Nordson Corporation Reports a Strong Fourth Quarter and Record Fiscal Year 2022 Results

WESTLAKE, Ohio--(BUSINESS WIRE)--Nordson Corporation (Nasdaq: NDSN) today reported results for the fiscal fourth quarter ended October 31, 2022. Sales were $684 million, a 14% increase compared to the prior year's fourth quarter sales of $599 million. The increase in fourth quarter 2022 sales included 18% organic volume growth, a favorable 4% acquisition impact and unfavorable currency translation of 8%. Organic sales growth was strong in virtually all end markets, and particularly robust for electronics and medical.

Operating profit in the quarter was $178 million, or 26% of sales, a 17% increase compared to the prior year operating profit of $151 million. Sales volume leverage drove the quarterly increase. EBITDA in the quarter totaled $202 million, or 30% of sales, and represents an increase of 14% from the prior year EBITDA of $177 million.

Net income was $141 million, a 28% increase compared to the prior year earnings of $110 million. Fourth quarter diluted earnings per share were $2.44, a 30% increase over the prior year earnings of $1.88 per diluted share.

Commenting on the Company's fiscal 2022 fourth quarter results, Nordson President and Chief Executive Officer Sundaram Nagarajan said, "Once again, our teams responded to the broad-based demand of our customers and delivered a strong fourth quarter sales and operating performance. This is the second consecutive time that we have broken our quarterly sales record, despite significant currency headwinds. This is a testament to the execution of our Ascend strategy, as well as the resilience of our winning teams."

Fourth Quarter Segment Results

Industrial Precision Solutions sales of $356 million increased 13% compared to the prior year fourth quarter, driven by a 16% organic sales increase and a favorable acquisition impact of 7%, partially offset by an unfavorable currency impact of 10%. The organic sales increase was driven by robust demand in nearly all end markets with particularly strong system sales in the Americas and Europe. Operating profit totaled $110 million in the quarter, or 31% of sales, an increase of 8% compared to the prior year operating profit.

Medical and Fluid Solutions sales of $181 million increased 11% compared to the prior year fourth quarter, driven by an organic sales increase of 15% that was partially offset by an unfavorable currency impact of 4%. Organic sales growth was driven by strong demand for medical fluid components and interventional solutions product lines. Operating profit totaled $52 million in the quarter, or 29% of sales, an increase of 2% compared to the prior year operating profit.

Advanced Technology Solutions sales of $147 million increased 21% compared to the prior year fourth quarter, driven by an organic sales increase of 28% that was partially offset by an unfavorable currency impact of 7%. Organic sales growth was very strong in test and inspection systems, plus double-digit growth in electronics dispense product lines. Operating profit totaled $38 million in the quarter, or 26% of sales, an increase of 131% compared to the prior year operating profit.

"Our fourth quarter 2022 performance was a strong finish to a record year with double-digit organic sales growth in nearly all end markets. It was a dynamic quarter with increasing currency headwinds, continued inflationary pressure and a less favorable sales mix pressuring gross margins; however, the strong volume growth and related leverage still delivered targeted organic incremental operating profit margins of 43%. We remain focused on passing along price increases to offset inflation and executing the Ascend strategy to drive profitable growth," said Nordson Executive Vice President and Chief Financial Officer Joseph Kelley.

Fiscal 2022 Full Year Results

Sales for the fiscal year ended October 31, 2022 were $2.6 billion, an increase of 10% compared to the same period a year ago. This sales growth was driven by an 11% increase in organic volume and a favorable acquisition impact of 3%, partially offset by an unfavorable currency impact of 4%. Full year operating profit was $702 million. Net income was $513 million and diluted earnings per share were $8.81.

Adjusted operating profit, excluding non-recurring acquisition and facility consolidation costs, was $707 million, or 27% of sales, an increase of 15% compared to prior year adjusted operating profit. Adjusted net income, excluding the non-cash pension annuitization charge and other non-recurring costs, was $550 million, a 21% increase compared to the prior year adjusted net income of $454 million. Adjusted diluted earnings per share were $9.43, a 22% increase over the prior year earnings of $7.74 per diluted share.

