Nordson(NDSN) - 2025 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) This section presents the unaudited condensed consolidated financial statements, including statements of income, comprehensive income, balance sheets, shareholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, recent acquisitions, divestitures, and segment performance for the periods ended July 31, 2025 and 2024 Condensed Consolidated Statements of Income For the three months ended July 31, 2025, Nordson Corporation reported a 12.1% increase in sales and a 7.2% increase in net income compared to the prior year. For the nine months ended July 31, 2025, sales increased by 4.9%, but net income decreased by 3.6% due to higher operating costs and interest expenses | Metric (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Change (%) | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | | Sales | $741,509 | $661,604 | 12.1% | | Operating profit | $187,767 | $167,058 | 12.4% | | Net income | $125,784 | $117,327 | 7.2% | | Basic EPS | $2.23 | $2.05 | 8.8% | | Diluted EPS | $2.22 | $2.04 | 8.8% | | Metric (in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | Change (%) | | :-------------------- | :------------------------------ | :------------------------------ | :--------- | | Sales | $2,039,867 | $1,945,439 | 4.9% | | Operating profit | $497,464 | $495,109 | 0.5% | | Net income | $332,840 | $345,116 | (3.6)% | | Basic EPS | $5.86 | $6.04 | (3.0)% | | Diluted EPS | $5.83 | $5.99 | (2.7)% | Consolidated Statements of Comprehensive Income Total comprehensive income increased for both the three and nine months ended July 31, 2025, primarily driven by foreign currency translation adjustments, despite a slight decrease in net income for the nine-month period | Metric (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net income | $125,784 | $117,327 | $332,840 | $345,116 | | Foreign currency translation adjustments | $4,973 | $8,096 | $48,899 | $19,419 | | Pension and other postretirement plan adjustments, net of tax | $290 | $(1,198) | $382 | $(1,638) | | Total comprehensive income | $131,047 | $124,225 | $382,121 | $362,897 | Consolidated Balance Sheets As of July 31, 2025, total assets slightly increased to $6,009,713 thousand from $6,000,966 thousand at October 31, 2024. Current liabilities saw a significant increase, primarily due to higher current maturities of long-term debt and notes payable, while long-term debt decreased | Metric (in thousands) | July 31, 2025 | October 31, 2024 | | :-------------------- | :------------ | :--------------- | | Total current assets | $1,326,848 | $1,275,032 | | Total assets | $6,009,713 | $6,000,966 | | Total current liabilities | $783,108 | $528,477 | | Long-term debt | $1,785,745 | $2,101,197 | | Total shareholders' equity | $2,981,785 | $2,932,192 | - Current maturities of long-term debt and notes payable increased significantly from $103,928 thousand at October 31, 2024, to $336,078 thousand at July 31, 2025[10] Consolidated Statements of Shareholders' Equity Shareholders' equity increased from $2,932,192 thousand at November 1, 2024, to $2,981,785 thousand at July 31, 2025. This increase was primarily driven by net income and stock-based compensation, partially offset by dividends declared and treasury share repurchases | Metric (in thousands) | November 1, 2024 | July 31, 2025 | | :-------------------- | :--------------- | :------------ | | Total Shareholders' Equity | $2,932,192 | $2,981,785 | | Retained Earnings | $4,295,199 | $4,495,031 | | Common Shares in Treasury, at cost | $(1,904,511) | $(2,121,855) | | Net income (9 months) | N/A | $332,840 | | Dividends declared (9 months) | N/A | $(133,008) | | Purchase of treasury shares (9 months) | N/A | $(218,194) | - The company purchased $218,194 thousand of treasury shares during the nine months ended July 31, 2025, significantly higher than $34,105 thousand in the same period of 2024[14] Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities increased by $56,452 thousand to $516,264 thousand for the nine months ended July 31, 2025. However, net cash used in investing activities increased, and net cash used in financing activities also increased significantly, primarily due to higher treasury share repurchases and debt repayments | Cash Flow Activity (in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | Change | | :-------------------------------- | :------------------------------ | :------------------------------ | :----- | | Net cash provided by operating activities | $516,264 | $459,812 | $56,452 | | Net cash used in investing activities | $(44,730) | $(34,890) | $(9,840) | | Net cash used in financing activities | $(444,530) | $(370,612) | $(73,918) | | Increase in cash and cash equivalents | $31,836 | $49,645 | $(17,809) | | Cash and cash equivalents at end of period | $147,788 | $165,324 | $(17,536) | - Purchase of treasury shares increased