NDSN - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Nordson Corporation Third Quarter Fiscal Year 2020 Conference Call. 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] I would now like to hand the conference over to Ms. Mahoney. Lara ahead. go Please

Lara Mahoney

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

available available nordson.com/investors there being is live our and broadcast will will at a the be X, XX Our replay conference call be for audio on There until days. of webpage XXXX. telephone conference September call

in call, During press yesterday. metrics conference made. the release A financial reconciliation references this provided metrics to will metric be the to non-GAAP GAAP most issued these of comparable complete been has

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

Sundaram Nagarajan

on bringing and very our excited team. Chief joined to brings materials Good pleased conference welcome morning, XXXX of I'm Joe new global on Officer the have you a over the today to Nordson. X him Nordson of Nordson’s advanced is expertise Kelley, to Most recently July XX of I'm Financial third joining to call. this perspective board. fiscal serving everyone. great Thank as operational years for quarter Joe me and leadership financial already Officer and Joe morning. With Chief Nordson. company. energy He's to call Financial Materion,

drive and our has as health want set electronics, have focused safety of Nordson end-markets, and diversity results to and lines to maintaining challenge to serve efficiencies, and customers. the non-durables diverse our of our our safety By team in help the needs protecting medical, thank their of year. new running to This smoothly. needs aftermarket and industrial. XXXX. the stability parts on that flexibility, risen on to employees of and drive our the including They responding manufacturing navigated meet for depend measures, our general innovation and Nordson First, employees them the commitment products continued we very I helped to this keep remain has consumer customers the relative a of their point continuously supply enhance resilience us consumables continue who

as focused of On teams. device I framework. develop the Nordson part winning Nordson remain calling are Nordson acquisition the Nordson Also heart medical this strategic such the the quarter, during NBS System, replacement. team. building Medical a our that be continue we continues to to offering valve brings we and we're business diversifying priorities X, generation We're therapies System, capital making a of of Next, strategy. through as our Business we Fluortek medical industry. the to which towards for growth, PTFE precision acquisitions, and dynamic team manufacturer leveraging expertise, have current June of which minimally Fluortek, While our plastic leadership tubing extrusion the component Fluortek complementary is Growing differentiated employees to progress deployment environment, our invasive to announced the organic Business the committed pleased growth value-added of in equally managing accelerating Nordson next on highly Nordson's priority

division invested when segmentation strong, quarter. more our at delivery. to quality customer first the the by for insights deliver few empowered Nordson recovers. tasks our growth Next, us Staying on as makes I'll to our tools turn to economy technologies teams I'll an to critical added to product business customer possible. division level, a simplify and investments detailed decisions what non-value which to our realignment, a the about call centric provide will business and make more unleashes the and best-in-class as model in Using and speak over financial in Joe segment moments profitable were introduce accelerate prioritize himself Our perspective to precision but mindset results allows leaders the in created new NBS position owner the close

Joe Kelley

and consistently high to a a long-established I everyone. top-tier very has partnering leadership to of company team join which results. for Naga, look drive morning forward the you, good the financial profitable with next Thank to that Nordson. delivers quality Nordson, as Naga reputation chapter am growth pleased I to and

quarter We With solid to the and on in extremely have to honored part rich the team. that and foundation financial an let's of results. third am build which be turn our to I fiscal attention mind,

prior-year the and challenging decreased the quarter. primarily The broad as product well commercial company's Third times. currency related to as to geographic as acquisition. organic by offset exposure, Fluortek end third relatively was benefits strong in sales XXXX the decrease diverse compared from quarter were to performance X% applications unfavorable these volume contributed the The effects market

X% way in in year. attributable step-up million million totaled and $XXX the of acquisition, amortization COVID-XX Fluortek margins is inefficiencies. quarter in Our manufacturing $XXX The by the inefficiencies point to sales quarter. of of the Asia the mix, margins sales COVID-XX growth in prior to the decrease unfavorable inventory compared and and basis $X.X combined to XX% related million XXX manufacturing region XX% or led Gross delivering sales

