# Nordson (NDSN) Financial Model Free Excel 3-statement financial model and company analysis for Nordson. - Canonical: https://finamodel.com/companies/nordson - Industry: Industrial Equipment - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/NDSN.xlsx ## Model Purpose This model provides a comprehensive equity valuation and scenario planning tool for Nordson Corporation, allowing an equity research analyst to forecast the earnings accretion of recent acquisitions and evaluate the company's ability to achieve its Ascend strategy targets of mid-single-digit organic growth and sustained 30-plus percent EBITDA margins. ## Company Overview - Nordson Corporation engineers, manufactures, and markets differentiated products and systems used for precision dispensing, applying, and controlling of adhesives, coatings, polymers, sealants, and biomaterials. The company also provides testing and inspection equipment, as well as fluid management solutions for medical and industrial applications. - **Business segments:** Industrial Precision Solutions (approximately 50-55% of revenue), Medical and Fluid Solutions (approximately 20-25% of revenue), and Advanced Technology Solutions (approximately 20-25% of revenue). - **Key geographies:** The company operates globally, with the United States representing the largest single market, followed by the Asia Pacific region and Europe. - **Business model type:** Asset-light, highly engineered industrial technology model with a significant recurring revenue component derived from aftermarket parts, consumables, and service. - **Competitive position:** Nordson holds leading market shares in niche precision dispensing and fluid management markets, benefiting from high switching costs, proprietary technology, and a direct global sales and service network. - **Recent major events:** The company acquired the ARAG Group in August 2023 to enter the precision agriculture market. In August 2024, Nordson acquired Atrion Corporation for approximately $800 million to expand its medical infusion and cardiovascular portfolio. In September 2025, the company divested its medical contract manufacturing business to streamline operations. ## Revenue Deep Dive ### Industrial Precision Solutions (IPS) - **Segment name:** Industrial Precision Solutions - **Revenue driver formula:** (Base Systems Volume x Average Selling Price) + (Installed Base x Aftermarket Attachment Rate x Consumables Price) + Acquired Revenue (ARAG) - **Historical growth rate:** 4-7% CAGR, heavily supplemented by recent acquisitions. - **Key growth levers and headwinds:** Growth is driven by consumer non-durables packaging demand, polymer processing upgrades, and the adoption of precision agriculture technologies (via ARAG). Headwinds include cyclical industrial capital expenditure slowdowns. - **Pricing dynamics:** High pricing power due to the mission-critical nature of dispensing equipment where the cost of failure far exceeds the cost of the equipment. - **Revenue recognition notes:** Primarily recognised at a point in time upon shipment or delivery of systems and spare parts. - **Seasonality:** Relatively balanced, though fiscal fourth quarter (ending October) is often the strongest due to year-end capital budget flushes by industrial customers. ### Medical and Fluid Solutions (MFS) - **Segment name:** Medical and Fluid Solutions - **Revenue driver formula:** (Medical Device Components Volume x Unit Price) + (Fluid Management Systems Volume x Unit Price) + Acquired Revenue (Atrion) - Divested Revenue (Contract Manufacturing) - **Historical growth rate:** 3-6% organic CAGR, with significant step-ups from M&A. - **Key growth levers and headwinds:** Driven by secular growth in minimally invasive surgeries, biopharma production, and cardiovascular therapies. The recent divestiture of the contract manufacturing business creates a near-term revenue headwind but improves the segment margin profile. - **Pricing dynamics:** Contractual pricing with medical OEMs, often featuring volume-based tiering but generally stable due to FDA validation requirements. - **Revenue recognition notes:** Point-in-time recognition for components and consumables. - **Seasonality:** Minimal seasonality; driven more by medical procedure volumes and OEM inventory stocking cycles. ### Advanced Technology Solutions (ATS) - **Segment name:** Advanced Technology Solutions - **Revenue driver formula:** (Semiconductor/Electronics Systems Volume x Average Selling Price) + (Test & Inspection Units x Average Selling Price) - **Historical growth rate:** 5-8% CAGR, highly cyclical. - **Key growth levers and headwinds:** Tied to the semiconductor capital equipment cycle, electronics assembly demand, and advanced packaging trends. Headwinds