substantially from $34,105 thousand in the nine months ended July 31, 2024, to $218,194 thousand in the same period of 2025[14][130] Notes to Condensed Consolidated Financial Statements These notes provide detailed disclosures on the company's accounting policies, recent acquisitions and divestitures, financial instrument valuations, debt structure, and segment performance, offering crucial context to the condensed consolidated financial statements NOTE REGARDING AMOUNTS AND FISCAL YEAR REFERENCES All financial amounts, except for per share earnings and dividends, are expressed in thousands. All references to years pertain to the fiscal year ending October 31 - All amounts related to United States dollars and foreign currency and to the number of Nordson Corporation's common shares, except for per share earnings and dividend amounts, are expressed in thousands[18] - Unless otherwise noted, all references to years relate to our fiscal year ending October 31[18] Significant accounting policies The unaudited Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP for interim financial information. Key policies include consolidation of 100%-owned subsidiaries, use of estimates, and revenue recognition primarily at a point in time upon shipment or transfer of control, with less than ten percent recognized over time for certain customer-specific products - The unaudited Condensed Consolidated Financial Statements are prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X[19] - Revenue is generally recognized at a point in time when the product is shipped or control transfers to the customer[22] - Revenue recognized over time, primarily for customer-specific products in the MFS segment, represented approximately less than ten percent of overall consolidated revenues for the year-to-date periods ended July 31, 2025 and October 31, 2024[24] Recently issued accounting standards The company is evaluating new FASB ASUs on Segment Reporting (ASU 2023-07), Income Tax Disclosures (ASU 2023-09), and Reporting Comprehensive Income (ASU 2024-03). Adoption of ASU 2023-07 is planned for fiscal 2025, ASU 2023-09 for fiscal 2026, and ASU 2024-03 for fiscal 2028. While ASU 2023-07 is expected to expand disclosures, none are anticipated to materially impact consolidated financial statements - ASU 2023-07 (Segment Reporting) will be adopted in fiscal 2025, expanding disclosures but not impacting consolidated financial statements[30] - ASU 2023-09 (Income Tax Disclosures) will be adopted in fiscal 2026, with impact currently being evaluated[31] - ASU 2024-03 (Reporting Comprehensive Income) will be adopted in fiscal 2028, requiring disaggregated expense information in notes, with impact currently being evaluated[32] Acquisitions On August 21, 2024, Nordson acquired Atrion Corporation for $789,996 thousand, net of cash acquired, funding it through borrowings and cash on hand. Atrion, a leader in medical infusion fluid delivery, operates within the MFS segment, and its financial results are not expected to materially impact Nordson's consolidated financial statements - Nordson acquired Atrion Corporation on August 21, 2024, for $789,996 thousand, net of cash acquired[34][35] - The acquisition was funded using borrowings under the revolving credit facility, a 364-day term loan, and cash on hand[35] - Atrion operates within the Medical and Fluid Solutions (MFS) segment and contributed $494,279 thousand in goodwill and $129,600 thousand in identifiable intangible assets[35] Divestiture and related charges In the third quarter of 2025, Nordson entered into an agreement to sell select product lines in its medical contract manufacturing business within the MFS segment, resulting in a non-cash impairment charge of $4,726 thousand. Additionally, the company recognized a $7,485 thousand charge for the planned closure of its remaining medical contract manufacturing facility - Nordson classified select product lines in its medical contract manufacturing business as held for sale as of July 31, 2025[37] - A non-cash impairment charge of $4,726 thousand was recorded due to the divestiture[38] - An additional charge of $7,485 thousand was recognized for the planned closure of the remaining medical contract manufacturing facility[41] Receivables Accounts receivable, net of allowance for credit losses, decreased from $594,663 thousand at October 31, 2024, to $588,951 thousand at July 31, 2025. The allowance for credit losses also decreased, and the company recorded provision income for the three and nine months ended July 31, 2025, compared to provision expense in the prior year | Metric (in thousands) | July 31, 2025 | October 31, 2024 | | :-------------------- | :------------ | :--------------- | | Receivables - net | $588,951 | $594,663 | | Allowance for credit losses | $6,908 | $9,769 | | Metric (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Provision income (expense) | $161 | $(1,678) | $805 | $(2,156) | Inventories Total inventories, net of obsolescence and other reserves, decreased from $476,935 thousand at October 31, 2024, to $459,251 thousand at July 31, 2025. This reduction was primarily in finished goods and raw materials | Inventory Component (in thousands) | July 31, 2025 | October 31, 2024 | | :--------------------------------- | :------------ | :--------------- | | Finished goods | $250,681 | $256,465 | | Raw materials and component parts | $229,547 | $250,477 | | Work-in-process | $64,552 | $55,790 | | Obsolescence and other reserves | $(85,529) | $(85,797) | | Total Inventories - net | $459,251 | $476,935 | Property, Plant and Equipment Net property, plant and equipment decreased from $544,607 thousand at October 31, 2024, to $525,604 thousand at July 31, 2025. Depreciation expense increased for both the three and nine months ended July 31, 2025, compared to the prior year periods | Metric (in thousands) | July 31, 2025 | October 31, 2024 | | :-------------------- | :------------ | :--------------- | | Total Property, Plant and Equipment - net | $525,604 | $544,607 | | Accumulated depreciation and amortization | $(663,421) | $(637,764) | | Depreciation Expense (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Depreciation expense | $17,754 | $14,180 | $53,355 | $42,234 | Goodwill and other intangible assets Goodwill increased to $3,306,432 thousand at July 31, 2025, from $3,280,819 thousand at October 31, 2024, primarily due to currency effects, partially offset by an allocation to assets held for sale. The Measurement and Control Solutions (MCS) division was transferred from IPS to ATS segment, and reporting units were reassessed for impairment testing, with no impairment found | Segment (in thousands) | Balance at October 31, 2024 | Other (Divestiture) | Division Transfer | Currency Effect | Balance at July 31, 2025 | | :--------------------- | :-------------------------- | :------------------ | :---------------- | :-------------- | :----------------------- | | Industrial Precision Solutions | $1,207,631 | — | $(29,010) | $20,290 | $1,198,911 | | Medical and Fluid Solutions | $1,669,748 | $(10,565) | — | $1,967 | $1,661,150 | | Advanced Technology Solutions | $403,440 | — | $29,010 | $13,921 | $446,371 | | Total Goodwill | $3,280,819 | $(10,565) | — | $36,178 | $3,306,432 | | Intangible Asset (in thousands) | Net Book Value July 31, 2025 | Net Book Value October 31, 2024 | | :------------------------------ | :--------------------------- | :------------------------------ | | Customer relationships | $517,339 | $538,315 | | Patent/technology costs | $84,252 | $98,184 | | Trade name | $96,409 | $104,257 | | Total Intangible Assets - net | $698,000 | $740,846 | - Amortization expense for intangible assets increased to $59,099 thousand for the nine months ended July 31, 2025, from $57,412 thousand in the prior year period[51] Pension and other postretirement plans Total net periodic pension benefit cost for the nine months ended July 31, 2025, was $3,732 thousand, an increase from $3,409 thousand in the prior year, primarily due to higher service and interest costs, partially offset by expected returns on plan assets. Other postretirement benefit costs for U.S. plans decreased slightly | Pension Benefit Cost (in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :---------------------------------- | :------------------------------ | :------------------------------ | | U.S. Total benefit cost | $3,260 | $1,877 | | International Total benefit cost | $472 | $1,532 | | Combined Total benefit cost | $3,732 | $3,409 | | Other Postretirement Benefit Cost (U.S., in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :----------------------------------------------------- | :------------------------------ | :------------------------------ | | Total benefit cost (income) | $1,750 | $2,030 | Income taxes The effective tax rate for the nine months ended July 31, 2025, was 19.7%, lower than 21.1% in the prior year, primarily due to the foreign-derived intangible income deduction. Excluding a discrete tax impact from divestiture charges, the rate for the nine months ended July 31, 2025, was 19.2%. The company is evaluating the impact of the recently signed One Big Beautiful Bill Act (OBBBA) but does not expect a material impact on current year financial statements | Effective Tax Rate | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Reported | 21.0% | 21.5% | 19.7% | 21.1% | | Excluding discrete tax impact | 19.4% | N/A | 19.2% | N/A | - The lower effective tax rate for the nine months ended July 31, 2025, is primarily due to the foreign-derived intangible income deduction[54] - The company does not expect the One Big Beautiful Bill Act (OBBBA) to have a material impact on its current year consolidated financial statements[55] Accumulated other comprehensive income (loss) Accumulated