What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-12-19 compared with 2021-12-17 · 59 added, 56 removed, 194 unchanged (37% of the section changed)

1 unchanged sentence

We discuss in this section some of the risk factors that could materially and adversely affect our business, financial condition, value and results of operations.

You should consider these risk factors in connection with evaluating the forward-looking statements contained in this Annual Report on Form 10-K because these factors could cause our actual results and financial condition to differ materially from those projected in forward-looking statements.

You should consider these risk factors in connection with evaluating the forward-looking statements contained in this annual report because these factors could cause our actual results and financial condition to differ materially from those projected in forward-looking statements.

You should not interpret the disclosure of any risk factor to imply that the risk factor has not already materialized.

Additional risks factors may exist that are not presently known by the Company or that are currently deemed immaterial may also be present.

Risks Related to the COVID-19 pandemic

The COVID-19 pandemic has negatively disrupted our ability to operate, results of operations, financial condition, liquidity and capital investments, and may continue to have a negative impact, which could be material.

In March 2020, the World Health Organization categorized the COVID-19 pandemic outbreak as a pandemic, and the President of the United States declared the COVID-19 pandemic outbreak a national emergency.

COVID-19 continues to spread in the United States and other countries across the world, and the ultimate duration and severity of its effects are currently unknown.

Governments around the world have implemented various measures during this pandemic to help control the spread of the virus, including quarantines, social distancing protocols, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments, school closures and other measures.

In addition, governments and central banks in several parts of the world have utilized fiscal and monetary stimulus measures to attempt to counteract the impacts of the COVID-19 pandemic.

The COVID-19 pandemic has negatively disrupted, and may continue to negatively impact, our business.

While we have continued to operate during the course of the COVID-19 pandemic in all of our production facilities and have supported 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 experienced unfavorable impacts on our manufacturing efficiencies due to the implementation of worker safety measures and cost increases from COVID-19 pandemic-related supply disruptions.

We have invested and will continue to invest significant time and resources in modifying our business practices for the continued health and safety of our employees and in managing the impact of the COVID-19 pandemic on our global business.

Our focus on managing and mitigating the impacts of the COVID-19 pandemic on our business, including complying with any new or modified government health regulations, for an unknown period of time may cause us to divert or delay the application of our resources toward other or new initiatives or investments, which may have a material adverse impact on our business and results of operations.

Nordson Corporation 10

Governments around the world have implemented fiscal stimulus measures to counteract the effects of the COVID-19 pandemic.

The magnitude and overall effectiveness of these actions remain uncertain.

The full extent to which the COVID-19 pandemic will impact our business going forward will depend on future developments that are highly uncertain and cannot be accurately predicted, including, but not limited to, the duration and severity of the COVID-19 pandemic, variations of COVID-19, actions by government authorities to contain the outbreak or treat its impact, such as reimposing previously lifted measures or putting in place additional restrictions, the widespread distribution and acceptance of an effective vaccine, and the extent and severity of the impact on our customers, operations, and suppliers, all of which are uncertain and cannot be predicted.

Our future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and uncertain demand.

Additionally, to the extent the COVID-19 pandemic adversely affects our business, results of operations or financial condition, it may heighten other risks described in this “Risk Factors” section below.

Risks Related to Economic Conditions

The COVID-19 pandemic has negatively disrupted, and may continue to negatively disrupt, our business and results of operations.

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 continued to operate during the COVID-19 pandemic in all our production

Nordson Corporation 9

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.

We continue to actively monitor the 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.

For example, in the second quarter of 2022, our revenue growth in Asia-Pacific was negatively impacted by COVID-19 lockdowns in China.

COVID-19 lockdown restrictions in China continue to be implemented from time to time.

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.

Changes in United States or international economic conditions, including declines in the industries we serve, could adversely affect the profitability of any of our operations.

In 2022, approximately 33 percent of our revenue was generated in the United States, while approximately 67 percent was generated outside the United States.

The COVID-19 pandemic and related preventative and mitigation measures implemented by governments around the world have to date negatively impacted the global economy and created significant volatility and disruption of financial markets.

The COVID-19 pandemic and related preventative and mitigation measures implemented by governments around the world and the conflict between Russia and Ukraine have to date negatively impacted the global economy and created significant volatility and disruption of financial markets.

A general sustained slowdown in the global economy or in a particular region or industry or an increase in trade tensions with U.S.

6 unchanged sentences

It is not possible to predict accurately the factors that will affect demand for our products in the future.

