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    NDSN
    Earnings call· Apr 2026(Q2 FY26)

    NORDSON Q2 FY26 earnings call NDSN

    May 21, 2026 Source

    Executive summary

    Nordson Q2 FY26 — Record Sales and EPS Driven by Broad-Based Organic Growth

    Nordson delivered a strong second quarter, exceeding guidance with record sales and adjusted EPS, driven by broad-based organic growth across all segments and robust order entry. The company is leveraging its NBS Next framework and strategic acquisitions to capitalize on accelerating demand in key end markets, while maintaining a disciplined approach to capital deployment and M&A. Management expressed high confidence in the midpoint of its increased full-year guidance, with potential for the upper end if current demand trends persist.

    Highlights

    5

    • Record sales of $741 million, up 8% year-over-year, including 7% organic growth.

    • Record adjusted earnings per share of $2.86, an 18% increase year-over-year and $0.06 above the midpoint of quarterly guidance.

    • Backlog increased 18% organically compared to the prior year, with broad-based contributions across all segments.

    • Free cash flow of $170 million, achieving a 119% conversion rate on net income.

    • All three segments (IPS, MFS, ATS) contributed to organic growth and achieved record second quarter sales.

    Concerns

    3

    • EBITDA margin for Medical and Fluid Solutions was slightly compressed due to a near-term product start-up headwind in selected interventional medical product lines.

    • Incremental EBITDA contribution in the quarter was 31%, at the lower end of the typical mid- to upper 30s range, despite a 300 basis point improvement quarter-over-quarter.

    • The net impact of M&A (divestiture and acquisition) is expected to be a slight negative of approximately 1% on sales in the second half of fiscal year 2026.

    Guidance & targets

    6
    CategoryTargetConfidence
    Third Quarter Fiscal 2026 Sales
    $760 million to $790 million
    high materiality
    High
    Third Quarter Fiscal 2026 Adjusted Earnings Per Share
    $2.95 to $3.15 per diluted share
    high materiality
    High
    Full Year Fiscal 2026 Sales
    $2.930 billion to $3.010 billion
    high materiality
    High
    Full Year Fiscal 2026 Adjusted Earnings Per Share
    $11.30 to $11.80 per diluted share
    high materiality
    High
    Full Year Fiscal 2026 Adjusted Effective Tax Rate
    18% to 19%
    medium materiality
    High
    Foreign Exchange Impact on Sales Growth
    Neutral
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Industrial Precision Solutions
    Growth was driven by improving industrial coating and polymer processing systems demand, ongoing growth in precision agricultural end markets, and stable demand in broader consumer and industrial end markets. Margins are best-in-class, with focus on delivering growth while maintaining margin performance in an inflationary environment.
    Organic sales increase: 5%Favorable currency impact: 4%Acquisition impact: 1%EBITDA growth: 9% over prior year
    		$350 million10%—$124 million or 35% of sales
    Medical and Fluid Solutions
    Sales were a second quarter record. Organic growth was driven by contributions from both engineered fluid solutions and medical product lines. EBITDA margins were slightly compressed versus the prior year due to a near-term product start-up headwind in selected interventional medical product lines, which is expected to become an opportunity as the year progresses.
    Organic sales increase: 8%Divested sales impact: -4%EBITDA growth: 3% from prior year EBITDA of $77 million
    		$213 million5%—$79 million or 37% of sales
    Advanced Technology Solutions
    Sales were an all-time quarterly record. Organic sales increase was most notable in electronics dispense product lines, reflecting ongoing strength in semiconductor end market demand. The improvement in EBITDA margin compared to prior year reflects SG&A leverage on the high single-digit organic growth and sustainable operational and footprint changes.
    Organic sales increase: 8%EBITDA growth: 22% compared to prior year second quarter EBITDA of $40 million or 25% of sales
    		$178 million10%—$48 million and 27% of sales

    Operational metrics

    23
    Adjusted Operating Profit
    $199 millionup 11% YoY
    Q2 FY26

    Driven by increased SG&A leverage on strong organic sales growth.

