Nordson Corporation’s (NDSN Quick QuoteNDSN - Free Report) third-quarter fiscal 2023 (ended Jul 31, 2023) adjusted earnings (excluding 13 cents from non-recurring items) of $2.35 per share surpassed the Zacks Consensus Estimate of $2.31 per share. The bottom line decreased 5.6% year over year.

Revenue Details

In the reported quarter, Nordson’s revenues were $648.7 million, decreasing 2% from the year-ago fiscal quarter’s number. Revenues missed the Zacks Consensus Estimate of $665 million.

Organic sales declined 5%, due to ongoing pressure in electronics, primarily semiconductor dispense applications, and biopharma end markets. Acquisitions/divestitures had a positive impact of 2.4% while foreign currency translation had a positive impact of 0.1%.

On a regional basis, revenues from the Asia Pacific region decreased 17.6% to $190.6 million. Revenues generated from Europe increased 10.5% to $167.5 million while the metric in the Americas increased 4.1% to $290.5 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 $338.3 million in the quarter under review, down 0.9% from the year-ago fiscal quarter’s level. The segment contributed 52.2% to NDSN’s top line in the quarter.

Organic sales decreased 1.5% from the year-ago fiscal quarter’s level. Foreign currency translation had a positive impact of 0.6%.

Revenues from Medical and Fluid Solutions amounted to $170.9 million in the quarter under review, down 3.9% from the year-ago fiscal quarter’s level. The segment contributed 26.3% to NDSN’s top line in the reported quarter.

Organic sales decreased 3.9% from the year-ago fiscal quarter’s level.

Advanced Technology Solutions’ sales were $139.5 million, down 12.8% from the year-ago fiscal quarter’s figure. The metric represented 21.5% of Nordson’s revenues in the period.

Organic sales decreased 12.8% from the year-ago fiscal quarter’s level. Acquisitions/divestitures had a positive impact of 10.7% while foreign currency translation had a negative impact of 0.4%.

Margin Profile

In the reported quarter, Nordson’s cost of sales decreased 2.8% from the year-ago fiscal quarter’s level to $288.4 million. Gross profit was $360.3 million, down 1.4% from the year-ago fiscal quarter’s level. The gross margin increased 30 basis points to 55.5%.

Selling and administrative expenses increased 4.8% year over year to $189.3 million. Adjusted EBITDA was $207.9 million, the margin being 32%. The adjusted operating income in the reported quarter was $180.8 million, decreasing 4% year on year. The adjusted operating margin of 28% was in-line with the year-ago period’s figure.

Net interest expenses totaled $11.5 million, reflecting a 122.4% increase 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 $143.1 million compared with $163.5 million recorded at the end of the fourth quarter of fiscal 2022. Long-term debt was $727.5 million compared with $345.3 million recorded at the end of the fourth quarter of fiscal 2022.

In the first nine months of fiscal 2023, NDSN generated net cash of $478.1 million from operating activities, up 40.7% from the last fiscal year’s tally. Capital invested in purchasing property, plant and equipment totaled $24.2 million, decreasing 38.4% from the year-ago fiscal period’s figure.

Dividends/Share Buyback

In the first nine months of fiscal 2023, Nordson paid out dividends amounting to $111.5 million, up 25.8% from $88.7 million in the same period of the previous fiscal year.

Nordson’s treasury purchase shares amounted to $78.2 million in the first nine months of fiscal 2023, decreasing from $233.8 million in the last fiscal year.

Fiscal 2023 Outlook Narrowed

For fiscal 2023 (ending October 2023), Nordson anticipates adjusted earnings to be $8.90-$9.05 per share compared with $8.90-$9.30 per share anticipated earlier. The Zacks Consensus Estimate for the same stands at $9.06 per share. Sales are expected to increase 0-2% from the previous fiscal year’s reported number compared with 0-3% stated earlier.

Zacks Rank & Other Stocks to Consider

NDSN currently carries a Zacks Rank #2 (Buy). Some other top-ranked companies from the Industrial Products sector are discussed below:

Caterpillar Inc. (CAT Quick QuoteCAT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks.

CAT’s earnings surprise in the last four quarters was 18.5%, on average. In the past 60 days, estimates for Caterpillar’s earnings have increased 9.5% for 2023. The stock has gained 42.3% in the past year.

A. O. Smith Corp. (AOS Quick QuoteAOS - Free Report) presently carries a Zacks Rank of 2. AOS’ earnings surprise in the last four quarters was 10.5%, on average.

In the past 60 days, estimates for A. O. Smith’s earnings have increased 2.9% for 2023. The stock has gained 12.4% in the past year.

Alamo Group Inc. (ALG Quick QuoteALG - Free Report) presently carries a Zacks Rank of 2. ALG’s earnings surprise in the last four quarters was 13%, on average.

In the past 60 days, estimates for Alamo’s 2023 earnings have increased 1.1%. The stock has gained 27.1% in the past year.