Good morning, and welcome to the Nordson Corporation Conference Call today, December 14, 2017 to report Fiscal Year 2017 Fourth Quarter Results and Fiscal Year 2018's First Quarter outlook. Today's conference call is being broadcast live on Nordson's webpage at Nordson.com/investors and will be available there for 14 days. There will be a telephone replay for the conference call available until December 28, 2017. This can be accessed by dialing 404-537-3406. You will need to reference ID number 7396249. During this conference call, forward-looking statements may be made regarding 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 remarks on the quarter, there will be a question-and-answer session. With that being said, I will like to introduce Mike Hilton, President and Chief Executive Officer of Nordson Corporation. Please go ahead, sir.

Thank you. Good morning, everyone. Thank you for joining Nordson's 2017 Fourth Quarter Conference Call. I'm joined by Greg Thaxton, our Senior Vice President and Chief Financial Officer. I'd like to begin by recognizing the outstanding effort of our global team for delivering full year record-sales operating process, earnings per share and EBITDA. Our commitment to meeting our customers' needs and delivering the best technology solutions continues to be our priority, helping us surpass $2 billion in annual revenue this year. I'll provide some highlights on our record-setting financial performance and Greg will offer more detailed commentary. Looking at the fourth quarter, organic growth of 2% was driven by a strong demand in the electronics end market, along with solid growth in medical and those end market serving the Adhesive Dispensing segment. Against very challenging comparisons of year ago where total company organic growth increased 13%, this quarter's performance exceeded our guidance. Our recent acquisitions added 10% growth for the quarter, the sales volume coupled with our continuous improvement initiatives resulted in EBITDA growth of 17% and EBITDA margin improvement of about 1 percentage point in the fourth quarter as compared to the same period a year ago. Also during the quarter, we increased our annual dividend by 11%, marking our 54th consecutive year of dividend increases. Overall, our fourth quarter performance was solid and in what again was a very strong year for Nordson. Looking ahead to the New Year, our backlog indicates another robust first quarter for fiscal 2018. Our guidance for the quarter is very strong and is largely driven by our Advanced Technology segment where strong demand in electronics and medical end markets is driving performance. I'll speak more about our outlook in a few moments, but first, I'll turn the call over to Greg to provide more detailed perspective on the fourth quarter and our first quarter guidance. Greg?

