Nordson(NDSN) - 2025 Q2 - Quarterly Report

Part I – Financial Information Financial Statements (Unaudited) Nordson's Q2 FY2025 saw 5.0% sales growth, but net income decreased 4.9% to $112.4 million, with total assets at $6.06 billion Condensed Consolidated Statements of Income Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Three Months Ended April 30, 2025 | Three Months Ended April 30, 2024 | Six Months Ended April 30, 2025 | Six Months Ended April 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Sales | $682,938 | $650,642 | $1,298,358 | $1,283,835 | | Operating Profit | $168,750 | $168,616 | $309,697 | $328,051 | | Net Income | $112,404 | $118,217 | $207,056 | $227,789 | | Diluted EPS | $1.97 | $2.05 | $3.62 | $3.95 | Consolidated Balance Sheets Balance Sheet Summary (in thousands) | Metric | April 30, 2025 | October 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,323,522 | $1,275,032 | | Total Assets | $6,062,038 | $6,000,966 | | Total Current Liabilities | $516,640 | $528,477 | | Total Liabilities | $3,101,734 | $3,068,774 | | Total Shareholders' Equity | $2,960,304 | $2,932,192 | Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Six Months Ended (in thousands) | Cash Flow Activity | April 30, 2025 | April 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $278,292 | $294,964 | | Net cash used in investing activities | ($27,100) | ($15,177) | | Net cash used in financing activities | ($240,813) | ($265,757) | | Increase in cash and cash equivalents | $14,205 | $9,767 | | Cash and cash equivalents at end of period | $130,157 | $125,446 | Notes to Condensed Consolidated Financial Statements Notes detail the Atrion acquisition, MCS realignment, derivative usage for risk, and the company's $2.2 billion debt - On August 21, 2024, the Company acquired Atrion Corporation for an all-cash price of $789,996 (net of cash acquired), which now operates within the MFS segment[34][35] - Effective November 1, 2024, the Measurement and Control Solutions (MCS) division was transferred from the Industrial Precision Solutions (IPS) segment to the Advanced Technology Solutions (ATS) segment[41][69] - The company uses various derivative instruments, including foreign currency forward contracts, interest rate swaps (fair value hedges), and cross-currency swaps (net investment hedges) to manage market risks[81][87][90] - On May 28, 2025, the Company signed an agreement to divest select product lines within its medical contract manufacturing business, with the deal expected to close in Q4 2025[99] Management's Discussion and Analysis (MD&A) Management reported a 5.0% sales increase in Q2 2025, driven by acquisitions and ATS growth, despite operating margin contraction Results of Operations Q2 2025 sales increased 5.0% to $682.9 million, but net income decreased 4.9% to $112.4 million, with operating margin declining to 24.7% Q2 2025 vs Q2 2024 Sales Variance Analysis | Segment/Region | Total Variance | Organic | Acquisitions | Currency | | :--- | :--- | :--- | :--- | :--- | | Total Company | 5.0% | (2.4)% | 7.8% | (0.4)% | | IPS Segment | (7.6)% | (6.9)% | —% | (0.7)% | | MFS Segment | 20.0% | (10.0)% | 30.0% | —% | | ATS Segment | 18.0% | 18.1% | —% | (0.1)% | | Asia Pacific Region | 25.2% | 22.6% | 3.2% | (0.6)% | Q2 2025 vs Q2 2024 Operating Profit (in thousands) | Segment | Q2 2025 Profit | Q2 2025 Margin | Q2 2024 Profit | Q2 2024 Margin | | :--- | :--- | :--- | :--- | :--- | | Total Company | $168,750 | 24.7% | $168,616 | 25.9% | | IPS | $95,722 | 30.0% | $115,922 | 33.6% | | MFS | $56,805 | 28.0% | $48,993 | 29.0% | | ATS | $31,558 | 19.6% | $20,693 | 15.1% | - Interest expense increased by 32.1% in Q2 2025 to $26.6 million, primarily due to higher average debt levels driven by acquisitions[106][114] - The effective tax rate for Q2 2025 was 19.0%, down from 20.8% in the prior-year period, primarily due to the foreign-derived intangible income deduction[46][117] Financial Condition, Liquidity and Capital Resources The company maintains a strong financial condition with $130.2 million cash, $278.3 million operating cash flow, and $806.5 million available borrowings - Net cash provided by operating activities was $278.3 million for the six months ended April 30, 2025, compared to $295.0 million in the prior year period[123] - As of April 30, 2025, the company had $130.2 million in cash and cash equivalents and $806.5 million in available borrowings under its loan agreements and unused bank lines of credit[125] - Additions to property, plant and equipment increased to $37.4 million in the first six months of 2025, up from $21.9 million in the prior year, driven by productivity projects and a new manufacturing facility[123] Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk exposures, including interest rates and foreign currency, have occurred since the 2024 Form 10-K filing - Information regarding financial instruments sensitive to changes in interest and foreign currency exchange rates has not changed materially since the 2024 Form 10-K[129] Controls and Procedures Management concluded disclosure controls and procedures were effective as of April 30, 2025, with no material changes to internal controls - The principal executive and financial officers concluded that disclosure controls and procedures were effective as of April 30, 2025[130] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[131] Part II – Other Information Risk Factors Changes in government trade policies, tariffs, and import/export regulations pose a material risk to the company's business - The company highlights that changes in government trade policies, tariffs, and import/export regulations pose a material risk to its business, potentially impacting sales, margins, and profitability[135] Share Repurchases Nordson repurchased 423,521 shares for $85.3 million in Q2 2025, with $382.6 million remaining for future repurchases Share Repurchases for the Three Months Ended April 30, 2025 | Period | Total Shares Repurchased | Average Price Paid per Share | | :--- | :--- | :--- | | Feb 2025 | 123,121 | $216.07 | | Mar 2025 | 141,409 | $207.78 | | Apr 2025 | 158,991 | $184.59 | | Total | 423,521 | $201.49 | - As of April 30, 2025, approximately $382.6 million remained available for share repurchases under the company's authorized programs[136]