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Item 2. Management’s Discussion and Analysis

2024-05-23 compared with 2024-02-22 · 91 added, 45 removed, 64 unchanged (68% of the section changed)

15 unchanged sentences

Results of Operations

Three months ended January 31, 2024

Worldwide sales for the three months ended January 31, 2024, were $633,193, an increase of 3.7% from sales of $610,477 for the comparable period of 2023.

The increase was driven by a 5.4% increase due to an acquisition and a favorable effect from currency translation of 0.5%.

Organic sales decreased 2.2% driven by ongoing pressure in electronics product lines, partially offset by growth in medical interventional, industrial and polymer processing product lines.

In the Americas region, sales were $274,012 for the three months ended January 31, 2024, an increase of 3.4% from the comparable period of 2023, consisting of an organic sales decrease of 0.3%, an increase due to an acquisition of 3.1%, and favorable currency effects of 0.6%.

Three months ended April 30, 2024

Worldwide sales for the three months ended April 30, 2024, were $650,642, an increase of 0.1% from sales of $650,165 for the comparable period of 2023.

The increase included a 4.5% increase due to an acquisition and an unfavorable effect from currency translation of 0.7%.

Organic sales decreased 3.7%, driven by ongoing pressure in electronics product lines, partially offset by growth in industrial coatings systems and fluid solutions product lines.

In the Americas region, sales were $294,428 for the three months ended April 30, 2024, an increase of 5.6% from the comparable period of 2023, consisting of an organic sales increase of 2.9%, an increase due to an acquisition of 2.3%, and favorable currency effects of 0.4%.

In the Asia Pacific region, sales were $174,144, a decrease of 14.4% from the comparable period of 2023, consisting of an organic sales decrease of 12.3% and unfavorable currency effects of 2.8%, partially offset by a 0.7% increase due to an acquisition.

In Europe, sales were $182,070, an increase of 8.4% from the comparable period of 2023, consisting of an organic sales decrease of 4.4%, favorable currency effects of 0.3%, and a 12.5% increase due to an acquisition.

Cost of sales for the three months ended January 31, 2024 were $284,766, up from $281,610 in the comparable period of 2023.

Cost of sales for the three months ended April 30, 2024 were $284,765, down from $298,040 in the comparable period of 2023.

Gross profit, expressed as a percentage of sales, increased to 56.2% from 54.2% in the comparable period of 2023.

The increase was primarily driven by improved manufacturing efficiencies and favorable mix.

Selling and administrative expenses for the three months ended January 31, 2024 were $188,992, up from $184,648 in the comparable period of 2023.

The 2.4% increase was primarily driven by the first-year effect of an acquisition and related acquisition costs, partially offset by lower base business costs.

Operating profit increased to $159,435 for the three months ended January 31, 2024, compared to $144,219 in the comparable period of 2023.

Operating profit as a percentage of sales increased to 25.2% f or the three months ended January 31, 2024, compared to 23.6% in the comparable period of 2023 .

The 1.6 percentage-point increase in operating margin was primarily driven by the gross margin improvement .

Interest expense for the three months ended January 31, 2024 was $21,442, compared to $10,530 in the comparable period of 2023.

The increase in gross profit was in all segments and driven by improved manufacturing efficiencies and favorable mix overall.

Selling and administrative expenses for the three months ended April 30, 2024 were $197,261, up from $179,618 in the comparable period of 2023.

The 9.8% increase was primarily driven by the first-year effect of an acquisition and related acquisition costs.

Operating profit decreased to $168,616 for the three months ended April 30, 2024, compared to $172,507 in the comparable period of 2023.

Operating profit as a percentage of sales decreased to 25.9% f or the three months ended April 30, 2024, compared to 26.5% in the comparable period of 2023 .

The 0.6 percentage-point decline in operating margin was primarily driven by reduced sales leverage on selling and administrative expenses, partially offset by improved gross margin percentage performance .

Interest expense for the three months ended April 30, 2024 was $20,109, compared to $9,913 in the comparable period of 2023.

The increase, compared to the prior year period, was primarily due to higher average debt levels, driven by acquisitions.

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Nordson Corporation

Net income for the three months ended January 31, 2024 was $109,572, or $1.90 per diluted share, compared to $104,261, or $1.81 per diluted share, in the same period of 2023.

This represents a 5.1% increase in net income, and a 5.0% increase in diluted earnings per share.

The increase in income was driven by higher operating profit, partially offset by increased interest expense.

Net income for the three months ended April 30, 2024 was $118,217, or $2.05 per diluted share, compared to $127,563, or $2.21 per diluted share, in the same period of 2023.

This represents a 7.3% decrease in net income, and a 7.2% decrease in diluted earnings per share.

