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Nordson (NDSN) Q4 Earnings, Revenues Top Estimates, Down Y/Y

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Zacks Equity Research
·5 min read
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Nordson Corporation NDSN reported better-than-expected fourth quarter of fiscal 2020 (ended Oct 31, 2020) results. Both earnings and sales surpassed the Zacks Consensus Estimate by 3.9% and 0.04%, respectively.

Adjusted earnings, excluding one-time charges and gains, in the reported quarter were $1.59 per share, surpassing the consensus estimate of $1.53. However, the bottom line decreased 11.2% from the year-ago figure of $1.79 owing to decline in sales.

In fiscal 2020, the company’s adjusted earnings came in at $5.48, down 6.6% from $5.87 reported in the previous fiscal year.

Revenue Details

In the reported quarter, Nordson’s net sales were $558.5 million, down 4.6% year over year. The top line suffered from a 7% decline in organic volumes, partially offset by a positive impact of 1% from acquisitions and 2% positive impact of foreign currency translation. Notably, the top line marginally surpassed the Zacks Consensus Estimate of $558 million.

At the end of the reported quarter, backlog was $416 million.

In fiscal 2020, Nordson’s net sales were $2,121.1 million, down 3.3% on a year-over-year basis.

On a regional basis, revenues from the United States fell 5.9% year over year to $194.7 million. Revenues generated from operations in Japan declined 2.5% to $36.2 million, and that from the Asia Pacific region decreased 0.6% to $150 million. Revenues generated from Europe fell 2.6% to $142.1 million and that in the Americas declined 20.3% to $35.5 million.

The company reports under Industrial Precision Solutions and Advanced Technology Solutions. A brief discussion on the segmental performance in the quarter under review is provided below:

The Industrial Precision Solutions segment’s revenues totaled $308.4 million, down 8.3% year over year. The segment suffered from a 10% fall in volumes, partially offset by 1.7% positive impact of foreign currency translation.

Advanced Technology Solutions’ revenues were $250.1 million, up 0.5% year over year. The increase was backed by the positive impact of 2.2% from acquisitions and 1.4% positive impact of foreign currency translation 3.3%, partially offset by a 3.1% decline in volumes.

Margin Profile

In the fiscal fourth quarter, Nordson’s cost of sales decreased 1.8% to $261.7 million on a year-over-year basis. It represented 46.9% of net sales in the quarter compared with 45.5% in the year-ago quarter. Selling and administrative expenses contracted 4% to $172.1 million. It represented 30.8% of net sales in the reported quarter compared with 30.6% in the year-ago quarter.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the quarter were $159.3 million, down 5.3%.

Adjusted operating profits declined 7.9% to $130.2 million, while the margin came in at 23.3% compared with 24.2% in the year-ago quarter.

Balance Sheet & Cash Flow

Exiting the fiscal fourth quarter, Nordson’s cash and cash equivalents were $208.3 million, down from $221.8 million at the end of the previous quarter. The company’s long-term debt decreased 12.5% sequentially to $1,068 million.

In fiscal 2020, the company generated net cash of $502.4 million from operating activities, reflecting a year-over-year increase of 31.2%. Capital spent on the addition of property, plant and equipment fell 21.3% to $50.5 million.

During fiscal 2020, the company used $52.6 million to buy back shares and pay out dividends amounting to $88.3 million.

Outlook

For first quarter of fiscal 2021 (ending January 2021), Nordson anticipates adjusted earnings growth of 15-20% on a year-over-year basis. Also, in the quarter, it expects year-over-year sales growth of 2-3%.

Nordson Corporation Price, Consensus and EPS Surprise

Nordson Corporation Price, Consensus and EPS Surprise
Nordson Corporation Price, Consensus and EPS Surprise

Nordson Corporation price-consensus-eps-surprise-chart | Nordson Corporation Quote

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the same space are Altra Industrial Motion Corp. AIMC, Applied Industrial Technologies, Inc. AIT and Dover Corporation DOV. While Altra Industrial currently sports a Zacks Rank #1 (Strong Buy), Applied Industrial and Dover carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Altra Industrial delivered a positive earnings surprise of 50.07%, on average, in the trailing four quarters.

Applied Industrial delivered a positive earnings surprise of 14.68%, on average, in the trailing four quarters.

Dover delivered a positive earnings surprise of 18.10%, on average, in the trailing four quarters.

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