FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
January 31, 2021
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Ohio |
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Title of Each Class | Trading Symbol(s) | Name of Each Exchange | ||||||||||||
Common Shares, without par value |
| NDSN | Nasdaq Stock Market LLC |
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||||||
Emerging growth company | ☐ |
Nordson Corporation
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ITEM 1. | FINANCIAL STATEMENTS (UNAUDITED) |
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| Three Months Ended |
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| Six Months Ended |
| Three Months Ended | |||||||||||||||||||||||||||||||||||
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| April 30, 2020 |
|
| April 30, 2019 |
|
| April 30, 2020 |
|
| April 30, 2019 |
| January 31, 2021 | January 31, 2020 | ||||||||||||||||||||||||||||
(In thousands, except for per share data) |
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| (In thousands, except for per share data) | |||||||||||||||||||||||||
Sales |
| $ | 529,478 |
|
| $ | 551,119 |
|
| $ | 1,024,394 |
|
| $ | 1,049,029 |
| Sales | $ | 526,566 | $ | 494,916 | |||||||||||||||||||||
Operating costs and expenses: |
|
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| Operating costs and expenses: | |||||||||||||||||||||||||
Cost of sales |
|
| 239,880 |
|
|
| 249,590 |
|
|
| 471,602 |
|
|
| 478,524 |
| Cost of sales | 236,606 | 231,722 | |||||||||||||||||||||||
Selling and administrative expenses |
|
| 164,569 |
|
|
| 172,633 |
|
|
| 352,670 |
|
|
| 357,328 |
| Selling and administrative expenses | 180,935 | 188,101 | |||||||||||||||||||||||
|
|
| 404,449 |
|
|
| 422,223 |
|
|
| 824,272 |
|
|
| 835,852 |
| 417,541 | 419,823 | ||||||||||||||||||||||||
Operating profit |
|
| 125,029 |
|
|
| 128,896 |
|
|
| 200,122 |
|
|
| 213,177 |
| Operating profit | 109,025 | 75,093 | |||||||||||||||||||||||
Other income (expense): |
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|
|
|
|
|
|
|
|
|
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|
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|
|
| Other income (expense): | |||||||||||||||||||||||||
Interest expense |
|
| (8,293 | ) |
|
| (12,372 | ) |
|
| (18,034 | ) |
|
| (24,738 | ) | Interest expense | (6,932) | (9,740) | |||||||||||||||||||||||
Interest and investment income |
|
| 278 |
|
|
| 325 |
|
|
| 867 |
|
|
| 642 |
| Interest and investment income | 380 | 588 | |||||||||||||||||||||||
Other - net |
|
| (429 | ) |
|
| (568 | ) |
|
| (3,275 | ) |
|
| (4,757 | ) | Other - net | (4,661) | (2,846) | |||||||||||||||||||||||
|
|
| (8,444 | ) |
|
| (12,615 | ) |
|
| (20,442 | ) |
|
| (28,853 | ) | (11,213) | (11,998) | ||||||||||||||||||||||||
Income before income taxes |
|
| 116,585 |
|
|
| 116,281 |
|
|
| 179,680 |
|
|
| 184,324 |
| Income before income taxes | 97,812 | 63,095 | |||||||||||||||||||||||
Income taxes |
|
| 24,506 |
|
|
| 24,358 |
|
|
| 35,597 |
|
|
| 43,834 |
| Income taxes | 20,230 | 11,091 | |||||||||||||||||||||||
Net income |
| $ | 92,079 |
|
| $ | 91,923 |
|
| $ | 144,083 |
|
| $ | 140,490 |
| Net income | $ | 77,582 | $ | 52,004 | |||||||||||||||||||||
Average common shares |
|
| 57,677 |
|
|
| 57,288 |
|
|
| 57,672 |
|
|
| 57,498 |
| Average common shares | 58,059 | 57,668 | |||||||||||||||||||||||
Incremental common shares attributable to outstanding stock options, restricted stock, and deferred stock-based compensation |
|
| 583 |
|
|
| 768 |
|
|
| 720 |
|
|
| 719 |
| ||||||||||||||||||||||||||
Incremental common shares attributable to equity compensation | Incremental common shares attributable to equity compensation | 696 | 856 | |||||||||||||||||||||||||||||||||||||||
Average common shares and common share equivalents |
|
| 58,260 |
|
|
| 58,056 |
|
|
| 58,392 |
|
|
| 58,217 |
| Average common shares and common share equivalents | 58,755 | 58,524 | |||||||||||||||||||||||
Basic earnings per share |
| $ | 1.60 |
|
| $ | 1.60 |
|
| $ | 2.50 |
|
| $ | 2.44 |
| Basic earnings per share | $ | 1.34 | $ | 0.90 | |||||||||||||||||||||
Diluted earnings per share |
| $ | 1.58 |
|
| $ | 1.58 |
|
| $ | 2.47 |
|
| $ | 2.41 |
| Diluted earnings per share | $ | 1.32 | $ | 0.89 |
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| Three Months Ended |
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| Six Months Ended |
| Three Months Ended | |||||||||||||||||||||||||||||||||||
|
| April 30, 2020 |
|
| April 30, 2019 |
|
| April 30, 2020 |
|
| April 30, 2019 |
| January 31, 2021 | January 31, 2020 | ||||||||||||||||||||||||||||
(In thousands) |
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| (In thousands) | |||||||||||||||||||||||||
Net income |
| $ | 92,079 |
|
| $ | 91,923 |
|
| $ | 144,083 |
|
| $ | 140,490 |
| Net income | $ | 77,582 | $ | 52,004 | |||||||||||||||||||||
Components of other comprehensive income (loss): |
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Components of other comprehensive income: | Components of other comprehensive income: | |||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments |
|
| (21,227 | ) |
|
| (9,064 | ) |
|
| (18,434 | ) |
|
| 7,399 |
| Foreign currency translation adjustments | 28,433 | 2,793 | |||||||||||||||||||||||
Amortization of prior service cost and net actuarial losses, net of tax |
|
| 3,898 |
|
|
| 1,598 |
|
|
| 7,127 |
|
|
| 2,950 |
| Amortization of prior service cost and net actuarial losses, net of tax | 2,997 | 3,229 | |||||||||||||||||||||||
Total other comprehensive income (loss) |
|
| (17,329 | ) |
|
| (7,466 | ) |
|
| (11,307 | ) |
|
| 10,349 |
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Total other comprehensive income | Total other comprehensive income | 31,430 | 6,022 | |||||||||||||||||||||||||||||||||||||||
Total comprehensive income |
| $ | 74,750 |
|
| $ | 84,457 |
|
| $ | 132,776 |
|
| $ | 150,839 |
| Total comprehensive income | $ | 109,012 | $ | 58,026 |
|
| April 30, 2020 |
|
| October 31, 2019 |
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(In thousands) |
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| (In thousands) | |||||||||||||
Assets |
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| Assets | |||||||||||||
Current assets: |
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| Current assets: | January 31, 2021 | October 31, 2020 | |||||||||||
Cash and cash equivalents |
| $ | 306,255 |
|
| $ | 151,164 |
| Cash and cash equivalents | $ | 225,738 | $ | 208,293 | |||||||||
Receivables - net |
|
| 474,913 |
|
|
| 530,765 |
| Receivables - net | 455,376 | 471,873 | |||||||||||
Inventories - net |
|
| 312,118 |
|
|
| 283,399 |
| Inventories - net | 282,440 | 277,033 | |||||||||||
Prepaid expenses and other current assets |
|
| 49,990 |
|
|
| 45,867 |
| Prepaid expenses and other current assets | 45,124 | 43,798 | |||||||||||
Assets held for sale | Assets held for sale | 19,451 | 19,615 | |||||||||||||||||||
Total current assets |
|
| 1,143,276 |
|
|
| 1,011,195 |
| Total current assets | 1,028,129 | 1,020,612 | |||||||||||
Property, plant and equipment - net |
|
| 400,103 |
|
|
| 398,895 |
| Property, plant and equipment - net | 358,670 | 358,618 | |||||||||||
Operating right of use lease assets |
|
| 126,129 |
|
|
| — |
| Operating right of use lease assets | 123,041 | 122,125 | |||||||||||
Goodwill |
|
| 1,611,340 |
|
|
| 1,614,739 |
| Goodwill | 1,722,824 | 1,713,354 | |||||||||||
Intangible assets - net |
|
| 416,877 |
|
|
| 445,575 |
| Intangible assets - net | 396,935 | 407,586 | |||||||||||
Deferred income taxes |
|
| 10,841 |
|
|
| 11,261 |
| Deferred income taxes | 9,926 | 9,831 | |||||||||||
Other assets |
|
| 34,338 |
|
|
| 34,782 |
| Other assets | 43,876 | 42,530 | |||||||||||
Total assets |
| $ | 3,742,904 |
|
| $ | 3,516,447 |
| Total assets | $ | 3,683,401 | $ | 3,674,656 | |||||||||
Liabilities and shareholders' equity |
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| Liabilities and shareholders' equity | |||||||||||||
Current liabilities: |
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|
|
|
|
|
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| Current liabilities: | |||||||||||||
Accounts payable |
| $ | 79,785 |
|
| $ | 85,139 |
| Accounts payable | $ | 74,148 | $ | 70,949 | |||||||||
Income taxes payable |
|
| 15,663 |
|
|
| 15,601 |
| Income taxes payable | 8,238 | 7,841 | |||||||||||
Accrued liabilities |
|
| 146,090 |
|
|
| 161,655 |
| Accrued liabilities | 150,751 | 167,883 | |||||||||||
Customer advanced payments |
|
| 50,453 |
|
|
| 41,131 |
| Customer advanced payments | 50,934 | 42,323 | |||||||||||
Current maturities of long-term debt |
|
| 43,598 |
|
|
| 168,738 |
| Current maturities of long-term debt | 38,043 | 38,043 | |||||||||||
Operating lease liability - current |
|
| 18,428 |
|
|
| — |
| Operating lease liability - current | 17,215 | 16,918 | |||||||||||
Finance lease liability - current |
|
| 6,172 |
|
|
| 5,362 |
| Finance lease liability - current | 6,069 | 5,984 | |||||||||||
Liabilities held for sale | Liabilities held for sale | 14,211 | 13,148 | |||||||||||||||||||
Total current liabilities |
|
| 360,189 |
|
|
| 477,626 |
| Total current liabilities | 359,609 | 363,089 | |||||||||||
Long-term debt |
|
| 1,237,225 |
|
|
| 1,075,404 |
| Long-term debt | 981,284 | 1,067,952 | |||||||||||
Operating lease liability - noncurrent |
|
| 111,836 |
|
|
| — |
| Operating lease liability - noncurrent | 109,839 | 109,317 | |||||||||||
Finance lease liability - noncurrent |
|
| 11,100 |
|
|
| 9,513 |
| Finance lease liability - noncurrent | 10,806 | 10,470 | |||||||||||
Deferred income taxes |
|
| 83,730 |
|
|
| 83,564 |
| Deferred income taxes | 67,912 | 66,995 | |||||||||||
Pension obligations |
|
| 158,285 |
|
|
| 158,506 |
| Pension obligations | 165,831 | 165,529 | |||||||||||
Postretirement obligations |
|
| 86,950 |
|
|
| 86,368 |
| Postretirement obligations | 85,358 | 85,249 | |||||||||||
