Sales Performance - In fiscal 2025, 74.2% of NTIC's consolidated net sales, amounting to $62,488,397, were derived from ZERUST® corrosion prevention solutions, reflecting a decrease of 1.0% from fiscal 2024[30]. - NTIC's consolidated net sales from Natur-Tec® resin compounds and finished products were $21,746,077 in fiscal 2025, representing a slight decrease of 1.0% compared to fiscal 2024, accounting for 25.8% of total consolidated net sales[43]. - Sales of ZERUST® corrosion prevention solutions to the oil and gas industry totaled $7,317,704 in fiscal 2025, a decrease of 20.7% from fiscal 2024, although consistent re-orders from large customers were noted[37]. Product Offerings - NTIC's ZERUST® packaging products utilize proprietary chemical formulations that inhibit rust and corrosion, providing significant savings in labor, material, and capital expenditures compared to traditional methods[31]. - The Z-CIS® technical services system has been utilized by several major automotive companies to improve and control their corrosion management processes[36]. - Natur-Tec® resin compounds are engineered for high performance and reduced cost, allowing for processing using conventional plastic manufacturing methods[44]. - Natur-Tec® flexible film resin compounds are fully compostable and certified by organizations such as BPI and TÜV Austria, meeting international standards for compostable plastics[47]. - NTIC has developed unique corrosion inhibiting solutions for the oil and gas industry, addressing aggressive corrosion in critical infrastructure and extending service life[38]. - The introduction of products like AutoFog allows for rapid VCI saturation in large volume spaces, enhancing corrosion protection capabilities[45]. - NTIC's ZERUST® solutions for oil and gas infrastructure are tailored to customer requirements, addressing specific environmental conditions and enhancing protection against corrosion[42]. - Natur-Tec® compostable injection molding resin compounds are made with at least 90% bio-based materials, enhancing sustainability by replacing petroleum-based plastics[49]. - Natur-Bag® product line includes 15 different compostable trash bag sizes, certified fully compostable, and marketed through retail and industrial channels[50]. Market Trends - NTIC expects the U.S. market for bio-plastic solutions to continue growing due to legislation aimed at reducing single-use plastics, with a significant ban on plastic bags enacted in multiple states[54]. Research and Development - NTIC anticipates spending between $4,900,000 and $5,100,000 on research and development activities in fiscal 2026[61]. Financial Performance - NTIC had an estimated order backlog of $4,184,415 as of August 31, 2025, down from $5,837,430 as of August 31, 2024[71]. - NTIC's revenue is primarily derived from one-time purchase orders and short-term contracts, with revenue recognized upon the transfer of control of goods[298]. - The company assesses its investments in joint ventures for impairment annually, with additional evaluations performed if financial performance expectations are not met[295]. - Goodwill is tested for impairment annually, with assessments made more frequently if adverse changes in circumstances occur[300]. - NTIC utilizes the asset and liability method for accounting income taxes, recognizing deferred tax assets and liabilities based on expected future tax consequences[305][306]. - The company measures stock-based compensation costs based on the fair value of equity instruments issued, recognizing costs over the service period[304]. - NTIC's consolidated financial statements include accounts of its wholly owned subsidiaries but do not include accounts of its joint ventures[294]. - The company records trade receivables and fees for services provided to joint ventures as separate line items in its consolidated financial statements[289]. - NTIC's revenue recognition policy for joint ventures aligns with its policy for unaffiliated customers, ensuring consistency in financial reporting[290]. Workforce and Management - As of August 31, 2025, NTIC had a total of 94 employees, with 91 full-time and 3 part-time employees, including 28 in sales and marketing, 24 in research and development, 22 in administration, and 20 in production[73]. - NTIC's North American workforce is composed of 41% female employees and 31% racially or ethnically diverse individuals[74]. - The average tenure of NTIC employees is nine years, indicating a stable workforce[75]. - NTIC had only one lost time incident in both fiscal 2025 and 2024, reflecting strong safety performance[80]. - NTIC's management team has an average tenure of 17 years, suggesting experienced leadership[76]. - The company offers competitive compensation and benefits, including a 401(k) plan with matching contributions and profit-sharing options[84][85]. - NTIC provides employees with immediate eligibility for its medical plan, which has no co-pay and does not require premium contributions[86]. - Full-time employees are eligible for paid holidays and vacation time ranging from 15 to 25 days based on service length[87]. - NTIC is committed to equal opportunity and has policies in place to prevent discrimination and harassment[81][82]. - The company emphasizes health, safety, environment, and security (HSE&S) as core values and is dedicated to continuous improvement in these areas[78][79]. Joint Ventures - NTIC has established a joint venture network for approximately 30 years, participating in 15 active joint ventures across North America, Europe, and Asia[290]. - Revenue recognition for sales to joint ventures occurs when products are shipped, with fees based on either a flat fee or a percentage of sales[291][299].

Northern Technologies (NTIC) came out with a quarterly loss of $0.06 per share versus the Zacks Consensus Estimate of $0.08. This compares to earnings of $0.2 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -175.00%. A quarter ago, it was expected that this rust and corrosion prevention company would post earnings of $0.04 per share when it actually produced earnings of $0.02, delivering a surprise of -50%.Over the last four q ...

Financial Data and Key Metrics Changes - For the fourth quarter ended August 31, 2025, total consolidated net sales decreased 4.4% to $22.3 million compared to the same period last year [5][14] - Fiscal 2025 consolidated net sales decreased 1.0% year-over-year [14] - NTIC reported a net loss of $1.1 million, or $0.11 per diluted share for Q4 2025, compared to net income of $1.8 million, or $0.19 per diluted share for Q4 2024 [17] - For the full fiscal year 2025, NTIC reported net income of $18,000, or $0.00 per diluted share, compared to $5.4 million, or $0.55 per diluted share for fiscal 2024 [17] - Operating expenses increased 2.2% to $9.7 million for Q4 2025, with operating expenses as a percentage of net sales rising to 43.5% from 40.7% in the prior year [14][15] Business Line Data and Key Metrics Changes - Zerust oil and gas net sales decreased by 29.4%, while Natur-Tec net sales decreased by 10%, partially offset by a 5.8% increase in Zerust industrial net sales [6][5] - Natur-Tec sales for Q4 were $5.1 million, representing a 10% year-over-year decline [11] - NTIC China sales increased by 12% to $4 million for Q4 2025, with full-year sales up 14% to $16.2 million [8] Market Data and Key Metrics Changes - Joint venture sales for Q4 2025 increased by 4.7% to $24.4 million, while full-year joint venture sales declined by 4.9% [7][14] - The oil and gas group in North America experienced a decline of nearly 46% year-over-year, while Natur-Tec North America was down about 13% [39] Company Strategy and Development Direction - The company is focused on flattening operating expenses while expanding gross margins and driving sales in higher-margin areas [5] - NTIC aims to leverage strategic investments made over the past three years to enhance global operations and support future growth [4] - The company is optimistic about growth in fiscal 2026, particularly in the oil and gas and Natur-Tec segments [57] Management's Comments on Operating Environment and Future Outlook - Management anticipates