MRO Magazine

Nordson Corporation Reports Fiscal Year 2015 Fourth Quarter and Full Year Results


December 10, 2015
By Business Wire News

WESTLAKE, Ohio

Nordson Corporation(Nasdaq: NDSN) today reported results for the fourth quarter of fiscal year 2015. For the quarter ending October 31, 2015, sales were $446 million, a 5 percent decrease as compared to the prior year’s fourth quarter. This change in sales included organic volume that was flat, a 2 percent increase related to the first year effect of acquisitions, and a 7 percent decrease related to the unfavorable effects of currency translation. Operating profit was $76 million, net income was $50 million, and GAAP diluted earnings per share were $0.84, inclusive of an $0.11 per share charge related to one-time items. Prior year fourth quarter sales, operating profit, net income and GAAP diluted earnings per share were $469 million, $106 million, $72 million and $1.13, respectively. A reconciliation of GAAP diluted EPS to normalized amounts and a calculation of free cash flow are included in the attached tables.

“Nordson delivered fourth quarter sales within our range of guidance, resulting in full year organic growth of more than three percent compared to the prior year,” said Nordson President and Chief Executive Officer Michael F. Hilton. “Fourth quarter sales were impacted by negative currency translation and very challenging comparisons to the same period a year ago, where we delivered organic volume growth of 13 percent. We did generate strong organic growth during the quarter in our Adhesive Dispensing segment and solid organic growth in the Industrial Coating segment, which was offset by softness in selected electronics end markets in the Advanced Technology segment that are cyclical in nature.”

“Reported operating margin in the quarter was 17 percent. One-time items in the quarter impacted operating margin by more than two percentage points compared to the prior year, and included charges for short-term purchase accounting adjustments related to acquired inventory and for restructuring related to previously announced margin improvement initiatives. Negative currency translation compared to the prior also impacted operating margin by approximately two percentage points in the quarter. Excluding the one-time items and the effects of currency, operating margin in the quarter was approximately 21 percent, a solid level given flat organic volume and this quarter’s product mix. Diluted earnings per share as reported included a charge of $0.11 related to one-time items and were also negatively impacted by approximately $0.15 due to unfavorable currency translation as compared to the prior year. We generated free cash flow in the quarter before dividends of $80 million, representing strong cash conversion. We also continued to execute in all phases of our capital deployment strategy during the quarter, closing on the MatriX Technologies and WAFO acquisitions, distributing approximately $14 million in dividends and investing $196 million for the repurchase of shares.”

Fourth Quarter Segment Results

Sales volume in the Adhesive Dispensing Systems segment improved 8 percent compared to the fourth quarter a year ago, inclusive of 7 percent organic growth and 1 percent growth from the first year effect of the WAFO acquisition. The sales volume growth was offset by a 10 percent decrease related to unfavorable currency translation. “Organic growth was strong in nonwoven, rigid packaging, injection molding and pelletizing product lines and in most geographies, reflecting the resilience of the consumer non-durable end markets served by this segment,” said Hilton. Reported operating margin in this segment was 21 percent in the fourth quarter, or 24 percent on a normalized basis to exclude one-time items related to restructuring activities and purchase accounting charges for acquired inventory. Excluding these one-time items and the approximate effects of negative currency translation compared to the prior year, segment operating margin was 27 percent in the quarter.

Sales volume in the Advanced Technology Systems segment decreased 7 percent compared to the fourth quarter a year ago, inclusive of an 11 percent decrease in organic volume offset by a 4 percent increase related to the first year effect of the Liquidyn and MatriX acquisitions. Sales were also negatively impacted by approximately 3 percent related to unfavorable currency translation. “Organic growth in fluid management product lines, driven by strong demand in medical end markets, was offset by lower demand for electronic systems product lines,” said Hilton. “Results also were impacted by very challenging comparisons to the prior year fourth quarter, where we delivered organic volume growth of 21 percent in the prior year’s fourth quarter. Geographically, positive organic growth in the U.S. and Europe was offset by slower demand in other regions.” Reported operating margin in this segment was 17 percent in the fourth quarter, or 18 percent on a normalized basis to exclude one-time items related to restructuring activities and purchase accounting charges for acquired inventory. The effects of currency on operating margin as compared to the prior year were negligible.

