Nordson Corporation · NASDAQ:NDSN
Nordson — Investor Day (March 2021)
54 slides from Nordson's investor day presentation, Mar 30, 2021
Slide 1: Nordson Corporation | March 30, 2021
Nordson Corporation | March 30, 2021
Slide 2: Safe Harbor Statement
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 Certain statements contained in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by terminology such as
Slide 3: Today's Speakers
Today’s Speakers Sundaram Nagarajan Joe Kelley Greg Merk Jeff Pembroke Lara Mahoney President & Executive Vice President Executive Vice President Executive Vice President Vice President Chief Executive Officer & Chief Financial Officer Investor Relations & Industrial Precision Advanced Technology So
Slide 4: Today's Agenda
Today’s Agenda 9:00 AM Business Overview and Long-Term Strategy 9:35 AM Industrial Precision Solutions Segment Overview 10:05 AM Q & A Session 10:20 AM Advanced Technology Solutions Segment Overview 10:55 AM Q & A Session 11:10 AM M&A Focus and Financial Overview 11:35 AM Closing Remarks 11:45 AM Q
Slide 5: Nordson Overview
Nordson Overview Sundaram Nagarajan President and CEO
Slide 6: A premier industrial technology company focused on precision dispensing, fluid control
A premier industrial technology company focused on precision dispensing, fluid control and related processes and proprietary technology. Company Founded *Sales *EBITDA Employees Countries with Direct Presence 1954 $2.1B $567M 7,500+ 35+ 6 *Sales and EBITDA for the full fiscal year ended 10/31/20.
Slide 7: By the Numbers
By the Numbers Demonstrated Consistent Record Disciplined focus Differentiated Consistent value to Value to Solid Returns of Growth on profitability Product Portfolio* shareholders Customers 5% 54% 27% 13% 1,926 57 yrs. Sales Growth Gross Margins EBITDA Margins Global Patents of Annual ROIC Held Div
Slide 8: Commitment to ESG
Commitment to ESG Diversified Board of Directors Strong Culture and Values Environmental Stewardship ▪ 56% diverse board (3 gender and 2 ▪ Nordson Impact – Invest 5% of domestic ▪ Product design improvements focused on racially or ethnically diverse) pretax earnings in communities reducing customers
Slide 9: What We Do
What We Do Precision Dispensing & Processing Test and Inspection Fluid Management ▪ Precision, hot material ▪ Manual and automated x-ray ▪ Customized delivery devices in healthcare ▪ Precision, cold material ▪ Acoustic / Optical inspection ▪ Proprietary components, fluid connectors ▪ Precision, powd
Slide 10: Where We Play
Where We Play Consumer Non-Durables Medical Electronics Industrial ▪ Box sealing ▪ Balloons, extrusions, delivery ▪ Semiconductor packaging ▪ Farm, construction and industrial catheters and other minimally machinery ▪ Baby diapers ▪ Wafer-level packaging invasive devices ▪ Rigid container ▪ Convenie
Slide 11: How We Are Organized
How We Are Organized 55% 45% INDUSTRIAL PRECISION SOLUTIONS ADVANCED TECHNOLOGY SOLUTIONS Polymer Processing Industrial Coatings Electronic Processing Test and Fluid Adhesives Medical Solutions Solutions Systems Inspection Management 11 *Segment average mix for the full fiscal year ended 10/31/20
Slide 12: Our Global Footprint
Our Global Footprint 65% of sales are outside of the U.S. Regional manufacturing and direct sales/service support Americas Europe Asia 42% 25% 33% Major manufacturing location 12 Notable sales location
Slide 13: Making a Strong Nordson even Stronger
Making a Strong Nordson even Stronger
Slide 14: Introducing the Strategy
