Good day, ladies and gentlemen, and welcome to the Nordson Corporation webcast for first quarter fiscal year 2017 conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. If anyone should require operator assistance, please press star then zero on your touch-tone telephone. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Senior Director Jim Jaye. You may begin.
Thank you, Leanne. This is Jim Jaye, Senior Director of Investor Relations and Communications for Nordson. I'm here with Mike Hilton, our President and CEO, Greg Thaxton, our Senior Vice President and CFO, and Jeff Pembroke, Corporate Vice President within our Advanced Technology segment. We welcome you to our conference call today, Tuesday, February 21st, 2017, to report Nordson's FY 17 first quarter results and our FY 17 second quarter outlook. Our conference call is being broadcast live on our webpage at nordson.com/investors and will be available there for 14 days. There will be a telephone replay of our conference call available until February 29th, 2017, which can be accessed by calling 404-573-406. You will need to reference ID number 64914948.
During this conference call, forward-looking statements may be made regarding our future performance based on Nordson's current expectations. These statements may involve a number of risks, uncertainties, and other factors, as discussed in the company's filings with the Securities and Exchange Commission, that could cause actual results to differ. After our remarks on the quarter, we'll provide some comments on our most recent acquisitions, as well on yesterday's announcement on our agreement to acquire Vention Medical's Advanced Technologies business. We'll then be happy to take your questions. With that, I'll turn the call over to Mike.
Thank you, Jim. Good morning, everyone. Our global team delivered very solid performance this quarter. We generated organic growth of 10% compared to the prior year, with all three segments contributing to the growth. This marks the 11th time in the last 12 quarters that Nordson has delivered organic growth compared to the prior year. Diverse end markets, innovative products, new applications, and the best customer experience are continuing to drive our success. We leveraged the increased volume to drive significant improvement in operating margin and earnings per share compared to the first quarter a year ago. Our ongoing continuous improvement efforts are aiding our results as well. We also continue to generate strong levels of free cash, and we executed on our capital deployment strategy, where we distributed approximately $50 million in dividends and completed one acquisition during the first quarter.
Two other acquisitions closed during the first few weeks of this quarter. As Jim noted, we were very happy to announce an agreement to acquire Vention Medical's Advanced Technologies business. This transaction gives us real scale, among many other benefits, in one of our fastest-growing and highest-performing product lines. We'll provide some additional detail on Vention and the other recent transactions later in the call. All four of these deals are aligned with our strategy and should provide excellent opportunities for profitable growth. Looking ahead to our second quarter, we're forecasting solid organic growth at the midpoint of our outlook. This outlook is based on current backlog, order rates, project activity, and in comparison to a very robust quarter of organic growth a year ago. I'll speak more about our outlook, current business trends, and our recent acquisitions in a few moments.
First, I'll turn the call over to Greg to provide more detailed commentary on our current results and our second quarter guidance.
Thank you, Mike, and good morning to everyone. Regarding first quarter results, sales were $407 million, an increase of 10% over the prior year's first quarter. This change in sales included a 10% increase in organic volume, a 1% increase related to the first-year effect of acquisitions, and a 1% decrease related to the unfavorable effects of currency translation compared to the prior year's first quarter. Looking at sales performance for the quarter by segment, within the Adhesive Dispensing segment, organic sales volume increased 3% as compared to the prior year first quarter, offset by 1% negative impact related to currency translation. This is solid growth against a challenging comparison to the prior year first quarter, where organic growth was 11% in this segment. Our product assembly and rigid packaging product lines drove the growth in the current quarter.
On a geographic basis, Asia Pacific, the Americas, and Japan were strongest. Sales volume in the Advanced Technology segment increased 25% over the prior year first quarter, inclusive of a 23% increase in organic volume and a 2% increase related to the first year effect of the LinkTech and ACE acquisitions. The growth was offset by 2% negative impact related to currency translation. All product lines and geographies in the segment delivered excellent organic growth, most by double digits, with performance aided in part by comparison to a softer first quarter in some end markets a year ago. Organic sales volume in the Industrial Coating segment increased 8% compared to the first quarter a year ago, offset by a 2% negative impact related to currency translation.
