Nordson Corporation · NASDAQ:NDSN
Nordson — Q2 2020 Earnings Presentation
45 slides from Nordson's earnings presentation, May 21, 2020
Slide 1: Investor Presentation
Today and every day, Nordson is dedicated to INVESTOR the safety of our employees, customers PRESENTATION and community. The company’s essential product lines and May 20, 2020 | NASDAQ: NDSN businesses are sustaining critical operations that support medical, consumer non-durable, non-woven and many
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 in 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 Strong Average Outstanding Excellent High Level of Strong Cash Reliable and Outstanding Annual Sales Gross Margins EBITDA Free Cash Flow Returns to Consistent Long Term Total Growth Margins Before Shareholders Dividend Shareholder Dividends 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 4% End markets include: 6% 23% ▪ Electronic Components: semiconductors, printed circuit boards, computing, communications/mobile, consumer electronics (i.e., 12% gaming, wearables, automotive electronics) ▪ Consumer Non-Durable: beverage, disposa
Slide 7: Nordson Business Segments
Nordson Business Segments INDUSTRIAL PRECISION SOLUTIONS* ADVANCED TECHNOLOGY SOLUTIONS* 55% 45% Delivers proprietary dispensing and processing technology to diverse Integrates proprietary product technologies found in customer end markets. Product lines commonly reduce material consumption, product
Slide 8: Industrial Precision Solutions
What We Do Industrial Product lines reduce material consumption, increase line efficiency, and enhance product Precision brand and appearance. Components are used for dispensing adhesives, coatings, paint, finishes, sealants and other materials. This business Solutions primarily serves the industria
Slide 9: Industrial Precision Solutions: Diverse end markets
Industrial Precision Solutions FY2019 Profile – Diverse end markets 6% 5% End markets include: ▪ Consumer Non-Durable: beverage, disposable hygiene, 7% food, paper, textiles, non-wovens, packaging 40% ▪ OEM/Distributor: Nordson products used to build manufacturing line, not end market specific 18% ▪
Slide 10: Advanced Technology Solutions
What We Do Advanced Precision dispense, fluid management, test, inspection, surface treatment and proprietary Technology solutions for medical, electronics and general industrial markets. Solutions 2-3X Global GDP Growth Driven by: ▪ Medical – Aging population, trends toward non- invasive surgical t
Slide 11: Advanced Technology Solutions: Diverse End Markets
Advanced Technology Solutions FY2019 Profile – Diverse End Markets 1% 1% 4% 5% End markets include: 6% ▪ Medical: minimally invasive interventional delivery devices, 37% catheters, medical balloons, fluid connection components, specialty 7% tubing ▪ Electronics: electronic components (i.e., computin
Slide 12: Strong Culture & Values
Strong Culture & Values We have a long and proud history of investing in the communities where we live and work. We invest approximately five percent of domestic pretax earnings to human welfare services, education and other charitable activities. Our commitment $109M+ 100K+ $3M 30+ to giving Overal
Slide 13: Why Invest in Nordson?
Giordson Why Invest in Nordson?
Slide 14: Our Priorities
Our Priorities Our plan is to deliver top shareholder 1 Accelerate organic growth returns by growing and extending our Diversify through high value business model in precision dispensing and adjacent technologies. 2 acquisitions Leverage Nordson 3 Business System (NBS) for profitable growth Enhance
Slide 15: Organic Growth
Multiple Paths to Organic Growth: Organic Growth 1. New Products We expect to accelerate organic growth 2. New Applications by creating our own demand. 3. Recapitalize Installed Base 4. Emerging Markets 5. Product Tiering Reported Organic Sales Growth (2015-2019): 4% Average Annual Growth 15
Slide 16: Key Acquisitions
Key Criteria for Acquisitions: 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 Rat
Slide 17: 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 18: Leverage Nordson Business System
The NBS growth framework integrates Nordson’s core strengths with new capabilities to drive sustainable, profitable Leverage Nordson growth of the company: 1. Strategic Discipline – select and invest in Business System the most attractive growth opportunities A growth framework driving the 2. Custom
Slide 19: Enhance Talent Development
As Nordson grows, we need to enhance our talent pipeline: Enhance Talent 1. Develop talent through divisional Development leadership opportunities Create a deep and diverse pipeline of 2. Focus on inclusion and diversity talent to lead Nordson’s next chapter of profitable growth 3. Empower employees
Slide 20: Financial Results
Giordson Financial Results
Slide 21: Fiscal 2Q2020 Results
Fiscal 2Q2020 Results $529M $125M $152M $90M $1.58 Sales Operating Profit EBITDA Free Cash Flow Before GAAP Diluted EPS (24% of Sales) (29% of Sales) Dividends (98% of net income) 21 Year to date cash conversion is 134% of net income
Slide 22: 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 23: 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 23
Slide 24: 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 24 *FY15 results impacted by significant negative currency translation effects compared to the pr
Slide 25: 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 25 *FY15 results impacted by significant negative currency translation effects compared to the prior year.
