Nordson (NDSN) 8-K Nordson Corporation Reports Fiscal Year 2015 Second Quarter Results

Exhibit 99.1

Nordson Corporation Reports Fiscal Year 2015 Second Quarter Results

• Sales in the quarter are $401 million and GAAP diluted EPS is $0.80
• Unfavorable currency translation impacts second quarter sales and EPS as compared to the prior year by $32 million and $0.15, respectively
• Free cash flow before dividends in the quarter is $72 million, reflecting strong cash conversion of 147% of net income
• Pro-forma 12 week order rates increase 3 percent over same period a year ago
• Third quarter 2015 guidance: sales expected to increase 2 to 6 percent over prior year, inclusive of 6 to 10 percent organic volume growth; GAAP diluted EPS in the range of $1.19 to $1.30

WESTLAKE, Ohio--(BUSINESS WIRE)--May 19, 2015--Nordson Corporation (Nasdaq: NDSN) today reported results for the second quarter of fiscal year 2015. For the quarter ending April 30, 2015, sales were $401 million, a 4 percent decrease from the prior year’s second quarter. This change in sales included a 1 percent increase in organic volume, a 3 percent increase related to the first year effect of acquisitions, and a negative 8 percent impact related to the unfavorable effects of currency translation. Operating profit was $76 million, net income was $49 million, and diluted earnings per share were $0.80. Prior year second quarter sales, operating profit, net income and diluted earnings per share were $417 million, $93 million, $62 million and $0.96, respectively. A reconciliation of GAAP diluted EPS to normalized amounts and a calculation of free cash flow are included in the attached tables.

“Our global team continued to execute in a challenging macroeconomic environment, and Nordson delivered a solid quarter with revenue, operating profit and earnings per share within our range of expectations,” said Nordson President and Chief Executive Officer Michael F. Hilton. “Our underlying business remains sound and total company organic sales volume growth was positive in the quarter. On a sequential basis, our results demonstrate the continued strength of our business model, as we leveraged solid top line growth of 6 percent to generate incremental operating margin of 63 percent. Free cash flow in the quarter before dividends was $72 million and our balance sheet has significant capacity for ongoing investments. We returned value directly to our shareholders in the quarter by investing $66 million for the repurchase of shares and by distributing approximately $13 million in dividends. We also continued to develop and release innovative products during the quarter while maintaining our focus on a variety of continuous improvement initiatives. As we look ahead, our current backlog, order rates and project lists continue to support our view of strong organic growth in the third quarter.”

Second Quarter Segment Results

Sales volume in Adhesive Dispensing Systems decreased 2 percent compared to the second quarter a year ago. “Strength in rigid packaging, nonwovens, injection molding and general assembly end markets was offset by softness in extrusion and pelletizing end markets,” said Hilton. The Adhesive Dispensing segment’s operating margin in the second quarter was 25 percent.

In Advanced Technology Systems, second quarter sales volume increased 5 percent over the prior year, inclusive of a 4 percent decrease in organic volume and a 9 percent increase related to the first year effect of acquisitions. “Strong demand for our surface treatment and test and inspection solutions in electronics end markets and fluid management components serving medical and industrial end markets was offset by lower demand for automated dispensing systems.” Operating margin for the Advanced Technology segment was 19 percent in the second quarter.

Industrial Coating Systems organic sales volume increased 23 percent compared to the second quarter a year ago. “This segment generated strong organic growth in most all product lines, driven by consumer durable, automotive, industrial and food and beverage end markets,” said Hilton. The Industrial Coatings segment’s operating margin was 17 percent in the second quarter.

Negative currency translation effects reduced total company sales by $32 million, or 8 percent, and reduced overall operating margin by 2 percent, both as compared to the prior year’s second quarter. On a company wide basis, Nordson delivered positive organic growth in all geographies with the exception of Asia Pacific. 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 half of fiscal year 2015, sales were $780 million, an increase of less than 1 percent over the prior year’s first half. This increase in sales included a 4 percent increase in organic volume, a 3 percent increase related to the first year effect of acquisitions, and a negative 7 percent impact related to the unfavorable effects of currency translation. First half operating profit was $139 million, net income was $92 million and GAAP diluted earnings per share were $1.48. Prior year first half sales, operating profit, net income and diluted earnings per share were $777 million, $147 million, $97 million and $1.50, respectively. Through the first half of the year, unfavorable currency effects reduced sales by $50 million and reduced operating margin by 1 percent, both as compared to the prior year.

“Nordson delivered solid organic volume growth in the first half of this year in what continues to be a challenging macroeconomic environment,” said Hilton. “This growth reflects the diversity of our end markets, geographic reach and the value we provide our customers. Sequential sales volume growth drove improved profitability while we continued to execute on initiatives that will drive growth, performance and sustainable competitive advantage over the long term.”

