Nordson Corporation

08/22/2024 | Press release | Distributed by Public on 08/22/2024 11:43

Quarterly Report for Quarter Ending July 31, 2024 (Form 10-Q)

ndsn-20240731
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-7977
____________________________________________________
NORDSON CORPORATION
(Exact name of registrant as specified in its charter)
___________________________________________________
Ohio
(State or other jurisdiction of incorporation or organization)
28601 Clemens Road
Westlake, Ohio
(Address of principal executive offices)
34-0590250
(I.R.S. Employer Identification No.)
44145
(Zip Code)
(440) 892-1580
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Trading Symbol(s) Name of Each Exchange
On Which Registered
Common Shares, without par value NDSN Nasdaq Stock Market LLC
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesxNo o
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YesxNo o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No x
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Shares, without par value as of August 20, 2024: 57,181,533
Table of Contents
PART I - FINANCIAL INFORMATION
3
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
3
Condensed Consolidated Statements of Income
3
Consolidated Statements of Comprehensive Income
4
Consolidated Balance Sheets
5
Consolidated Statements of Shareholders' Equity
6
Condensed Consolidated Statements of Cash Flows
8
Notes to Condensed Consolidated Financial Statements
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
24
Overview
24
Critical Accounting Policies and Estimates
24
Results of Operations
24
Financial Condition
27
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
28
ITEM 4. CONTROLS AND PROCEDURES
28
PART II - OTHER INFORMATION
29
ITEM 1. LEGAL PROCEEDINGS
29
ITEM 1A. RISK FACTORS
29
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
29
ITEM 5. OTHER INFORMATION
29
ITEM 6. EXHIBITS
31
SIGNATURE
32
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Nordson Corporation
Part I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Statements of Income
Three Months Ended Nine Months Ended
(In thousands, except for per share data) July 31, 2024 July 31, 2023 July 31, 2024 July 31, 2023
Sales $ 661,604 $ 648,677 $ 1,945,439 $ 1,909,319
Operating costs and expenses:
Cost of sales 292,603 288,357 862,134 868,007
Selling and administrative expenses 201,943 189,324 588,196 553,590
494,546 477,681 1,450,330 1,421,597
Operating profit 167,058 170,996 495,109 487,722
Other income (expense):
Interest expense (18,803) (12,089) (60,354) (32,532)
Interest and investment income 1,027 603 3,625 1,628
Other income (expense) - net 152 2,542 (971) (2,059)
(17,624) (8,944) (57,700) (32,963)
Income before income taxes 149,434 162,052 437,409 454,759
Income taxes 32,107 34,161 92,293 95,044
Net income $ 117,327 $ 127,891 $ 345,116 $ 359,715
Average common shares 57,229 56,989 57,171 57,114
Incremental common shares attributable to equity compensation 395 541 449 543
Average common shares and common share equivalents 57,624 57,530 57,620 57,657
Basic earnings per share $ 2.05 $ 2.24 $ 6.04 $ 6.30
Diluted earnings per share $ 2.04 $ 2.22 $ 5.99 $ 6.24
See accompanying notes.
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Consolidated Statements of Comprehensive Income
Three Months Ended Nine Months Ended
(In thousands) July 31, 2024 July 31, 2023 July 31, 2024 July 31, 2023
Net income $ 117,327 $ 127,891 $ 345,116 $ 359,715
Components of other comprehensive income (loss):
Foreign currency translation adjustments 8,096 3,455 19,419 79,986
Pension and other postretirement plan adjustments, net of tax (1,198) (159) (1,638) (908)
Total other comprehensive income 6,898 3,296 17,781 79,078
Total comprehensive income $ 124,225 $ 131,187 $ 362,897 $ 438,793
See accompanying notes.
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Consolidated Balance Sheets
(In thousands)
Assets
Current assets: July 31, 2024 October 31, 2023
Cash and cash equivalents $ 165,324 $ 115,679
Receivables - net 538,541 590,886
Inventories - net 438,167 454,775
Prepaid expenses and other current assets 82,106 67,970
Total current assets 1,224,138 1,229,310
Goodwill 2,785,773 2,784,201
Intangible assets - net 628,764 672,744
Property, plant and equipment - net 401,415 392,846
Operating right of use lease assets 96,631 106,176
Deferred income taxes 20,408 16,022
Other assets 47,241 50,471
Total assets $ 5,204,370 $ 5,251,770
Liabilities and shareholders' equity
Current liabilities:
Current maturities of long-term debt and notes payable $ 96,288 $ 115,662
Accrued liabilities 204,796 199,588
Accounts payable 98,305 106,320
Customer advanced payments 62,339 93,389
Income taxes payable 34,085 45,359
Operating lease liability - current 17,136 16,853
Finance lease liability - current 5,318 4,918
Total current liabilities 518,267 582,089
Long-term debt 1,398,155 1,621,394
Operating lease liability - noncurrent 83,775 92,412
Deferred income taxes 205,309 210,637
Postretirement obligations 51,120 50,862
Pension obligations 42,520 40,425
Finance lease liability - noncurrent 12,454 11,670
Other long-term liabilities 39,012 44,221
Shareholders' equity:
Common shares 12,253 12,253
Capital in excess of stated value 708,070 668,097
Retained earnings 4,217,680 3,989,353
Accumulated other comprehensive loss (178,660) (196,441)
Common shares in treasury, at cost (1,905,586) (1,875,202)
Total shareholders' equity 2,853,757 2,598,060
Total liabilities and shareholders' equity $ 5,204,370 $ 5,251,770
See accompanying notes.
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Consolidated Statements of Shareholders' Equity
Nine Months Ended July 31, 2024
(In thousands, except for share and 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, 2023 $ 12,253 $ 668,097 $ 3,989,353 $ (196,441) $ (1,875,202) $ 2,598,060
Shares issued under company stock and employee benefit plans - 12,519 - - 1,899 14,418
Stock-based compensation - 4,659 - - - 4,659
Purchase of treasury shares - - - - (7,371) (7,371)
Dividends declared ($0.68 per share)
- - (38,855) - - (38,855)
Net income - - 109,572 - - 109,572
Other Comprehensive Income (Loss):
Foreign currency translation adjustments - - - 43,943 - 43,943
Defined benefit pension and post-retirement
plan adjustments 		- - - (459) - (459)
January 31, 2024 $ 12,253 $ 685,275 $ 4,060,070 $ (152,957) $ (1,880,674) $ 2,723,967
Shares issued under company stock and employee benefit plans - 11,412 - - 1,389 12,801
Stock-based compensation - 5,384 - - - 5,384
Purchase of treasury shares - - - - (556) (556)
Dividends declared ($0.68 per share)
- - (38,941) - - (38,941)
Net income - - 118,217 - - 118,217
Other Comprehensive Income (Loss):
Foreign currency translation adjustments - - - (32,620) - (32,620)
Defined benefit pension and post-retirement
plan adjustments 		- - - 19 - 19
April 30, 2024 $ 12,253 $ 702,071 $ 4,139,346 $ (185,558) $ (1,879,841) $ 2,788,271
Shares issued under company stock and employee benefit plans - 1,490 - - 433 1,923
Stock-based compensation - 4,509 - - - 4,509
Purchase of treasury shares - - - - (26,178) (26,178)
Dividends declared ($0.68 per share)
- - (38,993) - - (38,993)
Net income - - 117,327 - - 117,327
Other Comprehensive Income (Loss):
Foreign currency translation adjustments - - - 8,096 - 8,096
Defined benefit pension and post-retirement
plan adjustments 		- - - (1,198) - (1,198)
July 31, 2024 $ 12,253 $ 708,070 $ 4,217,680 $ (178,660) $ (1,905,586) $ 2,853,757
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Nine Months Ended July 31, 2023
(In thousands, except for share and 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, 2022 $ 12,253 $ 626,697 $ 3,652,216 $ (207,782) $ (1,789,009) $ 2,294,375
Shares issued under company stock and employee benefit plans - 7,032 - - 1,775 8,807
Stock-based compensation - 7,071 - - - 7,071
Purchase of treasury shares - - - - (6,875) (6,875)
Dividends declared ($0.65 per share)
- - (37,199) - - (37,199)
Net income - - 104,261 - - 104,261
Other Comprehensive Income (Loss):
Foreign currency translation adjustments - - - 76,821 - 76,821
Defined benefit pension and post-retirement
plan adjustments 		- - - (576) - (576)
January 31, 2023 $ 12,253 $ 640,800 $ 3,719,278 $ (131,537) $ (1,794,109) $ 2,446,685
Shares issued under company stock and employee benefit plans - 2,632 - - 369 3,001
Stock-based compensation - 4,970 - - - 4,970
Purchase of treasury shares - - - - (47,490) (47,490)
Dividends declared ($0.65 per share)
- - (37,264) - - (37,264)
Net income - - 127,563 - - 127,563
Other Comprehensive Income (Loss):
Foreign currency translation adjustments - - - (290) - (290)
Defined benefit pension and post-retirement
plan adjustments 		- - - (173) - (173)
April 30, 2023 $ 12,253 $ 648,402 $ 3,809,577 $ (132,000) $ (1,841,230) $ 2,497,002
Shares issued under company stock and employee benefit plans - 5,958 - - 683 6,641
Stock-based compensation - 5,858 - - - 5,858
Purchase of treasury shares - - - - (23,798) (23,798)
Dividends declared ($0.65 per share)
- - (37,084) - - (37,084)
Net income - - 127,891 - - 127,891
Other Comprehensive Income (Loss):
Foreign currency translation adjustments - - - 3,455 - 3,455
Defined benefit pension and post-retirement
plan adjustments 		- - - (159) - (159)
July 31, 2023 $ 12,253 $ 660,218 $ 3,900,384 $ (128,704) $ (1,864,345) $ 2,579,806
See accompanying notes.
