Earnings call transcript Q3 2023

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Operator

Hello, and welcome to the Nordson Corporation's Third Quarter Fiscal Year 2023 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. [Operator Instructions]

I will now turn the conference over to Lara Mahoney. ahead. go Please

Lara Mahoney

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

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

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

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

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

your will to be happy We then questions. take

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

Sundaram Nagarajan

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

to the who of recognize range was for at team quarter, like in low-end were I actively the strong the and necessary market our divisions it guidance strong. has cost the was the third While adjusted share where sales NBS Nordson earnings of demand high-end to growth would deliver in which $X.XX, controlled dedicated leverage quarter per growth expected the in resulted of at Next framework where guidance. This EPS our was divisions

Going third the returning product of line pressured sight into these biopharma we have growth. ongoing expected we to weakness the factors quarter, end understand to our to electronics We the be and by macro impacting and in lines. markets

end-market from in when which results electronics pressure. customers These offset quarter's are softness assembly visible customers reflects is This business particularly looking some semiconductor of decreased This turning anticipate we the and cyclical, Pacific, XX%. them MFS segment this ATS The demand middle and markets electronics our our our in in XXXX. our in of at of segment. declined Asia diversification

markets Regionally, we supply Europe, chains Americas growth product business. rebalancing organic product to a in customers solutions high-single-digit the perspective, experienced double-digit closer experience processing in interventional to as they the mid-single-digit well and are polymer growth we regions test and both in as in organic our lines, both and to From medical these their serve. as continue be inspection growth

to on perspective turn ARAG to and few Joe in provide I'll of detailed a our the speak financial of results quarter. exciting acquisition over enterprise but more about call the new I'll moments, the our first,

Joseph Kelley

$XXX an quarter the offset X%, quarter you'll driven favorable Thank sales to sales see $XXX and the partially Slide of This million, the On organic decrease fiscal of third number was third prior Naga, X, good million. benefit everyone. a by morning compared you, by of of XXXX were to CyberOptics X% decrease acquisition. year's

by impacted $XXX end-market negatively the quarter, referenced. the XXXX third million. fiscal that the totaled profit sales Naga quarter pressures were for of Gross During

which of to severance the million XX% $XXX prior is comparable or year totaled gross cost, profit Excluding sales, third quarter.

in above million $XXX elevated for the six have been last quarters. averaging third a to the the we SG&A $XXX quarter million was

SG&A I'd by impacted notable Third non-recurring was like quarter highlight. to that items

Our teams the due all advanced acquisition comprehensive final way diligence $X two separate global process targets billion the the to through stages.

As to million an these total, non-recurring we ultimately the projects, $X incurred from move fairness and for ARAG, significant non-recurring opinion. quarter. service million third of for forward the in third-party included incurred a acquisition-related activity result only providers. chose cost strategic additional two cost $X in We we with In $X in million which

XX% these million. in operating $XXX Despite on $XXX non-recurring to of profit, margins our the the below of X% excluding can we team's profit decremental on dedication pricing, cost operating items, and held to of million XX%, prior adjusted NBS was controls reflective volume, be sales our which to profit lower of attributed framework. Next or improved Operating sales, adjusted the quarter year the

of driven volume Ascend remains scale strategy million strategic the the the acquisitions, of $X the above execute $XXX XX% quarter $XXX we key the quarter. EBITDA decrease is which million or X% below long-term and The our by for EBITDA however, EBITDA sales, target, metric. or profitability lower As was through million. was in sales prior third primarily year profitability

rate year XXXX. expense effective and losses. the forecasted line third the an million XX% million plans, changes of interest increased and rates. compensation Tax $XX foreign increase at in quarter, exchange higher decreased gains quarter net $X deferred rate the a in non-operating pension to interest for as in million $X well rate as which expense for expense associated is and and combination tax borrowings was related Looking expenses, full-year Other with with of prior

