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Nordson Corporation Reports Third Quarter Fiscal 2023 Results and Narrows Annual Guidance

Third Quarter:

  • Sales were $649 million, a 2% decrease from the prior year
  • Operating profit was $171 million
  • EBITDA was $208 million, 32% of sales
  • Earnings per share were $2.22
  • Adjusted earnings per share were $2.35

Guidance:

  • Narrowing previously issued full-year fiscal 2023 revenue guidance to 0% to 2% growth over record fiscal 2022 and adjusted earnings per diluted share to the range of $8.90 to $9.05 per share

Nordson Corporation (Nasdaq: NDSN) today reported results for the fiscal third quarter ended July 31, 2023. Sales were $649 million, a 2% decrease compared to the prior year’s third quarter sales of $662 million. The decrease in third quarter 2023 sales includes an organic decrease of 5%, partially offset by a favorable acquisition impact. The organic sales decrease was driven by ongoing pressure in electronics, primarily semiconductor dispense applications, and biopharma end markets, offset by strong growth in medical interventional solutions and polymer processing product lines.

Operating profit in the third quarter was $171 million. Adjusted operating profit, excluding $8 million in non-recurring acquisition costs plus severance costs, totaled $181 million, or 28% of sales, compared to prior year adjusted operating profit of $188 million. The 4% decrease in adjusted operating profit was driven by lower sales volume. EBITDA for the third quarter of fiscal 2023 totaled $208 million, or 32% of sales.

Net income was $128 million, or $2.22 of earnings per diluted share. Adjusted net income was $136 million, a $9 million decrease from the prior year earnings of $144 million. Third quarter 2023 adjusted earnings per diluted share were $2.35, a 6% decrease from the prior year adjusted earnings per diluted share of $2.49. The decrease was driven by increased interest expense and lower operating profit.

“During the fiscal third quarter, our team delivered strong profitability with 32% EBITDA and solid cash flow against persisting demand weakness in electronics and biopharma end markets. The team remains focused on the execution of our Ascend strategy to achieve top tier growth with leading margins and returns, as evidenced by the recently announced acquisition of ARAG and the steadfast deployment of the NBS Next growth framework. We are looking forward to the recovery of our cyclical end markets and the related incremental earnings power associated with the growth,” said Sundaram Nagarajan, president and chief executive officer.

Third Quarter Segment Results

Industrial Precision Solutions sales of $338 million decreased 1% from the prior year. The decrease was driven primarily by product assembly and nonwovens product lines in Asia Pacific, partially offset by continued strength in the polymer processing product lines. Operating profit in the quarter was $115 million, or 34% of sales, a 4% decrease from the prior year third quarter. The decrease in operating profit was driven by lower sales volume and changes in sales mix.

Medical and Fluid Solutions sales of $171 million decreased 4% compared to the prior year third quarter. The decrease was driven by continued softness in the medical fluid components and fluid solutions product lines, partially offset by strong double-digit demand for medical interventional solutions product lines. Operating profit was $54 million, or 32% of sales, a decrease of 11% compared to the prior year third quarter adjusted operating profit. The decreased segment profitability continued to be impacted by lower sales volume and sales mix changes within medical product lines.

Advanced Technology Solutions sales of $140 million decreased 3% compared to the prior year third quarter, as the favorable acquisition impact of 11% was more than offset by a decrease in organic sales of 13%. The organic sales decrease was driven by electronics dispense products serving semiconductor end markets, predominantly in Asia Pacific, slightly offset by continued growth in test and inspection product lines. Operating profit was $27 million. Adjusted operating profit, which excludes severance costs, totaled $29 million, or 21% of sales, an increase of 3% compared to the prior year third quarter operating profit. The improvement in operating profit was driven by favorable sales mix and realization of cost savings actions.

