Nordson Reports Q4 Fiscal Year 2018 and Record Full Year Results


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Fourth Quarter Segment Results

Adhesive Dispensing Systems sales increased 1% compared to the prior year’s fourth quarter, inclusive of 3% organic growth and a 2% decrease related to the unfavorable effects of currency translation as compared to the prior year.  Reported operating margin in the segment was 27% in the quarter, or 28% on an adjusted basis to exclude non-recurring restructuring charges of $2 million related to a previously announced facility consolidation.  The adjusted fourth quarter fiscal 2018 margin performance was equal to the prior year’s fourth quarter.

Advanced Technology Systems sales decreased approximately 1% compared to the prior year’s fourth quarter, inclusive of a decrease in organic volume of approximately 2%, an increase of approximately 3% related to the first year effect of acquisitions, and a decrease of approximately 1% related to the unfavorable effects of currency translation as compared to the prior year.  The fourth quarter’s acquisitive growth includes the fiscal 2018 acquisition of Sonoscan.  Reported operating margin in the segment was 20% in the quarter.  As compared to the prior year’s fourth quarter margin, acquisition dilution, product mix, and higher spending contributed to the margin decline.

Industrial Coating Systems sales volume decreased 8% compared to the prior year’s fourth quarter, inclusive of a decrease in organic volume of 7% and a 1% decrease related to the unfavorable effects of currency translation as compared to the prior year.  Compared to the prior year’s fourth quarter, reported operating margin in the segment improved 200 basis points to 20%, driven by improved product mix and focus on continuous improvement initiatives.

Detailed results by operating segment and geography are included in the attached financial exhibits.

“Despite tough comparisons to the prior year’s fourth quarter, Nordson delivered solid results,” said Michael F. Hilton, Nordson President and Chief Executive Officer. “Reported operating margin in the current quarter was negatively impacted by certain long-term investments, including facility consolidation efforts within the Adhesives segment and costs related to the launch of our new centralized shared service center in the United States. These investments will benefit both our customers and shareholders over the long-term.”

Fiscal 2018 Full Year Results

Sales for the fiscal year ended October 31, 2018 were $2.3 billion, an increase of 9% compared to the same period a year ago.  This change in sales included organic volume growth of 2%, a 5% increase related to the first year effect of acquisitions, and a 2% increase due to the favorable effects of currency translation as compared to the prior year.  Full year operating profit was $495 million, net income was $377 million, and GAAP diluted earnings per share were $6.40, or $5.94 on a normalized basis to exclude one-time items.  Prior year sales, operating profit, net income, and GAAP diluted earnings per share were $2.1 billion, $458 million, $296 million, and $5.08, respectively.

“Our global Nordson team delivered full year organic sales growth of nearly 2.5% in the current year, against two challenging prior year comparisons where we generated organic sales growth of 8% and 7% in fiscal years 2017 and 2016, respectively,” said Hilton.  “In fiscal 2018, sales, operating profit, GAAP diluted earnings per share, and EBITDA were company records, highlighting our continued commitment to deliver the best technology solutions to our customers and to generate growth through innovation and superior customer service.”

Full year EBITDA increased 11% to $605 million and adjusted EBITDA increased 8% to $609 million, both compared to the prior year.  EBITDA margin and adjusted EBITDA margin were both 27% of sales.  Free cash flow before dividends increased 44% over the prior year to $415 million, or 110% of net income.  In addition to funding organic and acquisitive growth initiatives, Nordson returned value to its shareholders by distributing $72 million in dividends in the fiscal year 2018 and investing $19 million for the repurchase of shares during the fourth quarter.  The company also reduced net debt leverage on the balance sheet to 2-times trailing-twelve-months EBITDA at the end of the fiscal year.

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