NDSN - Earnings call transcript Q1 2018

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Operator

Good morning, and welcome to Nordson Corporation Conference Call today, Friday, February 23, 2018, to report Fiscal Year 2018 First Quarter Results and Fiscal Year 2018 Second Quarter Outlook. Today's conference call is being broadcast live on Nordson's webpage at nordson.com/investors and will be available for 14 days. There will be a telephone replay of the conference call available until March 9, 2018, which can be accessed by dialing (404) 537-3406.

You will need to reference ID number 4186237.

During this conference call, forward-looking statements may be made regarding future performance based on Nordson's current expectations. cause a in risks, the the Exchange that involve factors and Securities may differ. Commission discussed to as company's could statements number uncertainties, of other and These results actual filings with After remarks be session. there a question-and-answer the on quarter, will that like introduce President I Mike Nordson Corporation. would Officer Chief Executive of said, being Hilton, With to and Please go ahead, sir.

Mike Hilton

once global team improvement delivered outstanding earnings as a successfully We leveraged margin, President Officer. the by operating Thank sales quarter has conference first very joining per drive Nordson's again to Greg our report to record you. Thaxton, XXXX and that Good EBITDA, quarter Financial morning, everyone. compared Thank results. volume and Senior to share, diluted pleased Vice increased I'm I'm you joined Chief for Nordson's first in call. year-ago.

Our technology this drive and leadership, service, customer excellence have diversification helped efforts in growth.

we quarter, to joined from looking the as assets of acquisition certain Nordson; extend During warm as to I great commentary completed well have recently also like forward our moments. employees highlights to performance that a with Dosing. Sonoscan Greg Infiniti financial we're the on these more would provide these coming additions will few expanding to the our the portfolio some offer will and in months. I a capabilities detailed in now welcome

delivering bottom-line electronics We to largely demand product year continuous all prior solutions, of the first challenging by robust records. all was quarter first We was were where per and earnings a remain XX%. the generated continued organic results. end EBITDA, very drive while growth technology at within Looking our top-line initiatives was employing most medical and in best quarter, improvement sales, diluted total operating share, markets. driven Demand committed strong to against and strong lines company profit, comparison

quarter, expense both the up to margin XX% over asset quarter, Excluding same increased one-time current of quarter very $X a EBITDA in the period margin adjusted and XXX operating was million as current first amortization compared prior of and in $X first quarter incremental representing the EBITDA XX% the points in the strong ago, performance. intangible year. the million points basis charges XXX basis improved year year's

second speak few moments, second more but I'll modest the to in about perspective more X%. Greg I'll to provide we're challenging organic guidance. the comparisons our up quarter on to expecting the was a the sales where growth ahead call growth the we turn to be quarter, first and organic are as first outlook Looking to prior year more sales against over detailed quarter

Greg Thaxton

Mike, you, for everyone. to I'll Thank and fiscal quarter XXXX. results second before on quarter outlook good comments morning first first our the of moving to some provide on our

in in First in quarter. was year's of to X% prior change approximately year electronics the of end driven increase and growth demand increase effective first over acquisitions, quarter by primarily volume, first the million, the prior favorable This of related included sales XX% the increase the quarter. approximately first XX% currency end organic approximately to high were XX% $XXX guidance, translation growth an Organic sales our sales compared strong medical to and markets. effect at year's related

Asia polymer segment's general drove Dispensing the non-woven's processing lines product the strongest softness rigid growth packaging, by product assembly, in lines. were segment, offset product Within Adhesive and this quarter, and regionally. the in Japan

prior segment effective the for first organic over segment, year to XX% where volume very year difficult XX% the prior Advanced included was growth and is particularly XX% first quarter growth This the related sales the strong Technology comparisons the quarter this to growth volume Systems acquisitions. performance growth Within organic year the XX%. first considering

the the which the the we markets Although quarter. of month XXXX to fiscal organic Sonoscan, of in XXXX geographies acquisitions one Mike and fiscal added Vention, Plas-Pak, and growth growth of product January. includes and portfolio lines were generated in as InterSelect, acquisition noted, ACE, acquisitive all strongest, end This electronic segment's do

finishing and Asia Coating were product drove lines Europe, Industrial powder, geographically Japan, liquid and sales this the growth, Within organic the quarter's segment, container, strongest.