Introducing the Strategy ▪ Sustained organic growth ▪ Data drives action ▪ Enhance depth and diversity ▪ Accelerate acquisitions ▪ Entrepreneurial, Accountable ▪ Enrich inclusive culture 14
Slide 15: Driving profitable growth by selecting and investing in best growth opportunities
Driving profitable growth by selecting and investing disproportionately in the 15 best growth opportunities
Slide 16: Entrepreneurial division-led organization
Entrepreneurial division-led organization: ▪ Decisions close to the customer ▪ Autonomy + Accountability ▪ Clear line of sight to deploying NBS Next 16
Slide 17: A key ingredient to successful execution of the Ascend strategy
A key ingredient to successful execution of the Ascend strategy: ▪ Leaders inspiring trust and building followership in the organization ▪ Focus on inclusion and diversity in everything we do ▪ Create an engaging culture that attracts and retains top talent 17
Slide 18: A Stronger Nordson
A Stronger Nordson Diversified, Fluid Dispensing Diversified, Precision Technology REVENUE EBITDA REVENUE EBITDA $2.1B 27% $3.0+B 30% 60% 45% 55% 40% 18 Industrial Precision Solutions Advanced Technology Solutions
Slide 19: What You'll Hear & See Today
What You’ll Hear & See Today 1. Strong growth drivers enabling Nordson’s future profitable growth performance 2. Proprietary precision technologies remain a competitive advantage 3. NBS Next is the framework driving our profitable growth 4. Ascend Strategy will deliver top tier financial performance
Slide 20: Industrial Precision Solutions (IPS)
Industrial Precision Solutions (IPS) Greg Merk Executive Vice President
Slide 21: Today's Key Messages
INDUSTRIAL PRECISION SOLUTIONS Today’s Key Messages 1. Well established business with a technically differentiated product portfolio 2. Well trained global direct salesforce and service team ensures consistent delivery of value to our customers and protects aftermarket revenue 3. Growth opportunitie
Slide 22: 2020 Overview
INDUSTRIAL PRECISION SOLUTIONS 2020 Overview Strategic Focus REVENUES OPERATING MARGIN EBITDA ▪ Material, machinery and process $1,143M 26% 30% ▪ innovations Emerging markets and product tiering GEOGRAPHIC MIX HISTORICAL 5 YR SALES CAGR 1% ▪ New applications, including $1,143 electric vehicle batter
Slide 23: Divisions and Products
INDUSTRIAL PRECISION SOLUTIONS Divisions and Products % OF PRODUCT DIVISION PRODUCTS SALES TYPE ▪ Melters that heat, pressurize and dispense adhesives Adhesives 57% ▪ ▪ Proprietary heated hoses High-speed precision applicators for heated polymers Polymer ▪ Filtration & pump systems for recycled and
Slide 24: End Markets
INDUSTRIAL PRECISION SOLUTIONS End Markets Relative Exposure / Growth Rates / Applications CONSUMER NON-DURABLE INDUSTRIAL OPPORTUNITIES 52% of IPS Sales 24% of IPS Sales 24% of IPS Sales ▪ Corrugated and carton packaging ▪ Farm and construction machinery ▪ Consumer durable ▪ Food and beverage packa
Slide 25: Why Nordson Wins in Adhesives
INDUSTRIAL PRECISION SOLUTIONS Why Nordson Wins in Adhesives ▪ Enabling high volume manufacturing of both durable and non-durable goods through precision, fully Automation automated and integrated solutions in hot melt adhesive bonding. ▪ Unique and precise dispense technologies reduce Sustainabilit
Slide 26: Applying NBS Next to Drive Focus & Profitable Growth
INDUSTRIAL PRECISION SOLUTIONS Applying NBS Next to Drive Focus & Profitable Growth ▪ Strategic Discipline enabling focus on top opportunities in customers, products and end markets ▪ Dedicated sales resources focusing on best opportunities with best customers ▪ Market development targeting dispropo
