Cover and table of contents

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 April 30, 2022

OR

☐			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 May 25, 2022: 57,511,790

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			22
Overview			22
Critical Accounting Policies and Estimates			22
Results of Operations			22
Financial Condition			25
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			26
ITEM 4. CONTROLS AND PROCEDURES			26
PART II – OTHER INFORMATION			27
ITEM 1. LEGAL PROCEEDINGS			27
ITEM 1A. RISK FACTORS			27
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			27
ITEM 6. EXHIBITS			27
SIGNATURE			28

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Part I – FINANCIAL INFORMATION

ITEM 1.			FINANCIAL STATEMENTS (UNAUDITED)

Condensed Consolidated Statements of Income

						Three Months Ended												Six Months Ended
(In thousands, except for per share data)						April 30, 2022						April 30, 2021						April 30, 2022						April 30, 2021
Sales						$	635,403					$	589,538					$	1,244,569					$	1,116,104
Operating costs and expenses:
Cost of sales						277,768						251,839						546,800						488,445
Selling and administrative expenses						173,662						171,308						357,936						352,243
						451,430						423,147						904,736						840,688
Operating profit						183,973						166,391						339,833						275,416
Other income (expense):
Interest expense						(5,361)						(7,139)						(11,011)						(14,071)
Interest and investment income						419						449						884						829
Other - net						(39,764)						(3,843)						(38,472)						(8,504)
						(44,706)						(10,533)						(48,599)						(21,746)
Income before income taxes						139,267						155,858						291,234						253,670
Income taxes						29,633						31,714						61,191						51,944
Net income						$	109,634					$	124,144					$	230,043					$	201,726
Average common shares						57,784						58,068						57,971						58,063
Incremental common shares attributable to equity compensation						598						584						635						640
Average common shares and common share equivalents						58,382						58,652						58,606						58,703
Basic earnings per share						$	1.90					$	2.14					$	3.97					$	3.47
Diluted earnings per share						$	1.88					$	2.12					$	3.93					$	3.44

See accompanying notes.

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Consolidated Statements of Comprehensive Income

						Three Months Ended												Six Months Ended
(In thousands)						April 30, 2022						April 30, 2021						April 30, 2022						April 30, 2021
Net income						$	109,634					$	124,144					$	230,043					$	201,726
Components of other comprehensive income (loss):
Foreign currency translation adjustments						(46,901)						(6,943)						(60,259)						21,490
Pension settlement adjustment, net of tax						32,047						4,581						32,047						4,581
Amortization of prior service cost and net actuarial losses, net of tax						2,778						3,804						5,838						6,801
Total other comprehensive income (loss)						(12,076)						1,442						(22,374)						32,872
Total comprehensive income						$	97,558					$	125,586					$	207,669					$	234,598

See accompanying notes.

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Consolidated Balance Sheets

(In thousands)
Assets
Current assets:						April 30, 2022						October 31, 2021
Cash and cash equivalents						$	120,892					$	299,972
Receivables - net						499,535						489,389
Inventories - net						383,215						327,195
Prepaid expenses and other current assets						56,197						48,282
Total current assets						1,059,839						1,164,838
Property, plant and equipment - net						357,561						355,565
Operating right of use lease assets						105,964						110,851
Goodwill						1,821,091						1,713,148
Intangible assets - net						357,952						357,367
Deferred income taxes						16,446						11,381
Other assets						77,490						77,811
Total assets						$	3,796,343					$	3,790,961
Liabilities and shareholders' equity
Current liabilities:
Accounts payable						$	96,948					$	91,689
Income taxes payable						23,181						16,636
Accrued liabilities						177,674						201,992
Customer advanced payments						91,685						77,868
Current maturities of long-term debt and notes payable						310,892						34,188
Operating lease liability - current						16,829						17,222
Finance lease liability - current						5,289						5,799
Total current liabilities						722,498						445,394
Long-term debt						479,703						781,709
Operating lease liability - noncurrent						93,242						97,685
Finance lease liability - noncurrent						13,458						14,944
Deferred income taxes						97,546						88,467
Pension obligations						76,282						80,584
Postretirement obligations						82,869						82,652
Other long-term liabilities						40,129						40,396
Shareholders' equity:
Common shares						12,253						12,253
Capital in excess of stated value						608,009						585,334
Retained earnings						3,435,769						3,265,027
Accumulated other comprehensive loss						(198,209)						(175,835)
Common shares in treasury, at cost						(1,667,206)						(1,527,649)
Total shareholders' equity						2,190,616						2,159,130
Total liabilities and shareholders' equity						$	3,796,343					$	3,790,961

See accompanying notes.