the quarter reduction quarter. the to Operating nature million. percentage actions headwinds to these profit $XXX historical prior returning in gross forecast the be challenging temporary cost to XX% the factories As profit margin gross quarter these in items distancing, social of a operating acquired anticipate employees, EBITDA margin safety staffing, XX% third a a with and quarter etcetera, X% to this combination addressed precautionary of million sales, implementing rotational time of factors needs inventory the million, in was the excluding profit quarantining three contributed employee majority EBITDA and the our We year our levels. totaled of of lower the operating the profit. or amortization, or is adjusted $XXX was decrease $XXX from related below X% which step-up prior-year sales, nonrecurring in million for adjusted of $XXX in

decreased quarter a losses million $X associated $X rate. million benefit pension deferred pension currency of to in with expense million at net by compensation. charge unfavorable effective totaled with of tax increased was pension an a levels, XX% nonoperating from driven million year-over-year expense with noncash exercises prior-year X% $XX of million $XX borrowing $X expense, in equity the quarter. stock in associated Tax million swing the lower a tax discrete expense Other prior Looking $X CEO. The cost. an $X levels associated lower was or increase non-recurring related primarily associated the rate effective with in million settlement interest rate or and the gains the and and primarily the net increase option

the or share. income $XX rate tax rate per XX%. reflect the within term company's $X.XX items in XX% discrete Net effective million closely these of to more long would quarter Excluding quarter, the the totaled

These earnings Excluding represents from year per million reflective a share. benefits, million severance the decrease charge were prior reduction structurally and to or payments. $X totaled X% million. actions primarily in $XX of to operating adjusted to the This annualized cost profit, adjustments non-cash Cost to million ongoing $XX settlement taken quarter XX% to decrease pension of related volumes. $XX the the in deliver and non-recurring $X.XX savings forecasted actions approximately adjusted profile the sales lower the earnings of company discrete tax are

X% to sales Stable markets. Precision demand and offset the weakness prior segment Solutions’ product sales of product were Looking performance. serving year serving from quarter. compared consumers line by at markets in in decreased the Industrial line industrial non-durable third

appear to markets profit be from XX% levels. of Operating the Asian for sales. was million lower COVID-XX quarter demand or $XX the recovering

serving weakness stable points levels. in million year reflective reduction in stable It's to surgery. compared simplification pandemic a product $X and lines, minimal. demand was quarter. in decrease or million volumes of the change fluid were of to US. offset prior mix basis end-markets. the related has included product increases end-markets softness and medical months drove industrial in serving during prior inefficiencies the to meaningful product XX% decrease by third cost This dispense by demand the and offset in volume, in of X% at the Currency X% product the Advanced of profit to of more product strength lines, test third decreased to unfavorable was sales that product lines electronics this manufacturing tied sales The actions, structural is of impact in quarter. Solutions, broadened Fluortek sales, a and the sales safety year EBITDA lines X% to approximately inspection volume organic medical and approximately some closely Sales Technology increase Lower elective lines, tied Excluding elective particularly other compared lower pandemic, XXX the of definition note the surgery been $XX early in acquisition. important in measures an

to ramp to see up. market elective back However, are starting that we beginning procedures signs are medical

reported Within million the the in was sales quarter. operating segment, Advanced of Solutions XX% or profit $XX Technology

with and million EBITDA cost or of inventory decrease charges amortization Excluding in actions line despite sales. one-time XX% $XX prior year profits associated reduction sales with X% the in the step was up

increase quarter $XXX conversion remain cash million Fluortek. has Finally, billion. net of the year X.X the to its challenging well We quarter company Investing a Free total borrowing summary, consistently the with in quarter year total $XXX in annual the a plenty and are trailing cash a free the to flow payments in balance which increasing a of debt has consecutive effective This EBITDA. very the committed the was dividend. the a date Ending line capacity. ratio $XX and the quarter macroeconomic XXX%. XX quarter to cash the and based activity fourth turning months million of $X strong In acquisition approved $XX confident board sheet Dividend ended the in the a the was with the million the in cash We considering leverage quarter the increased flow balance dividend marks brings $XXX XXth flows form net shareholders top XXXX. available dividend. company X% a driven the by million, of million to cash and the up in times flow. held were income and environment. Cash sheet in our returning rate on company's portion of of to the

cost controlling While we our a while team customers in has responded in end markets delivered quarter. the benefit from serve, the supporting we the way the diversity solid and in of great performance

maintain to back and a I'll a allow now sheet continue We drive growth. the turn with focused call to balance maintain long-term to sufficient strategic liquidity to initiatives on sheet us strong organic strong balance stay Naga. to inorganic

