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Nordson's Q2 Sales Up 21% to Record $382 Million
May 24, 2013 | Business WireEstimated reading time: 5 minutes
Nordson Corporation has reported results for the second quarter of fiscal year 2013. For the quarter ending April 30, 2013, sales were $382 million, a 21% increase over the prior year’s second quarter. This increase in sales included a 7% increase in organic volume, a 16% increase related to the first year effect of acquisitions, and a negative 2% impact related to unfavorable effects of currency translation compared to the same period a year ago. Operating profit was $82 million, net income was $55 million, and diluted earnings per share were $0.84. Prior year second quarter sales, operating profit, net income and diluted earnings per share were $315 million, $77 million, $52 million and $0.80, respectively.
“Our team continued to deliver value to our customers at a high level across the diverse end markets we serve, while also focusing on continuous improvement initiatives, resulting in another excellent quarter,” said Nordson President and Chief Executive Officer Michael F. Hilton. “Sales, operating profit, net income and earnings per share all improved on a year-over-year basis and were in line with our guidance. The 7% organic sales growth outpaced levels recently reported by many industrial companies, and our operating margin was very solid at 22%. On a sequential basis, we leveraged strong top line growth of 10% to generate incremental operating margin of 59%. We delivered this strong performance while continuing to fund strategic growth initiatives, introducing a variety of new products, and further integrating recently acquired businesses. Also during the quarter we executed on our strategy of returning value to our shareholders by investing $22 million for the repurchase of shares and by distributing approximately $10 million in dividends during the quarter. Free cash flow in the quarter before dividends was $47 million and our balance sheet has significant capacity for ongoing investments. Overall, our team continued to execute at a high level worldwide.”
Second Quarter Segment Results
“Nordson delivered organic sales volume growth in all three operating segments and every geography during the quarter,” said Hilton. “We continued to meet the needs of our customers efficiently, resulting in strong operating margin performance in every segment.
“Sales volume in Adhesive Dispensing Systems improved by 30% compared to the second quarter a year ago,” continued Hilton. “The first year effect of acquisitions generated most of the increase, with organic volume improving by 1%. The segment’s operating margin was 26%, up 2 percentage points from the first quarter, as operating performance for both legacy product lines and recent acquisitions improved sequentially.
“In Advanced Technology Systems, second quarter organic sales volume grew by 14% over the prior year. Volume expanded in every geography as demand for our precision dispensing and fluid management solutions in mobile electronic device, medical and other niche markets remained solid. Segment operating margin was 25% and is inclusive of the strategic investments we have described in previous quarters. On a sequential basis, operating margin improved by 6 percentage points.
“Industrial Coating Systems sales volume increased by 24% over the prior year, inclusive of 13% organic growth. The organic growth included most product lines and geographies and continued to be driven by the investments of durable goods manufacturers. Industrial Coating operating margin in the quarter was 15%, a strong level for this segment. The integration of last year’s Sealant Equipment acquisition remains on track.”
Detailed results by operating segment and geography are included in the attached tables, as is an earnings per share reconciliation table.
Fiscal Year-to-Date Results
For the first half of fiscal year 2013, sales were $729 million, a 25% volume increase over the prior year’s first half sales. This increase in sales included an 8% increase in organic volume and a 17% increase related to the first year effect of acquisitions. Unfavorable currency translation effects reduced sales by approximately 1% compared to the same period a year ago. Operating profit grew 8% over the prior year to $144 million, net income was $97 million, and GAAP diluted earnings per share were $1.49. Prior year first half sales, operating profit, net income and diluted earnings per share were $591 million, $133 million, $90 million and $1.38.
“Our first half organic growth of 8% eclipsed global GDP by a considerable margin,” said Hilton, “Profitability remained strong while we continued to execute on initiatives that will drive growth, performance and sustainable competitive advantage over the long term.”
Order Rates and Backlog
Order rates for the 12-week period ending May 19, 2013, measured in constant currency, decreased by 2% over the same period a year ago. Order rates by segment and geography are provided in the accompanying financial tables, with pro-forma growth in order rates calculated as though fiscal year 2012 acquisitions were owned in both years.
Backlog at the end of the second quarter was approximately $200 million, an increase of 3% compared to the end of the second quarter a year ago, and an increase of 7% compared to the end of the first quarter of fiscal 2013. Backlog amounts are calculated at April 30, 2013 exchange rates.
Outlook
For the third quarter of fiscal 2013, sales are expected to be in the range of $404 million to $419 million, an increase of 6 to 10% as compared to the third quarter a year ago. This growth is inclusive of organic volume growth of 0 to 4%, 7% growth from the first year effect of acquisitions, and a negative 1% currency translation effect based on the current exchange rate environment. Diluted earnings per share are expected to be in the range of $1.00 to $1.09.
“At the midpoint of our third quarter guidance we are forecasting organic sales growth of about 2%, a solid level against both a period of very strong growth a year ago and a relatively low growth macroeconomic backdrop,” said Hilton. “On a sequential basis, the midpoint of our sales guidance represents growth of 8%, and we expect to leverage this growth to generate operating margin performance of around 24% in the third quarter.
“Overall, our strategic initiatives, previously described, are progressing as planned, our continuous improvement efforts continue to gain momentum, and our acquisition integration efforts are on track. Nordson’s long term outlook remains very bright, as we will continue to apply our model of differentiated, best-in-class technology and direct global sales and service to a diverse set of growing end markets.”
About Nordson Corporation
Nordson Corporation engineers, manufactures and markets differentiated products and systems used for the precision dispensing of adhesives, coatings, sealants, biomaterials, polymers, plastics and other materials, fluid management, test and inspection, UV curing and plasma surface treatment, all supported by application expertise and direct global sales and service. Nordson serves a wide variety of consumer non-durable, durable and technology end markets including packaging, nonwovens, electronics, medical, appliances, energy, transportation, construction, and general product assembly and finishing. Founded in 1954 and headquartered in Westlake, Ohio, the company has operations and support offices in more than 30 countries. Visit Nordson on the web at www.nordson.com, @Nordson_Corp, or www.facebook.com/nordson.