NDSN - Earnings call transcript Q2 2022

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Operator

Good morning. My name is Chris and I’ll be your conference Operator today. At this time, I’d like to welcome everyone to the Nordson Corporation’s second quarter fiscal year 2022 conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

to then question your the like simply this telephone would star press number you ask during a time, keypad. If one on your withdraw question, press one To please again. star, you. Thank may you Mahoney, Lara begin.

Lara Mahoney

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

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

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

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

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

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

Sundaram Nagarajan

second the Thank team our the China a quarter who and the framework well everyone. for strong morning NBS newer and growth XXXX Nordson lockdowns inflationary I’m the Once chain Nordson’s currency of staying as dynamic call. as continued fiscal employees sales and and COVID-XX navigated customers. despite conference very Good from Next headwinds. challenges safe strong macro and foreign in proud environment pressures, deploying and constraints delivered increasing again, to you demand our are from broad-based the meet for growth earnings supply joining successfully thankful

during results packages in our Our by for This culture impacted is is but our to humbled and over a impact, the deeper in the company as a our company. special the the China raise by employees friends results moments, I’ll for I’ll call also financial and it COVID-related family few was lockdowns to who impacted perspective the and money to provide are send situation financial business up Ukraine. rise more on to to very detailed in care Nordson a is than and our we the colleagues a part Joe speak the turn about quarter. first quarter, of see I

Joseph Kelley

you’ll realization prior was increase increase of see impacted $XX you year’s China an five was Shanghai COVID-related of ship by lockdowns The XX% freight to weakening inflationary and resolve compared and the profit of XXXX. of the compared to in year We No. itself clearly million, lockdown first ship sales, receive facility $XXX increase restrictions good start manage particularly our quarter to as periods quarter from to headwinds, sales benefited XX% for euro. ease. or The be million everyone. the the quarter million. of unable view fiscal most products. to and primarily or actively Japan of for Slide customers this the fiscal X% except compared related to growth sales dynamic volume it to or and for and forwarders temporary the the growth were a broad-based of currency $XXX Thank to and sales by our Naga was team second The On Gross the second X% products of XXXX organic $XXX $XXX quarter these markets approximately beginning the million improved in price-cost and second morning to prior offset across from unable XXXX X, million negatively and quarter sales X% quarter. were the fiscal X% organic second weeks to end acquisition NDC second geographies is price many sequentially totaled impact continues to as China.

was level improved XX%, end The of a which markets, of profit. products well element was XX% sales, date-based framework, EBITDA is in increase etc., our decrease discipline operating tangible XX%. XXX target The in digit margin margins incremental $XXX a at million year. were the quarter results. leverage of of volume or and year-over-year Sales mix the the growth. segment NBS the the largely delivering basis points, sales, our XX%. or resulting view change to controlled growth spending from margins of term of as of XX% systems term favorable clearly profit $XXX of to the of opportunities Next in million quarter. incremental Organic-only and sales IPS, of for long of well is compared growth in the strong customers, profit our double-digit to delivered divisions, growth prior of low Operating the plus profit operating at ATS contributed strategic XX% mix parts incremental an growth the XX% sales Looking organic and framework is ahead long the best this of growth in terms sales quarter second single XX% ahead target within many exceeded organic resulted driving from this the

Looking settlement in charge. pension other net million at one-time the non-operating expenses, non-cash million of $XX includes $XX increase expenses the

long than first and quarter As million call, payment portion U.S. of exchange non-operating plan liability amortization XX% of settled ongoing Next sales per attractive The which liability in projected leaving other prior growth which NBS associated losses. in we increase reflective estimated share, higher reflects in is and primarily excluding in our defined the Tax $X.XX increase in XXXX. liability during This is slightly included pension retirees removes liability, assets transaction net $XXX $XXX full incremental also remaining in margins. application and funding per charge rate second in importantly our XX% benefit funded. in more referenced rate This the an year. growth of successfully totaled annuitized prior the consistent over totaled earnings expense of per forecasted the in quarter pension remaining risk year-over-year assumptions significant the pension with for transaction reduced only of benefits This effective the Adjusted tax only the the $X.XX status to totaling second XXX% annuitization associated leads future we benefit but quarter million with year with pension the framework, pension for quarter. the reduction of the the was improvement from exchange our plan steady company pension income but line the a expenses quarter, Net obligations. actuarial cash year’s million $XX for year-over-year XX% from million term $X the gains share a for share. non-cash an foreign currency with or not profitable the

