Nordson (NDSN) 21 May 202020 Q2 Earnings call transcript

Company Profile

Participants

Lara Mahoney	Vice President-Investor Relations and Corporate Communications
Sundaram Nagarajan	President and Chief Executive Officer
Greg Thaxton	Executive Vice President and Chief Financial Officer
Michael Halloran	Baird
Saree Boroditsky	Jefferies
Matt Summerville	DA Davidson
Allison Poliniak	Wells Fargo
Jeff Hammond	KeyBanc
Christopher Glynn	Oppenheimer
Walter Liptak	Seaport
Chris Dankert	Longbow Research

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Nordson Corporation Second Quarter Fiscal Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to hand the conference over to one of your speakers today, Lara Mahoney. you. Thank ahead. go Please

Lara Mahoney

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

available at is of call on broadcast for nordson.com/investors will and There being be available the until replay page conference Our June which our be will dialing by X, live accessed (XXX) there call telephone days. XX XXXX, web a be XXX-XXXX. can conference

to You number reference XXXXXXX. ID will need

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

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

Sundaram Nagarajan

second commitment and Nordson navigated employees for I'm safety two much morning, our the world you world Good you our Nordson’s the how I'm joining team. our XXXX has resilience, around quarter, responding quarter to families health are have call. on through proud your the detecting Thank flexibility, and safe. conference our incredible our of the colleagues It's the team their we pandemic. changed and for second in needs customers. thankful February focused since In few call. hope of and so critical months fiscal priorities, conference everyone. the We this healthy staying to was and of as the

have production greatest period, results And to of applications. is our infrastructure in which of for products certainly this end One to markets, to all year. manufacture during continued of critical the our this facilities is diversity strengths point Nordson’s contributing the

and Going will remotely our forward, temperature focus employees as our be continue where health protocols transitioned checks, regular face working other be we social distancing, essential. cleaning, on safety of maintaining and coverings will to from

global lessons share We're been together all to Representatives moving learned. coming from everyone's in and manner a to practices forward best have teams together our safety. ensure conservative

to While for on and opportunity we progress this remain strategic focused organization managing our environment, moving growth. profitable forward committed equally dynamic is I'm toward this The actively objectives. making greatest Nordson

accomplishing accelerating two announced leveraging focusing Advanced realignment discuss Business will will On in Technology organic a Solutions strategic priorities new terms in March we Industrial agile diversifying segments: of XX, our business of through growth, that Today talent development. we Precision Solutions. System our us results acquisition, on and and more make our Nordson the

turn about few perspective the second more detailed speak I'll I'll first moments, quarter. call business on the over but to the to Greg in more provide

Greg Thaxton

Thank you, Naga morning everyone. good and to

the second acquisition quarter of approximately Second decrease unfavorable fiscal decreased and not decrease to the effects a X% approximately prior to was change included first the of quarter significant. the organic compared the currency sales in of a volume quarter. year’s related of X% X% This year Growth Optical of translation. effect XXXX to related Controls in XXXX

to general combines prior included decrease which Adhesive decreased approximately year’s organic compared change segment, and This markets by X% a serving second as of currency related and as such segments, compared automotive markets Coating to Solutions strong Precision is approximately Industrial and end of lines performance the Relatively the a sales Systems Systems decrease Industrial sales the in volume Within our X% previous of quarter. X% effects Dispensing translation to industrial. as offset of in and such non-durable lines product prior sales nonwovens packaging sales consumer serving year. unfavorable of weakness product end the those

Sales compared included first increase less organic unfavorable second related effects change decrease and to X% quarter. decreased sales of prior than effective prior in year’s Advanced in a to approximately This to an segment than less a X%, translation the to the decrease volume Solutions Technology of the year. of related year the X% of compared acquisitions as than X% less the currency

and Sales in lines and product serving electronics lines product fluid markets. medical industrial end our end product was weakness markets. volume test product dispense increased in by and markets offset serving end serving fluid growth This inspection lines lines dispense

our the XX%, reported margin profit with was the for XX company quarter. reflects decline the Operating in margin margin however, compensation control comment accruals, focus in quarter. in points income operating to the Gross prior down addition statement. basis Moving the year’s of up operating operating on I’ll the reducing to quarter’s this million $XXX our specifically, offset on total was over segment second XX% spending margins sales.

