Executive Summary

Q2 2024 delivered 11% revenue growth to $48.8M, but GAAP EPS fell to $0.23 due to a $5.0M merger-related accrual and under-absorption from production halts; non-GAAP operating income (ex-merger accrual) was $5.5M, down 25% YoY .
Strength in cardiovascular MPS consoles (+22%) and disposables (+21%), with fluid delivery families showing double-digit growth; inventories declined 10% sequentially and 18% vs. year-end, supporting margin recovery plans .
Prior commentary guided to high single-digit FY24 revenue growth and margin improvement in 2H as production normalizes; Q2’s operational discipline (inventory reduction, demand strength) is tracking to that plan, though merger accrual obscured OI optics .
Near-term stock narrative is dominated by the pending Nordson acquisition at $460 per share cash; execution and approval timeline serve as catalysts and likely anchor valuation until close .

What Went Well and What Went Wrong

What Went Well

Demand resilience: Revenues rose 11% YoY to $48.8M, led by MPS consoles (+22%) and disposables (+21%); fluid delivery families saw double-digit increases .
Inventory actions: Continued production halts to work down excess inventories drove a 10% sequential decline and 18% reduction vs. Dec 31, 2023, laying groundwork for margin improvement as normal production resumes .
Balance sheet discipline: Cash and short- plus long-term investments reached $23.2M and the company remains debt free, preserving strategic flexibility .

Management quote: “We were pleased to see strong revenue growth of 11%… Our MPS consoles showed particularly strong growth, with sales up 22% and MPS disposables sales up 21%… inventories declined 10% from the first to the second quarters…and are 18% lower than…December 31, 2023.”

What Went Wrong

Profitability compression: GAAP operating income fell to $0.5M (vs. $7.4M), impacted by a $5.0M merger-related accrual and under-absorption from production halts; non-GAAP OI was $5.5M, down 25% YoY .
Margin headwinds: Gross profit was $15.8M (vs. $17.3M YoY), with elevated COGS from product mix and throughput impacts; operating expenses increased to $15.3M from $9.9M YoY .
EPS decline: Diluted EPS fell to $0.23 from $3.73 YoY, reflecting the merger accrual, lower operating leverage, and prior inventory normalization burdens .

Financial Results

Metric	Q2 2023	Q4 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$43.8	$43.6	$47.3	$48.8
Gross Profit ($USD Millions)	$17.3	$16.3	$12.4	$15.8
Gross Margin % (calc)	39.4%	37.4%	26.1%	32.5%
Operating Income ($USD Millions)	$7.4	$6.7	$3.1	$0.5
Operating Margin % (calc)	16.8%	15.3%	6.6%	1.1%
Net Income ($USD Millions)	$6.6	$6.4	$2.8	$0.4
Diluted EPS ($USD)	$3.73	$3.65	$1.59	$0.23
Inventories ($USD Millions)	—	$82.3	$75.0	$67.6
Cash + ST/LT Investments ($USD Millions)	—	$14.4	$18.7	$23.2

Estimate comparisons: Wall Street consensus (S&P Global) was unavailable for ATRI this quarter due to a missing CIQ mapping; estimate vs. actual comparisons are not provided.*

Non-GAAP reconciliation (Operating Income): GAAP OI $0.5M; add $5.0M merger accrual → non-GAAP OI $5.5M (−25% YoY) .

Product KPIs and Mix

KPI	Q2 2024
MPS consoles sales growth YoY	+22%
MPS disposables sales growth YoY	+21%
Fluid delivery product families	Double-digit revenue increases YoY (selected families)
Inventories change	−10% Q/Q; −18% vs. Dec 31, 2023
Debt status	Debt free

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue Growth	FY 2024	“High single digit increase in revenue”	No formal update in Q2; demand strength and inventory reduction continue	Maintained
Production Normalization & Margins	Q3 2024	Resume normal production in Q3; margins to improve as lines restart	Some lines still halted in Q2; inventory reduction progressing; margins still impacted by under-absorption	Maintained (progressing)
Operating Income Trajectory	1H/2H 2024	Challenging in 1H due to under-absorption; improve in 2H	Q2 OI depressed by $5.0M merger accrual and under-absorption; groundwork set via inventory actions	Maintained

Dividend/segment guidance: None disclosed in Q2 2024 materials .

