Nordson Corporation Reports Second Quarter Fiscal 2024 Results and Updates Annual Guidance

Second Quarter:

• Sales were $651 million
• Net income was $118 million
• Earnings per diluted share were $2.05
• Adjusted earnings per diluted share were $2.34
• EBITDA was $203 million, 31% of sales

Guidance:

• Updating full-year fiscal 2024 revenue guidance to the range of flat to 2% growth over record fiscal 2023 and adjusted earnings per diluted share to the range of $9.35 to $9.75 per share

WESTLAKE, Ohio--(BUSINESS WIRE)-- Nordson Corporation (Nasdaq: NDSN) today reported results for the fiscal second quarter ended April 30, 2024. Sales were $651 million, comparable to the prior year’s second quarter sales of $650 million. The second quarter 2024 sales included a favorable acquisition impact of 5%, partially offset by an organic sales decrease of 4%. The organic sales decrease was driven by ongoing pressure in electronics product lines, partially offset by growth in industrial coatings systems and fluid solutions product lines.

Net income was $118 million, or $2.05 of earnings per diluted share, compared to prior year’s second quarter net income of $128 million, or $2.21 of earnings per diluted share. Adjusted net income was $135 million, a decrease from the prior year adjusted net income of $141 million. Second quarter 2024 adjusted earnings per diluted share were $2.34, a 4% decrease from the prior year adjusted earnings per diluted share of $2.45. The decrease was driven primarily by increased interest expense from prior year acquisitions.

EBITDA in the second quarter was $203 million, or 31% of sales, compared to prior year EBITDA of $203 million, or 31% of sales. EBITDA was flat as improved gross margins were offset by higher selling and administrative expenses primarily related to the first-year effect of the ARAG acquisition.

Commenting on the Company’s fiscal 2024 second quarter results, Nordson President and Chief Executive Officer Sundaram Nagarajan said, “Once again, the teams delivered a solid operating performance, delivering strong gross margins and 31% EBITDA margin. Our sales were in line with management expectations with the IPS and MFS segments delivering organic growth. While we see positive early indicators, our Advanced Technology Solutions segment remains impacted by the electronics cycle. I am pleased with our ability to manage profitability during this period.”

Second Quarter Segment Results

Industrial Precision Solutions sales of $367 million increased 9% from the prior year, inclusive of an acquisition impact and an organic sales increase of 2%. The organic sales increase was driven primarily by industrial coatings systems and packaging product lines. Operating profit was $118 million, an increase of $6 million from the prior year. EBITDA in the quarter was $132 million, or 36% of sales, an 11% increase from the prior year second quarter EBITDA of $119 million, or 35% of sales. The year-over-year increase was driven by the ARAG acquisition and higher organic sales and gross profit.

Medical and Fluid Solutions sales of $169 million increased 2% compared to the prior year second quarter. The increase was driven by growth in the fluid and interventional solutions product lines. Operating profit was $49 million, an increase of $1 million from the prior year. EBITDA in the quarter was $63 million, or 37% of sales, flat versus the prior year second quarter EBITDA of $63 million, or 38% of sales.

Advanced Technology Solutions sales of $115 million decreased 22% compared to the prior year second quarter. The organic sales decrease was driven by weakness across the segment. Operating profit was $19 million, a decrease of $7 million from the prior year with a decremental margin of 22%. EBITDA in the quarter was $24 million, or 21% of sales, a decrease from the prior year second quarter EBITDA of $32 million, or 22% of sales.

Outlook

The Company is entering the third quarter of fiscal 2024 with approximately $700 million in backlog, which continues to normalize and remain concentrated in systems businesses. Based on current visibility and order entry trends, the Company is updating its full-year revenue guidance range to flat to 2% growth over record fiscal 2023 and adjusted earnings per diluted share to the range of $9.35 to $9.75 per diluted share. Third quarter fiscal 2024 sales are forecasted in the range of $645 to $670 million with adjusted earnings in the range of $2.25 to $2.40 per diluted share.

Reflecting on the outlook, Nagarajan continued, “As we move into the second half of fiscal 2024, the positive indicators in the electronics end markets have not yet converted into orders needed to meet our previously issued guidance. We are also experiencing increased pressure from the agriculture cycle in Europe, which is causing OEMs to slow investments in spray implement purchases. In each of these cases, we believe the impact is temporary and we remain confident in the long-term growth drivers of these respective end markets. Our core strengths remain: a diversified portfolio, close to the customer business model, high-level of recurring revenue, NBS Next growth framework, and commitment to innovation. All of this positions Nordson well to deliver our long-term Ascend Strategy goals.”

