As a reminder, this call will be recorded. I would now like to introduce your host for today's conference, Lara Mahoney. Please go ahead.
Thank you. Good morning. This is Lara Mahoney, Vice President of Corporate Communications and Investor Relations. I'm here with Mike Hilton, our President and CEO, and Greg Thaxton, Executive Vice President and CFO. We welcome you to our conference call today, Thursday, February 21st, 2019, to report Nordson's fiscal year 2019 first quarter results. Our conference call is being broadcast live on our webpage at nordson.com/investors, and will be available there for 14 days. There will be a telephone replay of the conference call available until March 7th, 2019, which can be accessed by dialing 404-537-3406. You will need to reference ID number 707-8765. During this conference call, forward-looking statements may be made regarding our future performance based upon 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 on the quarter, we will be happy to take your questions. With that, I'll turn the call over to Mike.
Good morning, everyone. Thank you for joining Nordson's 2019 fiscal first quarter conference call. We entered this year knowing we were facing a challenging comparison against 2018's outstanding first quarter performance, where we achieved organic sales growth of 19%. 2019's first quarter performance was in line with our expectations for the quarter and consistent with a typical seasonal pattern of sequential quarterly sales growth. Spending to support our business, selling and administrative expenses, does not vary significantly from quarter to quarter. Therefore, segment operating margins in the first quarter were impacted as expected by the lower sales volume. We expect sales each quarter to improve in line with our historic seasonality, allowing us to achieve our previously announced fiscal 2019 sales growth and margin guidance.
During the quarter, we delivered on various continuous improvement initiatives, including further integration of operations into our North American Shared Service Center and our adhesive facility consolidation within Europe and the U.S. In addition, during the quarter, we continued to execute our capital allocation strategy by investing $102 million for the repurchase of approximately 856,000 shares and we distributed $20 million in dividends. I'll speak more about our fiscal 2019 annual guidance in a few moments. First, I'll turn the call over to Greg to provide more detailed perspective on the quarter.
Thank you, Mike, and good morning to everyone. First quarter sales decreased 10% compared to the prior year's first quarter. This change in sales included a decrease of 9% organic volume, growth related to the first year effect of acquisitions of 1%, and a decrease of 2% related to the unfavorable effects of currency translation as compared to the prior year's first quarter. The first quarter's acquisitive growth includes the fiscal 2018 acquisition of Clada Medical Devices and 2 months of the fiscal 2018 acquisition of Sonoscan. As Mike noted, our first quarter performance was largely in line with our expectations as we were up against an exceptional prior year first quarter.
Within the Adhesive Dispensing Systems segment, sales decreased approximately 4% compared to the prior year's first quarter, inclusive of a decrease in organic volume of approximately 2% and a decrease of approximately 3% related to the unfavorable effects of currency translation as compared to the prior year. We did deliver organic growth in most product lines. However, this segment's performance was offset by nonwoven product line sales where system sales tend to be larger dollar and order patterns can be sporadic depending upon new OEM lines or customer line upgrades. As noted, we are up against very challenging comparisons within the Advanced Technology Systems segment, where prior year first quarter organic sales volume increased 50%.
In the current year, first quarter sales decreased approximately 14% compared to the prior year's first quarter inclusive of a decrease in organic volume of approximately 15%, an increase of approximately 2% related to the first year effect of acquisitions, and a decrease of approximately 1% related to the unfavorable effects of currency translation as compared to the prior year. Double-digit growth within the fluid management product lines and solid growth within test and inspection product lines was offset largely by the difficult comparison for the dispensing product lines associated with electronics end markets. Industrial Coating Systems segment sales decreased approximately 10% compared to the prior year's first quarter, inclusive of a decrease in organic volume of approximately 9% and a decrease of approximately 2% related to the unfavorable effects of currency translation as compared to the prior year.
