Nordson Corporation Reports Fourth Quarter and Record Fiscal Year 2023 Results

WESTLAKE, Ohio--(BUSINESS WIRE)--Nordson Corporation (Nasdaq: NDSN) today reported results for the fiscal fourth quarter ended October 31, 2023. Sales were $719 million, a 5% increase compared to the prior year's fourth quarter sales of $684 million. The increase in fourth quarter 2023 sales included the favorable 7% impact of acquisitions and favorable currency translation of 1%, offset by an organic decrease of 3%. The organic sales decrease was driven by electronics dispense and biopharma product lines, offset by strong growth in medical interventional solutions, industrial coatings and polymer processing product lines.

Operating profit in the quarter was $185 million, or 26% of sales. Adjusted operating profit, excluding $11 million in non-recurring acquisition costs, totaled $196 million, or 27% of sales. This was a 10% increase compared to prior year adjusted operating profit of $178 million. EBITDA in the quarter totaled a record $227 million, or 32% of sales, and represents an increase of 12% from the prior year EBITDA of $202 million.

Net income was $128 million, or earnings per diluted share of $2.22. Adjusted net income was $142 million, excluding $7 million of non-recurring financing costs related to the ARAG acquisition. Fourth quarter 2023 adjusted earnings per diluted share were $2.46 compared to prior year adjusted earnings per diluted share of $2.44. The increase was driven by higher sales, offset by higher interest expense.

Commenting on the Company's fiscal 2023 fourth quarter results, Nordson President and Chief Executive Officer Sundaram Nagarajan said, "The diversification of Nordson's precision technology portfolio and the progress of the Ascend strategy shined through again this quarter. Our medical interventional solutions and several industrial precision product lines delivered double-digit growth in the quarter, while demand weakness in electronics and biopharma end markets persisted as expected. Throughout this dynamic year, our winning teams have remained focused on meeting the needs of our customers. They demonstrated an owner mindset and responded rapidly over the course of the year to changing market conditions. This led to total company performance exceeding our incremental profit targets. I am also very pleased with the integration progress of our recent ARAG acquisition, which contributed favorably to the fourth quarter results."

Fourth Quarter Segment Results

Industrial Precision Solutions sales of $405 million increased 14% compared to the prior year fourth quarter, driven by a 4% organic sales increase, a favorable acquisition impact of 7%, and a favorable currency impact of 2%. The organic sales increase was driven by record sales in our packaging, industrial coating and polymer processing product lines, largely driven by strong system sales in the Americas and Asia Pacific. Adjusted operating profit, which excludes non-recurring charges related to the ARAG acquisition, totaled $136 million in the quarter, or 34% of sales, an increase of 23% compared to the prior year operating profit. The increase in operating profit was driven by higher sales and improved sales mix.

Medical and Fluid Solutions sales of $169 million decreased 7% compared to the prior year fourth quarter, driven by an organic sales decrease of 8% that was partially offset by a favorable currency impact of 1%. The organic sales decrease was driven by continued softness in medical fluid components and fluid solutions product lines, partially offset by double-digit growth in our medical interventional solutions product lines. Operating profit totaled $48 million in the quarter, or 28% of sales, a decrease of 7% compared to the prior year operating profit due to lower sales volumes.

Advanced Technology Solutions sales of $145 million decreased 1% compared to the prior year fourth quarter, driven by an organic sales decrease of 16% that was principally offset by a favorable acquisition impact of 15% and a favorable currency impact of 1%. The organic sales decline was primarily driven by continued softness in our electronic dispense product lines, which serves the cyclical semiconductor end markets. Operating profit totaled $32 million in the quarter, or 22% of sales, a decrease of 16% compared to the prior year operating profit due to lower organic sales volume.

