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NORDSON CORP (NDSN)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 revenue of $742M (+12% YoY) and adjusted EPS of $2.73 both exceeded guidance midpoints; strength was led by ATS (+15% organic) and Atrion contribution, with EBITDA up 15% to $239M and margin steady at 32% .
  • Results beat S&P Global consensus: revenue $741.5M vs. $723.6M*, adjusted EPS $2.73 vs. $2.64*; operational execution and ATS incrementals contributed to the upside (consensus from S&P Global)*.
  • FY25 outlook affirmed directionally: sales tracking slightly below the midpoint and adjusted EPS slightly above midpoint of original guidance; backlog down ~5% sequentially after strong shipments, but order intake viewed as stable .
  • Record quarterly free cash flow ($226M; 180% conversion) and balance sheet de‑leveraging to 2.2x leverage; new $500M buyback authorization (total remaining ~$793M) and a 5% dividend increase to $0.82 highlight capital return capacity .
  • Stock reaction catalysts: resilient margins amid mixed markets, ATS cycle upturn tied to advanced packaging/AI exposure, and capital returns (buyback/dividend); watch near-term comps in systems businesses and tariff/macro uncertainty .

What Went Well and What Went Wrong

What Went Well

  • ATS acceleration: +17% sales YoY (+15% organic) and EBITDA margin up to 24% (vs. 21% LY), driven by electronics dispense and optical sensors; management noted “second consecutive quarter of double digit organic sales growth” .
  • Record FCF and disciplined deployment: $226M QTD free cash flow (180% conversion) used to reduce debt, repurchase >$70M in shares, and pay $44M in dividends; leverage improved to 2.2x .
  • Integration and portfolio focus: Atrion outperformed and became EPS accretive a year ahead of schedule; medical contract manufacturing exit accelerated focus on proprietary components—“our new employees again exceeded expectations and contributed to both sales and earnings” .

What Went Wrong

  • IPS systems softness: Polymer processing systems remained weak; large system orders in plastics and industrial coatings saw customer delays, though pipelines remain robust; aftermarket mitigated margin impact .
  • Mixed ATS product demand: While dispense and optics were strong, X‑ray inspection systems were weak in the quarter, adding lumpiness to segment demand .
  • Elevated GAAP tax rate: 21% effective tax rate in Q3 due to a discrete nondeductible goodwill write‑down tied to the pending medical contract manufacturing exit; adjusted ETR ~19% .

Financial Results

Quarterly trend (sequential; oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$615.4 $682.9 $741.5
Diluted EPS ($)$1.65 $1.97 $2.22
Adjusted EPS ($)$2.06 $2.42 $2.73
Gross Margin (%)54.6% 54.7% 54.8%
EBITDA ($USD Millions)$188.1 $217.2 $238.5
EBITDA Margin (%)31% 32% 32%
Operating Profit ($USD Millions)$140.9 $168.8 $187.8

Q3 2025 YoY and vs. estimates

MetricQ3 2024Q3 2025S&P Global Consensus*
Revenue ($USD Millions)$661.6 $741.5 $723.6*
Adjusted EPS ($)$2.41 $2.73 $2.64*
Diluted EPS ($)$2.04 $2.22 n/a

Note: Consensus values are from S&P Global and refer to adjusted/“Primary” EPS comparisons where applicable.*

Segment breakdown (Q3 2025 vs. Q3 2024)

SegmentSales Q3’24 ($M)Sales Q3’25 ($M)YoY GrowthEBITDA Margin Q3’24EBITDA Margin Q3’25
Industrial Precision Solutions$349.0 $350.8 +0.5%37% 37%
Medical & Fluid Solutions$166.7 $219.5 +31.6%37% 38%
Advanced Technology Solutions$145.9 $171.3 +17.4%21% 24%

KPIs and balance sheet highlights (Q3)

KPIQ3 2025
Free Cash Flow (Quarter to Date)$226.4M
FCF Conversion (Quarter to Date)180%
Backlog (seq. change)~5% down sequentially
Net Debt~$2.0B
Leverage Ratio2.2x (down from 2.5x at start of FY)
Share Repurchases>$70M in Q3; ~$212M YTD

Guidance Changes

MetricPeriodPrevious GuidanceCurrent/ActualChange
SalesQ3 2025$710–$750M (Q2 guide) $741.5M Above midpoint
Adjusted EPSQ3 2025$2.55–$2.75 (Q2 guide) $2.73 Near high end
FY SalesFY 2025Original FY guide (not disclosed in 8-K)Tracking slightly below midpoint of original guide Maintained (slightly below midpoint)
FY Adjusted EPSFY 2025Original FY guide (not disclosed in 8-K)Tracking slightly above midpoint of original guide Maintained (slightly above midpoint)
Adjusted ETRFY 2025Range not specified~19% at low end of range Maintained low end
Share Repurchase AuthorizationOngoing~$293M remaining+$500M added; total ~ $793M remaining Increased
DividendQuarterly$0.78/share$0.82/share starting 9/25/25 (5% increase) Raised
Medical Contract Mfg. DivestitureFY Q4 timingExpected to close in Q4 Completed 9/2/25 Completed (post‑Q3)

