NDSN

Nordson Corporation (NDSN)

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Nordson Corporation (NDSN)

F3Q 2011 Earnings Conference Call

August 19, 2011 8:30 AM ET

Executives

Michael F. Hilton - President and CEO

Gregory A. Thaxton - VP and CFO

James R. Jaye - Director, Communications & IR

Analysts

Jason Ursaner - CJS Securities.

Charlie Brady - BMO Capital Markets.

Mark Douglass - Longbow Research.

Matt Summerville - KeyBanc.

Walter Liptak - Barrington Research.

Liam Burke - Janney Capital.

Scott Blumenthal - Emerald Advisors.

Presentation

Operator

Good day ladies and gentlemen and welcome to the Nordson Corporation Webcast for Third Quarter Fiscal Year 2011 Earnings. 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). As a reminder, this conference call is being recorded.

I would now like to turn your conference over to the host for today, Mr. Jim Jaye, Director of Investor Relations. Sir, please go ahead.

James Jaye

Thank you, Ben and good morning to everyone listening. This is Jim Jaye, Director of Communications and Investor Relations. I'm here with Mike Hilton, President and Chief Executive Officer; and Greg Thaxton, Vice President and Chief Financial Officer.

We would like to welcome you to our conference call today Friday, August 19, 2011 on Nordson's third quarter fiscal year 2011 results. Our conference call is being broadcast live on our webpage at www.nordson.com/investors and will be available for 14 days. There will be a telephone replay of our conference call available until midnight August 26 by calling 1-855-859-2056. You will need to reference ID number 89752139.

Our attorneys have requested we open this call with a cautionary statement 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 prepared remarks, we will have a question-and-answer session.

I would now like to turn the call over to Mike Hilton for an overview of our third quarter fiscal year 2011 results and Nordson's future outlook. Mike?

Michael Hilton

Thank you, Jim. Good morning everyone and thank you for listening to Nordson's third quarter 2011 conference call. This quarter we delivered the strongest third quarter in our history, with all segments generating solid growth and increased operating margins. Our update this morning will describe several of the highlights from our performance and we will also provide some perspective relative to our outlook for the fourth quarter of fiscal year 2011.

Let me begin by offering some comments on the third quarter. First, I want to congratulate and thank our global team for continuing to perform at an extremely high level. They delivered solid improvement over the strong levels of a year ago in sales, operating margin, operating profit, net income and earnings per share.

We continue to generate these results by delivering real value to our customers in the form of innovative technology, applications expertise and direct worldwide service. At the same time, we are maintaining our disciplined approach to spending and we are continuing to expand our operational efficiencies through a variety of continuous improvement initiatives.

Looking at a few of our numbers more specifically, sales grew by 12% in the third quarter compared to the same quarter a year ago as customers continued to respond to our value proposition. I'm especially pleased that we generated the solid growth despite a backdrop of sluggish global recovery impacted by the disaster in Japan, increased macroeconomic and political uncertainty in comparison against a very strong period of growth a year ago.

In addition to the solid top line, profitability reached the highest third quarter levels in our history. Excluding one-time items in both years, operating profits grew by 21% and operating margin reached 26% and EPS grew by 25%. We also continued to execute on our acquisition strategy during the quarter. As previously announced, the Verbruggen acquisition adds to our Adhesive Dispensing segment by providing us with an entry into growing flexible packaging markets worldwide and the Value Plastics acquisition, which we expect to close within the quarter, the fourth quarter, is a high performing growth business currently focused in an attractive niche market space in the medical area, but with opportunities to expand in industrial space as well.

In terms of our outlook, our 12-week order rates as compared to the prior year are solid and remain positive in all segments and geographies. So they are also reflective of the current macroeconomic environment. Overall, our guidance points to a record full year for Nordson in both sales and profitability.

I will offer additional comments relative to our outlook later in the webcast. Before that, let me turn the call over to Greg Thaxton, our Chief Financial Officer, who’ll provide a more detailed commentary on our third quarter financial results as well as some comments on our guidance for the fourth quarter of 2011. Greg?

Gregory Thaxton

Thank you, Mike and good morning to everyone. As Mike noted, this is the strongest third quarter in Nordson’s history. Let me start by talking about our sales performance, where in total sales were up 12% over the prior year’s third quarter. This growth is comprised of 5% improvement in volume with positive currency translation making up the balance of the increase and growth occurred in all three operating segments and in every region with the exception of Japan.

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