WESTLAKE, OHIO (June 26, 1:30 p.m. ET) — Nordson Corp. gobbled up screw and barrel maker Xaloy Inc. and flat die builder Extrusion Dies Industries Inc. over a two-and-a-half week period, and now Nordson will look for other related acquisitions, President and CEO Michael Hilton told analysts June 26.
“We like the base business, the organic growth prospects. But there are also other potential to add to our portfolio in this space as the strategy gets fully integrated and we have opportunities there,” Hilton said.
Based in Westlake, Ohio, Nordson makes equipment that applies industrial adhesives and sealants, industrial liquids, powder coatings and surface treatment. Packaging and medical are two major markets. Nordson is traded publicly traded on Nasdaq and reported 2011 sales of $1.2 billion.
Nordson officials held the conference call to discuss the acquisition of Xaloy, announced June 4. Nordson announced the EDI deal May 21.
Nordson's move to build a plastics group began last year. The company bought a Belgian flat-die maker, Constructiewerkhuizen G. Verbruggen NV. Nordson now has a major presence in flat dies used to make cast film for multilayer flexible packaging and extrusion coating.
Shortly after the EDI deal, Nordson bought Value Plastics Inc., an injection molder of single-use medical fittings in Fort Collins, Colo.
Nordson is paying $200 million apiece for Xaloy and EDI, using existing credit to finance both deals. Both had been owned by private equity companies.
Peter Lambert, senior vice president of adhesive dispensing systems, said that, for Xaloy, that was 10 times EBIDTA (earnings before interest, taxes, depreciation and amortization) for the trailing 12 months ended April 30, before the deal. Xaloy generated $20 million in EBITDA, and racked up about $114 million in sales during that period, he said.
Nordson executives have not provided an EBITDA multiple for buying EDI.
Xaloy, based in New Castle, Pa., is by far the largest U.S. maker of screws and barrels. Xaloy also makes melt pumps, screen changers, cleaning ovens and water-ring pelletizers used by extruders. Hilton said competitors offer individual components—“onsies and twosies”—and are regional players.
“Xaloy's the only one that has the entire piece,” Hilton said. He pointed out that Xaloy employs about 600 people and manufactures in the U.S., Europe and Asia.
EDI is in Chippewa Falls, Wis.
In the conference call, Hilton and Lambert gave out some financial details about Xaloy:
• Xaloy's largest end market is packaging, although that is less than half of the company's overall sales. Consumer electronics and medical markets make up about a quarter of sales.
• No one customer accounts for more than 7 percent of sales. About half of sales come from ongoing sales to plastics processors. Other sales go to machinery manufacturers, which were hurt in the recession but have recovered.
• On average, Xaloy products are replaced two to five times over the life of the injection press or extruder.
• Answering an analyst's question, Lambert said the average Xaloy product, including a screw, a pump or a screen changer, costs $8,000 to $10,000. EDI dies can run from $100,000 to $250,000.
• About 60 percent of sales go to North America and 20 percent to Asia.