As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Mr. Jim Jaye, Senior Director of Investor Relations. Sir, you may begin.
Thank you, Shane. This is Jim Jaye, Senior Director of Investor Relations and Communications. I'm here with Mike Hilton, our President and CEO, and Greg Thaxton, our Senior Vice President and CFO. We welcome you to our conference call today, Tuesday, February 23rd, 2016, to report on Nordson's FY 2016 first quarter results and our FY 2016 second 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 March 1st, 2016, which can be accessed by calling 404-537-3406. You'll need to reference ID number 44144362. During this conference call, forward-looking statements may be made regarding our future performance based on Nordson's current expectations.
These statements may involve a number of risks, uncertainties and other factors, as discussed in the company's filings with the Securities and Exchange Commission that could cause actual results to differ. After our remarks, we will have a question-and-answer session. Now, I will turn the call over to Mike Hilton for an overview of our FY 2016 first quarter results and a bit about our second quarter outlook. Mike, please go ahead.
Thank you, Jim, and good morning, everyone. Thank you for joining Nordson's first quarter conference call. Despite a challenging macroeconomic environment, we're pleased to report very strong organic growth compared to the prior year across all product lines in our largest segment, Adhesive Dispensing. We also delivered positive organic growth in our Industrial Coating segment. We did see softness in the Advanced Technology segment during the quarter against a very challenging prior year comparison. As a reminder, Advanced Technology organic volume increased 29% in the first quarter of FY 2015 compared to 2014. However, we are encouraged by recent order rates, which are up high single digits in this segment for most of the 12 weeks compared to the prior year. Including the first year effect of acquisitions, total company sales volume was up 4% in the quarter compared to prior year.
Unfavorable currency translation continued to be a headwind in the quarter, offsetting the volume growth by about 5% compared to prior year. Operating margin in the quarter was 14% or 17% on a normalized basis, excluding the approximate effects of unfavorable currency translation compared to prior year. Reported diluted earnings per share in the quarter exceeded the level of the prior year's first quarter as one-time discrete tax benefits more than offset the negative impact of one-time charges. Unfavorable currency translation as compared to the prior year reduced reported earnings per share by approximately $0.14. We also continued our balanced approach to capital deployment during the quarter, distributing $46 million to shareholders through share repurchases and dividends.
Our second quarter 2016 forecast reflects our current backlog, which is up 10% compared to the end of the first quarter last year, and our current 12-week order rate, which is up 1% over the same 12 weeks a year ago on a currency neutral basis. The current run rate is likely stronger than the 1%, as this period is impacted by the timing of Chinese New Year. We expect to deliver solid revenue growth in the second quarter over the prior year, including positive organic growth and a lower currency translation headwind based on the current exchange rate environment. At the same time, we remain cautious given the continued uncertainty in the macroeconomic environment. We are continuing to focus on the initiatives we have previously discussed that will improve normalized operating margin.
I'll speak more about our outlook and current business trends in a few moments, but first, I'll turn the call over to Greg Thaxton, our Chief Financial Officer, to provide more detailed commentary on the current results and our second quarter guidance. Greg?
Thank you and good morning to everyone. Regarding first quarter results, sales were $372 million, a decrease of less than 2% from the prior year's first quarter. This change in sales included a 4% increase in volume from the prior year's quarter, comprised of a slight improvement in organic volume and more than 3% increase related to the first year effect of acquisitions. Volume improvement was offset by a 5% decrease related to the unfavorable effects of currency translation as compared to the prior year's first quarter. Looking at sales performance for the quarter by segment, Adhesive Dispensing segment sales volume increased 12% as compared to the prior year first quarter, inclusive of 11% organic growth and 1% growth from the first year effect of the WAFO acquisition.
Unfavorable currency translation as compared to the prior year reduced sales by 7%. The 11% organic growth is an outstanding level in the current macroeconomic environment and reflects the resilience of the consumer nondurable end market served by this segment. Organic growth was strong in every product line. On a geographic basis, we generated strong volume growth in Europe, Asia Pacific and the United States. Sales volume in the Advanced Technology segment decreased 8% from the prior year first quarter, inclusive of a 15% decrease in organic volume, offset by a 7% increase related to the first year effect of the Liquidyn and MatriX acquisitions. Sales were also negatively impacted by approximately 3% related to the unfavorable currency translation as compared to the prior year's first quarter.
