NDSN - Earnings call transcript Q3 2021

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Nordson Corporation's Third Quarter Fiscal Year 2021 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. Instructions]. [Operator like Lara conference Investor Mahoney, now first to Relations. hand today, speaker Vice to would over the your I President of Please ma’am. go ahead,

Lara Mahoney

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

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

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

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

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

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

Sundaram Nagarajan

everyone. call. morning joining for XXXX quarter Thank fiscal third conference Nordson’s you Good

on First and quarter. foremost, I want team to the another record Nordson congratulate

the we NBS environment and in this record colleagues. in to in with also demand. plagued continues benefit division our of focus end over a and results to I'll provide the medical our Technologies on strengthening the markets and first concerns, macro from the framework leaders market businesses. the Next opportunities a but be on that greatest dynamic robust Joe growth Investments financial to by grow speak pleased of COVID end the more Joe? our During results quarter. the for NBS business resources about growth respective the the combination moments our deploying labor, acquisitions including I'll electronics quarter detailed perspective industrial call quarter. recent turn resilience to in supply In continued execution few their with I'm this chain, in context announcement NDC to Next are the of

Joseph P. Kelley

and driven by XXXX, into purposes, were third third end record in across $XXX quarter once divested impacts. company, in shipments XX% the were morning EBITDA in of would sales Also fiscal growth prior volume in Thank offset impact to $XX particularly and profit and or sales, of divestiture sales. XX% structural year an headwind line. quarter the to beginning strong of by of a acquisitions profit divested which the net line seasonal of or the the and fiscal higher prior comparability increase increase favorable quarterly improved record When offset year’s primarily of $XXX $XXX the $XXX $XXX result EBITDA were is was benefits XX% all XX% the $XXX over the quarterly from than negative a manage in more organic $XXX XX% in been regions prior quarter. XXXX including year Gross was This On demand and except to pandemic from XX% a and by of of than million margin or number from $XXX resulting million divestitures. of from Barrel million the the compared mix to XXX the Japan line increase vivaMOS or end million was for related of perspective, geographic again new divisions at quarter related profit and operating the growth the from current by prior continues This increase in taken markets sales have quarter. operating and gross a The the product measures in increase excluding in product million second reduction record. basis Screw organic all cost Barrel sales million electronics year. sales million. for currency quarterly product growth Screw the and above was third This markets. benefits the prior year from XX% XX% million, adjusted point of was leverage, The quarter sales From sales driven see good The totaled the X volume you'll you XX% Naga sales prior Slide of million. year continued Fluortek acquisitions increase everyone.

focus sales of The us opportunity. attractive XX% Our benefits broad-based of profitable Next organic including in than is growth margins divestiture growth and framework greater plus of incremental areas the quarter. our has realize greatest to the EBITDA the NBS the at in application helping growth led mix to favorable divisions

that income prior CEO prior did primarily a third expense or in expense charge non-cash with totaled million net $X translation at of year associated associated expense levels. now debt driven of significant growth losses by with XX% Net settlement not increased is currency XX% control quarter. efficiencies. decreased cost as tax quarterly as Other million quarter interest mix reduced and XX% $XX in of $X.XX benefits to Net $X quarter to increase reflective This manufacturing retirement an and pension record. $X well expense. the of per another smaller in sales from decreased Tax in improved million million from yet repeat. the leverage rate the sales volume non-operating driven Looking year-over-year share, company $XXX the or of measures XXXX million the XX% or by and the effective

was driving profit very efficiencies. profit $XXX XX% the year-over-year This product line performance. and margins. growth, to volume growth. Barrels with segment on prior was industrial sales XX% of profit in solution in The to increase mix, year particularly to and turn the gains profit Operating the XX% lines. driven or the the in is precision The and melt growth System organic the more third adhesive of XXXX quarter divested third attractive operating Industrial improved and let’s associated of markets X sales Screws quarter the growth volume $XXX by quarter. leverage strong sales segment $XX million framework end Now of at compared increased X coating year Slide was prior incremental a sales product up XX% sales adjusted period. the than XX% manufacturing driven Next compared sales by were to the million The strong offset same operating currency growth growth across in hot organic NBS set sales and million geographies. dispensing of favorable broad review

