Northern Technologies International Corporation (NASDAQ: NTIC), a
leading developer of corrosion inhibiting products and services, as
well as bio-based and biodegradable polymer resin compounds, today
reported its financial results for the fourth quarter and fiscal
year ended August 31, 2023.
Full year fiscal 2023 financial and operating highlights include
(with growth rates on a fiscal year-over-year basis):
- Consolidated net sales increased 7.7% to a record of
$79,903,000
- ZERUST® industrial net sales increased 2.0% to a record of
$53,926,000
- ZERUST® oil and gas net sales increased 69.3% to a record of
$7,802,000
- Natur-Tec® product net sales increased 8.8% to a record of
$18,175,000
- NTIC China net sales decreased 14.5% to $13,469,000
- Joint venture operating income increased 10.9% to
$11,642,000
- Net income attributable to NTIC was $2,912,000, compared to
$6,325,000
- Net income per diluted share attributable to NTIC was $0.30,
compared to $0.66
- Cash provided by operating activities was $5,541,000 for fiscal
2023, compared to $1,146,000 last fiscal year
- Consolidated balance sheet as of August 31, 2023 remained
strong with working capital of $22,950,000
“Fiscal 2023 marked NTIC’s third year of consecutive record
sales, despite the economic challenges growing in both Europe and
China, as well as rising interest rates in the U.S. Our continued
sales growth success demonstrates the increasing value we provide
our global customers as well as the efficacy of our strategic focus
on diversifying our products, end markets and geographies. I am
particularly encouraged by the top-line results within the large
oil and gas, and compostable plastics markets,” said G. Patrick
Lynch, President and CEO of NTIC.
“We will continue to invest strategically in our infrastructure
throughout fiscal 2024, to support our long-term geographic
expansion. At the same time, we will be navigating the challenges
created across our European and Asian markets by evolving
geopolitical conflicts. We are watching these markets closely and
working with our joint venture partners to improve performance and
joint venture profitability. As we enter fiscal 2024, demand within
our North American Zerust industrial market remains stable, and we
believe we are well positioned to experience continued strength
within our ZERUST® oil and gas and Natur-Tec® businesses. As a
result, we believe fiscal 2024 will be another good year of
top-line growth, and improving bottom-line profitability,”
concluded Mr. Lynch.
NTIC’s consolidated net sales increased 2.3% to $20,710,000
during the three months ended August 31, 2023, compared to
$20,252,000 for the three months ended August 31, 2022. The
year-over-year increase in consolidated net sales for the fourth
quarter was primarily a result of sales growth within the Company’s
ZERUST® oil and gas and Natur-Tec® product categories and supported
by higher customer demand. For the full year ended August 31, 2023,
consolidated net sales increased 7.7% to $79,903,000, compared to
$74,159,000 for the prior fiscal year.
The following tables set forth NTIC’s net sales by product
category for the three months and fiscal year ended August 31,
2023, and August 31, 2022, by segment:
| |
Three Months Ended |
| |
August 31,2023 |
|
% of Net Sales |
|
August 31,2022 |
|
% of NetSales |
|
%Change |
|
ZERUST® industrial net sales |
$ |
13,421,470 |
|
64.8 |
% |
|
$ |
13,917,674 |
|
68.7 |
% |
|
(3.6 |
)% |
| ZERUST® oil & gas net
sales |
|
2,377,472 |
|
11.5 |
% |
|
|
1,553,314 |
|
7.7 |
% |
|
53.1 |
% |
|
Total ZERUST® net sales |
$ |
15,798,942 |
|
76.3 |
% |
|
$ |
15,470,988 |
|
76.4 |
% |
|
2.1 |
% |
| Total Natur-Tec® net sales |
|
4,910,693 |
|
23.7 |
% |
|
|
4,780,929 |
|
23.6 |
% |
|
2.7 |
% |
|
Total net sales |
$ |
20,709,635 |
|
100.0 |
% |
|
$ |
20,251,917 |
|
100.0 |
% |
|
2.3 |
% |
| |
Fiscal Year Ended |
| |
August 31,2023 |
|
% of NetSales |
|
August 31,2022 |
|
% of NetSales |
|
%Change |
|
ZERUST® industrial net sales |
$ |
53,926,378 |
|
67.5 |
% |
|
$ |
52,851,150 |
|
71.3 |
% |
|
2.0 |
% |
| ZERUST® oil & gas net
sales |
|
7,801,986 |
|
9.8 |
% |
|
|
4,608,232 |
|
6.2 |
% |
|
69.3 |
% |
|
Total ZERUST® net sales |
$ |
61,728,364 |
|
77.3 |
% |
|
$ |
57,459,382 |
|
77.5 |
% |
|
7.4 |
% |
| Total Natur-Tec® net
sales |
|
18,174,588 |
|
22.7 |
% |
|
|
16,699,508 |
|
22.5 |
% |
|
8.8 |
% |
|
Total net sales |
$ |
79,902,952 |
|
100.0 |
% |
|
$ |
74,158,890 |
|
100.0 |
% |
|
7.7 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NTIC’s joint venture operating income increased 39.6% to
$4,181,000 during the three months ended August 31, 2023, compared
to joint venture operating income of $2,996,000 during the three
months ended August 31, 2022. The fourth quarter increase in joint
venture operating income reflects a one-time gain on the
liquidation of a previously written-off investment in the Company’s
former joint venture in China, Tianjin Zerust, of $1,986,000,
partially offset by decreases in equity income and fees for
services correlating to the decrease in joint venture sales. Net
sales of NTIC’s joint ventures, which are not consolidated with
NTIC’s financial results, decreased 6.6% to $24,157,000 during the
three months ended August 31, 2023, compared to $25,859,000 for the
three months ended August 31, 2022.