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Consolidated Statements of Shareholders’ Equity

						2022
(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, 2021						$	12,253					$	585,334					$	3,265,027					$	(175,835)					$	(1,527,649)					$	2,159,130
Shares issued under company stock and employee benefit plans						—						5,046						—						—						675						5,721
Stock-based compensation						—						8,392						—						—						—						8,392
Purchase of treasury shares (147,784 shares)						—						—						—						—						(35,002)						(35,002)
Dividends paid ($0.51 per share)						—						—						(29,724)						—						—						(29,724)
Net income						—						—						120,409						—						—						120,409
Other Comprehensive Income (Loss):
Foreign currency translation adjustments						—						—						—						(13,358)						—						(13,358)
Defined benefit pension and post-retirement plans adjustment						—						—						—						3,060						—						3,060
January 31, 2022						$	12,253					$	598,772					$	3,355,712					$	(186,133)					$	(1,561,976)					$	2,218,628
Shares issued under company stock and employee benefit plans						—						1,843						—						—						234						2,077
Stock-based compensation						—						7,394						—						—						—						7,394
Purchase of treasury shares (469,604 shares)						—						—						—						—						(105,464)						(105,464)
Dividends declared ($0.51 per share)						—						—						(29,577)						—						—						(29,577)
Net income						—						—						109,634						—						—						109,634
Other Comprehensive Income (Loss):
Foreign currency translation adjustments						—						—												(46,901)						—						(46,901)
Pension plan settlement adjustment						—						—						—						32,047						—						32,047
Defined benefit pension and post-retirement plans adjustment						—						—						—						2,778						—						2,778
April 30, 2022						$	12,253					$	608,009					$	3,435,769					$	(198,209)					$	(1,667,206)					$	2,190,616

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Consolidated Statements of Shareholders’ Equity

						2021
(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, 2020						$	12,253					$	534,684					$	2,908,738					$	(226,118)					$	(1,470,566)					$	1,758,991
Shares issued under company stock and employee benefit plans						—						6,462						—						—						976						7,438
Stock-based compensation						—						10,120						—						—						—						10,120
Purchase of treasury shares (27,347 shares)						—						—						—						—						(5,310)						(5,310)
Dividends paid ($0.39 per share)						—						—						(22,672)						—						—						(22,672)
Net income						—						—						77,582						—						—						77,582
Impact of adoption of ASU 2016-13						—						—						(396)						—						—						(396)
Other Comprehensive Income:
Foreign currency translation adjustments						—						—						—						28,433						—						28,433
Defined benefit pension and post-retirement plans adjustment						—						—						—						2,997						—						2,997
January 31, 2021						$	12,253					$	551,266					$	2,963,252					$	(194,688)					$	(1,474,900)					$	1,857,183
Shares issued under company stock and employee benefit plans						—						9,468						—						—						1,877						11,345
Stock-based compensation						—						3,877						—						—						—						3,877
Purchase of treasury shares (127,297 shares)						—						—						—						—						(24,964)						(24,964)
Dividends declared ($0.39 per share)						—						—						(22,670)						—						—						(22,670)
Net income						—						—						124,144						—						—						124,144
Other Comprehensive Income (Loss):
Foreign currency translation adjustments						—						—						—						(6,943)						—						(6,943)
Defined benefit pension and post-retirement plans adjustment						—						—						—						8,385						—						8,385
April 30, 2021						$	12,253					$	564,611					$	3,064,726					$	(193,246)					$	(1,497,987)					$	1,950,357

See accompanying notes.