Other long-term liabilities |
|
| 41,095 |
|
|
| 44,421 |
| Other long-term liabilities | 45,579 | 47,064 | |||||||||||
Shareholders' equity: |
|
|
|
|
|
|
|
| Shareholders' equity: | |||||||||||||
Common shares |
|
| 12,253 |
|
|
| 12,253 |
| Common shares | 12,253 | 12,253 | |||||||||||
Capital in excess of stated value |
|
| 503,841 |
|
|
| 483,116 |
| Capital in excess of stated value | 551,266 | 534,684 | |||||||||||
Retained earnings |
|
| 2,847,756 |
|
|
| 2,747,650 |
| Retained earnings | 2,963,252 | 2,908,738 | |||||||||||
Accumulated other comprehensive loss |
|
| (243,188 | ) |
|
| (231,881 | ) | Accumulated other comprehensive loss | (194,688) | (226,118) | |||||||||||
Common shares in treasury, at cost |
|
| (1,468,168 | ) |
|
| (1,430,093 | ) | Common shares in treasury, at cost | (1,474,900) | (1,470,566) | |||||||||||
Total shareholders' equity |
|
| 1,652,494 |
|
|
| 1,581,045 |
| Total shareholders' equity | 1,857,183 | 1,758,991 | |||||||||||
Total liabilities and shareholders' equity |
| $ | 3,742,904 |
|
| $ | 3,516,447 |
| Total liabilities and shareholders' equity | $ | 3,683,401 | $ | 3,674,656 |
|
| Three and Six Month Period Ended April 30, 2020 |
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(In thousands, except for per share data) |
| Common Shares |
|
| Additional Paid-in Capital |
|
| Retained Earnings |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Common Shares in Treasury, at cost |
|
| TOTAL |
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November 1, 2019 |
| $ | 12,253 |
|
| $ | 483,116 |
|
| $ | 2,747,650 |
|
| $ | (231,881 | ) |
| $ | (1,430,093 | ) |
| $ | 1,581,045 |
|
Shares issued under company stock and employee benefit plans |
|
| — |
|
|
| 12,330 |
|
|
| — |
|
|
| — |
|
|
| 4,049 |
|
|
| 16,379 |
|
Stock-based compensation |
|
| — |
|
|
| 6,105 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6,105 |
|
Purchase of treasury shares (26,223 shares) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (4,311 | ) |
|
| (4,311 | ) |
Dividends declared ($0.38 per share) |
|
| — |
|
|
| — |
|
|
| (21,915 | ) |
|
| — |
|
|
| — |
|
|
| (21,915 | ) |
Net income |
|
| — |
|
|
| — |
|
|
| 52,004 |
|
|
| — |
|
|
| — |
|
|
| 52,004 |
|
Impact of adoption of ASU 2016-02 (See Note 2) |
|
| — |
|
|
| — |
|
|
| (1,055 | ) |
|
| — |
|
|
| — |
|
|
| (1,055 | ) |
Other Comprehensive Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2,793 |
|
|
| — |
|
|
| 2,793 |
|
Defined benefit pension and post-retirement plans adjustment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,229 |
|
|
| — |
|
|
| 3,229 |
|
January 31, 2020 |
| $ | 12,253 |
|
| $ | 501,551 |
|
| $ | 2,776,684 |
|
| $ | (225,859 | ) |
| $ | (1,430,355 | ) |
| $ | 1,634,274 |
|
Shares issued under company stock and employee benefit plans |
|
| — |
|
|
| 2,362 |
|
|
| — |
|
|
| — |
|
|
| (194 | ) |
|
| 2,168 |
|
Stock-based compensation |
|
| — |
|
|
| (72 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (72 | ) |
Purchase of treasury shares (300,894 shares) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (37,619 | ) |
|
| (37,619 | ) |
Dividends declared ($0.38 per share) |
|
| — |
|
|
| — |
|
|
| (21,963 | ) |
|
| — |
|
|
| — |
|
|
| (21,963 | ) |
Net Income |
|
| — |
|
|
| — |
|
|
| 92,079 |
|
|
| — |
|
|
| — |
|
|
| 92,079 |
|
Impact of adoption of ASU 2016-02 (See Note 2) |
|
|
|
|
|
|
|
|
|
| 956 |
|
|
|
|
|
|
|
|
|
|
| 956 |
|
Other Comprehensive Income (Loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (21,227 | ) |
|
| — |
|
|
| (21,227 | ) |
Defined benefit pension and post-retirement plans adjustment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 3,898 |
|
|
| — |
|
|
| 3,898 |
|
April 30, 2020 |
| $ | 12,253 |
|
| $ | 503,841 |
|
| $ | 2,847,756 |
|
| $ | (243,188 | ) |
| $ | (1,468,168 | ) |
| $ | 1,652,494 |
|
Three Month Period Ended January 31, 2021 | ||||||||||||||||||||||||||||||||||||||
(In thousands, except for per share data) | Common Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Common Shares in Treasury, at cost | TOTAL | ||||||||||||||||||||||||||||||||
November 1, 2020 | $ | 12,253 | $ | 534,684 | $ | 2,908,738 | $ | (226,118) | $ | (1,470,566) | $ | 1,758,991 | ||||||||||||||||||||||||||
Shares issued under company stock and employee benefit plans | — | 6,462 | — | — | 976 | 7,438 | ||||||||||||||||||||||||||||||||
Stock-based compensation | — | 10,120 | — | — | — | 10,120 | ||||||||||||||||||||||||||||||||
Purchase of treasury shares (27,347 shares) | — | — | — | — | (5,310) | (5,310) | ||||||||||||||||||||||||||||||||
Dividends declared ($0.39 per share) | — | — | (22,672) | — | — | (22,672) | ||||||||||||||||||||||||||||||||
Net income | — | — | 77,582 | — | — | 77,582 | ||||||||||||||||||||||||||||||||
Impact of adoption of ASU 2016-13 | — | — | (396) | — | — | (396) | ||||||||||||||||||||||||||||||||
Other Comprehensive Income: | ||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | 28,433 | — | 28,433 | ||||||||||||||||||||||||||||||||
Defined benefit pension and post-retirement plans adjustment | — | — | — | 2,997 | — | 2,997 | ||||||||||||||||||||||||||||||||
January 31, 2021 | $ | 12,253 | $ | 551,266 | $ | 2,963,252 | $ | (194,688) | $ | (1,474,900) | $ | 1,857,183 | ||||||||||||||||||||||||||
|
| Three and Six Month Period Ended April 30, 2019 |
| |||||||||||||||||||||
(In thousands, except for per share data) |
| Common Shares |
|
| Additional Paid-in Capital |
|
| Retained Earnings |
|
| Accumulated Other Comprehensive Income (Loss) |
|
| Common Shares in Treasury, at cost |
|
| TOTAL |
| ||||||
November 1, 2018 |
| $ | 12,253 |
|
| $ | 446,555 |
|
| $ | 2,488,375 |
|
| $ | (179,314 | ) |
| $ | (1,317,128 | ) |
| $ | 1,450,741 |
|
Shares issued under company stock and employee benefit plans |
|
| — |
|
|
| 1,016 |
|
|
| — |
|
|
| — |
|
|
| 2,591 |
|
|
| 3,607 |
|
Stock-based compensation |
|
| — |
|
|
| 4,359 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,359 |
|
Purchase of treasury shares (901,545 shares) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (107,667 | ) |
|
| (107,667 | ) |
Dividends declared ($0.35 per share) |
|
| — |
|
|
| — |
|
|
| (20,210 | ) |
|
| — |
|
|
| — |
|
|
| (20,210 | ) |
Net income |
|
| — |
|
|
| — |
|
|
| 48,567 |
|
|
| — |
|
|
| — |
|
|
| 48,567 |
|
Impact of adoption of ASU 2014-09 |
|
| — |
|
|
| — |
|
|
| 4,329 |
|
|
| — |
|
|
| — |
|
|
| 4,329 |
|
Other Comprehensive Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 16,463 |
|
|
| — |
|
|
| 16,463 |
|
Defined benefit pension and post-retirement plans adjustment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,352 |
|
|
| — |
|
|
| 1,352 |
|
January 31, 2019 |
| $ | 12,253 |
|
| $ | 451,930 |
|
| $ | 2,521,061 |
|
| $ | (161,499 | ) |
| $ | (1,422,204 | ) |
| $ | 1,401,541 |
|
Shares issued under company stock and employee benefit plans |
|
| — |
|
|
| 8,116 |
|
|
| — |
|
|
| — |
|
|
| 2,731 |
|
|
| 10,847 |
|
Stock-based compensation |
|
| — |
|
|
| 4,869 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 4,869 |
|
Purchase of treasury shares (78,957 shares) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (10,422 | ) |
|
| (10,422 | ) |
Dividends declared ($0.35 per share) |
|
| — |
|
|
| — |
|
|
| (20,029 | ) |
|
| — |
|
|
| — |
|
|
| (20,029 | ) |
Net Income |
|
| — |
|
|
| — |
|
|
| 91,923 |
|
|
| — |
|
|
| — |
|
|
| 91,923 |
|
Other Comprehensive Income (Loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (9,064 | ) |
|
| — |
|
|
| (9,064 | ) |
Defined benefit pension and post-retirement plans adjustment |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1,598 |
|
|
| — |
|
|
| 1,598 |
|
April 30, 2019 |
| $ | 12,253 |
|
| $ | 464,915 |
|
| $ | 2,592,955 |
|
| $ | (168,965 | ) |
| $ | (1,429,895 | ) |
| $ | 1,471,263 |
|
Three Month Period Ended January 31, 2020 | ||||||||||||||||||||||||||||||||||||||
(In thousands, except for per share data) | Common Shares | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Common Shares in Treasury, at cost | TOTAL | ||||||||||||||||||||||||||||||||
November 1, 2019 | $ | 12,253 | $ | 483,116 | $ | 2,747,650 | $ | (231,881) | $ | (1,430,093) | $ | 1,581,045 | ||||||||||||||||||||||||||
Shares issued under company stock and employee benefit plans | — | 12,330 | — | — | 4,049 | 16,379 | ||||||||||||||||||||||||||||||||
Stock-based compensation | — | 6,105 | — | — | — | 6,105 | ||||||||||||||||||||||||||||||||
Purchase of treasury shares (26,223 shares) | — | — | — | — | (4,311) | (4,311) | ||||||||||||||||||||||||||||||||
Dividends declared ($0.38 per share) | — | — | (21,915) | — | — | (21,915) | ||||||||||||||||||||||||||||||||
Net income | — | — | 52,004 | — | — | 52,004 | ||||||||||||||||||||||||||||||||
Impact of adoption of ASU 2016-02 | — | — | (1,055) | — | — | (1,055) | ||||||||||||||||||||||||||||||||
Other Comprehensive Income: | ||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustments | — | — | — | 2,793 | — | 2,793 | ||||||||||||||||||||||||||||||||
Defined benefit pension and post-retirement plans adjustment | — | — | — | 3,229 | — | 3,229 | ||||||||||||||||||||||||||||||||
January 31, 2020 | $ | 12,253 | $ | 501,551 | $ | 2,776,684 | $ | (225,859) | $ | (1,430,355) | $ | 1,634,274 | ||||||||||||||||||||||||||
Six months ended |
| April 30, 2020 |
|
| April 30, 2019 |
| ||||||||||||||||
(In thousands) |
|
|
|
|
|
|
|
| (In thousands) | Three Months Ended | ||||||||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
| Cash flows from operating activities: | January 31, 2021 | January 31, 2020 | |||||||||||
Net income |
| $ | 144,083 |
|
| $ | 140,490 |
| Net income | $ | 77,582 | $ | 52,004 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||
Depreciation and amortization |
|
| 55,664 |
|
|
| 55,488 |
| Depreciation and amortization | 26,020 | 28,618 | |||||||||||
Non-cash stock compensation |
|
| 6,033 |
|
|
| 9,228 |
| Non-cash stock compensation | 10,120 | 6,105 | |||||||||||
Deferred income taxes |
|
| (5,932 | ) |
|
| (828 | ) | Deferred income taxes | (373) | (182) | |||||||||||
