Northern Technologies International (NTIC) 19 Nov 242024 Q4 Earnings call transcript

Good day, and welcome to NTIC's Fourth Quarter 2024 Conference Call. [Operator Instructions] As a reminder, this call may be 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. Please be advises that actual results could differ materially from those stated or implied by the forward-looking statements due to certain risks and uncertainties, including described in NTIC's most recent annual Form 10-K, subsequently quarterly reports on Form 10-Q and recent press releases. Please read these reports and other future filings that NTIC will make with the SEC. to to revise to turn CEO. duty would forward-looking Patrick any like now the disclaims update its and statements. I Lynch, NTIC call over go Please ahead.

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

and sales to our call, was year to we various achieve fiscal session. robust question-and-answer Gas thanks will provide XXXX the & continued improved XXXX Oil another year brief successful financial full of also able of fiscal with a then various quarter today's results, our During conclude in and initiatives. NTIC key fourth growth significantly We execution Zerust review improvement update closed Furthermore, and Natur-Tec profitability. aspects a businesses. business of both margin with

sales our prices various onetime affected pressures of of including higher $X liquidation million conditions, nearly continue global $X.X regional products, profit sales a increase we Oil to million results year improved and challenges. and $X well joint value Higher primarily ventures. Gas European to resulting of to the profitability well as joint offset XXXX other economic contributed reduction profits gross gross NTIC year-over-year China million amidst as with the economic in gain market or nearly resilience allowed for a from last Natur-Tec joint and gross as in fiscal income, venture energy across fiscal our venture This & XXXX. expanded that customers XX.X% a Our ongoing demonstrate challenging operating tied our in along Zerust to to fiscal profit former bring as

and actively in improve that fiscal on and will XXXX. in cautiously joint our begin Europe ventures European We demand remain profitability are focused to optimistic

Oil remains market infrastructure investments Zerust opportunities XXXX are & and are markets. believe fiscal our within we growth to The stable, XXXX, capitalize across Gas support we our fiscal and opportunities Zerust industrial enter our North well demand we businesses. positioned our workforce in and Natur-Tec As on American global in to we set made within strategic

economic will While further profitability. sales environment fluid, fiscal we anticipate the remains and bring improved XXXX growth

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

that during NTIC previously. million. Sales by period. decline $X.X quarter fourth XXXX territories to our by as XXXX, has in Fiscal to in optimistic demand our in ventures, $XX.X quarter fourth the X.X% a in consolidated X August a softer the $XX.X quarter China that the fiscal in the net experienced a remain market. million. XXXX, This Zerust increase to sales Excor fourth Natur-Tec sales stabilized to quarters statements, joint to across sales periods. consolidate We joint decrease this by respective sales. Total improve fiscal business have trends compared XXXX. in the China wholly sales ended which explained by Gas to subsidiary I total demand Zerust XX% net compared this down August will XXXX higher incremental this helping we XX.X% XX.X% fourth fiscal ended ventures, sales, For our period over industrial do included of a Germany, prior sales and growth & increase sales support consecutive geography of Broken due sales cautiously experienced global net our as increase our not quarter X.X% prior million the XX, in by XX.X% year net for profitability and joint fourth was unit, quarter NTIC our largest X.X% a in and owned increased increased venture net decreased in year fiscal as primarily record XX, serviced financial net to China Oil

the long-term market enhance geography. industrial to this committed Chinese operations are in our We continue opportunities steps provides segments, the to take our to and and we bioplastics

we become a believe likely to significant the us China for a result, geographic As will continue in market future.

