The paragraph is an introduction to the Nordson Corporation's Fourth Quarter Fiscal Year 2024 earnings call. The operator explains the procedures for the call, including a question and answer session. Laura Mahoney, Vice President of Investor Relations and Corporate Communications, begins the call by welcoming attendees and introducing company executives present. She mentions that the press release and slide presentation are available on the company's website. The call, which includes references to non-GAAP financial metrics, is being broadcast live on the investor website and will be accessible until December 19, 2024. A reconciliation of financial metrics is provided in the press release, and a disclaimer about forward-looking statements is noted.

The paragraph is from Nordson's fiscal 2024 fourth quarter and full year conference call, where Sundaram Nagarajan discusses the company's progress on the Ascend strategy. In fiscal 2024, Nordson achieved record sales of $2.7 billion and EBITDA of $849 million. Nagarajan credits these achievements to the company's employees and its business model, which focuses on customer satisfaction, innovation, geographical and market diversification, and high recurring revenue through aftermarket parts. Since the launch of the Ascend strategy in 2021, Nordson has added new capabilities like the NDS Next growth framework and a division-led structure, enabling quick adaptation to market changes.

Daniel Hopgood discusses the company's financial results for the fourth quarter and fiscal year 2024. Fourth-quarter sales were $744 million, a 4% increase from the previous year, driven by a 6% growth from acquisitions and a favorable 1% currency translation, despite a 3% decline in organic sales. The decline in organic sales stemmed from challenges in the Industrial Precision Solutions segment and declines in certain product categories within Medical and Fluid Solutions, partially mitigated by growth in Advanced Technology Solutions. Adjusted operating profit was $205 million, with a 30 basis point increase in profit margin due to improved gross margins and a higher mix of parts revenue. Selling, general, and administrative costs rose due to the Atrion acquisition and growth investments. The company's incremental operating margin was notably high at 35%, and EBITDA reached a record $241 million, a 6% increase from the previous year.

The company reported a strong financial performance in the fourth quarter, achieving a 56% incremental EBITDA on a 4% overall sales growth, driven by effective operational execution and the integration of the Atrion acquisition. Interest expenses rose slightly to $27 million due to higher net debt from acquisitions, and the company raised $600 million in debt to finance the Atrion purchase. Other expenses increased by $5 million primarily due to currency fluctuations and reduced pension income. The quarter's effective tax rate was 17%, with a full-year rate of 20%, influenced by changes in the earnings mix from acquisitions. GAAP net income was $122 million, or $2.12 per share, while adjusted earnings per share were $2.78, reflecting a 3% increase from the previous year and exceeding guidance by $0.19 due to strong operating performance and a favorable tax rate.

The paragraph discusses the fourth quarter performance of different business segments. Industrial Precision Solutions (IPS) saw a 3% decrease in sales to $392 million, with organic sales down 5%, partially offset by acquisitions and currency benefits. This decline is attributed to tough year-over-year comparisons due to record sales in the previous year. IPS's EBITDA was $143 million, representing 37% of sales. Meanwhile, Medical and Fluid Solutions sales rose 19% to $200 million, driven by the Atrion acquisition, despite a 3% decline in organic sales. The EBITDA for this segment was $72 million, or 36% of sales, reflecting a slight decrease in margins due to the acquisition. Advanced Technology Solutions reported a 5% increase in sales to $152 million.

The paragraph discusses financial performance highlights, including a 4% increase in organic sales volume and a small currency benefit for the quarter, driven by selected product line improvements. The ATS segment showed sequential improvement and nominal year-over-year growth for the first time since early fiscal 2023. Electronics and semiconductor markets are stabilizing. Fourth quarter EBITDA rose to $41 million, or 27% of sales, up from $35 million and 24% of sales the previous year, reflecting strong performance despite a down cycle. Annual sales reached a record $2.7 billion, a 2% increase primarily due to a 5% acquisition impact, despite a 3% organic decrease due mainly to the ATS segment. Adjusted operating profit remained comparable at $713 million, and full-year EBITDA increased by 4% to a record $849 million, or 32% of sales.