As Mike noted, current quarter results in this segment are challenged in comparison to the prior year first quarter, where we delivered organic growth of 29%. The result for last year's first quarter do not follow the typical seasonality of the segment, where volume builds as the year progresses. Organic volume growth during the current quarter in our surface treatment and medical fluid management product lines was offset by declines in other product lines, largely related to electronics end markets. These markets have historically driven solid organic growth for Nordson, and recent order rates and project activity in this space are encouraging. We're also pleased by the performance of the Liquidyn and MatriX acquisitions in this segment, both of which are meeting our expectations.
Organic sales volume in the Industrial Coating segment increased 2% compared to the first quarter a year ago, offset by a 5% decrease related to unfavorable currency translation. Organic growth in the quarter was driven by demand for our liquid painting, container coating, and UV curing product lines, and regional demand was strong in Asia Pacific, the Americas, and Japan. Gross margin for the total company in the first quarter was 53%, inclusive of a negative currency impact of more than 1 percentage point as compared to the prior year. As part of the margin enhancement initiative we have previously described, we incurred one-time charges during the first quarter of approximately $1 million, mostly related to the Adhesive Dispensing and Advanced Technology segments.
We also incurred approximately $1.5 million of short-term purchase accounting charges in the quarter within the Advanced Technology segment related to the step-up in value of acquired inventory. Operating profit in the quarter, including these one-time charges, was $52 million, and operating margin was 14%. As Mike previously noted, operating margin excluding one-time charges and the negative impact of currency translation as compared to the prior year was 17%. Looking at operating performance on a segment basis, Adhesive Dispensing delivered operating margin of 25% in the first quarter, inclusive of approximately $600 thousand in charges related to restructuring and short-term purchase accounting charges for acquired inventory. Adhesive Dispensing segment operating margin was 27% in the quarter, excluding these one-time charges and the estimated effect of currency translation as compared to the prior year.
Within the Advanced Technology segment, reported operating margin was 7% in the first quarter, inclusive of approximately $500,000 related to restructuring charges and $1.5 million related to short-term purchase accounting charges for acquired inventory. Normalized operating margin within this segment to exclude these one-time charges was 8%. Operating margin in the current quarter reflects product mix and negative leverage on lower volume, mainly related to electronics end markets. Operating margin was 9% in the first quarter, excluding these one-time charges and the estimated effect of currency translation as compared to the prior year. We do expect to leverage sales volume growth to generate significant improvement in operating margin in this segment as the year progresses, which is typical performance for this segment.
The Industrial Coating segment delivered operating margin of 8% in the first quarter. This level of operating margin reflects seasonally lower first quarter volume typical of this segment. Excluding the approximate effects of negative currency translation compared to the prior year, segment operating margin was 10% in the quarter. For the company, net income for the quarter was $41 million. GAAP diluted earnings per share were $0.72, 4% higher than last year's first quarter. Excluding one-time items, normalized diluted earnings per share were $0.61. We have included an earnings per share reconciliation schedule in our press release to reconcile between GAAP earnings and normalized earnings per share. Additionally, unfavorable currency translation as compared to the prior year reduced first quarter earnings per share by approximately $0.14. The first quarter's EBITDA was $70 million, and cash flow from operations was $49 million.
Free cash flow before dividends was $38 million, reflecting cash conversion of 91% of net income. We have included a table with our press release reconciling net income to free cash flow before dividends. During the quarter, we continued our approach of returning capital to shareholders by distributing approximately $14 million in dividends and investing $32 million for the repurchase of shares. From a balance sheet perspective, we remain liquid with net debt to EBITDA at 2.87x trailing 12-month EBITDA as of the end of the first quarter. We do have additional capacity available as we're currently borrowing well below our most restrictive debt covenants, and our strong free cash flow provides additional capacity. I'll now move on to comments regarding our outlook for the second quarter of fiscal 2016.
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 12 weeks ending February 14th, 2016, order rates are up 1% as compared to the same 12 weeks in the prior year. As we've noted in the past, order growth rates can fluctuate from week -to -week, and for most of the last several weeks, 12-week order rates on a currency-neutral basis have been positive compared to the prior year, such that our backlog, excluding acquisitions, is up 8% over the prior year.
