NDSN - Earnings call transcript Q2 2024

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Operator

Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the Nordson Corporation Second Quarter Fiscal Year 2024 Conference Call. [Operator Instructions]. Thank you. I would now like to turn the call over to Lara Mahoney. ahead. go Please

Lara Mahoney

Accounting morning. report Investor Good Sundaram Lara Vice results. Tuesday, Shamrock, Mahoney, our our you Thank call fiscal conference and This XXXX Corporate of today, Chief Stephen and Relations and XX, with We Communications. President welcome President to to you. May CEO; is Officer. Nordson's I'm Nagarajan, quarter here second

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

we During to these of make the press yesterday. this a non-GAAP release GAAP in references metrics provided We've financial metrics call, issued will conference metrics. reconciliation the comparable most to

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

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

then will your to questions. take happy be We

I'll that, turn call Naga. to the With over

Sundaram Nagarajan

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

and CFO Hopgood, expertise as Vice held years power financial Chief Dan Nordson. of Accounting a role. welcome He new he started Controller Nordson, I and Most Financial he Officer. Before yesterday. our with XX served $XX to President and to of to we would than responsibility like joining us Executive operational Dan begin, Officer Eaton the more Chief increasing Prior Corporation, billion recently, multinational Eaton's management at to company. roles brings

to experience, look will As you of an coming he months in KeyBanc his financial I operational Boston for I starting with and passion Basic robust got introducing and in, his know Conference impressed forward time the all and listening to this next as Dan, talent. leader, at we developing in week. the him to was Today, be Materials Industrials

$XXX quarter driven weakness which million well acquisition industrial product were by Next lines. coatings our I into NBS quarter fluid have lines, second guidance team range. Growth dedicated leveraged was in as offset strong shift results like within electronics our in second ARAG the At product our to to results. X. of deliver solid the on Framework would let's second quarter our the who Slide Now earnings continued Nordson outset, Sales and performance solutions as recognize Growth the

of of was focus our per and In earnings end share This at differentiated adjusted costs we improvements in the to adjusting delivered products on $X.XX, the addition, top for EPS quarter. top EBITDA our and gross focus product improved strategically and guidance top-quartile mix. led margin of quarter, In which customers margins the XX%.

net which our to cash like I'd XX% $XXX of of highlight income. was Finally, flow quarter free second million,

a the I'll performance speak flow more enterprise convert this to earnings the in We few retire to flow into and of cash debt within continue use nearly million about moments. cash $XXX quarter.

quarter. turn a perspective results detailed provide I'll on for to our Steve financial the call first, the But over to

Stephen Shamrock

second see good of This was and Naga, of slight foreign favorable acquisition, million. quarter you'll sales an were $XXX organic fiscal the increase of quarter to partially X%. benefit exchange ARAG driven Slide everyone. unfavorable #X, and a second decrease prior X% million, sales you, sales an the offset by Thank year's XXXX morning by $XXX a to X% On from impact

As industrial systems lines by Naga and product electronics weakness were fluid referenced, solutions strength offset our in ongoing lines. our in coating product

delivered Next we improvement second driving performance a in focusing profit in favorable the over on are basis Deploying point product top approximately mix the efforts manufacturing efficiency. strong excess NBS of to margins improve Gross prior was simplification XXX Growth We quarter. Framework, gross an XX%, year. products product and profit our

also our addition items special was and of totaled where necessary. which XX% administrative to $XXX sales, consistent of gross with cost ARAG. disciplined EBITDA attributable We year. primarily structure prior offset on higher or in both periods for actions Improved the the were taking by margins and costs, selling remain managing adjusted million,

$XX primarily interest million, nonoperating $X at to expenses exchange associated levels rates. compared expense rate prior in increased to guidance year. quarter, Looking of was foreign expenses, for XXXX. decreased $X range line and net debt net in is interest expense the our losses and Tax increased the with the lower XX% for with rate tax related an effective which Other million, prior higher million year

earnings X% earnings intangibles amount ARAG $XXX from of $X the primarily $XX a expense totaled actions reduction by acquisition-related share $X.XX in the excluding of or interest of million to income $X.XX. cost in share, share, totaled million, per million Adjusted Net decrease per higher of the nonrecurring amortization and per prior year adjusted acquisition. due $X.XX quarter was per The driven decrease earnings share.

