Nordson Corporation Reports Fiscal Year 2019 Second Quarter Results
- Sales were $551 million
- Operating profit was $129 million, or 23 percent of sales
- EBITDA was $156 million, or 28 percent of sales
- GAAP diluted EPS was $1.58; adjusted diluted EPS, which excludes discrete tax benefits in the quarter, was $1.54
WESTLAKE, Ohio–(BUSINESS WIRE)–Nordson Corporation (Nasdaq: NDSN) today reported results for the second quarter of fiscal year 2019. For the quarter ended April 30, 2019, sales were $551 million, which was a decrease of less than 1 percent compared to the prior year’s second quarter sales of $554 million. This change in second quarter 2019 sales included an increase of 3 percent organic volume, and a decrease related to the unfavorable effects of currency translation as compared to the prior year’s second quarter of 4 percent. Growth in the quarter related to the first year effect of the fiscal 2018 acquisition of Clada Medical Devices was not significant.
In the second quarter of fiscal year 2019, reported operating profit was $129 million, net income was $92 million, and GAAP diluted earnings per share were $1.58, inclusive of a $0.04 per share discrete tax benefit related to share-based compensation. Prior year second quarter operating profit, net income and GAAP diluted earnings per share were $129 million, $91 million and $1.55, respectively. A reconciliation of GAAP diluted earnings per share to adjusted diluted earnings per share and calculations for EBITDA, adjusted EBITDA, free cash flow before dividends, and adjusted free cash flow before dividends are included in the attached financial exhibits.
Second Quarter Segment Results
Adhesive Dispensing Systems sales decreased 1 percent compared to the prior year’s second quarter, inclusive of an increase in organic volume of 4 percent and a decrease of 5 percent related to the unfavorable effects of currency translation as compared to the prior year. Reported operating margin in the segment was 30 percent in the quarter.
Advanced Technology Systems sales decreased approximately 1 percent compared to the prior year’s second quarter, inclusive of an increase in organic volume of 2 percent and a decrease of 2 percent related to the unfavorable effects of currency translation as compared to the prior year. In the second quarter of 2019, reported operating margin in the segment was 23 percent.
Industrial Coating Systems sales increased approximately 2 percent compared to the prior year’s second quarter, inclusive of an increase in organic volume of 4 percent and a decrease of 3 percent related to the unfavorable effects of currency translation as compared to the prior year. Reported operating margin in the segment was 22 percent in the quarter.
Detailed results by operating segment and geography are included in the attached financial exhibits.
“We were pleased to see organic growth across all three segments compared to the prior year’s second quarter. This is a testament to the diversity of our end markets and our ability to execute on our growth initiatives,” said Michael F. Hilton, President and Chief Executive Officer.
Backlog
Backlog for the quarter ended April 30, 2019 was $436 million, a decrease of 2 percent compared to the same period a year ago. Impact from the Clada Medical Devices acquisition in fiscal 2018 was not significant. Backlog amounts are calculated at April 30, 2019 exchange rates.
Commenting on the company’s fiscal 2019 outlook, Hilton said, “As we look at the remainder of this fiscal year, we continue to forecast organic growth. However, with the impact of recent macroeconomic trends, we now expect organic growth in the low single digits for fiscal 2019. We remain confident in our ability to generate approximately 100 basis points of operating and EBITDA margin improvement, as we advance our continuous improvement initiatives. Our focus on the customer, commitment to innovation, and strong execution by the global Nordson team give us confidence that we will strengthen our business in fiscal 2019.”
Nordson management will provide additional commentary on these results and outlook during a conference call Tuesday, May 21, 2019 at 8:30 a.m. eastern time which can be accessed at www.nordson.com/investors. 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) 414-5639 or [email protected].
Except for historical information and comparisons contained herein, statements included in this release may constitute “forward-looking statements,” as defined by the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors, as discussed in the company’s filing with the Securities and Exchange Commission that could cause actual results to differ.
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.
