Northern Technologies International Corporation Reports Financial Results for Second Quarter Fiscal 2025

MINNEAPOLIS, April 10, 2025 (GLOBE NEWSWIRE) -- Northern Technologies International Corporation (NASDAQ:NTIC), a leading developer of corrosion inhibiting products and services, as well as bio-based and biodegradable polymer resin compounds, today reported its financial results for the second quarter of fiscal 2025.

Second quarter fiscal 2025 financial and operating highlights include (with growth rates on a fiscal quarter year-over-year basis):

Consolidated net sales decreased 8.5% to $19,072,000

ZERUST® industrial net sales decreased 3.7% to $12,562,000

ZERUST® oil and gas net sales decreased 28.5% to $1,549,000

Natur-Tec® product net sales decreased 11.8% to $4,960,000

NTIC China net sales increased 8.1% to $3,735,000

Gross profit, as a percent of net sales, decreased 440 basis points to 35.6%

Joint venture operating income decreased 31.8% to $1,691,000

Operating expenses increased 2.4% to $8,820,000

NTIC recognized $1,140,000 in other income due to the receipt of an Employee Retention Credit (ERC) payment

Net income attributable to NTIC was $434,000, compared to $1,701,000

Net income per diluted share attributable to NTIC was $0.04, compared to $0.17

Cash provided by operating activities was $3,199,000 for the six months ended February 28, 2025

"NTIC's second-quarter performance demonstrates the increasing intensity of the headwinds we are currently facing, including recent changes in U.S. trade and economic policies, the seasonality of our industrial and oil and gas businesses, and the timing of certain Natur-Tec® orders. Despite these current headwinds, we believe we are poised for a rebound in Natur-Tec® and ZERUST® oil and gas sales in the second half of the fiscal year," said G. Patrick Lynch, President and CEO of NTIC.

"As we navigate this dynamic global environment, we are unwavering in our commitment to delivering long-term value. Our disciplined approach to managing cash, including temporarily adjusting our quarterly dividend to $0.01 per share effective with our next quarterly dividend, and prioritizing debt reduction are intended to position us to seize future growth opportunities in our oil and gas and compostable plastics businesses. We believe that our strategic growth priorities and financial discipline will drive sustainable growth and long-term shareholder value," concluded Mr. Lynch.

NTIC's consolidated net sales decreased 8.5% to $19,072,000 during the three months ended February 28, 2025, compared to $20,843,000 for the three months ended February 29, 2024. This decrease was primarily a result of lower sales within the Company's ZERUST® oil and gas, Natur-Tec®, and ZERUST® industrial product categories. For the first half of fiscal 2025, consolidated net sales decreased 1.5% to $40,410,000, compared to $41,024,000 for the same period last year.

The following tables set forth NTIC's net sales by product category for the three and six months ended February 28, 2025 and February 29, 2024, by segment:

 

Three Months Ended

 

February 28,2025

 

% of Net Sales

 

February 29,2024

 

% of Net Sales

 

% Change

ZERUST® industrial net sales

$

12,562,853

 

65.9

%

 

$

13,050,767

 

62.6

%

 

(3.7

%)

ZERUST® oil & gas net sales

 

1,549,164

 

8.1

%

 

 

2,167,328

 

10.4

%

 

(28.5

%)

Total ZERUST® net sales

$

14,112,017

 

74.0

%

 

$

15,218,095

 

73.0

%

 

(7.3

%)

Total Natur-Tec® net sales

 

4,960,049

 

26.0

%

 

 

5,624,443

 

27.0

%

 

(11.8

%)

Total net sales

$

19,072,066

 

100.0

%

 

$

20,842,538

 

100.0

%

 

(8.5

%)

 

Six Months Ended

 

February 28,2025

 

% of Net Sales

 

February 29,2024

 

% of Net Sales

 

% Change

ZERUST® industrial net sales

$

26,525,105

 

65.6

%

 

$

26,954,198

 

65.7

%

 

(1.6

%)

ZERUST® oil & gas net sales

 

3,062,715

 

7.6

%

 

 

3,669,642

 

8.9

%

 

(16.5

%)

Total ZERUST® net sales

$

29,587,820

 

73.2

%

 

$

30,623,840

 

74.6

%

 

(3.4

%)

Total Natur-Tec® net sales

 