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Condensed Consolidated Statements of Cash Flows
(In thousands) Nine Months Ended
Cash flows from operating activities: July 31, 2024 July 31, 2023
Net income $ 345,116 $ 359,715
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 99,646 80,637
Non-cash stock compensation 14,552 17,067
Deferred income taxes (3,830) (930)
Other non-cash expense 3,698 762
Loss on sale of property, plant and equipment 1,015 1,624
Changes in operating assets and liabilities and other (385) 19,197
Net cash provided by operating activities 459,812 478,072
Cash flows from investing activities:
Additions to property, plant and equipment (43,786) (24,244)
Proceeds from sale of property, plant and equipment 63 91
Other 8,833 -
Acquisition of business, net of cash acquired - (377,843)
Net cash used in investing activities (34,890) (401,996)
Cash flows from financing activities:
Proceeds from issuance of debt 4,334 1,279,151
Repayment of debt (248,689) (1,205,195)
Repayment of finance lease obligations (4,505) (4,769)
Issuance of common shares in treasury 29,142 18,449
Purchase of treasury shares (34,105) (78,163)
Dividends paid (116,789) (111,547)
Net cash used in financing activities (370,612) (102,074)
Effect of exchange rate changes on cash (4,665) 5,679
Increase (decrease) in cash and cash equivalents 49,645 (20,319)
Cash and cash equivalents at beginning of period 115,679 163,457
Cash and cash equivalents at end of period $ 165,324 $ 143,138
See accompanying notes.
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Notes to Condensed Consolidated Financial Statements
July 31, 2024
NOTE REGARDING AMOUNTS AND FISCAL YEAR REFERENCES
In this Quarterly Report on Form 10-Q, all amounts related to United States dollars and foreign currency and to the number of Nordson Corporation's common shares, except for per share earnings and dividend amounts, are expressed in thousands. Unless the context otherwise indicates, all references to "we" or the "Company" mean Nordson Corporation.
Unless otherwise noted, all references to years relate to our fiscal year ending October 31.
Significant accounting policies
Basis of presentation. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles in the United States ("U.S. GAAP") for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended July 31, 2024 are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the Consolidated Financial Statements and notes included in our Annual Report on Form 10-K for the year ended October 31, 2023.
Consolidation. The Condensed Consolidated Financial Statements include the accounts of Nordson Corporation and its 100%-owned and controlled subsidiaries. Investments in affiliates and joint ventures in which our ownership is 50% or less or in which we do not have control but have the ability to exercise significant influence, are accounted for under the equity method. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of estimates. The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements. Actual amounts could differ from these estimates.
Revenue recognition. A contract exists when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of the consideration is probable. Revenue is recognized when performance obligations under the terms of the contract with a customer are satisfied. Generally, our revenue results from short-term, fixed-price contracts and primarily is recognized as of a point in time when the product is shipped or at a later point when the control of the product transfers to the customer. Revenue for undelivered items is deferred and included within Accrued liabilities in our Consolidated Balance Sheets. Revenues deferred as of July 31, 2024 and 2023 were not material.
However, for certain contracts related to the sale of customer-specific products within our Medical and Fluid Solutions segment, revenue is recognized over time as we satisfy performance obligations because of the continuous transfer of control to the customer. The continuous transfer of control to the customer occurs as we enhance assets that are customer controlled and we are contractually entitled to payment for work performed to date plus a reasonable margin.
As control transfers over time for these products or services, revenue is recognized based on progress toward completion of the performance obligations. The selection method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We have elected to use the input method - costs incurred for these contracts because it best depicts the transfer of products or services to the customer based on incurring costs on the contract. Under this method, revenues are recorded proportionally as costs are incurred. Contract assets recognized are recorded in Prepaid expenses and other current assets and contract liabilities are recorded in Accrued liabilities in our Consolidated Balance Sheets and were not material on July 31, 2024 and October 31, 2023. Revenue recognized over time represented approximately less than ten percent of our overall consolidated revenues at July 31, 2024 and October 31, 2023.
Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or services. Taxes, including sales and value add, that we collect concurrently with revenue-producing activities are excluded from revenue. As a practical expedient, we may exclude the assessment of whether goods or services are performance obligations, if they are immaterial in the context of the contract, and combine these with other performance obligations. While payment terms and conditions vary by contract type, we have determined that our contracts generally do not include a significant financing component. We have elected to apply the practical expedient to treat all shipping and handling costs as fulfillment costs as a significant portion of these costs are incurred prior to transfer of control to the customer. We have also elected to apply the practical expedient to expense sales commissions as they are incurred as the amortization period resulting from capitalizing the
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costs is one year or less. These costs are recorded within Selling and administrative expenses in our Condensed Consolidated Statements of Income.
We offer assurance-type warranties on our products as well as separately sold warranty contracts. Revenue related to warranty contracts that are sold separately is recognized over the life of the warranty term and are not material. 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, these items are typically regarded as inconsequential or not material.
We disclose disaggregated revenues by operating segment and geography in accordance with the revenue standard and on the same basis used internally by the chief operating decision maker for evaluating performance of operating segments and for allocating resources. Refer to our Operating segments Note for details.
Earnings per share. Basic earnings per share are computed based on the weighted-average number of common shares outstanding during each year, while diluted earnings per share are based on the weighted-average number of common shares and common share equivalents outstanding. Common share equivalents consist of shares issuable upon exercise of stock options computed using the treasury stock method, as well as restricted shares and deferred stock-based compensation. Options whose exercise price is higher than the average market price are excluded from the calculation of diluted earnings per share because the effect would be anti-dilutive. Options excluded from the calculation of diluted earnings per share for the three months ended July 31, 2024 and 2023 were74 and 138, respectively. Options excluded from the calculation of diluted earnings per share for the nine months ended July 31, 2024 and 2023 were 74 and 141, respectively.
Recently issued accounting standards
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires enhanced disclosures about significant segment expenses and enhanced disclosures in interim periods. The guidance in ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023 and interim reporting periods in fiscal years beginning after December 31, 2024, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-07 will have on its consolidated financial statements and disclosures and anticipates adoption in 2025.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to improve income tax disclosure requirements by requiring specific disclosure in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The guidance in ASU 2023-09 will be effective for annual reporting periods in fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact that the adoption of ASU 2023-09 will have on its consolidated financial statements and disclosures and anticipates adoption in fiscal 2026.
Acquisitions
Business acquisitions have been accounted for using the acquisition method, with the acquired assets and liabilities recorded at estimated fair value on the dates of acquisition. The cost in excess of the net assets of the business acquired is included in goodwill. Operating results since the respective dates of acquisitions are included in the Condensed Consolidated Statements of Income.
2024 Acquisition
On August 21, 2024, the Company completed the acquisition of Atrion Corporation, a Delaware corporation ("Atrion"), pursuant to the terms of the Agreement and Plan of Merger (the "Merger Agreement"), dated May 28, 2024, with Alpha Medical Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Nordson ("Merger Sub"), and Atrion. Pursuant to the Merger Agreement, Merger Sub merged with and into Atrion (the "Merger"), with Atrion surviving the Merger as a wholly owned subsidiary of Nordson. Atrion is a leader in proprietary medical infusion fluid delivery and niche cardiovascular solutions and will operate within our Medical and Fluid Solutions segment. The all-cash acquisition of Atrion of approximately $800,000, net of cash acquired, was funded using borrowings under our revolving credit facility and Term Loan Agreement (refer to Long-term debt Note) and cash on hand. Atrion sales for the year ended December 31, 2023 were approximately $169,000.
2023 Acquisitions
On August 24, 2023, the Company completed the acquisition of the ARAG Group and its subsidiaries ("ARAG Group" or "ARAG") pursuant to the terms of the Sale and Purchase Agreement, dated as of June 25, 2023, by and among the Company, its Italian subsidiary, Capvis Equity V LP, DRIP Co-Investment, and certain individuals. ARAG is a global market and innovation leader in the development, production and supply of precision control systems and smart fluid components for agricultural spraying. ARAG operates as a division of our Industrial Precision Solutions segment. In anticipation of the acquisition, the
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Company entered into a €760,000 senior unsecured term loan facility with a group of banks in August 2023 (the "364-Day Term Loan Facility"). The all-cash ARAG acquisition of approximately €957,000, net of the repayment of approximately €30,300 of debt of the acquired companies, was funded using borrowings under the 364-Day Term Loan Facility and the Company's revolving credit facility. The 364-Day Term Loan Facility was subsequently paid off in September 2023 with the net proceeds of a senior notes offering. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $687,357 and identifiable intangible assets of $353,500 were recorded. The identifiable intangible assets consist primarily of $27,500 of tradenames (amortized over nine years), $31,000 of technology (amortized over five years), and $295,000 of customer relationships (amortized over twenty-two years). Goodwill associated with the acquisition was not tax deductible. As of July 31, 2024, the purchase price allocation remains preliminary as we complete our assessment principally of income taxes. The financial results of the ARAG Group acquisition are not expected to have a material impact on our Consolidated Financial Statements.
