Earnings call transcript Q2 2023

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Operator

Good morning, and welcome to Nordson Corporation's Second Quarter Fiscal Year 2023 Results Conference Call. All participants are in a listen-only mode. After the speakers' presentation, we will conduct a question-and-answer session. [Operator Instructions].

As a reminder, this conference call is being recorded.

to of call Communications. Investor like Mahoney, to now President Vice Relations would turn over the Lara I and Corporate you. Thank Please go ahead.

Lara Mahoney

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

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

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

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

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

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

happy to be then questions. your take will We

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

Sundaram Nagarajan

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

as described can solid. Customer in a to medical a industrial, macro demand environment and second consumer were be the experience quarter, Nordson markets continued non-durable multi-speed During that economy. end interventional

lines continue the semiconductor cycle. negatively dispense medical by components gains inventory. the balance prior and sales in through electronic growth year to biopharma team being normalize These X% work quarter. our the prior factors customers delivered product themselves fluid impacted the to Alternatively, year's are excess as division And comparisons of out compared of lines to continues product sales downside challenging of second organic

targeted navigate enable where During the demand. position product weakness competitive in the quarter, and effectively Next growth these for also are and believe areas we remain strengthen business us direct we our long-term framework. invested took to profitable innovation, sales our including environment force, execution and of our training current will cost the seeing growth. the in teams Overall, customer actions NBS differentiators, We in

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

Joe Kelley

X%. sales XXXX to X% increase good CyberOptics see unfavorable driven offset prior fiscal of was by from by impact compared growth the Thank an X% everyone. you, quarter to you On second X, second $XXX organic of were and X% will acquisition morning the currency Slide quarter and The million. sales million, a of $XXX Naga, increase year's benefit of

growth, related the difference sales Pacific with X% timing to quarter, Year. reflecting in strong partially the Chinese New the During were Asia

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

factory inefficiencies compared cost prior sales down margins inflationary XX% points comparable totaled million, reduced and $XXX to to volumes. profit basis are periods. sites gross these dynamic manage year, to actively from the XXXX severance continues at first or costs, dealing When resulting gross of the as quarter price XXX profitability Excluding sales, team mix the with adjusted changes and

profit $XXX million quarter. Operating totaled the in

items, severance million quarter, profit, year one-time we million. costs XX% adjusted million. Adjusted non-recurring these of excluding the operating the X% $XXX recorded operating in $X $XXX profit of the prior sales, was totaling below During quarter, or

million, growth. second by EBITDA with target in prior unfavorable XX% of million sales $X the level; by line quarter headwind CyberOptics million or decrease for was offset sales, is $X currency was The below $XXX mix, the plus $XXX of profitability long-term primarily which the EBITDA year translation acquisition however, our driven million. a

million. non-cash increased of interest non-recurring, Looking Other higher $X expense with the and borrowings annuitization prior related at million expense net line quarter, rate was to rates. second forecasted which the million associated decreased XXXX. with the charge the rate $XX and in rate year XX% million, primarily of XX non-operating prior year expenses, increased pension in tax Tax for expense quarter year interest effective full $XX for an is

quarter per share, decrease $XXX in severance share, adjusted the million, or Adjusted totaled costs, year primarily expense. $X.XX profit by totaled prior the decrease X% higher earnings. lower Net a share. and income from excluding non-recurring driven earnings $X.XX The interest is per per operating

X Industrial non-durable of well review increased million partially X% driven $XXX Slide Solutions The XXXX into the compared the as to unfavorable Precision X%, was robust as X%. by strong organic markets sold organic to most growth processing offset through in second by product quarter X driven lines polymer growth currency products prior regions. sales end consumer by turn to let's across quarter, the of second demand Now segment of impacts year performance.