to & Now Gas. moving on Zerust Oil

that sales to as quarter grow gas customers significant casings storage increased a existing anticipated, still transformative quarter XX.X% is Gas As during had in as increased new the among from the by a this on Zerust growth record-breaking business today both Gas $XXX,XXX which Oil & Oil $X.X quarter Zerust tanks full million. annual unit in third revenues primarily supported as oil approximately million. Overall, Oil oil & of an focused of timing Zerust and protecting well Gas to both pipeline This our year new above-ground customers. from to and due and fourth record corrosion. solutions, The year for continues demand reaching and existing $X.X with was from & highlights fourth orders sales shifted

sector seasonal expect we we are growth Zerust Oil and patterns Gas sales, ordering fluctuations in While XXXX we fiscal compelling beyond. drive for through this to & believe positioned well in

sales arising growth customer Turning during as a was and well our in a over new record million. $X.X primarily period and customers. remained existing with global the America XX.X% year to wins from of of India prior the Natur-Tec fourth during quarterly as quarter expanding our increased demand to result North Natur-Tec's increased bioplastics relationships strong the fiscal business. Natur-Tec quarter

the as remain increased certified use for XXXX, investments continue growth opportunities demand across that in XXXX. Globally, Natur-Tec to compounds sales future well separate as robust certified expect in facility made growth business strategic support support plastics. country process to facility fiscal capitalize of the since a programs warehouses products X see Natur-Tec adding that in are number compostable consolidating opportunities. In alternatives our are We several manufacturing to growth market parts in we region. order of as and XXXX, India, fiscal adding broader into municipal to and resin single on and the in compostable a we both applications Brazil doubled we expected of capacity conventional fiscal a nearly plastic current of Throughout we and new Natur-Tec as strong interest in well have to to larger plastics growth commercial are region. Sales sales also as so in

invest also domestic We as improve of to new able effort in-source processes demonstrated gross this online in operations previously manufacturing earlier At our were location, year. certain as facility continue outsourced came part that to our Minnesota to that by Pines we've margin. been the this Circle

strategic XXXX investments to these fiscal enhance in beyond. profitability expect and We growth support and

and was year NTIC. strategic can see, you transformative a for fiscal As XXXX investments growth, of profitability

underway the NTIC direction headed. the excited and by positive is are We momentum

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

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

venture declined year liquidation Patrick consolidated of other decreased and net of XX.X% his at million X.X% at income XXXX trends X.X% Sales period, was across the Joint in fiscal offset our joint a fourth as increases the a net income as fiscal ventures NTIC's year venture recorded fiscal net because [indiscernible] fourth global venture joint fiscal positive in period, the with quarter sales record Germany, in to the reviewed increased company's operating in the compared associated primarily joint Thanks. the quarter. in in XXXX quarter prepared decrease in in gain remarks. grew income to prior an XX.X% by fourth well $X XXXX of that due during onetime to China joint partially ventures. NTIC's annual

income million. compared fiscal expenses while fourth the in Higher X.X% and fiscal to due quarter expenses fiscal year to to XXXX, global our increases across and costs for XX.X% period. Total for ventures inflationary personnel operating XXXX, For operating venture fourth fiscal and decreased decreased both XXXX for fiscal $X.X increased other primarily expenses. increased million the sales operating XXXX X.X%, quarter to were full prior X.X% joint increased $XX.X joint

sales, net compared for were expenses fourth fiscal for quarter operating XX.X% XX.X% the percentage a the As prior year period. of to

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

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

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

XXXX. non-GAAP non-GAAP or our For press for per was per fiscal measures million to compared that earnings $X.XX morning. or year diluted financial A and release diluted $X.X is this fiscal full share million net issued was of available quarter reconciliation GAAP $X.XX in XXXX, $X.X fourth adjusted income share to

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

to We positive debt and debt XXXX, million, ventures, August working generated cash be August outstanding million $XX.X XX, strategic we the August fiscal our revolving $X.X of of XXXX, which $X.X had operating under flow was On XX, of will had existing in this $XX.X of cash million line ended balance in for in in compared or other working Reducing improving invested August $X.X as of operating As XXXX. included flows in the cash focus investments primarily XX, XX.X% XX borrowings remaining capital. $X.X XXXX. joint through capital a credit XX, XXXX. million the the of efficiencies months million with million company

