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Nordson Endures Macro Headwinds With Broad-Based Organic Growth

By Steve Symington - May 21, 2019 at 3:15PM

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The adhesive-dispensing systems company's results are stronger than they look.

Nordson (NDSN 2.37%) announced fiscal second-quarter 2019 results on Monday after the market closed, showcasing a return to organic growth that was all but overshadowed by steep foreign-exchange headwinds and broader macroeconomic challenges.

And though the adhesive-dispensing systems leader followed by tempering its full-year expectations, shares are up around 3% today as the market absorbs the news. Let's take a closer look at how Nordson capped the first half and what investors should be watching in the coming quarters.

Nordson equipment dispensing adhesive on a cardboard box


Nordson results: The raw numbers

Metric Fiscal Q2 2019* Fiscal Q2 2018 Year-Over-Year Growth


$551.1 million

$553.7 million


GAAP net income

$91.9 million

$91.2 million


GAAP earnings per share (diluted)




Data source: Nordson. *For the quarter ended April 30, 2019. GAAP = generally accepted accounting principles. 

What happened with Nordson this quarter?

  • After adjusting for $0.04 per share in restructuring costs and inventory purchase accounting during last year's second quarter, Nordson's (non-GAAP) earnings declined 1.3% to $1.54 per share.
  • Keep in mind Nordson management no longer provides specific quarterly guidance. So, with the caveat that we don't normally pay close attention to Wall Street's demands, most analysts were modeling higher adjusted earnings of $1.60 per share on revenue of $559.3 million.
  • Nordson's change in revenue included 4% growth in organic volume and a 5% headwind from foreign currencies.
  • Adjusted EBITDA fell 2.4% year over year to $156.1 million.
  • By segment:
    • a 0.9% decline in adhesive dispensing systems revenue, to $236.7 million, as a 5% currency headwind more than offset 4.1% organic volume growth.
    • a 0.6% decline from advanced technology systems, to $249.3 million, as a 2.4% currency headwind offset 1.8% organic volume growth.
    • 1.6% growth from industrial coating systems, to $65.1 million, as 4.3% organic growth more than offset a 2.7% currency headwind.
  • Backlog fell 2% year over year to $436 million at the end of the quarter.

What management had to say

"We were pleased to see organic growth across all three segments compared to the prior year's second quarter," stated Nordson CEO Michael Hilton. "This is a testament to the diversity of our end markets and our ability to execute on our growth initiatives."

Looking forward

Considering the negative impact of "recent macroeconomic trends," Nordson now expects organic growth in the low single-digit percent range, down from guidance provided last quarter for a 3% to 5% increase. Nordson also anticipates improvement in operating and EBITDA margins of roughly 100 basis points from last year thanks to the company's ongoing operational-efficiency initiatives, near the lower end of its old outlook for an increase of 100 to 150 basis points.

"Our focus on the customer, commitment to innovation, and strong execution by the global Nordson team give us confidence that we will strengthen our business in fiscal 2019," Hilton added.

Fair enough. The foundations of Nordson's business and market opportunity appear to remain strong. And as long as macroeconomic challenges persist, the company is rightly focusing on finding improvement using the variables within its control.

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