macroeconomic headwinds to persist, especially in Europe, but believes NTIC is positioned for growth and improved profitability [5] - The company expects to see significant improvement in Zerust oil and gas sales and profitability in fiscal 2026 [10] - Management remains confident in the strategic growth plan despite challenges faced in fiscal 2025 [13] Other Important Information - NTIC's effective tax rate for fiscal 2025 was unusually high at 67.5%, primarily due to increased income tax expense in foreign subsidiaries [17] - The company declared a quarterly cash dividend of $0.01 per common share payable on August 13, 2025 [20] Q&A Session Summary Question: Are the income taxes on international business higher than in the U.S.? - The effective tax rate is influenced by profitability levels in North America, which were low in Q4, leading to a high effective tax rate [23][24] Question: How much can the company cut expenses to improve profitability? - The goal is to maintain operating expenses at similar levels to fiscal 2025, with expectations of revenue growth from previous investments [26][27] Question: What is driving the oil and gas business? - The growth is attributed to general acceptance of the technology and repeat business from existing customers [31] Question: How close is the company to getting business from compostable packaging? - Trials are ongoing with several customers, and initial orders are expected to contribute to sales in fiscal 2026 [33][53] Question: Where is the weakness in North America coming from? - The main weaknesses are in the Natur-Tec and oil and gas groups, with significant declines noted [39] Question: Is the one-time customs charge a recurring issue? - It is expected to be a one-time event, with no ongoing impact on the P&L [44][45]

Financial Data and Key Metrics Changes - For the fourth quarter ended August 31, 2025, total consolidated net sales decreased 4.4% to $22.3 million compared to the same period last year [5] - Fiscal 2025 consolidated net sales decreased 1.0% year-over-year [13] - NTIC reported a net loss of $1.1 million, or $0.11 per diluted share for Q4 2025, compared to net income of $1.8 million, or $0.19 per diluted share for Q4 2024 [17] - The effective tax rate for fiscal 2025 was 67.5%, significantly higher than 17.3% in the prior fiscal year [16] Business Line Data and Key Metrics Changes - Zerust oil and gas net sales decreased 29.4% in Q4 2025, totaling $3 million compared to $4.2 million in Q4 2024 [5][8] - NatureTech net sales declined 10% in Q4 2025, totaling $5.1 million [10] - Zerust industrial net sales increased by 5.8% [5] - NTIC China sales increased by 12% to $4 million in Q4 2025, and 14% to $16.2 million for the full fiscal year [7] Market Data and Key Metrics Changes - Joint venture sales increased by 4.7% in Q4 2025 to $24.4 million, but declined 4.9% for the full fiscal year [6] - The oil and gas group in North America was down close to 46% year-over-year, while NatureTech North America was down about 13% [39] Company Strategy and Development Direction - The company is focused on flattening operating expenses while expanding gross margins and driving sales in higher-margin areas [5] - NTIC is pursuing strategic initiatives to enhance long-term growth potential, including product innovation and emerging opportunities in the South American offshore oil and gas sector [4] - The company expects to start reaping benefits from strategic investments made over the past three years in fiscal 2026 [4] Management's Comments on Operating Environment and Future Outlook - Management anticipates macroeconomic headwinds to persist, especially in Europe, but believes NTIC is positioned for growth and improved profitability in key markets [5] - The company remains confident in its strategic growth plan despite challenges faced in fiscal 2025 [12] Other Important Information - NTIC's working capital as of August 31, 2025, was $20.4 million, down from $23.7 million a year earlier [18] - The company declared a quarterly cash dividend of $0.01 per common share payable on August 13, 2025 [19] Q&A Session Summary Question: Are the income taxes on international business higher than domestic taxes? - Management explained that the effective tax rate is influenced by profitability levels in North America, which were low in Q4 2025, leading to a high effective tax rate [22][23] Question: How much can the company cut expenses to improve profitability? - The goal is to maintain operating expenses close to fiscal 2025 levels, with expectations of revenue growth in 2026 from previous investments [25][26] Question: What is driving the oil and gas business? - The growth is attributed to general acceptance of the technology in the market and repeat business from existing customers [30] Question: What is the status of the compostable packaging business? - Trials are ongoing with several customers, and initial orders are expected to contribute to sales in 2026 [32] Question: Where is the weakness in North America coming from? - The main weaknesses were identified in the NatureTech and oil and gas groups, with significant declines reported [39] Question: Is the one-time customs charge a recurring issue? - Management confirmed it was a one-time event and does not expect it to impact future P&L [43][44]

Financial Performance - Consolidated net sales for fiscal year 2025 decreased 1.0% to $84,234,000 compared to $85,060,000 in fiscal year 2024[4] - ZERUST® oil and gas net sales decreased 20.7% to $7,318,000, while ZERUST® industrial net sales increased 2.4% to $55,171,000[6] - Operating income for fiscal year 2025 decreased 67.3% to $2,570,000 compared to the previous year[6] - Net income attributable to NTIC was $18,000, or $0.00 per diluted share, down from $5,409,000, or $0.55 per diluted share, in fiscal year 2024[12] - Net sales for the three months ended August 31, 2025, were $22.32 million, a decrease of 4.4% compared to $23.35 million in the same period of 2024[25] - Gross profit for the twelve months ended August 31, 2025, was $31.68 million, down 6.6% from $33.79 million in 2024[25] - Operating income for the three months ended August 31, 2025, was $929,372, a decline of 66.5% compared to $2.76 million in the same period of 2024[26] - Net loss attributable to NTIC for the three months ended August 31, 2025, was $1.10 million, compared to net income of $1.84 million in the same period of 2024[26] - Adjusted net loss income attributable to NTIC for the three months ended August 31, 2025, was $(606,998), compared to adjusted net income of $1.94 million in the same period of 2024[30] Profitability and Margins - NTIC's gross profit margin decreased by 210 basis points to 37.6% for the fiscal year 2025[6] - NTIC's effective income tax rate increased to 67.5% for fiscal year 2025 from 17.3% in the prior fiscal year[11] Cash Flow and Liquidity - Cash provided by operating activities was $2,389,000 for the twelve months ended August 31, 2025[6] - Cash and cash equivalents increased to $7.25 million in 2025 from $4.95 million in 2024, an increase of 46.2%[23] Assets and Liabilities - NTIC's working capital decreased to $20,439,000 as of August 31, 2025, from $23,682,000 a year earlier[14] - Total assets increased to $102.75 million in 2025 from $94.68 million in 2024, representing an increase of 8.5%[24] - Total current liabilities rose to $23.90 million in 2025 from $17.90 million in 2024, an increase of 33.4%[24] Research and Development - Research and development expenses for the twelve months ended August 31, 2025, were $5.04 million, up 4.9% from $4.80 million in 2024[26] Dividends - The company declared cash dividends of $0.01 per common share for the three months ended August 31, 2025, down from $0.07 in the same period of 2024[26] Future Outlook - NTIC expects to benefit from strategic investments made over the past three years to support future growth in fiscal 2026[3] - The company aims to flatten operating expenses while expanding gross margins and driving sales in higher-margin parts of its business[3]