Sundaram Nagarajan

Thank you, very a to pleased the Joe. the areas. make I'm few note performance team environment. of like I’d delivered with in challenging

strong appreciate customer. it in of They First, successfully performance the teams year. COVID-XX this the all, challenges serving I the they through remain of and Through Pacific our managed earlier Asia on Japan. focused

As new had meaningful clear progress the new making ago. region. in they X% several of and a service team in Revenue quarter. a weeks Asia prior team We very growth expertise year. resources, serve application Taking businesses the facilities the our on in tour a product virtual productive region customers is compared regional to to pipeline, product our it virtual review that in of the executive Asia-Pac in-country result, delivered is and our increased broadening the and

strong built offering has robust acquisition inspection of the up product inspection Xray, we and acoustic test lines imaging, of capabilities. product automated and have and Second, And acknowledge been digits I'd a area results like strategy. of are testing T&I including double inspection lines, focus our bond Test which to year-over-year. optical our a

technical us advanced need growing. portfolio As a expertise applications global equipment for and is for of for technology partner The becoming is electronic components are customers. increasingly T&I memory diverse making sophisticated. XG AI, and Nordson’s and semiconductor go-to solutions

our third SONOSCAN offline acoustic imaging DAGE product inline In the matrix testing, fact, fiscal automated Xray and lines Xray, had bond direct quarter. and in sales

a end to to earlier, Segmentation NBS progress for I our markets strengths. enhance period, Nordson’s are Inspection, growth encouraged profitable are geographic recovery In the of pressure. As position in under with the begins. Test are and Consumer helping Tools who businesses data-centered insights experimentation four balance market beginning to our businesses their with I'm July, and curiosity and I beginning investments Non-durable, a In greatest markets approach and are the use customer teams that pilot Next. mentioned deploying how NBS of in Next diversity still their Medical I'm that data-driven is end to end pleased weakness service our prioritize & currently to of review our this levels. industrial are apply teams one participated

Our to performance recurring contributes consumables our revenue of relatively aftermarket dynamic parts times. in and these stable

revenue. slightly Based our Looking to better come approximately order as has of the our Backlog entry off period fiscal early at and prior the same compared experienced levels; entry the third points, quarter to order we to quarter compared the the than trailing XX% XXXX these quarter, The decreased in we rate enter year. is fourth revenue approximately quarter is compared XX-week XX% to the entry fourth to X% quarter. be expect fourth year. last approximately the has order the four-week lows comparable on prior-year data

low colleagues world the to their our This commitment We growth strong in incredible execution want for team’s commendable. is thank the I customers. is time to around sequential also earnings. single-digit many expect and an for uncertain our

customers, take your that, thank pause support. our questions. and for continued I'll With always, want shareholders employees I As and to their

Operator

Instructions] Matt question First Summerville Davidson. comes [Operator from D.A. with

Matt Summerville

questions. of couple A Thanks.

the guess minimal is about much on the that now was I elective elective of First, business, talk that what of medical was by as versus can being impression is defined I side non-elective? being the portion driven you the under pretty how

Sundaram Nagarajan

Yeah. Thanks, Matt.

as quarter, you to continue and is the the broaden. know, elective As what of we selective, is what entered definition

so, of stent in diverse and product we and fairly the you or minimally look if at because our serves our that But only invasive you placement. medical have as a not offering, And did heart impact some surgeries businesses. portfolio that, have replacement such broad offering

fluid also management number of offering. well have as as a We surgical, product

fluid for pulmonary we was our demand a so, saw product really management And what surge offerings, treatments. in

last And less the so, have X% us certainly experienced, it year business, helped in X% to flat we historically, come to what medical in growth. than

year. device So, it it this environment you last And I’ll probably that, of but take at a it in down lower was look manufacturers, than to them you flat many is put context, what if was tell are mid-teens. in medical

the it and flat was than expectation, pleased really pleased team we're to the on a so, year-over-year is very in basis lower slightly And but able that for our medical. come

Matt Summerville

in outlook maybe activity a color. Thank provide kind as for on what And what to it dispense you as electronics, there? just to it. Got fluid that then an and, update follow-up, can pertains seeing Thank you. the consumer you're is you more project XG of,

