It has been about a month since the last earnings report for Nordson (NDSN). Shares have lost about 11.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nordson due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Nordson's Q4 Earnings & Revenues Top Estimates, Increase Y/Y
Nordson’s fourth-quarter fiscal 2024 (ended Sept. 30, 2024) adjusted earnings of $2.78 per share surpassed the Zacks Consensus Estimate of $2.59. The bottom line increased 2.6% year over year.
Quarterly Results
Nordson’s revenues were $744.5 million, up 4% from the year-ago fiscal quarter’s number, driven by solid momentum in the Medical and Fluid Solutions segment. Revenues beat the consensus estimate of $733 million.
Organic sales declined 3% year over year due to softness in the polymer processing and precision agriculture product lines. Acquisitions had a positive impact of 6% while foreign currency translation had a positive impact of 1%. Exiting the fiscal year, the company’s backlog totaled $580 million.
On a regional basis, revenues from the Asia Pacific region increased 7.5% year over year to $236 million. Revenues generated from Europe increased 0.6% to $185.4 million, while the metric in the Americas increased 2.4% to $323.2 million.
Nordson reports revenues under three segments. The segments are Industrial Precision Solutions, Medical and Fluid Solutions and Advanced Technology Solutions. A brief snapshot of the segmental sales is provided below:
Revenues from Industrial Precision Solutions amounted to $392.2 million, down 3.3% from the year-ago fiscal quarter’s level. The segment contributed 52.7% to NDSN’s top line in the quarter.
Organic sales decreased 5.5% from the year-ago fiscal quarter’s level. Acquisitions boosted sales by 1.2% while foreign currency translation had a positive impact of 1%.
Revenues from Medical and Fluid Solutions amounted to $200.2 million, up 18.7% from the year-ago fiscal quarter’s level. The segment contributed 26.9% to NDSN’s top line.
Organic sales decreased 3.2% from the year-ago fiscal quarter’s level. Acquisitions boosted sales by 21.4% while foreign currency translation had a positive impact of 0.5%.
Advanced Technology Solutions’ sales were $152.1 million, up 4.7% from the year-ago fiscal quarter’s figure. The metric represented 20.4% of Nordson’s revenues in the period.
Organic sales increased 3.9% from the year-ago fiscal quarter’s level. Foreign currency translation had a positive impact of 0.8%.
Margin Profile
Nordson’s cost of sales increased 1.9% from the year-ago fiscal quarter’s level to $341.7 million. Gross profit was $402.8 million, up 4.9% from the year-ago fiscal quarter’s level. The gross margin increased 70 basis points (bps) to 54.1%.
Selling and administrative expenses increased 12.5% year over year to $223.9 million. Adjusted EBITDA was $241.1 million, the margin being 32.4%. Operating income was $178.9 million, down 3.2% year on year. Operating margin of 24% decreased 170 bps from the year-ago period.
Net interest expenses totaled $27.3 million, reflecting a 5.4% increase from the year-ago fiscal quarter’s level.
Nordson’s Balance Sheet & Cash Flow
At the time of exiting fiscal 2024, Nordson’s cash and cash equivalents were $116 million, marginally higher than $115.7 million recorded at the end of fiscal 2023. Long-term debt was $2.1 billion compared with $1.6 billion recorded at the end of fourth-quarter fiscal 2023.
In fiscal 2024, NDSN generated net cash of $556.2 million from operating activities, down 13.2% from the last fiscal year period’s tally. Capital invested in purchasing property, plant and equipment totaled $64.4 million, up 86.1% from the year-ago fiscal period.
Dividends/Share Buyback
In fiscal 2024, Nordson paid out dividends of $161.4 million, up 7.3% from $150.4 million in the previous fiscal year.
Treasury purchase shares amounted to $33.3 million, down from $89.7 million in the last fiscal year.
Outlook
For fiscal 2025 (ending October 2025), Nordson anticipates adjusted earnings to be in the range of $9.70-$10.50 per share. Sales are expected to be in the range of $2,750-$2,870 million.
For the first quarter of fiscal 2025 (ending January 2025), it projects sales to be in the range of $615-$655 million, with adjusted earnings of $1.95-$2.15 per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -8.17% due to these changes.
VGM Scores
At this time, Nordson has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nordson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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