NDSN - Earnings call transcript Q3 2022

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Operator

Good morning. My name is Rex and I’ll be your conference Operator today. At this time, I would like to welcome everyone to the Nordson Corporation’s third 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 followed question on by keypad. like simply this your would star press the you ask during a time, telephone If number one

you your conference. again your you. If Mahoney, to one. Ms. begin star, Thank question, may you like would press withdraw

Lara Mahoney

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

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

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

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

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

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

Sundaram Nagarajan

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

I’d we the record Nordson another quarter. third for to team delivering begin, Before congratulate like

moments, the may Nordson NBS the sales the strong quarter in testament true a our of record and that driving financial detailed the recall, employees few I’ll on precision framework, this our effective a to we fact you is turn Next XXXX. differentiated the over team provide As The reported growth. in call business delivered are growth model, and of third but our perspective technology, profitability more the a quarter. results profitable fiscal the for speak who Joe first deployment about dedicated I’ll to customer-centric result above to

Joseph Kelley

the the Pacific, Naga across morning X% On which organic third was and the lockdowns Shanghai, Slide quarter, our third record markets for most to a Asia million, you a Thank see The quarter, as increased unfavorable first to impacts of X% growth basis, acquisition, related quarterly increase was of X, COVID currency X%. expected. you’ll primarily previous year’s XXXX sales this million. and prior an plus third constant No. On geographies which sales offset to impacted quarter record. were compared volume prior month China was NDC fiscal X% a $XXX and year was of the currency for except sales everyone. half third The to good organic $XXX fiscal the broad-based end by growth compared of quarter increase sales by

sales impact our their quarter. and to offset of helped China the outstanding portion a for thankful return in the efforts lockdown very record significant force are in of full the as quarter for employees contributed $XXX slight or We year or compared of fiscal of $XXX profit XX% sales quarter. totaled the million prior Gross to XX% of the a third increase the million sales, third XXXX to

totaled team price-cost million dynamic XX% gross unfavorable continues million $XXX of or manage Excluding inflationary addition sales. quarter. the currency The Operating actively one-time profit restructuring to in in the adjusted periods impacts. in totaled costs, $XXX profit to these

these the our operating facility ATS was sales $XXX million. million closure $XXX costs million volume non-recurring the of restructuring year in the Russian Organic term our the quarter, operating XX%. and profit sales, inflationary third and of During or of quarter is pressures. a operations. the prior XX% in division quarter of EBITDA the we Adjusted with was unfavorable of strong the currency the compared and recorded was associated one-time segment to consolidation operating leverage of EFB result of excluding sales to XX% impact long ahead contributed profit which profit quarter of target third $XXX for by items offset

decreased net XX% share the costs consistent primarily third driven the rate and in pension per the increase steady, gains. Net for of year expenses other leads year reflective growth. by foreign in exchange facility of profitable the is year. million lower non-operating at $XX share, currency the per Next from per and importantly, expense and $XXX which for year-over-year line costs growth and, or prior quarter XXXX. application was in is Adjusted in effective sales prior which the Tax expenses, $X.XX improvement of million framework severance This closure our to rate quarter Looking NBS more income $X.XX excluding share. tax totaled forecasted the X% $X quarter, a totaled million earnings full increase rate non-operating an with

be forward. million X year and to unfavorable of driven segment X% in product acquisition pulled IPS’ it several solution as XXXX offset $XXX XXXX to year. for on growth currency review Industrial was the increase factors operations of sales, which organic in inclusive turn in with decreased of of IPS above XX% the comparable third profit XX% Now a prior in average compared segment’s which impacted the to currency Operating quarter, markets packaging impact China decrease this third organic the NDC The Also, $XXX system and this operating X% of are therefore to end and properly performance. sales segment robust geographies. needs quarter interpreted providing X The X%. precision the was on quarter. disproportionately headquartered quarter sales compared a very was X%. Slides lockdowns third and product was June to decrease operating strong grew these the of currency was fiscal decrease customers but volume beverage lines for the as despite orders food demand The let’s segment X% sales excluding was of is organic quarter quarterly by in XXXX million and record COVID industrial year was an and basis, a assembly constant to Unfavorable industry Shanghai most negatively by $XXX large the which profit a prior prior X% by impacted million. the May third year the the quarter or profit X%

