Earnings call transcript Q1 2023

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Operator

Ladies and gentlemen, good morning. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Nordson Corporation First Quarter Fiscal 2023 Conference Call. [Operator Instructions] Thank you.

And I will now turn the conference over to Lara Mahoney.

begin. may You

Lara Mahoney

Vice morning. Investor Good Sundaram Lara Vice Kelley, Mahoney, our Thank and This Corporate of Executive Joseph and Relations and with and Communications. President CFO. President you. CEO; is President I'm Nagarajan, here

conference you results. February quarter XX, today, welcome Nordson's We call XXXX report fiscal Tuesday, our to first to

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

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

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

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

your We questions. will be to take happy then

turn With call to to hand the and Slide over I'll X that, Naga.

Sundaram Nagarajan

fiscal joining Thank everyone. morning, for conference you quarter XXXX Nordson's first Good call.

lot of quarter strong CyberOptics going Nordson from business quarter. this about our of bright the to To our a well, acquisition. There for for spots that was delivering are inspection contribution and and CyberOptics very begin, and focus the performance. our integration is energy were team our I team. differentiated of and long-term another we it in The thank CyberOptics with first want quarter first a optical is growth precision portfolio. excited pleased we Test to the adds technology of engagement are

New Europe, China Year which our shutdown, our but was Lunar also deliver to needs Once by of labor dedication the of again, we growth. Next, a in to and relating which COVID-XX in solid organic the offset unfortunate ensures the region. had the of steadfast results. the and saw diversification only delivered shortages weakness our partially to customers due not regional Pacific spread Asia in This we X% in performance the Americas collectively business declines

for Finally, ongoing Next opportunities. resources Next dynamic I gaining division quality also focused where we growth on remain growth our clarifies can on and growth, delivery this deployment of the opportunities NBS ensures and momentum so environment, towards focus pleased are profitable by we top-tier the Each In those we can NBS on-time greatest achieving better performance. is simplify framework. it

are provide quarter. the the call moments, about a turn to business, I'll speak financial markets, for few results the and our to our we will a on In detailed I end first, perspective more what in but over seeing Joe

Joe Kelley

you, morning Thank everyone. Naga, to good and

prior million of primarily referenced, million. was you'll strong and weakness X, XXXX offset organic quarter China. as impact growth the number Naga The of year's organic to currency to Asia demand in The X% was were $XXX sales Slide first sales the fiscal increase comparable quarter On primarily first plus see growth, $XXX Pacific, in related Americas, unfavorable by offset acquisition, CyberOptics by by Europe driven the X%.

profit million. the totaled Gross first $XXX XXXX quarter fiscal for of

sales, XX% of continues of or sales acquired prior or step-up, year $XXX first in in The in a the totaled point inflationary to actively XX% amortization impacts. unfavorable the quarter. profit price/cost million gross currency inventory Excluding XXX to manage X% team $XXX or periods compared the basis addition the to these of million decrease dynamic

Similar XXX significant gross in margins fourth along inflation basis quarter impact of the points. squeeze cost slightly to the of dollars approximately positive passing the XXXX, profit year-over-year while

with product mix plastics being and in Additionally, assembly quarter Asia interventional the solutions. biopharma, and fluid sales by growth in unfavorable, was the in down processing slightly offset dispense medical

adjusted million quarter in XXX improved comparing profit basis, quarter. the points. XXXX, On first to sequential approximately Operating quarter basis margins a gross $XXX fourth totaled

we During with and the onetime million. CyberOptics items other transaction the associated inventory $XX totaling step-up nonrecurring quarter, acquisition reported fees,

