Nordson Corp (NDSN) 2015 Q1 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the Nordson Corporation webcast for first quarter FY15/

(Operator Instructions)

As a reminder, this conference call is being recorded. I would now like to turn the call over to Jim Jaye, Director of Investor Relations. Please begin.

Thank you, Latoya. Good morning. This is Jim Jaye, Nordson's Director of Investor Relations. I'm here with Mike Hilton, our President and Chief Executive Officer, and Greg Thaxton, our Senior Vice President and Chief Financial Officer. We'd like to welcome you to our conference call today, Wednesday, February 25, 2015 on Nordson's FY15 first-quarter results and second-quarter outlook.

Our conference call is being broadcast live on our webpage at www.Nordson.com/investors and will be available there for 14 days. There will be a telephone replay of our conference call available until March 4, 2015 which can be accessed by calling 404-537-3406. You will need to reference ID number 797703908.

During this conference call forward-looking statements may be made regarding our future performance based on Nordson's current expectations. These statements may involve a number of risks, uncertainties and other factors as discussed in the Company's filings with the Securities and Exchange Commission that could cause actual results to differ.

After our remarks we will have a question-and-answer session. I'll now turn the call over to Mike Hilton for an overview of our FY15 first-quarter results and a bit about our second-quarter outlook. Mike, please go ahead

Thank you, Jim. Good morning, everyone. Thank you for attending Nordson's 2015 first-quarter conference call. Nordson continued to perform at a high level and delivered record first-quarter sales and earnings per share.

I'm particularly pleased with the 8% organic sales volume growth we delivered in the quarter compared to the same period a year ago. This growth was broad-based across the majority of our product lines and geographies, and quite impressive given the challenges presented by a weak macroeconomic environment.

Operating margin in the quarter improved two percentage points compared to the prior year and diluted earnings per share grew 28% compared to the first quarter of year ago, a rate significantly outpacing the strong top-line growth. While these results were strong, they were also impacted by the effect of negative currency translation compared to the first quarter a year ago.

Looking ahead, our current backlog and order rates are very strong, up 14% for the latest 12 weeks as compared to prior year. We expected to see solid sequential revenue improvement in the second quarter, though year-over-year results will be impacted by currency headwinds given the current exchange rates.

I'll state more about our outlook in current business trends in a few moments. But first I'll turn the call over to Greg Thaxton, our Chief Financial Officer, who will provide more detailed commentary on our current results and our second-quarter guidance. Greg?

Thank you, and good morning to everyone. Sales in the quarter were $379 million, an increase of 5.4% over the prior year's first quarter. This sales improvement included, and I'm rounding here, an 8% increase in organic volume, a 3% increase related to the first-year effect of acquisitions, and a 5% decrease related to the unfavorable effects of currency translation. This strength of the organic growth in the quarter highlights the benefits of our business model and the value that we bring to our customers.

Looking at sales performance for the quarter by segment, Adhesive Dispensing Segment sales volume decreased less than 1% as compared to prior-year first quarter. Organic growth was solid in product line serving disposable hygiene, general product assembly, rigid packaging and plastic injection end markets. We continue to see softness in plastic extrusion and polymer compounding and pelletizing end markets.

Sales volume in the Advanced Technology segment increased 38% over the prior-year first quarter. Organic volume growth was very strong at 29% and the first-year effect of the Avalon and Dima acquisitions added 10% growth. Organic growth was robust in automated dispensing product lines serving mobile device end markets and advanced semiconductor packaging applications, as well as our fluid management product lines serving electronics, general industry assembly and medical end markets.

Sales volume in the industrial coating segment increased 4% compared to the first quarter a year ago. The growth was driven by demand for our cold materials and powder coating product lines.