Excluding operating quarter. the margins impact profit of were the the XX% divestiture, incremental in

and acquisitions. of product double-digit and organic organic those of Moving change end lines increase X% Advanced third related year Sales increased serving as and medical included of particularly to on This now growth all industrial XX% to compared The Solutions. markets. sales approximately volumes Technology currency to increases X% management well XX% driven serving by was to quarter. product $XXX increase million prior in fluid markets related the end in lines, electronics strong as

for ITS realization driven NBS attractive the taken leverage, profit the from sales. Third driving XX% greater was year ATS than to quarter of million Next cost measures of sales of the million of XX% operating implementation sales throughout the by volume segment adjusted margin increase at is $XX favorable growth sales strong profit XXXX. margins or in divisions mix, fiscal incremental This control XX%. was of benefits of Similar XXXX $XX prior segment this over of operating and operating

in the of and has financial is dividend marks just driven XX% working primarily quarter quarter conversion The Finally significant dividend. below annual offense capital our prices. to X% the ratios. a levels XX% pension normal north yield dividend increase which balance progress turning Slide was X. at million $XXX executing conversion XXXX. under in reflects above cash cash on and yield cash combined fiscal to maintain increased Board continued XX% payments in strong was sheet in out were market quarter targeted flow and growth our pay increase by company at support on $XX the prior The the $XX flow quarter contribution. which desire the the to strategy year approved Dividend net of was which XXX%. of million company's annual free XXth of Free rate investments the with in fourth the flow. the The in This flow XX% Cash in results the year-to-date strength to in current its a the income remains consecutive million year the effective was cash free remains due

quarter cash debt of on quarter sheet leverage includes net X.X based was EBITDA. ratio balance $XXX third times with million and Our XX-months a XXX the ending million trailing

borrowing week. back I'll growth organic continue announced have acquisition available We to similar significant inorganic the and capacity NDC now the pursue last to to Naga. turn to opportunities, call

Sundaram Nagarajan

Joe. you Thank

team Let's Slide to turn Nordson outstanding Again, you thank delivering for performance. X. this to the

revenue Strategy margins making leading top to our growth achieve on are progress tier We with and returns. Ascend

review driven quarter the with see It deployment. to continued visit make to the meet to exciting our to increased NBS divisions of is Joe applied to NBS how decisions our is being progress their demand I customers. data and Next During Next

has understand customers example, Next complexity focus and and resources standardize them Solutions Interventional disproportionately the For has products. used product in to Nordson in Hampshire, New their facility NBS This to allowed team Salem, offering. best for their our Medical

are combination target is billion setting our deliver ensure at segment acquisitions. our the organic quarter second start strong We where record EBITDA. even the will be goals. through organic take third Clearly growth advantage core a setting is which in we recovery. in are of Next $X towards achieving record the to quarter profitable by greatest the that to XX% acceleration as we a and followed as of each our off within long-term growth the of purposeful the achieved NBS This during well demonstrates strategy, energy, focus the to designed revenue Ascend we opportunities for of

acquire to and also Technologies, are NDC solutions technologies. global We agreement making measurement our we line our new test On objectives. This August a acquisition signed on in platform adjacent precision into With and expands of for process progress a XXrd markets control. leading it is through Nordson acquisition nucleonic gauges, sensors, definitive like portfolio portfolio clear inspection laser, that technologies and includes gross a proprietary as model. and using infrared, a NDC leveraged measurement margins algorithms business customer XRAY, centric analyzers well is near and optical, software. differentiated has inline This that as product provider

diameter For estimate simultaneously and near thickness, a and the the electric can to medical moisture, measure anode to or can industrial porosity technologies cubic. It's and it cathode separate and wall capabilities used battery. ultrasonic are vehicle measure example, in or level brownness ovality, potato used chip the cables laser oil, film an surface it's of infrared in of

focus NDC their technologies. supports and quality success process through these control customers on critical As control, automation

pleased NBS in the also the fit portion strategy presented process of Nordson, year. this welcoming capabilities Nordson’s to look look with growth. leveraging of and development. We NDC's to expertise greatest at aligns investing opportunities business growth strategic the software which to very Day in the earlier our framework, NDC Investor with and profitable forward Next manufacturing We Ascend I'm intelligence NDC's algorithm advance forward for team this to acquisition our --

to XXXX. within close first fiscal the expect deal of quarter our We

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

full XXX the approximately are in changed the on is terms revenue in request Customer backlog have guidance. quarter, clearly and order dates our this prior in and extended XX% shipment entry fourth above Based elevated both order increasing patterns our and earnings we backlog, fiscal volume million the enter strength continued we of and year dynamic As year. environment.

