Nordson Corporation Reports Record Third Quarter Results and Raises Fiscal Year 2021 Guidance

Rhea-AI Summary

Nordson Corporation (Nasdaq: NDSN) reported record third-quarter sales of $647 million, marking a 20% increase year-over-year. Operating profit surged 57% to $188 million, with diluted earnings per share rising 70% to $2.42. The company has increased its full-year revenue guidance to 11%-12% growth, with earnings projected at $7.75 to $7.95 per share. Demand in medical, electronics, and industrial markets drove strong performance, despite challenges from supply chain issues. Nordson's backlog stands at approximately $700 million, indicating robust future growth.

Positive

• Record sales of $647 million, a 20% increase year-over-year.
• Operating profit increased by 57% to $188 million.
• Earnings per share rose by 70% to $2.42.
• Increased full-year revenue guidance to 11%-12% growth.
• Projected earnings for the year between $7.75 and $7.95.
• Backlog of approximately $700 million, 70% above the prior year.

Negative

• Net unfavorable impact of acquisitions and divestitures of 4% on sales.

Third Quarter:

• Quarterly sales, operating profit, and earnings per share were all company records
• Sales were $647 million, a 20% increase over prior year
• Operating profit was $188 million, a 57% increase over prior year adjusted operating profit
• Earnings were $2.42 per diluted share, a 70% increase over prior year adjusted earnings per share

Guidance:

• Increased prior fiscal 2021 full-year revenue guidance range to 11% to 12% growth over prior year, and earnings guidance range by approximately 7% to $7.75 to $7.95 per diluted share

WESTLAKE, Ohio--(BUSINESS WIRE)-- Nordson Corporation (Nasdaq: NDSN) today reported results for the fiscal third quarter ended July 31, 2021. Sales were a quarterly company record of $647 million, a 20% increase compared to the prior year’s third quarter sales of $538 million. The increase in third quarter 2021 sales included organic volume growth of 20% and favorable effects from currency translation of 4%, offset by a net unfavorable impact of acquisitions and divestitures of 4%. The organic sales increase was driven by continued demand across all end markets, including a seasonal increase of quarterly shipments into the electronics end market.

Operating profit in the quarter was $188 million, or 29% of sales, compared to prior year adjusted operating profit of $120 million. This 57% increase in adjusted operating profit was driven by sales volume leverage and benefits from structural cost reduction actions taken in fiscal year 2020, as well as the divestiture of the screws and barrels product line on February 1, 2021. EBITDA for the third quarter of 2021 totaled $215 million, or 33% of sales.

Net income was $142 million, a 71% increase from the prior year adjusted earnings of $83 million. Third quarter 2021 diluted earnings per share were $2.42, a 70% increase over the prior year adjusted diluted earnings per share of $1.42.

“In the fiscal third quarter, we continued to benefit from the robust end market demand and accelerated recovery that we experienced in our second quarter. We were particularly pleased to see strong growth return in our medical, electronics and industrial end markets. Our teams are doing an outstanding job of managing through external supply chain and labor headwinds in order to deliver on the needs of our customers. The comprehensive execution of the Ascend strategy with NBS Next growth framework at its core continues to help us deliver top tier growth with leading margins and returns,” said Sundaram Nagarajan, president and chief executive officer.

Third Quarter Segment Results

Industrial Precision Solutions sales of $345 million increased 20% compared to the prior year third quarter, driven by a 22% organic increase and a favorable currency impact of 5%, partially offset by a divestiture impact of 8%. The organic sales increase was driven by continued demand in consumer non-durable and industrial end markets, particularly in China. Operating profit was $124 million, or 36% of sales, an increase of 60% compared to the prior year third quarter adjusted operating profit.

Advanced Technology Solutions sales of $301 million increased 21% compared to the prior year third quarter. Organic sales increased 18% while favorable currency impacts added 2% and acquisitions increased sales by approximately 1%. Sales demand was strong in all product lines including those serving electronics and medical end markets, with the Americas and China leading the growth from a regional perspective. Operating profit totaled $81 million, or 27% of sales, an increase of 51% compared to the prior year third quarter adjusted operating profit.