The decrease in income was driven primarily by increased interest expense.

Industrial Precision Solutions

Sales of the Industrial Precision Solutions segment were $354,547 in the three months ended January 31, 2024, an increase of 13.8% from sales of $311,546 for the comparable period of 2023.

The increase consisted of an acquisition impact of 10.6%, an organic sales increase of 2.3%, and a favorable currency effect of 0.9%.

The organic sales increase was driven primarily by industrial coatings, polymer processing and non-wovens product lines.

Operating profit as a percentage of sales decreased to 30.6% for the three months ended January 31, 2024 compared to 32.8% in the comparable period of 2023 .

Sales of the Industrial Precision Solutions segment were $366,991 in the three months ended April 30, 2024, an increase of 9.3% from sales of $335,807 for the comparable period of 2023.

The increase consisted of an acquisition impact of 8.6% and an organic sales increase of 1.5%, partially offset by an unfavorable currency effect of 0.8%.

The organic sales increase was driven primarily by industrial coatings systems and packaging product lines.

Operating profit as a percentage of sales decreased to 32.1% for the three months ended April 30, 2024 compared to 33.3% in the comparable period of 2023 .

The 1.2 percentage point decline in operating margin was primarily due to higher intangible asset amortization expense of $5,437 related to the ARAG acquisition.

Medical and Fluid Solutions

Sales of the Medical and Fluid Solutions segment were $159,526 in the three months ended January 31, 2024, an increase of 3.4% from sales of $154,287 for the comparable period of 2023.

The increase consisted of an organic sales increase of 3.1%, driven by growth in the medical interventional solutions product lines, and a favorable currency effect of 0.3%.

Operating profit as a percentage of sales increased to 28.9% for the three months ended January 31, 2024 compared to 25.5% in the comparable period of 2023 .

T he 3.4 percentage point improvement in operating margin was primarily due to improved factory efficiencies and favorable product mix.

Sales of the Medical and Fluid Solutions segment were $168,966 in the three months ended April 30, 2024, an increase of 1.5% from sales of $166,526 for the comparable period of 2023.

The increase consisted of an organic sales increase of 1.8%, partially offset by an unfavorable currency effect of 0.3%.

The organic sales increase was driven by growth in the fluid and interventional solutions product lines.

Operating profit as a percentage of sales increased to 29.0% for the three months ended April 30, 2024 compared to 28.8% in the comparable period of 2023 .

T he 0.2 percentage point improvement in operating margin was primarily due to improved factory efficiencies.

Advanced Technology Solutions

Sales of the Advanced Technology Solutions segment were $119,120 in the three months ended January 31, 2024, a decrease of 17.6% from sales of $144,644 for the comparable period of 2023.

The decrease was entirely organic as the effects of currency were immaterial.

The organic sales decrease was driven by weakness across the segment, primarily electronics dispense products serving semiconductor end markets.

Operating profit as a percentage of sales increased to 16.0% for the three months ended January 31, 2024 compared to 11.7% in the comparable period of 2023 .

T he increase in operating margin was primarily due to fees, severance, and non-cash inventory charges of $10,295 recorded in the prior year associated with the CyberOptics acquisition .

Sales of the Advanced Technology Solutions segment were $114,685 in the three months ended April 30, 2024, a decrease of 22.4% from sales of $147,832 for the comparable period of 2023.

The decrease consisted of an organic sales decrease of 21.6% and an unfavorable currency effect of 0.8%.

The organic sales decrease was driven by weakness across the segment.

Operating profit as a percentage of sales decreased to 16.4% for the three months ended April 30, 2024 compared to 17.6% in the comparable period of 2023 .

T he decrease in operating margin was primarily due to the decline in sales.

Six Months Ended April 30, 2024

Worldwide sales for the six months ended April 30, 2024 were $1,283,835, an increase of 1.8% from sales of $1,260,642 for the comparable period of 2023.

The increase consisted of 4.9% increase due to acquisitions, partially offset by a 2.9% decrease in organic sales and an unfavorable effect from currency translation of 0.2%.

The sales decline was driven by the Advanced Technology Solutions segment, partially offset by organic sales increases in the other two segments.

In the Americas region, sales were $568,440, an increase of 4.6% from the comparable period of 2023, consisting of an organic sales increase of 1.3%, an increase of 2.8% due to acquisitions, and favorable currency effects of 0.5%.

In the Asia Pacific region, sales were $354,015, a decrease of 8.3% from the comparable period of 2023, consisting of an organic sales decrease of 6.7% and unfavorable currency effects of 2.3%, partially offset by a 0.7% increase from acquisitions.

