Good day, ladies and gentlemen and welcome to Nordson Corporation webcast for Third Quarter Fiscal Year 2014 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference Jim Jaye, Director of Investor Relations. You may begin.

Thank you, Nicole and good morning. This is Jim Jaye, Nordson’s Director of Investor Relations. I am here with Mike Hilton, our President and Chief Executive Officer and Greg Thaxton, our Senior Vice President and Chief Financial Officer. We would like to welcome you to our conference call today, Friday, August 22, 2014 on Nordson’s third quarter results and fourth quarter outlook. Our conference call is being broadcast live on our webpage at www.nordson.com/investors and will be available there for 14 days. There will be a telephone replay of our conference call available until August 29, 2014 by calling 404-537-3406. You will need to reference ID number 82465633. During this conference call, forward-looking statements maybe 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. I would now like to turn the call over to Mike Hilton for an overview of our fiscal 2014 third quarter results and a bit about our fourth quarter outlook. Mike, please go ahead.

Thank you, Jim and good morning everyone and thank you for attending Nordson’s 2014 third quarter conference call. Our performance in the third quarter was very good as Nordson’s global team delivered the strongest quarterly performance in revenue, operating profit and earnings per share in our history. This performance is particularly noteworthy given the continued softness in the macroeconomic environment. The global team is focused on meeting the needs of our customers with innovative products, applications expertise and global support, while also executing on a variety of strategic initiatives and continuous improvement projects to just drive sustained long-term success. I am especially pleased with the robust organic sales volume growth of 8% generated in the quarter as compared to the same period a year ago. All segments and geographies contributed to this growth and we leveraged the strong top line growth to deliver operating margin of 25% in the third quarter, a 2 percentage point improvement over the previous year’s third quarter. With this leverage, the earnings per share grew at a faster rate than top line improving 20% compared to the third quarter a year ago. Free cash flow in the quarter was strong and from a balance sheet perspective, we remained very liquid with significant capacity for appropriate capital deployment. We continued to create value for our shareholders through our balanced approach to capital deployment investing $36 million during the third quarter for the repurchase of shares and by distributing approximately $11 million in dividends during the quarter. After the close of the quarter, Nordson’s Board approved a 22% increase to our dividend as we moved toward a payout ratio nearing 20% marking the 51st consecutive year we have increased our annual dividend. I am also pleased to report that we continued to execute on our acquisition strategy with the purchase of Avalon Laboratories, a high performing company in the medical device space. We welcome Avalon employees to Nordson and will provide additional details on this acquisition later in the call. Looking ahead, our current backlog and order rates are solid leading us to expect continued strong performance in our fourth quarter and a record full year results for sales, operating profits and earnings per share. I will share additional comments about our current business trends and our near-term outlook momentarily, but first, I will turn the call over to Greg Thaxton, our Chief Financial Officer who will provide more detailed commentary on our third quarter financial results and our fourth quarter guidance. Greg?

Thank you and good morning to everyone. Sales in the third quarter were $459 million, an increase of 14% over the prior year third quarter. This sales improvement included an 8% increase in organic volume, a 5% increase related to the first year effective acquisitions and a 1% increase related to the favorable effects of currency translation. Looking at sales performance for the quarter by segment, Adhesive Dispensing segment sales volume increased 15% as compared to the prior year third quarter. Organic growth was 5% and the first year effect of the Kreyenborg acquisition added growth of 10%. The organic growth was driven by disposable hygiene rigid packaging and polymer processing end markets and we saw growth in every region. Sales volume in the Advanced Technology segment increased 15% over the prior year third quarter. Strong organic growth in all product lines during the quarter was led by demand for automated dispensing equipment as well as continued solid demand for our test and inspection and surface treatment equipment related to electronic mobile device end markets. Growth was also robust in our semi-automated dispensing systems and single-use fluid management components related to medical and industrial end markets. Geographically, organic sales growth in Japan, Asia-Pacific and the Americas was offset by softness in the U.S. and Europe. The Industrial Coating Systems segment sales volume increased less than 1% compared to the third quarter a year ago. Solid growth in the U.S. and Europe led by cold material dispensing equipment for automotive and industrial end markets was offset by softness in other regions and in selected consumer durable goods end markets. On a total company basis, gross margin in the third quarter was 56% equal to the level delivered in the prior year despite a higher mix of systems revenue in the current…