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

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

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

the the of of suggests third the year when look XXXX At guidance. guidance the it Given investors sales sales full strong the that electronics, plus XX%. and quarter important in system the of XXXX seasonality second growth is reviewing at growth in half earnings half second our XX% midpoint

guidance the to enter we XXXX the a fiscal backlog Additionally, XXXX. XX% robust implies with that than expect greater backlog approximately entering

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

to demand products our positioned this through increase well as critical solution ahead. to customers benefit from cycle in a are We the our remain

to entrepreneurial the a team sustainable profitable which organization, framework, of Ascend team growth. establishing our growth Additionally, implementation the leadership a diverse strategy and is drive deep is advancing

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

Operator

Instructions]. [Operator

question first D.A. with comes the of Matt from Davidson. Your line Summerville

Matt Summerville

Thanks, how the a I to sense current of some couple get terms these maybe how become? quarter, am elongated of converge of of much excuse I orders questions. have a your me, trying guess, in backlog Typically, in would

Joseph P. Kelley

Yeah so, Joe. Matt this is

given take just backlog that. than XXX% entering of you sales would Let we quarter. me less Typically, any tell I quarterly entering have

further. requested out And just of the clearly is let’s so I in the and further date that quarterly -- see it'll quarterly upcoming don’t sales and trend, the say range changing customer we as XX% delivery know,

further are orders just in customers placing advance. So

so you forward the entering is at XXX our the XXX quarter would guidance, suggest if and entering that is implied -- is it the quarterly and about about And our going sales about our midpoint look million million. backlog year

XXXX. versus for of So has It some it and each different business out the going systems of but into are elongated. depends parts on them businesses QX

Matt Summerville

better And any as mind are about stabilizing your supply Great, you we freight think shipment things etc.? guys or have then that’s delays issues, for encountered getting helpful. in and actual customers challenges, chain worse

Sundaram Nagarajan

Matt, this Naga. is

one. we really shipments customers that forward. difficult quarter a out environment in to is requested. we to can third some Let see Yes, shipments significant. but experiencing especially, team take even able get manage have Freight seems orders is its customers what international And me experienced you being very pushed are but the our sometimes is not impressive what as in pulling

Matt Summerville

finer point get my things the of And again things you starting getting to the Naga, sense question. yet, just in Did put and are up a challenging, regard on this thank you? get more has better are situation loosen stabilized,

Sundaram Nagarajan

under tell is Yeah, either. any worse an is that team Matt environments is but I participating say, any will this but I it would not getting environment, Nordson not better fully it's it you job. in challenging But the getting recovery some a excellent dynamic doing

Matt Summerville

guys. Excellent, thank you

Operator

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

Allison Poliniak

guess permanently? your IPS when patterns supply think that customers, a is Naga, guys. I is is the more your a more just are people are patterns the you bit this morning. a or of you to technology, to of customer Matt shift really reflection think delivery, about just good talk temporary or a orders bit challenges Hi, those, I some or to trying order with advanced any earlier you get it on talking little those just it order this explore of do in it to thoughts trends little I guarantee little for a sort is -- situation chain want the to starting

Sundaram Nagarajan

line patterns quite you ahead frankly, to people cases front we proactively broad pleased And is think trying for are at and seeing. markets, you seeing the we end about them, of that regions. drivers we markets the get secular But the play in kind if yes. you're where end strong in or what say there of line, of order are across are look the based momentum with all tell are would very the some across I I'd

rates recovery For here. a in of leading growth some embedded use find think is the those about And remains component growth components, we or and population solutions businesses, business in that is it not for about interventional of feel little but biopharma, at strong really all medical see going our good we what secular beginning surgeries have our it you vaccine, fluid about single nice you and is general, aging biopharma our come there in a biopharma example, as medical seeing business but in well we us. just cycle with Selective the still think really businesses. we drivers back, unfortunately surgeries our pretty you intact. might will if are really order medical the that our have On but bit side, are drivers fluid, started electronic some calling elective have if

all couple You around headlines that participating inspection the and and products on hear ship entering semiconductor manufacturers dispense shortages of business. it. new Nordson a got is about -- in nicely their We've making both of big you are that and major our are testing market can investments those the read

industrial Might that. that So, is might CAPEX say moderate say I pretty yes, time, do robust. would might over you that

in really On a restaurant. packaged strong out at continue, the Might beverages. home we're at goods, packaged that side, towards very a rather under nondurables, eating than move lot packaging consumer of seeing activity

more keg Our teams cans. call are and using we to to have starting can them people from

a well for color see containment Hopefully businesses lot we enough Allison. going is are of us. So this that

