NDSN - Earnings call transcript Q2 2021

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Operator

Good day and thank you for standing by. Welcome to the Nordson Corporation's Second Quarter Fiscal Year 2021 Conference Call. [Operator Instructions] I would now like to hand the conference over to Lara Mahoney.

Lara Mahoney

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

that both on presentation Web our call at This until will You Web webcast telephone can well X. is our during be the available days. will replay XX be conference live and investor press site site, our find refer on being as available to release call as for slide of we call our Tuesday conference will broadcast today's www.nordson.com/investors. June there There a

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

X call refer note involve during performance differ. begin, statements this that please that Before the and in uncertainties, factors expectations. forward-looking statements to the other that regarding certain These we we results our future may risks, of discussed a upon filings based our Slide presentation, Nordson's actual to and where made cause number be are Exchange as could with Securities Commission company's current of may

full about Naga to Moving as enterprise will well also year conclude the performance quarter review Joe and Joe Naga segments. the sales to the for XXXX commentary sheet updated cash business highlights. earnings about total X, our over today's company fiscal guidance. our will two balance second call and and with high-level talk flow. agenda, as will He to discuss on Slide turn will then the performance

turn X, take then that, With hand call Naga. to be happy the your questions. We to over will Slide and to I'll

Sundaram Nagarajan

XXXX conference technology and makes in Thank direct quarter morning, Throughout joining strong, we XXXX, invested Nordson portfolio. for model innovative second call. position what fiscal remained Nordson's fiscal our Good everyone. you sales

accelerate which last us framework, resources Next opportunities our the growth. positioned as also the best and advanced profitable NBS ensures for well profit on our in year, to XXXX, we has XXXX quarter. to during operating We growth customers new respond sales, recovery focus margin, strategy and This in continues has excellent put fiscal and EBITDA an deliver to gross second the position it record our us

demand data As accelerated In sustained and Solutions anticipated, and devices the the where a originally benefited electronics complex need in degree we particularly segment, Industrial packaging. the electronic and dispense for Solutions segment increasing semiconductors Technology products. the progressed quarter pickup industrial in the food end medical, market Nordson's markets. fluid as faster demand from to for end beverage test applications the end and and markets well inspection than drove in Precision and industrial our Advanced a dispense greater as centric for economy demand

We related have as also are solution recovery surgeries started COVID-XX medical the slowdown. see beginning lines product the increase to following in to interventional our outpatient

to more and for moments. safety the our the effectively about Nordson medical supply demand on components capacity chain this want from global congratulate and perspective financial quarter. more I'm meet team accelerating single of biopharmaceutical also for businesses call first, to managing team's I'll accelerated of constraints. the continues achieving applications. turn business protocols over dedication provide to COVID-XX I'll growth results second I and while fluid thank use maintaining speak Our But few Joe detailed record to for our in the this benefit proud quarter. to plastic

Joseph P. Kelley

of second million, growth an quarter a over increase bounce more good quarter year's is double-digit you to were Naga Thank you million. and than XX% prior This everyone. On XXXX $XXX sales sales back. Slide second morning #X, see of $XXX

Japan, end currency record of than record the of for million quarter. strong QX profit established $XXX quarterly which been a quarter. was significant of incremental relatively have XX% year growth XX% current of enhances growth, Robust the Investors prior is and second and profitable growth were margin of improved this beginning XXXX. gross mix, pandemic. noteworthy profit was a $XXX quarterly Gross the consumer sales is that noted, growth. primarily increase of and the company the are related and XX% headwinds second related XXXX of growth, the of the except XXXX. and by of foreign resulting The or new sales which divested of and record. basis negative the Naga Favorable growth adjusted a framework, structural acquisitions improved volume and $XXX organic The quarter than records would well cost XX% the strong profit product previous as in in product in has of divestitures. $XXX sales strengthening in in prior From heavily sales this Fluortek end double-digit fiscal mix. all markets The vivaMOS as the starting sales the from perspective, in were barrels benefits by medical the quarter off of is the year more net Next to divestiture drives primary margin in year efficiencies, XX% XX% million the and in the line compared by totaled sales mix, a non-durable volume This been negative EBITDA QX prior regions When see measures year. line compatibility offset more EBITDA power operating the quarter organic from million of it is impacted were shutdowns markets as breaking margins performance. leverage the to impact of XX% XX% a as performance. and the geographic to XX% from to million, sales the divested fact, The the in In or the a electronics for sales, increase industrial excluding of Also million. benefits from in purposes, manufacturing to from drivers taken growth NBS company, screws in line. volume combination or or barrels higher reduction driven in was sales, XXX contributor fiscal increase product the screws of or at EBITDA strong It point the improved gross a the XX% prior $XXX sales was million, $XXX year acquisitions operating

