NDSN - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Nordson Corporation Webcast for Fourth Quarter and Fiscal Year 2019. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

to Mahoney. conference like speaker to now Lara today, would hand over the your I ahead. go Please

Lara Mahoney

year Thank fourth you, I December today, morning. and We Corporate Nordson's Sundaram Lisa. welcome Good report Nordson's XX, Greg Communications quarter President Mahoney, Nagarajan, year end our President fiscal and XXXX of Thaxton, Vice you Executive results. to Investor and and to Thursday, Relations. President am and Vice with This here XXXX CEO; is CFO. Lara call conference

Our be by live until webpage available of conference dialing XXX-XXX-XXXX. will on our at investors.nordson.com, replay is being accessed call call broadcast for December There Investor XX, and available days. telephone conference Relations it XX XXXX, a will which be the be there can

number to need ID will reference XXXXXXX. You

statements other with company's remarks conference may These expectations. questions. actual may made Nordson's on regarding based to could After that of we be as take statements and the results the and happy factors this discussed performance, to cause your call, will our filings risks, be differ. our upon the future During Securities uncertainties, Exchange current Commission number quarter, involve a forward-looking in

the to call will Naga. With I that, turn over

Sundaram Nagarajan

conference. customer's our very bring serving by that creating been visits to technology like in our XXXX. and joining Throughout for fiscal I've morning, needs, passion Thank a environment macroeconomic for against our value over everyone. critical precision challenging customers. differentiated Nordson's Good you a my to the recognizing four past focused team our customer's impressed site for We're XXXX on I fourth the Nordson's by quarter would months, businesses. begin strong performance Nordson's solutions

end applications combined on of diversity to us markets macroeconomic the help focus the with these challenging during Our and times. continue customer, our

solid generated of quarter, growth the fourth X%. we organic For

by last softness Coating compared both the full offset X%, were markets end served segments and Adhesive in Advanced Dispensing Industrial total organic Technology to year company XXXX, in sales where was by year, the as organic down For electronics growth segment.

year full sales, we with and distraction prior margin For EBITDA the despite lower from in tariffs. operating margin basis, maintained the a company total line on year

I'll annual provide our turn detailed guidance but to XXXX call I'll Greg moments, more first, the speak to financial over perspective our more in Thaxton performance. about fiscal few on

Greg Thaxton

you, and than quarter. X% year related approximately everyone. Thank Change morning to Naga, good to effect volume, currency a quarter of to decrease Fourth of organic X% fiscal unfavorable sales and acquisition the increase to approximately an year's related prior X%. Control, first XXXX of the XXXX of Optical X% less fourth translation included growth increased the of compared the effect

currency sales our to of Within benefit end compared from X% the Dispensing as non-durable Systems effect the of related as quarter as prior X% to well organic This decrease of continues the segment, the stability year, markets Adhesive unfavorable growth, the year. prior and increased inclusive X% initiative. a consumer fourth to compared growth segment a translation to

less was end X% Strength Advanced year's acquisitive in as unfavorable inclusive offset markets. acquisition the effect growth than first a to organic the translation year. the and electronic to related X%, to currency fourth medical The of in prior System the less of in compared end quarter, increase Controls. Optical of to fourth decreased of decrease of related decrease than volume weakness prior X% effect acquisitions, by XXXX sales quarter's Technology fiscal a X% includes markets an of compared of the year

to year's compared the XX%, increased prior sales fourth system quarter. Coating Industrial

like was of The the sales a quarter unfavorable for growth drove the I'd X%, third and XX%. the by impacted to discussed conference activity team during As the translation our sales volume for of and their negatively call, strong efforts. thank solid currency order effect segment backlog quarter quarter entering fourth record organic quarter, during

down Moving was quarter. was operating increase the profit the prior million, was company year's quarter. gross to compared of XX% an fourth in total XX% statement, as in margin Operating and the prior $XXX margin year, approximately XX% for XX% the income compared to

delivered segment XXX margin a basis, points On of increase an to which compared year's the as Dispensing Adhesive fourth prior quarter, System in of strong quarter. segment operating is approximately XX% basis the

the product Austintown, and in We as mix are margin. improved facility impacts Germany seeing the on as some benefit well of efforts Ohio, gross consolidation

making continued drive the within is margins are segment. progress the We pleased this to see to team