impact ARAG now last increased through growth XX unfavorable X to Industrial to sales the XX Solutions X%. second performance. Organic the Now million packaging a the Precision let's upon organic well by turn increased exchange as of year X% sales our record and segment review of continuing quarter, lines. segment driven acquisition, prior X% XXXX $XXX increased systems by of segment, quarter, the foreign Slide industrial year compared prior second XXXX has quarters. the the second offset product X in for sales partially fiscal This over build coating to an delivered as quarter to in

acquisition, the sales second gross quarters EBITDA quarter million. the an XX XX% marks in this by prior was $XXX compared increase margin driven consecutive base growth of highlighting million of quarter and plus to the $XXX of XX% growth. improvement also organic of in the primarily XX ARAG increase sales, The EBITDA year It's business. that worth or EBITDA in of EBITDA was out

you'll in On product lines. Medical in growth driven sales interventional and of Solutions X% prior by second and component partially sales medical components product in This lines million we sequentially. by solutions our the medical year a modest medical lower increased fluid decrease, Fluid quarter, Despite Slide $XXX see fluid last the compared versus the to sales X, see increase fluid offset did modest year. was year-over-year

the $XX which margins Second XX quarter flat XX EBITDA of now $X.X This segment delivered XX% than in to XX% which million prior EBITDA actions. year items of sales, was greater million reduction EBITDA has quarters. was excluded of last special million, $XX of or for cost the

continued to prior compared primarily a you'll decrease were electronics sales decrease The Turning end $XXX to serving products million, XX% X, see segment, Technology driven Solutions related second in weakness year quarter. markets. by the was Advanced to sales the across Slide

related reduction excluded prior Second second year in trailed cost special $XX quarter or XX% $X which both million of million quarter EBITDA of million, EBITDA items to periods. was $XX sales, the actions of which

target the decremental to This decrease and of ahead volume, mix our reduction overall well of approximately to was XX% in in margins. EBITDA While actions reduction tied is favorable XX%. the contributed cost decremental

of Finally, second the the ratio resulting based flow XX cash the sheet end on on of quarter, cash the was we EBITDA. had turning trailing $XXX months and to debt million, $X.X XX. billion, of balance At net a leverage X.Xx and in Slide

have capacity, inorganic available We organic pursue significant to growth and continue borrowing opportunities.

in rate deployed quarter. income. was or flow a million We this cash repaid debt the in conversion of paid million net strategically quarter. revolver XX% during million cash flow strong Free $XX $XXX on $XXX dividends and the We

million rate our net year, effective with another to full financial capital $XX the modeling purposes an expense expectations. expenditures for second line the and million. $XX million, we $XX quarter, performance XX% in assume million to interest to $XX summary, delivered estimated For of XX%, In in fiscal of tax approximately strong of

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

Sundaram Nagarajan

changes want some of Thanks, way in we our markets to XXXX. minutes of demand the for as business becoming run is our also commend the we strong seeing a second Steve. I a want testament are segments. talking spend environment we challenging our half delivering to to This few move a the about Next the into operating under is and fiscal business. end performance NBS how I

Solutions Starting with Precision segment. Industrial

weakening Despite customers market, of in temporary full undeterred After high-growth market agricultural belief agricultural to about and well, precision cannot is slightly implies year of prior while and industrial and ARAG, pause impact consumer this this to year. cycle agriculture is end causing of particular continue we We nature. to are weakening excluding which steadiness through ARAG record versus go our nondurable the a X the work flat markets. our years see cycle, continues integration inventory, in ignore conditions. growth, IPS, the is end up to spending is that And we end in guidance

reducing customers chemicals. past we the ARAG's would and while usage of yields value about fertilizers the proposition and boost integration, on differentiated technology help Based remain excited X sustainably of that expensive months crop