XX, and our declared financial prepared fiscal results fourth $X.XX XXXX. To to quarter, quarter reflect fourth our conclude Directors market geographical August stable that on of quarterly we've the strategies. been expect NTIC's and global pursuing of trends securely robust environment dividend making, XXXX share on across that cash and We're bioplastic XX, navigating markets, the a successfully stockholders XXXX, seeing XXXX diversification trends business continue. July end demand And remarks, progress growth while gas our fiscal fluid American to During we common Board pursuing and payable was a record and -- North our of these oil per product,

be we will to Patrick take and and overview, of and by profitability As I it fiscal in questions. your prospects. With excited long-term another that believe good we're a happy this year NTIC, result, XXXX for sales our higher are

first [Operator comes question Capital with Instructions] from Northland Gus Markets. Richard Our

Any new Congratulations would you add the to mentioned, helpful. be wins little market? of the there on what the color that sector wins, results. Could strong your a you Natur-Tec color

to who join some Natur-Tec Anticipating President Vineet ask the I Dalal, Vice questions, of Natur-Tec is Yes. of the call. the

me to Natur-Tec So he'll answer next specifically. questions he's and happy sitting about here, to be

So Vineet?

resins. Yes. much North been lot products both as Asia, national across for acquisition in our America, we North that spree. through an finished sell We're pretty a all product, we've finished regions These in. In and seen distributors. on seen we America. distributors segments well growth of seeing the all We've growth it growth are market as sell and several obviously, have in yes, Gus, we

distribution months, the distribution up been smaller Over -- XX, past XX regional picking houses. we've local smaller and

service have we for market grow the across we've in And America. seen demand in compostable seen increased cutlery we've resins. resin our of resin, then more in both them. along zero-waste we've But able apparel packaging especially space with products also food solutions growth So well to the in as seen North our for as for U.S. And with demand sales, adoption India, been demand

growth. in been adopted benefited a fast they've and largest and fashion our that for India the brand their pretty material has pace, packaging, growing strong we've at of from One

there? forward? feel North That's stable Or over a what just is over it. that Got is shifting industrial, you sort macro super And bit be going then will Germany, particularly the weak has due a of America stable, trends Zerust seeing helpful. but of -- in I'm to there you're Europe, that headwind wondering to still

You'll particularly many with which the the still is Volkswagen also European headwinds of the be transition in manufacturers. Europe, and e-vehicles, other seeing affecting

mean, And in on helpful. do going a then I forward? dependent think for gross terms you of That's trend what heavily you just that quarter. you result Okay. Matt, gross -- know next think are nominally, year? gross the margin, was spectacular what go I do but mix, margins where margins it's

obviously, depend on to it's components think from weighted entirely I -- it's the going different in be average units. coming business the

at And margin -- the we've is a the obviously, of a the -- We business. And The and gross as of company of months amount Natur-Tec which past still from kind gross XX stabilization the those kind that are weighted over of similar experienced the as slightly. have seeing business helpful. in XX-plus past average potentially oil gross skew where over improved is that going stabilized we to favorable also a the months, is. margin coming more and has Zerust industrial margin margin margin dollars has increase, that of gross been to slightly stable gas traditional the

if pretty a all a have bump the consistent on few basis, business for it been in margins each But up margin gross quarters. past it the in gross nice certainly in look So unit was business-by-business the at for quarter. all, you

Got it.

it Let me this try way.

basis was was about points do you of year-on-year much of out And you for in much out think How XXX year gross structural? 'XX? structurally, how how just mix? improved think that that If margins full mix you the much equation, you the increase taking that