Allison Poliniak

place, is to execution, on kind terms to strong of of I two what Relative plans this upcycle, these this that's some past color into any expectations in -- better the your in helpful. your than view would And touch how then was just execution quarters setting the here. No, relative really want you incredibly operational could if have of may to operating into organization anticipated that is do? on maybe what the of walking be

Sundaram Nagarajan

fundamentally of to and the our execution in using not environment Next that demand team. company. it in what drive disproportionately our This making opportunities what this investing you of different in example, is incredibly is NBS growth is the Yes. shows for all in the we're in businesses of we it one some greatest is businesses No, I'm to begin businesses up understanding execution. in times your are see across about ways great And choices out or NBS incredible proud are this operating in. them meet to ordinary multiple plays Next and But many growth. way

team product offering, products streamlining You best dedicating in customers. the growth see our complexity, and to standardizing our business, reducing most the best prioritizing opportunities, our products important

really and So quality, how play, lots profitable I shipments, be differently we the cost, also orders am business playing markets the doing say of teams different right capacity, it are growth making conversion fact opportunities about is converting and the I I one it manufacturing I'm a to are happy choose this am to in ways, heck selecting it shipments end it that really progress for out. be to really job, treating to of is about wouldn't but excited the be unattractive of surprised, be very us. the all

Allison Poliniak

pass Great. on. Thanks so much. I'll it

Operator

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

Connor Lynagh

the existing existing portfolio obviously business looked in how in if I growth think thanks. are do touch about see very and few your eliminate enhancing this growth of wondering of it you your growth past is the the NDC over sort am years, on you is Yes, business, you basically of growth, business where opportunities, your just you this guys how you on portfolio, that? wondering this profile I if focused the was could could acquisition do

Sundaram Nagarajan

have historically, in business be they in growth because end where they this really growing these should versus of in terms we businesses. as the same play Yeah, underperformed markets

performance businesses. disproportionately So those what invest say we It for we see really to to feel tell is This an in like, really a would notes differentiated sales sort support, don’t of really growth clothes. in be It installed customer I strong lines our model, large NBS But and fundamentally similarities and has business and mid-single-digits application margins. and some would dry opportunities perform looking for I like businesses. good global understand talk service got business would and of we about it. best two business would you base, to this very has in we really them we sales of see similar gross it of about I the product the about lot of this it. direct year Nordson growth that most you they centric lot consumer good. in about is strategically specific how likely this Suddenly is Next model. that what this products a are non-durable Their expectation but good of our feel in suite

So really team, Next, this is forward NBS welcoming to we're understanding the us for place to and growth this be. looking using initiatives, strong pretty a

a You for XX% the do see expand to we margins north patch EBITDA. know, clearly of

Connor Lynagh

the broader Got context. am just you I if it, out there. characterize landscape helpful could M&A wondering

in You diamond rough one with options saw good this this of we they was there. out are know many the

great? an update and the sort the Just valuations be opportunity will of set on

Sundaram Nagarajan

Yes. M&A focused. clearly we remained

accelerated last year. have you, year As focused though. certainly to banker landscape remain when this improved, everybody compared would We has tell expanded M&A activity and

around there. of businesses. see We focused very opportunities to our are continuing We medical a up scale lot

to stay getting you technologies. is getting Test We will focused continue new and for inspection NDC an new illustrate into we to will markets, area to as diversify, there. continue

see. kind dress move NDC us you would electronic to and Our beyond [ph] centered. inspection can electronics is really begin that’s very you today of With see what

to adjacent we So And we opportunities precision there. that finally, on that we opportunities explore are an technologies have today. internal do what continues see team very to

reminder, and suite a to growth good in business real centric them. customer products to we of markets are play that focused strategic a end attractive on model. technology Precision laser profile as have criteria have Just

really would margins, that to that's looking the Nordson organic On growth like can financial add critical for are us. ambitions. assets side, We we for clearly, gross our

below the said our gross about That's within And way it. Day, about Investor differentiation think Would we EBITDA that, in results is greater as three margin would years. and five do clear for For and think looking margin capital how we yes deals a deals that, on over it decent our fairly to cost equals opportunities to all but XX%. expansion this do our the above we than otherwise in we expectations we're company. us approximately of

Connor Lynagh

color. Thank very the will it it. Got back. hand much I

Operator

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

Jeffrey Hammond

Hey, good morning everyone.

