Northern Technologies International (US:NTIC)2026-01-08 13:01Financial Performance - Total net sales for the three months ended November 30, 2025, were $23,308,881, an increase of 9.2% compared to $21,338,393 for the same period in 2024[54]. - NTIC's consolidated net sales increased by 9.2% to $23,308,881 for the three months ended November 30, 2025, compared to $21,338,393 for the same period in 2024, driven by higher demand for ZERUST® and Natur-Tec® products[77]. - Net sales from joint ventures for the three months ended November 30, 2025, totaled $24,531,431, an increase from $23,837,010 in the same period of 2024, representing a growth of 2.91%[35]. - Gross profit for the total segments was $9,164,961 for the three months ended November 30, 2025, compared to $8,970,504 in 2024, reflecting a growth of 2.2%[55]. - The Company’s share of equity in income from joint ventures for the three months ended November 30, 2025, was $1,222,116, up from $1,129,593 in the same period of 2024, a rise of 8.20%[35]. - The company reported a net income of $237,819 for the three months ended November 30, 2025, down from $561,091 in the same period of 2024[49]. - Basic net income per share for the three months ended November 30, 2025, was $0.03, compared to $0.06 for the same period in 2024[49]. Sales and Revenue Breakdown - ZERUST® segment net sales reached $17,316,196, up from $15,475,803, while Natur-Tec® segment net sales increased to $5,992,685 from $5,862,590[54]. - Sales of ZERUST® products and services accounted for 74.3% of total net sales, increasing by 11.9%, while Natur-Tec® products represented 25.7% of net sales, with a growth of 2.2%[74]. - Total ZERUST® sales rose by 11.9% to $17,316,196, accounting for 74.3% of consolidated net sales, primarily due to increased demand in the oil and gas sector[79]. - ZERUST® oil and gas net sales surged by 58.1% to $2,393,678, largely due to heightened demand in Brazil, with a significant contract valued at approximately R$70 million (US$13.1 million) expected to impact future sales positively[81]. Expenses and Costs - Cost of goods sold as a percentage of net sales rose to 64.0% from 61.7%, attributed to higher raw material prices and discounts[74]. - Total operating expenses increased by 2.9% to $9,741,367, primarily due to strategic investments in marketing and sales efforts for ZERUST® products[78]. - Research and development expenses decreased by 9.1% to $1,220,912, reflecting a shift in expense categorization to selling expenses[88]. - Cost of goods sold increased by 13.3% to $14,925,255, with the cost as a percentage of net sales rising to 64.0% from 61.7%[83]. Assets and Liabilities - Total inventories as of November 30, 2025, increased to $16,107,563 from $15,525,230 as of August 31, 2025, representing a growth of 3.73%[30]. - Property and equipment, net, rose to $15,800,929 as of November 30, 2025, compared to $15,183,918 as of August 31, 2025, reflecting an increase of 4.07%[31]. - Intangible assets, net, decreased to $8,594,926 as of November 30, 2025, down from $8,827,768 as of August 31, 2025, a decline of 2.64%[32]. - The outstanding balance for term loans as of November 30, 2025, was $2,826,615, slightly up from $2,804,695 as of August 31, 2025[43]. - Borrowings under the Credit Facility amounted to $9,134,428 as of November 30, 2025, slightly down from $9,329,021 as of August 31, 2025[37]. Cash Flow and Investments - Net cash provided by operating activities for the three months ended November 30, 2025, was $341,908, down from $2,395,066 in the same period of 2024[112]. - NTIC's net cash used in investing activities for the three months ended November 30, 2025, was $821,624, primarily for property and equipment purchases[116]. - Capital expenditures for the three months ended November 30, 2025, were $821,624, with an expected total of $2,000,000 to $2,500,000 for fiscal 2026[120]. Dividends and Shareholder Returns - The company declared a cash dividend of $0.01 per share on October 15, 2025, payable on November 12, 2025[46]. - NTIC declared a cash dividend of $0.01 per share on October 15, 2025, compared to $0.07 per share declared on October 16, 2024[119]. Strategic Initiatives and Future Outlook - NTIC's strategic initiative includes expanding into the oil and gas industry, with a significant contract secured in November 2025 valued at approximately R$70 million (US$13.1 million)[70]. - The company continues to strengthen its distribution network for Natur-Tec® products, anticipating higher sales growth in fiscal 2026 compared to fiscal 2025[71]. - Management is implementing measures to mitigate inflationary and supply chain pressures due to tariffs, focusing on supplier diversification and regional sourcing initiatives[75]. - NTIC anticipates continued volatility in quarterly net income due to inflation, supply chain disruptions, and fluctuating sales in its product segments[95]. Risks and Uncertainties - The company has identified several uncertainties that could materially affect its financial results, including changes in trade regulations and supply chain disruptions[130]. - NTIC expects to incur additional costs related to tariffs throughout fiscal 2026 and is implementing strategies to mitigate inflationary pressures[135]. - The company does not hedge against its foreign currency exchange rate risk, which could lead to declines in reported net income[134]. - 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[134].