“I am pleased with the broad-based organic growth and attractive incremental margins in both segments,” said Joseph Kelley, executive vice president and chief financial officer. “Rigorous application of the NBS Next growth framework in our divisions is helping us to focus and sustain profitable growth in our greatest opportunities.”

Outlook

Backlog entering the fourth quarter of fiscal year 2021 is approximately $700 million, or 70% above the prior year. Customer order patterns have clearly changed in terms of both volume and extended shipment request dates during this dynamic environment. Based on the continued strength in order entry and backlog, the Company is increasing its full-year revenue and earnings guidance.

The Company expects full year sales growth in fiscal 2021 to be approximately 11% to 12% over fiscal year 2020, inclusive of a 3% headwind from the second quarter 2021 divestiture of the screws and barrels product line. Additionally, the Company is now forecasting full year 2021 earnings per diluted share in the range of $7.75 to $7.95. The increased guidance midpoint represents a strong second half of 2021 with year-over-year sales growth of 14% and earnings growth of 47%. The Company is expecting to enter fiscal 2022 with a backlog approximately 70% greater than the prior year.

Nordson management will provide additional commentary on these results and outlook during its previously announced webcast on Tuesday, August 31, 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.

NORDSON CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands except for per-share amounts)
	Three months ended								Nine months ended
	July 31, 2021				July 31, 2020				July 31, 2021				July 31, 2020
Sales	$	646,858			$	538,181			$	1,762,962			$	1,562,575
Cost of sales	281,587				257,373				770,032				728,975
Gross profit	365,271				280,808				992,930				833,600
Gross margin %	56.5		%		52.2		%		56.3		%		53.3		%
Selling & administrative expenses	176,995				168,753				529,238				521,423
Operating profit	188,276				112,055				463,692				312,177
Interest expense - net	(5,647		)		(6,880		)		(18,889		)		(24,047		)
Other expense - net	(2,232		)		(9,668		)		(10,736		)		(12,943		)
Income before income taxes	180,397				95,507				434,067				275,187
Income taxes	38,215				8,526				90,159				44,123
Net income	$	142,182			$	86,981			$	343,908			$	231,064
Weighted-average common shares outstanding:
Basic	58,112				57,693				58,080				$	57,679
Diluted	58,735				58,427				58,714				58,404
Earnings per share:
Basic earnings	$	2.45			$	1.51			$	5.92			$	4.01
Diluted earnings	$	2.42			$	1.49			$	5.86			$	3.96

NORDSON CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands)
	July 31, 2021				October 31, 2020
Cash and cash equivalents	$	174,235			$	208,293
Receivables - net	516,685				471,873
Inventories - net	303,977				277,033
Other current assets	50,866				43,798
Assets held for sale	—				19,615
Total current assets	1,045,763				1,020,612
Property, plant & equipment - net	358,208				358,618
Goodwill	1,718,565				1,713,354
Other assets	547,544				582,072
	$	3,670,080			$	3,674,656
Current maturities of long-term debt and notes payable	$	31,385			$	38,043
Accounts payable and accrued liabilities	389,437				311,898
Liabilities held for sale	—				13,148
Total current liabilities	420,822				363,089
Long-term debt	789,731				1,067,952
Other liabilities	396,349				484,624
Total shareholders' equity	2,063,178				1,758,991
	$	3,670,080			$	3,674,656

NORDSON CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) (Dollars in thousands)
	Nine Months Ended
	July 31, 2021				July 31, 2020
Cash flows from operating activities:
Net income	$	343,908			$	231,064
Depreciation and amortization	78,233				84,164
Other non-cash items	18,947				8,751
Changes in working capital	12,565				2,455
Pension and postretirement plans	(82,604		)		(24,657		)
Other long-term assets and liabilities	4,407				8,181
Net cash provided by operating activities	375,456				309,958
Cash flows from investing activities:
Additions to property, plant and equipment	(28,073		)		(36,096		)
Acquisitions	—				(125,260		)
Other - net	5,076				(1,836		)
Net cash used in investing activities	(22,997		)		(163,192		)
Cash flows from financing activities:
Issuance (repayment) of long-term debt	(292,290		)		1,740
Repayment of finance lease obligations	(5,111		)		(5,814		)
Dividends paid	(68,021		)		(65,737		)
Issuance of common shares	24,136				46,304
Purchase of treasury shares	(46,840		)		(51,897		)
Net cash used in financing activities	(388,126		)		(75,404		)
Effect of exchange rate change on cash	1,609				(743		)
Net change in cash and cash equivalents	(34,058		)		70,619
Cash and cash equivalents:
Beginning of period	208,293				151,164
End of period	$	174,235			$	221,783