Sundaram Nagarajan

advanced activity applications side really Yeah. on you good in mobiles out -- increased our And I we're antenna new do of what XG-related you have, quarter as you fluid number or lot of see we a increased dispense you continued find as well components -- the of what we in had as stages speakers know, as complex businesses. that a quarter, side, go remember we last such. you see be for electronic increased know, AI you is know, you the products electronic have electronics go into for well requirements, modules, if project into you micro of, these and what applications, is number the have that camera a aeros finding of, early is it

geared seeing components is strong activity in see business.. side, are lot test electronics than semiconductor on was of and that. which a side components primarily the towards on the on business of more strength really But the we lot a side our the and of a we advanced quarter, So, rather and of inspection, had the project where

Operator

KeyBanc Capital Markets. Next from comes Jeff with question Hammond

Jeff Hammond

really the to trend kind want the through just quarter you kind numbers, I gave of and, understand, trend. some different of X-weel you trend, order you know, XX-week Hey, know,

things you Just Thanks. you're where the know, kind better. get things seeing you get is true terms of And really of, particularly a sequentially of, of, in sequentially maybe sense better what know, getting kind trend better.

Sundaram Nagarajan

Yeah. No. Thank you, Jeff.

context we're for about probably rates time little provided how entered probably is quarter We order talk what do first the the we the to in way we’re entered the it to We it was know. so, talked you more about to you And that, I some feel, quarter, us the for And you dynamic environment, want we than for now. with a about bit entry given and you trying color talking provide right. to know, you important we do. normally provide we

was that intent. the So,

order suddenly and the we what third was look to shorter the given entered the think the more can And at at felt so, of us for something XX-week environment. term important we see term longer you we looked XX-week so a dynamics, But stabilizes we rate as if order current as near-term is rate, that happening. little quarter, that

that's really that's that we six guidance, quarter. six-week the period last hit time weeks was our a you provided So, quarter why had because COVID in

forward, a ‘til So is dynamic seeing of this going giving how we're environment. we XX-week out what and thinking get a around are four-week we guidance you about

So, I The context, is is to quarter, begin about quarter, the is like So, X%. we about as were trends would down. as in for navigated to third that it environment we see, short was order trend around entered more to the improve, XX% the XX%. the total we say, that we with six-week the that the more tell more to what term way starting range see exit right? think company to And was sequentially sequentially. down order order And of I’ll through trends we the quarter, current think you best the begin

of that's Jeff. ahead, ahead. go -- Go So, sort

Jeff Hammond

best the sequential That's are do -- you Where helpful. improvement? seeing Okay. you where you think

Sundaram Nagarajan

Yeah.

chunks, give color of that, let's end probably question, to you Jeff, I two your first, the is of are go and we you some take and next around the give color part one the now So, by regions; part then, market. and think the question it trends some seeing around answered I

sequentially, order perspective, But that you about. company. geographies that remains order Americas, a which all entries Mexico we Brazil, a and Mexico, in trends think are very the from lower of are is, bit in So, our stabilizing, about sort a challenged, talked Latin part and if is level geography at little albeit remains on our given the US, challenged. such is still going of, America that the small still it

a a Europe, third in trend reported to of we last is then and that we when we flat. third as terms not is see In what that, compared compared Asia, remains accelerating do growth it And in Asia, you've And quarter. in sequentially sequentially but what is pick to there flat. year. in It than when up Asia meaningful numbers, a quarter any further our up find remaining seen but is have

So, some remain the I look And at regional businesses would the that's remain tell they in right? that that industrial have ICS you of picture. end-markets, if EFD, business dispensing challenged. So, fluid about industrial our like exposure or is what you end-markets challenged, our

be about seem good we Our medical it. to flat entry feel to are order and business continues flat, rates

and strong fluid dispensing up. Our in And flat test to business, that as talked And find electronic flat is about, up. we our and non-consumer, and there. slightly inspection we non-durables had slightly we are flat a processing quarter is to our plastic

remain terms the dynamic continue environment. find are improvement, for trends is various challenged sequentially to but hopefully, what end some for that what things we're of markets. a areas gives in ourselves that is dynamic and And environment. maybe some We're company. it’s very to we -- range managing seeing stabilizing parts the of the industrial it's seeing where But know, scenarios a So, essentially, you you

Jeff Hammond

Okay, great. That's Naga. good color,

know before? really or revenue has you know kind at annual you overall what gives can know, of have looks you incremental give what new market growing where you or know know, Fluortek, business margin that you you segment? medical contribution, of just kind business what's this the been you the product profile that on the least Advanced And you Tech the of that us, the didn't -- kind Just how at, versus

