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

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

WESTLAKE, Ohio--(BUSINESS WIRE)--May 23, 2022--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 [email protected].

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.