10,822,639

 

26.8

%

 

 

10,400,373

 

25.4

%

 

4.1

%

Total net sales

$

40,410,459

 

100.0

%

 

$

41,024,213

 

100.0

%

 

(1.5

%)

 

NTIC's joint venture operating income decreased 31.8% to $1,691,000 during the three months ended February 28, 2025, compared to joint venture operating income of $2,481,000 during the three months ended February 29, 2024. The $790,000 decrease in joint venture operating income was primarily due to a decrease in equity in income from joint ventures and fees for services provided to joint ventures, both of which were driven primarily by lower sales at most of NTIC's joint ventures. Net sales of NTIC's joint ventures, which are not consolidated with NTIC's financial results, decreased 15.7% to $19,800,000 during the three months ended February 28, 2025, compared to $23,480,000 for the three months ended February 29, 2024. Year-to-date, NTIC's joint venture operating income was $4,105,000, compared to joint venture operating income of $4,832,000 during the six months ended February 29, 2024. Net sales of NTIC's joint ventures were $43,637,000 for the six months ended February 28, 2025, compared to $47,041,000 for the six months ended February 29, 2024.

Operating expenses, as a percent of net sales, for the second quarter of fiscal 2025 were 46.2%, compared to 41.3% for the same period last fiscal year. Year-to-date, operating expenses, as a percent of net sales, were 45.3%, compared to 41.3% for the same period last fiscal year. Higher operating expenses for the three and six months ended February 28, 2025 were primarily due to strategic investments in ZERUST® oil and gas sales infrastructure and increased personnel expenses, including new hires and benefits, and higher travel and professional fees.

NTIC recognized $1,140,000 in other income during the three and six months ended February 28, 2025 due to the receipt of a cash ERC payment. No other income was recognized during the prior year periods.

Net income attributable to NTIC for the second quarter of fiscal 2025 was $434,000, or $0.04 per diluted share, compared to net income of $1,701,000, or $0.17 per diluted share, for the same period last fiscal year. Year-to-date, net income attributable to NTIC was $995,000, or $0.10 per diluted share, compared to net income of $2,597,000, or $0.27 per diluted share, for the same period last fiscal year.

NTIC's non-GAAP adjusted net income, as set forth in the GAAP reconciliation at the end of this release, was a loss of $300,000, or $(0.03) per diluted share, for the second quarter of fiscal 2025, compared to net income of $1,807,000, or $0.19 per diluted share, for the same quarter last fiscal year. Year-to-date, non-GAAP adjusted net income was $367,000, or $0.04 per diluted share, compared to net income of $2,808,000, or $0.29 per diluted share, for the same period last fiscal year.

NTIC had working capital of $21,416,000 as of February 28, 2025, including $5,091,000 in cash and cash equivalents and an outstanding revolving line of credit and term loan balance of $8,101,000, compared to $23,682,000 of working capital as of August 31, 2024, including $4,952,000 in cash and cash equivalents and an outstanding revolving line of credit and term loan balance of $7,112,000.

At February 28, 2025, the Company had $25,041,000 of investments in joint ventures, of which $13,025,000, or 52.0%, is cash, with the remaining balance mostly made up of other working capital.

Conference Call and Webcast

NTIC will host a conference call today at 8:00 a.m. Central Time to review its results of operations for the second quarter of fiscal year 2025 and its outlook, followed by a question-and-answer session. The conference call will be available to interested parties through a webcast. To join the live call and ask a question, a participant must register using the URL below.

https://register-conf.media-server.com/register/BI0367281b6c4e4339964df49370573727

Once registered, the participant will receive a dial-in number and unique PIN number to access the call.

The audio-only webcast can be accessed at the following link: https://edge.media-server.com/mmc/p/2p6jpccv A link to the webcast is also available on the Investor Relations section of NTIC's webpage. Participants are advised to go to the website at least 15 minutes early to register, download and install any necessary audio software. For those unable to participate in the live webcast, a replay of the webcast will be archived and accessible for approximately one year on the Investor Relations section of NTIC's webpage.