Technology the points was increase basis of Within Systems year's in an largely in quarter, prior compared the quarter, is quarter. quarter. segment, margin as operating enhancement compared margin the spending fourth year's driven to Advanced is to prior as which XXX by approximately the XX% fourth the This fourth lower

Industrial largely quarter. compared margin to year's is enhancement prior Coating is by XXX as the points the which absorption XX%, this by System fourth basis driven segment. improved to operating for in record and lower a spending quarter This margin segment better

net $XXX for basis, quarter company million, was total $X.XX. a and share approximately income per earnings diluted GAAP On the were

XX% quarter, inventory, over Excluding share income. discrete of EBITDA of increased cash quarter sales, $X.XX. fourth in earnings the and up increased was to acquired restructuring and or tax before to adjusted expense free prior net fourth the per net year's charges year's diluted X% XXX% in a flow $XXX dividends million, value of step the prior XX% quarter, or over

now a less a the prior Sales of effect than organic included volume unfavorable in due as decrease the a prior change X%, share first-year few compared I'll comments the This the to in translation, year X% compared of for related on decrease to to and the decrease currency were acquisitions of sales year. year. billion, a $X.X results. fiscal to growth full-year X% of effect X%, of

to charges, exclude for earnings lower $XXX tax was the margin per step XX%, net was year's income to up Adjusted Full year Net diluted million. operating expense margin, $X.XX. million, equal inventory and full-year was $X.XX. diluted operating despite last discrete acquired profit restructuring operating of share was GAAP which sales. the is in $XXX earnings share value and a were per Reported

prior to million, income. months the net Free perspective, XX or sheet a EBITDA million, of the before to times was full-year From quarter. balance net equal $XXX flow year. for EBITDA XX% the end of XX% debt at EBITDA was X.X was trailing the sales, cash $XXX dividends approximately or of fourth

for million return funding growth In $XXX cash with repurchase we initiatives and addition to dividends, investing organic shareholders flow, shares by to acquisitive during year. and distributing in our the million our of free the value $XX

financial and A our press reconciliation earnings of release. adjusted earnings between share GAAP the within is exhibits included per

dividends, free before dividends, flow also well free before cash release EBITDA. includes cash exhibits as and financial press adjusted net Our reconciling and adjusted as EBITDA, income, flow

Moving to compared the exchange organic on fiscal from sales volume year to we X% to environment, the XXXX. as currency effective points compared based of fiscal to expect growth XX first-year in on translation the acquisitions XXXX growth and add current XXXX, an effect X%, fiscal of unfavorable XX rate will points, guidance, forecasting as basis range basis

outlook, we hold results, offsetting equal to EBITDA expect the pressure operating of costs. margin and margin the to on inflationary With sales dilution fiscal XXXX

of the first, we this have a margin a a a typical the XXXX stronger spending quarter softest the given We level follow our from being relatively with our quarter than performance consistent and seasonality with perspective, from perspective, quarter-to-quarter. and be from revenue to model, will expect where pattern, second-half first the year fiscal direct

GAAP in rate $XX to maintenance approximately and expect Company's be in earnings tax is the estimated be diluted We expenditures to share. approximately $XX XX%. be outlook, earnings share growth expense per this XXXX, range fiscal year to GAAP diluted to to forecasted interest X% million XXXX fiscal is on Based year million. compared X%, capital XXXX as effective fiscal of for approximately per

Sundaram Nagarajan

full-year delivering against team a to challenging Thank macro thank solid you, I Greg. result a again, Once want our for environment.

