Nordson Corporation (NASDAQ:NDSN) announced stronger-than-expected fiscal first-quarter 2018 results on Thursday after the market closed, highlighting accelerated organic growth and broad-based demand across its product portfolio.

With shares down around 3% on Friday in response -- though still up nearly 30% from last year's lows in late August -- let's take a deeper look at how the adhesive-dispensing specialist kicked off its new year and what investors can anticipate in the months ahead.

Nordson equipment dispensing glue onto cardboard

Image source: Nordson.

Nordson results: The raw numbers

Metric

Fiscal Q1 2018*

Fiscal Q1 2017

Year-Over-Year Growth

Revenue

$550.4 million

$407.5 million

35.1%

GAAP net income

$104.6 million

$50.0 million

109.2%

GAAP earnings per share (diluted)

$1.78

$0.86

107%

*For the quarter ending Jan. 31, 2018. Data source: Nordson Corporation. 

What happened with Nordson this quarter?

  • Revenue growth was driven by 19% organic growth, a 12% contribution from first-year acquisitions, and a favorable 5% impact from foreign currency translation.
  • These results compared favorably to Nordson's most recent guidance, which called for revenue growth of 30% to 34% (assuming 15% to 19% organic growth, an 11% contribution from acquisitions, and a 4% currency tailwind).
  • GAAP earnings include a $0.37-per-share one-time benefit related to the impact of recent U.S. tax reform, as well as $0.08 per share related to other discrete tax items. On an adjusted basis, Nordson's earnings of $1.35 per share were slightly above the midpoint of guidance for $1.29 to $1.39.
  • Adjusted EBITDA increased 50.3% to $141.9 million.
  • Revenue by segment included the following:
    • 6% growth from adhesive-dispensing systems, primarily driven by currencies, as weakness in polymer processing product lines mostly offset "solid" growth in most other product lines.
    • 87% growth from advanced technology systems, including 50% organic volume growth with strength from all product lines, a 33% contribution from acquisitions, and a favorable 4% increase from currencies.
    • 7% growth from industrial coating systems, including 3% organic growth led by powder, container, and liquid finishing products, as well as a 3% increase from currencies.

What management had to say

Nordson CEO Michael Hilton stated:

Our team delivered impressive sales, operating profit, diluted earnings per share, and EBITDA in the quarter against very challenging prior year comparisons, where total company organic sales growth was 10%. Demand was robust in most all product lines, led by electronics and medical end markets within the advanced technology systems segment. With this strong top-line growth, Nordson delivered exceptional results for the quarter, where EBITDA margin improved 250 basis points as compared to the prior year's first quarter to 26% of sales.

Looking forward

Based on Nordson's backlog, which increased 24% to $405 million, Nordson expects fiscal second-quarter 2018 sales growth of 9% to 13%. This assumes a change in organic volume of down 3% to up 1%, a 7% contribution from acquisitions, and a 5% favorable impact from currencies. On the bottom line, Nordson anticipates GAAP earnings per diluted share of $1.33 to $1.47.

To be fair, management elaborated that this tempered growth is more a consequence of project timing, as well as the fact that Nordson is lapping strong 9% increase in organic volume in last year's fiscal second quarter.

"We continue to focus our efforts on technology leadership, product-tiering, new applications, and market penetration to drive growth over the long term," Hilton added.

In short -- and contrary to what today's modest stock-price decline might indicate -- there were no significant surprises from Nordson this quarter. Rather, the company continues to take all the right steps to sustain and improve its industry leadership. And I think investors should be more than pleased with its position today.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool owns shares of Nordson. The Motley Fool has a disclosure policy.