Sundaram Nagarajan

Yeah.

give I panning things some in of are let give And little the strategic me provide maybe of a Joe you first you So, and how some here. of sort you months color such. around color can around update bit contribution think couple and out then

a the to So, business great business. us. niche it's It's a tubing. brings company for It little PTFE

layer to patient. trying a of really it you the, about what heart stents valves have line you of layer is is So, is that's So, is, stent, product in which this major you is you the through that. is inside that thread if tubing think and a the you’re or tubing that know, that's right? the and a inner place place layer, this to used tube have really what those find like lubricious things lubricious that tube and that heart things inner is their And to lubricious like valves

in delivery very to that find a component So, to as add us therapies real core Vention, Through position we It's it's nice offering core that mechanism, these very a components great were bring complementary invasive on in a this addition niche we product. a our help right. and it. minimally have, to able we strong

In terms technology the the integration, is of really like business. solid. really The we

spent along people. so really Operations nicely. like time our we the within like about are have thought adding we this, it, coming we business, it strategic really the reaffirms As

financials. it’s take color adds Let the a value-added business. -- me Joe to business. can differentiated bit maybe It turn away, add little around so. a this a It to some It's doesn't Overall, company.

Joe Kelley

a a revenue $XX the give current business million. color, is ATS margin let's business. more little it say, Yeah. profile to standpoint, to Jeff, is this our just on from approximately, comparable annual And

Operator

from comes question Oppenheimer. Christopher Glynn Next with

Christopher Glynn

Thank morning. you. Good

you're search I'm of over not the great demand procedures. for it's wondering assuming about how people pent-up for success It’s about Just medical a curious important in pretty business of elective demand go you wanted how kind it maybe pent-up past. a elective you're obviously to the products. to bit. where prospects had piece late thinking I'm for some too thinking the about little into for

Sundaram Nagarajan

to number And your that as -- also know, for are -- and sounds, remember of It surgeries beginning we it think fundamentally specd we people be up. But slow fundamentally have Yeah. that we are This increase come really to these difficult what in that you great will that trying hopeful. pent-up you as are question. know, through dynamic. postponed -- that certainly I that it's a is orders customers. you getting demand are are but great dealing devices is that up enjoy needed question is that signs specd as us are surgeries Chris, of that we is all see the with they know and answer approvals is would very experience, up early Things do surgeries. products we -- because are ramp convinced of and hospitals bit. in up. to, believe a our very of in in these, amount environment, a sales We're But general, that in know, opening as and to are medical a the down FDA a stickiness

a quite you a changed. the in surgeries about short is you ramp, would expectations frankly, medical we, pickup enjoy solid, to ramp. not back. are very some on not have this strongly are meaningful come And our the as So the they slow But growth are know, be drivers fast term, know, very we going we feel

You you know, can as imagine.

we of want with that level pretty till in even as is and therapies, we bit a which where next here is lot flat revenue But really but well those used. a up be pulmonary little know, postponement this get You not came past the emphasize to performance, which going get some about have you that's our season normalcy, our management, flu know, [indiscernible] strong down. with are this is fluid we as you to offering in past very year-on-year, is what a and strong have, team to talked pulmonary I know, of really get because product and therapies there

opportunities. And see continue invest medical, so, still we here, like we we to really

color. that hopefully, you some So, provides

Christopher Glynn

And my kind in that. on great. Appreciate That's follow-up what is, update momentum. you're just, then terms of, of seeing

of, expect things infrastructure like early for the likely you robust around juncture? that You kind ecosystem vector your for handsets, XG, is this And at compare fiscal But of, touched along, and kind features for in handset and both contrast. most XXXX that. XG

Sundaram Nagarajan

around -- driver about it moment Yeah. The promise, remains for moment why about But terms, in circular strong. for the has mover a for we activities invited a behind. is, at are sorely really the needle But at infrastructure business. big is get want it the -- out, not Lots But got just we of needle XG secular handset, where only this excited think activity, broader different strong, base us. a working We as XG the the not station XG to projects the to build which is of we're promise, in talked moment, have a remains of we quarters. last couple activity least lot projects lots on. of about

are read, on XG. fairly these signals. lot If the Remember, depends that weak only tower, you But of you a -- really, of cell usefulness and right? of find are any the near is really around advertisement you’ll marketing if

be really awesome to one top got eventually it'll almost these things to that of technology come you’ve experience this happen. But of in. So, on has