Any significant downturn in the health of the general economy, or any recession, depression or other sustained adverse market event resulting from the COVID-19 pandemic, could have an adverse effect on our revenues and financial performance, resulting in impairment of assets.

Any significant downturn in the health of the general economy, or any recession, depression or other sustained adverse market event, including inflationary pressures, could have an adverse effect on our revenues and financial performance, resulting in impairment of assets.

We cannot predict the strength or duration of any economic slowdown and instability or the timing of any recovery.

7 unchanged sentences

or international trade policy could have an adverse impact on our business.

Further, the level of impact from the COVID-19 pandemic and the reactions of governmental authorities and others thereto may have significant adverse effects on international trade policy.

Further, the level of impact from the COVID-19 pandemic and the reactions of governmental authorities and others thereto as well as the conflict between Russia and Ukraine may have significant adverse effects on international trade policy.

Significant movements in foreign currency exchange rates or change in monetary policy may harm our financial results.

6 unchanged sentences

Nordson Corporation 10

have caused and will continue to cause foreign currency transaction and translation gains and losses, which historically have been material and could continue to be material.

have caused and may continue to cause foreign currency transaction and translation movements, which historically have been material and could continue to be material.

We cannot predict the effects of exchange rate fluctuations upon our future operating results because of the number of currencies involved, the variability of currency exposures and the potential volatility of currency exchange rates.

We take actions to manage our foreign currency exposure, such as entering into hedging transactions, where available, but we cannot assure that our strategies will adequately protect our consolidated operating results from the effects of exchange rate fluctuations.

For example, uncertainty surrounding the impact of the COVID-19 pandemic and the effects of the departure of the United Kingdom from the European Union ("Brexit") have caused increased volatility in global currency exchange rates that have resulted in the strengthening of the United States dollar against the foreign currencies in which we conduct business.

Future adverse consequences arising from the COVID-19 pandemic and Brexit may include continued volatility in exchange rates.

We take actions to manage our foreign currency exposure, such as entering into hedging transactions, where applicable, but we cannot assure that our strategies will adequately protect our consolidated operating results from the effects of exchange rate fluctuations.

For example, uncertainty surrounding the impact of the COVID-19 pandemic, the impact of the conflict between Russia and Ukraine, changes in monetary policies and the effects of the departure of the United Kingdom from the European Union ("Brexit") have caused increased volatility in global currency exchange rates that have resulted in the strengthening of the United States dollar against the foreign currencies in which we conduct business.

Future adverse consequences arising from the COVID-19 pandemic, the conflict between Russia and Ukraine, and Brexit may include continued volatility in exchange rates.

Any significant fluctuation in exchange rates may be harmful to our financial condition and results of operations.

3 unchanged sentences

Risks Related to Our Business and Operations

A disruption in, shortage of, or price increases for, supply of our components and raw materials may adversely impact our operations.

A disruption in, shortage of, or price increases for, supply of our components and raw materials may adversely impact our business, financial condition, results of operations and cash flows.

While we manufacture certain parts and components used in our products, we require substantial amounts of raw materials and purchase some parts and components from suppliers.

The availability and prices for raw materials, parts and components may be subject to curtailment or change due to, among other things, suppliers' allocation to other purchasers, interruptions in production by suppliers, changes in exchange rates and prevailing price levels, including as a result of inflation.

The availability and prices for raw materials, parts and components may be subject to curtailment or change due to, among other things, suppliers' allocation to other purchasers, interruptions in production by suppliers and changes in exchange rates and prevailing price levels, including as a result of inflation.

The COVID-19 pandemic and the conflict between Russia and Ukraine have negatively impacted, and may continue to negatively impact, the availability and prices for raw materials, parts, and components.

While we generally attempt to pass along higher raw material, part and component costs to our customers in the form of price increases, there historically has been a delay between an increase in our raw material costs and our ability to increase the prices of our products.

1 unchanged sentence

Shortages in raw materials or our inability to pass along price increases could affect the prices we charge, our operating costs and our competitive position, which could adversely affect our business, financial condition, results of operations and cash flows.

In addition, our facilities, supply chains, distribution systems, and products may be impacted by natural or man-made disruptions, including armed conflict, demand surges, damaging weather or other acts of nature, pandemics or other public health crises.

A shutdown of, or inability to utilize, one or more of our facilities, our supply chain, or our distribution system could significantly disrupt our operations, delay production and shipments, impact our relationships and reputation with customers, suppliers, employees and others, result in lost sales, or result in legal exposure and large remediation or other expenses, which could adversely affect our business, financial condition, results of operations and cash flows.