Core Points - Northern Technologies International Corporation (NTIC) is set to release its fiscal 2025 fourth-quarter financial results on November 18, 2025, before market opening [1] - A conference call with management will take place on the same day at 9:00 a.m. Eastern Time to discuss the financial results and outlook [2][3] Company Overview - NTIC develops and markets environmentally beneficial products and services in over 65 countries, primarily focusing on corrosion prevention under the ZERUST® brand [5] - The company has over 50 years of experience in selling rust and corrosion inhibiting products to various markets, including automotive, electronics, and military, and has recently expanded into the oil and gas industry [5] - NTIC also offers bio-based and biodegradable polymer resin compounds and finished products marketed under the Natur-Tec® brand [5]

Core Insights - Northern Technologies International Corporation (NTIC) announced a significant three-year contract for its subsidiary Zerust Brazil to provide corrosion protection solutions for floating production storage and offloading (FPSO) units, marking a milestone for the company [1][2][3] Company Overview - NTIC specializes in developing and marketing corrosion prevention products and services, operating in over 65 countries, primarily under the ZERUST® brand [4] - The company has over 50 years of experience in corrosion inhibition across various sectors, including automotive, electronics, and military, and has recently expanded into the oil and gas industry [4] Contract Details - The contract with a major international engineering, procurement, and construction (EPC) contractor is valued at approximately R$70 million (US$13 million), with R$40 million (US$7.4 million) allocated for materials and R$30 million (US$5.6 million) for engineering and field services [3] - Revenue from this contract will be recognized over the duration of the agreement as products are delivered and services performed [3] Market Position - Zerust Brazil's ability to deliver specialized corrosion solutions for offshore environments has established it as a trusted partner for leading FPSO operators [4] - The project highlights the scalability of NTIC's oil and gas business and the company's commitment to supporting offshore asset integrity in Brazil, identified as one of the fastest-growing deepwater markets globally [4]

```markdown PART I—FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=5&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited consolidated financial statements for Northern Technologies International Corporation and its subsidiaries, including balance sheets, statements of operations, comprehensive income, equity, and cash flows, along with detailed notes explaining accounting policies, segment information, and other financial disclosures for the periods ended May 31, 2025, and August 31, 2024 [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show an increase in total assets, driven by higher cash and cash equivalents and intangible assets, while current liabilities also increased, primarily due to a rise in the line of credit | Metric | May 31, 2025 ($) | August 31, 2024 ($) | | :-------------------------------- | :----------- | :-------------- | | Cash and cash equivalents | $6,773,401 | $4,952,184 | | Total current assets | $42,600,386 | $41,579,219 | | Investments in joint ventures | $27,139,197 | $25,397,287 | | Intangible assets, net | $8,464,861 | $5,682,945 | | Total assets | $99,303,381 | $94,676,502 | | Line of credit | $7,369,949 | $4,291,608 | | Total current liabilities | $20,938,671 | $17,896,943 | | Total equity | $76,576,495 | $75,175,321 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) For the three months ended May 31, 2025, net sales increased, but net income attributable to NTIC significantly decreased due to lower equity in income from joint ventures and higher operating expenses; for the nine months, net sales saw a slight increase, but net income attributable to NTIC also declined substantially | Metric | Three Months Ended May 31, 2025 ($) | Three Months Ended May 31, 2024 ($) | Nine Months Ended May 31, 2025 ($) | Nine Months Ended May 31, 2024 ($) | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net sales | $21,508,563 | $20,686,197 | $61,919,022 | $61,710,410 | | Gross profit | $8,259,440 | $7,893,094 | $23,217,977 | $23,566,532 | | Equity in income from joint ventures | $970,314 | $1,396,731 | $2,720,637 | $3,676,962 | | Total operating expenses | $9,665,165 | $8,978,405 | $27,954,669 | $25,901,387 | | Operating income | $867,187 | $1,523,917 | $1,640,925 | $5,106,621 | | Net income attributable to NTIC | $121,775 | $976,604 | $1,117,185 | $3,573,294 | | Basic EPS | $0.01 | $0.10 | $0.12 | $0.38 | | Diluted EPS | $0.01 | $0.10 | $0.12 | $0.36 | [Consolidated Statements of Comprehensive Income](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for the three months ended May 31, 2025, increased significantly year-over-year, primarily driven by a positive foreign currency translation adjustment, despite a decrease in net income; for the nine-month period, comprehensive income decreased due to lower net income, partially offset by a positive foreign currency translation adjustment | Metric | Three Months Ended May 31, 2025 ($) | Three Months Ended May 31, 2024 ($) | Nine Months Ended May 31, 2025 ($) | Nine Months Ended May 31, 2024 ($) | | :---------------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income | $332,451 | $1,155,322 | $1,729,225 | $4,108,791 | | Other comprehensive income (loss) – foreign currency translation adjustment | $2,292,208 | $(251,995) | $272,859 | $(296,281) | | Comprehensive income | $2,624,659 | $903,327 | $2,002,084 | $3,812,510 | | Comprehensive income attributable to NTIC | $2,323,190 | $1,029,905 | $1,481,919 | $4,267,068 | [Consolidated Statements of Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Equity) Total equity increased from August 31, 2024, to May 31, 2025, primarily due to stock-based compensation expense and net income, partially offset by dividends paid to stockholders; accumulated other comprehensive loss improved due to foreign currency translation adjustments | Metric | May 31, 2025 ($) | August 31, 2024 ($) | | :-------------------------------- | :----------- | :-------------- | | Common stock | $189,487 | $189,340 | | Additional paid-in capital | $24,715,123 | $23,615,564 | | Retained earnings | $53,467,780 | $53,771,211 | | Accumulated other comprehensive loss | $(6,017,390) | $(6,382,124) | | Stockholders' equity | $72,355,000 | $71,193,991 | | Non-controlling interests | $4,221,495 | $3,981,330 | | Total equity | $76,576,495 | $75,175,321 | - For the nine months ended May 31, 2025, key changes in equity included: stock issued for employee stock purchase plan (**$81,496**), stock-based compensation expense (**$1,018,210**), dividends paid to stockholders (**$(1,420,616)**), net income (**$1,117,185**), and other comprehensive income (**$272,859**)[21](index=21&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased significantly for the nine months ended May 31, 2025, compared to the prior year, primarily due to lower net income and dividends received from joint ventures; investing activities used more cash, mainly for intangible assets and property/equipment, while financing activities shifted from a net use to a net provide, driven by line of credit activity | Cash Flow Activity ($) | Nine Months Ended May 31, 2025 | Nine Months Ended May 31, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $3,808,450 | $7,583,905 | | Net cash used in investing activities | $(3,378,123) | $(2,601,176) | | Net cash provided by (used in) financing activities | $1,459,221 | $(4,587,474) | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on the company's financial statements, covering interim financial information, new accounting policies (ASU 2023-07 adoption), recently issued accounting pronouncements, breakdowns of inventories, property and equipment, intangible assets, and investments in joint ventures; they also detail corporate debt, stockholders' equity, net income per common share, stock-based compensation, segment and geographic information, commitments and contingencies, supplemental cash flow data, income