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

product million review to compared year third in our the and nonwovens to softness the sales Precision X through quarter by the the decreased double-digit offset XXXX X of Americas following sales X% segments Asia. Industrial growth. strength organic lines growth of performance. product prior This two IPS Year-to-date, processing in X% polymer driven continued Slide in partially to years by consecutive third has Europe. and turn delivered let's assembly segment Now growth lines was quarter, and product $XXX Solutions in

in product is prior EBITDA mix million the the sales year-to-date due driver was to sales the of current XX% is the year volume EBITDA biggest $XXX lines. quarter $XXX the quarter for has decrease EBITDA improved to The year unfavorable million which of and $X quarters higher than and the polymer sales, of or the to prior processing lower the higher X% prior is decrease million. compared current and volume of two sales of compared year. a

applications electronics our product primarily continued by you'll lines. decrease destocking specifically plastic pressure third Slide assembly prior Pacific. by product On was This Medical driven medical and quarter. Asia division interventional double-digit X, growth and in for million fluid solutions components X% in fluid Fluid sales Solutions year's in in of single-use solutions see biopharma was related components The $XXX the medical lines to the for partially offset compared softness decreased to

by million decrease to million basis $XX over of EBITDA or sales of quarter million. year back that segment second EBITDA XXXX of compared the prior EBITDA in lines. the It be margin meaningful points EBITDA XXXX the improved was is $X this XX% mix product continued sequentially noteworthy the medical profitability quarter segment $XX to and XXXX. within levels delivered XXX sales, is and changes Third impacted which of a to

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

quarter, serving markets, The growth. slightly in decrease growth the test the semiconductor and dispense end Organic acquisition predominantly inspection the Asia down was was Pacific, line, During organic by by products. volume driven contributed product electronics CyberOptics offset XX% continued sales in XX%.

will anniversary of were dispense which downturn fiscal during approximately cyclical fiscal quarter historic the actions four third quarters. with in reduction five of XXXX the semiconductor decrease aligns products. Structural the demand quarter XXXX, address cost volume the lasting electronics taken in second of in downcycles The to the to market

fabrication outsource value-added dispense non-recurring focus to of chosen on to they've example, resulting technology, shop $X For million severance their in a precision more cost.

improvement sales, million. the prior quarter improvement by an or organic sales $XX driven was EBITDA The during double-digit quarterly profitability mix year third quarter below favorable was of of decrease, XXXX to volume Third the was XX% quarter sales and of EBITDA cost $XX the segment continued in EBITDA Despite actions. savings levels. this delivering basis XXX million is points realization which only compared

times year-to-date cash turning generating quarter, X.X flow million a bringing the million $XXX and was XX Cash the X. in months the debt on in net cash flow, rate leverage on a very resulting strong sheet at cash income XXX%. $XXX had ended free ratio We EBITDA. balance to conversion flow on Finally, to cash and $XXX our trailing million, net based quarter Slide

significant to to such have We available capacity opportunities and inorganic as upcoming of acquisition continue ARAG. our growth pursue borrowing organic

acquisition to ARAG times. and We with approximately close expect by of the debt net the leverage to EBITDA August a exit end the year X of ratio

quarter, XXX,XXX at share. of debt, company repaid and we $XX third shares paid spent the During $XXX of per repurchasing million million an on $XXX price stock of approximately average million $XX in dividends

maintaining an the a of annual its consecutive the a company impressive our the markets. and Our year This quarter XXXX. serving Board in approved X% differentiated truly only increased marks precision fiscal enabled portfolio diverse effective accomplishment fourth in dividend, by end increase dividend, XXth technology has