Outlook

Backlog entering the fourth quarter of fiscal 2023 remains strong at $890 million and continues to be heavily weighted toward systems and medical interventional solutions. Order entry has been steady throughout the quarter. Based on current visibility, we expect fourth quarter sales to be the strongest of the year, increasing low-mid single digits over the prior year fourth quarter. This increase includes approximately $20-$30 million of sales from the acquisition of the ARAG Group, which is forecasted to close in late August. On balance, the Company is narrowing its previously issued full-year revenue growth guidance to 0% to 2% over record fiscal 2022 and adjusted earnings guidance to the range of $8.90 to $9.05.

Nordson management will provide additional commentary on these results and outlook during its previously announced webcast on Tuesday, August 22, 2023, at 8:30 a.m. eastern time, which can be accessed at https://investors.nordson.com. For persons unable to listen to the live broadcast, a replay will be available for 14 days after the event. Information about Nordson’s investor relations and shareholder services is available from Lara Mahoney, vice president, investor relations and corporate communications at (440) 204-9985 or lara.mahoney@nordson.com.

Certain statements contained in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “anticipates,” “believes,” “projects,” “forecasts,” “outlook,” “guidance,” “continue,” “target,” or the negative of these terms or comparable terminology. These statements reflect management’s current expectations and involve a number of risks and uncertainties. These risks and uncertainties include, but are not limited to, U.S. and international economic conditions; financial and market conditions; currency exchange rates and devaluations; possible acquisitions, including the Company’s ability to successfully integrate acquisitions; the Company’s ability to successfully divest or dispose of businesses that are deemed not to fit with its strategic plan; the effects of changes in U.S. trade policy and trade agreements; the effects of changes in tax law; and the possible effects of events beyond our control, such as political unrest, including the conflict between Russia and Ukraine, acts of terror, natural disasters and pandemics, including the recent coronavirus (COVID-19) pandemic and the other factors discussed in Item 1A (Risk Factors) in the Company’s most recently filed Annual Report on Form 10-K and in its Forms 10-Q filed with the Securities and Exchange Commission, which should be reviewed carefully. The Company undertakes no obligation to update or revise any forward-looking statement in this press release.

Nordson Corporation is an innovative precision technology company that leverages a scalable growth framework through an entrepreneurial, division-led organization to deliver top tier growth with leading margins and returns. The Company’s direct sales model and applications expertise serves global customers through a wide variety of critical applications. Its diverse end market exposure includes consumer non-durable, medical, electronics and industrial end markets. Founded in 1954 and headquartered in Westlake, Ohio, the Company has operations and support offices in over 35 countries. Visit Nordson on the web at www.nordson.com, www.twitter.com/Nordson_Corp or www.facebook.com/nordson.

NORDSON CORPORATION

 

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

(Dollars in thousands except for per-share amounts)

   

 

Three Months Ended

 

Nine Months Ended

 

July 31, 2023

 

July 31, 2022

 

July 31, 2023

 

July 31, 2022

Sales

$

648,677

 

 

$

662,128

 

 

$

1,909,319

 

 

$

1,906,697

 

Cost of sales

 

288,357

 

 

 

296,544

 

 

 

868,007

 

 

 

843,344

 

Gross profit

 

360,320

 

 

 

365,584

 

 

 

1,041,312

 

 

 

1,063,353

 

Gross margin %

 

55.5

%

 

 

55.2

%

 

 

54.5

%

 

 

55.8

%

 

 

 

 

 

 

 

 

Selling & administrative expenses

 

189,324

 

 

 

180,666

 

 

 

553,590

 

 

 

538,602

 

Operating profit

 

170,996

 

 

 

184,918

 

 

 

487,722

 

 

 

524,751

 

 

 

 

 

 

 

 

 

Interest expense - net

 

(11,486

)

 

 

(5,165

)

 

 

(30,904

)

 

 

(15,292

)

Other income (expense) - net (1)

 

2,542

 

 

 

752

 

 

 

(2,059

)

 

 

(37,720

)

Income before income taxes

 

162,052

 

 

 

180,505

 

 

 

454,759

 

 

 

471,739

 

 

 

 

 

 

 

 

 

Income taxes

 

34,161

 

 

 

38,694

 

 

 

95,044

 

 

 

99,885

 

 

 

 

 

 

 

 

 

Net income

$

127,891

 

 

$

141,811

 

 

$

359,715

 

 

$

371,854

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

56,989

 

 

 

57,409

 

 

 

57,114

 

 

 

57,782

 

Diluted

 

57,530

 

 

 

57,969

 

 

 

57,657

 

 

 

58,392

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic earnings

$

2.24

 

 

$

2.47

 

 

$

6.30

 

 

$

6.44

 

Diluted earnings

$

2.22

 

 

$

2.45

 

 

$

6.24

 

 

$

6.37

 

   

(1) Nine months ended July 31, 2022, includes pension settlement charge of $41,221.

