NORDSON CORP [NDSN] Filings

10-Q 1 ndsn-20240731.htm 10-Q ndsn-20240731

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-7977

____________________________________________________

NORDSON CORPORATION

(Exact name of registrant as specified in its charter)

___________________________________________________

Ohio

(State or other jurisdiction of incorporation or organization)

28601 Clemens Road

Westlake, Ohio

(Address of principal executive offices)

34-0590250

(I.R.S. Employer Identification No.)

44145

(Zip Code)

(440) 892-1580

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange
On Which Registered

Common Shares, without par value

NDSN

Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes x No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Shares, without par value as of August 20, 2024: 57,181,533

Table of Contents


PART I – FINANCIAL INFORMATION			3

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)			3
Condensed Consolidated Statements of Income			3
Consolidated Statements of Comprehensive Income			4
Consolidated Balance Sheets			5
Consolidated Statements of Shareholders' Equity			6
Condensed Consolidated Statements of Cash Flows			8
Notes to Condensed Consolidated Financial Statements			9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			24
Overview			24
Critical Accounting Policies and Estimates			24
Results of Operations			24
Financial Condition			27
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			28
ITEM 4. CONTROLS AND PROCEDURES			28

PART II – OTHER INFORMATION			29

ITEM 1. LEGAL PROCEEDINGS			29
ITEM 1A. RISK FACTORS			29
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			29
ITEM 5. OTHER INFORMATION			29
ITEM 6. EXHIBITS			31

SIGNATURE			32

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Nordson Corporation

Part I – FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS (UNAUDITED)

Condensed Consolidated Statements of Income


	Three Months Ended				Nine Months Ended
(In thousands, except for per share data)	July 31, 2024		July 31, 2023		July 31, 2024		July 31, 2023
Sales	$	661,604	$	648,677	$	1,945,439	$	1,909,319
Operating costs and expenses:
Cost of sales	292,603		288,357		862,134		868,007
Selling and administrative expenses	201,943		189,324		588,196		553,590

	494,546		477,681		1,450,330		1,421,597
Operating profit	167,058		170,996		495,109		487,722
Other income (expense):
Interest expense	(18,803)		(12,089)		(60,354)		(32,532)
Interest and investment income	1,027		603		3,625		1,628
Other income (expense) - net	152		2,542		(971)		(2,059)
	(17,624)		(8,944)		(57,700)		(32,963)
Income before income taxes	149,434		162,052		437,409		454,759
Income taxes	32,107		34,161		92,293		95,044
Net income	$	117,327	$	127,891	$	345,116	$	359,715
Average common shares	57,229		56,989		57,171		57,114
Incremental common shares attributable to equity compensation	395		541		449		543
Average common shares and common share equivalents	57,624		57,530		57,620		57,657
Basic earnings per share	$	2.05	$	2.24	$	6.04	$	6.30
Diluted earnings per share	$	2.04	$	2.22	$	5.99	$	6.24

See accompanying notes.

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Consolidated Statements of Comprehensive Income


	Three Months Ended				Nine Months Ended
(In thousands)	July 31, 2024		July 31, 2023		July 31, 2024		July 31, 2023
Net income	$	117,327	$	127,891	$	345,116	$	359,715
Components of other comprehensive income (loss):
Foreign currency translation adjustments	8,096		3,455		19,419		79,986

Pension and other postretirement plan adjustments, net of tax	(1,198)		(159)		(1,638)		(908)
Total other comprehensive income	6,898		3,296		17,781		79,078
Total comprehensive income	$	124,225	$	131,187	$	362,897	$	438,793

See accompanying notes.

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Consolidated Balance Sheets


(In thousands)
Assets
Current assets:	July 31, 2024		October 31, 2023
Cash and cash equivalents	$	165,324	$	115,679
Receivables - net	538,541		590,886
Inventories - net	438,167		454,775
Prepaid expenses and other current assets	82,106		67,970

Total current assets	1,224,138		1,229,310
Goodwill	2,785,773		2,784,201
Intangible assets - net	628,764		672,744
Property, plant and equipment - net	401,415		392,846
Operating right of use lease assets	96,631		106,176
Deferred income taxes	20,408		16,022
Other assets	47,241		50,471
Total assets	$	5,204,370	$	5,251,770

Liabilities and shareholders' equity
Current liabilities:
Current maturities of long-term debt and notes payable	$	96,288	$	115,662
Accrued liabilities	204,796		199,588
Accounts payable	98,305		106,320
Customer advanced payments	62,339		93,389
Income taxes payable	34,085		45,359
Operating lease liability - current	17,136		16,853
Finance lease liability - current	5,318		4,918

Total current liabilities	518,267		582,089
Long-term debt	1,398,155		1,621,394
Operating lease liability - noncurrent	83,775		92,412
Deferred income taxes	205,309		210,637
Postretirement obligations	51,120		50,862
Pension obligations	42,520		40,425
Finance lease liability - noncurrent	12,454		11,670
Other long-term liabilities	39,012		44,221
Shareholders' equity:
Common shares	12,253		12,253
Capital in excess of stated value	708,070		668,097
Retained earnings	4,217,680		3,989,353
Accumulated other comprehensive loss	(178,660)		(196,441)
Common shares in treasury, at cost	(1,905,586)		(1,875,202)
Total shareholders' equity	2,853,757		2,598,060
Total liabilities and shareholders' equity	$	5,204,370	$	5,251,770

See accompanying notes.

