Northern Technologies International Corporation (Nasdaq:NTIC) today
reported its financial results for the three and nine months ended
May 31, 2010.
Net income was $1,734,314, or $0.41 per diluted common share,
for the nine months ended May 31, 2010 compared to a net loss of
$(2,139,484), or $(0.57) per diluted common share, for the nine
months ended May 31, 2009. Net income was $951,698, or $0.22 per
diluted common share, for the three months ended May 31, 2010
compared to a net loss of $(638,679), or $(0.17) per diluted common
share, for the three months ended May 31, 2009. This return to
profitability is primarily attributed to significant increases in
NTIC's North American sales as well as significant increases in
income from NTIC's international joint
ventures.
NTIC's consolidated net sales increased 93.4% and 32.1% during
the three and nine months ended May 31, 2010 compared to the three
and nine months ended May 31, 2009, respectively. These
increases were primarily a result of increased sales of ZERUST®
rust and corrosion inhibiting packaging products and services to
customers in North America and sales to NTIC's joint
ventures.
During the nine months ended May 31, 2010, 96.1% of NTIC's
consolidated net sales were derived from sales of ZERUST® products
and services, which increased 37.8% to $8,485,046 during the nine
months ended May 31, 2010 compared to $6,159,096 during the nine
months ended May 31, 2009 due to increased demand primarily due to
an economic recovery of the domestic manufacturing sector. NTIC
experienced a significant increase in sales orders from existing
customers during the second and third quarters of fiscal 2010
compared to the same periods in fiscal 2009. NTIC has focused
its sales efforts of ZERUST® products and services by strategically
targeting customers with specific corrosion issues in new market
areas, including oil and gas industry and other industrial sectors
that offer sizable growth opportunities.
During the nine months ended May 31, 2010, $340,032, or 3.9%, of
NTIC's consolidated net sales were derived from sales of Natur-Tec®
products. Net sales of Natur-Tec® products increased 1077.3%
and decreased 31.9% during the three and nine months ended May 31,
2010 compared to the three and nine months ended May 31, 2009,
respectively. The increase in the three-month comparison was
primarily due to the addition of new Natur-Tec® distributors on the
West Coast of the United States and the decrease in the nine-month
comparison was due to several large stocking orders of Natur-Tec®
products that occurred early in 2009 that were not repeat
orders. NTIC is continuing to fortify and expand its West
Coast Natur-Tec® distribution network in California, while
expanding its industrial distribution reach to geographical
environmentally focused hotspots such as Oregon, Washington,
Minnesota and New England. Additionally, NTIC is targeting key
national and regional retailers utilizing independent sales
agents.
NTIC recognized a 24.7% increase in fee income for technical and
support services provided to joint ventures during the nine months
ended May 31, 2010. NTIC's equity in income of joint ventures
increased 346.9% to $2,909,120 during the nine months ended May 31,
2010 compared to $650,900 during the nine months ended May 31,
2009. Both of these increases were primarily a result of a
33.6% increase in total net sales of NTIC's joint ventures during
the nine months ended May 31, 2010 compared to the same prior year
period. The increase in total net sales of NTIC's joint
ventures was primarily a result of the economic recovery of the
international manufacturing sector that the NTIC joint venture
network serves.
NTIC's total operating expenses increased 38.0% during the three
months ended May 31, 2010 compared to the three months ended May
31, 2009 primarily as a result of increased sales efforts in both
the ZERUST® and the Natur-Tec® markets and increased general and
administrative costs due to increased employee count to
pre-recession levels.
NTIC's working capital was $5,536,087 at May 31, 2010, including
$1,103,620 in cash and cash equivalents.
G. Patrick Lynch, President and Chief Executive Officer of NTIC
said, "Both NTIC and many of our joint ventures experienced
significant sales increases in Q3 as compared to Q3 of last year
for the core business of ZERUST® corrosion inhibiting products.
Many of our international joint ventures reported their best sales
quarters ever which for NTIC results in fees for services and
equity income from joint ventures."
Lynch continued, "While still relatively small, we are also
starting to supply ZERUST® products and services to an increasing
number of companies in the oil & gas industry."
"Furthermore, market acceptance of our Natur-Tec® certified
fully compostable and biodegradable products continues to grow in
major U.S. regional "green" hotspots including Oregon, Washington,
Minnesota and New England as we have continued to make inroads with
key regional and national retailers," Lynch further
stated.
