Northern Technologies International (NTIC) 21 Nov 232023 Q4 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Northern Technologies International Corporation Fourth Quarter Fiscal Year 2023 Earnings Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded.

As part of the discussion today, the representatives from NTIC will be making certain forward-looking statements regarding NTIC's future financial and operating results as well as their business plans, objectives and expectations. Please be advised that these forward-looking statements are covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and that NTIC desires to avail itself of the protections of the safe harbor for these statements. those that implied could due Form by risks uncertainties, advised those materially to XX-K, be most press and or NTIC's releases. on stated the including and subsequent also quarterly actual report Form differ results from certain recent reports Please annual in XX-Q on recent described forward-looking statements Please SEC. the will make read these with reports and other future filings that NTIC its any forward-looking or statements. duty disclaims NTIC revise to update Patrick Lynch, over I today, would to hand conference like now your CEO. to the speaker Please ahead. go

Good CFO. a and quarter Wolsfeld, regarding morning. morning XXXX NTIC's here I'm this is CEO, fourth earlier fiscal and I'm Patrick Please Lynch, available financial with Matt issued ntic.com. results and our press NTIC's full year that was note release at

we fiscal marked review year of update year interest economic rising both Europe will record and full and and aspects key question-and-answer growing sales XXXX in XXXX rates U.S. despite NTIC's a results, with quarter as the session. call, as provide brief well our financial China in various Fiscal then third During a business consecutive challenges fourth today's of the conclude

focus as Our efficacy provide our and and by our well value within large continued of results demonstrates the we and growth customers compostable products, oil as gas our am sales increasing global end our particularly encouraged success the on plastics strategic markets I diversifying the geographies. top markets. line

material on overall XXXX. persistent cost felt pressures demand. of and and as conflicts These as geopolitical the impacted solutions dampening we respect effects found profitability to highly joint industrial in the fiscal well line market with during year, At top be proved to our our time, fiscal While end China. results inflation, Europe to and challenging for European indirect ventures very core the sales energy and also successful markets. Throughout both trends both product diversifying XXXX the our be of same increases conditions direct ZERUST mix raw our fiscal

and As we and American within well within to XXXX, stable, positioned Natur-Tec our believe we Gas we remains Oil strength market businesses. fiscal are North & ZERUST additional enter demand our ZERUST industrial develop

to expansion support We strategically our XXXX long-term our continue invest infrastructure in to needs. fiscal throughout will bolstering

on also will structure efficiencies, additional cost focused our be by improving gross and our We operational profitability margins. strengthen having

to a fiscal As profitability. bottom result, line and good of we growth expect top another XXXX line year be improved

So with let's this the quarter drivers overview, the detail. in for examine fourth more

a million X.X% August ended consolidated fourth August quarter a quarter in net unit, industrial partially offset Gas the included by net increase business our sales. net by XX, as & decline compared Natur-Tec increased increase sales Broken in this sales XXXX. fourth net a These fourth the of ended increases XX, and X.X% sales. record Oil X.X% For to XX.X% ZERUST were ZERUST a total to $XX.X XXXX, quarter down in

in sales we Germany, XXXX and are largest venture, $XX.X China fiscal statements, the ventures, geographic therefore, that decrease by Our net consolidate year-over-year to fourth quarter increased the total our our net for million. financial a optimistic our sales fiscal improve was experienced a do continue joint not decreased and market China Stabilizing X.X% during higher conditions steps of basis, Export X.X%, Chinese sequential joint as across throughout quarter that believe due basis. fourth demand to in continue we to X.X% quarter China largest we and sales XX% in Fiscal second remain by previously. trends XXXX, our by to wholly future. net China owned period. the encouraging, likely decline NTIC sales demand sales Chinese On as in our I by cautiously demand primarily decreased NTIC The was fiscal during are we million $X.X year-over-year the ventures, explained economic protect to market by due year-over-year joint global weaker will XXXX operations a serviced our by softer become to subsidiary the territories, to on China sequentially. in conditions which take challenging XXXX. consecutive our to Despite committed enhance will which