unfavorable to solutions, sales major by strength lines included dispense the Moving record biopharma across organic the quarterly increase record XXXX this million, offset increase geographies XX% were sales X% of in the sales particularly but contributed product regions. fluid for product revenue now impacts. strong advanced and currency Growth $XXX the growth lines. an international in all to this second in particular was component quarter’s electronics beat technology All volume quarterly compared sequentially quarter prior quarter and with segment. to year third a The

fiscal This improved of with complete. service consolidation efficiency the consolidation of closure the this will enable for quarter operating division non-recurring and results of XXXX division. customer included $X.X operations the to once ATS manufacturing Third EFD within million levels expenses support facility growth associated

margins. XX%-plus incremental in deliver of growth operating expense consolidation segment quarter profit offset delivering to driven at leverage NBS increase inflationary our sales, profit segment operating adjusted this XX% by and the profit sales was XX% million. success growth million growth impressive growth. framework $XX to element or of pressures. operating sales key The a of an very Third profit partially year continues by of was $XX volume This Deployment excluding be currency the attractive prior profitable continues Next over of the

to cash of turning includes balance cash and X.X million sheet $XXX times balance on EBITDA. the on Finally flow net was sheet third quarter Slide $XXX based leverage debt the our in and X, a trailing XX-months ratio resulting million,

were on the results, our increased its a growth driven XXth XX% the capacity with the share the pursue and XX% consecutive targeted or made $XXX market This our The ongoing address slightly Free to investments the repurchase opportunistic to price which chain of of growing over capacity yield of combined dividend. and acquisition over portions inorganic the reflects a year the the million $XX with the current to are Ascend strategic on be we desire net being quarter shares. annual are such company and strategy ratios. per significant has in CyberOptics in in of available XX% $XXX the now organic August capitalized repurchases income continued X. Dividend We announced as a strength market have increase share. million address on maintain prices. backlog. quarter volatility, date, was the marks will yield on as effective averaging have inventory in in by dividend in financial cash the and fiscal executing approved The opportunities, current again payout progress board increase XXXX. flow million rate quarter $XXX borrowing to of the to the dividend X% fourth increase conversion payments annual spent continue of Year of constraints significant we Also, to at supply our

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

Sundaram Nagarajan

Thank you Joe.

customers. working are thank customers incredibly want their to of record-breaking teams focus I and to in you We is our continued dynamic needs the on yet and our to It say resulted quarter. another our dedication through our pause meet employees. that times,

You results possible. these make

challenges to macro We manage through of on solid our the are Ascend strategy. progress continue making short term and environment the we

high technology diverse Nordson was Effective August and we Slide solutions in businesses Nordson. medical, across focus precision platform. industrial, medical tech on across one for on diverse our our for The remains proprietary and Nordson’s has led company’s on decision profitable to acquisitively. Jeff This and segment solutions both X, will segments Stephen into instrumental as finishes, strategy. He management also fluid our fluid reporting adhesives, medical being the we This other business. growth the advanced segment joined and development and markets. three he of the of solutions XXXX paints, growth joined in best new growth our processing and the by coatings, end include engines other will driven multiple Jeff organically business X, XXXX solutions opportunities. markets. materials illustrated he is better head for Corporate and Ascend Lovass. Development where Industrial coating dispensing the actively leader in our industrial led Pembroke segments. to was reorganized group focus by As in Stephen financial of our realign announced end appointed In Nordson has XXXX, Strategy

and roles solutions of market the President dispensing, leading of NBS he treatment management, XXXX framework. applications. precisely was Next will increasing inspection, the division recently controlled this in Vice most corporate electronics segment Processing of test focus segment. Finally, where technology is Nordson responsibility in our development, Srini is for and has growth on driving Srini Subramanian surface in joined Srini Solutions served and Electronics advanced execution the global and development. successfully business

our that electronics pleased reporting I’m the through strategy. new advance Our opportunities. gives recognize this visibility have into give structure grown both medical from Nordson organic us better structure within platforms, our which opportunity and to will acquisitive significantly and and promote and team also winning