Slide 27: Segment Organic Growth Targets
INDUSTRIAL PRECISION SOLUTIONS Segment Organic Growth Targets SALES CAGR MARGIN EXPANSION 3%+ 400 BPS+ ANNUAL SALES EBITDA % OF SALES $1,250 + 34% + CAGR 1-1.5% 150-250 CAGR 150-200 bps 2-2.5% bps 27
Slide 28: Industrial Precision Solutions (IPS)
Industrial Precision Solutions (IPS)
Slide 29: Advanced Technology Solutions (ATS) Overview
Advanced Technology Solutions (ATS) Overview Jeff Pembroke Executive Vice President
Slide 30: Today's Key Messages
ADVANCED TECHNOLOGY SOLUTIONS Today’s Key Messages 1. Clear end-market and application specific growth drivers enabling Nordson’s future performance 2. M&A investments are yielding results in new markets – medical, test and inspection 3. Diversified advanced technologies and products create strong a
Slide 31: Fiscal 2020 Overview
ADVANCED TECHNOLOGY SOLUTIONS Fiscal 2020 Overview Strategic Focus REVENUES OPERATING MARGIN EBITDA ▪ Medical – Aging population, $978M 20% 27% trends toward non-invasive surgical techniques and medical OEM outsourcing GEOGRAPHIC MIX HISTORICAL 5 YR SALES CAGR ▪ Electronics - Broad solutions across
Slide 32: Divisions and Products
ADVANCED TECHNOLOGY SOLUTIONS Divisions and Products % OF PRODUCT DIVISION PRODUCTS SALES TYPE ▪ Engineered shafts and delivery systems Medical 35% ▪ ▪ Custom medical balloons and catheters Single-use fluid transfer components ▪ Non-contact jet dispensing systems Engineered ▪ Fluid Dispense 23% ▪ Fl
Slide 33: End Markets
ADVANCED TECHNOLOGY SOLUTIONS End Markets Relative Exposure / Applications / Growth Rates MEDICAL ELECTRONICS REMAINING MARKETS 40% of ATS Sales 49% of ATS Sales 11% of ATS Sales ▪ Biopharma / Vaccine processing ▪ Underfill dispensing ▪ Adhesive packaging and dispense for ▪ Cardio-pulmonary support
Slide 34: Why Nordson Wins in Medical
ADVANCED TECHNOLOGY SOLUTIONS Why Nordson Wins in Medical Aging population ▪ Extensive single-use product offering for minimally invasive surgeries – catheters, balloons, connectors, etc. ▪ Rapid design and development Trends toward non-invasive capability – transitioning into full-scale surgical te
Slide 35: Why Nordson Wins in Electronics
ADVANCED TECHNOLOGY SOLUTIONS Why Nordson Wins in Electronics Data and technology ▪ Active participant in customer’s cutting- driven economy edge technology roadmaps ▪ Precision volume and position dispense at New architecture and shrinking high speeds consistently circuit footprint ▪ Best-in-class
Slide 36: Applying NBS Next to Drive Focus & Profitable Growth
ADVANCED TECHNOLOGY SOLUTIONS Applying NBS Next to Drive Focus & Profitable Growth ▪ Strategic Discipline aligns resources on best growth opportunities in customers, products and end markets ▪ Segmentation identifies best profitable growth opportunities. ▪ Disciplined alignment of commercial and res
Slide 37: Long-term Organic Targets
ADVANCED TECHNOLOGY SOLUTIONS Long-term Organic Targets SALES CAGR MARGIN EXPANSION 5%+ 500 BPS+ ANNUAL SALES EBITDA % OF SALES $1,250 + 32% + CAGR CAGR 1-1.5% 150 – 250 4-4.5% bps 300 – 400 bps 37
Slide 38: Advanced Technology Solutions (ATS)
Advanced Technology Solutions (ATS)
Slide 39: M&A Strategy
M&A Strategy Joe Kelley Executive Vice President & Chief Financial Officer
Slide 40: Disciplined M&A Strategy
Disciplined M&A Strategy Strategic Criteria Financial Criteria ▪ Differentiated precision technology based ▪ Attractive organic growth rate with Nordson-like product portfolio gross margins ▪ Serving attractive high-growth end market ▪ EBITDA ~20% with clear margin expansion applications opportuniti
