What changed in this filing

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Item 1. Business

2022-12-19 compared with 2021-12-17 · 61 added, 83 removed, 142 unchanged (50% of the section changed)

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We engineer, manufacture and market differentiated products and systems used for precision dispensing, applying and controlling of adhesives, coatings, polymers, sealants, biomaterials, and other fluids, to test and inspect for quality, and to treat and cure surfaces and various medical products such as:

catheters, cannulae, medical balloons and medical tubing..

catheters, cannulas, medical balloons and medical tubing.

These products are supported with extensive application expertise and direct global sales and service.

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We have 7,331 employees worldwide.

Principal manufacturing facilities are located in the United States, the People’s Republic of China, Germany, Ireland, Israel, Mexico, the Netherlands, and the United Kingdom.

COVID-19 Pandemic Update

In December 2019, a novel strain of coronavirus ("COVID-19") emerged and has since spread to other countries, including the United States.

In March 2020, the World Health Organization declared COVID-19 as a pandemic (the "COVID-19 pandemic").

The COVID-19 pandemic, including multiple variants, has resulted in governments around the world implementing stringent measures to help control the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business interruptions and other measures.

Throughout the COVID-19 pandemic, we have supported, and continue to support, multiple “critical infrastructure” sectors by manufacturing materials and products needed for medical supply chains, packaging, transportation, energy, communications, and other critical infrastructure industries.

We have benefited from our geographical and product diversification as the end markets we serve have remained resilient in response to the COVID-19 pandemic, and we continue to invest in the businesses, people, and strategies necessary to achieve our long-term priorities as we focus on driving profitable growth.

We have continued to operate during the COVID-19 pandemic in all our production facilities, having taken the recommended public health measures to ensure worker and workplace safety.

As a result, there have been unfavorable impacts on our manufacturing efficiencies.

Additionally, we are taking steps to offset cost increases from COVID-19 pandemic-related supply chain disruptions.

For more information on how we have modified our business practices during the COVID-19 pandemic, see “Human Capital Resources” below.

We continue to actively monitor the rapidly evolving circumstances and impact of the COVID-19 pandemic, which has negatively disrupted, and may continue to negatively disrupt, our business and results of operations in the future.

The full extent of the COVID-19 pandemic on our operations and the markets we serve remains highly uncertain and will depend largely on future developments related to the COVID-19 pandemic, including infection rates increasing or returning in various geographic areas, variations of COVID-19, the ultimate duration of the COVID-19 pandemic, actions by government authorities to contain the outbreak or treat its impact, such as reimposing previously lifted measures or putting in place additional restrictions, and the widespread distribution and acceptance of an effective vaccine, among other things.

These developments are constantly evolving and cannot be accurately predicted.

See Part I, Item 1A, “Risk Factors” in this report.

New Secretary and General Counsel

On October 12, 2021, we announced that Jennifer McDonough had been named Executive Vice President, General Counsel and Secretary, effective November 1, 2021.

McDonough succeeded Gina Beredo, who left the Company to pursue a new opportunity.

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Our principal manufacturing facilities are located in the United States, the People’s Republic of China, Germany, Ireland, Israel, Mexico, the Netherlands and the United Kingdom.

CyberOptics Acquisition

On November 3, 2022, the Company completed the acquisition of CyberOptics Corporation (“CyberOptics”) pursuant to the terms of the Agreement and Plan of Merger, dated as of August 7, 2022, by and among the Company, Meta Merger Company and CyberOptics.

CyberOptics is a leading global developer and manufacturer of high-precision 3D optical sensing technology solutions.

The CyberOptics acquisition expanded our test and inspection platform, providing differentiated technology that expands our product offering in the semiconductor and electronics industries and will be reported in our Advanced Technology Solutions segment.

The all-cash transaction of approximately $380,000, net of cash acquired, was funded using our revolving credit facility and is not expected to have a material impact on our Consolidated Financial Statements.

Corporate Purpose and Goals

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When short-term swings occur, we do not intend to alter our foundational objectives in efforts to mitigate the impact of these temporary occurrences.

In 2021, we launched the Ascend strategy, which is designed to deliver top tier revenue growth with attractive margins and returns.

In 2021, we launched the Ascend strategy, which is designed to deliver top tier revenue growth with leading margins and returns.