Gross margin for the total Company in the first quarter was 55%, one percentage point higher than the level delivered in the prior year, primarily due to segment and product mix. Operating profit in the quarter was $63 million, an increase of 17% over the prior year, and operating margin was 17%, an improvement of two percentage points over the prior year's first quarter. Currency negatively impacted gross margin and operating margin in the quarter by approximately 1%.

Looking at operating performance on a segment basis, Adhesive Dispensing delivered operating margin of 22% in the current quarter. Excluding the effects of currency operating margin would have been equal to the prior year's performance on slightly lower sales volume.

Within the Advanced Technology segment, operating margin was 20% in the first quarter, or 21% excluding short-term purchase accounting charges related to the step-up in value of acquired inventory. This is an improvement of 10 percentage points as compared to the same period a year ago, and reflects strong operating leverage on the increased volume. Operating margin performance for this segment was also negatively impacted by about 1% due to currency.

In the Industrial Coating segment operating margin was 7% in the first quarter, or 8% excluding the negative impact of currency. This performance reflects the seasonally lower first-quarter sales volume typical of this segment and a greater mix of engineered systems revenue compared to the same period a year ago. Given the typical seasonality pattern of the segment, we would expect to generate significant operating leverage on higher volume as the year progresses.

Corporate expense in the quarter was up $1.7 million compared to the prior year. This increase is related to one-time settlement costs of a pension obligation for a business we sold in 2010. Our effective tax rate for the quarter was 27%, reflecting the retroactive benefit of the 2014 R&D tax credit.

Continuing down the income statement, net income for the quarter was $43 million. GAAP diluted earnings per share were $0.69, an increase of 28% over the last year's first quarter. As in previous quarters, we have included an earnings-per-share reconciliation schedule in our press release to reconcile between GAAP earnings and normalized earnings per share to exclude certain one-time items.

The current quarter's EBITDA was $79 million, up 16% as compared to the same period a year ago. Cash flow from operations in the first quarter was $26 million and free cash flow before dividends was $9 million. Free cash flow compared to the prior year was impacted by an increase in working capital, mostly related to the timing of receivable collections and construction cost for our previously announced fluid management facility in Colorado.

We expect free cash flow in the second quarter to benefit from the collection of these receivables as we trend back toward typical day sales outstanding. We have included a table with our press release reconciling net income to free cash flow before dividends.

We continued our balance approach to capital deployment during the quarter, distributing approximately $14 million in dividends and investing $71 million for the repurchase of shares. Shares repurchased in the quarter more than offset the estimated dilutive effect of shares to be distributed for employee benefit programs during the year. From a balance sheet perspective we remain very liquid with net debt-to-EBITDA at 1.9 times trailing 12-month EBITDA as of the end of the first quarter.

I'll now move on to comments regarding our outlook for the second quarter of FY15. As we typically do, we have provided our most recent order data, both on a segment and geographic basis, with our press release. These orders are for the latest 12 weeks as compared to the same 12 weeks of the prior year on a currency-neutral basis and with the Avalon and Dima acquisitions included in both years.

For the 12 weeks ending February 15, 2015, order rates are up 14% as compared to the same 12 weeks in the prior year. Within the Adhesive Dispensing segment, order rates were up 6% over the last 12 weeks as compared to the same period in the prior year where we generated order growth in all four adhesive product lines.

In the Advanced Technology segment, order rates over the latest 12 weeks are up 18% compared to the same period in the prior year where we generated very strong growth rates in both our electronic system product lines and fluid management product lines. Mobile device, advanced packaging, general industrial and medical end markets are the primary drivers of growth for this segment.

Within the Industrial Coating segment, the latest 12-week order rates are up 39% as compared to the prior year. Order rates were strong across nearly all product lines.

On a total Company basis, orders were strong in all regions except Europe, which was down slightly from the prior year due to the timing of larger non-woven system orders and softness in certain end market served by our polymer product lines. Backlog at January 31, 2015 was approximately $230 million, an increase of 8% compared to January 31, 2014, and inclusive of 6% organic growth and 2% growth due to the Avalon and Dima acquisitions.