Sundaram Nagarajan

Jeff. morning Good

Jeffrey Hammond

the I a just there on So an we've XQ would the gone and some and the earlier is a question guess was caution little way the margins, think of down. there? that, is on the pressures guide I through, from back you mix was expectation or I we just XQ down or maybe to surprising inflationary the but on where's just I XQ see the do color largely what's guide come in think start think other it step most maybe step suggests margin,

Joseph P. Kelley

think gross our in XX% Yes. you on Maybe margin, the margin range, to between in we we did operate and XX%. I and I the say would could, QX if gross XX% about when used

Screw the gross margin divestiture of you profile XXX would moved systematically the top margin that up line, basis and Given has Barrel points. our and tell product probably I

rates think if XX% the about in standpoint range QX to XXXX to comparable the pull some and customer I sustainable the the I you from QX growth noteworthy the in primarily QX the despite forward the the million chain teams you in North million meet have if QX, investors Naga And and swing, I of request a of would of The of it QX. our the industrial new you is again revenue look starts also was ability QX think would $XX of was look so to margin forward. movement to forward. and for XX% moderate was of implies look Jeff, and when and request. $XX our issues, works you mentioned, a had this Therefore, into to by quarter, worth given to our I $XX customer performance approximately NIPS. were X%tailwind you to and at QX When of growth QX shipments QX request the -- the half second that and earnings that that at look you guess exclude X% adjust more about rates the customer's the guidance to million XX% at quarterly to and demand second growth at this primarily QX, you tell exchange you market year, at in see need actually midpoint. would that prior that million still tried other supply orders and you that pull noteworthy, you out record. be now when $XX as the Again, guess specifically, full that QX the point sequential from forecasted It we QX was we forward in the point to the been gross and in last you to QX. growth and both sequential understand normal of breaking year-over-year end and look year-over-year the guidance system that's just based quarters talking proud scheduled performance, to the QX This rate on sales in pulled if performance is range XX% QX record to half from

Jeffrey Hammond

very Joe. all helpful. that's Thanks Okay,

is called Naga recovery, line comments, of expected? on I to and the that in wanted or And particularly is out back the trending dig had you your better strong. medical, think pace kind Just you just I biopharma in of more than on elective surgery,

Sundaram Nagarajan

the really trending nicely. in surgeries, elective On you. thank Jeff, well Yeah. and was quarter did it third we

last last we our a without to I -- take describe not as fully year elective, Now selective expect like possible. talked expect more year, what But that as of had surgeries, right. that is might happened all would you down, that our back variant, teams a

to heart heart If just to have valve of it get a time. a replacement, a replacement you you is get valve matter need

you not you're but postponed, I that for. guess, that's get happen, couldn’t that it get could cancelled, something happens could it's but hoping then you what when So right. it

do really see back see. the a that what was we nice quarter, that in business saw get nice So recovery. quarter really We to and we and third experienced single what to digits is in the high

fourth into back do lower, this fully that be don't intact all way little it completely be of factors bumps cautious returning we bit like to recover we Going will is for Will see to great but we're the a last already be here is road, it expect normal. are be I because it growth going absolutely. all to the medical that quarter, in grow the but play all think us, there year. we to towards of aging on and yes business population, is trying

variant, could Hopefully, have the your the few Given question. delta road. gives bumps you in -- that answers you

Jeffrey Hammond

helpful. very that's No, Thanks.

Operator

[Operator Instructions].

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

Michael Halloran

good everyone. morning Hey,

Just a on last clarification quick Jeff question, asked. that

to a on that to that couple say that full you broader other medical of [ph] So goes happens seen how is the volatility next that Trajectory basis, that haven't we've over recovery gotten is yet. it is trailing and the think full yet, quarters fair? recovery good bearing PC you on factors. don't some But fair depending a get in the delta

Sundaram Nagarajan

Fair.

