Business Wire | Aug 19, 2020 04:30PM EDT

Nordson Corporation Reports Fiscal Year 2020 Third Quarter Results

Aug. 19, 2020

WESTLAKE, Ohio--(BUSINESS WIRE)--Aug. 19, 2020--Nordson Corporation(Nasdaq: NDSN) today reported results for the third quarter of fiscal year 2020. For the quarter ended July 31, 2020, sales were $538 million, a 4% decrease compared to the prior year's third quarter sales of $560 million. The diversity of our end market exposure and broad global customer base contributed to the sales performance in the quarter. The sales decrease was primarily organic, as the benefits from the recent acquisition of Fluortek were offset by unfavorable currency impacts.

Operating profit in the quarter was $112 million, or 21% of sales. Excluding non-recurring charges associated with cost structure simplification actions and the amortization of the step-up in acquired inventory, adjusted operating profit was $120 million, a 9% decrease compared to the prior year's adjusted operating profit. EBITDA, which is defined as adjusted operating profit plus depreciation and amortization, in the quarter totaled $148 million, or 28% of sales.

Net income was $87 million, and earnings per diluted share were $1.49. Adjusted earnings, which excludes non-recurring charges, discrete tax benefits of $12 million and a non-cash, non-operating pension settlement charge of $3 million, totaled $83 million, or $1.42 per share.

"Throughout the quarter, our team remained focused on protecting the health and safety of our employees and responding to the needs of our customers," commented Sundaram Nagarajan, president and chief executive officer. "At the same time, we made solid progress on our long-term strategic priorities by acquiring Fluortek, a high-quality medical company, and leveraging the next generation of the Nordson Business System - the NBS Next growth framework - to prioritize investments that will drive profitable growth and identify opportunities to simplify our cost structure."

Third Quarter Segment Results

Industrial Precision Solutions sales of $289 million decreased approximately 6% compared to the prior year's third quarter. Stable performance of those product lines serving consumer non-durable end markets was offset by weakness in sales of product lines serving industrial end markets. Operating profit, which included $3 million in structural cost reduction actions, totaled $75 million. Adjusted operating profit was $78 million, or 27% of sales, a decrease of 13% from the prior year adjusted operating profit.

Advanced Technology Solutions sales of $249 million decreased approximately 2% compared to the prior year's third quarter. The Fluortek acquisition increased sales approximately 2%, which was more than offset by organic volume declines and unfavorable currency impacts. Sales volume increases in test and inspection product lines serving electronics end markets and stable demand in medical product lines were offset by weakness in fluid dispense product lines serving industrial end markets. Operating profit, which included $3 million of structural cost reduction actions and the amortization of the step-up in acquired inventory, totaled $50 million. Adjusted operating profit was $53 million, or 21% of sales, which was in line with prior year profits.

Outlook

"Given the challenging macro-economic environment, I am very pleased with our performance in the quarter and the progress we are making in aligning the organization," Nagarajan stated. "We will continue to invest in these uncertain times and remain optimistic about the potential of the highly diversified and differentiated Nordson portfolio."

While the short-term environment remains difficult to predict, we expect fiscal fourth quarter revenue to be commensurate with to slightly better than fiscal third quarter revenue based on the current order entry trends and order backlog. Weekly order entry rates have improved from the lower levels experienced during the third quarter. Entering the fourth quarter, trailing four-week order entry is 93% of prior year levels and backlog totaled $423 million. Operating profit is forecasted to improve modestly in the fiscal fourth quarter compared to the third quarter, as cost reduction initiatives begin to deliver benefits.

Nordson management will provide additional commentary on these results and outlook during a conference call Thursday, August 20, 2020 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 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 on its Form 10-Q 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.

