Business News

Nordson Corporation Reports Second Quarter Results for Fiscal 2009

Monday 01. June 2009 - Revenue, operating margin and earnings per share improve sequentially over first quarter ; Second quarter selling and administrative expenses decline 25 percent versus same period a year ago; Strong second quarter free cash flow of $40 million matches level of a year ago

Nordson Corporation (Nasdaq:NDSN) today reported results for the second quarter of its 2009 fiscal year. For the quarter ending April 30, 2009, revenue was $189 million and net income was $14 million. Diluted earnings per share were $0.41, inclusive of a $0.10 per share charge related to previously announced cost reduction activities and a $0.07 per share gain related to a one-time tax benefit. Prior year revenue, net income and diluted earnings per share were $294 million, $33 million and $0.97, respectively.

“As expected, Nordson’s second-quarter results were impacted by the continued global economic downturn. On a positive note, revenue, operating income and earnings per share for the quarter all improved sequentially,” said Chairman, President and Chief Executive Officer Edward P. Campbell. “Our management team has responded aggressively to difficult conditions through implementation of broad-based cost reduction activities, the pace and scope of which are exceeding initial expectations. These actions have protected profitability, as evidenced by the widening of operating margin over the first quarter from 7 percent to10 percent.” Excluding restructuring charges, operating margin in the second quarter was 13 percent. Free cash flow increased 60 percent over the first quarter of 2009 to $40 million, a level approximately equal to last year’s second quarter.

Second Quarter Segment & Regional Results
“Within Adhesives Dispensing Systems, consumer non-durable end markets such as packaging and nonwovens have continued to remain more stable, enabling the segment to perform relatively well,” said Campbell. “Demand in semiconductor and electronics markets served by the Advanced Technology segment continued to be weak compared to a year ago, most notably in Asia Pacific. In the Industrial Coatings & Automotive segment, lack of capital spending in consumer durable end markets impacted sales. Overall, demand for aftermarket parts and the consumables portion of the company’s product portfolio remained more stable than did demand for systems.” Detailed sales by operating segment and geography are included in the accompanying tables.

Fiscal Year-to-Date Results
For the first half of fiscal 2009, sales were $375 million and net income was $25 million. First-half earnings per share on a diluted basis were $0.74, inclusive of $0.25 in charges related to restructuring activities and $0.17 in gains related to the sale of real estate assets and a one-time tax benefit. Prior year first-half revenue, net income and diluted earnings per share were $539 million, $54 million and $1.59 respectively.

“From an operating perspective, the cost savings activities we have implemented have the company on pace to realize $80 million in total selling and administrative expense savings during 2009, surpassing our previous estimate of $60 million,” added Campbell.

Order Rates and Backlog
Order rates for the 12-week period ending May 17, 2009, measured in constant currency, decreased 25 percent over the same period a year ago. Order rates by segment and geography are provided in the accompanying financial tables.

Backlog at the end of the second quarter was approximately $80 million, a decrease of 29 percent compared with $113 million at the end of the second quarter last year, and an increase of 4 percent compared with $77 million at the end of the first quarter of fiscal year 2009. Backlog amounts are calculated at April 30, 2009 exchange rates.

“The decline in year-over-year order rates reflects both the difficult economic environment and comparison against a very strong performance in 2008,” said Campbell. “On a sequential basis, order entry has improved in recent months. Specifically, average weekly-order volume during the past two and one-half months has increased 9 percent compared to the average in the first two months of the calendar year.”

Outlook
For the third quarter of fiscal year 2009, sales are expected to be in the range of $192 million to $202 million, reflecting continuing sequential improvement from the second quarter. Compared to the prior-year third quarter, currency translation is expected to produce an estimated 6 percent negative effect. Diluted earnings per share are expected to be in the range of $0.39 to $0.50, inclusive of a $0.03 per share charge associated with restructuring activities.

“We continue to operate the business under the assumption that a recovery will not occur in fiscal 2009,” said Campbell. “We will remain watchful throughout the second half of the year, matching resources with demand as necessary. Our strong balance sheet, solid margins, positive free cash flow and ample sources of credit continue to provide us with the flexibility to meet a variety of scenarios. While the cost reduction actions we have taken thus far have been aggressive, they have not impacted our ability to serve customers or maintain market share. As positive macro-economic signs begin to emerge, Nordson is well positioned to react opportunistically.”