Nordson Q3 Sales Jump 12 Percent

Nordson(NASDAQ:NDSN) reported fiscal third quarter 2025 results on August 20, 2025, delivering sales of $742 million, up 12% year-over-year, adjusted earnings per share (EPS) of $2.73, up 13% year-over-year, and record quarterly free cash flow of $226 million, with a conversion rate of 180% of net income. For clarity, fiscal Q3 2025 ended July 31, 2025. Key strategic developments included strong double-digit organic growth in the Advanced Technology Solutions (ATS) segment, early accretion from the Atrion acquisition, and initiation of an $800 million repurchase authorization. The following analysis dissects operational execution, balance sheet optimization, and competitive positioning that shape Nordson’s long-term thesis.

Free cash flow enables Nordson debt reduction

Nordson generated $226 million in free cash flow, topping 180% of quarterly net income and lifting the year-to-date cash flow conversion rate to 140%. Net debt fell over $100 million sequentially to about $2 billion, while leverage improved from 2.5x to 2.2x EBITDA from the start to the end of fiscal Q3 2025.

"our free cash flow of $226 million and cash flow conversion of 180% of net income. This represents record quarterly free cash flow and was driven by a focus on sustainable working capital improvements. We use this cash to reduce debt, repurchase shares, and return dividends to the shareholders, all the while continuing to invest in the company."
— Sundaram Nagarajan, President and Chief Executive Officer

Consistently high cash generation enables simultaneous investment, shareholder returns, and deleveraging, enhancing Nordson’s flexibility for both organic and acquisition-led growth.

ATS segment drives double-digit growth for Nordson

Advanced Technology Solutions delivered sales of $171 million, up 17% year-over-year, with 15% organic growth driven by demand in electronics dispense products, optical sensors, and measurement/control businesses, especially across Asia-Pacific. EBITDA margin improved from 21% in fiscal Q3 2024 to 24% in fiscal Q3 2025 on a 42% incremental conversion rate.

"The 15% organic sales increase was driven by double-digit growth in electronics dispense product lines, driven by demand across Asia Pacific, as well as growth in our optical sensors and our measurement and controls businesses. This was partially offset by weakness in X-ray inspection system sales during the quarter. Third quarter EBITDA was $42 million or 24% of sales, which represents an increase of 35% compared to the prior year third quarter EBITDA of $31 million or 21% of sales. The improvement in EBITDA margin was driven by strong operational execution on sales growth, representing a 42% conversion rate on incremental sales volume."
— Daniel Hopgood, Executive Vice President and Chief Financial Officer

ATS’s sustained outperformance, operational leverage, and exposure to secular electronic and semiconductor trends underpin Nordson’s long-term earnings power despite cyclical volatility in capital equipment markets.

Atrion acquisition accelerates EPS accretion for Nordson

The Atrion acquisition, completed in August 2024, contributed $52 million in revenue in the Medical and Fluid Solutions segment and delivered 34% year-over-year EBITDA growth for that segment. Management confirmed Atrion’s positive earnings accretion arrived a full year earlier than anticipated due to swift integration and commercial momentum.

"we are very pleased with the integration of the Atrion acquisition, which contributed to the adjusted earnings per share. That is a year earlier than originally expected. We knew there were opportunities for operational efficiency when we acquired this business, and the team's holistic implementation of NBS Next has accelerated those benefits."
— Sundaram Nagarajan, President and Chief Executive Officer

Early accretion from Atrion demonstrates Nordson’s disciplined M&A execution and ability to rapidly realize operational synergies from strategic acquisitions.

Looking Ahead

Management expects full-year fiscal 2025 sales to finish slightly below the midpoint of guidance, reflecting the divestiture of the contract manufacturing medical business, and adjusted EPS (non-GAAP) to finish slightly above the midpoint of the range on continued operational execution and margin resilience. The transaction to divest the medical contract manufacturing business is on track to close in fiscal Q4 2025. Cost restructuring actions are expected to drive more than $15 million in annual benefits by 2026, while ATS faces notably tougher year-over-year comparisons in fiscal Q4 2025, but continues to benefit from robust underlying demand trends in high-reliability electronics and semiconductor markets. No additional updates to full-year guidance were provided beyond these specifics.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.