The assets and liabilities acquired were as follows:
August 24, 2023
Cash $ 32,966
Receivables - net 31,081
Inventories - net 51,952
Goodwill 687,357
Intangibles 353,500
Other assets 55,993
Total Assets $ 1,212,849
Accounts payable $ 18,915
Deferred income taxes 100,097
Other liabilities 15,934
Total Liabilities $ 134,946
On November 3,2022, we acquired 100% of CyberOptics Corporation ("CyberOptics"). CyberOptics is a leading global developer and manufacturer of high-precision 3D optical sensing technology solutions. The CyberOptics acquisition expanded our test and inspection platform, providing differentiated technology that expands our product offering in the semiconductor and electronics industries and is reported in our Advanced Technology Solutions segment. We acquired CyberOptics for an aggregate purchase price of $377,843, net of cash of approximately $40,890, funded using borrowings under our revolving credit facility and cash on hand. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $285,330 and identifiable intangible assets of $58,600 were recorded. The identifiable intangible assets consist primarily of $15,200 of tradenames (amortized over fifteen years), $14,600 of technology (amortized over seven years), and $28,800 of customer contracts (amortized over twelve years). Goodwill associated with the acquisition was not tax deductible. As of July 31, 2024, the purchase price allocation was final. The results of CyberOptics are not material to our Consolidated Financial Statements.
The assets and liabilities acquired were as follows:
November 3, 2022
Cash $ 40,890
Receivables - net 21,364
Inventories - net 33,639
Goodwill 285,330
Intangibles 58,600
Other assets 13,768
Total Assets $ 453,591
Accounts payable $ 8,109
Deferred income taxes 14,826
Other liabilities 11,923
Total Liabilities $ 34,858
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Receivables
Our allowance for credit losses is principally determined based on aging of receivables. Receivables are exposed to credit risk based on the customers' ability to pay which is influenced by, among other factors, their financial liquidity. We perform ongoing customer credit evaluation to maintain sufficient allowances for potential credit losses. Our segments perform credit evaluation and monitoring to estimate and manage credit risk through the review of customer information, credit ratings, approval and monitoring of customer credit limits, and assessment of market conditions. We may also require prepayments or bank guarantees from customers to mitigate credit risk. Our receivables are generally short-term in nature with a majority of receivables outstanding less than 90 days. Accounts receivable balances are written-off against the allowance if deemed uncollectible.
Accounts receivable are net of an allowance for credit losses of $11,839 and $10,015 on July 31, 2024 and October 31, 2023, respectively. The provision for losses on receivables was $1,678 and $2,156 for the three and nine months ended July 31, 2024, respectively, compared to provision for losses of $410 and provision income of $239 for the same periods a year ago, respectively.The remaining change in the allowance for credit losses is principally related to net write-off/recoveries of uncollectible accounts as well as currency translation.
Inventories
Components of inventories were as follows:
July 31, 2024 October 31, 2023
Finished goods $ 255,565 $ 233,552
Raw materials and component parts 200,961 211,874
Work-in-process 65,462 86,474
521,988 531,900
Obsolescence and other reserves (83,821) (77,125)
$ 438,167 $ 454,775
Property, Plant and Equipment
Components of property, plant and equipment were as follows:
July 31, 2024 October 31, 2023
Land $ 15,280 $ 15,792
Land improvements 5,099 5,019
Buildings 289,691 294,267
Machinery and equipment 577,723 549,291
Enterprise management system 53,385 52,939
Construction-in-progress 40,054 24,916
Leased property under finance leases 30,086 28,406
1,011,318 970,630
Accumulated depreciation and amortization (609,903) (577,784)
$ 401,415 $ 392,846
Depreciation expense was $14,180 and $13,180 for the three months ended July 31, 2024 and 2023, respectively. Depreciation expense was $42,234 and $38,798 for the nine months ended July 31, 2024 and 2023, respectively.
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Goodwill and other intangible assets
Changes in the carrying amount of goodwill for the nine months ended July 31, 2024 by operating segment were as follows:
Industrial
Precision
Solutions 		Medical Fluid Systems Advanced
Technology
Solutions 		Total
Balance at October 31, 2023 $ 1,208,996 $ 1,173,858 $ 401,347 $ 2,784,201
Acquisitions (7,543) - - (7,543)
Currency effect 5,972 1,341 1,802 9,115
Balance at July 31, 2024 $ 1,207,425 $ 1,175,199 $ 403,149 $ 2,785,773
See Acquisitions Note for additional details.
Information regarding our intangible assets subject to amortization was as follows:
July 31, 2024
Carrying
Amount 		Accumulated
Amortization 		Net Book
Value
Customer relationships $ 811,392 $ 327,906 $ 483,486
Patent/technology costs 207,113 128,990 78,123
Trade name 126,820 59,861 66,959
Non-compete agreements 8,486 8,290 196
Other 421 421 -
Total $ 1,154,232 $ 525,468 $ 628,764
October 31, 2023
Carrying
Amount 		Accumulated
Amortization 		Net Book
Value
Customer relationships $ 794,706 $ 287,585 $ 507,121
Patent/technology costs 204,905 112,994 91,911
Trade name 125,692 52,488 73,204
Non-compete agreements 10,028 9,521 507
Other 182 181 1
Total $ 1,135,513 $ 462,769 $ 672,744
Amortization expense for the three months ended July 31, 2024 and 2023 was $19,202 and $13,922, respectively. Amortization expense for the nine months ended July 31, 2024 and 2023 was $57,412 and $41,839, respectively. See Acquisitions Note for details regarding intangibles recorded due to the acquisition of ARAG and CyberOptics.
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Pension and other postretirement plans
The components of net periodic pension and other postretirement cost for the three and nine months ended July 31, 2024 and 2023 were:
U.S. International
Three Months Ended 2024 2023 2024 2023
Service cost $ 2,507 $ 2,744 $ 231 $ 281
Interest cost 4,752 4,176 688 642
Expected return on plan assets (6,652) (6,529) (417) (392)
Amortization of prior service credit - - (2) (13)
Amortization of net actuarial loss - - 7 20
Settlement loss 56 - - -
Total benefit cost $ 663 $ 391 $ 507 $ 538
U.S. International
Nine Months Ended 2024 2023 2024 2023
Service cost $ 7,522 $ 8,233 $ 702 $ 838
Interest cost 14,257 12,526 2,062 1,887
Expected return on plan assets (19,958) (19,587) (1,250) (1,151)
Amortization of prior service credit - - (6) (38)
Amortization of net actuarial loss - - 24 61
Settlement loss 56 - - -
Total benefit cost $ 1,877 $ 1,172 $ 1,532 $ 1,597
The components of other postretirement benefit costs for the three and nine months ended July 31, 2024 and 2023 were:
U.S. International
Three Months Ended 2024 2023 2024 2023
Service cost $ 70 $ 100 $ 1 $ 1
Interest cost 754 766 3 3
Amortization of net actuarial gain (147) - (14) (16)
Total benefit cost (income) $ 677 $ 866 $ (10) $ (12)
U.S. International
Nine Months Ended 2024 2023 2024 2023
Service cost $ 211 $ 299 $ 4 $ 4
Interest cost 2,262 2,297 10 8
Amortization of net actuarial gain (443) - (43) (47)
Total benefit cost (income) $ 2,030 $ 2,596 $ (29) $ (35)
The components of net periodic pension and other postretirement cost, other than service cost, are included in Other - net in our Condensed Consolidated Statements of Income.
Income taxes
We record our interim provision for income taxes based on our estimated annual effective tax rate, as well as certain items discrete to the current period. The effective tax rate for the three months ended July 31, 2024 and 2023 was 21.5% and 21.1%, respectively. The effective tax rate for the nine months ended July 31, 2024 and 2023 was 21.1% and 20.9%, respectively.
Due to our share-based payment transactions, our income tax provision included a discrete tax benefit of $537 and $2,846 for the three and nine months ended July 31, 2024, respectively. Our income tax provision included a similar discrete tax benefit of $996 and $2,745 for the three and nine months ended July 31, 2023, respectively.
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Accumulated other comprehensive income (loss)
The components of accumulated other comprehensive income (loss), including adjustments for items that are reclassified from accumulated other comprehensive loss to net income, are shown below.
Cumulative
translation
adjustments 		Pension and
postretirement
benefit plan
adjustments 		Accumulated
other
comprehensive
income (loss)
Balance at October 31, 2023 $ (133,280) $ (63,161) $ (196,441)
Pension and other postretirement plan adjustments, net of tax of $250
- (1,638) (1,638)
Foreign currency translation adjustments(a)
19,419 - 19,419
Balance at July 31, 2024 $ (113,861) $ (64,799) $ (178,660)
(a)Includes a net loss of $11,475, net of tax of $3,427, on net investment hedges.
Stock-based compensation
During the 2021 Annual Meeting of Shareholders, our shareholders approved the Nordson Corporation 2021 Stock Incentive and Award Plan (the "2021 Plan") as the successor to the Amended and Restated 2012 Stock Incentive and Award Plan (the "2012 Plan"). The 2021 Plan provides for the granting of stock options, stock appreciation rights, restricted shares, restricted share units, performance shares, cash awards and other stock or performance-based incentives. A maximum of 900 common shares were authorized for grant under the 2021 Plan plus the number of shares that remained available to be granted under the 2012 Plan, as well as issuable under the CyberOptics equity plan. As of July 31, 2024, a total of 1,875 common shares were available to be granted under the 2021 Plan.