Adjusted million. operating year nonrecurring in these items, profit sales, was the operating prior of quarter $XXX million XX% of the profit X% or excluding $XXX adjusted below

the of year negatively XX% or line Foreign to was translation growth. is profitability first quarter. currency comparable for offset X% million first impacted constant X%, sales, long-term profit $XXX operating EBITDA by currency prior with the in our quarter operating and target profit level which

partially in effective rate the and expenses, rates. higher by the exchange Other the rate $X line lower year for and was expense rate and higher increased full expense an at expense offset borrowings increased XXXX. which prior nonoperating net of interest with losses $X for to $XX quarter, million foreign Looking quarter first interest million nonoperating with increased is hedge in related associated Tax costs. costs, XX.X% forecasted pension tax million year

from decrease changes. currency income million per X% per $X.XX nonrecurring primarily Net year. is unfavorable excluding the earnings decrease totaled Adjusted a The $X.XX or driven $XXX totaled cost, prior share, by in share. the quarter share, acquisition

quarter and product review impacts to Asia Precision quarter the let's from Solutions X% China the performance. first COVID-XX. to of first million spread was to by segment product Year Slide of year prior to The lines due Industrial unfavorable demand assembly X particularly labor decreased X%. XXXX the driven X Now turn currency through softness due offset shortages of to and sales Pacific organic the X% of of by timing growth steady $XXX most across Chinese New regions, in compared

XX% quarter prior $XXX of Unfavorable profit remains was or adjusted a X% impacted globally translation IPS is decrease of million to in exposed to changes. therefore, currency year-over-year, which million. X%. year $XXX profit most negatively our Operating of diverse currency operating operating the most profit compared and sales, segment

operating Looking strategy. only, strength highlighting X the constant growth, delivered organic and last of quarterly out basis on the business, the sales has the a and segment quarters, the currency profit this of Ascend X now team of execution and

the $XXX organic and sales compared decrease currency quarter. The impacts. decrease a related included in of a sales X% to change X% Medical lines, components of the to Fluid X% lines and decrease significant softness Europe. was Solutions primarily year's Solutions first Solutions in driven X% Americas by strong and offset Interventional million decreased Fluid product biopharma the the Fluid This and unfavorable organic in in Medical market by prior product demand China, medical serving for

was inefficiency sales profit XX% First by quarter decrease prior or a was to $XX individual and within profit factory is due $XX in the The of product compared sales, meaningful lines which driven operating the mix medical year decrease changes operating million of reduced $XX profit volumes. million to related million. operating

X. Turning to Slide

currency XX% growth Technology a acquisition. $XXX X% Advanced innovation. was year in plus increase prior quarter the another X%. sales from in offset to This was benefit unfavorable was by region an Inspection product strong from to Solutions compared the particularly Organic The the continues million, by of and the product XX% new and impact was organic which acoustic driven Americas Test first the growth line, were CyberOptics You'll sales see quarter.

adjusted quarter was operating inventory prior plus growth a operating which step-up profit. Organic sales, operating $XX profit acquisition was or of quarter excluding First unfavorable first impact. X% and was transaction acquisition currency XX% profit, X% the million the benefit year of offset to the by comparable expenses

and sheet Finally, turning X. on Slide to cash flow the balance

cash balance $XXX leverage quarter months million and the million, trailing $XXX debt Our net first XX was resulting EBITDA. X.Xx a of includes on based in ratio sheet

organic to to CyberOptics fund November. to of we significant available in the borrowing the continue acquisition that incurred capacity inorganic opportunities have We borrowing inclusive pursue and

Free cash payments of quarter free XX% $XX improvement were Dividend the $XXX prior the dividend XXX%, year the $X in a quarter net over income million, rate of reflective was increase flow cash approved last flow. or annual first of in million, the an conversion million year.

our During under the we shares XXbX-X quarter, repurchase plan. any not did

For in expenditures rate capital assume effective purposes, tax of approximately estimated $XX million. modeling XXXX, to XX%, fiscal to an of and million $XX XX%

back We will the to Naga. XX, and will turn call to now turn Slide I

Sundaram Nagarajan

Thanks, Joe.