XX% XXXX, tax out. For estimated effective as approximately assume capital of our have of in and million, timelines to to pushed $XX modeling investment rate expenditures of purposes, an $XX several fiscal million XX%

upcoming you for our some purposes. acquisition With with to want assumptions modeling I of ARAG, provide

approximately expected million $XX in are $XX high-XX% fiscal in the margins range. 'XX. For assume revenue, to EBITDA million

be increased to acquisition-related GAAP amortization with slightly of We to EPS associated and expect to due expense QX interest the ARAG acquisition. XXXX intangibles dilutive in

with the for following EPS Excluding the neutral will initially anticipate the close, acquisition revolver financed related acquisition expeditious and nature loan to quarter. intangible amortization, should borrowings. be be the and a of short-term up process. We later through assume fourth costs Due the average interest Nordson in a of are currently in X.X% and debt conditions, issuance working weighted Based current on approximately XXXX. for ratings this markets year, public rate market we total bond a with the

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

Sundaram Nagarajan

Thanks, Joe.

the to this in continues which is strong the execute team delivered strategy, profitability in Our quarter. clear Ascend

the to getting short-term we're managing biopharma related to in fiscal weakness end-market we While the cycle, pressure closer are electronic anniversarying XXXX. and that sales

customers' components we first believe biopharma have trend the medical Related to in product the this lines division, the destocking will in of our quarter seen anniversary bottom fiscal XXXX. the fluid pressure chain of unique supply we and

period, rate time. to medical mid high to business over Following cautiously components growth we historical fluid expect to its return the this single-digit

I leadership our Processing markets. this earlier visited California end electronics Electronics Carlsbad, onto Solutions Moving in team month.

to begin in half of will team's expectation the cycle turn is electronics Our XXXX. that CapEx spend the calendar second

We new expect in from memory, benefit investments and automation, AI customer to electronics innovation. product

successfully growth In the in while this opportunities costs, Next through framework. division meantime, identified profitable managing growth the NBS is invested staying

exceeded division EPS the period. its targeted fact, during decremental In this margins low-volume

the electronic cycle. inspection the We mutes with also be our continued growth test to the division, which pleased of and volatility of

monitoring and footprint we system demand long-tenured sales across The some has in Asia the orders. employees. three all Pacific exposure, segments, Geographically, which of the specifically to was was related electronics are closely pressure weakness due China. timing with large of in region, though to regional China the there well-established largely a was Nordson knowledgeable in in weakness

diversify customers, close if Simultaneously, Nordson's Europe. Americas positions regions to model them other supply of or appropriately. We and they will their the our customers Asia support into to well to us and business decide remain to support chain

Our global are prepared rebalance. we to chains supply participate as customer business model intimate ensures fully

important to there. our are an Ascend precision part technology. on acquired announced to Finally, the in a $XXX million share of billion Day, market target now of we XXXX. goal a revenue achieve ARAG, update very spraying way XX% global set Acquisitions nearly by XXXX of and we strategy. innovation our the the Investor I'd like acquisition revenue at June, $X the in we leader In are Of

generated into beginnings our adhered technology expanded model. Nordson. margins, Over dispense medical Nordson-like to Through industrial have applications end-market gross XX to Precision all, technology dispense non-wovens, and we assembly, that electronics, expertise the disciplined for high-growth business core nearly customer-centric acquisition criteria, applications packaging, product strategic in it beyond is and more. years, differentiated we

tractor in Today, manufacturers these of of in and expands ARAG or end-market high-growth ARAG single and the our history. to expertise of fluid agriculture leader in America. acquisition meets implement precision into is technology the The who largest technology sell market the precision in the acquisition OEMs. components manufacturers, agriculture, all turn Europe South are and to is sold our ARAG criteria

fertilizers recurring crop over ARAG is chemicals. channels customers' goals these improving closely the important the of expensive It yields ARAG's upon supports aftermarket sales America invest to of and works grow ARAG's attracted which the existing its presents the with continued customers The technology markets. distributors. of growth use attractive and geographic core through opportunity also ARAG's we the company. XX% of an minimizing pipeline, ensure were sold all growth, proposition We beyond to that North the in market within to is to opportunity innovation note valued revenue and existing in

excited very our long-term business. the and growth the in about I'm ARAG acquisition opportunities profitable