As Mike noted, there is likely some negative impact due to the timing of Chinese New Year in the most recent order rates. Within the Adhesive Dispensing segment, the latest 12-week orders are down 1% as compared to the same period in the prior year. Positive order rates in Packaging and Nonwovens product lines are offset by softness in other product lines. Geographically, orders were strong in Japan, Europe, and the Americas. Again, timing does have an effect on order rates, and for most of this fiscal year, 12-week order rates in the Adhesive segment have been up mid to high single digits over the same periods a year ago. In the Advanced Technology segment, order rates for the latest 12 weeks are up 8% as compared to the prior year.
These order rates reflect a strong return in demand for automated dispensing systems related to electronic end markets, with continued strength in our medical fluid management product lines. Order rates were strong in Asia Pacific, Europe, and the Americas, while the U.S. and Japan were essentially flat. Within the Industrial Coating segment, the latest 12-week order rates are down 5%. Growth in cold material dispensing systems for automotive applications and UV curing products was offset by softness in other product lines. Positive order growth in Asia Pacific, the Americas, and Europe was offset by softness in other regions. Comparisons in this segment are challenging, where order rates were up 39% a year ago at this time. However, project activity remains robust.
Backlog at January 31st, 2016 was approximately $247 million, an increase of 10% compared to the prior year, and inclusive of 8% organic growth and 2% growth due to acquisitions. Backlog amounts are calculated at January 31st, 2016 exchange rates. Let me now turn to the outlook for the second quarter of fiscal 2016. We're forecasting sales to increase in the range of 2%-6% as compared to the second quarter a year ago. This range is inclusive of an increase in organic volume of 1%-5%, 2% growth from the first-year effect of acquisitions, and a negative currency impact of 1% based on current exchange rates.
At the midpoint of our sales forecast, we expect second quarter gross margin to be approximately 55% and operating margin to be approximately 19%. This outlook includes one-time charges of approximately $1.3 million. Excluding these one-time charges, normalized operating margin is estimated to be 20%. Unfavorable currency rates as compared to the prior year are estimated to impact gross margin and operating margin by about 1 percentage point. We're estimating second quarter interest expense of about $6 million and an effective tax rate of approximately 30%, resulting in second quarter forecasted GAAP diluted earnings per share in the range of $0.85-$0.95, inclusive of a $0.02 per share charge related to non-recurring charges. In addition to the second quarter outlook, the following updates on FY 2016 full year basis may be helpful for modeling purposes.
For our effective tax rate, we're forecasting the full year rate to be about 30% based on current tax law and excluding discrete items. For capital spending in 2016, we're forecasting normal maintenance capital spending to be approximately $50 million. In addition, we do expect to occur additional non-recurring charges associated with our margin enhancement initiatives, primarily associated with integration activities within the Adhesive segment. As we indicated last quarter, the size and timing of these non-recurring charges in FY 2016 is difficult to estimate precisely, though we expect these charges to be well below the amount incurred in fiscal 2015. In summary, Nordson delivered slightly positive organic growth in the current quarter in a challenging macroeconomic environment and against a robust period of organic growth a year ago.
Reported earnings per share exceeded the level of the prior year's first quarter, and normalized earnings per share exceeded the high end of our normalized guidance. Looking ahead, our current quarter backlog and recent order rates have been solid, leading us to forecast solid revenue growth over the prior year's second quarter, including 3% organic growth at the midpoint of guidance. We expect to leverage the sales increase to drive improvement in earnings per share as compared to the same period a year ago, despite a tough macroeconomic environment and currency headwinds. With that, I'll turn the call back over to you, Mike.
Thank you, Greg. Before taking your questions, I'd like to provide some additional comments on our recent performance and outlook. First, I wanna thank our global team for their ongoing efforts. They continue to serve our customers at an extremely high level and are committed to continuous improvement. As Greg mentioned, given our backlog and order rates, we expect organic volume growth to be approximately 3% compared to the prior year at the midpoint of our second quarter guidance. This is a strong level given the continued softness in the global macroeconomic environment and reflects the solutions we bring to the diverse end markets we serve. We are particularly pleased with the ongoing strength we're seeing in the Adhesive Dispensing segment and the return of demand we're starting to see within Advanced Technology electronics end markets.