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NORDSON CORPORATION |
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FINANCIAL HIGHLIGHTS |
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(Dollars in thousands except for per-share amounts) |
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SECOND QUARTER PERIOD |
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Period Ended April 30, 2019 |
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(Unaudited) |
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CONSOLIDATED STATEMENT OF INCOME(1) |
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| Second Quarter | Year-to-Date | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Sales | $ | 551,119 | $ | 553,706 | $ | 1,049,029 | $ | 1,104,130 | ||||||||
| Cost of sales | 249,590 | 246,691 | 478,524 | 496,142 | ||||||||||||
| Selling & administrative expenses | 172,633 | 178,123 | 357,328 | 359,746 | ||||||||||||
| Operating profit | 128,896 | 128,892 | 213,177 | 248,242 | ||||||||||||
| Interest expense – net | (12,047 | ) | (11,908 | ) | (24,096 | ) | (22,936 | ) | ||||||||
| Other income (expense) – net | (568 | ) | 1,135 | (4,757 | ) | (3,669 | ) | |||||||||
| Income before income taxes | 116,281 | 118,119 | 184,324 | 221,637 | ||||||||||||
| Income taxes | 24,358 | 26,884 | 43,834 | 25,847 | ||||||||||||
| Net Income | $ | 91,923 | $ | 91,235 | $ | 140,490 | $ | 195,790 | ||||||||
| Return on sales | 17 | % | 16 | % | 13 | % | 18 | % | ||||||||
| Return on average shareholders’ equity | 26 | % | 27 | % | 20 | % | 31 | % | ||||||||
| Average common shares outstanding (000’s) | 57,288 | 57,989 | 57,498 | 57,870 | ||||||||||||
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Average common shares and common share equivalents (000’s) |
58,056 | 58,945 | 58,217 | 58,908 | ||||||||||||
| Per share: | ||||||||||||||||
| Basic earnings | $ | 1.60 | $ | 1.57 | $ | 2.44 | $ | 3.38 | ||||||||
| Diluted earnings | $ | 1.58 | $ | 1.55 | $ | 2.41 | $ | 3.32 | ||||||||
| Dividends paid | $ | .35 | $ | .30 | $ | .70 | $ | .60 | ||||||||
| Total dividends | $ | 20,029 | $ | 17,376 | $ | 40,239 | $ | 34,697 | ||||||||
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(1) |
Results for the three and six months ended April 30, 2018 have been revised to reflect the retrospective adoption of Accounting Standards Update No. 2017-07, Compensation — Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Cost (“ASU 2017-07”). The adoption of ASU 2017-07 resulted in a net increase to previously reported operating income of $2.2 million & $3.8 million for the three and six months ended April 30, 2018, respectively, and a corresponding increase of $2.2 million & $3.8 million to other expense for the three and six months ended April 30, 2018, respectively, with no net impact to net income or earnings per share. |
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CONSOLIDATED BALANCE SHEET |
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| April 30 | October 31 | |||||
| 2019 | 2018 | |||||
| Cash and marketable securities | $ | 149,183 | $ | 95,678 | ||
| Receivables | 489,745 | 491,423 | ||||
| Inventories | 280,733 | 264,477 | ||||
| Other current assets | 45,276 | 32,524 | ||||
| Total current assets | 964,937 | 884,102 | ||||
| Property, plant & equipment – net | 386,349 | 386,666 | ||||
| Other assets | 2,123,802 | 2,150,244 | ||||
| $ | 3,475,088 | $ | 3,421,012 | |||
| Notes payable and debt due within one year | $ | 153,734 | $ | 28,734 | ||
| Accounts payable and accrued liabilities | 292,757 | 321,546 | ||||
| Total current liabilities | 446,491 | 350,280 | ||||
| Long-term debt | 1,220,391 | 1,285,357 | ||||
| Other liabilities | 336,943 | 334,634 | ||||
| Total shareholders’ equity | 1,471,263 | 1,450,741 | ||||
| $ | 3,475,088 | $ | 3,421,012 | |||
| Other information: | ||||||
| Employees | 7,567 | 7,536 | ||||
| Common shares outstanding (000’s) | 57,446 | 58,037 | ||||
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NORDSON CORPORATION |
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FINANCIAL HIGHLIGHTS |
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(Dollars in thousands) |
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SECOND QUARTER PERIOD |
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Period Ended April 30, 2019 |
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(Unaudited) |