Stock Options
Nonqualified or incentive stock options may be granted to our employees and directors. Generally, options granted to employees may be exercised beginning one year from the date of grant at a rate not exceeding 25 percent per year and expire 10 years from the date of grant. Vesting accelerates upon a qualified termination in connection with a change in control. In the event of termination of employment due to early retirement or normal retirement at age 65, options granted within 12 months prior to termination are forfeited, and vesting continues postretirement for all other unvested options granted. In the event of disability or death, all unvested stock options granted within 12 months prior to termination fully vest. Termination for any other reason results in forfeiture of unvested options and vested options in certain circumstances. The amortized cost of options is accelerated if the retirement eligibility date occurs before the normal vesting date. Option exercises are satisfied through the issuance of treasury shares on a first-in, first-out basis. We recognized compensation expense related to stock options of $1,426 and $3,960 for the three and nine months ended July 31, 2024, respectively, compared to $1,697 and $4,982 for the three and ninemonths ended July 31, 2023, respectively.
The following table summarizes activity related to stock options for the nine months ended July 31, 2024:
Number of
Options 		Weighted-
Average
Exercise Price
Per Share 		Aggregate
Intrinsic Value 		Weighted
Average
Remaining
Term
Outstanding at October 31, 2023 1,062 $ 152.41
Granted 61 238.35
Exercised (243) 122.43
Forfeited or expired (7) 229.00
Outstanding at July 31, 2024 873 $ 166.21 $ 74,716 4.9 years
Expected to vest 164 $ 239.41 $ 2,428 8.0 years
Exercisable at July 31, 2024 707 $ 149.00 $ 72,263 4.2 years
As of July 31, 2024, there was $5,668 of total unrecognized compensation cost related to unvested stock options. That cost is expected to be amortized over a weighted average period of approximately 2.9 years.
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The fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:
Nine Months Ended July 31, 2024 July 31, 2023
Expected volatility 30.3% - 31.7% 30.4% - 31.8%
Expected dividend yield 1.15% - 1.20% 1.12% - 1.27%
Risk-free interest rate 4.22% - 4.52% 3.79% - 4.21%
Expected life of the option (in years) 5.0 - 6.2 5.0 - 6.2
The weighted-average expected volatility used to value the 2024 and 2023 options was 30.7% and 30.6%, respectively.
Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options. The risk-free interest rate was selected based upon yields of U.S. Treasury issues with a term equal to the expected life of the option being valued.
The weighted average grant date fair value of stock options granted during the nine months ended July 31, 2024 and 2023 was $79.84 and $77.99, respectively.
The total intrinsic value of options exercised during the three months ended July 31, 2024 and 2023 was $3,115 and $7,741, respectively. The total intrinsic value of options exercised during the nine months ended July 31, 2024 and 2023 was $33,286 and $19,873, respectively.
Cash received from the exercise of stock options for the nine months ended July 31, 2024 and 2023 was $29,142 and $18,449, respectively.
Restricted Shares and Restricted Share Units
We may grant restricted shares and/or restricted share units to our employees and directors. These shares or units may not be transferred for a designated period of time (generally oneto three years) defined at the date of grant. We may also grant continuation awards in the form of restricted share units with cliff vesting and a performance measure that must be achieved for the restricted share units to vest.
For employee recipients, in the event of termination of employment due to early retirement, with the consent of the Company, restricted shares and units granted within 12 months prior to termination are forfeited, and other restricted shares and units vest on a pro-rata basis, subject to the consent of the Compensation Committee. In the event of termination of employment due to normal retirement at age 65, restricted shares and units granted within 12 months prior to termination are forfeited, and, for other restricted shares and units, the restriction period applicable to restricted shares will lapse and the shares will vest and be transferable and all unvested units will become vested in full, subject to the consent of the Compensation Committee. In the event of a recipient's disability or death, all restricted shares and units granted within 12 months prior to termination fully vest. Termination for any other reason prior to the lapse of any restrictions or vesting of units results in forfeiture of the shares or units.
For non-employee directors, all restrictions lapse in the event of disability or death of the non-employee director. Termination of service as a director for any other reason within one year of date of grant results in a pro-rata vesting of shares or units.
As shares or units are issued, stock-based compensation equivalent to the fair value on the date of grant is expensed over the vesting period.
As of July 31, 2024, there was no unrecognized compensation cost related to restricted shares. The amount charged to expense related to restricted shares during the three months ended July 31, 2024 and 2023 was $0 and $73, respectively, which included common share dividends of $0 and $2, respectively. For the nine months ended July 31, 2024 and 2023, the amounts charged to expense related to restricted shares were $0 and $336, respectively, which included common share dividends of $0 and $5, respectively.
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The following table summarizes activity related to restricted share units during the nine months ended July 31, 2024:
Number of Units Weighted-Average
Grant Date
Fair Value
Restricted share units at October 31, 2023 69 $ 236.28
Granted 39 234.74
Forfeited (5) 241.30
Vested (31) 233.05
Restricted share units at July 31, 2024 72 $ 236.37
As of July 31, 2024, there was $10,876 of remaining expense to be recognized related to outstanding restricted share units, which is expected to be recognizedover a weighted average period of 1.9 years. The amount charged to expense related to restricted share units during each of the three months ended July 31, 2024 and 2023 was $2,198 and $2,152, respectively, compared to charges of $6,658 and $6,658, respectively, for the nine months ended July 31, 2024 and 2023, respectively.
Performance Share Incentive Awards
Executive officers and selected other key employees are eligible to receive common share-based incentive awards. Payouts, in the form of unrestricted common shares, vary based on the degree to which corporate financial performance exceeds predetermined threshold, target and maximum performance goals over three-year performance periods. No payout will occur unless threshold performance is achieved.
The amount of compensation expense is based upon current performance projections and the percentage of the requisite service that has been rendered. The calculations are based upon the grant date fair value, which is principally driven by the stock price on the date of grant. The per share values were $229.58 and $225.14 in 2024, and $231.34, $211.25 and $214.51 for 2023. The amount charged to expense related to performance awards for the three months ended July 31, 2024 and 2023 was $771 and $1,831, respectively. For the nine months ended July 31, 2024 and July 31, 2023, $3,637 and $4,785 were charged to expense, respectively. As of July 31, 2024, there was $8,224 of unrecognized compensation cost related to performance share incentive awards.
Deferred Compensation
Our executive officers and other highly compensated employees may elect to defer up to 100 percent of their base pay and cash incentive compensation, and for executive officers, up to 90 percent of their share-based performance incentive payout each year. Additional share units are credited for quarterly dividends paid on our common shares. Expense related to dividends paid under this plan for the three months ended July 31, 2024 and 2023 was $23 and $30, respectively, compared to $71 and $77 for the nine months ended July 31, 2024 and 2023, respectively.
Deferred Directors' Compensation
Non-employee directors may defer all or part of their cash and equity-based compensation until retirement. Cash compensation may be deferred as cash or as share equivalent units. Deferred cash amounts are recorded as liabilities, and share equivalent units are recorded as equity. Additional share equivalent units are earned when common share dividends are declared.
The following table summarizes activity related to director deferred compensation share equivalent units during the nine months ended July 31, 2024:
Number of Shares Weighted-Average
Grant Date
Fair Value
Outstanding at October 31, 2023 78 $ 93.11
Dividend equivalents 1 249.14
Distributions (14) 54.21
Outstanding at July 31, 2024 65 $ 103.73
The amount charged to expense related to director deferred compensation for the three months ended July 31, 2024 and 2023 was $91 and $76, respectively, compared to $226 and $234 for the nine months ended July 31, 2024 and 2023, respectively.
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Warranties
We offer warranties to our customers depending on the specific product and terms of the customer purchase agreement. A typical warranty program requires that we repair or replace defective products within a specified time period (generally one year) measured from the date of delivery or first use. We record an estimate for future warranty-related costs based on actual historical return rates. Based on analysis of return rates and other factors, the adequacy of our warranty provisions is adjusted as necessary. The liability for warranty costs is included in Accrued liabilities in the Consolidated Balance Sheets.
Following is a reconciliation of the product warranty liability for the nine months ended July 31, 2024 and 2023:
July 31, 2024 July 31, 2023
Beginning balance at October 31 $ 14,401 $ 11,723
Accruals for warranties 10,841 14,938
Warranty payments (11,279) (12,939)
Currency effect (209) 566
Ending balance $ 13,754 $ 14,288
Operating segments
We conduct business inthree primary operating segments: Industrial Precision Solutions, Medical and Fluid Solutions, and Advanced Technology Solutions. The composition of segments and measure of segment profitability is consistent with that used by our chief operating decision maker. The primary measure used by the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing performance is operating profit, which equals sales less cost of sales and certain operating expenses. Items below the operating profit line of the Condensed Consolidated Statements of Income (interest and investment income, interest expense and other income/expense) are excluded from the measure of segment profitability reviewed by our chief operating decision maker and are not presented by operating segment. The accounting policies of the segments are the same as those described in the Significant accounting policies Note.
Industrial Precision Solutions: This segment focuses on delivering proprietary dispensing and processing technology, both standard and highly customized equipment, to diverse end markets. Product lines commonly reduce material consumption, increase line efficiency through precision dispense and measurement and control, and enhance product brand and appearance. Components are used for dispensing adhesives, coatings, paint, finishes, sealants and other materials. This segment primarily serves the industrial, agricultural, consumer durables and non-durables markets.
