Northern Technologies International (NTIC) - 2025 Q1 - Quarterly Report

Financial Performance - For the three months ended November 30, 2024, the Company reported net income attributable to NTIC of $561,091, a decrease of 37.3% from$ 895,521 in the same period of 2023[51]. - Total net sales for the three months ended November 30, 2024 were $21,338,393, representing an increase of 5.7% compared to$ 20,181,675 in 2023[57]. - The basic net income per share for the three months ended November 30, 2024 was $0.06, down from$ 0.09 in 2023[51]. - NTIC's consolidated net sales increased by 5.7% to $21,338,393 for the three months ended November 30, 2024, compared to$ 20,181,675 for the same period in 2023[75]. - Net income attributable to NTIC decreased to $561,091, or$ 0.06 per diluted common share, for the three months ended November 30, 2024, down from $895,521, or$ 0.09 per diluted common share, in the prior year[94]. Sales and Revenue - ZERUST® segment net sales increased slightly to $15,475,803 in 2024 from$ 15,405,745 in 2023, while Natur-Tec® segment net sales rose significantly by 22.7% to $5,862,590 from$ 4,775,930[57]. - Net sales inside the U.S. increased to $13,088,319 in 2024 from$ 12,097,843 in 2023, while sales outside the U.S. also saw an increase[59]. - Sales of Natur-Tec® products surged by 22.8% to $5,862,590, accounting for 27.5% of total net sales, up from 23.7% in the prior year[82]. - ZERUST® product sales increased slightly by 0.5% to$ 15,475,803, representing 72.5% of total net sales[78]. - Net sales at joint ventures rose by 1.2% to $23,837,010 for the three months ended November 30, 2024, compared to$ 23,560,661 for the same period in 2023[85]. Expenses and Costs - Cost of goods sold as a percentage of net sales decreased to 61.7% from 63.7% year-over-year, primarily due to lower raw material prices and insourcing[83]. - Total operating expenses increased by 14.0% to $9,469,994, attributed to strategic investments in ZERUST® oil and gas sales infrastructure[75]. - Selling expenses increased by 15.8% for the three months ended November 30, 2024, with selling expenses as a percentage of net sales rising to 20.0% from 18.3% in the prior year[86]. - General and administrative expenses rose by 9.7% for the three months ended November 30, 2024, with these expenses as a percentage of net sales increasing to 18.1% from 17.4%[87]. - Research and development expenses increased by 21.5% for the three months ended November 30, 2024, reflecting continued investment in new product development[88]. Assets and Liabilities - As of November 30, 2024, total inventories amounted to$ 14,337,384, a slight decrease from $14,390,844 as of August 31, 2024[34]. - Property and equipment, net increased to$ 17,053,239 as of November 30, 2024, compared to $16,265,653 as of August 31, 2024, with depreciation expense decreasing to$ 267,155 from $307,010 year-over-year[35]. - Total intangible assets, net were reported at$ 5,573,945 as of November 30, 2024, down from $5,682,945 as of August 31, 2024, with amortization expense remaining stable[36]. - As of November 30, 2024, borrowings under the Credit Facility amounted to$ 4,518,734, an increase from $4,291,608 as of August 31, 2024[41]. - Working capital was$ 22,183,428 as of November 30, 2024, down from $23,682,276 as of August 31, 2024[98]. Cash Flow - Net cash provided by operating activities was$ 2,395,066 for the three months ended November 30, 2024, compared to $3,076,892 for the same period in 2023[111]. - Net cash used in investing activities for the three months ended November 30, 2024, was$ 1,258,336, compared to $423,871 for the same period in 2023[115]. - Net cash used in financing activities for the three months ended November 30, 2024, was$ 393,341, a significant decrease from $2,019,836 in the prior year[116]. Dividends and Share Repurchase - The Company declared a cash dividend of$ 0.07 per share on October 16, 2024, payable on November 13, 2024[49]. - As of November 30, 2024, $2,640,548 remains available for share repurchase under the stock repurchase program, with no repurchases occurring during the three months ended November 30, 2024[117]. Future Outlook and Strategic Initiatives - The Company anticipates adopting new accounting standards related to segment reporting and income tax disclosures for the fiscal year ending August 31, 2025[30][32]. - The Company is evaluating the impact of new SEC rules on climate-related disclosures, which will begin phasing in for fiscal years starting January 1, 2025[33]. - NTIC anticipates continued volatility in quarterly net income due to factors such as inflation and supply chain disruptions[95]. - NTIC expects to invest in joint ventures, research and development, and marketing efforts throughout fiscal 2025, although specific amounts are not yet determined[99]. - NTIC is enhancing its North American distribution network for Natur-Tec® products to capitalize on the growing demand for biodegradable plastics[72].