Nordson Beats on Q3 Earnings, Higher Revenues Offset Costs - Analyst Blog

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Nordson Corporation ( NDSN ) reported better-than-expected results for third-quarter fiscal 2014 (ended Jul 31, 2014). Adjusted earnings came in at $1.20 per share, up 21.2% from 99 cents recorded in the year-ago quarter. Moreover, the bottom line surpassed the Zacks Consensus Estimate of $1.13 by 6.2%.

Nordson Corporation - Earnings Surprise | FindTheBest

Revenues

Nordson Corporation's revenues improved 13.8% year over year to $458.6 million. The year-over-year improvement includes an 8% gain from volume growth, 5% contribution from acquisitions and 1% positive impact from currency translation. Top line also surpassed the Zacks Consensus Estimate of $448.0 million.

Backlog was $266 million, up 36% from the year-ago quarter. Orders, for the 12-week period ended Aug 17, 2014, increased 4% year over year.

Nordson Corporation reports its top-line results under three segments - Adhesive dispensing systems, Advanced technology systems and Industrial coating systems. A brief discussion on the segmental performance is provided below:

Revenues generated from the Adhesive dispensing systems segment, representing roughly 49.5% of total revenue, were $226.8 million. The result reflected an increase of 15.7% year over year. The Advanced technology systems' revenue grew 16.2% year over year to $174.6 million, accounting for 38.1% of total revenue. Revenue from the Industrial coating systems segment inched up 0.8% to $57.2 million. It represented 12.5% of total revenue.

On a regional basis, revenues generated in the U.S. climbed 3.4% year over year. Further, businesses in Europe and Asia Pacific flourished; recording revenue growth of 21.9% and 13.8% respectively. Revenues sourced from Japan escalated 29.5% while that from the Americas increased 11.7%.

Margins

Nordson Corporation's cost of sales increased 13% year over year and represented 43.8% of total revenue, down 30 basis points (bps) from the prior-year quarter. Selling and administrative expenses, as a percentage of total revenue, stood at 31.2% versus 32.7% in the year-ago quarter. Operating profits rose 22.8% year over year, while operating margin gained 190 bps, coming in at 25%.

Balance Sheet

Exiting third-quarter fiscal 2014, Nordson Corporation had cash and marketable securities of $53.2 million, increasing 7% from $49.7 million recorded at the preceding quarter-end. Long-term debt slipped 3.8% sequentially to $612.4 million.

Cash Flow

In the reported quarter, Nordson Corporation generated cash of $80.8 million from its operating activities, down 12.2% year over year. Capital spent on addition of property, plant and equipment were up 5.4% to $11.4 million.

During the quarter, Nordson Corporation repurchased shares worth $36 million and paid dividends amounting to $11 million.

Outlook

For fiscal fourth-quarter 2014, Nordson Corporation anticipates total revenues to grow in the range of 10−14%; comprising 7−11% organic revenue growth and 3% contribution from acquisitions. Operating margin is expected to be roughly 24%.

Generally Accepted Accounting Principles (GAAP) earnings are expected to come in a range of $1.07−$1.17 per share.

With a market capitalization of $5.1 billion, Nordson Corporation currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Blount International Inc. ( BLT ), DXP Enterprises, Inc. ( DXPE ) and IDEX Corporation ( IEX ). While Blount International sports a Zacks Rank #1 (Strong Buy), both DXP Enterprises and IDEX Corporation hold a Zacks Rank #2 (Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: NDSN , DXPE , IEX , BLT

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