Medical and Fluid Solutions: This segment includes the Company's fluid management solutions for medical, high-tech industrial and other diverse end markets. Related plastic tubing, balloons, catheters, syringes, cartridges, tips and fluid connection components are used to dispense or control fluids within customers' medical devices or products, as well as production processes.
Advanced Technology Solutions: This segment focuses on products serving electronics end markets. Advanced Technology Solutions products integrate our proprietary product technologies found in progressive stages of an electronics customer's production processes, such as surface treatment, precisely controlled dispensing of material and test and inspection to ensure quality and reliability. Applications include, but are not limited to, semiconductors, printed circuit boards, electronic components and automotive electronics.
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The following table presents information about our segments:
Three Months Ended Industrial
Precision
Solutions 		Medical and Fluid Solutions Advanced
Technology
Solutions 		Corporate Total
July 31, 2024
Net external sales $ 370,561 $ 166,737 $ 124,306 $ - $ 661,604
Operating profit (loss) 118,110 48,374 22,945 (22,371) 167,058
July 31, 2023
Net external sales $ 338,257 $ 170,871 $ 139,549 $ - $ 648,677
Operating profit (loss) 115,346 54,019 27,083 (25,452) 170,996
Nine Months Ended
July 31, 2024
Net external sales $ 1,092,099 $ 495,229 $ 358,111 $ - $ 1,945,439
Operating profit (loss) 344,305 143,467 60,767 (53,430) 495,109
July 31, 2023
Net external sales $ 985,610 $ 491,683 $ 432,026 $ - $ 1,909,319
Operating profit (loss) 329,439 141,326 70,136 (53,179) 487,722
We had significant sales in the following geographic regions:
Three Months Ended Nine Months Ended
July 31, 2024 July 31, 2023 July 31, 2024 July 31, 2023
Americas $ 287,016 $ 290,515 $ 855,456 $ 834,125
Europe 179,370 167,536 540,750 498,379
Asia Pacific 195,218 190,626 549,233 576,815
Total net external sales $ 661,604 $ 648,677 $ 1,945,439 $ 1,909,319
Fair value measurements
The inputs to the valuation techniques used to measure fair value are classified into the following categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
The following tables present the classification of our assets and liabilities measured at fair value on a recurring basis:
July 31, 2024 Total Level 1 Level 2 Level 3
Assets:
Foreign currency forward contracts (a)
$ 4,308 $ - $ 4,308 $ -
Net investment contracts (b)
5,834 - 5,834 -
Total assets at fair value $ 10,142 $ - $ 10,142 $ -
Liabilities:
Deferred compensation plans (c)
$ 9,513 $ - $ 9,513 $ -
Foreign currency forward contracts(a)
5,414 - 5,414 -
Net investment contracts (b)
17,100 - 17,100 -
Total liabilities at fair value $ 32,027 $ - $ 32,027 $ -
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October 31, 2023 Total Level 1 Level 2 Level 3
Assets:
Foreign currency forward contracts(a)
$ 696 $ - $ 696 $ -
Net investment contracts (b)
13,713 - 13,713 -
Total assets at fair value $ 14,409 $ - $ 14,409 $ -
Liabilities:
Deferred compensation plans (c)
$ 9,637 $ - $ 9,637 $ -
Net investment contracts (b)
9,985 - 9,985 -
Foreign currency forward contracts (a)
10,425 - 10,425 -
Total liabilities at fair value $ 30,047 $ - $ 30,047 $ -
(a)We enter into foreign currency forward contracts to reduce the risk of foreign currency exposures resulting from receivables, payables, intercompany receivables, intercompany payables and loans denominated in foreign currencies. Foreign exchange contracts are valued using market exchange rates. These foreign exchange contracts are not designated as hedges.
(b)Net assets of our foreign subsidiaries are exposed to volatility in foreign currency exchange rates. We utilize net investment hedges to offset the translation adjustment arising from re-measuring our investment in foreign subsidiaries. The fair value of these hedges is primarily based on the exchange rate between the currency pair of the hedge upon which settlement is based and includes an adjustment for the counterparty's or Company's credit risk. The notional amount of our net investment hedge contracts as of July 31, 2024 was $840,271.
(c)Executive officers and other highly compensated employees may defer up to 100% of their salary and annual cash incentive compensation and for executive officers, up to 90% of their long-term incentive compensation, into various non-qualified deferred compensation plans. Deferrals can be allocated to various market performance measurement funds. Changes in the value of compensation deferred under these plans are recognized each period based on the fair value of the underlying measurement funds.
The carrying amounts and fair values of financial instruments, other than cash and cash equivalents, receivables, accounts payable and notes payable, are shown in the table below. The carrying values of cash and cash equivalents, receivables, accounts payable and notes payable approximate fair value due to the short-term nature of these instruments.
July 31, 2024
Carrying Amount Fair Value
Long-term debt (including current portion) $ 1,483,798 $ 1,530,217
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. The carrying amount of long-term debt is shown net of unamortized debt issuance costs as disclosed in the Long-term debt Note.
Derivative financial instruments
Foreign Currency Forward Contracts
We operate internationally and enter into intercompany transactions denominated in foreign currencies. Consequently, we are subject to market risk arising from exchange rate movements between the dates foreign currency transactions occur and the dates they are settled. We regularly use foreign currency forward contracts to reduce our risks related to most of these transactions. These contracts usually have maturities of 90 days or less and generally require us to exchange foreign currencies for U.S. dollars at maturity, at rates stated in the contracts. These contracts are not designated as hedging instruments under U.S. GAAP. Accordingly, the changes in the fair value of the foreign currency forward contracts are recognized in each accounting period in "Other - net" on the Condensed Consolidated Statements of Income together with the transaction gain or loss from the related balance sheet position. The settlement of these contracts is recorded in operating activities on the Consolidated Statement of Cash Flows.
For the three months ended July 31, 2024, we recognized a net gain of $2,954 on foreign currency forward contracts and a net loss of $3,418 from the change in fair value of balance sheet positions. For the three months ended July 31, 2023, we recognized a net loss of $93 on foreign currency forward contracts and a net loss of $855 from the change in fair value of balance sheet positions. For the nine months ended July 31, 2024, we recognized a net gain of $8,624 on foreign currency forward contracts and a realized net loss of $11,035 from the change in fair value of balance sheet positions. For the nine months ended July 31, 2023, we recognized a net gain of $12,086 on foreign currency forward contracts and a net loss of $19,710 from the change in fair value of
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balance sheet positions. The fair values of our foreign currency forward contract assets and liabilities are included in Receivable-net and Accrued liabilities, respectively, in our Consolidated Balance Sheets.
The following table summarizes, by currency, the foreign currency forward contracts outstanding at July 31, 2024 and 2023:
July 31, 2024 contract amounts: Notional Sell Amounts Notional Buy Amounts
Euro $ 124,144 $ 144,557
British pound 17,187 138,240
Japanese yen 18,113 26,580
Mexican Peso 50 32,714
Hong Kong dollar - 1,942
Singapore dollar 2,391 22,735
Australian dollar - 9,630
Taiwan Dollar - 8,000
Others 3,425 71,755
Total $ 165,310 $ 456,153
July 31, 2023 contract amounts: Notional Sell Amounts Notional Buy Amounts
Euro $ 95,064 $ 194,850
British pound 20,489 132,956
Mexican Peso 3,227 28,158
Japanese yen 23,195 17,908
Hong Kong dollar 2,080 7,265
Singapore dollar 60 19,817
Australian dollar - 9,236
Taiwan Dollar - 8,000
Others 2,602 71,830
Total $ 146,717 $ 490,020
We are exposed to credit-related losses in the event of nonperformance by counterparties to financial instruments. These financial instruments include cash deposits and foreign currency forward contracts. We periodically monitor the credit ratings of these counterparties in order to minimize our exposure. Our customers represent a wide variety of industries and geographic regions. For the three and nine months ended July 31, 2024 and 2023, there were no significant concentrations of credit risk.
Net Investment Hedges
Net assets of our foreign subsidiaries are exposed to volatility in foreign currency exchange rates. We may utilize net investment hedges to offset the translation adjustment arising from re-measuring our investment in foreign subsidiaries.
As of July 31, 2024, the Company was party to various cross currency swaps between the U.S. Dollar and Euro, Japanese Yen, Taiwan Dollar, Singapore Dollar and Chinese Yuan, which were designated as hedges of our net investments in certain foreign subsidiaries to mitigate the foreign exchange risk associated with certain investments in these subsidiaries. Any increases or decreases related to the remeasurement of the hedges are recorded in the currency translation component of Accumulated other comprehensive income (loss) within Shareholders' Equity in the Consolidated Balance Sheet until the sale or substantial liquidation of the underlying investments. A loss of $6,968 and a loss of $11,475, net of tax, was recorded for the three and nine months ended July 31, 2024, respectively, compared to a $1,205 loss, net of tax, for both the three and nine months ended July 31, 2023, respectively.
