A reminder, this conference is being recorded. I would now like to hand the floor over to Jim Jaye, Senior Director of Investor Relations. Please go ahead, sir.
Thank you, Karen. I'm here with Michael F. Hilton, our President and CEO, and Gregory A. Thaxton, our Senior Vice President and CFO. We welcome you to our conference call today, Tuesday, May 23, 2017, to report Nordson's FY 2017 second quarter results and our FY 2017 third quarter outlook. 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 our conference call available until May 30, 2017. It can be accessed by dialing 404-537-3406. You will need to reference ID number 16097170.
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 on the quarter, we'll be happy to take your questions. With that, I'll turn the call over to Mike.
Thank you, Jim. Good morning, everyone. It was another very strong quarter for Nordson, including what was a record first half sales and earnings per share performance for the company. Including the effects of the Vention acquisition closed during the quarter, not included in our quarterly guidance, we exceeded the high end of our second quarter revenue expectations and operating margins improved by 1 percentage point when compared to the prior year. These results speak to the strong underlying performance we're seeing across the business, and our focus continues to improve. Overall, we generated 9% organic sales growth, which is in comparison to a very robust prior period growth a year ago. All segments and geographies contributed to the current quarter organic growth. Acquisitions added another 6% growth to the top line. We're very pleased with how all of our new businesses are performing so far.
Total revenue was a record for the second quarter. Diluted earnings per share in the quarter was impacted by one-time charges largely related to Vention acquisition. Adjusted diluted EPS increased by 13% compared to the second quarter a year ago. On a fiscal year-to-date basis, EBITDA, free cash flow before dividends increased by 13% compared to the same period last year, inclusive of transaction costs from acquisitions. Our base businesses are strong, our acquisitions are adding to our profitable growth opportunities, and our global team is executing across the enterprise.
Looking ahead, we're forecasting continued strength with record third quarter performance. At the midpoint of our guidance, we're forecasting 8% organic growth, inclusive organic growth in all segments. This outlook is based on our current backlog, order rates, project activity, all of which are strong. I'll speak more about our outlook in a few minutes, but I'll first turn the call over to Greg to provide more detailed commentary on our current results and our third quarter guidance.
Thank you, Mike, and good morning to everyone. Second quarter sales were $496 million, an increase of 13% from the prior year's second quarter. This change in sales included a 9% increase in organic volume, a 6% increase related to the first year effect of acquisition, and a 2% decrease related to the unfavorable effects of currency translation compared to the prior year's second quarter. The organic growth exceeded the high end of our guidance, driven by the strength we're seeing across our base business. Organic sales volume in the Adhesive Dispensing segment increased 5% as compared to the prior year's second quarter. This is very solid growth and compares to a robust period a year ago, where organic growth was 9% for the quarter. Our Product Assembly, Packaging, and Polymer product lines drove the growth in the current quarter.
Asia Pacific and the Americas were strongest on a geographic basis. Sales volume in the Advanced Technology segment increased 34% from the prior year's second quarter, inclusive of 18% organic volume growth and 16% growth related to the first year effect of acquisition. This segment's growth is very impressive given the challenging comparisons of the prior year, where organic volume growth was 20% for the quarter. Nearly all product lines and geographies in this segment contributed to the current quarter organic growth, with most up by double digits. The segment's acquisitive growth includes the first year effect of the LinkTech, ACE, InterSelect, Plas-Pak, and Vention acquisition.
Organic sales volume in the Industrial Coating segment increased 3% compared to the second quarter a year ago. Container Coating and Liquid Painting product lines drove the growth, with the U.S., Japan, and Asia Pacific being the strongest geographies.
Gross margin for the total company in the second quarter was 56%, down slightly from the prior year's second quarter due to the impact of acquisitions and inclusive of $2.1 million of one-time charges for the step-up of acquired inventory. Operating profit in the quarter was $104 million, and reported operating margin was 21%. Excluding the effect of the Vention acquisition, which was not in our quarterly guidance, operating margin was 24% in the quarter, one percentage point higher than the prior year second quarter.
Within the Adhesive Dispensing segment, reported operating margin was 29% in the second quarter. Within the Advanced Technology segment, reported operating margin was 26% in the second quarter, an increase of 2 percentage points over the same period a year ago. Operating margin was 27% when excluding the short-term purchase accounting charges for the step-up in the value of acquired inventory.
