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Nordson (NDSN) Q1 Earnings In Line, Up Y/Y on Solid Sales

Nordson Corporation NDSN reported flat bottom-line results for first-quarter fiscal 2018 (ended Jan 31, 2018).

Adjusted earnings in the quarter came in at $1.35 per share, in line with the Zacks Consensus Estimate. On a year-over-year basis, the company’s earnings surged 57% from the year-ago tally of 86 cents.

Revenues Increase From Volume Growth & Forex and Buyout Gains

In the reported quarter, Nordson’s net sales came in at $550.4 million, increasing 35.1% year over year. This improvement was driven by 30.4% gain from organic volume growth, benefits from acquired assets and 4.7% positive impact of currency translation.

Also, the top line surpassed the Zacks Consensus Estimate of $538.1 million by 2.3%.

At the quarter end, backlog was $405 million, up 24% year over year.

On a regional basis, revenues, sourced from the United States, increased 32.1% year over year to $165.8 million. Revenues generated from operations in Japan surged 172.4% to $65.9 million, while that from the American operations grew 14.1% to $34.3 million. Sales in Europe improved 19.1% to $141.9 million and that in the Asia Pacific expanded 31.3% to $142.5 million.

The company reports its top-line results under three segments, namely Adhesive Dispensing Systems, Advanced Technology Systems and Industrial Coating Systems. A brief discussion on the segmental performance in the fiscal firstquarter is provided below:

Adhesive Dispensing Systems segment’s revenues totaled $220.9 million, increasing 6.3% year over year. Results were driven by 0.6% organic growth and 5.7% forex gains.

Advanced Technology Systems revenues were $271.7 million, up 86.9% year over year on the back of 83.3% organic volume growth and 3.6% gains from favorable foreign currency movements. Product demand was strong in the medical and electronics end markets.

Revenues generated from Industrial coating systems grew 6.6% to $57.9 million.

Margin Improves Despite Higher Costs & Expenses

In the quarter, Nordson’s cost of sales increased 36.8% year over year to $249.4 million. It represented 45.3% of net sales versus 44.7% reported in the year-ago quarter. Selling and administrative expenses, as a percentage of net sales, were 33.3% compared with 36.6% in the year-ago quarter.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter were $141.9 million, increasing 50.3% year over year. Operating profits grew 55.1% year over year, while the margin came in at 21.4% versus 18.6% in the year-ago quarter.

Balance Sheet & Cash Flow
 
Exiting the fiscal first quarter, Nordson had cash and marketable securities of $132.8 million, up from $90.4 million recorded the previous-quarter end. The company’s long-term debt was $1,258.8 million, marginally above $1,256.4 million exiting the previous quarter.

In the fiscal first quarter, the company’s net cash flow from operating activities totaled $109.3 million, up 34.7% year over year. Capital spent on the addition of property, plant and equipment grew 65.5% to $16.7 million. During the quarter, the company paid dividends of approximately $17.3 million to its shareholders.

Outlook

For second-quarter fiscal 2018, Nordson anticipates sales to increase in the range of 9-13% year over year. Organic volume growth is predicted to range from 3% fall to 1% growth. Acquisition gains will likely add 7% sales growth, while foreign currency movements will benefit by 5%. Operating margin will likely be 22%. EBITDA is expected to be within $143-$154 million. The tax rate is estimated to be 25%.

GAAP earnings are expected in the range of $1.33-$1.47 per share, including 8 cents of expenses related to acquisition intangible asset amortization.

Nordson Corporation Price, Consensus and EPS Surprise
 

Nordson Corporation Price, Consensus and EPS Surprise | Nordson Corporation Quote

Zacks Rank and Key Picks

With $8.2-billion market capitalization, Nordson currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Applied Industrial Technologies, Inc. AIT, Dover Corporation DOV and Roper Technologies, Inc. ROP. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Applied Industrial Technologies has pulled off an average positive earnings surprise of 10.97% over the last four quarters. Also, earnings estimates for fiscal 2018 (ending June 2018) and 2019 (ending June 2019) have been revised upward over the last 60 days.

Dover Corporation has delivered an average positive earnings surprise of 7.26% in the trailing four quarters. Also, bottom-line expectations for 2018 and 2019 have improved in the last 60 days.

Roper Technologies’ financial performance has been impressive, with an average positive earnings surprise of 3.12% in the last four quarters. Also, earnings estimates for 2018 and 2019 have been revised upward over the last 60 days.

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Roper Technologies, Inc. (ROP): Free Stock Analysis Report
 
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