Current backlog increased 8% compared to the end of the fourth quarter of FY14. These backlog amounts are calculated at January 31, 2015 exchange rates.

Let me now turn to the outlook for the second quarter of FY15. We're forecasting sales to be the range of down 5% to down 1% as compared to the second quarter a year ago. This range is inclusive of organic growth of down 1% to up 3%, 3% growth from the first-year effect of acquisitions and a negative 7% impact related to the unfavorable effects of currency translation based on current exchange rates.

At the midpoint of our sales forecast we expect second-quarter gross margin to be 55% and operating margin is forecasted to be 20%. We're estimating second-quarter interest expense of about $4 million and an effective tax rate of approximately 30%, resulting in second-quarter forecasted GAAP diluted earnings in the range of $0.80 per share to $0.90 per share.

We are forecasting the full-year effective tax rate, excluding discrete items, to be about 30% based on current tax law. We also expect normal maintenance capital spending for the full year to be between $45 million to $50 million. In addition we estimate approximately $13 million remaining in capital expenditures associated with our previously announced investment for a new facility in Colorado supporting our fluid management product lines, the bulk of which will be spent in the second quarter.

To add a few additional comments related to currency, assuming exchange rates for the rest of FY15 remain where they are today, we expect currency translation to negatively impact full-year sales by about 5%. We also estimate currency will negatively impact full-year gross margin and operating margin by approximately 1%.

In terms of the currency impact on earnings per share, our historical results have shown that for every 1% change to sales related to currency translation, EPS is impacted approximately 2.5 times that amount in the same direction. This currency impact is due to the translation effect of converting foreign currency sales and cost back to US dollars which is not hedged. We have for a long time hedged our cash exposure by using forward contracts.

Getting back to first-quarter results in summary, our global team delivered a very strong first quarter. We have strong order momentum leading into our second quarter, although the impact of negative currency translation and the expected timing of shipments for this strong order activity will impact sales in the second quarter. Mike will share more comments relative to the current pace of the business and our view of sales for FY15. With that, I'll turn the call back over to you, Mike.

Thank you, Greg. Before taking your questions, as Greg noted I'd like to provide some additional comments on our recent performance and outlook. First I want to thank our global team again for their hard work. Their commitment to our customers propelled Nordson to a very solid start to our year.

At the midpoint of our second-quarter guidance we are expecting sequential sales growth of about 7%, which we should leverage to delivering operating margin approximately three percentage points higher than the first quarter and earnings per share that are 23% higher than the first quarter.

As Greg mentioned, on a year-over-year basis we do expect currency translation to remain a significant headwind to revenue and earnings growth in the second quarter and full year, given current exchange rates. Excluding this currency translation effect, our underlying business remains sound.

Our backlog is solid and 12-week order rates are up a strong 14% compared to the same period a year ago. This growth in organic orders is impressive given the challenging macroeconomic environment. Given this strength you might expect our organic growth in the second quarter to exceed the 1% level we are forecasting at the midpoint of our guidance, as we typically have a strong correlation between order growth rates and the outlook for the next quarter.

To help reconcile this, let me provide some additional color. First, timing does play a role here as the current backlog does include some longer lead time items that are expected to benefit the third quarter. This is particularly true within Advanced Technology and Industrial Coating segments.

In addition, we are optimistic as to our likely success on various projects that are not yet in our backlog that should generate revenue beyond the second quarter. Our participation in these large dollar projects reflects the consultative approach and applications expertise we bring to our customers. And in several cases is being driven by innovative Nordson technology.

Due to the competitive reasons and customer confidentiality agreements, we're guarded with the details we can share at this time. Directionally, however, we can provide some general commentary.

While we're not providing a specific forecast beyond our second quarter, we are optimistic that the current backlog, current order growth rates and project momentum will drive double-digit organic growth in the second half of our year as compared to the prior year, resulting in high single-digit organic growth for the full year. From a broader perspective there are many reasons we continue to feel good about our longer-term prospects.