Natur-Tec improvement comparing certainly of that mix. to from this we're of few quarters. QX margins half. they'd to gross kind would the QX, the say of industrial seeing have business mean year, We're probably of comparing to in to would kind I I'm don't the half QX I and do business comparing margins if saw consistent stronger we gross And -- first certainly what I gross pretty lot of a line. margins prior year stronger from mean, and line QX seeing with kind of but business, be be business

last Got super the one it. That's helpful. me. for And then

what's for of Sort your oil of and gas in expectations growth 'XX?

to business if that earnings of QX, our QX we're strong looking a a It's because $X.X seasonality be half mean fruition still we at we of anticipated. size us just business for you back forecast I come of significant the kind in it, which with obviously going a little the the stronger kind look some we saw to timing that year, to And very second bit QX comes which the well. finding calls, and growth opportunities volatile in line million that in, to and the of fourth certainly as just quarter. to of a came

fiscal regions investments and North growth that and we're world some areas. 'XX see So in into going new a if certainly around of significant expect and existing also because the various in basis, I making to new other customers look we at year-over-year America a the

going fiscal an -- with think, it's some I for with what put to nice standpoint kind XX% acceleration. the out see 'XX, So from total of to opportunities growth of an the XX% growth of for expectation more we've potential very is consistent

consistent to waiting what see. But fourth we're to quarter you're And see kind of so with going a first that's that's not quarter.

than gas, you're improvements likely see quarter. year to that makes oil first I a But some that think going first to nice going is in if think sense. year-over-year, I for and you're the quarter see better prior

comes with Management. Capital from question next Oracle Manalapan Joseph Our Instructions] Vidich [Operator

to love question I and Patrick, great one it. see just actually. -- just I'd Matt quarter.

the certain was me time about, wondering gas correct and have remind I Do believe, awaiting if Zerust that. just in U.S. technology for talked I You've a certification the what not? oil is that for frame And can I or the you

you do the you have Yes, Matt, do. I answer? think,

I at came to preservation of what that VCIs that's that key in change technology API to through more foothold one know late and far sometime certainly effect API taking the has in NACE dramatically we're -- It it's just the the VCIs to change as But a do of of I all an business. like acceptance a preservation credibility as that the product. working industry. But the the utilization of kind the going it certain certainly push sudden of in overall was if and XXXX of VCIs if don't world, doing think around accelerates the looks more to And the There look we're Yes. that markets. fiscal I with take in through. be going

Right, the anywhere States you within the Would that this else -- speed was assumption affect the really that around it not United of and be really impacts right. my only doesn't mean it do I globe. really -- adoption correct, think?

because I accurate United especially does, world rest with that's guidelines. States the the what of would say API the watches

net sure general, if would about if it in be be what's was quarter, -- on highlight talked not America, -- wondering good a in actually would I last last that you just there. it's believe much down quite right? positive I bigger about going you once talk received, net Brazil. -- also it guys actually South I'm is You than a could just growth So

Yes.

of the not that gas Zerust specifically products. Petrobras, more of saw had to going they growth one gas that in Petrobras have to some the with looking that sell Petrobras, they to in -- from oil And that companies. revenues increase Brazil and but new we've a saw oil suppliers some nice are growth the at, the Petrobras and nice location. working they're They the opportunities some increases highlight is 'XX kind of our 'XX kind fiscal to fiscal we Just seen, of we is at

that's Patrick so the in that America, oil part in of his South infrastructure specifically remarks, because prepared and see we significant a reason in increase after doing of the the opportunity And mentioned that go we're why gas Brazil market. to

there oil in years, or X seen both standpoint of and Brazil, we're from gas from over an standpoint really, an the is industrial out coming industrial have X So what sales increased. And revenues Brazil. that the past we've are that overall and seeing

if we're foreseeable looking of on going that of for -- kind and makes that capitalize sense. so keep kind next future, to that through, obviously, And the momentum the

I'd questions. over further no showing any call I'm to for remarks. closing Patrick back Lynch the to like turn

to in us joining and for I thank day. everybody today a Have in like your interest nice NTIC.

your Thank participation. for you conclude This program. does the

disconnect. You may now