Softer demand for cold material product lines associated with automotive end markets had the largest impact as compared to the prior year. Like other larger dollar system sales, demand can be lumpy for product lines within this segment. Moving down the income statement. Gross margin for the total company was 54% in the quarter. Operating profit was $84 million with reported operating margin of 17%. Regarding the adhesive facility consolidation initiative that we have talked about in previous quarters, we incurred approximately $1 million of duplicate costs during the quarter. We do not expect duplicate costs to be material for the remainder of the fiscal year. In addition, we incurred restructuring charges of approximately $1.5 million during the quarter with most of this cost related to the adhesive facility consolidation initiative.
As Mike noted earlier, operating margin for each of the segments was negatively impacted by lower sales volume in the quarter. We expect this year's performance to play out in line with historical seasonal patterns, where incremental sales generate significant margin leverage. On a total company basis, net income for the quarter was $49 million, and GAAP diluted earnings per share were $0.83 inclusive of approximately $0.09 per share of charges related to one-time items. These one-time items include non-recurring restructuring charges of $0.02 per share. Additionally, a net discrete tax charge of approximately $4 million, or $0.07 per diluted share, was recognized in the quarter, primarily related to the U.S. federal income tax reform legislation.
We delivered first quarter EBITDA of $108 million or 22% of sales, inclusive of the $1.5 million of restructuring charges and approximately $1 million of duplicate costs associated with the adhesive facility consolidation. Free cash flow before dividends during the quarter was $43 million, or 89% of net income. This cash conversion ratio is typical for a first quarter. Our press release includes financial exhibits reconciling net income to free cash flow before dividends and adjusted free cash flow before dividends, as well as EBITDA and adjusted EBITDA. From a balance sheet perspective, net debt to EBITDA was approximately 2.3x trailing 12 months EBITDA at the end of the first quarter, where we maintain adequate capacity for strategic priorities. I'll now turn the call back over to Mike for a few closing comments.
Thank you, Greg. As I mentioned earlier, our first quarter was in line with our expectations, where sales are typically the softest. Our spending is generally consistent from quarter- to- quarter, though we typically see an increase in the first quarter due to compensation increases. We expect to increase sales volume sequentially as the year progresses, and we remain committed to our annual organic sales guidance, growth guidance of 3%-5% for fiscal 2019, with forecasted unfavorable currency effects of 2%. While we continue to monitor macroeconomic challenges and the ongoing trade discussions, our customer conversations are encouraging. The strength of our diverse end markets and our ability to execute on our growth initiatives across emerging markets, product innovation, new application, and tiering give us confidence in our target.
The team also remains committed to achieving the operational improvements that support our previously announced operating and EBITDA margin enhancement target of 100-150 basis points over the fiscal 2018 performance. As always, thank you to our customers, employees and shareholders for your continued support. With that, we pause and take your questions.
Thank you. Ladies and gentlemen, if you have a question at this time, please press the star and the one key on your touch tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. To prevent any background noise, would you please place your line on mute once your question has been stated. Our first question comes from Allison Poliniak with Wells Fargo. Your line is now open.
Good morning, guys.
Morning, Allison.
Morning.
Just wanna go back to Adhesive Dispensing. You talked about some project volatility there. Is it your sense this is just seasonality, or does it feel like there's something bigger with all the trade and macro concerns out there? Any thoughts?
Yeah, I'd say it's just typical, maybe not even seasonality, but just order patterns can vary year to year, particularly when you think of nonwovens or larger systems orders within that part of our core adhesives business. You know, when we look at it, our product assembly, our packaging, and our polymer businesses were up, and that one happened to be down, and that tends to be lumpy. So I wouldn't say it's necessarily seasonality, it's just a function of order patterns for our customers. I wouldn't say it's related to any sort of larger macroeconomic trend.
Okay, great. You know, kind of similarly with the, you know, the technology piece, particularly with electronics, obviously a really tough comparison. You know, as you think about how the year progresses, you know, conversations relative to last year in terms of projects, are we still on a similar level there?
