Northern Technologies International (US:NTIC)2021-11-17 17:28Financial Data and Key Metrics Changes - For fiscal 2021, consolidated sales increased by 18.6% compared to the prior fiscal year, with a record quarterly sales growth of 54.7% in Q4 2021 [6][20] - Net income for Q4 2021 was $1.7 million or $0.17 per diluted share, a significant improvement from a net loss of nearly $1.8 million or a loss of $0.19 per diluted share in Q4 2020 [22] - Total operating expenses for Q4 2021 were $6.6 million, a 24.1% increase year-over-year, but operating expenses as a percentage of net sales decreased to 42.5% from 53.0% [21] Business Line Data and Key Metrics Changes - ZERUST oil and gas net sales increased by 139.6% in Q4 2021, while Natur-Tec net sales grew by 51.4% and ZERUST industrial net sales increased by 47.0% [10] - NTIC's joint ventures reported total net sales of $33.2 million in Q4 2021, a 79.3% increase compared to the same period last fiscal year [11] Market Data and Key Metrics Changes - NTIC's China subsidiary saw a 25.7% increase in net sales to $4.3 million in Q4 2021, driven by higher sales to new and existing customers [12] - The Indian joint venture, now wholly owned, is expected to contribute approximately $10 million in net sales and over $2.2 million in net income during fiscal year 2022 [14] Company Strategy and Development Direction - The company is focusing on expanding its operations in China and India, with significant investments in facilities and acquisitions to support growth [13][14] - NTIC aims to leverage its asset-light business model and global presence to navigate supply chain challenges and capitalize on demand trends in industrial production [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about strong demand trends continuing into fiscal 2022 as global economies reopen and industrial production improves [8] - The company anticipates fiscal 2022 to be another strong year of sales growth and higher profitability, supported by strategic investments in its business units [18][25] Other Important Information - NTIC's Board of Directors declared a quarterly cash dividend of $0.065 per share, which was increased to $0.07 per share in October 2021 [24] - The company reported a working capital of $25.2 million as of August 31, 2021, impacted by a $6.2 million investment in a new facility in China [23] Q&A Session Summary Question: Why is China doing so well? - Management attributed China's success to both domestic and international demand, with increasing domestic demand supporting sales despite slight drops in exports [28] Question: What is the growth rate in India? - India has seen significant year-over-year growth, becoming the second most profitable joint venture for NTIC, with expectations of continued expansion [30][31] Question: What new opportunities exist in the compostable space? - Management noted ongoing demand for compostable plastics but highlighted challenges due to facility reopenings and supply chain issues [34] Question: What is the timeline for API and PHMSA approvals? - Management expects a timeline of 12 to 18 months for the transition from technical report to recognized practice for API guidelines [47] Question: Can the company meet a surge in demand for Natur-Tec? - Management expressed confidence in meeting demand, with expectations of returning to pre-COVID levels by mid-fiscal 2022 [51][53] Question: What impact will ZERUST India have on OpEx and gross margins? - The acquisition of ZERUST India is expected to contribute approximately $1 million in additional income, with gross margins consistent with other subsidiaries [69]