Nordson Corporation NDSN reported lower-than-expected results for fourth-quarter fiscal 2015 (ended Oct 31, 2015). The company’s adjusted earnings came in at 95 cents per share, below the Zacks Consensus Estimate of $1.08. Also, the bottom line declined 17.4% from the year-ago tally of $1.15 per share.
Including severance & restructuring costs and other one-time adjustments, the company’s Generally Accepted Accounting Principles (“GAAP”) earnings were 84 cents per share, down from $1.13 reported a year ago.
For fiscal 2015, Nordson Corporation’s adjusted earnings were $3.57 per share, down from $3.88 per share in fiscal 2014.
Revenues
Nordson Corporation generated revenues of $446.2 million in fourth-quarter 2015, decreasing 4.8% year over year. Top-line decline includes flat organic volume sales and 2% contribution from acquisitions, offset by a 7% negative impact from currency translation.
Also, the top line lagged the Zacks Consensus Estimate of $450 million.
Backlog was $229 million, up 8% year over year. Orders for the 12-week period ended Dec 6, 2015 fell 5% year over year.
Nordson Corporation reports its top-line results under three segments, namely, Adhesive dispensing systems, Advanced technology systems and Industrial coating systems. A brief discussion on the segmental performance is provided below:
Revenues from the Adhesive dispensing systems segment decreased 2% year over year to $226.9 million, representing 50.9% of total revenue. Advanced technology systems’ revenues declined 9.1% year over year to $147.3 million, accounting for 33% of total revenue. Revenues generated from the Industrial coating systems segment decreased 4.1% to $72 million. It represented 16.1% of total revenue.
On a regional basis, revenues sourced from the U.S. decreased 3.6% year over year. Businesses in Japan, Asia Pacific and Europe also weakened; recording revenue decline of 16.6%, 10.8% and 0.8%, respectively. However, top-line performance in the Americas was encouraging, with revenues increasing 12.2% year over year.
For fiscal 2015, Nordson Corporation generated revenues of $1,688.7 million, down 0.9% year over year.
Margins
Nordson Corporation’s cost of sales was roughly flat year over year, while representing 47.4% of total revenue versus 45.1% in the year-ago quarter. Selling and administrative expenses, as a percentage of total revenue, was 35.7% as against 32.3% in the year-ago quarter. Operating profits declined 28.6% year over year, while the margin came in at 17%.
Balance Sheet & Cash Flow
Exiting fourth-quarter fiscal 2015, Nordson Corporation’s cash and marketable securities declined 17.6% to $50.3 million from $61 million in the preceding quarter. The company’s long-term debt was $1,092.6 million, up from $922.7 million recorded at third-quarter end.
In the reported quarter, Nordson Corporation generated cash of $93.1 million from its operating activities, down from $105.2 million in the year-ago quarter. Capital spent on addition of property, plant and equipment decreased 15.7% year over year to $13.2 million.
During the quarter, Nordson returned approximately $210 million to its shareholders through share buyback and dividend payments.
Outlook
For first-quarter fiscal 2016, Nordson Corporation anticipates sales to decline in a range of 1−5%. Organic volume is predicted to decline 3% to increase 1%, while acquisition gains are expected to be roughly 3%. These will, however, be partially offset by a 5% negative impact from adverse foreign currency movements.
GAAP earnings are expected in a range of 47−57 cents per share. The bottom-line prediction includes 8 cents per share of negative impact from currency movements.
With a market capitalization of nearly $4.1 billion, Nordson Corporation carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the sector include Encore Wire Corp. WIRE, CUI Global, Inc. CUI and John Bean Technologies Corporation JBT. While Encore Wire sports a Zacks Rank #1 (Strong Buy), both CUI Global and John Bean Technologies carry a Zacks Rank #2 (Buy).
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