NORDSON CORPORATION SALES BY GEOGRAPHIC SEGMENT (Unaudited) (Dollars in thousands)
	Three Months Ended						Sales Variance
	July 31, 2021			July 31, 2020			Organic			Acquisitions / Divestitures			Currency			Total
SALES BY SEGMENT
Industrial precision solutions	$	345,449		$	288,965		22.4	%		(8.0	)%		5.1	%		19.5	%
Advanced technology solutions	301,409			249,216			17.8	%		0.8	%		2.3	%		20.9	%
Total sales	$	646,858		$	538,181		20.2	%		(3.8	)%		3.8	%		20.2	%
SALES BY GEOGRAPHIC REGION
United States	$	201,531		$	183,508		15.7	%		(5.9	)%		—	%		9.8	%
Americas	47,717			38,265			22.0	%		(2.3	)%		5.0	%		24.7	%
Europe	162,298			132,107			17.5	%		(2.1	)%		7.5	%		22.9	%
Japan	24,946			31,226			(13.3	)%		(4.8	)%		(2.0	)%		(20.1	)%
Asia Pacific	210,366			153,075			34.0	%		(2.3	)%		5.7	%		37.4	%
Total sales	$	646,858		$	538,181		20.2	%		(3.8	)%		3.8	%		20.2	%
	Nine Months Ended						Sales Variance
	July 31, 2021			July 31, 2020			Organic			Acquisitions / Divestitures			Currency			Total
SALES BY SEGMENT
Industrial precision solutions	$	932,640		$	835,038		13.0	%		(5.8	)%		4.5	%		11.7	%
Advanced technology solutions	830,322			727,537			10.0	%		1.8	%		2.3	%		14.1	%
Total sales	$	1,762,962		$	1,562,575		11.6	%		(2.2	)%		3.4	%		12.8	%
SALES BY GEOGRAPHIC REGION
United States	$	589,771		$	560,941		8.5	%		(3.4	)%		—	%		5.1	%
Americas	128,769			106,021			16.8	%		3.2	%		1.5	%		21.5	%
Europe	453,900			394,554			9.2	%		(1.9	)%		7.7	%		15.0	%
Japan	79,913			90,353			(9.0	)%		(3.6	)%		1.0	%		(11.6	)%
Asia Pacific	510,609			410,706			21.1	%		(1.7	)%		4.9	%		24.3	%
Total sales	$	1,762,962		$	1,562,575		11.6	%		(2.2	)%		3.4	%		12.8	%