Attachment #1

NORDSON CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands except for per-share amounts)

THIRD QUARTER PERIODPeriod Ended July 31, 2020(Unaudited) CONSOLIDATED STATEMENTS OF INCOME Three Months Ended Nine Months Ended

July 31, July 31, July 31, 2020 July 31, 2019 2020 2019

Sales $ 538,181 $ 559,746 $ 1,562,575 $ 1,608,775

Cost of sales 257,373 257,123 728,975 735,647

Gross margin 280,808 302,623 833,600 873,128

Gross profit % 52.2 % 54.1 % 53.3 % 54.3 %

Selling & 168,753 172,347 521,423 529,675 administrativeexpensesOperating profit 112,055 130,276 312,177 343,453

Interest expense - (6,880 ) (10,989 ) (24,047 ) (35,085 )netOther income (9,668 ) 210 (12,943 ) (4,546 )(expense) - netIncome before income 95,507 119,497 275,187 303,822 taxes Income taxes 8,526 25,569 44,123 69,404

Net Income $ 86,981 $ 93,928 $ 231,064 $ 234,418

Weighted-averagecommon sharesoutstanding:Basic 57,693 57,395 57,679 57,463

Diluted 58,427 58,117 58,404 58,183

Earnings per share:Basic $ 1.51 $ 1.64 $ 4.01 $ 4.08

Diluted $ 1.49 $ 1.62 $ 3.96 $ 4.03



Attachment #2

NORDSON CORPORATION

CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

THIRD QUARTER PERIODPeriod Ended July 31, 2020(Unaudited) CONSOLIDATED BALANCE SHEET July 31, 2020 October 31, 2019

Cash and cash equivalents $ 221,783 $ 151,164

Receivables - net 498,283 530,765

Inventories - net 310,557 283,399

Other current assets 50,075 45,867

Total current assets 1,080,698 1,011,195

Property, plant & equipment - net 414,982 398,895

Goodwill 1,701,914 1,614,739

Other assets 622,364 491,618

$ 3,819,958 $ 3,516,447

Current maturities of long-term debt $ 43,598 $ 168,738

Accounts payable and accrued liabilities 303,620 308,888

Total current liabilities 347,218 477,626

Long-term debt 1,221,082 1,075,404

Other liabilities 481,746 382,372

Total shareholders' equity 1,769,912 1,581,045

$ 3,819,958 $ 3,516,447

NORDSON CORPORATION

CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

THIRD QUARTER PERIOD Period Ended July 31, 2020 (Unaudited) CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended

July 31, 2020 July 31, 2019

Cash flows from operating activities: Net Income $ 231,064 $ 234,418

Depreciation and amortization 84,164 83,331

Other non-cash items 8,751 14,699

Changes in working capital (14,021 ) (96,017 )

Net cash provided by operating activities 309,958 236,431

Cash flows from investing activities: Additions to property, plant and equipment (36,096 ) (46,002 )

Acquisitions (125,260 ) (12,110 )

Other - net (1,836 ) 193

Net cash used in investing activities (163,192 ) (57,919 )

Cash flows from financing activities: Issuance (repayment) of long-term debt 1,740 36,009

Repayment of finance lease obligations (5,814 ) (4,442 )

Dividends paid (65,737 ) (60,325 )

Issuance of common shares 46,304 17,275

Purchase of treasury shares (51,897 ) (118,124 )

Net cash used in financing activities (75,404 ) (129,607 )

Effective of exchange rate change on cash (743 ) 3,262

Net change in cash and cash equivalents 70,619 52,167

Cash and cash equivalents: Beginning of period 151,164 95,678

End of period $ 221,783 $ 147,845

Attachment #3

NORDSON CORPORATION

SALES BY SEGMENT AND GEOGRAPHIC REGION

(Dollars in thousands)

THIRD QUARTER PERIODPeriod Ended July 31, 2020(Unaudited) Three Months Ended Sales Variance

SALES BY July 31, July 31, Organic Acquisition Currency TotalSEGMENT 2020 2019

Industrial $ 288,965 $ 306,648 -4.5 % - -1.3 % -5.8 %precisionsolutionsAdvanced 249,216 253,098 -3.3 % 1.8 % - -1.5 %technologysolutions Total $ 538,181 $ 559,746 -4.0 % 0.8 % -0.7 % -3.9 %sales Three Months Ended Sales Variance

SALES BY July 31, July 31, Organic Acquisition Currency TotalGEOGRAPHIC 2020 2019REGION United $ 183,508 $ 190,460 -4.4 % 0.8 % - -3.6 %StatesAmericas 38,265 47,040 -17.5 % 4.2 % -5.4 % -18.7 %