the in year polymer for majority the X by X% million. sales from hot operating X%. profit X% was growth segment million, offset the approximately all XX% sales Industrial currency a compared impacted $XXX lines the of million is or was solution in in unfavorable an driven X by polymer the end review was This for acquisition. steady of geographies for and by to another increase this by of NDC consumer as except dispensing segment’s of quarter NDC prior prior non-durable second in the $XXX from plus acquisition. profit prior processing mix was markets Organic to sales Now second offset adhesives the which volume $XXX compared to compared let’s turn leverage growth growth quarter to in quarter negatively Slide volume million. $XX XXXX was to decrease X% of COVID-related processing the quarter year systems precision broad-based lockdowns was product and growth organic quarter robust sales, Favorable Shanghai IPS’ quarter. performance. second the of melt China. year X% the demand Operating of plus the unfavorable second quarter

sales product inspection, this currency which exception biopharma in is the organic test volume particularly dispense, to were increase this advanced contributed quarter, with strength $XXX the but quarter’s China solutions, increase a a across regions. quarterly major of an of particular and record included geographies the to lines. now growth unfavorable most product lines the for strong This was impacts. Moving change to component offset Growth and new in electronics XX% fluid All in XX% million, technologies sales second by international prior segment. and year compared with

in million the over reflects fiscal continues of this million a Next $XX taken attractive year sales The growth in the profit operating XXXX level and increase impressive NBS at be profit success or operating in key measures incremental a to $XX early segment ATS. XX% XXXX. sales control realization the deliver very profit was for quarter This was cost growth driven framework new sales. benefits the of from our delivering element growth. segment by margins quarter of to Second operating record of and profitable Deployment performance leverage volume XX% and the continues of prior XX%

cash on the growth, a disciplined Finally being XX to and and million X, borrowing Cash investments based X.X rate turning on as months approach EBITDA. conversion income Free deployment and ratio we through XX% to a current $XXX healthy support and to the sheet of resulting strategic strong was address backlog. cash in constraints inventory in $XXX with of in million Slide are profit capital growing capacity. flow the the chain our made totaled leverage net million, abundant balance on the or $XX balance operating quarter was portions supply the times flow quarter ended and trailing net debt sheet

million During $XX shares plan. of $XXX XXX,XXX and our through quarter, in repurchasing approximately dividends stock repurchase paid million XXbX-X second the spent we on company

in to now fiscal turn an estimated the approximately of Naga. XX% assume rate I back expenditures XXXX, million. For $XX effective capital modeling of purposes and will tax call

Sundaram Nagarajan

Joe. you Thank

April. navigating are Nordson thank this X. growth the and we to driving caliber the dynamic lot we continue beyond to Next focus the pilot words: how employees business Next choose profitable dedication growth strong Again, resources make time NBS a opportunities Slide several now focus, of continued despite three employees strategy. examples delivering to commitments simplifying. progress environment. NBS choices, its NBS customer performance. of Ascend of NBS down I sites, Let’s I’m appropriately. excited on learned of heart first our divisions. you had spend constraints boils our the discussions. data have by turn their our advancement well different proud to chain. program outstanding am of Expanding Next our best hands-on framework, a Strategically, I Nordson with the launched They of in-person we and the to facilities program, the are and In this to four-month training Nordson team the very mind, supply With in our for our talent of participants the to exercises through in actively real as Next in-class meet as in of which in deploying growth time this session and accelerator the have and

left with the framework action that and a accelerate across thoughtful the a participant understanding Next will each NBS of the deployment better importantly, growth More plan company.