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Condensed Consolidated Statements of Cash Flows

(In thousands)						Six Months Ended
Cash flows from operating activities:						April 30, 2022						April 30, 2021
Net income						$	230,043					$	201,726
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization						50,355						51,336
Non-cash stock compensation						15,786						13,997
Deferred income taxes						(6,786)						(491)
Other non-cash expense						42,168						837
Loss on sale of property, plant and equipment						281						515
Changes in operating assets and liabilities						(85,070)						20,206
Other						(32,276)						(40,412)
Net cash provided by operating activities						214,501						247,714
Cash flows from investing activities:
Additions to property, plant and equipment						(24,776)						(18,743)
Proceeds from sale of property, plant and equipment						15						69
Other						—						4,993
Acquisition of business, net of cash acquired						(171,613)						—
Net cash used in investing activities						(196,374)						(13,681)
Cash flows from financing activities:
Proceeds from long-term debt						8,439						4,899
Repayment of long-term debt						(6,785)						(255,000)
Repayment of finance lease obligations						(2,620)						(3,399)
Issuance of common shares						7,798						18,783
Purchase of treasury shares						(140,466)						(30,274)
Dividends paid						(59,301)						(45,342)
Net cash used in financing activities						(192,935)						(310,333)
Effect of exchange rate changes on cash						(4,272)						1,327
Decrease in cash and cash equivalents						(179,080)						(74,973)
Cash and cash equivalents at beginning of period						299,972						208,293
Cash and cash equivalents at end of period						$	120,892					$	133,320

See accompanying notes.

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Notes to Condensed Consolidated Financial Statements

April 30, 2022

NOTE REGARDING AMOUNTS AND FISCAL YEAR REFERENCES

In this quarterly report, 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 six months ended April 30, 2022 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, 2021.

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 April 30, 2022 and 2021 were not material.

However, for certain contracts related to the sale of customer-specific products within our Advanced Technology 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, 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 at April 30, 2022 and October 31, 2021.

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, 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 April 30, 2022 and 2021 were 77 and 91, respectively. Options excluded from the calculation of diluted earnings per share for the six months ended April 30, 2022 and 2021 were 80 and 91, respectively.

Recently issued accounting standards

There have been no new accounting standards issued which would require either disclosure or adoption during the current period.

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 Consolidated Statements of Income.

2022 Acquisition

On November 1, 2021, we acquired 100% of NDC Technologies (NDC), a leading global provider of precision measurement solutions for in-line manufacturing process control. NDC's technology portfolio includes in-line measurement sensors, gauges and analyzers using near-infrared, laser, X-ray, optical and nucleonic technologies, as well as proprietary algorithms and software. We acquired NDC for an aggregate purchase price of $171,613, net of cash of approximately $7,533 and other working capital adjustments of $2,763, utilizing cash on hand. Based on the fair value of the assets acquired and the liabilities assumed, goodwill of $129,856 and identifiable intangible assets of $31,130 were recorded. The identifiable intangible assets consist primarily of $10,800 of tradenames (amortized over thirteen years), $10,000 of technology (amortized over seven years), $9,500 of customer relationships (amortized over four years) and $830 of non-compete agreements (amortized over three years). Goodwill associated with this acquisition of $73,300 is tax deductible. This acquisition is being reported in our Industrial Precision Solutions segment and the results of NDC are not material to our Consolidated Financial Statements. As of April 30, 2022, the purchase price allocation remains preliminary as we complete our assessments of intangible assets and income taxes.

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 $8,300 and $7,552 at April 30, 2022 and October 31, 2021, respectively. The provision for losses on receivables was $180 and $651 for the three and six months ended April 30, 2022, respectively, compared to $301 and $404 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.

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Inventories

Components of inventories were as follows:

						April 30, 2022						October 31, 2021
Finished goods						$	235,511					$	211,628
Raw materials and component parts						141,397						111,089
Work-in-process						65,883						54,557
						442,791						377,274
Obsolescence and other reserves						(59,576)						(50,079)
						$	383,215					$	327,195

Property, Plant and Equipment

Components of property, plant and equipment were as follows:

			April 30, 2022						October 31, 2021
Land			$	9,358					$	9,238
Land improvements			4,913						4,786
Buildings			274,242						263,399
Machinery and equipment			500,427						491,180
Enterprise management system			50,532						50,532
Construction-in-progress			26,291						32,719
Leased property under finance leases			35,427						37,506
			901,190						889,360
Accumulated depreciation and amortization			(543,629)						(533,795)
			$	357,561					$	355,565

Depreciation expense was $12,393 and $12,700 for the three months ended April 30, 2022 and 2021, respectively. Depreciation expense was $24,698 and $25,639 for the six months ended April 30, 2022 and 2021, respectively.