NORDSON CORPORATION

 

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars in thousands)

   

 

July 31, 2023

 

October 31, 2022

Cash and cash equivalents

$

143,138

 

$

163,457

Receivables - net

 

533,793

 

 

537,313

Inventories - net

 

439,741

 

 

383,398

Other current assets

 

60,249

 

 

48,803

Total current assets

 

1,176,921

 

 

1,132,971

 

 

 

 

Property, plant and equipment - net

 

350,735

 

 

353,442

Goodwill

 

2,110,780

 

 

1,804,693

Other assets

 

558,596

 

 

529,269

 

$

4,197,032

 

$

3,820,375

 

 

 

 

Current maturities of long-term debt and notes payable

$

110,643

 

$

392,537

Accounts payable and accrued liabilities

 

417,966

 

 

441,666

Total current liabilities

 

528,609

 

 

834,203

  

 

 

 

Long-term debt

 

727,455

 

 

345,320

Other liabilities

 

361,162

 

 

346,477

Total shareholders' equity

 

2,579,806

 

 

2,294,375

 

$

4,197,032

 

$

3,820,375

NORDSON CORPORATION

 

CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

(Dollars in thousands)

   

 

Nine Months Ended

 

July 31, 2023

 

July 31, 2022

Cash flows from operating activities:

 

 

 

Net income

$

359,715

 

 

$

371,854

 

Depreciation and amortization

 

80,637

 

 

 

75,242

 

Other non-cash items (1)

 

18,523

 

 

 

54,928

 

Changes in working capital

 

19,197

 

 

 

(162,333

)

Net cash provided by operating activities

 

478,072

 

 

 

339,691

 

 

 

 

 

Cash flows from investing activities:

 

 

 

Additions to property, plant and equipment

 

(24,244

)

 

 

(39,373

)

Acquisition of businesses, net of cash acquired

 

(377,843

)

 

 

(171,613

)

Other - net

 

91

 

 

 

415

 

Net cash used in investing activities

 

(401,996

)

 

 

(210,571

)

 

 

 

 

Cash flows from financing activities:

 

 

 

Net issuance of long-term debt

 

73,956

 

 

 

22,905

 

Repayment of finance lease obligations

 

(4,769

)

 

 

(3,726

)

Dividends paid

 

(111,547

)

 

 

(88,675

)

Issuance of common shares

 

18,449

 

 

 

8,845

 

Purchase of treasury shares

 

(78,163

)

 

 

(233,767

)

Net cash used in financing activities

 

(102,074

)

 

 

(294,418

)

 

 

 

 

Effect of exchange rate change on cash:

 

5,679

 

 

 

(5,937

)

Net change in cash and cash equivalents

 

(20,319

)

 

 

(171,235

)

 

 

 

 

Cash and cash equivalents:

 

 

 

Beginning of period

 

163,457

 

 

 

299,972

 

End of period

$

143,138

 

 

$

128,737

 

 

 

 

 

(1) Nine months ended July 31, 2022, includes pension settlement charge of $41,221.