Growth was strong in nearly all regions and was led by demand for our cold material dispensing, powder coating, and UV curing product lines. Gross margin for the total company in the first quarter was 55%, a two percentage point improvement compared to the prior year first quarter, driven by volume leverage and favorable mix. Operating profit in the quarter was $76 million, and operating margin was 19%, a five percentage point improvement over the first quarter a year ago. Incremental operating margin on the increased volume was 68%. Within the Adhesive Dispensing segment, reported operating margin was 26% in the first quarter, an improvement of one percentage point compared to the same period a year ago. Within the Advanced Technology segment, reported operating margin was 18% in the first quarter, an increase of 11 percentage points over the same period a year ago.
Within the Industrial Coating segment, reported operating margin was 13% in the first quarter, an improvement of five percentage points over the same period a year ago. This strong performance overall, given the seasonally lower first quarter volume that is typical for all three of our segments. Volume leverage, favorable mix, and continuous improvement initiatives enabled all three segments to deliver operating margin improvement. For the company, net income for the quarter was $50 million. GAAP diluted earnings per share were $0.86, 19% higher than last year's first quarter. We have included an earnings per share reconciliation schedule in our press release to reconcile between GAAP earnings and normalized earnings per share. On a normalized basis, EPS in the current quarter represents a 41% increase over the prior year normalized EPS.
The first quarter's EBITDA was $94 million, and cash flow from operations was $78 million. Free cash flow before dividends was $71 million, reflecting cash conversion of 143% of net income. We've included a table with our press release reconciling net income to free cash flow before dividends. In terms of capital allocation priorities, as Mike mentioned, we continued our balanced approach, distributing approximately $15 million in dividends to shareholders during the quarter, and we've been active on the acquisition front. At the end of the first quarter, our net debt to EBITDA was 1.8x trailing twelve-month EBITDA, down from 2x at the end of fiscal 2016, and 2.8x at the end of fiscal 2015.
I'll now move on to comments regarding our outlook for the second quarter of FY 2017. As we typically do, we provided our most recent order data, both on a segment and geographic basis, with our press release. These orders are for the latest 12 weeks, as compared to the 12 weeks of the prior year, on a currency-neutral basis, and with acquisitions that closed prior to the end of the first quarter of 2017 included in both years. For the 12 weeks ending February 12, 2017, order rates are up 7% as compared to the same 12 weeks in the prior year. Within the Adhesive Dispensing segment, the latest 12-week orders are down 1% as compared to the same period in the prior year. Positive order rates in packaging and product assembly were offset by softness in other product lines.
Geographically, positive orders in the Americas were offset by flat to slightly down rates in other regions. Timing of larger dollar system orders can have an effect on order rates, and for most of this latest 12-week period, order rates in the Adhesive segment have been up mid to high single digits over the same periods a year ago. In the Advanced Technology segment, order rates for the latest 12 weeks are up 15% as compared to the prior year. These order rates reflect strong demand for automated and semi-automated dispensing systems, test and inspection systems, and surface treatment systems for electronics end markets. Order rates were up in all geographies. Within the Industrial Coating segment, the latest 12-week order rates are up 14%. Nearly all product lines and geographies were positive.
Backlog at January 31st, 2017 was approximately $308 million, an increase of 24% compared to the prior year, and inclusive of 23% organic growth and 1% growth due to acquisitions. Backlog amounts are calculated at January 31, 2017 exchange rates and include acquisitions that closed prior to the end of the first quarter of 2017. With this backdrop, we're forecasting sales to increase in the range of 3%-7% as compared to the second quarter a year ago. The sales forecast does include acquisitions that have closed but does not include the Vention AT acquisition, which has not yet closed.