the income improved operating of XX% Moving to current the first quarter. with statement, margin for as down million company $XXX gross and quarter total prior operating year's the the in XX% quarter, the margin in to profit was XX% reported compared

amortization asset to operating margin the prior compared As year the approximately which more Mike of incremental $X quarter's by than noted, million results expense include basis points. intangible dilutes as XXX

$X quarter operating one-time was million of million XX% the inefficiencies facility quarter in Dispensing of first Adhesive U.S. compares quarter. first the margin to segment efforts. basis, XX% the restructuring year U.S. or prior charges quarter, excluding one-time in of operating when operating amortization $X consolidation facility in the the margin margin and delivered dilution to for relates incremental the XX% working adjusted primarily On quarter consolidation. of to XX% which million Excluding the related the of expense, the a $X the for from the year's charges prior through quarter's XX% The

of expense, Technology Within short-term charges first accounting point related leverage. XX% in non-recurring step-up reported in and net step-up is the share. of leverage. basis quarter, basis, quarter first year amortization $X charges operating related segment, was $X.XX, basis reduced value of margin is $X.XX the in The XXX and charges due segment the asset quarter XX% prior or were per to to million, diluted was million diluted XX% diluted a points per total operating improvement earnings over by incremental million the earnings charges Coating by the million XX% Sonoscan over EPS of GAAP intangible Industrial of This $X.XX margin asset of mix excluding share margin XXX for $XXX and up the the prior and share. purchase first company primarily GAAP by acquired year's for incremental product the and intangible of per driven $X System reported from $X the per inventory. to volume acquired XXX% of inventory, and $X purchase value amortization when diluted reduced short-term income EPS year the share, a million increase volume mentioned $X previously On quarter restructuring of prior million accounting Advanced the

transition As in a $XX recognized XXXX, $XX of per Tax Reform foreign the million includes earnings. an legislation quarter. diluted benefit estimated on one-time deemed deferred liabilities estimated net or of the of tax and share charge to revaluation This of for result a tax related $XX tax U.S. unrepatriated million an of benefit Federal $X.XX passed Income discrete was in the million

EBITDA as trailing first balance release. times quarter. strong XX% over at $XXX sheet X.X XX% tax prior improved related EBITDA financial GAAP million perspective of debt quarter, press million, tax recognized to XX-months equity. A to per the margin quarter. basis share to the earnings of delivered our share a adoption payment $X prior quarter $X.XX reconciliation transactions accounting diluted increase a first credit per to acquired XXX exhibits From was points earnings to the to of non-GAAP requiring or We benefits to quarter adjusted of be Additionally, a first related inclusive per in year's share standard new compared is rather of and EBITDA was end benefit the in excess to net share-based year income of the EBITDA tax than of expense the included first

I'll includes Our turn year's and Prior well press second dividends, fiscal to EBITDA to before adjusted flow income as growth cash of before XXXX. now exhibits quarter release as financial EBITDA. adjusted free X%. net free flow outlook reconciling cash the the organic was for second and dividends, quarter

So we're comparisons challenging up again. against

is XX% an tax of the inclusive expense year. as second range earnings acquisitions, share year be million per effective This ago. the current margin second volume or With year. up intangible GAAP be XX%, approximately We diluted quarter be $X year. quarter we rate a XX% outlook, second compared $X.XX incremental rate the as modeling may expect increase in per expense helpful of of year. to prior excluding at amortization we about quarter the X%, expect as growth to this based XX% and comments This expense quarter, are a share. about and over forecasting the our about range to on be in interest up We're the $XX forecasted as down compared share range estimating compared amortization range operating XX% $XX mid-point of effect asset tax the the to per outlook intangible $X.XX X% diluted additional million forecasted of $XXX and in incremental of in for of includes a the I'll per sales first $XXX year exchange mid-point relative to diluted range that million, effective of forecasted prior amortization purposes. At the to quarter rate margin positive X% asset X% of million the to to from expense compared be depreciation second to the of add few currency to environment in and the for X% prior earnings to gross share to to of of the XX% million to organic EBITDA prior $X.XX

to estimate income based that, rate the the on Our second full-year tax corporate XX% and back forecasted for And mix quarter I'll time, laws. turn on jurisdictional tax call we effective XX% rate is effective over to our rate current fiscal At tax XXXX be of and this based XX%. Mike. U.S. tax lower our and between you, with