Medical the year's lines, returning business, our see is solutions segment, cycle, Similarly, modest our Solutions exposure entry product which order electronics growth components and are to following we biopharma to to destocking. Fluid turning in continuing Within positive. fluid our are have fluid which pickup last

comparisons the minimally and which solution interventional in population, tough in driven in have invasive fiscal medical XXXX we Our the the of aging year. by double second the therapies grew product lines, of digits half trends

largely made order to our are up a early the manufacturing of would fabrication implied the the ATS to the semiconductor see guidance. Currently, the semiconductor half second pick of the positive Keeping end the continue Nordson's subsegment, inflection. wafers. on silicon mind and processing support packaging we indicators of In in front the being with seeing investments prior at ramp not process in of chips. applications electronics entry end advanced positioned But process related in manufacturing focus back semiconductor are of segment, we're cycle that

electronics technology. these onshoring, invest the from shifts AI, increasing dispense Nordson individual wafers production for of chips customers and we automotive chips, and and of in and their electronics, will in benefit test Overall, chips will converting CHIPS advanced Act demand inspection support As more. towards packaging to

While and the which our half chips, with businesses these of of test expensive yields second experienced critical challenging is and ensure quality the XXXX, to our double-digit positioned year. are growth inspection in dealing in fiscal and the X-ray improve business, comparisons

for testament future continue operations the Our This NBS decremental ATS making to again ATS differentiated Growth leaders products, introducing includes ability and to job themselves positioning growth. customer, excellent quarter implementing to the outperform new is of adjustments. do a positioning to this the work. Next cost this Framework closer and targets strategic an

just XXXX. Turning are businesses, in of our of the trends, current $XXX shared XXXX concentrated the X% record in per Full the backlog. businesses. X% entry in now are to XX. third Based issued earnings have rest in guidance We fiscal on we be full enter outlook visibility order our customer to share. to of down This million year historical quarter our down in diluted the flat returned the updating to range fiscal with X% range remains to the I entry approximately backlog patterns previously up revenue Slide year forecasted systems while and order norms over on

full mind Investors growth acquisition quarter. fiscal X.X% guidance. of approximately should the and neutral ARAG acquisitive midpoint at ARAG our a the in in growth impact that fourth FX the rates year assumes we guidance the anniversary contributing This keep from of impact

the million fiscal sales earnings range $X.XX $XXX diluted to third $XXX adjusted with to of in share. the forecasted For million, quarter are per to $X.XX XXXX, in be the of of range

Third quarter electronics considers guidance weaker markets. and end agriculture

Growth Next portfolio commitment core model, conditions, diversified close of the and as revenue, to level we challenging face market remain Nordson's customer a strengths Even business Framework, recurring to a innovation. high NBS more

deliver All of long-term Nordson Ascend goals. strategy well this to positions

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

questions. your we that, take will Steve will With pause, and I and

Operator

[Operator the from of Instructions] Halloran Your with question line Mike first comes Baird.

Michael Halloran

ag in what's A from piece you guidance end an you of could here. talk the understand just piece. maybe as I to certainly the the recovery. through market assumed questions couple year electronics and work Naga,

You ramp, probably fourth look little seasonality. quarter a implied at above the still it's

of year. wondering the to and to packaging any next So you the or have those And recover. if the still pushed been fourth how in projects of if you that's systems about some is piece thoughts sustainability think quarter hitting going biopharma and

remainder you work think out year So through maybe we assumed markets and track in as the lay just what's the the end guidance. basically, how of

Sundaram Nagarajan

Yes.

guide start markets, is through we'll -- get X Let's then IPS. started and first maybe really hits The with Mike. with the big go the end

first -- ramp. not for that orders we're implied X that expected highlighted is pickup half second with the you we So in the factors seeing which the had electronic the systems

number Number cycle is own ARAG having one. the a impact greater our So that's agriculture two than expectation. is on