Thank you, Greg. Before taking your questions, I would like to provide some additional comments on our recent performance and outlook. Again, I am very pleased with the ongoing efforts of our global team. They are executing at a high level and meeting the needs of our customers better than our competitors. At the midpoint of our fourth quarter guidance, we are expecting organic sales volume growth of 9% over the prior year’s fourth quarter, a very strong level given the macroeconomic environment that is yet to gain full momentum. We expect to leverage this growth to deliver improvement in operating margin and in earnings per share as compared to last year’s fourth quarter. Overall, we are on pace for a record full year performance in sales, operating profit, net income and diluted earnings per share. In addition to our positive near-term view, we are also getting the job done on a variety of strategic initiatives that will drive value over the long-term. In terms of acquisitions, Avalon is a great strategic fit to our medical platform. And again, I would like to welcome the Avalon employees to the Nordson team. We also continue to evaluate a number of other opportunities in our pipeline that may fit our strategic goals although we remain diligent in our acquisition process. We are also excited about the next phase of our continuous improvement efforts with the informal internal launch of what we are calling the Nordson Business System. The Nordson Business System is our collective set of tools and best practices that can help improve our performance in every area of Nordson. Rooted in Lean Six Sigma and supported by our company values, the Nordson Business System touches all areas of the company, including all business units and corporate functions. We have been using many of the tools within the business system for several years and we will continue to add them – add to them in the future. Overall, our future is bright and we are focused on getting better everyday. We expect to continue leveraging our best-in-class technology, applications expertise, global support and operational excellence across a variety of diverse growth markets to create sustained shareholder value. At this time, let’s turn to your questions.

Thank you. (Operator Instructions) Our first question comes from the line of Allison Poliniak of Wells Fargo. Your line is now open.

Hi, guys. Good morning.

Good morning, Allison.

Good morning, Allison.

Just going back on the order comments, solid orders this quarter, it sounded like there is a little bit of falloff in Q4. Are you guys seeing any changes in sort of customer or end market dynamics driving that or is it more seasonal?

It’s more in line with our seasonal pattern if I think you understand that our orders tend to peak in the third quarter and build up from the second quarter through sort of end and early part of the third quarter and then drop off as we approach sort of the end of the year in the holiday season. So, we have seen that sort of same pattern this year. I’d say this year is maybe a little slower start just given kind of the global dynamic at the beginning of the year and the winter here in the U.S., but then we have really strong third quarter across all of our businesses, very high rates sustained throughout the quarter. And then we are starting to see the sort of natural decline. Greg made some comments that kind of relate to how the orders come in. So, in this particular third quarter, we had across a couple of businesses some large orders in the quarter that drop off in this last week. And so it sort of understates what we are seeing in terms of the health of the business at this point.

That’s great. And then just going back to sort of your acquisition comments, it sounds like your pipeline’s full, we have had a nice acquisition with Avalon. Can you maybe talk about the environment? Multiple for Avalon seems fairly reasonable just given the margins in that business?

Yes. I would say as we said throughout this year, our focus was on sort of integration and digesting, but there would be some smaller tuck-ins and potentially adds to our key areas like Avalon. I would say we are – in our pipeline going forward, we still see a number of sort of those tuck-in type of opportunities. I would say the market is pretty robust and the pricing is also pretty robust just given the fact that many people have cash and the opportunity to finance at low rate, but we think this was a good multiple for the kind of quality business that we have in the growth prospects in the business and the fit with our portfolio. So, I think it was a fair price for this business and we are really excited about the – not only the growth prospects, but the team coming with us as part of this acquisition.

Great, thanks so much.

Thank you. And our next question comes from the line of Christopher Glynn of Oppenheimer. Your line is now open.

Thanks. Good morning.

Good morning, Chris.

Just wondering on an update on with respect to the polymer processing platform, the integration progress and if you think it’s returning to sustainable growth at this point or if it’s little early to call that?