NORDSON CORPORATION

 

SALES BY GEOGRAPHIC SEGMENT (Unaudited)

(Dollars in thousands)

   

 

Three Months Ended

 

Sales Variance

 

July 31, 2023

 

July 31, 2022

 

Organic

 

Acquisitions

 

Currency

 

Total

SALES BY SEGMENT

 

 

 

 

 

 

 

 

 

 

 

Industrial Precision Solutions

$

338,257

 

$

341,215

 

(1.5

)%

 

%

 

0.6

%

 

(0.9

)%

Medical and Fluid Solutions

 

170,871

 

 

177,840

 

(3.9

)%

 

%

 

%

 

(3.9

)%

Advanced Technology Solutions

 

139,549

 

 

143,073

 

(12.8

)%

 

10.7

%

 

(0.4

)%

 

(2.5

)%

Total sales

$

648,677

 

$

662,128

 

(4.5

)%

 

2.4

%

 

0.1

%

 

(2.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

SALES BY GEOGRAPHIC REGION

 

 

 

 

 

 

 

 

 

 

 

Americas

$

290,515

 

$

279,205

 

2.2

%

 

1.2

%

 

0.7

%

 

4.1

%

Europe

 

167,536

 

 

151,659

 

5.7

%

 

1.4

%

 

3.4

%

 

10.5

%

Asia Pacific

 

190,626

 

 

231,264

 

(20.0

)%

 

4.3

%

 

(1.9

)%

 

(17.6

)%

Total sales

$

648,677

 

$

662,128

 

(4.5

)%

 

2.4

%

 

0.1

%

 

(2.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended

 

Sales Variance

 

July 31, 2023

 

July 31, 2022

 

Organic

 

Acquisitions

 

Currency

 

Total

SALES BY SEGMENT

 

 

 

 

 

 

 

 

 

 

 

Industrial Precision Solutions

$

985,610

 

$

981,582

 

2.6

%

 

%

 

(2.2

)%

 

0.4

%

Medical and Fluid Solutions

 

491,683

 

 

508,836

 

(2.4

)%

 

%

 

(1.0

)%

 

(3.4

)%

Advanced Technology Solutions

 

432,026

 

 

416,279

 

(6.6

)%

 

12.2

%

 

(1.8

)%

 

3.8

%

Total sales

$

1,909,319

 

$

1,906,697

 

(0.7

)%

 

2.6

%

 

(1.8

)%

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

SALES BY GEOGRAPHIC REGION

 

 

 

 

 

 

 

 

 

 

 

Americas

$

834,125

 

$

792,859

 

3.2

%

 

1.9

%

 

0.1

%

 

5.2

%

Europe

 

498,379

 

 

479,900

 

4.3

%

 

1.6

%

 

(2.0

)%

 

3.9

%

Asia Pacific

 

576,815

 

 

633,938

 

(9.7

)%

 

4.4

%

 

(3.7

)%

 

(9.0

)%

Total sales

$

1,909,319

 

$

1,906,697

 

(0.7

)%

 

2.6

%

 

(1.8

)%

 

0.1

%

 

 

 

 

 

 

 

 

 

 

 

 

NORDSON CORPORATION

 

RECONCILIATION OF NON-GAAP MEASURES - ADJUSTED OPERATING PROFIT AND EBITDA (Unaudited)

(Dollars in thousands)

   

 

Three Months Ended

 

Nine Months Ended

 

July 31, 2023

 

July 31, 2022

 

July 31, 2023

 

July 31, 2022

SALES BY SEGMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Precision Solutions

$

338,257

 

 

 

 

$

341,215

 

 

 

 

$

985,610

 

 

 

 

$

981,582

 

 

 

Medical and Fluid Solutions

 

170,871

 

 

 

 

 

177,840

 

 

 

 

 

491,683

 

 

 

 

 

508,836

 

 

 

Advanced Technology Solutions

 

139,549

 

 

 

 

 

143,073

 

 

 

 

 

432,026

 

 

 

 

 

416,279

 

 

 

Total sales

$

648,677

 

 

 

 

$

662,128

 

 

 

 

$

1,909,319

 

 

 

 

$

1,906,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING PROFIT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Precision Solutions

$

115,346

 

 

 

 

$

119,706

 

 

 

 

$

329,439

 

 

 

 

$

324,089

 

 

 

Medical and Fluid Solutions

 

54,019

 

 

 

 

 

58,103

 

 

 

 

 

141,326

 

 

 

 

 

165,510

 

 

 

Advanced Technology Solutions

 

