIT (NON-GAAP) (2)
% of Sales
% of Sales
Industrial precision solutions
$
83,403
29%
$
56,703
21%
Advanced technology solutions
47,201
20%
35,257
15%
Corporate
(21,579)
(13,598)
Total operating profit - adjusted
$
109,025
21%
$
78,362
16%
DEPRECIATION & AMORTIZATION
Industrial precision solutions
$
6,983
$
9,827
Advanced technology solutions
16,544
16,320
Corporate
2,493
2,471
Total depreciation & amortization
$
26,020
$
28,618
EBITDA (NON-GAAP) (2)
Industrial precision solutions
$
90,386
31%
$
66,530
25%
Advanced technology solutions
63,745
27%
51,577
22%
Corporate
(19,086)
(11,127)
Total EBITDA
$
135,045
26%
$
106,980
22%
(1) Represents costs and adjustments related to cost structure simplification actions.
(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 cost structure simplification actions. EBITDA is defined as adjusted operating profit plus depreciation and amortization.
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Attachment 6
NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - PROFITABILITY (Unaudited)
(Dollars in thousands)
Three Months Ended
January 31, 2021
January 31, 2020
GAAP AS REPORTED
Operating profit
$
109,025
$
75,093
Other / interest expense - net
(11,213)
(11,998)
Net income
77,582
52,004
Diluted earnings per share
$
1.32
$
0.89
Shares outstanding - diluted
58,755
58,524
OPERATING PROFIT ADJUSTMENTS
Severance and other
$
—
$
3,269
Adjustments net of tax
$
—
$
2,563
Other discrete tax items
$
—
$
(2,537)
EPS effect of adjustments and other discrete tax items
$
—
$
—
NON-GAAP MEASURES-ADJUSTED PROFITABILITY
Operating profit (1)
$
109,025
$
78,362
Operating profit % of sales
20.7
%
15.8
%
Net income (2)
$
77,582
$
52,030
Diluted earnings per share (3)
$
1.32
$
0.89
(1) Adjusted operating profit is defined as operating profit plus certain adjustments such as cost structure simplification actions. 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.