Nordson Corporation Reports Third Quarter Fiscal 2023 Results and Narrows Annual Guidance
Rhea-AI Summary
Nordson Corporation reports Q3 sales of $649 million, a 2% decrease from the prior year. Earnings per share were $2.22. Adjusted earnings per share were $2.35. Full-year fiscal 2023 revenue guidance narrowed to 0% to 2% growth over fiscal 2022.
Positive
Q3 sales decrease of 2% from prior year
Full-year revenue guidance narrowed to 0% to 2% growth
08/21/2023 - 04:30 PM
Third Quarter:
Sales were $649 million , a 2% decrease from the prior year
Operating profit was $171 million
EBITDA was $208 million , 32% of sales
Earnings per share were $2.22
Adjusted earnings per share were $2.35
Guidance:
Narrowing previously issued full-year fiscal 2023 revenue guidance to 0% to 2% growth over record fiscal 2022 and adjusted earnings per diluted share to the range of $8.90 to $9.05 per share
WESTLAKE, Ohio --(BUSINESS WIRE)--
Nordson Corporation (Nasdaq: NDSN) today reported results for the fiscal third quarter ended July 31, 2023. Sales were $649 million , a 2% decrease compared to the prior year’s third quarter sales of $662 million . The decrease in third quarter 2023 sales includes an organic decrease of 5%, partially offset by a favorable acquisition impact. The organic sales decrease was driven by ongoing pressure in electronics, primarily semiconductor dispense applications, and biopharma end markets, offset by strong growth in medical interventional solutions and polymer processing product lines.
Operating profit in the third quarter was $171 million . Adjusted operating profit, excluding $8 million in non-recurring acquisition costs plus severance costs, totaled $181 million , or 28% of sales, compared to prior year adjusted operating profit of $188 million . The 4% decrease in adjusted operating profit was driven by lower sales volume. EBITDA for the third quarter of fiscal 2023 totaled $208 million , or 32% of sales.
Net income was $128 million , or $2.22 of earnings per diluted share. Adjusted net income was $136 million , a $9 million decrease from the prior year earnings of $144 million . Third quarter 2023 adjusted earnings per diluted share were $2.35 , a 6% decrease from the prior year adjusted earnings per diluted share of $2.49 . The decrease was driven by increased interest expense and lower operating profit.
“During the fiscal third quarter, our team delivered strong profitability with 32% EBITDA and solid cash flow against persisting demand weakness in electronics and biopharma end markets. The team remains focused on the execution of our Ascend strategy to achieve top tier growth with leading margins and returns, as evidenced by the recently announced acquisition of ARAG and the steadfast deployment of the NBS Next growth framework. We are looking forward to the recovery of our cyclical end markets and the related incremental earnings power associated with the growth,” said Sundaram Nagarajan, president and chief executive officer.
Third Quarter Segment Results
Industrial Precision Solutions sales of $338 million decreased 1% from the prior year. The decrease was driven primarily by product assembly and nonwovens product lines in Asia Pacific , partially offset by continued strength in the polymer processing product lines. Operating profit in the quarter was $115 million , or 34% of sales, a 4% decrease from the prior year third quarter. The decrease in operating profit was driven by lower sales volume and changes in sales mix.
Medical and Fluid Solutions sales of $171 million decreased 4% compared to the prior year third quarter. The decrease was driven by continued softness in the medical fluid components and fluid solutions product lines, partially offset by strong double-digit demand for medical interventional solutions product lines. Operating profit was $54 million , or 32% of sales, a decrease of 11% compared to the prior year third quarter adjusted operating profit. The decreased segment profitability continued to be impacted by lower sales volume and sales mix changes within medical product lines.
Advanced Technology Solutions sales of $140 million decreased 3% compared to the prior year third quarter, as the favorable acquisition impact of 11% was more than offset by a decrease in organic sales of 13%. The organic sales decrease was driven by electronics dispense products serving semiconductor end markets, predominantly in Asia Pacific , slightly offset by continued growth in test and inspection product lines. Operating profit was $27 million . Adjusted operating profit, which excludes severance costs, totaled $29 million , or 21% of sales, an increase of 3% compared to the prior year third quarter operating profit. The improvement in operating profit was driven by favorable sales mix and realization of cost savings actions.