Thank you, Mike, and good morning to everyone. I'll first provide some comments on our fourth quarter and full fiscal year results before moving on to our outlook for the first quarter of fiscal 2018. Fourth quarter sales were $574 million, an increase of 13% over the prior year's fourth quarter. This change in sales included a 2% increase in organic volume; the 10% increase related to the first year effective acquisitions; and the 1% increase related to the favorable effects of currency translation compared to the prior year's fourth quarter. Organic growth exceeded the high end of our guidance range driven primarily by strong demand in electronics end market. Looking at sales performance for the quarter by segment, sales in Adhesive Dispensing segment increased 6% as compared to the prior year's fourth quarter, inclusive of 4% organic volume growth and 2% related to favorable effects of currency translation. This marks the 10th consecutive quarter of organic growth in the segment, where all product lines in nearly all regions drove the increase in the current quarter. Within the Advanced Technology segment, sales volume increased 29% from the prior year fourth quarter, inclusive of 4% organic volume growth and 25% growth related to the first year effect of acquisitions. The effects of currency translation were immaterial. This is outstanding performance that exceeded our expectations considering the difficult comparison to the prior year fourth quarter where organic growth for this segment was 30%. Strong demand from electronics and medical end markets drove the current quarter's growth. We continue to benefit from the ongoing changing technology in the marketplace and our ability to broaden our application solutions. Regionally, growth was strongest in Japan with the Americas and U.S. also adding to this growth. This segment's acquisitive growth includes one month of a fiscal 2016 LinkTech acquisition and the fiscal 2017 acquisitions of Ace, Interselect, Plas-Pak and Vention. Organic sales volume in the industrial coating segment decreased 8% where this segment was also up against the very challenging comparison to the fourth quarter a year ago where organic volume growth was 12%. Customer demand in most product lines was offset by strong prior year performance in our cold material product line. Europe and Japan were strongest geographically in the current quarter. Moving down the income statement, gross margin for the total company was 54% in the quarter and operating profit improved 13% to $125 million as compared to the prior year's fourth quarter where reported operating margin of 22% in the quarter. This performance includes approximately $6 million of intangible asset amortization expense related to acquisitions made in the current year which dilutes operating margin by a full basis point. Looking at operating performance on a segment basis, Adhesive Dispensing delivered operating margin of 28% in the fourth quarter. This was an impressive improvement of 4 percentage points driven by changes in product mix and fewer restructuring charges as compared to the prior year. The current quarter includes approximately $1 million in restructuring charges related to facility consolidation efforts. Within the Advanced Technology segment, reported operating margin was 24% in the fourth quarter or 26% when excluding $6 million of intangible asset amortization expense related to current year acquisition. Industrial Coating segment delivered operating margin of 18% in the fourth quarter, down from the prior year's exceptional performance due to volume leverage in mix, but still strong performance for this segment. On a total company basis, net income for the quarter was $80 million and GAAP diluted earnings per share were $1.37, a 5% increase over the prior year GAAP diluted earnings per share. The $6 million of intangible asset amortization charges in the current quarter where current year acquisitions reduced earnings per share by $0.07. As Mike noted, we delivered strong fourth quarter EBITDA of $150 million, a 17% increase over the prior year fourth quarter and EBITDA margin improved 1 percentage point to 26% as compared to the prior year's fourth quarter. Cash flow from operations was $133 million and free cash flow before dividends was $111 million or 139% of net income, highlighting our continued focus on liquidity. Our press release includes financial exhibits reconciling net income to free cash flow before dividends and adjusted free cash flow before dividends as well as EBITDA and adjusted EBITDA. I'll now share a few comments on our full year results. Sales for fiscal 2017 were $2.1 billion, inclusive of very strong organic growth of 8% as compared to the prior year, which also was a strong year for Nordson. The first year effective acquisitions added 7% sales growth and we continue to be pleased with the performance of these acquisitions. Full year operating profit was $458 million, which is an increase of 18% over the prior year and inclusive of approximately $15 million of intangible asset amortization expense related to current year acquisitions. Reported operating margin was 22% or 24% on an adjusted basis to exclude both the effective one-time charges highlighted in the EPS reconciliation financial exhibit and the $15 million intangible asset amortization expense, representing a 200 basis point improvement over the prior year's adjusted operating margin. Net income for the full year was $296 million and GAAP diluted earnings per share were $5.08. Adjusted diluted earnings per share increased 15% over the prior year to $5.37. Both EPS amounts include the $0.18 per share of charges for intangible asset amortization expense for fiscal 2017 acquisitions. A reconciliation between GAAP earnings and adjusted earnings per share is included within the financial exhibits to our press release. EBITDA for the full year increased 19% to $547 million and adjusted EBITDA increased 22% to $565 million, both compared to the prior year. EBITDA margin and adjusted EBITDA margin were 26% and 27% respectively, both up over 100 basis points as compared to the prior year. From a balance sheet perspective, net debt to trailing 12-month EBITDA inclusive of acquired EBITDA was just under 2.5x at the end of the fourth quarter. We generated $282 million of free cash flow before dividends and distributed $64 million in dividends for a payout ratio of 22%. I'll now move on to comments regarding our outlook for the first quarter of fiscal 2018. We entered the quarter with strong momentum where as of October 31, 2017; backlog was approximately $402 million, an increase of 45% compared to the prior year, inclusive of 28% organic growth and 17% growth due to acquisition. Backlog amounts are calculated at October 31, 2017 exchange rates. We're forecasting sales to increase in the range of 30% to 34% as compared to the first quarter a year ago. This growth includes organic volume growth of 15% to 19%, 11% growth from the first year effective acquisitions and the positive currency effect of 4% based on the current exchange rate environment. At the midpoint of this outlook, we expect first quarter gross margin to be about 55% and operating margin to be approximately 22% or 23% excluding $6 million of intangible asset amortization expense associated with fiscal 2017 acquisitions. EBITDA margin is forecasted at 27% for the quarter as compared to 23% for the prior year's first quarter. We're estimating first quarter interest expense of about $11 million, depreciation and amortization expense of about $25 million and an effective tax rate of 29% based on current tax law resulting in first quarter forecast of GAAP diluted earnings per share in the range of $1.29 to $1.39 per diluted share. The CPS range is inclusive of the $6 million or $0.07 per diluted share of intangible asset amortization expense related to the fiscal 2017 acquisitions. These charges did not occur during the first quarter of fiscal 2017. We expect EBITDA to be in the range of $141 million to $150 million. In addition to this first quarter outlook, the following full year data points may be helpful where our effective tax rate were forecasting the full year rate to be 29% based on current tax law and we're forecasting capital spending to be approximately $60 million. And with that, I'll turn the call back over to you, Mike.

