Ladies and gentlemen, thank you for standing by, and welcome to the Nordson Corporation's Fourth Quarter and Fiscal Year 2020 Conference Call. At this time, all participant lines are on mute. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. I would now like to then the call over to your speaker today, Lara Mahoney. Please go ahead.

Thank you. Good morning. This is Lara Mahoney, Vice President of Investor Relations and Corporate Communication. I'm here with Sundaram Nagarajan, our President and CEO; and Joseph Kelley, Executive Vice President and CFO. We welcome you to our conference call today, Wednesday, December 16, 2020, to report Nordson's fiscal year 2020 fourth quarter and full-year results.

Good morning, everyone. Thank you for joining Nordson's fiscal 2020 fourth quarter and full-year conference call. In this unprecedented fiscal year, we did not just weather a challenging macro environment; we advanced our long-term strategy and achieved solid financial results. First, I want to thank our Nordson employees for their flexibility, resilience, and commitment as we navigated fiscal 2020. From the beginning of this pandemic, our leadership team has worked together to protect the health and safety of our employees and respond to the needs of our customers. Representatives from our global teams came together to share best practices and lessons learned as COVID-19 spanned the globe. We implemented new protocols of social distancing and face coverings, as well as regular cleaning and temperature checks, all of which continues to this day. By protecting our employees, we were able to offer uninterrupted service to our customers, many of whom were deemed essential to supporting critical infrastructure. Nordson products serve a very diverse set of end markets, including medical, electronics, consumer non-durables, and general industrial. This diversity helped us drive the relative stability of our results. We have also stayed invested in our direct sales application and service model and committed to the innovation in our precision technologies. For the full year, sales decreased only 3% compared to the prior year, which is commendable in this environment.

Thank you, Naga, and good morning to everyone. As Lara mentioned, we have provided slides that complement the narrative during today's earnings call. On slide number five, you see fourth quarter 2020 sales were $559 million, a decrease of 5% compared to the prior year's fourth quarter sales of $585 million. The decrease was primarily related to organic volume, offset by favorable currency and benefits from the Fluortek and vivaMOS acquisitions. Test and inspection product lines were solid again this quarter, and we continue to see growth in our product lines serving medical end markets. The sales decline in the quarter was largely driven by weakness in the industrial and automotive end markets.

Thank you, Joe. Let's turn to slide 10. We're well positioned going into fiscal 2021. We have been operating safely and efficiently in this pandemic environment. We also have found creative ways to connect with our customers, whether it is virtual training and tech support or safely distanced onsite product implementations. For example, our team recently participated in the Annual PackExpo, which is the largest North American packaging trade show. It rose to the challenge of this virtual event, showcasing our recent innovation through virtual demonstrations and videos. No matter the environment, Nordson employees remain focused on innovation and delivering on the needs of our customers. I'm also pleased with the engagement of the team in adopting our MDS Next growth framework. This is truly about making a strong Nordson even stronger. Fundamental to this framework is to select and invest in the best profitable growth opportunities. This data-driven, customer and product segmentation approach, which we refer to as 'Strategic discipline,' identifies where we create the greatest value for our customers. It is the new capability that our team is learning. Using a data-driven segmentation approach in a consistent and disciplined way, division leaders across Nordson have been working to define their strategic business priorities. This framework empowers our division leaders to take action on the data and focus on the areas where we win. Our decision to divest the screws and barrels product line was based on critical insights gained from this data-driven segmentation approach. Realigning our portfolio is another step forward in positioning Nordson for long-term profitable growth. This divestiture will improve earnings on a going-forward basis. It also gives our PPS leaders more time and energy to focus their resources on their differentiated and profitable product lines. This action exemplifies the power of NBS Next; identify our business's core, simplify the areas that distract you from focusing and growing with your core strengths. With consistent deployment of a data-driven growth framework will complement Nordson's great strengths of innovation, customer passion, and culture. We'll continue to strengthen our newer capability by unleashing an entrepreneurial mindset at the division level while also building deep and diverse winning teams.

Thank you. At this time, we will be conducting a question-and-answer session. Your first question comes from the line of Allison Poliniak with Wells Fargo. Allison, your line is open.

Great, thanks. Good morning, guys. Within the 5% order rate for the past couple of weeks, is there a noted vertical that's driving that or is it fairly broad-based here?