The forward seeing even environment, these will markets will end total of our fiscal in markets, trends, assuming we as and conservative growth fiscal a fiscal look flat we'll we taking medical, resilience macro order project are improved that in company to against any gives non-durables we notably, though perspective. electronic see sales convert the are year than approach a XXXX indications And end As in from better activity we not macroeconomic for other that serve, outlook are improved confidence achieve XXXX. into hopeful outlook lines fiscal consumer we're organic we product be challenging a XXXX, us XXXX. we a to next

perspective, in Before we and Greg thank CEO. transitioned Nordson the Since Greg Board the morning. Personally, move want into Financial of Financial XXXX to strategic the Greg's with to want I've has strong On Thaxton humor, to His our role Chief evident Nordson his important to within success for retire who contributions has recognize for acumen, I intention made the we Greg Q&A, financial I a Officer. Analyst. of XXXX, sound Nordson's judgment, as is of as he with announcement as and his started I've served appreciated this organization. leadership, his him. to passion team, in everyone interacts drove Nordson. Directors, leadership Nordson and XXXX. announced His many that behalf into

gracious thinking CEO, hear retiring. the was one CEO new to things Nordson of put plans a could your so execute that transition. to CFO Greg first that his smooth hold As about on leadership is is a last want you

life, planning successor few nothing but new say Greg before but his a for and you your gets staying you excited, his has Greg, would like I your family and it's identified as you Now, he wish turn, committed is Greg until in us and begin with best words? to onboarded. this to too chapter the

Greg Thaxton

these It XX is months. is time Nordson, such of and Thank and be all will for ensuring and remain a collaboration pleasure company to support team, over is the Nordson. exciting the committed a a years. our have phase the planning marked years with growth. over I I you, many has Earlier know With want this This several its I organization, an Naga. great I to and and of executive smooth those thank worked year, direction, the transition well-positioned, company truly profitable next part next I with of Naga's to been for

Sundaram Nagarajan

Greg. you, Thank

be Greg's patience will both launching search external time and including during We candidates. morning's successor, internal for for you your and call. Thank this a

We pause questions. your will take now and

Operator

And Christopher of the from line Thank first our from you. comes Instructions] question Glynn [Operator Oppenheimer.

open. is line Your

Christopher Glynn

at a Thank you. congrats long morning, Good and run everyone, on Greg, Nordson. great

Greg Thaxton

Chris. you, Thank

Christopher Glynn

there with roll-offs the I'm there? program on view like the if wondering you're need medical, expecting key consistent if long-term on horizon, question you through or is to A transition organic any performance

Sundaram Nagarajan

medical our don't consistent performance our Chris, continue XX% in see be We to in for our that question. thank impact significantly you had year a will with organic any with expectations We your strong real roll-offs and medical. growth, performance.

Christopher Glynn

in the conservative outlook just have seems, margin next scraping medical ADS in understanding Great. year, is the seem should and flat momentum you leverage. for it profitability ATS, second-half, the built does on And structural bottom of then, it your kind at the some electronics the caveat, and

could there more embedded is of view? So, there, it you seemed tailwind margin if of comment that kind on bit that intuitive the a

Sundaram Nagarajan

of so higher we the really towards a sales impact sales end we direct some and you midpoint with costs, at development there our forecast leverage. there margin customers, target, the If margin, our technology organization, we in our stay look midpoint and our are improvement we of labor forecast our consider invested on significant expect currency not our our do sales but is our the offset we at -- and as to interactions positive inflationary include that to sales want of expect probably would is move

Christopher Glynn

Okay, great. it will Thank on. I you. pas

Operator

D.A. next line the Our comes from Matt Davidson. of Summerville question from

is open. line Your

Matt Summerville

Greg. Thanks, and congrats,

the First, saw little of kind of and ADS product granularity fourth more can polymer, being in the you outlook pieces into what you for trends different know, give the is quarter a you maybe non-wovens assembly? just rigid, demand

Greg Thaxton

held Order Matt. the trends well, cycle of set This with pretty of pretty resilient again, time. lead is the short, have adhesives, end that's up Yes, Greg. the markets kind overall short within non-durables

fourth to as those as that really we'd down So, markets saw end in well markets. the strength expect year of full applications go and where We to continue line that new benefit we the new don't those end of and from but product innovation the of the performance resiliency you quarter level, to bring indicative to opportunities. is

times, challenging pretty So expect that's it's held these up we part against would of the business even well. as

Matt Summerville

side, medical, if terms outside of other actionability on areas. test of to avenues on then, And comment two electronic the seeing pipeline, explore maybe sort M&A in other company forward? maybe for in outside you're areas can just guys of you types the M&A are there of and those going what looking Naga, are you of the

Sundaram Nagarajan

significant have in our in medical opportunity of early We platform it. testing still about platform. fairly are These thinking sort scaling still inspection up and our

are ever out but market you we're come determine, other opportunities. When always something So, there they of we looking know, we so… can't to still of areas if moment, and There really there, we is remain are out there. focused the opportunities at, in run

Matt Summerville

Thank Got you, guys. it.

