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Nordson Corporation Reports First Quarter Fiscal 2023 Results and Updates Annual Guidance

First Quarter:

  • Sales were $610 million, a 1% organic increase over the prior year
  • Operating profit was $144 million
  • Adjusted operating profit was $155 million, 25% of sales
  • Earnings per share were $1.81
  • Adjusted earnings per share were $1.95 compared to $2.07 in the prior year

Guidance:

  • Updating previously issued full-year fiscal 2023 guidance: revenue growth of 0% to 3% over record fiscal 2022 and adjusted earnings per diluted share in the range of $8.75 to $9.50 per share

Nordson Corporation (Nasdaq: NDSN) today reported results for the fiscal first quarter ended January 31, 2023. Sales were $610 million, comparable to the prior year’s first quarter sales of $609 million. The increase in first quarter 2023 sales includes an organic increase of 1% and a favorable acquisition impact of 3%, offset by unfavorable currency translation of 4%. The organic sales increase was driven by strong 9% combined growth in Europe and the Americas, partially offset by weakness in Asia Pacific, predominantly China.

Operating profit in the first quarter was $144 million. Adjusted operating profit, excluding transaction fees, severance and non-cash inventory charges associated with the CyberOptics acquisition, totaled $155 million, or 25% of sales, compared to prior year adjusted operating profit of $157 million. The operating profit, similar to sales, was comparable to the prior year as favorable organic and acquisitive growth was offset by an unfavorable 6% headwind from currency translation. EBITDA for the first quarter of 2023 totaled $181 million, or 30% of sales.

Net income was $104 million, or $1.81 earnings per diluted share. Adjusted net income was $112 million, a $9 million decrease from the prior year earnings of $122 million. The decrease was driven by increased interest expense and foreign currency losses. First quarter 2023 adjusted earnings per diluted share were $1.95, a 6% decrease over the prior year adjusted earnings per diluted share of $2.07.

“First quarter results were in line with our expectations. Our team delivered sales growth comparable to a record fiscal first quarter 2022 despite unfavorable currency headwinds, the timing of the Chinese New Year, and the unexpected negative impact from the spread of COVID-19 in China. Growth was driven by the benefits of our CyberOptics acquisition, as well as solid demand in industrial and medical interventional solutions product lines. The diversity of our geographies and product lines in Europe and Americas, as well as our steadfast dedication to advancing the NBS Next growth framework and responding to the needs of our customers, continues to deliver high quality business performance in dynamic market conditions,” said Sundaram Nagarajan, president and chief executive officer.

First Quarter Segment Results

Industrial Precision Solutions sales of $312 million represents a constant currency growth of 1% over the prior year, offset by unfavorable currency translation impacts. The organic growth of 1% was driven primarily by steady demand across most product lines and regions, offset by softness in the Asia Pacific region due to labor shortages from the spread of COVID-19, as well as the timing of Chinese New Year. Operating profit in the quarter was $102 million, or 33% of sales, comparable to the prior year first quarter.

Medical and Fluid Solutions sales of $154 million decreased 3% compared to the prior year first quarter. Organic sales decreased 1% and currency had an unfavorable impact of 2%. The organic sales decrease was driven by significant softness in the medical fluid components product lines and fluid solutions product lines in China, offset by strong demand for medical interventional solutions product lines. Operating profit totaled $39 million, or 26% of sales, a decrease of 20% compared to the prior year first quarter operating profit. The decreased segment profitability resulted from meaningful sales mix changes within medical product lines and related individual factory inefficiencies due to reduced volumes.

Advanced Technology Solutions sales of $145 million increased 14% compared to the prior year first quarter. Sales benefited from the acquisition impact of 14% and an increase in organic sales of 5%, partially offset by an unfavorable currency impact of 4%. The organic sales increase was driven by test and inspection product lines. Operating profit totaled $17 million. Adjusted operating profit, excluding non-cash inventory and other acquisition-related charges, totaled $27 million, or 19% of sales, which was comparable to the prior year first quarter operating profit. Improvements in profit from the acquisition were offset by unfavorable changes in sales mix and a 5% currency translation headwind.