Other non-cash expense |
|
| 2,166 |
|
|
| 1,213 |
| Other non-cash expense | 163 | 1,135 | |||||||||||
Loss on sale of property, plant and equipment |
|
| 237 |
|
|
| 884 |
| Loss on sale of property, plant and equipment | 361 | 109 | |||||||||||
Changes in operating assets and liabilities |
|
| 15,928 |
|
|
| (44,563 | ) | Changes in operating assets and liabilities | 29,416 | 28,486 | |||||||||||
Net cash provided by operating activities |
|
| 218,179 |
|
|
| 161,912 |
| Net cash provided by operating activities | 143,289 | 116,275 | |||||||||||
Cash flows from investing activities: |
|
|
|
|
|
|
|
| Cash flows from investing activities: | |||||||||||||
Additions to property, plant and equipment |
|
| (25,835 | ) |
|
| (26,603 | ) | Additions to property, plant and equipment | (7,917) | (13,881) | |||||||||||
Proceeds from sale of property, plant and equipment |
|
| 104 |
|
|
| 984 |
| Proceeds from sale of property, plant and equipment | 22 | 65 | |||||||||||
Equity investments |
|
| (2,000 | ) |
|
| — |
| ||||||||||||||
Acquisition of businesses, net of cash acquired |
|
| — |
|
|
| (69 | ) | ||||||||||||||
Net cash used in investing activities |
|
| (27,731 | ) |
|
| (25,688 | ) | Net cash used in investing activities | (7,895) | (13,816) | |||||||||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
| Cash flows from financing activities: | |||||||||||||
Proceeds from long-term debt |
|
| 165,773 |
|
|
| 186,084 |
| ||||||||||||||
Repayment of long-term debt |
|
| (125,951 | ) |
|
| (125,807 | ) | Repayment of long-term debt | (100,000) | (125,951) | |||||||||||
Repayment of finance lease obligations |
|
| (3,548 | ) |
|
| (2,963 | ) | Repayment of finance lease obligations | (1,734) | (2,421) | |||||||||||
Issuance of common shares |
|
| 18,547 |
|
|
| 14,454 |
| Issuance of common shares | 7,438 | 16,379 | |||||||||||
Purchase of treasury shares |
|
| (41,930 | ) |
|
| (118,089 | ) | Purchase of treasury shares | (5,310) | (4,311) | |||||||||||
Dividends paid |
|
| (43,878 | ) |
|
| (40,239 | ) | Dividends paid | (22,672) | (21,915) | |||||||||||
Net cash used in financing activities |
|
| (30,987 | ) |
|
| (86,560 | ) | Net cash used in financing activities | (122,278) | (138,219) | |||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||
Effect of exchange rate changes on cash |
|
| (4,370 | ) |
|
| 3,841 |
| Effect of exchange rate changes on cash | 4,329 | (307) | |||||||||||
Increase in cash and cash equivalents |
|
| 155,091 |
|
|
| 53,505 |
| ||||||||||||||
Cash and cash equivalents: |
|
|
|
|
|
|
|
| ||||||||||||||
Beginning of year |
|
| 151,164 |
|
|
| 95,678 |
| ||||||||||||||
End of period |
| $ | 306,255 |
|
| $ | 149,183 |
| ||||||||||||||
Increase (decrease) in cash and cash equivalents | Increase (decrease) in cash and cash equivalents | 17,445 | (36,067) | |||||||||||||||||||
Cash and cash equivalents at beginning of period | Cash and cash equivalents at beginning of period | 208,293 | 151,164 | |||||||||||||||||||
Cash and cash equivalents at end of period | Cash and cash equivalents at end of period | $ | 225,738 | $ | 115,097 |
April 30, 2020
Unless the context otherwise indicates, all references to “we” or the “Company” mean Nordson Corporation.
|
|
Page 8
Nordson Corporation
Certain arrangements may include installation, installation supervision, training, and spare parts, which tend to be completed in a short period of time, at an insignificant cost, and utilizing skills not unique to us, and, therefore, are typically regarded as inconsequential or not material.
Operating Segments note.
|
|
On November 1, 2019, we adopted ASU 2016-02, Accounting Standards Codification (ASC) 842, “Leases.” This standard requires a lessee to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases with a lease term of more than 12 months. We elected to use the transition option, which allows entities to initially apply the new standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption without restating prior periods. We elected the practical expedient package related to the identification of leases in contracts, lease classification, and accounting for initial direct costs whereby prior conclusions do not have to be reassessed for leases that commenced before the effective date. As we have not reassessed such conclusions, we did not adopt the practical expedient to use hindsight to determine the likelihood of whether a lease will be extended or terminated, to separate non-lease components within our lease portfolios, or whether a purchase option will be exercised. There was not a material cumulative-effect adjustment to our beginning retained earnings for the adoption of this standard. Upon adoption, we recognized operating right-of-use assets and lease liabilities in our Consolidated Balance Sheet of $130,583 and $134,853 as of November 1, 2019, respectively, and operating right-of-use assets and lease liabilities were $126,129 and $130,264 as of April 30, 2020, respectively. Adoption of the new standard did not have a material impact on our Consolidated Statements of Income and Cash Flows. Refer to Note 14 for further discussion of leases.
New accounting guidance issued and not yet adopted:
Page 9
Nordson Corporation
measurements held at the end of the reporting period as well as the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. It will be effective for us beginningWe adopted the new standard on November 1, 2020. Early adoption is permitted. We currently do not expect this standard will have a2020 with no material impact on ourto the Consolidated Financial Statements.
In August 2018, the FASB
not yet adopted:
|
|
2019 acquisition
2018 acquisitions
On October 17, 2018, we purchased 100 percent of the outstanding shares of Cladach Nua Teoranta (“Clada”vivaMOS Ltd. ("vivaMOS"), a Galway, Ireland designerdeveloper and developer primarily focused on medical balloons and balloon catheters. Clada’s technologies are used in key applications such as angioplasty and the treatmentfabricator of vascular disease.high-end large-area complementary metal–oxide–semiconductor (CMOS) image sensors for a wide range of X-ray applications. We acquired CladavivaMOS for an aggregate purchase price of $5,236, which included an earn-out liability$17,154, net of $1,131.cash and other closing adjustments of approximately $158, utilizing cash on hand. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $3,776$14,394 and identifiable intangible assets of $697$4,040 were recorded. The identifiable intangible assets consist primarily of $58 of customer relationships (amortized over 6 years), $70 of tradenames (amortized over 9 years), $499$3,900 of technology (amortized over 710 years) and $70$140 of non-compete agreements (amortized over 3 years). Goodwill associated with this acquisition is not tax deductible. This acquisition is being reported in our Advanced Technology Solutions segment.
Page 10
Nordson Corporation
segment and the results of vivaMOS are not material to our Consolidated Financial Statements. As of January 31, 2021, the purchase price allocation remains preliminary as we complete our assessments of income taxes.
|
|
At April 30,
January 31, 2021 | October 31, 2020 | ||||||||||||||||
Receivables - net | $ | 9,883 | $ | 14,327 | |||||||||||||
Inventories - net | 11,399 | 9,854 | |||||||||||||||
Prepaid expenses and other current assets | 1,424 | 696 | |||||||||||||||
Property, plant and equipment - net | 59,260 | 58,950 | |||||||||||||||
Other assets | 24,016 | 23,159 | |||||||||||||||
Impairment on carrying value | (86,531) | (87,371) | |||||||||||||||
Assets held for sale | $ | 19,451 | $ | 19,615 | |||||||||||||
Accounts payable | $ | 5,010 | $ | 4,625 | |||||||||||||
Accrued liabilities | 4,315 | 3,352 | |||||||||||||||
Other liabilities | 4,886 | 5,171 | |||||||||||||||
Liabilities held for sale | $ | 14,211 | $ | 13,148 |
|
| April 30, 2020 |
|
| October 31, 2019 |
| January 31, 2021 | October 31, 2020 | ||||||||||||||
Finished goods |
| $ | 197,276 |
|
| $ | 183,973 |
| Finished goods | $ | 184,065 | $ | 183,860 | |||||||||
Raw materials and component parts |
|
| 107,065 |
|
|
| 102,044 |
| Raw materials and component parts | 100,496 | 94,630 | |||||||||||
Work-in-process |
|
| 55,611 |
|
|
| 42,904 |
| Work-in-process | 47,345 | 44,403 | |||||||||||
|
|
| 359,952 |
|
|
| 328,921 |
| 331,906 | 322,893 | ||||||||||||
Obsolescence and other reserves |
|
| (42,528 | ) |
|
| (39,377 | ) | Obsolescence and other reserves | (44,471) | (41,315) | |||||||||||
LIFO reserve |
|
| (5,306 | ) |
|
| (6,145 | ) | LIFO reserve | (4,995) | (4,545) | |||||||||||
|
| $ | 312,118 |
|
| $ | 283,399 |
| $ | 282,440 | $ | 277,033 |
|
|
January 31, 2021 | October 31, 2020 | ||||||||||
Land | $ | 8,883 | $ | 8,816 | |||||||
Land improvements | 4,631 | 4,611 | |||||||||
Buildings | 256,886 | 253,621 | |||||||||
Machinery and equipment | 476,264 | 464,171 | |||||||||
Enterprise management system | 51,697 | 56,103 | |||||||||
Construction-in-progress | 32,391 | 29,897 | |||||||||
Leased property under capitalized leases | 34,283 | 32,590 | |||||||||
865,035 | 849,809 | ||||||||||
Accumulated depreciation and amortization | (506,365) | (491,191) | |||||||||
$ | 358,670 | $ | 358,618 |
|
| Industrial Precision Solutions |
|
| Advanced Technology Solutions |
|
| Total |
| |||
Balance at October 31, 2019 |
| $ | 411,461 |
|
| $ | 1,203,278 |
|
| $ | 1,614,739 |
|
Currency effect |
|
| (1,954 | ) |
|
| (1,445 | ) |
|
| (3,399 | ) |
Balance at April 30, 2020 |
| $ | 409,507 |
|
| $ | 1,201,833 |
|
| $ | 1,611,340 |
|
Industrial Precision Solutions | Advanced Technology Solutions | Total | ||||||||||||||||||
Balance at October 31, 2020 | $ | 415,862 | $ | 1,297,492 | $ | 1,713,354 | ||||||||||||||
Currency effect | 4,614 | 4,856 | 9,470 | |||||||||||||||||
Balance at January 31, 2021 | $ | 420,476 | $ | 1,302,348 | $ | 1,722,824 |
As part
|
| April 30, 2020 |
| January 31, 2021 | ||||||||||||||||||||||||||||