Mike Hilton

team results. to thank Thank like our for you, global strong I'd Greg. delivering Again these

year's quarter Our sales more second the second growth. modest to as prior quarter guidance compared growth reflects challenging

on Our penetration technology remain focus capital We'll long-term. drive and market strategic growth to continue over to objectives tiering consistent. product and the our deployment priorities leadership, new applications, efforts

high to will companies We will continue the and will we'll questions. organization that, across efficiencies leverage drive and and we With within continue tools fit our system help your spaces growth to see us pause profitability. targeted take operating business to that quality Nordson long-term the achieve the

Operator

Instructions]. [Operator you. Thank

Our from first from question SunTrust. comes Charlie Brady

is open. line Your

Charlie Brady

Dispensing talk of about consolidation? Adhesive or in Mike, that you in first the Can about the can quarter, you XQ? that that impact is quarter on now continuing the just from comment commentary facility at into of inefficiencies that end done the kind is the

Mike Hilton

Yes.

and those end a to So by that are the At running capability as facilities between we one finish equipment this consolidation into three the to new because have you and of fiscal four we've we and the out moment, laid transitioning three year. facilities recall, consolidate plan facility.

end So we'll some will is it year. but the all of happening impact continued systematically those quarter, see impact going and we probably it's is but fiscal to the at remaining three according this in biggest as once, through close not say facilities, that we happen but this I'd to by be plan

Charlie Brady

Would you expect QX QX? the EBIT in a be similar at to impact to margin impact

Greg Thaxton

Greg. Charlie impact impact similar this if be the expect into a is QX, I to it'll going we're we year as of in QX. a probably down be kind that would get similar but it's at half scale the of to impact. looking back we say Generally

Charlie Brady

And us Okay. -- can you remind

Mike Hilton

Let one me make Charlie. more comment, just

Charlie Brady

Sorry.

Mike Hilton

As won't we into year have some we part consolidation. so to of the duplication benefits invested the of also we next obviously see consolidated, efficiencies, facilities new should have should add We've as XXXX. look equipments will which some this and in facility we costs

Charlie Brady

that you the think and shapes of piece year? Tech, is Thanks, Advanced for mix now the remind the Hey, kind on right can current helpful. out us how of what non-electronics you that's

Mike Hilton

Yes.

of you into other general at electronics and semiconductor the sort rest phone, be into that probably or XX% falls variety or XX% look automotive of mobile a medical be that then into we're kind with will the would for If that XX% and year be about falls would and into about electronics it so falls rest non-electronic of another like XX% that category, XX%, industries, of the across around XX% at looking typically applications. sort the

Greg Thaxton

about So related. half of that being being segment we're looking of that non-electronics at non-electronic, half

Charlie Brady

it. hop the Appreciate I'll thanks. back queue. Great, in

Mike Hilton

you. Thank right. All

Operator

Thank you.

Our from Baird. from Mike Halloran comes next question

Your line is open.

Mike Halloran

work you at the the what's just how process you across trends as three look growth talk second the about you and is businesses? the when by the quarter quarter, Could should through track backlog segment thought

Mike Hilton

we I equipment is at backlog, going positive At X%. Yes. nice rates Order we what delivered well. up What were third some of level a pretty look and quarter. and to about second not is high we a then, delivered quarter, be to is strong quarter when in though so had be the year-on-year going very the as comparisons, the think in at backlog for And look us. quarter

more bit where the period we're a challenging. gets So comparisons of order time that rate in little

year our businesses then in you outlooks in the better at say we we delivered think guidance little is I'd going against the feel the for have level, for opposed I’ll high be reflects if maybe So really because the what for expect the But what for at expect that and we as and quarter comparison. if the know this quarter-to-quarter and you to think what go at bit in to be year we can to projects general and expectations we a as company. look we give seasonality. the the the we another look seasonal year, just we -- growth have out,

and year such all Last going systems most the product The up. lines having to expect mobile the We will that's business tremendous area particularly a of be are linked one our kind which dispense be to year. virtually be a challenge. there to the of challenge phone in electronics

that offset that. business the other Our hope activities industries will is medical general the and

Mike Halloran

So this the impressive is not a forward terms these against customers process forward when moving the really to today? are it able really -- but at there, is there's be what how saying or are look process I the as of electrical thought What's mean a basis growth, of pause a in revenue the obviously the maintain least level even quarter. pipeline with on this maintain comparisons here out think can here about I thought you of high onboarding lot is there sits pace difficult if

