Nordson sales up 6% with demand up for testing, medical markets
Westlake, Ohio-based Nordson Corp. saw a 6 percent sales bump to $527 million in its fiscal first quarter compared to the prior year with demand growing for its test and inspection products as well as equipment for the medical, consumer and industrial markets.
The company's two divisions, Industrial Precision Solutions (IPS) and Advanced Technology Solutions (ATS), were up 9 percent to $288 million and 3 percent to $238 million, respectively.
IPS growth was driven by strong demand for flexible packaging and nonwovens product lines while ATS sales were bolstered by a couple factors, Nordson President and CEO Sundaram Nagarajan said during a Feb. 23 quarterly conference call.
"Advancements in technology are causing electronics customers to shift from sampling to 100 percent inspection, and we are benefiting from this trend," Nagarajan said. "Our medical fluid components product line delivered double-digit organic growth, largely driven by biopharmaceutical application, such as tamper-proof packaging for vaccine delivery."
A lot of the test and inspection equipment, and some dispense products, will find homes at businesses expanding to meet demand for semiconductor devices, according to Nagarajan. While the operators of those facilities wait for new capacity, they will be "using test and inspection to improve yields, help them meet some of the accelerating demand," the CEO said.
"So very excited about this," he told investment bankers. "This is a great opportunity for the company, well-positioned to win here."
Electric vehicles offer another opportunity, not only for testing and inspection products, but in battery production.
"So you could think about batteries, they are put together in many different ways," Nagarajan said. "One of the ways is combining multiple cells. So we have a lot of opportunity in manufacturing of the battery."
Nordson also is seeing growth in its fluid dispense product lines for industrial and automotive end markets.
The increased demand for the company's test and inspection and fluid-related product lines was offset, however, by continued softness in medical interventional and certain electronic dispense applications, Nagarajan said.
Still, for the full year fiscal 2021, the CEO expects sales growth of 4 percent to 6 percent, which he said excludes "the 3 percent headwind from the revenue of the divested screws and barrels product line in the prior year."
Nordson sold its screws and barrels product line, including the 92-year-old Xaloy brand, to Chicago-based private equity firm Altair Investments Inc. The product line, used by plastics processors and machine builders, had generated more than $70 million in annual sales for Nordson.
Even so, order entry trends improved throughout the first quarter of fiscal year 2021 and the backlog entering the second quarter was about $495 million, an increase of 7 percent compared to the same period a year ago.
Another one of the new bright spots is single-use plastic components to manufacture biopharma products, including vaccines.
"We saw some pretty strong growth in the quarter. We expect the growth to continue in the out quarters and maybe even further out," Nagarajan said. "And the biggest reason we are able to have a sort of a flat medical revenue when compared to our customers being down 15 percent is mainly because of this biopharm growth driver."