The paragraph highlights the company's financial performance for the year, emphasizing a strong incremental EBITDA margin of 49% and marking the fourth year of solid growth under the Ascend strategy. GAAP diluted earnings per share were $8.11, with adjusted earnings at $9, slightly down by 1% due to higher interest costs from acquisitions. Despite challenges in certain markets, the company remains confident in its long-term targets. The company generated $492 million in free cash flow, with a conversion rate of 105%, although slightly lower due to increased capital investments. The debt increased due to the Atrion acquisition, but cash was efficiently used for dividends and share repurchases. They ended the year with a strong balance sheet, a leverage ratio of 2.5 times, and met their profit conversion goals for the fourth quarter.

The paragraph discusses the company's positive performance, highlighting its Advanced Technology segment's improvement and strong performance in IPS and MFS segments despite some demand weaknesses. The company closed fiscal 2024 with a strong balance sheet and reinvested in its business, preparing for 2025. Reflecting on the past four years, the company's Ascent strategy leveraged its competitive advantages, such as leadership in niche markets and high recurring revenues. They've added two new competitive advantages by renewing focus on a growth-biased portfolio and expanding into high-growth markets like medical and electronics through organic and acquisitive means. The recent acquisition of Atrium Medical supports this strategy by significantly increasing their addressable market in medical products, contributing to growth and recurring revenue streams in future fiscal years.

The paragraph discusses Nordson's implementation of the NBS Next growth framework, which is credited with driving profitable growth and creating a competitive advantage. The framework's impact is evident in strong fourth-quarter results for the ATS segment, despite a challenging electronic cycle. It highlights that the NBS Next framework is integral to Nordson's operations, improving performance metrics like on-time delivery and product quality. At Nordson's Investor Day, future performance targets for 2025 to 2029 were announced, aiming for 6% to 8% average annual revenue growth and 10% to 12% adjusted EPS growth. The paragraph concludes with a note on entering 2025 with cautious expectations due to global economic uncertainties affecting customer spending.

The paragraph discusses the outlook for different segments of the company's business. In the Industrial Precision Solutions segment, there is optimism due to current order trends, but near-term large capital investments are expected to slow down, particularly affecting polymer processing due to decreased investment in recycling. European agriculture markets have stabilized, but significant growth is not anticipated. In the Medical and Fluid Solutions segment, cautious inventory purchase patterns from medical device customers are impacting the interventional solutions product line, though some growth is expected from fluid components and the Atrion acquisition in 2025. Electronics sales are improving, but significant capital spending increases are not expected, especially in semiconductor applications, due to cautious customer purchasing. Financially, the company begins fiscal 2025 with a backlog of $580 million, reflecting a return to normal levels.

The company anticipates a sales increase of 2% to 7% for fiscal 2025, with adjusted earnings growth expected between neutral to 8% per share. They estimate an effective tax rate of 19% to 21%, capital expenditures between $50 and $60 million, and interest expenses of $90 to $100 million. The guidance assumes a 1.5% negative impact from foreign exchange rates, no significant recovery in electronics or agricultural markets, and a 6% growth contribution from the Atrion acquisition. Expected modest growth in the first fiscal quarter of 2025 predicts sales between $615 and $655 million and earnings of $1.95 to $2.15 per share. The company emphasizes operational excellence, cash flow, and reinvestment while returning value to shareholders. The discussion then opens for questions.

The paragraph discusses the current market outlook and growth potential for a company. Sundaram Nagarajan highlights that consumer non-durable end markets in the IPS segment have a steady outlook with high recurring revenue. However, large capital investments are expected to be muted, especially in polymer processing and recycling, following two years of high sales. The automotive industry is also experiencing slowness. In the ICS segment, the agricultural business in Europe is stabilizing. The MFS segment is experiencing modest growth in the fluid components business, with some exposure to the biopharma sector. Dan is expected to provide further guidance on these observations.