open defer organization. our within during continue our of estimated a to includes in line the bias administrative fiscal only This be to discretionary expect the monitor would second headcount to we spending conservative towards reduce spending half trends, the and in order with efforts We the prior our second spending. year second but of with additions also half selling as half where year’s expenses are XXXX not

the operating prior quarter. in second Solutions basis, the was segment compares year’s XX% the Industrial This quarter. to XX% On segment in a margin Precision

year, impacted the As negatively to lower current volume. prior by year’s the second quarter operating was sales compared margin

mix. operating by in total second Solutions, XX% in quarter margin Technology million $XX primarily per share compared quarter for second the GAAP net On improvement company as Advanced income the was was $X.XX. were quarter. Within to XX% and a operating prior earnings the year diluted This in basis, the driven margin product reported was

finish first $XXX XXXX. the cash by quarter positively flow receivables collection resulting to cash year second was the income. cash basis of net in XX of EBITDA XX% sales, Free conversion last up million, of strong over We dividends of impacted or year was Year-to-date the XX% net delivered million second $XX in during quarter before of is quarter. fiscal the of from XXX% which conversion income, quarter points

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

sheet balance position at of ensure we had end the a conservative the quarter, a $XXX took of a perspective, cash liquidity. as million From appropriate second to we balance

dividends returned investing to In $XX Company approximately addition paid during value shareholders the quarter. approximately dilution, end plan EBITDA to XXX,XXX second is this benefit have the in quarter, to XX by we year's which available. this cash $XX months was credit repurchase times million revolving offset the we facility intended undrawn Net and EBITDA trailing the to at $XXX of quarter. shares to million position, during our debt X.X million

benefit in held In line in supporting our from performance customers our macro summary, solid has markets team the top considering diversity end serve. environment, the of delivered has responded great Nordson where and the we the we challenging in way up a quarter.

balance on to liquidity longer strategic maintain a to term sufficient continue We sheet initiatives. to stay strong with focused allow us

call I'll to back you, now Naga. turn the

Sundaram Nagarajan

for you, the execution Again, is their incredible to time our colleagues the is This and team’s want during Thank uncertain an our commendable. I thank strong commitment customers around Greg. quarter. to many this Nordson world for

year the our said, business the impact is the have of Our has is performance That half incredibly pandemic the on this of an environment year. impact of accurately this will the dynamic first it for difficult COVID-XX. considering been predict through remainder the and solid to

the Our quarter is year to backlog approximately and of the The increased evenly a at has X% ATS same IPS the split a end is which the backlog second certainly fiscal between period segments. compared sign. ago, positive

We On order both hand, XXXX though owned to currency measure rates weeks. soften in with rates begun several rates in constant the years. pro growth other order forma calculated the as acquisition order last in fiscal year was have the in

XX the decreased rates year same May order ending the week period For ago. for X% period XXXX, a XXth,

both segment rates ATS order compared a the XX%, order period rates same X% year while segment ago. to as IPS decreased increased

lack at highlight these quarter our to we fall Looking IPS the suspending the may the trend order annual I for at of a pandemic, prior are XX% guidance we to Because year, Day, impact six volatility with of last of about over the balance are performance duration the for postpone are and do the Though XXXX these total X%. and down be ATS compared time. announced rates not and previously period of results year XX% dealing which decided weeks, this down our shorter forecast with first clarity to six of also the the company weeks a fiscal uncertainties Investor in the conference down the We’ve time, XXXX. referenced call.

are trends excited demand I Nordson. near-term of unclear, the future the about am While

and technologies. customer market the foundation of diversity our We solid business have a centric by position leading model business, our strong fortified

strength Nordson of markets liquidity past the and good of serve. and indicators financial diversity we end are performance resilience Our and

strong, what in invested and global innovation our in stay talented will organization. We notes makes

connectivity an to like is this. Our our environment in particularly customers critical,

We monitor these ensure will business manage dynamic action uncertain the to through times. however, to to we are continue taking environment this appropriate

XXXX. On expertise Before Executive a announced we over to brings that Officer, President Xth, as the want Xth years financial Nordson Joe for Vice announcement. joining XX the open May be I Financial CFO Kelley call and operational to recent we July Q&A, Joseph highlight effective and will role. of Chief new

our right well process, long-term us experience Joe's candidate for search operational the as the his company CFO, him as help as public a finance During execute Nordson. experience vision met to

the strong to smooth leadership especially to have appreciated. company current that sustainable, we on Nordson, staying profitable support and energy, Nordson will Joe the transition. the ensure his navigated to with environment. a as is Greg On excited driving be greatly want is I flexibility coming of welcome team your for I'm Joe August Greg, has time, behalf thank this Greg growth decade. to focused in through

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

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

Operator

Halloran your you. Michael [Operator now Baird. of is And question open. the Please comes ahead, Thank line Instructions] with your line first from here go