Thank you, Greg. This is outstanding performance for both the fourth quarter and the full fiscal year. I want to again thank our global team for helping us deliver these record results for fiscal 2017. Our first quarter guidance is very strong, largely driven by the Advanced Technology segment where strong demand in electronics and medical end markets is driving performance. Our diversification efforts to drive growth through new applications, technology and tiering are paying off and our recent acquisitions are off to a good start. With a short-cycled nature of our end markets, we have limited visibility to sales beyond the first quarter. However, we do anticipate future organic sales growth to moderate to more typical levels beyond our first quarter, particularly giving the challenging comparisons from a strong fiscal 2017. Our strategic priorities for the year remain consistent with prior years and will continue to be focused on driving our growth initiatives across each segment. From an [indiscernible] perspective, we'll continue to target high-quality companies in our targeted space and we'll continue to use tools within the Nordson business system to drive operating improvement across the enterprise. With that, we'll pause now and take your questions.

Thank you. [Operator Instructions] Our first question comes from the line of Matt Summerville of Alembic Global Advisors. Your line is open.

Thank you. Good morning. Can you first talk about the Advanced Tech business and whether there's a clearly-defined timing element to this? I guess the best word may be described as the surge you anticipate in your business in Q1? Whether that's a handful of projects, a few customer concentrations that's driving that or this is indeed something more broad-based and then also historically you've given quarterly order data. Is there are reason you're not providing that and if so, are you able to provide it in response to the question?

Yes. Let me comment on the first piece. What we've seen really in the tail end of our fourth quarter and into the first quarter is continuing strong demand in the electronic segment. A good portion of that is mobile-related. But also, we're seeing some large orders related to some underlying growth in newer technologies. For one example, that would be moving from rigid to flex circuits to provide some more flexibility to customers with smaller design footprints. What I'd say is that we saw a couple of large projects come through, some of that supporting mobile directly, some of that more broadly-based. So obviously we've had a pretty strong year of mobile introductions this year and that has continued a little bit into the fourth quarter and into the first quarter. At a high level, that's what we're seeing on the electronic side. As far as the guidance around orders, let me give you our thought process here. We've been thinking about the order guidance for quite a while. Originally, we provided that because we thought it was providing additional insight with regard to underlying run rate across the business. But more recently over the last couple of years, we've seen through the order rates be out of whack a little bit with backlog and/or our sales guidance. And the reasons behind that are a couple of fold [ph]. The mix of our business has changed with the growth in the Advanced Technology segment, both in electronics and now in the medical business. Particularly in the electronics side, our delivery windows have been shrinking and the timing of orders year-to-year has varied pretty considerably. In addition, we have some customers who places orders for large projects, but look at deliveries over multiple quarters. We've found ourselves in situations where we're explaining why our sales guidance looks out [indiscernible] with our order growth rate and we thought a more consistent way to look at things was to give you sort of the backlog at the end of the quarter and then our guidance going forward that takes all of those kinds of things into effect. And we also were getting feedback from many of our shareholders that they were getting confused by order rate data and it wasn't necessarily healthy to provide additional insight. That's why we decided to make that change.

Got it. And then just one follow-up with respect to Advanced Tech; as I look at the incremental margins in the fourth quarter, if I back out, I think the $6 million of intangibles amortization, I come up with a number in the high 20s, which isn't a bad number per se, but I guess I would think with the high positive volume gain, maybe that number would be a little bit higher. So going forward -- and I assume you're going to continue to include the intangibles amortization as you've laid it out in your guidance -- what's sort of the right way to think about the incrementals in Advanced Tech going forward?

Matt, this is Greg. What I'll add there is we did see good volume growth success in the fourth quarter, but that was largely acquisitive growth. We had low single-digit growth on an organic basis and what we had suggested in prior quarters was the operating margin excluding the intangible asset amortization for those acquisitions was very near the opt margins of that segment. Have we seen stronger organic growth? Or when we see stronger organic growth, that's where we see very strong incremental margins helping lift margins. In this case, that wasn't necessarily true.

Got it. Thanks, guys.

Thank you. Our next question comes from the line of Michael Halloran of Baird. Your line is open.

On the order side, the one thing that was useful was the composition by segment. Could you give a little context on the backlog as we exit the year in two respects? One, I'm guessing, Mike, that it meres [indiscernible] the comments that you just gave to Matt's question, but a little thought on the backlog as you look through the segments and also how to think about conversion of backlog into revenue?