other comprehensive loss decreased from $(184,840) thousand at October 31, 2024, to $(135,559) thousand at July 31, 2025, primarily driven by positive foreign currency translation adjustments | Component (in thousands) | Balance at October 31, 2024 | Balance at July 31, 2025 | | :----------------------- | :-------------------------- | :----------------------- | | Cumulative translation adjustments | $(116,890) | $(67,991) | | Pension and postretirement benefit plan adjustments | $(67,950) | $(67,568) | | Total Accumulated other comprehensive income (loss) | $(184,840) | $(135,559) | - Foreign currency translation adjustments contributed $48,899 thousand to other comprehensive income during the nine months ended July 31, 2025[57] Stock-based compensation Nordson Corporation's 2021 Stock Incentive and Award Plan authorizes various equity awards. Stock option compensation expense decreased for both the three and nine months ended July 31, 2025. Restricted share units and performance share incentive awards also incurred compensation expenses, with significant unrecognized costs remaining | Stock Option Metric (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Compensation expense | $758 | $1,426 | $2,328 | $3,960 | | Total intrinsic value of options exercised | $2,315 | $3,115 | $4,875 | $33,286 | | Cash received from exercise | N/A | N/A | $5,419 | $29,142 | - As of July 31, 2025, $6,020 thousand of unrecognized compensation cost related to unvested stock options is expected to be amortized over approximately 2.4 years[60] | Restricted Share Units Metric (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Expense related to restricted share units | $2,167 | $2,198 | $7,028 | $6,658 | - As of July 31, 2025, $11,336 thousand of remaining expense for restricted share units is expected to be recognized over 1.8 years[68] | Performance Share Awards Metric (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Expense related to performance awards | $773 | $771 | $3,507 | $3,637 | - As of July 31, 2025, $8,304 thousand of unrecognized compensation cost related to performance share incentive awards remains[70] Warranties The product warranty liability increased from $13,538 thousand at October 31, 2024, to $15,142 thousand at July 31, 2025, reflecting accruals for new warranties partially offset by warranty payments | Warranty Liability (in thousands) | July 31, 2025 | July 31, 2024 | | :-------------------------------- | :------------ | :------------ | | Beginning balance at October 31 | $13,538 | $14,401 | | Accruals for warranties | $9,796 | $10,841 | | Warranty payments | $(8,482) | $(11,279) | | Ending balance | $15,142 | $13,754 | Operating segments Nordson operates in three segments: Industrial Precision Solutions (IPS), Medical and Fluid Solutions (MFS), and Advanced Technology Solutions (ATS). Effective November 1, 2024, the MCS division was transferred from IPS to ATS. For the three months ended July 31, 2025, ATS showed strong organic sales growth, while IPS and MFS experienced slight organic declines. For the nine months, IPS and MFS organic sales decreased, while ATS grew robustly - Effective November 1, 2024, the Measurement and Control Solutions (MCS) division was transferred from the IPS segment to the ATS segment[77] | Segment Net External Sales (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Organic Change (YoY) | | :---------------------------------------- | :------------------------------- | :------------------------------- | :------------------- | | Industrial Precision Solutions (IPS) | $350,784 | $348,997 | (2.0)% | | Medical and Fluid Solutions (MFS) | $219,465 | $166,737 | (0.4)% | | Advanced Technology Solutions (ATS) | $171,260 | $145,870 | 14.6% | | Segment Net External Sales (in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | Organic Change (YoY) | | :---------------------------------------- | :------------------------------ | :------------------------------ | :------------------- | | Industrial Precision Solutions (IPS) | $970,079 | $1,031,717 | (5.7)% | | Medical and Fluid Solutions (MFS) | $615,883 | $495,229 | (7.1)% | | Advanced Technology Solutions (ATS) | $453,905 | $418,493 | 8.0% | | Segment Operating Profit (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Change (%) | | :-------------------------------------- | :------------------------------- | :------------------------------- | :--------- | | Industrial Precision Solutions (IPS) | $116,720 | $115,023 | 1.5% | | Medical and Fluid Solutions (MFS) | $52,500 | $48,374 | 8.5% | | Advanced Technology Solutions (ATS) | $36,877 | $26,032 | 41.7% | | Segment Operating Profit (in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | Change (%) | | :-------------------------------------- | :------------------------------ | :------------------------------ | :--------- | | Industrial Precision Solutions (IPS) | $308,153 | $340,043 | (9.4)% | | Medical and Fluid Solutions (MFS) | $150,241 | $143,467 | 4.7% | | Advanced Technology Solutions (ATS) | $86,558 | $65,029 | 33.1% | Fair value measurements The company classifies fair value measurements into Level 1, 2, or 3 inputs. As of July 31, 2025, all assets and liabilities measured at fair value on a recurring basis, including foreign currency forward contracts, interest rate swaps, and net investment contracts, were classified as Level 2, indicating observable market-based inputs | Fair Value Assets (in thousands) | July 31, 2025 | October 31, 2024 | | :------------------------------- | :------------ | :--------------- | | Foreign currency forward contracts | $4,274 | $3,332 | | Interest rate swaps | $8,662 | — | | Net investment contracts | $4,153 | $6,049 | | Total assets at fair value | $17,089 | $9,381 | | Fair Value Liabilities (in thousands) | July 31, 2025 | October 31, 2024 | | :------------------------------------ | :------------ | :--------------- | | Deferred compensation plans | $11,615 | $9,615 | | Interest rate swaps | $6 | — | | Net investment contracts | $57,454 | $20,261 | | Foreign currency forward contracts | $8,108 | $5,508 | | Total liabilities at fair value | $77,183 | $35,384 | - All recurring fair value measurements for assets and liabilities are classified as Level 2, indicating observable market-based inputs[84] Derivative financial instruments Nordson uses derivative instruments to manage foreign currency and interest rate risks. This includes foreign currency forward contracts (not designated as hedges), treasury locks (cash flow hedges), net investment hedges (cross currency swaps), and interest rate swaps (fair value hedges). The company recognized net losses on foreign currency forward contracts and net investment hedges for the nine months ended July 31, 2025 - Foreign currency forward contracts are used to reduce foreign currency exposure from intercompany transactions and are not designated as hedging instruments[90] | Foreign Currency Forward Contracts (in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | | Net loss (gain) on contracts | $(1,658) | $8,624 | | Net loss from change in fair value of balance sheet positions | $(4,251) | $(11,035) | - Net investment hedges, primarily cross currency swaps, resulted in a loss of $27,470 thousand (net of tax) for the nine months ended July 31, 2025[96] - Interest rate swaps are designated as fair value hedges to manage exposure to changes in fixed-rate liabilities, resulting in a loss of $209 thousand (net of tax) for the nine months ended July 31, 2025[99] Long-term debt Total long-term debt, including current maturities, decreased from $2,223,928 thousand at October 31, 2024, to $2,129,078 thousand at July 31, 2025. The company repaid senior notes due 2025 and maintains a $1,150,000 unsecured multi-currency credit facility, with $280,000 outstanding on the term loan and $243,000 on the revolving credit facility as of July 31, 2025 | Long-term Debt (in thousands) | July 31, 2025 | October 31, 2024 | | :---------------------------- | :------------ | :--------------- | | Notes Payable | $6,078 | $18,285 | | Revolving credit agreement | $243,000 | $240,000 | | Term loan due 2026 | $280,000 | $280,000 | | Senior notes, due 2025 | — | $8,500 | | Senior notes, due 2025-2027 | $20,000 | $37,143 | | Senior notes, due 2025-2030 | $130,000 | $190,000 | | 5.600% Notes due 2028 | $350,000 | $350,000 | | 5.800% Notes due 2033 | $500,000 | $500,000 | | 4.500% Notes due 2029 | $600,000 | $600,000 | | Total | $2,129,078 | $2,223,928 | | Less current maturities | $(336,078) | $(103,928) | | Long-term maturities | $1,785,745 | $2,101,197 | - The weighted-average interest rate on the revolving credit facility at July 31, 2025, was 5.48%[101] - The company was in compliance with all debt covenants at July 31, 2025[104] Contingencies Nordson is involved in various legal proceedings, including an environmental remediation matter at the City of New Richmond municipal landfill. The company has accrued for these obligations and does not believe that losses in excess of accrued amounts would have a material adverse effect on its financial condition or results of operations - The company is involved in pending or potential litigation regarding environmental, product liability, patent, contract, employee and other matters[105] - The accrual for the ongoing operation, maintenance, and monitoring obligation at the City of New Richmond municipal landfill was immaterial as of July 31, 2025[106] - Management does not believe that losses in excess of accrued amounts would have a material adverse effect on financial condition, operating results, or cash flows[105] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on Nordson's financial performance and condition, highlighting key drivers of sales and operating profit by segment and geographic region, changes in