Yes. So, we had a solid quarter in the polymer processing business this quarter. I would say across the different components of the business, some are performing little better than others, I would say the area that was most stressed that we have talked about has been in the dye area. And while that’s improving, it’s still – we still really haven’t seen that biax piece come back. In talking with the OEMs, they are encouraged that we are going to see some pickup, but I would say we have not seen progress on that front, where we have seen progress on some of the other newer product lines that we talked about in that area. So, I would say, no, we are not seeing the robust return of the biax piece yet, but we are filling in other market opportunities for that, and the Kreyenborg and BKG acquisitions that came in last year have been solid. And as it relates to the integration efforts, we are through the integration of the businesses. We still have some of the longer term things that we have talked about like the sales channel optimization to work through and some of the supply chain opportunities, but in terms of cross-selling opportunities and picking up additional sort of broader scope full product line sales, we are seeing some encouraging progress there, but the underlying sort of biax market has not come back. And some of that is a reflection I think of what’s going on macroly, particularly in Europe and to some extent in parts of Asia.

Okay, thanks for that. And then on ADS orders flat there, we did note relatively tough orders comparisons for the 3Q the past couple of years, so does it feel like that’s a specific comparison thing or that market kind of flattening out after four consecutive periods of pretty good orders growth?

Yes. I would say – I wouldn’t read any significant concern into that. I would say it varies a little bit region-by-region, but we have had sort of a strong year in our packaging business and improving year in our non-wovens business and a pretty solid year in product assembly, and you can have impacts quarter to quarter based on sort of the order dynamic I was talking about thoroughly. And we have seen a little bit of that in the adhesives area, but when we look at sort of overall prospects around the globe, we feel pretty good about where we are in that business and we think the business will have a very good year.

Okay, thanks again.

Thank you. Our next question comes from the line of Charlie Brady of BMO Capital Markets. Your line is now open.

Hi, thanks. Good morning guys.

Good morning, Charlie.

Hey, just with respect to advanced tech and the margins there, obviously pretty good margins, really, really strong incrementals. With the impact of the commentary in the release about the automated dispensing in the single-use fluid systems, those tend to be fairly high margin product. Did that mix have a – was that skewing kind of the margin there and you think you expect going forward into Q4 the same type of incremental margin?

Yes. So, Charlie, in that business, we talked earlier in the year when things were sort of going the other way about the sort of volume leverage in that business and how we try and move our structure up and down to accommodate it. But I think what you are seeing here is good order growth, and the volume leverage really is coming from that good order growth and it’s quality mix of products, but it’s really around the volume leverage that we are seeing and we would expect the fourth quarter to be a little bit lower in part, because we see the orders naturally seasonally drop off and so the revenue was likely sequentially to be down a little bit, and so you will see a little bit negative leverage there from a volume perspective, but I would say the quality of the business has been good across all of the product lines. And as we have talked earlier in the year, we have had a particularly solid year in our test and inspection business and the expense piece has come along starting in second quarter continuing this quarter and into the fourth quarter, so after a slow start, a pretty good year.

Okay. And then on advanced – I am sorry, adhesive dispensing just try to understand the orders in the quarter, was it you said it’s up double-digit most of the quarter, was it a slow start or a slow ending that skewed it to flat for the period you gave?

It’s really been more about the last week or so. And as orders come in, we had some large orders that fell off from sort of the first week of that 12-week period. And so it skewed it a little bit. So, what we are trying to give you is a road feel of a run-rate being pretty strong and we are getting a little bit of a point to point comparison there as well as in the advanced tech side that doesn’t truly reflect the strength of what we saw. I think what you can see is the pretty significant step up in the backlog and that gives us a feel for how solid the orders were in the quarter.

Yes, this is Greg. Just to add to that, the comments are intended to suggest that throughout the quarter in both adhesives and advanced technology, the order pace was pretty strong and sometimes it couldn’t get down to what week 13 weeks ago drops off and what week comes in to that 12-week comparison. It can be as simple as the one dropping off and the one coming in that can skew the numbers. So, the comments we are intending to imply that it was a good order pace throughout the quarter and you see that reflected in the backlog as we start the fourth quarter.