Order Rates and Backlog

Order rates for the 12-week period ending May 10, 2015, measured in constant currency, increased by 3 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 2014 acquisitions were owned in both years.

Backlog for the quarter ended April 30, 2015 was approximately $287 million, an increase of 26 percent compared to the same period a year ago, and inclusive of 23 percent organic growth and 3 percent growth due to acquisitions. Current backlog increased 25 percent compared to the first quarter ended January 31, 2015. Backlog amounts are calculated at April 30, 2015 exchange rates.

Outlook

For the third quarter of fiscal 2015, sales growth is expected to be in the range of 2 percent to 6 percent as compared to the third quarter a year ago. This growth is inclusive of organic volume growth of 6 to 10 percent, 2 percent growth from the first year effect of acquisitions, and negative 6 percent currency translation effect based on the current exchange rate environment. At the midpoint of this outlook, operating margin is expected to be approximately 24 percent, and GAAP diluted earnings per share are expected to be in the range of $1.19 to $1.30.

“We are forecasting a very good start to the second half of our fiscal year based on our backlog and current 12 week order rates. The midpoint of our third quarter sales guidance includes organic growth of 8 percent over the same period a year ago, which is outstanding performance in a weak macroeconomic environment,” said Hilton. “Clearly, Nordson’s package of values, including innovative products backed with unmatched service, support and global availability, continues to resonate with our customers. The strength we are seeing is relatively broad based as order rates are positive in most product lines and geographies. Relative to our previous full year expectations, several major projects converted to orders during the quarter. Based upon changing customer requirements, a unique application that we had expected to become an order did not materialize. Consequently, we now expect full year organic growth to be in the mid single digit range. Overall, we continue to feel very good about the second half of our year, and we remain on pace to deliver excellent full year results.”

Nordson will broadcast its second-quarter conference call on its web site at www.nordson.com/investors on Wednesday, May 20, 2015 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 Corporation engineers, manufactures and markets differentiated products and systems used for the precision dispensing of adhesives, coatings, sealants, biomaterials, polymers, plastics 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 http://www.nordson.com, @Nordson_Corp, or www.facebook.com/nordson.

NORDSON CORPORATION
FINANCIAL HIGHLIGHTS
(Dollars in thousands except for per-share amounts)
SECOND QUARTER PERIOD
Period Ending April 30, 2015
(Unaudited)
CONSOLIDATED STATEMENT OF INCOME
	Second Quarter						Year-to-Date
	2015			2014			2015			2014
Net sales	$	400,727		$	417,461		$	779,735		$	776,881
Cost of sales		178,837			181,909			349,124			346,547
Selling & administrative expenses		145,476			142,718			291,379			283,641
Operating profit		76,414			92,834			139,232			146,693
Interest expense - net		(4,162	)		(3,315	)		(8,165	)		(6,778	)
Other income (expense) - net		(687	)		(406	)		(789	)		(615	)
Income before income taxes		71,565			89,113			130,278			139,300
Income taxes		22,351			27,179			38,179			42,486
Net Income	$	49,214		$	61,934		$	92,099		$	96,814
Return on sales		12	%		15	%		12	%		12	%
Return on average shareholders' equity		23	%		27	%		22	%		21	%
Average common shares outstanding (000's)		61,116			63,964			61,569			64,095
Average common shares and
common share equivalents (000's)		61,638			64,557			62,094			64,711
Per share:
Basic earnings	$	.81		$	.97		$	1.50		$	1.51
Diluted earnings	$	.80		$	.96		$	1.48		$	1.50
Dividends paid	$	.22		$	.18		$	.44		$	.36
Total dividends	$	13,481		$	11,543		$	27,116		$	23,104

CONSOLIDATED BALANCE SHEET
	April 30		October 31
	2015		2014
Cash and marketable securities	$	51,454	$	42,314
Receivables		316,091		365,844
Inventories		239,406		210,871
Other current assets		55,192		53,654
Total current assets		662,143		672,683
Property, plant & equipment - net		241,667		224,439
Other assets		1,346,427		1,383,008
	$	2,250,237	$	2,280,130
Notes payable and debt due within one year	$	68,491	$	116,932
Accounts payable and accrued liabilities		229,783		253,936
Total current liabilities		298,274		370,868
Long-term debt		819,203		682,868
Other liabilities		314,530		321,597
Total shareholders' equity		818,230		904,797
	$	2,250,237	$	2,280,130
Other information:
Employees		5,998		5,966
Common shares outstanding (000's)		60,833		62,435