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Consolidated Statements of Shareholders’ Equity


	Nine Months Ended July 31, 2024
(In thousands, except for share and per share data)	Common Shares		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Common Shares in Treasury, at cost		TOTAL
November 1, 2023	$	12,253	$	668,097	$	3,989,353	$	(196,441)	$	(1,875,202)	$	2,598,060
Shares issued under company stock and employee benefit plans	—		12,519		—		—		1,899		14,418
Stock-based compensation	—		4,659		—		—		—		4,659
Purchase of treasury shares	—		—		—		—		(7,371)		(7,371)
Dividends declared ($0.68 per share)	—		—		(38,855)		—		—		(38,855)
Net income	—		—		109,572		—		—		109,572

Other Comprehensive Income (Loss):
Foreign currency translation adjustments	—		—		—		43,943		—		43,943
Defined benefit pension and post-retirement plan adjustments	—		—		—		(459)		—		(459)
January 31, 2024	$	12,253	$	685,275	$	4,060,070	$	(152,957)	$	(1,880,674)	$	2,723,967
Shares issued under company stock and employee benefit plans	—		11,412		—		—		1,389		12,801
Stock-based compensation	—		5,384		—		—		—		5,384
Purchase of treasury shares	—		—		—		—		(556)		(556)
Dividends declared ($0.68 per share)	—		—		(38,941)		—		—		(38,941)
Net income	—		—		118,217		—		—		118,217
Other Comprehensive Income (Loss):
Foreign currency translation adjustments	—		—		—		(32,620)		—		(32,620)

Defined benefit pension and post-retirement plan adjustments	—		—		—		19		—		19
April 30, 2024	$	12,253	$	702,071	$	4,139,346	$	(185,558)	$	(1,879,841)	$	2,788,271
Shares issued under company stock and employee benefit plans	—		1,490		—		—		433		1,923
Stock-based compensation	—		4,509		—		—		—		4,509
Purchase of treasury shares	—		—		—		—		(26,178)		(26,178)
Dividends declared ($0.68 per share)	—		—		(38,993)		—		—		(38,993)
Net income	—		—		117,327		—		—		117,327

Other Comprehensive Income (Loss):
Foreign currency translation adjustments	—		—		—		8,096		—		8,096

Defined benefit pension and post-retirement plan adjustments	—		—		—		(1,198)		—		(1,198)
July 31, 2024	$	12,253	$	708,070	$	4,217,680	$	(178,660)	$	(1,905,586)	$	2,853,757

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	Nine Months Ended July 31, 2023
(In thousands, except for share and per share data)	Common Shares		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Common Shares in Treasury, at cost		TOTAL
November 1, 2022	$	12,253	$	626,697	$	3,652,216	$	(207,782)	$	(1,789,009)	$	2,294,375
Shares issued under company stock and employee benefit plans	—		7,032		—		—		1,775		8,807
Stock-based compensation	—		7,071		—		—		—		7,071
Purchase of treasury shares	—		—		—		—		(6,875)		(6,875)
Dividends declared ($0.65 per share)	—		—		(37,199)		—		—		(37,199)
Net income	—		—		104,261		—		—		104,261

Other Comprehensive Income (Loss):
Foreign currency translation adjustments	—		—		—		76,821		—		76,821
Defined benefit pension and post-retirement plan adjustments	—		—		—		(576)		—		(576)
January 31, 2023	$	12,253	$	640,800	$	3,719,278	$	(131,537)	$	(1,794,109)	$	2,446,685
Shares issued under company stock and employee benefit plans	—		2,632		—		—		369		3,001
Stock-based compensation	—		4,970		—		—		—		4,970
Purchase of treasury shares	—		—		—		—		(47,490)		(47,490)
Dividends declared ($0.65 per share)	—		—		(37,264)		—		—		(37,264)
Net income	—		—		127,563		—		—		127,563

Other Comprehensive Income (Loss):
Foreign currency translation adjustments	—		—		—		(290)		—		(290)

Defined benefit pension and post-retirement plan adjustments	—		—		—		(173)		—		(173)
April 30, 2023	$	12,253	$	648,402	$	3,809,577	$	(132,000)	$	(1,841,230)	$	2,497,002
Shares issued under company stock and employee benefit plans	—		5,958		—		—		683		6,641
Stock-based compensation	—		5,858		—		—		—		5,858
Purchase of treasury shares	—		—		—		—		(23,798)		(23,798)
Dividends declared ($0.65 per share)	—		—		(37,084)		—		—		(37,084)
Net income	—		—		127,891		—		—		127,891

Other Comprehensive Income (Loss):
Foreign currency translation adjustments	—		—		—		3,455		—		3,455
Defined benefit pension and post-retirement plan adjustments	—		—		—		(159)		—		(159)
July 31, 2023	$	12,253	$	660,218	$	3,900,384	$	(128,704)	$	(1,864,345)	$	2,579,806

See accompanying notes.