another effective $X.XX of $XXX rate yet per as Other prior $X by million, to increase not an Tax interest from Looking driven debt share, This XX% is year million, million associated the totaled the did gains benefits that currency and borrowing in well expense company or largely and leverage with significant at in efficiencies. quarter. net XX% levels the levels year. expense as measures reduced by cost lower Net tax effective net expense translation increased year-over-year volume decreased in sales growth reflective driven the non-operating current million in expenses, or the from $XX increased rate. record. or year XX% repeat in income quarter $X quarterly XX% prior improved a the of control

to prior adjusted year the product when divested of the and year line. to on packaging operating and a the X% screw product contributed segment volume profit year-over-year in and and flexible in million, This by and through mix, $XXX that with Industrial XXXX million $XX improved travel growth, adjusted efficiencies the second or of profit segment line the lines. turn segment X% driven X% XX% and quarter. XX% was coating note X% Slide are euro growth quarter was X% sales we to of increase organic SG&A, performance. sales including was of sales and Solutions second currency the favorable industrial strong negative continue for let's during are the balances Precision leverage north the second manufacturing X also year-over-year divested year XXXX The Operating increased The It's X sales compared expense Now demand review XXXX sales A lower was of experience to $XXX in sales organic to RMB screws to driven strengthening impact by associated prior quarter. levels period. benefit important million and prior the growth. barrel volume a the product quarter. profit compared that reduced barrels to

as we electronic now product to acquisitions. year million and prior forecasted, markets lines Moving Sales Technology we X% increases of The growth test quarter. X% and inspection second an product well organic industrial increased volume sales contribute started organic $XXX to dispense Solutions. by included markets. to compared approximately serving the Advanced related Also, approximately to related end see currency and the of as approximately as strong fluid XX% the the change for quarter increase driven and first in increase electronics of This applications to medical quarter. to serving management call, was demand on end late in lines XX%

Second segments. of margin sales from organic in This NBS our quarter $XX and strong leverage, sales. to volume increase encouraging year of profit cost the margins control growth in driving line $XX see or delivering of prior realization of benefits the XXXX and for taken of of XX% profit by XX% segment of driven the operating XX% is top or XXXX. sales measures It operating favorable was benefits mix million, Next this operating over sales million incremental fiscal both was

borrowing and free turning now Page free ending was leverage of normal contribution. due million, flow year sufficient working balance cash turn the We quarter available free cash months a which million flow $XX the trailing the conversion XX% X. very again Cash debt efficiency our capacity. cash sheet favorably and quarter Free balance X% a the The XXX%. end quarter, net on north which the million, Naga. cash will call based strong flow remains million Finally, pension I was with X.Xx totaled the discretionary Cash rate capital net year-to-date in conversion $XX back $XXX XX strong was at below was to to to $XXX with cash prior in EBITDA. the sheet flow and on contributed the was quarter. to primarily in in a Improvements above income ratio quarter and flow. levels

Sundaram Nagarajan

Thank you, Joe.

outstanding an you performance Let's We the Nordson XX making turn for strong this in stronger. Day quarter. delivering team hosted the a long-term to Investor on plans X. our to thank detail Again, even March for Slide Nordson to

participate If did to chance our event Web is available our have site. not replay Investor you Day, the a in the on of

I'd a few summarize to like Now, highlights.

performance, end markets, First strong enabling growth the including and foremost, Nordson's emerging new growth drivers markets. future and describe we diverse profitable applications

resilient us to competitive our through fiscal are end divisions, the advantages. diversity one of of each At drivers reiterated results. to Investor of unique revenue growth and our our the our XXXX commitment markets fiscal our key our made Norton's and high-level in XXXX Day, also While strengthening recurring innovation, of we