Mike Hilton

That that rest you had across the strong, is will offset part at significant because segment. be of non-dispense the strong will the parts did look business, well. business I our change. we're of last be long is acquisitions help the the we expect in business business going the business quarter particular are run, So parts business, the be challenge we businesses the business, our non-electronic other said, the of but electronics of service treatment new the if think first year-on-year. the strong segment, year inspection The to look expecting said, is just doing I as you what a parts particularly strong, the the dispense if total the of which it's to challenged and year still of things On a

comes of business go ones the been to be. challenge the going to of diversification we going of have the with with to Now also what the the forward potential don't going is continue advantage drive that of time lots this and the we innovators is year but impact whatever in be take to to the But of those we that projects The is our meet growth typically which are and business. all has flexible, of know of out to focus them.

the seeing drive So we're to piece, to and there. drive medical, good non-electronics traction

Mike Halloran

-- you how or to just seeing are portfolio chain the hear you from within the then want about guys an it inflationary it And cost just the good spot. are But and own perspective to supply guys on how your seems are and you're what like feeling side your relative in financials? price inflationary side, you a

Mike Hilton

commodity seeing So in I'd movement some you're say, materials. we're -- some

I think there. global pretty mitigating a activity job we're we push do products, that with any sourcing and offset in new innovate as able our we good to continue impact, to of

big So a concern we us. see don't as for that

Mike Halloran

labor the on Anything side?

Mike Hilton

good there typical business drive we leverage first of we've job and our of end people And to increase through -- kind skilled is that the productivity, most think seeing we're the day I think quarter. hit done the of to at in as systems have and a those the well. all the I our and take increases first that focus year-on-year the

Operator

Thank you.

from question Company. Our comes Trusz Matt Gabelli from & next

Your line is open.

Matt Trusz

for my you Thank questions. morning. Good taking

Mike Hilton

Yes, good morning, Matt.

Matt Trusz

will and some Can on that do additional from you impact spending be plans? there in how think from an levels perspective provide just customer end of granularity pieces you XXXX overall performed ADS Tax any the on that you Act how their non-polymers see CapEx market and

Mike Hilton

sort to business, recapitalization which of focus growth, drive continues consumer it packaging largely plus us, helps look side the and challenged of you lot improvement productivity part many applications product our things, grow, and to continue non-polymer through but to at with we customers if a are there's of our new be the with technology. of of Yes, tends linked on

note out be the looking spot. say at solid. non-woven's lot see say that's entry investment product but sort solid. all into our trying would at to you And other out in I'd order products look And the And a business, I U.S. those in expect and assembly So in related if Product year been a be solid. can been diaper the that that we businesses encouraging the over encouraging the well. be that here falls our we and underlying drivers talking the a to improvement I'd has would to a the broader about activities people middle direct to consumption-related of as that us. strong. of nice to Act, a still seeing continue I extent of that say an in sweet as we're where means think class, lot uptick part are improvement the figure across expect Tax so polymer lines, of in growth, links customers of mentioned, effect business, just be to we middle a see I what class, as would productivity that that's for improvement little that

Matt Trusz

of elements be softness Or company have Great, type markets to to more then the of encountering way? color in end polymers, And specific would either you great business? turning are you seeing it thanks. challenges, that facing

Mike Hilton

neither. really It's

of bigger pelletizing that are intake business that business and part can particularly be have We of order parts the lumpy. the the

in big year where they're just really similar if product the first quarter year-on-year a there. up last order comparison big across didn't rates have all order and lines at Yet And look we had looking order this year. so a the I at we're a of nicely

not always like concern line up, we electronics of a product at that business doesn't our we but So year-over-year times timing expect lumpy see look be can that that have improvement. and if year-to-year, to and assembly just some you at and

Matt Trusz

you. Thank Understood.

Operator

comes Thank Hammond Capital you. from Jeff KeyBanc question next And from our Markets.

open. is line Your

Jeff Hammond

projects indicating is is So or coming year this base, you're the to or said pretty on year, they're projects, less this are going mobile are see with they starting it of time still you they customer back that the just fewer phone the do to to you in robust?