$XXX operating unfavorable currency million, the year for sales, profit X% XX% is of Operating of profit the prior was impacts. quarter some translation or to despite increase an of $XXX million which adjusted compared

to most and the changes with diverse last currency translation timing IPS the globally difference segment, our and therefore remains New mentioned most Chinese Year. As quarter, exposed

and to Next of currency margins. growth on delivered margins XX% strong segment the basis targeted constant of demonstrates XX% power of NBS the segment's growth continued incremental Looking this ahead incremental framework. a and has X% our XX% organic This year-to-date, performance

unfavorable compared year's second you'll prior Solutions impacts. and X, related Slide quarter. $XXX decreased Fluid X% included change the sales of currency This organic a X% million, decrease in to see On Medical a to and decrease of X% sales

solutions demand product factors medical biopharma in offset Europe the the Asia. serving by net a and lines components decrease. These more than softness Americas, and Strong was fluid in organic in interventional primarily applications solutions medical for fluid drove lines, product X% sales

costs. that quarter, cost During to in pressure actions took the second we million volume of in targeted non-recurring businesses $X responding resulted severance

which operating Second year is XX% million, profit operating of million decrease profit million. quarter adjusted to a the sales, compared $XX $X of of $XX was or prior

and factory lines again profit XXX years. that meaningful It in operating quarter the due driven over The mix the and profitability changes reduced volumes. is noteworthy inefficiencies of two segment to profitability points with basis by line related decrease more sequentially of sales the levels within the is in first running the medical was product prior the XXXX improved

Solutions X, million, X% $XXX Slide to the Technology a see increase to sales quarter. you'll prior were Turning year second Advanced compared

sales the During XX% was and quarter, the CyberOptics X%. the down currency volumes contributed during were impact quarter Organic acquisition unfavorable growth. XX%

and in structural The decrease slightly significant the the lines during in million actions continued resulted to non-recurring by were by in $X severance serving the organic quarter Americas the markets in nature driven address second reduction in dispense of Cost electronics was growth and decrease XXXX fiscal of product costs. offset electronics product the lines. inspection test products semiconductor Asia, and dispense end

by XX% sales, second organic profitable quarter was million. prior the acquisition million, the The quarter profit of $XX adjusted in second offset $XX The operating operating of which driven decrease, below partially decrease or profit sales the operating was was profit year growth. adjusted by

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

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

working growth Free was available organic $XXX year-to-date cash flow the and current quarter. significant on to efficiency capital during net improved bringing cash inorganic income have conversion to million, opportunities. quarter in capacity continue XXX% We to rate the pursue borrowing the as

the made price stock on at shares average quarter, $XX During million approximately XX per XXX,XXX share. of repurchasing dividend an $XXX and of in company payments million second spent we

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

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

Sundaram Nagarajan

Joe. Thanks,

dynamic Going with we into be fiscal would a XXXX, knew dealing we environment.

electric gain seeing lines. we continue segment, customers. vehicles. now of an I progresses, update we steady And like provide non-durable Precision product would the to see in Investments in better our our lines, product are be end industrial we in Solutions visibility Industrial consumer through As to markets. notably what to year made demand automotive the In and continue

segment, the polymer and We're driving markets end diverse applications and for sales also parts our year-to-date related combined our direct the both which battery this is Joe applications. continuing combination recycling strong with to strength growth profitable of processing product in reviewed. seeing These and systems revenue and lines

strong. experience and in ECMO Medical product and stent segment, catheters variety integrated cannulas products Turning we into interventional our that Solutions procedures, backlog a and to continue growth of the blood delivery, for valve and to is angioplasties, including include replacement, are digit These solutions for balloons, devices Fluid medical oxygenation. lines double heart the

assembly within the The The Asia continue and serve segment see and Europe. demand, electronics end a solution in markets, set and product end of medical. MFS health electronics including line within to construction, fluid product lines construction soft animal assembly, diverse markets this particularly industrial,

stopcocks for single use MFS and the component valves which medical markets. our makes Finally, medical in fluid the biopharmaceutical segment, lines connectors, product plastic and

years, two in benefited division double this growth biopharma from past strong organic Over applications. the digit

As continuing our through we last end in shared inventory market this to are in work quarter, customers destocking. the

That normalization normalizes, market for within cuffs as provide business a this the fluid to stable. components, applications the remain pressure segment. blood headwind the within growth significant patient care said, biopharma such this and bags continues IV As