of our teams returning and employees the deliver want first the COVID-XX or thankful to our to of quarter I'm very have China thank as to customers operations our returned to continuing region. work following needs spread in in the respond the performance. I strong are normal that to

are our We we health they glad so and that will well. employees safety always are the prioritize of and

with to deployment NBS the Throughout travel prioritize Europe. opportunities the our pleased first engage with Next, to sites ongoing our profitable very greatest and for opportunities in continues North growth. I which I'm America help of us employees quarter, had to many and

accelerated deployment dynamic growth this and framework this on guide decisions our of simplify. where focus In environment, the to where will to

dynamic the full knew we we with dealing year. be fiscal visibility into environment we Going have a would XXXX, into limited as

seeing consumer nondurable continued Industrial spend Packaging Slide in we to in in to Europe, product Precision there and markets increasing seeing demand minutes now the our end a softness perform is sharing end automotive and In like and and lines. in to in are segment, Turning we industrials demand XX. few assembly are what well I'd Americas markets. and steady product China. Solutions

segment, for we the investments market, semiconductor benefited years. the we orders Within a see have the and cyclical end Electronics a softening the to days. known started is Solutions Technology in past boom Advanced over over from XX two being past of

customers an lines. orders product which dispense starting near-term reevaluate is are our to for having capital impact spending, electronic Now on

a pushing into some been the second orders matter it's In out half. cases, system of

and to continue Inspection product memory seeing weakness end closely. Test relating will optical this the monitor to lines also market. We're We in

strong Inspection of Our in the is weakness order segment. the remains Test and remaining offsetting areas somewhat rate

acoustic the from to drove benefiting exposure. of volatility and diversify our growth overall The technology APS company's as is is of muting quarter. strategy electronics the our innovation in in such C&I terms new new product that product first the offering system historical application

the Solutions Turning to and Fluid Medical segment.

during the lines. levels. the that surgeries to double-digit in pressured business experiencing growth high And pause returning elective Interventional This lines product during are a product are now single-digit pandemic. was in these is Solutions We growth our

in balloons, lines. part Elsewhere of seeing Orders a our in catheters product medical we're big our and components cannulas for backlog. the MFS fluid segment, are weakness continued

pandemic. two biopharma and vaccines COVID customers then organic growth supply following This was for Over benefited we to demand division. the by inventory from which from years, driven chain strong compensate concerns the this benefited the in past from from double-digit partially rebuilding

at destocking product lines. inventory is there large customers believe for we Now these

Over the product driven revenue medium lines remain biopharma drivers secular to rates growth term, such strong, components by as for single-use these applications. long growth in

Fluid dates, are in MFS lines Solutions provided well of $X.XX the combination to product we market in pushout our updating and X% the adjusted electronics earnings weakening and the Considering to molded growth in in tailwinds, and guidance XXXX some seeing entry revenue our injection order construction $X.XX. lines, Finally, of fiscal current headwinds end to XXXX applications delivery we over relating range previously of are as product to X% China. the

Ascend solid I patterns, our of record-level the execution to our testament our the changes is seeing the sustaining order business and performance, remind XXXX are employees, investors, reflects which of diversification we in dedicated while our a strategy. some guidance

specifically XXXX acquisition at headwinds. sales offset year quarter on by forecasting to the currency quarter XX, second Looking Slide prior are comparable are fiscal second as to be benefits largely second we the quarter XXXX

reflective quarter of share are quarter our experience a anticipated remain balanced prudent in $X to range which approach will $X.XX for are in comparable of Second environment, per XXXX, we earnings and sales remain we of innovation, the businesses. this in first is customers invested in while mix, forecasted strong service to the differentiated financially adopting the core

needed. while fully structure investments markets making businesses adjustments also it select will accelerate continue strategic in to to high-growth participate We cost when tactical in is to

the thank to your Nordson want shareholders I our continued support. customers, always, As team and for

will questions. your we take that, and pause With

Operator

[Operator with our Baird. Instructions] take And Mike we first question will from Halloran

is line open. Your

Mike Halloran

Hi, good morning, everyone.