Ascend is driven by three interconnected pillars:

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Using data in a consistent and disciplined way, leaders across the Company are defining their strategic business priorities.

We drive organic growth by continually introducing new products and technology, providing high levels of customer service and support, capturing rapidly expanding opportunities in emerging geographies, and by leveraging existing technology into new applications.

Additional growth comes through the acquisition of companies that have differentiated precision technology based product portfolio, serve attractive high-growth end-markets applications and have a customer-centric business model.

The primary goals of our acquisition strategy are to complement our current capabilities, diversify our business into new industry sectors with new customers and expand the scope of the solutions we can offer to our customers.

We drive organic growth by continually introducing new products and technology, providing high levels of customer service and support, capturing rapidly expanding opportunities in emerging geographies, and leveraging existing technology into new applications.

Additional growth comes through the acquisition of companies that have differentiated precision technology-based product portfolios, serve attractive high-growth end-markets applications and have a customer-centric business model.

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primary goals of our acquisition strategy are to complement our current capabilities, diversify our business into new industry sectors with new customers and expand the scope of the solutions we can offer to our customers.

We strive to provide genuine customer satisfaction – it is the foundation upon which we continue to build our business.

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At Nordson, we have a long and proud history of investing in the communities where we live and work.

We are committed to contributing approximately five percent of domestic pretax earnings to human welfare services, education and other charitable activities, particularly in communities where we have significant operations.

Through the Nordson Corporation Foundation (the “Foundation”), we give back by providing grants to nonprofits in communities where we have facilities employing more than 100 people.

We are committed to contributing approximately five percent of domestic pretax earnings to education, human welfare services and other charitable activities, particularly in communities where we have significant operations.

Through the Nordson Corporation Foundation (the “Foundation”), we give back by providing grants to nonprofits in communities where we have facilities employing approximately 100 people.

In recent years, we have extended our reach internationally, with giving programs in 11 international locations.

We also expanded our Matching Gifts program internationally in 2022, which further expands our culture of giving around the world.

Since 1989, we have donated more than $148 million to communities where we live and work.

In addition, our employees volunteered more than 106,000 hours through our Time ‘N Talent program.

In addition, our employees volunteered more than 107,000 hours through our Time ‘N Talent and Dollars for Doers programs.

Principal Products and Uses

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In 2022, no single customer accounted for ten percent or more of sales.

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The following is a summary of the product lines and markets served by our operating segments:

Industrial Precision Solutions

This segment delivers proprietary dispensing and processing technology to diverse end markets.

Product line specific solutions reduce material consumption, increase line efficiency and enhance product brand and appearance.

Technologies are used for dispensing adhesives, coatings, paint, finishes, sealants and other materials.

This segment delivers proprietary dispensing and material processing technology, as well as measurement, inspection and control solutions to diverse end markets.

Product line specific solutions reduce material consumption, increase line efficiency and enhance product quality and appearance.

Technologies are used for processing polymers, inspection and measurement of food, tubing and films and dispensing adhesives, coatings and sealants.

This segment primarily serves the industrial, consumer durables and non-durables markets.

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Key strategic markets include beverage containers and food cans, electric battery, appliances, automotive, building and construction, composites, electronics and medical.

• Measurement and Control Solutions – In-line measurement sensors, gauges and analyzers using near-infrared, laser, X-ray, optical and nucleonic technologies, as well as proprietary algorithms and software.

These precision applications ensure quality and reliability within the customers’ manufacturing processes.

Key strategic markets include consumer non-durable, film extrusion and converting, cable and tubing and energy storage.

• Nonwovens – Dispensing, coating and laminating systems for applying adhesives, lotions, liquids and fibers to disposable products and continuous roll goods.

Key strategic markets include adult incontinence products, baby diapers and child-training pants, feminine hygiene products and surgical drapes, gowns, shoe covers and face masks.

Key strategic markets include adult incontinence products, baby diapers and child-training pants, hygiene products and surgical drapes, gowns, shoe covers and face masks.

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• Packaging – Automated adhesive dispensing systems used in the rigid packaged goods industries.

Key strategic markets include food and beverage packaging, pharmaceutical packaging, and other consumer goods packaging.

Key strategic markets include packaging for food and beverage, pharmaceutical and other consumer goods.