Our we advancing the quarter. decision for that industry. two is and we framework Nordson the of strong to newest customer the new growth and Vantage for in Flex our these new are as model dispense framework. insight also product of the to we technologies. contributed needs first the spoke both and the sales This a presentation, Next accelerating In the to highlighted integrated integrated data driving our automation, gives we and packaging notably an the automation stronger, the intimate handling products develop record make productivity. us enabler their are designed ProBlue customers, Both our melter is new which wafer cases, reducing of semiconductor even roadmap NBS making. cost driven new system In fully our competencies products, customers, building, system, To products

our facility drove projects Since support is in our I of line. to our year, also We travel equipment bottom analysis. new investments and Mexico components, approved quarter. vaccinated, businesses. our a our barrels teams the NBS facility to both to to Next beginning the building most best the products. being engagement or how Colorado that in on benefits discipline our top exciting These biopharmaceutical decisions in as to second to funding top technology data to deploying in the It are to started the our we operations. at are driven Nordson Last line we our already announced Loveland Simultaneously, to starting medical customers make see for top such based Next. NBS new interventional needs grow divest invest products decisions and cost have delight our of product the decision new structural were manufacturing of screws or on reductions deployment strategic strengthening solution the of our our of It opportunities, and prioritize innovative see

which of new and revenue NBS XX, Ascend to returns. a with Turning is growth is to Slide our deliver margins Strategy, tier designed critical top Next leading pillar

execution pillars are NBS also In Mindset, progress exciting XXXX and the Strategy Strategy second demonstrate through Next, of Ascend It division is in we help Teams, to Winning a who and addition billion We and making these Nordson's start XX% strong a acquisitions. all be building our acceleration fiscal combination the within revenue entrepreneurial pillars. quarter, goals. and Owner organic are; of division-led diverse we of $X in to will bench will our support of to that This strategy. segment us on our they off are achieved other each a Nordson's successful the have of long-term Ascend the long-term updated the are our The growth well towards will outlook now growth. of deep each of experience place, as Clearly, an interconnected in target organization talent EBITDA. growth achieve leaders the as talent record of achieving milestones long-term focused

XX. to fiscal turn XXXX let's outlook updated on Slide Now our

enter entry lines the across prior geographic As and about quarter, the levels of product strong and fiscal up our digits order third double XX-week backlog is we trailing regions. year majority is

to be year XXXX. For we full year sales XXXX, over approximately fiscal growth fiscal expect to X% XX%

growth in would barrels revenue our XX% Excluding the divested to the sales full the product the approximately forecasted X% year from screws headwind be year, prior of line XX%. and

Our this XX% XX% XXXX range earnings forecasted actions of in prior a is and forecasted the strategic over compared to combined $X.XX efficiency year deliver guidance increase to cost growth growth with around per diluted sales $X.XX earnings and The taken earnings. to of reflects midpoint share.

end the more of than Nordson precision results benefits our Our foundation focus, model diversified current markets. the signify of customer of centric wins technology recovery. financial the because and

recovery, and remain to a solution well-positioned critical ahead. are the cycle to benefit through We our customers from our products the

implementation Strategy, team is Additionally, growth sustainable of the the profitable which team management organization our fully deep a entrepreneurial and advancing framework diverse a to growth. in engaged will drive establish Ascend

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

Operator

[Operator question from Instructions] Wells line Allison Fargo. the The of first comes Poliniak with

Allison Poliniak

issues impacting back growth of sort we're as maybe terms lot about hearing this seeing we a there particularly Naga, supply Good morning. chain what thoughts you're in the Any some at of half. opportunities, enter point?

Sundaram Nagarajan

but Allison. you, expectations non-material year. Thank stand limited we From the of standpoint, is our really our it Yes. the From half we've had around to today, issues, back very some where resin. in

Allison Poliniak

that get of the inventory behind you you're today? inventories? demand Perfect. -- your mentioned of an this I replenishing of are Obviously, what single on just the your And sort then Is to side. And seeing on Or that back kind use medical. people you're to comments improvement true consumable there. an is that point want is seeing sense issue

Sundaram Nagarajan

Yes. use these components, applications. biopharma are single In for our

biopharmaceuticals of on seen coming this of demand, as we we it through that this vaccine, well as last have because market, truly the So as are representative think the year all see year. of a is new think demand

we very We to restocking chain supply have there. our directly kind So, mostly limited business. in of this sell customers

Allison Poliniak

of half in. going the one more to mindful just to be of the I'm back in Great. you? for Any mix sneak issues year

Sundaram Nagarajan

to want you take Joe, one? that

Joseph P. Kelley

Yes.

of we and I broad QX organic the do again, it's growth see see segments. that looked demand as environment the relates but volume think when pretty for look you to we quite much think, in we the Allison, it a forecast I when both based the that as question. geographies good in at year, was at mix performance, the favorable our remainder

this tell I issues there's So the half aware at that time. we mix would you, no back be heading into to of see

Allison Poliniak

Perfect. Thank you.