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Condensed Consolidated Statements of Cash Flows


(In thousands)	Nine Months Ended
Cash flows from operating activities:	July 31, 2024		July 31, 2023
Net income	$	345,116	$	359,715
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	99,646		80,637
Non-cash stock compensation	14,552		17,067
Deferred income taxes	(3,830)		(930)
Other non-cash expense	3,698		762
Loss on sale of property, plant and equipment	1,015		1,624
Changes in operating assets and liabilities and other	(385)		19,197


Net cash provided by operating activities	459,812		478,072
Cash flows from investing activities:
Additions to property, plant and equipment	(43,786)		(24,244)

Proceeds from sale of property, plant and equipment	63		91
Other	8,833		—
Acquisition of business, net of cash acquired	—		(377,843)
Net cash used in investing activities	(34,890)		(401,996)
Cash flows from financing activities:
Proceeds from issuance of debt	4,334		1,279,151
Repayment of debt	(248,689)		(1,205,195)
Repayment of finance lease obligations	(4,505)		(4,769)
Issuance of common shares in treasury	29,142		18,449
Purchase of treasury shares	(34,105)		(78,163)
Dividends paid	(116,789)		(111,547)
Net cash used in financing activities	(370,612)		(102,074)

Effect of exchange rate changes on cash	(4,665)		5,679
Increase (decrease) in cash and cash equivalents	49,645		(20,319)
Cash and cash equivalents at beginning of period	115,679		163,457
Cash and cash equivalents at end of period	$	165,324	$	143,138

See accompanying notes.

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Notes to Condensed Consolidated Financial Statements

July 31, 2024

NOTE REGARDING AMOUNTS AND FISCAL YEAR REFERENCES

In this Quarterly Report on Form 10-Q, all amounts related to United States dollars and foreign currency and to the number of Nordson Corporation’s common shares, except for per share earnings and dividend amounts, are expressed in thousands. Unless the context otherwise indicates, all references to “we” or the “Company” mean Nordson Corporation.

Unless otherwise noted, all references to years relate to our fiscal year ending October 31.

Significant accounting policies

Basis of presentation. The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles in the United States ("U.S. GAAP") for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended July 31, 2024 are not necessarily indicative of the results that may be expected for the full year. For further information, refer to the Consolidated Financial Statements and notes included in our Annual Report on Form 10-K for the year ended October 31, 2023.

Consolidation. The Condensed Consolidated Financial Statements include the accounts of Nordson Corporation and its 100%-owned and controlled subsidiaries. Investments in affiliates and joint ventures in which our ownership is 50% or less or in which we do not have control but have the ability to exercise significant influence, are accounted for under the equity method. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of estimates. The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements. Actual amounts could differ from these estimates.

Revenue recognition. A contract exists when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of the consideration is probable. Revenue is recognized when performance obligations under the terms of the contract with a customer are satisfied. Generally, our revenue results from short-term, fixed-price contracts and primarily is recognized as of a point in time when the product is shipped or at a later point when the control of the product transfers to the customer. Revenue for undelivered items is deferred and included within Accrued liabilities in our Consolidated Balance Sheets. Revenues deferred as of July 31, 2024 and 2023 were not material.

However, for certain contracts related to the sale of customer-specific products within our Medical and Fluid Solutions segment, revenue is recognized over time as we satisfy performance obligations because of the continuous transfer of control to the customer. The continuous transfer of control to the customer occurs as we enhance assets that are customer controlled and we are contractually entitled to payment for work performed to date plus a reasonable margin.

As control transfers over time for these products or services, revenue is recognized based on progress toward completion of the performance obligations. The selection method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. We have elected to use the input method – costs incurred for these contracts because it best depicts the transfer of products or services to the customer based on incurring costs on the contract. Under this method, revenues are recorded proportionally as costs are incurred. Contract assets recognized are recorded in Prepaid expenses and other current assets and contract liabilities are recorded in Accrued liabilities in our Consolidated Balance Sheets and were not material on July 31, 2024 and October 31, 2023. Revenue recognized over time represented approximately less than ten percent of our overall consolidated revenues at July 31, 2024 and October 31, 2023.

Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products or services. Taxes, including sales and value add, that we collect concurrently with revenue-producing activities are excluded from revenue. As a practical expedient, we may exclude the assessment of whether goods or services are performance obligations, if they are immaterial in the context of the contract, and combine these with other performance obligations. While payment terms and conditions vary by contract type, we have determined that our contracts generally do not include a significant financing component. We have elected to apply the practical expedient to treat all shipping and handling costs as fulfillment costs as a significant portion of these costs are incurred prior to transfer of control to the customer. We have also elected to apply the practical expedient to expense sales commissions as they are incurred as the amortization period resulting from capitalizing the

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costs is one year or less. These costs are recorded within Selling and administrative expenses in our Condensed Consolidated Statements of Income.

We offer assurance-type warranties on our products as well as separately sold warranty contracts. Revenue related to warranty contracts that are sold separately is recognized over the life of the warranty term and are not material. Certain arrangements may include installation, installation supervision, training, and spare parts, which tend to be completed in a short period of time, at an insignificant cost, and utilizing skills not unique to us, and, therefore, these items are typically regarded as inconsequential or not material.

