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8-K - NORDSON CORPORATION 8-K - NORDSON CORPa51477591.htm

Exhibit 99.1

Nordson Corporation Reports Fiscal Year 2016 Fourth Quarter and Full Year Results

  • Fourth quarter sales are a record $509 million, inclusive of 13 percent organic growth compared to the prior year
  • Fourth quarter operating margin increases five percentage points compared to the prior year to 22 percent
  • Fourth quarter GAAP diluted EPS increases 56 percent compared to the prior year to $1.31, or $1.39 on a normalized basis to exclude one-time items
  • Full year sales, operating profit and diluted EPS are company records
  • Full year sales of $1.8 billion includes 7 percent organic growth, with operating margin increasing three percentage points to 22 percent, and GAAP diluted EPS increasing 37 percent to $4.73, all compared to the prior year
  • Pro-forma 12 week order rates increase 17 percent compared to the same period a year ago
  • First quarter fiscal 2017 guidance: sales expected to increase in the range of 4 to 8 percent compared to the prior year, inclusive of 6 to 10 percent organic growth, offset by negative 2 percent impact of unfavorable currency translation effects; GAAP diluted EPS in the range of $0.74 to $0.84

WESTLAKE, Ohio--(BUSINESS WIRE)--December 13, 2016--Nordson Corporation (Nasdaq: NDSN) today reported results for the fourth quarter of fiscal year 2016. For the quarter ending October 31, 2016, sales were $509 million, a 14 percent increase as compared to the prior year’s fourth quarter. This change in sales included organic volume growth of 13 percent and a 1 percent increase related to the first year effect of the recent LinkTech Quick Couplings acquisition. The effects of currency translation on sales compared to the prior year were not material. Operating profit was $111 million, net income was $76 million, and GAAP diluted earnings per share were $1.31, inclusive of an $0.08 per share charge related to one-time items. Prior year fourth quarter sales, operating profit, net income and GAAP diluted earnings per share were $446 million, $76 million, $50 million and $0.84, respectively. A reconciliation of GAAP diluted EPS to normalized amounts and a calculation of free cash flow are included in the attached tables.

“Nordson generated record sales in the quarter, driven by the value we bring our customers, the diverse and resilient end markets we serve, and the hard work of our global team,” said Michael F. Hilton, Nordson President and Chief Executive Officer. “Outstanding organic growth of 13 percent in the fourth quarter capped a terrific year in which we delivered 7 percent organic growth. All three of our operating segments and most geographies contributed to the growth in the quarter.”


“We leveraged the increased volume and our ongoing continuous improvement initiatives to improve fourth quarter operating margin by five percentage points compared to the prior year to 22 percent, or 23 percent on a normalized basis to exclude one-time items,” Hilton added. “Fourth quarter GAAP diluted EPS expanded 56 percent compared to the prior year to $1.31, or $1.39 on a normalized basis to exclude one-time items. These one-time items are primarily related to previously-announced restructuring initiatives, where we continue to make good progress and expect a benefit in future results.”

“Free cash flow in the quarter before dividends was $121 million, or 160 percent of net income, representing strong cash conversion. Capital deployment during the quarter included acquiring LinkTech to add to our Advanced Technology segment’s medical offering, increasing our annual dividend for the 53rd consecutive year, and reducing debt.”

Fourth Quarter Segment Results

Sales volume in the Adhesive Dispensing Systems segment improved 3 percent compared to the fourth quarter a year ago. “The three percent organic growth is solid performance, especially in comparison to a robust quarter a year ago. Our general product assembly, rigid packaging, and nonwovens product lines led the growth in the current quarter. Asia Pacific, Europe and the United States were the strongest regions,” said Hilton. Reported operating margin in this segment was 24 percent in the fourth quarter, or 26 percent on a normalized basis to exclude one-time items related to previously announced restructuring activities.

Sales volume in the Advanced Technology Systems segment increased 32 percent compared to the fourth quarter a year ago, including a 30 percent increase in organic volume and a 2 percent increase related to the first year effect of the LinkTech acquisition. “Organic growth was robust across the segment’s electronic systems and fluid management portfolio, led by demand for our automated and semi-automated dispensing product lines. The growth was positive in nearly all geographies and was strongest in Asia Pacific and Japan,” said Hilton. Driven by the higher volume and a better product mix, reported operating margin in this segment improved nine percentage points over the prior year period to 26 percent in the fourth quarter. Incremental operating margin on the quarter’s sales growth was 53 percent.


Organic sales volume in the Industrial Coating Systems segment improved 12 percent compared to the fourth quarter a year ago. “Demand for our cold material dispensing product lines in automotive and other durable goods end markets drove the growth. Growth was strongest in the Americas, the United States and Japan,” said Hilton. Fourth quarter operating margin in this segment improved four percentage points over the prior year period to 23 percent.

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

Fiscal 2016 Full Year Results

Sales for the fiscal year ended October 31, 2016 were $1.81 billion, an increase of 7 percent over the same period a year ago. This change in sales included organic volume growth of 7 percent, a 2 percent increase related to the first year effect of acquisitions, and about 2 percent negative impact related to the unfavorable effects of currency translation. Full year operating profit was $388 million, net income was $272 million and GAAP diluted earnings per share were $4.73, or $4.68 on a normalized basis to exclude one-time items. Prior year sales, operating profit, net income and GAAP diluted earnings per share were $1.69 billion, $318 million, $211 million and $3.45, respectively.