XXXX this after fiscal XX-Q third new will segmentation the historic We quarter financials share filing. reflecting

very in Slide August. agreement highlight new earlier has to we a acquisition to disciplined XX, Nordson acquisition I’m that strategy. Turning pleased the announced

precision attractive serve end that We’re acquiring differentiated applications. with growth focused market technology businesses on high

such inspection. wireless efficiency. diagnostic machines in-line new to process have platform our inspection two have sensors production in We quality and end and time inspection product platform, The will these images the we strategic offering In test been a reliability test results platforms with the semiconductor reflection offline, customer XD surface takes Optical significant of in and utilizes application that advanced a level CyberOptics markets built real of electronics end product optical meet of criteria: of technology, building a semiconductor Today and for market. the category indicates technology of and that circuit and existing industry and will wafer an type significantly company and and X-ray Nordson XD the customers Using in product innovative division improve trends the has growing throughput test into presence growth WaferSense printed NBS as us where higher growth is deep double inspection high called to diverse XD inspection requires that growth understanding leading tool combined applications. high of with provides the speed, resolution. technology the picture a diagnostic which quality of or in for inspection, Further, this that the and CyberOptics quality inspection acoustic end manufacturing create at a automated so boards which high method. solutions calibration front semiconductors to customers application optical provides which electronic the software a market-leading optical the has allow sensing introduced end identified new ensure this CyberOptics, itself The our offers framework, Next proprietary in today. electronics in inspection. established inspection is medical is This go reduces manufacturer MRS an developer expand a sensor market. as Nordson systems. precision that data a technology precision efficient inspection non-invasive image customer’s global as also limited process WaferSense further digits. and to

We are technology expectations meets outlined soon This the very strategic into portfolio. acquisition and in March investor our we add excited differentiated CyberOptics’ Nordson’s financial to during day XXXX.

XXXX. our first We in expect of quarter close fiscal this deal to

to invest to electronics their We to extend of scale business infrastructure global to accessible technology a will range make and this service customers. sales meet their needs the technology and customer broader in emerging

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

fiscal guidance XXXX, to are XXXX of X% XXXX, we our range to is XX% of earnings For adjusted It increased following fiscal XX% the over full in year X% XX% revenue growth growth confirming the previously provided of and currency execution a and This strategy. earnings our the headwinds. approximately employees dedicated the despite the SN solid growth performance. is record financial a to testament

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

disproportionately of Additionally, in dynamic this opportunities clear a that making we of the view remain sure ongoing best we crystal implementation growth have NBS Next invested during environment. and our them is

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

Operator

line of from [Operator instructions] Poliniak Your question Wells the comes Allison from Fargo. first

Your line open. is

Allison Poliniak

there. is certainly that filling, in in that, your maybe of you of guess your --[indiscernible] businesses, strength view any end earlier here flags just this cycles? that entry now raising you’re markets defensible significantly some some so line as built do red that are and there. portfolio cycle maybe strength some just that any we thoughts seems you’re medical commentary with seeing, that I particularly your the through in order in you’ve go dynamics head? Any bucks about trend more that in It with technology forward seeing certainly how differences

Sundaram Nagarajan

the the of Allison, earlier we missed question. part

don’t repeat mind, Maybe you could missed it? it. you If I

Allison Poliniak

around any of normalization there you out starting or flags to red any that sort I order that pretty customers or just being but know slowing some talked of strong are some your to today? was just see. entry it cautiousness you’re still, Yes,

Sundaram Nagarajan

strength, we our Sure. indicated In results a we electronics, experiencing of today, was as and general, broad-based as show, we are and medical. environment that indicated, it very demand points

businesses and We some revenue and in also well. our industrial order good in solid were as as really businesses, saw entry, particularly strength strong our America North well consumer-facing as profiles

as solid in beginning solid that’s very comps You you orders, right? pretty probably see, so. strength in very get about general in electronics, difficult, would you good but are think If industrial, what medical, in to anything, know,

Allison Poliniak

it, and--go ahead? Got

Joseph Kelley

to a where been our a the entry was adding from the quarter favorable order consecutive In so north that’s record backlog, strength we’ve book quarter, order sales. entry bill, again was seventh sales, so our of despite standpoint to the

Allison Poliniak

Got it, historically you’ve should of How and you was then kind just there? some out recall push into extremely ATS in that think we medical inspection of of volatility that the test new put segment that before structure there, volatility volatile. and that seen Is balancing that that I today? ATS

Sundaram Nagarajan

Yes.

less and if and applications, now as broader time business and cyclical diverse find know, for the when well before, business, still as than you think and you dispense being dispense our test it our more muted this You still some gotten amplitude electronics might electronics of has but in a really about here, to has talked volatile about cycles it be the is some as is business, compared cyclicality, tech-facing inspection our we’ve is such hence more what is expectation. less

Allison Poliniak

Understood, thank you.