Within the Industrial Coating segment, reported operating margin was 17% in the quarter. This is continued strong operating margin performance by all three segments and reflects our ongoing continuous improvement efforts. For the company, net income for the quarter was $65 million, and GAAP diluted earnings per share were $1.11. Adjusted EPS in the current quarter was $1.35, a 13% increase over the prior year adjusted diluted earnings per share. We have included an earnings per share reconciliation schedule in our press release to reconcile between GAAP earnings per share and adjusted earnings per share.
The second quarter's EBITDA was $123 million, cash flow from operations was $61 million, and free cash flow before dividends was $45 million. On a fiscal year-to-date basis, EBITDA increased 13% compared to the prior year to $217 million, and free cash flow before dividends increased 13% to $116 million, representing strong cash conversion of 101% of net income.
Adjusted EBITDA on a fiscal year-to-date basis increased 20%, and adjusted free cash flow before dividends increased 23% compared to the prior year, with both measures highlighting the strong cash generation of the overall business. We've included tables with our press release reconciling net income to EBITDA, adjusted EBITDA, free cash flow before dividends, and adjusted free cash flow before dividends.
From a balance sheet perspective, net debt -to -EBITDA at the end of the second quarter is 3x, including trailing twelve months of acquired EBITDA. This level is well below our most restricted debt covenants, leaving us with additional debt capacity. At the end of the quarter, we had approximately $362 million of combined cash and availability on a revolver. As we've demonstrated, our strong cash generation enables us to delever quickly, which is our intent in the near term.
I'll now move on to comments regarding our outlook for the third quarter of fiscal 2017. As we typically do, we provided our most recent order data, both on a segment and geographic basis, with our press release. These orders are for the latest twelve weeks as compared to the same twelve weeks of the prior year on a currency neutral basis, and with acquisitions included in both years.
For the twelve weeks ending May 14, 2017, order rates are up 13% as compared to the same twelve weeks in the prior year. Within the Adhesive Dispensing segment, the latest twelve-week orders are up 1% compared to the same period a year ago, where comparisons are challenging as order rates were up 7% at this time last year. Positive order rates in packaging and product assembly were offset by softness in other product lines. Geographically, orders were up in all regions except Europe.
In the Advanced Technology segment, order rates for the latest twelve weeks are up 30% as compared to the prior year. Nearly all product lines and geographies were up by double digits. These order rates reflect strong demand for automated and semi-automated dispensing systems and surface treatment systems related to mobile device and other electronics end markets and fluid management components for industrial and medical markets.
Within the Industrial Coating segment, the latest 12-week order rates are up 4%, with organic growth in most all product lines. Geographically, order strength in the U.S. and the Americas was offset by softness in other regions. Backlog at April 30th, 2017 was approximately $403 million, an increase of 37% compared to the prior year, and inclusive of 18% organic growth and 19% growth due to acquisition. Backlog amounts are calculated at April 30th, 2017 exchange rates.
Let me now turn to the outlook for the third quarter of fiscal 2017. We are forecasting sales to increase in the range of 15%-19% as compared to the third quarter a year ago. This growth includes organic volume growth of 6%-10%, 10% growth from the first year effect of acquisitions, and a negative currency effect of 1% based on the current exchange rate environment. At the midpoint of this outlook, we expect third quarter gross margin to be approximately 55% and operating margin to be approximately 24% or 25%, excluding estimated acquired inventory step-up charges and non-recurring restructuring charges associated primarily with our previously announced footprint consolidation initiative within our Adhesive Dispensing segment.
We're estimating third quarter interest expense of about $9 million. An effective tax rate of approximately 29%, resulting in third quarter forecasted GAAP diluted earnings per share in the range of $1.51-$1.65 per share, inclusive of approximately $0.07 per share or $6 million for intangible asset amortization charges related to our fiscal 2017 acquisitions, with most of this related to the Vention acquisition. A range of GAAP diluted earnings per share also includes one-time charges of approximately $0.03 per share for the footprint consolidation efforts within the Adhesive Dispensing segment, $0.02 per share for short-term purchase accounting related to the step-up in the value of acquired inventory, and a corporate charge of $0.01 per share for Vention acquisition transaction costs.
Third quarter EBITDA is expected to be approximately $164 million, an improvement of approximately 18% over the same period a year ago. With regards to the Vention acquisition, we expect both short-term inventory step-up charges and transaction costs to be mostly complete in our third quarter. For fiscal year 2017, we're forecasting Vention to deliver between $0.05 to $0.10 earnings per share, excluding transaction costs.