include cyclical downturns in consumer electronics and memory markets. - **Pricing dynamics:** Highly competitive but value-driven, based on throughput speed and inspection accuracy. - **Revenue recognition notes:** System sales are recognised upon delivery or customer acceptance, depending on the complexity of the installation. - **Seasonality:** Can be lumpy based on the timing of large semiconductor fabrication plant build-outs. ## Cost Structure ### Variable Costs / COGS - **Line-by-line breakdown:** Direct materials (metals, electronic components, plastics), direct manufacturing labour, manufacturing overhead, and freight costs. - **Gross margin range:** 54.0% to 55.5% (FY2025 gross margin was 55.2%). - **Key input costs and commodity exposures:** Exposure to steel, aluminium, and specialised electronic components. - **How COGS scales with revenue:** High gross margins indicate strong pricing power and a favourable mix of high-margin aftermarket parts. COGS scales relatively linearly, though volume leverage exists on fixed manufacturing overhead. ### Operating Expenses - **R&D:** Typically runs at 2.5% to 3.5% of revenue, focused on proprietary dispensing technology, optical sensors, and medical device engineering. Costs are generally expensed as incurred. - **SG&A:** Represents the largest operating expense category, typically 20% to 23% of revenue. It includes a large direct global sales force, marketing, and corporate administrative costs. - **Depreciation & Amortisation:** Significant amortisation expense due to serial acquisitions. Amortisation of acquired intangibles is a major non-cash charge that management excludes from adjusted earnings. - **Stock-Based Compensation:** Typically 1% to 2% of revenue, standard for a mature industrial technology firm. - **Restructuring / one-time charges:** Frequent but moderate in size, usually related to footprint consolidation following acquisitions or the implementation of the Ascend strategy. ### Margin Profile - **Gross margin:** 54.0% to 55.5%. - **EBITDA margin:** 31.0% to 34.0% (FY2025 EBITDA margin was 32.2%). - **Operating margin:** 24.0% to 26.0% (GAAP), higher on an adjusted basis. - **Net margin:** 16.0% to 18.0%. - **Margin trend:** Expanding. The company's Ascend strategy targets sustained EBITDA margins above 30%, which it has successfully achieved through product mix optimisation and strategic pricing. ## Balance Sheet Structure - **Total assets:** Approximately $4.5 billion to $5.5 billion, heavily weighted towards intangibles. - **Key asset categories:** Goodwill, intangible assets, inventory, and accounts receivable. - **Goodwill & intangibles as % of total assets:** Very high (typically 50% to 60% of total assets) due to the acquisitive growth strategy (ARAG, Atrion, CyberOptics). - **Working capital profile:** - **Days Sales Outstanding (DSO):** 55 to 65 days. - **Days Inventory Outstanding (DIO):** 80 to 100 days (inventory levels are kept relatively high to ensure rapid fulfilment of mission-critical spare parts). - **Days Payable Outstanding (DPO):** 40 to 50 days. - **Net working capital as % of revenue:** Typically 15% to 20%. - **Is working capital positive or negative?** Positive. The company requires working capital to fund inventory for its global direct sales and service model. - **PP&E:** Relatively light (10% to 15% of assets), consisting of light manufacturing and assembly facilities, testing labs, and administrative offices. - **Right-of-use assets / operating leases:** Material but not dominant, primarily related to regional sales and service offices and some manufacturing sites. ## Capital Expenditure & Investment - **Capex as % of revenue:** 1.5% to 2.5% (highly asset-light business model). - **Maintenance capex vs. growth capex:** Approximately 60% maintenance and 40% growth (IT systems, facility upgrades, and manufacturing automation). - **Major capex programmes underway or planned:** Investments in enterprise resource planning systems and integration of recently acquired manufacturing footprints. - **Capitalised software / development costs if material:** Minimal relative to total revenue. - **M&A pattern:** Serial acquirer utilizing a mix of bolt-on and transformational deals. Recent large deals include ARAG (precision agriculture) and Atrion (medical). - **Typical acquisition multiple paid:** 13x to 16x EBITDA (e.g., Atrion was acquired for 15x estimated 2024 EBITDA inclusive of synergies). ## Debt & Capital Structure - **Total debt:** Approximately $1.2 billion to $1.5 billion. - **Debt/EBITDA ratio:** Typically managed between 1.0x and 2.5x. The company deleverages rapidly post-acquisition due to strong free cash flow. - **Credit rating:** Investment grade. - **Key debt instruments:** 364-Day Term