Yes. From an overall backlog standpoint, obviously the strongest change year-on-year is in the Advanced Tech segment and if you take out -- for a couple of reasons; one, most of the acquisitions fall into that. They're all falling to that segment, number one. Number two, on an organic basis, medical is strong, electronics is particularly strong. As you look at the other businesses, our Adhesives business was up, our Coating business was a little bit down and that's really more of a year-on-year comparison where the prior year we had some strong flip in Q4 and then Q1, some strong auto platform work that didn't repeat. I'd say in general, the biggest driver is the Advanced Tech segment, but the Adhesives piece is up as well. As we look to the first quarter, we expect all of the segments to be up, but again, the key driver is going to be the Advanced Tech piece.

And the backlog conversion question?

I'd say for this quarter coming forward, lowest of what we see in the backlog will get converted in the first quarter, but we do have some longer projects both in the Adhesives area, particularly the polymers and then some of the industrial coatings and even in some of the technology side where you have some orders to potentially push out. I'd say a good portion of that as you know converts within the quarter.

That's sort of my guess. And then second question, obviously the seasonality on the Advanced Tech side is shifted around here. Your answer to previous question, quite some nice project activity, some electronics pieces that have moved in the quarter, some of the higher complexity items helping out. I know your visibility is limited on that side, but could you help provide how you're thinking about seasonality through fiscal '18? Are you expecting some seasonality to materialize in the fiscal second quarter that maybe would have materialized in the fiscal first quarter before ramping hard in the back half of the year? Something smoother than that now that you've got a larger piece of that portfolio being medical? Maybe just thoughts on the cadence.

Yes, just a couple of comments there. I'd say the first quarter obviously is stronger than we would have expected at the year-end, but that's really linked to some of those large orders that we got. When you look at the second and third quarters going out, we had strong double-digit organic growth. There are going to be a little tougher comps year-over-year. So I think that will be the challenge that we're up against. I would say across the businesses and you start at the technology side of things, we are looking on a pro forma basis, medical being a sizable part of the portfolio now and that Advanced Tech piece, it's likely to be in that 30% range. So that's going to be something that's a little bit more stable and then I'd say if you look at the pieces, not electronic-related beyond medical is probably as much as another 20%. So that's also likely to be a bit more stable throughout the year and less seasonal. The electronics piece is the one that can vary, but I would say is this is the time of the year where we look at and work with our key customers on project activity and our project activity continues to be robust. I think the challenge will be that it's been a strong launch here by some of the mobile guys, but we're seeing a lot of interest in some of the newer technology, whether that's on the wafer side or whether that's on some of the things like flexible packaging side of things which is gaining share in the marketplace and has generally higher growth. We'd be figuring out that mix particularly in that segment against some stronger comps in the second or third quarter I think is the challenge. But that's the best insight we can provide at this point.

Thanks for that. I appreciate the color. Congrats on a very nice quarter.

Thank you.

Thank you. Our next question comes from the line of Matt Trusz of Gabelli & Company. Your line is open.

Good morning. Thanks for taking the question. Just following up on that, could you go through more detail and discuss the technology dynamics driving growth and electronics away from mobile and more on the chip and semi side?

Yes. I'll make a couple of comments. On the semi side, we've historically done a lot on the packaging, but now we're seeing some customers that are looking at Advanced Technologies where they're actually stacking on the wafer as opposed to after the wafer is diced. And so ultimately that will proceed towards what's called through silicon via [ph]; so just think of that going vertical on the chip architecture and doing that on the wafer. That's a new application that has resulted in some nice growth for us over the last sort of 18 months. There are still potential additional customers that would adopt that particular approach and that's very sophisticated technology that we developed in concert with these customer applications. I'd say on the expense side, but also on the inspection side, a lot of the new products on the electronics side have enabled growth in a number of areas. On the packaging side, on the flexible packaging, rigid packaging and flexible packaging, in smaller packages to basically cram more in and allow for growth in the batteries, customers are starting to go to more flexible packages and that's something that our technology is enabling. And then I'd say if you look on a broader basis, right now, today, probably about 15% of Advanced Technology business goes into auto electronics and we see that as a longer term growth opportunity as you move towards more and more senses in equipment that would support eventually autonomous driving. We're doing a lot of development there. And then when you look at the non-electronics part in the Advanced Technologies space, with the medical piece, virtually all of the medical growth is coming from supporting new products and new applications for customers and that's the hallmark of our total company in all of our businesses, in our focuses around how do we create our own demand or whether that's in our Adhesives area, our Coatings area or in Advanced Technology area. That's really the focus and that's something we've been driving already relatively lower growth environment that we've seen over the last several years.

