What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-22 compared with 2024-05-23 · 80 added, 80 removed, 75 unchanged (68% of the section changed)

1 unchanged sentence

The following is management's discussion and analysis of certain significant factors affecting our financial condition and results of operations for the periods included in the accompanying condensed consolidated financial statements.

Throughout this Quarterly Report on Form 10-Q, components may not sum to totals due to rounding.

Nordson is an innovative precision technology company that leverages a scalable growth framework to deliver top tier growth with leading margins and returns.

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Results of Operations

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.

Three Months Ended July 31, 2024

Worldwide sales for the three months ended July 31, 2024 were $661,604, an increase of 2.0% from sales of $648,677 for the comparable period of 2023.

The increase included a 3.8% increase due to an acquisition and an unfavorable effect from currency translation of 0.9%.

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 April 30, 2024 were $284,765, down from $298,040 in the comparable period of 2023.

Organic sales decreased 0.9%, driven by lower demand in electronics and medical product lines, partially offset by growth in packaging, nonwovens, and optical sensors product lines.

In the Americas region, sales were $287,016 for the three months ended July 31, 2024, a decrease of 1.2% from the comparable period of 2023, consisting of an organic sales decrease of 3.4%, an increase due to an acquisition of 2.4%, and unfavorable currency effects of 0.2%.

In the Asia Pacific region, sales were $195,218, an increase of 2.4% from the comparable period of 2023, consisting of an organic sales increase of 4.1% and a 0.8% increase due to an acquisition, partially offset by unfavorable currency effects of 2.5%.

In Europe, sales were $179,370, an increase of 7.1% from the comparable period of 2023, consisting of an organic sales decrease of 2.0%, unfavorable currency effects of 0.7%, and a 9.8% increase due to an acquisition.

Cost of sales for the three months ended July 31, 2024 were $292,603, up from $288,357 in the comparable period of 2023.

Gross profit, expressed as a percentage of sales, increased to 55.8% from 55.5% 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 increase in gross profit was due to favorable mix overall.

Selling and administrative expenses for the three months ended July 31, 2024 were $201,943, up from $189,324 in the comparable period of 2023.

The 6.7% increase was primarily driven by the first-year effect of an acquisition.

Operating profit decreased to $167,058 for the three months ended July 31, 2024, compared to $170,996 in the comparable period of 2023.

Operating profit as a percentage of sales decreased to 25.3% f or the three months ended July 31, 2024, compared to 26.4% in the comparable period of 2023 .

The 1.1 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.

Interest expense for the three months ended July 31, 2024 was $18,803, compared to $12,089 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.

Other expense was $785 compared to expense of $1,405 in the comparable period of 2023.

Included in 2024 other expense were pension and postretirement income of $1,029 and $1,125 of foreign currency losses.

Included in 2023 other expense were pension and postretirement income of $1,332 and $2,168 in foreign currency losses.

Other income was $152 compared to $2,542 in the comparable period of 2023.

Included in 2024 other income were pension and postretirement income of $1,028 and $464 of foreign currency losses.

Included in 2023 other income were pension and postretirement income of $1,343 and $886 in foreign currency losses.

Nordson Corporation

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.

Net income for the three months ended July 31, 2024 was $117,327, or $2.04 per diluted share, compared to $127,891, or $2.22 per diluted share, in the same period of 2023.

This change represents an 8.3% decrease in net income, and an 8.1% decrease in diluted earnings per share.

The decrease in income reflects increased interest expense from prior year acquisitions and slightly lower overall operating margins.

Industrial Precision Solutions

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 .

Sales of the Industrial Precision Solutions segment were $370,561 in the three months ended July 31, 2024, an increase of 9.6% from sales of $338,257 for the comparable period of 2023.

The increase consisted of an acquisition impact of 7.4% and an organic sales increase of 3.6%, partially offset by unfavorable currency effects of 1.4%.

The organic sales increase was driven primarily by packaging and nonwovens product lines.

Operating profit as a percentage of sales decreased to 31.9% for the three months ended July 31, 2024 compared to 34.1% in the comparable period of 2023 .

The 2.2 percentage point decline in operating margin was primarily due to higher intangible asset amortization expense of $5,786 related to the ARAG acquisition.