Okay, that’s helpful. Thanks. And just on Avalon for a minute, can you talk about maybe some more granularity on that business in terms of the revenues, the margins in that business?

Yes. In terms of the revenues, I think we suggested that this year’s expected revenues were around $34 million. Well, we didn’t comment on the margins, but you can assume that those are really strong margins consistent with what we see in the other parts of the medical business. So – and I think if you look at the sort of EBITDA multiple, you get a feel for that, Charlie.

Great, thanks.

Thank you. Our next question comes from the line of Jason Ursaner of CJS Securities. Your line is now open.

For the Adhesive Dispensing business on the operating margin side, just sort of a follow-up to Chris’ question before, could you quantify the margin of the plastics group at all, just because on the surface, it does still look like a pretty significant drag relative to the old core business?

Yes. What we have said in the past is most of the margin impact has been the mix of these businesses coming in. And what we have said in the long run is the core businesses should operate, historical business at sort of 30 plus and the polymer business is we need to get up into the 20 plus towards the mid 20s. They are not there right now. They weren’t there when we bought them and the volume has been a little bit weak. So, I would say we are on target with what we see in terms of the improvements overall in the segment. And in the long run, we expect the segment to inch up closer to that 30%, I think is the way to think about it.

Okay. And any plans to break it out over time now that it’s getting more of a sizable complete offering?

No. I mean, if you look at it most of what we are doing has gone into the packaging part of the business and that’s the biggest part of our adhesive segment and we are really trying to leverage the customer elements of that and some of the operating approaches that we have as well. So, it’s a nice complement really with a significant focus in the same markets that we serve out of the adhesive business.

Okay. And for Avalon, is that business selling its own product direct or is it a contract manufacturer that would sell through other medical device brands?

So, I wouldn’t characterize it as the contract manufacturer, but no, it’s going through like our dye plastics business, it’s going through the big OEMs that you would recognize on the medical device space. So, it’s not gone directly to end users, we are one step back and really what they are providing is sophisticated components that are used in the applications around cardiovascular and pulmonology. And when you think about it, the trends in that business, include further outsourcing by the OEMs are a big positive in addition to the underlying sort of demographics of the markets.

So, Jason, this is Greg. Think about it similar to other Nordson products, it’s highly engineered, performing a critical application and gets incorporated then into a bigger product set.

Got it. And do you have the full year sales or EBITDA for 2013 that are going to be the first year effect? Just wondering how much of the $34 million is going to end up showing up is kind of – or would show up as organic growth?

Yes. Well, what we gave – what we provided was the forecast through what would coincide with our fiscal year end which is about $34 million in revenue.

Right. But I guess, if I look at the 2.5 months in guidance for the first year effect, if I take out a month of Kreyenborg, it looks like it’s on significantly different run rate. So, I am – guess I am trying to wonder how much that business is growing, I mean it looks like it’s 25% to 30% growth this year?

Yes. What we incorporated in our guidance for the quarter was their historical revenue in this fourth quarter – in aligning with our fiscal fourth quarter.

So, in long run though we think that, I think Greg mentioned over the last five years, it’s grown nicely at double-digit rate. So, we expect it to continue to grow at that rates because of the applications that it plays into and this outsourcing phenomenon that we talked about. So, like our other medical businesses that have been growing at nicely double-digits over the last three years or so, we think this is a nice fit and complement with similar growth characteristics.

Okay.

So that Avalon plus the partial period of the Kreyenborg in the prior year that we didn’t note them contribute to that full 3% acquisitive growth.

Okay. And long-term, just what do you see is the kind of total addressable size of that market?

Are you talking about the space for our medical space or Avalon specifically?

I guess the spring reinforced catheters?

Yes. So, that’s in the hundreds of millions of dollar opportunity we see in the long run in that space.

And that’s differentiated from what would be the more commodity tubing.

That’s not a part that they play in or we have any interest in. This is all really highly engineered specialty tubing multiple ports reinforced electrical connections and so forth. It’s a very sophisticated approach to providing a particular set of requirements for some of the areas that we have talked about, the surgical areas in particular.

