Nordson(NDSN) - 2021 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements (Unaudited) The company presents unaudited condensed consolidated financial statements and key accounting policies for the period ended April 30, 2021 Condensed Consolidated Statements of Income The company reported significant growth in sales, operating profit, and net income for the three and six months ended April 30, 2021 Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Three Months Ended April 30, 2021 | Three Months Ended April 30, 2020 | Six Months Ended April 30, 2021 | Six Months Ended April 30, 2020 | |:---|:---:|:---:|:---:|:---:| | Sales | $589,538 | $529,478 | $1,116,104 | $1,024,394 | | Operating Profit | $166,391 | $125,029 | $275,416 | $200,122 | | Net Income | $124,144 | $92,079 | $201,726 | $144,083 | | Diluted EPS | $2.12 | $1.58 | $3.44 | $2.47 | Condensed Consolidated Balance Sheets Total assets slightly decreased to $3.59 billion while shareholders' equity increased to $1.95 billion as of April 30, 2021 Balance Sheet Summary (in thousands) | Account | April 30, 2021 | October 31, 2020 | |:---|:---:|:---:| | Cash and cash equivalents | $133,320 | $208,293 | | Total current assets | $949,425 | $1,020,612 | | Goodwill | $1,720,990 | $1,713,354 | | Total assets | $3,594,910 | $3,674,656 | | Total current liabilities | $385,267 | $363,089 | | Long-term debt | $829,044 | $1,067,952 | | Total liabilities | $1,644,553 | $1,915,665 | | Total shareholders' equity | $1,950,357 | $1,758,991 | Condensed Consolidated Statements of Cash Flows Operating cash flow was $247.7 million, with significant cash used for debt repayment, dividends, and share repurchases Cash Flow Summary for Six Months Ended (in thousands) | Activity | April 30, 2021 | April 30, 2020 | |:---|:---:|:---:| | Net cash provided by operating activities | $247,714 | $218,179 | | Net cash used in investing activities | ($13,681) | ($27,731) | | Net cash used in financing activities | ($310,333) | ($30,987) | | Effect of exchange rate changes on cash | $1,327 | ($4,370) | | Net (decrease) increase in cash | ($74,973) | $155,091 | Notes to Condensed Consolidated Financial Statements The notes detail key accounting policies, recent acquisitions and divestitures, segment realignment, and other financial items - On February 1, 2021, the company completed the sale of its screws and barrels product line, which was part of the Industrial Precision Solutions segment; an impairment charge of $87.4 million was recorded in 2020 related to this divestiture[42][44] - The company acquired vivaMOS Ltd. in September 2020 for $17.2 million and Fluortek, Inc. in June 2020 for $125.3 million; both acquisitions are reported in the Advanced Technology Solutions segment[40][41] - The company realigned its structure from three to two operating segments in Q2 2020: Industrial Precision Solutions (IPS) and Advanced Technology Solutions (ATS)[76] Segment Operating Profit (in thousands) | Segment | Three Months Ended April 30, 2021 | Three Months Ended April 30, 2020 | Six Months Ended April 30, 2021 | Six Months Ended April 30, 2020 | |:---|:---:|:---:|:---:|:---:| | Industrial Precision Solutions | $104,283 | $76,454 | $187,686 | $132,858 | | Advanced Technology Solutions | $76,585 | $58,689 | $123,786 | $90,976 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong financial performance driven by organic sales growth and provides an optimistic outlook for fiscal year 2021 - The company continues to operate all production facilities during the COVID-19 pandemic, supporting critical infrastructure sectors; while facing some manufacturing inefficiencies and supply chain disruptions, the company's diversification has provided resilience[99] Full Year 2021 Outlook | Metric | Forecast Range | |:---|:---:| | Full Year Sales Growth (vs. 2020) | 8% to 10% | | Full Year Diluted EPS | $7.20 to $7.50 | Results of Operations Sales grew significantly due to strong organic volume, while profitability improved from higher sales and a favorable divestiture impact - Gross margin for Q2 2021 increased to 57.3% from 54.7% YoY, with 1.8 percentage points of the improvement attributed to the divestiture of the screws and barrel product line[104] Q2 2021 Sales Growth Components | Component | Contribution | |:---|:---:| | Organic Sales Volume | +10.4% | | Currency Translation | +3.7% | | Acquisitions/Divestitures (Net) | -2.8% | | Total Sales Growth | +11.3% | H1 2021 Sales Growth Components | Component | Contribution | |:---|:---:| | Organic Sales Volume | +7.0% | | Currency Translation | +3.3% | | Acquisitions/Divestitures (Net) | -1.3% | | Total Sales Growth | +9.0% | Financial Condition Strong operating cash flow was primarily used for net debt repayment of $250.1 million, dividends, and share repurchases - Long-term debt decreased by $238.9 million from October 31, 2020, mainly due to the full repayment of the term loan due in 2024[130] - Pension obligations decreased by $56.5 million, primarily due to pension contributions made during the second quarter of 2021[130] Quantitative and Qualitative Disclosures About Market Risk Market risk exposures for interest rates and foreign currency exchange rates have not materially changed since the 2020 Form 10-K - Information regarding financial instruments sensitive to interest rate and foreign currency exchange rate changes has not materially changed since the 2020 Form 10-K[136] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective as of April 30, 2021[137] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[138] PART II – OTHER INFORMATION Legal Proceedings The company refers to the 'Contingencies' note for legal matters, which are not expected to have a material adverse effect - For discussion of legal matters, the report refers to the Contingencies note in the financial statements[141] Risk Factors The report refers to the 2020 Form 10-K for risk factors, noting they may be exacerbated by the COVID-19 pandemic - The company advises that risk factors disclosed in the 2020 Form 10-K should be considered, and notes that the COVID-19 pandemic may exacerbate these risks[142] Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 114,598 common shares in Q2 2021, with $422.3 million remaining available for future repurchases - As of April 30, 2021, approximately $422.3 million remained available for share repurchases under the company's authorized programs[143] Common Stock Repurchases (Q2 2021) | Period | Total Shares Purchased | Average Price Paid per Share | |:---|:---:|:---:| | February 2021 | 50,527 | $186.48 | | March 2021 | 36,834 | $198.57 | | April 2021 | 27,237 | $205.45 | | Total | 114,598 | - | Exhibits This section lists all exhibits filed with the Form 10-Q, including agreements, plans, and required officer certifications