Outlook

While the backlog remains robust at approximately $1 billion, the backlog is not consistent across the different businesses and is heavily weighted toward systems and medical interventional solutions. Order entry in recent weeks has decreased from the previous run rate and several customers have been pushing delivery dates out into the second half of fiscal 2023. Based on our current visibility, the Company is updating its previously issued full-year revenue growth guidance to 0% to 3% over record fiscal 2022 and narrowing its adjusted earnings guidance to the range of $8.75 to $9.50.

Nordson management will provide additional commentary on these results and outlook during its previously announced webcast on Tuesday, February 21, 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 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

 

January 31,

2023

 

January 31,

2022

Sales

$

610,477

 

 

$

609,166

 

Cost of sales

 

281,610

 

 

 

269,032

 

Gross profit

 

328,867

 

 

 

340,134

 

Gross margin %

 

53.9

%

 

 

55.8

%

 

 

 

 

Selling & administrative expenses

 

184,648

 

 

 

184,274

 

Operating profit

 

144,219

 

 

 

155,860

 

 

 

 

 

Interest expense - net

 

(9,943

)

 

 

(5,185

)

Other income (expense) - net

 

(3,196

)

 

 

1,292

 

Income before income taxes

 

131,080

 

 

 

151,967

 

 

 

 

 

Income taxes

 

26,819

 

 

 

31,558

 

 

 

 

 

Net income

$

104,261

 

 

$

120,409

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

Basic

 

57,170

 

 

 

58,152

 

Diluted

 

57,762

 

 

 

58,819

 

 

 

 

 

Earnings per share:

 

 

 

Basic earnings

$

1.82

 

 

$

2.07

 

Diluted earnings

$

1.81

 

 

$

2.05

 

NORDSON CORPORATION

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in thousands)

 

 

January 31, 2023

 

October 31, 2022

Cash and cash equivalents

$

121,994

 

$

163,457

Receivables - net

 

546,649

 

 

537,313

Inventories - net

 

447,727

 

 

383,398

Other current assets

 

62,046

 

 

48,803

Total current assets

 

1,178,416

 

 

1,132,971

 

 

 

 

Property, plant & equipment - net

 

361,447

 

 

353,442

Goodwill

 

2,107,113

 

 

1,804,693

Other assets

 

590,447

 

 

529,269

 

$

4,237,423

 

$

3,820,375

 

 

 

 

Current maturities of long-term debt and notes payable

$

420,947

 

$

392,537

Accounts payable and accrued liabilities

 

404,514

 

 

441,666

Total current liabilities

 

825,461

 

 

834,203

 

 

 

 

Long-term debt

 

595,166

 

 

345,320

Other liabilities

 

370,111

 

 

346,477

Total shareholders' equity

 

2,446,685

 

 

2,294,375

 

$

4,237,423

 

$

3,820,375

NORDSON CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(Dollars in thousands)

 

 

Three Months Ended

 

January 31,

2023

 

January 31,

2022

Cash flows from operating activities:

 

 

 

Net income

$

104,261

 

 

$

120,409

 

Depreciation and amortization

 

26,434

 

 

 

25,390

 

Other non-cash items

 

6,224

 

 

 

11,023

 

Changes in working capital

 

(58,371

)

 

 

(29,217

)

Other

 

44,789

 

 

 

(9,518

)

Net cash provided by operating activities

 

123,337

 

 

 

118,087

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Additions to property, plant and equipment

 

(9,302

)

 

 

(12,491

)

Acquisition of businesses, net of cash acquired

 

(377,843

)

 

 

(171,613

)

Other - net

 

9

 

 

 

7

 

Net cash used in investing activities

 

(387,136

)

 

 