Great, thank you for the detail. Just to ask a follow-up on that. What's your sense of the penetration of these newer technologies into the supply chain and how many more years or portion of the market will need to adapt?

I'd say it's early on, but it's hard to say for what I sense at all will be adapted. I think if you look at broader flex circuit technology, that's something that's growing through the high signal digits rates right now as basically some of the rigid circuit board gets converted over. On the wafer side, there are multiple ways to get at three-dimensional approach. It depends on which dimensions the customers take, but there's still some additional opportunity there. And then one area we haven't talked about yet is the other things that we offer on the electronics space, particularly test and inspection. Customers go to either three-dimensions or different approaches in process or technology. The inspection to this is becoming more critical particularly on the x-ray side of things and we've got a whole new set of products that are doing really well. And then our most recent acquisitions of the smaller [indiscernible] based companies were off to a good start as well and that's interconnect and ultimately three-dimension. So, we feel pretty good about that. It's also a lot about electronics, but that's the philosophy in terms of driving new product and new application growth, and as Greg said earlier, tiering what we try to do across all of our business.

Matt, this is Greg. I'll just add a high-level comment. A lot of the trends that Mike talked about translate into more sophisticated solutions for our customers, that they're dispensing smaller quantities in tighter, more difficult to reach spaces and the more sophisticated the application is, the more likely they're coming to Nordson for that solution provider.

Thank you very much.

Thank you. Our next question comes from the line of David Stratton of Great Lakes. Your line is open.

Good morning. Thanks for taking the question. Just one for me today; given the growth especially in ATS, can you talk a little bit about capacity where you stand as acquisitions? Have they been adding to capacities that you don't really need to expand? Or is there a potential to this growth to create some bottlenecks and impact your ability to meet demand in the near future?

There's a lot in that question, but let me suggest that -- I'd say particularly on the electronics side, we've become a very adapted flexing up and down. We have our facilities across the world where we have capacity to flex up and down and we've also used our Nordson business systems to many cases, re-layout our factory to relatively low cost and capability. So I think we're very good there. I'd say with the medical business as an example, we have been through the acquisitions adding not only capacity but capability in the U.S. and outside the U.S. and we have been expanding. We built a new facility in Colorado; we've expanded our facility in Mexico with our latest acquisitions; we've got some additional capability and we're all centered in all the key areas where our customers are doing their development work. But then I'd say across all of our businesses, we've used a combination of our continuous improvement activity and increasing levels of upgrading of equipment and automation to not only make us more efficient, but to give us the capacity we need. So other than sort of normal maintenance capacity, we're in pretty good shape and with regard to our Palmers [ph] business, we're finishing up this year the transition in that business' consolidation. We're in pretty good shape from that standpoint.

Thank you. Our next question comes from the line of Jeff Hammond of KeyBanc. Your line is open.

Jeff?

Hey. Sorry about that.

It's okay. Good morning.

Good morning. Just maybe on the acquisitions, just I think you said they're on track, but anything notable in terms of opportunities that you're uncovering it on cost or revenue synergies early on?

Well, I would say a couple of things. We've done a number of acquisitions and maybe I'll break them down and start with some of the smaller ones. Our smaller ones were two acquisitions in the electronics side that got us into a new area in the selective side of the space and our plan there is off to a good start, just as we did with the matrix inspection company which is the globalized local business. So we've seen some good success, I'd say in utilizing our global sales force to create new opportunities and start to close on some of those. I'd say with our plus back acquisition, we've added complement story as the product line and got us into a new area in animal health and I think we're seeing benefits from that and that gives us opportunities to optimize our EFT business there. I'd say Vention brought a lot of capability to us, in particular in the design and development space, which really allows us to get in early not only with critical larger established customers involved in their new product development, but also with some of the entrepreneurial new venture development companies there and we've been able to seize opportunities to pull through our broader product portfolio of products and I think longer term, there will be opportunities across some of these businesses to further optimize our supply chain and footprint. But I'd say in the short term, we're off to a good start; we've added capability in the case of medical side. We've added significant capability on the design front, I think just what customers are looking for and very helpful with [indiscernible] product portfolio through and it really came with some various established organization and people capability.