|
| Carrying Amount |
|
| Accumulated Amortization |
|
| Net Book Value |
| Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||||||||||||
Customer relationships |
| $ | 478,457 |
|
| $ | 191,300 |
|
| $ | 287,157 |
| Customer relationships | $ | 487,336 | $ | 204,435 | $ | 282,901 | |||||||||||||
Patent/technology costs |
|
| 154,018 |
|
|
| 77,121 |
|
|
| 76,897 |
| Patent/technology costs | 155,455 | 81,205 | 74,250 | ||||||||||||||||
Trade name |
|
| 96,437 |
|
|
| 44,495 |
|
|
| 51,942 |
| Trade name | 74,737 | 36,250 | 38,487 | ||||||||||||||||
Non-compete agreements |
|
| 11,490 |
|
|
| 10,614 |
|
|
| 876 |
| Non-compete agreements | 10,031 | 8,734 | 1,297 | ||||||||||||||||
Other |
|
| 1,398 |
|
|
| 1,393 |
|
|
| 5 |
| Other | 1,404 | 1,404 | 0 | ||||||||||||||||
Total |
| $ | 741,800 |
|
| $ | 324,923 |
|
| $ | 416,877 |
| Total | $ | 728,963 | $ | 332,028 | $ | 396,935 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
|
| October 31, 2019 |
| October 31, 2020 | ||||||||||||||||||||||||||||
|
| Carrying Amount |
|
| Accumulated Amortization |
|
| Net Book Value |
| Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||||||||||||
Customer relationships |
| $ | 480,007 |
|
| $ | 173,996 |
|
| $ | 306,011 |
| Customer relationships | $ | 483,568 | $ | 193,617 | $ | 289,951 | |||||||||||||
Patent/technology costs |
|
| 154,735 |
|
|
| 71,663 |
|
|
| 83,072 |
| Patent/technology costs | 153,555 | 76,934 | 76,621 | ||||||||||||||||
Trade name |
|
| 96,655 |
|
|
| 41,303 |
|
|
| 55,352 |
| Trade name | 74,240 | 34,693 | 39,547 | ||||||||||||||||
Non-compete agreements |
|
| 11,540 |
|
|
| 10,406 |
|
|
| 1,134 |
| Non-compete agreements | 9,908 | 8,444 | 1,464 | ||||||||||||||||
Other |
|
| 1,400 |
|
|
| 1,394 |
|
|
| 6 |
| Other | 1,403 | 1,400 | 3 | ||||||||||||||||
Total |
| $ | 744,337 |
|
| $ | 298,762 |
|
| $ | 445,575 |
| Total | $ | 722,674 | $ | 315,088 | $ | 407,586 |
|
|
The components of net periodic pension cost for the three and six months ended April 30,January 31, 2021 and 2020 and 2019 were:
|
| U.S. |
|
| International |
| U.S. | International | ||||||||||||||||||||||||||||||||||
Three Months Ended |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| Three Months Ended | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
Service cost |
| $ | 5,235 |
|
| $ | 3,577 |
|
| $ | 459 |
|
| $ | 486 |
| Service cost | $ | 5,766 | $ | 5,057 | $ | 518 | $ | 571 | |||||||||||||||||
Interest cost |
|
| 4,026 |
|
|
| 4,492 |
|
|
| 251 |
|
|
| 424 |
| Interest cost | 3,340 | 3,918 | 220 | 262 | |||||||||||||||||||||
Expected return on plan assets |
|
| (6,175 | ) |
|
| (5,794 | ) |
|
| (304 | ) |
|
| (407 | ) | Expected return on plan assets | (6,753) | (6,159) | (391) | (330) | |||||||||||||||||||||
Amortization of prior service credit |
|
| (22 | ) |
|
| (15 | ) |
|
| (68 | ) |
|
| (76 | ) | Amortization of prior service credit | (20) | (21) | (77) | (74) | |||||||||||||||||||||
Amortization of net actuarial loss |
|
| 3,622 |
|
|
| 1,544 |
|
|
| 729 |
|
|
| 428 |
| Amortization of net actuarial loss | 3,574 | 3,398 | 790 | 734 | |||||||||||||||||||||
Total benefit cost |
| $ | 6,686 |
|
| $ | 3,804 |
|
| $ | 1,067 |
|
| $ | 855 |
| Total benefit cost | $ | 5,907 | $ | 6,193 | $ | 1,060 | $ | 1,163 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
|
| U.S. |
|
| International |
| ||||||||||||||||||||||||||||||||||||
Six Months Ended |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||||||||||||||||||||||||||||
Service cost |
| $ | 10,293 |
|
| $ | 7,155 |
|
| $ | 1,030 |
|
| $ | 970 |
| ||||||||||||||||||||||||||
Interest cost |
|
| 7,943 |
|
|
| 8,989 |
|
|
| 514 |
|
|
| 846 |
| ||||||||||||||||||||||||||
Expected return on plan assets |
|
| (12,334 | ) |
|
| (11,597 | ) |
|
| (635 | ) |
|
| (807 | ) | ||||||||||||||||||||||||||
Amortization of prior service credit |
|
| (42 | ) |
|
| (30 | ) |
|
| (142 | ) |
|
| (152 | ) | ||||||||||||||||||||||||||
Amortization of net actuarial loss |
|
| 7,019 |
|
|
| 3,088 |
|
|
| 1,462 |
|
|
| 855 |
| ||||||||||||||||||||||||||
Total benefit cost |
| $ | 12,879 |
|
| $ | 7,605 |
|
| $ | 2,229 |
|
| $ | 1,712 |
|
Page 12
Nordson Corporation
|
| U.S. |
|
| International |
| U.S. | International | ||||||||||||||||||||||||||||||||||
Three Months Ended |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| Three Months Ended | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
Service cost |
| $ | 143 |
|
| $ | 165 |
|
| $ | 4 |
|
| $ | 6 |
| Service cost | $ | 176 | $ | 190 | $ | 4 | $ | 4 | |||||||||||||||||
Interest cost |
|
| 558 |
|
|
| 749 |
|
|
| 3 |
|
|
| 6 |
| Interest cost | 454 | 614 | 3 | 3 | |||||||||||||||||||||
Amortization of prior service credit |
|
| (4 | ) |
|
| (6 | ) |
|
| — |
|
|
| — |
| Amortization of prior service credit | 0 | (4) | 0 | 0 | |||||||||||||||||||||
Amortization of net actuarial (gain) loss |
|
| 258 |
|
|
| 152 |
|
|
| (9 | ) |
|
| (9 | ) | Amortization of net actuarial (gain) loss | 347 | 419 | (10) | (9) | |||||||||||||||||||||
Total benefit cost |
| $ | 955 |
|
| $ | 1,060 |
|
| $ | (2 | ) |
| $ | 3 |
| Total benefit cost | $ | 977 | $ | 1,219 | $ | (3) | $ | (2) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
|
| U.S. |
|
| International |
| ||||||||||||||||||||||||||||||||||||
Six Months Ended |
| 2020 |
|
| 2019 |
|
| 2020 |
|
| 2019 |
| ||||||||||||||||||||||||||||||
Service cost |
| $ | 333 |
|
| $ | 331 |
|
| $ | 7 |
|
| $ | 9 |
| ||||||||||||||||||||||||||
Interest cost |
|
| 1,173 |
|
|
| 1,497 |
|
|
| 7 |
|
|
| 11 |
| ||||||||||||||||||||||||||
Amortization of prior service credit |
|
| (8 | ) |
|
| (13 | ) |
|
| — |
|
|
| — |
| ||||||||||||||||||||||||||
Amortization of net actuarial (gain) loss |
|
| 677 |
|
|
| 304 |
|
|
| (18 | ) |
|
| (16 | ) | ||||||||||||||||||||||||||
Total benefit cost |
| $ | 2,175 |
|
| $ | 2,119 |
|
| $ | (4 | ) |
| $ | 4 |
|
|
|
Our income tax provision included a discrete tax benefit of $138 and $2,675higher than the comparable prior year period primarily due to our share-based payment transactions which resulted in discrete tax benefits of $799 and $2,537 for the three and six months ended April 30,January 31, 2021 and 2020, respectively. Our income tax provision included a similar discrete tax benefit of $2,149 and $3,017 for the three and six months ended April 30, 2019, respectively.
During the six months ended April 30, 2019, a discrete tax expense of $4,866 was recorded to update the provisional amounts recognized in 2018 due to changes in interpretations and assumptions and the finalization of estimates related to the U.S. Tax Cuts and Jobs Act.
|
|
|
| Cumulative |
|
| Pension and |
|
| Accumulated |
| |||
|
| translation |
|
| postretirement benefit |
|
| other comprehensive |
| |||
|
| adjustments |
|
| plan adjustments |
|
| loss |
| |||
Balance at October 31, 2019 |
| $ | (53,332 | ) |
| $ | (178,549 | ) |
| $ | (231,881 | ) |
Amortization of prior service costs and net actuarial losses, net of tax of $(2,213) |
|
| — |
|
|
| 7,127 |
|
|
| 7,127 |
|
Foreign currency translation adjustments |
|
| (18,434 | ) |
|
| — |
|
|
| (18,434 | ) |
Balance at April 30, 2020 |
| $ | (71,766 | ) |
| $ | (171,422 | ) |
| $ | (243,188 | ) |
Cumulative translation adjustments | Pension and postretirement benefit plan adjustments | Accumulated other comprehensive loss | ||||||||||||||||||
Balance at October 31, 2020 | $ | (40,422) | $ | (185,696) | $ | (226,118) | ||||||||||||||
Amortization of prior service costs and net actuarial losses, net of tax of ($930) | 0 | 2,997 | 2,997 | |||||||||||||||||
Foreign currency translation adjustments | 28,433 | 0 | 28,433 | |||||||||||||||||
Balance at January 31, 2021 | $ | (11,989) | $ | (182,699) | $ | (194,688) |
|
|
Page 13
Nordson Corporation
|
| Number of Options |
|
| Weighted- Average Exercise Price Per Share |
|
| Aggregate Intrinsic Value |
|
| Weighted Average Remaining Term | |||||||||||||||||||||||||||||
Outstanding at October 31, 2019 |
|
| 1,787 |
|
| $ | 97.74 |
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Number of Options | Weighted- Average Exercise Price Per Share | Aggregate Intrinsic Value | Weighted Average Remaining Term | |||||||||||||||||||||||||||||||||||||
Outstanding at October 31, 2020 | Outstanding at October 31, 2020 | 1,487 | $ | 122.45 | ||||||||||||||||||||||||||||||||||||
Granted |
|
| 370 |
|
| $ | 165.04 |
|
|
|
|
|
|
| Granted | 92 | 201.50 | |||||||||||||||||||||||
Exercised |
|
| (228 | ) |
| $ | 81.40 |
|
|
|
|
|
|
| Exercised | (64) | 116.96 | |||||||||||||||||||||||
Forfeited or expired |
|
| (21 | ) |
| $ | 138.83 |
|
|
|
|
|
|
| Forfeited or expired | (6) | 146.89 | |||||||||||||||||||||||
Outstanding at April 30, 2020 |
|
| 1,908 |
|
| $ | 112.28 |
|
| $ | 94,349 |
|
| 6.9 years | ||||||||||||||||||||||||||
Outstanding at January 31, 2021 | Outstanding at January 31, 2021 | 1,509 | $ | 127.40 | $ | 80,152 | 7.0 years | |||||||||||||||||||||||||||||||||
Expected to vest |
|
| 845 |
|
| $ | 140.24 |
|
| $ | 18,964 |
|
| 8.6 years | Expected to vest | 600 | $ | 156.03 | $ | 16,077 | 8.5 years | |||||||||||||||||||
Exercisable at April 30, 2020 |
|
| 1,047 |
|
| $ | 89.09 |
|
| $ | 75,214 |
|
| 5.6 years | ||||||||||||||||||||||||||
Exercisable at January 31, 2021 | Exercisable at January 31, 2021 | 902 | $ | 108.12 | $ | 63,938 | 5.9 years |
|
|
| ||
|
|
| ||
|
|
| ||
|
|
| ||
|
|
|
Three Months Ended | January 31, 2021 | January 31, 2020 | |||||||||||||||||||||
Expected volatility | 30.8% | - | 32.6% | 24.5% | - | 25.4% | |||||||||||||||||
Expected dividend yield | 0.83% | 0.93% | - | 1.16% | |||||||||||||||||||
Risk-free interest rate | 0.43% | - | 0.54% | 1.64% | - | 1.69% | |||||||||||||||||
Expected life of the option (in years) | 5.3 | - | 6.2 | 5.3 | - | 6.2 |
Page 14
Nordson Corporation
We may also grant continuation awards in the form of restricted share units with cliff vesting and a gateway performance measure that must be achieved for the restricted share units to vest.