Operator

Your of next from question comes the Lynagh. Connor line

Your is line open.

Connor Lynagh

of second of bit why it the CyberOptics the we in portion to be sort company, positioning wondering detail you. of a the a cost deal. an attractive was I just Could the more. was little target, like thank that dive and portion you you maybe Yes, of - you this, it on found of if the synergies could discuss competitive seems could then the if some acquisition meaningful

Sundaram Nagarajan

Nordson the to marketplace be global our continue our which still like digits, is--the high is for inspection nicely and single question market optical technologies, competitor certainly which expand you that a portfolio. a than in coming is want $XXX existing and existing and the space really and inspection of double is solve find CyberOptics’ highly rate, they some From digits, around addition to able a technology really the for continue think so precise like good of a are on inspection is out market global in company we find on the of shiny gain that XD called and really customers. we CyberOptics really a test infrastructure growth developer technology, inspection, leads technology customers is with is or the there call Nordson’s suppresses reason in here rate optical commercial at perspective, speeds is inspection their Their an MRS, images at reflection Joe, off what so the million to XD the really growing billion, this XD part share that speed, XD existing wonderful at us greater advantage is--you really $X to really position surfaces, really--which is to inspection technology infrastructure, something XD is precision faster you CyberOptics, that growth you to they’re competitors. our much so take and optical to growing What this but opportunity know, growing that we if use it to strong unique problems our have the presence and believe technology, resolution. design test about they of about market double-digit Yes, combination a as leading that of our hence about of do like are and so and synergies? into their felt believe we

Joseph Kelley

tell synergies than you there’s Naga. I company you of so public is simply of about One buckets. Yes, greater the when cost the eliminating million are costs. cost main synergies, those $X two would XX% thank think you Yes,

there’s north total. cost a As you’re so and company, are the that of CyberOptics some is of synergies XX% aware, there public

synergies. infrastructure, leverage other the presence sales support the to million you one start remainder of you would at their tell you when I and to is, in The look sales efficiently their force there’s there leverage that’s I opportunity more cost tell to around the Nordson’s $X physical geographies, would infrastructure existing and global our other world

Sundaram Nagarajan

CyberOptics, it’s support have to customer continue needs, of emerging more I’d have CyberOptics, the why invest that the technology go this equally intend on add in they remember incredibly this have the growth good is we the important the it CyberOptics that one to technology technology route, and we invest yes, is this but really is exceptional to important and and piece is in in synergies meet to compared so experienced, that we to also which decided we thing to peers. reason of is an acquired our to is their mind,

Connor Lynagh

just there compelling are was thank speaking particularly broadly you capital high this as other sense, wondering, I value any particularly further allocation? within growth, Makes areas you. for that chain, see

Sundaram Nagarajan

we as the the a to as pipeline this are do part components, well limited, we evaluate, end in front continue front opportunities we’ve opportunities and end an limited most see in have where Nordson’s exposure presence our brings there What more area we is manufacturing more still of know, semiconductor pretty of the manufacturing align where so our middle we traditionally the is yet is semiconductor of PCBs. in capabilities spent terms back good. and there You so there. number out time CyberOptics area, us opportunities, to opportunity also other But have spent of of looks that so to time the

Connor Lynagh

very All I’ll much. turn back. thanks right, it

Operator

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

Your line is open.

Christopher Glynn

time, along you, curious the orders and time, with longer the Was good larger the I’m could differentiate if the large on morning. business, Thank industrial of among kind electronics markets long on markets seeing mentioned deal. of Congrats those long end with curious in medical, where you land. orders, markets, your cycle industrial industrial lead the you you’re but side lead

Sundaram Nagarajan

XXXX, about forward doing as really but business they’re industrial pretty about we and customers much see placing just we well have good industrial into our talked Similarly that not a only really see U.S., you pretty is strength. continues emerge, look this is those think as coating the so and think into been basis, you’re--on we regional more backlog for strength where business, consumer-facing, have do in for one they have a begin to to some is our it’s constraints this our see businesses opportunities is businesses right, what supply we to XXXX, places, and chain to grow. also customers of and strength re-shore some to strong broader to opportunities orders that but has coatings find--and our we container about as industrial example trend If the manufacturing is continue pretty--we we our which