Okay. And is there just last question for me, sorry, is there any concern of 3D printing as a competitor to the single piece construction versus the casting that you guys have?

I would say not at this point in time given the level of sophistication of the devices and the multiple materials here down the road. We are always looking for new opportunities for the business. So, 3D printing could play a role in a number of things that we do, but right now, I would say we don’t see that as any immediate concern. We actually think the unique technology that Avalon has and the benefits that come with it will allow to grow disproportionately.

Okay, great. I appreciate it. Thanks.

Thank you. Our next question comes from the line of Walter Liptak of Global Hunter. Your line is now open.

Hi, good morning. Thank you.

Good morning.

Good morning. I wanted to go back to advanced tech and I guess the question is on new product launches, where are we in the launch cycle. It seems like we keep hearing everyday about new mobile devices getting launched and some of those are pretty large launches. Is the ordering for your products something that’s already passed in some of these and we will see some seasonal weakness or is there a pipeline of awards that you can see over the next three to six months?

I would say we will continue to see the seasonal pattern that we typically see in that business. I mean, some of it is just the nature of our, if you look at our year in the holiday period and so forth as it relates to the first quarter, but lot of it as it relates to the sort of mobile space, it’s time to launch as that tend to come out in the late second through early fourth quarter period of time. And so we will see that kind of pattern I think continue unless the timing on some of these launches change. One of the things that we did mentioned in the last call is that we are continuing to look at some of the up and coming new device providers, particularly in China and then this quarter we have got our first orders with a couple of the Chinese manufacturers that are looking to move aggressively into the smartphone technology. And then there is also potential down the road which was not clear as to how accepted this will be in the marketplace is the whole wearable technology. I would say to-date it’s been a little bit hit and miss, but some people are optimistic about the potential for that down the road and that depending on how that would play out that could skew some things in terms of when the various customers would launch that. So, I think we will continue to see the sort of second quarter to early fourth quarter kind of period of high intensity and it can move fluctuate year-to-year and we typically will see the seasonal patterns that we are starting to see now where things wind down as we get to year end.

Okay, that sounds great. Going back to some of the first award and some of these other potential out there, what do you – can you help us size what those opportunities are like and if you have any initial wins here?

We have had a few initial wins, I would say in our tiered offering of our automated platform and also in sort of our semi-automated platform. I think the challenge as we have talked about in the past is to what degree will these folks go to automation and how sophisticated they will be in the automation approach? And then from a process standpoint, to what degree will they do things that relate to mechanical integrity and moisture production and things like that not clear yet. Lot of these folks obviously are aimed at a different price point and it’s not clear what the ultimate quality is going to be, I would say in the near-term. In the long-term, I think it’s going to be globally, they are going to need to be globally competitive and particularly if they look to try and export out of China. So, I would say, it’s for us it’s too early to tell our approach has been – we have a pretty good handle on who we think is going to make progress and be successful. We have teams involved working those accounts. We have got our first orders in, which is encouraging but it’s a little hard to size the opportunity at this point in time given those factors that I mentioned.

Okay, got it. Alright, thank you.

Thank you. Our next question comes from the line of Greg Halter of Great Lakes Review. Your line is open.

Thank you and good morning.

Good morning.

Good morning, Greg.

Couple of cleanup items, can you provide the number of shares that were purchased in the quarter and also if you are having what the payables figure is?

Yes. The number of shares purchased in the quarter was about 470,000 shares comprising that 36 million. I will add on a year-to-date basis, we have bought about 1.2 million shares, so about 2% of outstanding shares. And in total, on that 1.2 million that’s at a average share price of about $73.35. Your comment on payables?

Yes, if you have that figure.

You are talking about notes payable?

Accounts payable, sorry.

Yes, it’s about $20 million including our short-term debt.

Okay. And on the competition front, have you noticed any of your competitors becoming more or less so recently?

I would say across all the businesses, no significant change in the competitive intensity. As we have talked about in the past, we have got good competitors in each of our businesses, but we haven’t seen any changes of significance one way or another there. I think our approach is what it’s always been is to continue to leverage our business model, which starts with offering the best technology and the best customer experience in terms of support and service and applications know-how. So, we think we are doing a good job. We think we are winning in the marketplace, but I would say the competitive intensity remains basically unchanged. It’s competitive.