Goodwill and other intangible assets

Changes in the carrying amount of goodwill for the six months ended April 30, 2022 by operating segment were as follows:

						Industrial Precision Solutions						Advanced Technology Solutions						Total
Balance at October 31, 2021						$	415,020					$	1,298,128					$	1,713,148
Acquisitions						129,856						—						129,856
Currency effect						(12,431)						(9,482)						(21,913)
Balance at April 30, 2022						$	532,445					$	1,288,646					$	1,821,091

The increase in goodwill for the six months ended April 30, 2022 was due to the acquisition of NDC. See Acquisitions Note for additional details.

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

						April 30, 2022
						Carrying Amount						Accumulated Amortization						Net Book Value
Customer relationships						$	485,584					$	238,359					$	247,225
Patent/technology costs						160,542						92,682						67,860
Trade name						83,806						42,209						41,597
Non-compete agreements						10,448						9,184						1,264
Other						1,209						1,203						6
Total						$	741,589					$	383,637					$	357,952
						October 31, 2021
						Carrying Amount						Accumulated Amortization						Net Book Value
Customer relationships						$	483,815					$	226,658					$	257,157
Patent/technology costs						154,267						89,299						64,968
Trade name						74,301						39,858						34,443
Non-compete agreements						9,896						9,099						797
Other						1,385						1,383						2
Total						$	723,664					$	366,297					$	357,367

Amortization expense for the three months ended April 30, 2022 and 2021 was $12,572 and $12,617, respectively. Amortization expense for the six months ended April 30, 2022 and 2021 was $25,657 and $25,697, respectively. See Acquisitions Note for details regarding intangibles recorded due to the acquisition of NDC.

Pension and other postretirement plans

During the second quarter of 2022, we completed a partial plan settlement transaction in regards to two of our U.S. pension plans in which plan assets amounting to $171,181 were used to purchase a group annuity contract from The Prudential Insurance Company of America (Prudential). The settlement resulted in a loss of $41,221 which is included in Other-net on the Condensed Consolidated Statements of Income. This transaction relieved the Company of its responsibility for the pension obligation related to certain retired employees and transferred the obligation and payment responsibility to Prudential for retirement benefits owed to approximately 1,500 retirees and other beneficiaries. The annuity contract covered retirees who commenced receiving benefits on or before November 1, 2021. The monthly retirement benefit payment amounts currently received by retirees and their beneficiaries did not change as a result of this transaction. Plan participants not included in the transaction remain in the plans and responsibility for payment of the retirement benefits remains with the Company.

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The components of net periodic pension cost for the three and six months ended April 30, 2022 and 2021 were:

						U.S.												International
Three Months Ended						2022						2021						2022						2021
Service cost						$	4,728					$	5,722					$	431					$	662
Interest cost						4,241						3,494						290						250
Expected return on plan assets						(8,511)						(7,335)						(367)						(431)
Amortization of prior service cost (credit)						12						(21)						(13)						(88)
Amortization of net actuarial loss						2,318						4,042						593						1,011
Settlement loss						41,221						2,018						—						—
Total benefit cost						$	44,009					$	7,920					$	934					$	1,404
						U.S.												International
Six Months Ended						2022						2021						2022						2021
Service cost						$	9,915					$	11,488					$	920					$	1,180
Interest cost						7,824						6,834						588						470
Expected return on plan assets						(16,389)						(14,088)						(761)						(822)
Amortization of prior service cost (credit)						24						(41)						(30)						(165)
Amortization of net actuarial loss						5,084						7,616						1,200						1,801
Settlement loss						41,221						2,018						—						—
Total benefit cost						$	47,679					$	13,827					$	1,917					$	2,464

The components of other postretirement benefit costs for the three and six months ended April 30, 2022 and 2021 were:

						U.S.												International
Three Months Ended						2022						2021						2022						2021
Service cost						$	148					$	216					$	3					$	3
Interest cost						474						456						3						3
Amortization of net actuarial (gain) loss						226						338						(12)						(10)
Total benefit cost (income)						$	848					$	1,010					$	(6)					$	(4)
						U.S.												International
Six Months Ended						2022						2021						2022						2021
Service cost						$	343					$	392					$	6					$	7
Interest cost						962						910						6						6
Amortization of net actuarial (gain) loss						489						685						(24)						(20)
Total benefit cost (income)						$	1,794					$	1,987					$	(12)					$	(7)

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

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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 April 30, 2022 and 2021 was 21.3% and 20.3%, respectively. The effective tax rate for the six months ended April 30, 2022 and 2021 was 21.0% and 20.5%, respectively.

