NORTHERN TECHNOLOGIES INTERNATIONAL CORP Q4 FY2024 earnings call

• Patrick Lynch noted robust sales growth in ZERUST Oil and Gas and Natur-Tec, along with improved profitability due to margin improvement initiatives. - Strategic investments in workforce and infrastructure in fiscal 2024 to support growth. - Matt Wolsfeld discussed consolidated net sales growth, joint venture operating income changes, operating expenses, gross profit improvement, net income figures, cash flows, and debt levels. - Positive sales trends in NTIC China with three consecutive quarters of growth, and cautious optimism for improved demand in China in fiscal 2025.

For the fourth quarter ended August 31, 2024, total consolidated net sales increased 12.7% to $23.3 million. By business unit: ZERUST Oil and Gas had a 76.6% increase in Q4 net sales, reaching $4.2 million for the quarter and $9.2 million for the full year (18.3% growth). Natur-Tec sales saw a 16.4% increase to $5.7 million in Q4. ZERUST Industrial had a 0.1% increase. Total net sales for joint ventures decreased 3.6% to $23.3 million, with EXCOR Germany, the largest joint venture, experiencing a 15% decrease in net sales. NTIC China's net sales increased 1.1% to $3.6 million, with sales trends stabilizing and three consecutive quarters of growth.

• Anticipates fiscal 2025 will bring further sales growth and improved profitability. - Sees stable North American demand trends and growth opportunities in ZERUST Oil and Gas and Natur-Tec. - Strategic focus in fiscal 2025 on reducing debt through positive operating cash flow and improving working capital efficiencies.

• Economic challenges and regional economic pressures affecting European joint ventures. - Volatility in ZERUST Oil and Gas sales due to seasonality and timing of opportunities for orders.

Q: Could you add a little color to your Natur-Tec wins that you mentioned, what sector of the market?

A: Vineet Dalal mentioned growth across regions and market segments, including North America with sales through distributors and increased demand for compostable products, and India with growth in apparel taxing and food service resins.

Q: What are your expectations for growth of oil and gas in '25?

A: Anticipate significant growth in fiscal '25 due to investments in new regions and customers, with potential for 20% to 30% growth and possible acceleration despite seasonality.

Q: You've talked about awaiting a certain certification for the Oil and Gas ZERUST technology in the U.S., what's the time frame?

A: API change is set to take effect sometime in late fiscal 2025, and the rest of the world watches NTIC's actions with API guidelines.

Q: Talk about growth in South America, specifically Brazil.

A: ZERUST Brazil had increased revenues to Petrobras and opportunities with Petrobras suppliers, with investments in infrastructure to capitalize on South American oil and gas market opportunities.