The paragraph discusses the current state of various business segments. The order entry has seen a slight decline, but the fluid dispense business remains steady, offsetting the pressure from the struggling medical interventional segment. The latter is affected by conservative OEM supply chain practices, as it constitutes 47% of the segment's revenue. However, the long-term pipeline and Atrium acquisition offer growth potential. The APS business segment sees steady improvement, but order patterns are inconsistent due to geopolitical factors. The agricultural business has stabilized, though it faces one more tough quarter due to backlog clearance from the previous year.

In the article's fourteenth paragraph, the speaker discusses the market outlook, noting expectations for flat organic growth over the year. They highlight that Q1 is usually the weakest quarter due to historical sales seasonality, accounting for around 23% of annual sales when excluding acquisitions. This year, Q1 may be slightly weaker than usual because the Chinese New Year falls in the first quarter instead of the second, affecting production timings. On the Electra side, Mike Halloran inquires about any unusual activity in the fourth quarter possibly due to project delays being resolved. Daniel Hopgood and Sundaram Nagarajan hint at strong customer conversations regarding upcoming projects, suggesting slight improvements in the electronics sector despite caution on capital aspects.

The paragraph discusses the company's recent positive developments, highlighting that conversations are starting to translate into order entries, leading to significant growth in the fourth quarter, the first such occurrence in a long time. Although capital spending has not increased significantly, there's cautious optimism about modest growth for ATS in 2025 due to positive order trends. Mike Halloran confirms that the fourth quarter was normal. The backlog, including a $35 million contribution from the Atrion acquisition, stands at $580 million, or $550 million without it. Additionally, it's noted that the company's recurring revenue, which now exceeds 55%, impacts backlog perceptions. Ben acknowledges the response and mentions the Chinese New Year's impact on Q1.

In the conversation, Daniel Hopgood confirms that the anticipated sales impact of $10 to $20 million remains appropriate and is primarily a matter of timing between the first and second quarters. When asked about reaching the higher end of their full-year guidance, Hopgood explains that this would likely depend on stronger recoveries in key markets like semiconductor and electronics, as well as in general industrial sectors. The conversation then shifts to Christopher Glynn from Oppenheimer, who inquires about reported factory efficiency gains mentioned earlier in the call, seeking more details on this topic.

The paragraph discusses the positive impact of deploying MBS Next on the business's efficiency and product mix, leading to improved on-time delivery. Christopher Glynn questions the revenue and EBITDA margins of Atrium, to which Sundaram Nagarajan responds positively about the integration and synergy progress. Daniel Hopgood adds that the acquisition is performing well and meeting expectations, with Atrium's EBITDA margins in the upper 20% range and a path towards achieving Nordson-like margins.

The paragraph discusses the strategic repositioning and growth plans of a business during a downturn. The company has slightly higher DNA due to acquisition accounting but is seeing sustained margin improvement and a comfortable EBITDA. A new growth framework, MBS Next, has helped improve business mix and leverage, with a notable 27% EBITDA at the beginning of a cycle. The company is positioning itself for growth with a new manufacturing and distribution location in India, supporting a China plus one strategy, set to impact growth from 2025. Additionally, investments in new products and innovation have been made, leading to promising industry recognition for some products.

The paragraph is part of a conversation during a financial results call, where Matt Summerville from DA Davidson asks about the monthly order cadence experienced in the fiscal first quarter and any trends noticed post-election. Daniel Hopgood responds, stating that their guidance reflects current conditions, with a 4% organic growth seen in Q4 expected to be sustainable. While there hasn't been a significant uptick, ongoing support for nominal growth is observed. He mentions that they've returned to a normalized backlog compared to the previous year. Post-election, no discernible shifts have been noted yet, as customers are waiting to see how things develop. The uncertainty in the near-term outlook is expected to stabilize as circumstances evolve.

Sundaram Nagarajan discusses the company's conservative approach to navigating an uncertain macro environment, emphasizing their strong operating model, direct-to-customer strategy, and diversified end markets. He highlights the positive outlook for EBITDA margin conversion in 2024, expressing confidence in the company’s ability to operate well under various conditions. Matt Summerville inquires about the expectations for organic growth in ATS and other segments for fiscal 2025. Daniel Hopgood responds that they typically do not provide specific guidance at the segment level.