Okay, great. And you mentioned active project inquiries, et cetera and Advanced Tech looking out past Q1. Can you speak to the same on what you're hearing from your customers on the Adhesive side? If we look a little further out just in terms of quoting and customer feedback, et cetera?

Yes. I'd say on the adhesive side, it's a pretty skeptical [ph] of what we see. Just timing of things slowdown in most of the businesses for the holidays, but I'd say in terms of opportunities going forward, we think there's an opportunity for growth in all of our businesses. Some of them are more digital like our product assembly businesses and our palletizing businesses, but we're seeing typical activity and opportunity there. And for us in businesses like our traditional Adhesives business, we continue to benefit from both tiering. This year we got a lowered tier of non-woven set of customers all new to us based on complete design and built out of Shanghai and there are some growth opportunities there and then we've really used new product development to help recapitalize in that business and I'd say we've introduced some new technology to Asia for example on the palletizing side where we've gone with our underwater palletizers. We've started up the first facility in China, it's going well and we've got a lot of interest now relative to competing products. We feel good about with what the new technology is bringing. I'd say at this point in time, our visibility in some of these businesses in the short term, but I think the activity is typical of what we've expect to see at this point in time.

Okay. Thanks a lot, Mike.

Yes.

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

Hey, good morning. Congrats on the organic and inorganic performance.

Thanks, Chris.

Just wondering about capital allocation in the medium term; you've come some pretty robust activity there as the focus on continued execution on the pipeline relative to debt pay down? Or where does all that stand?

I'd say our capital allocation is first and foremost supporting organic growth. I think Greg gave you some numbers on that and then second, around the dividend's piece, but both of those together are relatively mild. I think beyond that, we still have a short-term focus on debt reduction to free up capacity for opportunities and we will see opportunities out there in the targeted areas that we've mentioned. I think there are still probably the most opportunities in the medical side just because the market is more fragmented. But I'd say in the very short term, it continues to be around reducing debt to give us some free board opportunities through this year. So I'd say the priorities are pretty similar to where they've been after first quarter of last year.

Okay. And then a modeling question on the corporate number. It spiked up a little bit in the quarter, but what's the best way to plug in for run rates there?

Yes, Chris. This is Greg. We had some -- call it 'unusual items' in the course -- and one time in the quarter and most of that increase over the prior year was associated with an initiative that we have in North America to move a portion of the business to a more shared service type of model. So I'd expect as we move into FY '18, we'll kind of normalize that to spend the amounts that you've seen in the most recent quarters. And then fourth quarter to trend down over time.

Okay. And then my last one is on ADS. I just want to revisit if you can quantify the structural benefits from consolidation for fiscal '18 over '17?

Yes. I would say it's going to be relatively modest because we'll have completed both the major progress we have under way, the one in North America where we're consolidating three facility into one and the one in Europe were going from two to one. It will get completed in the year, but for the first part of the year, we're still running multiple facilities as we transition equipment's and build out the new facilities. We're further ahead in the U.S. and the project in Europe started a little bit later. So I'd say there will be some modest impact in this year and some larger impacts in '19.

Yes. Chris, we'll probably firm that number up and give you some better guidance on that margin improvement within that segment as we're heading into '19.

Okay. Thanks, guys.

Thank you.

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

Hi, thanks. Good morning.

Hi, Walt.

And congratulations, too. You talked about backlog and I think Jeff asked about it. He says I wonder if we could do the same thing on the coatings? It sounds like that one is probably maybe down even or probably growing the least. Any commentary on the first quarter on what you're seeing from projects over the next year?

Yes. As I mentioned I think earlier, we do expect for all the businesses to be up in the first quarter. But we haven't seen I'd say some tough comps this fourth quarter and in the first quarter on the Coatings business, primarily on the auto side. If you look at our powder and liquid container, those businesses have grown nicely. We had some big auto platform work last fourth quarter that went through and some of that continued into the first quarter as the customers were going through model changes. We'd only anticipate significant model change kind of activity going through this year. But we do see a couple of areas that I think for the future would present good opportunities for growth in that business where we had some revenue and expect it to tick up over time. One we've talked about before in the sort of aerospace area as customers both the end customers and the Tier 1 suppliers look to do more automation. So I'd say we've had a lot of development work and some modest sales to date. We expect that to pick up over time. Another area that we're seeing more opportunity in is with electric vehicles. There is more work around the batteries themselves and we're seeing opportunities across the business, but most importantly in the Coatings area to support some of the things going on in the battery development. So we see opportunities there over time. I'd say the thing that's been a little bit of a drag this year, that issue being '17 has really been the auto piece of the platform. In the longer term we expect to see growth in that area.