Michael Halloran

questions. then so two And

look and carries you're orders, the those about has on you any elongated order actual all change basis, and demand is are shifted seasonality when you you the First, patterns conversion at think have same the as that in seasonality the the still on expecting seen in through, seasonality other that have the those or some? thinking of in how the shifted, you words, an

Joseph P. Kelley

you strongest down on is for take, QX our the would exposure you when know don't have our at suggest normal on think I about evolving. I numbers implied the was QX -- be you our that. what in applications, customers example, into end market Yes. QX industrial QX mean, particular typically, side quarter of don't quarter, that and is is look guidance going our I we anymore. seasonality through studied seasonality the shipments I tell and that When behavior the pulling because our if to

exposure biopharma changed return the our side to growth. business, electronics the surgeries of as has in been has to elective back our come So, the applications medical I interventional the terms don't know with that and strong semiconductor given cycle, starts

say Our make normal challenged to statement as would that I seasonality really anymore.

Michael Halloran

when ordering cadence you're the the that the the answer order no, book in the underlying of over in, couple business that been orders like quarters? a getting look seems cadence spots that a there's you that some next it what's declines cancelability double and what at different versus is so underlying can just reserve demand, So, risk order but those with is or

Joseph P. Kelley

tell uptick track would you I not we in see do we very an order and that cancellation closely Yes, whatsoever.

So, monitor risk, risk I think we that low. to that date is very but

Michael Halloran

You go know ahead. --

Sundaram Nagarajan

then… finish ahead, up Mike, and go Sorry

Michael Halloran

No, thank please else, go ahead. no, so to there's wanted I Naga know say I something no but you, didn't

Sundaram Nagarajan

Yeah.

what what business see seen the you've in APS for add that I the big in drivers out think I what would is this that semi-investments business. really our in to CAPEX, consumer industrial one turning a as are demand would I to What unprecedented also that at strong in just IPS is a of our and strong, be real going is investments electronics one look digital particularly electronic on point would economy. is you

really in the of strong our what of that some precision technologies. drivers are we are So, pretty good about we macro for terms feel seeing demand

Michael Halloran

there you're implying line implication that seems it is more you like still yes, has order then and getting you're robust? the also book front pretty the that remains very fact of the visibility good the but opportunity been that like So

Sundaram Nagarajan

Yes. Yes.

Michael Halloran

you. Okay, good. Appreciate Thank it.

Operator

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

Christopher Glynn

morning. Thank Good you.

Sundaram Nagarajan

Good morning.

Christopher Glynn

if pandemic, competitive up consistent the coincident the anything but flat or about had if with anyone's with of off kind the just out footed, you've changes fallen backdrop terms well? of some that wondering, call Just with in or the you of like kind to question clearly, you seems generated, picked in wondering it momentum as notable Naga, broader gotten

Sundaram Nagarajan

the competitor, businesses, know -- very -- a long significant some have but you consumer a followed have we Yes, we of strong us period business generally course are tone with right. time. being global we really position In really our of competitors, non-durable for little a in bit down

relied of be upon that can So, is for us global this and right. times upon service what competitor be global you sales, support businesses being see and and applications our can a and relied customers bad times good lot for for

you we've or that really hiccups going if technologies, in supporting only what seen be so get and customers why even -- work have this support going you're strengthens value nature. here there reaffirms it is that's make ways And precision in reliable come some for the going lot proposition. further of customer Nordson, through to value our environment strengthened will and value is to strong to with not able not getting And reaffirms others then proposition is our global just in want as that our there, Nordson because are to a commitments, get to you're team anything proposition

Christopher Glynn

the you. as more we backlog And that got segments in kind parallel less? about Thank then participating think XX%, should of or both

Joseph P. Kelley

our We I quite in you quarter geography a on but organically give can end year-to-date specific Yes. growing you division. XX% backlog and segments performance broad interpret both been the markets in based of terms broad see guidance don't segment based. mean, and approximately and basis, has

So backlog segments. in we're going to start giving not

Christopher Glynn

seeing industrial? about wasn't past I'm are I Last during just quarter, answer. the that the that appreciate of and what particular, me, and sequentially from accelerating one in industrial Yeah, through breakout applications that has in I in curious particular, trends really types any been you're there asked.

Sundaram Nagarajan

strong business, you. out investments, industrial point areas of I Our would couple a for

how focus in understand in do that what are really Next NBS our want applied positions is the we have of on are and best all inherently growth We treat some we opportunities, to to unattractive. businesses it where

real container of And growth strong some of find in is so the result net for all this example. we

position and example about and strong and talked they shift of whole in consume beverage a you what attractive eat on how and supplies very can has a beverage of technology we this So the very coat beverage a that's position see cans Nordson make consumer suite inside an you who cans. And people food. that beverages and

there. also broad lines powder activity We're benefiting are on industrial things is we that business see in paint beginning to like that. to and this leading investments our So based

there. well doing we're So

on extremely is adhesive well packaging well. an doing the Our industrial, as

gives points. a different couple that of hopefully, you So

going is how participating is with pretty in this broad the but based pleased of fully where certainly on. are recovery is that Some the we team

Christopher Glynn

Great, thanks for the color.