While we can't control currency or other aspects of the macroeconomic environment, there are many things we can control, and that is where we are focused. The first of these is innovative technology. Nordson earned 211 patents in 2014. Driven by our envision process we continue to introduce products that provide tangible benefits to our customers and are helping to drive organic growth.

Second is continuous improvement. The Nordson business system is our set of tools and best practices for driving improvement in all value streams across the Company. We continue to [engrain] the business system in all we do.

Third is adding to the portfolio through targeted and strategic acquisitions. We continue to evaluate opportunities in the spaces as we've talked about previously, and we're working to optimize our integration processes to deliver value faster.

Finally, we're focusing on making a strong team even better. Our talent management and development initiatives continue to gain momentum, ensuring we are equipped to capture the growth opportunities that we see. Overall we are focused on providing our customers with the best experience in the industries we serve and delivering excellent shareholder returns over the long term.

And we will continue our balanced approach for capital allocation, including returning value directly to shareholders with dividends and remaining prudent with regards to our share repurchase activity and executing on appropriate acquisition opportunities. At this time let me turn to your questions.

Thank you.

(Operator Instructions)

Joe Radigan, KeyBanc

Good morning.

Mike, maybe we can start with your comments around the timing in the second quarter. Can you provide any more granularity in terms of growth by segment? Obviously you have got some longer lead times stuff in ICS, but orders were fairly good in Adhesives, and that tends to be relatively short cycle.

It sounds like there's some longer lead time stuff in Advanced Tech, but there's -- you have a relatively comp on a year-over-year basis and orders were up almost 20% there. And that business has been growing at double-digit clip here for, I think, three consecutive quarters. So can you maybe reconcile the growth by what you're expecting by segment?

Yes, Joe. You did hit the key areas that tend to have bigger projects, and bigger projects tend to be a little bit longer lead item. We also have projects in here where our customers have asked for sort of phased deliveries. So that's also a part of what we're seeing. And that falls into the two areas in particular that you mentioned, the Industrial Coatings and the Advanced Technology area.

There are elements of our plastics business that have some longer lead time orders, like our pelletizing business that also impact that. So from our perspective, what we've seen is more systems orders, which is encouraging, and some of those are phased from a delivery standpoint. And that's really the main fact. Chalk it up essentially to timing

Okay. And then in terms of the cadence of orders that you saw through the 12-week period, first quarter is typically a soft spot in the customer capital cycle. Did you see orders -- order rates strengthen in recent weeks? Can you kind of talk about how that developed?

Yes, Joe. As you know, it's soft because of the holiday period and it tends to, as we've talked about the past, orders tend to get to a low point sort of over the holidays, right after the new year, and then start to pick up. And we have -- absolutely did see that trend where each of the last few weeks has gotten stronger, generally across most businesses

Okay. Then maybe lastly, in terms of the operating margin. At the midpoint of your guidance, I think you said it's expected to be about 20%. That's almost a 250, or about a 250 basis point decline year over year. Some of that, probably 100 basis points of that, I think is FX. But is there a mix factor as well in the second quarter in terms of the timing of engineered versus standard stuff?

Yes. So you've -- the currency is a significant impact. And then when you look at things, volume is relatively soft and actually down a little bit. So we get a little bit of a negative leverage there relative to our spend base.

So it's not anything that we're alarmed about. Again, I think it's largely the timing issue on the organic piece. And we're really pretty encouraged by the prospects that we see in addition to orders already in hand. The currency piece, as Greg said, we are going to deal with over the next couple of quarters. And is a strong headwind and it does impact margin to the tune of about 100 basis points, maybe a little more in the second quarter and a little less as we go throughout the year

Okay. Thanks, Mike

Charley Brady, BMO Capital Markets.

Good morning.