The following table summarizes the fair values of our net investment contracts designated as net investment hedges in the Company's Consolidated Balance Sheets as of July 31, 2024:
Prepaid expenses and other current assets Other assets Accrued liabilities Other long-term liabilities
Net investment contracts $ 5,579 $ 255 $ 7,827 $ 9,273
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Long-term debt
A summary of long-term debt is as follows:
July 31, 2024 October 31, 2023
Notes Payable $ 10,644 $ 5,019
Revolving credit agreement, due 2028 130,000 248,000
Term loan due 2026 280,000 300,000
Senior notes, due 2025 8,500 32,000
Senior notes, due 2025-2027 37,143 54,286
Senior notes, due 2025-2030 190,000 260,000
5.600% Notes due 2028 350,000 350,000
5.800% Notes due 2033 500,000 500,000
1,506,287 1,749,305
Less current maturities 96,288 115,662
Less unamortized debt issuance costs 10,487 10,773
Less bond discounts 1,357 1,476
Long-term maturities $ 1,398,155 $ 1,621,394
Revolving credit agreement - In June 2023, we entered into a $1,150,000 unsecured multi-currency credit facility with a group of banks, which provides for a term loan facility in the aggregate principal amount of $300,000 (the "Term Loan Facility"), maturing in June 2026, and a multicurrency revolving credit facility in the aggregate principal amount of $850,000 (the "Revolving Facility"), maturing in June 2028 (the "New Credit Agreement"). In June 2024, the Revolving Facility was amended to increase the aggregate principal amount to $922,500. The Company borrowed and had outstanding $280,000 on the Term Loan Facility and $130,000 on the Revolving Facility as of July 31, 2024. The Revolving Facility permits borrowing in U.S. Dollars, Euros, Sterling, Swiss Francs, Singapore Dollars, Yen, and each other currency approved by a Revolving Facility lender. The New Credit Agreement provides that the applicable margin for (i) RFR, as defined in the New Credit Agreement, and Eurodollar Loans will range from 0.85% to 1.20% and (ii) Base Rate Loans will range from 0.00% to 0.20%, in each case, based on the Company's Leverage Ratio (as defined in the New Credit Agreement and calculated on a consolidated net debt basis). Borrowings under the New Credit Agreement bear interest at (i) either a base rate or a SOFR rate, with respect to borrowings in U.S. dollars, (ii) a eurocurrency rate, with respect to borrowings in Euros and Yen, or (iii) Daily Simple RFR, with respect to borrowings in Sterling, Swiss Francs or Singapore Dollars, plus, in each case, an applicable margin (and, solely in the case of Singapore Dollars, a spread adjustment). The applicable margin is based on the Company's Leverage Ratio. The weighted-average interest rate at July 31, 2024 was 6.39%.
364-day term loan agreement - In June 2024, we entered into a 364-day term loan agreement (the "Term Loan Agreement") with a group of banks. The Term Loan Agreement provides for a delayed draw term loan facility in the aggregate principal amount of $500,000 and was entered into to fund, in part, the acquisition of Atrion.
Senior notes, due 2025 - These unsecured fixed-rate notes entered into in 2012 with a group of insurance companies have a remaining weighted-average life of 0.99 years. The weighted-average interest rate at July 31, 2024 was 3.07%.
Senior notes, due 2025-2027 - These unsecured fixed-rate notes entered into in 2015 with a group of insurance companies have a remaining weighted-average life of 1.80 years. The weighted-average interest rate at July 31, 2024 was 3.13%.
Senior notes, due 2025-2030 - These unsecured fixed-rate notes entered into in 2018 with a group of insurance companies have a remaining weighted-average life of 2.95 years. The weighted-average interest rate at July 31, 2024 was 4.03%.
5.60% Notes due 2028 and 5.80% Notes due 2033 - In September 2023, we completed an underwritten public offering (the "Offering") of $350,000 aggregate principal amount of 5.60% Notes due 2028 and $500,000 aggregate principal amount of 5.80% Notes due 2033.
We were in compliance with all covenants at July 31, 2024, and the amount we could borrow would not have been limited by any debt covenants.
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Contingencies
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 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.
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. As of July 31, 2024 and October 31, 2023, our accrual for the ongoing operation, maintenance and monitoring obligation at the Site was $181 and $231, 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 accuracy 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 complexity and evolution of environmental laws and regulations, and the identification of presently unknown remediation requirements. Consequently, our liability could be greater 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.
Subsequent Event
On August 21, 2024, the Company completed the acquisition of Atrion pursuant to the terms of the Merger Agreement. Pursuant to the Merger Agreement, Merger Sub merged with and into Atrion with Atrion surviving the Merger as a wholly owned subsidiary of Nordson. Atrion is a leader in proprietary medical infusion fluid delivery and niche cardiovascular solutions and will operate within our Medical and Fluid Solutions segment. The all-cash acquisition of Atrion of approximately $800,000, net of cash acquired, was funded using borrowings under our revolving credit facility and Term Loan Agreement (refer to Long-term debt Note) and cash on hand. Atrion sales for the year ended December 31, 2023 were approximately $169,000.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant factors affecting our financial condition and results of operations for the periods included in the accompanying condensed consolidated financial statements. Throughout this Quarterly Report on Form 10-Q, components may not sum to totals due to rounding.
Overview
Nordson is an innovative precision technology company that leverages a scalable growth framework to deliver top tier growth with leading margins and returns. We engineer, manufacture and market differentiated products and systems used for precision dispensing, applying and controlling of adhesives, coatings, polymers, sealants, biomaterials, and other fluids, to test and inspect for quality, and to treat and cure surfaces and various medical products such as: catheters, cannulas, medical balloons and medical tubing. These products are supported with extensive application expertise and direct global sales and service. We serve a wide variety of consumer non-durable, consumer durable and technology end markets including packaging, electronics, medical, appliances, energy, transportation, precision agriculture, building and construction, and general product assembly and finishing.
Our strategy for long-term growth is based on solving customers' needs globally. We were incorporated in the State of Ohio in 1954 and are headquartered in Westlake, Ohio. Our products are marketed through a network of direct operations in more than 35 countries.
We have approximately 7,700 employees worldwide. Our principal manufacturing facilities are located in the United States, the People's Republic of China, Germany, Ireland, Israel, Italy, Mexico, the Netherlands and the United Kingdom.
Critical Accounting Policies and Estimates
A comprehensive discussion of the Company's critical accounting policies and management estimates and significant accounting policies followed in the preparation of the financial statements is included in Item 7 of our Annual Report on Form 10-K for the year ended October 31, 2023 (the "2023 Form 10-K"). There have been no significant changes in critical accounting policies, management estimates or accounting policies followed since the year ended October 31, 2023.
Results of Operations
Three Months Ended July 31, 2024
Worldwide sales for the three months ended July 31, 2024 were $661,604, an increase of 2.0% from sales of $648,677 for the comparable period of 2023. The increase included a 3.8% increase due to an acquisition and an unfavorable effect from currency translation of 0.9%. Organic sales decreased 0.9%, driven by lower demand in electronics and medical product lines, partially offset by growth in packaging, nonwovens, and optical sensors product lines.
In the Americas region, sales were $287,016 for the three months ended July 31, 2024, a decrease of 1.2% from the comparable period of 2023, consisting of an organic sales decrease of 3.4%, an increase due to an acquisition of 2.4%, and unfavorable currency effects of 0.2%. In the Asia Pacific region, sales were $195,218, an increase of 2.4% from the comparable period of 2023, consisting of an organic sales increase of 4.1% and a 0.8% increase due to an acquisition, partially offset by unfavorable currency effects of 2.5%. In Europe, sales were $179,370, an increase of 7.1% from the comparable period of 2023, consisting of an organic sales decrease of 2.0%, unfavorable currency effects of 0.7%, and a 9.8% increase due to an acquisition.
Cost of sales for the three months ended July 31, 2024 were $292,603, up from $288,357 in the comparable period of 2023. Gross profit, expressed as a percentage of sales, increased to 55.8% from 55.5% in the comparable period of 2023. The increase in gross profit was due to favorable mix overall.
Selling and administrative expenses for the three months ended July 31, 2024 were $201,943, up from $189,324 in the comparable period of 2023. The 6.7% increase was primarily driven by the first-year effect of an acquisition.
Operating profit decreased to $167,058 for the three months ended July 31, 2024, compared to$170,996 in the comparable period of 2023. Operating profit as a percentage of sales decreased to 25.3% for the three months ended July 31, 2024,compared to 26.4% in the comparable period of 2023. The 1.1 percentage-point decline in operating margin was primarily driven by reduced sales leverage on selling and administrative expenses, partially offset by improved gross margin percentage performance.
Interest expense for the three months ended July 31, 2024 was $18,803, compared to $12,089 in the comparable period of 2023. The increase, compared to the prior year period, was primarily due to higher average debt levels, driven by acquisitions. Other income was $152 compared to $2,542 in the comparable period of 2023. Included in 2024 other income were pension and postretirement income of $1,028 and $464 of foreign currency losses. Included in 2023 other income were pension and postretirement income of $1,343 and $886 in foreign currency losses.
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Net income for the three months ended July 31, 2024 was $117,327, or $2.04 per diluted share, compared to $127,891, or $2.22 per diluted share, in the same period of 2023. This change represents an 8.3% decrease in net income, and an 8.1% decrease in diluted earnings per share. The decrease in income reflects increased interest expense from prior year acquisitions and slightly lower overall operating margins.
Industrial Precision Solutions
Sales of the Industrial Precision Solutions segment were $370,561 in the three months ended July 31, 2024, an increase of 9.6% from sales of $338,257 for the comparable period of 2023. The increase consisted of an acquisition impact of 7.4% and an organic sales increase of 3.6%, partially offset by unfavorable currency effects of 1.4%. The organic sales increase was driven primarily by packaging and nonwovens product lines.
