Northern Technologies International Q1 Earnings Call Highlights

Core Insights - Northern Technologies International Corporation (NTIC) reported record first-quarter consolidated net sales of $23.3 million, reflecting a 9.2% year-over-year increase, driven by strong performance in its Zerust Oil & Gas and China subsidiaries [2][3][5] Financial Performance - NTIC China achieved a 23.5% year-over-year increase in net sales, reaching $4.9 million, attributed to strong domestic demand [1] - Zerust Oil & Gas recorded first-quarter sales of $2.4 million, a 58.1% increase from the previous year, marking the second consecutive quarter with over $2 million in revenue [2][7] - Natur-Tec bioplastics sales reached a quarterly record of $6.0 million, up 2.2% year-over-year and 16.5% quarter-over-quarter [4][12] Profitability and Margins - Gross margin decreased to 36.0% from 38.3% a year earlier, with net income reported at $238,000, down from $561,000 in the prior-year period [4][16][15] - Management is prioritizing margin improvement and aims to keep operating expenses relatively flat while pursuing growth opportunities [19] Strategic Focus - The company is focusing on improving profitability by driving sales in higher-margin segments and enhancing gross margins [19] - NTIC is pursuing larger opportunities in North America and India, particularly in compostable food packaging solutions [13] Joint Ventures and Market Trends - Total net sales for NTIC's joint ventures rose 2.9% year-over-year to $24.5 million, with management monitoring European markets for signs of stabilization [6] - NTIC's joint venture operating income decreased by 5.1% from the prior-year period, primarily due to increased operating expenses [6] Debt and Cash Flow - As of November 30, 2025, NTIC reported working capital of $19.4 million, with $12.0 million in outstanding debt [17] - The company aims to reduce debt through anticipated positive operating cash flow and improved working capital efficiencies [17]