Organic sales volume in the Industrial Coating Systems segment improved 2 percent compared to the fourth quarter a year ago, offset by a 6 percent decrease related to unfavorable currency translation. “Growth was driven by demand for our powder coating, liquid coating, and cold material dispensing product lines in durable goods end markets,” said Hilton. Solid demand in the Americas, Asia Pacific and Europe was offset by softness in other regions. Reported operating margin in this segment was 19 percent in the fourth quarter, or 20 percent on a normalized basis to exclude one-time items related to restructuring activities. Excluding these one-time items and the approximate effects of negative currency translation compared to the prior year, segment operating margin was 22 percent in the quarter.

Detailed results by operating segment and geography are included in the attached tables.

Fiscal 2015 Full Year Results

Sales for the fiscal year ended October 31, 2015 were $1.69 billion, down approximately 1 percent from the same period a year ago. Sales volume increased by 6 percent, consisting of more than 3 percent organic volume growth and more than 2 percent growth related to the first year effect of acquisitions, offset by negative currency translation effects of 7 percent. Full year operating profit was $318 million, net income was $211 million and GAAP diluted earnings per share were $3.45, inclusive of a $0.12 per share charge related to one-time items. Prior year sales, operating profit, net income and GAAP diluted earnings per share were $1.70 billion, $367 million, $247 million and $3.84, respectively.

“Unfavorable currency translation negatively impacted full year sales by $115 million and diluted earnings per share by approximately $0.54,” said Hilton. “Given the weak macroeconomic environment, we are pleased with our full year organic growth of more than three percent. This reflects Nordson’s continued focus on providing customers with best-in-class technology, application expertise and global support. Reported operating margin for the year was 19 percent. Excluding one-time items and the approximate effects of unfavorable currency translation compared to the prior year, total company operating margin for the year was 21 percent. We also continued to generate strong cash flow which enabled us to execute on our multi-pronged approach to capital deployment. In addition to funding organic growth initiatives, we completed three acquisitions during the year within our targeted spaces. We also returned $436 million directly to shareholders during the year through dividends, which we raised for the 52nd consecutive year, and share repurchases.”

Order Rates and Backlog

Order rates for the 12-week period ending December 6, 2015, measured in constant currency, decreased by 5 percent over the same period a year ago. Order rates by segment and geography are provided in the accompanying financial tables, with pro-forma growth in order rates calculated as though fiscal year 2015 acquisitions were owned in both years.

Backlog for the quarter ended October 31, 2015 was approximately $229 million, an increase of 8 percent compared to the same period a year ago, and inclusive of 5 percent organic growth and 3 percent growth due to the WAFO, Liquidyn and MatriX acquisitions. Backlog amounts are calculated at October 31, 2015 exchange rates.

Outlook

For the first quarter of fiscal 2016, sales are expected to be in the range of down 1 percent to down 5 percent as compared to the first quarter a year ago. This range is inclusive of organic volume down 3 percent to up 1 percent, 3 percent growth from the first year effect of acquisitions, and a negative 5 percent impact related to the unfavorable effects of currency translation based on the current exchange rate environment. GAAP diluted earnings per share are expected to be in the range of $0.47 to $0.57, inclusive of a $0.03 per share charge related to non-recurring items. This outlook is also inclusive of an unfavorable currency translation effect of approximately $0.08 per share at current exchange rates.

“Our first quarter forecast reflects our backlog, current 12 week order rates, typical seasonality, and challenging comparisons to the same period a year ago,” said Hilton. “As we begin 2016, we will continue to target organic growth that exceeds global GDP, driven by our ongoing initiatives around new products, new applications, penetration of emerging markets, and recapitalization of our installed base. The diverse set of end markets we serve are expected to grow over the long term and we are well positioned to meet customer needs with global direct sales and service. As we noted in our previous quarter’s earnings call, given the weak macroeconomic backdrop, we have initiated actions across the portfolio that will improve our normalized margins, with some of the benefit to be realized during fiscal 2016. These benefits are independent of additional margin benefits we may realize related to sales volume leverage.”

Nordson will broadcast its fourth quarter conference call on its web site at www.nordson.com/investors on Friday, December 11, 2015 at 8:30 a.m. eastern time. 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 James R. Jaye, Director of Communications & Investor Relations at (440) 414-5639 or jim.jaye@nordson.com.