This the CyberOptics in of electronics of end sales growth has in lines. dispense the and Technology We of product firmly in electronic cycle. Solutions the market. midst we're segment, believe Within downside impacted the the our electronics long-term Advanced

and we from seen to the in yet Act, memory electronic all investment continue. that not have know will We the CHIPS product automation, the as investments innovation benefits new related

efficiency historic for are cycle, of adjust the and in actions T&I X-Ray continue muting current in in While quality lines. customers structure cycle. product innovation manufacturing we invested inspection in that end took and to lines test product downside this volatility to the volumes, will market. their this in Growth remain to systems teams the of successfully Even targeted our ensure cost the invest serve

and on I our this simply semiconductor remind organic capital to technology long-term of the This growth quarter average. by to optical cycle continue lines excited exposure are product more we remain the end has long-term growth end experienced market, ongoing opportunities in business. its market, acquisition this so about serving have we years two past expenditures differentiated the memory multiple XX% this the market. attractive pleased segment weakness. be investors delivered we of with dip CyberOptics Regardless, and the integration Our is encouraged the growth

portfolio profitable Overall, product diversification geographic growth. exposure of the enables the Nordson sustainable market end and

we or period remaining However, in delivering connectors. divisions market two profit X% corrections, nine Nordson and are incremental levels. a XX% approximately growth where The at divisions organic year-to-date seeing is semiconductor equipment targeted of biopharma significant are

entry, market of order $X.XX. the provided our Considering to of well as of combination we our growth tailwinds revenue earnings current end XXXX are range headwinds guidance narrowing X% maintaining these and the X% over $X.XX as to and fiscal adjusted XXXX to previously

Looking specifically than to quarter quarterly QX. sales prior QX sales XXXX the forecasting into be to QX now stronger earnings at year some XXXX as for third split, third anticipated, the quarter. Therefore, comparable were we're previously sales fiscal pulled was forecasted and

share. of range earnings quarter the Third in $X.XX per to forecasted $X.XX are

fourth expect over the to to the be prior single digits mid year, strongest fourth sales low quarter. We year increasing of the quarter

full and of employees, testament dedicated diversification the our our customer-focused which our a NBS business our Ascend the sustains markets, strategy. Next record the sales is performance, year range solid guidance of execution to Our end XXXX model, and

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

pause questions. will and that, we With take your

Operator

Instructions]. [Operator you. Thank

question from comes Markets. KeyBanc Jeff Hammond from Please Capital go first Our ahead.

is line open. Your

Jeff Hammond

Hi. Good morning, everyone.

Sundaram Nagarajan

Good morning, Jeff.

Joe Kelley

Good morning, Jeff.

Jeff Hammond

biopharma to know just focus the about talked I I you on want piece. destocking. inventory

I like wrapping lingering. it'd it but it had be up, sounds is thought you XQ maybe by think

comps kind of So a visibility just to hit your easier that to or sense either get re-inflect for positive? of trying better business

Sundaram Nagarajan

business. start growth secular intact. biopharma Yes. impact Jeff. would no is I all to Thank what this There have with negative we always about Overall, you, drivers thought

is this high strong, digit single So business. growth a

quarter destocking, terms the look expected it be like this would but second of doesn't it, had In have indicated. from we short-term in as we we maybe it was recovering what

to back expectations from year, by Our end normalized be the this are should of our patterns order we customers.

time, by also you And so comps by also would time. -- comps have the be the this would anniversaried that growth

Jeff Hammond

terms where fourth just you more pull us level forward a on quarter of ramp? color on And Thanks. of And for Okay, great. a visibility then in saw can then segment that or little strong the you your detail? color little systems more give business

Joe Kelley

it backlog that I elevated I Jeff, different. a Yes. near you what relates tell guess remains very the to of second would the very at But $X visibility, billion. part as question, the level, mix is our is

plastics IPS business, there's about backlog to today, business think large X.X remains which quarters our business was majority and pre-COVID, sales our I of backlog. your would XX% processing, the the and typically answer about in of ran where you our you, of is normalized sales. sales. the systems But I'd XX% quarterly in is it with a to our our of the in XX% question quarterly But has that backlog If we of X% of backlog XX% segment. business backlog where worth is call this roughly coatings tell And elevated, the particularly