Europe 132,107 143,449 -7.6 % 0.3 % -0.6 % -7.9 %

Japan 31,226 30,488 0.6 % 0.4 % 1.4 % 2.4 %

Asia 153,075 148,309 3.7 % 0.3 % -0.8 % 3.2 %Pacific Total $ 538,181 $ 559,746 -4.0 % 0.8 % -0.7 % -3.9 %sales Nine Months Ended Sales Variance

SALES BY July 31, July 31, Organic Acquisition Currency TotalSEGMENT 2020 2019

Industrial $ 835,038 $ 871,925 -2.8 % - -1.4 % -4.2 %precisionsolutionsAdvanced 727,537 736,850 -2.1 % 1.1 % -0.3 % -1.3 %technologysolutions Total $ 1,562,575 $ 1,608,775 -2.5 % 0.5 % -0.9 % -2.9 %sales Nine Months Ended Sales Variance

SALES BY July 31, July 31, Organic Acquisition Currency TotalGEOGRAPHIC 2020 2019REGION United $ 560,941 $ 551,510 1.2 % 0.5 % - 1.7 %StatesAmericas 106,021 123,159 -12.0 % 1.8 % -3.7 % -13.9 %

Europe 394,554 425,650 -6.0 % 0.5 % -1.8 % -7.3 %

Japan 90,353 89,566 -1.1 % 0.3 % 1.7 % 0.9 %

Asia 410,706 418,890 -1.3 % 0.3 % -1.0 % -2.0 %Pacific Total $ 1,562,575 $ 1,608,775 -2.5 % 0.5 % -0.9 % -2.9 %sales

Attachment #4

NORDSON CORPORATION

RECONCILIATION OF NON-GAAP MEASURES - ADJUSTED OPERATING PROFIT AND EBITDA

(Dollars in thousands)

THIRD QUARTER PERIODPeriod Ended July 31, 2020(Unaudited) Three Months Ended Nine Months Ended

July 31, 2020 July 31, 2019 July 31, 2020 July 31, 2019

SALES BYSEGMENTIndustrial $ 288,965 $ 306,648 $ 835,038 $ 871,925 precisionsolutionsAdvanced 249,216 253,098 727,537 736,850 technologysolutionsTotal sales $ 538,181 $ 559,746 $ 1,562,575 $ 1,608,775

OPERATINGPROFITIndustrial $ 74,744 $ 88,811 $ 207,603 $ 229,702 precisionsolutionsAdvanced 49,952 53,562 140,928 150,882 technologysolutionsCorporate (12,641 ) (12,097 ) (36,354 ) (37,131 )

Total $ 112,055 $ 130,276 $ 312,177 $ 343,453 operatingprofit OPERATINGPROFITADJUSTMENTS^(1)Industrial $ 2,813 $ 543 $ 3,477 $ 1,809 precisionsolutionsAdvanced 3,413 835 6,383 835 technologysolutionsCorporate 1,387 - 1,387 192

Total $ 7,613 $ 1,378 $ 11,247 $ 2,836 adjustments ADJUSTED % of % of % of % ofOPERATING Sales Sales Sales SalesPROFIT(NON-GAAP)Industrial $ 77,557 27 % $ 89,354 29 % $ 211,080 25 % $ 231,511 27 %precisionsolutionsAdvanced 53,365 21 % 54,397 21 % 147,311 20 % 151,717 21 %technologysolutionsCorporate (11,254 ) (12,097 ) (34,967 ) (36,939 )

Totaloperating $ 119,668 22 % $ 131,654 24 % $ 323,424 21 % $ 346,289 22 %profit -adjusted DEPRECIATION&AMORTIZATIONIndustrial $ 8,588 $ 8,699 $ 25,732 $ 25,671 precisionsolutionsAdvanced 17,738 17,581 51,980 51,785 technologysolutionsCorporate 2,174 1,563 6,452 5,875