So timing expected. is time -- enough we ramp had achieve there not to just here originally is the

about of is following terms going flat non-ARAG, IPS, record In expectation X think to years. to markets, slight end if our you be growth

ARAG -- In the terms to of business. growth contribute of continues to the

pickup growths as below certainly, talked ATS, growth the seeing of are about. We're our long-term terms we the rates. In not

is be components our up. fluid that terms expectation our slightly Medical In Fluid will of business Solutions,

solutions interventional on components. fluid offset also business be tough would the slightly up Our comps by

So returning slightly. ATS have IPS in up, down, growth flat slightly to to we're to going summary, MFS

Michael Halloran

stressed So that in rest are of the year? you through just of we let in of to following In understand how quarter? assuming derisked backlog any up those stressed those fourth any the as markets some are out then, trying sort work pickup the sort points some words, other guidance in or those markets the on stressed of any of of in

Sundaram Nagarajan

to fourth think to Yes. not What expect you I'll does that tell is come about electronics back. back, if -- does is not you our ARAG come require quarter

is those X markets. But these expected, improvement markets. So though, is sequential continued stressed what both think about in if you

-- saw that both expectation. electronics our we sequentially quarter, so So that's is second up ATS in and

Michael Halloran

your So markets? stable here in in in other are versus sequential from words, the those sequentials relatively mind pattern a normal

Sundaram Nagarajan

seeing entry order -- we're ahead, What Yes. Steve. some yes, go more... provide is Maybe

Stephen Shamrock

we around that look there, you're our basically XX% year was also growth midpoint spot at had if to to you say, Mike, this growth growth, on I I year. implies going No, And from think QX last QX. because sequential X%

So usually our QX quarter. strongest seasonally is

So I about it. think that thinking aligns we're with how

Operator

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

Unknown Analyst

on kind the James ARAG. for follow is This just Saree. to up wanted of on I

in more that kind recurring I when said you to you pressure? high here. expect ag see you can thought of And have increased you kind on inflection of the color Because do revenue So provide guys of guys market? kind got point an

Sundaram Nagarajan

'XX, expect we're year. guidance is turnaround but any market not 'XX. this be really this general, down to In expected on giving this And we in sometime

So guidance pickup difficult But you that tell exactly when agriculture to happen. ag, this will in our any year. does not markets imply

Unknown Analyst

of -- kind I to follow growth. And performance on strong it. up here despite revenue like flat Got the wanted like the margin gross

year? like should of for we how So about gross remainder margin the the think

Stephen Shamrock

Yes. Yes. No.

-- guidance when for QX, a from was that assumed in with performance, sales call, neutral. kind we I And from sales million gave really what standpoint. we would currency what and in QX expected to sales where we in So of came ties that really would I of tell with back our, very strong QX. right? $XXX you, Basically, we standpoint We the came a QX,

a if there. in of gross on impact because guidance you So performance the $X referenced back add million actually came And that spot FX, of were at high midpoint we near about the QX of you we the guidance. margin end our of in our unfavorable basically

good customer also and strong, our and referenced mix -- whether factors really parts even we cost was versus had a strong controls. it in about comments had in I very that tell number QX, product is mix, the we QX, margins would manufacturing had very within that We we efficiencies think mix. earlier was And sales, and a in in way I had you performance lines, for a would of right? strong

would I margin about I going call, gross gross How think a forward, on I we're previous margins not think mentioned on this expansion. focused

long-term maintain Our margins to is the we really have. focus that gross

do saw think I So a QX was normal. you than mix what favorable in

forward. going of a favorable about in would think balance I So that's the the year. wouldn't how expect as that mix I of

Operator

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

Matt Summerville

the it I impacted on cycle. to a be We clearly, when as Just seem to ag would here. that question the this by did less related a And convinced back pretty you not the that's business call remember ARAG. case acquisition. down

wrong. guess level, I me last I'm about long but have if you you the And over indeed assume of you destocking. to that how How think the ARAG learned tied what the business quarters point, lasts? cycle So seemingly OEM do at is? couple that and mentioned inventory that that's correct destock to I