shares or units.
|
| Number of Shares |
|
| Weighted-Average Grant Date Fair Value |
| ||||||||||||||||
Restricted shares at October 31, 2019 |
|
| 66 |
|
| $ | 126.83 |
| ||||||||||||||
Number of Shares | Weighted-Average Grant Date Fair Value | |||||||||||||||||||||
Restricted shares at October 31, 2020 | Restricted shares at October 31, 2020 | 58 | $ | 148.75 | ||||||||||||||||||
Granted |
|
| 18 |
|
| $ | 162.95 |
| Granted | 0 | 0 | |||||||||||
Forfeited |
|
| (4 | ) |
| $ | 138.36 |
| Forfeited | (1) | 147.93 | |||||||||||
Vested |
|
| (25 | ) |
| $ | 120.18 |
| Vested | (15) | 139.70 | |||||||||||
Restricted shares at April 30, 2020 |
|
| 55 |
|
| $ | 141.09 |
| ||||||||||||||
Restricted shares units at January 31, 2021 | Restricted shares units at January 31, 2021 | 42 | $ | 151.90 |
|
| Number of Units |
|
| Weighted-Average Grant Date Fair Value |
| ||
Restricted share units at October 31, 2019 |
|
| — |
|
| $ | — |
|
Granted |
|
| 7 |
|
| $ | 160.68 |
|
Restricted share units at April 30, 2020 |
|
| 7 |
|
| $ | 160.68 |
|
Number of Units | Weighted-Average Grant Date Fair Value | |||||||||||||
Restricted shares units at October 31, 2020 | 0 | $ | 0 | |||||||||||
Granted | 85 | 202.14 | ||||||||||||
Forfeited | (2) | 198.68 | ||||||||||||
Vested | (1) | 201.50 | ||||||||||||
Restricted shares units at January 31, 2021 | 82 | $ | 202.26 |
Page 15
Nordson Corporation
$4,592.
|
| Number of Shares |
|
| Weighted-Average Grant Date Fair Value |
| Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||||||
Outstanding at October 31, 2019 |
|
| 114 |
|
| $ | 55.52 |
| Outstanding at October 31, 2019 | 120 | $ | 60.81 | ||||||||||
Dividend equivalents |
|
| — |
|
| $ | — |
| Dividend equivalents | 0 | 0 | |||||||||||
Outstanding at April 30, 2020 |
|
| 114 |
|
| $ | 55.99 |
| ||||||||||||||
Distributions | Distributions | (7) | 81.32 | |||||||||||||||||||
Outstanding at January 31, 2021 | Outstanding at January 31, 2021 | 113 | $ | 59.93 |
|
|
Sheets.
|
| April 30, 2020 |
|
| April 30, 2019 |
| January 31, 2021 | January 31, 2020 | ||||||||||||||
Beginning balance at October 31 |
| $ | 11,006 |
|
| $ | 12,195 |
| Beginning balance at October 31 | $ | 10,550 | $ | 11,006 | |||||||||
Accruals for warranties |
|
| 5,429 |
|
|
| 4,846 |
| Accruals for warranties | 3,870 | 2,954 | |||||||||||
Warranty payments |
|
| (5,231 | ) |
|
| (5,258 | ) | Warranty payments | (3,594) | (2,551) | |||||||||||
Currency effect |
|
| (122 | ) |
|
| 31 |
| Currency effect | 259 | 8 | |||||||||||
Ending balance |
| $ | 11,082 |
|
| $ | 11,814 |
| Ending balance | $ | 11,085 | $ | 11,417 |
|
|
Page 16
Nordson Corporation
The financial information presented herein reflects the impact of the preceding changes and prior periods have been revised to reflect these changes.
|
| Industrial Precision Solutions |
|
| Advanced Technology Solutions |
|
| Corporate |
|
| Total |
| ||||||||||||||||||||||||||||||
Three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
April 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Industrial Precision Solutions | Advanced Technology Solutions | Corporate | Total | |||||||||||||||||||||||||||||||||||||
January 31, 2021 | January 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
Net external sales |
| $ | 282,274 |
|
| $ | 247,204 |
|
| $ | — |
|
| $ | 529,478 |
| Net external sales | $ | 288,416 | $ | 238,150 | $ | — | $ | 526,566 | |||||||||||||||||
Operating profit (loss) |
|
| 76,454 |
|
|
| 58,689 |
|
|
| (10,114 | ) |
|
| 125,029 |
| Operating profit (loss) | 83,403 | 47,201 | (21,579) | 109,025 | |||||||||||||||||||||
Three months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
April 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
January 31, 2020 | January 31, 2020 | |||||||||||||||||||||||||||||||||||||||||
Net external sales |
| $ | 301,824 |
|
| $ | 249,295 |
|
| $ | — |
|
| $ | 551,119 |
| Net external sales | $ | 263,799 | $ | 231,117 | $ | — | $ | 494,916 | |||||||||||||||||
Operating profit (loss) |
|
| 85,481 |
|
|
| 56,535 |
|
|
| (13,120 | ) |
|
| 128,896 |
| Operating profit (loss) | 56,404 | 32,287 | (13,598) | 75,093 | |||||||||||||||||||||
Six months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
April 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Net external sales |
| $ | 546,073 |
|
| $ | 478,321 |
|
| $ | — |
|
| $ | 1,024,394 |
| ||||||||||||||||||||||||||
Operating profit (loss) |
|
| 132,858 |
|
|
| 90,976 |
|
|
| (23,712 | ) |
|
| 200,122 |
| ||||||||||||||||||||||||||
Six months ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
April 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||
Net external sales |
| $ | 565,277 |
|
| $ | 483,752 |
|
| $ | — |
|
| $ | 1,049,029 |
| ||||||||||||||||||||||||||
Operating profit (loss) |
|
| 140,890 |
|
|
| 97,320 |
|
|
| (25,033 | ) |
|
| 213,177 |
|
|
| Three Months Ended |
|
| Six Months Ended |
| Three Months Ended | |||||||||||||||||||||||||||||||||||
|
| April 30, 2020 |
|
| April 30, 2019 |
|
| April 30, 2020 |
|
| April 30, 2019 |
| January 31, 2021 | January 31, 2020 | ||||||||||||||||||||||||||||
Total profit for reportable segments |
| $ | 125,029 |
|
| $ | 128,896 |
|
| $ | 200,122 |
|
| $ | 213,177 |
| Total profit for reportable segments | $ | 109,025 | $ | 75,093 | |||||||||||||||||||||
Interest expense |
|
| (8,293 | ) |
|
| (12,372 | ) |
|
| (18,034 | ) |
|
| (24,738 | ) | Interest expense | (6,932) | (9,740) | |||||||||||||||||||||||
Interest and investment income |
|
| 278 |
|
|
| 325 |
|
|
| 867 |
|
|
| 642 |
| Interest and investment income | 380 | 588 | |||||||||||||||||||||||
Other-net |
|
| (429 | ) |
|
| (568 | ) |
|
| (3,275 | ) |
|
| (4,757 | ) | Other-net | (4,661) | (2,846) | |||||||||||||||||||||||
Income before income taxes |
| $ | 116,585 |
|
| $ | 116,281 |
|
| $ | 179,680 |
|
| $ | 184,324 |
| Income before income taxes | $ | 97,812 | $ | 63,095 |
|
| Three Months Ended |
|
| Six Months Ended |
| Three Months Ended | |||||||||||||||||||||||||||||||||||
|
| April 30, 2020 |
|
| April 30, 2019 |
|
| April 30, 2020 |
|
| April 30, 2019 |
| January 31, 2021 | January 31, 2020 | ||||||||||||||||||||||||||||
United States |
| $ | 188,933 |
|
| $ | 190,699 |
|
| $ | 377,433 |
|
| $ | 361,050 |
| United States | $ | 185,316 | $ | 188,500 | |||||||||||||||||||||
Americas |
|
| 36,673 |
|
|
| 43,682 |
|
|
| 67,756 |
|
|
| 76,119 |
| Americas | 36,138 | 31,083 | |||||||||||||||||||||||
Europe |
|
| 136,056 |
|
|
| 149,526 |
|
|
| 262,447 |
|
|
| 282,200 |
| Europe | 135,151 | 126,391 | |||||||||||||||||||||||
Japan |
|
| 31,575 |
|
|
| 30,031 |
|
|
| 59,127 |
|
|
| 59,078 |
| Japan | 27,115 | 27,552 | |||||||||||||||||||||||
Asia Pacific |
|
| 136,241 |
|
|
| 137,181 |
|
|
| 257,631 |
|
|
| 270,582 |
| Asia Pacific | 142,846 | 121,390 | |||||||||||||||||||||||
Total net external sales |
| $ | 529,478 |
|
| $ | 551,119 |
|
| $ | 1,024,394 |
|
| $ | 1,049,029 |
| Total net external sales | $ | 526,566 | $ | 494,916 |
Page 17
Nordson Corporation
|
|
April 30, 2020 |
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts (a) |
| $ | 3,492 |
|
| $ | — |
|
| $ | 3,492 |
|
| $ | — |
|
Total assets at fair value |
| $ | 3,492 |
|
| $ | — |
|
| $ | 3,492 |
|
| $ | — |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred compensation plans (b) |
| $ | 12,708 |
|
| $ | — |
|
| $ | 12,708 |
|
| $ | — |
|
Foreign currency forward contracts (a) |
|
| 4,990 |
|
|
| — |
|
|
| 4,990 |
|
|
| — |
|
Total liabilities at fair value |
| $ | 17,698 |
|
| $ | — |
|
| $ | 17,698 |
|
| $ | — |
|
October 31, 2019 |
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward contracts (a) |
| $ | 5,042 |
|
| $ | — |
|
| $ | 5,042 |
|
| $ | — |
|
Total assets at fair value |
| $ | 5,042 |
|
| $ | — |
|
| $ | 5,042 |
|
| $ | — |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred compensation plans (b) |
| $ | 11,850 |
|
| $ | — |
|
| $ | 11,850 |
|
| $ | — |
|
Foreign currency forward contracts (a) |
|
| 2,381 |
|
|
| — |
|
|
| 2,381 |
|
|
| — |
|
Total liabilities at fair value |
| $ | 14,231 |
|
| $ | — |
|
| $ | 14,231 |
|
| $ | — |
|
|
|
|
|
January 31, 2021 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Foreign currency forward contracts (a) | $ | 8,255 | $ | 0 | $ | 8,255 | $ | 0 | ||||||||||||||||||
Total assets at fair value | $ | 8,255 | $ | 0 | $ | 8,255 | $ | 0 | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Deferred compensation plans (b) | $ | 13,708 | $ | 0 | $ | 13,708 | $ | 0 | ||||||||||||||||||
Foreign currency forward contracts (a) | 2,150 | 0 | 2,150 | 0 | ||||||||||||||||||||||
Total liabilities at fair value | $ | 15,858 | $ | 0 | $ | 15,858 | $ | 0 |
October 31, 2020 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Foreign currency forward contracts (a) | $ | 2,700 | $ | 0 | $ | 2,700 | $ | 0 | ||||||||||||||||||
Total assets at fair value | $ | 2,700 | $ | 0 | $ | 2,700 | $ | 0 | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Deferred compensation plans (b) | $ | 12,304 | $ | 0 | $ | 12,304 | $ | 0 | ||||||||||||||||||
Foreign currency forward contracts (a) | 5,937 | 0 | 5,937 | 0 | ||||||||||||||||||||||
Total liabilities at fair value | $ | 18,241 | $ | 0 | $ | 18,241 | $ | 0 |
|
| April 30, 2020 |
| |||||
|
| Carrying Amount |
|
| Fair Value |
| ||
Long-term debt (including current portion), excluding unamortized debt issuance costs |
|
| 1,280,823 |
|
|
| 1,317,424 |
|
January 31, 2021 | ||||||||||||||
Carrying Amount | Fair Value | |||||||||||||
Long-term debt (including current portion), excluding unamortized debt issuance costs | 1,019,326 | 1,084,467 |