Michael Halloran

on and everyone great run. Greg Good a really morning congrats

Greg Thaxton

Mike. you, Thank

Michael Halloran

second the any talked what so some a seeing would put about Please. relative non-durables So for where the benefits medical context well as variance in context pieces just first have the and for dig lot you're Could and whether from the industrial And talk happening softening trends doing electronics seeing quarter, an the in comments on and you're lower from question, you bit? in layer what's about fiscal may well. perspective end also of thanks the order environment be a little a side. to you market

Sundaram Nagarajan

for Mike you, Thank question. Yes. the

through overall through started came Nordson that in with and certainly the contributed results us get end serves, first our diversity the of markets half. certainly strong and to benefited Let's quarter the

what if for not down, rates. period, whole week period, the And further the down look since As trends, go you the at six total have lot if overall disconnect order we we weeks rates think talked the IPS And X%. total as of we XX the about you order XX%. the for the down are about really see six this, XX is in there between order company – week a the not is it segment, and between first week

some applications the see non-woven really strength on well like the mainly in we nonwoven PPS you making you And see lines in by automotive IPS, declines strength ICS in and as of lot systems, But non-durables, what bordered product if kind in IPS, non-durable categories market. testing with of market. applications that liquid would and offset think product serves end end businesses in consumer you that kits, large the as so the mass good in a some strength in that system COVID with our product container significant is about expect lines, especially

So where declines. the do systems we have when it and end serves or automotive markets, do see you industrial

we're of if mainly X%. you you XX% really, this is not in When down first if lot IPS and shorter our at for really week weakness XX have think between systems the about a up But our segment, we dispense period six and look about into week difference. ATS you if trends general a the this time, quarter, the side. seen in it, coming were of XX electronic But really the think – week,

more, bit larger in are our volumes. price you also if come system typically product think categories and they about dispense that little So a higher

just So able what it sort of is not volatility of that, weakness typical indicative we would trend the this is six we ascertain are to week is see. from or

to are all segment; where given systems. what and given tend our seeing shorter-term, So nonwovens in well, trends, week pretty we medical IPS Mike, talked in nice in environment the trend the – see we've you the ATS, a we this in cardiac the that around and better the you the kits really we seeing a pulmonary color around, about trends we the we where we're there. product seen And point really the give weakness connectors as trends. But use lines you of the CapEx this is as because to really XX things cycles, of use XX company really well. are are is to applications, remind and some order and these the electronic in use week we I’d to really that really we’ve the doing we testing ventilators number and in It is bypass have other machine indicator. applications

So dispense see see around in where up, businesses. in have for applications really semiconductor we dispense is applications, electronics really strength applications good also we PC in end industrial medical for general we board ATS market. good really some weaknesses is

Michael Halloran

Greg. ahead, a makes That Go of lot sense.

Greg Thaxton

market. that, that's color lay on end the to just Yes, great over

change the and six systems from weeks the ATS systems. good was of of seven a six and a on XX side through clarify the negative to weeks change the the the six to Naga from in XX and what not XX did was in to around just the much was job electronic six plus IPS really So that a again, highlighting

Michael Halloran

and I great really appreciate that color.

strong strong the is very a sheet, capital position, is in on here balance cash liquidity strategy flow. good So free

the how So long-term? offensive and turning and versus M&A on sides thinking internal lot dry on then keeping growth a near-term balancing well potential the as change side, you're that for about initiatives, unknowns challenges about maybe the there, and probably as in you in how powder not thinking more I'm of briefly share buybacks. investing touch the touch the also but on guessing investment the are that

Sundaram Nagarajan

consistent, they there. So let changes me Really, remain priorities. talk about our capital allocation no

one continuing is to internal number Our fund organic our initiatives. priority growth

that. quarter. about projects, is X% CapEx about continue have to Just strategy you we offset share intend repurchases compensation And to in we business to plans. you seen X% and that in line marketplace, a is our we that's that to do a strategy from we have our on sort dislocation in repurchases, hence, dividend the to are good earnings, of implement we'll asset-light think is we internal our model, continue acted do as that we – our we remember revenue dilution our the Nordson of terms if baseline mainly plan policy spend dividend for increase continue in do with saw our And have to share what that to to of that last

for to for properties That things think And lever going portfolio technologies acquisition special. key We us want to continue but is disciplined. the diversify acquiring Nordson about strong finally, when create acquisitions, acquire in, that allow is want makes to all you an customers. really important and that be assets to and really create company. to We to to we're the about acquisitions value we're use us precision growth that allow our

to test disciplined our to inspection we which where there lot businesses add acquisitions, want are and opportunities is strong value, act. and focus on of maybe we've really stay bolt-on clearly going to certainly if we're medical core that, a we in where and will So identified we

given the continue act But on the mind. opportunities, to to are we continue stay the in going but environment environment, on long-term, keeping focused to

little if in sort bit areas. could more that's and other I more add are we of color So you where are interested

Michael Halloran

And safe that No, very helpful. always. you. Appreciate stay was as Thank everyone.