Could you give us a sense of what the parts business look like in the quarter? Was there any -- because I'm trying to parse out if that had any meaningful impact on the margins, particularly Adhesive Dispensing.

Year over year it was pretty much the same as last year, around I think 43%, 44% Charley. So no significant impact. Adhesives is one of the areas where we feel the biggest impact from a currency perspective.

Right, right. I want to go back to Joe's question on the segment organic growth, particularly on Adhesive Dispensing. Because if I'm hearing you correctly, that one -- and there's some in the plastics, but the majority of this long lead time or phase-in of order, is happening in ICS and Advanced Tech, not so much in Adhesive Dispensing. Can you give us a sense what you're looking for on organic growth just on the adhesive dispensing in Q2?

Well, I think overall for the year we're thinking that things will be consistent with our long-term kind of growth rates. I think in the second quarter we're looking for things to be a little bit less and pick up based on some of the order strength coming in.

So not too atypical when you look at sort of the more traditional adhesives. The one area that is strong right now but can be lumpy is the product assembly piece, because those tend to be bigger systems orders as well, but nothing atypical that we see here in terms of progress on that part of the business. We are encouraged by what we see across most of the product lines.

And Charlie, this is Greg. I'd just add quarter to quarter we might see some trends -- a softening trend in one quarter versus the next. But as Mike mentioned, if we look at that business on a longer-term basis across the year, we'd expect to see that typical mid-single-digit growth rate in adhesives.

Yes, I'm just trying to square it out because you had a 6% order growth in the quarter, which was -- that's a good solid order number for Adhesives. And am I not hearing that you have a lot of longer lead time phase-in on the Adhesives side, unless I'm hearing that incorrectly.

I'm trying to square up 6%, really good order growth, but not translating into the same kind of growth organically in Q2. Am I correct on that? Is there stuff that is being phased in like the other two segments, or am I missing a piece here?

It's mainly on the plastics side that there tend -- particularly the pelletizer business that tends to be a little bit longer lead time. So you're seeing that sort of impacted in the near term. There is nothing unusual in the Adhesive side.

As Greg said, you can have some -- one quarter or another movement based on some orders, and typically those orders will be in the product assembly area that's been pretty strong for us here of late. So nothing unusual there. But we do have orders on the plastics side that are a little bit longer lead time, and that's pulling that number down in the short-term.

Okay, thanks.

Allison Poliniak, Wells Fargo.

Hello. Good morning. Just want to go back to operating margins, particularly as we look to the back half. You talked about currency headwinds, and it sounds like there's some system headwinds there. I'm just tried to marry that with the expected volume improvement. I mean, is it going -- I mean, should we expect that acceleration on the EBIT side as well?

Yes, absolutely. I think you know that we've got tremendous incremental margin leverage on volume. So in typical year we will see margin improve from the first quarter throughout the year as volumes improve just on a seasonal basis.

And this year, based on some of these orders stretching into the third quarter and what we see from a project list and some new technology introductions, we expect to see that volume lift later in the year. With that you'll see the margin lift that we typically see across the quarters with volume.

Okay. Then just even on the second half, you noted some confidence in the second half, acceleration in top-line growth. Is there any segment or end market specifically that you're probably a little bit more concerned about as we look to the back half of the year?

I would say the growth across most of our segments looks solid. There could be certain end markets that are a little soft here, but we're making them up in others. I'd say more concern would be around geography, and because some of the geographies are struggling from an economic perspective,

When you think about the Americas, particularly Latin America. Europe is not as robust, and Japan is more of a mixed bag. That said, some of the other geographies have been considerably stronger. So I'd say it's more of a mixed bag on geography than end market applications.

There are obviously some that are pretty strong, and things like auto, medical, electronics applications including wireless. Those kind of things are generally pretty strong. We've got new areas where we're interested in that are picking up. But for us also we're introducing a lot of new products this year, I would categorize in the singles category nice new incremental growth opportunities, or recapitalization opportunities, that I think will also help in our getting some traction.