with labor, leading the organization, end in people skilled that in This I’m as deliver demand As all leading we top our to team In is inflation, practical revenue and Next our this embedded secular and deeper dynamic mitigate key COVID ongoing environment, risks from growth margins more in company. are investment and and gets chain, a Nordson energized aligned challenges. returns. grateful for the the NBS an important growth is done being equally tier of to markets to customers. I’m due application team drivers strong our supply to to

product the benefit and medical in is including As on-shoring, our grow. to segment these for investments Joe trends. on record our sales T&I both noted, electronics ability profits. continues and electronics, product market end in Nordson’s to demand ATS continued delivered exciting and trends will driven and from It innovation, to dispense semiconductors also new capacity The deliver and lines PCBs. continue Both by

in fueled by shifts length have towards components, the also we at fluid outpatient recovery geographic talked solutions through product to While diversity experiencing are interventional about which as are our outsourcing. procedures, we of us end our the the growth aging positions population, cycle. The deliver lines and consistent the economic medical content high Nordson’s profitable recurring and of well OEM well as growth exposure markets biopharma revenue

related in outlook dates over turn XX. large to request to quarter let’s and Order strong $X Slides industrial on with Now backlog This and in a ratio the XXXX entry favorable medical throughout orders book billion. growth our electronics, the partially shipment customer extended to updated XX for markets. backlog fiscal growing end to ongoing bill is remained second

the fiscal adjusted prior earnings results third the quarter prior forecast revenue XXXX, XXXX. was of be specifically and quarter to strongest comparable Looking quarter third fiscal where at year the to year are the

year performance. the XXXX. range SN a XXXX, earnings we execution and X% are It are guiding following increasing XX% earnings financial approximately to fiscal a the solid X% to the revenue growth fiscal testament issued XXXX to of is XX% strategy. previously of For to adjusted XX% to guidance the growth we record of a the over This is full

diversified customer-centric growth financial end differentiated for results model, our expectations Our precision and markets. reflect and technology,

a view clear priorities have on Next is sure environment. dynamic Additionally, we the making NBS this in crystal of implementation ongoing

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

Operator

Summerville [Operator with instructions] Matt Our Davidson. DA first question from today is

open. Your line is

Matt Summerville

QX, of questions. think quarter impact million COVID-related plays second expect couple mandated I was dynamic into sort that pushed, QX? lockdowns are net here. effectively about do $XX you Obviously go today to in you net China. do but A Thanks. you What a understand to on in to given your impact that $XX trying top still I’m a meaning net positive fiscal impacted basis, by the is guess line the related views forward how the seeing million

Joseph Kelley

you thank the Yes for Matt, question.

guidance five starting we’re As starting be had and starting to our China, the for it relates our up in of to to in back QX get in subside. we’re to We’ve anticipate no open and QX people we we’re shipments able to forecast region Shanghai and those to for weeks the ship. are the lockdowns so there, factory, start to to--things starting

but by what’s we We’re assumption. not XXX% so is roughly yet anticipate being that our mid-June, in at XXX% included

Matt Summerville

had to maybe that you ATS, taken on how be also ATS expense you’ve about actions year-over-year incrementals should thinking part specifically? in in we and quarter-on-quarter margin very side, attributable Go discipline. cost that strong some the cadence you. of forward-looking Thank Then forward, the

Joseph Kelley

you don’t given the generally the that is referenced, the last the Next, That’s those which what I segment that can divisions. and incrementals strategic say, want standpoint improving quarter and driver so look profitability ATS, in database see over about we’re on mix opportunities, gross cost that several terms I does of best kind script and individual the high so but quite Matt, to us annualize is impact proud not profitability strong but margin of so It’s outgrow control, when But trend the like will in results, growth trend. margin consistently is which any discipline, really in as the is a know mix that about higher take there, markets, encourage a and think to as improving best you growth those and NBS coming you given to in it. see. what those to favorable NBS contributing rate, I incremental a hey, my divisions think segment. to ATS, you’ll within on ongoing end of only said continue from if framework ATS, I within a the and say, from so you each is margin there’s they at going the that the and comment that in Yes, handful any quarters is directionally of it’s what the QX quarter the next mix lines, of in focusing those don’t I divisions now product regions, that’s say, margins are run segment, improving opportunities, that we are those of what’s are opportunities, one

Matt Summerville

Understood, thanks Joe.

