Nordson Corporation Reports Record First Quarter Sales, Operating Profit, Diluted Earnings per Share, and EBITDA

• Sales increased 35 percent over prior year’s first quarter to $550
  million
• Operating profit increased 55 percent over prior year’s first
  quarter to $118 million and is inclusive of $6 million of incremental
  intangible asset amortization expense over prior year related to
  acquisitions
• First quarter EBITDA increased 49 percent over prior year’s first
  quarter to $141 million
• GAAP diluted EPS increased 107 percent over prior year’s first
  quarter to $1.78; adjusted diluted EPS of $1.35 increased 57 percent
  over prior year’s first quarter
• Second quarter 2018 guidance: sales expected to increase 9 to 13
  percent over prior year; GAAP diluted EPS in the range of $1.33 to
  $1.47; EBITDA in the range of $143 to $154 million

WESTLAKE, Ohio–(BUSINESS WIRE)–Nordson
Corporation (Nasdaq: NDSN) today reported results for the
first quarter of fiscal year 2018. For the quarter ending January 31,
2018, sales were $550 million, a 35 percent increase over the prior
year’s first quarter. This change in sales included organic volume
growth of approximately 19 percent, growth related to the first year
effect of acquisitions of approximately 12 percent, and an increase
related to the favorable effects of currency translation as compared to
the prior year’s first quarter of approximately 5 percent. Reported
operating profit was $118 million, net income was $105 million, and GAAP
diluted earnings per share were $1.78, inclusive of a net $0.43 per
diluted share benefit from one-time items mostly related to the impact
of the U.S. tax reform. Prior year first quarter sales, operating
profit, net income and GAAP diluted earnings per share were $407
million, $76 million, $50 million and $0.86, respectively. A
reconciliation of GAAP diluted earnings per share to adjusted diluted
earnings per share and calculations for EBITDA, adjusted EBITDA, free
cash flow before dividends, and adjusted free cash flow before dividends
are included in the attached financial exhibits.

“Our team delivered impressive sales, operating profit, diluted earnings
per share, and EBITDA in the quarter against very challenging prior year
comparisons, where total company organic sales growth was 10 percent,”
said Michael F. Hilton, Nordson President and Chief Executive Officer.
“Demand was robust in most all product lines, led by electronics and
medical end markets within the Advanced Technology Systems segment. With
this strong top line growth, Nordson delivered exceptional results for
the quarter where EBITDA margin improved 250 basis points as compared to
the prior year’s first quarter to 26 percent of sales,” Hilton added.

The current quarter’s results include incremental intangible asset
amortization expense of $6 million over the prior year, or $0.08 per
diluted share, and charges of $1 million, or $0.01 per diluted share,
for short-term purchase accounting related to the step-up in value of
acquired inventory and $1 million, or $0.01 per diluted share, of
non-recurring restructuring charges. As a result of U.S. federal income
tax reform legislation passed in 2017, a one-time discrete tax benefit
of $22 million, or $0.37 per diluted share, was recognized in the
quarter. This includes a benefit of $45 million related to the
revaluation of net deferred tax liabilities and a charge of $23 million
for the transition tax on deemed unrepatriated foreign earnings.
Additionally, a discrete tax benefit of $5 million, or $0.08 per diluted
share, was recognized in the quarter related to the adoption of a new
accounting standard requiring excess tax benefits related to share-based
payment transactions to be credited to income tax expense rather than
equity.

First Quarter Segment Results

Adhesive Dispensing Systems sales increased 6 percent compared to the
prior year’s first quarter, inclusive of less than 1 percent organic
growth and a 6 percent increase related to the favorable effects of
currency translation as compared to the prior year. Solid growth in most
product lines was offset by softness in polymer processing product
lines. Reported operating margin in the segment was 24 percent, or 25
percent on an adjusted basis to exclude non-recurring restructuring
charges of $1 million related to a previously announced U.S. facility
consolidation.

Advanced Technology Systems sales increased 87 percent compared to the
prior year’s first quarter, including a 50 percent increase in organic
volume, a 33 percent increase related to the first year effect of
acquisitions, and a 4 percent increase related to the favorable effects
of currency translation as compared to the prior year. All product lines
contributed to this growth. The quarter’s acquisitive growth includes
the fiscal 2017 acquisitions of ACE, InterSelect, Plas-Pak and Vention
Medical, and one month of the fiscal 2018 acquisition of Sonoscan.
Reported operating margin in the segment was 25 percent in the quarter,
or 27 percent on an adjusted basis to exclude $6 million of incremental
intangible asset amortization expense and $1 million of short-term
purchase accounting charges related to the step-up in value of acquired
inventory from the Sonoscan acquisition.

