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February 21, 2013 | First Quarter Fiscal 2013 Investor Presentation
Nordson CorporationPrecision Technology Solutions
: NDSN
Dispensing - Processing - Test & Inspection - Surface Treatment - Fluid Management
2
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
Information in this presentation may contain “forward-looking statements,” as defined by this Reform Act. These statements are identified by words or phrases such as “are expected to,” “will likely result,” “is anticipated,” “estimates,” “will continue,” “outlook,” “project,” or similar expressions.
These forward looking statements are based on current expectations and involve risks and uncertainties. Consequently, Nordson Corporation’s actual results could differ materially from the expectations expressed in the forward-looking statements. Factors that could cause the Company’s actual results to differ materially from the expected results include, but are not limited to: fluctuations in currency exchange rates; a sales mix different from assumptions; deferral of orders; customer-requested delays in system installations; and unanticipated delays.
DISCONTINUED OPERATIONSAll numbers for years prior to FY 2006 in this presentation include results from discontinued operations unless otherwise noted.
Applied to Diverse Markets
3
Nordson Investment Summary
Real technology differentiation
Unparalleled application know-how
Global direct sales & service
Parts & consumables annuity
Globally recognized brand
30+ countries, established and emerging
Technology, consumer non-durables, consumer durables
Emerging applications
Sustainable Business Model
Delivers Exceptional Results
Strong top line growth
49 years of dividend increases
Excellent margins and returns
Strong cash flow for continued investment
Top quartile total shareholder return
Nordson: Focused on Precision Technology Solutions Material Dispensing
Dispensing, Coating Sealing, Finishing Spraying, Painting Extrusion
Plastic Processing Extrusion Injection Molding
Test and Inspection X-ray, optical inspection Bond test
Surface Treatment UV curing Plasma treatment
Fluid Management Components
4
Customer Value PropositionReliability…uptime
Speed…productivity…yield
Efficiency…lower material usage
Leading edge features
Lower Cost of Ownership
End Markets: Consumer Non-Durables, Durables, Technology
….Every Day You Experience the Value We Bring
Packaging, Nonwovens
Product Assembly
Plastic Processing
5
Adhesive Dispensing Advanced Technology
Electronics, Medical
Solar, LEDs
Industrial
Industrial Coating
Appliances, Agriculture
Automotive, Furniture
Containers, Construction
Engineered Systems
20%
Standard Product
38%
Parts & Consumables
42%
Industrial Coating15%
Adhesive Dispensing
48%
Advanced Technology
37%
6
Sales Distribution – FY2012
Americas8%
Europe27%
Japan9%
Asia Pacific29%
United States27%
Operating SegmentsOperating Segments
Product TypeProduct Type GeographyGeography
Consumer Non-Durables
43%
Consumer Durables
18%
Industrial4%
Automotive4%
Medical7%
Electronic Components
6%
Semiconductor9%
Circuit Board Assembly
10%
Markets ServedMarkets Served
7
Adhesive Dispensing Systems
Income growth in emerging markets Increased use of disposable hygiene
products Increased use of processed/
convenience foods Increased use of lightweight plastics Productivity investments Material, machinery and process
innovations
Food and beverage packaging Nonwovens / disposable hygiene Furniture and building products Paper converting Macro electronics General industrial assembly Alternative energy Medical devices Labeling Transportation
48% of FY12 sales
48% of FY12 sales
Twelve Months Ending 1/31/2013:Sales: $728m Operating Margin: 29%
Melting, filtering, pumping, transporting and deposition of adhesives, plastics and other materials in the manufacturing of a wide range of goods.