• Polymer Processing – Components and systems used in the thermoplastic and biopolymer melt stream in extrusion, injection molding, compounding, polymerization and recycling processes.

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Key strategic markets include appliances, automotive components, building and construction materials, electronics, furniture, solar energy, and the manufacturing of bags, sacks, books, envelopes and folding cartons.

Medical and Fluid Solutions

This segment includes fluid management solutions for medical, high-tech industrial and other diverse end markets.

• Medical – Components used for minimally invasive interventional delivery of medical devices, including cannulas, catheters and medical balloons.

Products also include proprietary single-use plastic components in medical applications, including biopharmaceutical, patient care/surgical and diagnostic systems.

• Fluid Management – Precision manual and semi-automated dispensers and highly engineered single-use plastic molded syringes, cartridges, tips and fluid connection components.

Products are used within critical industrial production processes and for applying and controlling the flow of adhesives, sealants and lubricants.

Key strategic markets include electronics, industrial and animal health.

Advanced Technology Solutions

This segment integrates our proprietary product technologies found in progressive stages of a customer’s production processes, such as surface treatment, precisely controlled dispensing of material and post-dispense test and inspection to ensure quality.

Related single-use plastic molded syringes, cartridges, tips, fluid connection components, tubing, balloons and catheters are used to dispense or control fluids in production processes or within customers’ end products.

This segment predominantly serves customers in the electronics, medical and related high-tech industrial markets.

This segment integrates our proprietary product technologies into the progressive stages of a customer’s production processes, such as surface treatment, precisely controlled dispensing of material and pre- and post-dispense test and inspection to ensure quality.

This segment predominantly serves customers in the electronics end markets.

• Electronics Systems – Automated dispensing systems for high-speed, accurate application of a broad range of attachment, protection and coating fluids, and related gas plasma treatment systems for cleaning and conditioning surfaces prior to dispense.

Key strategic markets include the breadth of the electronics industry manufacturing supply chain that produces semiconductor, printed circuit board assemblies and electronic components.

• Fluid Management – Precision manual and semi-automated dispensers, minimally invasive interventional delivery devices, and highly engineered single-use plastic molded syringes, cartridges, tips, fluid connection components, tubing, balloons, and catheters.

Products are used within medical equipment and related surgical procedures, in critical industrial production processes and for applying and controlling the flow of adhesives, sealants, lubricants, and biomaterials.

Key strategic markets include medical, consumer goods, electronics, and industrial assembly.

• Test and Inspection – Bond testing and automated optical, acoustic microscopy and x-ray inspection systems used in the semiconductor and printed circuit board industries.

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as well as in the People’s Republic of China, Germany, Ireland, Israel, Mexico, the Netherlands and the United Kingdom.

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Principal materials used to make our products are metals and plastics, typically in sheets, bar stock, castings, forgings, tubing and pellets.

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Suppliers are competitively selected based on cost, quality and service.

All significant raw materials that we use are available through multiple sources.

Most significant raw materials that we use are available through multiple sources.

We purchase most raw materials and other components on the open market and rely on third parties to provide certain finished goods.

While these items are generally available from multiple sources, the cost of products sold may be affected by changes in the market price of raw materials and tariffs on certain raw materials, particularly imports from China, as well as disruptions in availability of raw materials, components and sourced finished goods.

We monitor and investigate alternative suppliers and materials based on numerous attributes including quality, service and price.

We monitor and investigate alternative suppliers and materials based on numerous attributes including quality, service, financial stability and price.

We currently source raw materials and components from a number of suppliers, but our ongoing efforts to improve the cost effectiveness of our products and services may result in a reduction in the number of our suppliers.

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Senior operating management supervises an extensive quality control program for our equipment, machinery and systems, and manufacturing processes.

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However, standby capacity for alternative sources is available if needed.

Though the COVID-19 pandemic has disrupted the global supply chain, we have not experienced significant supply disruption from third-party component suppliers.

However, we have faced and continue to face some supply chain constraints primarily related to logistics, including higher freight rates, and obtaining select manufacturing components.

Though the COVID-19 pandemic disrupted the global supply chain, we have not experienced significant supply disruption from third-party component suppliers.

However, we have faced and continue to face some supply chain constraints, primarily related to electronic component availability.

