Nordson Corporation (NDSN Quick QuoteNDSN - Free Report) reported better-than-expected fourth-quarter fiscal 2022 (ended Oct 31, 2022) results, wherein earnings beat the Zacks Consensus Estimate by 4.7% and sales beat the same by 4.5%.

NDSN’s adjusted earnings were $2.44 per share in the reported quarter, beating the Zacks Consensus Estimate of $2.33. The bottom line increased 29.8% from $1.88 in the year-ago fiscal quarter.

Revenue Details

In the reported quarter, Nordson’s revenues were $683.6 million, reflecting an increase of 14.1% from the year-ago fiscal quarter’s number. Revenues beat the Zacks Consensus Estimate of $654 million.

Organic sales expanded 18%, driven by healthy end-market businesses, mostly in medical and electronics. Acquisitions/divestitures had a positive impact of 4% while foreign currency translation had a negative impact of 8%.

On a regional basis, revenues from the Asia Pacific region increased 15.7% to $214.1 million. Revenues generated from Europe increased 1.3% to $165.7 million, while the metric in the Americas increased 21.2% to $303.7 million.

Nordson started reporting revenues under three segments effective Aug 1, 2022. The segments are Industrial Precision Solutions, Medical and Fluid Solutions, and Advanced Technology Solutions. A brief snapshot of the segmental sales is provided below:

Revenues from Industrial Precision Solutions amounted to $355.7 million in the quarter under review, up 13.2% from the year-ago fiscal quarter’s level. The segment contributed 52% to NDSN’s top line in the quarter.

Organic sales increased 15.5% from the year-ago fiscal quarter’s level. Acquisitions/divestitures had a positive impact of 7.4%, while foreign currency translation had a negative impact of 9.7%.

Revenues from Medical and Fluid Solutions amounted to $181.3 million in the quarter under review, up 10.9% from the year-ago fiscal quarter’s level. The segment contributed 26.5% to NDSN’s top line in the reported quarter.

Organic sales increased 14.6% from the year-ago fiscal quarter’s level, while foreign currency translation had a negative impact of 3.7%.

Advanced Technology Solutions’ sales were $146.6 million, up 20.7% from the year-ago fiscal quarter’s figure. The metric represented 21.5% of Nordson’s revenues in the period.

Organic sales increased 27.8% from the year-ago fiscal quarter’s level, while foreign currency translation had a negative impact of 7.1%.

Nordson Corporation Price and Consensus

Margin Profile

In the reported quarter, Nordson’s cost of sales increased 19.5% from the year-ago fiscal quarter’s level to $320.4 million. The cost of sales represented 46.9% of net sales. Gross profit was $363.2 million, up 9.7% from the year-ago fiscal quarter’s level. The gross margin contracted 220 basis points (bps) to 53.1%. NDSN suffered the adverse impacts of supply-chain woes and labor shortages.

Selling and administrative expenses increased 3.3% year over year to $185.6 million and represented 27.2% of net sales. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $202.3 million, the margin being 30%. Adjusted operating income in the reported quarter was $177.6 million, increasing 17.3% year on year. Adjusted operating margin increased 100 bps to 26%.

Net interest expenses totaled $5.1 million, reflecting a 13.3% decrease from the year-ago fiscal quarter’s level.

Balance Sheet & Cash Flow

At the time of exiting the fiscal fourth quarter, Nordson’s cash and cash equivalents reached $163.5 million, decreasing 45.5% from the $300 million recorded at the end of the fourth quarter of fiscal 2021. Long-term debt was $345.3 million, reflecting a 55.8% decline from $781.7 million.

In fiscal 2022, NDSN generated net cash of $513.1 million from operating activities, down 6% from the last fiscal year’s tally. Capital invested in purchasing property, plant and equipment totaled $51.4 million, increasing 34.2% from the year-ago fiscal period’s figure.

Dividends/Share Buyback

In fiscal 2022, Nordson paid out dividends amounting to $125.9 million, up 28.9% from $97.7 million in the same period of the previous fiscal year.

Nordson’s purchase of treasury shares amounted to $262.9 million in fiscal 2022, increasing from $61 million in the last fiscal year.

Outlook

Nordson anticipates solid orders and backlog (about $1 billion including the acquired CyberOptics backlog) to be beneficial in the first quarter of fiscal 2023 (ending January 2023).

For the first quarter of fiscal 2023, Nordson expects revenues to be $605-$630 million. The adjusted earnings are anticipated to be $1.85-$2.00 per share.

For fiscal 2023 (ending October 2023), Nordson anticipates adjusted earnings to be $8.75-$10.10 per share. Sales are expected to increase 1-7% from the previous fiscal year’s reported number.

Zacks Rank & Stocks to Consider

Nordson currently has a Zacks Rank #3 (Hold). Some better-ranked companies from the Industrial Products sector are discussed below:

Applied Industrial Technologies, Inc. (AIT Quick QuoteAIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy) and has a trailing four-quarter earnings surprise of 24.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

AIT’s earnings estimates have increased 4.6% for fiscal 2023 (ending June 2023) in the past 60 days. Shares of Applied Industrial have risen 37.9% in the past six months.

MRC Global Inc. (MRC Quick QuoteMRC - Free Report) presently has a Zacks Rank of 1. MRC’s earnings surprise in the last four quarters was 103%, on average.

In the past 60 days, MRC Global’s earnings estimates have increased 16.2% for 2022. The stock has rallied 22.2% in the past six months.

EnerSys (ENS Quick QuoteENS - Free Report) delivered an average four-quarter earnings surprise of 2.1%. ENS presently carries a Zacks Rank #2 (Buy).

ENS’ earnings estimates have increased 0.6% for fiscal 2023 (ending March 2023) in the past 60 days. The stock has gained 33.6% in the past six months.