The paragraph discusses a financial outlook, mentioning stable performance in the IPS business and some variability in the medical sector. The company's guidance anticipates zero organic growth year-over-year, with growth stemming from the Atrion acquisition, slightly offset by foreign exchange influences. A modest ongoing growth in ATS is expected. In a subsequent conversation, Jeff Hammond from KeyBanc Capital Markets asks about backlog normalization after it was elevated during COVID. Sundaram Nagarajan responds that most of the backlog normalization has occurred in large system businesses, specifically highlighting reductions in backlog in plastic processing and industrial coatings sectors.

The paragraph discusses several challenges and dynamics affecting a business, particularly in the adhesive and polymer processing sectors. It highlights the normalization of large system orders in the adhesive business, tough comparisons in polymer processing due to prior record sales, reduced investments in recycling in Europe and virgin polymer production in Asia, especially China. This business, which previously contributed significantly to growth, is now facing a downturn due to cyclical impacts. The conversation also touches on backlog normalization, noting an increase in the parts versus systems mix due to acquisitions and organic growth, with the current percentage being around 57%. Additionally, there's a mention of inventory destocking and ongoing supply chain adjustments, indicating they are still in progress.

The paragraph discusses the outlook for the interventional business, noting that although there has been some return to normalcy, there is still some time needed to fully recover. The company is optimistic about long-term growth prospects due to a strong project pipeline and has seen some sectors return to normal growth. Timing the recovery is challenging but they are working through it with customers. Sundaram Nagarajan adds that they have been investing in new growth areas using their NBS Next framework over the last 12-18 months, which will benefit them as they emerge from the current stock situation. The paragraph ends with a transition to a conversation with Andrew Buscaglia from BNP.

The paragraph is part of a discussion about the company's full-year outlook, focusing on how they plan to achieve margin expansion despite low or no organic growth. Daniel Hopgood explains that the company expects to improve margins through restructuring actions aimed at cost reduction, decreasing debt to create financial leverage, and benefiting from a year-over-year improvement in the tax rate. These strategies are part of their performance improvement plan, including efforts categorized under MFS Next, which is likely a company initiative to enhance operational efficiency.

The paragraph primarily features a discussion between Andrew Buscaglia, Daniel Hopgood, and Sundaram Nagarajan about the MFS business's performance. They discuss potential margin changes, with Daniel noting that costs and savings might lead to improvement later in the year. Sundaram mentions that integration is progressing well, with early adjustments showing promise. The conversation then shifts as Walt Liptak inquires about orders and recovery trends, particularly concerning industrial companies with exposure to medical and semiconductor sectors, noting they often receive early or blanket orders.

The paragraph discusses the uncertainty around economic recovery and planning, with insights from Daniel Hopgood and Sundaram Nagarajan. They note that the current outlook is supported by present observations, but there's hesitance and cautious investments due to uncertainty. They anticipate a clearer understanding of the year's economic trajectory by the end of Q1 and Q2. While they acknowledge concerns in areas like large system orders, they remain optimistic about growth in other areas like ATS. The discussion also briefly touches on interest rates decreasing and the impact of the recent election.

The paragraph is a discussion between Sundaram Nagarajan and Walt Liptak regarding the uncertainties impacting customer hesitancy in investments, particularly in areas like EV batteries and solar, due to factors like tariffs and the geopolitical environment. Nagarajan highlights the high performance of their ATS business, noting its 27% EBITDA margin as best in class among peers. This business requires significant investment in new products and technologies, typically 14% to 15% of revenues, to maintain a competitive edge and support customer needs.

The paragraph discusses the company's focus on growing the business rather than expanding EBITDA margins, highlighting a consistent preference for top-line growth. The speaker acknowledges a satisfactory EBITDA margin of around 27% and expresses intent to maintain this while pursuing growth opportunities. Walt Liptak thanks the speaker, and the operator concludes the call, with Sundaram Nagarajan expressing optimism about the company's strategy and wishing participants a happy holiday season as they approach fiscal 2025.

This summary was generated with AI and may contain some inaccuracies.