interest expense and income taxes, and the company's liquidity and capital resources Overview Nordson Corporation is an innovative precision technology company that engineers, manufactures, and markets differentiated products and systems for precision dispensing, applying, and controlling various fluids, as well as for quality testing and inspection. The company serves diverse end markets globally and employs approximately 7,700 people worldwide - Nordson engineers, manufactures, and markets products for precision dispensing, applying, and controlling adhesives, coatings, polymers, sealants, biomaterials, and other fluids, and for quality testing and inspection[108] - The company serves a wide variety of consumer non-durable, consumer durable, and technology end markets[108] - As of July 31, 2025, Nordson had approximately 7,700 employees worldwide and operates in over 35 countries[110] Critical Accounting Policies and Estimates There have been no significant changes in Nordson's critical accounting policies, management estimates, or accounting policies since the fiscal year ended October 31, 2024 - No significant changes in critical accounting policies, management estimates, or accounting policies since October 31, 2024[111] Results of Operations Nordson experienced sales growth for both the three and nine months ended July 31, 2025, driven by acquisitions and strong performance in the ATS segment, particularly in Asia Pacific. However, net income for the nine-month period decreased due to higher interest expense and divestiture-related charges. Operating margins varied by segment, with ATS showing significant improvement Consolidated Financial Results Consolidated sales increased by 12.1% for the three months and 4.9% for the nine months ended July 31, 2025. Net income increased by 7.2% for the three-month period but decreased by 3.6% for the nine-month period, impacted by higher interest expense and divestiture charges | Metric (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Change (%) | | :-------------------- | :------------------------------- | :------------------------------- | :--------- | | Sales | $741,509 | $661,604 | 12.1% | | Gross margin % | 54.8% | 55.8% | (1.0)% | | Operating profit | $187,767 | $167,058 | 12.4% | | Net income | $125,784 | $117,327 | 7.2% | | Metric (in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | Change (%) | | :-------------------- | :------------------------------ | :------------------------------ | :--------- | | Sales | $2,039,867 | $1,945,439 | 4.9% | | Gross margin % | 54.7% | 55.7% | (1.0)% | | Operating profit | $497,464 | $495,109 | 0.5% | | Net income | $332,840 | $345,116 | (3.6)% | Net Sales For the three months ended July 31, 2025, total net sales increased by 12.1%, driven by 7.8% from acquisitions and 2.1% organic growth, with ATS showing robust organic growth of 14.6%. For the nine months, total net sales increased by 4.9%, with 8.1% from acquisitions offsetting a 3.1% organic decline. Asia Pacific was the strongest performing region, with 17.4% organic growth for the three months and 13.1% for the nine months | Segment Sales Variance (3 Months Ended July 31, 2025) | Organic | Acquisitions | Currency | Total | | :------------------------------------ | :------ | :----------- | :------- | :---- | | Industrial Precision Solutions (IPS) | (2.0)% | — % | 2.5 % | 0.5 % | | Medical and Fluid Solutions (MFS) | (0.4)% | 31.0 % | 1.0 % | 31.6 %| | Advanced Technology Solutions (ATS) | 14.6 % | — % | 2.8 % | 17.4 %| | Total | 2.1 % | 7.8 % | 2.2 % | 12.1 %| | Segment Sales Variance (9 Months Ended July 31, 2025) | Organic | Acquisitions | Currency | Total | | :------------------------------------ | :------ | :----------- | :------- | :---- | | Industrial Precision Solutions (IPS) | (5.7)% | — % | (0.3)% | (6.0)%| | Medical and Fluid Solutions (MFS) | (7.1)% | 31.5 % | — % | 24.4 %| | Advanced Technology Solutions (ATS) | 8.0 % | — % | 0.5 % | 8.5 % | | Total | (3.1)% | 8.1 % | (0.1)% | 4.9 % | | Geographic Sales Variance (3 Months Ended July 31, 2025) | Organic | Acquisitions | Currency | Total | | :--------------------------------------- | :------ | :----------- | :------- | :---- | | Americas | (3.2)% | 13.0 % | (0.2)% | 9.6 % | | Europe | (6.1)% | 4.8 % | 5.3 % | 4.0 % | | Asia Pacific | 17.4 % | 2.9 % | 2.8 % | 23.1 %| | Geographic Sales Variance (9 Months Ended July 31, 2025) | Organic | Acquisitions | Currency | Total | | :--------------------------------------- | :------ | :----------- | :------- | :---- | | Americas | (10.0)% | 13.1 % | (0.8)% | 2.3 % | | Europe | (8.7)% | 5.0 % | 1.1 % | (2.6)%| | Asia Pacific | 13.1 % | 3.1 % | — % | 16.2 %| Operating Profit For the three months ended July 31, 2025, total operating profit increased by 12.4%, with ATS showing a significant 41.7% increase due to strong organic sales and cost reduction. MFS operating margin declined due