NDSN - Earnings call transcript Q1 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Nordson Corporation's First Quarter Fiscal 2020 Conference Call. [Operator Instructions]

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

Lara Mahoney

Thank you, Marcela. Good morning. Vice Corporate Mahoney, Relations. and Lara is President Communications of Investor This here President President Executive Nordson's Sundaram and CEO; I'm Nagarajan, Thaxton, and with and Greg CFO. Vice XXXX call welcome quarter. first Thursday, We our Nordson's conference to February year you XXth to XXXX report fiscal today,

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

number You to reference will need XXXXXXX. ID

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

With Naga. that, I'll turn to the call over

Sundaram Nagarajan

you XXXX the quarter Good performance with with for expectations everyone. XXXX's fiscal our pattern. was sales in joining were quarter seasonal call. conference Thank the where consistent first morning, quarter line first for typical Nordson's

model year reminder, generally strong a is direct consistent and focus. sales throughout to As customer spending our the our due

margin operating line with quarter in our company total was So expectation. first the also in

previously to as our sales sales fiscal announced year, EPS achieve we improve to XXXX guide. expect margin allowing We move through us the growth, and

provide in detailed XXXX fiscal over guidance our a moments. quarter. to about annual the more the perspective I'll more speak call But few I'll to Greg on first, turn

Greg Thaxton

to Naga, Thank morning you, and everyone. good

the in growth of X%, effects to the of of year's in translation quarter. compared the prior the less first year to prior approximately than to currency than quarter. unfavorable sales X%, compared first from X% decreased first of sales included less of related decrease a sales quarter X% as Change organic decrease acquisitions effect First year's

growth GmbH. Optical the XXXX of fiscal Control First quarter's acquisition includes acquisitive

X% of a decreased as of first to a compared the organic and effects to segment, compared inclusive of related Adhesive in the sales decrease the decrease quarter, year's X% the translation to X% Within year. prior Systems Dispensing currency unfavorable prior of volume

non-woven our other line the by Systems in lines Technology Advanced in modest product segment declines segment. in Growth offset product was

compared decreased First the the year. of unfavorable of volume a quarter, sales effect approximately related effects Control X% prior quarter year's first X% of as less translation first year to to to acquisition, in the prior increase compared than the decrease of of to the related inclusive X% decrease X%, of and Optical organic currency

of was in growth medical electronic those product Solid by offset supporting end lines softness product market. lines

quarter, of decrease organic segment growth prior the Industrial to effects to in of associated the cold less driven year. translation systems of the X% year's volume the first as Coating Systems of product related X% compared materials, lines sales unfavorable the compared than US inclusive prior by primarily quarter, currency product and X% increased growth with organic to generated Most line. demand outer in a

was profit margin statement, in Operating margin XX%. Moving reported of for down was the company the million $XX income XX% gross total quarter. with the operating

approximately segment. the charges our restructuring the $X During we incurred cost Advanced structure quarter, we million within Technology as realigned of

margin. and margin product margin due company gross and Advanced operating lower quarter was impacts operating last mix total the Technology down on operating charge, this margin from Excluding first XX% segment XX%, year's to was absorption

a a quarter for restructuring related $X.XX tax charge to Industrial and were stock-based equal segments prior Operating related discrete Adhesive share Coating basis, net $X.XX, $X.XX GAAP were diluted a was per per to compensation. for share inclusive benefit income quarter. and the On performance total and to earnings million $XX the company share the year's margin per both of

million $XXX of EBITDA quarter first delivered XX% sales. We or of

margin benefited EBITDA net XX%. collection the quarter, quarter quarter charges before was Free in of prior XXX% was income. or cash restructuring of flow during in flow from with $XXX cash Free revenue. the the accounts million dividends Excluding associated quarter the receivable

exhibits flow EBITDA well as net includes net diluted before income financial balance Our diluted EBITDA, quarter. sheet From to first end press times as and cash free the XX of to X.X trailing dividends of EPS was EBITDA the EPS. a reconciling the release to debt adjusted perspective, reconciliation months approximately at

call now few Naga to comments. over the turn a I'll closing for

Sundaram Nagarajan

move The growth generate year. to of of with improved and half committed operating fiscal XXXX equal XXXX to sales X% revenue X% the you, for EPS growth the our annual of as total Thank we over range FY this being the growth 'XX. deliver will Greg. fiscal year X% a second to EBITDA X% expect to margins performance where guidance remain fiscal in incremental to we in We organic and through year the generated margin

