Nordson Corporation
Precision Technology Solutions
Dispensing - Test & Inspection - Surface Preparation
: NDSN
December 15, 2010 | Fourth Quarter Fiscal 2010 Investor Presentation
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 OPERATIONS
All numbers for years prior to FY 2006 in this presentation include results from discontinued
operations unless otherwise noted.
2
Nordson Investment Summary
Sustainable Business Model





Real technology differentiation
Unparalleled application know how
Global direct sales & service
Parts & consumables annuity
Globally recognized brand
Applied to Diverse Markets



30+ countries, established and emerging
Technology, consumer non-durables,
consumer durables
Emerging applications
Delivers Exceptional Results





3
13% top line growth over 50 years
47 years of dividend increases
Continually improving margins and returns
Strong cash flow for continued investment
Top quartile total shareholder return
Nordson: Focused on Precision Technology Solutions
Core Technology
Adjacent
technology
Material Dispensing
Adjacent
technology
Surface Treatment
& Preparation
Testing &
Inspection
UV Curing
Plasma Cleaning
High Resolution X-Ray
Automated Optical
Physical Bond Test
Dispensing - Coating - Sealing
Finishing – Spraying – Painting - Underfilling
4
How Nordson Adds Value
Increase speed, productivity, uptime, profitability
Enable new products and features
Decrease material use
Sales Distribution – FY2010
MARKETS SERVED
OPERATING SEGMENTS
Circuit Board
Assembly
6%
Semiconductor
9%
Consumer NonDurables
46%
Industrial Coating
13%
Advanced
Technology
37%
Electronic
Components
9%
Medical
3%
Automotive
2%
Industrial
6%
Adhesive Dispensing
50%
Consumer
Durables
18%
GEOGRAPHIC DISTRIBUTION
PRODUCT TYPE
Engineered Systems
17%
Americas
7%
United States
27%
Parts &
Consumables
45%
5
Europe
33%
Standard Product
38%
Asia Pacific
24%
Japan
9%
Adhesive Dispensing Systems
50% of FY10 sales
Twelve Months Ending 10/31/2010:
Sales: $525m
Operating Margin: 32%
Dispense and apply adhesives and other materials to a wide variety of products during
manufacturing processes
Applications
End markets
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Carton and case sealing
Diaper assembly
Window and door assembly
Bookbinding
Furniture assembly
Labeling
Mobile phone assembly
Solar panel assembly
Food and beverage packaging
Nonwovens / tissue and disposable hygiene products
Furniture and building products
Paper converting
Macro electronics
General industrial assembly
Drivers of growth
•
•
•
•
•
6
Income growth in Asia, Latin America, East Europe
Increased use of disposable hygiene products
Increased use of processed and convenience foods
Productivity investments
Material, machinery and process innovations
Typical dispensing unit and replacement parts
Advanced Technology Systems
37% of FY10 sales
Twelve Months Ending 10/31/2010:
Sales $380M Operating Margin 23%
 High precision dispensing, test, inspection and surface treatment technologies for
electronics and other high tech markets.
Applications







Semiconductor packaging
Printed circuit board assembly & coating
Bond testing, X-ray & optical inspection for
semiconductors & printed circuit boards
LED/LCD assembly & packaging
Medical device assembly and testing
Medical procedure biomaterial dispensing
UV curing of coatings
End markets







Semiconductors
Electronic assembly systems
Life sciences
General industrial assembly
Solar
Aerospace
LED
Drivers of growth:






7
Mobile computing trend
Device convergence, migration to flip chips
Circuit shrinkage in devices driving new architectures
Emerging consumers for products in BRIC countries
Growth in medical devices driven by aging population
Alternative energy high volume manufacturing
Includes industry leading brands:
Nordson ASYMTEK, Nordson DAGE, Nordson EFD
Nordson MARCH, Nordson MICROMEDICS, Nordson YESTECH
Typical dispensing system
and consumables
Industrial Coating Systems
13% of FY10 sales
Twelve Months Ending 10/31/2010:
Sales $136m
Operating margin 9%
Equipment and systems to apply paints, sealants, coatings and other materials to a
wide range of products
End markets:






Appliance
Office furniture
Outdoor products
Automobile assembly
Food & beverage containers
Disposable batteries
Applications:





Powder finishing
Liquid finishing
Metal container inside coating
Battery inside coating
Automobile sealing & bonding
Drivers of growth:





8
Environmental advantages of powder coatings
Productivity investments
Lean manufacturing
Quick color change
Growth in emerging markets
Typical products, systems
and replacement parts
Industry Leading Gross Margins
Consistent Sales Growth
$1,200
Nordson Gross Margin – FY2003-FY2010
$1.1B
$1.0B
$1,000
Millions of $
$800
$600
$400
62%
60%
58%
56%
54%
52%
50%
48%
46%
44%
42%
40%
59.7%
57.4%
55.8%
56.7%
56.4%
2003
2004
2005
2006
55.7%
56.0%
2007
2008
57.2%
2009
Long term stability of high gross margin
$200
$0
'55
'60
'65
'70
'75
'80
'85
'90
CAGR: 14%
1955 – 2010
'95
'00
'05
'10
80%
60%
40%
20%
59.7%
35.0%
S&P 400 Industrial
Machinery - Avg
37.0%
S&P 500 Industrial
Machinery - Avg
Nordson
Nordson outperforms industry indices
9
2010
Operating Margin 2002-2010
FY 2010
Continuous Improvement
30%
25%
25%
23%
FY 2009
Continuous Improvement
20%
15%
10%
9%
5%
0%
2002
10
2003
2004
2005
2006
2007
2008 2009* 2010
Q1 09 Q2 09 Q3 09
Q4
09*
*FY09 excludes non-cash charges for impairment of goodwill and other long-lived assets.
Q1 10 Q2 10 Q3 10 Q4 10
Lean Metrics
Operating Profit Per Employee
2003-2010
Sales Per Employee
2003-2010
$300,000
$70,000
CAGR: 6%
CAGR: 16%
$60,000
$250,000
$50,000
$200,000
$40,000
$150,000
$30,000
$100,000
$20,000
$50,000
$10,000
$0
$0
2003 2004 2005 2006 2007 2008 2009 2010
2003 2004 2005 2006 2007 2008 2009 2010
*
Note: Based on average headcount per year
*FY09 Op Profit excludes non-cash charges for impairment of goodwill and other long-lived assets.
11
Diluted Earnings Per Share
2003 -2010
1Q FY 2011
Guidance
CAGR: 22%
$5.00

Volume growth

Currency

Sales growth

Earnings per share
20% to 24%
$4.50
$4.00
$3.50
Effects of acquisitions
$3.00
$2.50
$2.00
(vs. $0.78 in 1Q 2010)
$1.50
$1.00
$0.50
2003
12
2004
2005
2006
2007
2008
2009 *
2010
*FY09 EPS excludes non-cash charges for impairment of goodwill and other long-lived assets.
1Q FY11 Source: December 15, 2010 press release guidance.
(2)%
18% to 22%
$1.03 to $1.13
Nordson Outperforms Its Peer Group
20.0%
ROIC – 5 Year Average
(2006 through 2010)
16.4%
15.0%
11.4%
12.1%
S&P 400 Industrial
Machinery (Median)
S&P 500 Industrial
Machinery (Median)
10.0%
Source: Bloomberg excluding impairment charges
5.0%
0.0%
Nordson Total
Shareholder Return
ranks in top quartile
S&P 500 Industrial Mach
3 year TSR 5 year TSR
Nordson
Nordson Rank
Nordson
S&P 400 Industrial Mach
3 year TSR 5 year TSR
18.67
Quartile 1
18.05
Quartile 1
18.67
Quartile 1
18.05
Quartile 1
7.52
6.38
1.02
(4.42)
12.68
10.74
9.35
2.73
7.33
3.59
(1.21)
(23.05)
12.01
9.38
5.35
(3.65)
Quartile
13
1
2
3
4
Disciplined Use of Cash
Uses of Cash – 2003 to 2010
Debt
17%
Cash Flow
Self funding business model
generates excess cash
Low Working Capital Requirements
Low Capital Expenditures
(approx. 1.5% of sales)
Strong free cash
$202
Working Capital
4%
Share
Repurchases
20%
$234
$42
Property, Plant &
Equipment/Capital
Leases - 13%
$152
$188
Dividends
16%
$357
Acquisitions
30%
Cash Deployment
Organic growth
- Product/Application development
- Channel expansion
- Emerging markets
Acquisitions
Dividends/share repurchase
Dividend increased 47 consecutive years
16th among US public companies
$0.80
$0.70
$0.60
$0.50
$0.40
Dividends per share
$0.30
$0.20
$0.10
14
$0.00
1964
1972
1980
1988
1996
2004
Capital Management
NET DEBT TO CAPITAL
DEBT MATURITY
EFD
Acquisition
70%
$100
Four
Acquisitions
60%
Prudential Sr Note
10% Outstanding
Stock Repurchase
50%
Senior Note
Revolver
$75
$400 million committed facility
40%
$50
$50
30%
20%
$46
$25
10%
$14
$0
0%
2001
2002
2003
2004
2005
2006
Net Debt to Capital calculated net of cash
15
2007
2008
2009
2010
2011
2012
Revolver drawn as of October 31, 2010
2013
2011 Priorities
Growth




