Nordson Corporation · NASDAQ:NDSN
Nordson — Investor Presentation (August 2019)
49 slides from Nordson's investor presentation, Aug 20, 2019
Slide 1: Investor Presentation
INVESTOR PRESENTATION Click to edit August text | NASDAQ: NDSN 20, 2019 Photo: Nordson Dage 4600 Bondtester 4600 carrying out a wire bond test on a battery pack.
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 Liti gation Reform Act of 1995. Forward-looking statements can be identified by words such as “
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 $2.3B $605M 7,500+ 35+ Company Founded *Sales *EBITDA Employees Countries with Direct Presence 3 *Sales and EBITDA for the full fiscal year ended 10/31/18.
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 8% 55% 25% $1.4B $907M 55 yrs
Slide 5: Diversified Sources of Sales
Diversified Sources of Sales FY2018 Profile - $2.3 Billion Product Type Geographies 7% 7% 22% Engineered 32% United States Systems Europe 47% Standard Product Asia Pacific 26% Japan Parts and 31% Consumables Americas 28% High percentage of recurring Nearly 70% of sales outside USA. sales from parts
Slide 6: Diversified End Markets
Diversified End Markets FY Fiscal 2018 Profile - $2.3 Billion 4% End markets include: 4% 14% ▪ Electronic Components: computing, communications/mobile, consumer electronics (i.e., gaming, wearables, automotive 14% electronics) 8% ▪ Semiconductors ▪ Printed Circuit Boards 5% ▪ Consumer Non-Durable: b
Slide 7: Nordson Business Segments
Nordson Business Segments ADVANCED TECHNOLOGY SYSTEMS* ADHESIVE DISPENSING SYSTEMS* INDUSTRIAL COATINGS SYSTEMS* 46% 42% 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. 2-3X Global GDP Growth Driven by: 15.4% ▪ Medical – Aging population, trends toward non- invasive surgic
Slide 9: Advanced Technology: Diverse End Markets
Advanced Technology FY Fiscal 2018 Profile – Diverse End Markets 2% 1% End markets include: 7% ▪ Electronics: electronic components (i.e., computing; 8% 26% communications/mobile; consumer electronics – gaming, wearables; automotive electronics), semiconductors, printed circuit boards ▪ Medical: min
Slide 10: Advanced Technology Systems: Strong topline growth
Advanced Technology Systems Strong topline growth Creating our own demand through innovation, new applications, emerging markets and product tiering, as well as an active acquisition diversification strategy drive strong sales growth. 10
Slide 11: 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. 1.5-2X Global GDP Growth Driven By: 4.0% ▪ Increased use of disposable hygiene products (diapers, feminine car
Slide 12: Adhesive Dispensing: Diverse end markets
Adhesive Dispensing FY Fiscal 2018 Profile – Diverse end markets 3% End markets include: 4% 5% ▪ Consumer Non-Durable: beverage, disposable hygiene, food, paper, textiles, non-wovens, packaging ▪ OEM/Distributor: Nordson products used to build manufacturing line, not end market specific 16% ▪ Indust
Slide 13: Adhesive Dispensing Systems: Stable Organic Growth
Adhesive Dispensing Systems Stable Organic Growth Strong track record of organic growth driven by large percentage of consumer non-durable end markets and growth initiatives, including recapitalization, emerging markets and product tiering. 13
Slide 14: 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. GDP+ Growth Driven By: 2.3% ▪ Environmental advantages of powder coatings ▪ Adhesives replacing mechani
Slide 15: Industrial Coatings: Diverse end markets
Industrial Coatings FY Fiscal 2018 Profile – Diverse end markets 1% 4% End markets include: 9% ▪ Industrial: aerospace, chemical, construction, defense, energy, farm and construction machinery, industrial machinery, rigid container, metal 11% ▪ Automotive: applications for new vehicle platforms; upg
Slide 16: Industrial Coatings Systems: Consistent Top Line Growth
Industrial Coatings Systems Consistent Top Line Growth Sales growth opportunities in mature and emerging markets, as well as new applications. 16
Slide 17: Why Invest in Nordson?
Giordson Why Invest in Nordson?
Slide 18: 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. 2 Diversify through acquisitions Further optimize the 3 business 4 Cultures and Values 18
Slide 19: 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 (2014-2018): 5% Average Annual Growth 19
Slide 20: 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 21: Strong Growth: Organic and Acquisitive
Strong Growth: Organic and Acquisitive On average across the past five years, Nordson has delivered annual sales growth of 8 percent, inclusive of 5 percent organic growth, 4 percent growth related to the first year effects of acquisitions and a decrease of 1 percent related to the unfavorable effec
Slide 22: 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 23: Culture & Values: Giving Back
Our Commitment to Giving Back: 4 Culture & Values 1. Over $100M 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. Nearly
Slide 24: Financial Results
Giordson Financial Results
Slide 25: Fiscal 3Q2019 Results & FY2019 Guidance
Fiscal 3Q2019 Results & FY2019 Guidance 3QF19 Results $560M $130M $158M $1.62 $55M Sales Operating Profit EBITDA GAAP Diluted EPS Free Cash Flow (23% of Sales) (28% of Sales) Before Dividends (59% of net income) 2019 Guidance ▪ Flat to modest organic sales volume growth compared ▪ Interest expense e
Slide 26: Total Shareholder Return Above Our Peers
Total Shareholder Return Above Our Peers Comparison of 10 Year Cumulative Total Return $900.00 $800.00 $700.00 $600.00 $500.00 $400.00 $300.00 $200.00 $100.00 $0.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Nordson Corporation S&P 500 Index S&P MidCap 400 S&P 500 Ind. Machinery S&P MidC
Slide 27: Industry Leading Gross Margins
Industry Leading Gross Margins Consistently Mid 50s 70% 60% 55.5% 54.1% 54.9% 55.1% 54.8% 50% 40% 30% 20% 10% 0% 2014 2015 2016 2017 2018 27
Slide 28: Strong EBITDA Margins
Strong EBITDA Margins Continuous Improvement Initiatives 5 Year CAGR = 9.8% $700,000 26.8% $600,000 26.4% $500,000 25.4% 25.0% $400,000 22.7% $000 $300,000 $200,000 $100,000 $0 2014 * 2015 2016 2017 2018 28 *FY15 results impacted b y significant negative currency translation effects compared to the
Slide 29: EPS Growth
EPS Growth High gross margins lead to significant volume leverage 5 Year CAGR = 13.4% $7.00 $6.40 $6.00 $5.08 $5.00 $4.73 $4.00 $3.84 $3.45 $3.00 $2.00 $1.00 $0.00 2014 * 2015 2016 2017 2018 29 *FY15 results impacted b y significant negative currency translation effects compared to the prior year.