Nordson management will provide additional commentary on these results and outlook during its previously announced webcast on Tuesday, May 21, 2024 at 8:30 a.m. eastern time, which can be accessed at https://investors.nordson.com. 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.

The Company’s definition of adjusted earnings excludes acquisition related amortization for both current and historical periods. It is not possible for the Company to identify the amount or significance of future adjustments associated with acquisition and integration costs, restructuring costs, acquisition-related amortization, certain non-operating or income tax items, or other non-routine costs that the Company adjusts in the presentation of adjusted earnings guidance. These items are dependent on future events that are not reasonably estimable at this time. Accordingly, the Company is unable to reconcile without unreasonable effort the forecasted range of adjusted earnings guidance to a comparable GAAP range.

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 these 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 recent 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 through an entrepreneurial, division-led organization 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, linkedin/Nordson, or www.facebook.com/nordson.

NORDSON CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands except for per-share amounts)
	Three Months Ended								Six Months Ended
	April 30, 2024				April 30, 2023				April 30, 2024				April 30, 2023
Sales	$	650,642			$	650,165			$	1,283,835			$	1,260,642
Cost of sales		284,765				298,040				569,531				579,650
Gross profit		365,877				352,125				714,304				680,992
Gross margin %		56.2	%			54.2	%			55.6	%			54.0	%
Selling & administrative expenses		197,261				179,618				386,253				364,266
Operating profit		168,616				172,507				328,051				316,726
Interest expense - net		(18,555	)			(9,475	)			(38,953	)			(19,418	)
Other expense - net		(785	)			(1,405	)			(1,123	)			(4,601	)
Income before income taxes		149,276				161,627				287,975				292,707
Income taxes		31,059				34,064				60,186				60,883
Net income	$	118,217			$	127,563			$	227,789			$	231,824
Weighted-average common shares outstanding:
Basic		57,222				57,184				57,142				57,177
Diluted		57,681				57,680				57,617				57,721
Earnings per share:
Basic earnings	$	2.07			$	2.23			$	3.99			$	4.05
Diluted earnings	$	2.05			$	2.21			$	3.95			$	4.02

NORDSON CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)
	April 30, 2024				October 31, 2023
Cash and cash equivalents	$	125,446			$	115,679
Receivables - net		530,283				590,886
Inventories - net		443,578				454,775
Other current assets		86,283				67,970
Total current assets		1,185,590				1,229,310
Property, plant and equipment - net		395,595				392,846
Goodwill		2,782,909				2,784,201
Other assets		807,777				845,413
	$	5,171,871			$	5,251,770
Notes payable and debt due within one year	$	119,328			$	115,662
Accounts payable and accrued liabilities		416,683				466,427
Total current liabilities		536,011				582,089
Long-term debt		1,414,363				1,621,394
Other liabilities		433,226				450,227
Total shareholders' equity		2,788,271				2,598,060
	$	5,171,871			$	5,251,770

NORDSON CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (Dollars in thousands)
	Six Months Ended
	April 30, 2024				April 30, 2023
Cash flows from operating activities:
Net income	$	227,789			$	231,824
Depreciation and amortization		66,264				53,535
Other non-cash items		10,281				11,458
Changes in working capital		(3,435	)			(45,857	)
Other		(5,935	)			36,945
Net cash provided by operating activities		294,964				287,905
Cash flows from investing activities:
Additions to property, plant and equipment		(21,907	)			(15,349	)
Acquisition of businesses, net of cash acquired		—				(377,843	)
Other - net		6,730				39
Net cash used in investing activities		(15,177	)			(393,153	)
Cash flows from financing activities:
Issuance (repayment) of long-term debt		(204,372	)			184,617
Repayment of finance lease obligations		(2,881	)			(2,775	)
Dividends paid		(77,796	)			(74,463	)
Issuance of common shares		27,219				11,808
Purchase of treasury shares		(7,927	)			(54,365	)
Net cash provided (used) in financing activities		(265,757	)			64,822
Effect of exchange rate change on cash:		(4,263	)			6,042
Net change in cash and cash equivalents		9,767				(34,384	)
Cash and cash equivalents:
Beginning of period		115,679				163,457
End of period	$	125,446			$	129,073