Greg Thaxton

Thank Mike. you,

Operator

with Your Please line Saree from go is of ahead, next your line now comes question the Boroditsky Jefferies. open.

Saree Boroditsky

good and morning. you Thank

you some any the weeks. order six you orders the talked on question order color the the the weeks. through cadence the six just slowing of see growth on Could last and improvement over on provide about last up did trends, you Following

ending little than So maybe better the a the was bit week average?

Sundaram Nagarajan

Yes.

are to of you XX% if that speaking, that's weeks find could general, of have – is to difference. trends in Broadly two about it and week week the change. seems our to is our on and no really very given sort XX%, So down highlighted, say trend difficult XX% to think to In Week going CapEx between that it is week, businesses, the the changes. – our IPS, weeks that XX about order really really which have you're that to that we I six say trend. a would to no nature really really

in of went plus would and ATS, lumpiness that just from the our large in see what a But really of there, following for in single system orders electronic can indication we a order from we in we and because order give business, X the an would week. system to to X highlighted, volatility no saw and you know, difficult negative we be week, you coming really is our weakness electronic get area the you it week-to-week, us and in as really

to a So company that's really marker XX has and moving look how it as forward. important is always at over things for good it us time week period, are used a of why the the

Saree Boroditsky

Yes, Thanks. thank Appreciate that. you.

on could appreciate saw and the the thinking remainder of year? markets I IPS, you just the how the these you declines weakness in the in industries and quantify are auto about color outlook for the within So general help you

Sundaram Nagarajan

add me some – me would Saree, let color to Greg, Let have you the...

Greg Thaxton

to bucket, where deck, got customer, that of it's the end our total that from a, in some quantification that It's on we as put that as investor as not softness the industrial of an of saw it's X% gave we some of large not portfolio, around the in just just both company's injection portion X%, several sell business. Saree, applications in – set markets a don't the But quarter. We level as go one color well structural overall but that perspective into portfolio. for we we Yes, we've typically It's product competitive into. some well molding from down lines dispense dynamics.

Saree Boroditsky

Okay. questions. Thanks for taking my

Sundaram Nagarajan

Thank you.

Operator

go Your Matt now line is open. next with question ahead, from your the Summerville Davidson. Please line of comes DA

Matt Summerville

questions. Thanks. Couple of

getting that, the to perhaps China, please? talking of was including weeks. back Asia last add kind wondering to I North about First, depths some trends America could Europe seeing you if seen over the versus you've what in versus to XX order six you're here geographic

Sundaram Nagarajan

about broad in Asia still out. it steadying through Let have that, U.S. is general take In flux to probably probably details. some and then Europe, if you Greg and you seeing color what we're me you of a think recover it's starting give is is a state and

turn over that the specific more Greg, it some me trends. provide let so So can detail to on he you order

Greg Thaxton

Yes, in up biggest Matt, change the being we pick where held the that of amount and of medicals, customers that the to geographies from Asia we most are the each portion those talk Naga's color and provided, generally, things up he got the week we've in a and the where electronic systems kind six the a of lot consumer I'll about portfolio, XX the of one that, in of see non-durables, Europe. fair well, have those

in that two we saw versus in systems geographies. softness XX the in those the primarily where electronic was So six

Matt Summerville

it. Got then... And

Greg Thaxton

end markets. the consumer been when it in Generally pretty the and has those we – six kind to week. Specific medical XX think week of those about the non-durable, consistent

Matt Summerville

related anything, sort looking as that for order of and a then that projects you're both conclusion now Thank infrastructure? devices to with Thank color. in seeing might XG rates it. and foretell, respect electronics Got just what what forward drawn for to you with any Is to be you. respect follow-up. And there

Sundaram Nagarajan

Yes.

system maybe broadly our let's about electronic So talk business.