Sundaram Nagarajan

Yes.

precision the business did like were. Certainly, still our market. is the You're added right, have very we certainly out look, in the important have really the exposure less been muted that But like our we would not people of ag that to We this interesting expectations is Matt, what because organization. expectations to the way technology. remember play a end

expectations precision XX%. at look the OEMs, you expected XX%, If down ag down is be some or to itself of the of

even you ag through way So worked is our expectations the continue that precision out about it the to not going to think with grow if has is. cycle,

inventory of They're aftermarket go distribution. direct of remember, this aftermarket XX% parts destocking, And business through terms In is those sale. not parts.

through ARAG. through a is on So of they they going some there that go inventory distributor. destocking in don't is level And OEM, the go

Matt Summerville

second the looking indicators could order put those for been there? has finer side? performed you maybe conference call you activity businesses, some the positive showing in concerned to longer a inbound Got -- -- businesses a With those the no way and Are a you I mentioned maybe leading point those quarter how are canary just that and of you that it. on how of electronics electronics, good to broader respect respect upturn with canary kind And signs last mean in life. businesses, will, in if

Sundaram Nagarajan

in mentioned to first quarter. businesses strengthen continue Both trends Yes. that the in the we our

leading those indicators. continuing X tell we're -- is very separate And So reason convinced remain we are are those both I'll indicators. good you the

For the example, That semiconductor have actually process up front-end with we business forecasts UV businesses. the is in a in see of of builders. where one end the That semiconductors lamp That is to to what the talked increased. product you niche was nicely. strengthen, one we machine continues about growing our line the sell large front lines

existing see usage that. see lines. you to see products, on you're you But also of finished So continuing electronic greater

Those from So this the EFD. is consumables to continue strengthen.

So are strong. both those still

what system would business that getting is And it are this that electronics we up. this is doesn't a going spend pick not the We're you that cycle immediately is think delayed. is translated is this in concerned -- that the see getting is to an uncertainty CapEx more It I that that's translation not turn. in indicate seeing.

is has the not more rather the CapEx does that. investment turned related it on to than cycle So

So hopefully, you. that helps

Operator

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

Christopher Glynn

a on wanted inspection different in any, I cycle. broadly. seeing follow if And and up modalities. then interesting in the Yes. different little processing could directly the if speak for electronics T&I you versus cross-section electronics to nuances test I'm to the you're curious differences

Sundaram Nagarajan

All Okay. right.

-- growth So so. if in in and continue just the right? lower I businesses. to business, EPS had the last quarter, T&I some you down first in ATS the XX% to let's in those that or levels, think I'll systems line start remind we significant you with be, continue And year with EPS T&I. be

business facing comp. are what on tough a is we X-ray So our

a go our continuing have grow The Among just into the It WaferSense the business are and is of side, on growing it parts small end to line, behind. applications. front the product memory market, our end business, of which that are nicely. we other is sensors the the T&I the optical that of new part is growing, and optical the acoustic part business, call on some more is but also on systems the The fine, front it test business, nicely. is we inspection

comps compared What mixed got So our be and business you've business. tough the dispense business. to X-ray in test declines we believe fundamentally is when inspection in lower will some our there still

quality One, closer things. In performances. job their teams of the are to doing are our X an cases, manufacturing customers. doing certainly incredible they moving these strengthening all They delivery are and

shifting got new we up in into So customers distribution and India. a have our location who electronic manufacturing coming to India focus are support

very by Third, new exciting and are have we business. being our test that inspection released products

line And product our business got We've all AXI received our MXI certainly our are see the again, that as coating the Vantage marketplace. lines, new dispense market. products is Our product business, well a a updated the well for hitting in as hitting in you market. new software new

position So to this really growth. we're using the for time business

Christopher Glynn

could general similar into of a demand polymer then the state and wondering assembly one IPS, And adhesives, if I'm in for go of the you pieces. phasing Great. and comparisons

quarter out stood as piece coatings for the think maybe strongest in IPS. the I non-ARAG