taxes, and a one-time Employee Retention Credit (ERC) payment - The Company adopted ASU No. 2023-07, Segment Reporting, retrospectively, resulting in enhanced disclosures related to segment expense information without impacting financial position, results of operations, or cash flows[28](index=28&type=chunk) Inventories (May 31, 2025) | Category | Amount ($) | | :--------------- | :----------- | | Production materials | $6,339,081 | | Finished goods | $8,583,804 | | **Total** | **$14,922,885** | Inventories (August 31, 2024) | Category | Amount ($) | | :--------------- | :----------- | | Production materials | $5,513,409 | | Finished goods | $8,877,435 | | **Total** | **$14,390,844** | Intangible Assets, Net (May 31, 2025) | Category | Gross Carrying Amount ($) | Accumulated Amortization ($) | Net Carrying Amount ($) | | :-------------------- | :-------------------- | :----------------------- | :------------------ | | Patents and trademarks | $3,530,296 | $(2,940,992) | $589,304 | | Capitalized software | $3,490,026 | $(374,719) | $3,115,307 | | Customer relationships | $6,347,000 | $(1,586,750) | $4,760,250 | | **Total** | **$13,367,322** | **$(4,902,461)** | **$8,464,861** | Estimated Future Amortization Expense | Fiscal Year | Amount ($) | | :----------------- | :----------- | | Remainder of 2025 | $310,619 | | Fiscal 2026 | $805,760 | | Fiscal 2027 | $770,685 | | Fiscal 2028 | $770,685 | | Fiscal 2029 | $770,685 | | Thereafter | $5,036,427 | | **Total** | **$8,464,861** | NTIC's Share of Joint Ventures' Financials (Nine Months Ended May 31, 2025) | Metric | Total ($) | EXCOR ($) | All Other ($) | | :------------------------------------ | :---------- | :---------- | :---------- | | NTIC's share of equity | $27,139,197 | $16,441,653 | $10,697,544 | | NTIC's share of equity in income from joint ventures | $2,720,637 | $1,340,674 | $1,379,963 | | NTIC's dividends received from joint ventures | $1,566,946 | $0 | $1,566,946 | - The Company received a one-time Employee Retention Credit (ERC) payment of **$1,139,756**, recognized as Other Income, and **$181,529** in related interest income during the nine months ended May 31, 2025[69](index=69&type=chunk)[70](index=70&type=chunk) Net Sales by Segment | Segment | Three Months Ended May 31, 2025 ($) | Three Months Ended May 31, 2024 ($) | Nine Months Ended May 31, 2025 ($) | Nine Months Ended May 31, 2024 ($) | | :-------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | ZERUST® | $15,728,637 | $14,837,235 | $45,316,457 | $45,461,075 | | Natur-Tec® | $5,779,926 | $5,848,962 | $16,602,565 | $16,249,335 | | **Total** | **$21,508,563** | **$20,686,197** | **$61,919,022** | **$61,710,410** | Net Sales by Geographic Location (to unaffiliated customers and JVs) | Location | Three Months Ended May 31, 2025 ($) | Three Months Ended May 31, 2024 ($) | Nine Months Ended May 31, 2025 ($) | Nine Months Ended May 31, 2024 ($) | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Inside the U.S. | $7,341,392 | $7,086,859 | $21,492,193 | $21,160,095 | | Outside the U.S. to JVs | $630,653 | $441,067 | $1,802,906 | $1,904,444 | | Outside the U.S. to unaffiliated customers | $13,536,518 | $13,158,271 | $38,623,923 | $38,645,871 | | **Total** | **$21,508,563** | **$20,686,197** | **$61,919,022** | **$61,710,410** | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=24&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides an in-depth analysis of NTIC's financial performance and condition, highlighting business operations, the impact of tariffs, key financial results, liquidity, capital resources, and market risks, detailing segment performance, changes in revenues and expenses, and factors influencing profitability, including a significant one-time Employee Retention Credit [Business Overview](index=24&type=section&id=Business%20Overview) NTIC develops and markets proprietary, environmentally beneficial products and services globally, primarily focusing on ZERUST® corrosion prevention for various industries and Natur-Tec® bio-based and compostable polymer products, strategically expanding its ZERUST® offerings into the oil and gas industry - NTIC's primary business is ZERUST® corrosion prevention, serving automotive, electronics, electrical, mechanical, military, retail consumer, and oil and gas markets[73](index=73&type=chunk)[74](index=74&type=chunk)[76](index=76&type=chunk) - NTIC also markets Natur-Tec® bio-based and compostable polymer resins and finished products, aiming to replace petroleum-based plastics and reduce carbon footprint[73](index=73&type=chunk)[78](index=78&type=chunk) - A strategic initiative is to expand ZERUST® corrosion prevention technologies into the oil and gas industry, which typically involves long sales cycles[76](index=76&type=chunk)[77](index=77&type=chunk) [Tariffs](index=25&type=section&id=Tariffs) NTIC expects to continue incurring additional costs due to tariffs but is implementing mitigation strategies such as targeted price increases, supplier diversification, and cost reductions; NTIC China's exposure to tariffs is limited as most of its production and sales are for local consumption - NTIC anticipates continued additional costs from tariffs for the remainder of fiscal **2025**[80](index=80&type=chunk) - Mitigation strategies include targeted price increases, supplier diversification, strategic sourcing adjustments, cost reductions, and manufacturing optimization[80](index=80&type=chunk) - NTIC China's tariff exposure is limited because the majority of its production and sales are for local consumption[80](index=80&type=chunk) [Financial Overview](index=25&type=section&id=Financial%20Overview) NTIC's consolidated net sales increased slightly for both the three and nine months ended May 31, 2025; however, total joint venture operations decreased, and net income attributable to NTIC saw a significant decline for both periods, primarily due to increased operating expenses and reduced joint venture income, partially offset by a one-time ERC payment | Metric | Three Months Ended May 31, 2025 ($) | Three Months Ended May 31, 2024 ($) | Nine Months Ended May 31, 2025 ($) | Nine Months Ended May 31, 2024 ($) | | :------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Consolidated Net Sales | $21,508,563 | $20,686,197 | $61,919,022 | $61,710,410 | | Cost of Goods Sold (% of Net Sales) | 61.6% | 61.8% | 62.5% | 61.8% | | Total Joint Venture Operations | $2,272,912 | $2,609,228 | $6,377,617 | $7,441,476 | | Net Income Attributable to NTIC | $121,775 | $976,604 | $1,117,185 | $3,573,294 | | Diluted EPS | $0.01 | $0.10 | $0.12 | $0.36 | - The increase in three-month net sales was primarily due to increased demand for ZERUST® products, while the nine-month increase was driven by Natur-Tec® products, partially offset by decreased ZERUST® sales[82](index=82&type=chunk) - Decreases in total joint venture operations were primarily due to decreased equity in income from joint ventures, driven by lower sales at most joint ventures[82](index=82&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Net sales increased for the three-month period due to ZERUST® industrial products, but slightly decreased for ZERUST® oil and gas; Natur-Tec® sales decreased for three months but increased for nine months due to demand in India and new applications; gross profit margins remained relatively stable; equity in income from joint ventures and total joint venture operations decreased significantly; operating expenses rose due to strategic investments in sales and marketing, and general and administrative costs; net income attributable to NTIC declined substantially for both periods, primarily due to increased operating expenses and decreased joint venture income, partially offset by a one-time ERC payment Net Sales by Segment (YoY Change) | Segment | 3 Months Ended May 31, 2025 ($) | 3 Months Ended May 31, 2024 ($) | % Change | 9 Months Ended May 31, 2025 ($) | 9 Months Ended May 31, 2024 ($) | % Change | | :-------------------- | :-------------------------- | :-------------------------- | :------- | :-------------------------- | :-------------------------- | :------- | | ZERUST® Industrial | $14,440,591 | $13,477,181 | **7.1%** | $40,965,696 | $40,431,379 | **1.3%** | | ZERUST® Oil & Gas | $1,288,046 | $1,360,054 | (5.3%) | $4,350,761 | $5,029,696 | (13.5%) | | Total ZERUST® Sales | $15,728,637 | $14,837,235 | **6.0%** | $45,316,457 | $45,461,075 | (0.3%) | | Natur-Tec® Sales | $5,779,926 | $5,848,962 | (1.2%) | $16,602,565 | $16,249,335 | **2.2%** | | **Total Net Sales** | **$21,508,563** | **$20,686,197** | **4.0%** | **$61,919,022** | **$61,710,410** | **0.3%** | Key Financial Metrics (YoY Change) | Metric | 3 Months Ended May 31, 2025 ($) | 3 Months Ended May 31, 2024 ($) | % Change | 9 Months Ended May 31, 2025 ($) | 9 Months Ended May 31, 2024 ($) | % Change | | :------------------------------------ | :-------------------------- | :-------------------------- | :------- | :-------------------------- | :-------------------------- | :------- | | Cost of Goods Sold | $13,249,123 | $12,793,103 | **3.6%** | $38,701,045 | $38,143,878 | **1.5%** | | Equity in Income from Joint Ventures | $970,314 | $1,396,731 | (30.5%) | $2,720,637 | $3,676,962 | (26.0%) | | Fees for Services Provided to Joint Ventures | $1,302,598 | $1,212,497 | **7.4%** | $3,656,980 | $3,764,514 | (2.9%) | | Selling Expenses | $4,375,956 | $4,232,887 | **3.4%** | $12,515,638 | $12,053,839 | **3.8%** | | General and Administrative Expenses | $4,150,966 | $3,500,113 | **18.6%** | $11,668,492 | $10,253,966 | **13.8%** | | Research and Development Expenses | $1,138,243 | $1,245,405 | (8.6%) | $3,770,539 | $3,593,582 | **4.9%** | | Interest Income | $37,821 | $23,744 | **59.3%** | $273,544 | $99,396 | **175.2%** | | Interest Expense | $(162,096) | $(59,939) | **170.4%** | $(421,471) | $(248,835) | **69.4%** | | Other Income | $0 | $0 | N/A | $1,139,756 | $0 | N/A | | Net Income Attributable to NTIC | $121,775 | $976,604 | (87.5%) | $1,117,185 | $3,573,294 | (68.7%) | - Interest income increased significantly due to **$181,529** earned on a delayed IRS payment related to Employee Retention Credit (ERC) claims[97](index=97&type=chunk) - Other income of **$1,139,756** was recognized from a one-time ERC payment, which does not represent recurring operational revenue[99](index=99&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) NTIC's working capital decreased, but cash and cash equivalents increased; the company relies on existing cash, forecasted cash flows, joint venture distributions, and financing arrangements to fund operations and investments; the Credit Facility with JPM was amended to extend maturity and increase availability, and NTIC China secured new term loans; operating cash flow decreased, while investing cash flow increased, and financing cash flow shifted from a net use to a net provide; the company temporarily adjusted its quarterly dividend to **$0.01** per share Liquidity Metrics | Metric | May 31, 2025 ($) | August 31, 2024 ($) | | :------------------------------------ | :----------- | :-------------- | | Working Capital | $21,661,715 | $23,682,276 | | Cash and Cash Equivalents | $6,773,401 | $4,952,184 | | Outstanding Line of Credit | $7,369,949 | $4,291,608 | | Outstanding Term Loans (NTIC China) | $2,778,125 | $2,820,835 | - The Credit Facility with JPMorgan Chase Bank, N.A. was amended on July 8, 2025, to increase availability from **$8.0 million** to **$10.0 million**, with a maturity date extended to January 5, 2026[41](index=41&type=chunk)[71](index=71&type=chunk)[112](index=112&type=chunk) - NTIC China entered into two new term loan agreements totaling RMB **20,000,000** (USD **$2.78 million**) with China Construction Bank Corporation, maturing in April and May 2026[48](index=48&type=chunk)[120](index=120&type=chunk) Cash Flow Activities (Nine Months Ended) | Activity ($) | May 31, 2025 | May 31, 2024 | | :------------------------------------ | :----------- | :----------- | | Net cash provided by operating activities | $3,808,450 | $7,583,905 | | Net cash used in investing activities | $(3,378,123) | $(2,601,176) | | Net cash provided by (used in) financing activities | $1,459,221 | $(4,587,474) | - The Board of Directors temporarily adjusted the quarterly cash dividend to **$0.01** per share, effective with the fiscal **2025** third-quarter dividend[128](index=128&type=chunk) - Capital expenditures for the nine months ended May 31, 2025, totaled **$3,398,123**, primarily for facility improvements and ERP software implementation[129](index=129&type=chunk) [Inflation and Seasonality](index=33&type=section&id=Inflation%20and%20Seasonality) Inflation has had a minimal effect on NTIC's gross margins during the first nine months of fiscal 2025; the business experiences seasonality, with net sales in the second fiscal quarter typically lower due to the Chinese New Year, North American holiday season, and lower winter temperatures - Inflation has had minimal adverse effect on NTIC's gross margins during the first nine months of fiscal **2025**[130](index=130&type=chunk) - NTIC's net sales in the second fiscal quarter are typically adversely affected by the long Chinese New Year, North American holiday season, and lower winter temperatures worldwide[131](index=131&type=chunk) [Market Risk](index=34&type=section&id=Market%20Risk) NTIC is exposed to market risks from foreign currency exchange rates, commodity prices, and interest rates; the company does not hedge against foreign currency risk, and its floating-rate Credit Facility and fixed-rate term loans contribute to interest rate exposure - NTIC is exposed to foreign currency exchange rate risk, primarily with the Euro, Japanese Yen, Indian Rupee, Chinese Renminbi, South Korean Won, and English Pound against the U.S. Dollar, and does not hedge this risk[133](index=133&type=chunk) - Commodity price exposures primarily relate to plastic and bioplastic resins used in NTIC's products[134](index=134&type=chunk) - Interest rate risk stems from its floating-rate Credit Facility (**$7,369,949** outstanding as of May 31, 2025) and fixed-rate term loans from NTIC China (**$2,778,125** outstanding as of May 31, 2025)[134](index=134&type=chunk)[135](index=135&type=chunk) [Critical Accounting Policies and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) There have been no material changes to NTIC's critical accounting policies and estimates; the adoption of ASU No. 2023-07 enhanced segment disclosures but did not impact accounting estimates - No material changes to critical accounting policies and estimates from the prior annual report[136](index=136&type=chunk) - The adoption of ASU No. 2023-07 resulted in enhanced segment disclosures but did not impact accounting estimates or the identification of critical accounting policies[137](index=137&type=chunk) [Recent Accounting Pronouncements](index=34&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 3 of the consolidated financial statements for a discussion of recently issued accounting pronouncements - Refer to Note 3 to NTIC's consolidated financial statements for details on recent accounting pronouncements[138](index=138&type=chunk) [Forward-Looking Statements](index=34&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements subject to various uncertainties and factors that could cause actual results to differ materially; key risks include changes in trade regulations, global economic conditions, supply chain disruptions, geopolitical events, volatility in specific product sales (oil & gas, Natur-Tec®), foreign currency fluctuations, dependence on joint ventures, raw material costs, new product success, competition, and the impact of rapid advancements in AI technologies - Forward-looking statements are subject to uncertainties and factors beyond NTIC's control, including changes to trade regulation, quotas, duties, or tariffs[139](index=139&type=chunk)[140](index=140&type=chunk) - Risks include the effect of current worldwide economic conditions (inflation, recessionary indicators), slowdowns in the automotive industry, worldwide supply chain disruptions, and ongoing wars/sanctions affecting energy and commodity prices[140](index=140&type=chunk) - Other significant risks are variability in sales of ZERUST® oil and gas products and Natur-Tec® products, dependence on joint