We disclose disaggregated revenues by operating segment and geography in accordance with the revenue standard and on the same basis used internally by the chief operating decision maker for evaluating performance of operating segments and for allocating resources. Refer to our Operating segments Note for details.

Earnings per share. Basic earnings per share are computed based on the weighted-average number of common shares outstanding during each year, while diluted earnings per share are based on the weighted-average number of common shares and common share equivalents outstanding. Common share equivalents consist of shares issuable upon exercise of stock options computed using the treasury stock method, as well as restricted shares and deferred stock-based compensation. Options whose exercise price is higher than the average market price are excluded from the calculation of diluted earnings per share because the effect would be anti-dilutive. Options excluded from the calculation of diluted earnings per share for the three months ended July 31, 2024 and 2023 were 74 and 138, respectively. Options excluded from the calculation of diluted earnings per share for the nine months ended July 31, 2024 and 2023 were 74 and 141, respectively.

Recently issued accounting standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires enhanced disclosures about significant segment expenses and enhanced disclosures in interim periods. The guidance in ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023 and interim reporting periods in fiscal years beginning after December 31, 2024, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-07 will have on its consolidated financial statements and disclosures and anticipates adoption in 2025.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 is intended to improve income tax disclosure requirements by requiring specific disclosure in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold. The guidance in ASU 2023-09 will be effective for annual reporting periods in fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact that the adoption of ASU 2023-09 will have on its consolidated financial statements and disclosures and anticipates adoption in fiscal 2026.

Acquisitions

Business acquisitions have been accounted for using the acquisition method, with the acquired assets and liabilities recorded at estimated fair value on the dates of acquisition. The cost in excess of the net assets of the business acquired is included in goodwill. Operating results since the respective dates of acquisitions are included in the Condensed Consolidated Statements of Income.

2024 Acquisition

On August 21, 2024, the Company completed the acquisition of Atrion Corporation, a Delaware corporation (“Atrion”), pursuant to the terms of the Agreement and Plan of Merger (the “Merger Agreement”), dated May 28, 2024, with Alpha Medical Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Nordson (“Merger Sub”), and Atrion. Pursuant to the Merger Agreement, Merger Sub merged with and into Atrion (the “Merger”), with Atrion surviving the Merger as a wholly owned subsidiary of Nordson. Atrion is a leader in proprietary medical infusion fluid delivery and niche cardiovascular solutions and will operate within our Medical and Fluid Solutions segment. The all-cash acquisition of Atrion of approximately $800,000, net of cash acquired, was funded using borrowings under our revolving credit facility and Term Loan Agreement (refer to Long-term debt Note) and cash on hand. Atrion sales for the year ended December 31, 2023 were approximately $169,000.

2023 Acquisitions

On August 24, 2023, the Company completed the acquisition of the ARAG Group and its subsidiaries ("ARAG Group" or "ARAG") pursuant to the terms of the Sale and Purchase Agreement, dated as of June 25, 2023, by and among the Company, its Italian subsidiary, Capvis Equity V LP, DRIP Co-Investment, and certain individuals. ARAG is a global market and innovation leader in the development, production and supply of precision control systems and smart fluid components for agricultural spraying. ARAG operates as a division of our Industrial Precision Solutions segment. In anticipation of the acquisition, the

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Company entered into a €760,000 senior unsecured term loan facility with a group of banks in August 2023 (the "364-Day Term Loan Facility"). The all-cash ARAG acquisition of approximately €957,000, net of the repayment of approximately €30,300 of debt of the acquired companies, was funded using borrowings under the 364-Day Term Loan Facility and the Company's revolving credit facility. The 364-Day Term Loan Facility was subsequently paid off in September 2023 with the net proceeds of a senior notes offering. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $687,357 and identifiable intangible assets of $353,500 were recorded. The identifiable intangible assets consist primarily of $27,500 of tradenames (amortized over nine years), $31,000 of technology (amortized over five years), and $295,000 of customer relationships (amortized over twenty-two years). Goodwill associated with the acquisition was not tax deductible. As of July 31, 2024, the purchase price allocation remains preliminary as we complete our assessment principally of income taxes. The financial results of the ARAG Group acquisition are not expected to have a material impact on our Consolidated Financial Statements.

The assets and liabilities acquired were as follows:


	August 24, 2023
Cash	$	32,966
Receivables - net	31,081
Inventories - net	51,952
Goodwill	687,357
Intangibles	353,500
Other assets	55,993
Total Assets	$	1,212,849

Accounts payable	$	18,915
Deferred income taxes	100,097
Other liabilities	15,934
Total Liabilities	$	134,946

On November 3, 2022, we acquired 100% of CyberOptics Corporation ("CyberOptics"). CyberOptics is a leading global developer and manufacturer of high-precision 3D optical sensing technology solutions. The CyberOptics acquisition expanded our test and inspection platform, providing differentiated technology that expands our product offering in the semiconductor and electronics industries and is reported in our Advanced Technology Solutions segment. We acquired CyberOptics for an aggregate purchase price of $377,843, net of cash of approximately $40,890, funded using borrowings under our revolving credit facility and cash on hand. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $285,330 and identifiable intangible assets of $58,600 were recorded. The identifiable intangible assets consist primarily of $15,200 of tradenames (amortized over fifteen years), $14,600 of technology (amortized over seven years), and $28,800 of customer contracts (amortized over twelve years). Goodwill associated with the acquisition was not tax deductible. As of July 31, 2024, the purchase price allocation was final. The results of CyberOptics are not material to our Consolidated Financial Statements.