Sundaram Nagarajan

Yes.

coatings the demand opportunities. market growth is doing Our business on really an incredible and delivering

So happy the very we're about there. performance

about think growing. XX in XX you or quarters quarters, our out XX general, XX of been adhesive of If we out business, have

So strong growth. pretty

still, we be is expectation we Our as flat would finish up. the slightly to year,

in part spot. incredibly doing Particularly So good our a business that packaging well. of is our is

had about record they X tough years. again, business, you last face If year, comp. you our in this think And those some for businesses the growth would plastics

record will generally is color businesses. that So lower enough be talk slightly lower. by their speaking, you so We hopefully, don't that plastic But last right? will about around sales tell I X different individual is the slightly business years, you than what gives our divisions. And

Christopher Glynn

you, Yes. Naga. Terrific. Thank

Sundaram Nagarajan

the last talks one businesses. helpful. this Certainly, reasons sales very mix, of this when when I are thing we about -- is significantly would the is add our one was adhesive -- up This business. system some our parts of in And talk Steve to certainly, when compared

Christopher Glynn

sales in less you're revenue quarter saying the recurring strong was really of growth? Yes, neutralized sort system by

Sundaram Nagarajan

Recurring growth. Yes. revenue

Operator

of the from comes Loop Chris with Your Capital. line Instructions] [Operator Dankert question next

Christopher Dankert

a I for ARAG to return guess moment. just

the the agriculture of current synergies around we the for is peak risk about context here, come here? structure And expected how off markets just deal? maybe slowdown that kind that think business any of that in Given there do the cost of

Sundaram Nagarajan

Yes.

acquired ARAG, new model. there complete own this when valuation Hence, baked -- cost no into for are our there the based think to division is It if we mostly you our grow were synergies our on was remember, company. market. ability a I down puts part market plan had we expectations the with panning the the sales out the it follow our being certainly that wouldn't to continue expected, and market, Clearly, not the behind. with way of

you, agriculture, market still us great solid Europe, opportunities with great remind technology, North in South precision as as job long-term end market I'd have that But we it. we leader think geographies. growth opportunities X existing North leader to that for America, America, fully in company, market in believe our for we big to Certainly, acknowledge is an about about competitors think America, opportunity who nice us do a do we continue but a

Christopher Dankert

-- there, I -- of my cost think the economics There just brought slowdown. of of was there a question. the When no no was expectation it you that was side on crux to board, the my manage kind decrementals -- Has sounds to kind to sound It any guess. business. like I that that contemplating adjustment of not just sort -- like through we're doesn't on we're has it going changed. of that

Sundaram Nagarajan

No. think profit This business, you north if this of are margins. the even the in reduction about their margins revenue, with -- company's

Christopher Dankert

the Got it. driver main side else cycle. follow-up, down beyond there for now of ATS, within is on that's there? hand, kind I processing think that's of the of Is electronic at anything kind business, right that that kind electronic particularly weighing business handset the always handsets the still And of has or the me, Got for short least the just on my it. Perfect.

Sundaram Nagarajan

that. still from last in X the moved important years, is advanced mean camera over of this Chris, a such small and an components certainly business the is electronics packaging driver X, handset and as Yes. part as the a has But become also business. business. things Handset modules I bigger that business. of like where is the really, in away we have semiconductor part growing, Automotive

still. business. longer semiconductor, small presence a is just automotive and electronics, So a no it's handset handset It

Operator

comes Your with next of the from Walter Research. question Liptak Seaport line

Walter Liptak

try follow-ups yes, I just And on couple want a ARAG. to of

Are markets same the Europe, all the in by the cycle? talked getting America. market the about You picked Latin way

Sundaram Nagarajan

Yes.

across look there, is that you of market which a that even And to the down If the market precision that America, And some to North XX% the reports is much the South out ag, are at in seems cycle that typically world, growth America. was be Europe, is XX%. engine. pretty

