Nordson Corporation · NASDAQ:NDSN
Nordson — Q1 2020 Earnings Presentation
47 slides from Nordson's earnings presentation, Feb 20, 2020
Slide 1: Investor Presentation
INVESTOR PRESENTATION Click to edit February 20,text 2020 | NASDAQ: NDSN Nordson® ProBlue® Flex Melter featuring BBconn Controls, which allow for remote operation, more visibility, real-time oversight, and data and analytics needed for continuous improvement.
Slide 2: Safe Harbor Statement
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 Information in this presentation may contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “m
Slide 3: A premier industrial technology company focused on precision dispensing
A premier industrial technology company focused on precision dispensing, fluid control and related processes and proprietary technology. 1954 $2.2B $587M 7,500+ 35+ Company Founded *Sales *EBITDA Employees Countries with Direct Presence 3 *Sales and EBITDA for the full fiscal year ended 10/31/19.
Slide 4: Investment Highlights
Investment Highlights High Level of Outstanding Strong Average Excellent Free Cash Flow Strong Cash Reliable and Long Term Total Annual Sales Outstanding EBITDA Before Returns to Consistent Shareholder Growth Gross Margins Margins Dividends Shareholders Dividend Returns 5% 55% 26% $1.2B $895M 56 yrs
Slide 5: Diversified Sources of Sales
Diversified Sources of Sales FY2019 Profile - $2.2 Billion Product Type Geographies 7% 6% 23% Parts and United States Consumables 35% Europe Standard Product 26% Asia Pacific 54% Japan 23% Engineered Systems Americas 26% High percentage of recurring Nearly 70% of sales outside USA. sales from parts
Slide 6: Diversified End Markets
Diversified End Markets FY2019 Profile - $2.2 Billion End markets include: 4% 6% ▪ Electronic Components: semiconductors, printed circuit boards, 23% computing, communications/mobile, consumer electronics (i.e., gaming, wearables, automotive electronics) 12% ▪ Consumer Non-Durable: beverage, disposa
Slide 7: Nordson Business Segments
Nordson Business Segments ADVANCED TECHNOLOGY SYSTEMS* ADHESIVE DISPENSING SYSTEMS* INDUSTRIAL COATINGS SYSTEMS* 45% 43% 12% Precision dispense, fluid management, Hot melt dispense solutions for recession- Standard and highly-engineered systems used surface treatment, test & inspection and resistant
Slide 8: Advanced Technology Systems
What We Do Advanced Precision dispense, fluid management, test, inspection, surface treatment and Technology proprietary solutions for medical, electronics and general industrial Systems markets. Organic 5.2% 2-3X Global GDP Growth Driven by: Acquisitive 8.3% ▪ Medical – Aging population, trends tow
Slide 9: Advanced Technology: Diverse End Markets
Advanced Technology FY2019 Profile – Diverse End Markets 1% 1% 4% End markets include: 5% ▪ Medical: minimally invasive interventional delivery devices, 6% catheters, medical balloons, fluid connection components, specialty tubing 37% 7% ▪ Electronics: electronic components (i.e., computing; communi
Slide 10: Adhesive Dispensing Systems
What We Do Adhesive Products to melt, filter, pump, Dispensing transport, dispense and deposit adhesives, polymers and other materials in the manufacturing of a Systems wide range of goods. Organic 3.3% 1.5-2X Global GDP Growth Driven By: Acquisitive 0.2% ▪ Increased use of disposable hygiene produc
Slide 11: Adhesive Dispensing: Diverse End Markets
Adhesive Dispensing FY2019 Profile – Diverse end markets 4% End markets include: 4% 5% ▪ Consumer Non-Durable: beverage, disposable hygiene, food, paper, textiles, non-wovens, packaging 8% ▪ OEM/Distributor: Nordson products used to build manufacturing line, not end market specific ▪ Industrial: aer
Slide 12: Industrial Coatings Systems
What We Do Industrial Precision equipment and systems to Coatings apply and cure paints, sealants, coatings, ambient temperature adhesives, and other materials to a Systems wide range of products. Organic 2.9% GDP+ Growth Driven By: Acquisitive 0.0% ▪ Environmental advantages of powder coatings Curr
Slide 13: Industrial Coatings: Diverse End Markets
Industrial Coatings FY2019 Profile – Diverse end markets 1% End markets include: 8% ▪ Industrial: aerospace, chemical, construction, defense, energy, farm and construction machinery, industrial 10% machinery, rigid container, metal ▪ Automotive: applications for new vehicle platforms; upgrades of cu
Slide 14: Why Invest in Nordson?
Giordson Why Invest in Nordson?