Due to our share-based payment transactions, our income tax provision included a discrete tax benefit of $309 and $1,424 for the three and six months ended April 30, 2022, respectively, compared to $1,796 and $2,595 for the three and six months ended April 30, 2021, respectively.

Accumulated other comprehensive 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, 2021						$	(33,389)					$	(142,446)					$	(175,835)
Amortization of prior service costs and net actuarial losses, net of tax of ($1,850)						—						5,838						5,838
Foreign currency translation adjustments						(60,259)						—						(60,259)
Pension settlement, net of tax of ($9,573)						—						32,047						32,047
Balance at April 30, 2022						$	(93,648)					$	(104,561)					$	(198,209)

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 of April 30, 2022, a total of 2,126 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% 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 post retirement 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 $2,391 and $4,163 for the three and six months ended April 30, 2022, respectively compared to $1,565 and $3,801 for the three and six months ended April 30, 2021, respectively.

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The following table summarizes activity related to stock options for the six months ended April 30, 2022:

						Number of Options						Weighted- Average Exercise Price Per Share						Aggregate Intrinsic Value						Weighted Average Remaining Term
Outstanding at October 31, 2021						1,235						$	130.93
Granted						83						267.51
Exercised						(68)						115.99
Forfeited or expired						(14)						204.77
Outstanding at April 30, 2022						1,236						$	140.12					$	97,385					5.8 years
Expected to vest						380						$	185.05					$	15,565					7.5 years
Exercisable at April 30, 2022						854						$	119.99					$	81,711					5.0 years

As of April 30, 2022, there was $9,848 of total unrecognized compensation cost related to unvested stock options. That cost is expected to be amortized over a weighted average period of approximately 1.1 years.

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:

Six Months Ended			April 30, 2022												April 30, 2021
Expected volatility			30.6%			-			30.8%						30.8%			-			32.6%
Expected dividend yield			0.76%			-			0.76%						0.83%			-			0.85%
Risk-free interest rate			1.36%			-			1.47%						0.43%			-			0.77%
Expected life of the option (in years)			5.3			-			6.2						5.3			-			6.2

The weighted-average expected volatility used to value the 2022 and 2021 options was 30.6% and 31.0%, 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 six months ended April 30, 2022 and 2021 was $79.03 and $56.02, respectively.

The total intrinsic value of options exercised during the three months ended April 30, 2022 and 2021 was $2,405 and $12,166, respectively. The total intrinsic value of options exercised during the six months ended April 30, 2022 and 2021 was $9,366 and $17,601, respectively.

Cash received from the exercise of stock options for the six months ended April 30, 2022 and 2021 was $7,798 and $18,783, 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.

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

The following table summarizes activity related to restricted shares during the six months ended April 30, 2022:

						Number of Shares						Weighted-Average Grant Date Fair Value
Restricted shares at October 31, 2021						19						$	157.36
Vested						(10)						146.50
Restricted shares at April 30, 2022						9						$	171.11

As of April 30, 2022, there was $804 of unrecognized compensation cost related to restricted shares. The cost is expected to be amortized over a weighted average period of 0.5 years. The amount charged to expense related to restricted shares during the three months ended April 30, 2022 and 2021 was $299 and $501, respectively, which included common share dividends of $5 and $13, respectively. For the six months ended April 30, 2022 and 2021, the amounts charged to expense related to restricted shares were $613 and $1,465, respectively, which included common share dividends of $10 and $31, respectively.