Okay.

And Greg, just let me clarify, the $20 million is notes payable and debt due, is that the number or you are looking for accounts payable?

Accounts payable, accounts payable.

Okay. And accounts payable and other liabilities was about $240 million that those numbers are on the financial exhibit in the press release.

Okay, alright. And relative to Avalon, you made a comment that their business is mainly in the U.S., is there any restriction for that to go international and if not why have they not done so and is that your plan going forward?

I would say, there is no restrictions on going outside of the U.S. I think they focused on significant opportunities in the U.S. and in many of these procedures, the U.S. is more advanced than other countries, but we have been moving our business in our other medical applications overseas and so our plan will be over time to expand the business, but we have got lot of opportunities still here in the U.S. Obviously, the next likely target would be Europe and that’s what we have done with our other medical businesses, I think Asia is a little bit more fragmented and in some areas little bit further behind.

Okay. And looking at the geographic orders obviously some of the areas are very bumpy, lumpy whatever, but Japan being up 39% and 15% the prior quarter, can you talk to the strength there, what’s going on there in Japan?

I would say there is good progress across most of the businesses. I would say earlier in the year it was maybe a little softer and that’s it’s picked up across all businesses. I would say if you think about things like the mobile business, a lot of the components that go in there, get made in Japan, so that’s not so surprising. I would say, the strength in some of our sort of more consumer durable businesses is a little surprising to-date, but we are seeing good progress there, probably a little bit more robust than we would have expected, I’d say coming into the year.

Yes, this is Greg. I would just add as Mike mentioned it, it was good solid growth rates across each of the segment and that’s even against a trend where Japanese manufacturers are offshoring production to other low cost countries. So, very good growth rates within Japan for our product lines.

I think that speaks to the strength of our customer base and the business model there and the execution on the team as the opportunities come up, but I would say we are probably pleasantly surprised that the strength in the last quarter or two.

I hope you keep that up. And one last one I don’t know if you commented on it, but the Freedom product line, just wonder if you could give an update there?

Yes. I would say the Freedom product line and this now includes what we call Liberty, which is the sort of next year down product in that suite. I would say revenue wise we are pretty much on plan. As I said in the last quarter, unit wise, we are a little bit behind, but pricing based on the value provided was a little bit better and that trend is continuing. And I would say the sort of full value impact of the adhesive material itself has still not come to fruition that’s probably end of the calendar year kind of timeframe for some of the newer adhesives to have sort of the full impact on mileage and so forth. So, I think the combination of both the tiered product and the high end product, we feel pretty good about progress to-date.

Okay, great. Thank you.

Thank you. Our next question comes from the line of Rudy Hokanson of Barrington. Your line is now open.

Your expansion of the facility in Colorado from about 45,000 square feet up to 115,000 square feet and now with the acquisition of Avalon, are there opportunities in terms of managing workflow or production of certain products between the two or will Avalon….

Rudy, you are dropping off throughout your question. So, we didn’t catch your…

Let me take a stab at the first part of that and then if I am not quite getting it, you can come back. Yes, the expansion when we talked about the expansion in Colorado, it was primarily driven by our opportunity in the medical space. We also did talk about so the fact that some of the other EFD products that we make and might need some expansion that we could probably delay some of those expansion requirements through this particular facility. And so it’s really based on the growth that we see. I think we have growth opportunities with Avalon as well and naturally with I mean the – in the mix here and given the manufacturing facilities they have in Mexico, we will look at the total capability not just across the medical platform, but across all of our sort of food management business and look to sort of optimize our supply chain, but we see robust demand in the medical space at least in the niches that we are in today, which is really driving the prime reason for the Colorado expansion.

Okay, thank you. That answers my question.

Thank you. Our next question comes from the line of Liam Burke of Janney Capital Markets. Your line is now open.

Thank you. Good morning, Mike. Good morning, Greg.

Good morning.

Good morning, Liam.