Loan Facility, $350 million 5.600% Notes due 2028, and $500 million 5.800% Notes due 2033. - **Maturity profile:** Well-laddered, with the next major bond maturities in 2028 and 2033. - **Interest rate profile:** Predominantly fixed via the 2028 and 2033 Notes, with some floating exposure on term loans and revolving credit facilities. - **Covenants:** Standard leverage and interest coverage ratios; the company operates with significant headroom. - **Share repurchase programme:** Active. The company repurchased over $300 million in common shares in FY2025. - **Dividend policy:** The company is a Dividend Aristocrat with 62 consecutive years of dividend increases. The payout ratio is typically 25% to 30% of net income. ## Cash Flow Characteristics - **Operating cash flow conversion:** Exceptionally strong, typically 115% to 130% of net income. - **Free cash flow margin:** 20% to 24% of revenue (FY2025 FCF was $661 million, a 136% conversion rate of net income). - **Major non-cash items that bridge net income to OCF:** Depreciation, heavy amortisation of acquired intangibles, and stock-based compensation. - **Working capital cash flow impact:** Can be a use of cash during periods of rapid organic growth or supply chain normalisation, but generally stable. - **Capex intensity:** Very low, driving the high free cash flow conversion. - **Cash tax rate vs. GAAP effective tax rate:** Cash taxes are generally aligned with the GAAP effective tax rate (typically 19% to 22%), though timing differences arise from amortisation of intangibles. ## Sheet Structure 1. **Assumptions:** Hardcoded inputs for macroeconomic drivers, segment growth rates, margin targets, working capital days, capex percentages, and tax rates. 2. **Revenue & Segment Build:** Detailed build for Industrial Precision Solutions, Medical and Fluid Solutions, and Advanced Technology Solutions. Includes organic growth, M&A contributions, and divestiture adjustments. 3. **Income Statement:** Consolidated P&L from revenue down to net income and EPS. Includes adjustments for non-GAAP metrics (adjusted EBITDA, adjusted EPS). 4. **Working Capital:** Schedules for accounts receivable, inventory, accounts payable, and other current assets/liabilities driven by DSO, DIO, and DPO. 5. **Depreciation & Amortisation:** Waterfall schedules for existing PP&E, new capex, and heavy amortisation schedules for acquired intangibles. 6. **Debt Schedule:** Tranche-by-tranche tracking of the 2028 Notes, 2033 Notes, term loans, and revolving credit facility. Calculates interest expense and tracks mandatory repayments. 7. **Balance Sheet:** Consolidated assets, liabilities, and shareholders' equity. Must balance perfectly in all periods. 8. **Cash Flow Statement:** Indirect method starting from net income, adjusting for non-cash items, working capital changes, capex, debt issuance/repayment, dividends, and share repurchases. 9. **Valuation (DCF):** Unlevered free cash flow build, WACC calculation, terminal value calculation, and implied share price. 10. **Outputs & Charts:** Summary dashboard showing revenue growth, EBITDA margins, FCF conversion, and EPS trends. ## Key Financial Relationships 1. `IPS Revenue = Prior Year IPS Revenue x (1 + IPS Organic Growth Rate + IPS M&A Impact + FX Impact)` 2. `MFS Revenue = Prior Year MFS Revenue x (1 + MFS Organic Growth Rate + Atrion M&A Impact - Contract Manufacturing Divestiture Impact + FX Impact)` 3. `ATS Revenue = Prior Year ATS Revenue x (1 + ATS Organic Growth Rate + FX Impact)` 4. `Total Sales = IPS Revenue + MFS Revenue + ATS Revenue` 5. `Gross Profit = Total Sales x Gross Margin Percentage (Assumed at 54.5% - 55.5%)` 6. `SG&A Expense = Total Sales x SG&A Margin Percentage` 7. `EBITDA = Gross Profit - SG&A Expense - R&D Expense + Depreciation + Amortisation` 8. `Adjusted Net Income = GAAP Net Income + Amortisation of Acquired Intangibles + Restructuring Costs + Acquisition/Integration Costs` 9. `Accounts Receivable = (Total Sales / 365) x DSO` 10. `Inventory = (COGS / 365) x DIO` 11. `Accounts Payable = (COGS / 365) x DPO` 12. `Interest Expense = (Average Balance of 2028 Notes x 5.600%) + (Average Balance of 2033 Notes x 5.800%) + (Average Balance of Term Loans x Floating Rate)` 13. `Free Cash Flow = Cash from Operations - Capital Expenditures` 14. `Dividends Paid = Prior Year Dividends Paid x (1 + Dividend Growth Rate)` 15. `Ending Shares Outstanding = Beginning Shares Outstanding - (Share Repurchase Amount / Average Share Price)` ## Cross-Sheet Dependencies - The **Assumptions** sheet dictates the growth rates and margin profiles used in the **Revenue & Segment Build** and **Income Statement**. - The **Revenue & Segment Build** feeds the top line of the **Income Statement** and drives the activity levels