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| Second Quarter | % Growth over 2018 | Year-to-Date | % Growth over 2018 | |||||||||||||||||||||||||||||||
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SALES BY BUSINESS SEGMENT |
2019 | 2018 | Volume | Currency | Total | 2019 | 2018 | Volume | Currency | Total | ||||||||||||||||||||||||
| Adhesive dispensing systems | $ | 236,722 | $ | 238,775 | 4.1 | % | -5.0 | % | -0.9 | % | $ | 448,240 | $ | 459,639 | 1.4 | % | -3.9 | % | -2.5 | % | ||||||||||||||
| Advanced technology systems | 249,295 | 250,839 | 1.8 | % | -2.4 | % | -0.6 | % | 483,752 | 522,540 | -5.6 | % | -1.8 | % | -7.4 | % | ||||||||||||||||||
| Industrial coating systems | 65,102 | 64,092 | 4.3 | % | -2.7 | % | 1.6 | % | 117,037 | 121,951 | -1.8 | % | -2.2 | % | -4.0 | % | ||||||||||||||||||
| Total sales by business segment | $ | 551,119 | $ | 553,706 | 3.1 | % | -3.6 | % | -0.5 | % | $ | 1,049,029 | $ | 1,104,130 | -2.3 | % | -2.7 | % | -5.0 | % | ||||||||||||||
| Second Quarter | Year-to-Date | |||||||||||||||||||||||||||||||||
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OPERATING PROFIT BY BUSINESS SEGMENT(1) |
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||||
| Adhesive dispensing systems | $ | 71,012 | $ | 70,337 | $ | 118,905 | $ | 124,327 | ||||||||||||||||||||||||||
| Advanced technology systems | 56,535 | 58,690 | 97,320 | 126,183 | ||||||||||||||||||||||||||||||
| Industrial coating systems | 14,469 | 12,050 | 21,985 | 22,595 | ||||||||||||||||||||||||||||||
| Corporate | (13,120 | ) | (12,185 | ) | (25,033 | ) | (24,863 | ) | ||||||||||||||||||||||||||
| Total operating profit by business segment | $ | 128,896 | $ | 128,892 | $ | 213,177 | $ | 248,242 | ||||||||||||||||||||||||||
| Second Quarter | % Growth over 2018 | Year-to-Date | % Growth over 2018 | |||||||||||||||||||||||||||||||
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SALES BY GEOGRAPHIC REGION |
2019 | 2018 | Volume | Currency | Total | 2019 | 2018 | Volume | Currency | Total | ||||||||||||||||||||||||
| United States | $ | 190,699 | $ | 178,821 | 6.6 | % | – | 6.6 | % | $ | 361,050 | $ | 344,652 | 4.8 | % | – | 4.8 | % | ||||||||||||||||
| Americas | 43,682 | 38,959 | 14.9 | % | -2.8 | % | 12.1 | % | 76,119 | 73,238 | 6.5 | % | -2.6 | % | 3.9 | % | ||||||||||||||||||
| Europe | 149,526 | 154,736 | 4.6 | % | -8.0 | % | -3.4 | % | 282,200 | 296,674 | 1.4 | % | -6.3 | % | -4.9 | % | ||||||||||||||||||
| Japan | 30,031 | 33,030 | -5.6 | % | -3.5 | % | -9.1 | % | 59,078 | 98,899 | -39.3 | % | -1.0 | % | -40.3 | % | ||||||||||||||||||
| Asia Pacific | 137,181 | 148,160 | -4.1 | % | -3.3 | % | -7.4 | % | 270,582 | 290,667 | -4.1 | % | -2.8 | % | -6.9 | % | ||||||||||||||||||
| Total Sales by Geographic Region | $ | 551,119 | $ | 553,706 | 3.1 | % | -3.6 | % | -0.5 | % | $ | 1,049,029 | $ | 1,104,130 | -2.3 | % | -2.7 | % | -5.0 | % | ||||||||||||||
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(1) |
Results for the three and six months ended April 30, 2018 have been revised to reflect the retrospective adoption of ASU 2017-07. |
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NORDSON CORPORATION |
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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
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(Dollars in thousands except for per-share amounts) |
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SECOND QUARTER ENDED |
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Period Ended April 30, 2019 |
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(Unaudited) |
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| EBITDA | Second Quarter | Year-to-Date | ||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Net income | $ | 91,923 | $ | 91,235 | $ | 140,490 | $ | 195,790 | ||||
| Adjustments: | ||||||||||||
| Depreciation and amortization expense | 27,740 | 27,431 | 55,488 | 53,716 | ||||||||
| Interest expense, net | 12,047 | 11,908 | 24,096 | 22,936 | ||||||||
| Income taxes | 24,358 | 26,884 | 43,834 | 25,847 | ||||||||
| EBITDA | $ | 156,068 | $ | 157,458 | $ | 263,908 | $ | 298,289 | ||||
| Adjustments: | ||||||||||||
| Acquisition costs and adjustments (1) | – | 2,431 | – | 3,484 | ||||||||
| EBITDA As Adjusted | $ | 156,068 | $ | 159,889 | $ | 263,908 | $ | 301,773 | ||||
| EBITDA per diluted share | $ | 2.69 | $ | 2.67 | $ | 4.53 | $ | 5.06 | ||||
| EBITDA As Adjusted per diluted share | $ | 2.69 | $ | 2.71 | $ | 4.53 | $ | 5.12 | ||||
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(1) |
