Earnings Highlights and Review: Organic Volume Growth and Acquisitions Boosted Nordson’s Q2 Results

Research Desk Line-up: Welbilt Post Earnings Coverage

LONDON, UK / ACCESSWIRE / June 9, 2017 / Pro-Trader Daily publishes post-earnings coverage on Nordson Corp. (NASDAQ: NDSN) following the Company’s reporting of its financial results for the second quarter fiscal 2017 (Q2 FY17) on May 22, 2017. The Westlake, Ohio-based Company reported a 13% y-o-y growth in both its net sales and adjusted diluted EPS; outperforming market consensus estimates. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at: http://protraderdaily.com/register/.

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Earnings Reviewed

During the three months ended on April 30, 2017, Nordson reported net sales of $496.14 million compared to $437.59 million recorded at the end of Q2 FY16. Net sales numbers topped market expectations of $468.2 million. The Company attributed 9% of growth in quarterly net sales to increase in organic volume, 6% growth due to acquisitions, and a 2% headwind because of negative foreign currency translation.

The adhesives and industrial coatings maker reported net income of $64.52 million, or $1.11 per diluted share in Q2 FY17 compared to $70.60 million, or $1.23 per diluted share, in the prior year’s comparable period. Meanwhile, the Company’s adjusted net income increased to $1.35 per diluted share in Q2 FY17 from $1.19 per diluted share in the past year’s comparable quarter. Wall Street had expected the Company to report adjusted net income of $1.30 per diluted share.

Operating Metrics

In the reported quarter, Nordson’s cost of sales came in at $220.63 million compared to $189.19 million in the year ago same period. The Company spent $171.98 million in Q2 FY17 on selling and administration compared to $146.50 million in Q2 FY16. Operating profit for Q2 FY17 stood at $103.53 million compared to $101.90 million in the second quarter of FY16. The Company’s EBITDA increased to $123.12 million in Q2 FY17 from $121.58 million in Q2 FY16. Furthermore, the adjusted EBITDA for the reported quarter was $138.60 million versus $121.93 million in Q2 FY16.

The Company’s order rates for the 12-week period ending May 14, 2017, measured in constant currency, increased by 13% y-o-y. Furthermore, the backlog for the quarter ended April 30, 2017, was approximately $403 million, rising 37% y-o-y, with 18% increase due to organic growth and 19% growth due to acquisitions.

Segment-Performance

The Company’s Adhesive dispensing systems segment’s net sales grew 2.7% from $221.03 million in Q2 FY16 to $226.94 million in the reported quarter. The segment’s operating profit increased to $65.72 million in Q2 FY17 from $62.98 million in Q2 FY16.

During Q2 FY17, Advanced technology systems segment reported net sales of $210.14 million, surging 32.5% from $158.56 million recorded in the prior year’s same quarter. Moreover, the segment’s operating profit increased to $54.31 million in Q2 FY17 from $38.73 million in Q2 FY16.

Nordson’s Industrial coating systems segment’s sales were $59.05 million in Q2 FY17, up from $58.01 million in Q2 FY16. Meanwhile, the segment’s operating profit fell marginally to $10.25 million in Q2 FY17 from $10.29 million in the previous year’s comparable quarter.

Cash Flow & Balance

During Q2 FY17, Nordson’s adjusted free cash flow before dividend fell to $55.49 million from $64.95 million in Q2 FY16. At the close of books on April 30, 2017, Nordson had cash and marketable securities balance of $88.41 million versus $67.24 million at the close of books on October 31, 2016. Additionally, the Company’s long-term debt increased to stand at $1.57 billion as on April 30, 2017, from $942.77 million as on October 31, 2016.

Dividend

In a separate press release on May 16, 2017, Nordson’s Board of Directors declared cash dividend for Q3 FY17 of $0.27 per common share, payable on June 13, 2017, to shareholders of record as of the close of business on May 30, 2017.

Earnings Guidance

In its guidance for Q3 FY17, Nordson management expects sales to increase by 15% to 19% y-o-y. Operating margin at mid-point is forecasted to be 24%, while GAAP diluted EPS is anticipated to be in the range of $1.51 to $1.65. Furthermore, EBITDA during Q3 FY17 is expected to be approximately $164 million, rising 18% y-o-y.

Stock Performance

At the closing bell, on Thursday, June 08, 2017, Nordson’s stock rose 1.27%, ending the trading session at $115.73. A total volume of 374.28 thousand shares were traded at the end of the day, which was higher than the 3-month average volume of 282.21 thousand shares. In the last six months and previous twelve months, shares of the Company have soared 5.78% and 31.81%, respectively. Moreover, the stock gained 3.28% since the start of the year. Shares of the Company have a PE ratio of 24.55 and have a dividend yield of 0.93%. The stock currently has a market cap of $6.66 billion.

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