to divestiture and acquisition-related costs. For the nine months, total operating profit increased marginally by 0.5%, with ATS again leading growth, while IPS operating profit declined due to lower sales volumes | Segment Operating Profit (3 Months Ended July 31, 2025) | Operating Profit (in thousands) | % of Sales | Change (YoY) | | :-------------------------------------- | :------------------------------ | :--------- | :----------- | | Industrial Precision Solutions (IPS) | $116,720 | 33.3% | 1.5% | | Medical and Fluid Solutions (MFS) | $52,500 | 23.9% | 8.5% | | Advanced Technology Solutions (ATS) | $36,877 | 21.5% | 41.7% | | Total | $187,767 | 25.3% | 12.4% | | Segment Operating Profit (9 Months Ended July 31, 2025) | Operating Profit (in thousands) | % of Sales | Change (YoY) | | :-------------------------------------- | :------------------------------ | :--------- | :----------- | | Industrial Precision Solutions (IPS) | $308,153 | 31.8% | (9.4)% | | Medical and Fluid Solutions (MFS) | $150,241 | 24.4% | 4.7% | | Advanced Technology Solutions (ATS) | $86,558 | 19.1% | 33.1% | | Total | $497,464 | 24.4% | 0.5% | - ATS operating margin improved by 370 basis points for the three months and 360 basis points for the nine months, driven by strong conversion on increased organic sales and strategic cost reduction actions[119][120] Interest expense and Other-net Interest expense increased significantly for both the three and nine months ended July 31, 2025, primarily due to higher average debt levels from acquisitions. Other-net shifted from income to expense for the three-month period and saw a substantial increase in expense for the nine-month period, mainly due to foreign currency losses | Metric (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Interest expense | $(26,258) | $(18,803) | $(79,389) | $(60,354) | | Other - net | $(2,945) | $152 | $(5,380) | $(971) | - The increase in interest expense was primarily due to higher average debt levels, driven by acquisitions[121][122] - Other-net for the nine months ended July 31, 2025, included $5,909 thousand of foreign currency losses, compared to $2,411 thousand in the prior year[122] Income Tax Expense The effective tax rate for the nine months ended July 31, 2025, was 19.7%, a decrease from 21.1% in the prior year, primarily attributable to the foreign-derived intangible income deduction. Excluding discrete tax impacts from divestiture charges, the rate was 19.2% | Effective Tax Rate | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Reported | 21.0% | 21.5% | 19.7% | 21.1% | | Excluding discrete tax impact | 19.4% | N/A | 19.2% | N/A | - The effective tax rate for the nine months ended July 31, 2025, is lower than the U.S. tax rate of 21% primarily due to the foreign-derived intangible income deduction[124] Net Income Net income for the three months ended July 31, 2025, increased by 7.2% to $125,784 thousand, or $2.22 per diluted share, driven by higher operating profit. However, for the nine months, net income decreased by 3.6% to $332,840 thousand, or $5.83 per diluted share, primarily due to higher interest expense from acquisitions and divestiture-related charges | Metric (in thousands, except EPS) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | | Net income | $125,784 | $117,327 | 7.2% | | Diluted earnings per share | $2.22 | $2.04 | 8.8% | | Metric (in thousands, except EPS) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | Change (%) | | :-------------------------------- | :------------------------------ | :------------------------------ | :--------- | | Net income | $332,840 | $345,116 | (3.6)% | | Diluted earnings per share | $5.83 | $5.99 | (2.7)% | - The decrease in nine-month net income was primarily driven by higher interest expense due to prior year's acquisition and divestiture and related charges[126] Foreign Currency Effects For the three months ended July 31, 2025, foreign currency exchange rate changes are estimated to have decreased sales by approximately $13,000 thousand and costs by approximately $8,000 thousand. For the nine months, sales would have been approximately $3,000 thousand higher, while costs would have been approximately $500 thousand lower - Estimated foreign currency impact for the three months ended July 31, 2025: sales $13,000 thousand lower, costs $8,000 thousand lower[127] - Estimated foreign currency impact for the nine months ended July 31, 2025: sales $3,000 thousand higher, costs $500 thousand lower[127] Other Trends Changes in trade policies, tariffs, and other import/export regulations did not materially impact financial results for the nine months ended July 31, 2025, but the company acknowledges potential negative impacts on sales and purchases in the future - Changes in trade policies, tariffs, and other import/export regulations did not have a material impact on financial results for the nine months ended