Slide 41: M&A Focus
M&A Focus Strengthening our Precision Technology Platforms Medical Device Test & Inspection Complementary Components Systems Precision Technologies 41
Slide 42: M&A Objective
M&A Objective Deliver over half the growth needed for $3+ billion in sales Execute a disciplined M&A process that meets $3,000 + the Strategic and Financial Criteria ▪ Don’t acquire simply for growth and capital deployment Acquire >$500 million in revenue ▪ Aligned in one of three focus areas Acquir
Slide 43: Financial Review
Financial Review Joe Kelley Executive Vice President & Chief Financial Officer
Slide 44: Targeted Financial Performance
Targeted Financial Performance Sustained Sales Growth & Margin Expansion $3,500 35% $3,000 + 2015 - 2020 2020 - 2025 $3,000 30% $2,500 $2,121 30% Sales CAGR 5% 7%+ $2,000 $1,688 27% 25% $1,500 24% EBITDA CAGR 7% 10% $1,000 20% $500 Ending ROIC % 13% 13%+ $0 15% 2015 2020 2025 Sales EBITDA % 44
Slide 45: Sales Growth
Sales Growth Balanced Organic and Acquisition Led Growth $3,000 + 2020 – 2025 Sales Growth Components Organic with NBS Next 4%+ Acquisitions 3%+ Total 5 Year CAGR 7%+ 45
Slide 46: EBITDA Margin Expansion
EBITDA Margin Expansion Combination of Organic and Inorganic Growth 40 - 45% Incremental margins on volume growth 30%+ NBS Next contributes 200+ bps of margin expansion ▪ Improved sales mix ▪ Operational efficiency ▪ Simplification Acquired EBITDA ~20% with clear margin expansion opportunities 46
Slide 47: Capital Allocation Priorities
Capital Allocation Priorities SUSTAINED INVESTMENT TO DRIVE DISCIPLINED M&A RETURN OF CAPITAL ORGANIC GROWTH ▪ Increased R&D investment ▪ Differentiated precision ▪ Strong history with 57-year of ▪ Sustained investment in direct technologies paying and increasing the sales model ▪ Financially discip
Slide 48: Capital Allocation
Capital Allocation Acquisition is Key Component of the Growth Strategy Deployed Cash 2016 – 2020 2021 – 2025 Debt Repayment ~ 50 - 60% Strategic M&A Organic Capital Organic Capital Dividends ~ 30% Returned to Acquisitions Dividends Shareholders Acquisitions Share buyback Share buyback ~ 10% Organic
Slide 49: Strong Focus on ROIC & Balance Sheet
Strong Focus on ROIC & Balance Sheet Maintaining Solid Returns and Strong Balance Sheet are Core to Nordson's Strength ROIC Balance Sheet ▪ High margin organic growth and NBS Next ▪ Strong free cash flow conversion provides ample benefits more than offset dilution from Acquisition liquidity to suppo
Slide 50: Closing Remarks
Closing Remarks Sundaram Nagarajan President and CEO
Slide 51: What You've Heard Today
What You’ve Heard Today 1. Strong growth drivers enabling Nordson’s future profitable growth performance 2. Proprietary precision technologies remain a competitive advantage 3. NBS Next is the framework driving our profitable growth 4. Ascend Strategy will deliver top tier financial performance ▪ Su
Slide 52: Making a Strong Nordson Even Stronger
Making a Strong Nordson Even Stronger Diversified Precision Technology Company, $3B Revenue and 30% EBITDA 52
Slide 53: Giordson
Giordson
Slide 54: Non-GAAP Definitions
Appendix Non-GAAP Definitions This presentation contains references to non-GAAP financial information. Although these are non-GAAP measures, we believe that they are useful to an investor in evaluating the company performance for the period presented. These non-GAAP definitions include: ▪ Adjusted o