Yes, Allison, good morning. Thank you for your question. Let's discuss specific end markets as that might provide a clearer answer. In our consumer nondurable business, food and beverage packaging proves to be resilient during recessions. Adhesives have shown a slight upward trend, and we expect better growth than we have seen in a while. In the medical sector, order rates have remained stable, although the environment there is still dynamic. Parts of our medical business are affected by elective surgeries, but we also have fluid components serving biopharma markets and single-use plastics, which are performing well. Overall, the medical sector is stable and continues to grow. In electronics, our test and inspection business is doing exceptionally well, supported by advancements in semiconductor components and camera modules. This quarter has seen double-digit growth; my expectations may be slightly lower, targeting high-single digits. Our industrial business faces challenges, but we anticipate some recovery in the first quarter. While our OEM businesses are moderating, automotive represents a small part of our overall company. Therefore, we observe differing growth rates and trends based on the end market.

Got it, that's helpful. And then just touching on the divestiture, I know your comment about it not necessarily being Nordson longer term. Is there somewhat of an impact, a mix impact that you guys are thinking about when looking at these businesses as well in terms of the long-term profitability of the company, or is that sort of just an insight at this point?

Joe, do you want to take this one?

Yes. So, when you think about the divestiture, as Naga mentioned in his script, this divestiture, which we hope to conclude, I would say at the end of Q1 or early Q2, it will improve the ongoing earnings of Nordson, and specifically, I guess to your question, the IPS segment, and will also improve therefore the profitability profile. But I would tell you, no different than Naga mentioned in his script, the most important and I think impactful is the prioritization and allocation of resources to those more attractive growth opportunities, and so that's what really came through the NBS Next portfolio analysis, driving that focus in terms of a growth framework going forward.

Great, thanks so much.

Thank you.

Your next question comes from the line of Matt Summerville with D.A. Davidson. Matt, your line is open.

Thanks. A couple questions, maybe just to follow up on the last point. This internal review process that led to this divestiture announcement. Have you fully concluded that at this point, and should we expect any additional portfolio shaping actions here in the more immediate term?

Yes, thank you for your question. Portfolio analysis is a crucial part of NBS Next, which we refer to as strategic discipline, focusing on product and customer segmentation. This is an ongoing process. After reviewing our PPS business, we determined that this segment doesn't align with the long-term differentiation and growth potential we aim for. However, we identified certain segments within our PPS business that show strong differentiation and technical advantages, which we believe will enable us to grow this area with profitability similar to Nordson. For our other businesses, this process continues. It's not just about what we decide not to pursue; it's equally about where we will focus our efforts. Each division is currently examining their portfolios to identify the best growth opportunities, determine where we can create the most value, and prioritize our resources and investments accordingly. This is an ongoing process, and I hope this provides some clarity.

Yes, thank you. And then as a follow-up, when you look at your implied organic guidance for the first quarter, probably flat to maybe down slightly because you'll have some FX tailwind and then some acquisition tailwind. Can you maybe talk about how that squares with your trailing order entry being up mid-single digits? And you mentioned some things maybe around the correlation with timing, et cetera. Can you maybe expand on that a little bit, Naga?

Yes, I guess let me expand on maybe Naga, you can expand on the trend that you're seeing in the orders. But you are correct. I mean if you look at our Q1 guidance as it relates to the revenue, we assume there are FX rates similar to what we experienced in Q4. And so therefore, when you look at the Q1 guidance, the FX and the acquisition will be favorable to about the same degree they were in our Q4 performance, which to your point implies organic growth relatively flat on a year-over-year basis. Now, I'll point out that organic growth of relatively flat is a significant improvement from the 7% decrease that we saw organically in Q4 and the 4% organic decrease in the full year 2020. Also, I would add, if you look at what the revenue forecast implies for Q1 2021, not only is it up 2% to 3% over 2020 Q1, but it's also up over Q1 2019. So, said differently, from a run-rate standpoint, we're starting out the year north of 2019 levels. And then one other comment I would make is in your observation, the 5% on the order entry and the 5% on the backlog. That 5% is calculated on a constant dollar basis. So that's really what's driving our optimism and our attitudes and our positive outlook as we enter Q1 2021. Now, that being said, you could clearly see there is a difference between timing and lead times in terms of shipments and order entry and backlog, and all of that has to be taken into consideration when we give the Q1 guidance, but when we look at that backlog and that order entry trend, that's what provides us that optimism heading into 2021.

