Northern Technologies International (NTIC) Q1 2026 earnings summary

Executive summary

• Achieved record consolidated net sales of $23.3 million for Q1 FY2026, up 9.2% year-over-year, with the strongest growth since FY24, driven by robust performance in ZERUST Oil & Gas, NTIC China, and Natur-Tec segments.

• ZERUST Oil & Gas, ZERUST Industrial, NTIC China, and Natur-Tec all posted quarterly record sales, with ZERUST Oil & Gas net sales up 58.1% and NTIC China up 23.5%.

• Net income attributable to shareholders declined to $238,000 ($0.03 per diluted share) from $561,000 ($0.06 per share) year-over-year, mainly due to higher operating and interest expenses and a higher tax rate.

• Strategic investments and upgrades over the past three years are expected to yield profitability improvements and support future growth.

Financial highlights

• Total consolidated net sales increased 9.2% year-over-year to $23.3 million for Q1 FY2026.

• Gross profit margin was 36.0%, down from 38.3% in the prior year, due to a temporary supplier lead time issue.

• Net income was $238,000 ($0.03 per diluted share), compared to $561,000 ($0.06 per diluted share) in Q1 FY2025.

• Non-GAAP adjusted net income was $344,000 ($0.04 per diluted share), versus $667,000 ($0.07 per diluted share) last year.

• Operating expenses rose 2.9% to $9.7 million, mainly from higher SG&A, partially offset by lower R&D; operating expenses as a percentage of sales improved to 41.8%.

Outlook and guidance

• Anticipates higher year-over-year sales and profitability for the remainder of FY2026, with significant growth expected in the third and fourth quarters.

• Expects gross margin to improve sequentially and for sales growth to outpace operating expense increases.

• Profitability expansion in FY2026 will be used to reduce debt.

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

• The new Brazil contract is expected to ramp up in FY2026 and run through 2028, with an estimated value of $13 million.