About Northern Technologies International Corporation

Northern Technologies International Corporation develops and markets proprietary, environmentally beneficial products and services in over 65 countries either directly or via a network of subsidiaries, joint ventures, independent distributors and agents. NTIC's primary business is corrosion prevention marketed mainly under the ZERUST® brand. NTIC has been selling its proprietary ZERUST® rust and corrosion inhibiting products and services to the automotive, electronics, electrical, mechanical, military and retail consumer markets for over 50 years and more recently has also targeted and expanded into the oil and gas industry. NTIC offers worldwide on-site technical consulting for rust and corrosion prevention issues. NTIC's technical service consultants work directly with the end users of NTIC's products to analyze their specific needs and develop systems to meet their technical requirements. NTIC also markets and sells a portfolio of bio-based and biodegradable polymer resin compounds and finished products marketed under the Natur-Tec® brand.

Forward-Looking Statements

Statements contained in this release that are not historical information are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include NTIC's beliefs that it is poised for a strong rebound in Natur-Tec® and ZERUST® oil and gas sales in the second half of the fiscal year, that its disciplined approach to managing cash, including temporarily adjusting its quarterly dividend to $0.01 per share effective with its next quarterly dividend, and prioritizing debt reduction will position NTIC to seize future growth opportunities in its oil and gas and compostable plastics businesses and that its strategic growth priorities and financial discipline will drive sustainable growth and long-term shareholder value, and other statements that can be identified by words such as "believes," "continues," "expects," "anticipates," "intends," "potential," "outlook," "will," "may," "would," "should," "guidance" or words of similar meaning, and the use of future dates. Such forward-looking statements are based upon the current beliefs and expectations of NTIC's management and are inherently subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Such potential risks and uncertainties include, but are not limited to, in no particular order: the health of the U.S. and worldwide economies, including in particular the U.S. automotive industry and its evolution towards electric vehicles; the effect of economic uncertainty, recessionary indicators, inflation, increased interest rates and turmoil in the global credit, financial and banking markets or perception thereof; effect of supply chain disruptions; dependence on joint ventures, relationships with joint venture partners and their success, including fees and dividend distributions; risks associated with international operations, including NTIC China, exposure to exchange rate fluctuations, tariffs and trade disputes; effect of economic slowdown and political unrest, including the wars between Russia and Ukraine and Israel and Hamas; the level of growth in NTIC's markets; NTIC's investments in research and development efforts; acceptance of existing and new products; timing of purchase orders under supply contracts; variability in sales to oil and gas customers and effect on quarterly financial results; increased competition; costs and effects of complying with changes in tax, fiscal, government and other regulatory policies, and rules relating to environmental, health and safety matters; and NTIC's reliance on its intellectual property rights and the absence of infringement of the intellectual property rights of others. More detailed information on these and additional factors which could affect NTIC's operating and financial results is described in NTIC's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the fiscal year ended August 31, 2024 and subsequent quarterly reports on Form 10-Q. NTIC urges all interested parties to read these reports to gain a better understanding of the many business and other risks that it faces. Additionally, NTIC undertakes no obligation to publicly release the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.

Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this release contains non-GAAP financial measures, including adjusted net income attributable to NTIC and adjusted net income attributable to NTIC per diluted share. NTIC's reasons for use of these measures, reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures and other information are included at the end of this release. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for NTIC's financial results prepared in accordance with GAAP.

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF FEBRUARY 28, 2025 (UNAUDITED) AND AUGUST 31, 2024 (AUDITED)

 

 

February 28, 2025

 

August 31, 2024

ASSETS

 

 

 

 CURRENT ASSETS:

 

 

 

 

Cash and cash equivalents

$

5,090,630

 

 

$

4,952,184

 

 

Receivables:

 

 

 

 

Trade, less allowance for credit losses

 

 

 

 

of $310,000 as of February 28, 2025 and August 31, 2024

 

15,418,555

 

 

 

19,187,079

 

 

Fees for services provided to joint ventures

 

957,220

 

 

 

1,235,016

 

 

Income taxes

 

911,609

 

 

 

392,293

 

 

Inventories, net

 

14,985,166

 

 

 

14,390,844

 

 

Prepaid expenses

 

2,261,632

 

 

 

1,421,803

 

 

Total current assets

$

39,624,812

 

 

 

41,579,219

 

PROPERTY AND EQUIPMENT, NET

$

14,814,389

 

 

$

16,265,653

 

OTHER ASSETS:

 

 

 

 

Investments in joint ventures

 

25,041,302