Nordson Corporation

38
: NDSN A premier industrial technology company focused on precision dispensing, fluid control and related processes Investor Presentation Nordson Corporation August 20, 2018 | Fiscal 2018 3Q Results & 4Q Outlook

Transcript of Nordson Corporation

Page 1: Nordson Corporation

: NDSN

A premier industrial technology company focused on

precision dispensing, fluid control and related processes

Investor PresentationNordson Corporation

August 20, 2018 | Fiscal 2018 3Q Results & 4Q Outlook

Page 2: Nordson Corporation

Safe Harbor Statement Under the Private Securities

Litigation Reform Act of 1995

Information in this presentation may contain “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters.

All statements regarding our future performance, earnings projections, events or developments are forward-looking statements. These forward-looking statements are made based on known events and circumstances at the time of release, and as such, are subject in the future to unforeseen uncertainties and risks that could cause actual results to differ materially from those contained in any forward-looking statement. Such risks and uncertainties are described under “Risk Factors” in Item 1A of our annual report on Form 10-K and any updates to those factors set forth in our subsequent quarterly reports on Form 10-Q or current reports on Form 8-K. We make these statements as of the date of this disclosure, and undertake no obligation to update them unless otherwise required by law.

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Nordson at a GlanceA premier industrial technology company focused on precision dispensing,

fluid control and related processes

▪ Founded in 1954

▪ FY17 sales = $2.1 billion

▪ 7,500 employees

▪ Direct presence in 35+ countries

▪ Best-in-class technology

▪ Founded in 1954

▪ FY17 sales = $2.1 billion

▪ 7,500 employees

▪ Direct presence in 35+ countries

▪ Best-in-class technology

▪ Diversified, growing end markets

▪ Market leading positions

▪ Sustained financial performance

▪ Outstanding long-term returns

▪ Diversified, growing end markets

▪ Market leading positions

▪ Sustained financial performance

▪ Outstanding long-term returns

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Product Type

High percentage of

recurring revenue

from parts and

consumables

Diversified Sources of RevenueFY2017 Profile - $2.1 billion

Geography

Nearly 70% of

revenue outside USA.

Direct presence in

over 35 countries.

Diverse End Markets

Consumer non-durables,

durables, industrial,

medical and technology

Operating Segments

Three segments with leading

product lines and brands

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Investment Highlights

8%

CAGR

2012-2017

Strong

growth:

organic and

acquisitive

Strong

growth:

organic and

acquisitive

Strong cash

returns to

shareholders

Strong cash

returns to

shareholders

Reliable and

consistent

dividend

Reliable and

consistent

dividend

Outstanding

long term

Total

Shareholder

Returns

Outstanding

long term

Total

Shareholder

Returns

$1.0 billion

Share

repurchases &

dividends

2012-2017

54 Yearsof annual

increases

(22% payout

ratio in 2017)

$1.5 billion

100% of

net income

2012-2017

High level of

free cash

flow before

dividends

High level of

free cash

flow before

dividends

122%

TSR*

2012-2017

Outstanding

gross

margins

Outstanding

gross

margins

56%

Gross

Margin

Average

2012-2017

*((Share Price at 10/31/2017 – Share Price at 10/31/2012 + dividends) / Share Price at 10/31/2012 ) = (($126.69 - $59.03 + $4.39) / $59.03 ) = 122%

Excellent

EBITDA

margins

Excellent

EBITDA

margins

25%

EBITDA

Margin

Average

2012-2017

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Total Shareholder Return Above Our Peers

*Peer Group = AIN, AME, ATU, B, DCI, ENTG, ESL, FLIR, GGG, GTLS, IEX, ITT, KEYS, LECO, ROP, TER, WTS, WWD

Source:

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Nordson Corporation $100.00 $70.90 $105.80 $160.42 $194.33 $252.55 $311.36 $334.00 $314.64 $448.10 $572.29

S&P 500 Index $100.00 $63.90 $70.17 $81.76 $88.37 $101.81 $129.48 $151.84 $159.73 $166.93 $206.38

S&P MidCap 400 $100.00 $63.54 $75.09 $95.84 $104.03 $116.63 $155.68 $173.82 $179.77 $191.02 $235.87

S&P 500 Ind. Machinery $100.00 $57.23 $76.58 $97.99 $101.38 $121.33 $173.25 $195.37 $195.07 $222.74 $307.08

S&P MidCap 400 Ind. Machinery $100.00 $57.90 $71.57 $93.02 $105.80 $115.55 $160.42 $170.00 $142.30 $167.01 $239.53

Peer Group $100.00 $67.28 $72.96 $89.87 $100.94 $115.31 $160.25 $176.57 $169.73 $174.34 $261.11

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Why invest in Nordson?