July 31, 2025[128] - The company continues to actively work to minimize the impact of these changes and mitigate risk[128] Financial Condition Nordson's financial condition remained strong as of July 31, 2025, with increased cash from operating activities and substantial available borrowing capacity. The company believes it has adequate liquidity to meet both short-term and long-term needs, despite increased cash used in financing activities due to treasury share repurchases Liquidity and Capital Resources Cash and cash equivalents increased by $31,836 thousand during the nine months ended July 31, 2025, reaching $147,788 thousand. Net cash provided by operating activities was $516,264 thousand, while net cash used in financing activities significantly increased to $(444,530) thousand, primarily due to higher treasury share repurchases. The company has $824,120 thousand in available borrowings and believes it can meet its liquidity needs - Cash and cash equivalents increased by $31,836 thousand during the nine months ended July 31, 2025[130] | Cash Flow Activity (in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | Increase (Decrease) | | :-------------------------------- | :------------------------------ | :------------------------------ | :------------------ | | Net cash provided by operating activities | $516,264 | $459,812 | $56,452 | | Net cash used in investing activities | $(44,730) | $(34,890) | $(9,840) | | Net cash used in financing activities | $(444,530) | $(370,612) | $(73,918) | - As of July 31, 2025, the company had $147,788 thousand in cash on hand and $824,120 thousand in available borrowings under loan agreements and unused bank lines of credit[132] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company's disclosures regarding financial instruments sensitive to interest rates and foreign currency exchange rates have not materially changed since the 2024 Form 10-K - Information regarding financial instruments sensitive to changes in interest rates and foreign currency exchange rates has not materially changed since the 2024 Form 10-K[136] ITEM 4. CONTROLS AND PROCEDURES Management concluded that the company's disclosure controls and procedures were effective as of July 31, 2025. There were no material changes in internal control over financial reporting during the three months ended July 31, 2025 - Disclosure controls and procedures were effective as of July 31, 2025[137] - No material changes in internal control over financial reporting occurred during the three months ended July 31, 2025[138] PART II – OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Information on legal proceedings and contingencies is detailed in the 'Contingencies' note to the condensed consolidated financial statements - Legal proceedings are discussed in the 'Contingencies' Note to the condensed consolidated financial statements[141] ITEM 1A. RISK FACTORS No material changes to risk factors were identified other than the potential adverse effects of changes in trade policies, tariffs, and import/export regulations on the company's business, financial condition, and results of operations - No material changes to risk factors described in the 2024 Form 10-K, except for potential adverse effects of changes in trade policies, tariffs, and import/export regulations[142][143] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS During the three months ended July 31, 2025, Nordson repurchased 336,368 common shares at an average price of $211.92 per share. Approximately $311,394 thousand remained available for share repurchases under the authorized program, which was further increased by $500,000 thousand in August 2025 | Period (2025) | Total Number of Shares Repurchased | Average Price Paid per Share | | :------------ | :--------------------------------- | :--------------------------- | | May 1-31 | 79,778 | $194.13 | | June 1-30 | 116,187 | $215.52 | | July 1-31 | 140,403 | $219.04 | | Total | 336,368 | $211.92 | - Approximately $311,394 thousand of the total $1,500,000 thousand authorized remained available for share repurchases at July 31, 2025[144] - In August 2025, the board of directors authorized the repurchase of an additional $500,000 thousand of the Company's common shares[144] ITEM 5. OTHER INFORMATION During the quarter ended July 31, 2025, one Rule 10b5-1 trading arrangement for an executive officer was terminated in connection with their separation from the company - Stephen P. Lovass, Executive Vice President, terminated a Rule 10b5-1 trading arrangement on June 1, 2025, due to his separation from the company[145] ITEM 6. EXHIBITS This section lists all exhibits filed with the Form 10-Q, including certifications, the separation agreement, and financial information formatted in iXBRL SIGNATURE The report was duly signed on behalf of Nordson Corporation by Joseph Rutledge, Chief Accounting Officer, on August 21, 2025