of our of we are remember, business, inspection, our dollar and we if systems compared electronic packaging system. our and both value have and have to, So test system our dispense you when say these larger it part in

lumpiness going are compare you're set amount to product those of So see of if two, associated so this with categories. you that some

the And we have given is week, so between you either that the us near-term rates, not provide environment, little it wouldn't if as sit we would or important very XX it backdrop, is that because volatility. of say macro today, this which thought today, here see. our volatility we us is But the see normally a lumpiness normal we would the talking did color. for normal for to about order difficult to additional we this we be it is It be disconnect

infrastructure general what me opportunity where to little XG driver not to only XG, is important for going for electronics. seeing going you just Around have growth devices. talk going and but also We're driver, XG. electronics. let opportunities It we to a the going bit in in to are IoT opportunities be have a are growth today We're us. looks we consumer it's what in be the to auto and is base about an in going set, opportunities like. have We're to mobile in in the our

So for a opportunity it's broad going to company. pretty be based the

certainly we slower than all The like. rollout would of XG had hoped is and

still We For a electronics talked that some things. across we've XG a a sorted issues reasons, there We different technology in our are participate out, side. chains. on semiconductor, as getting number to with around you of is of start about supply number a

diversified across highly entire supply We chain. are really the

So start where work who chip application, the making into somebody is or with XG for antennas. component certainly then switches these a or with filters semiconductors, integrate we manufacturers, we

end and We product certainly board assemble you you who the application. a those board, there. on participate have have manufacturer, then components PCB Then

XG of some activity So We're in activity, timing in for due some difficult to of is and mostly positioned, but to components. overall, these, it's matter also for environment, this seeing seeing we We're we an be be in of us. us long-term, all a on important it’s that we're it – this the say the driver are where board. participate PC seeing really will activity Semiconductors. would most well But for

Matt Summerville

Thank you.

Operator

the Allison line now your from line Fargo. Poliniak is comes Please with ahead, open. of Wells Your go next question

Allison Poliniak

the your years everything. And Greg, all best wishes. Thank with Good help you. Great. luck Nordson. understanding firstly, for with thanks over

or environment? that in is start supply want production, Any you fully But to kind color of there? noticing with supply as you to producing. I is are Next, chain, to ramp today's Nordson in challenges or deal chain have any guys point even just

Sundaram Nagarajan

material. Allison, supply chain, of nothing really terms in

supply We program robust job handled risk have teams done quick and a one had issues, which against our mitigation a manner. were executing we risk in fairly of maybe expedient very have a occasional or really chain and constraints risk We The were with was chain. analysis mitigation. have and faced What wonderful two around general, we've bit is a freight. some have issues. little there China don't freight, But that, had pay near-term up supply have we in supply In just the is terms to on a chain of that issue. more and running. a

So I believe that fairly fairly, we strong position a are in way.

Allison Poliniak

And just significant incremental it little it that environment, both you with, Great. or is a minimal terms Nordson at having freight. help anyway through internally you're thoughts then you Is this I managing this touched point? Any say there quantify to with on bit, deal costs it Is of mentioned, would that? in and to there?

Sundaram Nagarajan

process, minimal but pretty a the do not Greg, saw constraint additional immaterial. anymore, early we it’s that it you in at is have But color? Allison, this really. point any

Greg Thaxton

amount, material a not It's right. Allison. That's

Allison Poliniak

within quarter, that? shutdown? was then And trying Just facility your to around context there some around get Okay. the – thought any of

Sundaram Nagarajan

limited, infrastructure really of of There we Not are but really very two so we made no working all period impact facilities. our one really for on short or through our product a may this. were were all supporting time, have not facilities deemed, of critical lines and

Allison Poliniak

so thanks much. Great,

Sundaram Nagarajan

Thank Alison. you,

Operator

ahead, line now your go question next is KeyBanc. Jeff comes with open. Please Your line from the of Hammond

Jeff Hammond

guys. morning good Hey,

Sundaram Nagarajan

morning, Jeff. Good

Jeff Hammond

on retirement And and new Greg, in luck congrats hire. of the best your

I from there's had just go terms I little better you – kind in to of off handset the and handset the investment on delays, their just are years was and of of think off? mobile bit but in mobile you terms be of what hearing years a two space, of know think OEMs, two kind a cycle, can level this of cycle, spending Just been the year you after anticipated to I

Sundaram Nagarajan

in you right. put Yes, know it context, probably to

you phone from if about, billion, we to the the started went $X.X So million $XX for right. volumes company, past, think when mobile

to about certainly volume. growth, decade, significant a which would driver. you new be not every going over an going company come technology innovation, – know, are see run happens, is benefits are from to in the really that What continue right? new innovation, significant to time as clearly fully incredibly participated you a Nordson there as have and to features that every the volume you this, that continue But new into think phone. strong change was So is our read every seen, as and going to you growth mobile And