So, It’s that about We we’re it. things excited roll base on certainly geopolitical know, components advanced around number slow the strains as competitive opportunity. station there suddenly a all like That that. to going be so another get out, big developed the going of is big player are XG devices to going electronics get going a area to they're getting like to be IoT we that. because incorporated. you XG are will where Auto really incorporated.

beyond time. of most the handset handset. what But just XG to press up nuances the is different of lots So takes probably

in So, mover just company. overall at needle for good projects, big activity, the still not continuing to moment participate the a

Christopher Glynn

it we like timing it's now sounds visibility kind not guess. Yeah, of know quixotic, the I but is

Sundaram Nagarajan

to good use. a It’s Yeah. Yeah. word

Operator

Next Baird. question comes with from Mike Halloran

Mike Halloran

here. margin of A questions couple

probably So that going the the if mix good been the about into to be that same quarter? to quarter pressures were pressures fiscal margins there ATS, fourth you the assumption sequential in on fiscal fourth think third the fiscal the your same appears for mix quarter,

Sundaram Nagarajan

Yes.

in -- demands the quarter in of there, be that there the Naga similar will in be that just was on think, to some fourth assumed based market mix the pressure I the third quarter is ATS, reviewed. there

Mike Halloran

That makes how think maybe Industrial those inefficiencies referenced sense. some you do linger? context Then the on they long and business, Precision the for you

Sundaram Nagarajan

Yeah.

employees initially our factories. So to know, and efforts keep needs, significant you the know, our during and, to our efforts the but employees You COVID factories responded we safe the customer crisis continue to had meet in keep safe

think While clean When had they remained about put in rooms, to open, our we of some were distancing. we precautionary you several quarantining also social people.

And so our efficient processes labor -- our weren't direct of standpoint. manufacturing as a from some

And so, quarantine. PP&E, coming and proper people been working staffing the we've that, proper from the getting through back

we're so, progress, made From kinks. would I in quarter. rates. it earlier as working of and manufacturing tell in the the quarter through conversion And those relates you to efficiencies We've cost kind

get as go anticipate the we so, continue throughout as QX improve And out to used normal new we we to to here.

Mike Halloran

But as And some today? here what that. the thoughts that able on obviously, basically done. you from the it some the looks for Thanks that just here convert were as getting ability of good piece, to M&A looks The we then, sit maybe that like last really one. pipeline to pipeline and Fluortek

Sundaram Nagarajan

Mike, a great question.

what as M&A, is about you you talked we've really think focus. know, You know, our about

precision rationale it's But model, the to on. for. Our make add-on. know, complementary, we very we is, you business two start very what technology, are scaling that that find for two important Nordson, the focus emphasize and, wouldn't look two anything core, context for makes focused areas really us will we with big very we areas; really T&I to are medical, do next our things that if up our things we're strategic scaling And you customer-centric right, know, some up

outlooks of they're and take time any Meaning, in of those sort of stuff, in want particularly on sort they own acting of sort not the wait-and-see the opportunities has particularly But we our about pipeline touch. to look So, would add a at the think this as to pipeline, we we like number reduction transact. stay interested given to that continue companies to the is approach. that the of that and not their in portfolio, environment, great given

adds them. do meaningfully, to of able come existed. still opportunities what in still feel some we happen are expect probably been put the it. can these them, are stay best we of sort we're as We're most them us to the is important way to market Should act will to But Fluortek, the the So, to to have areas you on we the interested with in. company disciplined certainly to cultivating

Mike Halloran

Naga. there, Thanks Appreciate Great. the time.

Sundaram Nagarajan

Thank Yeah. you.

Operator

Next Berenberg. comes Instructions] with Buscaglia Andrew [Operator from question

Andrew Buscaglia

tougher Good within in my Industrial there energy there expectations was I on exposure, -- I got because on some question with way exposure, we've a some AND auto exposure. morning. have and Precision. there, you were markets had modeling off

in little this you I'm So, -- talk outlook least a can at is specific difficult resiliency or for you did curious surprised what there -- guess in about the those seeing bit businesses why more -- more and that did -- tougher I trends in the those your you're areas pieces?

