Nordson Corp. has a market cap of $2.73 billion; its shares were traded at around $40.43 with a P/E ratio of 12.8 and P/S ratio of 2.6. The dividend yield of Nordson Corp. stocks is 1.2%. Nordson Corp. had an annual average earning growth of 12.8% over the past 10 years. GuruFocus rated Nordson Corp. the business predictability rank of 3.5-star.
Highlight of Business Operations:Operating profit as a percent of sales for the Advanced Technology Systems segment was 26.2 percent in 2011 compared to 22.8 percent in 2010. The current year included charges of $3,003 related to short-term inventory purchase accounting adjustments. The operating profit increase was primarily due to higher sales volume supported by a more efficient cost structure.
Operating profit as a percent of sales for the Advanced Technology Systems segment was 22.8 percent in 2010 compared to an operating loss of 88.7 percent of sales in 2009. The change was due primarily to goodwill and long-lived asset impairment charges of $239,427 in 2009. Excluding these impairment charges, operating margin was 10.2 percent. The increase from 10.2 percent to 22.8 percent was primarily due to sales volume increasing at a higher rate than selling and administrative expenses.
Operating profit as a percent of sales for the Industrial Coating Systems segment was 9.9 percent in 2010 compared to an operating loss of 5.9 percent of sales in 2009. Operating profit in 2009 included a goodwill impairment charge of $3,616. Excluding this charge, operating margin was negative 2.8 percent in 2009. The profitability improvement in 2010 was primarily due to higher gross margin percentages and to sales volume increasing at a higher rate than selling and administrative expenses.
The following is a summary of significant changes by balance sheet caption from October 31, 2010 to October 31, 2011. Receivables increased due to higher accounts and notes receivable resulting from higher sales in the fourth quarter of 2011 compared to the fourth quarter of 2010. This increase was partially offset by a decrease in other receivables due to a lower value of foreign exchange contracts. The increase in inventories is due to a higher level of business activity in the fourth quarter of 2011 compared to the fourth quarter of 2010 and inventory held by three acquisitions completed in 2011. Goodwill increased primarily due to three acquisitions completed in 2011 that added $200,823 of goodwill. The increase in other intangibles net was due to $86,237 of intangibles added as a result of the 2011 acquisitions, partially offset by $8,018 of amortization. The increase in accounts payable is primarily due to a higher level of business activity in the fourth quarter of 2011 compared to the fourth quarter of 2010 and accounts payable of three acquisitions completed in 2011. The decrease in income taxes payable is largely due to higher estimated U.S. tax payments in 2011. The increase in accrued liabilities is primarily due to accruals for salaries and incentive compensation. Current maturities of long-term debt decreased due to scheduled repayments of Senior Notes. The increase in long-term pension and retirement obligations and long-term postretirement obligations is the result of a decrease in the discount rate for U.S. plans, lower expected returns on pension assets and updated demographic assumptions. Long-term deferred tax liabilities increased primarily as a result of purchase accounting adjustments related to the 2011 acquisitions, partially offset by the tax effect of pension and postretirement amounts recorded in other comprehensive income.
Our operating performance and balance sheet position for 2011 were both stronger than 2010, as we continued to experience excellent recovery since 2009, which was affected by disruptions in global financial markets and the general economic environment. Going forward, we are well-positioned to manage our liquidity needs that arise from working capital requirements, capital expenditures, and principal and interest payments on indebtedness. Primary sources of capital to meet these needs are cash provided by operations and borrowings under our loan agreements. In 2011, cash from operations was 20 percent of revenue, compared to 13 percent in 2010, which included voluntary contributions to our U.S. pension plans and one-time postretirement payments representing 8 percent of revenue. Funds provided by borrowings occurred under a $400,000 five-year committed revolving line of credit with a group of domestic and international banks that was set to expire in 2012. As of December 9, 2011, we replaced our existing revolving loan agreement, and balances outstanding under the prior facility were transferred to a new $500,000 unsecured multicurrency credit facility with a group of banks. This facility has a five-year term and includes a $40,000 subfacility for swing-line loans. It may be increased from $500,000 to $750,000 under certain conditions. As of October 31, 2011, we had $207,800 under the previous facility as available borrowing capacity, which has been expanded under the replacement facility. In addition, in June 2011, we entered into a $150,000 three-year Private Shelf agreement with New York Life Investment Management LLC. As of October 31, we had $75,000 borrowing capacity. While these facilities provide the contractual terms for any borrowing, we cannot be assured that these facilities would be available in the event that these financial institutions failed to remain sufficiently capitalized.
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