Matt, what I would add to that is really that timing depends on various different businesses, right? There are certain businesses, like our medical business, it's pretty much not a backlog kind of business; it's more a book-and-ship kind of business. But if you contrast that with an ICS business, that is more backlog-oriented. You get the order, then you have a large system that you have to put together. And then our aftermarket parts revenues are pretty much book-and-ship. And in our adhesive business, it's somewhere in between; it is more standard products that you're customizing or configuring to sell. So, depending on a business, depending on where it is, there is a correlation of timing that we talk about.

Thank you, guys.

Your next question comes from the line of Jeff Hammond with KeyBanc. Jeff, your line is open.

Hey, good morning.

Good morning, Jeff.

Maybe just give us a 5G update. We're seeing new phones get rolled out with 5G; just what are you seeing in terms of a CapEx cycle, and on the mobile side as well as 5G infrastructure?

Yes, let me talk about that broadly, Jeff. What we are seeing in the business is that 5G related, but more broadly, digital acceleration is really driving the electronic supply chain within our businesses. The most prominent area where we are seeing this kind of activity in digital acceleration is in the semiconductor side of the business. So in the semiconductor business, we're seeing some incredible, really nice demand patterns emerging for our test and inspection business, and that is really where you're seeing the strength. In terms of 5G, some of the semiconductors are related to 5G, but not entirely; this is really mostly because of a contact-free economy that is beginning to emerge, virtual conferences, virtual investor discussions, how you order your Christmas gifts, how you order your groceries. All of this is really an example of how this contact-free economy and digital acceleration are driving the growth of semiconductors. So you want to think about our electronic business not so much with the mobile revolution as we thought about our business then and within the last decade, where the mobile revolution was really the biggest growth driver for us. But going forward, you want to think about our electronic business more in terms of digital acceleration, which would mean two to three times GDP kind of growth over the long cycle. And on infrastructure, it is still slow. We're continuing to get orders; we're continuing to work on those things. But it is not at the same rate as one would expect. So, 5G in our mind is still an emerging opportunity.

Okay. And then medical, you characterize as stable. And I guess I think this business is historically kind of a high single-digit, low double-digit grower, and maybe I'm just assuming stable means a little bit of growth. But I'm just trying to understand how you think the growth rate shapes up for medical and kind of these puts and takes around elective surgeries maybe coming back as we get vaccine distribution versus kind of comps from PPE equipment, etc.?

Yes, that's a great question, Jeff. In terms of our medical business, there are really two parts to the medical business that allow us to have flat to low single digits, but you've got to remember the context. The context really is our med device customers are down 10%-15%, so that's the context. And so why are we doing better then in that context? It's really because we have a fluid component business which is servicing the biopharma end market as well as fluid components for COVID-type therapies. So, what you're finding is our fluid component business is doing incredibly well, which is muting some of the declines we're seeing in our interventional component business, which is directly correlated to the selective surgeries and elective surgeries. So, big picture, if you think about our elective selective surgery kind of related component business, this is down a little bit. In the long term, all of the drivers, the aging population, single-use components, outsourcing of med device components, all of those are intact as spins normalize; we will return to mid to high single-digit kind of growth for this business, and that's our expectation. And right now in this transition, if you think about elective surgeries, in July they were down about 75%, they were 75% of pre-COVID levels, elective surgeries were. Our expectation was they were going to improve, but they have not. So as these elective surgeries improve, what you're going to find is that we will benefit from it, and we will return to our mid single-digit, high single-digit kind of growth in the medical business. So, let me stop there. If you have any follow-up, I certainly would be happy to answer.

No, that's great. Just maybe last one. I understand the uncertainty. Just give us a sense of what you need to see or I don't know if it's just a couple more quarters before you kind of flip to a more full-year kind of outlook. Thanks.

Yes. Joe, you want to take that?

Yes, our hope is that our visibility will improve, or I should say, our confidence as it relates to the volatile time that we're in with the pandemic, you know, here in Q1 and Q2, and so our hope is that by the time we have our Investor Day that Naga referenced, we'll resume annual guidance at that time.

Okay, thanks so much everyone.

Thank you.

Your next question comes from the line of Andrew Buscaglia with Berenberg. Andrew, your line is open.

I wanted to delve deeper into the Electronics component within ATS. Last year, there was a lot of optimism heading into 2020. Clearly, there were challenges to manage related to trade and the pandemic. How do you see the current situation compared to historical cycles for that segment? As the year continues, what should we be watching to understand how that business develops?

