Nordson posts Q2 earnings of US$32M, more than double the level seen a year ago, as sales increase 33% to US$252M on 28% volume growth, favorable effects of currency translation
May 21, 2010
– * Sales increase 33 percent over previous year to $252 million
* Operating profit reaches record $58 million, more than triple level of a year ago
* Operating margin reaches 23 percent, highest level in over twenty years
* Diluted EPS of $0.94 more than doubles level of a year ago
* First half operating profit, net income and EPS exceed record levels of 2008
* Third quarter guidance: sales expected to increase 25 to 29 percent over prior year; EPS in the range of $1.08 to $1.18
Nordson Corporation (Nasdaq: NDSN) today reported second quarter sales, operating profit, net income and diluted earnings per share that were strongly improved compared to the same period a year ago. For the quarter ending April 30, 2010, sales were $252 million, a 33 percent increase over the prior year’s second quarter sales, with volume up 28 percent and the remainder of the increase coming from the favorable effects of currency translation. Second quarter operating profit reached a record $58 million. Net income was $32 million, more than double the level of a year ago. Diluted earnings per share were $0.94, inclusive of a $0.15 one-time charge related to recently enacted changes in the tax treatment of Medicare Part D and a $0.01 restructuring charge.
“Our global team has done an excellent job of executing as the economic recovery continues”
“Our global team has done an excellent job of executing as the economic recovery continues,” said Nordson President and Chief Executive Officer Michael F. Hilton. “We are winning in the marketplace, capturing new business through our continued focus on technology differentiation, application expertise, and emerging market penetration. Strong top line growth is being supported by a lower-cost operating structure, which enabled operating margin in the quarter to reach 23%, the highest level in more than twenty years. This translated to excellent earnings per share performance, as we more than doubled the level of the previous year’s quarter.”
Second Quarter Segment and Regional Results
Nordson delivered year-over-year sales increases in all three business segments and in every geographic region. “Advanced Technology’s ability to serve very robust demand in technology end markets led to an 88 percent improvement in segment sales over the prior year’s second quarter and an excellent operating margin of 22 percent for the segment,” said Hilton. “Sales in Adhesive Dispensing Systems grew 17 percent over the prior year’s second quarter, and the operational efficiencies we have implemented helped push the segment’s operating margin to 34 percent. Sales within Industrial Coating Systems were essentially flat compared to the same period a year ago, though the renewed order activity from durable goods manufacturers that began late in our first quarter and continued this quarter is encouraging. While systems sales have rebounded nicely, total company parts and consumables remained a larger portion of the overall product mix in the second quarter than is typical for Nordson.”
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 2010, sales of $472 million generated operating profit of $94 million and net income of $59 million, both of which are records. First half earnings per share on a diluted basis are a record $1.73, inclusive of $0.17 in charges related to restructuring costs and the recently enacted change in the tax treatment of Medicare Part D and a gain of $0.09 related to a one-time tax benefit. Prior year first half revenue, operating profit, net income and diluted earnings per share were $375 million, $32 million, $25 million and $0.74, respectively.
“Our ability to serve customers and capture returning demand, coupled with maintenance of the structural changes we made last year and ongoing cost control, enabled first half operating profit, net income and earnings per share to exceed the record level of the first half of fiscal 2008,” Hilton added.
Order Rates and Backlog
Order rates for the 12-week period ending May 16, 2010, measured in constant currency, increased 43 percent over the same period a year ago. Order rates by segment and geography are provided in the accompanying financial tables.
Backlog at the end of the second quarter was approximately $131 million, an increase of 60 percent compared to the end of the second quarter a year ago, and an increase of 30 percent compared to the end of the first quarter of fiscal 2010. Backlog amounts are calculated at April 30, 2010 exchange rates.
For the third quarter of fiscal 2010, sales are expected to be in the range of $259 million to $267 million, an increase in volume of 29 to 33 percent offset by a negative 4 percent currency translation effect as compared to the third quarter a year ago. Diluted earnings per share are expected to be in the range of $1.08 to $1.18.
“While we are very pleased with our current order activity, these rates reflect the rapid return of demand often seen in the recovery period of an economic cycle,” said Hilton. “Based on our experience in previous cycles, we would expect the pace of orders to moderate to a more sustainable level at some point in the coming quarters. As the year progresses, inventory levels likely will have been replenished to normal levels, fiscal stimulus may begin to slow or end, unemployment probably will remain high, and European sovereign debt issues may persist, all of which could have a dampening economic effect. Balancing these factors is the ongoing strength still being shown in many emerging markets. As we have demonstrated in the first half of the year, we are well-equipped to capture business in every region of the world, whatever the pace of new demand may be. We expect another solid performance in the third quarter, anchored by the restructuring activities and cost reductions we completed over the past year and propelled by our deep customer knowledge, innovative technology and global reach.”
Nordson will broadcast its second-quarter conference call on its web site at http://www.nordson.com/investors on Friday, May 21, 2010 at 8:30 a.m. EDT. For persons unable to listen to the live broadcast, a replay will be available for 14 days after the event. Information about Nordson’s investor relations and shareholder services is available from James R. Jaye, Director of Communications & Investor Relations at (440) 414-5639 or Jim.Jaye@nordson.com.
Except for historical information and comparisons contained herein, statements included in this release may constitute “forward-looking statements,” as defined by the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors, as discussed in the company’s filing with the Securities and Exchange Commission that could cause actual results to differ.
Nordson Corporation is one of the world’s leading producers of precision dispensing equipment that applies adhesives, sealants, liquid and powder coatings and other materials to a broad range of consumer and industrial products during manufacturing operations. The company also manufactures equipment used in the testing and inspection of electronic components as well as technology-based systems for curing and surface treatment processes. Headquartered in Westlake, Ohio, Nordson has direct operations and sales support offices in more than 30 countries. Visit Nordson at www.nordson.com.
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