Northern Technologies International (NTIC) Q1 2025 earnings summary

Executive summary

• Achieved record Q1 consolidated net sales of $21.3 million, up 5.7% year-over-year, driven by strong Natur-Tec® sales and stable ZERUST® performance.

• Net income attributable to NTIC declined to $561,000 ($0.06 per diluted share) from $896,000 ($0.09 per share) year-over-year, due to higher operating expenses.

• Gross profit margin improved to 38.3% from 36.3% in the prior year, a 200 basis point increase.

• Operating expenses rose 14% year-over-year, mainly from investments in ZERUST® oil & gas sales infrastructure and higher personnel costs.

• NTIC China posted its highest quarterly sales in nearly three years, with an 8.6% year-over-year increase to nearly $4 million.

Financial highlights

• Consolidated net sales increased 5.7% year-over-year to $21.3 million, a Q1 record.

• Natur-Tec® net sales grew 22.8% to a quarterly record of $5.86 million; ZERUST® industrial and oil & gas net sales increased 0.4% and 0.7%, respectively.

• Joint venture net sales increased 1.2% year-over-year to $23.8 million, with operating income up 2.7% to $2.41 million.

• Adjusted net income (non-GAAP) was $667,000 ($0.07 per share), compared to $1 million ($0.10 per share) last year.

• Cash and cash equivalents were $5.57 million at quarter end; working capital was $22.2 million as of November 30, 2024.

Outlook and guidance

• Management anticipates further sales growth and improved profitability for fiscal 2025, with stronger performance expected in the second half.

• Natur-Tec® is expected to sustain approximately 20% growth for the year.

• China sales projected to grow from $14.2 million last year to over $15 million this year.

• Oil and gas sales expected to be weighted toward the second half of the year, with a 60/40 or one-third/two-thirds split.

• Management expects continued volatility in quarterly net income due to joint venture performance, oil & gas, and bioplastics sales.