Joseph Kelley

you. Thank

Operator

with Capital question is Keybanc Jeff Our next Markets. Hammond from

Your line is open.

Jeff Hammond

everyone. morning good Hey,

Joseph Kelley

Morning Jeff.

Jeff Hammond

seeing of to the a in go-forward inspection? Can and of you’re what slow of the electronics on and you kind and wanted you’re talk line durability just heard get test PCs, to tough consumer the mobility, here around growth comps a about etc., seeing We’ve just and starting basis.

Sundaram Nagarajan

for [indiscernible] what business, areas. business you have of of the in is thank the Yes, couple well begin that our that the different we see number years, electronics of over undertaken customers last and question, incredibly Jeff. applications our you we On see doing a to this

in were electronics the just this of electronics of rates the time pretty reminder, and customers and strong, as the some to both it, well what is order strong digital industry, capacity are really in the risks inspection so test to have and from electronic helping we of growth. of the a other. see That comp our benefit we in it but electronics new our one we we quarter on-shoring for really come. that growth is consumer we for chain We years we shipments our good in all see ongoing Certainly has as continuing there we number so is us. really know, participating that a now broad-based a area, feel in product as of double-digit technology pretty so about good we particular benefiting talked used is dispense do we in, these are and we the in issues, their From applications, to are businesses, have our diversified digital supply supply the had mitigate chain both how our doing to where so additions, contribution to entire Nordson’s areas be you think or to addition participate lesser divisions diversity have a One what but and business semiconductors, and secular participate have in way have electronics, and way. the us to some that that about exposure--you to prospects in growth just find less correlated for divisions us business spurred see ago,

Jeff Hammond

Then industrial the wanted back what come other because the saying That’s out and great. have stuff backlogs just to Okay, deliver. big of dynamic and seems things of get customers they we’re--you most more the helpful. my a this can’t order we I companies can are want of little it’s backlog rates the timing bit just outpacing door, around we function know, a and later, like it on

just it a bit little to seems why Yours just that different, understand way. and I out shakes wanted

Sundaram Nagarajan

a question. that’s great Jeff,

shipments. still of us I say in - some be are talking you’re terms to terms the our to don’t so that about right ahead the a for of in In backlog. have that factor can systems - we that, our limited of how suppliers wouldn’t we our issue especially our much backlog, provide do components, able supply by of business have We chain, is meaning orders ship,

pretty components business, where line see it of we and understand we placing in now we system components normally medical seeing is though, business to ahead and well. good in customers factor, have, second interventional they sight that clearly, seeing our interventional of business, have that we’re as The mostly our have we are orders

businesses, backlog, by If the driven customer our you from is medical backlog of request look our at majority businesses these partly and dates. long-dated systems and

Jeff Hammond

much. so thanks Okay,

Operator

Fargo. Allison is with question from next Poliniak Wells Our

open. Your line is

Allison Poliniak

morning. Hi, good

an meaning backlog folks. of quarter? a ordering, in to extended is weeks Just it concern the backlog any just better a wanted I theme. to two Just on way Is extension, a is on there’s which color there, and extent stick cancellation it there then that a is certainly risk that here. backlog thoughts extended, understand of of any double I or that month, know know

thanks. there, thoughts any Just

Sundaram Nagarajan

you thank Allison. Yes,

seeing cancellation, me Let a cancellation talk the in very something take closely requests. of we’ll the then little that On terms customer in business. we and about first bit long-dated that’s we’re monitor what

customer our not customer behavior, today. Given had itself us it and allows our right? in business so not general, issues In manifesting business into direct model, perspective thoughts, around from the much and sentiments cancellation, insight have that’s we more

so it than second place systems, different you a system that seen business couple more I a The our perspective also cancellation is engineered that remember of business places. not now. know, you thing to very for is system it oriented, Once would in your a XX% this own customized benefit you is like application, is from the a tell not right, order is very of could in us, we--you so have buy we

