We expect the business to be accretive on EBITDA to Nordson and slightly accretive to EPS when you exclude amortization. So, hopefully, that gave you a broad overview of that.
Michael Halloran: The broad overview, all that makes sense. I think the question was a little bit more geared to just current trends and how you’re seeing those trends materialize in the market.
Sundaram Nagarajan: In terms of demand trends, is that what you’re talking about, Mike?
Michael Halloran: Yes, sir. Because I certainly understand the contribution you’re expecting, the 5%, certainly in the prepared remarks. I understand the long term component to it. I think just for the short term dynamics, particularly because [indiscernible] just curious how that’s impacting you to knowing that you do have a sizable [Technical Difficulty].
Sundaram Nagarajan: Europe is – the market is down. It does impact us a little bit, but not to the same extent as an implement – a big tractor manufacturer or an implement manufacturer since we are selling components. So it does have an impact, but not to the same extent, as you’ve heard in the Street around 15%, 20%. That’s not what we’re seeing in the business.
Operator: [Operator Instructions]. Your next question comes from the line of Andrew Buscaglia from BNP Paribas.
Andrew Buscaglia: Just wanted to confirm in that backlog, as it relates to ATS, can you see what’s coming in Q4 through those orders from UV lights and electronics packaging or is it something else? I’m just trying to confirm your confidence that that converts?
Sundaram Nagarajan: Probably two interrelated items that you mentioned, Andrew. First on the UV and the electronic packaging barrels, that’s happening right now. They are smaller parts of the company, but they’re very good early indicators because they serve – so if you think about an electronic manufacturer or a finished device manufacturer, you’re going to pick up the slack by increasing your manufacturing consumables, right? You’re not buying new lines, but you’re increasing the usage of your existing lines. And so, you would normally see that in our consumable barrels, packaging businesses. That’s what you’re seeing. And we’re seeing it right now. On the UV light is the same way. We sell to people who make equipment that goes in the front end of the semiconductor, again, a small business, but a good early indicator that that our customers, who essentially play in the front end of the market, and Nordson doesn’t play much there, it’s a new opportunity for us, but it is early for us.
So those two early indicators, that’s what I meant by that. In terms of our backlog, in couple of our test and inspection businesses, we have customer orders in place for shipments in third and fourth quarter. That is in our backlog. So, those are system backlog that is in the business that gives us confidence for a portion of the third and the fourth quarter shipments. And we do still expect order entry to pick up to fully deliver on the ATS expectations we have.
Andrew Buscaglia: Naga, your margins have been great. A strong quarter. Ascend has really been successful. It’s in the third year now. And I’m wondering how much more is left in the tank as it pertains to pricing and things like cost savings?
Sundaram Nagarajan: Think of Ascend and NBS Next as a growth framework, rather than a cost play. In terms of where we are – look, when you sort of implement and deploy a growth framework across a company, think about – this was all organically put together and built within the company. So three years, in my opinion, is still early innings. So what you’re trying to do – NBS Next is now becoming the way we run the company, operate the company. So you’re just beginning to see the benefits of the strategy being effective. So in terms of – if you think about where are we at in terms of each of our divisions using it, I would say, three or four divisions delivering what we call leadership level performance. These are very specific metrics of quality, on time delivery, new product, vitality, customer growth, employee engagement.
So there are five metrics within the company, I would say, and we call them leadership level performance. We have about four of our divisions at leadership level in most of those metrics. We have six or seven very closely following. So what you’re beginning to see is the impact of NBS Next and the Ascend strategy that is beginning to show up in our business. And IPS is a great example of that. These were some of the – a couple of the big divisions in IPS were the first places where we implemented the strategy and you can begin to see the performance on the organic growth side. So, our expectation is we’re focused on growing the company organically, innovation, top customer growth. Clearly, we will have solid incrementals. Our expectation on organic growth is 40%.
So by virtue of that, you’re going to see some margin expansion, but that’s not where we start.
Operator: Your next question comes from the line of Jeff Hammond from KeyBanc Capital Markets.
Jeffrey Hammond: Back on this Chinese New Year, is that pretty broad across the segments? Or is that going to be more focused on electronics?
Stephen Shamrock: Jeff, I would tell you that most of that impact is concentrated in the IPS segment and to a lesser degree in ATS.
Jeffrey Hammond: Naga, just on biopharma, it sounds like the destocking is behind us. That’s what we’re hearing, I guess, from some of the people in that space, but it doesn’t sound like you’re seeing any real order intake. As you talk to that customer base, what’s kind of the visibility for that to start to inflect?
Sundaram Nagarajan: I think the way to think about it is, rather than giving you an exact timing, let me tell you what we fundamentally believe about this business. You’re right, the destocking has come to a place where it is pretty much at the bottom of the cycle at a lower demand level, for sure. And that’s what we’re seeing in our businesses. As we talk to our customers in general what we are talking about is for specific components they buy from us, what is their current inventory level. That is a better indicator of their future orders. And we are at that point where people are ordering – their ordering pattern has changed. That is one thing that we see in this. In the past, like other medical device manufacturing space is by – most of our biopharma customers will place blanket orders.