• | Long-term debt is valued by discounting future cash flows at currently available rates for borrowing arrangements with similar terms and conditions, which are considered to be Level 2 inputs under the fair value hierarchy. |
Page 18
Nordson Corporation
|
|
|
| Notional Amounts |
| |||||||||||||||||||
April 30, 2020 contract amounts: |
| Sell |
|
| Buy |
| ||||||||||||||||
Notional Amounts | ||||||||||||||||||||||
January 31, 2021 contract amounts: | January 31, 2021 contract amounts: | Sell | Buy | |||||||||||||||||||
Euro |
| $ | 110,114 |
|
| $ | 182,146 |
| Euro | $ | 122,414 | $ | 270,516 | |||||||||
British pound |
|
| 18,987 |
|
|
| 58,543 |
| British pound | 20,206 | 60,579 | |||||||||||
Japanese yen |
|
| 16,301 |
|
|
| 31,934 |
| Japanese yen | 25,011 | 42,370 | |||||||||||
Australian dollar |
|
| 327 |
|
|
| 7,647 |
| Australian dollar | 193 | 9,255 | |||||||||||
Hong Kong dollar |
|
| 53,935 |
|
|
| 60,737 |
| Hong Kong dollar | 60,949 | 88,915 | |||||||||||
Singapore dollar |
|
| 1,082 |
|
|
| 15,620 |
| Singapore dollar | 204 | 16,983 | |||||||||||
Others |
|
| 3,995 |
|
|
| 61,286 |
| Others | 9,649 | 81,018 | |||||||||||
Total |
| $ | 204,741 |
|
| $ | 417,913 |
| Total | $ | 238,626 | $ | 569,636 | |||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||
|
| Notional Amounts |
| Notional Amounts | ||||||||||||||||||
April 30, 2019 contract amounts: |
| Sell |
|
| Buy |
| ||||||||||||||||
January 31, 2020 contract amounts: | January 31, 2020 contract amounts: | Sell | Buy | |||||||||||||||||||
Euro |
| $ | 401,545 |
|
| $ | 279,131 |
| Euro | $ | 227,292 | $ | 118,275 | |||||||||
British pound |
|
| 21,012 |
|
|
| 44,879 |
| British pound | 18,934 | 54,818 | |||||||||||
Japanese yen |
|
| 28,504 |
|
|
| 46,226 |
| Japanese yen | 37,429 | 58,672 | |||||||||||
Australian dollar |
|
| 180 |
|
|
| 7,771 |
| Australian dollar | 345 | 7,817 | |||||||||||
Hong Kong dollar |
|
| 1,209 |
|
|
| 128,710 |
| Hong Kong dollar | 643 | 152,452 | |||||||||||
Singapore dollar |
|
| 794 |
|
|
| 15,356 |
| Singapore dollar | 1,109 | 15,987 | |||||||||||
Others |
|
| 3,128 |
|
|
| 60,540 |
| Others | 6,505 | 68,395 | |||||||||||
Total |
| $ | 456,372 |
|
| $ | 582,613 |
| Total | $ | 292,257 | $ | 476,416 |
|
|
We review new contracts to determine if the contracts include a lease. To the extent a lease agreement includes an extension option that is reasonably certain to be exercised, we have recognized those amounts as part of the right-of-use assets and lease liabilities. We combine lease and non-lease components, such as common area maintenance, in the calculation of the lease assets and related liabilities. As most lease agreements do not provide an implicit rate, we use an incremental borrowing rate (IBR) based on information available at the lease commencement date in determining the present value of lease payments and to help classify the lease as operating or financing. We calculate the IBR based on a bond yield curve which considers secured borrowing rates based on our credit rating and current economic environment, as well as other publicly available data.
Page 19
Nordson Corporation
We lease certain manufacturing facilities, warehouse space, machinery and equipment, and vehicles. We often have options to renew lease terms for buildings and other assets. We evaluate renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. Leases with an initial term of 12 months or less (short-term leases) are not recorded on the Consolidated Balance Sheet. Lease expense for operating leases is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments occur. Variable payments for leases primarily relate to future rates or amounts, miles, or other quantifiable usage factors which are not determinable at the time the lease agreement commences. Finance lease assets are recorded in Property, plant, and equipment – net on the Consolidated Balance Sheet. As of April 30, 2020, we have no material leases that have yet to commence.
Additional lease information is summarized below for the three and six months ended April 30, 2020:
|
| Three months ended |
|
| Six months ended |
| ||||||||||
|
| April 30, 2020 |
|
| April 30, 2020 |
| ||||||||||
|
| Finance Leases |
|
| Operating Leases |
|
| Finance Leases |
|
| Operating Leases |
| ||||
Amortization of right of use assets |
| $ | 1,799 |
|
| $ | — |
|
| $ | 3,513 |
|
| $ | — |
|
Interest |
|
| 91 |
|
|
| — |
|
|
| 174 |
|
|
| — |
|
Lease cost(1) |
| $ | 1,890 |
|
| $ | 5,348 |
|
| $ | 3,687 |
|
| $ | 10,667 |
|
Short-term and variable lease cost(1) |
|
| 534 |
|
|
| 435 |
|
|
| 823 |
|
|
| 1,300 |
|
Total lease cost |
|
| 2,424 |
|
|
| 5,783 |
|
|
| 4,510 |
|
|
| 11,967 |
|
|
|
Supplemental cash flow information is summarized below for the six months ended April 30, 2020:
Cash outflows for leases |
| $ | 3,548 |
|
| $ | 10,635 |
|
Weighted average remaining lease term (years) |
| 4.84 years |
|
| 10.60 years |
| ||
Weighted average discount rate |
|
| 2.66 | % |
|
| 1.71 | % |
The following table reconciles the undiscounted cash flows for five years and thereafter to the operating and finance lease liabilities recognized on the statement of financial position as of April 30, 2020. The reconciliation excludes short-term leases that are not recognized on the Consolidated Balance Sheet.
Year: |
| Finance Leases |
|
| Operating Leases |
| ||
2020 |
| $ | 6,503 |
|
| $ | 19,870 |
|
2021 |
|
| 4,420 |
|
|
| 17,865 |
|
2022 |
|
| 2,694 |
|
|
| 15,426 |
|
2023 |
|
| 1,243 |
|
|
| 13,128 |
|
2024 |
|
| 680 |
|
|
| 11,350 |
|
Later years |
|
| 3,293 |
|
|
| 63,655 |
|
Total minimum lease payments |
| $ | 18,833 |
|
| $ | 141,294 |
|
Amounts representing interest |
|
| 1,561 |
|
|
| 11,030 |
|
Present value of minimum lease payments |
| $ | 17,272 |
|
| $ | 130,264 |
|
Page 20
Nordson Corporation
|
|
A summary of long-term debt is as follows:
January 31, 2021 | October 31, 2020 | |||||||||||||
Senior notes, due 2021-2025 | $ | 109,900 | $ | 109,900 | ||||||||||
Senior notes, due 2021-2027 | 85,714 | 85,714 | ||||||||||||
Senior notes, due 2023-2030 | 350,000 | 350,000 | ||||||||||||
Term loan, due 2024 | 155,000 | 255,000 | ||||||||||||
Euro loan, due 2023 | 321,602 | 308,642 | ||||||||||||
1,022,216 | 1,109,256 | |||||||||||||
Less current maturities | 38,043 | 38,043 | ||||||||||||
Less unamortized debt issuance costs | 2,889 | 3,261 | ||||||||||||
Long-term maturities | $ | 981,284 | $ | 1,067,952 |
|
| April 30, 2020 |
|
| October 31, 2019 |
| ||
Senior notes, due 2020-2025 |
|
| 140,800 |
|
|
| 140,800 |
|
Senior notes, due 2020-2027 |
|
| 92,857 |
|
|
| 92,857 |
|
Senior notes, due 2023-2030 |
|
| 350,000 |
|
|
| 350,000 |
|
Term loan, due 2022-2024 |
|
| 405,000 |
|
|
| 505,000 |
|
Euro loan, due 2023 |
|
| 290,315 |
|
|
| 128,219 |
|
Private shelf facility, due 2020 |
|
| 5,556 |
|
|
| 30,556 |
|
Development loans, due 2020-2026 |
|
| — |
|
|
| 951 |
|
|
|
| 1,284,528 |
|
|
| 1,248,383 |
|
Less current maturities |
|
| 43,598 |
|
|
| 168,738 |
|
Less unamortized debt issuance costs |
|
| 3,705 |
|
|
| 4,241 |
|
Long-term maturities |
| $ | 1,237,225 |
|
| $ | 1,075,404 |
|
In April 2019, we amended, restated and extended the term of our existing $605,000 term loan facility with a group of banks. The interest rate is variable based upon the LIBOR rate. At April 30, 2020, $405,000 was outstanding under this facility. The Term Loan Agreement provides for the following term loans in two tranches: $200,000 due in September 2022, and $205,000 due in March 2024. The weighted average interest rate for borrowings under this agreement was 1.06% at April 30, 2020. We were in compliance with all covenants at April 30, 2020.
In April 2019, we entered into a $850,000 unsecured, multicurrency credit facility with a group of banks, which amended, restated and extended our existing syndicated revolving credit agreement that was scheduled to expire in February 2020. This facility has a five-year term and includes a $75,000 subfacility for swing-line loans. It expires in April 2024. We had 0 balances outstanding under this facility at April 30, 2020 and OctoberJanuary 31, 2019. We were in compliance with all covenants at April 30, 2020, and the amount we could borrow under the facility would not have been limited by any debt covenants.
In June 2018, we entered into a Note Purchase Agreement with a group of insurance companies under which we sold $350,000 of Senior Notes to the insurance companies and their affiliates. The notes start to mature between June 2023 and June 2030 and bear interest at fixed rates between 3.71% and 4.17%. We were in compliance with all covenants at April 30, 2020.
In July 2015, we entered into a Note Purchase Agreement with a group of insurance companies under which we sold $100,000 of unsecured Senior Notes. At April 30, 2020 and October 31, 2019, there was $92,857 outstanding under this agreement. Existing notes mature between July 2020 and July 2027 and bear interest at fixed rates of 2.89% and 3.19%. We were in compliance with all covenants at April 30, 2020.
In 2012, we entered into a Note Purchase Agreement with a group of insurance companies under which we sold $200,000 of unsecured Senior Notes. At April 30, 2020 and October 31, 2019, there was $140,800 outstanding under this agreement. Existing notes mature between July 2020 and July 2025 and bear interest at fixed rates between 2.62% and 3.13%. We were in compliance with all covenants at April 30, 2020.
We entered into a $150,000 2021.