And so in every good an we is Nordson we the an our people's with are from – perspective, it participate is in projects we go-to technology we of about feel time innovation, because roadmaps. of that are there terms part customers, working really innovation partner,

those some themselves. the in. feature really related, Those those. in we features new are in that So quite participating what of applications for do are mobile technologies company, most but and adds we're of are on is are really really participating seeing mobile is, see we variables, And uptick new in those are still and not sort track. we Where

have see think been some that's a enjoying So I new that we nice growth there. and area we

Jeff Hammond

And decremental good. great. certainly the is Okay, then

in the mix – that, some of this think some attributed you Advanced in I think the product of I quarter, Tech.

cadence should Tech? ATS, how looking the in think Just kind mix margins into would we second of for impacting at you – half, order the think product how about Advanced

Sundaram Nagarajan

that? detail some on Greg, do you the take to of Yes. want

Greg Thaxton

Jeff, that think strong. would characterized very way to as has is, we've the I Yes, I been this medical point, think about

we to medical. continue expect momentum in So that would

does we've around what of the create trend. to at And it when business. forecastable their the side again, in will, week really in if that rates you volatility makes not of is move that question that it's customers But is our of projects. systems order the that that with the think the you XX doing versus look in seen I more willingness our six week their this to six a week backdrop forward mind, in terms

what certainly a this a projects. come activity. well year. market is, lot uncertainty feel of with of this working hit It's We in We're year. The very will will many how positioned We're those to projects. involved lot of project

business dispense are got business, you've been one The through those be to They've very go six through that's this what sell of projects continues forward first pretty question is Where the challenged the have that the strong. systems going to So industrial. product the year. strong, electronic of months. been very of we the much lines aspect mark really side on into

Jeff Hammond

there on one, visibility understand terms And or great. seeing pop? surgeries markets kind mean, is of that and any strengths. lot are there see Okay, would there's medical, Did just sounds expect elective what sustainability a like to kick product from and that it lines any then certain final short-term surgeries in snapback delayed. negative want one in? as are impact or And seeing you of conversely, And then it I end you're elective you a unique that been of

Sundaram Nagarajan

Yes.

first. So let's surgeries talk elective about

the products For supply, components of exposure surgery. we have kind to and elective core minimal we that

impact it. two so our but right. in. are portfolio broadly And there a There areas participate sort medical did about very products, were from thinking of really of lot really And of that not see whole some limited, we

device value-added customers components is help components, devices value-added med of that deliver – safely very our and effectively core therapies. sort One critical devices,

innovation fairly there. in, continues either strong work of have you of we a a part for that very new We good be So do business that or a the therapies, participating is see there. well us. We pretty fully cardiac-related we the are pulmonary lot see activities where to

doing participate continue We to well. and that's

is an for such things half are ventilator used connectors lots and of a The things really IV critical as, that around, other would application. business really be second a or application example good the of

to see still we But significant continue growth – intact areas, market to a for grow us. of number there. a there continue baseline in expect remember pickup is we is to and So that

exposure very business business have this elective to This done order limited well, We well. trends surgery. as pretty has in strong is

Jeff Hammond

excellent. Okay, Thanks guys.

Sundaram Nagarajan

you. Thank

Operator

Your of go Christopher Glynn next question ahead. from with comes the Oppenheimer. Please line

now Your open. line is

Christopher Glynn

morning. Thank you. Good

Sundaram Nagarajan

Good morning, Chris.

Christopher Glynn

wondering just in hey, Very packaging side, create there. seeing recapitalization for on going encore. flexible a wanted to good curious you're I on and morning Greg, the – with if and of hear lot everything and to particularly and packaging dynamic. hoarding both to a really your customer's a the I'm you backdrop the good products constructive rigid

that points COVID medical where differentiated benefit little If a actually pockets versus immediate in flexible, effect lagged kicks a rigid by the impacts further the any some the demand of contrast? from you than see could from be of of dynamic,

Sundaram Nagarajan

really for packaging has the really an non-durable is leader strong as nicely position know, that we market a up company very technology. part The held have leading the of serving strong that you provides market and This us. area

parts period held of and would I during this both So fairly systems time. up say, well

participated don't We we versus for In terms way one a see the both. in significant really, other. or really us of flexible uptake rigid packaging,

based polymer injection the flexible businesses, our automotive sort applications helped. has which But of molding you that But of overhang of kind also have the side, overweighs helps been that.