Operating profit as a percentage of sales decreased to 31.9% forthe three months ended July 31, 2024compared to 34.1% in the comparable period of 2023. The 2.2 percentage point decline in operating margin was primarily due to higher intangible asset amortization expense of $5,786 related to the ARAG acquisition.
Medical and Fluid Solutions
Sales of the Medical and Fluid Solutions segment were $166,737 in the three months ended July 31, 2024, a decrease of 2.4% from sales of $170,871 for the comparable period of 2023. The decrease consisted of an organic sales decrease of 2.0% and an unfavorable currency effect of 0.4%. The organic sales decrease was driven by lower demand in interventional solutions and fluid components product lines.
Operating profit as a percentage of sales decreased to 29.0% forthe three months ended July 31, 2024compared to 31.6% in the comparable period of 2023. The 2.6 percentage point decline in operating margin was primarily due to unfavorable mix.
Advanced Technology Solutions
Sales of the Advanced Technology Solutions segment were $124,306 in the three months ended July 31, 2024, a decrease of 10.9% from sales of $139,549 for the comparable period of 2023. The decrease consisted of an organic sales decrease of 10.2% and an unfavorable currency effect of 0.7%. The organic sales decrease was driven by softness in electronics processing and x-ray and test product lines, offset by growth in optical sensors product lines.
Operating profit as a percentage of sales decreased to 18.5% forthe three months ended July 31, 2024compared to 19.4% in the comparable period of 2023. The decreasein operating margin was primarily due to the decline in sales.
Nine Months Ended July 31, 2024
Worldwide sales for the nine months ended July 31, 2024 were $1,945,439, an increase of 1.9% from sales of $1,909,319 for the comparable period of 2023. The increase consisted of 4.5% increase due to acquisitions, partially offset by a 2.2% decrease in organic sales and an unfavorable effect from currency translation of 0.4%. The organic sales decrease was principally driven by the Advanced Technology Solutions segment, partially offset by organic sales increases in the Industrial Precision Solutions and Medical Fluid Solutions segments.
In the Americas region, sales were $855,456, an increase of 2.6% from the comparable period of 2023, consisting of an organic sales decrease of 0.3%, an increase of 2.7% due to an acquisition, and favorable currency effects of 0.2%. In the Asia Pacific region, sales were $549,233, a decrease of 4.8% from the comparable period of 2023, consisting of an organic sales decrease of 3.1% and unfavorable currency effects of 2.4%, partially offset by a 0.7% increase from an acquisition. In Europe, sales were $540,750, an increase of 8.5% from the comparable period of 2023, consisting of a 12.2% increase from an acquisition and favorable currency effects of 0.8%, partially offset by an organic sales decrease of 4.5%.
Cost of sales for the nine months ended July 31, 2024 were $862,134, down from $868,007 in the comparable period of 2023. Gross profit, expressed as a percentage of sales, increased to 55.7% from 54.5% in the comparable period of 2023. The 1.2 percentage point increase in gross margin was primarily driven by improved manufacturing efficiencies and favorable product mix.
Selling and administrative expenses for the nine months ended July 31, 2024 were $588,196, up from $553,590 in the comparable period of 2023. The 6.3% increase was primarily driven by the first-year effect of an acquisition, partially offset by improved cost controls.
Operating profit increased to $495,109 for the nine months ended July 31, 2024compared to $487,722 in the nine months ended July 31, 2023. Operating profit as a percentage of sales was 25.4% for the nine months ended July 31, 2024compared to 25.5% in the comparable period of 2023.
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Interest expense for the nine months ended July 31, 2024 was $60,354, compared to $32,532 in the comparable period of 2023. The increase was due primarily to higher average debt levels, driven by acquisitions. Other expense was $971 compared to $2,059 in the comparable period of 2023. Included in 2024 other expense were other pension and postretirement income of $3,085 and $2,411 of foreign currency losses. Included in 2023 other expense were pension and postretirement income of $4,044 and $7,625 of foreign currency losses.
Net income for the nine months ended July 31, 2024 was $345,116, or $5.99 per diluted share, compared to $359,715, or $6.24 per diluted share, in the same period of 2023. This change represents a 4.1% decrease in net income, and a 4.0% decrease in diluted earnings per share. The decrease in income was driven primarily by increased interest expense.
Industrial Precision Solutions
Sales of the Industrial Precision Solutions segment were $1,092,099 in the nine months ended July 31, 2024, an increase of 10.8% from sales in the comparable period of 2023 of $985,610. The increase was the result of higher organic sales of 2.5% and an increase of 8.8% due to an acquisition. Organic sales growth was driven primarily by the industrial coatings and packaging product lines.
Operating profit as a percentage of sales decreasedto 31.5%forthe nine months ended July 31, 2024compared to 33.4%in the comparable period of 2023. The 1.9 percentage point decline in operating margin was primarily due to higher intangible asset amortization expense of $17,146 related to the ARAG acquisition.
Medical and Fluid Solutions
Sales of the Medical and Fluid Solutions segment were $495,229 in the nine months ended July 31, 2024, an increase of 0.7% from sales in the comparable period of 2023 of $491,683. The increase was the result of an organic sales increase of 0.9%. Sales growth occurred principally in the interventional solutions product line.
Operating profit as a percentage of sales increasedto 29.0%forthe nine months ended July 31, 2024compared to 28.7%in the comparable period of 2023. The 0.3 percentage point improvement in operating margin was primarily due to the increase in sales and improved factory efficiencies.
Advanced Technology Solutions
Sales of the Advanced Technology Solutions segment were $358,111 in the nine months ended July 31, 2024, a decrease of 17.1% from sales in the comparable period of 2023 of $432,026. The decrease was the result of an organic sales decrease of 16.6% and unfavorable currency effects that decreased sales by 0.5%. The organic sales decrease was driven by weakness across the segment.
Operating profit as a percentage of sales increasedto 17.0%forthe nine months ended July 31, 2024compared to 16.2%in the comparable period of 2023. The improvement in operating margin was primarily due to improved factory efficiencies and cost controls.
Income taxes
We record our interim provision for income taxes based on our estimated annual effective tax rate, as well as certain items discrete to the current period. Significant judgment is involved regarding the application of global income tax laws and regulations and when projecting the jurisdictional mix of income. We have considered several factors in determining the probability of realizing deferred income tax assets including forecasted operating earnings, available tax planning strategies and the time period over which the temporary differences will reverse. We review our tax positions on a regular basis and adjust the balances as new information becomes available. The effective tax rate for the three and nine months ended July 31, 2024 was 21.5% and 21.1%, respectively, compared to 21.1% and 20.9%, respectively, for the three and nine months ended July 31, 2023.
Foreign Currency Effects
In the aggregate, average exchange rates for 2024 used to translate international sales and operating results into U.S. dollars were generally unfavorable compared with average exchange rates existing during 2023. It is not possible to precisely measure the impact on operating results arising from foreign currency exchange rate changes, because of changes in selling prices, sales volume, product mix and cost structure in each country in which we operate. However, if transactions for the three months ended July 31, 2024 were translated at exchange rates in effect during the same period of 2023, we estimated that sales would have been approximately $8,000 higher while costs of sales and selling and administrative expenses would have been approximately $5,000 higher. If transactions for the nine months ended July 31, 2024 were translated at exchange rates in effect during the same period of 2023, we estimated that sales would have been approximately $8,000 higher while costs of sales and selling and administrative expenses would have been approximately $5,000 higher.
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Financial Condition
Liquidity and Capital Resources
During the nine months ended July 31, 2024, cash and cash equivalents increased $49,645. Cash provided by operations during this period was $459,812 compared to $478,072 for the nine months ended July 31, 2023. The primary sources were net income adjusted for non-cash income and expenses, which was $460,197, compared to $458,875 for the nine months ended July 31, 2023. Changes in operating assets and liabilities decreased cash by $385 in the nine months ended July 31, 2024 and increased cash by $19,197 in the comparable period of 2023. The change for the nine months ended July 31, 2024 was driven primarily by improvements in accounts receivable and inventory, principally offset by decreases in customer advance payments, accounts payable and accrued liabilities, including income taxes payable.
Cash used in investing activities was $34,890 for the nine months ended July 31, 2024, compared to $401,996 used in the comparable period of 2023. During the nine months ended July 31, 2024, cash of $43,786 was used for capital expenditures. During the ninemonths ended July 31, 2023, cash of $377,843 was used for the CyberOptics acquisition and $24,244 was used for capital expenditures.
Cash used in financing activities was $370,612 for the nine months ended July 31, 2024, compared to cash used of $102,074 in the comparable period of 2023. In the nine months ended July 31, 2024, cash of $116,789 was used for dividend payments and cash of $34,105 was used for the purchase of treasury shares, versus $111,547 and $78,163, respectively, in the comparable period of 2023. The nine months ended July 31, 2024 included net repayments of long-term debt of $244,355, compared to net borrowings of $73,956 during the nine months ended July 31, 2023.
The following is a summary of significant changes by balance sheet caption from October 31, 2023 to July 31, 2024. Receivables-net decreased $52,345, primarily due to higher collections from customers, and intangibles decreased by $43,980, principally due to amortization. Long-term debt also decreased $223,239 due to the use of operating cash flow to pay down debt balances.