We have good ongoing discussions. As you know, we have development projects with a lot of our customers on the electronics side of things. You know, we're getting to the point where, you know, in the next month or two, we'll see whether those projects turn into, you know, real opportunities this year. It's kind of the timeframe where customers make those decisions. You know, I'd say, as we've talked in the past, we're seeing nice growth in things like the electronics area. You know, the thing that's been the swing factor has been the mobile piece, and that's still not clear yet what this year looks like. If you look outside the electronics business within that segment.
You know, we had a really strong first quarter in both our traditional EFD business and a very, very strong quarter in our medical business. We expect that to continue as we go throughout the year.
Great. Thank you.
Thank you. Our next question comes from Charley Brady with SunTrust Robinson. Your line is now open.
Hey, thanks. Good morning.
Morning, Charley.
Hey, Mike, on that last point on medical, do you quantify how strong medical was in the quarter?
Well, you know, we expected that business to grow on a long-term basis, high single digits, low double digits, and it did that and a little bit more in the quarter.
Okay. Good. Then I guess just, you know, if I look, I know you guys have split the orders any longer, but, you know, sort of our back of the envelope calc looks like orders in the quarter were down about 2% on a maybe a 25% tough comp. Can you give any commentary and color? I suspect a lot of that was due to on the ATS side. In order patterns or what you're seeing going into the current quarter, is anything really, you know, as things flip around, particularly on the lumpiness of the nonwoven stuff?
Yeah, I would say for most businesses, we saw year-on-year order increases, you know, overall, probably in the sort of low single digits kind of rates. You know, our backlog is up 9%, but not all that's gonna get delivered in the quarter. I'd say we're generally encouraged by what we see and being consistent with the overall guidance that we provided. As you know, the system orders can be lumpy, you know, not only in things like, you know, nonwovens, but also in some of our industrial coatings businesses, and, you know, so that could vary quarter to quarter, but overall, we don't see anything that's inconsistent with what we think the overall top line should be for the year.
Okay. Just to get one more from me. On the comments about the automotive sector being a little bit weaker, is that a function of just what we're seeing in North American auto market in terms of auto sales? Or is it just broader overall CapEx going into the plants themselves?
Well, I would say, you know, certainly what you've seen in North America is kind of a slowdown. I'd say even around the world, you've not seen significant growth on the auto side. You know, I think, you know, China in particular is probably a little bit flatter than it may have been over the last couple of years. I'd say it's a sort of a global sort of auto story, not necessarily a global investment story.
Sure. Thanks.
Thank you. Our next question comes from Chris Dankert with Longbow Research. Your line is now open.
Hey. Morning, guys.
Morning.
Morning, Chris.
Looking at the guide, you know, you guys reiterated that today, kind of assumes we get back to double-digit growth in ATS organically kind of through the rest of the year. Could you kind of walk us through kind of what gives you confidence, what the key drivers are there, some of the new applications maybe, automotive? Just kind of walk through what really gives you confidence in that guide in ATS.
Well, I think if you look at the total segment, you know, over half the segment now is non-electronic. You know, a significant portion of that is medical, which is growing very substantially. Even the general industries piece has grown nicely, and we expect that to continue to grow. Within electronics even though I made the comment just previously about auto electronics or about autos the auto electronics piece is growing nicely. If you saw the comments that Greg made around our test and inspection business, which hits a broader market in the electronics business compared to just the mobile segment, you know, that was up nicely as well.
We're seeing some good opportunities that come from our diversification effort in the electronics and in the segment in general, our broader diversification into medical. We feel pretty good about the pace of business that we see here. As I just said to Allison, the sort of development work on the mobile piece is not as clear, but that's typically where we are this time of the year.
Got it. That's helpful. I guess, given some of the headwinds we saw in the first quarter, is the target for the year still to get to that, you know, 30% margin, within the Adhesive Dispensing that ADS chunk of it?