The around we’re orders a customer a that anecdotal One, next you In the as indicative to we you that’s norm was businesses, couple request year. couple to in months system second be experiencing. requests, in see we now past, four quarter so six of we now out are dates, second would business the quarters are long-dated of of of and the shipped what things in that sort give one. of our out, have three, dated see three, I’ll starting question get

of Second business, typically is indication evidences orders quarter [indiscernible]? we what give time, might but what that prepayments a an customer us and orders a the we’re blanket longer of blanket getting those now for cover so want medical in businesses, orders about anecdotal to two, a our period bit seeing we’re talk two business. seeing you in little our indicates medical blanket in we’re those interventional of for Joe, would be that get

Joseph Kelley

but view out orders, and quarters cancellations very for the visibility backlog systems weeks, more and solid prepayments our so and prepayments, that, and Allison, also We the and comprised the prepayments, several much mentioned, Yes I’ll not grown. is up also customer majority we to it we medical north as that customer business, book-and-ship track systems backlog Naga, are in nearly out million, our have of as backlog, as now now of non-systems proportional to looking systems the backlog $XX come our the is as are systems see heavy not also so orders Naga and parts whereas those the it of a out shipments, couple with just so as within traditional, modest piece relates call a uptick but is future business, far. that one is those

Allison Poliniak

you Then helpful. think just being favorable That’s for that improved. price-cost with had still sequentially I realization, comfortable Are are and you Nordson a half you thanks. more price second today, a mentioned in net situation positive Great, Naga, forward? going

Joseph Kelley

cost was terms was with so slightly it dollar the components different good to to had I it’s bit price we and long as when so improve situation performance into to going the a was here than work little QX and as QX, QX It’s Allison, our you again forecasted the favorable Yes feel look we backlog, through a the inflationary dynamic pretty we re-pricing to pressures. about very actually what will QX, we improve head going QX all realization better you at continue tell anticipated in QX. our in in into and that. forecasted

Allison Poliniak

Great, you. thank

Operator

your star, like on keypad. you’d question, a one to if Again telephone ask that’s

with Loop is Capital. Dankert from Our Chris next question

is open. line Your

Chris Dankert

how Just the kind confident Can the a we sense morning. those orders in are fiscal cadence fourth fluid of could quarter. just piece sense us to fall for a the Hey, seeing half back that growth in into see and your kind Again, of up of implies how guess. fourth of guidance just any is commentary in that what’s pulling quarter, just bit some of thread your the on are year-over-year for here, of you kind ’XX? the shows give that growth most the confidence a the in in backlog keep I you versus risk that expected

Joseph Kelley

let Yes, could, split You me here guidance bet, Chris. the in I our on quarterly of half. just the if back comment,

the get third is know, I year, million to mentioned in our QX is QX, pulled roughly on would the lockdown, challenging will the so systems see X% as China so out I up year, think that stronger midpoint confidence the prior scheduled I and and there able the right, and that year. what over starts still strong, to that into softer on were of from be electronics also sequentially guidance, you you a was the you back half as in tell system QX customer and see in QX based over question, sales in $XX is--you QX what the request of quarter to and bit our the strongest space If in little forward this first quarter, high prior remind will about worth was a you going a impacts QX was quarter the last is forecasting, be the that a on was and second here to implies us year half, delivery QX. the so we about degree you’re QX. be visibility than but it X% growth you fourth side going there heavy, again, moderate was

visibility with it that is X% more tell FX organic in half, side. if carried we’re a and and think half, growth about than I away X.X% about X% the what quarter to think forecasting tailwind, and really wouldn’t X% I you growth on about acquisitions X% X% in down, good year-over-year is to to would stronger is back QX a you QX, headwind, broken growth as about X% get and roughly the the second systems the So so it’s rates

that it material growth, the the dynamic greater supply we be think, and a look, digit in averaging past quarters, will ship in but that optimistic it, Your to here deliver five than quite question able get been growth to able to environment, chain QX. is double so I over about requires it delivering organic be constraints, I’m us and we’ve successful,