So well. really our look businesses adhesive packaging traditional

technology in to We continue invest here.

to savings. making continue are really sure We on cost productivity around be focused good our working really and having customers certainly

such, are businesses savings. our when So can it, when think small and or right, material our productivity we systems positions, recap or savings your of as in can efficiency improve about to of they a is you customer our the very their bring compared to value capital terms –

– we we it. will really We really from have. So the we liked position think benefit

now, potentially up tailwind, it there that is Would a nicely. For could be be. holding

Greg Thaxton

if the And if would packaging. like in add change Chris, I we do is this we see that. Greg. a businesses, Generally, across there's

when single-serve a for us smaller because been that's toward of packaging, for there shift those has good that lines. often thing of type a means recap So example,

Christopher Glynn

I electronic that flush that. strengthened Thanks we I silo adhesive lines just out about out. to referenced. wanted in so And the recall called that product curious, Usually hearing you really was electronics. dispense system talk side, fluid Great. for then don't product dispense on

Greg Thaxton

the the the is you our markets. have fairly last heard, example, may into Chris. inspection softness for was and In were past side of seeing so that test well product through year talked up dispense end lines were we line Yes, we year holding Greg. where This product electronics selling these suggested and in

this between inspection. a differentiate seen and major that maybe most Both of the those those often dispense So return test for has been buying we're same recent we've in customer period. what But demand dispense year will two this softer in product side, we inspection test and and lines. a bit suggesting – the is

Sundaram Nagarajan

to about, maybe think it. color to So little bit a add more

use what really fluid is about component really a of electronic things manufacturer would dispensing, end or If our in you're we customer dispensing that thinking mean different product an various assembly.

electronic application in dispensed for underfill as an gets type be would good that adhesives A of a chip.

that So it drops not your does when phone impact particular that chip.

to So that'd way about think good a it. be

the TIMs, systems to thermally that in application Another dispense called insulating those good also used electronics right. our are materials TIMs dispense is

distinguish of test kind that's systems why dispense talked systems Greg and like about. between and inspection So we

Greg Thaxton

margins we've into comes systems because this gross in the that carry suggested to margin as T&I. dispense tend play higher And quarter, on operating line sometimes than

Christopher Glynn

Great, thank you.

Operator

Liptak next Please [Operator here of from line comes go Instructions] Your ahead. Walter with the question Seaport.

Your line is now open.

Walter Liptak

morning. thanks. Good Hi,

Greg Thaxton

Walter. morning, Good

Sundaram Nagarajan

Good morning, Walter.

Walter Liptak

ask wanted minus delayed? seeing ups order look companies, industrial XX questions, order you in just see got even couple follow ATS that congratulations. and other Greg, Or to a cancellations backlog because trends to what doesn't anything or on of did I the kind you're the the declines, that of project bad. in relative any

Greg Thaxton

we few really not Well, but outs pretty really minimal, did cancellations. any have push

very impact. limited So,

Walter Liptak

or companies, other about that locations, any happen, that because are From to of their virus. for that that, you systems installations bigger of couldn't Did see because something becoming customers' is Okay. hearing couldn't get is you? access we issue a the companies

Sundaram Nagarajan

at for example some nothing to us for Say hard But major total limited. level. company complete Very automotive a we've an plant, nothing significant, had in they when went issues stop. a

Walter Liptak

the I is levels then great. that the last And in on right? side, mentioned spending cost Okay, second you would year, about with think, half flat Greg, the be that

Greg Thaxton

Yes.

quarter, back see gets spending year's the of level to expect the this and at last the would third year. what in fourth you ballpark for of look half that you we If in

Walter Liptak

Okay. there? And you're it changes making sounds the like any heard not I CapEx,

Greg Thaxton

Correct.

Walter Liptak

did it do But sound like you cost did control. some

if do of pay or I back the you're to it cutting Did could cuts related any of spending? hold So is on try kind or little the bit about, you that and any furloughs what layoffs, wonder you doing because virus? back a talk bonus accruals,

Sundaram Nagarajan

stay general, overview get very to a let you detail sort me we We bit a are give broad probably Walter, color a In in more and make to Sure. position. strong it. the give Greg business customer-centric me little on We innovation. our in to participate want and of win stay fully invested, invested in to want positioned to we stay our in sure we want invested recovery. model. be then and really Really

that's we spending environment, control have more So theme. quarter, let certainly few to the on cost an acted given Greg the those detail talk going our that in you overarching we're going to discreetly approach bit measures a be conservative aspects? really levels, a – take little and on the get to to helped maybe decrementals, But through me