The our system are That customer they customers on heavy large business. solutions interventional said, within here, large request orders ship can't and spec clear in customer they delivery then dates the in by visibility our have our And remainder medical quantities. are depending for of Here, dates. orders move backlog blanket where requests product. we ability prepayments placed quarters. we is these And these to have routinely communicate the and discrete being the to customer

it it predominantly businesses these given QX, backlog. when any and by our driven could think systems we quarter. fluctuate So you do strong have on about But where heavy it's

QX, in the the coatings quite IPS, was strong, here processing, and the particularly the where pull As to was in from plastic coatings of QX. which you processing the the some and saw saw plastic we QX

the really our in our systems IPS any it's pull -- to given in customer results these but on large visibility, timing, for and I out would that's large driving within to that's or so QX business ability And quarter push also say, clear systems.

Sundaram Nagarajan

market color strong framework systems is in growth to and that truly are It Let here is What that products Joe really best on businesses, me we agility of testament feel that showing businesses say would and things of strength. indicated. fourth have strong also Next leading a to we add something And flexibility to customer optimism pretty respond it. good quarter. medical strong really, intervention a our business, as focused about so demand action. is the also which the we our way, about strongly the feel our in drive find is some you the NBS really two feel for I about those

Jeff Hammond

appreciate color. I Okay. the

Operator

Saree from comes from Jefferies. question go next Please Our Boroditsky ahead.

open. is line Your

Saree Boroditsky

Hi. Good morning.

Sundaram Nagarajan

Good morning.

Joe Kelley

morning. Good

Saree Boroditsky

So weakness going also But I guess semis. lot the a obviously first, government well there's been funding telegraphed. it's in towards of ATS

CHIPS bit about mentioned little You the a Act.

that this So when see that? do given about how would think benefit? to start And you then cycle down long we

Sundaram Nagarajan

Yes. cycle it, about semi The normal look downturn. you historical way to the think -- at expect expects if four quarters of that about cycles,

where quarter are are. we so really And in is we two

of to to middle somewhere CapEx year the a be is in expenditures this expect come next start we'll expenditures back, place where start come we back. what So for sure

customers Our our this the conversations prospects long-term are business. for about bullish with pretty

going given of As making Act our you you towards businesses CHIPS that our find kind investments benefit their are that considerations, know, from allocated to CapEx typically construction. from end are in, customers come given of these the expenditures are geopolitical is what

at they plans, that packaging constructing people us of towards right see end semiconductors. would come back putting equipment, So are expenditure in would sort That's now eventually would you that ours of where in benefit. of goes start the

Saree Boroditsky

about what margins with thinking related. been term? into long we of here is volatile. the Then this But how rather margins mix? do and there normalized is some have think And over XXXX mix helpful. ATS, know That's I

Joe Kelley

the you you ATS I as Yes. semiconductor. Saree, the as saw when were the lower to mentioned about business, think in we for quarter, responding volumes

specifically, tell that those of nature, impact in consolidated of was in some portion basis margin points help going ATS the semiconductor improved in the year just ending significantly about that when XX% a over at at components the fluid profile. the let's the to were years, the you in last quite I responding segment, has And structural of But say forward XXX of us and which over lower profitability, the business. operating would volumes But actions margins last profit several on medical terms cost both up think level to the will XX%. from you

now, volumes year quarter. right about running it at this volumes, XX% that's So at roughly think this it's these how I mix. these the with would in for And

Saree Boroditsky

volume we of you as about is a mix this or And it about point? that think benefitting there like question at is XXXX, anything related really think

Joe Kelley

we see the margins I 'XX that no reason this to Yes, tight segment. recover back for get as we wouldn't

Saree Boroditsky

taking Thanks questions. my Great. for

Operator

Dankert Please next question Our from go Loop comes ahead. from Chris Capital.

Your line is open.