Mike Hilton

kind project say, that any November would through activity are robust. I'd I is going of say the when pretty from not one ones year now is activity clear though is forward. underway. to go which We're in

these business, particularly a are introduce introduced. because around traction. new other expectation really, that continue of it's last go be think new of are But technologies seeing of of have circuits phones given to little which was and flexible the point, if of electronics, year I of the going to a of the projects offset say are going lot customer this of and bit go ones in to be innovation which be we strong the couple sort prudent the I'd phone outside of you demand months we last new we're to at of base that just impact. a look you last products there. the our changes kind really magnitude if auto reasonable year. forward clear getting the to year of some even it occurred cautious in year know will of into it’s going that's next a like all markets, year forward strong nice amount But the have. we those had tough And different some a an At the things, phone But

Jeff Hammond

are you OEMs? seeing handset the what China And from

Mike Hilton

little with We're come projects we to through of interesting be seeing again that which comes orders phone good It'll well. of activity. say well in where see expect see in. good, offerings, in them we're time new later I'd a I'd their be year. bit will probably as this innovation working We're degree what on to say period

Jeff Hammond

normal you backlog that pushing guidance -- into Okay. And a quarters; the the longer in mentioned then that's component the or normal are timing, guess and or greater I backlog that's out just is pushing some stuff out is you timing cycle kind that of you project projects? have future in seeing

Mike Hilton

unusual. tend assembly, that be I orders polymer that mean at are parts Yes. other in longer our in I if don't our think area, our the look that product projects are you the it's to released in are of tranches. of in businesses anything some

you can. say here nothing unusual, give just best to And we give commentary we're can so we the best particularly and it's -- you it's the I'd transparency trying

Jeff Hammond

perfect. a Mike. Okay, Thanks lot,

Mike Hilton

Yes.

Operator

you. Thank

from comes Allison Fargo. question next Poliniak Wells from Our

Your open. line is

Allison Poliniak

significant base, to numbers, year, model the back as been Just on obviously just this this customer gaining fairly further going any share. but is there guess I successful change some than maybe the might has for ATS you diversify the more that? not you customer that be know and that of to model gain handset, guys greater opportunity outside is with I base, middle Nordson mentioned thoughts diversifying share,

Mike Hilton

Yes, absolutely.

what markets are sizable. certain are I that So -- nicely that mean there growing become end

process inspection So both there. at side, as that both their the are in as equipment. more bond on We've to we of and talked both we we that auto there. have the offerings and specific side well doing will getting the And some customers inspection year, semiconductor dispense well this to the relates as past but grow as not testing see continue traction changes the sophisticated applications long about in talk more most of interested to the started X-ray things that sophisticated on one run, dispense is electronics just in about

and make not about And traction the applications space are suppliers that systems the the talked within electronics good necessarily I'd we side phone encouraging the for then, on of really phone to to sort tied those are continuing Chinese there. us. are so opportunities And say that who

but and both we growth. application that it's good to drive new we're basis traction the getting continue technologies on diversification beyond trying within to effort continues introduce a customer and also electronics So

we example, nice a was good seeing in So, for in which year. we're growth the largely some animal there. expanded side course of the participate last and we're And medical that acquired in They we medical the Plas-Pak segment we growth seeing business. had that, of didn't then health

outside trying piece, to diversification. we're drive that electronics to the and continue within So

Greg Thaxton

Allison, is And Greg. allow in the I us Sonoscan that this the beyond the some before. some that flex also the dispensing add those would of we in space, coding in electronics will done we've spaces participated that acquisitions, acquisition, of so acquisitions other to gain share haven't

Allison Poliniak

That's I working potentially? maybe on going of around then three you in to to be sort historical, XXXX understand Reform if for the terms more but acceleration How investment kind get the terms through of potential would are of just we this quickly Tax that I next the guess in all great. still of guess going recognize folks a of figure back sense the that, event investment, that, And in from back do of commentary months. obviously turns would I you

Mike Hilton

It in related depends what bit little of part the is business terms that's to. -- of a

consumer to longer-term could in to if investment that side folks the sooner. make six likely kind in probably next line upgrades If that something of happen of related probably are like starting depends things up, it's the quicker look not investment a it's businesses so be So will facilities nature the that those activity, that nine product could that going would months. because happen going a what like to be or its be that's automobile new that they're platform like. on it whole If

So well spend consumers some sort benefiting it's because to investment If up it depends on tax nature quicker. that little relief could looking from be as the that in of money that is. what a are capacity bit ramp of initial and the of

Greg Thaxton

scope scope is Yes, on the big within that ability the to how that, it's deliver the it's short our really as project and product do our opposed Mike project mentioned of as a I'd customers We to our could the for timeframe. of customer. the suggest about

Operator

you. Thank

comes Our question D.A. Matt next from from Davidson. Summerville

Your line is open.