Great. Thank you so much.

Christopher Glynn, Oppenheimer.

Thanks, good morning.

Wanted go into the second half margin outlook a little bit more. I think in the past maybe you offered directional guidance on quantifying a range or expectation for sequential incremental margins. So given the volume outlook, it's a little different modeling this year given the FX dynamics. So wondering if you could you offer some vague or specific rule of thumb?

Yes.

The incremental margins are significant as the volume grows throughout the year. It does depend a little bit on mix. So for example, the Industrial Coatings, given the nature of scope we provide there, while they have very good incremental margins that are probably in the 30% kind of range, are different than what we might see in Technology, which would be higher and traditional Adhesives would be higher yet.

So it does depend a little bit on the mix. But we would expect to see strong incremental margins across each of the businesses as it grows throughout the year. You can see from the order rates that we are providing that Industrial Coatings is stepping up nicely and Advanced Technology is stepping up nicely. So those mix effects will be a little bit lower than, say, if all of the Adhesives business was stepping up. But we would expect a pretty typical pattern as the volume grows up -- grows for the rest of the year, only to be moderated a little bit by mix.

Thanks, that's helpful. And then at ADS, just wondering how you'd score the investments in the plastics processing at this point, like EDI and XALOY are coming up about three years with Nordson. And just wondering if there's any change to your view of the long-term returns and update on how you get there, the integrations, et cetera?

Yes. Maybe I'll just start with a comment on the two major end markets that support all that business. As Greg mentioned in his comments, the plastic injection part of the end markets are doing well, and when you think about the products that are being made there, it goes into auto, it goes into electronics, it goes into medical. Those areas all doing pretty well.

When you look at the film side of the business, the film side of the business particularly the high-end film side of the business is really struggling. While there some increase in demand, Europe's slowing, China's slowing, Latin America's slowing. Really hurt the sort of supply/demand situation on the film business.

I'd say we're still struggling pretty significantly on the film business. That affect the dies business the most. A different application like fluid coatings in the dies business is doing really well, but the bigger application is struggling. So obviously we are behind where we had hoped to be.

And the supply/demand imbalance has not resolved itself yet. And we could be looking at another year or two before that's completely resolved. And that's a function really of the soft growth, primarily outside the US on the demand side at this point.

Now as far as integration goes, we made I think great progress on the integration of those businesses. We're focused on new products in sort of other markets that we haven't played in as much, particularly on the film side. We're getting some traction there. And we've built up our international capabilities, allowing us to do well, particularly in Asia. So we're encouraged by that. But in the short term, we're obviously behind where we thought we would be.

Okay, thank you.

Jason Ursaner, CJS Securities.

Good morning.

Had a little trouble connecting and missed some of the notes around each segment. Organic growth and the order rates obviously extremely strong. Just wondering maybe if you could walk through which divisions in the Tech segment were driving that in the 12-week orders?

Yes, it's pretty much across the board. So if you look it at on the electronics part of the business is doing well in wireless, but also in more traditional advanced packaging applications have started to pick up. And if you look at some of the Gartner date it's encouraging in that area. But also auto electronics has been strong.

And then outside of the electronics space a lot of general industry applications that would affect our EFD business our strong. We have a bunch of new products coming into play across our EFD businesses, as well as our systems business. And then the medical business is doing really well, really driven by the broadening of our product line and some international growth now as well. So really across the board that looks very encouraging at the moment.

Okay. And the traditional PC market, I know it's been a struggle but came back to growth, at least in global numbers and especially in the domestic market. Have you seen any of that translate in some of the more legacy applications in PC and server?

Yes, we are seeing that, as my comment on advanced packaging is directly related to PC desktop, server kind of applications, both with end users and then the outsource manufacturers. We saw some encouraging orders coming through. So we're certainly starting to see that.

