Nordson Sticks Another Fantastic Quarter
Nordson Corporation(NASDAQ: NDSN)announced stronger-than-expected fiscal first-quarter 2017 results on Monday, punctuated by healthy organic growth, expanding margins, and a handful of recent acquisitions. Naturally, the adhesive dispensing equipment specialist is pleased with its latest accomplishment.
But let's take a closer look at what drove Nordson's results as it kicked off the new fiscal year, as well as what investors can expect going forward.
Image source: Nordson Corporation.
Nordson results: The raw numbers
| Metric |
Fiscal Q1 2017 |
Fiscal Q1 2016 |
Year-Over-Year Growth |
|---|---|---|---|
|
Revenue |
$407.5 million |
$372.2 million |
9.5% |
|
GAAP net income |
$50.0 million |
$41.2 |
21.4% |
|
GAAP earnings per share (diluted) |
$0.86 |
$0.72 |
19.4% |
Data source: Nordson Corporation.
What happened with Nordson this quarter?
- Top-line growth included a 10% increase in organic volume, a 1% increase related to the first-year effect of acquisitions, and a 1% decrease from unfavorable foreign currency exchange.
- Operating margin improved 5 percentage points year over year, to 19%.
- Earnings per share were the same ($0.86) on an adjusted/non-GAAPbasis, which excludes one-time items like severance and restructuring charges and discrete tax items. By comparison, adjusted earnings in the same year-ago period were $0.61 per diluted share.
- For perspective, Nordson's guidanceprovided in Decembercalled for lower revenue growth in the range of 4% to 8%, assuming organic volume growth of 6% to 10%, and a more severe 2% headwind from foreign currency translation. Nordson also told investors to expect slightly lower operating margin of 18%, and lower adjusted earnings per diluted share of $0.74 to $0.84.
- Revenue by segment included:
- 3% organic sales volume growth at adhesive dispensing systems, driven by strength in general product assembly and rigid packaging product lines. Adhesive dispensing growth was partially offset by a 1% currency headwind.
- 25% sales volume growth in advanced technology systems, as a 23% increase in organic volume was offset by a 2% foreign currency headwind. Growth in advanced technology systems was broad-based across all product lines, as well as in line performances from Nordson's prior acquisitions of LinkTech and ACE (more on that below).
- 8% organic sales growth at industrial coating systems, partially offset by a 2% negative currency headwind. Growth here was driven by strong demand for cold material dispensing, power coating, and UV curing product lines.
- Revenue by geography included:
- a 6.9% increase in United States sales, to $125.5 million
- 12.5% growth (15.9% excluding currencies) from the rest of the Americas segment, to just over $30 million
- a 0.5% decline (1.9% growth at constant currency) from Europe, to $119.2 million
- 24% growth (16.3% at constant currency) in Japan, to $24.2 million.
- 22.1% growth (24.4% at constant currency) in the Asia-Pacific region, to $108.6 million.
- Acquired assets of ACE Production Technologies for undisclosed terms, adding selective soldering capabilities for electronics assembly customers.
- Acquired Plas-Pak Industries (terms not disclosed), a designer and manufacturer of injection molded, single-use plastic dispensing and packaging products.
- Acquired InterSelect GmbH (terms not disclosed), a German designer and manufacturer of selective soldering systems used in automotive, aerospace, and industrial electronics assembly applications.
- Agreed to acquire Vention Medical's Advanced Technologies business, a highly complementary business adding scale and enhancing strategic capabilities of Nordson's existing MEDICAL platform.
What management had to say
Nordson CEO Michael Hilton stated:
Looking forward
For the current fiscal second quarter, Nordson anticipates revenue will increase in the range of 3% to 7%, assuming 3% to 7% organic growth, a 2% contribution from acquisitions, and a 2% headwind from foreign currencies. The midpoint of that revenue range should translate to operating margin of roughly 24%, and GAAP diluted earnings per share of $1.21 to $1.33. Note these rangesdo notinclude contributions from Vention Medical's Advanced Technologies business, the acquisition of which should close in the current quarter.
Hilton added:
All things considered, this was another undeniably strong quarter from Nordson, both from an organic growth standpoint and as the company relentlessly cements its industry leadership through acquisitions. With shares already trading near an all-time high going into this report, investors should be more than happy with where Nordson stands today.
10 stocks we like better than NordsonWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Nordson wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of February 6, 2017
Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of Nordson. The Motley Fool has a disclosure policy.