Nordson Corporation Reports Strongest Quarterly Results in Company History; Guides to Record Full-Year Performance

WESTLAKE, Ohio--(BUSINESS WIRE)--August 20, 2012--Nordson Corporation (Nasdaq: NDSN) today reported the strongest quarterly sales, operating profit, net income and diluted EPS in its history. For the quarter ending July 31, 2012, sales expanded to $380 million, a 22 percent increase over the prior year’s third quarter sales. This increase in sales included a 16 percent increase in organic volume, a 10 percent increase related to the first year effect of acquisitions, and a negative 4 percent impact related to unfavorable effects of currency translation. Third quarter operating profit was $99 million, a record for any quarter, and operating margin reached 26 percent, an increase from the strong level in the same period a year ago. Third quarter net income and diluted earnings per share were both records at $67 million and $1.03, respectively, and compared to $57 million and $0.82 a year ago. Diluted earnings per share in the current quarter include a $0.01 per share one-time tax benefit, a $0.02 per share charge for short-term purchase accounting related to the step-up in value of inventory from the EDI and Xaloy acquisitions, and a $0.02 per share charge for acquisition related costs. A table highlighting one-time items in the quarter and year-to-date is included with this news release.

“Broad based demand across our business combined with the outstanding effort and execution of our global team resulted in another excellent quarter for Nordson,” said Nordson President and Chief Executive Officer Michael F. Hilton. “Organic sales volume was strong across all segments as customers continued to respond to our value proposition of best in class technology, application expertise and global support. We added to our momentum in the quarter with the acquisitions of EDI and Xaloy, two high-quality companies that together provide Nordson with a new growth platform in the plastics processing industry. The robust top line growth, coupled with our ongoing continuous improvement efforts, drove operating income, net income and diluted earnings per share to the highest levels in Nordson history. Operating margin in the quarter was 26 percent, which exceeded the high level of a year ago, and performance in the quarter excluding the acquisitions was in line with our operating margin guidance. We continued to generate high levels of free cash flow which will enable us to invest in strategic opportunities.

Third Quarter Segment and Regional Results
“Nordson delivered year-over-year organic sales volume increases in all three business segments and in every geographic region compared to the third quarter a year ago,” said Hilton. “Total sales volume in Adhesive Dispensing Systems grew 21 percent over the prior year’s third quarter, as solid growth in consumer non-durables end markets drove a 4 percent increase in organic volume, with the remainder of the increase coming from acquisitions. Operating margin in the segment was 30 percent, a very strong level that includes acquisitions made during the quarter and the short term purchase accounting impacts associated with acquired inventory. In Advanced Technology Systems, organic sales volume increased by 33 percent, and acquisitions added 6 percent. Strong broad based demand for dispensing and test and inspection in electronics end markets, especially for mobile device applications, along with continued penetration of niche applications drove the increase. The excellent top line growth, solid execution and operational efficiencies enabled us to drive segment operating margin to 33 percent, five percentage points higher than the level of a year ago. Industrial Coating Systems’ sales volume increased by 12 percent over the previous year and was driven by durable goods manufacturers’ demand for our coating and cold material system solutions. The segment delivered operating margin of 14 percent in the quarter. On a sequential basis, operating profit excluding one-time charges in both quarters expanded at nearly twice the rate as sales, reflecting strong leverage within the business.”

Detailed results by operating segment and geography are included in the attached tables, as is an earnings per share reconciliation table.

Fiscal Year-to-Date Results
For the first-nine-months of fiscal year 2012, sales were $971 million, operating profit was $232 million and net income was $157 million. First-nine-months earnings per share on a diluted basis are $2.41 and include one-time charges of $0.12 per diluted share as described on the attached earnings per share reconciliation table. Prior year first-nine-months revenue, operating profit, net income and diluted earnings per share were $902 million, $237 million, $168 million and $2.44, respectively, inclusive of one-time gains of $0.07 and one-time charges of $0.05, both per diluted share.

“Our year-to-date results have played out much as we expected, with overall demand increasing more recently after a relatively softer start to the year,” said Hilton. “On a sequential basis, sales, operating profit, operating margin, net income and diluted earnings per share have increased every quarter. Our team delivered these results as we continued to execute on our acquisition strategy, fund investments in technology, add customer facing resources to capture future demand, and implement continuous improvement initiatives that should have long term benefits on our performance.”

Order Rates and Backlog
Order rates for the 12-week period ending August 12, 2012, measured in constant currency, increased 15 percent over the same period a year ago. Order rates by segment and geography are provided in the accompanying financial tables. Pro-forma changes in order rates exclude 2012 acquisitions not owned for the full 12 week period and were calculated as though 2011 acquisitions were owned in both years.