Sundaram Nagarajan

Yeah.

of is IPS, nonwovens, -- know, are been this the of beverage you this of that maybe strong let's part end legacy of things and so and traditionally ones company business of and that we know, the and sort. leader, food strong adhesive the So, A resilient part company. a served core you part company. first History markets, very the always is take well and number packaging, doing market a have the that recession has

if a think of has the that component it strong aftermarket XX% you business, about it, market. about very to really So,

piece has of resilient. So, IPS really as done think being It about very that well.

general but down take in mask some early nonwovens really production. You our masks, quarter, well helped know, by done definitely of slight the Certainly expectations. to terms had has up in it in

great So, a our That's production. some customers mask from example. production diaper shifting of to

our remain capacity benefited making turns. have even And cases those of same businesses some and benefited some IPS, customers facing in it. In our -- manufacturing added mask also challenged. in market more So, end we we we industrial from from that those

in know the know our industry. deferrals, you as like other CapEx automotive industrial -- pure You know shut down businesses think like about you any significant you

that diversity impacted helped the you end certainly has those even of challenged. of Those markets All remain perform know, and segment us businesses. fairly certainly the diversity within But well.

Sundaram Nagarajan

Right.

you for give what that you’re Andrew? looking there So,

Andrew Buscaglia

businesses maybe that would thinking some there of I maybe, you differently? Or there. you of to -- areas I is along you kind had But know, world, of, it a post That's think… any of, those any, no. of like kind sort make it mean, though And and -- that, I -- opportunities Because guess these is you as guys about helpful. seems changed? pruning resiliency are can Yeah, along lines your the your -- really in though, view along And COVID seems

Sundaram Nagarajan

Yeah.

of… think you if certainly, So,

Andrew Buscaglia

in same …running pace. the

Sundaram Nagarajan

of growth really product from you're I to yearly And a own And, a think, look One question at at a -- potential a business. our take really portfolio Yeah. is on approach management we portfolio lenses. is through review consistent two so, all a it it around basis. lines and asking look if

of, We’re of the being, is consider very lens. profitability an the And when those those, differentiation? in we growth, history profitable to at product our really as some businesses? look didn't Really, growth on So, areas, expectations make we on decisions what what and the you add potential kind the if second things company, of you, lines. back degree important focused of lens did being is up the act

so so, a that -- a regular do assessment and on annual it’s basis. something And we

Andrew Buscaglia

Got it.

Okay. you. Thank

Operator

Walter? Seaport. from Liptak comes Walter question Next with

Walter Liptak

hi. I wanted talking some you're if And you June, going I industrial. to again about understand a wonder again. Industrial's cars up of weaken I in and saw, we virus I if little more around think. the help could you recently, better because getting see any ask May the around with cases things that things the And to trends if bit -- -- wanted us about the wonder I maybe, of

Sundaram Nagarajan

to Walt, in it the seem I don't way industrial find think you think best know, about is, to much. probably, strength we

other seems challenged remain businesses, either You it right? is the a of it have -- better probably level it further. saying stabilized sort industrial down but lower gotten it line just than has If continues it. challenged, back know, other saying remains businesses at going gone today, up. our we you in with CapEx not We're it not has we're it down do say to way when to So

Walter Liptak

it And that a sell to higher getting it solve, CapEx Or just guess cautious out live you. their ROI? there to Okay. difficulty new to because because get -- is slower the there wonder, down sales customers spending of thought are we out in a is was with engineers customers is I and this into because field on that's this virtual is world out being I systems? for spec not to able systems? the I now and

Sundaram Nagarajan

Yeah.

CapEx capital larger are these of, you our right, example. businesses, are know, where to In system fairly significant good outlays. people about is trying it the think a I our really spend sort system powder think so it’s businesses, powder

probably for some so if of going you industrial the is have to large sort issues, a that time you are put manufacturer demand and an And you're systems. capital out not this outlay

are kind to where mass find is that need, how this able early this all for industrial their customers customers, our that's have seeing. actual manufacturing, not We're changing. to even particular of But like able they pretty we our more requirements virtual that in visit, So on is all In spec-in stringent we ourselves need. but in learning to is new person Certain in case, we're world. when somebody to work consumer that, world, able space, with work has understand which what what but some non-durable,

-- with are with virtually complete actually design because They spend has projects have folks think to of home are have have picked time working. but that you up need such now some a So, plenty and engineers at and lot salespeople. of -- this of time engineers their that to about and the communication

have is in your past our else. touch something But with interaction yourself you is points have now, a an the changed frankly, increased in somebody and greater customers. somebody engineer-to-sales-person doing from conversations, quite find customers having actually with So, which the meeting or