Matt Summerville

what of million be just somewhere in asked earlier. will of you in more First, terms in help is that? can impact Adhesives, from $X some inefficiencies impact, were to impact, little a back these a that quantify get between, Can specific, it million absolute a $XX Greg, questions you this just year; the

Greg Thaxton

Yes, to the charge at would back in Matt, if prior my look comments, one-time I those you the provided year without get I you say dilution, inefficiencies. as excluding

you back that. the And XXXX. as somewhat we're have drag into we as QX, and helps that and so the quantify of by we that that then And past that mentioned, get will then dissipates in half probably similar we fiscal end

Matt Summerville

start So months if you demand this you beyond you is or better XX? next maybe XX -- rationalization leads is there facility otherwise see XX XX to get anything XX% a once think about any think business, reason there that the over those is efficiencies, than to you're that consolidation, number this cannot this seeing you get back to maybe a plus business operating margin to

Greg Thaxton

you to get talked I Yes, that's look segment, think yes, the if that's you at total, total look XX%. to the goal our the overall we've is if back at as certainly

to what facilities you in to this but one, incorporated from working parallel, also also allow a the us technology tell facilities to will by that we've going consolidation and one three in two that we're but get just to we're Europe additional year. done end also will say from I'd So which doing, of more be capacity in efficiencies, new we're

that efficient help this get facility, the So you And segment, in that when be the most most to technology, level. the around XX% we'll will at have look area. to the then so our latest total globe, aspiration would

we there said, may do be you to be would next get our aspiration it not that. As to but a we see path year, and think

Matt Summerville

granularity then And more chop that back help parse can of would how give increase or quarter, or to some mobile of a the in up to weighting a that business you medical all up, the XX% with organic that with you bit of you increase XX%? the sort just quarter half give events-type can

Greg Thaxton

other than stuff, linked you of -- circuit the really particularly big to the would technology. dispense it nicely I we had at business, was look this say, linked in, some to key The double-digits. was of Yes. come dispense parts if up orders flex all

in with of So we-re that there's others. orders the sizable very getting and that's some new and application come the Flex circuits in a some take mobile that and we our biggest to had traction advantage all single platforms driver. then across of was well-positioned technology And

we that couple inspection in we around from performance our to that. all nice really with -- but to also and globe the linked rigid technology our are of of well, that, as of well-positioned product beyond some Now circuits advantage saw flex capability big came take had being of us our in that growth business moving projects

Matt Summerville

circuitry, are it may of Longer-term fiscal moving it'd be funnel, flexible opportunities in Mike, funnel in to the customers the QX? that if be couple in whether want there things a saw with to be stacking, you be funnel, are you whether the if XD look other the like it'd call quarters you you're having next conversations from rigid things beyond like can what substantial like

Mike Hilton

and the and to going to level to I say you on trends. grow dicing to to are look it mean do if going that are grow. even now larger to bit, we've global for you inspection customers in so in wouldn't that dispense I'd I there, is put things in likely more. talked have kind Select, going And things effectively, that's higher to businesses on high about Greg then, haven't self-driving globalizing Sonoscan have trying inspection like of items. MatriX, prior with of mean position, that some come quarter bond us. and lot customers that and are of to because a these And it's with little I'd and that. we companies electronics where two, so as to regional offerings a more wafers as number we're some get it make to that's with that we're priced in Number technology that one we a before. to the and that of adopt other business, I growing positions benefits expect both well, yet continue and testing continuing those significantly had one believe there vehicles had to auto we're not more opportunity based sense. say it's pretty those is we just wafer tell as our I'd big success increase. level bought our smaller a grow now get things and continue we've fact

about the There I opportunities of the that but ones working are there's on I've other good folks trends So the those, there think are really technology are can't the is I highlighted growth nature some us. where we on; think talk heading. projects based for

Greg Thaxton

the for and those dispense, And, perspective. years has Matt, us is is now several of the this both Greg. spaces markets for that end end for a dispense limited been And have are high demands for good with manufacturing kind level is and from add only place more we're continue that the this demand good a require those a those for in supplier they topic or for faster or in the can those group oftentimes to perhaps I'd and of that needs take driver precision, us that deliver markets TNI. in changes trends tighter

be So end high markets in favor. trends level those our in continue the to

Mike Hilton

I role. to focus all would a technology We're also businesses, across plays everywhere new introducing like critical drive our to of growth. that technology

new talked talk newer about completely customers year through we a adhesives haven't some approach. We targeting all set last that non-woven much, core a of little but our about of bit technologies tearing

wear some promise. have that some new into that get of applications like there's athletic look the makers We supporting

looking of growth. opportunities last years do our we're all as we couple across is of how for product our kind create we monitored So the or of create, own applications really either to businesses