You know, our newly is strength. acquired good NDC Technologies, which systems we call it some within business pretty as seeing the mission Nordson, control also

the positions are are as and are excited, produced. that detect just reminder, secular film crispness, thickness that line, the sensor food manufacturing, Here, here or on industry, we what you’re it example, chip, technologies trend ensure that to and a another technologies sensors measures manufacture quality right in in automation, lines go the sure has a for beverage film we sensors grow. automated to if that aiding very sensing and high you of to Again, the so our that if Nordson cast make the film is continue our of

Christopher Glynn

thanks. Great,

to industrial the of the know, the continuity OEM cycle that wanted you particularly - content short on you’re some how touch the you consumables, on seeing there, Just space sell.

Sundaram Nagarajan

Yes.

muted manufacturing to very beneficial applications very to not is headwinds that but new melt in we that. currency that we well, are seem gain solidified adhesive Nordson’s OEM enough, technologies, hot to about applications strength, now. yet, think On very number completely you consumer-facing are In business, interestingly strength. good we’re right of electric pretty that gets in in In starting continue vehicles, to businesses, our North Europe our vehicle we’re about consumer about. packaging, battery have If other have businesses we and emerging America some our the have especially there. the as Europe facing but so excited traction excited Electric it adhesive by good

Christopher Glynn

Thanks for all the color.

Joseph Kelley

up X%, add could rate if in a it I United organically year-to-date our little I look if growth States, color which the in at is business. number was in accelerating our just growth you mean, - rate terms Yes, that from

Christopher Glynn

Got you, Joe. thanks

Operator

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

line Your open. is

Jeff Hammond

everyone. good morning Hey,

Sundaram Nagarajan

morning Good Jeff.

Joseph Kelley

Good morning.

Jeff Hammond

you’re less order of just to dated Then away behind back still to Naga, play separately, from of focus, electronics and patterns but and very messages order any is they’re to getting wondering indications long on lot that start gotten Just the get strong, kind I mixed kind kind or just customers front, the going on how normalize this from looking there. that capex, understand of cracks continuing you’re to out? think a scenes semi we’ve of said you any the

Sundaram Nagarajan

so Yes, about talk then we’ll the me and electronics question first take let that.

now changed a and bigger not much is about the of electronics cloud, digital of how significantly remember that now what of of the technologies part model we In that in find as for number have Think is both in the we you’re to order conduct have side which terms our goods, business in solid to Electronics customers, distributors broader, different Teams in model, of based electronics, don’t our--customers about be beginning with robust doing well as people a that something explosion inspection. a sales between, call. interactions business. it the is have bigger entry still to about pretty a consumer common our limited dispense become electronics sales with on has call think The a thing business, our is is what is just see direct test part--a direct looks and still right? or and Zoom to part be continues businesses teams, so

has to that All digital behind of needs it continue be this to infrastructure supported, so.

of do devices, - trend and about--you part this so for digital offline can test electronics lot these but we and so on know, electronics the economy we we and Our and in these from lot a it we sales is than this electronics much teams need benefit. than pretty we that throughput the and close what has do, in at because today. business, hence there about you visibility business see ever a see is longer complexity find work why inspection been, where darn is to and broader of to continue from a our and to see going in one, more feel that ensure explanation sampling, have not examination good period the that what line second we model, of really of businesses inspection semiconductors, strength of benefit see, the is for electronics and an our that might have the than be of to quite before XXX% direct our is quality visibility more devices, From businesses

supply so that, be of In now of we our not and this and is our have not as unless--at this used normalize get online so chain right, ahead, resolve I that we quarters feeling not which my need that customers it get perspective, for chain a now. to have just and going pattern front people the past, coming my but going people we going to it delayed. seen we backlog come changing, this is issues terms is I have orders In back supply from order chain, are project, to just just about people long my to confident change, to but we least, a think personal supply quarter supply yet, year dated is Nordson’s now, in in us, global feel doesn’t several orders have in is line until chain, more

we’re I but wish clear give I answer, a know, seeing. could you what that’s more You

backlog last same to I that four yet. customers to it and have our still reflected seen we seen have this the normalize pattern we the in see keep that are six quarters, continue not We large have, in

Jeff Hammond

a the the segment or ex-CyberOptics or margin businesses? maybe electronics, difference be the profile growth or--you if the a great you on of just change, color. medical those going profile kind material and any can size on we shed rough--I business that’s expect between know should don’t XX/XX is of Then preview and to light know, in those, No,

Joseph Kelley

in the that release. ’XX, issue which for after a filing XX-Q, [indiscernible] segments, give the ’XX XXXX, be information all will historical quarterly shortly release financially to you our Yes, and so press we’re new going back going will

Jeff Hammond

XQ? expense How we that Okay, think about housekeeping, and a little should just run then into rate was a bit corporate higher.