We delivering focused headwinds, solid flow. and and profitability managing is on through who have market while winning a customer team, the cash unique

the XX. year Turning on Slide to the the remainder outlook for of

growth X% earnings $X.XX. We over fiscal are guidance our guidance and revenue record adjusted to our XXXX to X% previously to provided narrowing $X.XX narrowing XXXX to

sales earnings to Slide that fourth the the year, This ARAG quarterly split on expect the we quarter in of of quarter to the $XX we $XX August. acquisition at sales year late at over the includes million be XX, sales close increasing low approximately to specifically the million and from to midpoint. fourth strongest Looking prior expect mid-single-digits guidance

in mindset. Fourth conversion execution forecast the teams range Nordson's $X.XX cash is created advantage quarter by excellence, are the of strong and strategy winning the owner share. operational our in of competitive an through profitability which per result a $X.XX Ascend to forecasted earnings clear a performance, with Embedded of is

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

take we and will your that, pause questions. With

Operator

you. Instructions] moment [Operator your Thank for question. first One

Hammond question comes of Jeff first Capital line Your KeyBanc the Markets. of from

Your line is open.

Jeff Hammond

morning, Hey. everyone. Good

Sundaram Nagarajan

morning, Jeff. Good

Joseph Kelley

Jeff. morning, Good

Jeff Hammond

and weaker and really kind the the just So, guidance want hear electronics mean, change. to Pac impact. I of unpack then I of Asia ARAG kind

line, moving lighter pieces. seems the So And was XQ maybe kind Thanks. maybe it more XQ, help revenue but little just of in just seemed what unpack like the but a kind the lower-end. drives in of on

Joseph Kelley

Yes.

start with if I let could. take So a me that Jeff,

at guide, the midpoint it's roughly of So the growth. X.X%

about in And which that contribute QX, for just QX. with be an so, what when X%, think organic you and negative it's delivered FX should standpoint, X.X% X%, about will is here we about acquisition consistent from the favorable,

I that to (ph) And months $XX you range, close ARAG appreciate then when think there actual that. the of first two contribute post-acquisition, the on will we the about the of the to have range timing million. acquisition, million And $XX

on say, some drive the flex guidance that there. I So or the little revenue bit range volatility, a would expands

large The strongest and year is this is our tell other is be QX system -- as was recall, I as would forecasted the to shipments. year year you of the the timing quarter you of some last same. QX

there And large there. deliveries system in so, are

from comment. is little pushed standpoint, to so, And out, pulled wide sometimes and you those revenue. on bit get the to that And contributes the range so an how can end-market Naga,

Sundaram Nagarajan

as IPS, in our we as long-term, well Yeah. From are an to the think we good about where end-market at three perspective, segments, about feel comparison if you pretty sequentially.

continue be our at or system We to long-term growth expect above rate. this to

the certainly embedded and fourth growth. what are recover quarter. at today, little they that's bit about are and Suddenly, continuing in a the expect we'll to here electronics is more talk biopharma them don't it the our levels later. in we So expectation, They

is But is to been my In to comments, but single-digits when expect long-term that as in kind when fully be cautious trends of we're XXXX as be the impacted. growth its high secular to of that sometime expect in that middle we have in we is and biopharma biopharma to indicated that initial turn -- calendar rate. nothing here first we going to recovers going going quarter XXXX on be, is the of electronics, biopharma I growth sometime in when anniversary, to

matter to to in for then quarter, the think So we double-digits. takes we is And business, it. get get us It IS long is so. back fourth to just fully expect will continue a that expect how if fully it. our medical growing about we of it that We do you to

are are well, have do that got businesses next processing incredibly couple we've expect do to businesses that a and system -- quarter. well are polymer doing backlog well well. we as in strong they And to of Our the expected