We expect to leverage this increased volume to deliver a normalized operating margins and earnings per share that exceed the level of the same period a year ago. I'm also pleased to report that we're making solid progress on our margin enhancement initiatives. During the quarter, we continued to execute on integration and footprint optimization activities within the Adhesive Dispensing segment. We also took action within the Advanced Technology segment to drive efficiency within our electronic systems product lines. We plan to continue executing on activities across the company that will enable us to meet our goal of 200 basis points improvement to the normalized operating margin by the end of 2017. Overall, the trajectory of the global economy remains uncertain for the year. At the same time, we remain well positioned to capture growth opportunities when and where they occur.
We remain focused on continuous improvement, and our strong ongoing cash generation provides the ability to fund multiple priorities that will benefit our shareholders over the long term. At this point, let me turn over the call to you for questions.
Ladies and gentlemen, at this time, if you have a question, please press the star, then the number 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. Our first question comes from the line of Liam Burke with Wunderlich. Your line is now open.
Yes, thank you. Good morning, Mike. Good morning, Greg.
Good morning, Liam.
Good morning.
Mike, the margin improvement in adhesive systems, could you give us a little color on the product mix there, just directionally how the polymer business performed?
This is a solid quarter for the polymer business. I'd say if you look at the margin improvement overall, I would say, you know, something like a third of that is probably related to, you know, the initiatives that we've talked about taking, and then the other 2/3 is split between the volume growth that we've seen and normalized continuous improvement kind of activities. It was really a solid quarter for both the, you know, sort of traditional core adhesives as well as the polymer business from a sales perspective.
Okay. On the electronic side, you're seeing the bounce there. How about on the mobile side? Is there any life on that side?
Yeah. What I would say is, in this quarter, we haven't seen that sort of tick up. What we have seen is some activity in the semiconductor side on sort of Advanced Technology, particularly affecting our dispensing businesses. We have started to see a step up in our Tier 1 products in Asia, where we have some penetration into the mobile customer base, that primarily the Chinese mobile customer base that's more than onesies and twosies. I would say the normal sort of seasonal pickup that we see in this business, we'd expect to see more in Q2 and going into Q3.
That said, there are a lot of projects that we're working on right now, which is typical at this time, you know, where we go through a qualifying effort, and then the order placement tends to occur later in Q2 into Q3. I'd say that activity level is high, which is particularly encouraging across the Dispense segment.
Great. Thank you, Mike.
Okay.
Our next question comes from the line of Charley Brady with SunTrust. Your line is now open.
Hi. Morning, guys.
Morning, Charlie.
Morning.
Can you just talk on the Adhesive Dispensing, you know, you just commented on some of the margin there. I wonder, can you just give us what the aftermarket percentage was on that? Was there any, you know, any mix impact? I mean, that was a pretty strong margin performance out of that segment this quarter, despite the higher volumes.
Yeah. I would say, Greg's to look it up, 'cause I don't remember offhand what the mix is on the parts and systems. I don't think that's a big issue in the quarter. I would say really every product line was up you know, nicely, whether it was the you know, the Packaging, the Nonwovens, the Product Assembly, you know, the four product lines within the polymer area were all up you know, nicely in the quarter. That was certainly very encouraging there. I don't think there's a significant mix effect, Greg, on that.
No, there's not. In fact, within the Adhesive segment, the percentage of parts sales is actually just slightly lower than what it was in the first quarter of last year. It's not driven by a mix shift between systems and parts.
Okay. Just, Mike, on your commentary on the 12-week order rates in Adhesive Dispensing that, you know, you're down 1% for the whole twelve weeks, but you're saying for the majority of that twelve weeks is up mid-high single digits. Is that correct? Can you just put some more color around that? Was it just, you know, you start off the year down significantly and just kind of snap back, or what's driving that?
No, I'd say there's a couple things. I'd say if you look at this year versus last year, we do have the Lunar New Year hitting in this order week period. For that week, we essentially registered no orders. You have a bit of a swing associated with that. Doesn't mean there aren't orders, we just didn't have any recorded. I'd say secondly, our core adhesives continued to remain up sort of mid-single digits. The polymer business was off a little bit, but it's really more lumpiness on products. If you look at that business over the last couple of quarters, it was up 9%, it was up 20%+ in this quarter. It's just timing more than anything else, there.