ventures, fluctuations in raw material costs, and the potential disruptive impact of rapid advancements in artificial intelligence (AI) technologies[140](index=140&type=chunk)[141](index=141&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=37&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) NTIC is exposed to market risks from foreign currency exchange rates, commodity prices, and interest rates; the company does not hedge foreign currency risk, and its debt instruments include both floating and fixed interest rates - NTIC is exposed to foreign currency exchange rate risk, particularly with the Euro, Japanese Yen, Indian Rupee, Chinese Renminbi, South Korean Won, and English Pound against the U.S. Dollar, and does not hedge this risk[144](index=144&type=chunk) - Commodity price exposure primarily relates to plastic and bioplastic resins used in its products[146](index=146&type=chunk) - Interest rate risk arises from its floating-rate Credit Facility (**$7,369,949** outstanding as of May 31, 2025) and fixed-rate term loans from NTIC China (**$2,778,125** outstanding as of May 31, 2025)[147](index=147&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=38&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, evaluated the effectiveness of NTIC's disclosure controls and procedures and concluded they were effective as of May 31, 2025; there were no material changes in internal control over financial reporting during the quarter - NTIC's disclosure controls and procedures were evaluated and deemed effective as of May 31, 2025[148](index=148&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended May 31, 2025[149](index=149&type=chunk) PART II—OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=39&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section refers to Note 13 of the consolidated financial statements for details on legal matters; management believes that any liability from these matters will not materially affect the Company's consolidated results of operations, financial position, or cash flows - Refer to Note 13 for information on legal proceedings[150](index=150&type=chunk) - Management believes that any liability from legal matters will not materially affect the Company's consolidated results of operations, financial position, or cash flows[66](index=66&type=chunk) [ITEM 1A. RISK FACTORS](index=39&type=section&id=ITEM%201A.%20RISK%20FACTORS) NTIC discloses updated risk factors, including the negative impact of changes to trade regulations, quotas, duties, or tariffs, particularly due to evolving U.S. and geopolitical environments; the company is also subject to extensive governmental regulations and taxes, with compliance costs and potential penalties, and faces uncertainty from political climate changes that could affect environmental and other regulations - Changes to trade regulation, quotas, duties, or tariffs, including potential new tariffs from the Trump administration, may negatively impact NTIC's business, operating results, and financial condition[151](index=151&type=chunk) - NTIC's business is subject to various international, federal, state, and local laws and regulations related to environmental protection, natural resources, worker health and safety, and hazardous substances, with potential for compliance costs, penalties, and adverse effects on product demand[152](index=152&type=chunk) - Governmental regulation, such as PHMSA rules, can delay work and adversely impact demand for certain products and operating results, with further slowdowns expected due to the current political climate[153](index=153&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=40&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) NTIC did not issue any unregistered equity securities during the three months ended May 31, 2025; the company's stock repurchase program had **$2,640,548** remaining available as of May 31, 2025, with no repurchases made during the third quarter of fiscal 2025 - No unregistered equity securities were issued during the three months ended May 31, 2025[154](index=154&type=chunk) - As of May 31, 2025, **$2,640,548** remained available for repurchase under NTIC's stock repurchase program, and no shares were repurchased during the third quarter of fiscal **2025**[156](index=156&type=chunk)[157](index=157&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=41&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This item is not applicable to NTIC for the reporting period - Not applicable[160](index=160&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=41&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to NTIC for the reporting period - Not applicable[161](index=161&type=chunk) [ITEM 5. OTHER INFORMATION](index=41&type=section&id=ITEM%205.%20OTHER%20INFORMATION) On July 8, 2025, NTIC amended its Credit Agreement with JPMorgan Chase Bank, N.A. to increase the Credit Facility's availability from **$8.0 million** to **$10.0 million**; additionally, no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, terminated, or modified by directors or officers during the three months ended May 31, 2025 - On July 8, 2025, the Credit Agreement with JPMorgan Chase Bank, N.A. was amended to increase the Credit Facility's availability from **$8.0 million** to **$10.0 million**[162](index=162&type=chunk) - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted, terminated, or modified by NTIC's directors or officers during the three months ended May 31, 2025[164](index=164&type=chunk) [ITEM 6. EXHIBITS](index=41&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed or furnished with the quarterly report on Form 10-Q, including amendments to the Credit Agreement, various certifications (e.g., CEO, CFO), and Inline XBRL data for the financial statements - Exhibits include the Third Amendment to Credit Agreement, Line of Credit Note, Certifications of President and CEO, and CFO (pursuant to SEC Rule 13a-14(a) and 18 U.S.C. Section 1350), and Inline XBRL formatted financial statements[165](index=165&type=chunk) SIGNATURES The report is formally signed by Matthew C. Wolsfeld, CPA, Chief Financial Officer, on behalf of Northern Technologies International Corporation, confirming its due authorization - The report was signed by Matthew C. Wolsfeld, CPA, Chief Financial Officer, on July 10, 2025[168](index=168&type=chunk) ```

Financial Highlights & Management Commentary [Executive Summary of Q3 FY2025 Performance](index=1&type=section&id=1.1.%20Executive%20Summary%20of%20Q3%20FY2025%20Performance) Northern Technologies International Corporation (NTIC) reported sequential and year-over-year growth in consolidated net sales for Q3 FY2025, driven by top-line improvements across various business segments despite global trade and geopolitical challenges. The company highlighted increased demand for ZERUST® industrial products, partially offset by lower sales in ZERUST® oil and gas and Natur-Tec® categories * Consolidated net sales increased **4.0% year-over-year** in Q3 FY2025, reaching **$21,509,000**[5](index=5&type=chunk)[7](index=7&type=chunk) * ZERUST® industrial net sales increased **7.1% to $14,441,000**, while ZERUST® oil and gas net sales decreased **5.3% to $1,288,000**, and Natur-Tec® product net sales decreased **1.2% to $5,780,000**[7](index=7&type=chunk)[8](index=8&type=chunk) * Gross profit as a percent of net sales increased **20 basis points to 38.4%**[7](index=7&type=chunk) * Net income attributable to NTIC was **$122,000**, or **$0.01 per diluted share**, a decrease from **$977,000**, or **$0.10 per diluted share**, in the prior year[7](index=7&type=chunk)[11](index=11&type=chunk) [Management's Strategic Commentary & Outlook](index=1&type=section&id=1.2.