Slide 26: 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 27: 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 28: Proven Financial Investment Performance
Proven Financial Investment 1. Clear Strategy and Goals Performance Summary 2. Strong Execution and Performance 3. Leading Global Businesses 4. Numerous Growth Opportunities 5. Outstanding Culture and Values 6. Committed to Community 28
Slide 29: Appendix
Appendix • Product Innovation • Historic Financials • 2QF2020 Financial Exhibits
Slide 30: Appendix: Product Innovation
Appendix: Product Innovation
Slide 31: 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 32: Our Role in the Semiconductor Process
Our Role in the Semiconductor Process 32
Slide 33: 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 34: 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 35: Appendix: Historic Financials
Appendix: Historic Financials
Slide 36: 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 36 At fiscal years ending 10/31 * Net De
Slide 37: Strong Capital Management: Debt Position
Strong Capital Management Debt Position (as of 4/30/2020) $900 Drawn Available $800 $850 $700 $600 $500 $400 $405 $300 $350 $165(b) $200 $100 $125(a) $141 $5.5 $93 $0 Term Loan A NYL Term Loan A 2012 Private 2015 Private 2018 Private Revolver (US) & PNC (EUR) Placement Placement Placement Loan ▪$200
Slide 38: 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 38
Slide 39: 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 39 FX Impact to EPS: ($0.54) ($0.19) ($0.03) $0.24 ($0.30)
Slide 40: Appendix: Financial Exhibits
Appendix: Financial Exhibits
Slide 41: 2015–2019 Sales Growth
Nordson Corporation 2015 – 2019 Sales Growth Nordson Corporation Organic Acquisitive Currency Total FY2015 3.4% 2.4% -6.7% -0.9% FY2016 6.5% 2.0% -1.4% 7.1% FY2017 7.9% 6.9% -0.5% 14.3% FY2018 2.5% 4.6% 2.0% 9.1% FY2019 -1.1% 0.4% -2.0% -2.7% 5 yr avg 3.8% 3.3% -1.7% 5.4% Advanced Technology Solutio
Slide 42: Second Quarter Financial Highlights
42 ‘SECOND QUARTER PERIOD NORDSON CORPORATION Period Ended April 30, 2020 FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands except for per-share amounts) CONSOLIDATED STATEMENT OF INCOME CONSOLIDATED BALANCE SHEET ‘Second Quarter Year-to-Date April 30 October 31 2020 2019 2020 2019 2020 2019 Sa
Slide 43: Second Quarter Segment and Geographic Results
43 ‘SECOND QUARTER PERIOD Period Ended April 30, 2020 (Unaudited) SALES BY BUSINESS SEGMENT Industrial precision solutions Advanced technology solutions Total sales by business segment OPERATING PROFIT BY BUSINESS SEGMENT Industrial precision solutions Advanced technology solutions Corporate Total o
Slide 44: Reconciliation of Non-GAAP Financial Measures
SECOND QUARTER PERIOD NORDSON CORPORATION Period Ended April 30, 2020 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) (Dollars in thousands except for per-share amounts) EBITDA ‘Second Quarter Year-to-Date 2020 2019 2020 2019 Net income $s 92,079 $ 91,923 $s 144,083 $ 140,490 Adjustments:
Slide 45: Free Cash Flow Before Dividends
Free Cash Flow Before Dividends Second Quarter Year-to-Date 2020 2019 2020 2019 Net income $ 92,079 $ 91,923 $ 144,083 $ 140,490 Depreciation and amortization r 27,046” 27,740 r 55,664” 55,488 Other non-cash charges (4,663) 4,157 2,504 10,497 Changes in operating assets and liabilities (12,558) (18,