Jeff Hammond

on just questions And some Okay. the then housekeeping one. deal ARAG

margins. you EBITDA think I said So high-XXs

ARAG -- Thanks. of wondering you for total is associated that D&A with that is if would just a component the the for kind get and at kind the least Just clarification that to so, for ongoing funding the you've interest the business deal expense just be? on weighted is operating what what if think of -- kind And how at or the ARAG to of accounting, cost would an done year-one. in purchase -- X.X% margin to then in interest about company,

Joseph Kelley

Yeah.

that, let take me So Jeff. a stab at

accounting, clear we that when the off First XXXX. all, guidance I'll some give of we'll on our purchase full-year do on hold and

so, we And trends historical this but assumptions for on now, XXXX purchase with is Nordson, and a guide issue firm the purchase when up, price, just the will we at that of include right acquisitions amortization for guide the nature ARAG. percentage accounting will the of really which looking

of the that expense, current expense this given based will will the roughly estimate interest Nordson debt. later current is bonds our depending X.X% And on market year, that's price to where X% market On be for conditions, interest conditions. the total our currently weighted on basket

Jeff Hammond

And -- bond the kind pre-ARAG? that what or would would have what offering, pre been of

Joseph Kelley

weighted from slightly cost. in year-to-date look X% interest below we're you average standpoint, If of our a terms

Jeff Hammond

queue. Okay. Appreciate it. back I'll get in

Joseph Kelley

Jeff. Thanks,

Operator

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

open. is line Your

Allison Poliniak

Hi. Good morning.

Sundaram Nagarajan

Good morning.

Joseph Kelley

morning. Good

Allison Poliniak

the don't talk I did about I would point. of to to maybe Is to go structural. at are to want -- but this regions to starting or there decide there way comments offsets you region see on -- the any say, that in I sort cyclical there Are for other some know versus way you Just terms because potentially your structural some, China. any back you you? it, I know you're to aspects minimizing industry did in that if there's maybe seeing what talk over cyclical of

Sundaram Nagarajan

Yeah.

if businesses think in of of revenues significant a China. If itself, XX% of electronic in about part our business -- you right? right, is And Asia, electronic their China our is than you more at that majority divisions, look

think impact, the if the our of Pac electronics. is about find China, majority is Asia to So what China impact you due you

fully our expect cyclical we cyclicality. see And we -- global customers. major so, that is the follows is more that it What do what and we

think China And customers. our China Chinese mostly to mid-tier global China. we if exposure about it global customers following is you our exposure, So that do is international the large some segments, customers across but have we serve,

Europe customers than North Asia, or with global is parts in customers seems in of regions, some or chain moves find do of on, making China. there out it we our capacity from different other we in in let's most say, What don't anybody building, in be customers, of significant other our work other see be capacity going new our additional it China. but rebalancing of amount of with America It regions supply we see or

why you decline see in to a nice begin Europe Pac. growth nice So a Americas that's numbers growth in in and Asia our in regional a and

in China. of ways, Asia it a part Pac, some big is

a doing is really doing but for Japan us. business, in well. smaller is general well it It's

up do system large So, is and any which cyclical the what could decline quarter. we in can We majority we down and given electronics. today see see, that to misses from related some see be the of are

sense. investments we that do makes other see places, if So, see in structurally changing, but don't anything we happening

Allison Poliniak

of is out of a still chain this like feel a And you or It does. great. Just growth backlog it's sort of lot of then, relatively backlog that backlog lot helpful, any this the forward that's out? would look pushed and really That just Do projects number rebalancing as being thanks. color been on supply There's backlog point we at year. be strong. was

Sundaram Nagarajan

we high. to additional kind of some our our and detail, give is with driven about get help you medical high historically Joe but I'll is where business, right? historically businesses And can the backlog think longer-term interventional and orders, is system way of which Yeah. by me couple our into some so backlog go backlog, that color

backlogs if pre-pandemic about majority, So normalized we think to business, levels. about fundamentally XX% believe you XX%, our the have our of

our normalizing these So, think our supply be or orders. of which polymer our XX%, XX% our would related businesses, business to elevated sort business in give processing blanket large anything customers you can that? targets you IS to is -- ICS about medical system add the chain mainly where more businesses, business, and Joe, it us of

Joseph Kelley

just last, all It think $X of you has would IS to about No. -- majority -- you if would I what the today, weighted it heavily has the said. maybe be and is remaining, I months, our the historical across of you businesses be large the just billion, tell weighted on disproportionately over would repeating normalized I used divisions. migrated backlog medical six to mean balanced worth which our and systems months where nine it's business the heavy I levels.