We will including the continue region. to impact monitor macroeconomic in of Asia-Pacific the the coronavirus environment,

we and be closer soon. operational are to full capacity China in to facilities expect Our

who thank and to to of want continue along We the committed to do employees families. employees support greatly all and appreciate the in needs our for Nordson their I China customers, our the ways. to our of many during efforts, China rest of supported team, all we time in serving we'll can their employees our the with incredibly difficult

customers year expect return in production, be recovers, not supply our on as scale impact we coronavirus second do full there our and normal, operations our Although a to up sales material some fiscal delivery from we impact may resume results. our chain on quarter schedules

open phone This who months by focused talented customers. lines on serving observations driven employees great want a Before few Q&A, that's first company a are Nordson. six their for we my is the to I share at from

priorities growth. our XXXX our the are this near-term results, we aligning business' we While on on long-term focused for internal greatest opportunity are delivering profitable

growth, To key deliver profitable have we priorities. four

track need and sustain on to through new do we emerging We'll foremost, innovation, historical the focus growth and this our First organic record. markets applications.

three, scaling stay is true what to start the our us Nordson and acquisitions. good product on Second, through Medical need us Inspection which framework I'm a Business great, Number with System. Test We'll implement and we line. includes growth-focused a we to technology. sustainably. our pleased allows diversify has including this This grow that to business strategic to need that makes portfolio, Nordson precision

executive to next leadership are growth this how we the opportunity NBS level. believe in team, take the executing is there an I and on With can evaluating we Nordson refining for framework.

focus on aspirations. today. priority fourth focused we growth folks Our that the -- support have team is our diverse team pleased and a to developing customer I'm with deep

will we more of grow, As we them. need

available pleased in fall, announce our to long-term Please will your the discuss Investor in we Day the calendar September will New focused coming and for event available of the More detail. XXXX, will at also in Hotel -- where morning I'm the Palace mark XXth, information plans our webcast. for plans the be York the business be months. more Plaza an for through

employees thank shareholders customers, continued As always, to their I for and want support. our

your pause we'll that, take and With questions.

Operator

Instructions] line comes from Your [Operator first of question from Summerville Matt the D,A. Davidson.

Your line open. is

Matt Summerville

Thanks. Good morning.

easy maybe volume and First the a was of volume in balance all, organic tougher for where the talk you the organic in actually business what an QX outlook beyond easier get as in the bit like somewhat about what comparison? within comparison that of looks Adhesive the against year business that can declined quarter compares the

Sundaram Nagarajan

for don't X% company Matt. full-year total We provide to guidance you, rate. growth X%. segment committed our guidance by fully We of Thank organic to stay

Matt Summerville

see bit discernible quarter, look respect way late sort fiscal your with did and then, And to frame maybe the the is coronavirus, any impact thinking about and like to in that you of more year? we what you talk maybe if could about the to relative there Okay. perhaps think first company, a up impact normal the be pushed here how in a to sequential is should right cadence for QX earnings a seasonality

Sundaram Nagarajan

there there, right. I two in questions sort Matt, of assume, were I think

coronavirus. New from So, of first around the in We quarter we and for was and went Year coronavirus full in already the shipments scheduled awareness already have The on as impact our material first year had our one out Lunar don't expect results. is time. had planned to a immaterial impact

is some may it supply pushed following disruption quarter. we today, getting in As chain back further that don't in maybe quarter. delay to trouble customers the get second in or the there out look impact at If having any see orders capacity, there we

think And question company. So for had you that on a the around is earnings cadence I coronavirus.

Matt Summerville

Yeah.

Sundaram Nagarajan

that Is correct?