Joseph Kelley

the I just the is corporate would on I Yes, how expense run and That’s a in rate. think average that. basis take about would about think [indiscernible] quarterly

Jeff Hammond

Okay, thanks so much.

Joseph Kelley

Thanks.

Operator

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

Your line is open.

Saree Boroditsky

morning. good Thanks,

on building should fluids thinking the businesses? you and on through long margins on just business about independent how then the are how the separate growth outlook talk question incremental the and we ATS, and reporting think can medical you for last structure, new Just the then about term

Joseph Kelley

with that’s medical highlighted when think given I kind Saree, term XX% the think, growth, rate question, Yes, IPS quarters, serve, recent and all which and rate of which was segmentation, you a business the if that terms higher XX% in as of incremental business in on in forward, it’s bit has, market at on to medical. our like but we in see XX% the new of higher going and the the that investor growth, ATS electronics to margins the committed would our probably our it the as basis higher have past several we is so so aware on the that we that about XX% I incremental to Then growth growth organic predominantly to day, applications growth and mega points and side. to our rate over there, trends in slightly XXX little tell long you’re organic about relates margins, you higher than I quarters, the your segments. would a commit three the segment you

Saree Boroditsky

a think you in quantify closure, and this expect that us? could for and quarter, you, from to margin ATS. then you I the a Would see mentioned thank you closure facility in benefit Great,

Joseph Kelley

a going we supporting the I that at from the be benefit facility. that you think change margins consolidate facility in to XX%, play into I facility, so existing Yes, don’t a to predominantly of there’s as it expanded of It’s consolidate margin an and separate XX% and growth kind tell capacity as to incremental as consolidate support the it material we that. would a growth and

Saree Boroditsky

see could to still end assumptions earnings top think has the for need you range, the just I you. Could the squeeze Thank in, just and you bottom higher wide I at talk and Great, a your the the would fourth what through of end? to more and kind if lower one quarter. range guidance or hit of

Joseph Kelley

continues and have I you, to supply will kind just just you which was I the us overall, in midpoint guidance, any continued I increase guidance we QX when X% would a considering about and has think and chain in than that constant experienced the currency, XX% about an saw in don’t when you on the the the we marketplace, currency was QX which of are earnings impact our end as in QX. rates knows the if if XX% when headwind our that the so and some greater geopolitical, so answer that that’s QX, to the tell first challenge volatility, Saree, growth QX, you has the your move. suggests organic Yes, where about bet. growth as it’s XXXX maintaining at lower about growth, in QX, at all, suggests who sales would headwind, recurring I the so FX overall, fact volatility the going so and XX% and in as lockdowns guidance, know, side, be uncertainty look some There you QX, then You would of there’s tell in and it’s given think initially maintaining of you to in exchange whether it a guidance range growth was Shanghai forecast, lower gave rate the range. that COVID a FX tell the well the would we you say, of about a question,

on the an mix would is favorable I QX, taking say sequentially from XX% and suggests, growth, IPS should into the to sequentially guidance parity profitability our expected dollar upper from This we’re Then to composition of If at specifically. standpoint given where when U.S. as a secondly, earnings this you at to that some our stronger look range sequentially QX on or compared are compared sales our that for then compare look euro that look is again of kind QX also main the suggests was impact the One negative Those level the guidance there. consideration at QX, organic - of near below less forecast ship. forecast. it to down be let’s the the into be factors backlog of maintaining is upper QX and record a QX the which in you a scheduled for we increasing sales I earnings earnings and end QX. items thoughts has negative the however range, it just when mean, it portion our perspective, million, impact went has the tell of $XXX from is QX growth our to guidance, it you in comparable guidance, you really at to two there’s with

Saree Boroditsky

I the color. Thanks Great, appreciate guys. really

Operator

Your Halloran next comes from Mike question with Baird.