in a However, years to that the net NTIC China note over it is important fiscal $X X net to pandemic income COVID began. the XXXX before recorded loss during small compared of million each

for Gas on gas sales ZERUST full fiscal Oil year as a oil of XX.X% ZERUST to $X.X moving year Gas, million. increased to & Now was XXXX & annual record transformative and Oil an

of increased XX.X% quarter, primarily ZERUST sales For and storage focused customers from record which Demand and for existing XXXX the continues from solutions, Oil both on quarterly Gas million. to still & oil new tanks above-ground a fiscal protecting today $X.X casings corrosion. fourth pipeline grow is to our

to for a year strong believe continues As contribute we XXXX as result, Oil be profitability. this fiscal and ZERUST another to business Gas further scales will &

Natur-Tec Turning business. to bioplastics our

fourth strong a $X.X the year-over-year and Natur-Tec quarter sales of expected, during to X.X% record As remained quarterly million. increased

as demand as see certified and municipal certified conventional wins products its sales in use alternatives and as We growth that supported new demand Globally, plastics of we geographies. to increased these compose plastics. plastic for interest in and growing in fiscal and strong to throughout market orders expect resin Natur-Tec India, programs significant will and continue America favorable compostable applications well compounds, North XXXX, commercial remain by new customer

result, sustainable business. our we for long-term we are growth Natur-Tec positioned a well bioplastics As within believe

shareholders. quarter for can progress see, fourth full significant financial business the towards and you are results As we reflect making year value our creating growing our our and

quarter was by profitability we margin our growing a gross are core across challenging fourth China, structure, maintain cost the the and our making we leverage during strong Europe working below investments hard sales. conditions infrastructure to due in primarily improve to and are While our plan, the

to Before I want global partners. Matt, employees over venture the acknowledge of our both turn team to I joint commitment the call of and

are direct of is efforts. XXXX their results to the we the overview, year this now for call over Our With drive quarter. the Wolsfeld to turn opportunities financial summarize value let Matt in future shareholders fiscal our and our pursuing success result throughout a me to for fourth the the fiscal

to Thanks, prior NTIC's annual remarks. because fiscal an year fiscal and quarter the to net trends in Patrick X.X% X.X% XXXX Patrick. record XXXX fourth positive fiscal period, in prepared of in increased the grew consolidated sales his reviewed Compared

result our joint sales the venture $X ventures While a joint as increased a declined quarter, XX.X% year joint in operating period global prior in off of gain China, Tianjin-Zerust compared in previously our across on income former the fourth the a X.X% million. liquidation onetime investment to nearly venture of fiscal of written

the year XX.X% to full former Operating in due expense, majority-owned for joint quarter net Taiwan. expenses incurred increases expenses, income quarter fiscal increased the while joint $XX.X new both million. X.X%, for our to the subsidiary primarily and expenses year. operating period. XX.X% XX% Higher connection $X.X million, of joint were the year the expenses for compared and a quarter our fiscal XXXX XXXX operations expenses to $XX.X across fiscal fourth formed venture to sales XXXX, operating ventures with indirect other venture to and the fiscal were increased compared fiscal the in global of fiscal prior a to personnel sales percentage fourth increased Total decreased for XX.X% XXXX in operating as million for fourth the nearly For prior increased inflationary assume

reported by net year percentage income percentage prior fiscal three expenses compared prior of XX.X% compared XXXX, The August fiscal for fiscal share Gross higher prior the & percentage ZERUST actions the fiscal taken the a XX.X% period. fourth to XX.X% for net $X.XX profit as For to ended XX.X% a profit $X.XX fiscal compared inflationary the as August operating Gas were result the year margin sales of net per increased improvement point the XX, was net share sales for XXXX, address XX, diluted during XXXX gross ended Oil of XX.X% months NTIC diluted was for compared $XXX,XXX pressures the for $XXX,XXX company a sales the Gross sales fiscal of XXXX to was or year. fiscal quarter primarily our to of year. or XX.X% Solutions. to as fourth successful and quarter. per XXX-basis a of XXXX, during