Slide 30: Strong Cash Generation
Strong Cash Generation Funds Growth and Returns to Shareholders Strong Cash Conversion: 2014 – 2018 2018 Free Cash Flow Before Dividends = 110% of Net Income $450,000 $400,000 $350,000 $300,000 $250,000 $000 $200,000 $150,000 $100,000 $50,000 $- 2014 *2015 2016 2017 2018 Free cash flow before divide
Slide 31: Disciplined Capital Deployment
Disciplined Capital Deployment 36% or $906.7 Million to Shareholders via Share Repurchases and Dividends 100% $40.6 $37.7 $21.3 $62.5 $3.2 Working 153.0 ▪ Self funding business model $63.8 $24.0 Capital 6% generates excess cash 80% $33.4 Share Repurchases 610.9 ▪ Low working capital $166.4 24% requi
Slide 32: Proven Financial Investment Performance Summary
Clear Strategy and Goals Proven Financial 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 32
Slide 33: Appendix
Appendix • Product Innovation • Historic Financials • 3QF19 Financial Exhibits
Slide 34: Appendix: Product Innovation
Appendix: Product Innovation
Slide 35: Our Electronics Industry Position
Our Electronics Industry Position Surface Mount Manufacturing Solder paste Flux spray Optical Inline Systems Plasm a Underfill, Optical X-ray Conformal inspection coating inspection surface encapsulation inspection inspection coating treatment or precise coating Solder paste Component placement Refl
Slide 36: Our Role in the Semiconductor Process
Our Role in the Semiconductor Process 36
Slide 37: 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 38: 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 39: Industrial Coating Systems
Industrial Coating Systems 39
Slide 40: Appendix: Historic Financials
Appendix: Historic Financials
Slide 41: Strong Capital Management
Strong Capital Management Net Debt to EBITDA* Strong cash generation lets Nordson de-lever quickly. At 10/31/2018 Net Debt to TTM EBITDA = 2.0 times 3.00 Acquisitions & Vention Share Acquisition Repurchases 2.50 2.00 1.50 1.00 0.50 0.00 2014 2015 2016 2017 2018 41 At fiscal years ending 10/31 * Net
Slide 42: Strong Capital Management: Debt Position
Strong Capital Management Debt Position (as of 7/31/19) $900 Drawn Available $800 $850 $700 $600 $605 $500 $400 $300 $350 $200 $100 $128 [€ 100] $141 $93 $0 $36 Term Loan A NYL Term Loan A 2012 Private 2015 Private 2018 Private Revolver (US) & PNC (EUR) Placement Placement Placement Loan ▪$100M –a t
Slide 43: Innovation Drives Organic Growth
Innovation Drives Organic Growth Steady Stream of New Products $60,000 80 70 $50,000 62 63 58 60 53 $40,000 51 50 $30,000 40 30 $20,000 20 $10,000 10 $0 0 2014 2015 2016 2017 2018 R & D Spend U.S. Patents Granted 43
Slide 44: 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% 2014 2015 2016 2017 2018 44 FX Impact to EPS: ($0.06) ($0.54) ($0.19) ($0.03) $0.24
Slide 45: Appendix: Financial Exhibits
Appendix: Financial Exhibits
Slide 46: Third Quarter Period Financial Highlights
46 ‘THIRD QUARTER PERIOD Period Ended July 31, 2018 NORDSON CORPORATION FINANCIAL HIGHLIGHTS, (Unaudited) (Dollars in thousands except for per-share amounts) CONSOLIDATED STATEMENT OF INCOME" CONSOLIDATED BALANCE SHEET ‘Third Quarter Year-to-Date July 31 October 31 2019 2018 2019 2018 2019 2018 Sale
Slide 47: Third Quarter Financial Highlights by Segment
47 ‘THIRD QUARTER PERIOD NORDSON CORPORATION Period Ended July 31, 2019 FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands) ‘Third Quarter '% Growth over 2018 ‘Yearto-Date % Growth over 2018 ‘SALES BY BUSINESS SEGMENT 2019 2018 Volume _Currency __Total 2019 2018 Volume Currency __Total Adhesive
Slide 48: Reconciliation of Non-GAAP Financial Measures
THIRD QUARTER ENDED Period Ended July 31, 2019 (Unaudited) EBITDA Adjustments: ‘Acquisition costs and adjustments ‘"” EBITDA As Adjusted EBITDA per diluted share EBITDA As Adjusted per diluted share NORDSON CORPORATION RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Dollars in thousands except for pe
Slide 49: Free Cash Flow Before Dividends
49 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