(184,097

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Issuance (repayment) of long-term debt

 

252,278

 

 

 

(1,257

)

Repayment of finance lease obligations

 

(1,318

)

 

 

(1,640

)

Dividends paid

 

(37,199

)

 

 

(29,724

)

Issuance of common shares

 

8,807

 

 

 

5,721

 

Purchase of treasury shares

 

(6,875

)

 

 

(35,002

)

Net cash provided (used) in financing activities

 

215,693

 

 

 

(61,902

)

 

 

 

 

Effect of exchange rate change on cash:

 

6,643

 

 

 

(1,521

)

Net change in cash and cash equivalents

 

(41,463

)

 

 

(129,433

)

 

 

 

 

Cash and cash equivalents:

 

 

 

Beginning of period

 

163,457

 

 

 

299,972

 

End of period

$

121,994

 

 

$

170,539

 

NORDSON CORPORATION

SALES BY GEOGRAPHIC SEGMENT (Unaudited)

(Dollars in thousands)

 

 

Three Months Ended

 

Sales Variance

 

January 31,

2023

 

January 31,

2022

 

Organic

 

Acquisitions

 

Currency

 

Total

SALES BY SEGMENT

 

 

 

 

 

 

 

 

 

 

 

Industrial precision solutions

$

311,546

 

$

323,933

 

1.2

%

 

%

 

(5.0

) %

 

(3.8

) %

Medical and fluid solutions

 

154,287

 

 

158,784

 

(0.8

) %

 

%

 

(2.0

) %

 

(2.8

) %

Advanced technology solutions

 

144,644

 

 

126,449

 

4.6

%

 

13.5

%

 

(3.7

) %

 

14.4

%

Total sales

$

610,477

 

$

609,166

 

1.4

%

 

2.8

%

 

(4.0

) %

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

 

SALES BY GEOGRAPHIC REGION

 

 

 

 

 

 

 

 

 

 

 

Americas

$

264,878

 

$

239,901

 

8.6

%

 

2.1

%

 

(0.3

) %

 

10.4

%

Europe

 

162,939

 

 

155,985

 

10.7

%

 

1.3

%

 

(7.5

) %

 

4.5

%

Asia Pacific

 

182,660

 

 

213,280

 

(13.3

) %

 

4.7

%

 

(5.8

) %

 

(14.4

) %

Total sales

$

610,477

 

$

609,166

 

1.4

%

 

2.8

%

 

(4.0

) %

 

0.2

%

NORDSON CORPORATION

RECONCILIATION OF NON-GAAP MEASURES - ADJUSTED OPERATING PROFIT AND EBITDA (Unaudited)

(Dollars in thousands)

 

 

Three Months Ended

 

January 31, 2023

 

January 31, 2022

SALES BY SEGMENT

 

 

 

 

 

 

 

Industrial precision solutions

$

311,546

 

 

 

 

$

323,933

 

 

 

Medical and fluid solutions

 

154,287

 

 

 

 

 

158,784

 

 

 

Advanced technology solutions

 

144,644

 

 

 

 

 

126,449

 

 

 

Total sales

$

610,477

 

 

 

 

$

609,166

 

 

 

 

 

 

 

 

 

 

 

OPERATING PROFIT

 

 

 

 

 

 

 

Industrial precision solutions

$

102,319

 

 

 

 

$

102,187

 

 

 

Medical and fluid solutions

 

39,384

 

 

 

 

 

49,093

 

 

 

Advanced technology solutions

 

16,963

 

 

 

 

 

27,234

 

 

 

Corporate

 

(14,447

)

 

 

 

 

(22,654

)

 

 

Total operating profit

$

144,219

 

 

 

 

$

155,860

 

 

 

 

 

 

 

 

 

 

 

OPERATING PROFIT ADJUSTMENTS (1)

 

 

 

 

 

 

Industrial precision solutions

$

 

 

 

 

$

1,563

 

 