full income compared million the the $X.XX fiscal full XXXX million per $X.X diluted $X.XX $X.X NTIC year, to share or of year. share for reported For diluted net or per

to the fiscal the to income related For NTIC's fourth of non-GAAP non-GAAP fiscal liquidation diluted the was compared quarter. reduced $XXX,XXX adjusted for quarter, which onetime the per XXXX share income $XXX,XXX $X.XX per adjusted share primarily diluted gain Tianjin-Zerust, or fourth XXXX $X.XX of or for

per fiscal fiscal $X $X.X per diluted $X.XX million XXXX. for non-GAAP diluted $X.XX share was adjusted or For income million share to compared XXXX, or

morning. in available press is reconciliation that year GAAP release to quarter issued was measures financial non-GAAP and For fourth this full earnings of our

of equivalents compared including XX, million, as and was cash $XX $X.X to in XXXX. working equivalents cash and XXXX, XX, million of $XX.X August cash including in As $X.X August capital million, cash million

of August borrowings to August cash generated existing in compared XX As XX, of in cash, in of the XXXX, $X.X of which capital. On XXXX, profitability, We ended under gain $X.X million liquidation company in was primarily our the primarily line $X.X months lower XXXX, the debt of from including flows $XX.X other with for working as of This $X we balance included million was had remaining core ventures, the million operating million quarter $X.X driven levels, XX.X% million. which investments the in XX, XX, XX, credit outstanding revolving Tianjin-Zerust. of August million or joint million XXXX. and stronger inventory by fourth onetime had the August of $XX.X invested

XX, cash start the XX-Qs payable million During for to retention for Act. declared amended record that turn fourth call over credit Board on position. $X.X detailed filed to of and X, this XXXX.Before credits of Directors we filing on fiscal CARES our quarterly quarter financial share tax common to second of the qualification we the NTIC's stakeholders analyze want provided $X.XX questions, we quarter, At our to address I under Deloitte, restating August engaged XXXX, morning that in third NTIC's determined advisers for the dividend XXXX the per support we employee that fiscal the the August tax and They was and a X-K statements. of qualified XXXX,

credits credits. GAAP on payroll in As quarter and and did year-end of credits under a and U.S. scrutinized the the second determined application third recorded IRS based with not was accounting result, for the that the date.During for filed the recording we closing the process, for we accounting, the the NTIC the credits allow

the to receipt the deem be of for in GAAP. QX are U.S. we credit retention probable than and believe likely credits unable collected, the employee more we under to QX are fiscal While that not applied we as

XX-Qs statements, financial $XXX,XXX QX As we a and restated for $XXX,XXX as previously credits. on quarter line and our of to morning the are this a net financials QX with the result, X-K We decrease update retention for an progress and we third SEC NTIC's filed all in tax well as dealing reflecting we QX. amendments and restated employee collecting investors item QX second issued income plan making the changes, the the with to

our across continuing remarks, while markets. environment, with our our to So and gas conclude market oil trends business end navigating bioplastics overview we and prepared demand North and robust this continue We're American geographical growth seeing product, to diversification and stable strategies. pursue global and a fluid

by for economic NTIC, be another questions. take of Patrick this year we overview, long-term and are will XXXX your and the our to uncertain, environment I profitability happy excited and believe sales remains good we're fiscal increased While prospects.With

[Operator Van the line from of Clemens. Clarkson from Instructions] first question Our comes Tim

Yes, it it up. again. quarter was $X.XX. looks solid was the was I It and why I to like out other didn't add trying quarters was figure adding only it up a

in So snapshots? have this you did how quarter? that's for there just the I expenses the So, was Taiwan fourth much curious, answer. Is accounting go. we

expenses about the don't I year, I operations. of quarter, expenses of front Taiwan right far the would expenses fourth were fiscal it that exactly we me as of that JV of $XXX,XXX were a part can operating for have but be in previously had full in included in tell in as that you