Outstanding Culture and ValuesOutstanding Culture and Values

Leading Global BusinessesLeading Global Businesses

Clear Strategy and Goals

Strong Execution and PerformanceStrong Execution and Performance

Numerous Growth OpportunitiesNumerous Growth Opportunities

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Common Themes of our 2018–2023 Strategic Plan Continue to be a Premier Industrial Technology Company

▪ Product innovation

▪ New applications

▪ Emerging markets

▪ Recapitalize

installed base

▪ Segmentation

Accelerate

organic

growth

▪ Embed Nordson

Business System

▪ Expand margins

▪ Working capital

initiatives

▪ Drive synergies

with acquisitions

Further

optimize our

business

▪ Targeted spaces

▪ Growth and

technology

▪ Cultivate

proprietary deals

▪ Execute and close

deals effectively

▪ Disciplined pricing

▪ Fast integration

Add key

acquisitions

▪ Deepen bench

strength

▪ Leadership

development

▪ Rotational

assignments

▪ Diversity

Enhance

and expand

organization

capability

Deliver top quartile total shareholder returns

Support our communities & good corporate citizenship8

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Revenue Operating Profit

2018–2023 Strategic Plan TargetsFocused initiatives drive premium sales growth and expand profitability

~2x global GDP%

Outpace Revenue

Growth %

Underlying

Markets

Growth

Initiatives

Continuous

Improvement

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The Nordson Business System Driving Continuous Improvement Across the Organization

Key Performance

Indicators

▪Growth Initiatives

▪Price Effectiveness

▪Cost Reduction Initiatives

▪Cost of Poor Quality

▪Customer Delivery

Performance

▪Days of Sales in Inventory

▪Productivity

▪Sales from New Products

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Why invest in Nordson?

Outstanding Culture and ValuesOutstanding Culture and Values

Leading Global BusinessesLeading Global Businesses

Clear Strategy and GoalsClear Strategy and Goals

Strong Execution and Performance

Numerous Growth OpportunitiesNumerous Growth Opportunities

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0%

5%

10%

15%

20%

25%

30%

'07 '08 '09* '10 '11 '12 '13 '14 '15 '16 '17

Strong Top Line Growthorganic, acquisitive, and currency

0%

10%

20%

30%

40%

50%

60%

70%

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Industry Leading Gross MarginsConsistently mid 50s and above

Mill

ions o

f $

Financial Highlights

*FY09 excludes non-cash charges for impairment of goodwill and other long-lived assets. FY15 results impacted by significant negative currency translation effects compared to the prior year. source – NDSN SEC filings

Strong Operating MarginsContinuous Improvement Initiatives

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

$5.50

'07 '08 '09* '10 '11 '12 '13 '14 '15 '16 '17

EPS Growth Outpaces Sales Growth Over Time

Dilutive effect

of acquisitions

10 Year CAGR = 7.6%

10 Year CAGR = 14.3%

+14.3%

over FY16

+0.2 pts

over FY16

+0.7 pts

over FY16

+7.4%

over FY16

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currency

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$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

Free cash flow before dividends Net income

Strong Cash Generation Funds Growth and Returns to Shareholders

Strong Cash Conversion: 2007–2017Free cash flow before dividends = 102% of net income

Cash from Operations: 2007–2017> 10% as a % of sales every year

$000

$000

*FY09 excludes non-cash charges for impairment of goodwill and other long-lived assets. FY15 results impacted by significant negative currency translation effects compared to the prior year. source – NDSN SEC filings