in the **Working Capital** sheet. - The **Income Statement** generates net income, which is the starting point for the **Cash Flow Statement**. - The **Working Capital** sheet calculates changes in operating assets and liabilities, which feed into the operating section of the **Cash Flow Statement**. - The **Depreciation & Amortisation** sheet feeds operating expenses on the **Income Statement** and non-cash add-backs on the **Cash Flow Statement**, while updating PP&E and Intangibles on the **Balance Sheet**. - The **Debt Schedule** calculates interest expense for the **Income Statement** and debt balances for the **Balance Sheet**. A circular reference exists here: interest expense reduces net income, which reduces cash flow, which dictates the need for revolver borrowing, which in turn generates more interest expense. This must be managed with a circularity toggle. - The **Cash Flow Statement** determines the ending cash balance, which links directly to the **Balance Sheet**. ## Sign Convention - **Revenue and Income:** Entered and displayed as positive numbers. - **Expenses and Costs:** Entered as positive numbers in the assumptions and schedules, but subtracted in formulas (e.g., `Gross Profit = Revenue - COGS`). - **Assets:** Positive numbers on the Balance Sheet. - **Liabilities and Equity:** Positive numbers on the Balance Sheet. - **Cash Flow Statement:** Cash inflows are positive. Cash outflows (e.g., capital expenditures, debt repayments, dividends) are negative. - **Working Capital Changes:** An increase in an asset (e.g., inventory) is a negative cash flow. An increase in a liability (e.g., accounts payable) is a positive cash flow. ## Things Most Likely to Go Wrong 1. **M&A and Divestiture Timing:** Failing to properly model the stub periods for the Atrion acquisition (closed August 2024) and the medical contract manufacturing divestiture (closed September 2025) will distort year-over-year organic growth comparisons. 2. **Amortisation Add-Backs:** Nordson has massive amortisation charges due to its acquisition history. Failing to add these back to calculate Adjusted EPS will result in a severe undervaluation of the company's true cash-generating power. 3. **Circularity in Debt Schedule:** The revolver sweep function can cause the model to crash if the circularity toggle is not built correctly. 4. **Segment Margin Disconnect:** Applying a flat corporate margin to all segments ignores the reality that Medical and Fluid Solutions typically commands a different margin profile than Advanced Technology Solutions. 5. **Foreign Exchange Impacts:** Nordson generates significant revenue outside the US. The model must isolate constant-currency organic growth from FX translation effects, which can swing revenue by 2-4% annually. 6. **Free Cash Flow Conversion:** Modelling standard industrial FCF conversion (e.g., 80-90%) will severely underestimate Nordson's cash generation, which routinely exceeds 120% of net income due to low capex and high non-cash amortisation. 7. **Dividend Aristocrat Logic:** The model must force a dividend per share increase every year to reflect the company's 62-year track record, regardless of minor earnings fluctuations. 8. **Backlog Normalisation:** Assuming backlog translates to revenue linearly can be flawed; the model must account for the normalisation of systems backlog post-supply chain disruptions. ## Validation Checks 1. **Gross Margin Band:** Gross margin should remain tightly within the 54.0% to 56.0% range; flag if it deviates. 2. **EBITDA Margin Target:** EBITDA margin should be at or above 30.0% to align with management's Ascend strategy targets. 3. **FCF Conversion:** Free Cash Flow / Net Income must be >1.1x. Flag if it drops below 100%. 4. **Balance Sheet Check:** Total Assets must exactly equal Total Liabilities + Shareholders' Equity in every forecasted period. 5. **Capex Ratio:** Capital expenditures should not exceed 3.0% of total sales. 6. **Debt Servicing:** Interest coverage ratio (EBITDA / Interest Expense) should remain comfortably above 8.0x given the investment-grade profile. 7. **Dividend Growth:** Dividend per share must show positive year-over-year growth in every forecasted period. 8. **Effective Tax Rate:** The effective tax rate should remain between 19.0% and 22.0% absent major statutory changes. ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | IPS Organic Revenue Growth | 4.0 | % | Mid-point of historical cycle and Ascend strategy targets. | | MFS Organic Revenue Growth | 5.0 | % | Reflects secular growth in medical end markets. | | ATS Organic Revenue Growth | 6.0 | % | Reflects long-term semiconductor and electronics growth trends. | | Consolidated Gross Margin | 55.2 | % | Based on actual FY2025 reported gross margin. | | SG&A as % of Sales | 21.5 | % | Aligns with historical averages and recent cost optimisation efforts. | | R&D as % of Sales | 3.0 | % | Consistent with historical run-rate for innovation investments. | | Effective Tax Rate | 20.5 | % | Based on recent historical averages and global tax footprint. | | Days Sales Outstanding (DSO) | 60 | Days | Calculated from recent receivables and sales data. | | Days Inventory Outstanding (DIO) | 90 | Days | Reflects requirement to hold spare parts for global service network. | | Days Payable Outstanding (DPO) | 45 | Days | Standard payment terms with suppliers. | | Capex as % of Sales | 2.0 | % | Reflects the asset-light nature of the business model. | | 2028 Notes Interest Rate | 5.600 | % | Actual coupon rate on the 2028 notes. | | 2033 Notes Interest Rate | 5.800 | % | Actual coupon rate on the 2033 notes. | | Annual Dividend Growth Rate | 5.0 | % | Consistent with the 62-year track record of dividend increases. | | Annual Share Repurchases | 250 | $ Millions | Aligns with recent capital return behaviour and strong FCF generation. | | WACC | 8.5 | % | Standard discount rate for an investment-grade industrial technology firm. | | Terminal Growth Rate | 2.5 | % | Reflects long-term GDP growth plus slight premium for medical/tech exposure. | ## Data Sources & Benchmarks - **SEC Filings:** Nordson's Investor Relations website and the SEC EDGAR database for 10-K, 10-Q, and 8-K filings. - **Key Peers for Benchmarking:** Graco Inc. (GGG), Dover Corporation (DOV), IDEX Corporation (IEX), and Carlisle Companies (CSL). - **Industry Data Sources:** Semiconductor Equipment and Materials International (SEMI) for ATS segment trends; medical device industry reports for MFS segment trends. - **Consensus Estimates:** FactSet, Bloomberg, or Yahoo Finance for near-term revenue and EPS consensus figures. - **Presentations:** Nordson's Investor Day 2024 presentation detailing the Ascend strategy and 2029 financial targets. ## Sources - Nordson Corporation Form 10-K for the fiscal year ended October 31, 2025 (SEC EDGAR). - Nordson Corporation Q4 2025 Earnings Press Release and Webcast Presentation (nordson.com/investors). - Nordson Corporation Investor Day 2024 Presentation. - Press releases regarding the acquisitions of ARAG Group (2023) and Atrion Corporation (2024). - Seeking Alpha Q4 2025 Earnings Call Transcript. --- ## Frequently asked questions ### What products and services does Nordson Corporation offer? Nordson Corporation engineers, manufactures, and markets differentiated products and systems used for precision dispensing, applying, and controlling adhesives, coatings, polymers, sealants, and biomaterials. The company also provides testing and inspection equipment and fluid management solutions for medical and industrial applications across its Industrial Precision, Medical and Fluid, and Advanced Technology Solutions segments. ### How does Nordson Corporation generate its revenue? Nordson operates an asset-light industrial technology model with a significant recurring revenue component derived from aftermarket parts, consumables, and services. The company benefits from leading market shares in niche precision dispensing and fluid management markets, supported by its proprietary technology and direct global sales and service network. ### What are Nordson's key financial growth targets? Nordson aims to achieve mid-single-digit organic growth and sustained 30-plus percent EBITDA margins as part of its Ascend strategy. The financial model forecasts revenue growth at approximately 4.6% to evaluate the company's ability to meet these strategic targets. ### What is Nordson's capital expenditure strategy? Nordson maintains an asset-light business model, with capital expenditures typically ranging from 1.5% to 2.5% of revenue. Approximately 60% of this capex is for maintenance, while 40% supports growth initiatives such as IT systems and manufacturing automation. ### Is there a downloadable financial model available for Nordson Corporation? Yes, a comprehensive Excel financial model for Nordson Corporation is available for download. This model serves as an equity valuation and scenario planning tool, enabling analysts to forecast earnings accretion from acquisitions and evaluate the company's strategic goals. ### Why does Nordson Corporation have a high percentage of goodwill and intangible assets? Nordson's balance sheet is heavily weighted towards goodwill and intangible assets, typically comprising 50% to 60% of total assets. This high proportion is a direct result of the company's acquisitive growth strategy, including recent significant deals like ARAG and Atrion. [Interactive forecast calculator](https://finamodel.com/companies/nordson/forecast)