Chris Dankert

morning, question. Good Hi. the taking Thanks guys. for

I third for the at fiscal is actually a for timing the you here, As how sales quarter weaker? that below kind little expectation, around guide to third comp the the Just are of is that us more reason quarter think look it just sales can about seasonal getting semis give guide? of backlog, color it

Joe Kelley

Yes.

relates to to semiconductor, as relates particular the and we've lines. leveled off it entry to it commented, As order have those product appears

semiconductor million think where how about the the That's million QX. into about got issue from I plastics those pushed coatings for in I backlog. saw is forward. And pulled the from from would roughly QX we the forward some do And imply the QX sequential while would the XX cases between particularly does for roughly and deterioration is predominantly space Chris, sales, further so got QX. semiconductor QX systems sales, QX XX sequential have QX levels guide. deterioration It QX. specifically. speaking, QX were not there estimate guide and large the on timing And we to And in a actually pulled where probably in now out got

Chris Dankert

you Got within remind little of a the versus helpful. bit MFS it. just That's mix housekeeping kind thing EFD, life a us of very, I very the there's Could that there? in think maybe here. about interventional then confusion And sciences quickly versus segment

Joe Kelley

Yes.

think way about would I that So the correct. you're is

So of would fluid and $XXX which remainder you your is business And is solution there's is of which And the of business. actually your some then as roughly some of which a then electronics which markets, the tell some medical, there's annual and $XXX are assembly, I are set are reminder, that interventional which diverse a construction, are industrial, biopharma, medical which some the is business million end some EFD, dispense. serves electronics; of semiconductor. roughly million which

And so served it's by set business. a of markets that very diverse end

you we there significant the And be has business, talked continues pressured been to entry Growth so and within The quarter, the within electronics strong. biopharma strong. strength the business, has saw in that semiconductor will solutions medical and is as tell order was that of the interventional Naga that about, quarter the in performance. component mentioned, I EFD contributed but to

Sundaram Nagarajan

Let business. is it A that biopharma. million, components fluid more color some portion is all But of fluid me to XXX Of biopharma. bit business. it other in connector medical the not applications little of also add those have you

normalizes that in level. stable. And And up so the indicated biopharma one of you normalizing. show of find that that But normalization the this But pretty to the by end my sort other at as division one I the answers, of connectors is we significant is is expect what the year. you fairly biopharma have was been have

Chris Dankert

helpful. guys. That's Thank you,

Operator

D.A. question go comes Summerville next Please Matt from ahead. Our from Davidson.

line open. is Your

Matt Summerville

Thanks.

quick questions. couple a Just

relative in of flat currency in driving a roughly quarter probably be Can parse tailwind put kind sales? a on to delta third $X.XX Just material the on last somewhat year, reduction point guidance going to what's year-over-year flat EPS earnings a the out to quarter. you revenue, finer is on

Joe Kelley

There's components is that to the interest up Yes. One year-over-year is in two basis also on clearly earnings guide. expense a quarter.

year, full the to up XX million. about be going it's On

also to the forecasted in last hedged there not was year, So which FX gains are that contributes. some quarter, then repeat. benefited, which And

the so year-over-year are And I would OP, tell which an earnings the impact guide. below on those having are you

Sundaram Nagarajan

Sorry, Matt.

second that in above the margins, we about EBITDA to think the is it's of so XX%, line. delivered expectation are we our I level Just to while at strong quarter, add, are going Operationally, important year. pretty at these half of XX% into that the that the the all remember earnings

Matt Summerville

That's of M&A any backlog talking maybe about helpful. in you're sort last it. about therein? a coming of your Got Naga, And out spend relative evolution et actionability, to just thinking funnel quarter, minute, how cetera,

Sundaram Nagarajan

Yes.

healthy. remains pipeline acquisition Our

continue to We on projects. work

sort if businesses. test or to areas we focus businesses dispensing the up to run is continuing core any continuing to that, continuing remain which around add into Our in our medical expand inspection, same, to scale our of

financially not criteria. we've changed. those things but we disciplined. remain pretty Pipeline, have those talked So healthy, three strategically And about

you're And continues. disciplined, so going work expect see we to to continue but work us to But be our it.

an So top there only that -- mind this you I tell of our of is is piece important it's can and growth strategy.

as for committed and Just over we $XXX plan on in in to and million will the that $XXX in up $XXX we already, to million period. revenues period, deliver we plan fully million the acquisitions that have reminder, a expect acquired delivering

so and to we able demonstrated flexible in do. And type work deals we we're of are have good

year, process but we a where sort We company in this have out, carve are. public invested which completed company we CyberOptics, public and Last remain a of good about we is did deal. feel

Matt Summerville

Got it. Thank you.