    EBITDA
    $235 millionup 8% YoY
    Q2 FY26

    In line with prior year EBITDA margin as a percent of sales.

    Net Interest Expense
    $22 milliondecrease of $4 million vs prior year
    Q2 FY26

    Driven by lower year-over-year debt levels and a stable to declining rate environment.

    Other Expenses (GAAP)
    increased $30 millionYoY
    Q2 FY26

    Excluding these noncash charges, other expense was slightly favorable year-over-year.

    Adjusted Effective Tax Rate
    18%in line with prior quarter
    Q2 FY26

    On an adjusted basis.

    GAAP Net Income
    $117 million
    Q2 FY26

    Totaled in the quarter.

    GAAP EPS
    $2.09
    Q2 FY26

    Per share.

    Adjusted EPS
    $2.86up 18% YoY from $2.42; $0.06 above midpoint of quarterly guidance
    Q2 FY26

    Excluding acquisition-related amortization and costs and noncash losses. Reflects solid operating leverage and improved capital leverage.

    Cash on Hand
    $102 million
    Q2 FY26

    At the end of the second quarter.

    Net Debt
    ~$1.8 billion
    Q2 FY26

    At the end of the second quarter.

    Leverage Ratio
    1.9ximproving from last year
    Q2 FY26

    Provides significant firepower for capital deployment.

    Free Cash Flow Conversion
    119%
    Q2 FY26

    On net income, excluding noncash losses. Represents the fourth consecutive quarter above 100% conversion despite accelerated revenue growth.

    Capital Projects Investment
    $10 million
    Q2 FY26

    To support current and future organic growth.

    Dividends Paid
    $46 million
    Q2 FY26

    Paid to shareholders.

    Shares Repurchased
    $43 million
    Q2 FY26

    On the open market.

    Net Debt Reduction
    $93 million
    Q2 FY26

    Reduced during the quarter.

    FX Impact on Sales Growth
    3%favorable
    Q2 FY26

    Favorable currency translation impact.

    M&A Impact on Sales Growth
    slight offset
    Q2 FY26

    Net impact of medical contract manufacturing divestiture and CapstanAG acquisition.

    M&A Net Impact on H2 Sales
    -1%
    H2 FY26

    Net impact of divestiture and new acquisition.

    Consumables Business Revenue Mix
    60%
    Q2 FY26

    60% of business is consumables and single-use kind of turnover.

    CapstanAG Annual Revenue
    ~$13 million
    Annual

    Approximate size of the acquired business.

    CapstanAG H2 FY26 Revenue Contribution
    ~$5 million-$6 million
    H2 FY26

    Estimated incremental revenue for the second half of the fiscal year.

    M&A Capacity
    $900 million
    Q2 FY26

    Remaining capacity for M&A, along with strong cash flow generation.

    Industry KPIs

    3
    MetricValueDetails
    Tariff cost impact—
    Incremental margin operating leverage31%%
    Order backlog order intake by segmentup 18%%

    Orderbook & backlog

    2
    Total Backlogup 18%Q2 FY26

    YoY organically

    Broad-based across all segments; majority converts within 6 months, some within the quarter, minority into 2027. No fundamental change in overall backlog timing or delivery request.

    ATS Backlogdouble-digit increaseQ2 FY26

    YoY

    Particular strength in ATS segment, in line with or better than the 18% overall backlog growth. No fundamental lag between dispense and test & inspection businesses.

    Deals & partnerships

    1
    CapstanAGPrecision agriculture technology leader in North America, specializing in innovative pulse width modulation systems for increased efficiency and reduced waste in crop spraying.9x adjusted EBITDA

    Headquartered in Topeka, Kansas. Nordson is consolidating its existing precision agriculture facilities into Capstan's footprint.

    Capital programs

    1
    U.S. Pension Obligation Settlementcompleted~$113 million
    Funding: No cash outlay required

    Benefit: Annuitized approximately 1/3 of remaining U.S. pension obligation, improved funded status for remaining plan, no expected ongoing cash requirements

    Completed at a very competitive discount of 7.5%, resulting in a one-time $24 million pretax charge.