Greg Thaxton

or And we any did implement adjustments. Walt, Sure. compensation reductions programmatic not

up Given of and well are producing that, the all held factories products. has business fairly our

the serving customers it's still team Nordson our So needs.

what done. So lot we have downturn in of What actions. of significant fairly how be kind we a still without we a of did a those of concern. we're did any of like looking not did in period we companies do implement and early the would We year, and knowing at, feel

on the kind spending done that compensation first and really manage programs. on way with started or trends. order then we and continue we'll But voluntary-involuntary our business back We programmatic discretionary things any haven't eye with those of items, our travel other cut to retirement

not facing focused were not on closely some also or headcount, had attrition where customer If open hard. some positions backfill they so We positions, we've very to have we worked those positions. really

very spending managing we're tightly. So

Walter Liptak

Thanks it. got that for color. Okay,

Operator

with comes question the of next ahead. from Please go Dankert Longbow Research. line Chris Your

Your now open. line is

Chris Dankert

Greg. Is Hey, that update any good focuses start Naga guess, do I organic growth and your R&D off, congratulations we guess, it to I on guess, growth, virus any leadership spend move to again, how out I turbocharge what of we comments really just big as of kind one has been, of hopefully? phase the back development. product key and everyone, of morning, just kind the forward? how initiatives drive for we are get there? increased on Is it further tiering? of

Sundaram Nagarajan

for you, question. Thank Chris the

sort our best for of times, of as but stay is of time talked So to in really, focused been long-term And actively and the manage many about Nordson. I've it the priorities. us, continue important to the really greatest business, for organic on remain really growth – has number opportunity focused period and this

organic the decade. would drive we're the transforming So growth which our of to sustainable profitable coming NBS, Business on growth we that growth, working this for one become through is framework, through Nordson System, really strategic things in really

businesses, growth. our clear And around data-centric a using growth our products. opportunities, A the growth have It's best our about, is what to view in this invest fundamental What every of framework we Really to disproportionately really A business is serving a are choose that at this What entire to is to our all approach others. approach our is focus want what opportunities so of one data-centric A opportunities. when segmentation compared crystal those customers. to really and

one that's that working So of we're the things key on.

market really, makes leading And strong, which commercial incredible our innovation integrating our our second really technologies. is is this customer framework excellence, really of and with along what the the passion, part company

preserving or to So what it. things we've got, adding one two

we for within the sure equally to make continuous our improvement growth, that company. say, serve important would I to us to is continue addition, In enhance

been companies has I this other for and company around on come where who from there environments a have improvement, continuous been XX on are years. The five-year XX, journey

it's to at. of really in that, really an worked in we hard last we So is That's that but around hard learn our so we context a worked all in have context have framework. thing strategic and it of growth team six the to the the not – months, are, NBS has nine growth, to one the opportunity transforming become driving where

the make in businesses, we pilot are really implementing to within actionable framework is, five in Second process of the business. it this

really is sustain practice in performance the such company is of best to become the framework the best-in-class horizon, top continue And delivery, practiced the growth is does, tier really we have, enable we across believe Over a is. innovation holistic, with quality long a we really company quality and to what rigor expect of that the company. the and going consistency opportunities

So, company done growth. job has of nice a

way. that really, a we do it's profitable as So growth, we and it sustain we very in sustain how how to continue do grow,

it, thinking you are gives how headed, that hopefully, to color And as some we where are so we're today. we where about

Chris Dankert

going there. color feel there. past comments there through Just kind that may Yes, back Is within circle several of just not optimization for executing kind so it much a cycle of been of or inside further need do about If to I actions guess, today? taken may on moment, thank for Perfect. a I targets? to we've any the how you you polymers? years, manufacturing all could profitability be polymers

Sundaram Nagarajan

of business. over lot Yes, to business a is period integrate a have the the that done time work we in this of

recognized and plant well on there. perform all targeted had those It's continue to those achieve have we we through track savings consolidations. that of We to

Chris Dankert

Perfect, so much. perfect. Thanks

Sundaram Nagarajan

you, Chris. Thank

Operator

the questions further back for closing no are call over I turn will at there time. Naga this And to comments.

Sundaram Nagarajan

future While the about demand Nordson. I of near-term the conditions are really excited am unclear,

while solid a model. customer-centric appropriate have to Business and on for business a through and great day. Have to acquisition, action long-term staying talent Nordson our our Again, and strong business attention call. on objectives business, System, organic diversity today's to focusing diversifying focused we foundation, monitor on taking environment, this the of manage accelerating We growth, you ensure your the time We'll leveraging by thank fortified dynamic development. are of continue that

Operator

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

You may now disconnect.

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