Nordson (NDSN) Q2 FY26 earnings call: guidance and Q&A

Is medical growth sustainably on track for historical algorithm, and can you elaborate on the interventional product headwind?

Medical product lines are tracking towards normalized growth of 6-8%, with Q2's 8% organic growth being a good precursor. The interventional product headwind is a near-term, short-term issue related to a regulatorily required material change causing operational inefficiencies, which is expected to resolve and become an opportunity later in the year.

“I would say Medical is on track and still returning to normal growth rates of what we would call 6% to 8% as a target. So everything is on track. The 8% overall, I would say, is a pretty good precursor, but the mix within is still a little bit different than, I'd say, long-term expectations.”

asked by Matt Summerville · answered by Daniel Hopgood

Review Nordson's semiconductor positioning, views on cycle durability, and quantify orders/backlog.

The ATS segment is experiencing robust backlog growth, driven by diversification of customers, optimized footprint, and innovation for AI applications. Management believes the company is in the early stages of the semiconductor cycle, with numerous applications benefiting from co-development of technology with customers. Current strength is in electronic dispense, with test and inspection inflecting.

“I would definitely tell you we're in the early stages. In terms of number of applications, if you think about this business, over 50% of this business is in semiconductor now.”

asked by Matt Summerville · answered by Sundaram Nagarajan

Discuss IPS's flat to down margins despite decent growth, and how price/cost/mix will play out in H2.

IPS has returned to normalized growth (4% organic in H1), with best-in-class margins. The business is operating in an inflationary environment, including tariffs, which is impacting incrementals. Management is focused on maximizing growth while maintaining margin performance through selective pricing and offsetting cost actions, expecting this to be a short-term issue.

“I mean, clearly -- and this doesn't just apply to IPS. I mean I would say clearly, we are operating in a bit of an inflationary environment right now. And when I say that, I would include tariffs in that.”

asked by Jeffrey Hammond · answered by Daniel Hopgood

Elaborate on the moving pieces for guidance, including tax, acquisition impact, and backlog conversion assumptions.

FX will be neutral in H2, while M&A (divestiture net of acquisition) will be a slight 1% negative. The rest of the guidance is organic growth. Management has high confidence in the midpoint, with accelerated demand in recent months potentially driving the upper end. A meaningful pullback in order activity would be needed for the lower end. Backlog conversion timing remains largely normal.

“The net impact of M&A that's both the divestiture and the new acquisition, which is a small acquisition, is a slight negative of roughly 1% in the back half of the year. And then the rest of the guidance is really around growth.”

asked by Jeffrey Hammond · answered by Daniel Hopgood

Is backlog conversion normal, and what's driving the better trends in coatings and plastics?

Backlog conversion timeframes are fundamentally unchanged, with most converting within 6 months, and some within the quarter. The improved trends in coatings and plastics are a normal, gradual recovery from the trough in Q4 last year, not a surprise or a strong rebound, and are in line with expectations.

“On the backlog piece I would say no fundamental change. I mean, our backlog, in general, the majority, I would say, turned certainly within 6 months. In some cases, certainly within the quarter.”

asked by Michael Halloran · answered by Daniel Hopgood

What does the M&A environment look like, given the $900 million capacity, and are valuations normalizing?

M&A activity remains robust with an active pipeline, but Nordson will stay disciplined against strategic and financial criteria. The focus for large strategic acquisitions is medical, while bolt-on technology additions are considered across all strong existing portfolios. The company is active in the market, but specific valuation trends were not detailed.

“Our M&A activity continues to be robust. We have a pipeline that's pretty active. We continue to work it. But we're going to stay disciplined, right? We're going to stay disciplined against our strategic criteria as well as our financial returns criteria.”

asked by Andrew Buscaglia · answered by Sundaram Nagarajan

Quantify ATS order strength and explain the lag between dispense and test & inspection (T&I) growth.

ATS order strength is significant, contributing to the 18% overall backlog growth with a double-digit increase, in line with or better than the overall rate. There isn't a fundamental lag between dispense and T&I; rather, it's business dynamics. While dispense is currently more robust, both are seeing similar demand, and ATS has broadened its applications and technologies beyond just dispense.

“I would say, particular strength in our ATS segment contributing to that 18%. So I think you can easily draw a double-digit increase to ATS from those statements. And if anything, I would say, in line with or better than that 18% overall.”

asked by Walter Liptak · answered by Daniel Hopgood

Could IPS's precision dispensing act as a medium-term driver for consumables refresh demand, given persistent high input costs?

Absolutely. Nordson's offerings provide material savings, accuracy, and speed, which are critical for efficiency. This drive for efficiency, especially in an environment of high input costs and potential material scarcity, makes the value proposition of precision dispensing very strong across adhesives, coatings, and precision agriculture. This will help drive demand.

“Absolutely, right. This is -- you are absolutely right in that -- what we offer is material savings across the entire product line, material savings, of course, accuracy, precision, speed, things that matter.”

asked by Robert Jamieson · answered by Sundaram Nagarajan