Nordson Q2 2025 slides: Sales up 5%, stock surges on strong segment performance

Nordson Corporation (NASDAQ:NDSN) shares surged 10.81% on Thursday after the precision dispensing equipment manufacturer presented its second-quarter fiscal 2025 results, showing sales growth of 5% and adjusted earnings per share rising 3% year-over-year. The company also announced a strategic divestiture while maintaining strong order momentum across segments.

Quarterly Performance Highlights

Nordson reported sales of $683 million for the quarter ended April 30, 2025, exceeding the midpoint of its guidance range and representing a 5% increase from the prior year. Adjusted earnings per share reached $2.42, up 3% year-over-year, as operational excellence initiatives helped drive profitability despite global uncertainties.

The company’s EBITDA grew 7% to $217 million, with EBITDA margin slightly improving to 32%. While organic sales decreased by 2%, the Atrion acquisition contributed 8% growth, offsetting this decline and a minor currency headwind of 0.4%.

As shown in the following sales bridge chart, the acquisition’s contribution was substantial in driving overall growth:

"Strong sales and operating performance in a dynamic global environment," highlighted the company in its presentation, noting that order entry and backlog remained robust across all segments, with backlog increasing approximately 5% from the previous quarter.

Segment Analysis

Nordson’s performance varied significantly across its three business segments, with electronics and medical components showing strength while industrial systems faced headwinds.

The Industrial Precision Solutions (IPS) segment reported sales of $319 million, down 8% year-over-year. While nonwovens and precision agriculture product lines grew, this was offset by weaker systems demand in polymer processing and industrial coatings. EBITDA margin declined slightly to 36% due to lower sales volume.

In contrast, the Medical (TASE:BLWV) and Fluid Solutions (MFS) segment delivered impressive results with sales of $203 million, a 20% increase driven by the Atrion acquisition, which contributed 30% growth and continued to outperform expectations. Organic sales decreased 10%, primarily due to ongoing destocking in medical interventional solutions. EBITDA for this segment reached $77 million with a 38% margin, up 22% from the prior year.

The Advanced Technology Solutions (ATS) segment showed the strongest organic performance with sales of $161 million, an 18% increase driven by broad-based demand. Electronics dispense, optical, and x-ray inspection systems all grew by double digits compared to the prior year. EBITDA surged 43% to $40 million, with margin expanding nearly 500 basis points to 25% due to strong cost management and manufacturing improvements.

Portfolio Realignment Strategy

Nordson continued its strategic portfolio realignment, announcing an agreement to divest certain contract manufacturing product lines within its medical interventional solutions business. The company expects this move to improve the growth outlook and be accretive to MFS segment EBITDA margins when the transaction closes in early Q4 fiscal 2025.

"We’re prioritizing above-market growth in proprietary medical components," the company stated, noting it will focus on the remaining approximately $800 million medical and fluid solutions product lines, including components and proprietary devices for minimally invasive procedures such as balloons, catheters, and nitinol devices.

This strategic shift aligns with Nordson’s commitment to focus on higher-value growth opportunities while maintaining a strong customer pipeline in the medical components sector.

Balance Sheet and Cash Allocation

Nordson maintained a solid financial position with $130 million in cash and a net debt leverage ratio of 2.4x based on trailing 12-month EBITDA, a slight reduction from year-end. The company generated $103 million in free cash flow during the quarter, representing a 92% conversion rate of net income.

Capital allocation remained balanced, with $85 million directed toward share repurchases, $44 million to dividend payments, and $16 million to capital investments. Year-to-date share repurchases totaled $141 million, reflecting the company’s preference for buybacks in the current environment while maintaining its leverage target within the long-term 2.0-2.5x range.

Forward Guidance and Outlook

Looking ahead to the third quarter of fiscal 2025, Nordson provided guidance for sales between $710-750 million and adjusted EPS of $2.55-2.75, representing sequential and year-over-year growth in both metrics.

The company cited solid order entry moving into Q3 and noted that historical seasonality and current order entry trends support the projected increases. Management indicated that the Q3 outlook aligns with full-year 2025 guidance expectations.

"We’re executing in an uncertain environment," Nordson emphasized, highlighting three key strategic pillars: its close-to-the-customer model with in-region manufacturing, operational excellence initiatives including targeted workforce reductions expected to save $15-20 million annually, and disciplined capital deployment.

Despite macroeconomic uncertainties, Nordson remains confident in its competitive advantages, including a strong growth portfolio, high recurring revenue, diversified niche end markets, and differentiated products. The company’s performance in Q2 and positive market reaction suggest these strategies are resonating with investors as Nordson continues to navigate a complex global business environment.

Full presentation:

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