Nordson Corporation (NDSN Quick QuoteNDSN - Free Report) reported better-than-expected third-quarter fiscal 2022 (ended Jul 31, 2022) results, wherein earnings beat the Zacks Consensus Estimate by 1.6% and sales beat the same by 1.5%.

NDSN’s adjusted earnings were $2.49 per share in the reported quarter, beating the Zacks Consensus Estimate of $2.45. The bottom line increased 2.9% from $2.42 in the year-ago fiscal quarter.

Revenue Details

In the reported quarter, Nordson’s revenues were $662.1 million, reflecting an increase of 2.4% from the year-ago fiscal quarter’s number. Revenues beat the Zacks Consensus Estimate of $652 million.

Organic sales expanded 3.9%, driven by healthy end-market businesses, mostly in medical and electronics. Acquisitions/divestitures had a positive impact of 3.5% while foreign currency translation had a negative impact of 5%.

On a regional basis, revenues from the United States increased 8.7% from the year-ago fiscal quarter’s level to $219.1 million. Revenues from operations in Japan fell 7.5% to $23.1 million, while the same from the Asia Pacific region decreased 1% to $208.2 million. Revenues generated from Europe decreased 6.6% to $151.7 million, while the metric in the Americas increased 26% to $60.1 million.

Nordson reports revenues under two segments, namely Industrial Precision Solutions and Advanced Technology Solutions. A brief snapshot of the segmental sales is provided below:

Revenues from Industrial Precision Solutions amounted to $341.2 million in the quarter under review, down 1.2% from the year-ago fiscal quarter’s level. The segment contributed 51.5% to NDSN’s top line in the quarter.

Organic sales dipped 1.1% from the year-ago fiscal quarter’s level. Acquisitions/divestitures had a positive impact of 6.5%, while foreign currency translation had a negative impact of 6.6%.

Advanced Technology Solutions’ sales were $320.9 million, up 6.5% from the year-ago fiscal quarter’s figure. The metric represented 48.5% of Nordson’s revenues in the period.

Organic sales increased 9.6% from the year-ago fiscal quarter’s level, while foreign currency translation had a negative impact of 3.1%.

Margin Profile

In the reported quarter, Nordson’s cost of sales increased 5.3% from the year-ago fiscal quarter’s level to $296.5 million. The cost of sales represented 44.8% of net sales. Gross profit was $365.6 million, up 0.1% from the year-ago fiscal quarter’s level.

The gross margin contracted 130 basis points (bps) to 55.2%. NDSN suffered the adverse impacts of supply-chain woes and labor shortages.

Selling and administrative expenses increased 2.1% year over year to $180.7 million and represented 27.3% of net sales. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $213.2 million, the margin being 32%.

Adjusted operating income in the reported quarter was $188.3 million, flat year on year. Adjusted operating margin decreased 70 bps to 28.4%.

Net interest expenses totaled $5.2 million, reflecting a decrease of 7.1% from the year-ago fiscal quarter’s level.

Balance Sheet & Cash Flow

At the time of exiting the fiscal third quarter, Nordson’s cash and cash equivalents were $128.7 million, decreasing 57.1% from $300 million recorded at the end of the fourth quarter of fiscal 2021. Long-term debt was $401.7 million, reflecting a 48.6% decline from $781.7 million.

In the first nine months of fiscal 2022, NDSN generated net cash of $339.7 million from operating activities, down 9.5% from the last fiscal year’s comparable period’s tally. Capital invested in purchasing property, plant and equipment totaled $39.4 million, increasing 40.2% from the year-ago fiscal period’s figure.

Dividends/Share Buyback

In the first nine months of fiscal 2022, Nordson paid out dividends amounting to $88.7 million, up 30.4% from $68 million in the same period of the previous fiscal year.

Nordson’s purchase of treasury shares amounted to $233.8 million in the first nine months of fiscal 2022, increasing from $46.8 million in the same period of the last fiscal year.

Outlook

Nordson anticipates solid orders and backlog (more than $1 billion) to be beneficial in the third quarter of fiscal 2022. Pricing actions will also help mitigate the impacts of supply-chain and cost woes.

For fiscal 2022 (ending October 2022), Nordson anticipates adjusted earnings growth of 18-21% from the earlier fiscal year’s level. Sales are expected to increase 8-9% 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). AIT delivered a trailing four-quarter earnings surprise of 22.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.

AIT’s earnings estimates have increased 5.8% for fiscal 2023 (ending June 2023) in the past 60 days. Its shares have rallied 15% in the past six months.

Greif, Inc. (GEF Quick QuoteGEF - Free Report) presently has a Zacks Rank #2 (Buy). GEF delivered a trailing four-quarter earnings surprise of 22.9%, on average.

GEF’s earnings estimates have increased 0.4% for fiscal 2022 (ending October 2022) in the past 60 days. Its shares have risen 23.4% in the past six months.

Valmont Industries, Inc. (VMI Quick QuoteVMI - Free Report) presently has a Zacks Rank of 2. VMI’s earnings surprise in the last four quarters was 13.7%, on average.

In the past 60 days, Valmont’s earnings estimates have increased 3.8% for 2022. The stock has rallied 34.1% in the past six months.