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Nordson Corporation Reports Fiscal 2012 First Quarter Results

23 Feb 2012

  • Sales grow 2 percent over prior year to record first quarter of $276 million
  • Operating profit is $60 million and operating margin is 22 percent, excluding one-time items
  • Diluted EPS is $0.62, excluding $0.04 in charges for one-time items
  • Second quarter 2012 guidance: sales expected in the range of $313 - $326 million

Westlake, Ohio, USA – February 23, 2012 -  Nordson Corporation (Nasdaq: NDSN) today reported results for the first quarter of fiscal year 2012.  For the quarter ending January 31, 2012, sales were $276 million, a 2 percent increase over the prior year’s first quarter sales.  This sales improvement included a 4 percent increase related to the first year effect of acquisitions, offset by a 2 percent decrease in organic volume.  The effects of currency translation were neutral to the prior year.  Operating profit for the quarter was $56 million, or $60 million excluding one-time items, and operating margin excluding one-time items was 22 percent for the quarter.  First quarter diluted earnings per share as reported were $0.58, or $0.62 excluding one-time items.  A reconciliation of GAAP operating profit and EPS to normalized amounts is included in the attached tables.

“Nordson’s global team delivered solid quarterly results, in line with our guidance and against both a fairly difficult macroeconomic backdrop and a period of very strong recovery a year ago,” said Nordson President and Chief Executive Officer Michael F. Hilton.  “As expected, acquisitions added to our sales in the quarter, while near term organic volume was impacted by softness in some durable goods end markets, notably in Europe, as well as softness in Asia Pacific related to certain technology end markets and the impact of Chinese New Year occurring in our first quarter.   Operating margin in the quarter, excluding one-time items, was 22 percent, still well above pre-recession levels.  Our Continuous Improvement initiatives are targeted at driving growth and performance improvement over the longer term, and our balance sheet remains strong as we continue to generate excellent levels of free cash flow.  Overall, we remain focused on delivering value to our customers with differentiated technology, application expertise and direct global sales and service.” 

First Quarter Segment and Regional Results

“The fundamental strengths of our business model are intact in all business segments, though, as anticipated, conditions in some end markets and geographies dampened near term results,” said Hilton. 

“Volume in Adhesive Dispensing Systems improved by 2 percent compared to the same period a year ago,” continued Hilton.  “Organic volume was essentially flat and was impacted by the timing of customers’ buying patterns associated with some of our larger dollar systems.  Operating margin remained at a very strong 34 percent, even as we continued to invest in multiple initiatives, including our nearly completed U.S. facilities consolidation as well as strategic product development activities.   Excluding one-time charges, segment operating margin was 35 percent.  Volume in Advanced Technology Systems improved by 4 percent over the prior year’s first quarter.  The first year effect of acquisitions drove the increase, as organic volume decreased over the previous year due to softness in certain non-dispense product lines.  This segment’s operating margin was 16 percent, or 19 percent excluding the impact of one-time charges.   Within Industrial Coating Systems, softness in European durable goods end markets outweighed solid organic growth in other regions during the quarter.  For both the Advanced Technology and Industrial Coating segments, lower overall organic volume as compared to the prior year combined with ongoing strategic investments impacted segment operating margin.  Obviously, operating margins across the company are impacted by the seasonality of our business, where our first quarter is typically our weakest.”

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

Order Rates and Backlog

Order rates for the 12-week period ending February 19, 2012, measured in constant currency, decreased 3 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 2011 acquisitions were owned in both years.  

Backlog at the end of the first quarter was approximately $155 million, an increase of 3 percent compared with the end of the first quarter a year ago, and an increase of 19 percent compared to the end of the fourth quarter of fiscal 2011.  Backlog amounts are calculated at January 31, 2012 exchange rates. 

Outlook

For the second quarter of fiscal 2012, based on current exchange rates, sales are expected to be in the range of $313 to $326 million.  This sales outlook indicates growth will be in the range of down 2 percent to up 2 percent compared to the second quarter a year ago.  This growth is inclusive of organic volume down 4 percent to flat, 3 percent growth from the first year effect of acquisitions, and a negative 1 percent currency translation effect based on the current exchange rate environment.   Diluted earnings per share are expected to be in the range of $0.83 to $0.91.

“The midpoint of our guidance reflects sequential growth of 16 percent, a very positive outlook in light of current macroeconomic conditions,” said Hilton.  “Current order rates, as compared to the same period a year ago, reflect continued uncertainty in some parts of the global economy and are below the longer term rates we would expect in a more robust GDP environment.  The U.S. economy has not yet returned to full strength, and clarity surrounding the European economic backdrop has yet to emerge.  In developing markets, growth remains strong though its pace has moderated.  While these factors have caused some customers to remain cautious in the near term, the global economy is still expected to grow in 2012.  Going forward, we recognize that comparisons against our performance in 2011 may be difficult.  We remain focused on the long term view, however, we do expect growth as compared to the prior year to improve in our second half.  We continue to make strategic investments in our business to propel future growth and performance and we are well positioned to continue winning in the end markets we serve.   We have significant recurring revenue derived from parts and consumables, excellent positions in consumer non-durable spaces, rapid growth opportunities associated with mobile and other electronic devices, and multiple avenues for market expansion.  Our future is bright, and we will continue to build our market leading positions by providing our customers with the best products, support and service available anywhere.”  

Nordson will broadcast its first-quarter conference call on the investor relations page of its Web site, www.nordson.com/investors, on Friday, February 24, 2012 at 8:30 a.m. EST. 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 (Nasdaq: NDSN) delivers precision technology solutions to help customers succeed worldwide. The company engineers, manufactures and markets differentiated products and systems used for dispensing adhesives, coatings, sealants, biomaterials 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 30 countries.  Visit Nordson on the web at www.nordson.com, www.twitter.com/Nordson_Corp or www.facebook.com/nordson.

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CONTACT:  Nordson Corporation
                   James R. Jaye (Director, Communications and Investor Relations)
                   440-414-5639
                  
Jim.Jaye@nordson.com