This range is inclusive of an increase in organic volume growth of 3%-7%, 2% growth from the first year effect of acquisitions, and a negative currency impact of 2% based on current exchange rates. At the midpoint of our sales forecast, we expect second quarter gross margin to be approximately 56% and operating margin to be approximately 24%. We're estimating second quarter interest expense of about $6 million and an effective tax rate of approximately 29%, resulting in second quarter forecasted GAAP diluted earnings per share in the range of $1.21-$1.33 per share.
In addition to the second quarter outlook, the following full-year updates may be helpful for modeling purposes. For our effective tax rate, we're forecasting the full year rate to be about 29% based on current tax law and excluding discrete items. For capital spending in 2017, we're forecasting normal maintenance capital spending to be approximately $50 million.
Thank you, Greg. Again, I want to thank our team for delivering another strong quarter where sales and EPS were first quarter records for Nordson. Our second quarter outlook is also very positive, and we're forecasting good organic growth against a very strong period a year ago. We'd now like to spend some time highlighting the three recent acquisitions we have closed since the first of the year and the agreement we have entered into to purchase the advanced technology business of Vention Medical. A slide deck providing additional detail on these transactions is available on our investor website at nordson.com. We're excited about all of these additions to the portfolio and the profitable growth opportunities we believe they bring. All four will become part of our Advanced Technologies segment, further balancing the business around less cyclical end markets.
On January 3rd, we closed on the purchase of the ACE Production Technologies. ACE is a U.S.-based manufacturer of selective soldering systems used in a variety of automotive and industrial electronics assembly applications. ACE technology is highly complementary to Nordson's existing conformal coating and optical inspection solutions, and their products are often sold to the same set of customers. On February sixteenth, we announced the purchase of InterSelect, a European-based provider with the same type of technology as ACE. Together, these two properties will give us a new platform for growth within the electronics manufacturing space and further diversify our product offering. Combined annual revenue of the two businesses is approximately $12 million, with EBITDA margins in the mid-teens. We expect future performance of these businesses will benefit from volume leverage and operational improvements from the Nordson Business System.
Regarding our other recent transaction announcements on Plas-Pak and the advanced technology business of Vention Medical, let me turn the call over to Jeff Pembroke, Corporate Vice President within Nordson's Advanced Technology segment.
Thank you, Mike. We're very pleased with the acquisition of Plas-Pak Industries, which we announced on February first. Plas-Pak expands and diversifies Nordson's offering of single-use dispensing syringes, cartridges, and related components. Plas-Pak's recurring revenue model, proprietary technology, and low dollar cost, high value add selling proposition are complementary and consistent with our existing Nordson EFD product line. Plas-Pak strengthens Nordson EFD's position in select industrial end markets while providing access to a rapidly growing animal health market and broader exposure to the DIY pesticide and dental markets. The company has averaged high single-digit annual revenue growth over the last five years and had 2016 revenues of approximately $28 million and EBITDA margins slightly higher than Nordson's 2016 margin. We expect to leverage Nordson's global footprint to accelerate Plas-Pak's growth beyond its current strong presence in North America.
As announced in a press release yesterday, we've entered an agreement to acquire the advanced technologies business of Vention Medical, also known as Vention AT. This is a great acquisition for our customers, shareholders, and employees. Vention AT is a premium quality, highly complementary business that immediately adds significant scale and differentiation to our existing Nordson MEDICAL platform. It also establishes Nordson as a leading designer, developer, and manufacturer of minimally invasive interventional delivery devices, balloons, catheters, and advanced components for the global medical technology market. This transaction marks a major step forward in realizing our vision to become the premier solution provider of highly engineered, single-use components and delivery devices to leading medical device OEMs and emerging innovators around the world. Vention AT brings many complementary capabilities to our existing Nordson MEDICAL offering, such as complex extrusion, balloon and catheter manufacturing, Nitinol forming and other specialty material expertise.
