
Financial Highlights & Management Commentary Executive Summary of Q3 FY2025 Performance 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 $21,509,00057 * 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 $5,780,00078 * Gross profit as a percent of net sales increased 20 basis points to 38.4%7 * 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 year711 Management's Strategic Commentary & Outlook 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 orders3 * 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 million3 * The company anticipates that economic recovery from European stimulus packages, especially in Germany, will positively impact joint venture operating income4 * Despite macro-related challenges in FY2025, NTIC believes it is well-positioned for growth and profitability across many markets in fiscal 2026 and beyond4 Consolidated Financial Performance Net Sales by Product Category 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 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 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, 20257 | 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 Net Income and Earnings Per Share 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 year10 Liquidity and Capital Position 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 cash14 Financial Statements Consolidated Balance Sheets 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 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 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 expense2627 | 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 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 agents17 * 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 years17 * NTIC also markets bio-based and biodegradable polymer resin compounds and finished products under the Natur-Tec® brand17 Forward-Looking Statements 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 beyond18 * 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 rights18 * 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 statements1819 Use of Non-GAAP Financial Measures 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 performance20 * 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 business20 * Non-GAAP measures have limitations as analytical tools and should not be considered superior to, or a substitute for, GAAP financial results20 Investor Information Conference Call and Webcast Details 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 outlook15 * 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 webcast1516 * A replay of the webcast will be archived and accessible for approximately one year on the Investor Relations section of NTIC's webpage16 Investor and Media Contact 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) 225-660030