End MarketsEnd MarketsGrowth DriversGrowth Drivers
Flexible PackagingFlexible Packaging
Rigid PackagingRigid Packaging
Typical Replacement PartsTypical Replacement Parts
NonwovensNonwovens
General Product AssemblyGeneral Product Assembly
Includes industry leading brands:Nordson XALOY & Nordson EDI
8
Advanced Technology Systems
Mobile computing trend Device convergence / migration to flip chips Circuit shrinkage / new architectures New consumers in emerging markets Medical needs driven by aging population Alternative energy high volume manufacturing
Semiconductor packaging, testing, inspection, surface prep
Printed circuit board assembly General electronic assembly Medical devices and procedures General industrial assembly Solar LED
37% of FY12 sales
37% of FY12 sales
Twelve Months Ending 1/31/2013:Sales: $525m Operating Margin: 27%
High precision dispensing, fluid management, test, inspection and surface treatment products and systems for electronics, medical and general industrial markets
Test & InspectionTest & Inspection
End MarketsEnd MarketsGrowth DriversGrowth Drivers
Automated DispensingAutomated Dispensing
Medical DispensingMedical Dispensing
Semi Automated DispensingSemi Automated Dispensing
Includes industry leading brands:Nordson ASYMTEK, Nordson DAGE, Nordson EFDNordson MARCH, Nordson MICROMEDICS, Nordson YESTECH, Value Plastics
Consumable Tips, Cartridges Consumable Tips, Cartridges & Connectors& Connectors
9
Industrial Coating Systems
15% of FY12 sales
15% of FY12 sales
Twelve Months Ending 1/31/2013:Sales: $228m Operating Margin: 14%
Liquid CoatingLiquid Coating
End MarketsEnd MarketsGrowth DriversGrowth Drivers
Powder CoatingPowder Coating
Medical DispensingMedical Dispensing
Cold Material DispensingCold Material Dispensing
Container CoatingContainer Coating
Typical Replacement PartsTypical Replacement Parts
Growth in emerging markets Environmental advantages of powder coatings Productivity investments Lean manufacturing Quick color change
Appliances Lawn and garden Metal container inside coating Automobile sealing & bonding Cold material dispensing Pipe coating and construction Woodworking General industrial Electronics / UV curing
Precision equipment and systems to apply and cure paints, sealants, coatings, cold materials and other materials to a wide range of products
Includes industry leading brand:Sealant Equipment & Engineering
10
Consistent Sales Growth
$0
$300
$600
$900
$1,200
$1,500
'55 '62 '69 '76 '83 '90 '97 '04 '11
0%
10%
20%
30%
40%
50%
60%
70%
03 04 05 06 07 08 09 10 11 12
Industry Leading Gross Margins
Mill
ions
of
$Financial Highlights
0%
5%
10%
15%
20%
25%
30%
02 03 04 05 06 07 08 09* 10 11 12
*FY09 excludes non-cash charges for impairment of goodwill and other long-lived assets.
Strong Operating Margins
FY12 = $1.4B 14 % YOY Growth
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
'03 '04 '05 '06 '07 '08 '09* '10 '11 12
2003 – 2012 CAGR: 21%
Strong EPS Growth
Includes impact of Acquisitions
Cash Flow Self funding business model generates excess cash Low Working Capital Requirements Low Capital Expenditures (approx. 2.5% of sales) Strong free cash
Cash Deployment Organic growth - Product/Application development - Channel expansion - Emerging markets
Acquisitions Dividends/share repurchase
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
1964 1972 1980 1988 1996 2004 2012
Div
iden
ds p
er s
hare
Uses of Cash – 2007 to 2012Uses of Cash – 2007 to 2012
Dividend increased 49 consecutive years15th among US public companies
Dividend increased 49 consecutive years15th among US public companies