Page 21
Nordson Corporation
|
|
We are involved in pending or potential litigation regarding environmental, product liability, patent, contract, employee and other matters arising from the normal course of business. Including the litigation and environmental matters discussed below, after consultation with legal counsel, we do not believe that losses in excess of the amounts we have accrued would have a material adverse effect on our financial condition, quarterly or annual operating results or cash flows.
|
|
On June 1, 2020, we acquired Fluortek, Inc., a precision plastic extrusion manufacturer that provides custom dimensioned tubing to the medical device industry. We acquired Fluortek for an aggregate purchase price
| ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
On May 8, 2020, we announced that Joseph P. Kelley had been named Executive Vice President and Chief Financial Officer of the Company effective July 6, 2020. Mr. Kelley succeeds Gregory A. Thaxton, who previously announced his plans to retire. Upon Mr. Kelley’s start date, Mr. Thaxton will become Executive Vice President to the Company until he retires on August 28, 2020.
As described in Note 11, effective
While
As a business supporting multiple “critical infrastructure” sectors by manufacturing materials and products needed for medical supply chains, transportation, energy, communications,economic, public health and other critical infrastructure industries,impacts. These developments are constantly evolving and cannot be accurately predicted. We continue to invest in the business, people, and strategies necessary to achieve our long-term priorities as we focus on driving profitable growth. We have continued to operate during the course of the COVID-19 pandemic in all of our production facilities, having taken the recommended public health measures to ensure
Page 23
Nordson Corporation
worker and workplace safety. We have seen increases globally for several of our products. These products are being deployed in the fight against the COVID-19 pandemic in the medical industry, and are providing basic consumer necessities in the food and packaging industries. We continue to monitor our customers’ demand. As a result, there are practical limits to the extent we can increase output.have been unfavorable impacts on our manufacturing efficiencies. Additionally, we are takingcontinue to take steps to offset cost increases from pandemic-related supply chain disruptions. For more information about the risks to the Company as a result
2020.
Sales
Sales –
Sales of the Industrial Precision Solutions segment for the three months ended April 30, 2020 were $282,274 compared to $301,824 in the comparable period of 2019, a decrease of $19,550, or 6.5%. The decrease was due to an organic sales volume, decreasea favorable effect from currency translation of 4.5%,2.8% and unfavorable currency effects that decreased sales by 2.0%. Within this segment, sales volume increaseda 1.0% increase due to acquisitions. Strength in the United States and Japan regions, which was more than offset by softness in all other regions. Growth in our product lines serving consumer non-durable and industrial end markets such as nonwovens, was offset by weakness in sales of product lines serving end markets such as automotive and general industrial.
Saleswere the primary drivers of the Advanced Technology Solutions segment for the three months ended April 30, 2020 were $247,204 compared to $249,295 in the comparable period of 2019, a decrease of $2,091, or 0.8%. The decrease was due to a sales volume decrease of 0.2% and unfavorable currency effects that decreased sales by 0.6%. The sales volume decrease consisted of 0.8% from an organic volume decrease, partially offset by a 0.6% increase from the first-year effect of the Optical acquisition. Within this segment, sales volume increased in the Asia and Japan regions and was more than offset by softness in all other regions. Growth in product lines serving medical end markets and fluid dispense product lines serving electronics end markets was more than offset by weakness in our test and inspection and fluid dispense product lines serving industrial end markets.
growth.
Page 24
Nordson Corporation
Worldwide sales for the six months ended April 30, 2020 were $1,024,394, a 2.3% decrease from sales of $1,049,029 for the comparable period of 2019. The decrease was due to a sales volume decrease of 1.3%, and unfavorable currency effects that decreased sales by 1.0%. The decrease in sales volume consisted of an organic volume decrease of 1.7%, offset by a 0.4% increase from acquisitions.
Sales of the Industrial Precision Solutions segment for the six months ended April 30, 2020 were $546,073 compared to $565,277 in the comparable period of 2019, a decrease of $19,204, or 3.4%. The decrease was due to an organic sales volume decrease of 1.9%, and unfavorable currency effects that decreased sales by 1.5%. Within this segment, sales volume increased in the United States and Japan, which was more than offset by decreases in all other regions. Growth in our product lines serving consumer non-durable end markets, such as nonwovens, was more than offset by weakness in sales of product lines serving end markets such as automotive and general industrial.
Sales of the Advanced Technology Solutions segment for the six months ended April 30, 2020 were $478,321 compared to $483,752 in the comparable period of 2019, a decrease of $5,431, or 1.1%. The decrease was due to a sales volume decrease of 0.6%, and unfavorable currency effects that decreased sales by 0.5%. The sales volume decrease consisted of 1.4% from an organic volume decrease, partially offset by 0.8% growth from the first year effect of the Optical acquisition. Within this segment, sales volume increased in the Asia Pacific region, was more than offset by softness in all other regions. Growth in product lines serving medical end markets and fluid dispense product lines serving electronic end markets was offset by weakness in our test and inspection and fluid dispense product lines serving industrial end markets.
Sales outside the United States accounted for 63.2% of sales in the six months ended April 30, 2020 compared to 65.6% in the comparable period of 2019. On a geographic basis, sales in the United States were $377,433, an increase of 4.5% from 2019. The increase in sales was due to an organic sales volume increase of 4.2% and a 0.3% increase from acquisitions. In the Americas region, sales were $67,756, a decrease of 11.0% from 2019, with sales volume decreasing 8.3%, and unfavorable currency effects of 2.7%. The decrease in sales volume consisted of 8.6% from an organic volume decrease, partially offset by a 0.3% increase from acquisitions. Sales in Europe were $262,447, a decrease of 7.0% from 2019, with sales volume decreasing 4.6% and unfavorable currency effects of 2.4%. The decrease in sales volume consisted of 5.3% from an organic volume decrease, partially offset by a 0.7% increase from acquisitions. Sales in Japan were $59,127, an increase of 0.1% from 2019, with sales volume decreasing 1.8%6.3%, offset by favorable currency effects of 1.9%4.7%. The decrease in sales volume consisted of 2.0% from an organic volume decrease, and was partially offset by a 0.2% increase from acquisitions. Sales inIn the Asia Pacific region, sales were $257,631, a decrease$142,846, an increase of 4.8%17.7% from 2019, withthe comparable period of 2020, consisting of an organic sales volume decreasing 3.7%increase of 13.4% and unfavorablefavorable currency effects of 1.1%4.3%. The decrease in sales volume consisted of 3.9% from an organic volume decrease, partially offset by a 0.2% increase from acquisitions.
Operating profit –
Cost of sales for the six months ended April 30, 2020 were $471,602, downincreased to 55.1% from $478,52453.2% in the comparable period of 2019. Gross profit, expressed as a percentage of sales, decreased to 54.0% for this same period from 54.4% in 2019. Of the 0.42020. The 1.9 percentage point declineincrease in gross margin unfavorablewas driven by a favorable sales volume and product mix impact of 1.0 percentage point, favorable currency translation effects contributed 0.3of 0.5 of a percentage pointspoint, a favorable impact of 0.2 of a percentage point related to acquisitions, and unfavorable product mix contributed 0.1lower costs related to cost structure simplification actions of 0.2 of a percentage points.
point.
Selling and administrative expenses for the six months ended April 30, 2020 were $352,670, down from $357,328 in the comparable period of 2019. The 1.3% decrease includes 1.3% in support of base business and 0.9 percentage points in favorable currency translation effects. This improvement was partially offset by 0.5% due to the first year effect of acquisitions and 0.4% due to higher severance and restructuring costs.
Selling and administrative expenses as a percentage of sales decreased to 31.1% for the three months ended April 30, 2020 compared to 31.3% in 2019. Of the 0.2 percentage point decrease, 0.5 percentage points were due to lower base business costs. This improvement was partially offset by 0.22.2 percentage points due to the first year effectunfavorable currency translation effects, and 0.8 of acquisitions and 0.1a percentage point due to higher severance and restructuring costs.
Page 25
Nordson Corporation
acquisitions.
Operating capacity for each of our segments can support fluctuations in order activity without significant changes in operating costs. Changes in exchange rates can materially impact reported operating margins. Operating margins for each segment were unfavorably impacted by a stronger dollar primarily against the Euro and Chinese Yuan during the first six months of 2020 as compared to the same period in 2019.
Operating profit as a percentage of sales increased to 23.6% for20.7% for the three months ended April 30, 2020January 31, 2021 compared to 23.4% 15.2% in 2019. Of the 0.2 percentage point increase, lower base business costs contributed 0.5 percentage points and 0.4 percentage points were due to favorable product mix. This improvement was partially offset by 0.4 percentage points due to unfavorable currency translation effects, 0.2 percentage points due to the first year effect of acquisitions, and 0.1 percentage point due to higher severance and restructuring costs.
Operating profit as a percentage of sales decreased to 19.5% for the six months ended April 30, 2020 compared to 20.3% in 2019. Of the 0.8 percentage point decrease, unfavorable currency translation effects contributed 0.3 percentage points, higher severance and restructuring costs contributed 0.2 percentage points, unfavorable absorption due to lower sales volume and unfavorable product mix contributed 0.3 percentage points.
For the Industrial Precision Solutions segment, operating profit as a percentage of sales decreased to 27.1% for the three months ended April 30, 2020 compared to 28.3% in 2019. Of the 1.2 percentage point decrease in operating margin, 0.6 percentage points were due to unfavorable absorption due to lower sales volume and unfavorable product mix, 0.5 percentage points were due to unfavorable currency translation effects, and 0.1 percentage point was due to higher severance and restructuring costs.
For the Industrial Precision Solutions segment, operating profit as a percentage of sales decreased to 24.3% for the six months ended April 30, 2020 compared to 24.9% for the comparable period of 2019.2020. Of the 0.6 percentage point decline5.5 percent increase in operating margin, unfavorable currency translation effectslower services and employee related costs contributed 0.43.0 percentage points, favorable absorption due to higher sales volume and product mix contributed 1.4 percentage points, and unfavorable absorption duelower costs related to lower sales volumecost structure simplification actions and favorable currency translations effects each contributed 0.3 percentage points. These decreases were partially offset by 0.1 percentage point due to lower severance and restructuring expenses.
For the Advanced Technology Solutions segment, operating profit as0.6 of a percentage of sales increased to 23.7% for the three months ended April 30, 2020 compared to 22.7% in 2019. Of the 1.0 percentage point improvement in operating margin, favorable product mix contributed 1.1 percentage points and lower base business costs contributed 0.5 percentage points. These increases were partially offset by 0.4 percentage points due to the first year effect of acquisitions and 0.2 percentage points due to unfavorable currency translation effects.
For the Advanced Technology Solutions segment, operating profit as a percentage of sales decreased to 19.0% for the six months ended April 30, 2020 compared to 20.1% for the comparable period of 2019. Of the 1.1 percentage point decrease in operating margin, higher severance and restructuring costs contributed 0.6 percentage points, unfavorable product mix contributed 0.3 percentage points, and unfavorable currency translation effects contributed 0.2 percentage points.
Interest and other income (expense) - point.
year period. Other expense was $429 for the three months ended April 30, 2020,$4,661 compared to other expense of $568 for$2,846 in the comparable period of 2019. Included in the current quarter’s other expense were pension costs of $2,851, offset by2020 due to higher foreign currency gains of $2,992. Included in the prior year’s other expense were $1,489 of pension costs, partially offset by $627 of foreign currency gains.
Other expense was $3,275 for the six months ended April 30, 2020, compared to $4,757 for the comparable period of 2019.losses. Included in the current year’s other expense were pension costs of $5,615, offset by$1,476 and $2,760 in foreign currency gains of $2,992.losses. Included in the prior year’s other expenseyear were $2,980 of pension costs of $2,772 and $346an immaterial impact from foreign currency.