Sundaram Nagarajan

their forecast thing, too have Chris, allows one XX months, over - our know, organizational would structure, this where of as we Joe this we structure, each we about given at and fairly perform owner clarity model something fairly where market visibility, I mindset, I sum on based add feel to and a know, last own know, really our is is because and decide the our to supply expecting all I we--you business this our are better so an gone way good as divisions direct chain, it forecast, we our a to division-led is division. good right divisions’ You not by the of views divisions is in our us forecast customers of a does have was give so have where into of they--you divisions’ we division customer that so as much are crisp our think

Chris Dankert

helpful cross-cycle here. the it, Then thank and not Circling margin bit to least kind I both. Got to incredibly to you down, Is down past, That’s of was here, EBIT say back the color. on you pin of kind it at mid-XXs high the am that? we’ve margin that, a into I I’m you to in question, pin there. ATS going XXs try overstepping but moved target guess fair hey, a target or

Joseph Kelley

business, NBS and mid to at XX, look No, by trajectory up playbook. to trajectory stepped the running in high it what something? Naga, to half, running gains. year of about in low XXs, last that’s looking from the is way business add on that long we’re think the If at the and meant kind terms went then the we’re average what the around for first EBIT is at term think of to margins we this so I operating you this wanted Next I that XXs year the

Sundaram Nagarajan

Hey interrupt sorry color add to we little Chris, a I you, make before just and it put take but wanted sure. bit of down, to to there

materially on well that we’re one gains. feel which caution there, is, cycle materially a the know cycle, in have is it a two business, of for have Joe diversification I’d taken contributing know, give here in we’re so electronics number because rate. of One we things. mix part well, we out, a we’ve help and only in the good lock is we of position, have second has know, but as cycle, done, there of as so the cost the the we’ve those a the couple you--you run business, before have--you improved would business in muted my of quarters a say so still we position improved the cost we let’s would really you work this this mentioned, caution are really be have has--the quarter, amplitude so doing also structure We position of The factors, it I good about

Chris Dankert

ahead? go Totally thanks for--oh, much so fair,

Joseph Kelley

that profitability, that’s also you it’s all that growth, get in organic there’s the a you and just the is on I I sales this growth. so lot the Yes, XX% growth is also of the for mean, about going quarter line things not top as so quite and mean, these delivering as this them growth challenges. despite simply there, - it’s think driving segment, of one leverage quarter record that natural and a well,

Chris Dankert

I be guess a to has end, got utilization to near that no? facility or I’d record, assume at

Joseph Kelley

we the in to the on space making this to capacity where as space, support business, Well capex then medical this the high the expand see highlighted growth, particularly investments areas. growth which we’ve side you electronics needed are in and

we is see capex spend--you to so add it number capacity although where on an small although and You but continue we it’s continues $XX a million percentage and increase, capital-light. know, speaking, to it year-to-date, be needed,

Sundaram Nagarajan

side, the capacity of to ability to our capacity fully the the business, so get support our that’s Chris, that our on you’ve on consideration and backlog, the to take and got that by have as [indiscernible] own but supply Yes one. one demand. more ability act That’s think we components capacity chain constrained to on into assembly beyond

excited which mentioned, for our On great about within of company, are we in are growth, adds capacity capacity that is there the process investments and where the sort company we capacity Joe what adding making has the businesses really the very strong side, is have but we’re investors. physical it

Chris Dankert

Understood, much well color. for Much the thank appreciated. you both so

Sundaram Nagarajan

you. Thank

Operator

with is next Liptak Seaport. Walt question The from

is line Your open.