The assets and liabilities acquired were as follows:


	November 3, 2022
Cash	$	40,890
Receivables - net	21,364
Inventories - net	33,639
Goodwill	285,330
Intangibles	58,600
Other assets	13,768
Total Assets	$	453,591

Accounts payable	$	8,109
Deferred income taxes	14,826
Other liabilities	11,923
Total Liabilities	$	34,858

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Nordson Corporation

Receivables

Our allowance for credit losses is principally determined based on aging of receivables. Receivables are exposed to credit risk based on the customers' ability to pay which is influenced by, among other factors, their financial liquidity. We perform ongoing customer credit evaluation to maintain sufficient allowances for potential credit losses. Our segments perform credit evaluation and monitoring to estimate and manage credit risk through the review of customer information, credit ratings, approval and monitoring of customer credit limits, and assessment of market conditions. We may also require prepayments or bank guarantees from customers to mitigate credit risk. Our receivables are generally short-term in nature with a majority of receivables outstanding less than 90 days. Accounts receivable balances are written-off against the allowance if deemed uncollectible.

Accounts receivable are net of an allowance for credit losses of $11,839 and $10,015 on July 31, 2024 and October 31, 2023, respectively. The provision for losses on receivables was $1,678 and $2,156 for the three and nine months ended July 31, 2024, respectively, compared to provision for losses of $410 and provision income of $239 for the same periods a year ago, respectively. The remaining change in the allowance for credit losses is principally related to net write-off/recoveries of uncollectible accounts as well as currency translation.

Inventories

Components of inventories were as follows:


	July 31, 2024		October 31, 2023
Finished goods	$	255,565	$	233,552
Raw materials and component parts	200,961		211,874
Work-in-process	65,462		86,474
	521,988		531,900
Obsolescence and other reserves	(83,821)		(77,125)

	$	438,167	$	454,775

Property, Plant and Equipment

Components of property, plant and equipment were as follows:


	July 31, 2024		October 31, 2023
Land	$	15,280	$	15,792
Land improvements	5,099		5,019
Buildings	289,691		294,267
Machinery and equipment	577,723		549,291
Enterprise management system	53,385		52,939
Construction-in-progress	40,054		24,916
Leased property under finance leases	30,086		28,406
	1,011,318		970,630
Accumulated depreciation and amortization	(609,903)		(577,784)
	$	401,415	$	392,846

Depreciation expense was $14,180 and $13,180 for the three months ended July 31, 2024 and 2023, respectively. Depreciation expense was $42,234 and $38,798 for the nine months ended July 31, 2024 and 2023, respectively.

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Nordson Corporation

Goodwill and other intangible assets

Changes in the carrying amount of goodwill for the nine months ended July 31, 2024 by operating segment were as follows:


	Industrial Precision Solutions		Medical Fluid Systems		Advanced Technology Solutions		Total
Balance at October 31, 2023	$	1,208,996	$	1,173,858	$	401,347	$	2,784,201
Acquisitions	(7,543)		—		—		(7,543)
Currency effect	5,972		1,341		1,802		9,115
Balance at July 31, 2024	$	1,207,425	$	1,175,199	$	403,149	$	2,785,773

See Acquisitions Note for additional details.

Information regarding our intangible assets subject to amortization was as follows:


	July 31, 2024
	Carrying Amount		Accumulated Amortization		Net Book Value
Customer relationships	$	811,392	$	327,906	$	483,486
Patent/technology costs	207,113		128,990		78,123
Trade name	126,820		59,861		66,959
Non-compete agreements	8,486		8,290		196
Other	421		421		—
Total	$	1,154,232	$	525,468	$	628,764

	October 31, 2023
	Carrying Amount		Accumulated Amortization		Net Book Value
Customer relationships	$	794,706	$	287,585	$	507,121
Patent/technology costs	204,905		112,994		91,911
Trade name	125,692		52,488		73,204
Non-compete agreements	10,028		9,521		507
Other	182		181		1
Total	$	1,135,513	$	462,769	$	672,744

Amortization expense for the three months ended July 31, 2024 and 2023 was $19,202 and $13,922, respectively. Amortization expense for the nine months ended July 31, 2024 and 2023 was $57,412 and $41,839, respectively. See Acquisitions Note for details regarding intangibles recorded due to the acquisition of ARAG and CyberOptics.