While logistics flow continues to improve, we are experiencing much higher costs than pre-pandemic rates due to carrier rate increases, mode changes, fuel costs, port backlog and other factors.

In addition, shipments between countries have been impacted and we have experienced delays due to a variety of factors related to supply chain disruption.

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We rely on a combination of intellectual property rights, including patents, trademarks, copyrights, trade secrets, and contractual provisions to protect our intellectual property.

Our worldwide intellectual property portfolio is strengthened through innovation and brand recognition, and a comprehensive approach for protection and enforcement.

Our worldwide intellectual property portfolio is strengthened through innovation and brand recognition, and our comprehensive approach for protection and enforcement.

We enter into confidentiality and intellectual property agreements with our employees that require them to disclose any inventions created in the scope of employment, convey all rights to those inventions to us, and restrict the distribution of proprietary information.

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Seasonal Variation in Business

Historically, the highest volume of sales occurs in the second half of the year due in large part to the timing of customers’ capital spending programs.

Accordingly, first quarter sales volume is typically the lowest of the year due to timing of customers’ capital spending programs and customer holiday shutdowns.

However, COVID-19, supply chain disruptions related to COVID-19 and other unusual events have impacted this historical trend to a degree.

Working Capital Practices

No special or unusual practices affect our working capital.

We generally require advance payments as deposits on customized equipment and systems and, in certain cases, require progress payments during the manufacturing of these products.

We continue to initiate new processes focused on reduction of manufacturing lead times, resulting in lower investment in inventory while maintaining the capability to respond promptly to customer needs.

Historically, the highest volume of sales occurs in the second half of the fiscal year due in large part to the timing of customers’ capital spending programs.

Accordingly, fiscal first quarter sales volume is typically the lowest of the year due to timing of customers’ capital spending programs and customer holiday shutdowns.

However, the COVID-19 pandemic, supply chain disruptions, historic backlog and other unusual events have impacted this historical trend to a degree.

Competitive Conditions

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Our equipment is sold in competition with a wide variety of alternative bonding, sealing, finishing, coating, processing, testing, inspecting and fluid control techniques.

Potential uses for our equipment include any production processes

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that require preparation, modification or curing of surfaces;

Potential uses for our equipment include any production processes that require preparation, modification or curing of surfaces;

dispensing, application, processing or control of fluids and materials;

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Many factors influence our competitive position, including pricing, product quality and service.

We maintain a leadership position in our business segments by delivering high-quality, innovative products and technologies, as well as service and technical support.

We maintain a leadership position in our business segments by delivering high-quality, innovative products and technologies, as well as global service and technical support.

Working with customers to understand their processes and developing the application solutions that help them meet their production requirements also contributes to our leadership position.

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We also have safeguards established to identify non-compliance concerns through internal and external audits and risk assessments, as well as an ethics helpline reporting system.

We are also required to comply with increasingly complex and changing laws and regulations enacted to protect business and personal data in the United States and other jurisdictions regarding privacy, data protection and data security, including those related to the collection, storage, use, transmission and protection of personal information and other consumer, customer, vendor or employee data.

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related to the collection, storage, use, transmission and protection of personal information and other consumer, customer, vendor or employee data.

Such privacy and data protection laws and regulations, including with respect to the European Union’s General Data Protection Regulation ("GDPR"), the Brazilian General Data Protection Law, and the California Consumer Privacy Act of 2018 ("CCPA"), and the interpretation and enforcement of such laws and regulations, are continuously developing and evolving and there is significant uncertainty with respect to how compliance with these laws and regulations may evolve and the costs and complexity of future compliance.

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As of October 31, 2022, we had 7,331 full-time and part-time employees, including 128 at our Amherst, Ohio, facility who are represented by a collective bargaining agreement that expires on November 16, 2025.

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Health and Safety

In 2021, our employees’ health and safety remained our highest priority, especially as we continued to operate through the ever-present COVID-19 pandemic.

We manufacture products deemed essential to critical infrastructure industries, including health and safety, food and agriculture, and energy, and as a result, all of our production sites have continued to operate during the pandemic.

Continuing the best practices that we adopted in 2020, we maintained a safe work environment for our employees by staying true to the recommendations of the World Health Organization, the U.S.