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 to dispense, apply and control adhesives,coatings, polymers, sealants, biomaterials, and other fluids, to test and inspect for quality, and to treat and cure surfaces. These products are 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 30 countries. Visit Nordson on the web at www.nordson.com, www.twitter.com/Nordson_Corp or www.facebook.com/nordson.

 

NORDSON CORPORATION

FINANCIAL HIGHLIGHTS

(Dollars in thousands except for per-share amounts)

   

FOURTH QUARTER PERIOD

Period Ending October 31, 2015

(Unaudited)

   

CONSOLIDATED STATEMENT OF INCOME

Fourth Quarter Year-to-Date
2015 2014 2015 2014
 
Net sales $ 446,200 $ 468,590 $ 1,688,666 $ 1,704,021
Cost of sales 211,339 211,337 774,702 758,923
Selling & administrative expenses   159,213       151,296     596,234       577,993  
 
Operating profit 75,648 105,957 317,730 367,105
 
Interest expense – net (4,988 ) (4,003 ) (17,546 ) (14,454 )
Other income (expense) – net   1,465     713     678     (138 )
 
Income before income taxes 72,125 102,667 300,862 352,513
Income taxes   22,501     30,587     89,751     105,740  
 
Net Income $ 49,624   $ 72,080   $ 211,111   $ 246,773  
 
 
Return on sales 11 % 15 % 13 % 14 %
Return on average shareholders’ equity 27 % 31 % 26 % 27 %
 
 
                 
 
Average common shares outstanding (000’s) 58,907 62,954 60,652 63,656

Average common shares and common share equivalents (000’s)

59,330 63,561 61,151 64,281
 
Per share:
 
Basic earnings $ .84 $ 1.14 $ 3.48 $ 3.88
Diluted earnings $ .84 $ 1.13 $ 3.45 $ 3.84
 
Dividends paid $ .24 $ .22 $ .90 $ .76
 
Total dividends $ 14,383 $ 13,866 $ 54,849 $ 48,391
 
   

NORDSON CORPORATION

FINANCIAL HIGHLIGHTS

(Dollars in thousands except for per-share amounts)

 

FOURTH QUARTER PERIOD

Period Ending October 31, 2015

(Unaudited)

 

CONSOLIDATED BALANCE SHEET

October 31 October 31
2015 2014
 
Cash and marketable securities $ 50,268 $ 42,314
Receivables 389,550 365,844
Inventories 225,672 210,871
Other current assets   46,101   53,654
Total current assets 711,591 672,683
 
Property, plant & equipment – net 249,940 224,439
Other assets   1,398,913   1,383,008
$ 2,360,444 $ 2,280,130
 
Notes payable and debt due within one year $ 23,950 $ 116,932
Accounts payable and accrued liabilities   266,826   253,936
Total current liabilities 290,776 370,868
 
Long-term debt 1,092,643 682,868
Other liabilities 317,009 321,597
Total shareholders’ equity   660,016   904,797
$ 2,360,444 $ 2,280,130
 
         
 
Other information:
 
 
Employees 6,232 5,966
 
Common shares outstanding (000’s) 57,358 62,435
 
 

NORDSON CORPORATION

FINANCIAL HIGHLIGHTS

(Dollars in thousands)

 
FOURTH QUARTER PERIOD
Period Ending October 31, 2015
(Unaudited)
           
Fourth Quarter % Growth over 2014 Year-to-Date % Growth over 2014

SALES BY BUSINESS SEGMENT

2015 2014 Volume Currency Total 2015 2014 Volume Currency Total
 
 
Adhesive dispensing systems $ 226,931 $ 231,509 7.9 % -9.9 % -2.0 % $ 836,066 $ 899,696 2.3 % -9.4 % -7.1 %
Advanced technology systems 147,270 161,979 -6.5 % -2.6 % -9.1 % 593,858 561,784 8.6 % -2.9 % 5.7 %
Industrial coating systems   71,999     75,102   2.0 % -6.1 % -4.1 %   258,742     242,541   12.5 % -5.8 % 6.7 %
 
Total sales by business segment $ 446,200   $ 468,590   2.0 % -6.8 % -4.8 % $ 1,688,666   $ 1,704,021   5.8 % -6.7 % -0.9 %
 
 
 