Backlog at the end of the third quarter was approximately $251 million, an increase of 49 percent compared to the end of the third quarter a year ago, and an increase of 29 percent compared to the end of the second quarter of fiscal 2012. Backlog amounts are calculated at July 31, 2012 exchange rates.

Outlook
For the fourth quarter of fiscal 2012, sales are expected to be in the range of $408 million to $422 million, an increase of 23 to 27 percent as compared to the fourth quarter a year ago. This growth is inclusive of organic volume up 11 to 15 percent, 16 percent growth from the first year effect of acquisitions, and a negative 4 percent currency translation effect based on the current exchange rate environment. Diluted earnings per share are expected to be in the range of $0.96 to $1.04, inclusive of a $0.01 per share gain on the sale of a facility related to restructuring initiatives and $0.03 per share charge for short term purchase accounting related to the step up in value of inventory from acquisitions.

“Our current order rates are very healthy and have led us to forecast an excellent fourth quarter, which is expected to complete another record year for Nordson,” said Hilton. “At the same time, we remind investors that Nordson is not immune from macroeconomic trends over the longer term. While most economists continue to project growth going forward, many have softened their outlook, and the level of economic uncertainty has not diminished. Countering these factors is our view that Nordson is built to deliver excellent results over the long term. Our global team has few peers in terms of execution, and the fundamentals of our business are strong and intact. These fundamentals include innovative and differentiated technology, direct sales and service, global reach, market leading positions, outstanding margins, a consistent parts and consumables revenue stream, and a culture of continuous improvement. We remain well positioned to capture growth in a variety of niches in both developed and emerging markets, and our recently completed acquisitions provide us with additional growth opportunities in attractive markets. Overall, we remain focused on delivering precision technology solutions that enable our customers to succeed at the highest levels, and our outlook is for continued solid growth and performance.”

Nordson will broadcast its third quarter conference call on its web site at http://www.nordson.com/investors on Tuesday, August 21, 2012 at 8:30 a.m. eastern. 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 delivers precision technology solutions that help customers increase throughput, productivity and up-time, enable new products and features, and decrease material usage. The company engineers, manufactures and markets differentiated products and systems used for dispensing and processing adhesives, coatings, plastics, 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.



THIRD QUARTER PERIOD	NORDSON CORPORATION
Period Ending July 31, 2012	FINANCIAL HIGHLIGHTS
(Unaudited)	(Dollars in thousands except for per-share amounts)

CONSOLIDATED STATEMENT OF INCOME
	Third Quarter						Year-to-Date
	2012			2011			2012			2011

Net sales	$	379,872		$	312,255		$	970,901		$	902,141
Cost of sales		156,658			124,205			388,685			350,168
Selling & administrative expenses		124,676			109,394			350,334			315,365

Operating profit		98,538			78,656			231,882			236,608

Interest expense - net		(2,687	)		(637	)		(6,550	)		(3,130	)
Other income (expense) - net		(716	)		169			413			2,896

Income before income taxes		95,135			78,188			225,745			236,374
Income taxes		28,441			21,638			68,602			68,685

Net Income	$	66,694		$	56,550		$	157,143		$	167,689


Return on sales		18	%		18	%		16	%		19	%
Return on average shareholders' equity		45	%		36	%		36	%		39	%




Average common shares outstanding (000's)		64,029			67,945			64,507			67,998
Average common shares and common share equivalents (000's)		64,725			68,781			65,177			68,862

Per share:

Basic earnings	$	1.04		$	.83		$	2.44		$	2.47
Diluted earnings	$	1.03		$	.82		$	2.41		$	2.44

Dividends paid	$	.125		$	.105		$	.375		$	.315



THIRD QUARTER PERIOD
Period Ending July 31, 2012
(Unaudited)

CONSOLIDATED BALANCE SHEET
	July 31			October 31
	2012			2011

Cash and marketable securities	$	53,639		$	37,408
Receivables		301,369			254,310
Inventories		179,139			141,912
Other current assets		48,103			43,327
Total current assets		582,250			476,957

Property, plant & equipment - net		174,109			130,883
Other assets		1,035,843			696,610

	$	1,792,202		$	1,304,450

Notes payable and debt due within one year	$	105,667		$	5,697
Accounts payable and accrued liabilities		228,794			176,464
Total current liabilities		334,461			182,161

Long-term debt		587,977			313,459
Other liabilities		254,830			237,507
Total shareholders' equity		614,934			571,323