There's a Chinese New Year effect, not sure how big that is. Then there's some project timing effect and solid sort of core adhesive performance.
All right. One more. I'll hop back in the queue. Just on M&A pipeline, can you just kind of give us a sense of how that's looking these days and sort of multiples on that as well? Thanks.
Okay. I would say this year is looking a bit like last year, where we have a nice pipeline, but likely to be smaller tuck-in kinds of opportunities. You know, the medical area is one where there could be some larger opportunities, but at this point in time, it looks like smaller kind of tuck-ins is what we're talking about for this year as well. We probably go to the next question then.
Our next question comes from the line of Christopher Glynn with Oppenheimer. Your line is now open.
Okay, thanks. Good morning.
Hey, Chris. Good morning.
Hey, so we've had a multiple kinda quarter period of some negative mix, I would call it, at ATS, and you've started to you know, I think you've mentioned hints in the past but maybe a little more directly talking about stronger trends building for the dispense systems at ATS which do help mix. Just wanted to revisit the question on if there's been some primary fundamental resets on sustainable mix at ATS, and then clarify the comment on expectations for margin improvement for the segment. Does that, in fact, refer to the full year or relative to the start to the current year?
Yeah, so just a couple of comments. You know, last year, we had a more modest year from a dispense standpoint in the electronic systems side of that business, and we had a really strong year as it related to our surface treatment or technology business. That has had a significant effect on mix, both good businesses and product lines, but a significant effect on mix. The surface treatment business is continuing to remain solid. The sub-dispense business is starting to pick up. You know, in this quarter, we've seen some of the advanced packaging on the semi side translate into nice orders with some of the new dispense technology that we have out there that works well at the wafer level.
We also saw our sort of Tier 2 products coming out of China, going into some of the Chinese suppliers that are largely on the mobile side pick up. Then I'd say from a project standpoint, this is the time of year where we see a lot of project activity from a qualifying standpoint. We do see a lot of dispensing projects across the full spectrum, some that fall into our EFD business and a lot that fall into our Electronics Solutions business. We haven't really seen the impact of the orders yet there, is what I was trying to suggest. I think the earlier comment was suggesting that as the year builds, as the volume grows, we'll see significant margin improvement.
If you look back historically, and last year may be a little bit of anomaly, but if you look back the last three or four years, you know, we've typically seen, you know, a more modest first quarter and then margins into 20% for the full year. Assuming these projects that we're working on translates into revenue, we would expect the same kind of improvement and overall annual performance.
The margin improvement comment characterizes both normal seasonality, just for the record, but also is a comment on expectation for full year versus the prior year.
Yeah. Again, the caveat is those projects translate into revenue. You know, last year, some of them didn't go ahead. I'd say we've got a broad range of products this year, and we're encouraged by what we see at this point.
Okay. And then the 8% core backlog build, that's a pretty sweet number. You often make comments just cautioning that 12-week, any 12-week period can have short-term influences. In this case, the short-term influence might suggest the 8% was understated. At any rate, could you kind of kinda make that leap and tie that 8% to what, you know, your, in your wisdom, what your sense of the kind of real trend of your business efforts are out there in the marketplace?
Well, certainly the 8% is a good start. You know, the most recent order rates are down to closer to the sort of 1% level, although we provided the caveat around the Lunar New Year having some impact there. You know, what I would say is, and Greg alluded to this, everything that's going into the consumer nondurable space looks pretty good at this point in time and pretty resilient in the face of a macro environment that's clearly uncertain and trending to the level that we suggested last quarter in the kinda low 2% for the year.
I would say in the larger project range, the things that would affect, say, Product Assembly, some of our coatings business, we see good activity, but that's the area where if anything got pushed, it might be in that area as people, you know, question capital spending going forward. We're seeing some of that activity like that in China, leading to some, you know, softer numbers in the short term. I would say when we look then to project lists and funded project lists, that also looks encouraging across most businesses. In the quarter, we've said, hey, the midpoint looks like 3% even with the backlog at 8% based on the most recent order rates. Again, I think we're encouraged on the nondurable space.