27,083

 

 

 

 

 

28,155

 

 

 

 

 

70,136

 

 

 

 

 

95,533

 

 

 

Corporate

 

(25,452

)

 

 

 

 

(21,046

)

 

 

 

 

(53,179

)

 

 

 

 

(60,381

)

 

 

Total operating profit

$

170,996

 

 

 

 

$

184,918

 

 

 

 

$

487,722

 

 

 

 

$

524,751

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING PROFIT ADJUSTMENTS (1)

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Precision Solutions

$

 

 

 

 

$

 

 

 

 

$

 

 

 

 

$

1,563

 

 

 

Medical and Fluid Solutions

 

 

 

 

 

 

2,498

 

 

 

 

 

1,479

 

 

 

 

 

2,498

 

 

 

Advanced Technology Solutions

 

2,049

 

 

 

 

 

 

 

 

 

 

14,304

 

 

 

 

 

 

 

 

Corporate

 

7,732

 

 

 

 

 

897

 

 

 

 

 

7,731

 

 

 

 

 

897

 

 

 

Total adjustments

$

9,781

 

 

 

 

$

3,395

 

 

 

 

$

23,514

 

 

 

 

$

4,958

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADJUSTED OPERATING PROFIT (NON-GAAP) (2)

 

% of Sales

 

 

 

% of Sales

 

 

 

% of Sales

 

 

 

% of Sales

Industrial Precision Solutions

$

115,346

 

 

34

%

 

$

119,706

 

 

35

%

 

$

329,439

 

 

33

%

 

$

325,652

 

 

33

%

Medical and Fluid Solutions

 

54,019

 

 

32

%

 

 

60,601

 

 

34

%

 

 

142,805

 

 

29

%

 

 

168,008

 

 

33

%

Advanced Technology Solutions

 

29,132

 

 

21

%

 

 

28,155

 

 

20

%

 

 

84,440

 

 

20

%

 

 

95,533

 

 

23

%

Corporate

 

(17,720

)

 

 

 

 

(20,149

)

 

 

 

 

(45,448

)

 

 

 

 

(59,484

)

 

 

Total operating profit - adjusted

$

180,777

 

 

28

%

 

$

188,313

 

 

28

%

 

$

511,236

 

 

27

%

 

$

529,709

 

 

28

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DEPRECIATION & AMORTIZATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Precision Solutions

$

7,036

 

 

 

 

$

6,347

 

 

 

 

$

21,166

 

 

 

 

$

20,705

 

 

 

Medical and Fluid Solutions

 

14,133

 

 

 

 

 

15,021

 

 

 

 

 

41,441

 

 

 

 

 

42,146

 

 

 

Advanced Technology Solutions

 

3,834

 

 

 

 

 

2,195

 

 

 

 

 

11,656

 

 

 

 

 

6,705

 

 

 

Corporate

 

2,099

 

 

 

 

 

1,324

 

 

 

 

 

6,374

 

 

 

 

 

5,686

 

 

 

Total depreciation & amortization

$

27,102

 

 

 

 

$

24,887

 

 

 

 

$

80,637

 

 

 

 

$

75,242

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA (NON-GAAP) (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Industrial Precision Solutions

$

122,382

 

 

36

%

 

$

126,053

 

 

37

%

 

$

350,605

 

 

36

%

 

$

346,357

 

 

35

%

Medical and Fluid Solutions

 

68,152

 

 

40

%

 

 

75,622

 

 

43

%

 

 

184,246

 

 

37

%

 

 

210,154

 

 

41

%

Advanced Technology Solutions

 

32,966

 

 

24

%

 

 

30,350

 

 

21

%

 

 

96,096

 

 

22

%

 

 

102,238

 

 

25

%

Corporate

 

(15,621

)

 

 

 

 

(18,825

)

 

 

 

 

(39,074

)

 

 

 

 

(53,798

)

 

 

Total EBITDA

$

207,879

 

 

32

%

 

$

213,200

 

 

32

%

 

$

591,873

 

 

31

%

 

$

604,951

 

 

32

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Represents severance, as well as fees and non-cash inventory charges associated with acquisitions.

