Nordson Corporation (NASDAQ: $NDSN) is a leading American multinational firm and corporation that manufactures dispensing instruments related to coatings, adhesives, and sealants for industries and consumers. The company’s headquarters is based in Westlake, Ohio, and it has eight divisions with sales support offices in nearly 30 countries.
On May 20, Nordson announced their second quarter fiscal 2024 results, reporting earnings and revenue beat. However, the market reacted negatively to the revised guidance.
Nordson Beats Estimates in Q2 Results
Nordson Corporation reported an adjusted EPS of $2.34, a gain of 5.88% from the previous quarter and a 4% decrease from the prior year’s EPS of $2.45. The decrease was primarily caused by higher interest expenses from acquisitions made in the previous year. The EPS surpassed Zacks Consensus Estimate of $2.30, representing the fourth consecutive time Nordson Corporation has beaten Zacks Consensus Estimates.
In the second quarter, net income amounted to $118 million for a diluted EPS of $2.05, down 7.81% from the prior year’s second net income of $128 million.
Moreover, revenue amounted to $650.64 million, below the consensus estimate of $658 million by 1.17%. However, revenue is up by 0.1% compared to the previous year’s quarter. This increase is fueled by strong momentum in the Industrial Precision Solutions, Medical, and Fluid Solutions segments.
Furthermore, the EBITDA in the second quarter totaled $203 million, the same as last year. EBITDA stayed unchanged as the gains from improved gross margins were counterbalanced by increased selling and administrative expenses, mainly attributable to the first-year impact of the ARAG acquisition.
Additionally, Nordson’s cost of sales rose by 4.5% from last year, amounting to $284.8 million. The quarterly Gross profit also rose by 3.9%, compared to the year-ago fiscal quarter, totaling $365.9 million.
Segment Results of Q224
Net sales for Industrial Precision Solutions were $366.9 million, compared to the estimate of $360.19 million, an increase of 9% compared to the prior year. This includes the impact of an acquisition and a 2% increase in organic sales.
Sales for Medical and Fluid Solutions reached $169 million, a 2% increase compared to the previous year’s second quarter. This increase was driven by the expansion of the fluid and interventional solutions product lines.
In addition, the net sales for Advanced Technology Solution amounted to $115 million, down by 22% compared to the previous year. The decline in organic sales was attributed to weakness across the segment. Operating profit amounted to $19 million, down by $7 million compared to the previous year, resulting in a decremental margin of 22%.
Nordson Lowers Guidance
Amid challenges in Europe and weakness in agriculture and electronics, Nordson announced a downward revision in its guidance. For fiscal 2024, it expects growth of 0% to 2%, lower than its previous guidance of 4% to 7% and missing analysts’ estimates of 5%.
The company now expects full-year adjusted earnings of $9.35 to $9.75, significantly lower than its previous forecast of $10 to $10.50.
Nordson CEO Sundaram Nagarajan said, “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.”
He added, “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.”
Nordson (NDSN) Stock Performance
NDSN shares opened at $246.16 on Tuesday, and closed at $243.14, a decrease of 9.41%. The stock price is down by 7.41% since the start of the year. The 52-week high is $279.38. At the time of writing, the market cap is $13.905 billion, with an average volume of 235,695.
Should You Add NDSN Stock to Your Portfolio in 2024?
Nordson’ electronic and agriculture segments have not done well in recent months. However, the Industrial Precision Solutions segment continues to perform quite well. In coming quarters, the investments in automation, AI, and product innovation will drive growth. However, medium term headwinds are expected . For investors with long-term horizons, NDSN stock could potentially be a great option.
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