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

Net cash provided by operating activities

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$30.0

$49.2 $49.1 $66.7

$64.6

$72.8 $332.4

$441.7 $176.3

$186.4

$75.6

$42.7

$805.9

$1,728.6

$33.8 $40.5

$48.4

$54.8

$56.4

$63.8

$297.7

$88.5 $33.4

$166.4

$383.9

$33.4

$3.2

$708.8

$20.2 $25.8 $40.6 $37.7 $21.3

$61.0 $206.6

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015 2016 2017 TOTAL

Disciplined Capital Deployment

PP&E/Leases 10%

Acquisitions 53%

Dividends 9%

Share Repur. 22%

Working Cap. 6%

31% or $1.0 billion

to shareholders via share repurchases

and dividends

31% or $1.0 billion

to shareholders via share repurchases

and dividends

▪ Self funding business model generates excess cash

▪ Low Working Capital Requirements

▪ Low Capital Expenditures (approx. 3% of sales)

▪ Strong free cash

▪ 54 consecutive years of dividend increases - 14th among publicly traded companies

▪ Self funding business model generates excess cash

▪ Low Working Capital Requirements

▪ Low Capital Expenditures (approx. 3% of sales)

▪ Strong free cash

▪ 54 consecutive years of dividend increases - 14th among publicly traded companies

$ millions

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$100

$805

$47(b)

$157

$350

$100(a)

$850

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

Private Placement(1) Term Loan A US(2) NYLIM Shelf(3) Private Placement(4) Private Placement(5) Syndicated Revolver(6)

Drawn Available

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

Strong Capital Management

Four

Acquisitions

10% Outstanding

Stock Repurchase

Net Debt to EBITDA*Strong Cash Generation Lets Nordson

De-lever Quickly

EFD

Acquisition

(2001)

*Net Debt to EBITDA calculated net of cash

In m

illio

ns $

Acquisitions &

Share

Repurchases

at fiscal years ending 10/31

Debt Positionat 7/31/2018

At 7/31/2018

Net Debt to TTM EBITDA = 2.1 times

(1) Amortizing-avg rate – 3.04% Remaining Avg. life – 5.5 years

(2) -Term $100m – 5 years (Q2 FY20) at 92.5 bps over USD Libor

-Term $200m – 3 years (Q2 FY20) at 92.5 bps over USD Libor

-Term $200m – 4 years (Q4 FY21) at 87.5 bps over USD Libor

-Term $305m – 5 years (Q2 FY22) at 95 bps over USD Libor

(3) (a) $100m matures Oct 2026 at 125 bps over USD Libor

(b) $47m – 1.19 remaining avg life at 2.4%

(4) Amortizing-avg rate – 3.03% Remaining Avg. life – 3.71 years

(5) Amortizing-avg rate – 3.90% Remaining Avg. life – 7.3 years

(6) Ends Feb 2020 - 87.5 bps over USD Libor at 7/31/18

Vention

Acquisition

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Fiscal Year 2018 3Q Results and Fiscal Year 2018 4Q Guidanceas reported in August 20-21, 2018 press release and webcast

Nordson Corporation Reports Record Third Quarter Results

▪ Sales were $581 million

▪ Operating profit was $136 million, or 23 percent of sales

▪ EBITDA was $163 million, or 28 percent of sales

▪ GAAP diluted EPS was $1.61; adjusted diluted EPS was $1.60

▪ Free cash flow before dividends was $118 million, or 124 percent of net income

Nordson Corporation Reports Record Third Quarter Results

▪ Sales were $581 million

▪ Operating profit was $136 million, or 23 percent of sales

▪ EBITDA was $163 million, or 28 percent of sales

▪ GAAP diluted EPS was $1.61; adjusted diluted EPS was $1.60

▪ Free cash flow before dividends was $118 million, or 124 percent of net income

Guidance

▪ Fourth quarter 2018 guidance: sales expected to be in the range of flat to down 4 percent over prior year; GAAP

diluted EPS in the range of $1.38 to $1.54; EBITDA in the range of $143 to $155 million

▪ Full year organic revenue growth expected to be 2 percent at the midpoint of fourth quarter guidance

Guidance

▪ Fourth quarter 2018 guidance: sales expected to be in the range of flat to down 4 percent over prior year; GAAP

diluted EPS in the range of $1.38 to $1.54; EBITDA in the range of $143 to $155 million

▪ Full year organic revenue growth expected to be 2 percent at the midpoint of fourth quarter guidance

See Nordson press release, conference call transcript, presentation Appendix, and SEC filings reconciling adjusted amounts to reported amounts16

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Why invest in Nordson?