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Nordson Corporation

Pension and other postretirement plans

The components of net periodic pension and other postretirement cost for the three and nine months ended July 31, 2024 and 2023 were:


	U.S.				International
Three Months Ended	2024		2023		2024		2023
Service cost	$	2,507	$	2,744	$	231	$	281
Interest cost	4,752		4,176		688		642
Expected return on plan assets	(6,652)		(6,529)		(417)		(392)
Amortization of prior service credit	—		—		(2)		(13)
Amortization of net actuarial loss	—		—		7		20
Settlement loss	56		—		—		—
Total benefit cost	$	663	$	391	$	507	$	538



	U.S.				International
Nine Months Ended	2024		2023		2024		2023
Service cost	$	7,522	$	8,233	$	702	$	838
Interest cost	14,257		12,526		2,062		1,887
Expected return on plan assets	(19,958)		(19,587)		(1,250)		(1,151)
Amortization of prior service credit	—		—		(6)		(38)
Amortization of net actuarial loss	—		—		24		61
Settlement loss	56		—		—		—
Total benefit cost	$	1,877	$	1,172	$	1,532	$	1,597

The components of other postretirement benefit costs for the three and nine months ended July 31, 2024 and 2023 were:


	U.S.				International
Three Months Ended	2024		2023		2024		2023
Service cost	$	70	$	100	$	1	$	1
Interest cost	754		766		3		3

Amortization of net actuarial gain	(147)		—		(14)		(16)
Total benefit cost (income)	$	677	$	866	$	(10)	$	(12)


	U.S.				International
Nine Months Ended	2024		2023		2024		2023
Service cost	$	211	$	299	$	4	$	4
Interest cost	2,262		2,297		10		8

Amortization of net actuarial gain	(443)		—		(43)		(47)
Total benefit cost (income)	$	2,030	$	2,596	$	(29)	$	(35)

The components of net periodic pension and other postretirement cost, other than service cost, are included in Other – net in our Condensed Consolidated Statements of Income.

Income taxes

We record our interim provision for income taxes based on our estimated annual effective tax rate, as well as certain items discrete to the current period. The effective tax rate for the three months ended July 31, 2024 and 2023 was 21.5% and 21.1%, respectively. The effective tax rate for the nine months ended July 31, 2024 and 2023 was 21.1% and 20.9%, respectively.

Due to our share-based payment transactions, our income tax provision included a discrete tax benefit of $537 and $2,846 for the three and nine months ended July 31, 2024, respectively. Our income tax provision included a similar discrete tax benefit of $996 and $2,745 for the three and nine months ended July 31, 2023, respectively.

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Nordson Corporation

Accumulated other comprehensive income (loss)

The components of accumulated other comprehensive income (loss), including adjustments for items that are reclassified from accumulated other comprehensive loss to net income, are shown below.


	Cumulative translation adjustments		Pension and postretirement benefit plan adjustments		Accumulated other comprehensive income (loss)
Balance at October 31, 2023	$	(133,280)	$	(63,161)	$	(196,441)
Pension and other postretirement plan adjustments, net of tax of $250	—		(1,638)		(1,638)
Foreign currency translation adjustments (a)	19,419		—		19,419

Balance at July 31, 2024	$	(113,861)	$	(64,799)	$	(178,660)

(a) Includes a net loss of $11,475, net of tax of $3,427, on net investment hedges.

Stock-based compensation

During the 2021 Annual Meeting of Shareholders, our shareholders approved the Nordson Corporation 2021 Stock Incentive and Award Plan (the "2021 Plan") as the successor to the Amended and Restated 2012 Stock Incentive and Award Plan (the "2012 Plan"). The 2021 Plan provides for the granting of stock options, stock appreciation rights, restricted shares, restricted share units, performance shares, cash awards and other stock or performance-based incentives. A maximum of 900 common shares were authorized for grant under the 2021 Plan plus the number of shares that remained available to be granted under the 2012 Plan, as well as issuable under the CyberOptics equity plan. As of July 31, 2024, a total of 1,875 common shares were available to be granted under the 2021 Plan.

Stock Options

Nonqualified or incentive stock options may be granted to our employees and directors. Generally, options granted to employees may be exercised beginning one year from the date of grant at a rate not exceeding 25 percent per year and expire 10 years from the date of grant. Vesting accelerates upon a qualified termination in connection with a change in control. In the event of termination of employment due to early retirement or normal retirement at age 65, options granted within 12 months prior to termination are forfeited, and vesting continues postretirement for all other unvested options granted. In the event of disability or death, all unvested stock options granted within 12 months prior to termination fully vest. Termination for any other reason results in forfeiture of unvested options and vested options in certain circumstances. The amortized cost of options is accelerated if the retirement eligibility date occurs before the normal vesting date. Option exercises are satisfied through the issuance of treasury shares on a first-in, first-out basis. We recognized compensation expense related to stock options of $1,426 and $3,960 for the three and nine months ended July 31, 2024, respectively, compared to $1,697 and $4,982 for the three and nine months ended July 31, 2023, respectively.

The following table summarizes activity related to stock options for the nine months ended July 31, 2024:


	Number of Options	Weighted- Average Exercise Price Per Share		Aggregate Intrinsic Value		Weighted Average Remaining Term
Outstanding at October 31, 2023	1,062	$	152.41
Granted	61	238.35
Exercised	(243)	122.43
Forfeited or expired	(7)	229.00
Outstanding at July 31, 2024	873	$	166.21	$	74,716	4.9 years
Expected to vest	164	$	239.41	$	2,428	8.0 years
Exercisable at July 31, 2024	707	$	149.00	$	72,263	4.2 years

As of July 31, 2024, there was $5,668 of total unrecognized compensation cost related to unvested stock options. That cost is expected to be amortized over a weighted average period of approximately 2.9 years.