Expand capability in emerging markets
Expand emerging applications (LED, solar, life sciences)
Accelerate and extend innovation/differentiation
Continue to develop more robust M&A pipeline
Performance





16
Maintain structural improvements
Augment with next phase of continuous improvement
Improve performance over cycle - reduce cyclicality
Enhanced acquisition process
Improve talent management program
Growth: Migration to “flip chips“ & device convergence
Smart phones will drive
mobile phone opportunities
Nordson is the market leader
In Flip Chip Underfill
18000
14000
12000
10000
Flip Chip in Package Units
18% Annual
Growth Rate
2011-15
Source: Prismark
8000
6000
4000
2500
Smartphone
2000
millions of units
16000
Traditional phone
1500
560
280
1000
172
500
973
1099
2009
2010
19% CAAGR
2000
Source: Prismark
Digitimes
0
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Millions of Packages Requiring First Level Underfill
17
1040
Red areas indicate Nordson underfill
opportunities on typical smart phone
2014
Growth: New Applications
Life Sciences
LED Manufacturing
Global LED Market Forecast by Segment
16
16000
16
t
14000
14 14
Bio Material Dispensing Forecast
Other
Lighting
Billions of $
12000
12 12
10 10
10000
Automotive
Sign Display
24% CAGR
$14.9 billion in 2013
Large LCD
Handheld
880008
660006
Estimated $3.5B material market
growing at >14%
40004
20002
0
2007
2008
2009
2010
2011
2012
2013
Nordson Applications
Encapsulation Clear
Encapsulation Phosphor Filled
Plate Attachment Underfill
Die Coat
Phosphor Coat
18Strategies Unlimited (Mountain View, CA) High-Brightness LED Market Review and
Source:
Forecast—Sept 2009 Source: Displaybank, LED Lighting Industry Growth Perspective - May 2009
Nordson Applications
Hearing Aids, Pacemakers
Catheters, Stents
Dental
Glucose Test Strips
Biomaterial Dispense
Acquisition
Announced October 5
Source: MedMarket Diligence Market Research
Growth: Emerging Regions - Consumer Non-Durables Examples
China - Baby Diaper Market
2007
2008
2010
2020
Babies Under
Age 2 (Millions)
41
41.3
42.5
45.2
Annual
Average
Market
Consumption
Growth Penetration
(100 million pcs)
Rate
Rate
77.5
44.6
17.6
95.7
23.5
21.1
137.8
20
29.6
297.5
8
60.1
China – Feminine Hygiene Market
2007
2008
2010
2020
Women
Age 15-49
(Millions)
364.8
366.6
371.4
398.3
Annual
Average
Market
Consumption
Growth Penetration
(100 million pcs)
Rate
Rate
443
6.8
67.5
480
8.4
72.7
534
5.5
79.8
720
3
99.9
Source: China National Household Paper Industry Association
India – Fast Moving Consumer Goods*
$35
*Fast moving consumer goods
defined as consumer packaged
goods. Category includes soaps,
detergents, shampoos,
toothpaste, shaving products,
packaged foodstuffs, household
accessories and certain
electronic goods.
$30
$25
$20
$15
$10
$5
19
$0
2008
2012
Source: NIIR Project Consultancy Services
Growth Drivers: Powder Coating
Global Powder
Equipment
Market
Global Powder
Equipment
Market
Growth in Standard of Living
in Emerging Markets
Productivity & Profitability
Powder Equipment
1000
Total Powder
Coating market
is growing…
Color change time improvement
Line speed increase & up time
Material savings
Quality of finish
Customization
millions of dollars
Demand for durable goods
1200
800
600
400
200
0
2008
2013
Global Share of Powder
Coating Manufacturing
Environmental Concerns
Emission reduction - no solvents
Ability to recycle unused powder
…with Asia
becoming the
largest market
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2006
Rest of World
2007
Americas
2008
Europe
2009
Asia
20
Source: Powder Coating Institute, BCC Research and Nordson
Growth: Asia Pacific Sales 2002 to 2010
Asia Pacific Sales
(Millions $)
$270
 Company’s 41th year of operation
in Asia
 Direct in China for 15 years
 Percent of total revenue:
- 2002:
7%
- 2010:
24%
24% CAGR
2002-2010
$240
$210
$180
$150
$120
$90
$60
$30
21
10
20
09
20
08
20
07
20
06
20
05
20
04
20
03
20
20
02
$0
Building on Excellence - 3 to 5 Year Goals
 Maintain organic growth at mid-to-high single digits
 Acquisitions bring core growth to double digits
 Improve operating margins by two percentage points on
current portfolio
 Maintain ROIC well above the cost of capital
 Continue to drive lean/six sigma to the bottom line
Continue to deliver top quartile performance
for our shareholders
22
Nordson Investment Summary
Sustainable Business Model





