NORDSON CORP

Results of Operations

Below is a detailed comparison of our results of operations for the three months ended January 31, 2025 and January 31, 2024.

As used throughout this Quarterly Report on Form 10-Q, geographic regions include the Americas (United States, Canada, Mexico and Central and South America), Asia Pacific and Europe.

Effective November 1, 2024, the MCS division was transferred from the IPS segment to the ATS segment due to an organizational change and determination that the economic and business characteristics of MCS better aligned with the Company’s ATS segment. Our segment reporting reflects this change and prior year financial information was revised to be comparable. The MFS segment was unchanged.

Consolidated Financial Results

Consolidated financial results for the three months ended January 31, 2025 and January 31, 2024 were as follows:

Net Sales

Net sales for the IPS, MFS and ATS segments were as follows:

The IPS organic sales decrease of 8.4 percent was driven primarily by weaker systems demand in polymer processing and industrial coatings product lines, which was partially offset by growth in systems and parts demand for adhesive product lines. The MFS organic sales decrease of 11.2 percent was driven by lower demand and tough year-over-year comparisons in medical interventional solutions product lines, where customer destocking trends continued to impact demand. The inorganic growth of MFS is due to the acquisition of Atrion. The ATS organic sales decrease of 9.6 percent was driven by lower systems deliveries in electronics processing and x-ray product lines, partially offset by growth in optical sensors and measurement and control product lines.

Net Sales by region were as follows:

Operating Profit

Operating profit for the IPS, MFS and ATS segments were as follows:

Consolidated operating margin decreased by 230 basis points primarily driven by reduced sales leverage. IPS operating margin declined 40 basis points, reflecting the impact of lower sales volumes. MFS operating margin declined 780 basis points, reflecting the contribution from the Atrion acquisition offset by lower organic demand. ATS operating margin improved by 140 basis points despite lower sales, due to strategic cost reduction actions and manufacturing footprint optimization actions.

Interest and Other expenses

Interest expense for the three months ended January 31, 2025 was $26,559, compared to $21,442 in the comparable period of 2024. The increase, compared to the prior year period, was primarily due to higher average debt levels, driven by acquisitions. Other income was $1,526 compared to $338 in the comparable period of 2024. Included in 2025 other income were pension and postretirement income of $1,015 and $331 of foreign currency gains. Included in 2024 other expense were pension and postretirement income of $1,025 and $822 in foreign currency losses.

Income Tax Expense

We record our interim provision for income taxes based on our estimated annual effective tax rate, as well as certain items discrete to the current period. Significant judgment is involved regarding the application of global income tax laws and regulations and when projecting the jurisdictional mix of income. We have considered several factors in determining the probability of realizing deferred income tax assets including forecasted operating earnings, available tax planning strategies and the time period over which the temporary differences will reverse. We review our tax positions on a regular basis and adjust the balances as new information becomes available. The effective tax rate for the three months ended January 31, 2025 was 19.0% compared to 21.0% for the three months ended January 31, 2024. The effective tax rate for the three months ended January 31, 2025 is lower than the U.S. tax rate of 21% primarily due to the foreign-derived intangible income deduction.

Net Income

Net income was $94,652, or $1.65 per diluted share, for the three months ended January 31, 2025, compared to net income of $109,572, or $1.90 per diluted share, in the same period of 2024. This represented a 13.6 percent decrease in net income and a 13.2 percent decrease in diluted earnings per share. The decrease of $0.25 per diluted share was primarily driven by lower sales, higher selling & administrative expenses due to the first-year effect of acquisitions, and higher interest expense in the first quarter of 2025 compared to the first quarter of 2024.

Foreign Currency Effects

In the aggregate, average exchange rates for 2025 used to translate international sales and operating results into U.S. dollars were generally unfavorable compared with average exchange rates existing during 2024. It is not possible to precisely measure the impact on operating results arising from foreign currency exchange rate changes, because of changes in selling prices, sales volume, product mix and cost structure in each country in which we operate. However, if transactions for the three months ended January 31, 2025 were translated at exchange rates in effect during the same period of 2024, we estimated that sales would have been approximately $12,000 higher while costs of sales and selling and administrative expenses would have been approximately $7,000 higher.