So they're are related than is just new to previously rather the expenses joint venture. fact being Taiwan now consolidated that that a

to decision the that? about good feel you like Do it consolidate Right.

contribution, a that I a Taiwan revenues doing be going It but well. from venture Taiwan wouldn't business. is I are at of contributed smooth is it the think continuation call to income. the look million generated the income Yes, was of standpoint $X that to million joint -- don't significant I $X.X probably entity, from bottom-line of about pretty the

had it expense the entity. the do new of to I of lot cleaning a old level about, and that certainly, So talked that with of entity transactional up implementing expense

go will of So rate that run down future. the in expense

Right.

you've far, on are and what deals On with customers done that thing, gas pleased getting? the the oil they're so

very pleased. Yes. I been mean, we've

the coming year, a doing large significant business projects some all we have So going very to come business. getting they rent in in the should geographies that we're will And where difference. make maybe fruition also

Right.

In you implementation, it is elegant scraps? it about terms pretty without worry technology? mean, having of a do guys can I to

Well, problems any far. we so had haven't

So, we've good I system think pretty a going. got

Good.

On the normalized in compostable on like growth COVID front, say stuff? you things again. decent looks terms the had some of you have and the it restaurant Would

Yes.

the on to a of the governmental Right. more occur bigger And to any this or at point mandating there it more technology and to on and deal, innovation product? use is is needs thing composable that the try make this

we a combination, make advances. and to R&D we it's continue that think innovate Well, certainly but

large In and into the at bottom of significant the any And fruition Europe, India on in months, States United in the XX fact, again, we're to line. those our several it'll moment. projects make difference if next working come

Our Partners. Walrus from from next of question Instructions] the [Operator Walter Ramsley line comes

couple results going a slowed in if you're German got timing on? there? a quarters, a business bit. that Is actually of down down has there quite joint or it were up primarily venture, the where what's catch I've has, future questions. issue the And to going The

turn that energy Germany, prices. in of West Russia, in the on factors. increased talking Well, Ukraine the and One, Russia put in you're extensions in because war several about particular, the

So of putting squeeze has up our and in is in Europe energy the good a on bit dramatically, gone of cost plastics a which margins.

In from to few significant couple did be Germany customer. going months actually a maybe recover that, that. quarters can addition one lose And a it's before or of to they

to by for the so not the the overall is Germany moment. the where also be, in down facing that consumerism impacted economy used Germany being is again economy in So is war it it

money I have do with And some liquidation accounting company there happened the the Did other Okay. from of an liquidation Is just venture. of that did could out China just what the entry, your get question the old the money has actually? or you that? collect company to that or joint process, explain actually actually

liquidation been No, owned we by the finalized. part fourth say China terminated sitting million venture it there that the being that I'm cash liquidation has the since been sitting and NTIC from of did bank we're in glad money first going we we the company tax then. everything received And in was $X out receive and in the received the actually was announcement as to of The government when essentially in joint held China. has quarter from but essentially the quarter, a government process and an in the Tianjin-Zerust through from The authority that XXXX.

of that legal came you There's other the out it. So that there's interest $XXX,XXX out you standpoint came And of it. expenses NTIC. have about net in that of NTIC that recognized that $X out withholding that impact to was The QX. came some it, we of deductions received, minority million XX% own from have we expenses from the tax a

as Okay. the And XX, there, cash or balance receivable? on as is the a showing August of is that on still sheet,

current the is receivable. receivable cash is as a joint cash sitting listed a on assets. in venture dividend The as It's not The there.

Lynch Thank for conference turn you. I to the closing would now back like over to Patrick remarks.

good everybody this Just want and for to have us thank morning, joining a week.

conference today's you participating. concludes Thank for This call.

may disconnect. You now