Northern Technologies International (NTIC) 11 Jan 242024 Q1 Earnings call transcript

Good day, and thank you for standing by. Welcome to NTIC First Quarter 2024 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 revise that implied could due Form by risks uncertainties, advised those materially to XX-K, be most press and or I NTIC's disclaims filings make with on stated will now the including and Please subsequently these also quarterly actual any to report Form differ hand results over releases. from duty NTIC the certain read statements. recent Please reports today, reports Please to annual in XX-Q that on and recent ahead. these described update to forward-looking statements like your or SEC. would Patrick other NTIC forward-looking go future conference the Lynch. speaker

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

fiscal During strong today's markets. across quarter question-and-answer industrial fiscal will key ZERUST provide review pleased financial with various call, highlighting stable of XXXX, Natur-Tec we to our and brief the update with conclude and XXXX session. I'm in results, a then first start a business demand our aspects

the hold did quarter net working in income. sales, and improving ZERUST a improvement the profitability as year's aimed our at first While first our over year-over-year prior broad by of in demonstrating certain that are XX% quarter higher I consolidated the timing particularly orders Oil Gas increase experienced gross & back initiatives we sales net intended. margin, encouraged income am

expansion particularly during greater primarily of gas unfolding investments current focused to we quarter, what XXXX both as support in advantage take enable support to we adding well anticipate last course and our Natur-Tec to also bolster our These and beyond. the the of as are on businesses. demand capabilities in us strategic fiscal and and and in sales investments making mentioned we As oil our infrastructure needs, long-term are

our striving as stable improve percent across net efficiencies by of operating expenses our months. as evidenced past relatively are We a X holding to operational over the our business sales

profitability cash and continue to XXXX. strong higher expect We flow throughout operating fiscal

first the balance our nearly We year-over-year dividend line initiatives on continue payment and existing to XX%. to to intend activities operating capital by from improved allocate our quarter, pay growth cash to excess while During the down cash support of credit. quarterly flow using

As categories. Gas we ZERUST growth believe look top the well product line we our to positioned and we across Natur-Tec XXXX, & Oil ZERUST of for remainder fiscal are industrial,

plan also European joint the profitability and improve markets. our performance We to of ventures and our across Asian

team pleased our with fluid a will performance be growth As and another and to of fiscal improved am I profitability. economic global believe environment, XXXX improving year NTIC's navigate good continues

ended the examine XX, more let's overview, XXXX, the first this with quarter in detail. So November for drivers

and a For our quarter included business a million to increased ended $XX.X net November in quarter X.X% XXXX. by the quarter, total in as a first X.X% Natur-Tec unit, net to increase record consolidated first compared sales sales down X.X% this Industrial XX, the Broken net sales. ZERUST increase of

Ukraine demand the and net related and higher within primarily XX% the to a war experienced million. due year-over-year we increases softer a other to our by of largest EXCOR Gas loss & consolidate Russia. joint do for decrease sales decreased first year ZERUST joint compared These were prior sales a venture, energy X.X% our the Europe sales. period Total our by net to prices the quarter to and externalities in partially X.X% Germany, in decline ventures, offset in to customer statements, financial linked net Oil by fiscal which between not $XX.X

net year-over-year wholly to sales increased basis owned first weaker throughout China a in XXXX NTIC at net optimistic $X.X we NTIC XXXX, China due and last cautiously quarter economic basis, year, was conditions by to consecutive on a million our which On remain quarter China market. of after in that a by by sequential recorded sales higher that we in China X.X% fiscal higher country. sales decreased X.X%, demand sales fiscal small will Fiscal loss the NTIC to sequentially support incremental annual improve helping subsidiary this third profitability

market China take operations. economic to to continue enhance we steps conditions our to committed to Chinese in remain near-term While uncertain, and are the Chinese continue

the believe to in continue likely market will China a future. become for us We significant geographic

& to moving Now Gas. Oil on ZERUST

fiscal quarter million, $X.X of momentum Oil & and quarter business. within gas positive consecutive Gas first the XXXX oil of reflecting the over ZERUST seventh was The sales our

and XXXX associated revenue were quarter. fiscal decline pushed compared gas first last Gas was & certain to sales to year. same for ZERUST year-over-year of oil the Gas Oil million the $X.X & which to the million X.X% $X.X in timing due Oil sales the projects quarter, the period For second ZERUST primarily A

As quarter. than & a second will ZERUST have first fiscal quarter stronger Gas we result, XXXX sales expect Oil a

corrosion. growing both ZERUST storage today solutions, and Gas aboveground existing still strong protecting which and and & remained is tanks new among primarily oil focused Oil Demand our pipeline casings customers on for from

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

Turning Natur-Tec bioplastics to our business.

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

in supported sales expect America throughout these customer XXXX, growth India new favorable and demand continue Natur-Tec We and and significant North fiscal in geographies. will by wins orders

market as and compostable plastics. well we that programs municipal compostable compounds to resin products interest increased applications and certified plastics use Globally, new growing as see to alternatives certified plastic demand of conventional in commercial as continue for

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

you reflect the XXXX growing results quarter and progress As see, improving making first we towards our fiscal profitability. can financial business our are