I think we will they the that. should likely year economies float and continue top improve on to last of and obviously this year hopefully have

Operator

you. Thank

Seaport comes Our next Global. Liptak from Walter question from

line open. is Your

Walter Liptak

on but the if I ask get their can outflow, some prices details may wonder them acquisitions the cash Dosing we get much much revenue Sonoscan, contribution? and wanted be looks how they're I small, to we can about of Infiniti like how and if

Mike Hilton

significant size was where in and we grow of bit dollars our Simtech That's I'd so of modest terms Yes, will particular million in relatively than a acquisitions portfolio business. in pretty like operation little say we be will capability That's in add pumping that Infiniti part Walt. of modest, -- few to us more forward. Sonoscan of be revenue to that, expect going nicely The similar dollars. is MatriX probably to millions tens previous of for a

Walter Liptak

through, happening M&A thoughts was you reform and was year Okay, it going just or great. the tax And were the get done? able the the year, now it the to timing the rest deals tax any two once reform's for of of at went with that deals the coincident on beginning these

Mike Hilton

Sure.

working. these we're particular would Walt, So the been pipeline are that I we've ones in say ones that

dividend happens We that come some capital initiatives organic just of remain up We'd that a these in keep support about. discussed. work and we first quarter. we two opportunities the high nice deployment the of priorities would and say strategy have to our question same, a I includes these talked like level priorities to our pipeline growth, our maybe forward continue to as we've

have although dilution didn't last M&A then, offsets year. priority. be share for would a We much And we do modest

the quickly going come the reduce to We forward, a probably forward. that continue for year have of and has our that's pipeline through should as going year there we this capacity of continue M&A capacity leverage, to move last been of to couple the part and so quarters our opportunities we de-lever certainly opportunities first have continuing so and to next focus the good

Walter Liptak

is with is on steady fairly good in the years? Okay. it With activity what to you're marketplace of you M&A more that come last pipeline, couple comment it businesses the saw picking or about up the seeing or

Mike Hilton

see these things work I fruition, years time say to to to mean it's them projects you them. sometimes come steady. say time never I'd can on can get you really I'd in tuck-ins done as business but Advanced activity medical in most support EFT the well. like -- in our Tech the properties medical they're or still the we've that to probably these space smaller fairly so never you we

-- a on. and come act we want say So I’d of just we be we to had of pipeline significance similar should need to type forward before prepared something as see we

Operator

you. Thank

next B. Liam Riley question from from Burke comes Our FBR.

Your line open. is

Liam Burke

one touched there? How you contributors the it previous the on the continuing on the is to and that briefly one it there. is questions of tiering of way competitive you growth on any being want responses of seeing -- develop Mike, the are you

Mike Hilton

I'd we new The markets developed the say a tier or so emerging continuing in we set I some lower China, it one reference, specific of do outside net to is products had reference making that China want. was with non-woven customers. of way

last think that or before. year new I we've XX that we customers had about XX had never

we're from another on good the little with particularly for applications down electronics we're traction say profitability a still we So or And space, continuing a further of there. tiered -- where some have in and then well as the tiered a is house. traction good to see pyramid going of and area products a I'd tiered side lot mobile the coating type formal or the automotive product the seeing

expected. it's playing way we’ve say I'd the out yes, So

We do pretty have I think successful. we've been competitors.

through change service these the team the is there having right chain the So applications I full offering after then just but secure on the think don't see it of the and a I supply from then to any businesses all it's having and team combination critical. the sale significant

model where tier businesses. further So our various can continue work continues to and to think I that we we opportunities look for

Liam Burke

to the Great, consumables within range? thanks the Mike. revenue was normal on And percentage Greg, the contribution

Greg Thaxton

say Liam, up closer XX% Yes, high the now. I'd to it's

some think is company particularly consumable that the the product, As we've acquisition Vention about range. acquisitions a in more completed so you running XX%, XX% which of total

Liam Burke

you, Thank Greg. Thank Mike. great. It’s you,

Mike Hilton

Thank you.