In addition, our facilities, supply chains, distribution systems and products may be impacted by natural or man-made disruptions, including armed conflict, demand surges, damaging weather or other acts of nature (including weather or other acts of nature caused by climate change), pandemics or other public health crises.

A shutdown of, or inability to utilize, one or more of our facilities, our supply chain, or our distribution system could significantly disrupt our operations, delay production and shipments, impact our relationships and reputation with customers, suppliers, employees and others, result in lost or decreased sales, or result in legal exposure and large remediation or other expenses, which could adversely affect our business, financial condition, results of operations and cash flows.

Failure to retain our existing senior management team or the inability to attract and retain qualified personnel could hurt our business and inhibit our ability to operate and grow successfully.

7 unchanged sentences

If we are unable to successfully manage these and other organizational changes, the ability to complete such activities and realize anticipated synergies or cost savings as well as our results of operations and financial condition could be materially adversely affected.

We cannot offer assurances that any of these initiatives will be beneficial to the extent anticipated, or that the estimated efficiency improvements, incremental cost savings or cash flow improvements will be realized as anticipated or at all.

We cannot offer assurances that any of these initiatives will be beneficial to the extent

Nordson Corporation 11

Political conditions in the U.S.

and foreign countries in which we operate could adversely affect us.

anticipated, or that the estimated efficiency improvements, incremental cost savings or cash flow improvements will be realized as anticipated or at all.

Political conditions in and between the United States and foreign countries in which we operate could adversely affect us.

We conduct our manufacturing, sales and distribution operations on a worldwide basis and are subject to risks associated with doing business both within and outside the United States.

We expect that international operations and United States export sales will continue to be important to our business for the foreseeable future.

Both sales from international operations and export sales are subject in varying degrees to risks inherent in doing business outside the United States.

Both sales from international operations and export sales are subject to varying degrees of risks inherent in doing business outside the United States.

Such risks include, but are not limited to, the following:

1 unchanged sentence

• unanticipated or unfavorable circumstances arising from host country laws or regulations;

• threats of war, terrorism or governmental instability;

• threats of war, terrorism or governmental instability, including the conflict between Russia and Ukraine;

• changes in tax rates, adoption of new tax laws or other additional tax policies, and other proposals to reform United States and foreign tax laws that impact how United States multinational corporations are taxed on foreign earnings;

13 unchanged sentences

presidential administration has criticized existing trade agreements, and while it remains unclear what actions the current or future administration may take with respect to existing and proposed trade agreements, or restrictions on trade generally, more stringent export and import controls may be ultimately imposed in the future.

Increased information technology ("IT") security threats and more sophisticated and targeted cyber crime could pose a risk to our systems, networks, products, solutions and services.

Increased information technology threats and more sophisticated and targeted cybercrime could pose a risk to our systems, networks, products, solutions and services.

We have experienced and expect to continue to experience cyber-attacks to our systems and networks.

1 unchanged sentence

To conduct our business, we rely extensively on information technology systems, networks and services, some of which are managed, hosted and provided by third-party service providers.

Increased global IT security threats and more sophisticated and targeted computer crime pose a risk to the security of our systems and networks and those of our third-party service providers and the confidentiality, availability and integrity of our data.

Increased global information technology security threats, more sophisticated and targeted computer crime and cyberterrorism pose a risk to the security of our systems and networks and those of our third-party service providers and the confidentiality, availability and integrity of our data.

Depending on their nature and scope, such threats could potentially lead to the compromising of confidential information, including but not limited to confidential information relating to customer or employee data, improper use of our systems and networks, manipulation and destruction of data, defective products, production downtimes and operational disruptions, which in turn could adversely affect our reputation, competitiveness and results of operations.

3 unchanged sentences

While we attempt to mitigate these risks by employing a number of measures, including employee training, comprehensive monitoring of our networks and systems, and maintenance of backup and protective systems, our systems, networks, products, solutions and services remain potentially vulnerable to advanced persistent threats.

The techniques used by criminals to obtain unauthorized access to sensitive data change frequently and often are not recognizable until launched against a target.

Accordingly, we may be unable to anticipate these techniques or implement adequate preventative measures.

It is therefore possible that in the future we may suffer a

The techniques used by criminals to obtain unauthorized access to sensitive data

Nordson Corporation 12

criminal attack, unauthorized parties may gain access to personal information in our possession and we may not be able to identify any such incident in a timely manner.

change frequently and often are not recognizable until launched against a target.

Accordingly, we may be unable to anticipate these techniques or implement adequate preventative measures.