Industrial Coating Systems sales increased approximately 7 percent
compared to the prior year’s first quarter, including 3 percent organic
growth and a 3 percent increase due to the favorable effects of currency
translation as compared to the prior year. Powder, container, and liquid
finishing product lines drove the growth this quarter. Reported
operating margin in the segment was 18 percent, a 450 basis point
improvement compared to the prior year’s first quarter.

Detailed results by operating segment and geography are included in the
attached financial exhibits. “Excluding the one-time charges in both
years and the incremental $6 million of intangible asset amortization
expense in the current year’s first quarter, adjusted operating margin
was 23 percent in the current quarter, up 420 basis points over the
prior year, representing very strong first quarter performance,” said
Hilton.

Backlog

Backlog for the quarter ended January 31, 2018 was approximately $405
million, an increase of 24 percent compared to the same period a year
ago, inclusive of 9 percent organic growth and 15 percent growth due to
acquisitions. Backlog amounts are calculated at January 31, 2018
exchange rates and include acquisitions that closed prior to the end of
the first quarter of 2018.

Outlook

For the second quarter of fiscal 2018, sales are expected to increase 9
percent to 13 percent compared to the second quarter a year ago. This
outlook includes a range for organic volume to be down 3 percent to up 1
percent, 7 percent growth from the first year effect of acquisitions,
and a positive currency effect of 5 percent based on the current
exchange rate environment as compared to the prior year. At the midpoint
of this outlook, operating margin is expected to be approximately 22
percent, or 23 percent excluding $6 million of incremental intangible
amortization expense over the prior year. GAAP diluted earnings per
share are expected to be in the range of $1.33 to $1.47, inclusive of
$0.08 per diluted share of incremental intangible asset amortization
expense over the prior year and an estimated effective tax rate of 25
percent. At the midpoint of the guidance, EBITDA and EBITDA margin are
expected to be $149 million and 27 percent, respectively.

“Current backlog and project timing indicates more modest sales growth
at the midpoint of our second quarter guidance, where prior year total
company organic sales growth was 9 percent,” said Hilton. “We continue
to focus our efforts on technology leadership, product-tiering, new
applications, and market penetration to drive growth over the long term.”

Nordson management will provide additional commentary on these results
and outlook during a conference call Friday, February 23, 2018 at 8:30
a.m. eastern time which can be accessed at www.nordson.com/investors.
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 Gregory A.
Thaxton, Senior Vice President and Chief Financial Officer at (440)
414-5388 or [email protected].

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 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 35 countries. Visit Nordson on the web at http://www.nordson.com,
@Nordson_Corp,
or www.facebook.com/nordson.

(1) Represents one-time costs, net of tax, associated with
our 2018 and 2017 acquisitions, including the step up in the value of
acquired inventory that are required to be expensed as incurred.

(1) Represents one-time costs associated with our 2018 and
2017 acquisitions, including the step up in the value of acquired
inventory that are required to be expensed as incurred.

EBITDA and EBITDA per diluted share are non-GAAP financial measures used
by management to evaluate the Company's ongoing operations. EBITDA is
defined as earnings before interest, taxes, depreciation and
amortization and EBITDA As Adjusted is defined as EBITDA plus certain
acquisition costs and adjustments. EBITDA per diluted share is defined
as EBITDA divided by the Company's diluted weighted average shares
outstanding. EBITDA As Adjusted per diluted share is defined as EBITDA
As Adjusted divided by the Company's diluted weighted average shares
outstanding.

Adjusted Diluted EPS is not a measurement of financial performance under
GAAP, and should not be considered as an alternative to EPS determined
in accordance with GAAP. Management believes that EPS as adjusted to
exclude the items in the table above assist in understanding the results
of Nordson Corporation. Our calculations of this non-GAAP financial
measure may not be comparable to the calculations of similarly titled
measures reported by other companies.

Contacts

Nordson Corporation
Gregory A. Thaxton, 440-414-5388
Senior
Vice President and Chief Financial Officer
[email protected]