The following table summarizes activity related to restricted share units during the six months ended April 30, 2022:

						Number of Units						Weighted-Average Grant Date Fair Value
Restricted share units at October 31, 2021						67						$	202.81
Granted						41						263.75
Forfeited						(8)						221.84
Vested						(15)						201.79
Restricted share units at April 30, 2022						85						$	230.34

As of April 30, 2022, there was $13,426 of remaining expense to be recognized related to outstanding restricted share units, which is expected to be recognized over a weighted average period of 1.0 year. The amount charged to expense related to restricted share units during each of the three months ended April 30, 2022 and 2021 was $1,819 and $2,192, respectively, compared to $4,092 and $4,284 for the six months ended April 30, 2022 and 2021, 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 or a Monte Carlo valuation for awards with market conditions. The per share values were $260.60 and $273.50 for 2022 and $202.50 for 2021. The amount charged to expense for the three months ended April 30, 2022 was $2,797 and credited to expense in 2021 of $460, respectively, compared to charges of $6,741 and $4,295 for the six months ended April 30, 2022 and 2021, respectively. The cumulative amount recorded in shareholders' equity at April 30, 2022 and 2021 was $13,756 and $4,132, respectively. As of April 30, 2022, there was $14,588 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% of their base pay and cash incentive compensation, and for executive officers, up to 90% 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 April 30, 2022 and 2021 was $18 and $29, respectively, compared to $36 and $58 for the six months ended April 30, 2022 and 2021, 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.

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The following table summarizes activity related to director deferred compensation share equivalent units during the six months ended April 30, 2022:

						Number of Shares						Weighted-Average Grant Date Fair Value
Outstanding at October 31, 2021						106						$	68.11
Distributions						(7)						48.01
Outstanding at April 30, 2022						99						$	70.81

The amount charged to expense related to director deferred compensation for the three months ended April 30, 2022 and 2021 was $75 and $63 compared to $151 and $125 for the six months ended April 30, 2022 and 2021, respectively.

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) 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 are 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 six months ended April 30, 2022 and 2021:

						April 30, 2022						April 30, 2021
Beginning balance at October 31						$	11,113					$	10,550
Accruals for warranties						7,557						7,708
Warranty payments						(6,773)						(8,200)
Currency effect						(446)						197
Ending balance						$	11,451					$	10,255

Operating segments

We conduct business across two primary operating segments: Industrial Precision Solutions (IPS) and Advanced Technology Solutions (ATS). 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 generally the same as those described in the Significant accounting policies Note.

Industrial Precision Solutions: This segment delivers proprietary dispensing and processing technology to diverse end markets. Product lines reduce material consumption, increase line efficiency 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, consumer durables and non-durables markets.

Advanced Technology Solutions: This segment integrates our proprietary product technologies found in progressive stages of a customer’s production processes, such as surface treatment, precisely controlled dispensing of material and post-dispense test and inspection to ensure quality. Related single-use plastic molded syringes, cartridges, tips, fluid connection components, tubing, balloons and catheters are used to dispense or control fluids in production processes or within customers’ end products. This segment predominantly serves customers in the electronics, medical and related high-tech industrial markets.

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The following table presents information about our segments:

Three Months Ended						Industrial Precision Solutions						Advanced Technology Solutions						Corporate						Total
April 30, 2022
Net external sales						$	316,434					$	318,969					$	—					$	635,403
Operating profit (loss)						102,196						98,458						(16,681)						183,973
April 30, 2021
Net external sales						$	298,775					$	290,763					$	—					$	589,538
Operating profit (loss)						104,283						76,585						(14,477)						166,391
Six Months Ended
April 30, 2022
Net external sales						$	640,367					$	604,202					$	—					$	1,244,569
Operating profit (loss)						204,384						174,785						(39,336)						339,833
April 30, 2021
Net external sales						$	587,191					$	528,913					$	—					$	1,116,104
Operating profit (loss)						187,686						123,786						(36,056)						275,416

We had significant sales in the following geographic regions:

						Three Months Ended												Six Months Ended
						April 30, 2022						April 30, 2021						April 30, 2022						April 30, 2021
United States						$	218,508					$	202,924					$	409,885					$	388,240
Americas						55,244						44,914						103,769						81,052
Europe						172,256						156,451						328,241						291,602
Japan						25,443						27,852						51,001						54,967
Asia Pacific						163,952						157,397						351,673						300,243
Total net external sales						$	635,403					$	589,538					$	1,244,569					$	1,116,104

