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Nordson Corporation (NDSN)

F1Q2012 Earnings Call

February 24, 2012; 08:30 am ET


Mike Hilton - President & Chief Executive Officer

Greg Thaxton - Senior Vice President & Chief Financial Officer

Jim Jaye - Director of Communications & Investor Relations


Mac Muirhead - Longbow Research

Matt Summerville - KeyBanc

Liam Burke - Janney Capital Markets

Kevin Maczka - BB&T Capital Markets

Charles Brady - BMO Capital Markets

Jason Ursaner - CJS Securities

Walter Liptak - Barrington Research

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Good day ladies and gentlemen and welcome to your Nordson Corporation webcast for the first quarter fiscal year 2012. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions).

I would now like to introduce your host for today’s conference, Mr. Jim Jaye. You may begin sir.

Jim Jaye

Thank you Kevin. This is Jim Jaye and I’m here with Mike Hilton, our President and Chief Executive Officer; and Greg Thaxton, our Senior Vice President and Chief Financial Officer. We’d like to welcome you to our conference call today, Friday, February 24, 2012, Nordson’s first quarter 2012 results.

Our conference call is being broadcast live on our webpage at

and will be available for 14 days. There will be a telephone replay of our conference call available until midnight Thursday, March 1, by calling 404-537-3406. You will need to reference ID number 507-26-541.

Our attorneys have requested we open this call with the cautionary statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. During this conference call, forward-looking statements may be made regarding our future performance based on Nordson’s current expectations. These statements may involve a number of risks, uncertainties and other factors as discussed in the company’s filings with the Securities and Exchange Commission that could cause actual results to differ. After our remarks we’ll have a question-and-answer session.

I would now like to turn the call over to Mike for an overview of our 2012 first quarter results and a bit about Nordson’s future outlook. Please go ahead Mike.

Mike Hilton

Thank you Jim and good morning everyone and thank you for attending Nordson’s first quarter 2012 conference call. Overall we delivered solid performance in the quarter, performance in line with our exceptions. Our global team remains focused and continues to execute aggressively. I want to thank all of them for their ongoing efforts.

In addition to our comments on the first quarter, we will also provide some perspective relative to our outlook for the second quarter of fiscal 2012.

Starting with the first quarter, as anticipated conditions in some our end markets and geographies were challenging during the quarter. Nordson does not appear to be an outlier in this regard, as many industrial companies have reported similar near term challenges in recent weeks. The good news is that Nordson still delivered solid results in the quarter and the fundamental strengths of our business model are intact. Those strengths include innovative technology, application expertise, highly effective direct sales and service model and our global capability.

Sales volume grew by 2% in the quarter over the previous year and we delivered operating margins of 22%, excluding non-recurring items. The operating margin is well above our pre-recession level and is inclusive of continues improvement and other strategic investments that will drive growth and performance for Nordson over the long term.

As a reminder, our first quarter is typically our weakest from a sales perspective, which does impact our operating margin. Earnings per share in the quarter, excluding non-recurring items was in line with our guidance.

In terms of our outlook, order trends over the last 12-weeks are down about 3% from the very strong period of recovery in the same 12-week period a year ago. Clearly some end markets and geographies continue to be impacted by near term economic uncertainty.

Orders are showing resiliency on a sequential basis, which is reflected in the 16% sequential increase, represented by the mid point of our second quarter sales guidance.

Overall the fundamentals of our business are solid and as we suggested in our December earnings conference call, we anticipate better year-over-year growth in the second half of our fiscal year. Most forecasters still predict GDP growth for the year and the second half is typically a stronger capital cycle for many of our customers.

Let me turn the call over to Greg Thaxton, our Chief Financial Officer, who will provide a more detailed commentary on our first quarter financial results, as well as some comments on our guidance for the second quarter of 2012. Greg.

Greg Thaxton

Thank you Mike and good morning to everyone. As Mike noted, our financial results for the first quarter were solid. Sales in the quarter increased 2% over the prior year. The sales improvement included a 4% increase related to the first year effect of acquisitions, offset by a 2% decrease in organic volume. The effects of currency translation were neutral as compared to the prior year.

Looking at segment performance, adhesive dispensing delivered sales volume improvement of 2% over the prior year’s first quarter. Organic volume decreased less than 1% over the prior year as the overall improvement was driven by acquisitions. Relatively strong growth otherwise in the segment was offset by the timing of customers buying patters associated with our non-woven’s product line, which tends to be larger dollar systems where the timing of a couple of orders can impact quarterly growth.

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