Sundaram Nagarajan

morning. Good

Joe Kelley

morning. Good

Mike Halloran

were understand the thinking how So here. the half Naga, the of It half. help pushed outsized in obviously, a here. stability has about quarter seems been in we year bit talking XQ more were change a and call in lot XQ you it, moving in of back the that you're about Maybe the like little last the back -- pieces

versus kind a and sustainable cancellations, So just half to of back the little help bit seasonality what front better? year? maybe you those bit And any understand about backlog, takes in you're talk assuming moving puts a pieces of the half why think normal versus little it's risk a

Sundaram Nagarajan

is sort segment, And the what Mike, some Yes. that if trends. I'll Joe, I'll of end take by through then, be of bridge will Mike market has, segment do the you questions great. you could

we back-end be So softening some first of approximately electronics. Year, it could the off fluid attributed XX to for days and which rates. have solutions business, have And foremost, in really prior be fallen seen, does what this electronic could the last of run portions are X% dispensing orders semiconductor and New Chinese in essentially process the versus

Broadly, go What had -- in we customer order So let's are pushouts in two requested addition that by happening. these to that's those are is orders, that have you seeing segment. right? markets, segment also the end are of things delivery, softer

industrial long-term and our fairly running demand demand in Europe automotive, lines, product nondurable Americas well increasing consumer precision we're assembly, in in China. doing rates, product particularly pretty some at look above you softness growth solutions, at industrials and and packaging in our -- or steady If with

IPS year. is how and really we're feel where thinking rest about general, the So good the and orders QX the we the where of are, backlog about in

to thing segment, are we the because come this the that Technologies, Advanced rates for this is particularly, our remind than we have segment in the in is what One long-term you rates. muted below suddenly seen you diversified If have growth we volatility is the growth looking past. to

XX here, orders days. the is traditionally we the downside happening what softening first two We cycle. semiconductor I over things said, cyclical. being past are the of in couple Electronics years. And benefited now a So seeing of as

long-term relates short seeing the optical is also still feel in our spending. softness in test about customers product reevaluate some the lines Our We're the inspection there capital are more the to term, capital in versus beginning also inspection end good it We And long term. there near-term things the now growth spending and orders. some looks What weakness But two -- Remaining market. is go medical going double-digit and our growth components, if long-term interventional below test memory fluid you in product are but the here. to find to happening is pretty to lines. rates, our our we different this strong. as

during So big strong. And balloons, part see part the backlog. of were back this pressured are and to where now you is elective the catheters pandemic, business due we this of business for the cannulas, of a coming our pretty postponement surgery really orders

And the And customers driven biopharma-facing are inventory. weaker to had in our be rates fluid component biopharma continue by expected. business, destocking order continue is partially to be we our -- this than who

During inventory concerns. from partially of chain where benefited rebuilding their COVID, they but supply pandemic, the because also

in get this as And weakening motor will We I is in our injected bit, time. fluid business. fundamentally high well in construction digits is back China. believe dispensing product single is as some to would It a last the electronics there lines say, the strong in

but seeing. a you gave I -- segment you color are lot give gave what of by some segment, that we hopefully, you So things here,

Joe. want ahead sorry, you - to Joe, go

Joe Kelley

Yes. Maybe your those change to questions could the guidance the in I comments the and if around guidance. reconcile

you I is remainder China. the at delay in think So in of electronics a timing around we recovery Naga the decrease in The midpoint, $XX brought the tell guidance. of that bit in the market. seeing also revenue and The the semiconductor by our we're we majority little here from QX would back-end softness saw what about the it the guidance biopharma orders what a about and down you in of prior and referenced million is change that if

they're QX the customers. system back entry, in pushouts But the orders where seeing the there, little markets also And electronics, that in the we dates. order it's industrial adjusted, end large are is the pushing customer into we're delivery Mike, These have in not their guidance, coatings where the half. timing bit markets. the given for timing the out perspective from prepayments your but dates it plastics just we're a on delivery end a seeing and in of question From electronic

there's these, half very was comments, strong. the half, first QX, back risk all, when in of think so very, on it the versus to you think about year's we we And cancellation. then guidance limited about and as back last your back again, of have as relates And prepayments the half

know, you As for a QX, by Nordson, followed record record QX.