Outlook
Backlog entering the fourth quarter of fiscal 2023 remains strong at $890 million and continues to be heavily weighted toward systems and medical interventional solutions. Order entry has been steady throughout the quarter. Based on current visibility, we expect fourth quarter sales to be the strongest of the year, increasing low-mid single digits over the prior year fourth quarter. This increase includes approximately $20-$30 million of sales from the acquisition of the ARAG Group, which is forecasted to close in late August. On balance, the Company is narrowing its previously issued full-year revenue growth guidance to 0% to 2% over record fiscal 2022 and adjusted earnings guidance to the range of $8.90 to $9.05 .
Nordson management will provide additional commentary on these results and outlook during its previously announced webcast on Tuesday, August 22, 2023, 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 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 , www.twitter.com/Nordson_Corp or www.facebook.com/nordson .
NORDSON CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands except for per-share amounts)
Three Months Ended
Nine Months Ended
July 31, 2023
July 31, 2022
July 31, 2023
July 31, 2022
Sales
$
648,677
$
662,128
$
1,909,319
$
1,906,697
Cost of sales
288,357
296,544
868,007
843,344
Gross profit
360,320
365,584
1,041,312
1,063,353
Gross margin %
55.5
%
55.2
%
54.5
%
55.8
%
Selling & administrative expenses
189,324
180,666
553,590
538,602
Operating profit
170,996
184,918
487,722
524,751
Interest expense - net
(11,486
)
(5,165
)
(30,904
)
(15,292
)
Other income (expense) - net (1)
2,542
752
(2,059
)
(37,720
)
Income before income taxes
162,052
180,505
454,759
471,739
Income taxes
34,161
38,694
95,044
99,885
Net income
$
127,891
$
141,811
$
359,715
$
371,854
Weighted-average common shares outstanding:
Basic
56,989
57,409
57,114
57,782
Diluted
57,530
57,969
57,657
58,392
Earnings per share:
Basic earnings
$
2.24
$
2.47
$
6.30
$
6.44
Diluted earnings
$
2.22
$
2.45
$
6.24
$
6.37
(1) Nine months ended July 31, 2022, includes pension settlement charge of $41,221 .
NORDSON CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollars in thousands)
July 31, 2023
October 31, 2022
Cash and cash equivalents
$
143,138
$
163,457
Receivables - net
533,793
537,313
Inventories - net
439,741
383,398
Other current assets
60,249
48,803
Total current assets
1,176,921
1,132,971
Property, plant and equipment - net
350,735
353,442
Goodwill
2,110,780
1,804,693
Other assets
558,596
529,269
$
4,197,032
$
3,820,375
Current maturities of long-term debt and notes payable
$
110,643
$
392,537
Accounts payable and accrued liabilities
417,966
441,666
Total current liabilities
528,609
834,203
Long-term debt
727,455
345,320
Other liabilities
361,162
346,477
Total shareholders' equity
2,579,806
2,294,375
$
4,197,032
$
3,820,375
NORDSON CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
Nine Months Ended
July 31, 2023
July 31, 2022
Cash flows from operating activities:
Net income
$
359,715
$
371,854
Depreciation and amortization
80,637
75,242
Other non-cash items (1)
18,523
54,928
Changes in working capital
19,197
(162,333
)
Net cash provided by operating activities
478,072
339,691
Cash flows from investing activities:
Additions to property, plant and equipment
(24,244
)
(39,373
)
Acquisition of businesses, net of cash acquired
(377,843
)
(171,613
)
Other - net
91
415
Net cash used in investing activities
(401,996
)
(210,571
)
Cash flows from financing activities:
Net issuance of long-term debt
73,956
22,905
Repayment of finance lease obligations
(4,769
)
(3,726
)
Dividends paid
(111,547
)
(88,675
)
Issuance of common shares
18,449
8,845
Purchase of treasury shares
(78,163
)
(233,767
)
Net cash used in financing activities
(102,074
)
(294,418
)
Effect of exchange rate change on cash:
5,679
(5,937
)
Net change in cash and cash equivalents
(20,319
)
(171,235
)
Cash and cash equivalents:
Beginning of period
163,457
299,972
End of period
$
143,138
$
128,737
(1) Nine months ended July 31, 2022, includes pension settlement charge of $41,221 .
