Nordson Corporation Reports Strong Second Quarter Fiscal 2022 Results and Raises Annual Earnings Guidance

By: Nordson Corporation via Business Wire

May 23, 2022 at 16:30 PM EDT

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

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.

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.

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.

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

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.

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	%

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.

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.

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Contacts

Lara Mahoney

Vice President,

Investor Relations & Corporate Communications

440.204.9985

Lara.Mahoney@nordson.com