Fiscal 2023 Full Year Results

Sales for the fiscal year ended October 31, 2023, were a record $2.6 billion, an increase of 2% compared to the prior year. This sales growth was driven by a favorable acquisition impact of 4%, partially offset by a 1% decrease in organic volume and an unfavorable currency impact of 1%. Full year operating profit was $673 million. Net income was $487 million and diluted earnings per share were $8.46.

Adjusted operating profit, excluding $34 million in non-recurring costs, was $707 million, or 27% of sales, comparable to prior year adjusted operating profit of $707 million. EBITDA totaled a record $819 million, or 31% of sales. Adjusted diluted earnings per share were $9.03, a 4% decrease from the prior year earnings per diluted share of $9.43, primarily due to higher interest expense.

Reflecting on fiscal 2023, Mr. Nagarajan continued, "In 2021, we launched our Ascend strategy with the milestone of achieving $3 billion in annual sales and greater than 30% EBITDA margins by 2025. As we complete the third year of our strategy, we are on track toward achieving this objective. This is our third consecutive year of record sales, demonstrating the execution of the NBS Next growth framework, exciting acquisitions reflecting our strategic capital deployment, entrepreneurial owner mindset and the continued development of winning teams at every level of our organization. In fiscal 2024, we are well positioned for the recovery of select end markets and the related incremental earnings power that will come with that growth. The Ascend strategy is creating a scalable, high quality earnings growth engine. I want to thank Nordson's employees and customers for all of their continued support."

Outlook

Following three consecutive years of record setting performance and a strong finish to fiscal 2023, we enter fiscal 2024 with approximately $800 million in backlog. The book-to-bill in the fourth quarter and the majority of 2023 was unfavorable as over $200 million in backlog was consumed.

Based on the combination of order entry, backlog and current exchange rates, we anticipate delivering sales growth in the range of 4% to 9% in fiscal 2024 when compared to fiscal 2023. Full year fiscal 2024 adjusted earnings are forecasted in the range of 1% to 8% growth per diluted share.

First quarter fiscal 2024 sales are forecasted in the range of $615 to $640 million with adjusted earnings in the range of $2.00 to $2.10 per diluted share. Starting in fiscal 2024, the Company's definition of adjusted earnings will exclude acquisition related amortization for both current and historical periods (see the appendix for historical amounts).

Nordson management will provide additional commentary on these results and outlook during its previously announced webcast on Thursday, December 14, 2023 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 conflicts in Europe and the Middle East, acts of terror, natural disasters and pandemics, including the recent 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, 2023				October 31, 2022				October 31, 2023				October 31, 2022
Sales	$	719,313			$	683,581			$	2,628,632			$	2,590,278
Cost of sales		335,220				320,398				1,203,227				1,163,742
Gross profit		384,093				363,183				1,425,405				1,426,536
Gross margin %		53.4	%			53.1	%			54.2	%			55.1	%
Selling & administrative expenses		199,054				185,574				752,644				724,176
Operating profit		185,039				177,609				672,761				702,360
Interest expense - net		(25,921	)			(5,095	)			(56,825	)			(20,387	)
Other income (expense) - net		1,462				5,026				(597	)			(32,694	)
Income before income taxes		160,580				177,540				615,339				649,279
Income taxes		32,802				36,291				127,846				136,176
Net Income	$	127,778			$	141,249			$	487,493			$	513,103
Weighted-average common shares outstanding:
Basic		57,020				57,170				57,090				57,629
Diluted		57,552				57,823				57,631				58,249
Earnings per share:
Basic earnings	$	2.24			$	2.47			$	8.54			$	8.90
Diluted earnings	$	2.22			$	2.44			$	8.46			$	8.81