Fourth Quarter Year-to-Date

OPERATING PROFIT BY BUSINESS SEGMENT

2015 2014 2015 2014
 
Adhesive dispensing systems $ 46,939 $ 58,131 $ 195,902 $ 229,556
Advanced technology systems 24,719 42,576 120,940 140,240
Industrial coating systems 13,854 16,355 41,458 38,117
Corporate   (9,864 )   (11,105 )   (40,570 )   (40,808 )
 
Total operating profit by business segment $ 75,648   $ 105,957   $ 317,730   $ 367,105  
 
 
 
Fourth Quarter % Growth over 2014 Year-to-Date % Growth over 2014

SALES BY GEOGRAPHIC REGION

2015 2014 Volume Currency Total 2015 2014 Volume Currency Total
 
United States $ 137,749 $ 142,872 -3.6 % -3.6 % $ 529,893 $ 503,776 5.2 % 5.2 %
Americas 35,100 31,288 31.4 % -19.2 % 12.2 % 129,325 120,993 18.8 % -11.9 % 6.9 %
Europe 128,322 129,366 12.0 % -12.8 % -0.8 % 462,565 494,538 8.1 % -14.6 % -6.5 %
Japan 31,118 37,330 -5.1 % -11.5 % -16.6 % 107,797 127,057 -1.3 % -13.9 % -15.2 %
Asia Pacific   113,911     127,734   -7.0 % -3.8 % -10.8 %   459,086     457,657   2.6 % -2.3 % 0.3 %
 
Total Sales by Geographic Region $ 446,200   $ 468,590   2.0 % -6.8 % -4.8 % $ 1,688,666   $ 1,704,021   5.8 % -6.7 % -0.9 %
 
                                         
 
 
Fourth Quarter Year-to-Date

FREE CASH FLOW BEFORE DIVIDENDS

2015 2014 2015 2014
 
Net income $ 49,624 $ 72,080 $ 211,111 $ 246,773
Depreciation and amortization 16,123 15,915 65,194 59,754
Other non-cash charges 4,293 9,080 18,808 22,387
Changes in operating assets and liabilities   23,072     8,122     (33,162 )   (40,759 )
Net cash provided by operating activities 93,112 105,197 261,951 288,155
 
Additions to property, plant and equipment (13,189 ) (15,638 ) (62,087 ) (43,574 )
Proceeds from the sale of property, plant and equipment   109     45     597     323  
 
Free cash flow before dividends $ 80,032   $ 89,604   $ 200,461   $ 244,904  
 
 

NORDSON CORPORATION

ORDER RATES FOR 12-WEEK PERIOD ENDING DECEMBER 6, 2015
CHANGE FROM PRIOR YEAR
     
 

BUSINESS SEGMENT

% CHANGE

GEOGRAPHY

% CHANGE

 
Adhesive dispensing systems 7 % United States -12 %
Advanced technology systems -16 % Americas 11 %
Industrial coating systems -14 % Europe 10 %
Japan -3 %
Total -5 % Asia Pacific -13 %
 
Total -5 %
 
Notes:
1. Numbers in this table are unaudited and exclude the effects of currency movements.

2. Pro-forma changes in order rates were calculated as though 2015 acquisitions were owned in both years.

 

     

NORDSON CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

 
FOURTH QUARTER PERIOD

Period Ending October 31, 2015

(Unaudited)
 
Fourth Quarter Year-to-Date
2015 2014 2015 2014
 
Diluted EPS as reported (U.S. GAAP) $ 0.84 $ 1.13 $ 3.45 $ 3.84
 
Short-term inventory purchase accounting adjustments 0.02 0.02 0.02 0.04
Severance and restructuring 0.11 0.01 0.14 0.03
Pension settlement expense 0.02
Gain on property insurance settlement (0.01 ) (0.01 )
Litigation settlement (0.02 ) (0.02 )
Discrete tax items           (0.04 )   (0.02 )
 
Diluted EPS as adjusted (Non-GAAP) $ 0.95   $ 1.15   $ 3.57   $ 3.88  
 
Adjusted EPS and operating margin are not measurements of financial performance under GAAP, and should not be considered as alternatives to EPS and operating margin determined in accordance with GAAP. Management believes that EPS and operating margin as adjusted to exclude the items in the tables above assist in understanding the results of Nordson Corporation. Our calculations of these non-GAAP measures may not be comparable to the calculations of similarly titled measures reported by other companies.

Nordson Corporation
James R. Jaye, 440-414-5639
Director, Communications & Investor Relations
Jim.Jaye@nordson.com