In Europe, sales were $361,380, an increase of 9.2% from the comparable period of 2023, consisting of a 13.4% increase from acquisitions and favorable currency effects of 1.5%, partially offset by an organic sales decrease of 5.7%.

Cost of sales for the six months ended April 30, 2024 were $569,531, down from $579,650 in the comparable period of 2023.

Gross profit, expressed as a percentage of sales, increased to 55.6% from 54.0% in the comparable period of 2023.

The 1.6 percentage point increase in gross margin was primarily driven by improved manufacturing efficiencies and favorable product mix.

Selling and administrative expenses for the six months ended April 30, 2024 were $386,253, up from $364,266 in the comparable period of 2023.

The 6.0% increase was primarily driven by the first-year effect of acquisitions, partially offset by improved cost controls.

Operating profit increased to $328,051 for the six months ended April 30, 2024 compared to $316,726 in the six months ended April 30, 2023.

Operating profit as a percentage of sales increased to 25.6% f or the six months ended April 30, 2024 compared to 25.1% in the comparable period of 2023 .

The 0.5 percentage point increase in operating margin was driven by improved manufacturing efficiencies and cost controls.

Interest expense for the six months ended April 30, 2024 was $41,551, compared to $20,443 in the comparable period of 2023.

The increase was due primarily to higher average debt levels, driven by acquisitions.

Other expense was $1,123 compared to

Nordson Corporation

$4,601 in the comparable period of 2023.

Included in 2024 other expense is other pension and postretirement income of $2,056 and $1,947 of foreign currency losses.

Included in 2023 were pension and postretirement income of $2,701 and $6,739 of foreign currency losses.

Net income for the six months ended April 30, 2024 was $227,789, or $3.95 per diluted share, compared to $231,824, or $4.02 per diluted share, in the same period of 2023.

This represents an 1.7% decrease in net income, and an 1.7% decrease in diluted earnings per share.

The decrease in income was driven primarily by increased interest expense.

Industrial Precision Solutions

Sales of the Industrial Precision Solutions segment were $721,538 in the six months ended April 30, 2024, an increase of 11.5% from sales in the comparable period of 2023 of $647,353.

The increase was the result of an increase of 1.9% in organic sales and an increase of 9.6% due to an acquisition.

Organic sales growth was driven primarily by the industrial coatings product line.

Operating profit as a percentage of sales decreased to 31.3% for the six months ended April 30, 2024 compared to 33.1% in the comparable period of 2023 .

The 1.8 percentage point decline in operating margin was primarily due to higher intangible asset amortization expense of $11,360 related to the ARAG acquisition.

Medical and Fluid Solutions

Sales of the Medical and Fluid Solutions segment were $328,492 in the six months ended April 30, 2024, an increase of 2.4% from sales in the comparable period of 2023 of $320,813.

The increase was the result of an organic sales increase of 2.4%.

Sales growth occurred in the fluid and interventional solutions product lines.

Operating profit as a percentage of sales increased to 28.9% for the six months ended April 30, 2024 compared to 27.2% in the comparable period of 2023 .

T he 1.7 percentage point improvement in operating margin was primarily due to the increase in sales and improved factory efficiencies.

Advanced Technology Solutions

Sales of the Advanced Technology Solutions segment were $233,805 in the six months ended April 30, 2024, a decrease of 20.1% from sales in the comparable period of 2023 of $292,476.

The decrease was the result of an organic sales volume decrease of 19.6% and unfavorable currency effects that decreased sales by 0.5%.

The organic sales decrease was driven by weakness across the segment.

Operating profit as a percentage of sales increased to 16.2% for the six months ended April 30, 2024 compared to 14.7% in the comparable period of 2023 .

T he improvement in operating margin was primarily due to improved factory efficiencies and cost controls.

We record our interim provision for income taxes based on our estimated annual effective tax rate, as well as certain items discrete to the current period.

Significant judgment is involved regarding the application of global income tax laws and regulations and when projecting the jurisdictional mix of income.

We have considered several factors in determining the probability of realizing deferred income tax assets which include forecasted operating earnings, available tax planning strategies and the time period over which the temporary differences will reverse.

We have considered several factors in determining the probability of realizing deferred income tax assets including forecasted operating earnings, available tax planning strategies and the time period over which the temporary differences will reverse.

We review our tax positions on a regular basis and adjust the balances as new information becomes available.

The effective tax rate for the three months ended January 31, 2024 was 21.0% compared to 20.5% for the three months ended January 31, 2023.

The effective tax rate for the three and six months ended April 30, 2024 was 20.8% and 20.9%, respectively, compared to 21.1% and 20.8%, respectively, for the three and six months ended April 30, 2023.