They have one of the largest design and development teams in the industry, which provide full service solutions to customers from concept design and prototyping, quality and regulatory support to finish device assembly, supporting some of the most complex and innovative interventional and advanced surgical procedures performed in health care today. Vention AT also strengthens and expands our relationships with medical device OEM customers, where we will now be able to provide a broader array of solutions across a wider range of high growth therapeutic areas such as cardiovascular, electrophysiology, peripheral vascular, urology, and neurovascular, among others. Finally, the acquisition clearly aligns with the medical growth strategy we have previously articulated and follows the other successful acquisitions we have made since 2010 to build our current Nordson MEDICAL platform, including Value Plastics, Micromedics, LinkTech Quick Couplings, and Avalon Laboratories.
We see Vention AT as an ideal complement to our current offering, which includes single-use fluid management components, biomaterial delivery devices, and high-end cannula and tubing. We estimate the total addressable market for the combination of Nordson MEDICAL and Vention AT to be in excess of $4 billion and growing at a high single digit, low double-digit rate. We expect the Vention AT transaction to close by the end of our second quarter. We look forward to bringing our combined capabilities to the many leading medical device OEM customers we currently share and expanding our reach to new customers. With that, I'll now turn the call over to Greg to address additional financial aspects of these acquisitions.
Thank you, Jeff. As with the Plas-Pak acquisition, we expect Vention AT to enhance Nordson's top and bottom line growth and be accretive to total company EBITDA margins. Vention AT sales for the twelve months ended January 31st, 2017, were approximately $150 million with EBITDA of $48 million. $705 million purchase price represents an EBITDA multiple of 14.7x, in line with similar multiples paid for other high-quality properties in the medical space. Initial identified cost synergies are modest and in the range of approximately $5 million. Including these benefits, the purchase price represents a synergized EBITDA multiple of 13.3x.
Assuming a close on Vention AT during our second fiscal quarter, we expect $0.05-$0.10 accretion to EPS in fiscal year 2017 from all four acquisitions, including estimated purchase accounting charges. Once we close and get further into our valuation work on purchase price allocation, we'll provide further updates on expected EPS accretion. The Vention AT deal will be funded with cash and debt. Our net debt to EBITDA is approximately 1.8x at the end of the first quarter. Based on our guidance for the second quarter and including trailing 12-month EBITDA for these four acquisitions, our net debt to EBITDA is forecasted at approximately 3x after close. As we have demonstrated historically, our consistent levels of cash flow allow us to de-lever quickly.
Thank you, Jeff and Greg. I want to welcome all the employees of ACE, InterSelect, and Plas-Pak, and upon close, Vention Medical AT to Nordson. We look forward to growing these great businesses in the months and years ahead. From an overall perspective, Nordson is firing on all cylinders right now, thanks to the hard work of our team and the value we bring to our customers. We're executing on a growth strategy and the various initiatives we have to drive continuous improvement across the company. With that, we'd be happy to take your questions.
Ladies and gentlemen, if you have a question at this time, please press star, then the one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Our first question comes from Jeff Hammond with KeyBanc Capital. Your line is open.
Hey, good morning, guys.
Morning, Jeff. Good morning.
Hey, congratulations on this deal. Just, can you walk through where you see the synergies, the $5 million, and then just talk about you know, where there's kind of the greatest customer overlap, and I think you mentioned kinda international opportunities. Just kinda touch on all those synergies. Thanks.
Yeah. I'll just make a couple of comments. The synergy level is relatively modest, as this is sort of a fourth pillar to our platform from a medical device standpoint. Obviously, there'd be some we'd see from the leverage of our procurement capability, and there may be some other cost improvement opportunities. We haven't included any revenue synergies here, although we do think and we have shown in the past that we've been able to demonstrate incremental top-line revenue by cross-selling across our product lines with the relationships that we have with key OEMs. As far as the specifics on the customer side, you know, this is a relatively concentrated group of OEM customers, and what this does for us is give us access to essentially all of the large OEM customers.
At the same time, this business has done a nice job with sort of the emerging innovators, and it gives us access to the broader part of our product line to some of these emerging innovators. That's an interesting opportunity. As you said, you know, a lot of the big customers are global and can help translate this business more globally. We feel pretty good about the position of the business.