And look we if so at to the FX you on rates. year-over-year a current become when the the exchange half, favorable basis guidance, back is going maintain

be would about X%, acquisitions about be X%. would that So favorable

And so on back would made. the just Naga about in at down based it basically the the organic half X% implies comments be midpoint,

Mike Halloran

I color. That's of great a appreciate really lot it.

fluid on demand. for the out to normal? this So rate guys normal destocking of behind the you is underlying do think follow-up is at relative start mix until the the order that least we patterns more balanced then coming segment to more about think versus side. right should What be And that maybe you through, component going margins and as run

Sundaram Nagarajan

the of the just we you order Order have some terms green in is me on what rates for be customer comment seeing recovery patterns rates, of rates and, shoots order are customers. from pick these the segment. order Joe, stabilized on might there a and up Let can the margin

X% about probably what is to to an But me come already exact X%, that is is the about put think orders going difficult. pickup a good this it's give how to slight business. and has best I recovery we when push way see orders to beginning you digits it. is high in you to the that date, to stability begun the definitely, be that we're in want can see to a is if you I'd this back. single this know Long we love term, exactly From tell going feel

Joe Kelley

know, as was at XX%. about margins, 'XX the about at XX%, you in on running the Mike, 'XX segment,

then normal, historical we on for they XX adjust -- will rate forward. that efficiency back forward this that improve And adjust the and logic the move I as as would So to this we in cost made variable did we the as run inefficiencies the not within is move off 'XX. QX the drop of drop factories recover we new is to individual comment initial and this volume there anticipate in their

Mike Halloran

Thank helpful. Really so you much. Great.

Operator

our Fargo. take will we Poliniak And question Allison Wells from with next

line Your is open.

Allison Poliniak

morning. Hi, good

Sundaram Nagarajan

morning, Good Alice.

Allison Poliniak

it IPS, seems stable. to turning Just pretty

this quarter. starts a Pacific be that growth a Asia quarter-to-quarter. headwind Asia we for where improvement that may Pacific is mitigate was here Do to headwind assume slight from

XQ trying between through Just Thanks. to that think and XQ?

Joe Kelley

Yes. seeing just as Allison, given that also New you, our systems has push-outs sequential improvement as Those segment, year will a year, Year fell businesses well within the some the versus you are you I know, business, Coatings business that there China would last IPS then into Industrial presence and where QX half. that. are of this I tell back in referenced And in those QX Plastics large large see as division division so in the QX businesses. Chinese

for projects first so prepayments to asking then the again, all their back half. improvement in. systems still are they're It's projects delayed being for second half, sequential those are locked improvement Their predominantly but into and businesses being customers, delay other sequential half delayed. in shipment reasons, of And and our they're those taking place,

Allison Poliniak

bit investment to you coming Are thanks. NBS the for as thoughts the just to are How it, lens Next company an you looking then there? of increase that And any the Are side. more? we about this talked Naga, look thinking starting in out Got you year? this, innovation a position you there had about tighten

Sundaram Nagarajan

it Yes, NBS is way momentum company. years holistic two gaining within maybe is about to than deployment - was is accelerating, the it think becoming think ago. more the it our And I Next

invested our all what our So That in businesses sharp opportunities, are in but that are that And in the what core really on staying does entire the total, strong not innovation company best means businesses. mean? division-by-division, division-by-division.

for businesses in us. capital we growth. are And is pretty accelerating investments strong That top also where priority have we a

I business, interventional on lines, product we significant very good off our expand example, a right? For about signed So where feel are. to really we recently, have capital

really important where is remember, have only not we invested are staying it businesses think our to core I strong positions. we in

In a is electronic are investing in that's growth where invested potential order innovation cases, in also the for in - from even cost declined, differentiation. our our more we we our are in variable because perspective. we're But have businesses entry adjusting source stay a those the us. of that But businesses, some that has cases, -

kind count of Our on thinking customers us. These not three-month process. are

of North participate those, going capital And because America is our leverage in for multiyear stay and and term, fully we technologies. capacity in continue expand long- to Europe. significant most business, in semiconductor investments in This to are in we to those see electronics need to our relevant customers

Allison Poliniak

thank Great, you.