Foreign Currency Effects

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It is not possible to precisely measure the impact on operating results arising from foreign currency exchange rate changes, because of changes in selling prices, sales volume, product mix and cost structure in each country in which we operate.

However, if transactions for the three months ended January 31, 2024 were translated at exchange rates in effect during the same period of 2023, we estimated that sales would have been approximately $4,000 lower while costs of sales and selling and administrative expenses would have been approximately $3,000 lower.

However, if transactions for the three months ended April 30, 2024 were translated at exchange rates in effect during the same period of 2023, we estimated that sales would have been approximately $5,000 higher while costs of sales and selling and administrative expenses would have been approximately $3,000 higher.

If transactions for the six months ended April 30, 2024 were translated at exchange rates in effect during the same period of 2023, we estimated that sales, costs of sales, and selling and administrative expenses would not have been materially impacted.

Nordson Corporation

1 unchanged sentence

Liquidity and Capital Resources

During the three months ended January 31, 2024, cash and cash equivalents increased $20,522.

Cash provided by operations during this period was $172,356 compared to $123,337 for the three months ended January 31, 2023.

The primary sources were net income adjusted for non-cash income and expenses, which was $149,668, compared to $136,919 for the three months ended January 31, 2023.

Changes in operating assets and liabilities increased cash by $14,614 in the three months ended January 31, 2024 and decreased cash by $58,371 in the comparable period of 2023, driven primarily by improvements in accounts receivable and inventory.

Cash used in investing activities was $5,725 for the three months ended January 31, 2024, compared to $387,136 used in the comparable period of 2023.

During the three months ended January 31, 2024, cash of $7,530 was used for capital expenditures.

During the three months ended January 31, 2023, cash of $377,843 was used for the CyberOptics acquisition and $9,302 was used for capital expenditures.

Cash used in financing activities was $140,491 for the three months ended January 31, 2024, compared to cash provided of $215,693 in the comparable period of 2023.

In the three months ended January 31, 2024, cash of $38,855 was used for dividend payments and cash of $7,371 was used for the purchase of treasury shares, versus $37,199 and $6,875, respectively, in the comparable period of 2023.

The three months ended January 31, 2024 included net repayments of long-term debt of $107,195, compared to net borrowings of $252,278 during the three months ended January 31, 2023 .

The following is a summary of significant changes by balance sheet caption from October 31, 2023 to January 31, 2024.

Receivables-net decreased $53,184 , primarily due to payments from customers, and goodwill increased by $20,885, principally due to currency translation.

During the six months ended April 30, 2024, cash and cash equivalents increased $9,767.

Cash provided by operations during this period was $294,964 compared to $287,905 for the six months ended April 30, 2023.

The primary sources were net income adjusted for non-cash income and expenses, which was $304,334, compared to $296,817 for the six months ended April 30, 2023.

Changes in operating assets and liabilities decreased cash by $3,435 in the six months ended April 30, 2024 and decreased cash by $45,857 in the comparable period of 2023.

The change for the six months ended April 30, 2024 was driven primarily by decreases in customer advance payments and accrued liabilities, principally offset by improvements in accounts receivable and inventory.

Cash used in investing activities was $15,177 for the six months ended April 30, 2024, compared to $393,153 used in the comparable period of 2023.

During the six months ended April 30, 2024, cash of $21,907 was used for capital expenditures.

During the six months ended April 30, 2023, cash of $377,843 was used for the CyberOptics acquisition and $15,349 was used for capital expenditures.

Cash used in financing activities was $265,757 for the six months ended April 30, 2024, compared to cash provided of $64,822 in the comparable period of 2023.

In the six months ended April 30, 2024, cash of $77,796 was used for dividend payments and cash of $7,927 was used for the purchase of treasury shares, versus $74,463 and $54,365, respectively, in the comparable periods of 2023.

The six months ended April 30, 2024 included net repayments of long-term debt of $204,372, compared to net borrowings of $184,617 during the six months ended April 30, 2023 .

The following is a summary of significant changes by balance sheet caption from October 31, 2023 to April 30, 2024.

Receivables-net decreased $60,603 , primarily due to payments from customers, and intangibles decreased by 30,369 , principally due to amortization.

The Company is well-positioned to manage liquidity needs that arise from working capital requirements, capital expenditures, and contributions related to pension and postretirement obligations, as well as principal and interest payments on our outstanding debt.

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The Company believes it has the ability to generate and obtain adequate amounts of cash to meet its long-term needs for cash.

We were in compliance with all debt covenants as of January 31, 2024.

We were in compliance with all debt covenants as of April 30, 2024.

Refer to our Long-term debt in the notes to our condensed consolidated financial statements for additional details regarding our debt outstanding and Term Facility.

21 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-Q

Item 2. Management’s Discussion and Analysis