open. is line Your

Pez

[ph] everybody. good Hey, Mike. morning This on is Pez for

Joseph Kelley

Pez. Hi

Pez

Wanted backlog little bit. into the to a dig

extending, they on that same? booking of sequentially how then backlog wanted about is quarter-over-quarter? you discuss the changed Is the extended that up shortening, several to also maybe continuing is Just clarify to out. see was and that’s dates. quarters commentary, composition you could also, based it Then Previously were the said the I shipment believe maybe backlog, - mentioned

Joseph Kelley

in the times getting north exceeded Yes, in so it slight would would and it an our weighted predominantly, of in our where timeline order say disproportionately order basically $X increase heavily longer that the entry of very systems tell terms just backlog. in was on backlog, you side it’s QX It’s and specifically, are. billion. so I sales, we maintaining I lead the was remains line entry but it saw

you look and there; a parts there’s our mentioned, so ship, out, as of and Naga at ’XX. systems into some our of Some and it’s not when you businesses, but book backlog know, heavy as consumables are more going

Your to dynamic changed tell the QX. It would question, has It remains you. hasn’t changed? same, it has--that from QX I

Pez

conversion next Then backlog Does into--sorry, obviously is sales you your for elevated into how a backlog a little could year front strength to versus half is bit prior the more you that and the--excuse that’s half? years relative maybe calendar front the on me, going XXXX, give comfort changed the going little next prior into year, elevated in visibility in more years. visibility that discuss does you give of going the bit Obviously FXXXX?

Joseph Kelley

also visibility board, backlog, with being better heavy of tell the our us billion. than ship, Clearly with visibility. terms we’re in I time but even large there’s tell there it’s now running you businesses, would used medical earlier. better would of across systems of us there I in for That you, we give of to and so not cycle some shorter our backlog said, that be remains business like is in the tell forecasting and the Yes, you to past, Think business, $X of how greater I does yes, million said there’s I’d used businesses, book $XXX a help the it which run systems portion so with our visibility, does, accuracy. a a and a

Pez

it helpful all color. That’s you. thank on. pass I’ll Great,

Joseph Kelley

Thanks Pez.

Operator

one ask telephone a your then star Again question, to press like and on keypad. would if you number the

comes with Capital. from the Dankert line Your Loop next question Chris of

line open. Your is

Chris Dankert

guess level inspection, niche great CyberOptics we way, really doing how questions historically. some the I for that given Naga, kind on Hey, the competitive some it’s into the move there, than Nordson’s guess TAM my just that the get of unique in been deal? morning and everyone. this more a that impetus wafer-level a should for back some and about test think into of inspection and following unique there more Is but into an because Thanks here. of capabilities us to taking end we you’ve wafer stuff it much the color space space capabilities is really T&I much this, of moved meaningful or further I

Sundaram Nagarajan

capabilities we’re their so in it CyberOptics have some just we is the that right, so We customers optical one not XD who into we technology. they major the really, CyberOptics so the CyberOptics opportunity right, great just you for so of is right? two inspection things There a understand inspection a make are customers component, about is build a but of for $X.X critical unique MRS to of we sell machine some system, TAM it. of small kind CyberOptics. does which businesses the sensor our where itself, markets, CyberOptics a buy think example of us, CyberOptics’ Wafer-level really if billion. something critical know, CyberOptics’ really Nordson the the for sell business, component sensor, but of inspection about You resembles already The an about MRS very other broader opportunity, have, wafer-level of customer that to the XD happen it’s that’s

just exclusively we because right? back front this is into CyberOptics XD and front is in end, the that’s It we end. sort what in end that what back think front that that Our how don’t it. the reason about not the middle were about I highlight sells is to to really already inspection greater end, we The just we do, systems end, interest we the do or not of also trying end is front it we business end, end do front end, move exclusively right, that’s opportunities to do is in and back so it so want in

all manufacturing value, XXX% test other place more that us and smaller, things and small technology monitoring of more I us and becoming us, which with good trend The of so systems a expand and in becoming this in line, a That where completely to rather things trend a company, and a of for so again performs is two it’s is different, test which think critical more very that puts rooted device wafer a online new and Nordson exciting production. complex, to is inspection sampling, function, CyberOptics their is brings technologies exciting lot for in adds technology, WaferSense secular in continue very portfolio, an secular but more hence becoming we capability. inspection the adding than bring our