Operator

from We'll with take question our Davidson. next Matt Summerville D.A.

open. is line Your

Matt Summerville

and QX any due that this recaptured you push way and or guys labor become end of now at try Thanks. also of part China-related the of the to may think out And it, in then follow-up. was to much shortages? the quick parse that all latter year? quarter Is into gets associated of be out the have - just quantify as you a half impact New I pertain pushed is can Year do what and the of there the that and COVID sort How

Joe Kelley

we probably you, $XX quantifying Chinese at of stab to what a take just million, Year me the let New that $XX into. when that. the falls tell million I quarter depending study on would So, timing is

that And some supply right experienced so lockdown and the impact. that's challenges. issues consistent Year at on of COVID and no our they has chain basis New The full and before year the customer

And disruption would to quarter. a $XX I the in recovers that in million full closer that, don't know I characterize as year. that the about

year. recover our itself part that that, you, within China, in about doesn't in in make itself that or QX year $XX so full year reduction the I guidance of was that tell miss what million the was in up And would anticipating

Matt Summerville

around sort acquisition than million. you're more Got announced recollect the it. and were And on then a time if the little maybe you of can $XXX I what revenues you expecting, annualized just CyberOptics comment

contribution clearly, the nowhere rate. look that in run at near You QX,

what a might of in Thank seeing revenue maybe So can about business? kind talk you that one, in that business and for reasonable year be you're what you. accretion outlook

Sundaram Nagarajan

Matt, adding follow-up. optical technology this with with to incredibly pleased the thank pleased of company the question we're CyberOptics, company, long-term way. long-term team, incredibly prospects inspection positions in the we a good capability the that you for on And the and pleased incredibly for are with really

And as In the however, short noticed term, memory have what right. you see is not talking where the capital if market, little been those delayed. spend strong as sort because that rate which they we had of of we helpful? that areas near-term of Joe, would run at investments they're really the you've same one is have that, really what And time in, is - not expected, could a

Joe Kelley

the so in you first - an in mid-teens. - it's And million sales. contributed quarter, as $XX favorably as highlighted Yes, can of from running tell the standpoint, we our a I favorable EBITDA operating mean, I to profit.

full growth approximately going you And adjusted we and forecast about be to think sales to to our year, on our profit growth the basis. operating so, have on when an X% forward, contributing that contributing year-over-year

Matt Summerville

you thank Understood, guys.

Sundaram Nagarajan

Yep.

Operator

take [Operator Boroditsky Jefferies. Instructions] question from And will next with Saree we our

line is open. Your

Saree Boroditsky

my Thanks for question. taking

of second, from there's a concern, while. kind been the this investors on for on some sticking for space I Just a electronics think,

to surprise in with customers semi was you? changed? conversations have how a the And orders softening So

Sundaram Nagarajan

or of off - sort surprising, hearing what surprise? customers report you're, in with on a is this but of dropped Certainly, it last It's our not terms changed. order our the line XX more outside. In the days,

the in semiconductor through their bullish very customers So or as if memory but you certainly they in P&L. all think the short-term manage of reevaluating customers, what long-term, investments about their about they spend them

about about the is with hearing you our think from the them marketplace. with reevaluating decline expect bullish Certainly, compare would how And in is we order longer was in spend. Yes, if volatility very So in if the are XX.X. term, the is rate think it, past, what line in certainly term, short-term, you the a surprised. muted. would surprise? what that in And days you the is But I and in they're certainly longer this sort about XX of the

strong to Optical, well But there. strong very think we and remain continues has it also is pretty what is really we'll a strong T&I excluding and is strong and do backlog,

certainly diversification So the T&I and expansion muted company's volatility I I think you? reduced cyclicality. Saree, has into or the this answer did historical

Saree Boroditsky

Yes, out of the coatings. push more the thanks your color then guidance you pushed these are generally, segments about, push Could then additional talked in the systems half on out? into any second and XXXX? industrial you outs that. across does for in And And obviously, provide why assume systems being