Operator

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

Andrew Buscaglia

Good morning guys.

Sundaram Nagarajan

Good morning Andrew.

Andrew Buscaglia

I want to talk in a quarter. little mix bit the about

is standpoint? helping So I And in helping divestiture with would Are and less actually with ATS, then Next obviously, a infection favorable interesting is electronics that mix, any seeing industrial trends think you out would what's the are seeing and mix you're there? in going that same helping maybe NBS that both. test you improving position but see

Joseph P. Kelley

Yes.

I think, favorable I almost segments, we And particularly ATS one segment the is within just but a at some the at your level, think point do to division. not it's within take let's mix. time, it see So the really division

think within divisions which mix driving So, about the margin, if being division is relatively improvement so the in businesses you seeing at even the are within profitability, is low in margin nice Next favorable level, it their implemented NBS gross the and divisions. their that

end of ATS each within is most such unfavorable, that the -- but for divisions the result it's at level, segment. within funny mix So at was the the favorable it division was the actually favorable that

we being mix the IPS, clearly similar the growth a is mean, NBS systems Next And basis IPS expansion. But they're opportunities and some divestiture story to that IPS, the improved specific in I probably at mix beyond so, margin of within within mix, but had if favorable the the very the looking divisions. of you and at I within benefit the you -- you look strong parts that expanding that but I to particularly, alone you of Within applied I IPS divestiture due yet within tell the points where over mention, a Barrel favorable coating mean, Screw would is applications. that see from the XXX that think margins expansion not beyond business. division you're of got the liquid business, worth

Andrew Buscaglia

Okay.

Sundaram Nagarajan

The Another continued you tell is in success point gain we've new helping is I guess, Pro from flex also helping And our line traction. that well to as would launches. Blue us IPS standpoint. in had ATS and and as with which perspective product the a Advantage top both I some is mix nice

Andrew Buscaglia

know helpful. target EBITDA this XX% like on a guess has And see term a the a That's situation and great like like XX%. I longer-term look margin near above expand high you surprised it specialty the a I NDC acquisition, given profile good business but XX.X% the margins margin that or to with maybe company. a a average? corporate Okay. you this it seems to bit another seems of they're the that is then target, little over opportunity company -- Is I pretty was like very in deal around one line margins EBITDA and where to more an that gave or gross get is nature

Sundaram Nagarajan

because have like really at model are margins, a is they business. right with look could color The Joe, it company would our we because its that is reason customer bit like like And gross fits Nordson. if Technologies be me start gross NDC a first little business Nordson more test and that margins. you we if inspection acquired then good. you particularly centric is add that They Let and particular

margins, this thinking portfolio, just term? it's product strong So, margins we case strong want if a to little EBITDA are Joe, of color a differentiated indicating add more are gross lower bit what you slightly than on but target. near our

Joseph P. Kelley

Yes.

see similar So, what is NBS next margin our Next. the to expansion over get about out and Next roll you EBITDA say, you Nordson business on to XX% to core the we margin coming of would of opportunities the are correct, under I XX% we and ownership couple as in margins NBS the years see execution

Sundaram Nagarajan

company opportunities, will them disproportionately, the main in is NBS expansion invest margin opportunity the really best and to growth the But here to to identify grow use Next follow. and

Joseph P. Kelley

that the XX% incremental the it's with margin So drives growth so growth expansion. margin, as the favorable

Andrew Buscaglia

Thanks guys. it. got Okay,

Operator

Your next of Liptak question the of from Seaport. comes line Walter

Walter Liptak

due into I the impressive And that everybody. about great were you I the I'd thanks. XX that But go Hi, is quarter. would that got be margins like then guess Good operating And morning quarter, the is get of in I able -- to Joe it's got right? what of Systems that the down mix was to fourth million quarter. said fourth my guess with the question you've back IPS chain system sequentially, supply to Systems pulled in due the parts the IPS is to think to forward. that leverage, if quarter? it it aftermarket you IPS more

Joseph P. Kelley

Yes.