Operator

Thank you.

comes from David Lakes from Great Our next Review. Stratton question

Your line is open.

David Stratton

the interest of rise we're know variable your can rate that the you in is majority When seeing, kind balance given rates give looking at sheet, just that I recent debt and on see us plan shift thoughts maybe you there's a your your how fixed that? and just your to on rate forward capital more to or structure going thoughts are if what

Greg Thaxton

we'll to to fixed floating manage we're capital our look of a appropriately. at coming revolver and kind mix both at to of is the to generally, David, be tend to prepared coming that of up pretty of, keep kind the but always a the as level that we across be structure allow appropriate us cycle maturity, Yes, business taking looking balanced,

So balanced, we'll be focus that, historical to it on trends. probably similar a but will

Operator

you. Charlie our next Brady from question Thank SunTrust. And from comes

is line Your open.

Charlie Brady

thanks. Hey

general normal there what's strong that's some you that first in systems on into or on the is and performance want margin quarter a follow-up to the quarter going have QX? step-up in timing pretty performance that for performance Just a be which that there, Industrial big there lowest to Coating change driving would tends pretty seasonality QX, strong margin and

Mike Hilton

to very from focused very level is standpoint trends say focus at had helpful time, a what that, given then a did business more of improving Well, comparisons are the and anything revenue continued you nice and on profitability improve We year-over-year. we team the the on long had team was the of year-over-year of we've nice probably bit a than business know, is probably better But bit that. job for scope supply. but the a beneficial a and of leverage a has which done mix the continue -- that doing up have a I’d they're little they business mix in volume little that else. business

Charlie Brady

of you revenue the typical seasonality, -- the you've kind revenue throughout years seen guess I Would expect typically?

Mike Hilton

business in that You're total? talking about or

Charlie Brady

I same you'd normally got some of the or seasonality I'm mean what of a that rest pull-forwards kind results than the year was to, skew and IC. get I therefore quarter About trying with the pull-forward great to XQ there would continues we've just of rest would normal guess indicate some the higher pattern the in it the see? was year the just and

Mike Hilton

of a wouldn't half than of first would I got And similar volume pattern we've and year-on-year, In no. different of there, perspective. of seeing a of from typically is stronger say have a there leverage here can significant the the where we second Yes. what year-over-year. mix and a year most a business, that effect pull-forward effect the was mix expect year little the variety the volume I so half think is product bit you're lines,

Greg Thaxton

period. the as segment equal to we -- on that opportunity raise made can There's to a generally the well the Mike else to this across this period back initiatives from we as margins other and those comment is improvement continue focus improvement believe to being board continue across But continuous earlier, segments, everything Charlie business.

Charlie Brady

more of So Greg XX% got because going a Run, a of one been if way not Home point business more now. it be high-teens to margin margin just that top a three or was the on I range, that there, it end upside kind beyond much XX% EBIT we're a two that next maybe that we're not over of see XX%, and guys at back to thinking years EBITDA is correct? right guess to you little look you of level; really the kind that's kind correct sounds years is the our like this few

Greg Thaxton

to that scale we improving things of that company shared service buy help the obviously got largely was done I the sort Yes, not I a at a space. to the we about be it's five level, or there at when But high OEM scope particular will in we're easy very what and to on great us this say to -- XX% from our than we're being in that. you we all think get talked timeframe still job, to move the that and approaching of moving of our center the if the I’d But approach that global focused grow level be team at year back goal beginning to ago XX%. as Asia. And end is a the standup the this end as and and then years the And cycle more in effectively North six to May/June still service integrate We're high right, cyclical then our a going and aspiration of about and what of do in that because lower the business, move so well. of looking get we American effectively end is has think we Europe to think the low cycle. we're more things process

but that a in So we're long forward the going additional benefit. cost probably run doing short-term things help the some be some in leverage to will other adds that

Operator

like now over remarks. showing you. lines. call no conference I’m And for to further turn Mike questions from back I closing phone to Thank Hilton any our the would

Mike Hilton

thank the for our thanks like to and expectations. you. quarter. a out you this my to who global everyone all continues put big to interest So also team Thank questions of I'd exceed

Operator

Ladies gentlemen, participating you program. conclude and the in thank today's for conference. does This

Everyone have You wonderful a day. may disconnect. all

Nordson (NDSN) 23 Feb 182018 Q1 Earnings call transcript