Operator

next line The Boroditsky the comes of Jefferies. from question with Saree

Saree Boroditsky

the Good on morning. Congratulations great quarter.

right this lower going think level really through should of had divestiture the is You you how is we travel about benefit forward, performance that the and given about mentioned? talk you just in IPS. great margin the to think Could

Sundaram Nagarajan

take Joe, that? will you

Joseph P. Kelley

basis you level, product the at barrels of divestiture benefit And significant a IPS volume in the the barrel think you can at probably sales XXX to of mix divestiture would improved you're then when and XXX tied the level, Naga. one, to impact. I the business that expanded [Technical basis difficulty] XXX screw look tell in our the that and at we about attributed level you the about mix margins leverage. quarter, the IPS margins the to screws of sales Nordson the quarter Nordson take did XXX margins and line. And be points. record points the to talking from our When that clearly had improved

excluding the second a even T&E that, so sales half, think forward, I will going are half if begin And in there's ramp do half. we the script, in a bit second you more up, up start in expense think I expense margin travel little component first with bit model performance. the think to and about When as expense, there our ramp saw to nice coming the than in mentioned little particularly where direct about you we'll the a

Saree Boroditsky

Great. M&A target buybacks? range. talk X.Xx, little we could bit market below you're about in with what about share or really And it's you're then the Maybe how a thinking your leverage seeing about

Joseph P. Kelley

Yes.

will remain has the as in continues work across tell will post-pandemic. So on deals we tell through we very M&A that there's coming I market the I to, the increase you looking a deals, And feeling active. I say, you market, would at of number

in reviewed financially we we after will disciplined. financial our strategic And we confirmed then very the our discipline filter. on Day put primary so Investor remain discipline, criteria And and we remained is strategic that we active,

targets and know, acquisition looking, as So to medical continue space active. the for in the you primarily inspection we're be we in and test will

the in we're what picking it looking is volume tell So of at. terms is I you would up

As plans. it $XX relates dilution. I additional to to will pension that did offset benefit our to million share point out buyback, we we contribute Saree target defined

U.S funded in status the is million XX%. our now we down quarter. of So $XXX And debt in north pay did

Saree Boroditsky

Thanks the question. for taking

Operator

Lynagh line Stanley. comes question the with Connor next of from The Morgan

Connor Lynagh

chain I return bit. the if supply thanks. little a to could was Yes, wondering we conversation

that like you really it cost inflation sounds that for need you also with muted? Are is address seeing relatively an is availability issue to component price? So not Or you.

Sundaram Nagarajan

it think think structure. to have overall first of Nordson, our you you the about as structure. of our cost is overall inflation cost when tell relates cost I all Nordson small you Yes, material component a relatively to about would And

that conversion costs with represents the a cost to manufacturing cost, fixed We in would address SG&A where cost, price the potential challenge have So procedures processes and component place manufacturing is you, itself. or But and appropriate. Connor, on labor the cost inflation do than larger I there material more when tell material increases and availability.

about think XX% of to really the mitigate we're side. this streamlining expand able made this costs you NBS in-lining inflation and isn't us we've helping on some is Next that those both availability when manufacturing And growth. the the manufacturing on labor pressures problem, a serve volume in the initiatives investments capacity So availability to our and where process, of and

the So the than tell material side. I labor inflation that's you is the pressure on seeing side more we're would cost on

Connor Lynagh

cost we as basis how significant be? then should the maybe just toward the think we a Nordson maybe give towards to of it. called of reopening. could And that points, move us basis think point, at with headwind about further how you order that is XX magnitude -- Could discretionary got you level XXX expenditure sticking maybe, just about an Okay, out

Sundaram Nagarajan

to it's so on $X half if portion commercial you look model, just of Yes, probably first entertainment the sales travel I sales our you, tell particularly benefit of force come at back. million about would going that's a and in terms to year-over-year, expense, start direct a

Connor Lynagh

mix, there this asking. is a been is of pressure the others that is guidance just tie certain maybe of the the seems could about think based margin that that back have line degradation, with growth on questions mean, understood. the maybe some is EPS top right the like together strong. half to outlook be Okay, some it some to margin, degree And way there I reversal but of that on

Joseph P. Kelley

strong. the so Yes, is line top growth

as favorable think favorable QX could I be the I or mix. think, any see unfavorable. do familiar quarter you're a in we And did mix in given

you And the And structure so back. may to as it then And cost come goes start that's that expense one. that expense moderate a little forward, on some tell bit. of the would I -- should side,

Sundaram Nagarajan

on north the XX% me to something way our to this. would of XX% to believe the is add [ph] Joe, half. XX% guidance, is on that think we about let We based incremental XX%. growth incrementals still best Connor, current back in long-term that us be our to

we yes, is there cost still solid performance pretty some but what So, are forecasting. back, coming is