	$	1,792,202		$	1,304,450




Other information:

Employees		5,176			4,094

Common shares outstanding (000's)		64,104			65,601



THIRD QUARTER PERIOD	NORDSON CORPORATION
Period Ending July 31, 2012	FINANCIAL HIGHLIGHTS
(Unaudited)	(Dollars in thousands)



	Third Quarter						% Growth over 2011						Year-to-Date						% Growth over 2011
SALES BY BUSINESS SEGMENT	2012			2011			Volume		Currency		Total		2012			2011			Volume		Currency		Total


Adhesive dispensing systems	$	175,175		$	153,071		20.9	%	-6.5	%	14.4	%	$	469,045		$	449,479		7.4	%	-3.0	%	4.4	%
Advanced technology systems		153,073			111,609		39.3	%	-2.1	%	37.2	%		368,178			320,844		15.8	%	-1.0	%	14.8	%
Industrial coating systems		51,624			47,575		11.8	%	-3.3	%	8.5	%		133,678			131,818		3.0	%	-1.6	%	1.4	%

Total sales by business segment	$	379,872		$	312,255		26.1	%	-4.4	%	21.7	%	$	970,901		$	902,141		9.7	%	-2.1	%	7.6	%



	Third Quarter												Year-to-Date
OPERATING PROFIT BY BUSINESS SEGMENT	2012			2011									2012			2011

Adhesive dispensing systems	$	52,266		$	51,385								$	151,011		$	157,230
Advanced technology systems		49,867			30,976									94,550			87,815
Industrial coating systems		7,082			8,325									13,582			19,036
Corporate		(10,677	)		(12,030	)								(27,261	)		(27,473	)

Total operating profit by business segment	$	98,538		$	78,656								$	231,882		$	236,608



	Third Quarter						% Growth over 2011						Year-to-Date						% Growth over 2011
SALES BY GEOGRAPHIC REGION	2012			2011			Volume		Currency		Total		2012			2011			Volume		Currency		Total

United States	$	100,974		$	77,884		29.6	%	-		29.6	%	$	261,823		$	227,456		15.1	%	-		15.1	%
Americas		28,041			26,510		13.6	%	-7.8	%	5.8	%		74,167			72,528		7.3	%	-5.0	%	2.3	%
Europe		95,259			97,621		8.8	%	-11.2	%	-2.4	%		273,272			285,927		1.6	%	-6.0	%	-4.4	%
Japan		30,619			26,662		14.1	%	0.7	%	14.8	%		90,658			81,895		7.8	%	2.9	%	10.7	%
Asia Pacific		124,979			83,578		50.8	%	-1.3	%	49.5	%		270,981			234,335		15.7	%	-0.1	%	15.6	%

Total Sales by Geographic Region	$	379,872		$	312,255		26.1	%	-4.4	%	21.7	%	$	970,901		$	902,141		9.7	%	-2.1	%	7.6	%




	Third Quarter												Year-to-Date
SELECTED SUPPLEMENTAL INFORMATION	2012			2011									2012			2011

Depreciation and amortization	$	9,560		$	6,559								$	25,519		$	20,805
Capital expenditures	$	7,180		$	3,592								$	21,550		$	14,306
Dividends paid	$	7,998		$	7,151								$	24,189		$	21,442

Notes:
1. Numbers in this table are unaudited and exclude the effects of currency movements.
2. Pro-forma changes in order rates exclude 2012 acquisitions not owned for the full 12-week period and were calculated as though 2011 acquisitions were owned in both years.




THIRD QUARTER PERIOD	NORDSON CORPORATION
Period Ending July 31, 2012	RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited)


	Third Quarter						Year-to-Date
	2012			2011			2012		2011

Diluted EPS as reported (U.S. GAAP)	$	1.03		$	0.82		$	2.41	$	2.44

Short-term inventory purchase accounting adjustments		0.02			-			0.04		0.01
Fixed asset write-down		-			-			-		0.01
Severance and restructuring		-			-			0.05		-
Pension termination expense		-			-			0.01		-
Discrete tax items		(0.01	)		(0.04	)		-		(0.07	)

Diluted EPS as adjusted (Non-GAAP)	$	1.06		$	0.81		$	2.53	$	2.42

Adjusted EPS is not a measurement of financial performance under GAAP, and should not be considered as an alternative to EPS determined in accordance with GAAP. Management believes that EPS as adjusted to exclude to exclude the items in the table above assist in understanding the results of Nordson Corporation. Our calculation of this non-GAAP measure may not be comparable to the calculation of a similarly titled measure reported by other companies.

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