Medical and Fluid Solutions

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.

Sales of the Medical and Fluid Solutions segment were $166,737 in the three months ended July 31, 2024, a decrease of 2.4% from sales of $170,871 for the comparable period of 2023.

The decrease consisted of an organic sales decrease of 2.0% and an unfavorable currency effect of 0.4%.

The organic sales decrease was driven by lower demand in interventional solutions and fluid components product lines.

Operating profit as a percentage of sales decreased to 29.0% for the three months ended July 31, 2024 compared to 31.6% in the comparable period of 2023 .

T he 2.6 percentage point decline in operating margin was primarily due to unfavorable mix.

Advanced Technology Solutions

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.

Sales of the Advanced Technology Solutions segment were $124,306 in the three months ended July 31, 2024, a decrease of 10.9% from sales of $139,549 for the comparable period of 2023.

The decrease consisted of an organic sales decrease of 10.2% and an unfavorable currency effect of 0.7%.

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 .

The organic sales decrease was driven by softness in electronics processing and x-ray and test product lines, offset by growth in optical sensors product lines.

Operating profit as a percentage of sales decreased to 18.5% for the three months ended July 31, 2024 compared to 19.4% 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.

Nine Months Ended July 31, 2024

Worldwide sales for the nine months ended July 31, 2024 were $1,945,439, an increase of 1.9% from sales of $1,909,319 for the comparable period of 2023.

The increase consisted of 4.5% increase due to acquisitions, partially offset by a 2.2% decrease in organic sales and an unfavorable effect from currency translation of 0.4%.

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.

The organic sales decrease was principally driven by the Advanced Technology Solutions segment, partially offset by organic sales increases in the Industrial Precision Solutions and Medical Fluid Solutions segments.

In the Americas region, sales were $855,456, an increase of 2.6% from the comparable period of 2023, consisting of an organic sales decrease of 0.3%, an increase of 2.7% due to an acquisition, and favorable currency effects of 0.2%.

In the Asia Pacific region, sales were $549,233, a decrease of 4.8% from the comparable period of 2023, consisting of an organic sales decrease of 3.1% and unfavorable currency effects of 2.4%, partially offset by a 0.7% increase from an acquisition.

In Europe, sales were $540,750, an increase of 8.5% from the comparable period of 2023, consisting of a 12.2% increase from an acquisition and favorable currency effects of 0.8%, partially offset by an organic sales decrease of 4.5%.

Cost of sales for the nine months ended July 31, 2024 were $862,134, down from $868,007 in the comparable period of 2023.

Gross profit, expressed as a percentage of sales, increased to 55.7% from 54.5% in the comparable period of 2023.

The 1.2 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

Selling and administrative expenses for the nine months ended July 31, 2024 were $588,196, up from $553,590 in the comparable period of 2023.

The 6.3% increase was primarily driven by the first-year effect of an acquisition, partially offset by improved cost controls.

Operating profit increased to $495,109 for the nine months ended July 31, 2024 compared to $487,722 in the nine months ended July 31, 2023.

Operating profit as a percentage of sales was 25.4% f or the nine months ended July 31, 2024 compared to 25.5% in the comparable period of 2023 .

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.

Interest expense for the nine months ended July 31, 2024 was $60,354, compared to $32,532 in the comparable period of 2023.

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

Other expense was $971 compared to $2,059 in the comparable period of 2023.

Included in 2024 other expense were other pension and postretirement income of $3,085 and $2,411 of foreign currency losses.

Included in 2023 other expense were pension and postretirement income of $4,044 and $7,625 of foreign currency losses.

Net income for the nine months ended July 31, 2024 was $345,116, or $5.99 per diluted share, compared to $359,715, or $6.24 per diluted share, in the same period of 2023.

This change represents a 4.1% decrease in net income, and a 4.0% 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 .

Sales of the Industrial Precision Solutions segment were $1,092,099 in the nine months ended July 31, 2024, an increase of 10.8% from sales in the comparable period of 2023 of $985,610.

The increase was the result of higher organic sales of 2.5% and an increase of 8.8% due to an acquisition.

Organic sales growth was driven primarily by the industrial coatings and packaging product lines.

Operating profit as a percentage of sales decreased to 31.5% for the nine months ended July 31, 2024 compared to 33.4% in the comparable period of 2023 .

