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Nordson Corporation NDSN has been benefiting from persistent strength in the Industrial Precision Solutions segment, driven by the solid demand for its packaging and nonwoven product lines. The growing need for packaged goods in food and beverage, pharmaceutical and other consumer goods markets is driving demand for the company's packaging product lines, which also bodes well for the segment. Sales from this segment increased 6.8% year over year in fiscal 2024 (ended October 2024).
Driven by strength across its businesses, the company expects sales to be in the band of $2.75-$2.87 billion in fiscal 2025 (ending October 2025), implying an increase of 4.5% at the midpoint on a year-over-year basis.
The company remains focused on acquiring businesses to gain access to new customers, regions and product lines. In August 2024, it acquired Atrion Corporation’s three major businesses, Halkey Roberts, Atrion Medical and Quest Medical. The buyout will enable NDSN to expand its medical offerings in the infusion and cardiovascular therapies market.
Also, the ARAG Group buyout in August 2023 expanded its core capabilities in precision dispensing technology. Acquired assets boosted total revenues by 4.8% in fiscal 2024.
Nordson has been focused on rewarding shareholders through dividend payouts and share repurchases. For instance, in fiscal 2024, it paid out dividends of $161.4 million and bought back treasury shares worth $33.3 million. Also, in August 2024, the company hiked its dividend by 15% to 78 cents per share.
However, NDSN has been subject to weakness in the Advanced Technology Solutions segment. Softness in the electronics dispense and test & inspection product lines remains a concern. This is reflected in the Advanced Technology Solutions segment’s revenues, which declined 11.6% in fiscal 2024. Also, supply-chain constraints, particularly in the medical device business, remain a concern for the company.
The escalating costs and expenses have also been a major concern for the company. In the fiscal fourth quarter, its cost of sales recorded a year-over-year increase of 1.9%. Also, in the same quarter, the company’s selling and administrative expenses increased 12.5% year over year due to high acquisition costs.
NDSN Stock’s Price Performance
Image Source: Zacks Investment Research
In the past three months, shares of this Zacks Rank #3 (Hold) company have lost 18.7% compared with the industry’s 2% decline.
Also, the high debt level remains a concern for Nordson. The company exited fiscal 2024 with a long-term debt of $2.1 billion, reflecting an increase of about 50% sequentially. The significant increase in debt level was primarily attributable to funds raised for acquisitions. Its interest expense was $89 million in fiscal 2024, up 49% year over year.