NORDSON CORPORATION SALES BY GEOGRAPHIC SEGMENT (Unaudited) (Dollars in thousands)
	Three Months Ended								Sales Variance
	April 30, 2024				April 30, 2023				Organic			Acquisitions			Currency			Total
SALES BY SEGMENT
Industrial Precision Solutions	$	366,991			$	335,807			1.5	%		8.6	%		(0.8	)%		9.3	%
Medical and Fluid Solutions		168,966				166,526			1.8	%		—	%		(0.3	)%		1.5	%
Advanced Technology Solutions		114,685				147,832			(21.6	)%		—	%		(0.8	)%		(22.4	)%
Total sales	$	650,642			$	650,165			(3.7	)%		4.5	%		(0.7	)%		0.1	%
SALES BY GEOGRAPHIC REGION
Americas	$	294,428			$	278,731			2.9	%		2.3	%		0.4	%		5.6	%
Europe		182,070				167,904			(4.4	)%		12.5	%		0.3	%		8.4	%
Asia Pacific		174,144				203,530			(12.3	)%		0.7	%		(2.8	)%		(14.4	)%
Total sales	$	650,642			$	650,165			(3.7	)%		4.5	%		(0.7	)%		0.1	%
	Six Months Ended								Sales Variance
	April 30, 2024				April 30, 2023				Organic			Acquisitions			Currency			Total
SALES BY SEGMENT
Industrial Precision Solutions	$	721,538			$	647,353			1.9	%		9.6	%		—	%		11.5	%
Medical and Fluid Solutions		328,492				320,813			2.4	%		—	%		—	%		2.4	%
Advanced Technology Solutions		233,805				292,476			(19.6	)%		—	%		(0.5	)%		(20.1	)%
Total sales	$	1,283,835			$	1,260,642			(2.9	)%		4.9	%		(0.2	)%		1.8	%
SALES BY GEOGRAPHIC REGION
Americas	$	568,440			$	543,610			1.3	%		2.8	%		0.5	%		4.6	%
Europe		361,380				330,843			(5.7	)%		13.4	%		1.5	%		9.2	%
Asia Pacific		354,015				386,189			(6.7	)%		0.7	%		(2.3	)%		(8.3	)%
Total sales	$	1,283,835			$	1,260,642			(2.9	)%		4.9	%		(0.2	)%		1.8	%

NORDSON CORPORATION RECONCILIATION OF NON-GAAP MEASURES - NET INCOME TO EBITDA (Unaudited) (Dollars in thousands)
	Three Months Ended								Six Months Ended
	April 30, 2024				April 30, 2023				April 30, 2024				April 30, 2023
Net income	$	118,217			$	127,563			$	227,789			$	231,824
Income taxes		31,059				34,064				60,186				60,883
Interest expense - net		18,555				9,475				38,953				19,418
Other expense - net		785				1,405				1,123				4,601
Depreciation and amortization		32,720				27,100				66,264				53,535
Inventory step-up amortization (1)		—				—				2,944				4,306
Severance and other		2,078				3,439				2,078				3,439
Acquisition-related costs (1)		—				—				597				5,989
EBITDA (non-GAAP) (2)	$	203,414			$	203,046			$	399,934			$	383,995

(1)	Represents fees, severance and non-cash inventory charges associated with acquisitions.
(2)	EBITDA is a non-GAAP measure used by management to evaluate the Company's ongoing operations. EBITDA is defined as operating profit plus certain adjustments, such as severance, fees and non-cash inventory charges associated with acquisitions, plus depreciation and amortization.