Okay. Just a quick follow-up here on Advanced Tech. Can you just give us an update on what you're seeing from a, you know, quoting activity, customer tone standpoint as you kinda enter this more seasonally strong? Maybe just comment on, you know, what you're seeing from the Chinese OEMs automation-wise, anything around major smartphone upgrades, that'd be helpful. Thanks.
Yeah, I would say, you know, let's sort of split this up into a couple of buckets. On the electronic side of the business, we're clearly seeing our approach to diversification playing out here. Yeah, we're seeing good interest from the local mobile guys in China, but we also have more applications that go into the automobile electronics space, and some of these new additions that we've added give us an even bigger footprint there on the automotive electronics space. But we're also seeing good penetration because of our new products into that, you know, that wafer-related processing, both the deposition through ASYMTEK and the inspection part of the business as well. Kind of what the story we've seen over the last few quarters is continuing there.
We do see a lot of interest, at least in terms of project activity, on the mobile side. Again, at this point in time, you never know which ones of those are really gonna come forward. If you look at the other part of the business, in our fluid management business, we're seeing, you know, solid business in a lot of general industry applications, fluid formulators, as well as activity in the electronics related space. On medical, we're seeing strong opportunities in our medical business, you know, related to our new products and our broadening product line there. Pretty solid activity across the board. Now, also, we're up against that point of time where we start to see, you know, the business pick up, orders pick up.
We do have, as the year goes on, tougher comps in the business as well.
Thanks, Mike.
Our next question comes from Liam Burke with Wunderlich. Your line is open.
Thank you. Good morning, Mike. Morning, Greg.
Morning, Liam.
Mike, can we go over about adhesives, and can you give us color on how the polymer business has been doing?
Yeah. On the adhesives side of the business, you know, the parts of the business that support sort of consumer-related products, food, beverage, other consumer-related products like packaging, are doing well. Our product assembly business is strong. Nonwovens business is a little soft, but that's against a really strong comparison last year. As you look at our polymer area, our dies business has picked up as the extrusion business has started to improve. We're seeing a little softness in the injection molding area as we see some of the things like the auto business maybe start to slow down from a growth perspective a little bit.
In our melt delivery and our pelletizing business, we expect to see this be a solid year, although maybe a little lumpy, because particularly the pelletizing piece tends to be very project specific. I'd say the business is improving, you know, not quite as robust as we'd like to see yet, but improving.
Okay. Thank you. On the Vention acquisition, you mentioned there was discussion of the customer overlap or non-overlap. Is there any leveragability on the R&D front or on the production front?
I'd say on the production front, down the road, there could be. On the R&D side, I think it's a complementary capability, but at this point, we haven't factored that in. Jeff, I don't know if you wanna comment any more on that.
I would just say on the manufacturing front, one of the things that this acquisition brings us is a new position into complex extrusion, balloon blowing and manufacturing, and Nitinol forming some other things. It's really complementary to what we do today with some very specialized facilities that they have. Probably not so much on the manufacturing side. On the design and front end, there are certain aspects of how we design products across the different medical platforms or product platforms that we can take advantage of envelope technology from one area and use it to another. We do think there's some opportunity there.
Great. Thank you.
Our next question comes from Charley Brady with SunTrust. Your line is open.
Hi. Yeah, thanks. Good morning, guys.
Morning, Charley.
On this acquisition of Vention, you know, you guys have talked about getting life sciences platform to $300-$400 million size. This certainly, you know, jumps it really closely to the bottom end of that market. I'm just wondering, guys, obviously another piece of the business you really weren't into, you know, into minimally invasive technologies. As you add this piece of the business, are there additional tack-on pieces to the one you just did that further broadens out the capabilities, or is it, or, you know, as we look to life sciences M&A, is this kind of, you know, it for a while, you're gonna focus on other areas in terms of M&A?
Yeah. Let me make a couple of comments, Charlie. First of all, we feel like we're getting a lot of capability with this particular acquisition, and particularly, as you mentioned, in the minimally invasive space, which is probably the highest growth space within the medical device marketplace. We like that. That said, across all of our businesses in the medical space, there's still a degree of fragmentation there. There's still a fair bit of work that's done in-house from the OEMs that the trend continues to outsource that. We see good organic growth opportunities, and we do see opportunities to add additional capability down the road.