Okay. And the investments you've been making in tech, any update on where those stand? And any success on the tiering strategy?

Yes. So we have, on the wafer project we launched we picked up a second big order in that business. And we have probably more than 10 significant prospects that we expect to see signed this year. So we're getting good traction on that.

We're also taking advantage of expanding our local China manufacturing applications. And we have a number of new products across that particular system space that we're introducing this year that we are seeing some good traction on. So it's encouraging at this point

Okay. Appreciate the commentary. Thanks.

Jason Rogers, Great Lakes Review.

Yes. I was wondering if you could give an update on the Freedom and Liberty systems and how they play into your forecast for a strong second half of the year?

Yes. We've had an uptick on both of those products in the last couple of quarters. I think what we characterized last year is probably revenue exceeded expectations, volume didn't quite exceed expectations. I think that is continuing, but we have seen an uptick. The one issue we mentioned was the availability of new adhesives that would further enhance the benefit of those particular new products has really not come to market yet.

And some of the things gone on in the oil industry right now and supply chain probably delays that a little bit further, but they're clearly -- Freedom's top-of-the-line, Liberty is sort of our next tiered position, then we have a number of other tiered positions. So we feel pretty good about what we have to offer broadly in that we've only recently started to offer those products in Asia. So, i'd say we're at expectations on those products. Not accelerating the way we might have hoped based on the availability of the adhesives.

Okay. And Greg, the pension settlement expense that you have (technical difficulties) press release, is that included in the selling and admin line of the income statement?

Yes, that is. And in the segment detail that's in corporate spending.

(Operator Instructions)

Walter Liptak, Global Hunter

Hi, thanks. Good morning.

Wanted to ask about the coatings business. Very strong orders there, and this is the third quarter that we've seen this strong order trend. And as I think back through the past, we've seen periods like this before where you kind of take on a couple of quarters of increasing orders. And then my recollection is then starts to slow down again. So, I guess I'd like to get some color on what's driving it, what the visibility looks like as we go further into 2015?

Yes, of course. I would say obviously the business itself is linked to the business cycle, and that's what you are referring to in your comments. That said, there are a number of markets that have been strong. So auto, for example, is one that's been strong for us.

With some of our cold materials acquisition in the equipment business we've been able to take that, now starting to take that internationally. We're seeing some uptick there. We've talk about in the past oil and gas exploration and what that's doing from pipe coating application. Pipe coating.

So I would say solid, but even in the businesses that are more traditional, like our container business, we're seeing good order growth. Some of that is upgrades and recapitalization, which new technology helps. So I'd say generally it's fairly broad-based.

I'd say the areas that are still a little bit slow would be things like coatings for recreational products for some office furniture. Things like appliances go up and down a little bit, but they're generally solid.

So I'd say the key drivers are the ones that I talked about here. And we've got, as you look at the orders, some pretty good visibility at least in the near-term. And when we look at our projects list, really across the globe we see some pretty good activity

Okay, great, sounds good. And just a general one on currency. Is there any fundamental impact on currency? Like are you any less competitive in any markets because of the stronger dollar?

Now, if you look at we're pretty well distributed from a supply chain standpoint. So, it's really translation impacts that you're looking at there. So no, we're not seeing any significant competitive threats there. But the degree of change, particularly in Europe and the yen, and to a lesser extent the pound, is impacted the translation effect. But we're is not seeing a competitive dynamic, given the balance on our supply chain.

I got it. Thank you.

I'm not showing any further questions in queue at this time. Would you like to close with any closing remarks?

Yes. This is Jim again. Thank you everybody for joining the call. I do have some calls scheduled with some of you later today. I'm around and I will be around tomorrow as well to take your call. So again, thank you and appreciate your ongoing interest in Nordson. Have a good day.

Thank you.

Thank you. Ladies and gentlemen, this concludes today's conference. You may now disconnect. Good day.