Connor Lynagh

Appreciate color. it. Got the I'll back. turn it

Operator

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

Jeffrey Hammond

if give organically? can what Just don't us is in missed I I on the number that know presentation. backlog, you the backlog and that up

Joseph P. Kelley

these abnormal now we're looking behavior, And pandemic. coming Jeff, we're our out the entry, backlog, are of in our the order at delivery. Yes, timing when our of differences in seeing customers' times

can appropriate, our the now to we I quarter double don't would sales. the confidence But tell What is you we I and a not give guidance right backlog provided. so think. backlog be next our in digits, in I order our indicative backlog that And have are up is think of number therefore entry

Jeffrey Hammond

is normal. So longer orders, the the turnaround but idea you're significant getting than that they're

Sundaram Nagarajan

on Yes, side in customers we businesses system do see the in advance. placing orders particular

times that XXXX, actually go with is And abnormal into for so little which order patterns. a out historical therefore bit our customer delivery

point. data So therefore it's distorting that

Jeffrey Hammond

this barrel, just margins, were second pretty popping. temp just were think in -- some and just of [ph] -- half, screw mix And trying IPS of because about what way to back a just how understand, I'm outside the to those the core you is versus in to cost eye kind incremental like give how quarter? of then that because maybe like much to margins it underlying there And go Okay. and the drove

Joseph P. Kelley

Yes.

IPS So when itself, screw business you and divestiture to the about margins XXX barrel you, roughly expanded I quarter points. in the XXX basis think the would tell

if still is XX% strong you can drop for were operating north number we a So which XX% that business. of very op, profit down, that

way is about of on that the the organic within leverage think the to the power X% that growth segment. so And

so business, And also margins strong structurally last on consumer coatings in in in where as mix Naga some non-durable within our some very coatings we -- mix actions that it to mentioned, some also to favorable industrial our favorable industrial incremental as packaging, the relates costs QX. year the it's business, that segment. this late took reduce And

see that through so benefit coming you of And well. as some

Jeffrey Hammond

just then Okay. And last one.

advanced talk still in precision Maybe about you're that's visibility? seeing standpoint, lagging late the in picking quoting quarter. kind up growth forward from there of mentioned You from Thanks. kind what dispense electronics the just order but of a tech, a

Sundaram Nagarajan

PCB in dispense complex PCB certainly treatment beginning product we diverse a lines the we to give across beginning our Jeff, we're here see surface then some starting that and take what side order color. some me -- treatment, can you on also helping, let to strong patterns electronic systems flow pretty and contribute the helping up to surface also systems. are the Late Semiconductor in chain. of surface supply electronic plasma around helping. one, our set is components Joe, pick electronics to with quarter, see begin

in pretty quarters nicely business would that contribute to feel the to in we So and we expected see good what I come. about say

Jeffrey Hammond

Okay. Thanks a lot.

Operator

the line The of question Mike next with from Baird. Halloran comes

Michael Halloran

Hey, good morning, everyone.

Sundaram Nagarajan

morning. Good

Joseph P. Kelley

morning. Good

Michael Halloran

nice the Is normalized this from And And quarter. medical you versus level trends think maybe some sustainable a of kind on you're what underlying non-elective some would thoughts think curve then elective you're here. look how pace? to that on So you it like? inflection as side, back this do today. happens right just more Obviously, improvement the seeing when

Sundaram Nagarajan

going right that about be business Well, difficult we to a the little in seeing talk come let's when normalized what to is But to predict. now. we're levels, bit

been biopharma accelerating. that to about getting drugs think our and to It from of just you a the of if vaccine, where but are foremost, number be the fluid business and only by is introduced led side continues biopharma strong, be has components, perspective have First mainly not just strong. we and manufactured the continues strong,

continue We the to in expect that part business nice of contribute a way.

elective On see is elective our up. you're selective the to We saw is surgeries nice surgeries in business benefiting, what selective pick you're case, slowdown beginning surgery, certainly starting the quarter. or beginning to and growth the to COVID some see in the in

end this our say. to of it's that thinking good. But are difficult how the normally we of expect year, quarters next is two next digits, that say, year, -- it's we second out us difficult which high And to really We the expectation early back single pretty this this for in get about would for kind pretty good. to still we look is what that's half of business expect is of business

Michael Halloran

maybe markets within any trajectory trend, end just those pieces? industrial a the nuance similar that And then seeing on facing underlying conversation you're

Sundaram Nagarajan

order our a across is difficult demand right feel -- core us broad on quarter based pent good is amount that something a the a kind for guidance based of what businesses entries geographies. about pinpoint performance a this when second half enjoying really again we pretty now. -- that across end -- number all see, of is full of double-digit of there having pretty are you Yes, we’ve we all what we normalized certainly expect that to in what a and we is the on backlogs see to industrial of can predict our up across the year. level, gets certain is and spending implies see, But What to as markets based can in CapEx difficult our we for growth the

Michael Halloran

Thanks, Naga. Appreciate it.