Centers for Disease Control and Prevention, and local governments, including taking actions such as:

• Increasing hygiene, cleaning and sanitizing procedures at all locations;

• Providing personal protective equipment, such as masks, available to employees;

• Limiting travel and encouraged quarantine upon return;

• Maintaining our COVID-leave policy encouraging employees to take time off for illness or caretaking while maintaining steady wages;

• Enforcing strict protocols and screening for outside guests;

• Updating our coronavirus intranet site as a central resource for up-to-date and accurate information.

As the year progressed, different regions of the world experienced lower level of community spread.

We began slowly reintegrating our employees, who had been working from home, into the office.

As vaccines have become more available, we continue to actively encourage our global employees to be vaccinated as the best defense against the COVID-19 virus.

We continue to be vigilant and adjust our guidelines based upon local data.

Our focus on employee health and safety has allowed us to successfully meet the evolving needs of our customers during this unique and dynamic period.

Total Rewards

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The Salaried Pension Plan is designed to work together with social security benefits to provide employees with up to 30 years of service retirement income replacement that is approximately 55% of eligible compensation, subject to the Internal Revenue Code maximum monthly benefit.

Participants fully vest in the Salaried Pension Plan after five years of service.

Participants fully vest in the Salaried

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Pension Plan after five years of service.

All eligible union employees hired prior to November 1, 2004 participate in a Company-sponsored tax-qualified pension plan for U.S.-based employees (the “Hourly Pension Plan”).

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We also maintain a supplemental retirement benefit restoration plan (“Excess Defined Benefit Pension Plan”), which is an unfunded, non-qualified plan that is designed to provide retirement benefits to U.S.-based eligible participants hired prior to July 1, 2021, as a replacement for retirement benefits limited by regulations under the Internal Revenue Code.

Together, the Salaried Pension Plan and Excess Defined Benefit Pension Plan are intended to provide executive officers, hired prior to July 1, 2021, with retirement income at a level equivalent to that provided to other employees under the Salaried Pension Plan.

We also provide service awards which show appreciation and thanks to longstanding employees with five or more years of service.

In 2022, we launched a global recognition program that allows managers and peers to recognize the special achievements of others through both written recognition shared on a company awards feed, as well as monetary recognition that allows a recipient to choose a physical gift, gift card or donate the value of their recognition to charity.

We also continue our service award program, which demonstrates appreciation and thanks to longstanding employees with five or more years of service.

Service milestones are recognized at each five-year increment by presentation of a digital and/or printed certificate with an invitation to select a recognition award via an online catalog.

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Our key talent philosophy is to develop talent from within and supplement with external hires.

This approach has yielded a deep understanding among our employee base of our business, products and customers, while adding new employees and ideas in support of our continuous improvement mindset.

We believe that our average tenure across the globe – 10 years as of the end of 2021 – reflects the strong engagement of our employees and is reflective of our positive workplace culture.

Attracting and retaining the best talent relies on our ability to provide a diverse and inclusive workplace, personal and professional growth opportunities, and a rewarding employee experience.

We strive to uphold a culture of shared knowledge, appreciation and success.

We believe that our average tenure across the globe reflects our positive workplace culture and the strong engagement of our employees.

Our talent acquisition team uses internal and external resources to recruit highly skilled and talented workers, and we encourage employee referrals for open positions.

Talent development and succession planning for critical roles is a cornerstone of our talent program.

Development plans are created and monitored for critical roles to ensure progress is made along the established timelines.

Development plans are created and monitored to ensure progress is made along the established timelines.

Development plans also intersect with our mission, particularly as we strive to be responsible to our communities.

One of our core values—Respect for People—reflects the behavior we strive to include in every aspect of the way we conduct business.

Our inclusion and diversity initiatives support our goal that everyone throughout the Company is engaged in creating an inclusive workplace, and we work to build diverse talent pools as part of our recruitment efforts.

We strive to promote inclusion through “Inclusive Leadership” and unconscious bias training across the Company.

With the support of our board of directors, we continue to drive our diversity and inclusion initiatives.

Our approach encompasses inclusion awareness and skill-building, intentionality with respect to diversity in our hiring and selection process and performance management and succession planning that recognizes the importance of diversity.

We strive to promote inclusion through ongoing “Inclusive Leadership” and unconscious bias training across the Company.

We regularly reflect on our progress and explore opportunities to improve our inclusion and diversity programs, including at the executive leadership and Board levels.

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business