NORDSON CORPORATION
CONSOLIDATED BALANCE SHEET (Unaudited)
(Dollars in thousands)
	October 31, 2023			October 31, 2022
Cash and cash equivalents	$	115,679		$	163,457
Receivables - net		590,886			537,313
Inventories - net		454,775			383,398
Other current assets		67,970			48,803
Total current assets		1,229,310			1,132,971
Property, plant & equipment - net		392,846			353,442
Goodwill		2,784,201			1,804,693
Other assets		845,413			529,269
	$	5,251,770		$	3,820,375
Notes payable and debt due within one year	$	115,662		$	392,537
Accounts payable and accrued liabilities		466,427			441,666
Total current liabilities		582,089			834,203
Long-term debt		1,621,394			345,320
Other liabilities		450,227			346,477
Total shareholders' equity		2,598,060			2,294,375
	$	5,251,770		$	3,820,375

NORDSON CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
(Dollars in thousands)
	Twelve Months Ended
	October 31, 2023				October 31, 2022
Cash flows from operating activities:
Net Income	$	487,493			$	513,103
Depreciation and amortization		111,898				99,923
Other non-cash items		16,105				63,174
Changes in working capital		(3,571	)			(107,314	)
Other		29,357				(55,755	)
Net cash provided by operating activities		641,282				513,131
Cash flows from investing activities:
Additions to property, plant and equipment		(34,583	)			(51,428	)
Acquisitions		(1,422,780	)			(171,613	)
Other - net		20,484				280
Net cash used in investing activities		(1,436,879	)			(222,761	)
Cash flows from financing activities:
Borrowing (repayment) of long-term debt		976,043				(33,908	)
Repayment of finance lease obligations		(6,840	)			(5,439	)
Dividends paid		(150,356	)			(125,914	)
Issuance of common shares		21,373				12,124
Purchase of treasury shares		(89,708	)			(262,869	)
Net cash used in financing activities		750,512				(416,006	)
Effect of exchange rate change on cash		(2,693	)			(10,879	)
Net change in cash and cash equivalents		(47,778	)			(136,515	)
Cash and cash equivalents:
Beginning of period		163,457				299,972
End of period	$	115,679			$	163,457

NORDSON CORPORATION
SALES BY GEOGRAPHIC SEGMENT (Unaudited)
(Dollars in thousands)
	Three Months Ended						Sales Variance
	October 31, 2023			October 31, 2022			Organic			Acquisitions			Currency			Total
SALES BY SEGMENT
Industrial precision solutions	$	405,436		$	355,659		4.4	%		7.2	%		2.4	%		14.0	%
Medical and fluid solutions		168,632			181,342		(7.6	) %		-	%		0.6	%		(7.0	) %
Advanced technology solutions		145,245			146,580		(16.4	) %		15.0	%		0.5	%		(0.9	) %
Total sales	$	719,313		$	683,581		(3.1	) %		6.9	%		1.4	%		5.2	%
SALES BY GEOGRAPHIC REGION
Americas		315,635			303,738		(0.9	) %		4.0	%		0.8	%		3.9	%
Europe		184,297			165,702		(6.3	) %		12.0	%		5.5	%		11.2	%
Asia Pacific		219,381			214,141		(3.8	) %		7.2	%		(1.0	) %		2.4	%
Total sales	$	719,313		$	683,581		(3.1	) %		6.9	%		1.4	%		5.2	%
	Twelve Months Ended						Sales Variance
	October 31, 2023			October 31, 2022			Organic			Acquisitions			Currency			Total
SALES BY SEGMENT
Industrial precision solutions	$	1,391,046		$	1,337,242		3.1	%		1.9	%		(1.0	) %		4.0	%
Medical and fluid solutions		660,316			690,177		(3.7	) %		-	%		(0.6	) %		(4.3	) %
Advanced technology solutions		577,270			562,859		(9.2	) %		12.9	%		(1.1	) %		2.6	%
Total sales	$	2,628,632		$	2,590,278		(1.4	) %		3.8	%		(0.9	) %		1.5	%
SALES BY GEOGRAPHIC REGION
Americas		1,149,760			1,096,596		2.0	%		2.4	%		0.4	%		4.8	%
Europe		682,676			645,603		1.4	%		4.2	%		0.1	%		5.7	%
Asia Pacific		796,196			848,079		(8.2	) %		5.2	%		(3.1	) %		(6.1	) %
Total sales	$	2,628,632		$	2,590,278		(1.4	) %		3.8	%		(0.9	) %		1.5	%