Financial Results
NORTHERN TECHNOLOGIES
INTERNATIONAL CORPORATION AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF OPERATIONS (UNAUDITED) |
FOR THE THREE AND
NINE MONTHS ENDED MAY 31, 2010 AND 2009 |
|
|
|
|
|
|
Three Months
Ended |
Nine Months
Ended |
|
May 31, 2010 |
May 31, 2009 |
May 31, 2010 |
May 31, 2009 |
NORTH AMERICAN OPERATIONS: |
|
|
|
|
Net sales, excluding joint
ventures |
$ 2,559,467 |
$1,555,065 |
$ 7,164,784 |
$ 5,855,536 |
Net sales, to joint ventures |
677,731 |
118,569 |
1,660,294 |
823,212 |
|
3,237,198 |
1,673,634 |
8,825,078 |
6,678,748 |
Cost of goods sold |
2,172,902 |
995,672 |
5,771,045 |
4,444,075 |
Gross profit |
1,064,296 |
677,962 |
3,054,033 |
2,234,673 |
|
|
|
|
|
JOINT VENTURE OPERATIONS: |
|
|
|
|
Equity in income (loss) of joint
ventures |
1,511,534 |
(6,838) |
2,909,120 |
650,900 |
Fees for services provided to joint
ventures |
1,140,295 |
821,810 |
3,441,563 |
2,760,379 |
|
2,651,829 |
814,972 |
6,350,683 |
3,411,279 |
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
Selling |
819,572 |
591,559 |
2,004,094 |
1,975,387 |
General and administrative |
869,183 |
599,012 |
2,628,447 |
2,184,974 |
Expenses incurred in support of
joint ventures |
208,444 |
224,887 |
682,828 |
1,152,654 |
Research and development |
960,780 |
655,281 |
2,526,478 |
2,222,576 |
Loss on impairment |
— |
— |
— |
554,000 |
|
2,857,979 |
2,070,739 |
7,841,847 |
8,089,591 |
|
|
|
|
|
OPERATING INCOME (LOSS) |
858,146 |
(577,805) |
1,562,869 |
(2,443,639) |
|
|
|
|
|
INTEREST INCOME |
864 |
6,509 |
5,607 |
7,828 |
INTEREST EXPENSE |
(23,867) |
(27,933) |
(73,637) |
(102,271) |
OTHER INCOME |
6,825 |
4,550 |
20,475 |
18,200 |
MINORITY INTEREST |
— |
— |
— |
3,398 |
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME TAX EXPENSE |
841,968 |
(594,679) |
1,515,314 |
(2,516,484) |
|
|
|
|
|
INCOME TAX (BENEFIT) EXPENSE |
(110,000) |
44,000 |
(219,000) |
(377,000) |
|
|
|
|
|
NET INCOME (LOSS) |
$ 951,698 |
$ (638,679) |
$ 1,734,314 |
$ (2,139,484) |
|
|
|
|
|
NET INCOME (LOSS) PER COMMON SHARE: |
|
|
|
|
Basic |
$ 0.23 |
$ (0.17) |
$ 0.41 |
$ (0.57) |
Diluted |
$ 0.22 |
$ (0.17) |
$ 0.41 |
$ (0.57) |
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES ASSUMED
OUTSTANDING: |
|
|
|
|
Basic |
4,244,086 |
3,754,596 |
4,213,465 |
3,746,977 |
Diluted |
4,299,855 |
3,754,596 |
4,252,735 |
3,746,977 |
About Northern Technologies International
Corporation
Northern Technologies International Corporation develops and
markets proprietary environmentally beneficial products and
technical services either directly or via a network of joint
ventures and independent distributors in over 55
countries. NTIC's primary business is corrosion prevention.
NTIC has been selling its proprietary ZERUST® rust and corrosion
inhibiting products and services to the automotive, electronics,
electrical, mechanical, military and retail consumer markets, for
over 35 years. NTIC also offers worldwide on-site technical
consulting for rust and corrosion issues. NTIC's technical
service consultants work directly with the end users of NTIC's
products to analyze their specific needs and develop systems to
meet their technical requirements. In addition, NTIC markets
proprietary bio-plastic technologies under the Natur-Tec®
brand. Finally, NTIC's Polymer Energy® joint venture
manufactures and sells advance waste plastic to fuel conversion
machines.
The Northern Technologies International Corporation logo is
available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5481
Forward-Looking Statements
Statements contained in this press release that are not
historical information are forward-looking statements as defined
within the Private Securities Litigation Reform Act of 1995. Such
statements include our expectations regarding the future
performance of our new businesses and other statements that can be
identified by words such as "expect," "intend," "continue,"
"anticipate," "estimate," "potential," "will," "would," or words of
similar meaning and any other statements that are not historical
facts. Such forward-looking statements are based upon the current
beliefs and expectations of NTIC's management and are inherently
subject to risks and uncertainties that could cause actual results
to differ materially from those projected or implied. Such
potential risks and uncertainties include, but are not limited to,
in no particular order: NTIC's dependence on the success of its
joint ventures and technical fees and dividend distributions that
NTIC receives from them; NTIC's relationships with its joint
ventures and its ability to maintain those relationships; risks
associated with NTIC's international operations; exposure to
fluctuations in foreign currency exchange rates; the health of the
U.S. and worldwide economies, including in particular the U.S.
automotive industry; the level of growth in NTIC's markets; NTIC's
investments in research and development efforts; acceptance of
existing and new products; increased competition; the success of
NTIC's new businesses; the costs and effects of complying with
changes in tax, fiscal, government and other regulatory policies,
including rules relating to environmental, health and safety
matters, NTIC's reliance on its intellectual property rights and
the absence of infringement of the intellectual property rights of
others, the ability of NTIC's lender to declare outstanding
indebtedness immediately due and payable and current and potential
litigation. More detailed information on these and additional
factors which could affect NTIC's operating and financial results
is described in the company's filings with the Securities and
Exchange Commission, including its most recent annual report on
Form 10-K and subsequent quarterly reports on Form 10-Q. NTIC urges
all interested parties to read these reports to gain a better
understanding of the many business and other risks that the company
faces. Additionally, NTIC undertakes no obligation to publicly
release the results of any revisions to these forward-looking
statements, which may be made to reflect events or circumstances
occurring after the date hereof or to reflect the occurrence of
unanticipated events.
CONTACT: NTIC
Investor and Media Contacts:
Matthew Wolsfeld, CFO
(763) 225-6600
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