Northern Technologies International Corp (NTIC) investor relations material

Executive summary

• Consolidated net sales rose 4% year-over-year to $21.5M in Q3 FY25, driven by ZERUST industrial growth and strong China performance, despite global economic uncertainty.

• Net income attributable to shareholders dropped to $122K ($0.01/share), down from $977K ($0.10/share) year-over-year, due to higher expenses and lower joint venture income, partially offset by a $1.14M Employee Retention Credit.

• Operating expenses increased 7.6% year-over-year, mainly from investments in oil and gas sales, personnel, and marketing.

• Joint venture income and sales declined due to European economic pressures.

• Management remains confident in long-term growth, focusing on profit-driven strategies and operational improvements.

Financial highlights

• Net sales: $21.5M for Q3 FY25 (+4% YoY); gross margin improved to 38.4% for the quarter.

• Net income was $122K ($0.01/share), down from $977K ($0.10/share) in Q3 FY24; adjusted net income was $228K ($0.02/share) vs. $1.1M ($0.11/share) last year.

• Operating expenses were $9.7M, or 44.9% of net sales, up from 43.4% in Q3 FY24.

• Cash and cash equivalents stood at $6.8M as of May 31, 2025; operating cash flow was $3.8M for the nine months ended May 31, 2025.

• Outstanding debt was $10.1M, including $7.4M under the revolving line of credit.

Outlook and guidance

• Management expects improvements in profitability in Q4 FY25 and continued progress into FY26, with sequential and significant year-over-year growth in oil and gas sales.

• China market expected to continue driving incremental sales and profitability.

• New opportunities in bioplastics, especially in food packaging, could materialize over the next two years.

• Management anticipates volatility in quarterly net income due to joint venture performance, oil and gas, and Natur-Tec sales.

• Inflation and supply chain disruptions are expected to continue impacting earnings.