Walter Liptak

Good morning everyone. Hi, thanks.

Joseph Kelley

Walt. morning Good

Walter Liptak

might fourth second the if - you as there’s a about to quarter, know, going the I thinking wanted shipped that margin impact recollection could might about talk on higher that to you systems systems we’re little in quarter have is wonder ask that. lower. be margin? be bit My and the parts if be gross I half, more follow-on does fourth an a

Joseph Kelley

are systems Yes, correct tell not level, high you one the the I parts as at level. a you into would is I that. would--you think I high would offsetting Perhaps a you couple go know, but as QX, at you a price-cost the disparity and that two realization. leverage, great, you are QX, correct and although about there’s volume is is sales tell things then between you

improve so within you opportunity we I within to big about I a Then sequentially that, the there from systems bucket, also will you, for going think QX necessarily business, the think as degradation improve. go and QX QX. margin half, be there about about so QX improved, to is as also our that’s back into to opportunities QX, that think I think systems that from business, when would the mix Walt, tell within is that for we wouldn’t favorable, mix the should

Walter Liptak

the I I IPS one out Okay, seeing was you the segment, organic, if the versus try what could wonder are If and parse on great. growth? units, could you unit price XX%

Joseph Kelley

X%. as It but tell Yes, the unit there growth a wasn’t was component price of you well. also I X%, simply would full was Price price. wasn’t that

Sundaram Nagarajan

had currency also, this too, right? headwinds And segment more is the Joe, we

Joseph Kelley

we all Correct, that to segment volume business in But just I price. specifically organic that so due and headwind than not would at That’s was the piece, large in the ATS currency the European growth was tell the was there that have in segment this looking there. you X%, greater here.

Walter Liptak

think Okay, think be all right. and will reopening, and own where China work, Great. your this something you thinking chains it I ramp do China will employees you get supply back is this Then is its going have I to guess get to will wonder, last to it to China as take do or you think normal? quickly long a slower about back How just ramp? a one, the

Sundaram Nagarajan

rest and and not China, our teams of are our it’s together situations. factory really--and around we this four expectation. that’s dealing in who and our shipments people would where how to to us but one it doing so work controls, our who six his You we been have weeks, world we with our will to, in also as earlier China, customers very very business, have other but be are that incredible mid-June some fully bringing proud none the us leadership the around dynamic are believe we normal we slowly and in at teams we have ramp teams pull worked our from of incredibly and believe run our next so job doing back be a allows of so our the a work in China know, in proud the factories, teams government have that only the Walt, that that hopefully But Joe all rates operational slower so we have we all environment are, mentioned really are difficult of issue comments, in also

coming an weeks, with are shipping expectations things back doing expectation things slower to we well, a that expect get four six rates. Our ramp but surely back, to are normal are another

will our everybody I’m and just I emphasize the world challenges us. out. have so a working the everything into to the Nordson had and to who our of us, proud team work there this of For of we quarter the in been as shout-out big team. get China job Nice the we and so third number one quarter, overcome in have around couldn’t priority, is people more But proud else we’re - safety for

Walter Liptak

talk luck that China, great. in we’ll ramp Okay, Thanks. that Good and you soon. to sounds with

Joseph Kelley

Thank you Walt.

Operator

have any time. to this closing at further We questions I’ll turn remarks. it over no for Naga

Sundaram Nagarajan

Thank you.

Our of markets. performance environment. your Next positioned model, call. technology, Ascend attention continued the end The time reflects Thank a ensure our remain differentiated great dynamic we continued Have in on and day. customer-centric business will for NBS and this today’s strategy the you diversified well strength deployment positioned and of

Operator

gentlemen, today’s participating. conference and Ladies this Thank concludes you call. for

disconnect. now may You

Nordson (NDSN) 24 May 222022 Q2 Earnings call transcript