Mr. Nagarajan continued, "Reflecting on fiscal 2022, Nordson employees managed through supply chain constraints, increasing currency pressures, COVID-19 shutdowns and labor challenges. Throughout it all, they remained true to our core values, including excellence, energy and respect for people, while innovating and solving complex problems for our customers. We have added to this differentiating set of core capabilities, our NBS Next growth framework, which has guided our choices and helped us prioritize our efforts and resources this year. Our record performance is the result. As we transition into fiscal 2023, we remain focused on meeting the needs of our customers and expanding the practice of the NBS Next growth framework deeper in the organization to enable us to deliver top tier growth with leading margins and returns."

Outlook

Following two consecutive years of record setting performance and a strong finish to fiscal 2022, we enter fiscal 2023 with approximately $1 billion in backlog, inclusive of the acquired CyberOptics backlog. The book-to-bill in the fourth quarter of 2022 was slightly unfavorable and the year-over-year currency headwinds are significant as evidenced in our fiscal fourth quarter results.

Based on the combination of order entry, backlog, customer delivery timing requests and current exchange rates, we anticipate delivering sales growth in the range of 1% to 7% in fiscal 2023 when compared to fiscal 2022. Full year fiscal 2023 earnings are forecasted to be in the range of $8.75 to $10.10 per share. This full year guidance assumes an unfavorable currency impact of approximately 2% on sales and 3% on earnings.

First quarter 2023 sales are forecasted in the range of $605 to $630 million with adjusted earnings in the range of $1.85 to $2.00 per diluted share. Included in the forecasted guidance amounts are the unfavorable currency impacts of approximately 4% on sales and 7% on earnings.

Nordson management will provide additional commentary on these results and outlook during its previously announced webcast on Thursday, December 15, 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 [phone] or [e-mail].

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 these 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 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 through an entrepreneurial, division-led organization 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 STATEMENT OF INCOME (Unaudited)
(Dollars in thousands except for per-share amounts)
	Three Months Ended								Twelve Months Ended
	October 31, 2022				October 31, 2021				October 31, 2022				October 31, 2021
Sales	$	683,581			$	599,247			$	2,590,278			$	2,362,209
Cost of sales		320,398				268,097				1,163,742				1,038,129
Gross profit		363,183				331,150				1,426,536				1,324,080
Gross margin %		53.1	%			55.3	%			55.1	%			56.1	%
Selling & administrative expenses		185,574				179,715				724,176				708,953
Operating profit		177,609				151,435				702,360				615,127
Interest expense - net		(5,095	)			(4,452	)			(20,387	)			(23,341	)
Other income (expense) - net		5,026				(6,874	)			(32,694	)			(17,610	)
Income before income taxes		177,540				140,109				649,279				574,176
Income taxes		36,291				29,649				136,176				119,808
Net Income	$	141,249			$	110,460			$	513,103			$	454,368
Weighted-average common shares outstanding:
Basic		57,170				58,123				57,629				58,091
Diluted		57,823				58,792				58,249				58,734
Earnings per share:
Basic earnings	$	2.47			$	1.90			$	8.90			$	7.82
Diluted earnings	$	2.44			$	1.88			$	8.81			$	7.74

NORDSON CORPORATION
CONSOLIDATED BALANCE SHEET (Unaudited)
(Dollars in thousands)
	October 31, 2022			October 31, 2021
Cash and cash equivalents	$	163,457		$	299,972
Receivables - net		537,313			489,389
Inventories - net		383,398			327,195
Other current assets		48,803			48,282
Total current assets		1,132,971			1,164,838
Property, plant & equipment - net		353,442			355,565
Goodwill		1,804,693			1,713,148
Other assets		529,269			557,410
	$	3,820,375		$	3,790,961
Notes payable and debt due within one year	$	392,537		$	34,188
Accounts payable and accrued liabilities		441,666			411,206
Total current liabilities		834,203			445,394
Long-term debt		345,320			781,709
Other liabilities		346,477			404,728
Total shareholders' equity		2,294,375			2,159,130
	$	3,820,375		$	3,790,961