Slide 15: Our Priorities
Our Priorities Our plan is to deliver top shareholder returns by growing 1 Accelerate organic growth and extending our high value business model in precision dispensing and adjacent technologies. Diversify through 2 acquisitions Leverage NBS for 3 profitable growth Sustain our cultures 4 and values
Slide 16: Organic Growth
Multiple Paths to Organic Growth: 1 Organic Growth 1. New Products We expect to accelerate organic growth by 2. New Applications creating our own demand. 3. Recapitalize Installed Base 4. Emerging Markets 5. Product Tiering Reported Organic Sales Growth (2015-2019): 4% Average Annual Growth 16
Slide 17: Key Acquisitions
Key Criteria for Acquisitions: 2 Key Acquisitions 1. Strategic Fit Additional growth comes through the acquisition of companies that share our 2. High Quality Businesses: business model characteristics and can Strong Performers & Proprietary leverage our global infrastructure. Technology 3. Growth R
Slide 18: Strong Growth: Organic and Acquisitive
Strong Growth: Organic and Acquisitive On average across the past five years, Nordson has delivered annual sales growth of 5 percent, inclusive of 4 percent organic growth, 3 percent growth related to the first year effects of acquisitions and a decrease of 2 percent related to the unfavorable effec
Slide 19: Optimize Business
Key Performance Indicators: 3 Optimize Business 1. Growth Initiatives Driving continuous improvements across the organization. 2. Price Effectiveness 3. Cost Reduction Initiatives 4. Cost of Poor Quality 5. Customer Delivery Performance 6. Days of Sales in Inventory 7. Productivity 8. Sales from New
Slide 20: Culture & Values: Our Commitment to Giving Back
Our Commitment to Giving Back: 4 Culture & Values 1. Over $109M in overall giving We have a long and proud history of investing in the to date communities where we live and work. We invest approximately five percent of domestic pretax earnings to human welfare services, education and other 2. More t
Slide 21: Financial Results
Giordson Financial Results
Slide 22: Fiscal 1Q2020 Results & FY2020 Guidance
Fiscal 1Q2020 Results & FY2020 Guidance 1QF2020 Results $495M $75M $101M $0.89 $102M Sales Operating Profit EBITDA GAAP Diluted EPS Free Cash Flow (15% of Sales) (20% of Sales) Before Dividends (197% of net income) 2020 Guidance ▪ Organic sales volume growth in the range of 1 to 3 ▪ Interest expense
Slide 23: Total Shareholder Return Above Our Peers
Total Shareholder Return Above Our Peers Comparison of 10 Year Cumulative Total Return 800.00 700.00 600.00 500.00 400.00 300.00 200.00 100.00 0.00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Nordson Corporation S&P 500 Index S&P MidCap 400 S&P 500 Ind. Machinery S&P MidCap 400 Ind. Machi
Slide 24: Industry Leading Gross Margins
Industry Leading Gross Margins Consistently Mid 50s 70% 60% 54.1% 54.9% 55.1% 54.8% 54.3% 50% 40% 30% 20% 10% 0% 2015 2016 2017 2018 2019 24
Slide 25: Strong EBITDA Margins
Strong EBITDA Margins Continuous Improvement Initiatives 5 Year CAGR = 6.6% $700,000 26.8% 26.7% $600,000 26.4% $500,000 25.4% $400,000 22.7% $000 $300,000 $200,000 $100,000 $0 *2015 2016 2017 2018 2019 25 *FY15 results impacted by significant negative currency translation effects compared to the pr
Slide 26: EPS Growth
EPS Growth High gross margins lead to significant volume leverage 5 Year CAGR = 8.6% $7.00 $6.40 $6.00 $5.79 $5.08 $5.00 $4.73 $4.00 $3.45 $3.00 $2.00 $1.00 $0.00 * 2015 2016 2017 2018 2019 26 *FY15 results impacted by significant negative currency translation effects compared to the prior year.