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Nordson Corporation

The fair value of each option grant was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:


Nine Months Ended	July 31, 2024			July 31, 2023
Expected volatility	30.3%	-	31.7%	30.4%	-	31.8%
Expected dividend yield	1.15%	-	1.20%	1.12%	-	1.27%
Risk-free interest rate	4.22%	-	4.52%	3.79%	-	4.21%
Expected life of the option (in years)	5.0	-	6.2	5.0	-	6.2

The weighted-average expected volatility used to value the 2024 and 2023 options was 30.7% and 30.6%, respectively.

Historical information was the primary basis for the selection of the expected volatility, expected dividend yield and the expected lives of the options. The risk-free interest rate was selected based upon yields of U.S. Treasury issues with a term equal to the expected life of the option being valued.

The weighted average grant date fair value of stock options granted during the nine months ended July 31, 2024 and 2023 was $79.84 and $77.99, respectively.

The total intrinsic value of options exercised during the three months ended July 31, 2024 and 2023 was $3,115 and $7,741, respectively. The total intrinsic value of options exercised during the nine months ended July 31, 2024 and 2023 was $33,286 and $19,873, respectively.

Cash received from the exercise of stock options for the nine months ended July 31, 2024 and 2023 was $29,142 and $18,449, respectively.

Restricted Shares and Restricted Share Units

We may grant restricted shares and/or restricted share units to our employees and directors. These shares or units may not be transferred for a designated period of time (generally one to three years) defined at the date of grant. We may also grant continuation awards in the form of restricted share units with cliff vesting and a performance measure that must be achieved for the restricted share units to vest.

For employee recipients, in the event of termination of employment due to early retirement, with the consent of the Company, restricted shares and units granted within 12 months prior to termination are forfeited, and other restricted shares and units vest on a pro-rata basis, subject to the consent of the Compensation Committee. In the event of termination of employment due to normal retirement at age 65, restricted shares and units granted within 12 months prior to termination are forfeited, and, for other restricted shares and units, the restriction period applicable to restricted shares will lapse and the shares will vest and be transferable and all unvested units will become vested in full, subject to the consent of the Compensation Committee. In the event of a recipient's disability or death, all restricted shares and units granted within 12 months prior to termination fully vest. Termination for any other reason prior to the lapse of any restrictions or vesting of units results in forfeiture of the shares or units.

For non-employee directors, all restrictions lapse in the event of disability or death of the non-employee director. Termination of service as a director for any other reason within one year of date of grant results in a pro-rata vesting of shares or units.

As shares or units are issued, stock-based compensation equivalent to the fair value on the date of grant is expensed over the vesting period.

As of July 31, 2024, there was no unrecognized compensation cost related to restricted shares. The amount charged to expense related to restricted shares during the three months ended July 31, 2024 and 2023 was $0 and $73, respectively, which included common share dividends of $0 and $2, respectively. For the nine months ended July 31, 2024 and 2023, the amounts charged to expense related to restricted shares were $0 and $336, respectively, which included common share dividends of $0 and $5, respectively.

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Nordson Corporation

The following table summarizes activity related to restricted share units during the nine months ended July 31, 2024:


	Number of Units	Weighted-Average Grant Date Fair Value
Restricted share units at October 31, 2023	69	$	236.28
Granted	39	234.74
Forfeited	(5)	241.30
Vested	(31)	233.05
Restricted share units at July 31, 2024	72	$	236.37

As of July 31, 2024, there was $10,876 of remaining expense to be recognized related to outstanding restricted share units, which is expected to be recognized over a weighted average period of 1.9 years. The amount charged to expense related to restricted share units during each of the three months ended July 31, 2024 and 2023 was $2,198 and $2,152, respectively, compared to charges of $6,658 and $6,658, respectively, for the nine months ended July 31, 2024 and 2023, respectively.

Performance Share Incentive Awards

Executive officers and selected other key employees are eligible to receive common share-based incentive awards. Payouts, in the form of unrestricted common shares, vary based on the degree to which corporate financial performance exceeds predetermined threshold, target and maximum performance goals over three-year performance periods. No payout will occur unless threshold performance is achieved.

The amount of compensation expense is based upon current performance projections and the percentage of the requisite service that has been rendered. The calculations are based upon the grant date fair value, which is principally driven by the stock price on the date of grant. The per share values were $229.58 and $225.14 in 2024, and $231.34, $211.25 and $214.51 for 2023. The amount charged to expense related to performance awards for the three months ended July 31, 2024 and 2023 was $771 and $1,831, respectively. For the nine months ended July 31, 2024 and July 31, 2023, $3,637 and $4,785 were charged to expense, respectively. As of July 31, 2024, there was $8,224 of unrecognized compensation cost related to performance share incentive awards.

Deferred Compensation

Our executive officers and other highly compensated employees may elect to defer up to 100 percent of their base pay and cash incentive compensation, and for executive officers, up to 90 percent of their share-based performance incentive payout each year. Additional share units are credited for quarterly dividends paid on our common shares. Expense related to dividends paid under this plan for the three months ended July 31, 2024 and 2023 was $23 and $30, respectively, compared to $71 and $77 for the nine months ended July 31, 2024 and 2023, respectively.

