- Sales grow 4 percent over prior year’s first quarter to $359
million
- First quarter GAAP Diluted EPS is $0.54, or
$0.56 excluding one-time items
- First quarter free cash flow before dividends
was $40 million, or 114 percent of net income
- Second quarter 2014 guidance: Sales expected to
increase in the range of 5 percent to 9 percent compared to same period a year
ago; GAAP Diluted EPS in the range of $0.85 to
$0.94
Westlake, Ohio, USA – February 25, 2014 - Nordson
Corporation (Nasdaq: NDSN) today reported results for the first quarter of
fiscal year 2014. For the quarter ending January 31, 2014, sales
were $359 million, a 4 percent increase over the prior year’s first quarter
sales. This sales improvement included a 6 percent increase
related to the first year effect of acquisitions, a 1 percent
decrease in organic volume, and a negative 1 percent impact related to the
unfavorable effects of currency translation. Operating profit for
the quarter was $54 million, net income was $35 million, and first quarter
diluted earnings per share as reported were $0.54. Free cash flow
before dividends in the quarter was $40 million, or 114 percent of net
income. A reconciliation of GAAP diluted EPS to normalized
amounts and a calculation of free cash flow are included in the attached
tables.
“Nordson’s first quarter performance reflects our normal seasonality,
lower demand in selected technology end markets, and regional variations in the
pace of macroeconomic growth,” said Nordson President and Chief Executive
Officer Michael F. Hilton. “We delivered very solid organic volume
growth over the prior year’s first quarter in our consumer non-durable end
markets, though this was offset primarily by softness in some applications
related to electronics end markets. Regionally, conditions were
mixed, with organic volume growth in the U.S., Americas and Europe being offset
by softness in Japan and Asia Pacific. We continue to monitor all
of our end markets carefully and are making near-term adjustments to spending,
where prudent. Overall, we continued to generate excellent levels
of free cash flow in the quarter, and our balance sheet remains strong.
Going forward, our team remains focused on best-in-class technology,
global customer support, and continuous improvement, and we remain positioned
better than our competitors to capture demand when and where it occurs.”
First Quarter Segment Results
“We are encouraged by solid organic growth in Adhesive Dispensing
Systems, our largest segment, and portions of our other two segments, though
softness in certain product lines and difficult comparisons to the prior year
impacted overall growth,” said Hilton.
Sales volume in the Adhesive Dispensing Systems segment improved by 16
percent compared to the same period a year ago. “Organic volume
grew by more than 4 percent, a solid level, with increases in almost all product
lines, including polymer processing,” said Hilton. The remainder
of the volume increase was due to the first year effect of the Kreyenborg
acquisition. Segment operating margin was 23 percent.
Excluding short-term purchase accounting charges associated with the
step-up in value of acquired inventory, operating margin was 24 percent, equal
to the level of the first quarter a year ago.
Sales volume in the Advanced Technology Systems segment decreased by 10
percent from the prior year’s first quarter. Growth was solid for
fluid management components serving medical and general industrial end markets
and for test and inspection equipment in electronics end markets.
This growth was offset by softness in automated dispensing equipment for
mobile device and other niche electronic end markets. “Visibility
can be challenging in electronics markets in the short term, and the pace of
orders for some product lines slowed as the quarter progressed,” said
Hilton. “The long term view for these markets continues to be
positive. Segment operating margin was 11 percent in the quarter,
and we are adjusting spending on a targeted basis related to the near term-lower
volume. We expect to leverage sequential sales volume growth to
generate significantly improved operating margin performance as the year
progresses.”
“Within the Industrial Coating Systems segment, sales volume decreased
3 percent compared to the first quarter a year ago, a period in which we
delivered 38 percent organic growth,” said Hilton. “Growth in
powder and liquid coating product lines for durable goods end markets was offset
by softness in other product lines. Operating margin in the
quarter was 9 percent, a number within our range of expectations for this
segment given this quarter’s level of revenue and product
mix.”
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 16, 2014, measured
in constant currency, decreased 4 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 2013 acquisitions were owned in
both years.
Backlog for the quarter ended January 31, 2014 was approximately $229
million, an increase of 23 percent compared with the end of the first quarter a
year ago, and inclusive of 4 percent organic growth and 19 percent growth due to
the Kreyenborg acquisition. Current backlog increased 5 percent
compared to the end of the fourth quarter of fiscal 2013. Backlog
amounts are calculated at January 31, 2014 exchange rates.
Outlook
For the second quarter of fiscal 2014, sales growth is expected to be
in the range of 5 percent to 9 percent compared to the second quarter a year
ago. This overall growth is inclusive of organic growth of 0
percent to 4 percent, and 5 percent growth from the first year effect of
acquisitions. The effect of currency translation is expected to be
immaterial as compared to the prior year’s second quarter based on the current
exchange rate environment. At the midpoint of this sales growth
outlook, we would expect to generate operating margin of approximately 22
percent. GAAP diluted earnings per share are expected to be in the
range of $0.85 to $0.94.
“At the midpoint of our second quarter guidance, sequential sales
growth would be about 14 percent, and we would expect to leverage this increased
volume to deliver significantly higher operating margin as compared to first
quarter results,” said Hilton. “While this is encouraging, we
recognize that year-over-year growth has been below our long term targets in
recent quarters. In the near term, we are responding to
fluctuating demand with appropriate spending adjustments, but remain focused on
our long term success and optimistic about our prospects beyond the current
quarter. A variety of new products introduced over the last 12
months are gaining traction, and the incremental R&D and localization
investments made during 2013 are expected to begin generating returns this
year. We also continue to identify and execute on continuous
improvement opportunities, and our acquisition integration efforts remain on
track. More fundamentally, we continue to believe in the strong
long-term growth opportunities afforded by our diverse end markets.
Food and beverage markets provide excellent prospects for our rigid and
flexible packaging applications, especially in emerging regions.
The same is true for our products serving disposable personal hygiene
applications. Medical applications are among the fastest growing
in the company. And while demand in electronics end markets can
vary from quarter to quarter, industry and technology trends in this space
remain in our favor over the next several years. Our customer
value proposition of direct global service and differentiated products remains
intact, and we expect to continue delivering long-term value to shareholders at
a high level.”
Nordson will broadcast its first-quarter conference call on the
investor relations page of its Web site, www.nordson.com/investors, on
Wednesday, February 26, 2014 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
engineers, manufactures and markets differentiated products and systems used for
dispensing and processing adhesives,
coatings,
polymers,
sealants
and biomaterials; and
for managing fluids, testing and
inspecting for quality, treating surfaces and curing.
These products are supported with extensive application expertise and
direct global sales and service. We serve a wide variety of
consumer non-durable, consumer durable and technology end markets including
packaging, nonwovens, electronics, medical, appliances, energy, transportation,
building and 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.
# # #
CONTACT:
Nordson Corporation
James R. Jaye (Director,
Communications and Investor Relations)
440.414.5639
Jim.Jaye@nordson.com