So, of in today. environment hopefully are operating a how provides that this color you we

Walter Liptak

Okay. of it And you on does. heard couple shortages. about things wondered, Yeah, I then, that. parts Thank a for supply some We've just chain.

some you might I that if You wonder a are little changes I about feel over, made you doing you've pilot sort mentioned or could next be profit you of like us four any -- the what of improvement. in, give And didn't and if should as nine anything MDS, expect about any of the but that, better there. six, which in mention that segmentation work wonder project. months we segments in then, your supply also, plants chain factories, bit say, a terms which understanding how

Sundaram Nagarajan

Well, let first… there. maybe me So, questions two

Walter Liptak

two questions, Two sorry, there. Yeah. questions

Sundaram Nagarajan

Right.

because, We it me the mention didn't let So, take supply we you first know, issues, had quite chain. no frankly. around question

very have a You a strong And plan. have and supply we mitigation team risk know, chain robust great process. we

All of we that, way you know, the anticipated. really have out played

more anything the have a here not March, in did Early for any a higher had us. we past really, ended cost freight non-issue and may up so, quarter with were there have is And in few than but hiccups else. issues. But they all really

things chain, no And running. supply so, issues, so

is everything So, good.

a Next, have we you is that NBS pretty -- it's you NBS to our really, to sort of weaker segments. it's businesses. our at look Next our total is not businesses and really some strong roll we what as context we that equally the growth probably of is But, pilot terms provide spread to framework. important company in them you expectation We’ll know, So, And businesses. the both roll out is, know, And among really, them strong. out

we businesses the among a than else. strong, that believe took best our because from is we important at lens growth this So, anything more looking

And are and teams really on. they're are working the at heart that's so, at is what these businesses really process Next database so what is using of data-centric a looking the NBS segmentation

you the the we as would businesses a it company we is the growth know, and margin know, play learning able will learn expectation our goals when happens. I delivery at are think recovery next our And, model you of lead them facing mode and as increase to we look the to starting out coach. know, XX best quality, to about, this really way And are here metrics how and, months, do characterize are we it, so the accelerate and our do. that say in not are, we much as within customers I you have on We have would to do products, the proficiency how the you XX we profit know, over

margin not with have growth to company for we it business about opportunities centered a positioning improvements, the of know, as areas. is you view and incremental the could and what growth will is really much top-tier But crystal the around invest that cost as do those out know, growth. And, really exercise growth how are capture come. clear disproportionately So have we in you taking

Walter Liptak

the luck price Good in when one do It you Yeah. environment? get last annual any going with and How about with know, in this slowness just Great. project. You get you one know, typically increases do, are you are know, you there economy? price in. on you this pricing If Okay. the can I businesses sounds thinking promising. very could where even,

Sundaram Nagarajan

increases. at typically We price annual look

environment that As you we and you there increases cost maybe inflation, in know, company, the the might expect, in. can just for potential inflationary input we're environment are given the enter

of of lot lot mindful our paid most our value. the the margin get because profile, add and But also of we value, where you is in as that create we our a know, And we we're position So we of are. gross we for really a margin value, have, businesses, is pretty strong. profile

know, creating. you for the You we are have know premium significant value we

to for us you expect focused know and we it. around would be value you focused are getting growth, so, creating And thoughtful, around paid

of pricing the as sure just biggest And -- encounter should growth us as we in much So, making not costs them. for then comes. for as growth you not inflationary that driver is we any it participating should know, are we the

Operator

the time, turn to at this Naga. And I over call will

Sundaram Nagarajan

Thank you.

the stabilize of conditions demand I at near-term the reduced future excited about level, Nordson. a remain While

of business, We’ll by on on diversifying our action a long-term teams. model. for business you fortified making on our Next by foundation a to continue the and focused Nordson and attention building of organic call. focus NBS Again framework, a the stronger ensure time today's the dynamic while objective leveraging our on winning environment taking customer-centric business monitor solid diversity have strong to growth, we're thank staying this through to acquisitions, strong manage and mindset, unleashing even accelerating We your growth appropriate

Operator

This concludes call. today’s conference

You may now disconnect.

Nordson (NDSN) 20 Aug 202020 Q3 Earnings call transcript