Earnings Call Themes & Trends

(Company did not publish an earnings call transcript for Q2 2024; themes below reflect press release narratives.)

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q2 2024)	Trend
Supply chain & production	Q4: easing supply issues; fluid delivery and some CV products at lower production; plan for 2H margin recovery . Q1: supply shortages resolved; continued production halts to work down inventory; expect normal production in Q3 .	Continuing halts on some fluid delivery lines to reduce inventory; under-absorption impacts OI .	Improving (inventory reduction; normalization pending)
Product demand (MPS)	Q4: strong demand expected; MPS 3 production now at record levels . Q1: record MPS 3 placements; consoles lower margin but enable recurring disposables .	MPS consoles +22%, disposables +21% YoY .	Strong/expanding
OEM inventory normalization	Q4: OEM customers right-sizing inventories after 2022 over-ordering . Q1: OEM orders to resume normal levels in H2 2024 .	Continued recovery in fluid delivery; select families double-digit YoY .	Recovering
Margins	Q4: 2023 OI margin 13.3%; expect improvement in 2H 2024 . Q1: GAAP GM 26.1%; adj GM 31.0%; margin headwinds from halts and mix .	Gross profit down YoY; OI pressured by merger accrual and under-absorption .	Stabilizing post-inventory workdown
Balance sheet	Q4: cash & investments $14.4M; debt free . Q1: $18.7M cash & investments; debt free .	$23.2M cash & investments; debt free .	Strengthening liquidity

Management Commentary

“Adjusting for the accrual of expenses relating to the merger with Nordson Corporation… operating income was $5.5 million, down 25% from the prior year period.”
“Our MPS consoles showed particularly strong growth, with sales up 22% and MPS disposables sales up 21%.”
“We continued to halt some fluid delivery production lines to reduce inventories… While this halt resulted in under-absorption of overhead… inventories declined 10% from the first to the second quarters… and are 18% lower than… December 31, 2023.”
Prior quarter context: “We expect to resume normal production levels in the third quarter, which should result in improved margins.”
Full-year framing: “For 2024, we expect a high single digit increase in revenue… Operating income should improve in the second half of the year as our inventory depletion will require a resumption of idled production lines.”

Q&A Highlights

No Q2 2024 earnings call transcript located; Q&A highlights not available. (Company press release provided detailed qualitative context in lieu of call materials) .

Estimates Context

S&P Global consensus estimates for ATRI in Q2 2024 were unavailable due to a missing CIQ mapping, so comparisons to Street expectations cannot be provided.*
Implication: Given strong top-line growth and clear non-GAAP adjustment for merger accrual, we would expect models to emphasize revenue momentum and second-half margin recovery trajectory; however, formal estimate-revision context is not available from S&P Global this quarter.*

Key Takeaways for Investors

Revenue momentum is real: +11% YoY to $48.8M on robust MPS demand and improving fluid delivery, supporting the narrative of demand normalization into 2H .
Margin recovery thesis intact but delayed optics: Under-absorption from production halts and the $5.0M merger accrual depressed GAAP OI; inventory actions (−10% Q/Q, −18% vs YE) are prerequisites for margin improvement as lines restart in Q3 .
Non-GAAP lens matters: Adjusted OI of $5.5M (−25% YoY) clarifies core profitability excluding merger costs; focus near term on mix (consoles vs disposables) and throughput normalization .
Balance sheet strength: $23.2M cash/investments and debt-free status provide resilience during operational transition and merger process .
Merger sets near-term valuation anchor and catalyst path: $460/share cash offer by Nordson, expected to close before NDSN fiscal year-end 2024 pending approvals, likely dominates trading dynamics and compresses event risk to approval/execution .
Watch 2H execution: Key milestones are resumption of normal production in Q3, gross margin improvement, and continued inventory normalization, consistent with prior commentary .
Absent Street estimates, model sensitivity should focus on gross margin trajectory, operating expense control, and the cadence of disposables utilization following console placements .

References:
Q2 2024 press release with financials and non-GAAP reconciliation .
Q1 2024 press release (inventory write-off context; margin/production guidance) .
Q4 2023 press release (FY guidance framing; margin outlook) .
Nordson–Atrion merger terms and timetable .

*Estimates unavailable via S&P Global (CIQ mapping for ATRI missing); comparisons to consensus are not provided.

ATRION CORP (ATRI)·Q2 2024 Earnings Summary