Northern Technologies International Corporation Q4 FY2025 earnings call

• NTIC used fiscal 2025 to strengthen competitive position via product innovation, new solutions, and pursuing offshore opportunities.
• Accelerated product innovation in Natur-Tec, advanced ZERUST solutions in global industrial markets, and pursued South American offshore oil and gas.
• Consolidated net sales down 4.4% in Q4 2025; operating expenses up 2.2% in Q4 2025; gross profit margin lower due to less profitable sales mix.
• NTIC China sales growing, with limited U.S. tariff exposure; expected to support growth in fiscal 2026.
• ZERUST Brazil secured new 3-year offshore project contract, validating capabilities.
• Entered preferred supplier agreement with Natur-Tec distributor, expecting sales growth in fiscal 2026.

For the fourth quarter ended August 31, 2025, total consolidated net sales decreased 4.4% to $22.3 million. ZERUST oil and gas net sales decreased 29.4%, Natur-Tec net sales decreased 10%, while ZERUST industrial net sales increased 5.8%. Joint venture net sales in Q4 2025 increased 4.7% to $24.4 million, but declined 4.9% for fiscal 2025. NTIC China's fourth quarter 2025 net sales increased 12% to $4 million, and for fiscal 2025, it increased 14% to $16.2 million. ZERUST oil and gas Q4 2025 sales were $3 million vs $4.2 million prior year, annual sales $7.3 million vs $9.2 million. Natur-Tec Q4 2025 sales were $5.1 million, down 10% y/y.

• Fiscal 2026 expected to benefit from strategic investments, reaccelerate growth, and improve profitability.
• Focus on flattening operating expenses, expanding gross margins, and driving sales in higher-margin parts of the business.
• Anticipate growth in Natur-Tec and ZERUST oil and gas segments in fiscal 2026, with benefits from prior investments.

• Macroeconomic headwinds, especially in Europe.
• Impact of high energy prices and regional political pressures on European economy.
• Uncertainty related to U.S. trade and economic policies affecting global supply chains.
• One-time Chinese customs penalty, though expected to be nonrecurring.

Q: About international income taxes vs domestic.

A: Effective tax rate affected by profit distribution; expected to normalize with more North American profit.

Q: Expense cutting.

A: Goal is to hold operating expenses stable, with revenue growth expected in 2026 from prior investments.

Q: Oil and gas business drivers.

A: Combination of technology acceptance, repeat business, and new customer acquisition.

Q: Compostable packaging progress.

A: Trials in progress, expected sales in 2026, with higher cost but driven by regulations.

Q: Chinese tariff custom charge.

A: Onetime event, part of COGS going forward.

Q: Food packaging applications.

A: Trials in India and U.S., expected growth in 2026.

Q: Operating cash flow and CapEx.

A: Minimal CapEx in North America in 2026, focus on paying down debt and ramping dividend.