Outstanding Culture and ValuesOutstanding Culture and Values

Leading Global Businesses

Clear Strategy and GoalsClear Strategy and Goals

Strong Execution and PerformanceStrong Execution and Performance

Numerous Growth OpportunitiesNumerous Growth Opportunities

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We Win with Unique Competitive AdvantagesCommon across our businesses

Strategic Assets

▪ Customer relationships with leaders

▪ Product breadth

▪ Technology position

▪ Premier brand reputation

▪ Large installed product base

▪ Global footprint (distribution, support)

▪ Balance sheet / ability to scale production

Strategic Assets

▪ Customer relationships with leaders

▪ Product breadth

▪ Technology position

▪ Premier brand reputation

▪ Large installed product base

▪ Global footprint (distribution, support)

▪ Balance sheet / ability to scale production

Core Competencies

▪ Application development

▪ Precision manufacturing

▪ Engineering strength

▪ Technical expertise

▪ Direct global sales and service

▪ Customer “touch” / solutions provider

Core Competencies

▪ Application development

▪ Precision manufacturing

▪ Engineering strength

▪ Technical expertise

▪ Direct global sales and service

▪ Customer “touch” / solutions provider

Customer Value Proposition

▪ Product reliability = more uptime

▪ Speed = greater productivity and yield

▪ Efficiency = lower material usage

▪ Leading product features = ease of operation

▪ Unmatched global support

Lower Cost of

Ownership

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Industrial Coating Systems: durable goods and industrial market focusIndustrial Coating Systems: durable goods and industrial market focus

Advanced Technology Systems: electronics, medical and industrial market focusAdvanced Technology Systems: electronics, medical and industrial market focus

Adhesive Dispensing Systems: consumer non-durable market focusAdhesive Dispensing Systems: consumer non-durable market focus

Every Day You Experience the Value We Bring

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Nonwovens

Adhesive Dispensing Systems

What we do: Products to melt, filter, pump, transport, dispense and deposit adhesives,

polymers and other materials in the manufacturing of a wide range of goods.

Leader in recession-resistant, consumer non-durable end markets

Targeted organic growth rate: 1.5 to 2x global GDP

Growth Drivers

▪ Increased use of disposable

hygiene products (diapers,

fem care, etc)

▪ Increased use of packaged

convenience foods

▪ Increased use of plastics

▪ Emerging markets

▪ Product tiering

▪ Recapitalization of large

installed base

▪ Productivity investments

▪ Material, machinery and

process innovations

Growth Drivers

▪ Increased use of disposable

hygiene products (diapers,

fem care, etc)

▪ Increased use of packaged

convenience foods

▪ Increased use of plastics

▪ Emerging markets

▪ Product tiering

▪ Recapitalization of large

installed base

▪ Productivity investments

▪ Material, machinery and

process innovations

Key End Markets

▪ Food and beverage packaging

▪ Nonwovens / disposable

hygiene / diapers

▪ Furniture and building

products

▪ Macro electronics

▪ General industrial assembly

▪ Alternative energy

▪ Medical devices

▪ Labeling

▪ Transportation

Key End Markets

▪ Food and beverage packaging

▪ Nonwovens / disposable

hygiene / diapers

▪ Furniture and building

products

▪ Macro electronics

▪ General industrial assembly

▪ Alternative energy

▪ Medical devices

▪ Labeling

▪ Transportation

2012-17 Sales CAGR = 6.0%

2012-17 average annual operating margin = 26.6%

Polymer Processing

Packaging

Product Assembly

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Advanced Technology Systems

What we do: Precision dispensing, fluid management, test, inspection and

surface treatment products for electronics, medical and general industrial markets