I think as I said last quarter, we think ultimately we can get to 30%. We didn't really commit that we'd get there this year because I think we needed to complete the restructuring efforts that we're talking about and then ramp up the business and improve the efficiency on the polymer side. I think ultimately that's our goal to get there. I'm not committing that we're gonna get there this year.
Got it. Thanks. I'll hop back in queue.
Thank you.
Thank you. Our next question comes from Matt Summerville with D.A. Davidson. Your line is now open.
Thanks. Just a question on, I guess, Mike. Do you have a line of sight? I heard your prepared remarks, but do you have a line of sight at this point at all towards whether or not you think mobile innovation will be more of an on year in fiscal 2019 versus what was maybe a little bit more of an off year in fiscal 2018? Can you put the context in as to sort of what's embedded in the 3%-5% organic guide for the year? Is it more of an on year or more of an off year, if you will?
Yeah. What I would say, if you recall on some of the last conversations we talked about what would be sort of the next more significant driver in the mobile business, you know, we talked about things like 5G. You know, in our mind, 5G is something that people are looking at this year, but probably won't see a broader implementation till next year, and that's kind of what we plan for. Not a significant step up that's associated with 5G. As far as other innovations that customers are working on, there are a number of things they're working on. We don't have a clear line of sight to which ones they're gonna implement into sort of mass production for the next set of mobile opportunities.
That's why we continue to diversify across semi and across the auto electronics piece and generally across our test and inspection business as well. We've you know been pretty successful in tiering to capture some of the other parts of the market. I'd say it's not as clear yet on what degree of innovation our customers are gonna see this year. There's announcements starting to come out, but it's really not clear yet in terms of what's gonna go to mass production.
Then just a, as a follow-up, across any of your businesses at this point, have you seen delays or deferrals in customer capitalization decisions, particularly in Asia, due to either, you know, weak local demand in China or just due to the general trade uncertainty out there?
I would say we haven't seen any kind of significant order cancellations or anything like that. I'd say there is some concern with regard to trade, particularly the trade discussions with China. I would say that's top of mind for a lot of our customers. That said, you know, the most recent news is encouraging. We'll see how that plays out. I'd say we haven't seen anything significantly canceled, but I'd say there is a concern both in the U.S. and China on that. To this point, it's not having a big impact on customer decisions.
Got it. Just to follow up on medical, you indicated to answering another question, that that business is sort of growing organically above what you would otherwise normally expect. Can you talk about perhaps what's driving that? Is it market share related? Is it expanding that business internationally? Can you just provide some more granularity on medical?
Yeah. It's really around kind of the heart of what drives all of our business, which is innovation. There's a lot of new products that are coming out in concert with new product introductions of our customers. Across most of the businesses, particularly the catheter businesses, the cannula and catheter businesses, we're seeing significant launches of new products to support customer growth, and there's a continued, you know, pipeline of innovation there. As we've, you know, made the number of acquisitions we've made, we've expanded our product portfolio, which is giving us more access to customers as they look to have a more complete soup to nuts shop support them. We're certainly seeing the benefit of that.
I'd say it's around innovation, ours and customers, and it's around broadening that product portfolio and being able to take advantage of more opportunities.
Thanks, Mike.
Thanks, Matt.
Thank you. Our next question comes from Christopher Glynn with Oppenheimer. Your line is now open.
Thank you. Good morning.
Good morning.
Nice to see that, diversification reading through with electronics. I did have a question on coatings actually. In terms of the automotive exposure there, some companies are talking about revived new platform launches in the industry after a slower 2018, you know, independent of production. Just wondering if you concur and to what degree that's a driver of your coatings, automotive business.