Deferred Directors' Compensation

Non-employee directors may defer all or part of their cash and equity-based compensation until retirement. Cash compensation may be deferred as cash or as share equivalent units. Deferred cash amounts are recorded as liabilities, and share equivalent units are recorded as equity. Additional share equivalent units are earned when common share dividends are declared.

The following table summarizes activity related to director deferred compensation share equivalent units during the nine months ended July 31, 2024:


	Number of Shares	Weighted-Average Grant Date Fair Value
Outstanding at October 31, 2023	78	$	93.11
Dividend equivalents	1	249.14
Distributions	(14)	54.21
Outstanding at July 31, 2024	65	$	103.73

The amount charged to expense related to director deferred compensation for the three months ended July 31, 2024 and 2023 was $91 and $76, respectively, compared to $226 and $234 for the nine months ended July 31, 2024 and 2023, respectively.

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Nordson Corporation

Warranties

We offer warranties to our customers depending on the specific product and terms of the customer purchase agreement. A typical warranty program requires that we repair or replace defective products within a specified time period (generally one year) measured from the date of delivery or first use. We record an estimate for future warranty-related costs based on actual historical return rates. Based on analysis of return rates and other factors, the adequacy of our warranty provisions is adjusted as necessary. The liability for warranty costs is included in Accrued liabilities in the Consolidated Balance Sheets.

Following is a reconciliation of the product warranty liability for the nine months ended July 31, 2024 and 2023:


	July 31, 2024		July 31, 2023
Beginning balance at October 31	$	14,401	$	11,723
Accruals for warranties	10,841		14,938
Warranty payments	(11,279)		(12,939)
Currency effect	(209)		566
Ending balance	$	13,754	$	14,288

Operating segments

We conduct business in three primary operating segments: Industrial Precision Solutions, Medical and Fluid Solutions, and Advanced Technology Solutions. The composition of segments and measure of segment profitability is consistent with that used by our chief operating decision maker. The primary measure used by the chief operating decision maker for purposes of making decisions about allocating resources to the segments and assessing performance is operating profit, which equals sales less cost of sales and certain operating expenses. Items below the operating profit line of the Condensed Consolidated Statements of Income (interest and investment income, interest expense and other income/expense) are excluded from the measure of segment profitability reviewed by our chief operating decision maker and are not presented by operating segment. The accounting policies of the segments are the same as those described in the Significant accounting policies Note.

Industrial Precision Solutions: This segment focuses on delivering proprietary dispensing and processing technology, both standard and highly customized equipment, to diverse end markets. Product lines commonly reduce material consumption, increase line efficiency through precision dispense and measurement and control, and enhance product brand and appearance. Components are used for dispensing adhesives, coatings, paint, finishes, sealants and other materials. This segment primarily serves the industrial, agricultural, consumer durables and non-durables markets.

Medical and Fluid Solutions: This segment includes the Company’s fluid management solutions for medical, high-tech industrial and other diverse end markets. Related plastic tubing, balloons, catheters, syringes, cartridges, tips and fluid connection components are used to dispense or control fluids within customers’ medical devices or products, as well as production processes.

Advanced Technology Solutions: This segment focuses on products serving electronics end markets. Advanced Technology Solutions products integrate our proprietary product technologies found in progressive stages of an electronics customer’s production processes, such as surface treatment, precisely controlled dispensing of material and test and inspection to ensure quality and reliability. Applications include, but are not limited to, semiconductors, printed circuit boards, electronic components and automotive electronics.

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Nordson Corporation

The following table presents information about our segments:


Three Months Ended	Industrial Precision Solutions		Medical and Fluid Solutions		Advanced Technology Solutions		Corporate		Total
July 31, 2024
Net external sales	$	370,561	$	166,737	$	124,306	$	—	$	661,604
Operating profit (loss)	118,110		48,374		22,945		(22,371)		167,058
July 31, 2023
Net external sales	$	338,257	$	170,871	$	139,549	$	—	$	648,677
Operating profit (loss)	115,346		54,019		27,083		(25,452)		170,996

Nine Months Ended
July 31, 2024
Net external sales	$	1,092,099	$	495,229	$	358,111	$	—	$	1,945,439
Operating profit (loss)	344,305		143,467		60,767		(53,430)		495,109
July 31, 2023
Net external sales	$	985,610	$	491,683	$	432,026	$	—	$	1,909,319
Operating profit (loss)	329,439		141,326		70,136		(53,179)		487,722

We had significant sales in the following geographic regions:


	Three Months Ended				Nine Months Ended
	July 31, 2024		July 31, 2023		July 31, 2024		July 31, 2023

Americas	$	287,016	$	290,515	$	855,456	$	834,125
Europe	179,370		167,536		540,750		498,379

Asia Pacific	195,218		190,626		549,233		576,815
Total net external sales	$	661,604	$	648,677	$	1,945,439	$	1,909,319

Fair value measurements

The inputs to the valuation techniques used to measure fair value are classified into the following categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The following tables present the classification of our assets and liabilities measured at fair value on a recurring basis:


July 31, 2024	Total		Level 1		Level 2		Level 3
Assets:
Foreign currency forward contracts (a)	$	4,308	$	—	$	4,308	$	—
Net investment contracts (b)	5,834		—