Okay. Thanks for that color and then if I could just ask -- I don't mean to beat the dead horse in the Advanced Tech, but I wonder if there's a way of delineating the traditional mobile phone makers versus China where it sounds like you've been maybe growing more rapidly as that market evolves. And then any difference in the growth rates there? And then with the new technologies, you talked about large projects, but I think this is the first time we're hearing that. I wonder if you could comment just on these test orders and then if the technologies work, there's more behind it as there's more features that go in with flexibles, or is this a short-term thing? Is there any visibility there?

Yes. There's a lot of components there; maybe I'll just start at just the highest level and if you look at the mix of our business in Advance Tech today. So if you look at pro forma for '18, about 30% of our business is going to be medical. There's probably another close to 20% that would be industrial and other types of application. Then about half falls into that electronics space. Of that total Advance Tech, about 15 is directly mobile and then you got auto electronics as the similar side. Semiconductor is a little smaller and other consumer electronics are a little smaller, so that could be gaming consoles, LEDs, a variety of other things. So there's a breadth in the diversification, I'd say to the applications there across the whole segment that is different than it was if you just go back a couple of years primarily because of one, the medical piece and two, some of these other applications. So I'd say now in some of the newer applications that we've mentioned, the direction for most semiconductor makers is to go 3D, to go to three-dimensional chips. The question is whether you do that before or after you dice the wafer. The newest technology is going towards doing it on the wafer, but everybody is not following that app. We got some indications that others will be going in that direction, but it's not clear yet whether that's going to step up in a significant way, but those are typically larger opportunities, more sophisticated equipment. With regard to some of the other technologies that support the mobile side -- and I think if you look at the most recent phones, the biggest thing you see is battery. Everything is about battery, capacity and space, which means it squeezes everything else out and so some of the things that customers are working on is how do I cram in the capability in that reduced space and one of the ways to do that is to use more flexible circuits and we're certainly seeing outsize growth in the flexible circuits and that's an area where we've been successful in offering our technology both on dispense and on inspection side. Those are a couple of examples of things that we'll work on. There's a lot of other things that customers are working on. Now, you also ask about the Chinese mobile folks versus a more traditional. '17 has been a good launch year for the more traditional global players. We haven't heard as much from the Chinese players, but over time they have been growing, taking share particularly in China. So the opportunity for them is they continue to grow in China, do they grow beyond China and we expect to see further growth there and as we've mentioned in the past, they have now gone on the animation train and they're moving that way. It's still not far along as the global folks that we expect that trend to continue. So we have lots of projects for all of these folks -- which ones are going to go and what time is always difficult to judge. And I'd say in the other areas that are outside of the electronics space, we've got a lot of development work, particularly in the medical side that's robust. And then on the other businesses as well, this is typically the time of the year where we're working on particularly the newer technology-related projects.

Okay, alright, I appreciate that color. Thanks, guys.

Thanks, Walt.

Thank you. Our next question comes from the line of Charlie Brady of SunTrust. Your line is open.

Hi, guys. This is actually Patrick [ph] standing in for Charlie. Thanks for taking my question.

Hey, Patrick.

Good morning. Looking at adhesive dispensing margin, I mean adjusted margins were 28%. Obviously very good. I just wanted to know what the mix of parts in consumables was for the segment and sort of looking out, what expectations you guys have in terms of adhesive margins expanding in '18 and beyond?

I'd say Greg is looking up the parts number here. Typically, that's a segment where the parts are a little higher than our average might be closer to the middle 40s and the lower 40s, but we'll give you a heads up on that. But it's in that range. I'd say longer term from a margin's perspective for that segment; we'd like to get to the 30% level. Some of that will come from our normal continuous improvement using our business systems. Some of that will come from the restructuring that we're going through in the Palmer [ph] side of the business, but our longer term goal would be to get to that 30% level.

Okay, great. As I wait for Greg on the consumables part.

Yes, we may have to follow up and get back to you on that. It's not jumping off the page for us right now.

Patrick, I have that. Within Adhesives in the fourth quarter, our mix of parts was about 46% and in that, trending pretty closely to what it had been in prior quarters and as Mike mentioned, that tends to be pretty close to where the total company -- total company was about 48% in the fourth quarter. Now, that's up a bit from prior year, driven by a couple of things: one, general mix in the quarter as well as we've got the impact of the acquisitions in there that are more of a consumable, so they fall into that category. So that's lifting as well by a couple of percentage points, what the total mix otherwise would have been prior to those acquisitions timing their way in. That's going to primarily be in the Advanced Tech segment.