NORDSON CORPORATION RECONCILIATION OF NON-GAAP MEASURES - EBITDA (Unaudited) (Dollars in thousands)
	Three Months Ended														Six Months Ended
	April 30, 2024							April 30, 2023							April 30, 2024							April 30, 2023
SALES BY SEGMENT
Industrial Precision Solutions	$	366,991						$	335,807						$	721,538						$	647,353
Medical and Fluid Solutions		168,966							166,526							328,492							320,813
Advanced Technology Solutions		114,685							147,832							233,805							292,476
Total sales	$	650,642						$	650,165						$	1,283,835						$	1,260,642
OPERATING PROFIT
Industrial Precision Solutions	$	117,831						$	111,773						$	226,195						$	214,093
Medical and Fluid Solutions		48,993							47,922							95,093							87,307
Advanced Technology Solutions		18,784							26,090							37,822							43,053
Corporate		(16,992	)						(13,278	)						(31,059	)						(27,727	)
Total operating profit	$	168,616						$	172,507						$	328,051						$	316,726
OPERATING PROFIT ADJUSTMENTS (1)
Industrial Precision Solutions	$	—						$	—						$	3,541						$	—
Medical and Fluid Solutions		—							1,479							—							1,479
Advanced Technology Solutions		2,078							1,960							2,078							12,255
Total adjustments	$	2,078						$	3,439						$	5,619						$	13,734
DEPRECIATION & AMORTIZATION
Industrial Precision Solutions	$	13,920						$	7,285						$	28,300						$	14,130
Medical and Fluid Solutions		13,564							13,683							27,269							27,308
Advanced Technology Solutions		3,284							4,010							6,725							7,822
Corporate		1,952							2,122							3,970							4,275
Total depreciation & amortization	$	32,720						$	27,100						$	66,264						$	53,535
EBITDA (NON-GAAP) (2)
Industrial Precision Solutions	$	131,751			36	%		$	119,058			35	%		$	258,036			36	%		$	228,223			35	%
Medical and Fluid Solutions		62,557			37	%			63,084			38	%			122,362			37	%			116,094			36	%
Advanced Technology Solutions		24,146			21	%			32,060			22	%			46,625			20	%			63,130			22	%
Corporate		(15,040	)						(11,156	)						(27,089	)						(23,452	)
Total EBITDA	$	203,414			31	%		$	203,046			31	%		$	399,934			31	%		$	383,995			30	%

(1)	Represents severance as well as fees and non-cash inventory charges associated with acquisitions.
(2)	EBITDA is a non-GAAP measure used by management to evaluate the Company's ongoing operations. EBITDA is defined as operating profit plus certain adjustments, such as severance, fees and non-cash inventory charges associated with acquisitions, plus depreciation and amortization.

NORDSON CORPORATION RECONCILIATION OF NON-GAAP MEASURES - ADJUSTED NET INCOME AND EARNINGS PER SHARE (Unaudited) (Dollars in thousands)
	Three Months Ended								Six Months Ended
	April 30, 2024				April 30, 2023				April 30, 2024				April 30, 2023
GAAP AS REPORTED
Operating profit	$	168,616			$	172,507			$	328,051			$	316,726
Other / interest expense - net		(19,340	)			(10,880	)			(40,076	)			(24,019	)
Net income		118,217				127,563				227,789				231,824
Diluted earnings per share	$	2.05			$	2.21			$	3.95			$	4.02
Shares outstanding - diluted		57,681				57,680				57,617				57,721
OPERATING PROFIT ADJUSTMENTS
Inventory step-up amortization	$	—			$	—			$	2,944			$	4,306
Acquisition-related costs		—				—				597				5,989
Severance and other		2,078				3,439				2,078				3,439
ACQUISITION AMORTIZATION OF INTANGIBLES	$	18,823			$	14,044				38,210				27,917
Total adjustments	$	20,901			$	17,483			$	43,829			$	41,651
Adjustments net of tax	$	16,556			$	13,798			$	34,669			$	32,988
EPS effect of adjustments and other discrete tax items	$	0.29			$	0.24			$	0.60			$	0.57
NON-GAAP MEASURES-ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
Adjusted Net income (1)	$	134,773			$	141,361			$	262,458			$	264,812
Adjusted Diluted earnings per share (2)	$	2.34			$	2.45			$	4.55			$	4.59

(1)	Adjusted net income is a non-GAAP measure defined as net income plus tax effected adjustments and other discrete tax items.
(2)	Adjusted earnings per share is a non-GAAP measure defined as GAAP EPS adjusted for tax effected adjustments and other discrete tax items.

Management uses certain non-GAAP measures, such as adjusted net income, adjusted EPS and EBITDA, 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240520510596/en/

Lara Mahoney

Vice President, Investor Relations & Corporate Communications

440.204.9985

Lara.Mahoney@nordson.com

Source: Nordson Corporation