Sundaram Nagarajan

our we of that. Let you then, what color sort why are additional outs. have and take push me with you can to seeing customers any if the And Joe, add

about line. One that systems would think, tell manufacturing I a larger of subsystems is, as you the things in our large that go a part of

you large We capital these saying, have expansions of we of away. hear customers construction it, typically, do. our going play a when we So project so a - that's any are don't what

delayed have subsystems of of they construction we're other delivery That's in are that phase What are not what are is expecting from it, the do hearing. hearing we systems, vendors they that don't are we so second and the confident has the to this it in the prepayments. about right? reason quarter, pushed And been And this need this is hence just delivery half.

all come increases line of prepayment with are large repayments and backlog increases. So our with our these system in orders

about it. hopefully, pretty that's good you're that so looking you for. we And what feel -- And gives

Joe Kelley

that these systems when to inspection of Medical in combined businesses our -- at comprise coating in you Yes. it's And Interventional industrial space if our space plastic XXXX, and businesses, Saree, the could the Solutions, look those large test I timing XXXX, with are space, businesses the -- around question backlog. those your over the XX% add and

are the on there already those XXXX divisions. for out so orders going into books And

'XX, think actually you when much about that subset backlog businesses. just it goes Nordson the our for but it's of 'XX and so not And into our confidence, so

means And less say, so that, that that supports, of revenue. I'd our than half

backlog And only so sales. supported our only by that our one revenue portion the XX% less quarter it's backlog -- price where than greater of of of half of our so than And is business is

And book the the is changing to subject and where we more and patterns need that portion business. in so ship order we're of business for there quarter

Sundaram Nagarajan

also thing to is these revenues than One revenue. that we are recurring in our where just more I book of businesses and XX% add would ship, have our

-- those in cases, some higher. in little it's So a and businesses,

confidence customer gone sort level hence, I The the businesses And the in businesses, that's demand improved, our is has to of down our fact you their that think line have our expect away. So good level has with more their the of and confidence in problems in the order chain to news what begins comes supply customer news. XX% good supply for these real chain entry believe is. that would are on

-- good well. as So gives me, pretty for that me confidence that

Saree Boroditsky

Great. taking my questions. Thanks for

Operator

[Operator our with Instructions] from Walter Seaport. Liptak We next question will take

is line open. Your

Walter Liptak

Industrial segment. a Hi, can get color I thanks. bit in specifically wanted I and to the in well. Americas Good the ask if what's little more Europe. going on morning. just about orders Precision And And see about

packaging. feeling talk just last how you could you called think tone of about you're about it. and just and if industrial XX wonder days the automotive, I business, out the I And there the

Joe Kelley

it growth question. Yes. the line, Naga as the long-term think growth our Yes, mentioned In we as business, steady I segment thanks about in for see with that Walt, rates. that

Americas you'll the next. were recall us. And for for quarter. that, has what's continue our to last pretty in been referenced, a launches several it that performance But gain steady was new in to driving line year's our traction. consumer the It's contributed have that NBS non-durable where within so and segment also largest site pilot there, within factory is of we it's There, product we our as particularly is, growth Europe, and

so they're to contributing there it's And you think the their having growth with and the well. delivery, about on-time improvement traction when that that as

business and the we're would that you, the as So if a to mentioned, -- then go Industrial you demand automotive tell in Coatings coating there. Naga side, pickup, for seeing I

Walter Liptak

Okay. Good. Yes.

soften. were to period throughout parts you in clear, average, other XX-day and that steadiness speaking the including where quarter just but of signed So the of there just be on that the was business not was that

Joe Kelley

Yes.

a say, term, -- multi-speed economy. As we the would said, I it's as

steady that some of our are And line that growing nicely. have going business You steady long-term that are I expectations. into some lump with would in that are and down, some growth the

Walter Liptak

this Great. the as like you were how a feeling you cost? bit the about sounds positive then in a And IPS, how little Great. quarter, about follow-up just you feeling rest are of are It Okay. price year?