NORDSON CORPORATION
SALES BY GEOGRAPHIC SEGMENT (Unaudited)
(Dollars in thousands)
Three Months Ended
Sales Variance
July 31, 2023
July 31, 2022
Organic
Acquisitions
Currency
Total
SALES BY SEGMENT
Industrial Precision Solutions
$
338,257
$
341,215
(1.5
)%
—
%
0.6
%
(0.9
)%
Medical and Fluid Solutions
170,871
177,840
(3.9
)%
—
%
—
%
(3.9
)%
Advanced Technology Solutions
139,549
143,073
(12.8
)%
10.7
%
(0.4
)%
(2.5
)%
Total sales
$
648,677
$
662,128
(4.5
)%
2.4
%
0.1
%
(2.0
)%
SALES BY GEOGRAPHIC REGION
Americas
$
290,515
$
279,205
2.2
%
1.2
%
0.7
%
4.1
%
Europe
167,536
151,659
5.7
%
1.4
%
3.4
%
10.5
%
Asia Pacific
190,626
231,264
(20.0
)%
4.3
%
(1.9
)%
(17.6
)%
Total sales
$
648,677
$
662,128
(4.5
)%
2.4
%
0.1
%
(2.0
)%
Nine Months Ended
Sales Variance
July 31, 2023
July 31, 2022
Organic
Acquisitions
Currency
Total
SALES BY SEGMENT
Industrial Precision Solutions
$
985,610
$
981,582
2.6
%
—
%
(2.2
)%
0.4
%
Medical and Fluid Solutions
491,683
508,836
(2.4
)%
—
%
(1.0
)%
(3.4
)%
Advanced Technology Solutions
432,026
416,279
(6.6
)%
12.2
%
(1.8
)%
3.8
%
Total sales
$
1,909,319
$
1,906,697
(0.7
)%
2.6
%
(1.8
)%
0.1
%
SALES BY GEOGRAPHIC REGION
Americas
$
834,125
$
792,859
3.2
%
1.9
%
0.1
%
5.2
%
Europe
498,379
479,900
4.3
%
1.6
%
(2.0
)%
3.9
%
Asia Pacific
576,815
633,938
(9.7
)%
4.4
%
(3.7
)%
(9.0
)%
Total sales
$
1,909,319
$
1,906,697
(0.7
)%
2.6
%
(1.8
)%
0.1
%
NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - ADJUSTED OPERATING PROFIT AND EBITDA (Unaudited)
(Dollars in thousands)
Three Months Ended
Nine Months Ended
July 31, 2023
July 31, 2022
July 31, 2023
July 31, 2022
SALES BY SEGMENT
Industrial Precision Solutions
$
338,257
$
341,215
$
985,610
$
981,582
Medical and Fluid Solutions
170,871
177,840
491,683
508,836
Advanced Technology Solutions
139,549
143,073
432,026
416,279
Total sales
$
648,677
$
662,128
$
1,909,319
$
1,906,697
OPERATING PROFIT
Industrial Precision Solutions
$
115,346
$
119,706
$
329,439
$
324,089
Medical and Fluid Solutions
54,019
58,103
141,326
165,510
Advanced Technology Solutions
27,083
28,155
70,136
95,533
Corporate
(25,452
)
(21,046
)
(53,179
)
(60,381
)
Total operating profit
$
170,996
$
184,918
$
487,722
$
524,751
OPERATING PROFIT ADJUSTMENTS (1)
Industrial Precision Solutions
$
—
$
—
$
—
$
1,563
Medical and Fluid Solutions
—
2,498
1,479
2,498
Advanced Technology Solutions
2,049
—
14,304
—
Corporate
7,732
897
7,731
897
Total adjustments
$
9,781
$
3,395
$
23,514
$
4,958
ADJUSTED OPERATING PROFIT (NON-GAAP) (2)
% of Sales
% of Sales
% of Sales
% of Sales
Industrial Precision Solutions
$
115,346
34
%
$
119,706
35
%
$
329,439
33
%
$
325,652
33
%
Medical and Fluid Solutions
54,019
32
%
60,601
34
%
142,805
29
%
168,008
33
%
Advanced Technology Solutions