Yeah. I would say to this point, that hasn't translated into significant systems orders. I know there's a fair bit of discussion on that, but I'd say at this point, it has not translated into significant orders. Now, just to keep in mind, this first quarter, particularly for a lot of the coatings customers is this timeframe where sort of the end of January, they're finalizing all their capital plans, so it's not atypical for us to not see anything launched yet because they typically are calendar year and finalize those plans between then and January.
That does play to how you serve those markets.
Yes.
Okay, great. Overall, you know, you commented on the first quarter was in line with your view of the year. Obviously our sell-side models were uniformly didn't quite capture the seasonal deleverage all that well. Just wondering if any fine point considerations on how we view the split of the first half and second half and really any wisdom on how the second quarter bridges to the full year, given that we kind of didn't quite manage all that well the first quarter with the change from quarterly to annual guidance.
Yeah. I would say that, just a couple things. First of all, I think the one thing, I'll get to the top-line comment in a minute, but the one thing that just to think through is, knowing that we have sort of a seasonal business, our sort of sales administrative costs don't typically vary tremendously throughout the year. So that's, you know, maybe it varies a few million quarter to quarter. Maybe it's a little higher ultimately in the end of the year depending on how the year plays out. But it doesn't typically vary that much which is great when we look at incremental volume and the incremental margins are going up. Obviously if the volume's gone down, unfortunately, then we see that as well.
I would say that's one thing to focus in on. Now on the top line, we would expect the second half of the year to be stronger than the first half. Obviously, the first quarter is down, but we would expect to see seasonal growth in the second half of the year that would be stronger than we see in the first half. You know, our backlog, as I said earlier, is up 9%, but all that's not gonna go out in the quarter. This, you know, we expect to see improvement in the second quarter but more improvement in the second half of the year.
Got it. Thank you.
Thank you. Our next question comes from Matt Trusz with G abelli Research. You r line is open.
Good morning. Thank you for taking my question.
Good morning.
Within the mobile phone exposure, can you get a little more granular about what changes trigger a customer need for new Nordson equipment? For example, with waterproofing or 5G, there's a new hardware feature or a fundamental change to form factor requires new gear. When we're thinking about iterative type of model updates, does that really require much new Nordson equipment?
If you think about the things that drive it's change in general. It could be shape factor. There, it could be something like making it thinner or expanding battery size, which squeezes everything else. That's been a benefit in the past. It could be features, you know, things like you know, the thumbprint recognition or any other type of sensing technology. Or it could be process changes. Waterproofing would fall into a process change. You know, with 5G, the reason that we point to that is that you'll need more antennas within the phone and as a result of that, you're gonna have less space.
as I said earlier, we don't really expect that to be a significant change until 2020. It could be all of those things, including process changes in the way our customers manufacture the phones. We have a variety of different things that we're working on there.
Matt, this is Greg. What I'd add to that is oftentimes when we see a new feature finding its way into these devices, we get the added benefit of we're often working at the module level with those suppliers, either with our dispensing equipment or our inspection equipment, and then working at the assembly level where the module gets integrated into the device.
That said, you know, one of the things we continue to try to do is, as I mentioned earlier, diversify across different applications, whether it's in the semi side, whether it's on the auto side, whether it's in the electric battery, batteries for electric car space. We're trying to diversify so we're not as dependent there on the mobile phone space.
That's very interesting. Thank you. I'm wondering overall how you would characterize your general level of business confidence and your sense of customer's confidence, and whether your answer today would be any different than it would have been two quarters ago. Thank you.
Yeah, I would say it's pretty consistent. I think, as we talked last quarter, we expected global growth this year to be a little less than global growth last year. I'd say we're still seeing that as consistent. I'd say to play out with our expectations. I mean, I think somebody asked earlier about trade. That's sort of the one wild card that's out there. If there was a significant trade war, well, then that would have some more implications. If the trade issues, particularly with China, get resolved in a positive manner, we could see some uptick there. I'd say our view of the macro environment is where we thought it was gonna be at, sort of the tail end of last year with growth globally but slower.