NORDSON CORPORATION
FINANCIAL HIGHLIGHTS
(Dollars in thousands)
SECOND QUARTER PERIOD
Period Ending April 30, 2015
(Unaudited)
	Second Quarter						% Growth over 2014						Year-to-Date						% Growth over 2014
SALES BY BUSINESS SEGMENT	2015			2014			Volume		Currency		Total		2015			2014			Volume		Currency		Total
Adhesive dispensing systems	$	203,273		$	231,954		-2.3	%	-10.1	%	-12.4	%	$	397,486		$	441,425		-1.5	%	-8.5	%	-10.0	%
Advanced technology systems		129,482			127,628		5.3	%	-3.8	%	1.5	%		261,700			225,169		19.6	%	-3.4	%	16.2	%
Industrial coating systems		67,972			57,879		23.3	%	-5.9	%	17.4	%		120,549			110,287		14.1	%	-4.8	%	9.3	%
Total sales by business segment	$	400,727		$	417,461		3.6	%	-7.6	%	-4.0	%	$	779,735		$	776,881		6.9	%	-6.5	%	0.4	%
	Second Quarter												Year-to-Date
OPERATING PROFIT BY BUSINESS SEGMENT	2015			2014									2015			2014
Adhesive dispensing systems	$	50,780		$	62,699								$	94,109		$	110,619
Advanced technology systems		24,770			30,842									51,588			41,220
Industrial coating systems		11,514			9,335									15,278			14,291
Corporate		(10,650	)		(10,042	)								(21,743	)		(19,437	)
Total operating profit by business segment	$	76,414		$	92,834								$	139,232		$	146,693
	Second Quarter						% Growth over 2014						Year-to-Date						% Growth over 2014
SALES BY GEOGRAPHIC REGION	2015			2014			Volume		Currency		Total		2015			2014			Volume		Currency		Total
United States	$	140,030		$	125,693		11.4	%	-		11.4	%	$	262,854		$	241,199		9.0	%	-		9.0	%
Americas		31,028			31,144		9.3	%	-9.7	%	-0.4	%		59,296			58,409		9.1	%	-7.6	%	1.5	%
Europe		105,097			122,058		3.9	%	-17.8	%	-13.9	%		213,663			238,533		3.8	%	-14.2	%	-10.4	%
Japan		28,499			28,889		15.6	%	-16.9	%	-1.3	%		50,032			55,134		5.1	%	-14.4	%	-9.3	%
Asia Pacific		96,073			109,677		-10.4	%	-2.0	%	-12.4	%		193,890			183,606		7.8	%	-2.2	%	5.6	%
Total Sales by Geographic Region	$	400,727		$	417,461		3.6	%	-7.6	%	-4.0	%	$	779,735		$	776,881		6.9	%	-6.5	%	0.4	%
	Second Quarter												Year-to-Date
FREE CASH FLOW BEFORE DIVIDENDS	2015			2014									2015			2014
Net income	$	49,214		$	61,934								$	92,099		$	96,814
Depreciation and amortization		16,238			14,743									32,222			29,231
Other non-cash charges		4,386			4,631									11,251			10,304
Changes in operating assets and liabilities		21,686			(26,806	)								(18,136	)		(34,160	)
Net cash provided by operating activities		91,524			54,502									117,436			102,189
Additions to property, plant and equipment		(19,362	)		(8,603	)								(36,183	)		(16,494	)
Proceeds from the sale of property, plant and equipment		146			86									421			99
Free cash flow before dividends	$	72,308		$	45,985								$	81,674		$	85,794

NORDSON CORPORATION
ORDER RATES FOR 12-WEEK PERIOD ENDING MAY 10, 2015
CHANGE FROM PRIOR YEAR
BUSINESS SEGMENT	% CHANGE	GEOGRAPHY	% CHANGE
Adhesive dispensing systems	8%	United States	1%
Advanced technology systems	-10%	Americas	29%
Industrial coating systems	21%	Europe	21%
		Japan	-6%
Total	3%	Asia Pacific	-15%
		Total	3%

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 2014 acquisitions were owned in both years.

NORDSON CORPORATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
SECOND QUARTER PERIOD
Period Ending April 30, 2015
(Unaudited)
	Second Quarter				Year-to-Date
	2015		2014		2015			2014
Diluted EPS as reported (U.S. GAAP)	$	0.80	$	0.96	$	1.48		$	1.50
Short-term inventory purchase accounting adjustments		-		-		0.01			0.02
Severance and restructuring		-		0.01		-			0.01
Pension settlement expense		-		-		0.02			-
Discrete tax items		-		-		(0.03	)		-
Diluted EPS as adjusted (Non-GAAP)	$	0.80	$	0.97	$	1.48		$	1.53

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, 440-414-5639
Director, Communications & Investor Relations
Jim.Jaye@nordson.com