Nordson Corporation (Nordson) has reported net sales of $186.6 million for the first quarter of fiscal 2009, down 24%, compared with the net sales of $244.7 million in the year-ago quarter. It has also reported a net income of $11.2 million, or $0.33 per diluted share, for the first quarter of fiscal 2009, compared with the net income of $21.3 million, or $0.62 per diluted share, in the year-ago quarter.
For the quarter ending January 31, 2009, of the 24% decrease in sales, 19% was related to volume and 5% was related to the unfavorable effects of currency translation. Net income for the first quarter includes a $0.16 per share charge related to previously announced cost reduction activities and a $0.10 per share gain related to the sale of real estate assets.
“As anticipated in our previous guidance, Nordson’s first quarter results compared to a year ago were significantly impacted by the continuing global economic slowdown,” said chairman, president and chief executive officer Edward P. Campbell. “Nordson’s ability to anticipate changing conditions and respond quickly and aggressively enabled the company to outperform profitability expectations.”
First Quarter Segment & Regional Results:
Sales decreased 16% in the Adhesive Dispensing segment, 30% in the Industrial Coatings and Automotive segment and 33% in the Advanced Technology segment compared to results in the first quarter a year ago. On a geographic basis, first quarter sales decreased 6% in Japan, 22% in the Americas, 23% in the United States, 24% in Europe and 35% in Asia Pacific compared to the same period last year.
“Implementation of the cost reduction measures we announced last fall helped to mitigate the impact of declining sales on operating margins,” said Campbell. “Further deterioration of conditions during the quarter led us to implement an additional $13 million of annualized cost reduction actions associated with further headcount reductions. These actions follow other programs already in place including the headcount reductions announced last September, the freezing of wages worldwide and tightened control of capital and discretionary spending. Going forward, we will continue to manage costs aggressively as circumstances warrant.”
Order Rates and Backlog:
Order rates for the 12 week period ending February 15, 2009, measured in constant currency, decreased 31% over the same period a year ago. Order rates by segment and geography are provided in the accompanying financial tables.
Backlog at the end of the first quarter was about $77 million, a decrease of 37% compared with $123 million at the end of the first quarter last year, and a decrease of 6% compared with $82 million at the end of fiscal year 2008. Backlog amounts are calculated at January 31, 2009 exchange rates.
“In this environment, Nordson’s mix of business has shifted to a greater portion of standard systems and replacement parts, which has reduced backlog and expanded margins,” said Campbell. “Our customers’ concerns about their access to credit and the falling demand they are experiencing continued to influence investment decisions for large ticket capital goods during the quarter.”
Outlook:
For the second quarter of fiscal year 2009, sales are expected to be in the range of down 34% to 38% compared to the same period a year ago, including an estimated 7% negative effect associated with currency translation. Diluted earnings per share are expected in the range of $0.17 to $0.32. This earnings per share range includes a net charge of $0.04 related to one-time items and restructuring costs expected to be recognized during the quarter.
“Global demand for capital goods is expected to remain weak during 2009, as falling demand and liquidity concerns continue to guide customer behavior. We also remain hopeful that recent small improvements in credit markets coupled with the cumulative effects of the massive stimulus programs being launched by governments worldwide will stem falling demand and create the conditions necessary for sequential improvement,” said Campbell. “With a strong balance sheet, solid margins, positive free cash flow and ample sources of credit, we are confident that Nordson remains well positioned to manage through these conditions, however long they may last.”