million my it and into just from predominantly So, would comment there both IPS. XX predominantly, QX say, was I about holistically was QX systems

your point we flat. incremental’s Naga’s sequential in would standpoint, over QX that time. really relatively it But to build meet customer it our QX and what customer a that and you to on so an to when point, And these deliver Nordson request, systems shouldn't if are have out requests. of It you and they comment -- huge QX out Walt are and growth basis, just But those the going margin take you the our team guidance. it into is take And to for level being adjust we're QX XX was of from our impressive able midpoint QX. be QX adjusted million still

that is just drop. which the the it's driving swing sequential in systems, And so

Walter Liptak

there Okay. in about or the margin a systems more is you be margin, incorrect? lower because bit I are and margins, that say think can’t less to quarter little you there's in saying thinking that's going because because the And a be be aftermarket there'll volume high of won't fourth leverage how really are pickup growth maybe as

Joseph P. Kelley

a Yeah, but that historically. I to the it think bit, is little was not degree, changing it

XX%, gross that in rate QX. margin run with I here for QX in we're new you of saw thinking tell be XX.X% And the comparable about QX our to at so, would line we margins

of to the level So, operate XXX the confident call as in range XX% gross XXX million to XX% in feel to it we million sales. margin

Walter Liptak

Okay, great.

are it are wonder you quarter you to by prices? taking are customers, on supply the the like you how seeing or little Okay. that you talked a but then little And wondered sounds that bit, Thanks. it challenges, project pricing, basis or are there's doing passing I you bit a some this inflationary I is on pricing project along up last chain but about guys

Joseph P. Kelley

division. Yeah. It's really I by tell by project would you project. division

these provide entered customer. touched important model. would long-term and we as looking And that managing logistics gross are the over customer laser We you but terms customer is the as for this the business. some on tell and our supply position some well focused sales our value strengthening margins what's intimate us. but of this also I as out chain relates relationships challenging pandemic Naga And the experiencing are challenges, our of on think it we in we're challenges, bodes to capturing gross in When relationship remaining through Nordson we to work direct we focused that with also margin protecting times long-term on the I

you So, pricing. at that we I look tell that's would how

Sundaram Nagarajan

to of is add thing process compared when business material given margins, is big value components. We assembler one I added We the don't in small would have component had business. companies. fairly it Walt, our to our cost our a other gross to

issue So, to us. certain material to increase extent this for need we a have continue not we huge, that. that, will But is to the areas, in general do done in prices significant, we that

Walter Liptak

about Yes, doubt agree. There's no that.

to moving into end if one delta the continue And like last visit delta and then how of you you and can out me I any about finish variants you been that year? mentioned is that the wonder the are and Okay impact you maybe now Naga the for going you traveling, visiting where facilities, feeling Joe variant have the operations yes. have process,

Sundaram Nagarajan

perspective, can’t stay in continue we to the continue travel safe right. we to Yes. just From but bunkers, remain our

Joe are going of than in in we being really team, are to to well travel, cautious the on all is of in how exist, the continue safe limited where we on. so being very with today, are the So going absolutely is which to But, businesses find as as building businesses thing be we travel would basis. If a this I but and we we didn’t our where right travel, in very action trying balance yes. more terms

Walter Liptak

with customers. will the end Do the sales through continue are are visiting your expect that year? of people out and I And guess too getting Great. Okay, you

Sundaram Nagarajan

is is have help by their thoughts customers well the as -- not region? business some customers and It as in needs. to to it do we Yes. We're request meet safety our trying trying of balance around

leaders travels, So travel. still by in is it the company decided we where who senior

have started We a going basis. on limited to shows some very

taking we're the customers. yet is doing make taking dynamic mentions care of prudent So be job are safe environment excellent of to sure an

Walter Liptak

Okay, great.

you. thank Okay,

Operator

like closing back I management this there floor time, questions. or to remarks. additional now are to the would any At for no turn further

Sundaram Nagarajan

want recovery remain customers our you. positioned is benefit this precision reiterate Thank our Nordson to solution from technologies accelerating cycle. to through well I and a that the critical to

framework, implementation diverse your is to a and entrepreneurial great Additionally, is advancing sustainable you for the which profitable of Have day. our leadership team deep establishing and time organization, drive Ascend growth a the growth. and attention a Thank strategy, team today.

Operator

for participating you in Thank today’s call conference call.

may this disconnect You now at your lines time.

Nordson (NDSN) 31 Aug 212021 Q3 Earnings call transcript