Represents costs and adjustments associated with our 2018 acquisition, including accounting adjustments to inventory that were charged to cost of sales when the inventory was sold; transaction-related costs comprising of acquisition fees, legal, financial and tax due diligence expenses; and valuation costs that are required to be expensed as incurred. |
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EBITDA, EBITDA As Adjusted, EBITDA per diluted share and EBITDA As Adjusted per diluted share are non-GAAP financial measures used by management to evaluate the Company’s ongoing operations. EBITDA is defined as earnings before interest, taxes, depreciation and amortization and EBITDA As Adjusted is defined as EBITDA plus certain acquisition costs and adjustments. EBITDA per diluted share is defined as EBITDA divided by the Company’s diluted weighted average shares outstanding. EBITDA As Adjusted per diluted share is defined as EBITDA As Adjusted divided by the Company’s diluted weighted average shares outstanding. |
| Second Quarter | Year-to-Date | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Diluted EPS as reported (U.S. GAAP) | $ | 1.58 | $ | 1.55 | $ | 2.41 | $ | 3.32 | ||||||||
| Short-term inventory purchase accounting adjustments | – | 0.03 | – | 0.04 | ||||||||||||
| Severance and restructuring | – | 0.01 | 0.02 | 0.03 | ||||||||||||
| U.S. Tax Reform discrete item | – | – | 0.08 | (0.37 | ) | |||||||||||
| Other discrete tax items | (0.04 | ) | (0.04 | ) | (0.05 | ) | (0.12 | ) | ||||||||
| Diluted EPS as adjusted (Non-GAAP) | $ | 1.54 | $ | 1.56 | $ | 2.46 | $ | 2.90 | ||||||||
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Adjusted EPS is not a measurement of financial performance under GAAP, and should not be considered as an alternative to EPS determined in accordance with GAAP. Management believes that EPS as adjusted to exclude the items in the table above assist in understanding the results of Nordson Corporation. Amounts may not add due to rounding. |
| Free Cash Flow Before Dividends | Second Quarter | Year-to-Date | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net income | $ | 91,923 | $ | 91,235 | $ | 140,490 | $ | 195,790 | ||||||||
| Depreciation and amortization | 27,740 | 27,431 | 55,488 | 53,716 | ||||||||||||
| Other non-cash charges | 4,157 | 4,690 | 10,497 | (33,203 | ) | |||||||||||
| Changes in operating assets and liabilities | (18,755 | ) | (20,323 | ) | (44,563 | ) | (3,992 | ) | ||||||||
| Net cash provided by operating activities | 105,065 | 103,033 | 161,912 | 212,311 | ||||||||||||
| Additions to property, plant and equipment | (12,482 | ) | (16,368 | ) | (26,603 | ) | (33,049 | ) | ||||||||
| Proceeds from the sale of property, plant and equipment | 724 | 167 | 984 | 235 | ||||||||||||
| Free cash flow before dividends | $ | 93,307 | $ | 86,832 | $ | 136,293 | $ | 179,497 | ||||||||
| Adjustments: | ||||||||||||||||
| Acquisition costs and adjustments, net of tax(1) | – | 1,832 | – | 2,620 | ||||||||||||
| Free cash flow before dividends, adjusted | $ | 93,307 | $ | 88,664 | $ | 136,293 | $ | 182,117 | ||||||||
| (1) | Represents costs and adjustments associated with our 2018 acquisition, including accounting adjustments to inventory that were charged to cost of sales when the inventory was sold; transaction-related costs comprising of acquisition fees, legal, financial and tax due diligence expenses; and valuation costs that are required to be expensed as incurred. | |
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Free cash flow before dividends, a non-GAAP financial measure, is defined as net cash provided by operating activities less purchased property, plant and equipment and proceeds from the sale of property, plant and equipment. It is a financial measure used by management to assess its ability to generate cash in excess of its operating needs. Therefore, the Company believes this financial measure provides useful information to investors. Free cash flow before dividends is not a measure of financial performance under GAAP and should be considered in addition to, and not as a substitute for, operating cash flows or other financial measures prepared in accordance with GAAP. Our calculations of non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies. |
Contacts
Lara Mahoney
Vice President, Investor Relations & Corporate Communications
440.414.5639
[email protected]
This article published with permission from Business Wire