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

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

declined fiscal trends Sales period, XXXX to to Patrick. net increased fiscal quarter NTIC's in the consolidated first global in record quarter reviewed Thanks, X.X% across first quarter. year joint prior first the a sales Compared prepared fiscal for his because the of XXXX our ventures X.X% remarks. Patrick

the $X.X compared income joint at joint was sales income venture income lower our X.X% Joint reduction venture in to The primarily operating resulting year-over-year net the German fiscal operating to was lower and period. down year compared offset prior due partially profitability same operating to the fiscal our of million last for Total venture, increased year. across $X.X million expenses improved for quarter by fiscal many ventures. other first period X.X% to XXXX joint

were increased Higher personnel costs. primarily due to operating expenses

primarily the period. November ended was of during X the for Gross net of expenses to address were XX.X% profit quarter pressures. The fiscal taken percentage to during year as sales, year net a successful the XXXX, a first As inflationary actions company point sales months operating XX, prior by was improvement the compared basis compared result XX.X% XX.X% XXX of percentage for the XX.X% fiscal XXXX period. a to prior fiscal

for quarter Net first XXXX $X.XX or $XXX,XXX share per compared to share fiscal was NTIC quarter. or the $XXX,XXX income $X.XX diluted to per for attributable XXXX first the fiscal

of first first non-GAAP was reconciliation the compared XXXX last net of or A the to $X.XX period year. or income issued non-GAAP measures For that release available NTIC's per non-GAAP quarter our for per $X.XX income XXXX fiscal quarter, diluted financial diluted same GAAP was is this press million adjusted on morning. $X net share $XXX,XXX earnings share to

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

$X.X outstanding million. our XX, borrowings to XXXX, million of included $X.X of revolving of XXXX. as This in had August existing As under XX, we compared $X November credit of line million debt

million continued the improvement we which XXXX. XXXX positive to ended in year-over-year primarily our November This flows existing operating invest for November months quarterly of balance million plan generate on cash by Throughout operating ended XX, we profitability months generated X was cash to in driven of flow core support to and down $X.X for XX.X% X XXXX, and dividend our stronger the XX, assets business cash compared $X revolving cash changes and growth our to credit. current liabilities. flow in fiscal the the in expect line operating pay We

of million investments remaining of the November ventures, was joint million XX.X% invested in with capital. XX, the in On or working which in other cash, balance $XX.X had primarily company $XX.X XXXX,

XXXX, XX, $X.XX X, XXXX, fiscal NTIC's to cash share on quarter, of record was that quarterly of During of on a first XXXX. Directors payable November the declared per common stockholders November dividend Board

product, remarks, and diversification So to continue market fluid environment we navigating pursuing prepared with a this our and business strategies. end overview geographical our conclude while

We're North demand seeing and our bioplastic growth American and trends across markets. global robust and gas oil stable

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

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

Patrick. Matt.

to is the dreaming you I where have $X.X a always little potential million oil doing about million mean guys $X I know this bit. there is -- are a just there business. a quarter? year in I million scenario mean, a So I or $X.X tank

Absolutely. That's what -- waiting for.

business the than rest business, the of And are the on Yes. margins gross higher that right?

Yes, that's correct.

the for on your dream get other the just I'll -- My second, compostable but -- Good. be applications what to typical is plastics? compostable again, Right. would that

also major we're a for Cutlery, United for articles are application injection-molded talking plastic States. You're the in and one. servicing that major example, is It's bags

of advantages lot the And one that the competition. it of is a of Right. than stuff, major stronger

Yes, and cheaper.

a getting material problem cheaper. know with I And with and of there's Right, you make that. had a problem to no years -- ago, couple the

worldwide basis. They've capacity added on No. a

shortage So raw materials now right for there's of us. no

Right, right.

where a and sense add the could mean or or thing technology compostable a public. that that? basis? potentiality scenario is Or Now if a to is you is there Or still of manufacturing is early? link could bringing -- it to I a either on another and a too on separate there up company make marketing it piece basis basis you on would a with

what stand-alone Natur-Tec where do One ultimately, happen makes a think be different I a it think there's level sense it we or would profitability there, it's of level to with revenue Well, to when hits of Tim. more going entity. a X -- is questions

level the entity I be where said think of certainly at right think it not But when Natur-Tec, now, that, look to really I stand-alone revenues growing, a at a you total properly valued. although will they're they're it's that's where we've always possibility. a sustainable be

that's companies resin. growing other part The of by main using container-load your that the you talk that of about with developing we other larger where companies Natur-Tec ways for of applications quantities are main -- question are one partnering are the specialty

And a our comes -- to the looking resin that XX large we're over expecting to see own from for that of of container-load the quantities them lot months to next companies working products. compostable use with XX growth make XX months, are so to months, specialty their

what's where both I of the those in really Asia, sell certainly significant as But grow. parts as help going to Natur-Tec think in overall of Europe, of the in seeing So applications kind opportunities company United a well. and States, these brand combination a there's we're in are

sure. Sure,

of for know pretty basis, them, on a come quarter weak? Is weak that that is reasons. kind Germany starting that Or of variety still foreign I Now for to a was back? a

and bit don't had replace. prices back which that Also they and that going One, putting conflict not higher easy reasons. X the sales. coming to that's as for also and a long a downward they I I are raw large very it on very There prices as have lost time, is immediately. in long customer a continues, pressure see energy you're material Russia Ukraine to mean Europe,

been in moderating? Right, oil of across board that and prices terms you claim lower the just some overall better seeing right. now inflation And of the guys the costs with -- has inflation, are

States, I -- under we've well So certainly the in control. got inflation and I think United think

in most issue. And to that an be not energy, that's get said, is But or elsewhere, settled, issue from in continue they fine be to to region. their used it it's of oil in of in all of Russia So to. Europe and regard. an going an conflict Like I continues that until gas because issue -- we're Europe, that

Got you. it. am right. I Right, done. Thank

At this remarks. time, over conference [Operator to to now I turn would Instructions] Lynch Patrick for back like the closing

a you for Thank and you. wish Well, thank attending you this very nice morning, much day.

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

may now You disconnect.