2020. This represents a 49.2% increase in net income, and a 48.6% increase in diluted earnings per share.
Our income tax provision included a discrete tax benefit of $138 and $2,675higher than the comparable prior year period primarily due to our share-based payment transactions for the three and six months ended April 30, 2020, respectively. Our income tax provision included a similarwhich resulted in discrete tax benefitbenefits of $2,149$799 and $3,017 for the three and six months ended April 30, 2019, respectively.
During the six months ended April 30, 2019, a discrete tax expense of $4,866 was recorded to update the provisional amounts recognized in 2018 due to changes in interpretations and assumptions and the finalization of estimates related to the U.S. Tax Cuts and Jobs Act.
Net income – Net income$2,537 for the three months ended April 30,January 31, 2021 and 2020, was $92,079, or $1.58 per diluted share, compared to $91,923, or $1.58 per diluted share, in the same period of 2019. This represents a 0.2% increase in net income. Net income for the three months ended April 30, 2020 was comparable to the same period of 2019 as lower sales were offset by reduced selling and administrative expenses and lower interest expense. For the six months ended April 30, 2020, net income was $144,083, or $2.47 per diluted share, compared to $140,490, or $2.41 per diluted share, in the same period of 2019. This represents a 2.6% increase in net income and a 2.5% increase in diluted earnings per share. These increases are due primarily to lower income tax and interest expenses in the current year.
respectively.
2020.
same periods, respectively.
Page 27
Nordson Corporation
2020.
In December 2014, the board of directors authorized a $300,000 common share repurchase program. In August 2015, the board of directors authorized the repurchase of up to an additional $200,000 of the Company’s common shares. In August 2018, the board of directors authorized the repurchase of an additional $500,000 of the Company’s common shares. Approximately $447,703 of the total $1,000,000 authorized remained available for share repurchases at April 30, 2020. Uses for repurchased shares include the funding of benefit programs including stock options and restricted stock. Shares purchased are treated as treasury shares until used for such purposes. The repurchase program is being funded usingpresent capital resources, cash from operations and proceedsunused financing sources are more than adequate to meet cash requirements for 2021. There are no significant restrictions limiting the transfer of funds from borrowings under our credit facilities.
Contractual Obligations
In March 2020, we amended, restated and extendedinternational subsidiaries to the term of our existing term loan facility with Bank of America Merrill Lynch International Limited. The interest rate is variable based on the EURIBOR rate. The Term Loan Agreement provides for the following term loans in two tranches: € 115,000 due in March 2023 and an additional € 150,000 that was drawn down in March 2020 and is due in March 2023. The weighted average interest rate at April 30, 2020 was 0.824%. At April 30, 2020, the balance outstanding was € 265,000 ($290,315).parent company. We were in compliance with all covenants at April 30, 2020.
In April 2019, we amended, restated and extendedJanuary 31, 2021. See Long-term debt in the term ofnotes to these financial statements for additional details regarding our existing $605,000 term loan facility with a group of banks. The interest rate is variable based upon the LIBOR rate. At April 30, 2020, $405,000 was outstanding under this facility. The Term Loan Agreement provides for the following two tranches: $200,000 due in September 2022, and $205,000 due in March 2024. The weighted average interest rate for borrowings under this agreement was 1.06% at April 30, 2020. We were in compliance with all covenants at April 30, 2020.
In April 2019, we entered into a $850,000 unsecured, multicurrency credit facility with a group of banks, which amended, restated and extended our existing syndicated revolving credit agreement that was scheduled to expire in February 2020. This facility has a five-year term and includes a $75,000 subfacility for swing-line loans. It expires in April 2024. We had no balances outstanding under this facility at April 30, 2020 and October 31, 2019. We were in compliance with all covenants at April 30, 2020, and the amount we could borrow under the facility would not have been limited by any debt covenants.
In June 2018, we entered into a Note Purchase Agreement with a group of insurance companies under which we sold $350,000 of Senior Notes to the insurance companies and their affiliates. The notes start to mature between June 2023 and June 2030 and bear interest at fixed rates between 3.71% and 4.17%. We were in compliance with all covenants at April 30, 2020.
In July 2015, we entered into a Note Purchase Agreement with a group of insurance companies under which we sold $100,000 of unsecured Senior Notes. At April 30, 2020 and October 31, 2019, there was $92,857 outstanding under this agreement. Existing notes mature between July 2020 and July 2027 and bear interest at fixed rates of 2.89% and 3.19%. We were in compliance with all covenants at April 30, 2020.
In 2012, we entered into a Note Purchase Agreement with a group of insurance companies under which we sold $200,000 of unsecured Senior Notes. At April 30, 2020 and October 31, 2019, there was $140,800 outstanding under this agreement. Existing notes mature between July 2020 and July 2025 and bear interest at fixed rates between 2.62% and 3.13%. We were in compliance with all covenants at April 30, 2020.
We entered into a $150,000 three-year Note Purchase and Private Shelf agreement with New York Life Investment Management LLC in 2011. In 2015, the amount of the facility was increased to $180,000, and in 2016 it was increased to $200,000. At April 30, 2020 and October 31, 2019, $5,556 and $30,556, respectively, was outstanding under this facility. Existing notes mature in September 2020 and bear interest at a fixed rate of 2.21%. We were in compliance with all covenants at April 30, 2020.
Page 28
Nordson Corporation
outstanding.
We move forward with caution given the potential for a lower-growth macroeconomic environment, continued trade negotiations between the U.S. and other countriesorder entry trends, and the marketplace effects of political instability in certain areas of the world. We are also monitoring the COVID-19 pandemic. While the COVID-19 pandemic did not have a material adverse effect on our reported results for the second quarter,correlation to sales timing, we expect 2021 full year sales growth to be approximately 4% to 6% over 2020. Additionally, we are continuing to actively monitor the impact of the pandemic, which may negatively impact our business and results of operations for the third quarter and potentially beyond. We are unable to predict the ultimate impact that it may have on our business, future results of operations, financial position or cash flows.
Though the status of the global economy remains unclear, our growth potential has been demonstrated over time through our ability to build and enhance our core businesses by entering emerging markets, pursuing market adjacencies and driving growth initiatives. We drive value for our customers through our application expertise, differentiated technology, and direct sales and service support. Our priorities also are focused on operational efficiencies by employing continuous improvement methodologies in our business processes. We expect our efforts will continue to provide more than sufficient cash from operations to meet our liquidity needs, pay dividends to common shareholders and enable us to investforecasting full year 2021 earnings per diluted share in the developmentrange of new applications and markets for our technologies.
$6.30 to $6.70.
| ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
| ITEM 4. CONTROLS AND PROCEDURES |
Page 29
Nordson Corporation
| ITEM 1. LEGAL PROCEEDINGS |
We are involved in pending or potential litigation regarding environmental, product liability, patent, contract, employee and other matters arising from
Class Action Litigation
On February 22, 2019, a former employee, Mr. Ortiz, filed a purported class action lawsuit in the San Diego County Superior Court, California, against Nordson Asymtek, Inc. and Nordson Corporation, alleging various violations of the California Labor Code. Plaintiff seeks, among other things, an unspecified amount for unpaid wages, actual, consequential and incidental losses, penalties, and attorneys’ fees and costs. Mediation is currently scheduled for June 2020. Management believes, based on currently available information, that the ultimate outcome of the proceeding described above will not have a material adverse effect on the Company’s financial condition or results of operations.
Environmental
We have voluntarily agreed with the City of New Richmond, Wisconsin and other Potentially Responsible Parties to share costs associated with the remediation of the City of New Richmond municipal landfill (the “Site”) and the construction of a potable water delivery system serving the impacted area down gradient of the Site. At April 30, 2020 and October 31, 2019, our accrual for the ongoing operation, maintenance and monitoring obligation at the Site was $360 and $401, respectively. The liability for environmental remediation represents management’s best estimate of the probable and reasonably estimable undiscounted costs related to known remediation obligations. The accuracydiscussion of our estimate of environmental liability is affected by several uncertainties such as additional requirements that may be identified in connection with remedial activities, the complexitycontingencies and evolution of environmental laws and regulations, and the identification of presently unknown remediation requirements. Consequently, our liability could be different than our current estimate. However, we do not expect that the costs associated with remediation will have a material adverse effect on our financial condition or results of operations.
| ITEM 1A. RISK FACTORS |
The COVID-19 pandemic may have a negative impact, which could be material, on our ability to operate, results of operations, financial condition, liquidity and capital investments.
In March 2020, the World Health Organization categorized the current coronavirus disease (“COVID-19”) as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. COVID-19 continues to spread throughout the United States and other countries across the world, and the duration and severity of its effects are currently unknown. The pandemic has resulted in governments around the world implementing increasingly stringent measures to help control the spread of the virus, including quarantines, social distancing protocols, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments, school closures and other measures. In addition, governments and central banks in several parts of the world have enacted fiscal and monetary stimulus measures to counteract the impacts of COVID-19.
We manufacture and provide essential products and services to a variety of critical infrastructure customers around the globe, and we intend to continue providing our products and services to these customers. However, any negative impact of the COVID-19 pandemic and similar issues in the future could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity, and capital investments. In addition, preventive measures we may voluntarily put in place may have a material adverse effect on our business for an indefinite period of time, such as the potential shut down of certain locations, decreased employee availability, potential border closures, disruptions to the businesses of our channel partners and other potential adverse effects. Our suppliers and customers may also face these and other challenges, which could lead to a disruption in our supply chain, as well as decreased customer demand for our products and services. These issues may also materially affect our future access to our sources of liquidity, particularly our cash flows from operations, financial condition, capitalization and capital investments. The long-term economic impact and near-term financial impacts of the COVID-19 pandemic cannot be reasonably estimated at this time due to the uncertainty of future developments.
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Nordson Corporation
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| Total Number of |
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| Approximate Dollar Value |
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| Shares Purchased |
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| of Shares that |
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| Total Number |
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| Average |
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| as Part of Publicly |
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| May Yet Be Purchased |
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| of Shares |
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| Price Paid |
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| Announced Plans |
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| Under the Plans |
| ||||
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| Purchased(1) |
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| per Share |
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| or Programs(2) |
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| or Programs(2) |
| ||||
February 1, 2020 to February 29, 2020 |
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| — |
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|
| — |
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| — |
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| $ | 485,242 |
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March 1, 2020 to March 31, 2020 |
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| 212 |
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| 120.71 |
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|
| 212 |
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| $ | 459,543 |
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April 1, 2020 to April 30, 2020 |
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| 88 |
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| 135.33 |
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| 88 |
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| $ | 447,703 |
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Total |
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| 300 |
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|
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| 300 |
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|
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(in whole shares) | Total Number of Shares Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) | Maximum Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) | ||||||||||||||||||||||
November 1, 2020 to November 30, 2020 | 1,136 | 193.01 | 1,136 | $ | 446,884 | |||||||||||||||||||||
December 1, 2020 to December 31, 2020 | 5,348 | 202.12 | 942 | $ | 446,701 | |||||||||||||||||||||
January 1, 2021 to January 31, 2021 | 16,533 | 190.38 | 16,306 | $ | 443,599 | |||||||||||||||||||||
Total | 23,017 | 18,384 |
ITEM 6. | EXHIBITS |
| Separation Agreement and Release between John J. Keane and Nordson Corporation, effective February 1, 2021. | |||||
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101 | ||||||
| The following financial information from Nordson Corporation’s Quarterly Report on Form 10-Q for the three months ended | |||||
104 | ||||||
| The cover page from Nordson Corporation’s Quarterly Report on Form 10-Q for the quarter ended |
* | Furnished herewith. |
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Date: March 4, 2021 | Nordson Corporation | |||||
By: /s/ | ||||||
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Executive Vice President, Chief Financial Officer | ||||||
(Principal Financial Officer) |