Yes, Andrew, thank you. The electronics business, what has happened with our electronics business is something that we've been talking about for a while. If you think about historically, going back a decade ago, over the last decade, Nordson benefited from this incredible mobile revolution, where you went from 30 million phones to about 1.5 billion phones worldwide. It was an incredible time of change, incredible amount of things changing in mobile technology; Nordson played a significant role and contributed incredible technology and value to our customers and benefited from it. That said, as you think about the next decade, and that's sort of what we are in right now, that mobile revolution was a once-in-a-lifetime kind of event, and what you're going to see is a much more normal kind of growth, still pretty strong growth, two to three times GDP. And so, the way we plan and think about our business is, we think about two to three times growth across the Electronics supply chain, not just mobile, but really, in our view as we work with our customers and what we see in our businesses, what we find the greater drivers are digital acceleration. In virtual conferences, virtual way of doing business, virtual way of buying groceries, virtual way of ordering Christmas gifts, many different ways you think about it; this virtual economy, this contact-free economy continues to grow, which is leading to digital acceleration on infrastructure in capabilities. Certainly, all of this adds to supply improvement and order trends that are across the supply chain. Nordson has done a really nice job over the last decade to diversify from just one particular product category to multiple semiconductors, components and products PCB, so we're diversified across the electronics supply chain, and so we'll benefit from that, and we diversified into test and inspection. And so, what you really see is this digital acceleration, all of this leading to complex devices and components, leading to 100% inspection, inline inspection in some cases, all leading to our test and inspection business doing really well. So, our expectation is two to three times growth. And it is a different kind of growth compared to what you experienced in the last decade.

Yes, okay. With NBS Next, you're using data to better understand your business, and while you've identified this aspect, is it influencing any changes in segments you're interested in, or will the focus continue to be on test and inspection and medical?

So as you think about it, we didn't talk about this when we clarify it, our focus is going to be on test and inspection and medical, but really that is what was behind our public discussion about NBS Next. We were still in the process of building it, but really what drove our focus was focus on test and inspection and medical, which is really a concerted view inside the company on how the portfolio was, and where was the greatest growth opportunities or the most differentiated parts of the company, which have the greatest growth potential is sort of what led us to this focus around testing, inspection, and medical. We are looking for new market spaces that have characteristics that are very similar to Nordson, do we like the company potentially, what is the level of differentiation? So should we ever run out of ideas? We do not rule out the opportunity to expand into a newer space should that need to happen.

Okay. Thanks, Naga.

Thank you, Andrew. I appreciate the question.

Your next question comes from the line of Saree Boroditsky with Jefferies. Saree, your line is open.

Thank you, and good morning.

Good morning, Saree.

How does the MDS next portfolio analysis find any businesses or product lines that you found were being underfunded that you want to focus on growing organically going forward?

I think that's a great question. We are really focused on this decision, and there are two ways to approach it. First, it's about maintaining a consistent and disciplined perspective when evaluating opportunities within the company. More importantly, this analysis and decision-making now occur at the division level. While it's valuable to understand the company's overall goals, it's even more effective to analyze individual businesses and their segments to identify the greatest opportunities. As our division leaders define their strategic priorities, we're seeing them take ownership of these decisions. The company has effectively maintained its commitment to customer engagement and innovation. So, while I wouldn’t say there's been a complete shift, we are discovering new opportunities. I’m particularly excited that these decisions are now being made much closer to the customer and are informed by real-time knowledge, which reflects the shift we are undertaking.

Thank you. And then lastly, as we think about the backdrop for industrial spending next year, what are you hearing from customers as far as appetite for capital spending?

As we talked a little about how the industrial business remains challenged, but we're starting to see some recovery. From the middle of the year to now, sequentially the orders continue to improve and continue to grow. We see some of that in our industrial businesses. So as we think about it, it remains a dynamic environment, but our expectations are that it is trending up, and we expect some recovery in the first quarter.

Great. Thanks so much for answering my question.

So I would just add your comment on the MDS Next; if you look at our SG&A, we did take several actions during the back half of 2020 to lower our structural costs. That said, those actions were very strategic, focused on business as identified in areas identified through the MDS next framework. At the same time, it also allowed us areas where we wanted the best, as Naga mentioned. So, if you look at our product development costs on the full year in the quarter, it was actually flat for the full year, up in the quarter. So, there are areas where we continue to invest, and there are areas where we are taking strategic cost reduction actions.