From a performance perspective, Vention will be accretive to Nordson's EBITDA margin beginning in the third quarter. From an operating margin perspective, we do not expect Vention to have a material impact on Nordson's overall operating margins once we are past third quarter one-time charges. For Nordson overall, we're forecasting a full-year effective tax rate of 29% based on current tax law and excluding discrete items.
For capital spending in 2017, we're forecasting normal maintenance capital spending to be approximately $50 million.
Thank you, Greg. I wanna thank our team for delivering another outstanding quarter. Revenue and earnings per share through the first half were Nordson records. Innovation, premier customer service, strategic acquisitions, and continuous improvement using the Nordson Business System are driving our performance. Although global growth is still expected to present a challenging backdrop, we're forecasting another strong quarter. With that, we'd be happy to take your questions.
Thank you. Ladies and gentlemen, if you have a question at this time, please press star followed by the one key on your telephone keypad. If your question has been answered, or if you'd like to remove your line from the queue, you may press the pound key. Again, if you do have a question, please press-
At what you're seeing-
Comes from the line of Rudy Hokanson with Barrington Research.
Thank you. Could you maybe talk about what you're seeing in the medical end markets since that's such a critical area, given your acquisitions right now? Does it seem to be an organic type of steady growth, or is there a particular push geographically? Just wondering if you could flesh it out a little bit more, and if there's anything else you can say in terms of, you know, getting to that level you've talked about of maybe $500 million in revenue.
Obviously, we just closed on a pretty large acquisition for us with the Vention acquisition, which doubles the size of our business in the medical space. If you look at the underlying demographics, you know, we're seeing more procedures. We're seeing the move to plastic. We're seeing more outsourcing. All of that is driving significant sort of top-line growth. The key to this, like many of our businesses, is around new products and innovation. In all of our businesses, we continue to introduce new products, and so across the board, that is helping.
In some of our businesses that were, you know, relatively local or North American focused, we've been able to globalize those. For example, in our Value Plastics business, we're seeing nice global growth there. We've been successful with our OEM customers in some strong new product wins. I'd say the things that we felt were gonna drive this business are exactly what we're seeing driving the business.
Okay, thank you. That was my primary question.
Thank you. Our next question comes from the line of Liam Burke with Wunderlich.
Thank you. Good morning, Mike. Good morning, Greg.
Morning.
Morning, Liam.
Mike, could you give us a little color on the polymer business? You mentioned in the prepared statements that the business delivered results. Are you through the restructuring, and are you seeing good order flow here?
I'd say within the quarter, we had nice sales growth across all the product lines. I'd say we're starting to see the film business come back. You know, some of the businesses are a little bit more lumpy, like our pelletizing business tend to be, you know, big project related. It was you know solid within the quarter. I'd say across the board, we're seeing improvement there.
As far as the restructuring, no, we're not done. We're in the process in the U.S. of consolidation in our core components business. We have our new facility in Austintown, Ohio, where we're just bringing in equipment as we speak. You know, that should be fully up and running and transitioned probably by the first calendar quarter of next year, where we're starting to bring in equipment, and we'll be doing that in stages. And then, we're also expanding our facility in Germany, the existing facility, as a consolidation move, and that's probably another year out. There's still work to be done there, but we're making good progress along the lines that we expected.
Great. Vention has now been integrated. You have a fair amount of liquidity. Does the acquisition pipeline continue to be strong, or how do you view that now?
Yeah, you know, we've had the Vention business for about a month, so I wouldn't say it's fully integrated. But I'd say the teams at Vention and Nordson Medical are doing an excellent job, focused, you know, particularly on our customers and making sure that we maximize our opportunities there. We're off to a good start. I would say, you know, there's still opportunities and probably the most robust area of opportunities are in the medical space. I would say also we have continued interest in the cold materials space. But I'd say probably the most robust area is probably in that medical space because the market across the different products is fairly fragmented. We're in a good spot.
Obviously, as Greg said, our primary focus right now is to reduce our debt level so that we're prepared for further opportunities in the future.
Great. Thank you, Mike.
Thank you. Our next question comes from the line of Matt Summerville with Alembic.
Thanks. Good morning, guys.
Morning, Matt.
In terms of incoming on order rates, it looks like Europe was down kind of in the low single-digit range in the quarter. Can you maybe comment on what drove that, and maybe if you can parse comments across your three reportable business segments?
Yeah. If you look at the order rates in Europe, I'd say really it's more a function of you know some tough comps. If I look at, for example, our core adhesives business, our Packaging and Product Assembly is doing well. Our Nonwovens is off a little bit, but that's a function of some large projects last year as some of our customers were converting to new form factors, for example, in diapers. I think it's really just a tough comp.