Matt Summerville

yeah. you. Thank Yeah,

Sundaram Nagarajan

-- -- in So, quarter based the seasonality, typical I the is on our of our growth happens say, second second in most I'm half, should our always growth sorry.

strong So, margins typically revenue improved as we increased will as have margins through half, we that this flow improve go second sale. have generate into very and will and EBITDA higher operating

Operator

Hammond Your the next from line KeyBanc. from comes of question Jeff

Your line is open.

Jeff Hammond

just kind that's and into electronics XG morning, been order seeing project Hey. as Can levels Good something around inactivity you're what just we've for season I of heavier mobile know you talk about the XG inflection. and infrastructure, an kind looking year. you quoting in go into the going of guys.

Sundaram Nagarajan

Yeah.

a XG the slow been slowing. opportunity. there continue we will where of out to has we and The that on build see know, is that you lot is progress regarding As greatest also infrastructure, infrastructure press believe and

As in to forecasted, robust. business fiscal mentioned activities before, we have compared in what that's continue electronic project XXXX, our to don't but growth be expect our 'XX not we

conversations. from benefit When that XG it. We in great of are will hits, wave we infrastructure

strong. of are as activities So, now, project

order X% point maintaining into the you're continue project year participating have for confidence of terms of second in strength it right, are us what rates and will in what typical the And those gives up strong half, that's quoting, in delivering at will when our is be we lot guidance of timing us -- second that pick We a on to be to convert dependent X%. activities that to full order. in

Lara Mahoney

element, AI, indicative a XG And which -- are that, is different we are just It's to add of applications, automotive of -- of diversified. course. where change, also we electronics, but important lot an there to

Jeff Hammond

strong great. Okay, working US that's you What quarter. it in see the then, like particularly there well? the was And business do looks

Sundaram Nagarajan

Adhesive business our to in to businesses And do done our have related primarily is continuing that well. also US certainly well. has ICS It

Jeff Hammond

so of or on confidence other anything of kind the activity else Okay. project visibility. there in I that an the pipeline year? you the that gives just seasonality, kind typical move But mentioned through the half, then, just And is you as some quoting guess you in second acceleration than of

Sundaram Nagarajan

about And feel which strong our half, seasonality. -- season certainly strongly and a we past the is pattern, second project seasonal and activity our in we have pretty on we it expect our too. typical No, seen based

Operator

from question next Christopher comes from of the Oppenheimer. Your line Glynn

open. is line Your

Christopher Glynn

Thank morning. Good you.

$X strategic sequentially front indicate Just log imperative last wondering or had that beta or that SG&A if down was to adjusted that typically about the And the has been million $X so pipeline million of or some XQ, is kind unadjusted. spend question years, $X XQ a your million five mandating.

Greg Thaxton

say would did Chris, this wouldn't one-time the much of $X I it's first the corporate expense a suggest -- you I quarter just Greg. in million line. the talk cost corporate there. that what managed is in to have

were line So that's a in you I That to that non-recurring around $XX.X expense expect item, item. than million out, quarter. would quarter modeling that be per current corporate more the if

you year our global compensation is I quarter increase modest And think is a pretty -- year that in first prior the If then quarter increases. the you're when the when year. back looking at out, have current over a we

the So hitting to as in with bit associated a QX. fourth quarter, little our you increases of get compared merit bump

look So it's when item. one-time increase quarter, $X current modest year exclude if you prior first pretty that versus at you million quarter a

Christopher Glynn

Okay.

you a XXX looking spend So was get and first top spending that for about the you year the at bit would first SG&A carry after I'm be because quarter last SG&A the rates sort to and points. X% sales basis quarter growth up restrained line suggest if year, -- of

to So, you're look suggesting at wrong way that's a it?

Greg Thaxton

what would Chris line that am I dependent I -- what is it Well, growth. upon is, suggest, top

it's that in our our impact, to that line might have growth you that to need we're inflationary prior top deliver over we're increase, to going year, generate dilution what the If assume from have spending. offset to going spending merit

Christopher Glynn

basis? Is XQ the high a rate run spend watermark on for SG&A

Greg Thaxton

Yeah.

that our lowest -- from true. the a it's That's perspective, sales quarter. seasonal Given

Christopher Glynn

had So higher sort subsequent be as spend will in you of quarters?