It is therefore possible that in the future we may suffer a criminal attack, unauthorized parties may gain access to personal information in our possession and we may not be able to identify any such incident in a timely manner.

The interpretation and application of data protection laws, including federal, state and international laws, relating to the collection, use, retention, disclosure, security and transfer of personally identifiable data in the U.S., Europe and elsewhere (including but not limited to the European Union’s GDPR, the Brazilian General Data Protection Law and the CCPA), are uncertain and evolving.

37 unchanged sentences

Our recent historical growth has depended, and our future growth is likely to continue to depend, in part on our acquisition strategy and the successful integration of acquired businesses into our existing operations.

For example, in November 2022, we completed our acquisition of CyberOptics.

We intend to continue to seek additional acquisition opportunities both to expand into new markets and to enhance our position in existing markets throughout the world.

We cannot assure we will be able to successfully identify suitable acquisition opportunities, prevail against competing potential acquirers, negotiate appropriate acquisition terms, obtain financing that may be needed to consummate such acquisitions, complete proposed acquisitions, successfully integrate acquired businesses into our existing operations or expand into new markets.

In addition, we cannot assure that any acquisition, once successfully integrated, will perform as planned, be accretive to earnings, or prove to be beneficial to our operations and cash flow.

In addition, we cannot assure that any acquisition, including the recent acquisition of CyberOptics, once successfully integrated, will perform as planned, be accretive to earnings, or prove to be beneficial to our operations and cash flow.

The success of our acquisition strategy is subject to other risks and uncertainties, including:

13 unchanged sentences

We assess at least annually whether there has been any impairment in the value of our intangible assets.

If future operating performance at one or more of our business units were to fall significantly below current levels, if competing or alternative technologies emerge, if market conditions for acquired businesses decline, if significant and prolonged negative industry or economic trends exist, if our stock price and market capitalization declines, or if future cash flow estimates decline, we could incur, under current applicable

Nordson Corporation 14

accounting rules, a non-cash charge to operating earnings for goodwill impairment.

price and market capitalization declines, or if future cash flow estimates decline, we could incur, under current applicable accounting rules, a non-cash charge to operating earnings for goodwill impairment.

Any determination requiring the write-off of a significant portion of unamortized intangible assets would negatively affect our results of operations and equity book value, the effect of which could be material.

Risks Related to Legal, Compliance and Regulatory Matters

Changes in United States and international tax law may have a material adverse effect on our business, financial condition and results of operations.

Changes in United States and international tax laws may have a material adverse effect on our business, financial condition and results of operations.

We are subject to income taxes in the United States and various foreign jurisdictions.

13 unchanged sentences

Changes in assumptions, laws or regulations and how the Company manages pension liabilities could lead to variability in financial results and could have a material adverse impact on liquidity.

Our global operations are subject to increasingly complex environmental regulatory requirements.

Our global operations are subject to increasingly complex environmental regulatory requirements, and compliance with evolving environmental regulatory requirements could negatively impact our business, capital expenditures, results of operations, financial condition and competitive position.

We are subject to increasingly complex environmental regulations affecting international manufacturers, including those related to air and water emissions, waste management and climate change.

4 unchanged sentences

Changes in environmental laws or regulations could result in higher expenses and payments, and uncertainty relating to environmental laws or regulations may also affect how we conduct our operations and structure our investments and could limit our ability to enforce our rights.

Changes in environmental and climate change laws or regulations, including laws relating to greenhouse gas emissions, could subject us to additional costs and restrictions, including increased energy and raw material costs.

If environmental laws or regulations are either changed or adopted and impose significant operational restrictions and compliance requirements upon us or our products, they could negatively impact our business, capital expenditures, results of operations, financial condition and competitive position.

Nordson Corporation 15

It is our policy to apply strict standards for environmental protection to all of our operations inside and outside of the United States, even when we are not subject to local government regulations.

It is our policy to apply strict standards for environmental protection to all of our operations within and outside of the United States, even when we are not subject to local government regulations.

We may incur substantial costs, including cleanup costs, fines and civil or criminal sanctions, liabilities resulting from third-party property damage or personal injury claims, or our products could be prohibited from entering certain jurisdictions, if we were to violate or become liable under environmental laws, if our products become non-compliant with environmental laws or if we were to undertake environmental protection actions voluntarily.

Expectations relating to environmental, social and governance considerations expose us to potential liabilities, increased costs, reputational harm and other adverse effects on our business.