You an inherently would know, make first doesn’t we continues have that a grow time, inspection but optical thing presence so is not sure but that that impacts inspection, not component the we the our inspecting, impact optical that optical component it it’s inspection, viewed is inspection about inspection to is optical happen, the you method think time on as something to is--one X-ray space. optical it that so wanted as impact tenth and inspection inspecting, does more in it the after

Chris Dankert

spots you follow-up, shaping front yet, thank mind helpful but of just know we’re out you, are building here? given fiscal to and there not way Got space, any really your ’XX that That’s I so color. size picking as again Naga. end keep and It in in about is very the sounds by you you. we’re like guess talking year the the lumpiness of backlog, out thank

Joseph Kelley

versus say, you Yes, performance back QX, I look QX in our you saw QX. in you than level would out. to, last of our I when guidance we if in tell lumpiness really terms would our year It’s the different just at QX starting for half delivered and what

it’s obsoleting at The immaterial ATS about fact about into consolidated older when in XXXX, LIFO was the to impact level little bit impacted that to a QX years, consolidated immaterial changes of one segment, forecasting QX compared QX switching these I as to were so XXX you make valuation and segment of IPS results follow-up it think guidance on QX in understand in product the inventory to unfavorably to historically performance looking you increase. if adjustments Nordson. properly to on QX our question a When adjustment quarter, Saree’s there the the I’d from but like profitability method that’s our from saw at by profitability interpreting impacted so FIFO There’s QXs our to look the to QX, also tell results. our thinking was and in points, the specifically lumpiness, net related point I several despite important go when opposed started favorably and strong basis Nordson lighter lines. you out other by back QX method as would to You and

Chris Dankert

helpful, for really That’s Joe. Thank you that. much so

Operator

the Summerville comes from line DA of question Matt Davidson. with next Your

open. line Your is

Matt Summerville

Thanks.

questions. Just two quick

maybe versus quick pipeline a Nordson funnel where on comment you actionability, price the just CyberOptics, can like, and go-forward comment on the Thank you’re then cost, on word First, looks right M&A what seeing. beyond you. multiples now stands

Joseph Kelley

I’ll cost in but in plus was increase of favorable like increase pass standpoint cost versus a again, was Yes, XX% a of negative it from terms it’s terms successful favorable it, were cost price through on standpoint. take we margin impact in not the maybe the because simply through top Naga, was passing pricing, it - it of remaining from

Sundaram Nagarajan

to continues In continues terms of pretty pipeline, be strong. be our very active, it to

We inspection is look to and strategically and at our if disciplined we find acquisition strategy, very businesses our adjacent do, focused technology inspection. it, a test a medical what we that very Clearly around core to have Actionability on pipeline businesses. we you medical test a remain and - certainly difficult we itself say. good. is focused take The but pretty know, very it will is and

great public the the it Given strength is we with seems going agreement, continue it, than had the much wouldn’t the equities, depends, example, we highly our differentiated was they’ve difficult end that were in we I moderated, technologies. opportunity other kind we pipeline, way We known the of the as markets to an and but comment some activity I but predict, look about so it have have well get of very at in CyberOptics a right? Actionability we pleased place like it’s a for as cultivate continue opportunity able just could areas number best that where to are and to to so. volatility, pipeline actionability have, to--and we to--you valuation, highly differentiated On are convert to had a say a businesses, nice playing take on. got know, of years, we least CyberOptics

at of us time being grow financially very pay great good disciplined. two well a strategic entering have us indicator the we’re company a where hopefully to to while deals has but are markets We multiples, for same we going on it is the highly and to opportunity so last market our be return announced, and that disciplined CyberOptics, financial metrics, expect to as our NDC

Matt Summerville

Got it, thank you guys.

Operator

over the further no time. back this call are turn Naga, at I questions to There you.

Sundaram Nagarajan

and thank reflects Our want day. possible. technology, strength to ensure our call. of continued for Have for commitment performance Again, attention I in differentiated will employees of results you model, and the their NBS this positioned these and we great the deployment strategy continued The Thank makes end precision environment. and Next remain Ascend markets. today’s perseverance a time customer-centric Nordson’s dynamic diversified which well on your

Operator

concludes This conference today’s call.

You may now disconnect.

Nordson (NDSN) 23 Aug 222022 Q3 Earnings call transcript