Mike, you talked about the integration of polymers coming along supply chain etcetera, are they – is the integration along – further along enough to be able to start applying continuous improvement or as you call it Nordson Business Systems?

Yes. We are absolutely doing that across the sort of platform of four products – product lines that we brought in and prioritizing those opportunities. So, yes, we are seeing good progress along the continuous improvement front. I would say, each of the businesses was probably in a different place as it relates to their level of experience with Lean Six Sigma. And so we are trying to bring them all up to the sort of highest level. We are managing the priorities of those projects. I think as we have talked in the past there would be some bigger opportunities as it relates to optimizing the overall supply chain, but that will take us some time to do, because the thought process and planning behind that’s a little different than what we did in the adhesives side of things, but there is still opportunity to come over the next couple of years in that area. And then the full leverage on the selling side and the sales channel management, I would say, we are making good progress, but there is still some opportunity there, but the basics for Lean Six Sigma philosophy, the team is getting up to speed with and we have got folks leading those activities. And it’s really a matter of just prioritizing the biggest hits first and effectively utilizing the organization to get those priority activities done.

And on the medical side, do you see I mean, you have had a great quarter on the advanced tech more cyclical businesses kicked in across the board? Are you seeing the medical business starting to contribute enough, we would anticipate some of – offsetting some of the cyclical swings we would normally see in advanced tech?

Yes. So I would say certainly in the, yes, the medical business is done very well the last several years, strong double-digit growth and the broader not just the medical but the broader fluid management piece that goes into non-electronic markets has also had very solid growth. So, yes, we have a focused effort to continue to grow that total area to help balance the cyclicality in the electronics business. And there is a seasonality that we see with throughout the year and then there is the longer term cycle piece with that. So, the seasonality is going to be what it is, but the longer term cycle piece we are trying to offset. So, I would say that whole fluid management piece is contributing to that. Our goal over time is to continue to grow both organically and with add-ons in this medical business to continue to help that balance.

Great. Thank you, Mike.

Okay.

Thank you. Our next question comes from the line of Matt Summerville of KeyBanc. Your line is now open.

Hi, couple of questions. First is with respect to Avalon, it looks like they already have a low-cost manufacturing footprint in Mexico, Mike, are there other cost synergies to be had with this business and can you talk about whether or not existing relationships in the medical space you have will lend itself to revenue synergies. Could you kind of address the whole synergy opportunity there?

Sure. So I would say the fact that they do have low cost manufacturing provides some opportunities I would say in the near-term, but also from a growth perspective as we look at some of the operations that we do that are more labor-intensive. So, I think there is some opportunities there both near-term and longer term. I would say we are more encouraged on the revenue side, because there are some customers that are sort of direct overlap, where we immediately have a broader product line, but there are other customers that they have and we have whether that opportunity to provide that fuller suite going forward. And as customers move to more and more outsourcing, customers being that sort of OEM channel having a full suite of products and demonstrating that you can meet the technology requirements, the quality control and the traceability requirements and provide the support and service, I think makes sense. And in a market that’s been fragmented as we build the bigger portfolio here, I think that’s attractive as well. So, yes, we anticipate there will be some nice revenue synergies down the road as we are able to offer fluid product line and leverage either of the Avalon client base with the Nordson client base here.

And can you also just with respect to Avalon, is that subject to direct FDA regulation medical device tax, is any of that involved here?

Now, we are kind of like one step back like we are with the Value Plastics business, where we supply into that group of key customers that have the FDA requirements. So, we have to provide products that go in and that as the system itself will get certified and a lot of the effort is on the upfront development of the new treatments, therapies, approaches and so it’s very similar in that regard to the Value Plastics piece of business.

Lastly, just with respect to polymer processing, I think it was on your prepared remarks or in response to a question you mentioned that margins are clearly not where you would like them to be more in the mid 20s is kind of where you are targeting longer term, can you talk about when you acquired this group of businesses collectively, where were margins and where are they actually now and how much of the equation to get from wherever they are to say 25% is predicated upon volume versus cost-oriented synergies if you will?

