Nordson Earnings: Headwinds in Semiconductor and Biopharma End Markets Weigh on Revenue Growth

Narrow-moat-rated Nordson’s NDSN fiscal third-quarter adjusted EPS declined by 6% from the prior-year period, from $2.49 to $2.35, as the firm continued to face headwinds in the semiconductor and biopharma end markets. We’ve maintained our $237 fair value estimate, as our slightly more muted near-term revenue growth projections were offset by time value of money.

Nordson’s fiscal third-quarter organic sales decreased by 5% from the same period last year. Industrial precision solutions organic sales were down 2% due to weaker results in Asia-Pacific. Medical and fluid solutions organic sales declined by 4% because of continued softness in medical fluid components and fluid solutions, which more than offset double-digit growth in medical interventional solutions. Lastly, advanced technology solutions organic sales fell by 13%, primarily due to a decline in electronics dispense product lines in the semiconductor end market, especially in Asia-Pacific.

Management lowered the high end of its guidance range for full-year fiscal 2023 and now expects adjusted EPS of $8.90-$9.05 (down from $8.90-$9.30) and revenue growth of 0%-2% (down from 0%-3%). The updated outlook bakes in a roughly $20 million-$30 million revenue contribution from the ARAG acquisition, which management expects to close by the end of August.

Looking beyond fiscal 2023, Nordson reiterated its long-term goals and continues to target $3 billion in revenue and EBITDA margins of over 30% by fiscal 2025. Headwinds in the semiconductor and biopharma end markets will likely continue to pressure Nordson’s results in the near term, but management said on the earnings call that it expects an inflection in the electronics dispense product lines in the second half of calendar 2024.