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Machinery company Nordson Corporation (NDSN - Free Report) reported better-than-expected results in third-quarter fiscal 2017 (ended Jul 31, 2017). Adjusted earnings came in at $1.78 per share, surpassing the Zacks Consensus Estimate of $1.66 by 7.2%. Also, the bottom line surpassed the year-ago tally of $1.47 by 21.1% on the back of healthy segmental sales and improved margin.
Net sales in the quarter were $589.4 million, increasing 20.3% year over year. The improvement came on the back of 11% increase in organic volume and 10% gain from acquired assets, partially offset by 0.4% negative impact of currency translation. Also, the top line came in above the Zacks Consensus Estimate of $575.6 million.
Backlog was $372 million, up 10% year over year. Orders for the 12-week period ended Aug 13, decreased 2% year over year.
On a regional basis, revenues sourced from the United States increased 35.5% year over year. Businesses in Japan, Asia Pacific and the Americas also improved, recording revenue increase of 19.5%, 17.7% and 36.3%, respectively. Top-line performance in Europe improved 4.1%.
Segmental Revenues
Nordson 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:
Adhesive dispensing systems generated revenues of $233.4 million, up 5.7% year over year. Advanced technology systems revenues totaled $290.4 million, up 41.4% year over year. Revenues generated from Industrial coating systems increased 3% to $65.7 million.
Margins
Nordson’s margin profile improved in the quarter on the back of sales growth, partially offset by rise in expenses. Cost of sales grew 21.5% year over year, representing 44.6% of net sales compared with 44.2% in the year-ago quarter. Selling and administrative expenses, as a percentage of net sales, was 29.3% compared with 30.5% in the year-ago quarter.
Operating profits increased 24.1% year over year while the margin came in at 26% versus 25.2% in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the fiscal third quarter, Nordson’s cash and marketable securities were $110.7 million, up from $88.4 million recorded in the previous-quarter end. The company’s long-term debt was $1,569.7 million, slightly below $1,574.2 million exiting the previous quarter.
In the quarter, the company’s net cash generated from operating activities increased 13.2% year over year to $76.8 million while capital spent on addition of property, plant and equipment increased 11.9% to $22.3 million.
During the quarter, the company paid dividends of approximately $15.6 million to its shareholders.
Outlook
For fourth-quarter fiscal 2017, Nordson anticipates sales to increase in the range of 4-8% year over year. Organic growth is predicted to decrease 3% to 7%. Acquisition gains will likely lead to 10% sales growth while foreign currency movements will add 1%. Operating margin will likely be 21%.
GAAP earnings are expected in the range of $1.18-$1.32 per share, including 7 cents of expenses related to acquisition intangible asset amortization.
For fiscal 2017, organic revenue growth is predicted to be 6%. Adjusted earnings per share will be $5.24, reflecting 12% year-over-year growth.
With a $7.2 billion market capitalization, Nordson currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Altra Industrial Motion Corporation , Kadant Inc. (KAI - Free Report) and Applied Industrial Technologies, Inc. (AIT - Free Report) . While both Altra Industrial Motion and Kadant sport a Zacks Rank #1 (Strong Buy), Applied Industrial Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Altra Industrial Motion’s financial performance was impressive in the last four quarters, with an average positive earnings surprise of 16.95%. Also, earnings estimates for 2017 and 2018 were revised upward over the last 60 days.
Kadant pulled off an average positive earnings surprise of 19.29% in the trailing four quarters. Also, earnings expectations for 2017 and 2018 improved over the past 60 days.
Applied Industrial Technologies’ financial performance was impressive, with an average positive earnings surprise of 10.10% for the last four quarters. Also, earnings estimates for fiscal 2018 and fiscal 2019 were revised upward over the last 60 days.