Thank you.

Your next question comes from the line of Mike Halloran with Baird. Mike, your line is open.

Good morning.

Good morning.

Some thoughts on the margin profiles as you worked through fiscal '21. Could you just help us put together the puts and takes? How are you thinking about incremental margins with some new structural cost improvement initiatives providing a tailwind, and any other puts and takes when you think about obviously the divestitures coming up that will help with the mix, but beyond that, how should we think about some of the key buckets in fiscal '21?

Sure, Mike. Let me provide a general overview of our perspective on the business, and then Joe can delve into the specifics. Overall, we anticipate that as our revenues increase, our expectation for incremental margins will exceed 45%. This outlook allows us, with a growth rate of 54%, to reinvest in the business for continued expansion. With that, I'll let Joe discuss the details regarding the various factors involved.

Yes. When you think about the incremental margins, I mean our guidance here in Q1 I think are high incremental margins sequentially and our stay on year-over-year basis because that is where you are seeing the benefits of some of those structural cost reduction actions in the Q1 numbers, but I will go back to Q4 and I'll just point out. I'm quite pleased with IPS, 30% OP as a percent of sales. And that was nice sequential incremental margins there when we look at it compared to Q3. And so, it just highlights that that particular business, when some modest growth can really drop some nice incremental margins north of 50%. And so, that 30% is back to the Q4 2019 levels, but also even to Q2, Q3 back in '19 when that business is north of $300 million doing 29-30% margins is something it can do. So, it's nice to see that bounce back from the Q3, which was a little bit depressed. Some of those items we view it as temporary. And it is nice to see that they were temporary in nature.

And then on the capital deployment side on the external, obviously internal is the priority, but what does the acquisition side look like? How are you thinking about buybacks, anything like that? What does the prioritization look like in '21 as well as what the opportunity side how realistic it would be to move the needle on the acquisition side?

Yes. From a priority perspective, organic growth typically offers the best return with the lowest risk. Therefore, we continue to invest organically in the business. It requires relatively little capital and does not heavily impact our strong cash flow from operations. As you know, we remain committed to paying and increasing dividends. We would also like to engage in share buybacks to mitigate dilution, but our primary focus is on acquisitions. The M&A market has been challenging, but I am pleased with our progress with Fluortek, vivaMOS, and the recently announced divestiture. Like factories adapting to safely produce in the current environment, the M&A community is also learning how to navigate deals. I believe the M&A market is improving, and we are actively engaged. We are strategically concentrating on growth opportunities outlined in the NBS Next framework that Naga discussed with you. We are working to deploy capital through acquisitions, and I would describe our pipeline as expanding.

Appreciate the time and the color. Thank you.

Thank you, Mike.

Your next question comes from the line of Christopher Glynn with Oppenheimer. Christopher, your line is open.

Thanks. Good morning. I had a question about the T&I momentum and the compounding dynamics involved. I'm interested in understanding what you are focusing on regarding the succession pattern of new capabilities compared to the adoption of the technology updates you've introduced over the past year, and how these two aspects align with achieving complete online testing capabilities.

Yes, that's a great question, Chris. We're putting significant effort into this area, which has strong potential for the company. Looking at our test and inspection business, we currently focus on two or three main product technologies. The first is x-ray inspection, the second is acoustic imaging, and the third is mechanical testing, particularly for wire bond testing. We also perform optical inspection, but that's a smaller aspect of our business. Our primary product lines are x-ray imaging, acoustic imaging, and mechanical testing. We believe that both acoustic and x-ray imaging will continue to grow, especially as devices become more complex. For instance, in the past, complex semiconductor packages were sampled to ensure process stability and product quality, but due to their increasing complexity and functionality, the necessity for 100% inspection has emerged. Customers now seek comprehensive insights into the integrity of their products—not just whether the bonds are secure but also ensuring all components are correctly placed. Consequently, 3D metrology integrated with x-ray inspection has become crucial, transforming from a nice addition to a necessity. To support these demands, we need to maintain our excellence in resolution while also enhancing our speed and minimizing signal noise. The recent acquisition of CMOS image sensors addresses these needs by providing a unique combination of faster speeds, higher resolutions, and lower noise levels. As we enhance our inspection capabilities, we will identify further technologies enabling real-time inspections at an elevated pace and improved 3D metrology capabilities. Currently, we are focused heavily on the electronics market but are also in the early stages of diversifying into adjacent markets. The vivaMOS acquisition allows us to consider becoming a component supplier, enabling us to sell our image sensors and tubes to other OEMs in markets where we previously lacked a presence. Our superior resolution, low noise levels, and high speed position us well. This is an exciting time for our test and inspection business, which we will continue to invest in. An area we haven’t covered much yet is defect classification, which is vital for our customers to determine the quality of chip packages. There are many facets to our strategy, but overall, we see solid organic growth opportunities and potential acquisitions. We will remain disciplined in our acquisition strategies, focusing on meaningful additions that enhance our strengths in positioning technologies, customer relationships, and value creation.

