Nordson Corp Q1 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Matt Summerville - D.A. Davidson & Co. - Analyst : A couple of questions. Help me understand a little bit more about what played out in your electronics-related business in the quarter? I guess I was under the impression that you had seen order inflection supporting a return and sustained sort of pathway to organic growth in that business. So help me understand kind of how the quarter played out and then how incoming orders inform the

Question: Matt Summerville - D.A. Davidson & Co. - Analyst : And then as a follow-up, just getting over to the interventional side of your medical-related business, (multiple speakers) -- anniversary that destock you mentioned you expect to see quarter-on-quarter growth. When do we start to see year-on-year growth more aligned to the long-term trajectory you lay out for that business?

Question: Andrew Buscaglia - BNP Paribas - Analyst : In the ATS segment, if you were to exclude that, the movement of that Measurement & Control Solutions, what would organic growth have been? And then what's the rationale behind moving that out of IPS and into ATS?

Question: Andrew Buscaglia - BNP Paribas - Analyst : Okay. Yes. And a slower start to the year than you expected and you're trending towards the low end of that guidance range for the top line for the full year. Are there things you're working on to still achieve at least the midpoint of EPS, whether it's further restructuring or some sort of margin enhancement?

Question: Jeffrey Hammond - KeyBanc Capital Markets - Analyst : So just real quick on the guide. It sounds like you think right now, lower end of the sales guide, but you're still kind of closer to the midpoint. One, is that correct? And two, what are kind of the drivers that are kind of offsetting the weaker sales?

Question: Jeffrey Hammond - KeyBanc Capital Markets - Analyst : No, that's very helpful. I wanted to follow up on the medical margin dynamic. Can you give us a sense of how much of the margin dilution was just Atrion coming in and what the decrementals were on the base? Because -- and then how it looks from a dilution perspective as we go forward? And then just on the medical destocking, I mean, I understand that the comps get easier, but just any update on kind of where we're at in that process? Is it still the view that, that carries through the first half and then abates?

Question: Jeffrey Hammond - KeyBanc Capital Markets - Analyst : And then just the destocking?

Question: Mike Halloran - Baird - Analyst : Not to overly harp on the guide. I just want to make sure I understand what's embedded on the revenue side of things. Obviously, the first quarter, as you said, was a little lower expectations, FX a little worse. Is that a majority of the move for the revenue to be at the low end? And maybe I suppose, what is the assumption then for end market recovery curves, normal seasonality, backlog conversion that's embedded in that lower assumption? Is it pretty normal sequentials from here, pretty normal backlog outlay? Any kind of color around those things would be super helpful.

Question: Mike Halloran - Baird - Analyst : Right. Super helpful there. And then just kind of a question on once that recovery happens in these markets? I know earlier Naga was talking about the positive decremental margin performance, particularly in the ETF side? And I suppose as well on the MFS side. What does the look like to the upside? Obviously, the IPS are already really healthy levels, I know aided by mix, but still really strong levels. What kind of work would you expect to see in those margins or incremental margins as the volume recovers and normalizes to a more historically normal pattern?

Question: Mike Halloran - Baird - Analyst : Correct.

Question: Saree Boroditsky - Jefferies - Analyst : So maybe building on the last question, as we think specifically on ATS, that business has seen margins decrease substantially over the last few years. So how should we think about incrementals in this segment once demand and flex? And what would it take to get back to that 23%-plus margins you saw in 2022? Or is that sort of a onetime event? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 1:30PM, NDSN.OQ - Q1 2025 Nordson Corp Earnings Call

Question: Saree Boroditsky - Jefferies - Analyst : That's helpful. And maybe just on the weaker growth in IPS. How much of this is related to underlying demand versus the challenging comparables that you had from the strong incoming backlog from last year?

Question: Christopher Danker - Loop Capital Markets - Analyst : Maybe just a conceptual question. I guess if we go back to the Medical segment, Atrion has been doing really well on an organic basis. Is there anything to learn from Atrion's operations in terms of -- they didn't seem to get destocked the same way that legacy Interventional did. I mean -- is there a difference in customer set? Is there a difference in how they stock? Maybe just conceptually, what's -- how do we think about that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 1:30PM, NDSN.OQ - Q1 2025 Nordson Corp Earnings Call

Question: Christopher Danker - Loop Capital Markets - Analyst : That's extremely helpful. And then maybe just to circle back, I mean, back in October, and I could be interpreting this wrong, but you sounded fairly optimistic about just the deals that were out there from an acquisition perspective. what was kind of coming across your desk. I guess, would you echo that same level of optimism today?

Question: Walter Liptak - Seaport Research Partners - Analyst : I wanted to ask -- go back to the 2025 guidance and sales questions again. And just -- I think, Dan, when you were going through, you gave some good kind of delineation around the segments. And so just to repeat it back, so I heard him right, you're thinking that MFS could be mid- to high end of the revenue guide, ATS at the low end and IPS at the low end? Is it -- is that kind of what you guys are thinking on a segment basis? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 1:30PM, NDSN.OQ - Q1 2025 Nordson Corp Earnings Call

Question: Walter Liptak - Seaport Research Partners - Analyst : Okay. Yes. I appreciate that. That's very helpful. And just kind of drilling into the industrial precision part of it a little bit. The -- happy to hear that ARAG that there's a potential plus there. I wonder if you could go into maybe a little bit more detail about it? Is it a new product? Is it Europe? Is it Rest of World where you're seeing some green shoots. And then maybe talk about some of those other sectors beyond polymers and coatings, like Naga, you know the auto sector very well. What's going on there? What's happening with others?