Underlying business is solid, and there's a lot of sort of OEMs located in Europe. I'd say ICS also a little softer given some larger auto orders last year, which again are more lumpy. I'd say there's nothing fundamentally going on there other than a little tougher comparisons there.
Is there a way to parse, Mike, the growth you're seeing in the advanced tech business, specifically on the electronic side between new platforms or new mobile devices being launched versus new processes such as moisture protection, hermetically sealing devices, et cetera? How much of the growth is being driven by, you know, those various buckets, if you will, new stuff being launched on the part of your customers versus new processes? Thank you.
What I would say is first, just a general comment on the electronics side. This year we're seeing pretty good backdrop across sort of all areas. Mobile is certainly strong, but auto electronics is strong. We're seeing a rebound in the semiconductor side. All of those things are contributing, you know, number one. If any of you look specifically at the mobile side of things, you've got sort of the entrenched global competitors who are, you know, have launched new products or are launching new products this year. You also, as we've talked about, the growth, significant growth of the sort of Chinese mobile suppliers that we're doing very well with, as well.
A lot of that is a function of our sort of tiered offering structure to support them. I'd say on the higher end, it's really the new products that we've offered, you know, not only on dispense but in test and inspection, and in select areas of surface treatment, allow our customers ultimately to lower their cost of ownership by getting more yield out the back end. Higher speed, more precise on the dispense, you know, better resolution, faster processing on the inspection. You know, there are some products that are related to things like waterproofing, but I would say that's probably not the primary driver here.
I'd say our new products are getting us traction, whether that's the high end or whether it's the tiered products with the customer base there, and we're taking advantage of all of the global growth we're seeing this year. It's broader than just the mobile side.
Just lastly, if you back out the acquisitions in ATS, what would your core incremental margin have been in the quarter, Greg?
If you back out all current year acquisitions?
Yes.
That may be something we have to get back to you on, or we might not have that at. It'd be good, i t'd be good, but might have to get back to you.
Obviously very strong. If we lifted those, you know, 200-300 basis points with some of the current year acquisitions in, it'd be even north of that.
Got it. Thanks, guys.
Thank you. Our next question comes from the line of Jeff Hammond with KeyBanc Capital Markets.
Hey, good morning, guys.
Morning, Jeff. Morning.
Hey, just back on electronics, can you just talk about the quoting funnel activity levels just as you start to enter this, you know, period of tougher comps in advanced tech?
Well, I'd say as you saw from our order rates going into the third quarter, they remain strong. You know, this business is very seasonal, though, so if you think about it, the development period tends to be our first quarter, early into the second quarter, and the strong order period tends to be second quarter through third quarter, maybe into fourth quarter.
We're in that peak period of time where we typically see the orders come in and project activity is high. You know, it tends to taper off in the fourth quarter because everybody is you know, getting ready for various model launches, et cetera, holiday season, et cetera. I'd say we're in that typical uptick period, and project activity is strong. Again, it tends to taper off in the fourth quarter.
Jeff, I'll just add a couple comments. You know, kind of tying on to some of the comments that Mike made previously, what's exciting about the opportunities here are the tiering opportunities as we're reaching a different tier of customer base and what impact that may have on order patterns and seasonality of order patterns. Also the traction we've made, as Mike mentioned, around the success with some new product launches and the opportunities that also provides. A typical seasonality would suggest that strength at this time of year, but also encouraged by the opportunity we have in these penetration of different customers with new products or different customers with our tiering opportunities.
Yeah, we've talked in the past about the sort of high-end dispense capability that we have, the precision on the dots, the speed. We've also launched a whole new product set of product lines in our test and inspection business that's getting really good traction. Some, like in our bond testing, which typically has been a back-end packaging environment, we're now pushing that into the tail end of the front end and getting some traction on much more sophisticated complex machines. You know, it's not carrying the day yet, but it's the kind of thing that's a leading indicator of broadening our product point.
Okay, great. Then adhesive sounds like the biggest issue there is really just tough comps. Any markets really stand out that you know feel on the softer side, or is it just really a tough comp issue?
Yeah, as I said earlier, if you look at sort of our core adhesives, the Packaging business has been very strong. Particularly given some of the headlines that have been out there around some of the consumer product companies, it's been, you know, very strong relative to that. Our Product Assembly that goes into a lot of different applications has been strong. You know, Nonwovens has been solid, but has a you know, challenge of comparables year-over-year. I'd say, you know, our, as I mentioned earlier, our Pelletizing business tends to be lumpy with bigger projects. In the current order set, it's a little soft, but the project activity is solid.
