Nordson Corporation (NDSN) reported better-than-expected results, third time in a row, for fourth-quarter fiscal 2014 (ended Oct 31, 2014). Adjusted earnings came in at $1.15 per share, up 23.7% from 93 cents recorded in the year-ago quarter.
Moreover, the bottom line surpassed the Zacks Consensus Estimate of $1.13 by 2 cents.
Revenues
Nordson Corporation generated revenues of $468.6 million, reflecting a year over year increase of 14.1%. Top-line growth includes a 13% gain from volume growth, 3% contribution from acquisitions and 2% negative impact from currency translation.
The top line also surpassed the Zacks Consensus Estimate of $458 million.
Backlog was $223 million, up 6% from the year-ago quarter. Orders, for the 12-week period ended Dec 7, 2014, increased 10% year over year.
Nordson Corporation reports its top-line results under three segments — Adhesive dispensing systems, Advanced technology systems and Industrial coating systems. A brief discussion on the segmental performance is provided below:
Revenues generated from the Adhesive dispensing systems segment totaled $231.5 million, up 6.3% year over year and representing 49.4% of total revenue. The year-over-year growth reflects a 9% gain from volume growth and 2.7% negative currency impact.
The Advanced technology systems’ revenue grew 27.3% year over year to $162 million, accounting for 34.6% of total revenue. Top-line growth includes 27.7% of volume gains and 0.4% negative currency impact.
Revenues from the Industrial coating systems segment increased 14.1% to $75.1 million, including a 15.7% gain from volume growth, partially offset by a 1.6% adverse currency impact. It represented 16% of total revenue.
On a regional basis, revenues generated in the U.S. climbed 15.3% year over year. Further, businesses in Europe and Asia Pacific flourished; recording revenue growth of 8.7% and 25.1% respectively. Revenues sourced from Japan escalated 9.7% while that from the Americas declined 1.6%.
Margins
Nordson Corporation’s cost of sales increased 14.9% year over year and represented 45.1% of total revenue, up 30 basis points (bps) from the prior-year quarter. Selling and administrative expenses, as a percentage of total revenue, stood at 32.3% versus 34.1% in the year-ago quarter. Operating profits rose 22% year over year, while operating margin, came in at 22.6%, gaining 150 bps.
Balance Sheet
Exiting fourth-quarter fiscal 2014, Nordson Corporation’s cash and marketable securities amounted to $42.3 million, down 20.5% from $53.2 million in the preceding quarter. The company’s long-term debt increased 11.5% to $682.9 million from $612.4 million in the previous quarter.
Cash Flow
In the reported quarter, Nordson Corporation generated cash of $105.2 million from its operating activities, increasing 42.6% year over year. Capital spent on addition of property, plant and equipment amounted to $15.6 million versus $12.7 million in the year-ago quarter.
During the quarter, Nordson repurchased shares worth $72 million and paid dividends amounting to $14 million.
Also, Nordson Corporation’s board of directors authorised a new share buyback program worth $300 million. This replaced the company’s existing $200 million program, of which roughly $1 million was left.
Outlook
For fiscal first-quarter 2015, Nordson Corporation anticipates total revenues to grow in the range of 5−9%; comprising 6−10% organic revenue growth, 3% contribution from acquisitions and 4% adverse currency impacts.
Generally Accepted Accounting Principles (“GAAP”) earnings are expected to come in a range of 60−70 cents per share.
With a market capitalization of $4.8 billion, Nordson Corporation currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Blount International Inc. (BLT), EnPro Industries, Inc. (NPO) and Illinois Tool Works Inc. (ITW). While Blount International sports a Zacks Rank #1 (Strong Buy), both EnPro Industries and Illinois Tool Works carry a Zacks Rank #2 (Buy).
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