NORDSON CORPORATION
RECONCILIATION OF NON-GAAP MEASURES - ADJUSTED OPERATING PROFIT AND EBITDA (Unaudited)
(Dollars in thousands)
	Three Months Ended														Twelve Months Ended
	October 31, 2023							October 31, 2022							October 31, 2023							October 31, 2022
SALES BY SEGMENT
Industrial precision solutions	$	405,436						$	355,659						$	1,391,046						$	1,337,242
Medical and fluid solutions		168,632							181,342							660,316							690,177
Advanced technology solutions		145,245							146,580							577,270							562,859
Total sales	$	719,313						$	683,581						$	2,628,632						$	2,590,278
OPERATING PROFIT
Industrial precision solutions	$	131,450						$	110,387						$	460,889						$	434,476
Medical and fluid solutions		48,041							51,689							189,367							217,199
Advanced technology solutions		31,526							37,720							101,662							133,253
Corporate		(25,978	)						(22,187	)						(79,157	)						(82,568	)
Total operating profit	$	185,039						$	177,609						$	672,761						$	702,360
OPERATING PROFIT ADJUSTMENTS (1)
Industrial precision solutions	$	4,658						$	-						$	4,658						$	1,563
Medical and fluid solutions		-							-							1,479							2,498
Advanced technology solutions		-							-							14,304							-
Corporate		6,142							-							13,874							897
Total adjustments	$	10,800						$	-						$	34,315						$	4,958
ADJUSTED OPERATING PROFIT (NON-GAAP)					% of Sales							% of Sales							% of Sales							% of Sales
Industrial precision solutions	$	136,108			34	%		$	110,387			31	%		$	465,547			33	%		$	436,039			33	%
Medical and fluid solutions		48,041			28	%			51,689			29	%			190,846			29	%			219,697			32	%
Advanced technology solutions		31,526			22	%			37,720			26	%			115,966			20	%			133,253			24	%
Corporate		(19,836	)						(22,187	)						(65,283	)						(81,671	)
Total operating profit - adjusted	$	195,839			27	%		$	177,609			26	%		$	707,076			27	%		$	707,318			27	%
DEPRECIATION & AMORTIZATION
Industrial precision solutions	$	12,062						$	7,186						$	33,228						$	27,891
Medical and fluid solutions		13,547							12,528							54,988							54,674
Advanced technology solutions		3,529							2,075							15,185							8,780
Corporate		2,123							2,892							8,497							8,578
Total depreciation & amortization	$	31,261						$	24,681						$	111,898						$	99,923
EBITDA (NON-GAAP) (2)
Industrial precision solutions	$	148,170			37	%		$	117,573			33	%		$	498,775			36	%		$	463,930			35	%
Medical and fluid solutions		61,588			37	%			64,217			35	%			245,834			37	%			274,371			40	%
Advanced technology solutions		35,055			24	%			39,795			27	%			131,151			23	%			142,033			25	%
Corporate		(17,713	)						(19,295	)						(56,786	)						(73,093	)
Total EBITDA	$	227,100			32	%		$	202,290			30	%		$	818,974			31	%		$	807,241			31	%