You know, I feel pretty good about the underlying pace of the business, and maybe a little surprised on the upside, how solid the packaging is given, you know, what might be some softer consumer numbers out there.
Okay. Thanks, guys.
Thank you. Our next question comes from the line of Charley Brady with SunTrust Robinson Humphrey.
Hey, thanks. Good morning, guys.
Morning, Charley.
Morning, Charley.
I wanted to ask you about, you know, you've had this margin target out there, off of 2015 margin of, you know, 200 basis points, I guess, by the end of this fiscal year. I'm just really trying to square that up. I mean, I guess you didn't obviously update that yet. We're still, you know, only halfway through. I'm just wondering, as you look at these acquisitions, you know, a lot of them obviously here in the medical space, which, you know, tend to carry pretty good margins, and obviously there's room for you guys to squeeze more out of that. H ave you given any thought as to kind of what your longer term target beyond this initial target you put out there might be as to where longer term margins can go?
Yeah. Charley, just a couple of comments. As far as our 200-point target, we made great progress last year as we mentioned at our year-end call, and we're essentially there in terms of the 200-point improvement. You know, obviously, there's a lot of noise in the numbers given all the acquisitions we've been making recently, but we're essentially there. We're not gonna stop. There's opportunities to continue to drive improvement. I'd say we're probably not ready to talk about a longer range target, but we're not gonna stop with this improvement effort. As I mentioned earlier, we're still working through the polymer consolidation. That'll yield some benefits in 2018, so we'll see some additional improvement there.
Not necessarily coming out with long range target because there's a lot of noise in the short term. Quite frankly, one of the reasons we put the EBITDA information out there is that things can get a little confusing in the near term, but the cash generation from the businesses both the organic and acquired is really a critical focus, I think, going forward, so we wanted to put that additional information out there.
Yeah, no, appreciate the added incremental information. Just back on the China comments, and you answered part of it, but I'm just wondering, I think, China was approaching 50% of Advanced Technology Solutions sales. Have we hit that 50% mark yet or are we still approaching that? That's obviously driven by the China mobile phone market.
Well, certainly China is, you know, a strong part of the business because you have a lot of the final assemblers are in China. When you look at the extended supply chain for the electronics business, a lot of the components are not necessarily made in China. If you think about camera modules and speakers and microphones and gyroscopes and all that stuff, there's an extended supply chain that's not necessarily in China. I'd say overall, you know, probably two-thirds of the electronics business is still in Asia. In the short term, it might be a little higher than that, but I wouldn't say China is 50% of that given the broader supply chain.
Yeah, I would add, Charlie, some of the new product introductions, particularly in the T&I space, are taking us to a customer base that also still resides in Asia, but not specific to China. China is still, as Mike mentioned, a big part, but I wouldn't suggest that it's greater than 50%.
Great. Thanks, guys.
Thank you. Our next question comes from the line of Walter Liptak with Seaport Global.
Hi, guys. Thanks. Morning, and great quarter.
Thanks, Walt. Good morning.
I wanted to do a follow-up on, you know, what you alluded to earlier from one of the questions regarding the growth rates. I wonder if the Vention business, if that's, you know, what the growth rate was of that this quarter, and is that in your 12-week order rates?
Walt, this is Greg. It is included from an organic perspective in our 12-week order rates. We don't break that particular line of business out specifically. In our most recent order rates, we would look at the current year for Vention as well as the prior year, and that would find its way into that organic number, as well as then it's gonna be in the acquisitive growth in our third quarter guidance.
As a general comment, Walt, when you look at the medical business, we have expectations of, you know, high single-digit, low double-digit kinda growth rates, and that's what we've seen historically, and that's what we expect from the kind of businesses that we have.
Okay. Fair enough. Wanted to ask about corporate expenses and where, you know, if you can give us an idea of 2017 corporate expenses, and I don't know if there's a GAAP, non-GAAP number, but that would be helpful too. Thank you.
Yeah. Okay. Walt, it's Greg again. In the current quarter, the second quarter, in that corporate managed number, you've got the transaction costs associated with Vention, so that's where you see the step up. We'll have a minor amount in Q3 that'll also show up in that corporate number. For modeling purposes, I'd expect that to trend back closer to what the run rate had been, call it in that $10 million-$12 million per quarter range.