Operator

Halloran question go Please comes from Mike ahead. Baird. Our next from

Your line open. is

Mike Halloran

Hi. Good morning, everyone.

Sundaram Nagarajan

morning, Mike. Good

Joe Kelley

Good morning.

Mike Halloran

a here. So couple

get here out? change levels? guys guidance, until normalized you in the this are for to what's backlog is Or still in run current more how the any expect from underlying year. is demand next seeing the about rate you're embedded sounds your from kind assumptions thinking guide First, point And of at don't there normalization in any then like -- that It you probably related, very elevated?

Joe Kelley

Mike. levels. the I backlog historical at the XX% our pre-COVID that on business, to Yes. guess take would backlog if me let you you, tell getting I of first is look part question, close

backlog to this given you quarter. sales levels, in into say pre-COVID If XX% quarterly heading at business about of ran any XX% we

worth our about of quarter backlog. we're business, in the at one XX% For

the hasn't it's of to revert continue is is the practices reverted The that backlog historical level, is about business, business, know it's at to interventional I piece levels. solution which business. be and historical almost don't orders the and businesses, an coatings to So that systems quarters going plastics our to at large it have about X.X we're business, we of the running that in There and worth elevated those backlog medical continue where strong businesses. XX%

the not so of seeing And we're is. norms, while historical portion revert remainder that to business our

Mike Halloran

And of the the second question part then.

Joe Kelley

Sorry. Could you repeat the second part of the question please?

Mike Halloran

Just there within any in for improvement noted avoiding normalization guide? the assumption is backlog the underlying guide, fundamentals or deterioration

Joe Kelley

Yes.

our So order we look has if stabilization that QX. at we level stabilized feel do at you on assumption throughout entry, that it saw the

assumes And is remain guide so that deliveries. to then systems of the continue within the these the levels. quarters the timing what And we you we have at --

And fluctuations. quarterly what so the drives that's

Mike Halloran

you're basis? Sounds level guys about the you piece, business, forward of at fluid given how ATF business Because lot then the to just that And of of a the pretty good. side normalization And a biopharma thinking a other healthy within on the are things medical that of parts high that more there, you've the about. medical with piece? feeling within context should correlate

on about the how timing normalizing? just that So that remaining you more and piece of think

Sundaram Nagarajan

that's our year, about of as bit MFS, and right? our end think medical component back growth. The are the expectation X% X%, biopharma say, And by so XXXX. is ATS, of the you That's into going we middle next to normalizes for part year-on-year I business. year, the in And to going be little a of fluid would the

our So in APS our business comes comes fluid in components first, next.

some of this too. And is of normalization comps

Mike Halloran

referring construction, the think segment working mentioned the of the et optimizing, that type to I Naga, earlier in specifically more pieces. was I that you are call. No. that parts cetera,

Sundaram Nagarajan

take you to do Joe, Okay. want --

Joe Kelley

broad you Yes. and side, business the tell The the components medical other not on our industrial, the And the EFD MFS fluid half interventional construction, piece management there's that medical. medical segment. is half similar to roughly not business market has piece animal that that's I exposure and of of exposure of the more health, ATS there's on would

So that's how we it. think about

Sundaram Nagarajan

-- then And

Mike Halloran

ahead. Go

Sorry, Naga.

Sundaram Nagarajan

Mike. Sorry,

for like got in are the the it So ATS. has exposure We that electronics and right. think the construction you Asia, about portion to

Mike Halloran

it. helps Great, just you Is actions those would mitigate margins demand. normalize and Last guys are Or what way could like? those some run thinking about actions any quantify look I what internally you detrimental rates there appreciate question, for with more cost look mentioned like? to demand you

Joe Kelley

actions structural But were just actions, quarter were million [indiscernible] in Yes. to adjust did the piece. respond and ATS those, cost cost profitability structural very actions segment I The X.X roughly cost some Mike, in recovers the tell the MFS of focused to structure. within you segment will our will segment we just level not back benefit the 'XX. that say reduction take some as particularly that ATS help historical in to let's

million. quarter the so year will -- X.X the savings within offset the generated the And within

Mike Halloran

appreciate really Thanks. it. I Great.