Sundaram Nagarajan

Thank you.

Operator

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

Chris Dankert

of strong demand the expansion adoption Thanks or can the quarter, more the morning. question. more for business of T&I two? driven great. kind would combination of semiconductor we good be there or the is the about guess Hey, Is strong any comments saw comment about the this being product in a you thinking Just customer by taking there? I mix this

Sundaram Nagarajan

is our Yes. the I components benefit late see business, really also dispense of benefit certainly Thank the we indicated beginning Chris. well to our contribution number from see having strong electronic benefiting the continues We semiconductors, of growth business. definitely investment T&I to But we're well. which complexity as business begin and in you, this the and the as and semi as from from script, quarter, in T&I semi to a quarters of complexity fluid

have treatment in beginning well product surface some dispense product our as doing progress Our good very lines as coating are to well. really as lines We're well.

in so, participate, in I of in semiconductor of surface tell will where you space in cleaning the first side terms we participate the we broadly And it.

underfill see past, terms packaging. front packaging lot in the participant in Second of starting we're as now and we're this there the to packaging and happens. sliced up a But well. then post packaging to wafer beginning to In move happened of starting

based growth, I semiconductor So pinpoint Chris. wouldn't pretty one product. broad just that particular or just

Chris Dankert

but for up then though? a Got it, And it. digits it in put was to point safe to on the assume double not is quarter too fine Thanks color. T&I the

Sundaram Nagarajan

yes. Yes,

Chris Dankert

Okay.

Or of really this very growth very, called in sort than PCB Okay. it bit based that? broad this cycle of demand of and robust beginning out opinion? some there. the it's just ago a the XG your And you Is more again, little -- much is

Sundaram Nagarajan

strategy bit the of in electronics broad place in set time right shift supply for to electronics two a have a or the Yes, get we where us applications on a we've the in spent chain. to year past is across a quite

a we're the And I based than you that so rather will what that we're seeing, particular specific thinking is growth demand product. a tell is broad about forecasting

Chris Dankert

much, so Naga. Understood. Thanks

Sundaram Nagarajan

Chris. Sure. Thank you,

Operator

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

Matt Summerville

Thanks.

of on anticipated to of sort in of follow-up -- about and thinking piece experienced business. in? you foreseeable do double-digit a test see this What And Just quarter the What's that growth Naga inspection kind What the continue the that in the expect way be the cycle? future? duration into to are you second the you that? inning do we right

Sundaram Nagarajan

the best think we probably are it past the year what about typical in probably is semi cycle. we the to than we And year Yes. is to say little bit depending half the much or say on is one one, are growth I the in a X and would certainly of magnified early it happens. more X back cycle years, would is so -- cycle way

-- is to it's difficult many double-digit quarters that's of we helps Investor best end best this is we the to pinpoint year are way more X%, cycle, is on We the think way or sort in how But a clearly So very Hopefully in the kind about you. Matt. market over leg what opportunity growth our the X% the of kind it, think of to which first of about growth. that maybe to Day. indicated our have

Matt Summerville

one just And on Thanks. one then last pricing.

the this your in With the pretty across to experiencing? strength price much going board you Are be as Are orders demand you're taker? about you're the given in we in positioned backlog. business, of forward, think seeing a double-digit demand, able growth environment you be and so more to

Sundaram Nagarajan

we comment. our year And the company we gross pretty feel Think to the for you that, paid a issue, to into will are. create add of we like value any one inflation regular need things we more it? opportunity make maybe really inflation price of We sort we Joe, becomes and will And add account it be But color more some be little right? and value where should cover helpful. it. about margin good an to that to we once then, certainly could thoughtful. plus it. the create XX% of general, we strong, about have our but the lines, bit want product a to customers. get that detail you In for have and me to indicative Joe, take a is in of Let increase

Joseph P. Kelley

that just margin. I would good to gross at Yes, opportunity price and again, But opportunity and needs the we The best Naga nice is margins very take raw you, mentioned. volume inflation have as say record customer's support as tell in this we're to maintain that opposed to because to monitor our margins. already raise meet incremental very increase the margin this growth running processes gross we about processes costs, to XX% to place I feel would material

be we about opportunity As the we growth, back are and this customers. look our to at margins to that's support organic think managing it, best as half double-digit attractive organic growth the in we the incremental and the

Sundaram Nagarajan

Nordson reiterate of position. to deck, more part our one Typically cost maybe And total just is to really think on a customers' Nordson's very about lowest right. cost is the critical small component,

the deck. company So, customers' our components cost -- smaller are total of part

prices, we we should to need able provide raise are that. so to And

Matt Summerville

you Thank it. Got guys.