Disciplined Use of Cash
Share Repurchases
$303 17%
Dividends$163 9%
Acquisitions$1,089
61%
PP&E / Capital Leases$136 8%
Working Capital
$93 5%
11
42% increase since 2009
12
Capital Management
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
FourAcquisitions
10% Outstanding Stock Repurchase
$50 $50$70
$200$252
$248
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
Prudential Bridge Loan NYLIM Shelf Private Placement
Syndicated Revolver
Drawn Available
NET DEBT TO EBITDAStrong Cash Generation Lets Nordson
De-lever Quickly
NET DEBT TO EBITDAStrong Cash Generation Lets Nordson
De-lever Quickly
EFD Acquisition
Net Debt to EBITDA calculated net of cash
In m
illio
ns $
DEBT POSITIONat 1/31/2013
DEBT POSITIONat 1/31/2013
Acquisitions &Share
Repurchases
Ends Feb [email protected]%
- Ends June 2013- 100 bps over Libor
Amortizing-avg rate – 2.21%Avg. life – 3.58 years
- Amortizing-avg rate – 2.93%- Initial avg. life – 8.26 years
- Ends Dec 2016- 87.5 bps over Liborat 10/31
Nordson Outperforms its Peers in Total Shareholder Return
13
10 YEAR TSR 5 YEAR TSR 3 YEAR TSR 1 YEAR TSRNORDSON CORP 18.03% 19.05% 32.18% 31.94%S&P 400 MIDCAP INDEX 9.99% 3.58% 15.81% 15.93%S&P 400 INDUSTRIAL MACHINERY INDEX 12.09% 3.23% 17.31% 12.93%S&P 500 INDUSTRIAL MACHINERY INDEX 11.30% 4.47% 16.58% 22.89%Bloomberg November 2012 - Annualized - Periods beginning 11/1 and ending 10/31
10 Year Total ReturnSource: Zack’s Investment Research
Nordson
S&P 500Industrial Machinery
S&P Midcap 400 Industrial Machinery
S&P Midcap 400
Assumes $100 invested on 11/1/2002, dividends reinvested, fiscal year ending 10/31/2012
14
FY2013 1Q Results
Organic Volume growth 3% to 8%
Acquisition Growth 16%
Currency (1)%
Total Sales Growth 18% to 23%
GAAP Diluted EPS $0.78 to $0.87
1Q FY13 1Q FY12Sales $347m $276m
Earnings per share $0.65 $0.58
26% total8% organic 18% acquisitions
12%
Y-O-Y Growth
2Q 2013 Guidance
SOURCE: February 21, 2013 Press Release
2013 Global Economic Environment: A lot like 2012Nordson Delivered 7.9% Organic Growth in 2012
January 2013
15
1.94%
3.55%
-0.17%
2.12%
-0.02%
7.96%
5.82%
2.17%
6.60%
2.20%
7.90%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
US Latin America
European Monetary
Union
Eastern Europe
Japan China India World 2013
NDSN Organic Growth
1H13 FCST
World 2012
NDSN Organic Growth
2012
Global GDP Forecasts 20132012 GDP &
NDSN Organic Growth
1H13 NDSN forecast based on midpoint of guidance provided in Feb 22 press release
Going Forward: Multiple Paths for Profitable Growth
Organic - target at mid-to-high single digits
New Applications Emerging Market Penetration
Strategic Acquisitions – target to bring total growth to double digits Technology Sales channels Core portfolio
Product Innovation
Adjacencies Step outs
Asia Pacific and Latin America Sales (millions)
$0
$100
$200
$300
$400
$500
1990 2000 2012
Test & InspectionPlastics
Processing
Fluid Mgmt. (esp. medical)
Cold Material Dispense
Current areas of focus
Priorities consistent with FY2012 Enhance / Protect the Core
Further Penetrate Emerging Markets
Pursue Market Adjacencies
Further Optimize Business
Make Portfolio Adjustments
Enhance / Expand Organizational Capability
With particular focus on: Further development of Corporate Growth Strategy / Vision
Acquisition integration and organizational development
Increased Asia presence in Advanced Tech segment
Prudence in view of uncertain economic backdrop
Key Themes for FY2013
17
Continue to deliver top quartile
performance for our shareholders
Continue to deliver top quartile
performance for our shareholders
