Nordson (NDSN) Beats Q1 Earnings, Sales; To Buy Vention AT
Zacks Equity Research
Updated
Nordson Corporation NDSN reported better-than-expected results for first-quarter fiscal 2017 (ended Jan 31, 2017). Adjusted earnings came in at 86 cents per share, 4.9% above the Zacks Consensus Estimate of 82 cents. Also, the bottom line surpassed the year-ago tally of 61 cents by 41%.
Revenues
Nordson Corporation’s fiscal first-quarter revenues totaled $407.5 million, increasing 9.5% year over year. The top-line improvement was driven by 10.7% growth in volumes, partially offset by 1.2% negative impact of currency translation. Also, the top line surpassed the Zacks Consensus Estimate of $397 million.
Backlog was $308 million, up 24% year over year. Orders for the 12-week period ended Feb 12, increased 7% year over year.
Nordson Corporation reports its top-line results under three segments, namely, Adhesive dispensing systems, Advanced technology systems and Industrial coating systems. A brief discussion on the segmental performance is provided below:
The Adhesive dispensing systems segment generated revenues of $207.8 million, up 2.2% year over year. The Advanced technology systems segments’ revenues totaled approximately $145.4 million, up 23.3% year over year. Revenues generated from the Industrial coating systems segment increased 6.6% to $54.3 million.
On a regional basis, revenues sourced from the U.S. increased 6.9% year over year. Businesses in Japan, Asia Pacific and the Americas also improved, recording revenue increase of 24%, 22.1% and 12.5%, respectively. However, top-line performance in Europe was weak, with revenues slipping 0.5% year over year.
Margins
In the quarter, Nordson Corporation’s cost of sales increased 4% year over year, representing 44.7% of total revenue compared with 47.1% in the year-ago quarter. Selling and administrative expenses, as a percentage of total revenue, was 36.6% compared with 38.9% in the year-ago quarter. Operating profits increased 46.1% year over year, while the margins came in at 18.6%.
Balance Sheet & Cash Flow
Exiting the fiscal first quarter, Nordson Corporation had cash and marketable securities of $87.7 million, higher than $67.2 million recorded in the preceding quarter. The company’s long-term debt was $912.4 million, down from $944.6 million at previous-quarter end.
In the quarter, the company generated approximately $78 million from its operating activities, up roughly 60.7% from the year-ago tally. Capital spent on addition of property, plant and equipment totaled $10.1 million, down from $11.1 million recorded a year ago.
During the quarter, the company paid dividends of approximately $15 million to its shareholders.
Acquisition: Concurrent with the earnings release, Nordson Corporation announced that it has agreed to acquire Advanced Technologies (Vention AT) business of Vention Medical. Transaction value has been fixed at $705 million in cash, to be financed by the company through cash and debt.
Vention AT specializes in designing, developing and manufacturing of minimally invasive interventional delivery devices, catheters and advanced components for the global medical technology market. This business reportedly generated sales of $150 million and earnings before interest, tax, depreciation and amortization (EBITDA) of $48 million for the trailing twelve months ended Jan 31, 2017.
The deal is in sync with Nordson Corporation’s inorganic expansion strategy and will likely expand its market reach through new and improved product offerings. It will be accretive to revenues, earnings and EBITDA margin, with earnings accretion of 5−10 cents per share anticipated in fiscal 2017.
Outlook
For second-quarter fiscal 2017, Nordson Corporation anticipates sales to increase in the range of 3−7%. Organic growth is predicted within 3−7%. Acquisition gains will likely lead to 2% sales growth, offset by 2% negative impact from adverse foreign currency movements. Operating margin will likely be 24%.
GAAP earnings are expected in the range of $1.21−$1.33 per share.
Nordson Corporation Price and Consensus
Nordson Corporation Price and Consensus | Nordson Corporation Quote
Zacks Rank and Stocks to Consider
With a 6.89 billion market capitalization, Nordson Corporation currently carries a Zacks Rank Zacks Rank #2 (Buy). Other stocks worth considering in the machinery industry include Chart Industries Inc. GTLS, Manitex International, Inc. MNTX and Roper Technologies, Inc. ROP. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chart Industries Inc. has an average positive earnings surprise of 548.51% for the last four quarters.
Manitex International, Inc.’s earnings estimates for 2017 have improved over the last 60 days. Earnings surprise in the last quarter was a positive 225%.
Roper Technologies, Inc.’s financial performance has been impressive, with an average positive earnings surprise of 0.92% for the last four quarters. Also, earnings estimates for 2017 and 2018 have been revised upward, over the last 60 days.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