Sundaram Nagarajan

business in in know But all innovation, to would model, us deployment. remind of that is thing Mike, front think Next stay the question. in of us one yes, for to of thing the right do. I customer-centric business NBS keep was market our that, all this product the you demand. And adjusting ask invested you I didn't I I in that our we mind But for is

More important really well is positioned XX% headwinds, of than is this So growth. sure we business as the making continued long-term the of short-term growing. the is for well for adjust company positioned is

to And our innovation, customer experience. in so we stay invested sure make invested stay want in we

but those have innovation. short-term we headwinds, where the in also So are parts, we parts in that do some we even invested in well

Mike Halloran

off. we'll And Naga. call, cut next forth. Thanks, have won't maybe a smoother back I you and

Sundaram Nagarajan

okay. That's

Operator

[Operator Instructions].

Allison Wells from Poliniak comes Please question go next Fargo. from Our ahead.

Your is line open.

Allison Poliniak

morning. Good Hi.

Sundaram Nagarajan

morning. Good

Joe Kelley

Al. morning, Good

Allison Poliniak

on questions China's to starting some I'm get Naga, ban. Micron

flow Just risks Thanks. to that any see any through or you comments or you color guys on there. guys

Sundaram Nagarajan

in Micron optical is that our we work somebody business. with

capacity other focused to going its on term, are in places, more long expects as We we certainly are benefit. Micron the because

As you made they're strong they America. North have pretty some where have seen, projections on here in investing

So to they from benefit as alternate we're in make this, investments think about I capacity. going

benefits new Nordson add when capacity investments. or you, expand alternative as lines, So people make

headed -- on about we is understand But business customer-centric of capability. chips long to stay way, manufactured. reason allows very a are some pressure of in a and a impacted But not there China. where their may is think their our touch by another lot have not want they to to close the our might our that ways, impact their what yes, model like, questions allows feel we're they're expand you way Yes, and think with this be doing. very to I business us investment. in would close -- want this So is volume in what customers volumes term, us their I on In we're on why

is pretty about does is impact new This So long probably us it the in how news. we term? this thinking

Allison Poliniak

And generating and had Analyst main you growth Understood. a out the you IPS then execution laid Thanks. meeting. thing the at comment, better made

want to forward? it will you of was that kind understand the on a surprise of get execution, sort think it just Just division, of sustainable is be terms better you products, development for that is going where in sense of how

Sundaram Nagarajan

Yes, couple to I'd that things of like I are to. a think point there

call growth opportunities. about discipline internally have growth point our opportunities framework been we and have doubling I'll that thinking discipline. those Strategic about been of best down really is growth strategic best businesses on understanding to the each and First, using our what NBS Next

we they opportunities. benefit onshoring home, add first some So are you in want what to more here you effort whatever terms macro it, you be is investing reshoring pretty find call it. we our capacity to begin customers that [indiscernible], of Asia suddenly to what trends and beginning our moving about, all by to from is secular focused closer on from the away see excited or Definitely, from concerted to divisions best benefit a growth of or

that one. important an So is

The number a business are that in benefiting this that emerging as other continues from vehicle are there battery thing applications is electric we're that -- of evolve. as to electric vehicle well manufacturing

but there. wouldn't is have help into these brings we But in new say solidified certainly that discipline this of help kind focus some play applications all I the the company yet. opportunities, to of So not allows business, and us them applications invest for strategic fully new had

also to. best point would to two things be So products in Certainly playing I our our dedication the factory out. execution the certainly is those business terms inside would that of

leading. have So significantly that to see customer better in realistically starting the implemented Next, NBS market you're businesses service we is a

So is on our how Next I where opportunities. those teams would growth see three to as deliver things we NBS of helping point sort

Allison Poliniak

Great, thank you.

Operator

comes Our Liptak Seaport. Walt ahead. question next Please go from from

open. line Your is

Walter Liptak

Good Thanks. Hi. morning, guys.