We're cautious on the durable space just because it's just not that clear at the moment. Activity level is not falling off.
Great. Makes sense. I'll let it go. Thanks.
Okay.
Our next question is from the line of Allison Poliniak with Wells Fargo. Your line is now open.
Hi, guys. Good morning.
Hey, Allison.
Just talking a little bit on the cadence of orders. I know obviously Chinese New Year sort of impacted the back half of that. Was there any notable change in your businesses relative when we sort of hit that January 1 switch, that capital was freeing up a little bit from your customers?
I would say, you know, no significant change. Typically, for those customers that are on an annual capital budget, most things get approved by the end of January, and we start to see them let and come through in the February and beyond timeframe. Through the quarter, I'd say it played out fairly typically as what we'd expect. Nothing unusual there. We'd expect the bigger projects to be let, you know, in the third quarter or in the second quarter then into the third quarter.
Great. Perfect. Just going back to sort of your commentary on acquisitions. Any, you know, I know you mentioned medical, you know, tuck-ins and maybe some larger ones there. Any change to the multiples in this environment? Have you noticed those pull in a little bit, just given the uncertainty?
I would say not yet. We'd like to see that, but I'd say not yet.
Okay. We'll wait for that then. Thank you.
Okay.
Our next question comes from the line of Walter Liptak with Seaport Global. Your line is now open.
Hi. Thanks. Good morning, guys.
Hey, Walter.
Hi, Walter/
Wanted to ask about your U.S. orders. You know, down 6%, you know, that wouldn't be impacted, I don't think by you know, by timing for anything except for maybe some concern over the macro and slowing international. I wonder if you could talk a little bit about you know, the U.S. orders, you know, has the stock market or concern about the economy been negative or anything related to the strong dollar and you know, that impacting your export sales?
No, I would say most of it would fall in the category of project timing year-over-year. Last year, this period of time, overall U.S. orders were up 12%. Particularly in our coatings business, we had, you know, very, very strong orders in the auto platform business. That year, that's sort of a year-over-year effect that's having some impact. We think it's more project timing than anything else. No, it's not an international or currency-related impact. It's more project timing.
Okay, kind of in a similar way, just being more specific about the adhesive in North America. You know, it sounds great, the mid-single-digit kind of growth outlook for adhesives. I wonder if you could talk specifically about adhesives in North America and, you know, the pipeline of orders and activity or pipeline of business out there.
Yeah, I would say in general, Packaging and Nonwovens, which tend to be the nondurable piece, are pretty solid. I would say on the Product Assembly side, it's a little weaker at the moment. Again, they tend to be more higher dollar, more capital related. You know, we expect some of that from a seasonal standpoint, and we do see good activity. But if anything would get pushed, it would be things like the product assembly area and a number of the coatings-related activities, and maybe some of the bigger polymer projects. So that's the ones that, while we're not hearing that at the moment, that's probably where the risk would be. Right now, it looks more like a normal quarter on the Product Assembly timing.
That's the one area that's been a little bit softer within the quarter.
Okay. Great. Okay. Thank you.
All right, Walter.
Our next question is from the line of Kevin Maczka with BB&T Capital Markets. Your line is now open.
Thanks. Good morning.
Good morning, Kevin.
Mike, we've talked for some time now about these tiered products in the China mobile. I'm wondering if you can give an update there on the traction you're seeing there, the size of business that is for you now, what kind of growth rates you're seeing, margins, that kind of thing.
Yeah. I would say it's just starting to move from the handful of unit orders to orders that are more in the range 20, 30, 40 kind of units at a time. It's starting to get some traction. These are mid-tier products, so they'd be fully automated, but not necessarily as sophisticated as our high-end products when you think about a vision system and dual dispensing and things like that. They're coming out of China largely at our Suzhou facility, so we have nice margins on this business. You know, not as good as our fully featured products, but good margins in the business. I would say, though, in general, the Chinese manufacturers are still pretty low on the curve from an automation perspective.
They still do a lot, manually, and we think in the long run, that's a nice upside for us. It's not driving that part of the segment at the moment, but we have gone from putting units in, demonstrating them, selling a handful of units to real orders, and so that's encouraging.