“Given the weak macroeconomic environment, we entered the year focused on driving our growth initiatives and improving operating margin. Our team did an outstanding job delivering on both of these goals,” said Hilton.

“Full year organic growth was a robust 7 percent compared to the prior year, driven by new products and applications, product tiering, recapitalization of our large installed base, further penetration of emerging markets, and a recurring stream of parts and consumables revenue,” said Hilton. “Full year operating margin of 22 percent is an improvement of three percentage points compared to the prior year, with full year incremental operating margin of 59 percent. Sales volume leverage and improvements driven by the Nordson Business System both contributed to the margin enhancement.”

Free cash flow before dividends for the year was $272 million, or 100 percent of net income, representing strong cash conversion. In addition to funding organic and acquisitive growth initiatives during the year, Nordson invested $32 million to repurchase shares, all during our first fiscal quarter, paid $56 million in dividends for a full year payout ratio of 21 percent, and reduced leverage on the balance sheet from approximately 2.8 times trailing-twelve-month EBITDA at the start of the year to approximately 2 times at the end of the year.


Order Rates and Backlog

Order rates for the 12-week period ending December 4, 2016, measured in constant currency, increased by 17 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 2016 acquisitions were owned in both years.

Backlog for the quarter ended October 31, 2016 was approximately $274 million, an increase of 20 percent compared to the same period a year ago, with less than 1 percent of the increase due to the LinkTech acquisition. Backlog amounts are calculated at October 31, 2016 exchange rates.

Outlook

For the first quarter of fiscal 2017, sales are expected to increase in the range of up 4 percent to up 8 percent as compared to the first quarter a year ago. This range is inclusive of organic volume up 6 percent to up 10 percent, and negative 2 percent currency translation effects based on the current exchange rate environment. Operating margin is expected to be approximately 18 percent at the midpoint of this sales outlook, and GAAP diluted earnings per share are expected to be in the range of $0.74 to $0.84.

“Our first quarter outlook is very positive, reflecting our improved backlog, current 12 week order rates, typical seasonality, and comparisons to the prior year where organic growth was modest,” said Hilton. “Order rates are strong in all three segments, particularly in Advanced Technology where customers in electronics and medical end markets continue to respond to our technology and application expertise.”

Nordson will broadcast its fourth quarter conference call on its web site at www.nordson.com/investors on Wednesday, December 14, 2016 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, Senior 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 nearly 40 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, 2016

(Unaudited)

 

CONSOLIDATED STATEMENT OF INCOME

       
Fourth Quarter Year-to-Date

 

2016 2015 2016 2015
 
Net sales $ 509,283 $ 446,200 $ 1,808,994 $ 1,688,666
Cost of sales 234,316 211,339 815,495 774,702
Selling & administrative expenses   164,104       159,213     605,068     596,234  
 
Operating profit 110,863 75,648 388,431 317,730
 
Interest expense - net (5,606 ) (4,988 ) (20,594 ) (17,546 )
Other income (expense) - net   106     1,465     657     678  
 
Income before income taxes 105,363 72,125 368,494 300,862
Income taxes   29,496     22,501     96,651     89,751  
 
Net Income $ 75,867   $ 49,624   $ 271,843   $ 211,111  
 
Return on sales 15 % 11 % 15 % 13 %
Return on average shareholders' equity 36 % 27 % 37 % 26 %
                 
 
Average common shares outstanding (000's) 57,206 58,907 57,060 60,652

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

57,864 59,330 57,530 61,151
 
Per share:
 
Basic earnings $ 1.33 $ .84 $ 4.76 $ 3.48
Diluted earnings $ 1.31 $ .84 $ 4.73 $ 3.45
 
Dividends paid $ .27 $ .24 $ .99 $ .90
 
Total dividends $ 15,428 $ 14,383 $ 56,436 $ 54,849
 
   

NORDSON CORPORATION

FINANCIAL HIGHLIGHTS
(Dollars in thousands except for per-share amounts)
 
FOURTH QUARTER PERIOD
Period Ending October 31, 2016
(Unaudited)
 

CONSOLIDATED BALANCE SHEET

October 31 October 31
2016 2015
 
Cash and marketable securities $ 67,239 $ 50,268
Receivables 428,560 389,550
Inventories 220,361 225,672
Other current assets   29,415   46,101
Total current assets 745,575 711,591
 
Property, plant & equipment - net 273,129 249,940
Other assets   1,403,661   1,398,913
$ 2,422,365 $ 2,360,444
 
Notes payable and debt due within one year $ 40,234 $ 23,950
Accounts payable and accrued liabilities   291,309   266,826
Total current liabilities 331,543 290,776
 
Long-term debt 944,553 1,092,643
Other liabilities 294,666 317,009
Total shareholders' equity   851,603   660,016
$ 2,422,365 $ 2,360,444
         