Automated Dispensing

Semi Automated Dispensing

Leader in rapidly growing electronics, medical and related markets

Targeted organic growth rate: 2 to 3x global GDP

Growth Drivers

▪ Mobile computing –

smart phones, tablets

▪ Circuit shrinkage / new

architectures / flip chips

▪ Medical needs driven by aging

population

▪ Medical OEM outsourcing

▪ New consumers in emerging

markets

▪ Product tiering

▪ Internet of things

Growth Drivers

▪ Mobile computing –

smart phones, tablets

▪ Circuit shrinkage / new

architectures / flip chips

▪ Medical needs driven by aging

population

▪ Medical OEM outsourcing

▪ New consumers in emerging

markets

▪ Product tiering

▪ Internet of things

Key End Markets

▪ Semiconductor packaging

▪ Printed circuit board assembly

▪ General electronic assembly

▪ Medical devices

▪ Medical components

▪ General industrial assembly

▪ Automotive electronics

▪ MEMS, sensors, LEDs

▪ Solar

Key End Markets

▪ Semiconductor packaging

▪ Printed circuit board assembly

▪ General electronic assembly

▪ Medical devices

▪ Medical components

▪ General industrial assembly

▪ Automotive electronics

▪ MEMS, sensors, LEDs

▪ Solar

2012-17 Sales CAGR = 11.7%

2012-17 average annual operating margin = 24.1% Test & Inspection

Single Use Fluid Components

Surface Treatment

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Industrial Coating Systems

What we do: Precision equipment and systems to apply and cure paints, sealants,

coatings, cold materials and other materials to a wide range of products

Leader in consumer durable goods and industrial end markets

Targeted organic growth rate: global GDP+

Growth Drivers

▪ Growth in emerging markets

▪ Environmental advantages of

powder coatings

▪ Glues replacing mechanical

fasteners

▪ Light-weighting of vehicles

▪ Productivity investments

▪ Lean manufacturing

▪ Quick color change

▪ Product tiering

Growth Drivers

▪ Growth in emerging markets

▪ Environmental advantages of

powder coatings

▪ Glues replacing mechanical

fasteners

▪ Light-weighting of vehicles

▪ Productivity investments

▪ Lean manufacturing

▪ Quick color change

▪ Product tiering

Key End Markets

▪ Appliances

▪ Lawn and garden

▪ Food and beverage

▪ Automotive assembly

▪ Cold material dispensing

▪ Pipe coating and construction

▪ Woodworking

▪ General industrial

▪ Electronics / UV curing

Key End Markets

▪ Appliances

▪ Lawn and garden

▪ Food and beverage

▪ Automotive assembly

▪ Cold material dispensing

▪ Pipe coating and construction

▪ Woodworking

▪ General industrial

▪ Electronics / UV curing

2012-17 Sales CAGR = 3.9%

2012-17 average annual operating margin = 15.5%Container Coating

Powder Coating

Liquid Painting

Cold Material Dispensing

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Why invest in Nordson?

Outstanding Culture and ValuesOutstanding Culture and Values

Leading Global BusinessesLeading Global Businesses

Clear Strategy and GoalsClear Strategy and Goals

Strong Execution and PerformanceStrong Execution and Performance

Numerous Growth Opportunities

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0

5

10

15

20

Global GDP NDSN Annual Organic Growth Rate Target

Multiple Paths to Organic GrowthAnnual Target is ~2x global GDP

New Products

Recapitalize Installed Base

Emerging Markets

New Applications

Customer Product Changes

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Innovation Drives Organic GrowthSteady stream of new products

44

67

6253

6263

51

35

45

55

65

75

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

2011 2012 2013 2014 2015 2016 2017

R&D Spend ($ 000) US Patents Granted

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$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

2007 2012 2017

Asia Pacific Americas

Emerging Markets Drive Organic GrowthGrowing middle class drives increased consumption

▪ baby diapers, disposable hygiene products

▪ packaged foods, beverages, convenience items

▪ appliances and other durable goods

▪ electronic devices

▪ medical products

▪ plastic goods

Nordson Sales (000s)

• Americas reporting includes Canada, but not US -Asia Pacific excludes Japan -Eastern Europe, Middle East and Africa are reported in Europe and not broken out separately

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▪ Biopharmaceuticals

▪ Orthobiologics

▪ Minimally invasive catheters

▪ Bottle labeling

▪ Pipe coating

▪ Flexible packaging

New Applications Drive Organic GrowthLeveraging our expertise – numerous emerging opportunities over last five years