Operator

Fargo. Our comes from from Wells line next question Allison Poliniak the of

is Your open. line

Allison Poliniak

Hi, announcement the guys. Good today. morning, congrats on and Greg

You relative move for tough I are talked some know could I how project, to about say forward, but and up, these inquiries, if increase talk of your around feeling guess, it's ADS year, increase last they'll to you was projects this XXXX? picking

Sundaram Nagarajan

good project of We're all activity. Allison, middle we certainly of still in see pretty that.

solve on our know, problems. applications, you those a we're capability market to technology customers lean where As our leader in our and

of the in of lot middle we're activity. So, a

projects. we're rates about position, and activities the you with those our our adjust orders, or but We And turn work expectations. as customers. continue them feel those have project to very market right have picked not not in seen rates significantly will of our order up, when We middle good us and into see our into convert order

Allison Poliniak

just a little Great. some reached we've level your overall of more downside minimal point? I feel is mean, do And where you there bit -- feeling, your at like risk guess I stability this then,

Sundaram Nagarajan

continue downside. sort can really in you is, from Quarter, third we're fourth about if our to Yes, today don't of we what think any to see we neutral, see seeing businesses

Allison Poliniak

helpful. that's Great, you. Thank

Operator

comes question Capital Markets. Hammond line next from the Our KeyBanc Jeff of from

Your line open. is

Jeff Hammond

good good guys; Hey, congrats, morning, hear. Greg, to

Greg Thaxton

Jeff. you, Thank

Jeff Hammond

that up translate not orders? into specifically on staying just activity pick Maybe where you levels may are seeing Hey. electronics,

Sundaram Nagarajan

as if So, so not are markets, XG, set semiconductor one our very of to think applications involved a diverse and PC board, applications, product including electronic you we automotive business, in electronics, it's end about packaging, to the to or are across in electronic find activities are the driver applications, throughout and we we that you project multiple supply other, pretty different chain, know, particular but involved electronics the overall board. the throughout strong the

Jeff Hammond

talked what you're can XG and from at there, I of on, comment you're you've and mobile guys? think you Okay, terms then just handset Thanks. in seeing just maybe what and length about then, hearing infrastructure the

Sundaram Nagarajan

product in that, think as know, you discussions, you So, tell projects I they to Really, continue rollout, and development will people. so into pretty good, that orders, early days but our projects phase conversation, XG in these and about are XG levels for terms issues Probably in expected. project general, and now, you you solving activity would phase. of in slower how are convert be we're than engaged find infrastructure and as

they've good so… feel know, activity, -- converted project our yet, So, we about it just orders you into not

Greg Thaxton

end which add And a kind a to. tend would see Jeff, you project seasonality point for I from at of were it's we Greg. to see what to this of activity perspective, would we some that low tend is those markets just from, referring

Jeff Hammond

Coating the a segment guess, little maybe pressure Okay. more Industrial is little to tends And segments you economically each I to of guidance, X% expect then, a organic, sensitive, I more to give there know would won't there? within but that X% be or you be

Sundaram Nagarajan

XXXX, see end at -- would of we the mid that expect growth segment. across you the high organic look feel the we at As to good to

Jeff Hammond

corporate? mentioned And then, a think it segments, I $X.XX of can basis, there's you Okay. a kind or said or I out where hit that you pre-tax you housekeeping, one-time Thanks. the would anything -- on of think item, just if kind if spike hit of items, tax

Sundaram Nagarajan

bulk Yes. the It that primarily It's really isn't makes of the restructuring significant across segments. as some corporate, as hit well it. segments, the and up charges across

to enough for particular not any move margin performance it's really So business.