 
Other information:
 
Employees 6,127 6,232
 
Common shares outstanding (000's) 57,307 57,358
 
 

NORDSON CORPORATION

FINANCIAL HIGHLIGHTS

(Dollars in thousands)

 

FOURTH QUARTER PERIOD

Period Ending October 31, 2016

(Unaudited)

           
Fourth Quarter % Growth over 2015 Year-to-Date % Growth over 2015

SALES BY BUSINESS SEGMENT

2016 2015 Volume Currency Total 2016 2015 Volume Currency Total
 
Adhesive dispensing systems $ 234,305 $ 226,931 2.5 % 0.7 % 3.2 % $ 879,573 $ 836,066 6.9 % -1.7 % 5.2 %
Advanced technology systems 194,542 147,270 32.1 % 0.0 % 32.1 % 676,329 593,858 14.7 % -0.8 % 13.9 %
Industrial coating systems   80,436     71,999   11.6 % 0.1 % 11.7 %   253,092     258,742   -0.6 % -1.6 % -2.2 %
 
Total sales by business segment $ 509,283   $ 446,200   13.7 % 0.4 % 14.1 % $ 1,808,994   $ 1,688,666   8.5 % -1.4 % 7.1 %
 
Fourth Quarter Year-to-Date

OPERATING PROFIT BY BUSINESS SEGMENT

2016 2015 2016 2015
 
Adhesive dispensing systems $ 55,383 $ 46,939 $ 229,143 $ 195,902
Advanced technology systems 49,712 24,719 159,531 120,940
Industrial coating systems 18,430 13,854 43,511 41,458
Corporate   (12,662 )   (9,864 )   (43,754 )   (40,570 )
 
Total operating profit by business segment $ 110,863   $ 75,648   $ 388,431   $ 317,730  
 
Fourth Quarter % Growth over 2015 Year-to-Date % Growth over 2015

SALES BY GEOGRAPHIC REGION

2016 2015 Volume Currency Total 2016 2015 Volume Currency Total
 
United States $ 147,397 $ 137,749 7.0 % - 7.0 % $ 531,117 $ 529,893 0.2 % - 0.2 %
Americas 33,834 35,100 -2.8 % -0.8 % -3.6 % 124,657 129,325 2.5 % -6.1 % -3.6 %
Europe 129,635 128,322 3.1 % -2.1 % 1.0 % 503,869 462,565 12.3 % -3.4 % 8.9 %
Japan 38,476 31,118 4.9 % 18.7 % 23.6 % 122,054 107,797 2.2 % 11.0 % 13.2 %
Asia Pacific   159,941     113,911   41.5 % -1.1 % 40.4 %   527,297     459,086   17.4 % -2.5 % 14.9 %
 
Total Sales by Geographic Region $ 509,283   $ 446,200   13.7 % 0.4 % 14.1 % $ 1,808,994   $ 1,688,666   8.5 % -1.4 % 7.1 %
                                         
 
Fourth Quarter Year-to-Date

FREE CASH FLOW BEFORE DIVIDENDS

2016 2015 2016 2015
 
Net income $ 75,867 $ 49,624 $ 271,843 $ 211,111
Depreciation and amortization 17,480 16,123 70,304 65,194
Other non-cash charges 7,100 4,293 20,313 18,808
Changes in operating assets and liabilities   35,977     23,072     (31,302 )   (33,162 )
Net cash provided by operating activities 136,424 93,112 331,158 261,951
 
Additions to property, plant and equipment (15,399 ) (13,189 ) (60,851 ) (62,087 )
Proceeds from the sale of property, plant and equipment   256     109     1,300     597  
 
Free cash flow before dividends $ 121,281   $ 80,032   $ 271,607   $ 200,461  
 
     

NORDSON CORPORATION

ORDER RATES FOR 12-WEEK PERIOD ENDING DECEMBER 4, 2016
CHANGE FROM PRIOR YEAR
   
BUSINESS SEGMENT % CHANGE GEOGRAPHY % CHANGE
 
Adhesive dispensing systems 8% United States 18%
Advanced technology systems 34% Americas 5%
Industrial coating systems 11% Europe 2%
Japan 4%
Total 17% Asia Pacific 42%
 
Total 17%
 
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 our 2016 acquisition was owned in both years.

 
     

NORDSON CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
 

FOURTH QUARTER PERIOD

 

Period Ending October 31, 2016

 

(Unaudited)  
 
Fourth Quarter Year-to-Date
2016 2015 2016 2015
 
Diluted EPS as reported (U.S. GAAP) $ 1.31 $ 0.84 $ 4.73 $ 3.45
 
Short-term inventory purchase accounting adjustments - 0.02 0.03 0.02
Severance and restructuring 0.08 0.11 0.13 0.14
Pension settlement expense - - - 0.02
Litigation settlement - (0.02 ) (0.01 ) (0.02 )
Discrete tax items - - (0.19 ) (0.04 )
Other pre-tax items related to discrete tax benefits   -   -     (0.01 )   -  
 
Diluted EPS as adjusted (Non-GAAP) $ 1.39 $ 0.95   $ 4.68   $ 3.57  
 
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.

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