Yes. So, on average, they are over sort of in the mid-teens kind of EBITDA, when we acquired them. I would say the dyes business in particular has had softer revenue than expected. And so we have had some negative volume leverage there that’s impacted the business. So, they are blow that collectively now. I think the volume like all of our businesses is certainly the biggest driver, but in this business, we do have an opportunity for significant both productivity improvements and cost synergies as we look at the overall supply chain. As we talked before, that’s not something we can execute in three months, because it’s more complicated than that, but we are already involved with some things that will help move us down the road of getting more efficient there, but like all of our businesses, number one driver is the volume piece. Here I would say we have more than – more opportunity in our normal business to affect the cost equation. And in the short-term that’s our primary focus.

Can you just sort of remind maybe what the manufacturing footprint looks like in this business currently and whether or not that is a component of this equation to get that substantial margin improvement off where it is today?

Sure. We have manufacturing facilities in every region. So, if you look at Asia, we have facilities in Thailand and in China. If you look at Europe, we have facilities in Germany and Belgium. And then in the U.S., we have a number of facilities from Wisconsin to Virginia to Iowa and Pennsylvania and maybe one or two others. So, there are opportunities to optimize the overall approach there going forward.

Thanks Mike.

Okay.

Thank you. Our next question comes from the line of Mark Douglass of Longbow Research. Your line is now open.

Hi, good morning gentlemen.

Good morning.

Good morning.

Just to follow-up on Greg’s question, do you have an estimate for accounts payable ex-accrued liabilities?

I don’t have that detail, Mark. I can get back to you on that, but again, the sum of those two is about $240 million.

Right. I see that. Just wondering what the timetable was.

Yes.

Okay. And then looking at Avalon, you said 11 times EBITDA that would be equivalent to EBITDA in your fiscal ‘14?

Right, yes.

Right, okay. So, looking forward at EBIT or EBITDA, what are you estimating would be additional D&A layered on post-acquisition relative to I mean where it was?

Yes, Mark. So, we are in the early stages of doing the valuation work. So, we have got our estimates of kind of on a macro basis of what we think those charges would be and that’s incorporated in the $0.06 to $0.08 accretion that we called out for ‘15, but we are not at the point where we have got any of that detail.

Okay. And looking at Avalon, what kind of cash-on-cash returns do you expect over the next two to three years? Is it going to require much, it doesn’t sound like it, but will it require some investments on your part, what are you shooting for as far as returns?

Yes. So, in terms of investment, I think it’s an asset-light type of manufacturing like the rest of our businesses. I think Greg said sort of to maintain it going forward you can expect sort of 2% to 3% of revenue in terms of overall sort of maintenance type investment. The – we have got capacity in the facilities that we have, but we also have opportunities to grow, I think we would expect the trends that we have seen in the past, which are double-digit top line and EBITDA. They would continue in that business.

Okay. And then final question, looking at ICS, the real strong order growth, is that a factor of easier comps or is it really just you received some really big orders. And if it’s receiving some bigger orders, does that imply that there is some longer term deliveries, so that gives you some backlog even into first quarter ‘15 or will most of this ship in 4Q?

Yes. And so just on a typical pattern, we would see the sort of the order rates be strong second quarter to early fourth quarter as people kind of spend their capital budgets for the year and that’s kind of what we have seen here, some of this is a little bit comp year-on-year, but very solid order growth there. In terms of deliveries, most of what we can deliver, we deliver in the say maybe up to 8 weeks. So, there could be some that slip over a little bit into the fourth quarter, but I wouldn’t say it’s an unusual quarter in anyway relative to the mix of what gets delivered in the quarter or not. I would say what you are seeing is people are completing their budget work for the year and have let their orders come and we are seeing that benefit and a little bit of year-on-year comparison, which you always have in this business, because it’s lumpy project-related business.

Yes, thank you.

Nicole, we probably have time for maybe one more question.

(Operator Instructions) I am showing no further questions at this time.

Okay. Well, thank you all for attending our call today. This is Jim. I will be around today to take your questions as I always am and feel free to give me a call and can answer any other questions that you have. And with that, thank you again and have a good weekend everybody.

Alright, thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program. You may all disconnect. Have a great day everyone.