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:

April 30, 2022						Total						Level 1						Level 2						Level 3
Assets:
Foreign currency forward contracts (a)						$	5,389					$	—					$	5,389					$	—
Total assets at fair value						$	5,389					$	—					$	5,389					$	—
Liabilities:
Deferred compensation plans (b)						$	10,407					$	—					$	10,407					$	—
Foreign currency forward contracts (a)						19,819						—						19,819						—
Total liabilities at fair value						$	30,226					$	—					$	30,226					$	—

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October 31, 2021						Total						Level 1						Level 2						Level 3
Assets:
Foreign currency forward contracts (a)						$	2,755					$	—					$	2,755					$	—
Total assets at fair value						$	2,755					$	—					$	2,755					$	—
Liabilities:
Deferred compensation plans (b)						$	9,115					$	—					$	9,115					$	—
Foreign currency forward contracts (a)						4,507						—						4,507						—
Total liabilities at fair value						$	13,622					$	—					$	13,622					$	—

(a)We enter into foreign currency forward contracts to reduce the risk of foreign currency exposures resulting from receivables, payables, intercompany receivables, intercompany payables and loans denominated in foreign currencies. Foreign exchange contracts are valued using market exchange rates. These foreign exchange contracts are not designated as hedges.

(b)Executive officers and other highly compensated employees may defer up to 100% of their salary and annual cash incentive compensation and for executive officers, up to 90% of their long-term incentive compensation, into various non-qualified deferred compensation plans. Deferrals can be allocated to various market performance measurement funds. Changes in the value of compensation deferred under these plans are recognized each period based on the fair value of the underlying measurement funds.

The carrying amounts and fair values of financial instruments, other than cash and cash equivalents, receivables, and accounts payable, are shown in the table below. The carrying values of cash and cash equivalents, receivables and accounts payable approximate fair value due to the short-term nature of these instruments.

						April 30, 2022
						Carrying Amount						Fair Value
Long-term debt (including current portion)						$	790,595					$	788,897

We used the following methods and assumptions in estimating the fair value of financial instruments:

• Long-term debt is valued by discounting future cash flows at currently available rates for borrowing arrangements with similar terms and conditions, which are considered to be Level 2 inputs under the fair value hierarchy. The carrying amount of long-term debt is shown net of unamortized debt issuance costs.

Derivative financial instruments

We operate internationally and enter into intercompany transactions denominated in foreign currencies. Consequently, we are subject to market risk arising from exchange rate movements between the dates foreign currency transactions occur and the dates they are settled. We regularly use foreign currency forward contracts to reduce our risks related to most of these transactions. These contracts usually have maturities of 90 days or less and generally require us to exchange foreign currencies for U.S. dollars at maturity, at rates stated in the contracts. These contracts are not designated as hedging instruments under U.S. GAAP. Accordingly, the changes in the fair value of the foreign currency forward contracts are recognized in each accounting period in “Other – net” on the Condensed Consolidated Statements of Income together with the transaction gain or loss from the related balance sheet position.

For the three months ended April 30, 2022, we recognized a net loss of $9,080 on foreign currency forward contracts and a realized net gain of $10,079 from the change in fair value of balance sheet positions. For the three months ended April 30, 2021, we recognized a net loss of $8,133 on foreign currency forward contracts and a net gain of $7,357 from the change in fair value of balance sheet positions. For the six months ended April 30, 2022, we recognized a net loss of $12,678 on foreign currency forward contracts and a realized net gain of $14,041 from the change in fair value of balance sheet positions. For the six months ended April 30, 2021, we recognized a net gain of $1,209 on foreign currency forward contracts and a net loss of $4,746 from the change in fair value of balance sheet positions. The fair values of our foreign currency forward contract assets and liabilities are included in Receivable-net and Accrued liabilities, respectively, in our Consolidated Balance Sheets.