▪ Sensor assembly

▪ LED assembly

▪ MEMS assembly

▪ Wafer level inspection

▪ Wearable electronics

▪ Micro-materials testing

▪ Aerospace assembly

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Recapitalization Drives Organic GrowthLarge installed base of Nordson products worldwide provides

regular replacement and upgrade opportunities

▪ Packaging lines

▪ Nonwovens lines

▪ Powder coating lines

▪ Extrusion & injection molding lines

▪ Electronics assembly lines

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-25.0%

-15.0%

-5.0%

5.0%

15.0%

25.0%

35.0%

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

Organic Volume Acquisitions

Acquisitions Drive GrowthHigh quality properties supplement organic growth

Current Focus and Recent Transactions

Polymer

Processing

Polymer

Processing

Fluid Mgmt.

(medical)

Fluid Mgmt.

(medical)

Test &

Inspection

Test &

InspectionCold Material

Dispense

Cold Material

Dispense

Core Dispense

Portfolio

Core Dispense

Portfolio

Key Criteria

▪ Strategic fit

▪ Strong performers

▪ Growth rate at/above Nordson

▪ High % recurring revenue

▪ Reasonable multiples

▪ Revenue and cost synergies

Key Criteria

▪ Strategic fit

▪ Strong performers

▪ Growth rate at/above Nordson

▪ High % recurring revenue

▪ Reasonable multiples

▪ Revenue and cost synergies

2007–2017: 4.4% average annual growth from acquisitions

pause

during

recession

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Why invest in Nordson?

Outstanding Culture and Values

Leading Global BusinessesLeading Global Businesses

Clear Strategy and GoalsClear Strategy and Goals

Strong Execution and PerformanceStrong Execution and Performance

Numerous Growth OpportunitiesNumerous Growth Opportunities

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Strong Culture and ValuesRooted in the vision of our founders

Evan Nord

Eric Nord

“My hope for Nordson is that we continue to be a venturesome

company, operating somewhere out on the leading edge…

we must encourage innovators and entrepreneurs.”

“”To be truly fit, we must exercise our ‘giving’ muscles.”

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Giving Back - Part of Who We Are~$53 million donated 2007-2017

Employees also volunteer thousands of hours via Time ‘n Talent program

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

Foundation Grants Corporate Donations

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Investment SummaryProven Model for Long Term Value Creation

Outstanding Culture and Values

Leading Global Businesses

Clear Strategy and Goals

Strong Execution and Performance

Numerous Growth Opportunities

Strong

growth:

organic and

acquisitive

Strong

growth:

organic and

acquisitive

Excellent

EBITDA

margins

Excellent

EBITDA

margins

Strong cash

returns to

shareholders

Strong cash

returns to

shareholders

Reliable and

consistent

dividend

Reliable and

consistent

dividend

Outstanding

long term

Total

Shareholder

Returns

Outstanding

long term

Total

Shareholder

Returns

High level of

free cash

flow

High level of

free cash

flow

Outstanding

gross

margins

Outstanding

gross

margins

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Financial Appendix

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THIRD QUARTER PERIOD NORDSON CORPORATION

Period Ending July 31, 2018 FINANCIAL HIGHLIGHTS

(Unaudited) (Dollars in thousands except for per-share amounts)

CONSOLIDATED STATEMENT OF INCOME CONSOLIDATED BALANCE SHEET

Third Quarter Year-to-Date July 31 October 31

2018 2017 2018 2017 2018 2017

Net sales 581,243$ 589,438$ 1,685,373$ 1,493,044$ Cash and marketable securities 266,802$ 90,383$

Cost of sales 260,847 263,173 757,146 666,130 Receivables 507,681 505,087

Selling & administrative expenses 184,820 172,799 548,223 494,000 Inventories 271,360 264,266

Other current assets 31,978 28,636

Operating profit 135,576 153,466 380,004 332,914 Total current assets 1,077,821 888,372

Interest expense - net (13,409) (11,038) (36,345) (24,041) Property, plant & equipment - net 356,777 346,411

Other income (expense) - net 528 27 673 (1,452) Other assets 2,172,794 2,179,756

3,607,392$ 3,414,539$

Income before income taxes 122,695 142,455 344,332 307,421

Income taxes 27,811 40,999 53,658 91,454 Notes payable and debt due within one year 33,729$ 326,587$