Sundaram Nagarajan

Good morning, Walt.

Walter Liptak

Maybe there's if tell to of to like broaden applications follow And In that on I about of IoT, a the you're there's electronics I wonder guys strategic that looking semiconductor now, traditional you trying think working a if the on that have NBS something automotive ATS metric segment, as these last disciplines. things at Next you from the questions to us some of with using sensors, effort? couple been or that. of the fruits sort

Sundaram Nagarajan

Yes.

performance. like in business, targeted it have are view four measure, the deploying leadership NBS doing gives of call and we got we of KPIs Within we that which a us terms of we level sort Next how

growth is not from metrics significant and trends, we are differs the by customer where have is impacted that macro leadership that metric business business. like towards what performance businesses level where to to beginning business for it company. on be, to the one the So of right, you're is we see within trending And key would

levels And I number. some metrics performance are progress give and service are business what certainly very businesses what excited can't other there identifying business, level is leadership growth, we beginning customer see will product you I teams that nice But on couple customer of you to on are by a are specific tell in is new we So a the innovation. around about.

of number profitable the pretty experience believe growth that to execution translates strong the that customer we track of metrics is into that to us some effectiveness leading and and growth allows company. strategy internal the deployment So for

Walter Liptak

much Okay. X% All how organic, us I right, great. just understand was That's again, IPS, and And volume switching could then the much help if that price? wonder over of you helpful. to how growth was

Joe Kelley

IPS for realization improved Nordson be would in this X% price you broadly the segment approximately Yes. I and for estimate so is and QX, would to Joe. X% Walt, tell volume. that price attributed X% I of be that would would that

Walter Liptak

And then --

Joe Kelley

ahead. go Sorry,

Walter Liptak

operating in just or level cost? And the there a now the really of too. higher on good price is catch Is NBS so looked at there, XX% we're margins up that incremental some Next

Joe Kelley

you no to tell on headwind. I tell would expressing itself the that that that I where cost, No, would point you is we longer NBS Next the got price a

two the gross recall our you'll last If pressuring margins. been quarters that's

cost that offset price to the and maintain here, balanced realized price the pressuring gross is longer inflation so And our for is Nordson no as margins. have margins increase we

with broadly in past is but it's X% I and there's of of would years. IPS incremental throughout host there, largely the what seen tell there see of NBS issues being consistent And you, divisions. margin you'll the the those over we've what Next benefit couple a for implemented So

Walter Liptak

Okay. Congratulations you. on Thank that.

Joe Kelley

but as growth sales growth. with then realization is is headwind. the other of roughly profit the one in digit that guide. favorable and to around our volumes particular it's the different growth in the QX. were and QX, said, the such with assumed guide little below QX question longer coming spoke line, as price bit QX when by at what operating line margin others I double becoming businesses. in back the the about XX.X% less and I to you lines delivering are than product look And those But what we've operating who margins profit. margins processing on two that I is that the would lower at offsetting here The But mix was think consistent That like drivers a to comment, gross Matt's see coming are pressured no gross in make talked QX. a it's being the plastic were a you

margin when because QX, you OP So and about is be should going from the think gross into profitability mix comparable. QX the profitability comparable margin

Operator

We have Naga over like I call to for back to the turn no questions. further remarks. would closing

Sundaram Nagarajan

performance these long-term Ascend continued in our growth. will Our NBS strength strategy Next deployment markets. which I differentiated commitment thank The want position possible. model, for the precision their diversified and reflects to employees Nordson's results end of makes Again, the for of customer-centric technology, us well

ATS, conference We Lara Industrial Stephen opportunity New and our in X Jeff leader, the investor XX Lara of look leader, you Joe, XX. in MFS Bank June with conference York. and the Pembroke, segment be at on our the to participating at Lara on be on IPS Joe, Capital will Wells will forward Srini June upcoming a Industrial Joe, Lovass, segment And and June to segment Loop be Deutsche at leader our will Virtual talk events. Subramanian, in Fargo Chicago. Roadshow with

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

Operator

you Thank your participation. today's concludes call. This conference for

disconnect. now may You

Nordson (NDSN) 23 May 232023 Q2 Earnings call transcript