Totaldepreciation $ 28,500 $ 27,843 $ 84,164 $ 83,331 &amortization EBITDA % of % of % of % of(NON-GAAP) Sales Sales Sales SalesIndustrial $ 86,145 30 % $ 98,053 32 % $ 236,812 28 % $ 257,182 29 %precisionsolutionsAdvanced 71,103 29 % 71,978 28 % 199,291 27 % 203,502 28 %technologysolutionsCorporate (9,080 ) (10,534 ) (28,515 ) (31,064 )

Total EBITDA $ 148,168 28 % $ 159,497 28 % $ 407,588 26 % $ 429,620 27 %

^(1) Represents charges associated with our 2020 and 2019 acquisitions, andcosts and adjustments related to cost structure simplification actions. Adjusted operating profit and EBITDA are non-GAAP measures used by managementto evaluate the Company's ongoing operations.Adjusted operating profit is defined as operating profit plus certainadjustments, such as cost structure simplification actions, and non-cashinventory charges related to acquisitions. EBITDA is defined as adjustedoperating profit plus depreciation and amortization.

Attachment #5

NORDSON CORPORATION

RECONCILIATION OF NON-GAAP MEASURES - PROFITABILITY

(Dollars in thousands)

THIRD QUARTER PERIODPeriod Ended July 31, 2020(Unaudited) Three Months Ended Nine Months Ended

July 31, July 31, July 31, July 31,GAAP AS REPORTED 2020 2019 2020 2019

Operating profit $ 112,055 $ 130,276 $ 312,177 $ 343,453

Other / interest income (16,548 ) (10,779 ) (36,990 ) (39,631 )(expense) - netNet income 86,981 93,928 231,064 234,418

EPS diluted $ 1.49 $ 1.62 $ 3.96 $ 4.03

Shares outstanding - 58,427 58,117 58,404 58,183 diluted OPERATING PROFITADJUSTMENTSInventory step-up $ 1,229 $ 188 $ 1,229 $ 188 amortizationSeverance and other 6,384 1,190 10,018 2,648

NON-OPERATING EXPENSEADJUSTMENTSPension settlement loss $ 2,508 $ - $ 2,508 $ -

Total adjustments $ 10,121 $ 1,378 $ 13,755 $ 2,836

Adjustments net of tax $ 7,966 $ 1,071 $ 10,825 $ 2,195

Other discrete tax $ (11,816 ) $ (1,068 ) $ (14,491 ) $ 740 itemsEPS effect of $ (0.07 ) $ 0.00 $ (0.06 ) $ 0.05 adjustments and otherdiscrete tax items NON-GAAP MEASURES -ADJUSTED PROFITABILITYOperating profit $ 119,668 $ 131,654 $ 323,424 $ 346,289

Operating profit % of 22.2 % 23.5 % 20.7 % 21.5 %salesNet income $ 83,131 $ 93,931 $ 227,398 $ 237,353

EPS diluted $ 1.42 $ 1.62 $ 3.89 $ 4.08

Adjusted operating profit is defined as operating profit plus certainadjustments such as cost structure simplification actions and non-cashinventory charges related to acquisitions. Adjusted operating profit as apercentage of sales is defined as adjusted operating profit divided by sales.Adjusted net income is defined as net income plus tax effected adjustments andother discrete tax items.Adjusted EPS is defined as GAAP EPS adjusted for tax effected adjustments andother discrete tax items. Management does not consider the effects of the adjustments identified above inevaluating the core operational activities of the Company. Management usesthese non-GAAP measures internally to make strategic decisions, forecast futureresults, and evaluate the Company's current performance. Given management's useof these non-GAAP measures, the Company believes these measures are importantto investors in understanding the Company's current and future operatingresults as seen through the eyes of management. In addition, managementbelieves these non-GAAP measures are useful to investors in enabling them tobetter assess changes in the Company's core business across different timeperiods. Because non-GAAP financial measures are not standardized, it may notbe possible to compare these financial measures to other companies' non-GAAPfinancial measures, even if they have similar names.Amounts may not add due to rounding.

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CONTACT: Lara Mahoney Vice President, Investor Relations & Corporate Communications 440.204.9985 Lara.Mahoney@nordson.com