Accounts payable and accrued liabilities 307,375 321,159

Net Income 94,884$ 101,456$ 290,674$ 215,967$ Total current liabilities 341,104 647,746

Long-term debt 1,521,393 1,256,397

Other liabilities 321,979 354,903

Return on sales 16% 17% 17% 14% Total shareholders' equity 1,422,916 1,155,493

Return on average shareholders' equity 39% 28% 30% 45% 3,607,392$ 3,414,539$

Average common shares outstanding (000's) 58,053 57,594 57,931 57,495

Average common shares and

common share equivalents (000's) 58,912 58,259 58,910 58,171

Per share: Other information:

Basic earnings 1.63$ 1.76$ 5.02$ 3.76$

Diluted earnings 1.61$ 1.74$ 4.93$ 3.71$ Employees 7,543 7,532

Dividends paid .30$ .27$ .90$ .81$ Common shares outstanding (000's) 58,149 57,715

Total dividends 17,412$ 15,550$ 52,109$ 46,549$

Page 36: Nordson Corporation

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THIRD QUARTER PERIOD NORDSON CORPORATION

Period Ending July 31, 2018 FINANCIAL HIGHLIGHTS

(Unaudited) (Dollars in thousands)

Third Quarter % Growth over 2017 Year-to-Date % Growth over 2017

SALES BY BUSINESS SEGMENT 2018 2017 Volume Currency Total 2018 2017 Volume Currency Total

Adhesive dispensing systems 244,728$ 233,367$ 3.4% 1.5% 4.9% 704,367$ 668,146$ 0.8% 4.6% 5.4%

Advanced technology systems 266,595 290,406 -8.9% 0.7% -8.2% 789,135 645,907 20.0% 2.2% 22.2%

Industrial coating systems 69,920 65,665 5.7% 0.8% 6.5% 191,871 178,991 4.5% 2.7% 7.2%

Total sales by business segment 581,243$ 589,438$ -2.4% 1.0% -1.4% 1,685,373$ 1,493,044$ 9.6% 3.3% 12.9%

OPERATING PROFIT BY BUSINESS SEGMENT 2018 2017 2018 2017

Adhesive dispensing systems 68,490$ 66,451$ 191,319$ 185,226$

Advanced technology systems 67,158 87,385 192,732 168,054

Industrial coating systems 15,179 13,192 36,911 30,529

Corporate (15,251) (13,562) (40,958) (50,895)

Total operating profit by business segment 135,576$ 153,466$ 380,004$ 332,914$

Third Quarter % Growth over 2017 Year-to-Date % Growth over 2017

SALES BY GEOGRAPHIC REGION 2018 2017 Volume Currency Total 2018 2017 Volume Currency Total

United States 191,512$ 182,953$ 4.7% - 4.7% 536,164$ 464,569$ 15.4% - 15.4%

Americas 38,911 41,604 -4.1% -2.4% -6.5% 112,149 107,971 3.8% 0.1% 3.9%

Europe 150,710 133,846 9.4% 3.2% 12.6% 447,384 381,473 8.2% 9.1% 17.3%

Japan 28,367 41,472 -32.5% 0.9% -31.6% 127,266 96,504 29.7% 2.2% 31.9%

Asia Pacific 171,743 189,563 -10.8% 1.4% -9.4% 462,410 442,527 1.6% 2.9% 4.5%

Total Sales by Geographic Region 581,243$ 589,438$ -2.4% 1.0% -1.4% 1,685,373$ 1,493,044$ 9.6% 3.3% 12.9%

Third Quarter Year-to-Date

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THIRD QUARTER PERIOD NORDSON CORPORATION

Period Ending July 31, 2018 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited) (Dollars in thousands except for per-share amounts)

EBITDA Third Quarter Year-to-Date

2018 2017 2018 2017

Net income 94,884$ 101,456$ 290,674$ 215,967$

Adjustments:

Depreciation and amortization expense 27,321 25,954 81,037 65,366

Interest expense, net 13,409 11,038 36,345 24,041

Income taxes 27,811 40,999 53,658 91,454

EBITDA 163,425$ 179,447$ 461,714$ 396,828$

Adjustments:

Acquisition costs and adjustments (1)

- 2,252 3,484 17,898

EBITDA As Adjusted 163,425$ 181,699$ 465,198$ 414,726$

EBITDA per diluted share 2.77$ 3.08$ 7.84$ 6.82$

EBITDA As Adjusted per diluted share 2.77$ 3.12$ 7.90$ 7.13$

(1) Represents costs and adjustments associated with our 2018 and 2017 acquisitions, including accounting adjustments to inventory

that were charged to cost of sales when the inventory was sold; and transaction-related costs comprising of acquisition fees, legal, financial

and tax due diligence expenses, and valuation costs that are required to be expensed as incurred.