Walter Liptak

Okay. this slowing it's ag that, about precision market, or the cycle? something? to And precision as the ag destocking is related -- follow-up is The what's different is

Sundaram Nagarajan

there is some of so our is deep short understanding a large period other our of time, would some certainly we knowledge that also is are not is -- industrial end there compared as is destocking, I'd business of our to obviously, tell -- sort that as amount think hesitancy is some we of agriculture in for been But you, of destocking, markets. we've I but of in have but there is amount -- knowledge this in knowledge or nondurable in when investing our even. electronics implements

bit OEM. is what to seems you're business cycle their unique a understand looked things And when we is in did lot and were the And seeing, this the as we -- reduction we of around evaluated unique And little performance. is a that to this this prior that business' compared it, one performance. so because, of relationship is work in this between at

So of we And but more are like current expected. our like we're at had business, well. kind us still really situation I out, it impacting figuring tell it what is we is And that's than And is. us, and it will we that you people. that's the think the to where with is products. continuing We integrate the We're which going still still ARAG. on I working impacting still

Walter Liptak

front timing years? months or is a the a that? the should it that? you think electronics Great. part Can follow-up just -- us issue long question, that mentioned back I there's educate end. the of Okay. of the guess in help and just we end is you And how as between measured business, Is the How

Sundaram Nagarajan

happened. Yes. We has based right, expected That not or on now, had would by don't in look, we quickly this that expectations quarter, follow thereafter. -- our the first

the think of in And for a the So approach might to that year. rest as our place to you better remember for we color pick pickup electronics outlook significant in imply provide I the when XXXX, up. guidance it is actually be electronic more our we'll to of year. have doesn't rest important market derisked we for a But what is the as

Operator

Your Buscaglia line Paribas. with of next the comes from Andrew question BNP

Andrew Buscaglia

I to back to ATS the wanted segment. go

direct so the saying going gives are lot what of nature are of having But forward? sales difficult to when is what given it to the it that predict spend to Nordson in you a confidence these saying. you more a is Just move customers investors making guys that's model

Sundaram Nagarajan

Yes.

I Andrew. will is you think with of look, this and it's all we is somebody said, it canceled. come not customers, What great none I us That the case. the is the our off that table, on a tell that projects working are is to question,

our new smaller, on much continue with chips customers projects AI, as opportunities for on we technologies We bring to work they much more technologies they for complicated have. bring and on as than more

sort right? in in and some it well work customers not can reluctance. only right? but or that the systems as into but there to of yet, be to reluctance, to trend exactly We translating But I'm than projects seems in is, So there is of project continues. rather that reasons have to of system orders, doing people has be either, here. There we're systems reluctance, you we the So customer translated it our broader continue from work orders, it a parts, seeing core are why and on understand that what the project they're has sort nor to is about seems what what our sales -- reluctance middle have do uncertainty. into canceled I time, call not talk translated work, work, this not terms completely actions

Andrew Buscaglia

little What to regionally, Maybe bit dig in there than don't one on? going is something region thinking seeing a deeper, China unusual is geography, worse And are other? I by I'm you the guess? I here. Like know.

Sundaram Nagarajan

entry. not have geography, work behavior Sequentially, seeing of from Yes. significantly -- There semiconductor -- all continue We're we it's order grow. we We manufacturers. geography. major not to with sequentially different are the like obviously, we better -- still

is or bottom. out. not we're is not had like come as just to starting as It We're -- continuing we are fast in it we the just hoped. So flat we're to decline not

because is the whole is our need what in are that half, not a is than not had far implied away, hoped difference in the reduction that see to steeper at we we don't for. It flatter we rate probably a hoped. our mainly getting as are And orders had regions. in because same happening. we a that is ramp lot we not at guidance had rate that's think take And we of is little second I happening

are that's us. Clearly, tell Mexico in has to that when our and activity is customers electronics up, right? for is picked last Asia year, us, Southeast for Asia in just compared than us. you, okay. for significantly China Certainly, better automotive we better can Certainly, Europe

that's, how business. that's about So broadly, we ATS think the

Operator

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

Jeffrey Hammond

cycle been of you about And of you on as have CyberOptics and just wondering timing if guys wrong and around and the at back kind cyclicality I of about timing you think going deals So I'm think look how we forward. just now. kind step allocation, capital ARAG think side