Okay. And then I just want to go to Coatings for a second. Looking at the margins for the fourth quarter in '17, that seems to be lower than the previous three fourth quarters, I guess going back to '14. Is there anything that we should be looking at here or is it one of those items where we talked about volume being down in the bigger -- you guys had an impact on autos?

Obviously there's some impact from the volume being down a little bit and then there's a little bit of mix effects there. There's nothing structurally changed there and that's something that we've been on a good path of improvement year-on-year for quite a while and I think we have continued opportunity to move up a little bit in that area; so nothing structurally going on there.

Okay. That's all right. Thank you.

Thank you. And our next question is from the line of Allison Poliniak of Wells Fargo. Your line is open. Allison Poliniak-Cusic: Good morning. I just want to go back to Jeff's question in terms of customer or clients' thoughts into '18. As we stand today versus maybe a year ago, our customers are talking more optimistically about spending '18, or really no change at this point?

I would say we haven't seen a significant change in terms of the dialog at this point. Obviously we have this potential for tax change here coming up. If that happens, I could see particularly some of our smaller mid-sized customers that might be an opportunity for further reinvestment. But I'd say the mood is encouraging. I think if you look at the year just from a macro standpoint, the U.S. is probably going to be a little better than we thought clearly Europe and Japan are stronger this year than most expected. So we've seen some good performance there, but I'd say in terms of project list in volumes, not a dramatic change in terms of customer attitude. Not a dramatic change for us. Allison Poliniak-Cusic: Got it, thanks. And then I might have missed this, but could you talk about the growth rate that you're seeing medically? Are we still on that high single digit range at this point?

Yes. We've had a good year, a double-digit year for us this year and I think that our high single to double-digit expectation for us and the long run there. There's a lot of trends that favor that and as we talked earlier, a lot of that is driven by new customer procedures, and approaches and products that we developed to support them and particularly with the drive towards minimally invasive procedures, we'd see that as a strong opportunity going forward. Allison Poliniak-Cusic: Great. Thank you.

Thank you.

Thank you. We do have a follow-up question from the line of Walter Liptak of Seaport Global. Your line is open.

Hi. Thanks for taking the follow-up. I just wanted to -- you answered the question, Greg, about the shared services and the increased expense. Is this part of a bigger multi-quarter project to do more shared services where if that's true, were you in the project and is there going to be some savings from it?

Yes, Walter, that phase is part of our ongoing drive to improve overall performance, to drive how we can approach the business from a more efficient way and you could go back several years prior to acquisitions and suggest that in parts of the world, we had been executing under this model, but with acquisitions over the last several years, this is an effort to really kind of bring more of the businesses under this type of model. So we're starting first in North America. We're largely into that effort. We'll complete that let's say in most of that in the first half or so of FY '18 and then we will look to other parts of the world where it makes sense then to integrate some of the businesses that are not in some of the established locations where we had shared services. So I do expect that this will continue. I wouldn't suggest that I see this as being a significant expense to be modeled in once we get through the '18 effort here.

And I'd say Walt, the biggest benefit that we see is really -- there was a question earlier about capacity and capacity to support growth. For us the biggest benefit here is to have a platform that's going to allow us to scale across effectively and as Greg said, to integrate with some of the acquisitions more efficiently and there has been a fair bit of work that we needed to do upfront around process and systems and we're in the phase now starting to stand up the North American Organizations. Again, I think the benefits we'll see are sort of the longer term and our ability to scale more effectively and efficiently.

Okay. Where is the shared services going to be? In one location?

Yes. For the U.S., it's going to be in Ohio. In Europe and Asia today, we have I'd say partial shared services in different places as Greg was mentioning. But for the U.S., it's going to be in Ohio.

Okay, great. All right. Thank you.

In an existing facility.

Yes, at an existing facility that we're refitting.

Okay, thank you.

Thank you.

Thank you. And at this time, I'm showing no further questions. I'd like to turn the conference back over to Mr. Mike Hilton for any closing remarks.

First of all, I'd like to thank everybody for participating and I'd like to once again thank our global team for doing an outstanding job this year of meeting our customers' needs in a very effective way and allowing us to deliver outstanding results. With that I'd just say happy holidays to everyone. Take care.

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.