Jeff Hammond

Okay. lot. Thanks a

Operator

from the from of comes Mike question next Baird. Halloran line Our

open. is Your line

Mike Halloran

morning Greg. and good congrats, Hi, everyone,

the thoughts going you're there well into context about on what side, first the improvement seeing kind some of it So, maybe you're what XXXX? just on and sounds on like operational adhesives, that's on actions thinking

Sundaram Nagarajan

structural like a much On improvement on through of performance pretty consolidations We as more is indicated, volume still that margin in really the restructuring side, operational those. is happened all the than that we're place year. terms business… segment, that going say, feel the the from most in proportional be those would you good the in performance came of last business in pretty of margin Adhesive to We're rather any left I to here.

Mike Halloran

the the makes to based that earnings for on fiscal is adjusted sense. thought today, follow-up bridging you're the other this you or at -- anticipated GAAP then thinking GAAP that equal And about when there year, numbers is Okay, or point, there know about is that something items or what could? think you and are the the XXXX, -- any and adjusted in next restructuring is

Greg Thaxton

reported line Greg. the is pretty in EPS. this Mike, It with would be in much growth No.

Mike Halloran

GAAP So, adjusted for for adjusted you're growth, XXXX? be EPS expectations EPS saying similar adjusted versus GAAP, XXXX growth should the

Greg Thaxton

Correct.

Mike Halloran

right, All Thank time. you. great. the I appreciate

Greg Thaxton

Thank you.

Operator

next comes Our from line Instructions] Global. question from the of Seaport Walter Liptak [Operator

is Your open. line

Walter Liptak

morning, ask been regions, Good thanks. that's recovered the like and run. it a a I the about U.S. Greg. and on Hi, probably back geographic guys, little It's bit, good to congratulations, coatings. wanted there's of looks the --

we regions, if like may like looks of EU, can a starting of geographic looks bit, recover, think Asia any review weakens which kind just it just there. as wonder be little seeing as trends which well the I the So, that they you're Japan some Pac, and to about and

Greg Thaxton

this is Walt, Greg. Yes,

challenging years, comps primarily up last many where product within non-woven of OEMs product of comps challenging the lines against certain the the couple are [ph], line to growth that's ICS large extent characterized the it really of you well. segments. across quarter, pretty each volume U.S. of to some saw is Europe along think talked I softness. We've of from in and being some the good some we within year really related a throughout located.

there Pacific, all strength in and So some we're in the across quarter, the really that's good Asia the Europe, largest then segments. within impact

Walter Liptak

last it shipments you kind to we then back of and did are part overhang that had start look of like business, XXXX slowdown as period, The great. delayed came on looks coatings? we coatings through. macro How quarter, that got Okay, the things those or the that

Greg Thaxton

On that's quarter. the realized backlog coatings, right, the quarter, going you're the into the strong we suddenly fourth

are deliver to well-positioned As we GDP growth be our going but the it's most of Really, look expectations ICS. shipping backlog business. of rate type for of into our of to XXXX, through we're there, all kind we're on GDP

Walter Liptak

of Okay, for infrastructure back any where great. out, us the just get do, pushing of going infrastructure why and don't the And you the one that of from is XG, is world me, those who comments part then, and about last to visibility that the region mobile, there's [indiscernible]? there

Greg Thaxton

the and work the as really our chain XG sort a and just is So, supply and because technology about has and been on you of lot think the about pace, and consider think Then supply U.S. done that on dramatically, so, want they of project really slower disruptive to Europe, in recognition, chain of needs back transition about disputes been pretty where the and infrastructure that think some of that -- understanding into if a trade overall the issues there is activities get slowdown. you such, sort phones, the created, first. that's if really in is that to you have XG

Walter Liptak

great. you. Thank Okay,

Operator

of Research. comes from Our the Dankert from next question Longbow Chris line

line Your is open.

Chris Dankert

talk trends again, inspections on really just seeing at congratulations you if morning Hi, could Did helpful. just broadly specifically, and quick tests comment that'd be and and what on want you're on semis good everyone, a Greg.