(1)		Represents severance, as well as fees and non-cash inventory charges associated with acquisitions.
(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, fees and non-cash inventory charges associated with acquisitions. 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, 2023				October 31, 2022				October 31, 2023				October 31, 2022
GAAP AS REPORTED
Operating profit	$	185,039			$	177,609			$	672,761			$	702,360
Other / interest expense - net		(24,459	)			(69	)			(57,422	)			(53,081	)
Net income		127,778				141,249				487,493				513,103
Diluted earnings per share	$	2.22			$	2.44			$	8.46			$	8.81
Shares outstanding - diluted		57,552				57,823				57,631				58,249
OPERATING PROFIT ADJUSTMENTS
Inventory step-up amortization	$	4,556			$	-			$	8,862			$	1,563
Severance and other		-				-				5,487				3,395
Acquisition costs		6,244				-				19,966				-
NON-OPERATING EXPENSE ADJUSTMENTS
Pension settlement loss	$	-			$	-			$	-			$	41,221
Interest		6,817				-				6,817				-
Total adjustments	$	17,617			$	-			$	41,132			$	46,179
Adjustments net of tax	$	14,019			$	-			$	32,641			$	36,355
EPS effect of adjustments and other discrete tax items	$	0.24			$	-			$	0.57			$	0.62
NON-GAAP MEASURES-ADJUSTED PROFITABILITY
Operating profit (1)	$	195,839			$	177,609			$	707,076			$	707,318
Operating profit % of sales		27.2	%			26.0	%			26.9	%			27.3	%
Net income (2)	$	141,797			$	141,249			$	520,134			$	549,458
Diluted earnings per share (3)	$	2.46			$	2.44			$	9.03			$	9.43

(1)		Adjusted operating profit is defined as operating profit plus certain adjustments, such as severance, fees and non-cash inventory charges related to acquisitions. 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.

NORDSON CORPORATION
APPENDIX - RECONCILIATION OF NON-GAAP MEASURES - PROFITABILITY (Unaudited)
(Dollars in thousands)
		Three Months Ended												Twelve Months Ended
		October 31, 2023			July 31, 2023			April 30, 2023			January 31, 2023			October 31, 2023
GAAP net income as reported		$	127,778		$	127,891		$	127,563		$	104,261		$	487,493
Diluted earnings per share		$	2.22		$	2.22		$	2.21		$	1.81		$	8.46
Operating and non-operating adjustments		$	17,617		$	9,781		$	3,439		$	10,295		$	41,132
Adjustments net of tax		$	14,019		$	7,719		$	2,714		$	8,189		$	32,641
EPS effect of non-recurring adjustments		$	0.24		$	0.13		$	0.05		$	0.14		$	0.57
Adjusted EPS (as previously reported)		$	2.46		$	2.35		$	2.26		$	1.95		$	9.03
Acquisition amortization of intangibles		$	17,881		$	13,922		$	14,044		$	13,872		$	59,719
Acquisition amortization net of tax		$	14,228		$	10,987		$	11,084		$	11,034		$	47,333
EPS effect of acquisition amortization		$	0.25		$	0.19		$	0.19		$	0.19		$	0.82
Revised adjusted EPS		$	2.71		$	2.54		$	2.45		$	2.14		$	9.85

		Three Months Ended												Twelve Months Ended
		October 31, 2022			July 31, 2022			April 30, 2022			January 31, 2022			October 31, 2022
GAAP net income as reported		$	141,249		$	141,811		$	109,634		$	120,409		$	513,103
Diluted earnings per share		$	2.44		$	2.45		$	1.88		$	2.05		$	8.81
Operating and non-operating adjustments		$	-		$	3,395		$	41,221		$	1,563		$	46,179
Adjustments net of tax		$	-		$	2,667		$	32,450		$	1,238		$	36,355
EPS effect of non-recurring adjustments		$	-		$	0.04		$	0.56		$	0.02		$	0.62
Adjusted EPS (as previously reported)		$	2.44		$	2.49		$	2.43		$	2.07		$	9.43
Acquisition amortization of intangibles		$	12,459		$	12,766		$	12,753		$	12,847		$	50,825
Acquisition amortization net of tax		$	9,911		$	10,029		$	10,039		$	10,179		$	40,158
EPS effect of acquisition amortization		$	0.17		$	0.17		$	0.17		$	0.17		$	0.68
Revised adjusted EPS		$	2.61		$	2.67		$	2.61		$	2.24		$	10.13

Contacts

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