Sundaram Nagarajan

you. Thank

Operator

the Christopher [Operator Oppenheimer. from with of The question next line Instructions] comes Glynn

Christopher Glynn

did good industrial demand Thanks, Covered far, a of on follow-up to patterns. so lot morning. want I ground

on, OEM by seen this recovery within then You’ve cycle see of industrial mean coming what activity, early production that at of And online. is more capacity type capital oriented demand different typically a and mid driven by any maybe you just I transitions lot improvements types stage?

evolving? you light on any how wondering, Just shed that's could

Sundaram Nagarajan

what from pickup pent yet. capacity yet we're what not seen on demand Chris, as Yes, based is see, up can today mostly is And we seeing we've a spending. CapEx significant

Christopher Glynn

Thanks. Okay.

Sundaram Nagarajan

Sure.

Operator

line question next comes The Andrew from the Berenberg. with of Buscaglia

Andrew Buscaglia

not understand, components. would on wrong, that? and you quarter these don’t know -- so well. these, other lot expected of components and shortages. guys. are which guess, And day and coatings just And just and I questions a don't test kind one able hoping various to you are got your that, I me of headlines around I performed that was have with nature business you thing the supply if quite every explain chain your that what's I'm could sidestep I component navigating correct on I Hey, wondering, business that. the inspect I'm think of I I the in a in

there. color any just So

Sundaram Nagarajan

give of for maybe of are, me end is overall little the for can components critical end and specific we a to you our value what Joe are, point differentiated from more markets and at let we customers right, Nordson had who we it create data. Yes, color add view an about to bit some with assembler Think some applications.

So, but that added small. that really our that components. is really is is, total is materials that part we are fairly means as a value of assembler cost a what And structure of

thing So keep mind. to that's one in

manufacture do country, the second cases. we in our most in is in of products region that The

a run we into lot issues chain of supply that don't really So way.

have put So perspective, one there, or in We've two not we say. and two of here don't any those problems what but things issues if kind you had we is at they're material I'm all. saying really not

Andrew Buscaglia

They -- -- broader are headlines. niche. broad you It's the just you can't at look at so the can't look it,

focused it impact kind doesn't really that narrowly of you, You're seems. too

Sundaram Nagarajan

processor are, big manufacturing not a molded we we're materials right? not we either, business, have some consumable converter resin we're Yes, not and of right. Yes of a who contract injection big but That's to parts.

So …

Andrew Buscaglia

Yes.

this maybe, -- then be you it mean long-term but Naga, of that would And out think EBITDA XX% you're the that. close I you're to looks brush XX,XXX to going guidance. into target based implied Okay. I margins, you like put I the year on mean,

conservative achieve or look practically be guess I after perspective? is like a just that XX% more with able dollar being like are from guess year? So, way you really EBITDA because at this -- year-over-year looking you're the Or growth there long-term guidance to should we at I long-term to being

Sundaram Nagarajan

only really the thinking, it of seeing through some this long-term is And you're is the our of walk -- organic some year. of impact growth but now what target. a can you Joe, our

our a guidance acquisition. growth and from dilution organic -- long-term So and includes

This cycle. So a two We things. there's is is through the estimate. don't conservative believe this

Joe, what X that, please? we you little the add more bit Over would expect a is color this will years, to we do.

Joseph P. Kelley

just EBITDA, Yes. the is think when of growth targeted that million to at the XX%. down such Andrew, XX% would drive about when that it, the add, in $XXX line, at a of I that has to XX% the you revenue dilution EBITDA margin organic acquired expansion comes the I mean, north net

the is years million appropriate includes EBITDA. worth So at a the our $XXX next of just goal. XX% an dilution over still It acquisitions X of XX%

Andrew Buscaglia

Okay.

Sundaram Nagarajan

Another the to XX% to every is That's and XX% think we're within we're headed have we're businesses growth way of focused incremental. dollar around. for that about expectation that how is going where our what really -- to

target. a you this that XX% EBITDA so it. thinking acquisitions, that's of that's time over how yearly And if to project on basis, we come how And we're about sort with

Andrew Buscaglia

guys. you, Thank Okay.