EBITDA and EBITDA per diluted share are non-GAAP financial measures used by management to evaluate the Company's ongoing

operations. EBITDA is defined as earnings before interest, taxes, depreciation and amortization and EBITDA As Adjusted is defined as

EBITDA plus certain acquisition costs and adjustments. EBITDA per diluted share is defined as EBITDA divided by the Company's diluted

weighted average shares outstanding. EBITDA As Adjusted per diluted share is defined as EBITDA As Adjusted divided by the Company's

diluted weighted average shares outstanding.

Third Quarter Year-to-Date

2018 2017 2018 2017

Diluted EPS as reported (U.S. GAAP) 1.61$ 1.74$ 4.93$ 3.71$

Short-term inventory purchase accounting adjustments - 0.02 0.04 0.05

Acquisition costs - 0.01 - 0.17

Severance and restructuring 0.02 0.01 0.05 0.02

U.S. Tax Reform discrete item - - (0.37) -

Other discrete tax items (0.03) - (0.15) 0.04

Diluted EPS as adjusted (Non-GAAP) 1.60$ 1.78$ 4.50$ 3.99$

Adjusted EPS is not a measurement of financial performance under GAAP, and should not be considered as an alternative

to EPS determined in accordance with GAAP. Management believes that EPS as adjusted to exclude the items in the

table above assist in understanding the results of Nordson Corporation. Amounts may not add due to rounding.

Free Cash Flow Before Dividends Year-to-Date

2018 2017 2018 2017

Net income 94,884$ 101,456$ 290,674$ 215,967$

Depreciation and amortization 27,321 25,954 81,037 65,366

Other non-cash charges 3,934 (8,592) (29,269) 3,041

Changes in operating assets and liabilities 4,477 (41,299) 485 (62,583)

Net cash provided by operating activities 130,616 77,519 342,927 221,791

Additions to property, plant and equipment (12,923) (22,295) (45,972) (49,324)

Proceeds from the sale of property, plant and equipment 64 308 299 3,906

Free cash flow before dividends 117,757$ 55,532$ 297,254$ 176,373$

Adjustments:

Acquisition costs and adjustments, net of tax (1) - 1,597 2,630 12,564

Free cash flow before dividends, adjusted 117,757$ 57,129$ 299,884$ 188,937$

(1) Represents costs and adjustments associated with our 2018 and 2017 acquisitions, including accounting adjustments to inventory

that were charged to cost of sales when the inventory was sold; and transaction-related costs comprising of acquisition fees, legal, financial

and tax due diligence expenses, and valuation costs that are required to be expensed as incurred.

Free cash flow before dividends, a non-GAAP financial measure, is defined as net cash provided by operating activities less purchased property,

plant and equipment and proceeds from the sale of property, plant and equipment. It is a financial measure used by management to assess its

ability to generate cash in excess of its operating needs. Therefore, the Company believes this financial measure provides useful information to

investors. Free cash flow before dividends is not a measure of financial performance under GAAP and should be considered in addition to, and

not as a substitute for, operating cash flows or other financial measures prepared in accordance with GAAP. Our calculations of non-GAAP

measures may not be comparable to the calculations of similarly titled measures reported by other companies.

Third Quarter

Page 38: Nordson Corporation

-30%

-20%

-10%

0%

10%

20%

30%

$0.18 $0.29 ($0.23) $0.15 $0.16 ($0.11) ($0.09) ($0.06) ($0.54) ($0.19) ($0.03)

Appendix: Currency Impact Annual Sales Growth and EPS

Volume Growth

Currency Effect

EPS Currency Effect

’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ‘16 ‘17

Numbers as reported and do not factor in stock splits

38