Allison Poliniak

you. Thank Great.

Operator

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

open. is line Your

Matt Summerville

Yeah, in the kind basically is thanks. has bit the to line level business. and there here? If question 'XX high for little I up And piece turning that half, same or continued is fiscal with of electronics Couple medical take at seemingly coincide about in the of of does a -- of second the or questions. think the going give T&I, that with we strength a side a

year. organic such all latter of pieces four towards we that of pretty business, see of reaccelerate, I'm those next day, I to growth end medical between begin the different begins conclude out at to part good biopharma decelerate? a things As guess the whether the interventional of see we or will, of of And Nordson the can thinking, or does you if trying not to rollover

Sundaram Nagarajan

Yeah.

So around expectations -- add and what we next some with to are, maybe you you and could can. I'll markets give our some -- the that color let numbers end to Joe, me extent the

all, of not guidance we're 'XX giving first yet. for So

Matt, you, that's give really question. color, a end-market So but terms in good of the perspective that's I'd

XXXX with -- our calendar middle are that of expectations My calendar me electronics. expectations sort electronic cycle of rebounds start let XXXX. Our -- in

amplitude. is And you're growth in like talked smaller doing not see our EPS. is is not at compared not for cycles. what when it's and T&I amplitude on that T&I business, the is both based serve. -- in us. -- time, All T&I of yielding It's It about That's cycle EPS, on the along, to cyclical, that the going we've and to expectation really end T&I customers is it as just applications the the we the based we T&I

So clearly, ATS, from benefit to a historical the perspective, comes is muted, bounce you're But nicely well. T&I like back, back but way EPS as done. from as traditional going we've it will see this

is it benefit. to T&I So is not not -- going

piece is that So electronic it. of the

medical, If you're for have here think our of biopharma growth is to couple and some medical coming off of as elective find the to you're getting very backlog mainly quarters, all last and strong you about surgery has normal. back as what because going double-digit you

compartments. single-digits and big interventional 'XX would uptick certainly, for expect its pretty demand to mid to That you medical find What go rate. high this get to as in later, growth is you start we historical into that

components, have believe the current growth levels. biopharma, we in we enjoyed itself. years that of that what full in (ph) see of for at the two it's two fundamentally the end is years anniversary out -- first we bottomed anniversaries you By On and it fluid rates begin to these that settling double-digit has growth of quarter, sort

We cautious we gives are for believe biopharma. is both how those to on caution to the get impaired, What back on high-single-digit on to we'll is But growth fundamentally growth but how that happens. now also right of how of Hopefully, get color ramp that Joe, the high-single-digit add to in us questions. terms else it would we believe rate. I fast numbers? get we're sure terms We not us in takes long anything you fast nothing there. the

Joseph Kelley

through the that you recovery Matt, T&I, XX%. go a the those we last the growing a that's end-market, think I study -- offsetting see about it, EPS. downs down applications, scenario may of Yeah. and it's it ups like some and been several anticipate diversity is division the given XX%, where would wouldn't I When electronics, just years, say, scenario EPS while the when down don't you roughly in

whereas XX%, interventional mix now, pandemic, And you XX%, destocking is quite COVID, the the that yes, would you, solution, go where there I only maybe go on I in if it's if growing medical in XX%, going -- unique, in but -- during you similarly, medical to would tell the our the biopharma back it's XX%. double-digits nice was say, the down the the, down

just we're that current it the swings seeing the the of have doesn't down-cycle. magnitude So, in

wouldn't offset in I So, anticipate to that 'XX. the recovery those in

Sundaram Nagarajan

I think...