Operator

line The of final from with question the Seaport Global Liptak comes Walt Research.

Walter Liptak

Hey, guys. good Good morning, quarter.

Sundaram Nagarajan

you. Good morning. Thank

Walter Liptak

sold? follow-up of I if you to a just were might be supposed else to were when When talking some can you saying get there XXXX. which give And earlier, these so so segment on were you systems of of wanted low couple I Or something things there those it in? out booking that were the about wonder they're that backlog idea -- Is us is things. timing why some running on? going long. to are

Joseph P. Kelley

where call, Yes, discussed you environment what supply challenges. what's just it's that tell been phone it the chain is macroeconomic as hearing I people relates on would Walt, our are understanding to this

and And they our are, would that I orders. of some customers of orders think, so advance when responding in to place placing typically

building us to. they orders not orders, used their They're they're building earlier So with just than placing or inventory.

time. And as not at number we're backlog the view disclose and so why we on what this going that's choosing to

Walter Liptak

understand. kind the customers it I about board future concerned is segment just give delays. of Okay, are Can which you though, across us some where or color, about

orders? pre-placing So they're of these sort

Joseph P. Kelley

we in of would bit tell see our Yes, you I both it -- it a little segments.

that why made it's time a specific. have tied products one not lead to and systems. they're the advance And typically that ordering And generally the comment I naturally of it's so calling in segment those And that's about longer those.

the As of it's it parts within relates booked to and many business, the those shipped week.

there we up And so built have backlog. that don't

Walter Liptak

this this Okay, -- levels are back half year, great. out, rate, cycle, great. margin the from And seeing pointed understand abnormal. the is given mix? as reasonable a there's you early you're into gross absolutely that But And and as in the we run look things XX% that what is of was volume some the I

Joseph P. Kelley

drove you I the that Yes, and watermark. think that impact I of is think you is new cost last divestitures barrel improved the took what a the increased and think mix, structure we business, actions when it And the divestiture at do high benefits demand But sustainable. I the the screw think tell XX%, year, levels. and these you about of on lot of about a would

strong with incremental would you is expect type this of the margins. leverage So

this And this reflective or to the any the I is levels. do XXX fluctuate quarter mix, points so, but of XXX can profitability down given on business up based that on think sales basis of at

Walter Liptak

is of one growing surgery those in medical digits. double products I are then talk And great. can you early it you But the recovery I else on for think if of half the are the a some those elective not think comments. double can in digits. just, wonder in about gather not me double year? majority Naga's back that if digits the you is was growing And Okay, of a maybe and He growing made last comment what

Joseph P. Kelley

to me Japan. more a would let at experienced was a quarter then at stab double Yes, I pandemic. the in experienced you I There business that organically geographic and And not can color. some was But or when add look significant -- you in due Walt, digits Naga guess they growing it. take the one the that our tell region, shutdowns split,

because the comment by medical or several fluid driven at was component, that's that's to encouraging the electronics the was in look last procedures or Japan. And application. started selective the late use in I what to one to And if so think question we we single then, see more was the the going the But interventional think tied organic performance our did elective closely quarters, growth back which deliver you the medical, single growth double-digit quarter I and biopharma the on the procedures. in the your of over solutions,

was see that encouraging so And it back. to come

electronic the fluid it QX. that see performer. back the part was come of in growth the the the business been contribute and dispense space, later And On portion T&I strong electronic encouraging to dispense had of to

that there. comment the And was so

Sundaram Nagarajan

remember that year-over-year, X%. add thing One or were rate last other down growth is the deep I about as Nordson's declines you if were Okay. performance year as would growth not compare we

top of a we're growth on double-digit of broader bad was not what seeing year, sort the is So too given the decline last of environment.

Walter Liptak

Okay, Thank got All very you guys. it. right. much,

Operator

now closing for will over Naga back turn call to the remarks. I

Sundaram Nagarajan

a solution the want you. recovery, well-positioned technologies we remain to ahead. cycle Thank the position All are benefit to from I and through to accelerating that critical right. our reiterate customers our

Ascend entrepreneurial a on management attention will which drive growth call. team Strategy, Additionally, the Have deepened is today's organization and of time and implementation your you sustainable team profitable growth. our great a framework, Thank for to in engaged establish a diverse day. a the fully advancing

Operator

This concludes conference participating. today's call. for you Thank

now may disconnect. You

Nordson (NDSN) 25 May 212021 Q2 Earnings call transcript