Greg Thaxton

as our we flex as move flat global throughout of fairly trends. With is comments. spending infrastructure, Naga the sales mentioned Our based upon in year, his you seasonality that don't

year. So a the pretty as through it's fixed number move you

the of impact, more upon dependent the top heavily sales number. terms in So, it's margin line

Lara Mahoney

mark year. So was the higher a first quarter spending for

Christopher Glynn

clarify you hear. didn't that? Lara. Sorry, Can I

Lara Mahoney

as just I'm watermark sales with based higher your a a just is spend. you to question, that of percentage agreeing earlier it that on

Christopher Glynn

Thanks. offline. up follow I'll Okay.

Operator

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

open. line Your is

Allison Poliniak

experienced. maintaining Any Good to a market? we mark that comment? growth to color Nordson's products, sustainable Is on it comment, of end morning. new Is it think of guys. just how want I that high that Hi, I guess, go just of kind looking Naga, different, any back sort growth there and your level rate at there? color about should

Sundaram Nagarajan

strategic spend are strategic framework framework win. -- forth opportunities going would really, lot view we the to want -- our are a think selecting we bringing end I a of building existing of really kind That time product bringing growth enhancing the be couple I really what for where we is It the on out I really framework. that and will a invest grow to NBS so of growth is and niches there. as best would add of focused here, company, we strategic do things that market be

framework consists does really growth distinguishing add commercial innovation. the So framework. factor that that that one be company the the to excellence, growth product existing well, the things which is of really, will And would also of

great of view best our So NBS And enhanced want strategic this of an the we really next. new that version combinations is adds to what product are market growth focus existing on. it framework

the customers. So is of best we to excellence, where which well really, to the the at, strategic really model, our a things combination leading innovation is that that that company for precision as close think customer as to grow, commercial technologies want as problems discipline around in solves with good greater

Allison Poliniak

thanks you And to coronavirus out sort then, up color And -- Great. hear running back and color. It's of any going the and again. on running sort experiencing things getting Have up that. what's I projects a thanks then getting of on? are get are on we you components in the of -- getting for terms costs result as for as elevated of or good mean,

Sundaram Nagarajan

moment, present the At no.

period that is could out. continues we we fairly may that if continuing hope have side, longer are then there And are be of -- on fairly delivery over are the get a and seeing. good visibility time, Our supply this cost to But changes no, some improve we the pushed comfortable. as

the We allow on path we're that will have good very inventories continue to on. us

Operator

Your of from next Instructions] [Operator question from line Halloran the Mark comes Baird.

open. Your line is

Mark Halloran

it some to now things. and on the question like with And little So, acquisition then, your Greg's quick side M&A pipeline and of does it look sits newer that departure, just change after a management scene. What things the the you're to the willingness go of today? changes does upcoming as here

Sundaram Nagarajan

continue allocation in committed that acquiring remain to And Inspection. funding and We we have maintaining our and No. strategy. focused priorities Medical organic be growth, interest an there to dividend our capital our on, which our streak, is and spaces in expressed Test the

In good opportunities. have terms we pipeline, acquisition of

and makes areas control, and they We we to continue we market which focused strong, that work is earlier but to continue look Medical and and is on technology When Inspection. come something to precision will I focused Test to us mentioned is don't disciplined what company stay them. remain on two the for as

Mark Halloran

the sequential that side about or Coating and Industrial the that seemed comparisons mostly you'd easier in cadence? in normal but strength? anything were pretty seems there a anything unusual was point then, little It just And normal, to for

Sundaram Nagarajan

It is pretty normal.

a the There comps As some timing, worked quarter but the were the quarter, you certainly that easier. project helped in were certainly significant. us nothing things we first in mentioned, fourth on little

Operator

I further presenters. this time, call over no questions back to are your There will turn at the

Sundaram Nagarajan

us soon. to and today, joining you for Thank again you we'll talk

Operator

This concludes call. today's conference

may now You disconnect.

Nordson (NDSN) 20 Feb 202020 Q1 Earnings call transcript