Joe Kelley

Yes.

passing So communicated the But successful again, gross passing we but as XX% plus dilutive been from percent price gross margin. gross but it not the inflation margin from it dollar QX standpoint, cost, favorable in a is is in QX, net the standpoint. we and in here through through a have inflation margin

incurred our consolidated has they significant by in -- And and margins would Nordson basis diluted inflation. So you been successful diluted tell a this division it's about XXX points. I

And been pricing the led so passing would clearly I initiative. way that successful through say, and this in division that has,

Walter Liptak

Okay. That sounds great. Thank you.

Operator

will we from our Jeff with question And take next Hammond KeyBanc.

open. Your line is

Jeff Hammond

Hi, good morning.

Sundaram Nagarajan

morning, Jeff. Good

Jeff Hammond

XX-XX? seems maybe you And -- maybe a parse of kind gave like color IPS, terms the heavier of wondering great split guys the change. it out I'm of it can or then of one you is. it between on like and medical kind Is between the cut? way But So if Is lot just the the in split where softness other? ATS no

Joe Kelley

tell market. as dropped in midpoint would to guidance, if is seeing about the -- and I Yes. revenue, semiconductor, in million, so simply $XX think we're the that you, change majority in of our you the the what response we I on that

it the in the segment. so in And segment a is is from -- reduction than MFS greater perspective, ATS

Jeff Hammond

helpful then. kind And how you you And what of then there? of what medical are -- have this in will take? built in really That's destocking hearing long Okay. just terms

Sundaram Nagarajan

-- detail the a to be give and this it are stabilized, to to order my going And on some that any able answer tell is big will recovery be that's more more entry love what is about the I'd customers. beginning see when more to this to -- perspective. on come you because from you hate I see think and is have would give in precise biopharma we I think we to based you I declines What way back. from speculation today. can

of good no we long-term to have our components is strong single-use because This single-digit really this high going in about growth feel space our be feel this drives prospects good. -- growth -- loan company. holds secular on we is a I still

about increasing be not beginning further recovery. this stabilized question are fully hope we and it but more and -- to see we I your increasing we when confident see -- We less to see use, will that sure answering but expect on will use is exactly a what normalized. later, than sooner what beginning feel I

Jeff Hammond

just That's great. And --

Joe Kelley

was mean, the of change part the guidance. in I that

the delayed before, to our it If guide guidance come about quarter. you a QX in be our thought think recovery appears in might about QX, we

Jeff Hammond

Okay. That's great.

the their run CyberOptics. the Just right I about is year-on-year? is is if seems of from XQ one it rate revenue -- softer. to don't on filings is, there way going that don't contribution that I Or step was last the business I think Or up? -- forward? seasonal Is be go know to maybe don't some recall it seasonality, kind there down just like business and know,

Joe Kelley

would comment, wouldn't would run that. -- QX annualize I the rate I I Yes, say and guess I take

I think like QX Again, business Thanksgiving. many businesses, QX is for that our includes light.

Our QX included New Chinese the includes QX and Year. our Christmas

probably I So run quarterly light. their that is or their not rate -- XX% to million $XX QX would $XX million but indicative to of XX% think

Sundaram Nagarajan

they quarter On Yes. not yes, with be run would wouldn't and first I basis, lighter, but a it's take our year-on-year that.

Jeff Hammond

much. so Thanks Okay.

Joe Kelley

you. Thank

Sundaram Nagarajan

you. Thank

Operator

at And there questions this time. no are further

back the additional turn call remarks. to now will I Naga and for closing So

Sundaram Nagarajan

differentiated technology, it and quarter business solid, model markets. customer-centric diversified performance of first position Our reflects and strength the was and end product our geographic

ability XXXX our XXXX remains a our in reflecting some While sustain guidance with performance. change our strong patterns, we seeing year record to order are

We'll this adopt in and that We experience core environment. customers will our financially service strong a in remains balanced differentiated remain invested for approach in innovation prudent businesses.

Thank you a Have for your call. and day. on time today's attention great

Operator

gentlemen, concludes your conference call. today's participation. And thank ladies you for this We and

You may disconnect. now

Nordson (NDSN) 21 Feb 232023 Q1 Earnings call transcript