(2) Adjusted operating profit and EBITDA are non-GAAP measures used by management to evaluate the Company's ongoing operations. Adjusted operating profit is defined as operating profit plus certain adjustments, such as severance, fees and non-cash inventory charges associated with acquisitions. EBITDA is defined as adjusted operating profit plus depreciation and amortization.

NORDSON CORPORATION

 

RECONCILIATION OF NON-GAAP MEASURES - PROFITABILITY (Unaudited)

(Dollars in thousands)

   

 

Three Months Ended

 

Nine Months Ended

 

July 31, 2023

 

July 31, 2022

 

July 31, 2023

 

July 31, 2022

GAAP AS REPORTED

 

 

 

 

 

 

 

Operating profit

$

170,996

 

 

$

184,918

 

 

$

487,722

 

 

$

524,751

 

Other / interest expense - net

 

(8,944

)

 

 

(4,413

)

 

 

(32,963

)

 

 

(53,012

)

Net income

 

127,891

 

 

 

141,811

 

 

 

359,715

 

 

 

371,854

 

Diluted earnings per share

$

2.22

 

 

$

2.45

 

 

$

6.24

 

 

$

6.37

 

 

 

 

 

 

 

 

 

Shares outstanding - diluted

 

57,530

 

 

 

57,969

 

 

 

57,657

 

 

 

58,392

 

 

 

 

 

 

 

 

 

OPERATING PROFIT ADJUSTMENTS

 

 

 

 

 

 

 

Inventory step-up amortization

$

 

 

$

 

 

$

4,306

 

 

$

1,563

 

Acquisition Costs

 

7,732

 

 

 

 

 

 

13,721

 

 

 

 

Severance and other

 

2,049

 

 

 

3,395

 

 

 

5,487

 

 

 

3,395

 

 

 

 

 

 

 

 

 

NON-OPERATING EXPENSE ADJUSTMENTS

 

 

 

 

 

 

 

Pension settlement loss

$

 

 

$

 

 

$

 

 

$

41,221

 

 

 

 

 

 

 

 

 

Total adjustments

$

9,781

 

 

$

3,395

 

 

$

23,514

 

 

$

46,179

 

 

 

 

 

 

 

 

 

Adjustments net of tax

$

7,719

 

 

$

2,667

 

 

$

18,600

 

 

$

36,401

 

EPS effect of adjustments and other discrete tax items

$

0.13

 

 

$

0.04

 

 

$

0.32

 

 

$

0.62

 

 

 

 

 

 

 

 

 

NON-GAAP MEASURES-ADJUSTED PROFITABILITY

 

 

 

 

 

 

 

Operating profit (1)

$

180,777

 

 

$

188,313

 

 

$

511,236

 

 

$

529,709

 

Operating profit % of sales

 

27.9

%

 

 

28.4

%

 

 

26.8

%

 

 

27.8

%

Net income (2)

$

135,610

 

 

$

144,478

 

 

$

378,315

 

 

$

408,255

 

Diluted earnings per share (3)

$

2.35

 

 

$

2.49

 

 

$

6.56

 

 

$

6.99

 

   

(1) Adjusted operating profit is defined as operating profit plus certain adjustments, such as severance, fees and non-cash inventory charges related to acquisitions. Adjusted operating profit as a percentage of sales is defined as adjusted operating profit divided by sales.

(2) Adjusted net income is defined as net income plus tax effected adjustments and other discrete tax items.

(3) Adjusted earnings per share is defined as GAAP EPS adjusted for tax effected adjustments and other discrete tax items.

Management uses these non-GAAP measures internally to make strategic decisions, forecast future results, and evaluate the Company's current performance. Given management's use of these non-GAAP measures, the Company believes these measures are important to investors in understanding the Company's current and future operating results as seen through the eyes of management. In addition, management believes these non-GAAP measures are useful to investors in enabling them to better assess changes in the Company's core business across different time periods. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures to other companies' non-GAAP financial measures, even if they have similar names. Amounts may not add due to rounding.

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