Okay. Great. Thank you.
Thank you. Our next question comes from the line of Allison Poliniak-Cusic from Wells Fargo.
Hi, guys. Good morning.
Morning, Allison.
Morning.
Margins obviously very strong, but, you know, when I look at our expectations, the incrementals and the investment-
Hey, Allison, we're having a little trouble hearing you. Maybe you're not close to the mic.
Is that better?
Not really.
Not much.
All right. I'll try to yell. Sorry. Incrementals in Industrial Coating seem a bit lighter than expected, from our end. I'm assuming it's mix. Any color that you can provide there?
Yeah, listen, it's Greg. It's primarily mix of the product lines within Industrial Coating.
Are we assuming that's sort of the same level of impact in Q3, just given your orders that have come in?
Well, again, it's gonna depend upon what the mix of those orders for the balance of the quarter. It's not only what sits in backlog, but what comes in during the quarter. You know, the issue being, for example, our gross margin by product line, whether it's a powder engineered system, or a liquid kinda standard system, container standard system, have different margins, as well as then the spare parts gross margin. Really depends on the composition of the systems and sales as well as the composition of parts to systems.
Nothing fundamentally going on with the margins in that business.
Perfect. Thank you, guys.
Thank you. Our next question comes from the line of Matthew Trusz from Gabelli & Company.
Good morning. Thank you for taking my question.
Good morning.
We talked about medical, talked about electronics. Could you also provide some color on what you're seeing in your industrial markets and what your sense is of the industrial economy more broadly?
Yeah. If I just a couple of comments. You know, a lot of our business goes into consumer nondurables. It's still probably about 40-some% of our business. You know, indicators of how that business is doing is around, say, our Packaging business, and that's been strong, as I mentioned earlier. When you look at our Product Assembly business in the adhesives side of things, that's a lot of that could be construction related, windows, flooring, that kind of thing, that's been solid as well. There's also some electronics in that business. When you look at our Industrial Coatings business, you know, the automobile sector has been strong for a number of years.
That sort of feels like it's plateaued a little bit and maybe fewer platform orders coming through this year. Our powder coating business goes to a lot of and liquid coating to a lot of general assembly general machining kinds of applications, and that's been solid. Our container business is more niche-y, again, back to the consumer product side. I'd say, you know, generally we're seeing a solid market from investment. You know, maybe the one area that's slowing down a little bit would be the auto sector from a platform standpoint.
Thank you. Looking at the margin strength in ADS at 29% in the quarter, could you speak to the role of product mix versus specific improvement at the polymers business? Or is it just other factors like continuous improvement?
Yeah. I would say, you know, the mix probably helped us a little bit in this quarter. The primary focus has been around, you know, trying to deliver volume growth and the incremental margin comes from that, and then our continuous improvement efforts. We've had strong continuous improvement efforts. We've started to get some nice traction on the adhesive side on some new products like our Adhesive Tracking System, which is helping in the package business as an addition to the sales that we already provide. We've come up with yet another tiered offering, as an example in our Nonwovens business, which is getting us into some lower tiers, some in China, but outside of China and other developing countries.
A whole new set of customers that we haven't tapped into before, and that's a system designed and built in China for us. We're starting to see some traction on new products in that business, which is helpful, as well as the improvement in the polymer business from a cost perspective and the overall continuous improvement. It's a number of things, not just one.
Excellent. I appreciate the time.
Thank you. Our next question comes from the line of David Stratton with Great Lakes Review.
Good morning. Thank you for taking the question.
Good morning.
I was wondering, really quickly touch on the cadence of which your group plan to pay down debt. I know you highlighted aggressive pay down, but any color you could give around that for modeling purposes?
I'd just say that that's our, you know, our primary focus. I mean, if you go to our capital deployment model, our primary focus is support organic growth. Greg gave you some insight on what we think for the year there. Next is kind of continue our dividend trend, you know, and then the third in the current environment is probably, you know, paying down debt, and that's kind of our primary focus. If you go back a year or so ago, after a fairly significant share buyback effort in 2015, you know, we were able to deliver within a year over a full point of a multiplier on the EBITDA. That'll be our focus here in the short term.
All right. Thank you.
Thank you. That concludes our question and answer session for today. I'd like to turn the conference back over to Nordson Corporation for any closing comments.
Well, I'd just like to thank everyone for their interest and support. Again, compliments to our global team for doing an excellent job this quarter. Thank you.
Thank you. Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect. Everyone, have a great day.