Matt Summerville

it. Got

Sundaram Nagarajan

And addition interventional fluid medical just say, our little components a is picks high-single maybe to And I would in up digits component that, of grows bit. out, would... flattens is sort how I

Matt Summerville

potential it -- away just running made the two about deal walk won then, out were processes as other about halt you few over what months. the last you from you other candidate? can Got talk billion of concurrent helpful. maybe or ARAG follow-up, sounded maybe talk And M&A like it. $X That's over why a and the kind Maybe

Sundaram Nagarajan

Yeah.

you to opportunities. really excited understand customer-centric places growth in strategically dab in really If we deals, were and in for markets we the business middle fit of rates do a and very They at be, end both we attractive where both model. those like technologies, we the smack have look highly-differentiated want right precision it well

both of pursue equally, both of we to want strategically, we yeah. and them be them exactly were it where So

then and company, make we down step next about, like when strategic a when final discipline, has really returns then and to talked we've the the always diligence, through for the we it, it. if financial sense we so, like, we look, due we what And go do came go exercise criteria we'd we it's to financially first

In final the of is we analysis, both walked I'm there we away from ARAG, and So get disciplined couldn't deal, financially in them. what telling we hit the that, we you other so it. on and were

Matt Summerville

Naga. Thanks,

Operator

ahead, [Operator Go Naga. Instructions]

Sundaram Nagarajan

and of acquisitions. challenges about markets, team about upsides And about in challenges Nordson's bottom Yeah. step talk if quarter. that line, were quarter, about we kind And add, were two the did that as your excellence right? the One in incredible and It would job. this but of an did the thing talking through the would kind end-market this really operational on end came topline, the what back think was I think some the really Matt, we I and you showed during team an the showed have the there question, results.

and really my advantage at point, of incredible owner competitive and the and got framework NBS And the strategy are around Next what to Ascend inside excellence the we strong it advantage what strategy competitive shines you say doing operational vantage in Ascend been that's one an But building. three really it company simply winning mindset advantage the and we've and shows through that the competitive from this delivering work away. that growth up That's are look And is executing right? could is results, building with ways. different teams you've we is, walk are

incredible a the market strong set through decremental need in incremental have Then and are really opportunities divisions actions shows and up participating in in right? end-market that about where One, takes we an have we've strong the that figures what take out and team XX%. growth service really kind really of to and deliver talked that you mindset margins, fully margins cost divisions challenged, conditions customer it owner of delivering

not company idle, at the are certainly opportunities sitting looking through the side, acquisitions. on the then what third growth And

coming what different the results and we're -- talking our in really in mind quarter. through the of what that's themes end three is team the That's my about here. so, the And is in day,

Operator

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

is line open. Your

Christopher Glynn

Naga in what of you're Joe, of is markets, morning, curious dynamics, Lara. curious for sort market any if I momentum? market. that or and the interesting Thanks. polymer about view Good a around typical was recap structural timing there higher-level penetration seeing cycle of terms a Just a

Sundaram Nagarajan

recycling. is the this pretty for I to words but given whole thrown growth the is is, we is Really for we gone as the plastic do that recycling. some I biggest the those incredible up go work certain this as get set opportunities. And What opportunity usage find setting know the is of around growth issue find but is of businesses we're out there that this advantage say in good don't team reduction, really seeing of whether through parts around, far we've that a business ban, taking pursuing around what demand world, plastic

into And technology year, is that some particular has unique would business next part And as serve trend year. highlight strong backlog going of significant have secular an that And I we to our that allows that business in in pretty that going us Germany BKG next some pretty on. strong market.

