Nordson (NASDAQ:NDSN) reported record fiscal second-quarter sales and earnings, with management citing broad-based organic growth across all three business segments, stronger order activity and an 18% organic increase in backlog from the prior year.
President and Chief Executive Officer Sundaram Nagarajan said the company delivered record sales of $741 million in the quarter, up 8% from the prior year, including 7% organic growth. He said order entry accelerated during the final two months of the quarter and that all three segments contributed to the company’s organic growth performance.
“I’m very pleased to report a strong second quarter where all 3 segments contributed to our organic growth performance, surpassing the midpoint expectations of last quarter’s sales and earnings guidance,” Nagarajan said.
Adjusted earnings per share were $2.86, up 18% from $2.42 a year earlier and $0.06 above the midpoint of Nordson’s quarterly guidance. EBITDA was $235 million, a second-quarter record, and represented 32% of sales. Free cash flow totaled $170 million, with conversion of more than 100% of net income.
Segment Results Show Broad Growth
Executive Vice President and Chief Financial Officer Daniel Hopgood said second-quarter sales rose to $741 million from $683 million a year earlier. Currency translation added 3 percentage points to growth, while results were modestly offset by the prior divestiture of the medical contract manufacturing business and partially helped by the acquisition of Capstan AG during the quarter.
Industrial Precision Solutions generated second-quarter record sales of $350 million, up 10% from the prior year. Organic sales increased 5%, supported by improving demand in industrial coating and polymer processing systems, continued growth in precision agriculture and stable demand in broader consumer and industrial markets. Segment EBITDA rose 9% to $124 million, or 35% of sales.
Medical and Fluid Solutions sales were also a second-quarter record at $213 million, up 5% year over year. Organic sales increased 8%, helped by both engineered fluid solutions and medical product lines. Hopgood said the medical product lines showed solid growth after a slower start to the year. EBITDA in the segment was $79 million, or 37% of sales, up from $77 million a year earlier.
Advanced Technology Solutions posted all-time quarterly record sales of $178 million, up 10% from the prior year, including 8% organic growth. Hopgood said the increase was most notable in electronics dispense product lines and reflected ongoing strength in semiconductor demand. Segment EBITDA rose 22% to a record $48 million, while EBITDA margin improved to 27% from 25% a year earlier.
Margins, Cash Flow and Balance Sheet
Adjusted operating profit increased 11% year over year to $199 million, equal to 27% of sales. Hopgood said the increase was driven by SG&A leverage on organic sales growth. Incremental EBITDA contribution was about 31%, which he described as on the lower end of Nordson’s typical mid- to upper-30% conversion range but improved from the first quarter and in line with expectations.
Net interest expense declined by $4 million year over year to $22 million, due to lower debt levels and a stable-to-declining rate environment. GAAP net income was $117 million, or $2.09 per share. Hopgood said GAAP results included a $24 million pre-tax charge tied to a pension settlement and $10 million of non-cash mark-to-market charges on minority investments.
Hopgood said Nordson annuitized approximately $113 million, or just under one-third, of its remaining U.S. pension obligation during the quarter, with no cash outlay required. He said the transaction improved the funded status of the remaining pension obligation and favorably affects ongoing pension costs.
At quarter-end, Nordson had $102 million in cash and net debt of approximately $1.8 billion. Its leverage ratio improved to 1.9 times, which Hopgood said was below the low end of the company’s long-term target range. During the quarter, Nordson invested $10 million in capital projects, paid $46 million in dividends, repurchased $43 million in shares and reduced net debt by $93 million.
Capstan Acquisition Expands Precision Agriculture Portfolio
Nagarajan said Nordson acquired Capstan AG, a Topeka, Kansas-based precision agriculture technology company, during the quarter. He described Capstan as a North American leader in pulse width modulation systems, which provide nozzle-by-nozzle controls for row crop, orchard, planter and aerial sprayer applications.
The deal was valued at 9 times adjusted EBITDA. Nagarajan said the acquisition gives Nordson’s precision agriculture business another growth platform in North America, particularly with mid-tier OEM customers. Nordson is consolidating its existing North American precision agriculture facilities into Capstan’s Topeka footprint.
In response to an analyst question, Hopgood said Capstan is approximately a $13 million annual revenue business and that a $5 million to $6 million revenue contribution in the second half would be a reasonable modeling estimate.
Guidance Raised on Backlog and Order Momentum
Nagarajan said Nordson entered the third quarter with strong order entry and backlog up 18% from the prior year, with all segments contributing. He said foreign exchange, which benefited first-half growth, is expected to be essentially neutral in the second half at current exchange rates.
For the fiscal third quarter, Nordson expects sales of $760 million to $790 million and adjusted earnings of $2.95 to $3.15 per diluted share.
The company also raised its full-year outlook. Nordson now expects fiscal 2026 sales of $2.93 billion to $3.01 billion and adjusted earnings of $11.30 to $11.80 per diluted share. Management said the guidance reflects strong demand momentum while accounting for a range of potential macroeconomic outcomes.
“We have a high level of confidence in the midpoint of our range, and it would take a meaningful slowdown in order activity driven by macro conditions to move us towards the low end,” Nagarajan said. He added that sustained demand trends, particularly in electronics end markets, could position the company to reach the upper end of guidance.
Management Highlights Semiconductors, Medical and Industrial Trends
During the question-and-answer session, Hopgood said the Medical and Fluid Solutions segment is returning toward normalized growth, with medical product lines tracking toward the company’s 6% to 8% target. He said a near-term margin headwind in selected interventional medical product lines was tied to a regulatorily required material change that created operational inefficiencies, but management expects to work through the issue.
Nagarajan said medical order entry and backlog growth support confidence that the segment is returning to normalized growth.
On semiconductors, Nagarajan said Advanced Technology Solutions is benefiting from earlier actions to diversify beyond dispense products into test and inspection, broaden its customer base and reposition its operating footprint. He said the company is in the early stages of the semiconductor demand cycle and is participating in technologies related to AI infrastructure, including panel-level packaging and optical fiber applications.
Hopgood declined to provide segment-level backlog figures but said ATS showed particular strength within the company’s 18% backlog increase, suggesting a double-digit increase for the segment and potentially performance in line with or better than the companywide backlog growth.
In Industrial Precision Solutions, management said demand is improving in coatings and plastics, while packaging, product assembly and precision agriculture remain positive. Hopgood said Nordson is operating in an inflationary environment, including tariffs, and is using selective pricing and cost actions to manage pressure. He said the focus for the year is maintaining margins while growing revenue rather than expanding margins in the face of inflation.
Nagarajan closed the call by saying Nordson remains positioned as a diversified precision technology company, supported by its customer-focused model, recurring revenue, proprietary technologies and balance sheet strength.
About Nordson (NASDAQ:NDSN)
Nordson Corporation designs, manufactures and markets precision dispensing equipment and systems that apply adhesives, coatings, sealants and polymers in a broad range of industrial and medical applications. The company's portfolio spans fluid systems, curing and surface preparation technologies, vacuum and thermal management products, and advanced test and inspection solutions. Nordson's offerings serve critical manufacturing processes by delivering exacting dispensing accuracy and process control to ensure consistent product performance and high production throughput.
Nordson operates through multiple segments that cater to diverse markets including electronics, packaging, medical, energy, automotive and general industrial sectors.
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