When you talk about units, what's a typical ballpark dollar value for a unit like this? Does it capture still the same type of margin that your higher end, more bells and whistles units do?
I would say the answer to the first one is it's probably 50% to 2/3 of the pricing of the high-end units. The margins wouldn't be quite as high, but they're probably within 10 points of the kind of margins we see in the high-end units. The high-end units have a lot more features, you know, so they might be dual dispense systems with, you know, laser vision systems and so forth. They'd be different margins, but good margins nonetheless.
Mm-hmm. Yep, makes sense. This snapback, if you will, on the electronics demand, how much of that is coming from company specific things you're doing like this in the way of introducing new products and getting traction with them versus some of your markets just snapping back? I know you mentioned the semiconductor area, but how much of this is market versus things you're doing?
I would say it's a mix. The comment on the semi side is really a function of some new technology going into different customers that are on the wafer, the wafer side of things, so leading edge customers on the wafer side. That's really a combination of new product technology and a new application there, which is encouraging. I'd like to see that grow. We have introduced a whole new line of dispense technology that's getting some traction. I'd say we haven't yet seen the big uptick that we would expect seasonally, which, as I said earlier, would come later in the quarter. We are seeing some improvements in the underlying customer base, but it's probably more linked to new products and technologies that we're offering than anything else.
Got it. If I could just ask one more high level on the adhesives order. When we see those order growth rates in the 6%-12% all year last year go to -1% in Q1, there was a Chinese New Year in there last year at some point, too, where you probably had a week without orders. Your message is not that there's some new macro challenge and things have slowed, but more an issue of timing and the outlook there is still as encouraging as it was last quarter. Is that a fair way to characterize it?
Yeah, I'd say it's encouraging. As I commented on the sort of traditional adhesives businesses, the nondurables are solid. The area where we have a little more concern is on the Product Assembly, which is more investment related, but that's been solid today. We have some concerns, a little bit more concern going forward. You know, this is a period where that's typically what you'd see. On the polymer side, we've come off two really strong quarters from order entry. It's a little bit off right now, but it looks more like project timing than anything else based on the activity level. I'd say we are encouraged.
We're not trying to get too far ahead of ourselves, here, though, just given the general level of uncertainty in the macro environment.
Okay, thank you.
Our next question comes from the line of Matt McConnell with RBC Capital Markets. Your line is now open.
Thank you. Good morning.
Good morning, Matt.
I wanna follow up on the comments earlier. I know, polymers is doing pretty well. Could you give us a sense of where the margins are now relative to the segment average and maybe, what's been accomplished on the restructuring there and what's left to do, maybe over the remainder of the year?
Yeah, I would say in general, we're still on the early phases of the improvement activity in the polymer side of things. The margins aren't where we'd like to see them. Just to give you a sense of things that we've accomplished so far, we have shut down and exited our Belgian facility in Europe and consolidated that. We have got out of two small product lines related to that, one plating and one of our rolls business in the U.S. that were not making money for us, and so we've exited those businesses. We have pulled together the plan to consolidate our German facilities from two to one. Now, that requires expanding the one facility, so that's gonna play into 2017.
In the U.S. and our dies business, we have three facilities. We'll go down at least one, and that should play out over the next year. Then there's some other activities that we have underway that we'll talk more about later in the year that continue the improvement plan in that business. I would say we are on track with our expectations there. We're doing everything we can to pull in the time horizon. When you look at consolidating facilities and expand ones, the timing to make that happen stretches out more than everybody would like, but we're going as fast as we can in that regard. I'd say we're on track.
The margins aren't where we'd like to see them yet. We haven't really seen the big volume drivers come back yet, but even though we've had some nice volume growth, and that's something that we expect to see probably more in the 2017, 2018 timeframe, but we're on a good path.
Matt, this is Greg. I'd add that as part of our overall initiative to drive our margin improvement at 200 basis points, certainly, this product line is a part of that improvement.
Okay. All right, great. Thanks. That's a helpful update. Appreciate it.
At this time, I'm showing no further questions. I would now like to turn the conference back over to Jim Jaye. for any further remarks.
Thank you, Shane, and thank you everyone for joining us on the call today. I'm available this week for follow-up questions. Thank you again for your ongoing interest in Nordson. Have a good day.
Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.