Northern Technologies International (NTIC) Q3 2024 earnings summary

Executive summary

• Natur-Tec sales reached a quarterly record, driven by growth in North America and India, while ZERUST Oil & Gas sales declined due to delayed shipments but are expected to rebound in Q4.

• Consolidated net sales for Q3 FY2024 decreased 1.4% year-over-year to $20.7M, but nine-month sales rose 4.3% to $61.7M, led by Natur-Tec growth.

• Net income attributable to NTIC was $977K ($0.10 per diluted share) for Q3, and $3.57M ($0.36 per share) for nine months, up from $1.97M ($0.20 per share) last year.

• Gross margin improved to 38.2% for Q3, reflecting supply chain and cost initiatives.

• Operating cash flow for the nine months ended May 31, 2024, increased 116% to $7.6M.

Financial highlights

• Q3 FY2024 consolidated net sales: $20.7M (down 1.4% year-over-year); nine months: $61.7M (up 4.3%).

• Natur-Tec net sales for the quarter: $5.8M (up 20.1%); nine months: $16.2M (up 22.5%).

• ZERUST Oil & Gas net sales for the quarter: $1.36M (down 31.9%); nine months: $5.0M (down 7.3%).

• Gross profit margin for Q3: 38.2%, up from 36.1% year-over-year.

• Working capital as of May 31, 2024: $23.2M, with $5.8M in cash and $4.8M in debt.

Outlook and guidance

• Management expects a significant rebound in oil & gas sales in Q4 FY2024 due to order timing and a robust order book.

• Natur-Tec sales growth is expected to continue into fiscal 2025, supported by new customers and expanding applications.

• Strategic investments in North America, Brazil, and India are expected to support further growth.

• Expects continued positive operating cash flow and improved profitability for the remainder of fiscal 2024.

• Targets 10%-12% annual growth in ZERUST Industrial, with higher rates in emerging markets.