Obviously, this is a sizable scale play for us and puts us well on the way to getting this business to something that down the road could be a half a billion dollar business for us.
Right. I just wanna go back in your prepared remarks on the orders for adhesive dispensing. I wasn't sure if I heard correctly. You talked about, I think, the tenor of orders through the quarter or through the 12 weeks. It, you know, they obviously ended up those 12 weeks down 1%, but I thought I heard you say that for the majority of that time, they were actually up. Could you just clarify that?
When you do the sort of point-to-point analysis, you can have a real strong week drop off, and that's basically what we're seeing. We think, you know, there's some timing around the year-on-year comparisons. Well, we had solid orders, and then sort of in the last week, we had a period of time where we had some very large orders last year that drops out of that comparison. We feel pretty good about what we see, as I said, across the businesses in terms of interest. Particularly in the consumer nondurable related space, you know, that would affect our packaging. You know, as I said, this year, the nonwovens area is gonna be a little bit of a challenge because we had such a strong year last year with a lot of recapitalization.
We feel pretty good about the opportunities and prospects. You know, that said, it's still an uncertain global kind of environment here, and so we feel pretty good about the opportunities that we see.
Charlie, just to put a little more color on that, it also highlights, you know, in that segment, we've got some larger dollar product lines. As those orders, you know, come in in one given week, if that happens to be a week that drops off for an incoming week, it could impact that total 12-week view. Again, the comment was just to suggest if you look on a week-by-week basis within that 12 weeks, you know, order rates were pretty robust.
Yeah. Okay. That's the point I was trying to just clarify, so that was very helpful. Just one more for me. Did you guys give a gross margin forecast for the second quarter?
Yeah. Yeah, we did.
Just an operating margin?
Gross margin.
Our gross margin, we suggested would be 56% in the quarter.
Great. Thank you.
Our next question comes from Matt Summerville with Alembic Global Advisors. Your line is open.
Thanks, morning. I wanna talk about.
Hey, Matt
Vention again for a moment. Can you talk about, you mentioned the $4 billion sort of TAM for your core Nordson Medical, if you will, and then the recent acquisition sort of combined, including Vention. How big is Vention's addressable market as a subset of that? And can you speak directly to the competitive environment, who the players are, what the relative market share position looks like?
I'll let Jeff probably add some color to that. Getting into the minimally invasive space, you know, dramatically increases the available market to us. Probably, two-thirds of that $4 billion really falls into that minimally invasive space. At a high level, there are a couple of key competitors. There's a company called Integer that's a competitor in this space and then TE's Creganna business is a competitor in this space, and we feel good about our full capability from a solutions provider standpoint. There's a bunch of smaller folks out there, so opportunities for the future.
There's still a fair bit of work that's done in-house by large OEMs, but the trend continues to be to outsource that and focus more on the end device. Jeff, I don't know whether you wanna add any additional color there.
Yeah. I think, Mike, I think you had it right, from that addressable market that we quantified, about two-thirds of that would be, you know, in the Vention area, really related to, minimally invasive interventional delivery devices and those sorts of things. You know, the total outsource market for medical device OEMs is in excess of $40 billion. We're only talking about a portion of that, which is really the highly engineered, differentiated, piece. As Mike mentioned earlier in the call, there's additional opportunity that the OEMs continue to do in-house that more and more increasingly is being outsourced.
From a competitor standpoint, Mike mentioned a couple that we would see directly against Vention AT. The market remains fairly fragmented as well with several other competitors out there as well.
Just a couple of follow-ups on, just sticking with Vention. It looks like about a month ago, Vention completed an acquisition of a Nitinol wire manufacturer. Can you speak to the significance of that acquisition, what that technology adds to Vention, and then whether these products or even, Mike, maybe in core Nordson Medical, to the extent anything that's being done here falls under some sort of federal regulatory umbrella? Thank you.