NORDSON CORPORATION RECONCILIATION OF NON-GAAP MEASURES - ADJUSTED OPERATING PROFIT AND EBITDA (Unaudited) (Dollars in thousands)
	Three months ended														Nine months ended
	July 31, 2021							July 31, 2020							July 31, 2021							July 31, 2020
SALES BY SEGMENT
Industrial precision solutions	$	345,449						$	288,965						$	932,640						$	835,038
Advanced technology solutions	301,409							249,216							830,322							727,537
Total sales	$	646,858						$	538,181						$	1,762,962						$	1,562,575
OPERATING PROFIT
Industrial precision solutions	$	123,829						$	74,744						$	311,515						$	207,603
Advanced technology solutions	80,769							49,952							204,556							140,928
Corporate	(16,322		)					(12,641		)					(52,379		)					(36,354		)
Total operating profit	$	188,276						$	112,055						$	463,692						$	312,177
OPERATING PROFIT ADJUSTMENTS (1)
Industrial precision solutions	$	—						$	2,813						$	—						$	3,477
Advanced technology solutions	—							3,413							—							6,383
Corporate	—							1,387							—							1,387
Total adjustments	$	—						$	7,613						$	—						$	11,247
ADJUSTED OPERATING PROFIT (NON-GAAP) (2)					% of Sales							% of Sales							% of Sales							% of Sales
Industrial precision solutions	$	123,829			36	%		$	77,557			27	%		$	311,515			33	%		$	211,080			25	%
Advanced technology solutions	80,769				27	%		53,365				21	%		204,556				25	%		147,311				20	%
Corporate	(16,322		)					(11,254		)					(52,379		)					(34,967		)
Total operating profit - adjusted	$	188,276			29	%		$	119,668			22	%		$	463,692			26	%		$	323,424			21	%
DEPRECIATION & AMORTIZATION
Industrial precision solutions	$	5,964						$	9,865						$	19,414						$	28,990
Advanced technology solutions	18,474							16,266							51,439							47,832
Corporate	2,460							2,369							7,380							7,342
Total depreciation & amortization	$	26,898						$	28,500						$	78,233						$	84,164
EBITDA (NON-GAAP) (2)
Industrial precision solutions	$	129,793			38	%		$	87,422			30	%		$	330,929			35	%		$	240,070			29	%
Advanced technology solutions	99,243				33	%		69,631				28	%		255,995				31	%		195,143				27	%
Corporate	(13,862		)					(8,885		)					(44,999		)					(27,625		)
Total EBITDA	$	215,174			33	%		$	148,168			28	%		$	541,925			31	%		$	407,588			26	%

(1)		Represents 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 cost structure simplification actions. 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, 2021				July 31, 2020				July 31, 2021				July 31, 2020
GAAP AS REPORTED
Operating profit	$	188,276			$	112,055			$	463,692			$	312,177
Other / interest expense - net	(7,879		)		(16,548		)			(29,625	)			(36,990	)
Net income	142,182				86,981					343,908				231,064
Diluted earnings per share	$	2.42			$	1.49			$	5.86			$	3.96
Shares outstanding - diluted	58,735				58,427					58,714				58,404
OPERATING PROFIT ADJUSTMENTS
Inventory step-up amortization	$	—			$	1,229			$	—			$	1,229
Severance and other	$	—			$	6,384			$	—			$	10,018
NON-OPERATING EXPENSE ADJUSTMENTS
Pension settlement loss	$	—			$	2,508			$	—			$	2,508
Total adjustments	$	—			$	10,121			$	—			$	13,755
Adjustments net of tax	$	—			$	7,966			$	—			$	10,825
Other discrete tax items	$	—			$	(11,816	)		$	—			$	(14,491	)
EPS effect of adjustments and other discrete tax items	$	—			$	(0.07	)		$	—			$	(0.06	)
NON-GAAP MEASURES-ADJUSTED PROFITABILITY
Operating profit (1)	$	188,276			$	119,668			$	463,692			$	323,424
Operating profit % of sales	29.1		%		22.2		%			26.3	%			20.7	%
Net income (2)	$	142,182			$	83,131			$	343,908			$	227,398
Diluted earnings per share (3)	$	2.42			$	1.42			$	5.86			$	3.89

(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 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/20210830005514/en/

Lara Mahoney

Vice President,

Investor Relations & Corporate Communications

440.204.9985

Lara.Mahoney@nordson.com

Source: Nordson Corporation

FAQ

What were Nordson's third-quarter earnings for fiscal 2021?

Nordson reported earnings of $2.42 per diluted share, a 70% increase compared to the prior year.

How much did Nordson's sales grow in the third quarter of 2021?

Sales grew to $647 million, reflecting a 20% increase year-over-year.

What is Nordson's updated revenue guidance for fiscal 2021?

Nordson has increased its revenue guidance to 11% to 12% growth over the prior year.

What is the expected earnings per share for Nordson in fiscal 2021?

The expected earnings per diluted share range is $7.75 to $7.95.

How does the backlog for Nordson look entering the fourth quarter?

Nordson's backlog is approximately $700 million, 70% higher than the previous year.