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Nordson (NDSN) Beats Q3 Earnings & Sales, Q4 Sales View Weak
Machinery company Nordson Corporation (NDSN - Free Report) reported better-than-expected results in third-quarter fiscal 2017 (ended Jul 31, 2017). Adjusted earnings came in at $1.78 per share, surpassing the Zacks Consensus Estimate of $1.66 by 7.2%. Also, the bottom line surpassed the year-ago tally of $1.47 by 21.1% on the back of healthy segmental sales and improved margin.
Net sales in the quarter were $589.4 million, increasing 20.3% year over year. The improvement came on the back of 11% increase in organic volume and 10% gain from acquired assets, partially offset by 0.4% negative impact of currency translation. Also, the top line came in above the Zacks Consensus Estimate of $575.6 million.
Backlog was $372 million, up 10% year over year. Orders for the 12-week period ended Aug 13, decreased 2% year over year.
On a regional basis, revenues sourced from the United States increased 35.5% year over year. Businesses in Japan, Asia Pacific and the Americas also improved, recording revenue increase of 19.5%, 17.7% and 36.3%, respectively. Top-line performance in Europe improved 4.1%.
Segmental Revenues
Nordson 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:
Adhesive dispensing systems generated revenues of $233.4 million, up 5.7% year over year. Advanced technology systems revenues totaled $290.4 million, up 41.4% year over year. Revenues generated from Industrial coating systems increased 3% to $65.7 million.
Margins
Nordson’s margin profile improved in the quarter on the back of sales growth, partially offset by rise in expenses. Cost of sales grew 21.5% year over year, representing 44.6% of net sales compared with 44.2% in the year-ago quarter. Selling and administrative expenses, as a percentage of net sales, was 29.3% compared with 30.5% in the year-ago quarter.
Operating profits increased 24.1% year over year while the margin came in at 26% versus 25.2% in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the fiscal third quarter, Nordson’s cash and marketable securities were $110.7 million, up from $88.4 million recorded in the previous-quarter end. The company’s long-term debt was $1,569.7 million, slightly below $1,574.2 million exiting the previous quarter.
In the quarter, the company’s net cash generated from operating activities increased 13.2% year over year to $76.8 million while capital spent on addition of property, plant and equipment increased 11.9% to $22.3 million.
During the quarter, the company paid dividends of approximately $15.6 million to its shareholders.
Outlook
For fourth-quarter fiscal 2017, Nordson anticipates sales to increase in the range of 4-8% year over year. Organic growth is predicted to decrease 3% to 7%. Acquisition gains will likely lead to 10% sales growth while foreign currency movements will add 1%. Operating margin will likely be 21%.
GAAP earnings are expected in the range of $1.18-$1.32 per share, including 7 cents of expenses related to acquisition intangible asset amortization.
For fiscal 2017, organic revenue growth is predicted to be 6%. Adjusted earnings per share will be $5.24, reflecting 12% year-over-year growth.
Nordson Corporation Price and Consensus
Nordson Corporation Price and Consensus | Nordson Corporation Quote
Zacks Rank and Key Picks
With a $7.2 billion market capitalization, Nordson currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Altra Industrial Motion Corporation , Kadant Inc. (KAI - Free Report) and Applied Industrial Technologies, Inc. (AIT - Free Report) . While both Altra Industrial Motion and Kadant sport a Zacks Rank #1 (Strong Buy), Applied Industrial Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Altra Industrial Motion’s financial performance was impressive in the last four quarters, with an average positive earnings surprise of 16.95%. Also, earnings estimates for 2017 and 2018 were revised upward over the last 60 days.
Kadant pulled off an average positive earnings surprise of 19.29% in the trailing four quarters. Also, earnings expectations for 2017 and 2018 improved over the past 60 days.
Applied Industrial Technologies’ financial performance was impressive, with an average positive earnings surprise of 10.10% for the last four quarters. Also, earnings estimates for fiscal 2018 and fiscal 2019 were revised upward over the last 60 days.
Zacks' 10-Minute Stock-Picking Secret
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
But here's something even more remarkable: You can master this proven system without going to a single class or seminar. And then you can apply it to your portfolio in as little as 10 minutes a month.
Learn the secret >>