by Mike Buetow
Nordson today reported fiscal third quarter sales at its Advanced Technology Systems unit fell 8% from the prior year on an 11 percentage point decrease in organic volume.
The division saw a two percentage point increase due to the first-year effect of acquisitions, and a one point increase from currency translation effects.
Operating margin in the segment was 25% in the fiscal third quarter.
The results include the fiscal 2018 acquisition of Sonoscan. Other key brands in the unit include Nordson Dage, YesTech, EFD, Aysmtek, and March.
For the quarter ended Jul. 31, overall sales fell 1% year-over-year to $581 million. Organic volume was down three percentage points, offset in part by growth from first-year acquisitions of one point and favorable currency translation of one point. Operating profit was $136 million, versus $153 million in 2017. Net income was $95 million, down $6 million from last year.
In a statement, Michael F. Hilton, president and chief executive, said, “Nordson delivered solid results despite challenging comparisons to our prior year’s third quarter, where total company organic sales growth was 11%. Our commitment to delivering the best technology solutions while employing continuous improvement initiatives drove bottom line performance, generating operating margin of 23% and $118 million of free cash flow before dividends. Our base business is strong, and we remain focused on bringing value to our customers and the diverse end markets we serve.”
The results included one-time restructuring charges of approximately $1 million and discrete tax benefits of approximately $2 million.
Adhesive Dispensing Systems sales increased 5 percent compared to the prior year’s third quarter, inclusive of 3% organic volume growth and a 2% increase related to the favorable effects of currency translation as compared to the prior year. Reported operating margin in the segment was 28%, or 29% on an adjusted basis to exclude non-recurring restructuring charges of $1 million related to a previously announced U.S. facility consolidation.
Nordson guided for fiscal fourth quarter sales of flat to -4% compared with a year ago. The outlook suggests organic volume could be up 1% to down 3%.
“Looking ahead to the fourth quarter, our guidance reflects our current backlog, where organic volume is driven primarily by strength in adhesive and medical product lines, offset primarily by lower demand for Advanced Technology dispense product lines serving electronics end markets and automotive cold materials product lines,” said Hilton. “At the midpoint of our guidance, we expect to generate total company organic sales growth of 2% on a full year basis for fiscal 2018. On top of 8% organic growth in fiscal 2017 and 7% organic growth in fiscal 2016, delivering organic growth again this year highlights the attractiveness of the end markets we serve and our ability to continue to meet our customers’ expectations.”