Sundaram Nagarajan

test we starting On come see the and the [indiscernible] the inspection our of especially to semis side, new businesses, increased on yes, out, given and are semi, X-ray certainly the that two-and-a-half. activity, complexity we do

opportunities. new some see to starting are We

going lots now activities We still new right are in of project on.

those would convert as we thing. for that expectations activities orders adjust expectation our our So, project into that

Greg Thaxton

well Test it's some good really within look portion seen we've is year the area trends year, and been those see occurring going it's given you this and the forward. up challenge that prior we area all for that's Greg. the to are advanced platform dispense throughout commented electronic Chris, at an of systems growth of inspection when would that We've been pretty And against expect spaces, this the technology, the has that held opportunity these years. that us

Chris Dankert

I it, guys. did but a And lap kind that understanding Adhesive bit, it. we to in really there, Dispensing Thanks was circling Got and kind or for is need you volumes supposed mean, back-end first? question see the of color was that get costs benefit as to to just got that, additional Mike's we realignment, of obviously, it be to there from we moved some synergies, little the away as back said, duplicative my

Greg Thaxton

Yes, this Greg. is

the of the were this most last We that, end at are year we year. that of where much into we that consolidation of the behind and through duplicate incurring are costs, the period

the So, automation we've a five, benefit going where where we're see we're efficiency more going be two as investments facilities gains margin to up, we'll as in manufacturing environment in both see from operating the within would where versus that's the made efficient the environment, pick of as forward standpoint well forward. in the going

pushing through So, current about state. it's volume this

Chris Dankert

just medical last Understood, test one that an kind material the of top on said strategy you and And menu as inspection, M&A target? additional kind of pulled hear as as is still me, again, for didn't and remains battery that's the mind, of -- M&A I on what kind dispensing of makes ceiling one kind sense. the of

Sundaram Nagarajan

Yes.

it -- would progress. We've which in wins test an in compare some I and and it focused business, battery, remain as made we've when On but opportunities battery but you're the we marketplace, to in significant have certainly medical some side, opportunity there, the our inspection you organic growth say seeing some ICS we of nice big is and nice not the platforms. made

Greg Thaxton

battery really three of in participating and the with those we're segments, to the continuing innovation each are Yes, work who driving in there.

target more a organic funding that we're M&A, within there opportunities the growth as highlight of segments. ensuring each would we that for one be wouldn't it So, it's our

Chris Dankert

guys. much, so Thanks it. Got

Operator

comes line from from Glynn Oppenheimer. the of And our Christopher next question

open. Your line is

Christopher Glynn

[indiscernible] wondering equipment they're that we're extended wanted perform about cycles to Yes, the pick that up optionality? should consumables, if steady going the ATS, and as electronics, through I consumables particular just and parts between at products period in ask for pretty an in

Greg Thaxton

volume year -- Yes, Greg. On some our year is intuitive in down. XX% parts, are full systems of a a of in this this where would be kind we was year full segments, On the Chris, and about revenue. a basis of

strong by aided also -- category. that's in is consumables medical, Now, growth continued parts into falls that which and

a up we a in end might if markets, pick portfolio we're more across that our some see of to and bit. system getting demand moderate start So, the

On hand, talking medical expect that of to at about we've the to the other we see continue growing rates historically. been kind

a from the So, historical, the medical it's of up bit largely due to growth portion in portfolio.

Sundaram Nagarajan

And down. math, systems was as because just of percent our it's a right, also a XX

So, continue pretty pleased and grow the our know, to it are big so, that growing a we with be continue expectation certainly, you will we're business. but part is while the of that how of we part to this business,

Christopher Glynn

driver just you necessitates if Okay. base. Yes, better I'm into a that kind growth for equipment also [indiscernible] particular products, wondering see install as of electronics the

Sundaram Nagarajan

the line. those in that an be markets, it's improvement about see systems top that's going to driving I if more suggest would we volume end No,

Christopher Glynn

Got you. it, thank

Operator

have further call the no for remarks. the I'll presenters turn We back closing to questions in queue.

Sundaram Nagarajan

on for your allow over today's on attention and us thank Again, margins solutions diversity markets grow Despite We the time customer and and macro you want your to challenges I our call. of our focus to business, the support. appreciate end will long-term. for improve our

Operator

today's call. participating. for Ladies and this gentlemen, Thank concludes you conference

now may disconnect. You

Nordson (NDSN) 12 Dec 192019 Q4 Earnings call transcript