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The following table summarizes, by currency, the foreign currency forward contracts outstanding at April 30, 2022 and 2021:

						Notional Amounts
April 30, 2022 contract amounts:						Sell						Buy
Euro						$	96,436					$	337,291
British pound						38,478						80,853
Japanese yen						10,848						39,294
Australian dollar						295						9,269
Hong Kong dollar						7,727						55,666
Singapore dollar						198						17,899
Others						15,378						91,599
Total						$	169,360					$	631,871
						Notional Amounts
April 30, 2021 contract amounts:						Sell						Buy
Euro						$	127,660					$	309,020
British pound						21,228						79,446
Japanese yen						12,228						38,648
Australian dollar						194						10,240
Hong Kong dollar						978						33,024
Singapore dollar						15						18,071
Others						11,886						92,869
Total						$	174,189					$	581,318

We are exposed to credit-related losses in the event of nonperformance by counterparties to financial instruments. These financial instruments include cash deposits and foreign currency forward contracts. We periodically monitor the credit ratings of these counterparties in order to minimize our exposure. Our customers represent a wide variety of industries and geographic regions. For the three and six months ended April 30, 2022 and 2021, there were no significant concentrations of credit risk.

Long-term debt

A summary of long-term debt is as follows:

						April 30, 2022						October 31, 2021
Notes payable						$	961					$	3,545
Revolving credit agreement, due 2024						4,000						—
Senior notes, due 2022-2025						79,000						79,000
Senior notes, due 2022-2027						78,572						78,572
Senior notes, due 2023-2030						350,000						350,000
Euro loan, due 2023						279,329						306,358
						791,862						817,475
Less current maturities and notes payable						310,892						34,188
Less unamortized debt issuance costs						1,267						1,578
Long-term maturities						$	479,703					$	781,709

Revolving credit agreement, due 2024 — In April 2019, we entered into a $850,000 unsecured multi-currency credit facility with a group of banks, which amended, restated and extended our then existing syndicated revolving credit agreement. This facility has a five-year term and includes a $75,000 subfacility for swing-line loans. It expires in April 2024. The weighted-average interest rate at April 30, 2022 was 0.91%.

Senior notes, due 2022-2025 — These unsecured fixed-rate notes entered into in 2012 with a group of insurance companies had a remaining weighted-average life of 1.45 years. The weighted-average interest rate at April 30, 2022 was 3.10%.

Senior notes, due 2022-2027 — These unsecured fixed-rate notes entered into in 2015 with a group of insurance companies had a remaining weighted-average life of 2.70 years. The weighted-average interest rate at April 30, 2022 was 3.08%.

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Senior notes, due 2023-2030 — These unsecured fixed-rate notes entered into in 2018 with a group of insurance companies had a remaining weighted-average life of 3.55 years. The weighted-average interest rate at April 30, 2022 was 3.90%.

Euro loan, due 2023 — In March 2020, we amended, restated and extended the term of our existing euro term loan facility with Bank of America Merrill Lynch International Limited. The interest rate is variable based on the EURIBOR rate. The term loan agreement provides for the following term loans due in two tranches: €115,000 is due in March 2023 and an additional €150,000 that was drawn down in March 2020 is due in March 2023. The weighted average interest rate at April 30, 2022 was 0.61 percent.

We were in compliance with all covenants at April 30, 2022 and the amount we could borrow would not have been limited by any debt covenants.

Contingencies

We are involved in pending or potential litigation regarding environmental, product liability, patent, contract, employee and other matters arising from the normal course of business. Including the litigation and environmental matters discussed below, after consultation with legal counsel, we do not believe that losses in excess of the amounts we have accrued would have a material adverse effect on our financial condition, quarterly or annual operating results or cash flows.

Environmental

We have voluntarily agreed with the City of New Richmond, Wisconsin and other potentially responsible parties to share costs associated with the remediation of the City of New Richmond municipal landfill (the Site) and the construction of a potable water delivery system serving the impacted area down gradient of the Site. At April 30, 2022 and October 31, 2021, our accrual for the ongoing operation, maintenance and monitoring obligation at the Site was $313 and $319, respectively. The liability for environmental remediation represents management’s best estimate of the probable and reasonably estimable undiscounted costs related to known remediation obligations. The accuracy of our estimate of environmental liability is affected by several uncertainties such as additional requirements that may be identified in connection with remedial activities, the complexity and evolution of environmental laws and regulations, and the identification of presently unknown remediation requirements. Consequently, our liability could be greater than our current estimate. However, we do not expect that the costs associated with remediation will have a material adverse effect on our financial condition or results of operations.

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