29,132
21
%
28,155
20
%
84,440
20
%
95,533
23
%
Corporate
(17,720
)
(20,149
)
(45,448
)
(59,484
)
Total operating profit - adjusted
$
180,777
28
%
$
188,313
28
%
$
511,236
27
%
$
529,709
28
%
DEPRECIATION & AMORTIZATION
Industrial Precision Solutions
$
7,036
$
6,347
$
21,166
$
20,705
Medical and Fluid Solutions
14,133
15,021
41,441
42,146
Advanced Technology Solutions
3,834
2,195
11,656
6,705
Corporate
2,099
1,324
6,374
5,686
Total depreciation & amortization
$
27,102
$
24,887
$
80,637
$
75,242
EBITDA (NON-GAAP) (2)
Industrial Precision Solutions
$
122,382
36
%
$
126,053
37
%
$
350,605
36
%
$
346,357
35
%
Medical and Fluid Solutions
68,152
40
%
75,622
43
%
184,246
37
%
210,154
41
%
Advanced Technology Solutions
32,966
24
%
30,350
21
%
96,096
22
%
102,238
25
%
Corporate
(15,621
)
(18,825
)
(39,074
)
(53,798
)
Total EBITDA
$
207,879
32
%
$
213,200
32
%
$
591,873
31
%
$
604,951
32
%
(1) Represents severance, as well as fees and non-cash inventory charges associated with acquisitions.
(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 severance, fees and non-cash inventory charges associated with acquisitions. EBITDA is defined as adjusted operating profit plus depreciation and amortization.
NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - PROFITABILITY (Unaudited)
(Dollars in thousands)
Three Months Ended
Nine Months Ended
July 31, 2023
July 31, 2022
July 31, 2023
July 31, 2022
GAAP AS REPORTED
Operating profit
$
170,996
$
184,918
$
487,722
$
524,751
Other / interest expense - net
(8,944
)
(4,413
)
(32,963
)
(53,012
)
Net income
127,891
141,811
359,715
371,854
Diluted earnings per share
$
2.22
$
2.45
$
6.24
$
6.37
Shares outstanding - diluted
57,530
57,969
57,657
58,392
OPERATING PROFIT ADJUSTMENTS
Inventory step-up amortization
$
—
$
—
$
4,306
$
1,563
Acquisition Costs
7,732
—
13,721
—
Severance and other
2,049
3,395
5,487
3,395
NON-OPERATING EXPENSE ADJUSTMENTS
Pension settlement loss
$
—
$
—
$
—
$
41,221
Total adjustments
$
9,781
$
3,395
$
23,514
$
46,179
Adjustments net of tax
$
7,719
$
2,667
$
18,600
$
36,401
EPS effect of adjustments and other discrete tax items
$
0.13
$
0.04
$
0.32
$
0.62
NON-GAAP MEASURES-ADJUSTED PROFITABILITY
Operating profit (1)
$
180,777
$
188,313
$
511,236
$
529,709
Operating profit % of sales
27.9
%
28.4
%
26.8
%
27.8
%
Net income (2)
$
135,610
$
144,478
$
378,315
$
408,255
Diluted earnings per share (3)
$
2.35
$
2.49
$
6.56
$
6.99
(1) Adjusted operating profit is defined as operating profit plus certain adjustments, such as severance, fees 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 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230821670299/en/
Lara Mahoney
Lara.Mahoney@nordson.com
Source: Nordson Corporation