    Risks & headwinds

    3
    Near-term product start-up headwind in interventional medical product linesNear-term, Q2 FY26

    Slightly compressed Medical and Fluid Solutions EBITDA margins

    Mitigation: Working through a short-term changeover issue related to a regulatorily required material change; expected to become an opportunity as the year progresses.

    Broader inflationary environmentOngoing

    Lower end of incrementals in Industrial Precision Solutions (IPS)

    Mitigation: Managing through selective pricing where needed and offsetting cost actions. Tariffs are part of this broader impact but not material on their own.

    Potential for meaningful slowdown in order activity due to macro conditionsQ4 FY26

    Could move full-year sales and adjusted EPS towards the low end of guidance range

    Mitigation: Prudent guidance balances strong demand momentum with potential for a range of macroeconomic outcomes. Management is monitoring for raw material shortages or broader implications on industries served.

    What to watch in Q3 FY26

    5

    Medical and Fluid Solutions Margin Recovery

    As the year progresses
    CurrentSlightly compressed (37% EBITDA margin)
    TargetRecovery to prior levels or improvement

    Why it matters

    The resolution of the interventional product start-up headwind is expected to improve segment profitability and contribute to overall company performance.

    EBITDA margins during the quarter were slightly compressed versus the prior year due to the impact of a near-term product start-up headwind in selected interventional medical product lines. This should become an opportunity as the year progresses.

    Q&A highlights

    8

    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

    2 min read6 chapters

    Detailed Narrative

    01

    CapstanAG Acquisition and Strategic Rationale

    Nordson acquired CapstanAG, a precision agriculture technology leader in North America, for 9x adjusted EBITDA. This strategic bolt-on acquisition expands Nordson's precision agriculture portfolio, targeting mid-tier OEM customers. The company is consolidating its existing precision agriculture facilities into Capstan's Topeka, Kansas footprint to enhance proximity to North American customers and grow its expanded product offering.

    02

    Portfolio Diversification and End Market Exposure

    More than 50% of Nordson's portfolio is now concentrated in high-growth end markets such as semiconductor, electronics, and medical, with the remaining exposure in stable GDP-plus markets. This diversification provides confidence in the company's expectations for the remainder of the year and beyond, positioning Nordson to capitalize on various market dynamics.

    03

    Semiconductor Cycle and Technology Positioning

    Management believes Nordson is in the early stages of the semiconductor cycle, benefiting from robust demand. The company's positioning is attributed to diversifying its customer base, optimizing its operational footprint to be closer to customers, and innovating technologies for new AI applications and complex semiconductor manufacturing processes. Growth is currently strong in electronics dispense, with test and inspection systems beginning to inflect.

    04

    Medical Market Recovery and Interventional Headwinds

    After a modest first quarter, medical end markets are steadily returning to normalized growth rates of 6% to 8%, supported by strong order entry and backlog. However, the Medical and Fluid Solutions segment experienced a near-term product start-up headwind in selected interventional medical product lines due to a regulatorily required material change, which caused operational inefficiencies and slightly compressed EBITDA margins in the quarter. This is expected to become an opportunity as the year progresses.

    05

    Capital Allocation and Financial Strength

    Nordson maintains a balanced and value-seeking capital allocation strategy. During the quarter, the company invested $10 million in capital projects, paid $46 million in dividends, repurchased $43 million in shares, and reduced net debt by $93 million. The leverage ratio improved to 1.9x, below the long-term target range, providing significant capacity for strategic capital deployment, including M&A.

    06

    Pension Obligation Settlement

    The company completed a one-time📎 pension settlement transaction, annuitizing approximately $113 million, or nearly one-third, of its remaining U.S. pension obligation at a competitive 7.5% discount. This resulted in a $24 million pretax charge but required no cash outlay, further improving the funded status for the remaining obligation and favorably impacting ongoing pension costs.

    AI-generated summary of the company’s earnings call. Not investment advice.