That's, I think, what we see today as well.
Thank you.
Thank you. Our next question comes from Walter Liptak with Seaport Global. Your line is now open.
Hi. Thanks. Good morning.
Morning, Walt.
I wanted to ask, try one on a geographic basis. You know, the Japan market's down, and I just wonder if you could, you know, if you could talk a little bit about the sectors that led to the decline in Japan and kind of visibility, what would be the expectation? Because I think the comps get a little bit easier as you go on throughout the year.
Yeah. If you look at Japan, it's all year-over-year comparisons, Walt, and it was largely the significant electronics orders that we got in the fourth quarter of 2017 that came in. It also came into the first quarter of 2018. That happened to be through a Japanese supplier, although the end customers for those products were across the portfolio of mobile as well as some other opportunities. That really explains what's going on in Japan year-over-year. I'd say the first quarter in Japan is more typical than we expect in Japan as compared to last year. Wouldn't read anything more into that other than just what I said.
Now, I think we have said at the beginning of the year that we expect Europe and Japan to grow this year, but slower than they did last year, and that's still our expectation.
Okay. Okay, good. Yeah, that was the next question, just doing the same thing in Europe. I mean, we've heard about, you know, European auto slowing, Germany. I wonder, you know, what the visibility was like in Europe and kind of the expectations. You know, those comps, I think, stay a little bit more difficult throughout the year. What are your thoughts on some of the systems businesses in Europe?
Yeah, I would say it kind of lines up with the economy in terms of, you know, just a slower growth year. I mean, you see it in Germany, you see it in France. It's gonna be a slower growth year. You know, we'll see if Brexit has any particular impact. We don't expect it to have a big impact for us. But I think in general, it's affecting the economies. You know, we talked earlier about nonwovens. One of the big nonwovens OEMs happens to be located in Europe, so you could see some impact there depending on how that project level comes back throughout the year. But certainly, that's had some impact.
Okay. Considering some of these international, you know, slowdown issues, when we think about the self-help that you're doing for this year and the margin improvement, what are the factors that, you know, provide that range of operating margin improvement? You know, what does it take to get to the high end of that range, and what kind of assumptions go into the low end?
Yeah, well, first of all, I think, you know, we've talked about, you know, the restructuring efforts we had underway in, the polymer part of our adhesives business. We're essentially through that in this quarter, and we'll start to see some improvement as we go through the year. We also had some investment in setting up our customer service or shared service center activity in the U.S. that'll go away. There's some both expense that goes away and some benefit we'll see from finishing those projects. You know, we've got a number of things that we're driving on our continuous improvement activities through Nordson Business System that we think will help from the overall cost side.
We do expect the volume to come in at the levels that we've talked about, and we'll get the volume leverage on that. Those are the major factors that would drive the margin improvement that we're looking for.
Okay.
Well, this is Greg. I guess one way that I've characterized it is to say there's no one big aspect of this initiative that's gonna deliver the bulk of it. It's gonna be, you know, as we see across most of our areas, it's a lot of, you know, singles and doubles that add up to generate this kind of improvement.
Okay, it sounds like the swing factor here is the volume leverage. A number of these things are within your control. Where's the revenue coming to get leverage off of the top?
I mean, you know our incremental margins are pretty high. Even with you know, sort of the 3%-5% kind of growth targets we talked about, there's pretty good leverage on that, so you're correct.
Some of those comments that Mike made kind of go hand in hand with the volume. The point here is as we grow that top line, we believe we're gonna do it in a more efficient way because of some of these structural changes that we've made.
Okay. Okay, great. Thank you, guys.
Thank you. Our next question comes from Jason Rodgers with Great Lakes Review. Your line is now open.
Yes, morning.
Good morning.
Morning.