Appendix
- Selected Organic Growth Opportunities
- Currency Chart
18
Organic Growth: Recent Product Innovations
Mini Blue II adhesive applicator
Trilogy Gunsexpanded offering
Select Coatconformal coating
Spectrum jetting for LEDs
RediFlexHot melt hoses
NexJetAutomated dispensing
X-PlaneTest and inspection
ArtisteMedical dispensing
AllegroDispense nozzles
StediFlo™ Coating pumps
Growth: Summary of Electronics Industry Forecasts*
20
CAGR ’12-’15 = 32.4%
CAGR ’12-’15 = (0.4)%CAGR ’12-’15 = 4.4%
CAGR ’12-’15 = 24.9%
*Average of most recent forecasts to Jan 2013 compiled by Nordson. Includes data from Citibank, Digitimes, IC Insights, IDC, Henderson, iSuppli, Merrill, Prismark
Nordson is well positioned in mobile devices, where growth is outpacing traditional applications
Organic Growth: Smart Phones & Tablets multiple Nordson applications
1. Micro coatings for moisture protection
2. Hot Melt for display assembly
3. CSP & PoP Underfill
4. Solder paste for RF shield attach & SIM card solder joints
5. Flip chip underfill for blue tooth module
6. Lens bonding & underfill for camera modules
7. Solder Paste & Silicone Encapsulation for MEMS microphones
8. Epoxy Flux, Liquid RF shielding
9. Test & inspection
Growth Opportunities: MEMS
22
Nordson opportunities in dispensing, test/inspection, plasma treatmentNordson opportunities in dispensing, test/inspection, plasma treatment
Growth Opportunities: LEDs Market Trend
23
Nordson opportunities in dispensing, test/inspection, plasma treatment
Nordson opportunities in dispensing, test/inspection, plasma treatment
March 2012
Dispensing for LEDs
Growth: Nonwovens Trends Favor Nordson
Product Trends Thinner - more discrete Softer - more comfortable Stretch - improves fit and performance Fun - decorative printing Gender specific designs
Production Trends 20% increase in production speed anticipated by 2015
Emerging Market Trends (China, SE Asia, Latin America,…) forecasting at or near double-digit growth rates Relatively low penetration of baby diapers and feminine care Increasing incomes
24
Growth: Solid Trends in Plastic Processing
25
Plastics Machinery Aftmkt Parts CAGR 4.8%
Blow Molding Machinery CAGR 5.5%
Extrusion Machinery CAGR 6.5%
Injection Molding Machinery CAGR 6.0%
Thermoforming and Other CAGR 6.6%
Construction CAGR 6.5%
Consumer & Industrial CAGR 6.0%
Packaging CAGR 5.9%
Other CAGR 5.8%
Source: 2012
CAGR 2011-15: China 8.1%CAGR 2011-15: India 9.7%
CAGR 2011-15: China 8.1%CAGR 2011-15: India 9.7%
Growth Opportunities: Medical
26
Medical Device AssemblyHearing Aids, PacemakersCatheters, StentsDentalGlucose Test StripsMedical Electronics
Biomaterial DispensingDispensing syringes and componentsBleeding controlWound healingBone graft materialAesthetic devices
Medical Device Fluid Control Fittings & components Anesthesia equipment Cardiovascular surgery equipment Blood management equipment
Advanced Technology segment
Source: MedMarket Diligence, various 3rd party reports, Nordson internal estimates
27
Growth: Asia Pacific Sales 2006 to 2012
Company’s 43nd year of operation in Asia
Direct in China for 17 years Percent of total revenue:
- 2006: 16%- 2012: 29%
Asia Pacific Revenue
20% CAGR2006-2012
Note: Nordson Asia Pacific sales exclude Japan, which is reported separately
28
-30%
-20%
-10%
0%
10%
20%
30%
$.11 .05 (.10) .01 .16 (.11) (.19) (.20) .04 (.10) (.20) .01 .30 . 27 .11 (.10) .18 .29 (.23) .15 .16 (.11)
Currency and Annual Sales Growth
Volume Growth Currency Effect EPS Currency Effect
'91 ’92 ’ 93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ‘12