Nordson Reports Q2 Fiscal 2024 Results, Updates Annual Guidance

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Nordson Corporation reported results for the fiscal second quarter ended April 30, 2024. Sales were $651 million, comparable to the prior year’s second quarter sales of $650 million. The second quarter 2024 sales included a favorable acquisition impact of 5%, partially offset by an organic sales decrease of 4%. The organic sales decrease was driven by ongoing pressure in electronics product lines, partially offset by growth in industrial coatings systems and fluid solutions product lines.

Net income was $118 million, or $2.05 of earnings per diluted share, compared to prior year’s second quarter net income of $128 million, or $2.21 of earnings per diluted share. Adjusted net income was $135 million, a decrease from the prior year adjusted net income of $141 million. Second quarter 2024 adjusted earnings per diluted share were $2.34, a 4% decrease from the prior year adjusted earnings per diluted share of $2.45. The decrease was driven primarily by increased interest expense from prior year acquisitions.

EBITDA in the second quarter was $203 million, or 31% of sales, compared to prior year EBITDA of $203 million, or 31% of sales. EBITDA was flat as improved gross margins were offset by higher selling and administrative expenses primarily related to the first-year effect of the ARAG acquisition.

Commenting on the Company’s fiscal 2024 second quarter results, Nordson President and Chief Executive Officer Sundaram Nagarajan said, “Once again, the teams delivered a solid operating performance, delivering strong gross margins and 31% EBITDA margin. Our sales were in line with management expectations with the IPS and MFS segments delivering organic growth. While we see positive early indicators, our Advanced Technology Solutions segment remains impacted by the electronics cycle. I am pleased with our ability to manage profitability during this period.”

Second Quarter Segment Results

Industrial Precision Solutions sales of $367 million increased 9% from the prior year, inclusive of an acquisition impact and an organic sales increase of 2%. The organic sales increase was driven primarily by industrial coatings systems and packaging product lines. Operating profit was $118 million, an increase of $6 million from the prior year. EBITDA in the quarter was $132 million, or 36% of sales, an 11% increase from the prior year second quarter EBITDA of $119 million, or 35% of sales. The year-over-year increase was driven by the ARAG acquisition and higher organic sales and gross profit.

Medical and Fluid Solutions sales of $169 million increased 2% compared to the prior year second quarter. The increase was driven by growth in the fluid and interventional solutions product lines. Operating profit was $49 million, an increase of $1 million from the prior year. EBITDA in the quarter was $63 million, or 37% of sales, flat versus the prior year second quarter EBITDA of $63 million, or 38% of sales.

Advanced Technology Solutions sales of $115 million decreased 22% compared to the prior year second quarter. The organic sales decrease was driven by weakness across the segment. Operating profit was $19 million, a decrease of $7 million from the prior year with a decremental margin of 22%. EBITDA in the quarter was $24 million, or 21% of sales, a decrease from the prior year second quarter EBITDA of $32 million, or 22% of sales.

Outlook

The Company is entering the third quarter of fiscal 2024 with approximately $700 million in backlog, which continues to normalize and remain concentrated in systems businesses. Based on current visibility and order entry trends, the Company is updating its full-year revenue guidance range to flat to 2% growth over record fiscal 2023 and adjusted earnings per diluted share to the range of $9.35 to $9.75 per diluted share. Third quarter fiscal 2024 sales are forecasted in the range of $645 to $670 million with adjusted earnings in the range of $2.25 to $2.40 per diluted share.

Reflecting on the outlook, Nagarajan continued, “As we move into the second half of fiscal 2024, the positive indicators in the electronics end markets have not yet converted into orders needed to meet our previously issued guidance. We are also experiencing increased pressure from the agriculture cycle in Europe, which is causing OEMs to slow investments in spray implement purchases. In each of these cases, we believe the impact is temporary and we remain confident in the long-term growth drivers of these respective end markets. Our core strengths remain: a diversified portfolio, close to the customer business model, high-level of recurring revenue, NBS Next growth framework, and commitment to innovation. All of this positions Nordson well to deliver our long-term Ascend Strategy goals.”