Northern Technologies International Corporation Q1 FY2026 earnings call

• Record consolidated net sales driven by strong growth in key sectors like ZERUST Oil & Gas, NTIC China, and North American Natur-Tec.
• ZERUST Oil & Gas achieved record first quarter sales with second consecutive quarter over $2 million in revenue.
• Natur-Tec bioplastics had quarterly record sales of $6 million, with growth in North America.
• Focus on improving profitability by leveraging strategic investments, flattening operating expenses, and driving sales in higher-margin segments.
• Monitoring European markets for stabilization post subdued demand and expecting economic stimulus to impact joint venture operating income.
• NTIC China showing strong demand with limited exposure to U.S. tariffs, expected to continue growth.

For the first quarter ended November 30, 2025, NTIC's total consolidated net sales increased 9.2% to $23.3 million. ZERUST Oil & Gas had net sales up 58.1% to $2.4 million (first quarter record). ZERUST Industrial net sales rose 6.9%, and Natur-Tec product net sales increased 2.2% to $6 million (quarterly record). Joint venture net sales increased 2.9% to $24.5 million. NTIC China's net sales jumped 23.5% to $4.9 million.

• Anticipate higher year-over-year sales and profitability as the year progresses.
• Expect gross margin to improve sequentially during fiscal 2026.
• Focus on reducing debt through positive operating cash flow and working capital efficiencies.

• Fluctuations in ZERUST Oil & Gas sales due to industry nature.
• Economic uncertainties in European markets affecting joint ventures.

Q: What are some levers to improve profitability?

A: Driving sales growth to increase gross margin, keeping operating expenses relatively flat, and expecting growth in joint venture operating profits.

Q: Are there opportunities to cut expenses?

A: Not primarily cutting expenses but letting revenues catch up to recent investments in oil and gas, Natur-Tec, and North America.

Q: Pleased with sales team work in oil and gas hires?

A: Sales team is starting to put business on the books, with ZERUST Brazil's contract and growth in India, Middle East, and expected Europe contribution.

Q: Any other major oil and gas opportunities?

A: Biggest contract is in Brazil, but talking to other oil companies globally and expecting business growth worldwide