Nordson Corporation (NASDAQ:NDSN) just released fiscal fourth-quarter 2015 results, and at first glance, its numbers don't seem particularly encouraging. But before we understand why the looks of this adhesive-dispensing products company might be deceiving, let's take a closer look at what Nordson accomplished in its latest quarter:

Nordson results: The raw numbers


Fiscal Q4 2015 Actuals

Fiscal Q4 2014 Actuals

Growth (YOY)


 $446.2 million

 $468.6 billion


Adjusted Net Income

 $49.6 million

 $72.1 million


GAAP EPS (Diluted)




Data source: Nordson Corporation.

What happened with Nordson this quarter?

  • Revenue was within Nordson's guidance, which called for sales to decline in the range 3% to 7%.
  • Revenue included flat organic growth from the same year-ago period, again within guidance for organic growth in the range of down 1% to up 3%.
  • Revenue also included a 2% increase related to acquisitions, and a 6.8% negative impact from foreign currency exchange.
  • Earnings fell below guidance, which called for GAAP EPS of $1.00 to $1.12.
  • Foreign exchange also negatively affected earnings by $0.15 per share.
  • Excluding one-time charges of $0.11 per share related to severance and restructuring, adjusted earnings fell 17.4% year over year, to $0.95 per share.
  • At Adhesive Dispensing systems:
    • Revenue fell 2% on a reported basis, to $226.9 million, but would have grown 7.9% excluding currencies.
    • Operating profit declined 19.3% year over year, to $46.9 million.
  • At Advanced Technology systems:
    • Revenue declined 9.1% on a reported basis, and fell 6.5% excluding currencies.
    • Operating profit fell 41.9%, to $24.7 million.
  • At Industrial Coating systems:
    • Revenue fell 4.1% on a reported basis, but would have growth 2% excluding currencies.
    • Operating profit fell 15.3%, to $13.9 million.
  • Order rates for the 12-week period ended Dec. 6, 2015 fell 5% year over year at constant currency. This includes 7% growth at Adhesive Dispensing, and declines of 16% and 14% at Advanced Technology and Industrial Coating systems, respectively.
  • Backlog at the end of the quarter grew 8% year over year, to $229 million, including 5% organic growth and 3% growth from acquisitions.
  • The company spent $196 million to repurchase shares.
  • It generated free cash flow before dividends of $80 million, down 10.7% year over year.

What management had to say 
Nordson CEO Michael Hilton stated:

As we begin 2016, we will continue to target organic growth that exceeds global GDP, driven by our ongoing initiatives around new products, new applications, penetration of emerging markets, and recapitalization of our installed base. The diverse set of end markets we serve are expected to grow over the long term and we are well positioned to meet customer needs with global direct sales and service.

Looking forward 
For the current quarter, Nordson expects sales to be in the range of down 1% to down 5% year over year, including organic volume down 3% to up 1%, 3% growth from acquisitions, and a 5% negative impact from foreign exchange. That should translate to GAAP earnings per diluted share of $0.47 to $0.57, including a $0.03 per-share charge from non-recurring items, and a roughly $0.08 per share negative impact from currency translation based on current exchange rates.

Hilton explained that the forecast reflects typical seasonality and difficult year-over-year comparisons. But in the meantime, as Nordson continues to weather the current weak macroeconomic environment, Hilton also reminded investors that Nordson initiated cost-cutting efforts last quarter with the aim of improving normalized operating margin beginning in 2016, regardless of any supplemental benefit the company is able to achieve through sales-volume leverage.

In the end, while Nordson's results might not seem positive on the surface, investors should keep in mind that the company's primary antagonists -- namely, macroeconomic and currency headwinds -- are temporary in nature, and not indicative of broader problems with Nordson's underlying business. As Nordson works to improve its operational efficiency and continues to reward investors through dividends and repurchases, it should emerge stronger than ever when these headwinds eventually abate.