 

Advanced technology solutions

 

10,295

 

 

 

 

 

 

 

 

Total adjustments

$

10,295

 

 

 

 

$

1,563

 

 

 

 

 

 

 

 

 

 

 

ADJUSTED OPERATING PROFIT (NON-GAAP) (2)

 

 

% of Sales

 

 

 

% of Sales

Industrial precision solutions

$

102,319

 

 

33

%

 

$

103,750

 

 

32

%

Medical and fluid solutions

 

39,384

 

 

26

%

 

 

49,093

 

 

31

%

Advanced technology solutions

 

27,258

 

 

19

%

 

 

27,234

 

 

22

%

Corporate

 

(14,447

)

 

 

 

 

(22,654

)

 

 

Total operating profit - adjusted

$

154,514

 

 

25

%

 

$

157,423

 

 

26

%

 

 

 

 

 

 

 

 

DEPRECIATION & AMORTIZATION

 

 

 

 

 

 

Industrial precision solutions

$

6,845

 

 

 

 

$

7,442

 

 

 

Medical and fluid solutions

 

13,625

 

 

 

 

 

13,547

 

 

 

Advanced technology solutions

 

3,812

 

 

 

 

 

2,263

 

 

 

Corporate

 

2,152

 

 

 

 

 

2,138

 

 

 

Total depreciation & amortization

$

26,434

 

 

 

 

$

25,390

 

 

 

 

 

 

 

 

 

 

 

EBITDA (NON-GAAP) (2)

 

 

 

 

 

 

 

Industrial precision solutions

$

109,164

 

 

35

%

 

$

111,192

 

 

34

%

Medical and fluid solutions

 

53,009

 

 

34

%

 

 

62,640

 

 

39

%

Advanced technology solutions

 

31,070

 

 

21

%

 

 

29,497

 

 

23

%

Corporate

 

(12,295

)

 

 

 

 

(20,516

)

 

 

Total EBITDA

$

180,948

 

 

30

%

 

$

182,813

 

 

30

%

(1)

Represents fees, severance 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 fees, severance 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

 

January 31, 2023

 

January 31, 2022

GAAP AS REPORTED

 

 

 

Operating profit

$

144,219

 

 

$

155,860

 

Other / interest expense - net

 

(13,139

)

 

 

(3,893

)

Net income

 

104,261

 

 

 

120,409

 

Diluted earnings per share

$

1.81

 

 

$

2.05

 

 

 

 

 

Shares outstanding - diluted

 

57,762

 

 

 

58,819

 

 

 

 

 

OPERATING PROFIT ADJUSTMENTS

 

 

 

Inventory step-up amortization

$

4,306

 

 

$

1,563

 

Severance and other

 

5,989

 

 

 

 

 

 

 

 

Total adjustments

$

10,295

 

 

$

1,563

 

 

 

 

 

Adjustments net of tax

$

8,189

 

 

$

1,238

 

EPS effect of adjustments and other discrete tax items

$

0.14

 

 

$

0.02

 

 

 

 

 

NON-GAAP MEASURES-ADJUSTED PROFITABILITY

 

 

 

Operating profit (1)

$

154,514

 

 

$

157,423

 

Operating profit % of sales

 

25.3

%

 

 

25.8

%

Net income (2)

$

112,450

 

 

$

121,647

 

Diluted earnings per share (3)

$

1.95

 

 

$

2.07

 

(1)

Adjusted operating profit is defined as operating profit plus certain adjustments, such as fees, severance, 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.

The Company also uses the non-GAAP financial measure “constant currency” sales or sales “on a constant currency basis” to show changes in our revenue without giving effect to period-to-period currency fluctuations. Constant currency is defined as sales growth excluding the impacts of changes in foreign currencies. We express period over period revenue variances that are calculated in constant currency as a percentage. Because the reconciliation is inherent in the disclosure, we believe that a separate reconciliation would not provide any benefit.

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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