Nordson Corporation reports first quarter results
Nordson Corporation has reported results for the first quarter of fiscal year 2013. For the quarter ending 31 January 2013 sales were $347 million, a 26% increase over the prior year’s first quarter sales.
This sales improvement included an 8% increase in organic volume and an 18% increase related to the first year effect of acquisitions. Currency effects were minimal in the quarter compared to the prior year. Operating profit for the quarter was $62 million and operating margin was 18%. First quarter diluted earnings per share as reported were $0.65, representing a 12% increase over the prior year earnings per share of $0.58. A reconciliation of GAAP diluted EPS to normalised amounts is included in the attached tables.
“Nordson’s global team delivered solid quarterly results in line with our guidance and reflective of the normal seasonality of our business,” says president and CEO Michael F. Hilton. “Our continuing ability to provide precision technology solutions to customers in a diverse set of end markets generated strong organic volume growth with additional growth coming from the first year effect of acquisitions. Operating margin in the quarter was 18%, a level within the range we expected and one that includes the dilutive impact of recent acquisitions along with planned investments in initiatives that will fuel future growth and performance. Net income grew to a first quarter record of $42 million, we continue to generate excellent levels of free cash flow, and our balance sheet remains strong. Overall, we are pleased with the start of our fiscal year and we see multiple opportunities for growth and improvement in the coming quarters.
“The fundamental strengths of our business model are intact in all business segments, as we delivered organic volume growth in every geographic region and nearly all product lines.
“Volume in Adhesive Dispensing Systems improved by 33% compared to the same period a year ago. Organic volume growth was essentially flat as growth in consumer non-durable end markets was offset by softness in some plastics processing and consumer durable goods end markets. Segment operating margin was 24% and inclusive of the anticipated dilutive effect of 2012’s EDI and Xaloy acquisitions.
“Organic volume in Advanced Technology Systems improved by 8% over the prior year’s first quarter with solid growth in most all segment product lines. Demand in mobile electronic device, medical and other niche end markets remained solid. Segment operating margin was 19% in the quarter, an improvement of 3 percentage points over our performance in last year’s first quarter.
“Within Industrial Coating Systems volume grew by 51% compared to the first quarter a year ago. This improvement included a 38% increase in organic volume and a 13% increase related to the first year effect of acquisitions. Similar to our comments a quarter ago, the growth continues to be driven by well-capitalised customers in all geographies investing in production efficiency and plant expansion programs. Segment operating margin was 1%, an improvement of 10 percentage points over last year’s first quarter and reflective of our ability to leverage increased volume.” Order rates for the 12-week period ending 17 February 2013 measured in constant currency increased 4% over the same period a year ago. Backlog at the end of the first quarter was approximately $189 million, an increase of 25% compared with the end of the first quarter a year ago and an increase of 7% compared to the end of the fourth quarter of fiscal 2012. Backlog amounts are calculated at 31 January 2013 exchange rates.
For the second quarter of fiscal 2013, sales are expected to be in the range of $372 to $387 million. This sales outlook indicates growth will be in the range of 18-23% compared to the second quarter a year ago. This overall growth is inclusive of organic growth of 3-8%, 16% growth from the first year effect of acquisitions and a negative 1% currency translation effect as compared to the prior year’s second quarter and based on the current exchange rate environment. Diluted earnings per share are expected to be in the range of $0.78 to $0.87.
“At the midpoint of our guidance sequential sales growth would be about 10% and we would expect to leverage this increased volume to deliver higher operating margin. Our year-over-year order rates are positive, but uncertainty persists in the macroeconomic picture, not unlike the climate of a year ago. In that environment, Nordson generated full year organic growth of 8%. At this time most economists are forecasting global GDP growth in 2013 to be similar to 2012. Should these forecasts hold, we believe Nordson has the opportunity to generate mid-to-high single digit full year organic growth once again. At this level of growth Nordson would be well positioned to deliver full year operating margin similar to last year’s level, inclusive of the dilutive effect of last year’s acquisitions and the incremental R&D and localisation investments we are making this year. We have proven our ability to adjust to conditions as required, yet we are focused on delivering long-term returns to our shareholders. We remain well positioned with a direct sales and service model in all geographies, and our differentiated products meet the needs of customers in a wide variety of global growth markets. Our efforts remain underpinned by a commitment to innovation, continuous improvement, talent development and execution.”