NORDSON CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
	Twelve Months Ended
	October 31, 2022				October 31, 2021
Cash flows from operating activities:
Net Income	$	513,103			$	454,368
Depreciation and amortization		99,923				103,883
Other non-cash items		63,174				32,356
Changes in working capital		(107,314	)			29,011
Other		(55,755	)			(73,691	)
Net cash provided by operating activities		513,131				545,927
Cash flows from investing activities:
Additions to property, plant and equipment		(51,428	)			(38,303	)
Acquisitions		(171,613	)			—
Other - net		280				5,134
Net cash used in investing activities		(222,761	)			(33,169	)
Cash flows from financing activities:
Repayment of long-term debt		(33,908	)			(289,416	)
Repayment of finance lease obligations		(5,439	)			(6,624	)
Dividends paid		(125,914	)			(97,683	)
Issuance of common shares		12,124				31,780
Purchase of treasury shares		(262,869	)			(60,970	)
Net cash used in financing activities		(416,006	)			(422,913	)
Effect of exchange rate change on cash		(10,879	)			1,834
Net change in cash and cash equivalents		(136,515	)			91,679
Cash and cash equivalents:
Beginning of period		299,972				208,293
End of period	$	163,457			$	299,972

NORDSON CORPORATION
SALES BY GEOGRAPHIC SEGMENT (Unaudited)
(Dollars in thousands)
	Three Months Ended						Sales Variance
	October 31, 2022			October 31, 2021			Organic			Acquisitions / Divestitures			Currency			Total
SALES BY SEGMENT
Industrial precision solutions	$	355,659		$	314,307		15.5	%		7.4	%		(9.7	) %		13.2	%
Medical and fluid solutions		181,342			163,504		14.6	%		—	%		(3.7	) %		10.9	%
Advanced technology solutions		146,580			121,436		27.8	%		—	%		(7.1	) %		20.7	%
Total sales	$	683,581		$	599,247		17.8	%		3.9	%		(7.6	) %		14.1	%
SALES BY GEOGRAPHIC REGION
Americas		303,738			250,570		18.1	%		3.9	%		(0.8	) %		21.2	%
Europe		165,702			163,592		12.3	%		3.9	%		(14.9	) %		1.3	%
Asia Pacific		214,141			185,085		22.3	%		3.7	%		(10.3	) %		15.7	%
Total sales	$	683,581		$	599,247		17.8	%		3.9	%		(7.6	) %		14.1	%
	Twelve Months Ended						Sales Variance
	October 31, 2022			October 31, 2021			Organic			Acquisitions / Divestitures			Currency			Total
SALES BY SEGMENT
Industrial precision solutions	$	1,337,242		$	1,246,947		7.0	%		6.1	%		(5.9	) %		7.2	%
Medical and fluid solutions		690,177			641,654		9.7	%		—	%		(2.1	) %		7.6	%
Advanced technology solutions		562,859			473,608		22.4	%		—	%		(3.6	) %		18.8	%
Total sales	$	2,590,278		$	2,362,209		10.8	%		3.3	%		(4.4	) %		9.7	%
SALES BY GEOGRAPHIC REGION
Americas		1,096,596			969,110		10.9	%		2.8	%		(0.5	) %		13.2	%
Europe		645,603			617,492		10.7	%		3.9	%		(10.0	) %		4.6	%
Asia Pacific		848,079			775,607		11.0	%		3.2	%		(4.9	) %		9.3	%
Total sales	$	2,590,278		$	2,362,209		10.8	%		3.3	%		(4.4	) %		9.7	%

NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - ADJUSTED OPERATING PROFIT AND EBITDA (Unaudited)
(Dollars in thousands)
	Three Months Ended														Twelve Months Ended
	October 31, 2022							October 31, 2021							October 31, 2022							October 31, 2021
SALES BY SEGMENT
Industrial precision solutions	$	355,659						$	314,307						$	1,337,242						$	1,246,947
Medical and fluid solutions		181,342							163,504							690,177							641,654
Advanced technology solutions		146,580							121,436							562,859							473,608
Total sales	$	683,581						$	599,247						$	2,590,278						$	2,362,209
OPERATING PROFIT
Industrial precision solutions	$	110,387						$	102,677						$	434,476						$	414,192
Medical and fluid solutions		51,689							50,758							217,199							198,194
Advanced technology solutions		37,720							16,346							133,253							73,466
Corporate		(22,187	)						(18,346	)						(82,568	)						(70,725	)
Total operating profit	$	177,609						$	151,435						$	702,360						$	615,127
OPERATING PROFIT ADJUSTMENTS (1)
Industrial precision solutions	$	—						$	—						$	1,563						$	—
Medical and fluid solutions		—							—							2,498							—
Corporate		—							—							897							—
Total adjustments	$	—						$	—						$	4,958						$	—
ADJUSTED OPERATING PROFIT (NON-GAAP)					% of Sales							% of Sales							% of Sales							% of Sales
Industrial precision solutions	$	110,387			31	%		$	102,677			33	%		$	436,039			33	%		$	414,192			33	%
Medical and fluid solutions		51,689			29	%			50,758			31	%			219,697			32	%			198,194			31	%
Advanced technology solutions		37,720			26	%			16,346			13	%			133,253			24	%			73,466			16	%
Corporate		(22,187	)						(18,346	)						(81,671	)						(70,725	)
Total operating profit - adjusted	$	177,609			26	%		$	151,435			25	%		$	707,318			27	%		$	615,127			26	%
DEPRECIATION & AMORTIZATION
Industrial precision solutions	$	7,186						$	6,259						$	27,891						$	25,673
Medical and fluid solutions		12,528							14,033							54,674							56,600
Advanced technology solutions		2,075							2,954							8,780							11,826
Corporate		2,892							2,404							8,578							9,784
Total depreciation & amortization	$	24,681						$	25,650						$	99,923						$	103,883
EBITDA (NON-GAAP) (2)
Industrial precision solutions	$	117,573			33	%		$	108,936			35	%		$	463,930			35	%		$	439,865			35	%
Medical and fluid solutions		64,217			35	%			64,791			40	%			274,371			40	%			254,794			40	%
Advanced technology solutions		39,795			27	%			19,300			16	%			142,033			25	%			85,292			18	%
Corporate		(19,295	)						(15,942	)						(73,093	)						(60,941	)
Total EBITDA	$	202,290			30	%		$	177,085			30	%		$	807,241			31	%		$	719,010			30	%

(1)		Represents severance and 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. Adjusted operating profit is defined as operating profit plus certain adjustments, such as severance and non-cash inventory charges associated with acquisitions or facility closures. EBITDA is defined as adjusted operating profit plus depreciation and amortization.

NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - PROFITABILITY (Unaudited)
(Dollars in thousands)
	Three Months Ended								Twelve Months Ended
	October 31, 2022				October 31, 2021				October 31, 2022				October 31, 2021
GAAP AS REPORTED
Operating profit	$	177,609			$	151,435			$	702,360			$	615,127
Other / interest expense - net		(69	)			(11,326	)			(53,081	)			(40,951	)
Net income		141,249				110,460				513,103				454,368
Diluted earnings per share	$	2.44			$	1.88			$	8.81			$	7.74
Shares outstanding - diluted		57,823				58,792				58,249				58,734
OPERATING PROFIT ADJUSTMENTS
Inventory step-up amortization	$	—			$	—			$	1,563			$	—
Severance and other		—				—				3,395				—
NON-OPERATING EXPENSE ADJUSTMENTS
Pension settlement loss	$	—			$	—			$	41,221			$	—
Total adjustments	$	—			$	—			$	46,179			$	—
Adjustments net of tax	$	—			$	—			$	36,494			$	—
EPS effect of adjustments and other discrete tax items	$	—			$	—			$	0.62			$	—
NON-GAAP MEASURES-ADJUSTED PROFITABILITY
Operating profit (1)	$	177,609			$	151,435			$	707,318			$	615,127
Operating profit % of sales		26.0	%			25.3	%			27.3	%			26.0	%
Net income (2)	$	141,249			$	110,460			$	549,597			$	454,368
Diluted earnings per share (3)	$	2.44			$	1.88			$	9.43			$	7.74

(1)		Adjusted operating profit is defined as operating profit plus certain adjustments, such as severance, non-cash inventory charges related to the NDC acquisition, and facility closures. Adjusted operating profit as a percentage of sales is defined as adjusted operating profit divided by sales.
(2)		Adjusted net income is defined as net income plus tax effected adjustments and other discrete tax items.
(3)		Adjusted earnings per share is defined as GAAP EPS adjusted for tax effected adjustments and other discrete tax items.

Management uses these non-GAAP measures internally to make strategic decisions, forecast future results, and evaluate the Company's current performance. Given management's use of these non-GAAP measures, the Company believes these measures are important to investors in understanding the Company's current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in the Company's core business across different time periods. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures to other companies' non-GAAP financial measures, even if they have similar names. Amounts may not add due to rounding.

Contacts

Lara Mahoney
Vice President,
Investor Relations & Corporate Communications
440.204.9985
[e-mail]