Earnings Call Themes & Trends

TopicQ1 2025 (prior)Q2 2025 (prior)Q3 2025 (current)Trend
ATS cycle & AI/advanced packagingATS down YoY on lower systems deliveries ATS +18% organic; semi/electronics demand strong Second consecutive quarter of double‑digit organic growth; back‑end packaging for AI/cloud; Spectrum s2 gaining share Upturn continuing; comps get tougher into Q4
Supply chain & in‑region manufacturing—In‑region, for‑region strategy supports growth Emphasized close‑to‑customer model and agility; NBS Next enabling short lead times Structural tailwind
Tariffs/macroDynamic markets; order momentum building Uncertain geopolitical environment Tariff clarity improving but still uncertain; maintain balanced outlook Persistent uncertainty
IPS systems demandPolymer processing/coatings weak Polymer processing/coatings still weak Systems orders delayed; troughing in plastics; aftermarket supports margins Stabilizing
Medical end marketsInterventional destocking pressured demand Organic down 10% excluding Atrion; destocking ongoing Core medical returning to growth; interventional flat YoY; focus on proprietary components Improving
Capital allocation—$85M buybacks in Q2 >$70M Q3 buybacks; new $500M authorization; leverage 2.2x More dry powder

Management Commentary

  • Strategy and execution: “Operational excellence drove strong profit performance, increasing adjusted earnings per share by 13% and EBITDA by 15%... In this final full quarter of Atrion’s first year acquisition performance, our new employees again exceeded expectations and contributed to both sales and earnings” .
  • ATS positioning: “Our products deliver leading productivity and quality in complex advanced packaging applications of semiconductors used for AI, cloud computing, and more… we are experiencing that demand now” .
  • FCF and capital deployment: “Free cash flow of $226,000,000 and cash flow conversion of 180% of net income… used this cash to reduce debt, repurchase shares, and return dividends” .
  • Outlook tone: “I am pleased that we are able to affirm our full year sales guidance and earnings expectations… we have continuously demonstrated resilience and the ability to deliver solid growth and best‑in‑class profitability” .

Q&A Highlights

  • Orders and backlog: Backlog down slightly due to strong shipments; underlying order intake viewed as stable across segments; medical activity healthy; ATS remains lumpy but demand stable .
  • ATS trajectory: Cycle is in an upturn with several quarters of growth; management does not see evidence of customers pulling orders forward; broad demand across dispense, acoustic/optical; continued lumpiness is expected .
  • Q4 cadence and comps: Sequential uptick expected from Q3 to Q4, but tougher YoY comps in systems (e.g., plastics) temper growth optics .
  • Divestiture charges: ~$12.2M to write business to fair value less costs to sell; viewed as a one‑time item with limited further impact at close .
  • Capital allocation: Buybacks accelerated given valuation; M&A funnel “healthy” and discipline unchanged; Atrion is EPS‑accretive a year earlier than planned .

Estimates Context

  • Q3 2025 results vs. S&P Global consensus: Revenue $741.5M vs. $723.6M*; Adjusted/“Primary” EPS $2.73 vs. $2.64*. Management also beat its Q3 guidance midpoints ($710–$750M revenue; $2.55–$2.75 adjusted EPS) .
  • Implications: Modest upward bias to near‑term EPS trajectories in ATS given incrementals; watch for mixed systems comps in Q4 and FX/tax items that affected GAAP EPS (discrete goodwill write‑down) .
    Values marked with * are retrieved from S&P Global.
MetricQ3 2025 Consensus*Q3 2025 Actual
Revenue ($M)723.6*741.5
Primary/Adjusted EPS ($)2.64*2.73

Key Takeaways for Investors

  • ATS is the near‑term growth engine, benefiting from electronics/advanced packaging tied to AI/cloud, with stronger incrementals and improving margins (24% in Q3) .
  • IPS pressure is concentrated in large systems (polymer processing, industrial coatings); order deferrals persist, but pipelines are robust and plastics appears to have troughed .
  • Medical is reaccelerating organically as interventional destocking abates; Atrion continues to outperform and is EPS‑accretive ahead of plan; portfolio focus sharpened by the CDMO divestiture .
  • Quality of cash flow is high: record quarterly FCF and 180% conversion underscored working capital execution and enabled de‑leveraging and buybacks .
  • Capital returns stepping up: new $500M authorization (total ~$793M) and a 5% dividend hike to $0.82 per share provide downside support and flexibility .
  • FY25 guidance steady on sales (slightly below midpoint) and better on adjusted EPS (slightly above midpoint); expect Q4 sequencing to improve, but YoY optics will face tougher systems comps .
  • Watch items: tariff policy, GAAP tax volatility from discrete items, and ATS lumpiness—none of which appear to derail the multi‑year margin/FCF story given NBS Next and in‑region manufacturing advantages .

Footnote: Consensus values marked with * are retrieved from S&P Global.