Slide 27: Strong Cash Generation
Strong Cash Generation Funds Growth and Returns to Shareholders Strong Cash Conversion: 2015 – 2019 2019 Free Cash Flow Before Dividends = 95% of Net Income $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $- * 2015 2016 2017 2018 2019 Free cash flow before dividends N
Slide 28: Disciplined Capital Deployment
Disciplined Capital Deployment 37% or $894.5 Million to Shareholders via Share Repurchases and Dividends 100% $37.7 $62.5 Working ▪ Self funding business model $21.3 $3.2 Capital 8% $192.1 $63.8 $24.0 generates excess cash $79.7 $33.4 Share Repurchases 23% ▪ Low working capital 80% $565.0 requiremen
Slide 29: Proven Financial Investment Performance Summary
Proven Financial Clear Strategy and Goals Investment 1. Strong Execution and Performance Summary 2. Performance 3. Leading Global Businesses 4. Numerous Growth Opportunities 5. Outstanding Culture and Values 6. Committed to Community 29
Slide 30: Appendix
Appendix • Product Innovation • Historic Financials • 1QF2020 Financial Exhibits
Slide 31: Appendix: Product Innovation
Appendix: Product Innovation
Slide 32: Our Electronics Industry Position
Our Electronics Industry Position Surface Mount Manufacturing Solder paste Flux spray Optical Inline Systems Plasma Underfill, Optical X-ray Conformal inspection coating inspection surface encapsulation inspection inspection coating treatment or precise coating Solder paste Component placement Reflo
Slide 33: Our Role in the Semiconductor Process
Our Role in the Semiconductor Process 33
Slide 34: Advanced Technology – Fluid Management
Advanced Technology – Fluid Management Life Sciences Precision Low-Volume Dispensing Optimum® Syringe Barrels and Tips Fluid Management Components From benchtop dispensers to industry-best Optimum® components are designed as a From specialty tubing, catheters, jetting valves and automated dispensing
Slide 35: Core Adhesives Innovative Technology
Core Adhesives Innovative Technology Auto-fill Tankless Variable Dispense Foaming Jetting Precision dispense Technology Technology Technology Technology technology Adhesive fill systems Delivering different Maintains bond strength Dispenses adhesive Increases production monitor and maintain add-on r
Slide 36: Industrial Coating Systems
Industrial Coating Systems 36
Slide 37: Appendix: Historic Financials
Appendix: Historic Financials
Slide 38: Strong Capital Management
Strong Capital Management Net Debt to EBITDA* Strong cash generation lets Nordson de-lever quickly At 1/31/2020 Net Debt to TTM EBITDA = 1.7 times Acquisitions & 3.00 Share Repurchases Vention Acquisition 2.50 2.00 1.50 1.00 0.50 0.00 2015 2016 2017 2018 2019 38 At fiscal years ending 10/31 * Net De
Slide 39: Strong Capital Management: Debt Position
Strong Capital Management Debt Position (as of 1/31/2020) 39
Slide 40: Innovation Drives Organic Growth
Innovation Drives Organic Growth Steady Stream of New Products $60,000 80 70 $50,000 62 63 Number of U.S. Patents Granted 58 60 R&D Spend (in thousands) $40,000 51 47 50 $30,000 40 30 $20,000 20 $10,000 10 $0 0 2015 2016 2017 2018 2019 R & D Spend U.S. Patents Granted 40
Slide 41: Currency Impact
Currency Impact Annual Sales Growth and EPS 20.0% 15.0% 10.0% 5.0% Currency Effect Volume Growth 0.0% -5.0% -10.0% 2015 2016 2017 2018 2019 41 FX Impact to EPS: ($0.54) ($0.19) ($0.03) $0.24 ($0.30)
Slide 42: Appendix: Financial Exhibits
Appendix: Financial Exhibits
Slide 43: 2015 – 2019 Sales Growth
Nordson Corporation 2015 – 2019 Sales Growth Nordson Corporation Adhesive Dispensing Systems Organic Acquisitive Currency Total Organic Acquisitive Currency Total FY2015 3.4% 2.4% -6.7% -0.9% FY2015 2.0% 0.3% -9.4% -7.1% FY2016 6.5% 2.0% -1.4% 7.1% FY2016 6.2% 0.7% -1.7% 5.2% FY2017 7.9% 6.9% -0.5%
Slide 44: First Quarter Period: Income Statement and Balance Sheet
FIRST QUARTER PERIOD Period Ended January 31, 2020 (Unaudited) CONSOLIDATED STATEMENT OF INCOME PX FINANCIAL HIGHLIGHTS (Dollars in thousands except for per-share amounts) CONSOLIDATED BALANCE SHEET First Quarter January31 October 31 2020 2019 2020 2019 Sales $ 494,916 $497,910 Cash and cash equival
Slide 45: First Quarter Period: Segment Financial Highlights
FIRST QUARTER PERIOD NORDSON CORPORATION Period Ended January 31, 2020 FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands) First Quarter % Growth over 2019 SALES BY BUSINESS SEGMENT 2020 2019, Volume _Currency Total Adhesive dispensing systems $ 207,225 $ 211,517 1.1% 0.9% -2.0% Advanced technol
Slide 46: Reconciliation of Non-GAAP Financial Measures
FIRST QUARTER ENDED NORDSON CORPORATION Period Ended January 31, 2020 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) (Dollars in thousands except for per-share amounts) EBITDA First Quarter 2020 2019 Net income $s 52,004 $ Adjustments: Depreciation and amortization expense 28,618 Interest
Slide 47: Free Cash Flow Before Dividends
47 Free Cash Flow Before Dividends Net income Depreciation and amortization Other non-cash charges Changes in operating assets and liabilities Net cash provided by operating activities Additions to property, plant and equipment Proceeds from the sale of property, plant and equipment Free cash flow b