Nordson Corp (NDSN) Q2 2025 Earnings Call Highlights: Strong Revenue Growth Amid Market Challenges
Gross Profit: $374 million, representing 55% of sales.
EBITDA Margin: 32% of sales, with EBITDA at $217 million.
Net Income: $112 million or $1.97 per share on a GAAP basis.
Adjusted Earnings Per Share: $2.42, a 3% increase from the prior year.
Debt Leverage Ratio: 2.4 times, within the targeted range.
Free Cash Flow: $103 million, with a 92% conversion rate on net income.
Share Repurchases: $85 million during the quarter.
Dividends Paid: $44 million.
Industrial Precision Solutions Sales: $319 million, decreased 8% year-over-year.
Medical and Fluid Solutions Sales: $203 million, increased 20% year-over-year.
Advanced Technology Solutions Sales: $161 million, increased 18% year-over-year.
Third Quarter Sales Guidance: $710 million to $750 million.
Third Quarter Adjusted Earnings Guidance: $2.55 to $2.75 per diluted share.
Warning! GuruFocus has detected 3 Warning Sign with NDSN.
Release Date: May 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Nordson Corp (NASDAQ:NDSN) reported a 5% increase in second-quarter sales, reaching $683 million, driven by an 8% increase from the Atrion acquisition.
The company achieved strong EBITDA margins of 32%, attributed to operational excellence and contributions from the Atrion acquisition.
Nordson Corp (NASDAQ:NDSN) experienced solid growth in advanced technology systems, nonwoven systems, and medical fluid components.
The Atrion integration is progressing well, with results exceeding valuation model expectations.
Nordson Corp (NASDAQ:NDSN) maintained a strong balance sheet, with a leverage ratio of 2.4 times and significant share repurchases totaling $85 million during the quarter.
Nordson Corp (NASDAQ:NDSN) faced year-over-year weakness in select industrial system sales due to lower overall market demand.
The company experienced a double-digit decline in medical interventional product lines, partly due to ongoing destocking trends.
Net interest expense increased by $7 million compared to the prior year, driven by higher debt levels from the Atrion acquisition.
The Industrial Precision Solutions segment saw an 8% decrease in sales, impacted by weaker system sales in industrial coatings and polymer processing.
Nordson Corp (NASDAQ:NDSN) is cautious about potential impacts on end market demand due to ongoing geopolitical and trade policy uncertainties.
Q: Can you discuss the trends you see for the rest of the year, particularly in major verticals like ATS and interventional destocking? A: Sundaram Nagarajan, President and CEO, explained that ATS is experiencing solid order entry due to investments in computing, AI, and semiconductors. The Medical and Fluid Solutions segment is seeing growth from Atrion and fluid components, with destocking trends lessening. Industrial Precision Solutions is facing headwinds in automotive but shows momentum in powder coating and niche applications.
Q: Regarding the contract manufacturing divestiture, can you size the revenue and discuss if there are more divestitures planned? A: Sundaram Nagarajan stated that the divestiture is part of their strategy to focus on high-growth areas. Daniel Hopgood, CFO, added that the divested business represents about 4% of year-to-date sales in the medical segment and will be accretive to margins. No further divestitures are currently planned.
Q: ATS has been volatile. Can we expect more consistent growth, and where are you seeing order improvements? A: Sundaram Nagarajan noted that ATS is inherently lumpy due to customer investment cycles. However, they are seeing strong order entry, particularly from Asian customers, and expect the business to contribute significantly to organic growth.
Q: How do you view margin performance in ATS given its volatility? A: Sundaram Nagarajan highlighted that ATS margins are different due to higher innovation investments. Daniel Hopgood added that structural changes have improved the margin profile, ensuring better performance peak-to-peak and trough-to-trough.
Q: Can you elaborate on the impact of tariffs and how you're managing them? A: Daniel Hopgood explained that tariffs are manageable with no material impact in Q2. Their in-region, for-region strategy mitigates exposure, with only 10-15% of sales affected by tariffs. The main concern is the potential impact on end market demand.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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