Many governments, regulators, investors, employees, customers and other stakeholders are increasingly focused on environmental, social and governance considerations relating to businesses, including climate change and greenhouse gas emissions, human capital and diversity, equity and inclusion.

We make statements about our environmental, social and governance goals and initiatives through information provided on our website, press statements and other communications, including through our ESG Report.

Responding to these environmental, social and governance considerations and implementation of these goals and initiatives involves risks and uncertainties, requires investments and are impacted by factors that may be outside our control.

In addition, some stakeholders may disagree with our goals and initiatives and the focus of stakeholders may change and evolve over time.

Stakeholders also may have very different views on where environmental, social and governance focus should be placed, including differing views of regulators in various jurisdictions in which we operate.

Any failure, or perceived failure, by us to achieve our goals, further our initiatives, adhere to our public statements, comply with federal, state or international environmental, social and governance laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition and stock price.

Risks Related to Our Capital Structure

Our inability to comply with our existing credit facilities’ restrictive covenants or to access additional sources of capital could impede growth or the repayment or refinancing of existing indebtedness.

Our inability to comply with our existing credit facilities’ restrictive covenants or to access additional sources of capital could impede our growth or the repayment or refinancing of existing indebtedness.

The limits imposed on us by the restrictive covenants contained in our credit facilities could prevent us from making acquisitions or cause us to lose access to these facilities.

14 unchanged sentences

We may not be able to obtain new or additional financing because we have substantial debt or because we may not have sufficient cash flow to service or repay our existing or future debt.

In addition, depending on market conditions and our financial performance, neither debt nor equity financing may be available on satisfactory terms or at all.

In addition, depending on market conditions and our financial performance, neither debt nor equity financing may be available on

Nordson Corporation 16

satisfactory terms or at all.

Finally, as a consequence of worsening financial market conditions, our credit facility providers may not provide the agreed credit if they become undercapitalized.

1 unchanged sentence

Any period of interest rate increases may adversely affect our profitability.

At October 31, 2021, we had $815,897 of total debt and notes payable outstanding, of which 38 percent was priced at interest rates that float with the market.

As of October 31, 2022, we had $ 738,822 of total debt outstanding, of which 35 percent was priced at interest rates that float with the market.

A one percentage point increase in the interest rate on the floating rate debt in 2022 would have resulted in approximately $2,841 of additional interest expense.

1 unchanged sentence

For additional detail related to this risk, see Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk.

Additionally, the interest rates on some of our debt is tied to LIBOR.

In July 2017, the head of the United Kingdom’s Financial Conduct Authority announced its intention to phase out the use of LIBOR by June 2023.

The uncertainty regarding the transition from LIBOR to another benchmark rate or rates could have adverse impacts on our available debt that currently uses LIBOR as a benchmark rate, and ultimately, adversely affect our financial condition and results of operations.

Nordson Corporation 17

General Risk Factors

1 unchanged sentence

We maintain property, business interruption and casualty insurance but such insurance may not cover all risks associated with the hazards of our business and is subject to limitations, including deductibles and maximum liabilities covered.

We are potentially at risk if one or more of our insurance carriers fail.

We are potentially at risk if one or more of our insurance carriers fail or deny our claims.

Additionally, severe disruptions in the domestic and global financial markets could adversely impact the ratings and survival of some insurers.

1 unchanged sentence

Our business and operating results may be adversely affected by natural disasters or other catastrophic events beyond our control.

While we have taken precautions to prevent production and service interruptions at our global facilities, severe weather conditions, including any that may be caused by global climate change, such as hurricanes or tornadoes, as well as major earthquakes, wildfires and other natural disasters, as well as cyberterrorism, in areas in which we have manufacturing facilities or from which we obtain products may cause physical damage to our properties, closure of one or more of our manufacturing or distribution facilities, lack of an adequate work force in a market, temporary disruption in the supply of inventory, disruption in the transport of products and utilities, and delays in the delivery of products to our customers.

While we have taken precautions to prevent production and service interruptions at our global facilities, severe weather conditions, including any that may be caused by global climate change, such as hurricanes or tornadoes, as well as major earthquakes, wildfires and other natural disasters in areas in which we have manufacturing facilities or from which we obtain products may cause physical damage to our properties, closure of one or more of our manufacturing or distribution facilities, lack of an adequate work force in a market, temporary disruption in the supply of inventory, disruption in the transport of products and utilities, and delays in the delivery of products to our customers.

Any of these factors may disrupt our operations and adversely affect our financial condition and results of operations.

2 unchanged sentences

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 1A. Risk Factors