%20Management's%20Strategic%20Commentary%20%26%20Outlook) Management emphasized continued investment in the ZERUST® oil and gas business, expecting sequential improvement in sales and profitability in Q4 FY2025 and into FY2026 due to shifted larger orders. They are also monitoring European economic stimulus packages, anticipating a positive impact on joint venture operating income, particularly in Germany, and believe the company is well-positioned for growth and profitability in fiscal 2026 and beyond despite current macro challenges * NTIC continues to invest in its ZERUST® oil and gas business, including new salespeople and resources, expecting sales and profitability to improve sequentially in Q4 and into FY2026 due to shifted larger orders[3](index=3&type=chunk) * ZERUST® oil and gas sales have consistently produced **higher gross margins** than the core industrial business and remained **over $1.2 million for 13 consecutive quarters**, generating cumulative sales of **$24 million**[3](index=3&type=chunk) * The company anticipates that economic recovery from European stimulus packages, especially in Germany, will positively impact joint venture operating income[4](index=4&type=chunk) * Despite macro-related challenges in FY2025, NTIC believes it is **well-positioned for growth and profitability** across many markets in fiscal 2026 and beyond[4](index=4&type=chunk) Consolidated Financial Performance [Net Sales by Product Category](index=1&type=section&id=2.1.%20Net%20Sales%20by%20Product%20Category) Consolidated net sales for Q3 FY2025 increased by 4.0% year-over-year, primarily driven by a strong 7.1% increase in ZERUST® industrial net sales. This growth was partially offset by declines in ZERUST® oil and gas and Natur-Tec® product categories. Year-to-date consolidated net sales showed a modest increase of 0.3% | Product Category | Three Months Ended May 31, 2025 | % of Net Sales (2025) | Three Months Ended May 31, 2024 | % of Net Sales (2024) | % Change | | :----------------- | :------------------------------ | :-------------------- | :------------------------------ | :-------------------- | :------- | | ZERUST industrial | $14,440,591 | 67.1% | $13,477,181 | 65.1% | 7.1% | | ZERUST oil & gas | $1,288,046 | 6.0% | $1,360,054 | 6.6% | (5.3%) | | Total ZERUST | $15,728,637 | 73.1% | $14,837,235 | 71.7% | 6.0% | | Total Natur-Tec | $5,779,926 | 26.9% | $5,848,962 | 28.3% | (1.2%) | | Total net sales | $21,508,563 | 100.0% | $20,686,197 | 100.0% | 4.0% | | Product Category | Nine Months Ended May 31, 2025 | % of Net Sales (2025) | Nine Months Ended May 31, 2024 | % of Net Sales (2024) | % Change | | :----------------- | :----------------------------- | :-------------------- | :----------------------------- | :-------------------- | :------- | | ZERUST industrial | $40,965,696 | 66.2% | $40,431,379 | 65.5% | 1.3% | | ZERUST oil & gas | $4,350,761 | 7.0% | $5,029,696 | 8.2% | (13.5%) | | Total ZERUST | $45,316,457 | 73.2% | $45,461,075 | 73.7% | (0.3%) | | Total Natur-Tec | $16,602,565 | 26.8% | $16,249,335 | 26.3% | 2.2% | | Total net sales | $61,919,022 | 100.0% | $61,710,410 | 100.0% | 0.3% | [Joint Venture Operating Income](index=2&type=section&id=2.2.%20Joint%20Venture%20Operating%20Income) Joint venture operating income decreased by 12.9% in Q3 FY2025 and 14.3% year-to-date, primarily due to lower sales and a reduction in equity in income from NTIC's joint ventures. The net sales of unconsolidated joint ventures also saw a decline | Metric | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | % Change | | :----------------------------------- | :------------------------------ | :------------------------------ | :------- | | Joint venture operating income | $2,273,000 | $2,609,000 | (12.9%) | | Net sales of NTIC's joint ventures | $23,212,000 | $25,602,000 | (9.3%) | | Metric | Nine Months Ended May 31, 2025 | Nine Months Ended May 31, 2024 | % Change | | :----------------------------------- | :----------------------------- | :----------------------------- | :------- | | Joint venture operating income | $6,378,000 | $7,441,000 | (14.3%) | | Net sales of NTIC's joint ventures | $66,848,000 | $72,643,000 | (7.9%) | [Operating Expenses Analysis](index=2&type=section&id=2.3.%20Operating%20Expenses%20Analysis) Operating expenses increased by 7.6% in Q3 FY2025 and 7.9% year-to-date, leading to an increase in operating expenses as a percentage of net sales. This rise was attributed to strategic investments in ZERUST® oil and gas sales infrastructure and higher personnel expenses, including new hires, benefits, travel, and professional fees * Operating expenses increased **7.6% to $9,665,000** for the three months ended May 31, 2025[7](index=7&type=chunk) | Metric | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | Nine Months Ended May 31, 2025 | Nine Months Ended May 31, 2024 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Operating expenses (% of net sales) | 44.9% | 43.4% | 45.1% | 42.0% | * Higher operating expenses were primarily due to strategic investments in ZERUST® oil and gas sales infrastructure and increased personnel expenses (new hires, benefits, travel, professional fees)[9](index=9&type=chunk) [Net Income and Earnings Per Share](index=2&type=section&id=2.4.%20Net%20Income%20and%20Earnings%20Per%20Share) Net income attributable to NTIC significantly decreased in Q3 FY2025 and year-to-date compared to the prior year, resulting in lower diluted earnings per share. The year-to-date figures were impacted by the recognition of $1,140,000 in other income from an ERC payment | Metric | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | Nine Months Ended May 31, 2025 | Nine Months Ended May 31, 2024 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income attributable to NTIC | $122,000 | $977,000 | $1,117,000 | $3,573,000 | | Net income per diluted share | $0.01 | $0.10 | $0.12 | $0.36 | * NTIC recognized **$1,140,000 in other income** during the nine months ended May 31, 2025, due to the receipt of a cash ERC payment, with no such income in the prior year[10](index=10&type=chunk) [Liquidity and Capital Position](index=2&type=section&id=2.5.%20Liquidity%20and%20Capital%20Position) As of May 31, 2025, NTIC's working capital decreased compared to August 31, 2024, despite an increase in cash and cash equivalents. The company's outstanding revolving line of credit and term loan balance also increased. Investments in joint ventures grew, with a significant portion held in cash | Metric | As of May 31, 2025 | As of August 31, 2024 | | :----------------------------------- | :----------------- | :-------------------- | | Working capital | $21,662,000 | $23,682,000 | | Cash and cash equivalents | $6,773,000 | $4,952,000 | | Outstanding revolving line of credit and term loan balance | $10,148,000 | $7,112,000 | * Investments in joint ventures totaled **$27,139,000** as of May 31, 2025, with **$13,500,000 (49.7%) held in cash**[14](index=14&type=chunk) Financial Statements [Consolidated Balance Sheets](index=4&type=section&id=3.1.%20Consolidated%20Balance%20Sheets) The consolidated balance sheets present NTIC's financial position as of May 31, 2025, and August 31, 2024. Key changes include an increase in total assets, primarily driven by higher cash and cash equivalents and investments in joint ventures, alongside an increase in total liabilities, notably in the line of credit | ASSETS | May 31, 2025 | August 31, 2024 | | :----------------------------------- | :------------ | :-------------- | | Cash and cash equivalents | $6,773,401 | $4,952,184 | | Total current assets | $42,600,386 | $41,579,219 | | Investments in joint ventures | $27,139,197 | $25,397,287 | | Total assets | $99,303,381 | $94,676,502 | | LIABILITIES AND EQUITY | May 31, 2025 | August 31, 2024 | | :----------------------------------- | :------------ | :-------------- | | Line of credit | $7,369,949 | $4,291,608 | | Total current liabilities | $20,938,671 | $17,896,943 | | Total long-term liabilities | $1,788,215 | $1,604,238 | | Total equity | $76,576,495 | $75,175,321 | | Total liabilities and equity | $99,303,381 | $94,676,502 | [Consolidated Statements of Operations](index=5&type=section&id=3.2.