Real technology differentiation
Unparalleled application know how
Global direct sales & service
Parts & consumables annuity
Globally recognized brand
Applied to Diverse Markets



30+ countries, established and emerging
Technology, consumer non-durables,
consumer durables
Emerging applications
Delivers Exceptional Results





23
13% top line growth over 50 years
47 years of dividend increases
Continually improving margins and returns
Strong cash flow for continued investment
Top quartile total shareholder return
Appendix: GAAP Reconciliation
FOURTH QUARTER PERIOD
Period Ending October 31, 2010
(Unaudited)
NORDSON CORPORATION
SUPPLEMENTAL FINANCIAL INFORMATION
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Dollars in thousands except for per-share amounts)
Adjusted EPS, net income and operating profit are not measurements of financial performance under GAAP, and such measures should not be
considered as alternatives to EPS, net income and operating profit determined in accordance with GAAP. Management believes that EPS, net
income and operating profit as adjusted to exclude the items in the tables below assist in understanding the results of Nordson Corporation. Our
calculation of these non-GAAP measures may not be comparable to the calculation of similarly titled measures reported by other companies.
EARNINGS PER SHARE
Fourth Quarter
2010
Diluted EPS as reported (U.S. GAAP)
Goodwill and long-lived asset impairments
Effect of dilution on earnings as adjusted *
Diluted EPS adjusted for impairment charges
$
Other reconciling items:
Severance and restructuring
Tax benefit from sale of UV product lines
Other one-time tax items
Real estate sale
Diluted EPS as adjusted (Non-GAAP)
1.56
1.56
$
0.01
(0.07)
$
1.50
Year-to-Date
2009
(6.22)
7.08
(0.01)
0.85
2010
$
0.05
$
0.90
$
4.91
-
2009
4.91
(4.77)
7.09
(0.01)
2.31
0.04
(0.31)
(0.02)
-
0.32
(0.11)
(0.10)
4.62
$
$
2.42
* Our loss per share for generally accepted accounting principles (GAAP) does not allow for the inclusion of the dilutive effect of shares in the
denominator of our per share calculation since this effect would result in a reduction of the loss per share. The effect of dilution on earnings
as adjusted is included in the reconciliation of our Non-GAAP measure so that earnings as adjusted reflects the impact of any applicable dilutive shares.
24
Appendix: Currency and Annual Sales Growth
30%
20%
10%
0%
-10%
-20%
-30%
'91 '92
$
25
.11
'93 '94 '95 '96
.05 (.10) .01
'97 '98 '99
'00
'01 '02 '03 '04 '05 '06
.16 (.11 ) (.19) (.20) .04 (.10) (.20)
Volume Growth
Currency Effect
'07 '08 ‘09 ‘10
.01 .30 . 27 .11 (.10) .18
EPS Currency Effect
.29 (.23) .15