Sundaram Nagarajan

Yes.

because but a added. deals. to would technologies we pressure technology this. drivers of the we've We you the the bases that, for expand like we it's us need our the that sound, are that think pretty behind and of we think company market certainly and part long-term We the tell and precision I deals people as having spot have portfolio have a put to as these certainly short-term both conditions, we to on I of technologies. our continue thinking equation about we acquisitions these of each have in into about believe But are spent time fair question, said and

what Finally, right? you, is it's high-quality market. as not assets I we -- it control will so will, really don't an if when tell come excuse, you to But offered

we on We we're believe be past of I market get happy strategic continue we Next. fit And going long-term deploy continue to conditions, And these as focused that to strategy know part of Nordson portfolio. technology are businesses. remain incredibly portfolio, to of our the strong these these NBS building precision

on. fair a what working but it's that's think question asked, I we're So you

Jeffrey Hammond

color Appreciate there, the Naga. Okay.

NBS second we mean model, decrementals. in least you of the kind decremental initially, job guys half, a margins Next I decrementals. pretty have in good think had done with our pretty at I Just on limiting severe the But

So the about decrementals holding and how just maybe you're thinking line.

Sundaram Nagarajan

Yes.

quarter. ARAG, inside you think at were sales level comparison. number. If about number? have look total look But have had decrementals decrementals, find you apples-to-apples And for But apples-to-apples decrementals look the to of strong you pretty looking the our where core businesses. think That will at your in we I you strong You're pretty you think the at for our you about the if a company business, the total company mostly lower without decrementals ARAG if company's, best full load probably have is core SG&A, skewed. given And some decrementals. performance yet we the

want go add? Sorry, Steve, to you ahead

Stephen Shamrock

just we're QX our successful we've was to going EBITDA as well, I our Yes. years, And I margins. even XX% row where X focus margins no, Jeff, No, EBITDA higher. was mean on, I obviously think terms very here a or way I'd in also we been think EBITDA again EBITDA just quarter mean well the delivered in what say, too, more -- margins. XXXX. we've margins the had I strong that of last I is fifth generating to on or And XX% do in we right?

Sundaram Nagarajan

in if a is because XX to for of is Jeff, past XX use our what we you're direct precision want do. That it the in technology to stay want that's to innovation, core I done is businesses, asking the in continue line what gross margins to we'll which and XX. invested would invested is target And decremental, our customer in our about with stay what have we we sort in model.

really a still over perspective, deliver in right? look will full that at expecting record We're But essentially we're XX-plus you XXXX. you we still midpoint if our -- If of growth X% a put implies year, margins. all our this percent EBITDA

pretty on quarter, flow. about strong convert still converted will XX%. In to free net income the cash We we

from operational do good company that we pretty some is a yes, to this dealing the environment. the teams with market continue in but So in perspective, performance place, are the of and operational an conditions,

Operator

ahead. I for will Naga over now remarks. go turn back the to call closing Please

Sundaram Nagarajan

we quarter operating date of With long-term the that markets, Growth an that Framework. but our New York We focused XXXX. more second details of customer technologies, for sharing please on be Day calendars the October your of this save positions NBS us for the the of that on diversified hosting well close X, differentiated reflects are in Investor excited solid announce Ascend we afternoon to about on mind, deployment profitable the precision to will in be the and performance the strategy the We'll October growth. model, Thursday, strength Our X. information summer rigorous of Next remain implementation event

Again, I for thank Thank their which commitment, call. today's and great want to you time Nordson's these for your makes results a employees on attention possible. Have day.

Operator

that Ladies joining, Thank you all and now concludes gentlemen, may you and for today's disconnect. call.

Nordson (NDSN) 21 May 242024 Q2 Earnings call transcript