That's great detail and great bang for the buck on the question. Thanks. Just a little housekeeping to close-up, D&A and bias on working capital through the cash flow statement for fiscal '21, any comment there, Joe?

Yes, so quite pleased with our progress on working capital liquidation there in 2020, particularly the strength in Q4, we improved, I would say our efficiency around the AR side. And so when you look at the cash flow statement, you'll see it was on the AR, and it's not just selling 3% or 5% less than we did in Q4, I should say. It was really improving the DSI, as we implement NBS Next and see that rollout. I think going forward, there's an opportunity on the inventory side. So really anxious as we go into 2021 to continue to focus on the cash flow, and do feel that there's some opportunities from an inventory efficiency side there.

Thanks. Do you have a D&A figure for fiscal '21?

D&A, I don't have a figure yet; it's going to depend on the timing of this, or I should say, the screw and barrel divestiture.

Your final question comes from the line of Chris Dankert with Longbow Research. Chris, your line is open.

Hey, good morning, thanks for fitting me in here. Ran over this quickly, but just want to make sure I'm understanding the dynamic when we're looking at the ATS business specifically, as you characterize Medical stable, Test & Inspection up double digits, high singles; that really does kind of give the sense that that Dispense was extremely weak in the quarter kind of despite some of the other strength going on in PCBs and Semis. Am I thinking about that right, and I guess, just what was the key driver of the weakness in the quarter on that core dispense business and advanced technology?

Yes, I think it's a good question, Chris. Our dispense business, as you think about it, we've benefited in the last decade from this mobile revolution, this incredible investment on mobile revolution. We are benefiting from some projects that are related to semiconductors in that business, certainly benefiting from some projects in some newer features, but not to the same extent as we've benefited in the past. So, you had a competition there for that business that we're working our way through. In general, our expectation for that business is as this competition gets worked out, what you're going to find is going to be a nice 2% to 3% grower; isn't going to be the same kind of grower that it was, but the company was very thoughtful in diversifying into Test & Inspection, and so Test & Inspection all of a sudden is a really nice growth engine for us in the semiconductor side. And we'll benefit from it. Hopefully, that gives you how we're thinking about it internally.

That's fair. That's fair. Thanks, Naga. And then I guess just lastly from me, when we look back at the other half of the business, dispensing; I guess the coatings business versus hot melt, something that coatings is down pretty substantially, even really driving though the weakness in the fourth quarter here in hot melt was much more stable. Is that correct again, just kind of thoughts going forward?

Yes, yes, I think but you want to remember our coatings business was one of those businesses that had a substantial amount of orders slipped from the third quarter of '19 to the fourth quarter of '19. So, if you think about fourth quarter by itself, yes, the coatings business had a significant headwind, but if you look at it from the second half perspective, the coatings business was about mid-teens; still pretty high and was essentially one of the things. So there is a comp issue, and there is an industrial exposure issue. And you're right about to being in a much better place. Joe, do you want to add some color to it?

Yes, I would like to mention two aspects: the fluid dispense within ATS and the ICS business within IPS. We are noticing positive improvements in these sectors. These businesses have a significant industrial exposure. Reflecting on Naga's comments, during the latter part of 2020, we observed a consistent increase in order rates. Although there is a year-over-year decline, these sectors are showing sequential improvements.

Got it. That's all very helpful color. Thanks so much guys. And best of luck in the '21 here.

Thank you, Chris.

This concludes our question-and-answer session. I will turn the call back over to Naga for closing remarks.

All right. Thank you for your time and attention on today's call. We are well positioned going into fiscal 2021. We remain focused on our long-term objective of making a strong Nordson even stronger as we deploy NBS Next growth framework to prioritize organic and acquisitive growth opportunities while also unleashing an ownership mindset within our customer-focused divisions. We wish you a happy holiday season. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.