Yeah. Mike, want me to take that?
Yeah. Yeah, go ahead.
Yeah. The what you'll find in these types of businesses that are technology-based, a lot of the differentiation comes from your ability to manufacture, convert, and design around very specialty materials. The addition of Nitinol to Vention's capabilities, nickel titanium, which is basically a very biocompatible material with shape memory, so it can be used transcatheter. You can shape it, get it through a catheter, arrive at a point, and it goes back to its original shape to perform the function that it was meant to perform. It's a material that is becoming more widely used in medical devices.
The acquisition that Vention made was a company that has a unique ability in forming Nitinol into very complex shapes. We do see that as a significant capability that we could take and expand to other applications and other customers. As it relates to the regulatory and FDA, so Vention would be subject to similar levels of regulatory risk and FDA burden that we experience in some of our current Nordson Medical business today.
Vention's liability is limited to the extent they do not own 510(k) or other device registrations. They are subject to standard medical device quality standards and manufacturing practices, which are audited from time to time by the FDA. However, this is common and something that, again, we experience today within parts of our Nordson MEDICAL business.
Appreciate the color. Thank you.
Our next question comes from Chris Dankert with Longbow Research. Your line is open.
Hi, guys. This is actually Josh in for Chris. Thanks for taking my call.
Yeah.
Congrats on the quarter and the recent flurry of M&A. I guess the first one we have is that Vention looks like a huge win at a really accretive price. I guess, are there any other medical deals out there that have a similar scale to Vention and such accretive margins, or is this sort of a unicorn?
Well, I would say in terms of the margin side, you know, our focus is really on differentiated capability. Everything that we're looking to acquire in this space, whether it's the minimally invasive space that we're talking about here or the other products that we've already acquired, it's around being able to differentiate capabilities so that you can provide the right solution for customers, create value, and get paid for it. There are other opportunities, you know, out there that we continue to look at across all of the product lines within our medical business. I think this is a nice move from a scale perspective. You know, there may be some others out there.
There's certainly things that we're interested in, but really not at a point to talk about any of that right now. I'd say there's more opportunity. This is a good move from us, you know, scale play, but more importantly from the capability that it gives us, the market segment that it opens up to us in a big way, and the ability to kinda reinforce the broader capability we have with a consistent group of customers.
Okay, perfect. I guess to follow up, over into ADS, it seems like things have slowed a bit in EMEA. Any color you could provide there? Is this just a one-off or are you seeing anything slowing ex-packaging there?
You know, as I said, I think, you know, in this particular quarter, as you look at the order rates, it's more probably a larger project related kind of a thing than anything else. What I would say is across the board, the sort of consumer nondurable space looks solid right now, and that's why packaging looks solid. There's some good opportunities in the product assembly area that looks solid. You know, nonwovens is operating at a high level, but it's got a really tough comp. Last year, we did get a number of significant recapitalizations, so it's got a tough comp there. I'd say our dies businesses are improving. We're starting to see our core components pick up, as well as the melt delivery in terms of opportunities out there.
Pelletizing is lumpy, but we think it'll be a good year, but it's gonna be lumpy. I'd say the big project mix is the one thing that's hard to predict. That's you know, the one area that can move things around. That's both in, say, product assembly and to some lesser extent nonwovens and then in some things like pelletizing. We think the opportunities are good. We've got tough comparables in that business.
All right, perfect. Thanks.
Again, ladies and gentlemen, if you'd like to ask a question, please press star one on your touch tone telephone. Our next question comes from Allison Poliniak-Cusic with Wells Fargo. Your line is open.
Hi, guys. Good morning.
Morning, Allison.
With the incremental additions, including Vention, how should we think about the seasonality of that ATS business? I imagine it's a bit more smooth than it's been historically going forward.
I'd say on a seasonality, probably a little bit. If you think about it, we're still gonna see the kind of holiday effects that we see in most of our businesses in the first quarter. I'd say, seasonality-wise, it's probably a little improvement. Obviously, from a cyclicality standpoint, it's part of a specific strategy that we have to try and balance out that segment, where we have sort of more cyclicality in the electronics related parts of the business.