The 1.9 percentage point decline in operating margin was primarily due to higher intangible asset amortization expense of $17,146 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.

Sales of the Medical and Fluid Solutions segment were $495,229 in the nine months ended July 31, 2024, an increase of 0.7% from sales in the comparable period of 2023 of $491,683.

The increase was the result of an organic sales increase of 0.9%.

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 .

Sales growth occurred principally in the interventional solutions product line.

Operating profit as a percentage of sales increased to 29.0% for the nine months ended July 31, 2024 compared to 28.7% in the comparable period of 2023 .

T he 0.3 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%.

Sales of the Advanced Technology Solutions segment were $358,111 in the nine months ended July 31, 2024, a decrease of 17.1% from sales in the comparable period of 2023 of $432,026.

The decrease was the result of an organic sales decrease of 16.6% 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 .

Operating profit as a percentage of sales increased to 17.0% for the nine months ended July 31, 2024 compared to 16.2% in the comparable period of 2023 .

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

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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 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.

The effective tax rate for the three and nine months ended July 31, 2024 was 21.5% and 21.1%, respectively, compared to 21.1% and 20.9%, respectively, for the three and nine months ended July 31, 2023.

Foreign Currency Effects

In the aggregate, average exchange rates for 2024 used to translate international sales and operating results into U.S.

dollars were generally favorable compared with average exchange rates existing during 2023.

dollars were generally unfavorable compared with average exchange rates existing during 2023.

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 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.

However, if transactions for the three months ended July 31, 2024 were translated at exchange rates in effect during the same period of 2023, we estimated that sales would have been approximately $8,000 higher while costs of sales and selling and administrative expenses would have been approximately $5,000 higher.

If transactions for the nine months ended July 31, 2024 were translated at exchange rates in effect during the same period of 2023, we estimated that sales would have been approximately $8,000 higher while costs of sales and selling and administrative expenses would have been approximately $5,000 higher.

Nordson Corporation

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Liquidity and Capital Resources

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.

During the nine months ended July 31, 2024, cash and cash equivalents increased $49,645.

Cash provided by operations during this period was $459,812 compared to $478,072 for the nine months ended July 31, 2023.

The primary sources were net income adjusted for non-cash income and expenses, which was $460,197, compared to $458,875 for the nine months ended July 31, 2023.

Changes in operating assets and liabilities decreased cash by $385 in the nine months ended July 31, 2024 and increased cash by $19,197 in the comparable period of 2023.

The change for the nine months ended July 31, 2024 was driven primarily by improvements in accounts receivable and inventory, principally offset by decreases in customer advance payments, accounts payable and accrued liabilities, including income taxes payable.

Cash used in investing activities was $34,890 for the nine months ended July 31, 2024, compared to $401,996 used in the comparable period of 2023.

During the nine months ended July 31, 2024, cash of $43,786 was used for capital expenditures.

During the nine months ended July 31, 2023, cash of $377,843 was used for the CyberOptics acquisition and $24,244 was used for capital expenditures.

Cash used in financing activities was $370,612 for the nine months ended July 31, 2024, compared to cash used of $102,074 in the comparable period of 2023.

In the nine months ended July 31, 2024, cash of $116,789 was used for dividend payments and cash of $34,105 was used for the purchase of treasury shares, versus $111,547 and $78,163, respectively, in the comparable period of 2023.

The nine months ended July 31, 2024 included net repayments of long-term debt of $244,355, compared to net borrowings of $73,956 during the nine months ended July 31, 2023 .

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

Receivables-net decreased $52,345 , primarily due to higher collections from customers, and intangibles decreased by $43,980 , principally due to amortization.

Long-term debt also decreased $223,239 due to the use of operating cash flow to pay down debt balances.

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 April 30, 2024.

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

8 unchanged sentences

currency exchange rates and devaluations;

possible acquisitions including the Company’s ability to complete and successfully integrate acquisitions, including the integration of ARAG Group and CyberOptics;

possible acquisitions including the Company’s ability to complete and successfully integrate acquisitions, including the integration of Atrion, the ARAG Group and CyberOptics;

the Company’s ability to successfully divest or dispose of businesses that are deemed not to fit with its strategic plan;

10 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