The Company is well-positioned to manage liquidity needs that arise from working capital requirements, capital expenditures, and contributions related to pension and postretirement obligations, as well as principal and interest payments on our outstanding debt. Primary sources of capital to meet these needs, as well as other opportunistic investments, are a combination of cash provided by operations and borrowings under our loan agreements. Cash from operations, which when combined with our available borrowing capacity and ready access to capital markets, is expected to be more than adequate to fund our liquidity needs over the twelve months and the foreseeable future thereafter. The Company believes it has the ability to generate and obtain adequate amounts of cash to meet its long-term needs for cash. We were in compliance with all debt covenants as of July 31, 2024. Refer to our Long-term debt in the notes to our condensed consolidated financial statements for additional details regarding our debt outstanding and Term Facility.
Safe Harbor Statements Under the Private Securities Litigation Reform Act of 1995
This Quarterly Report on Form 10-Q, particularly "Management's Discussion and Analysis of Financial Condition and Results of Operations," contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, income, earnings, cash flows, changes in operations, operating improvements, businesses in which we operate and the United States and global economies. Statements in this Quarterly Report on Form 10-Q that are not historical are hereby identified as "forward-looking statements" and may be indicated by words or phrases such as "anticipates," "supports," "plans," "projects," "expects," "believes," "should," "would," "could," "hope," "forecast," "management is of the opinion," use of the future tense and similar words or phrases. These forward-looking statements reflect management's current expectations and involve a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, U.S. and international economic conditions; financial and market conditions; currency exchange rates and devaluations; possible acquisitions including the Company's ability to complete and successfully integrate acquisitions, including the integration of Atrion, the ARAG Group and CyberOptics; the Company's ability to successfully divest or dispose of businesses that are deemed not to fit with its strategic plan; the effects of changes in U.S. trade policy and trade agreements; the effects of changes in tax law; and the possible effects of events beyond our control, such as political unrest, including the conflicts in Europe and the Middle East, acts of terror, natural disasters and pandemics.
In light of these risks and uncertainties, actual events and results may vary significantly from those included in or contemplated or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Factors that could cause actual results to differ materially from the expected results are discussed in Part I, Item 1A, Risk Factors in our 2023 Form 10-K.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information regarding our financial instruments that are sensitive to changes in interest rates and foreign currency exchange rates was disclosed under Part II, Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" in our 2023 Form 10-K. The information disclosed has not changed materially in the interim period since then.
ITEM 4. CONTROLS AND PROCEDURES
Our management with the participation of the principal executive officer (president and chief executive officer) and principal financial officer (executive vice president and chief financial officer) has reviewed and evaluated our disclosure controls and procedures (as defined in the Securities Exchange Act Rule 13a-15(e)) as of July 31, 2024. Based on that evaluation, our management, including the principal executive and financial officers, has concluded that our disclosure controls and procedures were effective as of July 31, 2024 in ensuring that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
There were no changes in our internal control over financial reporting that occurred during the three months ended July 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Part II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See our Contingencies Note to the condensed consolidated financial statements for a discussion of our contingencies and legal matters.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the risk factors disclosed in "Item 1A. Risk Factors" of our 2023 Form 10-K. There have been no material changes to the risk factors described in the 2023 Form 10-K.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table summarizes common shares repurchased by the Company during the three months ended July 31, 2024:
(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)
May 1, 2024 to May 31, 2024 200 $ 260.10 - $ 548,800
June 1, 2024 to June 30, 2024 86,343 $ 231.09 86,343 $ 528,847
July 1, 2024 to July 31, 2024 21,944 $ 230.09 21,944 $ 523,798
Total 108,487 $ 230.94 108,287 $ 523,798
(1)Includes shares tendered for taxes related to stock option exercises and vesting of restricted stock.
(2)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. In September 2022, the board of directors authorized the repurchase of up to an additional $500,000 of the Company's common shares. Approximately $523,798 of the total $1,500,000 authorized remained available for share repurchases at July 31, 2024. 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 will be funded using cash from operations and proceeds from borrowings under our credit facilities. The repurchase program does not have an expiration date.
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ITEM 5. OTHER INFORMATION
Trading Arrangements
During the three months ended July 31, 2024, any director or officer (as defined in Rule 16a-1(f) promulgated under the Exchange Act) of the Company that adopted or terminated any "Rule 10b5-1 trading arrangement" or any "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408 of Regulation S-K, is disclosed below.
Name (Title) Action Taken (Date of Action)
Type of Trading Arrangement1
Nature of Trading Arrangement Duration of Trading Arrangement
Aggregate Number of Securities2
Stephen P. Lovass
Executive Vice President
Adoption
7/8/2024
Rule 10b5-1 Trading Arrangement
Sale
Until 11/31/2025
Up to 2,2293Common Shares
Jennifer L. McDonough
Executive Vice President, General Counsel and Secretary
Adoption
7/8/2024
Rule 10b5-1 Trading Arrangement
Sale
Until 12/31/2024
Up to 1,072 Common Shares
James E. DeVries
Executive Vice President, Continuous Improvement
Adoption
7/10/2024
Rule 10b5-1 Trading Arrangement
Sale
Until 11/21/2025
Up to 9,100 Common Shares
Joseph P. Kelley
Executive Vice President
Adoption
7/10/2024
Rule 10b5-1 Trading Arrangement
Sale
Until 7/3/2025
Up to 4,000 Common Shares
1 Each trading arrangement marked as a "Rule 10b5-1 Trading Arrangement" is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended (the "Rule").
2 The aggregate number of securities may include common shares subject to restricted stock units previously granted to the reporting director or officer may vest and be released to the reporting director or officer on or after July 31, 2024 upon the satisfaction of the applicable service-based vesting conditions. The actual number of shares that will be released to the reporting director or officer pursuant to the restricted stock units and sold under the Rule 10b5-1 trading arrangement will be net of the number of shares withheld by the Company to satisfy tax withholding obligations arising from the vesting of such shares and is not yet determinable.
3This figure includes an estimate of the number of shares issuable under performance share units ("PSUs") awarded under the Company's 2021 Stock Incentive and Award Plan ("SIAP") that may be sold under the trading arrangement; however, the actual number of shares that will be acquired through the SIAP may vary. In addition, the number of shares that may be sold under the trading arrangement includes the target number of shares issuable under Mr. Lovass' PSU award vesting during the term of the trading arrangement.
No other officers or directors, as defined in Rule 16a-1(f), adopted and/or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408 of Regulation S-K, during the three months ended July 31, 2024.
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ITEM 6. EXHIBITS
2.1
Agreement and Plan of Merger, dated as of May 28, 2024, by and among Nordson Corporation, Alpha Medical Merger Sub, Inc. and Atrion Corporation (incorporated herein by reference to Exhibit 2.1 to Registrant's Form 8-K dated May 28, 2024)**
2.2
Voting and Support Agreement, dated as of May 28, 2024, by and among Nordson Corporation, Montclair Harbour LLC, David A. Battat and Emile A. Battat (incorporated herein by reference to Exhibit 2.2 to Registrant's Form 8-K dated May 28, 2024)
2.3
Voting and Support Agreement, dated as of May 28, 2024, by and among Nordson Corporation, Stupp Bros., Inc. and John P. Stupp Jr. (incorporated herein by reference to Exhibit 2.3 to Registrant's Form 8-K dated May 28, 2024)
4.1
364-Day Term Loan Agreement, dated as of June 21, 2024, by and among Nordson Corporation, as Borrower, Morgan Stanley Senior Funding, Inc., as Administrative Agent, Sole Lead Arranger and Sole Bookrunner, and various financial institutions named therein as lenders (incorporated herein by reference to Exhibit 4.1 to Registrant's Form 8-K dated June 24, 2024)
4.2
Incremental Amendment to Credit Agreement, dated as of June 21, 2024, by and among Nordson Corporation as Borrower, Nordson Engineering GmbH as German Borrower, Wells Fargo Bank, National Association, as Administrative Agent, and various financial institutions named therein as lenders (incorporated herein by reference to Exhibit 4.2 to Registrant's Form 8-K dated June 24, 2024)
31.1
Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 by the Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 by the Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101
The following financial information from Nordson Corporation's Quarterly Report on Form 10-Q for the three and nine months ended July 31, 2024 formatted in inline Extensible Business Reporting Language (iXBRL): (i) the Condensed Consolidated Statements of Income for the three and nine months ended July 31, 2024 and 2023, (ii) the Consolidated Statements of Comprehensive Income for the three and nine months ended July 31, 2024 and 2023, (iii) the Consolidated Balance Sheets at July 31, 2024 and October 31, 2023, (iv) the Consolidated Statements of Shareholders' Equity for the three and nine months ended July 31, 2024 and 2023, (v) the Condensed Consolidated Statements of Cash Flows for the nine months ended July 31, 2024 and 2023, and (vi) the Notes to Condensed Consolidated Financial Statements.
104
The cover page from Nordson Corporation's Quarterly Report on Form 10-Q for the quarter ended July 31, 2024, formatted in inline Extensible Business Reporting Language (iXBRL) (included in Exhibit 101).
** Schedules and attachments to this exhibit have been omitted pursuant to Regulation S-K, Item 601(a)(5). The Registrant will provide a copy of any omitted schedule to the SEC or its staff upon request.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 22, 2024
Nordson Corporation
/s/ Stephen Shamrock
Stephen Shamrock
Chief Accounting Officer
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