Great. On, you know, ADS, I guess just in this, you know, optimism of the Trump administration right now, you know, I know you talked about backlog and orders, but in terms of inquiries, have you seen sort of a mix towards these larger projects starting to come through, particularly as you look to the U.S. or no change there yet? Just any thought from that?
Yeah, I would say we've not seen any dramatic change associated with the proposed policies that the president has talked about. For some bigger projects, it would take a little longer for those to materialize anyway. I mean, I think when you look at something, you know, for example, like the auto industry, we kind of support it wherever it is. It may move from place to place, but you know, we generally view that as an opportunity and one of the stronger sort of end markets. We haven't really seen anything that we could identify as an uptick associated with the proposed policies.
Great. Thank you.
Our next question comes from Walter Liptak with Seaport Global. Your line is open.
Hi. Thanks. Good morning, guys.
Morning, Walter.
Wanted to ask you about the Vention Medical acquisition. I wonder if you can help us understand a little bit more about how the business was organized and the part of the business that you didn't acquire. You know, I guess it was for sale, so you know, why didn't you acquire? You know, are there any relationships that are gonna be continuing from that either, you know, either way as a supply relationship, et cetera?
I just make a couple of high-level comments. I mean, the overall Vention business was put together through a series of acquisitions. You know, some more focused on, I'd say, the service side of the business, and some more focused on, you know, sort of the technology side of the business. The owners in the process decided to split this up into sort of two pieces. As we said before, we like the position where you have the opportunity to be a solutions provider to a customer where you've got differentiated capability. You know, we certainly saw that in the Vention AT business, and that's why we were most interested in that particular business.
There'll be a modest ongoing relationship between the two businesses and contracts to cover that and but it's not significant in terms of the total. They operated as fairly independent businesses.
Okay. Great. They're not gonna be contract manufacturing for Vention AT.
No, there's some products that go back and forth. It's a very de minimis amount and, you know, we'll have agreements in place to address those, but it's not significant. You know, there are, you know, as Jeff had mentioned, there's certain capabilities with each of the sites that are important. Quite frankly, the locations are important from a medical device, particularly front-end design, standpoint. We really like the locations that we have and the presence we have in sort of the hotbed markets of the medical design space.
Okay. Great. switching gears back to adhesives. You know, I wonder if you can talk a little bit more about the polymers business. You mentioned that it was a little bit soft for injection molding. Were those comments specifically to automotive, or is it 'cause that's kind of across-the-board sort of a product? You know, what are you thinking about for the full year and capital spending in that plastics area?
Yeah. I would say, you know, we're encouraged by the activity that we see in terms of the opportunities. I'd say, we're finally starting to see some of the extrusion, the film part of the business, pick up, and that shows up most in our dies business, which is looking better. I'd say the injection molding part of the business has been on a strong run up to about six to nine months ago, where it's slowed down a little bit, and I'd say that part is continuing. I'd say we expect to see this be a positive year from a growth perspective. You know, a lot of these are bigger projects. We're working on them now.
They need to come through, you know, to have an impact in the year. I'd say we're encouraged by what we're seeing from an opportunity standpoint, but it's not everything working, you know, in concert, much like, you know, the core adhesives business, where we've got a couple parts of the business looking pretty attractive and other parts up against tougher comps and, you know, not quite as attractive right now. Again, anything that's really more consumer nondurable related is looking pretty strong. The durable piece is, I'd say at a good level, but not as strong as we might have seen in parts of last year.
Okay. Great. All right. Thank you.
I'm not showing any further questions at this time. I would now like to send the call back to Senior Director Jim Jaye for any further remarks.
Thank you, Leanne. On behalf of our team, appreciate you joining our call today. I'm available throughout the week to take any additional questions you might have. Thank you again, and, have a good day, and we'll sign off. Thanks.
Thank you.
Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may all disconnect. Everyone have a great day.