Nordson Corporation (NDSN) reported disappointing results for fiscal first-quarter 2014 (ended Jan 31, 2014). Non-GAAP earnings per share in the quarter fell 9.7% year over year to 56 cents, compared with 62 cents earned in the year-ago quarter. The result was also below the Zacks Consensus Estimate of 61 cents.
GAAP earnings per share, including one-time items, came in at 54 cents, compared with 65 cents in first-quarter 2013.
Revenues
Nordson Corporation’s revenues in the quarter increased 3.6% year over year to $359.4 million driven primarily by 6% contribution from acquisitions, which was offset by 1% negative foreign currency translation impact as well as 1% decline in organic growth. Revenues were also below the Zacks Consensus Estimate of $367.0 million.
Exiting the quarter, backlog stood at $229.0 million, up 23% compared with the year-ago period while orders for the 12-week period ended Feb 16, 2014 decreased 4% year over year, on a constant currency basis.
A brief discussion of revenue segments of Nordson Corporation has been provided below:
Revenues from Adhesive dispensing systems business increased 14.2% year over year and represented 58.3% of total revenue. Advanced technology systems recorded a 10.3% fall in revenues and represented 27.1% of total revenue while revenues generated from Industrial coating systems business declined 4.6% and stood at 14.6% of total revenue.
On a regional basis, revenues generated in the United States and Europe grew 3.8% and 23.1%, respectively, year over year. The improvement was, however, offset by revenue decline of 5.0%, 1.5% and 26.3% recorded in the Asia Pacific, Americas and Japan, respectively.
Margins
Cost of sales in reported quarter went up 9.9% year over year and represented 45.8% of total revenue, up from 43.2% in the year-ago quarter. Selling and administrative expenses, as a percentage of total revenue, stood at 39.2%. Operating margin in the quarter was 15.0%, down from 17.7% in the year-ago quarter.
Balance Sheet
Exiting the quarter, Nordson Corporation had cash and marketable securities balance of $46.9 million, up from $42.4 million in the previous quarter. Long-term debt stood at $613.4 million, down from $638.2 million in the sequentially preceding quarter.
Cash Flow
In fiscal first-quarter 2014, Nordson Corporation generated roughly $47.7 million cash from operating activities, an increase of 20% over the year-ago quarter. Capital spending increased 4.9% and came in at $7.9 million. Free cash flow before dividends was $39.8 million, up from $32.3 million in fiscal first-quarter 2013.
The company paid total dividends of $11.6 million in the quarter, up from $9.6 million in the year-ago comparable quarter.
Outlook
For fiscal second-quarter 2014, management anticipates sales growth to range within 5–9% year over year. Organic growth is predicted in 0–4% range while currency translation is likely to have a negligible effect. Revenues are expected to get a 5% boost from acquisitions. Earnings per share are expected to be within the 85–94 cents range, with operating margin of roughly 22%.
Nordson Corporation is a $4.6 billion company, operating in the diversified machinery industry. The stock currently has a Zacks Rank #3 (Hold). Some better-ranked stocks to watch out for in the industry include Kadant Inc. (KAI), IDEX Corporation (IEX) and The Middleby Corp. (MIDD). While Kadant sports a Zacks Rank #1 (Strong Buy), IDEX Corp. and Middleby hold a Zacks Rank #2 (Buy).
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