Joseph Kelley

and product would that I quality the business. would that division. polymer add you, processing that that when the upgrading polymer in and you I lines the time about Chris, you of of divestiture The divestiture line, processing the differentiation Xaloy product of the think in degree remained resulted go back remember tell in of

so, that's what these think numbers. some I And also see through of you fallen

Christopher Glynn

D&A of the on rule to going thumb just back question of of D&A. in of metric sense. Makes percentage XQ Jeff's you kind the And referenced for terms guide sales informing ARAG, Thanks.

X.X%, heels just on year rule couple on a put stocking generic the know question, of sort XX% through around the of of correlates thumb volatility. distribution, it's I you and but price, purchase in if recurring, that kind of of as terms chain supply comes global viewed X% of also ARAG, since curious into Just it particularly

business. So of of and across just stock how inventory view sort balances equanimity the levels and that curious the kind you channel flow

Sundaram Nagarajan

me. help maybe So

take want first, maybe make and the inventory you question D&A comment So piece. can a to the I around then

Joseph Kelley

question your to X.X% of our starting amortization. purchase yes, in is answer that the price The terms is, of point annual typical Yeah.

Christopher Glynn

you. Thank

Sundaram Nagarajan

our that, They're big remember, the -- parts. detailed sprayers that But component. sitting that a around issue would a us be a of not are We're of significant systems units that at. Obviously, shelves don't we that longer they business. don't bit are are significant are my we still revenue recurring terms takes for business. have in is still not are here inventory, in lot in small the distributor These information expectation of sort own And time. where little and that

Christopher Glynn

Great. Thanks extra the for color.

Operator

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

is open. line Your

Unidentified Participant

were for orders bit color is you on Mike. a It Hoping down little morning, Good provide Hey. could looks more entry This like everybody. order comment. the [indiscernible] sequentially.

the of of of China pressure if It a obviously, said, are some would could provide entry little of -- more skewed maybe just the to you Pacific puts You bit got businesses talked through color on And be little along side. talk around so about if and then Can you you in was commentary the bit some the great. order of in study? maybe just the far region. bouncing the about the that sounded some like Asia bottom. kind that August, And a takes you negative to

Sundaram Nagarajan

right. All

Let the our at biopharma of our terms components out bottomed and the me fluid both put is with best it. of those businesses, way business, has start is entry electronics in order which business where to we're

as at they we they about feel We've start not declines. where a is are we this could come have where good that bottom. to is So the it to the currently that any seen performing, place see further quarter progressed,

In terms and done the And And saying and have entry to sequentially The would we little our the the spectrum medical the entry businesses incredibly those we order all remains pretty solution that's through a and the picked what that's entry of find the of a come up of business of high, improved middle, or truly our businesses little we well really how performing the have significantly of bit is business growth, has interventional declined. end that other robust. significantly is to say. then kind In They not it some where a and well contributed group you in order are some quarters, sort about that of polymer on low. improved. steady. have order has cases, bit

Unidentified Participant

it. the know, Got T&I. between side length for quarter When or slowdown paper and be talk thinking of the the for maybe to mentioned helpful. to can electronics you And well? four T&I we of terms, within on business, the the typical five Naga, them about dispense. kind cycles then it question you is But to the the between cycle and super the differently of amplitude should is slowdown as differentiating we That's that about dispense similar in different instance, of I business. up following the comes length? the refer T&I think typical a in

Sundaram Nagarajan

Maybe No. so. about From there what we know no, believe could There and similar. based don't experience, on nothing -- a significant. offset? slight an We is offset, but be it's our

Unidentified Participant

pass Understood. it on. I'll Thank All right. you.

Operator

time. questions turn call are remarks. There now this I for no back to will Naga you. further Thank the at closing

Sundaram Nagarajan

commitment, us and employees performance deployment operating differentiated Thank of customer-centric to model Nordson strong today's you on continued our The their Again, Our long-term growth. and strategy end-markets. day. the reflects want position for which results strength of thank diversified for Have makes these Ascend attention possible. a for will call. great precision technology, well your I time

Operator

concludes This call. conference today's

You may now disconnect.

Nordson (NDSN) 22 Aug 232023 Q3 Earnings call transcript