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.

Nordson's electronics adhesive dispensing system

Image source: Nordson Corporation.

Nordson results: The raw numbers


Fiscal Q1 2017

Fiscal Q1 2016

Year-Over-Year Growth


$407.5 million

$372.2 million


GAAP net income

$50.0 million



GAAP earnings per share (diluted)




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-GAAP basis, 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 guidance provided in December called 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:

Nordson delivered record first quarter sales, including 10% organic volume growth over the same period a year ago, as all three segments continued to perform at a high level. We leveraged the increased revenue to drive reported operating margin to 19% in the quarter, an improvement of 5 percentage points over the first quarter a year ago and an excellent performance given the seasonally lower volume we typically see in our first quarter. [...] Volume leverage, favorable mix and continuous improvement benefits enabled all three segments to deliver significant margin improvement compared to the first quarter a year ago.

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 ranges do not include contributions from Vention Medical's Advanced Technologies business, the acquisition of which should close in the current quarter.

Hilton added:

Our backlog, 12-week order rates and project activity all remain solid, leading us to forecast organic volume growth of 5 percent compared to the prior year at the midpoint of our second quarter guidance. This is an excellent level well ahead of most current global GDP forecasts and is against a challenging prior year comparison where we delivered robust organic sales growth of 9 percent. We continue to focus on innovative products, new applications and superior customer service to capture growth in our diverse end markets.  We also remained focused on continuous improvement initiatives within the Nordson Business System to drive ongoing performance enhancements across the enterprise.

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.