%20Consolidated%20Statements%20of%20Operations) The consolidated statements of operations detail NTIC's financial performance for the three and nine months ended May 31, 2025, and 2024. The report shows an increase in net sales but a decrease in gross profit for the nine-month period. Operating income and net income attributable to NTIC also declined significantly year-over-year for both the quarter and year-to-date periods | Metric | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | Nine Months Ended May 31, 2025 | Nine Months Ended May 31, 2024 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net sales | $21,508,563 | $20,686,197 | $61,919,022 | $61,710,410 | | Gross profit | $8,259,440 | $7,893,094 | $23,217,977 | $23,566,532 | | Total joint venture operations | $2,272,912 | $2,609,228 | $6,377,617 | $7,441,476 | | Total operating expenses | $9,665,165 | $8,978,405 | $27,954,669 | $25,901,387 | | Operating income | $867,187 | $1,523,917 | $1,640,925 | $5,106,621 | | Net income attributable to NTIC | $121,775 | $976,604 | $1,117,185 | $3,573,294 | | Diluted net income per common share | $0.01 | $0.10 | $0.12 | $0.36 | [GAAP to Non-GAAP Reconciliation](index=6&type=section&id=3.3.%20GAAP%20to%20Non-GAAP%20Reconciliation) NTIC provides a reconciliation of GAAP net income to non-GAAP adjusted net income, which excludes the impact of other income from ERC payments and amortization expense. This non-GAAP measure is used to facilitate period-to-period performance comparisons by factoring out non-recurring or unusual charges * Non-GAAP adjusted net income attributable to NTIC and adjusted net income per diluted share are presented to provide supplemental performance measures, excluding non-recurring items like ERC payments and amortization expense[26](index=26&type=chunk)[27](index=27&type=chunk) | Metric | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | Nine Months Ended May 31, 2025 | Nine Months Ended May 31, 2024 | | :----------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income attributable to NTIC, as reported | $121,775 | $976,604 | $1,117,185 | $3,573,294 | | Adjustments for adjusted net income: | | | | | | Other income from ERC | — | — | ($1,139,757) | — | | Bonus expense impact from ERC | — | — | $300,000 | — | | Amortization expense | $105,783 | $105,783 | $317,349 | $317,349 | | Non-GAAP adjusted net income | $227,558 | $1,082,387 | $594,777 | $3,890,643 | | Non-GAAP diluted adjusted net income per share | $0.02 | $0.11 | $0.06 | $0.39 | Company Overview & Disclosures [About Northern Technologies International Corporation](index=3&type=section&id=4.1.%20About%20Northern%20Technologies%20International%20Corporation) Northern Technologies International Corporation (NTIC) is a global developer and marketer of environmentally beneficial products and services, operating in over 65 countries. Its core business is corrosion prevention under the ZERUST® brand, serving various industrial and consumer markets, including a recent expansion into the oil and gas industry. NTIC also offers bio-based and biodegradable polymer resin compounds and products under the Natur-Tec® brand * NTIC develops and markets proprietary, environmentally beneficial products and services in **over 65 countries** through subsidiaries, joint ventures, distributors, and agents[17](index=17&type=chunk) * The primary business is corrosion prevention under the ZERUST® brand, serving automotive, electronics, electrical, mechanical, military, retail consumer, and recently, the oil and gas markets for **over 50 years**[17](index=17&type=chunk) * NTIC also markets bio-based and biodegradable polymer resin compounds and finished products under the Natur-Tec® brand[17](index=17&type=chunk) [Forward-Looking Statements](index=3&type=section&id=4.2.%20Forward-Looking%20Statements) This section contains forward-looking statements regarding NTIC's future expectations, including anticipated improvements in ZERUST® oil and gas sales and profitability, positive impacts from European economic stimulus, and overall growth prospects. These statements are subject to various risks and uncertainties, such as economic conditions, geopolitical tensions, supply chain disruptions, dependence on joint ventures, and regulatory changes, which could cause actual results to differ materially * Forward-looking statements include expectations for ZERUST® oil and gas sales and profitability to improve, positive impact from European economic stimulus on joint venture operating income, and being **well-positioned for growth** in fiscal 2026 and beyond[18](index=18&type=chunk) * Potential risks and uncertainties include the health of global economies, economic uncertainty, inflation, interest rates, supply chain disruptions, dependence on joint ventures, international operations risks (exchange rates, tariffs, trade disputes, political unrest), market growth, R&D investments, product acceptance, competition, regulatory compliance, and intellectual property rights[18](index=18&type=chunk) * NTIC urges interested parties to read its SEC filings (Form 10-K, 10-Q) for a better understanding of business risks and undertakes no obligation to publicly release revisions to these statements[18](index=18&type=chunk)[19](index=19&type=chunk) [Use of Non-GAAP Financial Measures](index=4&type=section&id=4.3.%20Use%20of%20Non-GAAP%20Financial%20Measures) NTIC utilizes non-GAAP financial measures, such as adjusted net income and adjusted net income per diluted share, to supplement GAAP results. These measures are intended to provide additional insight into operating performance by excluding non-recurring or unusual charges, facilitating period-to-period and company-to-company comparisons. However, they should not be considered in isolation or as a substitute for GAAP measures * Non-GAAP financial measures, including adjusted net income and adjusted net income per diluted share, are used as supplemental measures of performance[20](index=20&type=chunk) * These measures facilitate operating performance comparisons by factoring out potential differences caused by non-recurring, unusual, or infrequent charges not related to NTIC's regular business[20](index=20&type=chunk) * Non-GAAP measures have limitations as analytical tools and should not be considered superior to, or a substitute for, GAAP financial results[20](index=20&type=chunk) Investor Information [Conference Call and Webcast Details](index=3&type=section&id=5.1.%20Conference%20Call%20and%20Webcast%20Details) NTIC hosted a conference call and webcast on July 10, 2025, at 8:00 a.m. Central Time to discuss Q3 FY2025 results and outlook. Participants could register for the live call to ask questions or access an audio-only webcast, with a replay available on the Investor Relations section of NTIC's website * NTIC hosted a conference call on **July 10, 2025, at 8:00 a.m. Central Time** to review Q3 FY2025 results and outlook[15](index=15&type=chunk) * Interested parties could join the live call by registering via a provided URL to receive dial-in and PIN numbers, or access an audio-only webcast[15](index=15&type=chunk)[16](index=16&type=chunk) * A replay of the webcast will be archived and accessible for approximately **one year** on the Investor Relations section of NTIC's webpage[16](index=16&type=chunk) [Investor and Media Contact](index=7&type=section&id=5.2.%20Investor%20and%20Media%20Contact) Matthew Wolsfeld, CFO of NTIC, is listed as the primary contact for investor and media inquiries * Matthew Wolsfeld, CFO of NTIC, is the contact for investor and media inquiries, reachable at **(763) 225-6600**[30](index=30&type=chunk)

Core Insights - Northern Technologies (NTIC) reported quarterly earnings of $0.02 per share, missing the Zacks Consensus Estimate of $0.04 per share, and down from $0.11 per share a year ago, representing an earnings surprise of -50.00% [1] - The company posted revenues of $21.51 million for the quarter ended May 2025, surpassing the Zacks Consensus Estimate by 3.91% and up from $20.69 million year-over-year [2] - Northern Technologies shares have declined approximately 39.7% year-to-date, contrasting with the S&P 500's gain of 6.5% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.13 on revenues of $24 million, and for the current fiscal year, it is $0.20 on revenues of $85.1 million [7] - The estimate revisions trend for Northern Technologies was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Chemical - Diversified industry, to which Northern Technologies belongs, is currently ranked in the bottom 14% of over 250 Zacks industries, suggesting potential challenges for stock performance [8]