Just wondering if you could talk a little bit more about the growth expectations by segment to reach your full year guidance? Does the guidance assume that you're gonna realize some of these large system orders in Nonwovens and ADS? Looking at the ATS segment, given that the mobile side possibly may not see robust growth until next year and then some slower growth regionally, I'm just looking for some more detail on areas of growth in addition to medical in that segment that can get you to the levels that you need to reach that 3-5-year full year growth guidance.
What I would say is a couple things. One, we do expect all of our segments to grow this year. Two, within those segments, we probably have 25-30 different product lines. In any one year, we're not gonna have 100% of them grow, and we don't necessarily count on 100% of them growing. But as we look at the various drivers across each of the businesses, we feel confident enough in the things that we're doing with innovation, with new applications and products, and taking advantage through our tiering structure of new markets that we're gonna be able to generate that kind of growth that we've put out there.
I think all segments we would expect to grow, but not necessarily all product lines, but that's typical of any year that we have.
Okay. Looking at the share repurchase, you stepped that up in the quarter. Wanted to get your thoughts on future repurchases.
Yeah. Well, let me start sort of the high level. Our capital allocation priorities haven't changed. You know, it's to support the organic growth of the business. It's to continue our dividend string. It's to look to add to our portfolio with appropriate acquisitions, and it's really then to be more opportunistic on the share repurchase, and that's what we've done in this past quarter in particular, is being opportunistic around the share repurchase. At the end of the day, that's still our priorities. We feel like, as Greg mentioned, that we've got capacity to acquire some additional businesses. We've got a pipeline that we're working, but you never can tell when those things are going to come to market.
We maintain these priorities to appropriately allocate the capital for the greatest benefit to the company and our shareholders.
I'd add that in terms of part of that share buyback of, you know, part of our baseline strategy is to offset the dilutive effect of benefit plans. We've been able to accomplish that with this activity.
Okay, thank you.
Thank you.
Thank you. Again, ladies and gentlemen, if you have a question at this time, please press the star and the one key on your touchtone telephone. Our next question comes from Jeff Hammond with KeyBanc Capital Markets. Your line is open.
Hey, Good morning, guys.
Hey, Jeff.
Hey, just wanna come back to the areas where you're seeing lumpiness, I guess the nonwovens and then the pieces of coatings. Can you just talk about what you saw in terms of order activity and quoting that kinda gives you confidence you'll get, you know, maybe some good lumpiness back as you move through the year? Thanks.
Yeah. What I would say is, you know, we've got activities going across all of those businesses and product lines around the globe. We just can't necessarily predict when customers are gonna place orders. I would say on the auto side, it's been softer for a while, and so we're not necessarily counting on that to step up in a big way. We have our normal run rate business that comes from our installed base there in the parts and consumables and smaller projects. I'm not sure that we're betting on significant large platforms to come through in the year.
I'd say on the nonwovens, we've had really strong years over the last 3 or 4 years, and we'll continue to have some opportunities here this year, but it's kinda hard to place the timing on those things because they tend also to be shorter delivery type projects as well.
Okay. Just to come back on that.
What's important.
Okay.
Let me just add. What's important is that we've, as I mentioned earlier, we've got a lot of different product lines going into a lot of different markets and applications. If one is a little softer, we expect some others to pick up and we've highlighted a few so far.
Okay, great. Just kinda back on the cadence question. You know, as we head into 2Q, do you find 2Q kinda at least kinda falls into the range of the full-year kinda growth guidance?
Yeah. What we said is we expect, you know, sequentially for things to pick up and the second half to be stronger than the first half and some improvement in the second quarter. Yes, we'd expect some positive improvement in the second quarter. But as I commented earlier, with our backlog up 9%, we don't necessarily expect that to translate into the quarter.
Okay. Thanks, guys.
Thank you.
Thank you. That does conclude today's question- and- answer session. I would now like to turn the call back to Mike Hilton for any further remarks.
Just a thank you to all those who have participated today and continue to support Nordson. Thank you to our global team for continuing to delight our customers.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.