For fiscal 2023, NTIC’s joint venture operating income increased
10.9% to $11,642,000, compared to joint venture operating income of
$10,494,000 during the full year ended August 31, 2022. Net sales
of NTIC’s joint ventures decreased 3.3% to $100,682,000 during the
full year ended August 31, 2023, compared to $104,078,000 for the
full year ended August 31, 2022.
Operating expenses, as a percent of net sales, for the fourth
quarter of fiscal 2023 were 44.8%, compared to 37.1% for the same
period last fiscal year. For the full fiscal year 2023, operating
expenses, as a percent of net sales, were 41.8% compared to 38.3%
for last fiscal year. Higher operating expenses for the fiscal 2023
fourth quarter and full year were primarily due to increased
personnel expenses, other inflationary increases in expenses, and
expenses incurred in connection with a new indirect, majority owned
subsidiary, formed to assume the operations of a former joint
venture in Taiwan.
Net income attributable to NTIC for the fourth quarter of fiscal
2023 was $939,000, or $0.10 per diluted share, compared to net
income of $648,000, or $0.07 per diluted share, for the same period
last fiscal year. For the full year ended August 31, 2023, net
income attributable to NTIC decreased to $2,912,000, or $0.30 per
diluted share, compared to net income of $6,325,000, or $0.66 per
diluted share, for last fiscal year.
NTIC’s non-GAAP adjusted net income, as set forth in the GAAP
reconciliation at the end of this release, was $280,000, or $0.03
per diluted share, for the fourth quarter of fiscal 2023, compared
to $753,000, or $0.08 per diluted share, for the same quarter last
fiscal year. For the full year ended August 31, 2023, NTIC’s
non-GAAP adjusted net income, as set forth in the GAAP
reconciliation at the end of this release, was $2,570,000, or $0.27
per diluted share, compared to $3,031,000, or $0.32 per diluted
share, for last fiscal year.
NTIC’s consolidated balance sheet remains strong, with working
capital of $22,950,000 as of August 31, 2023, including $5,406,000
in cash and cash equivalents and an outstanding revolving line of
credit and term loan balance of $6,357,000 compared to $23,169,000
of working capital as of August 31, 2022, including $5,334,000 in
cash and cash equivalents and $6,000 in available for sale
securities, and $5,900,000 outstanding line of credit balance.
At August 31, 2023, the Company had $23,706,000 of investments
in joint ventures, of which $13,759,000 or 58.0%, is cash, with the
remaining balance mostly made up of other working capital.
Restatement of Historical Financial Results
On November 17, 2023, the management and Audit Committee of the
Board of Directors of NTIC determined that NTIC’s consolidated
financial statements for the three and six months ended February
28, 2023 and three and nine months ended May 31, 2023 require
restatement to correct the accounting treatment of employee
retention credits and related impacts and disclosures, which
credits were incorrectly recognized as income during such periods.
The change will result in a decrease to net income attributable to
NTIC of $474,000 and $466,000 during the three months ended
February 28, 2023 and May 31, 2023, respectively, compared to the
same prior year periods.
In the course of preparing its consolidated financial statements
for the fiscal year ended August 31, 2023, NTIC determined that
although management believes the collection of the employee
retention credits are still “more likely than not,” NTIC is not
able to deem the receipt of the employee retention credits
“probable” under U.S. generally accepted accounting practices,
therefore, requiring the restatement of NTIC’s previously issued
consolidated financial statements for the three and six months
ended February 28, 2023 and three and nine months ended May 31,
2023, and amendments to its related previously filed quarterly
reports on Form 10-Q. See a Current Report on 8-K filed by NTIC
today with the Securities and Exchange Commission for additional
details.
Conference Call and Webcast
NTIC will host a conference call today at 8:00 a.m. Central Time
to review its results of operations for the fourth quarter and full
fiscal year of 2023 and its outlook, followed by a
question-and-answer session. The conference call will be available
to interested parties through a webcast. To join the live call and
ask a question, a participant must register using the URL
below.
https://register.vevent.com/register/BI45a72a6038c049a38fd8fd0906f2e22c
Once registered, the participant will receive a dial-in number
and unique PIN number to access the call.
The audio-only webcast can be accessed at the following link:
https://edge.media-server.com/mmc/p/zpi7rm3d. A link to the webcast
is also available on the Investor Relations section of NTIC’s
webpage. Participants are advised to go to the website at least 15
minutes early to register, download and install any necessary audio
software. For those unable to participate in the live webcast, a
replay of the webcast will be archived and accessible for
approximately one year on the Investor Relations section of NTIC’s
webpage.
About Northern Technologies International
Corporation
Northern Technologies International Corporation develops and
markets proprietary, environmentally beneficial products and
services in over 65 countries either directly or via a network of
subsidiaries, joint ventures, independent distributors and agents.
NTIC’s primary business is corrosion prevention marketed mainly
under the ZERUST® brand. 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 almost 50 years and more recently has
also targeted and expanded into the oil and gas industry. NTIC
offers worldwide on-site technical consulting for rust and
corrosion prevention 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. NTIC also markets and sells a portfolio of bio-based
and biodegradable polymer resin compounds and finished products
marketed under the Natur-Tec® brand.
Forward-Looking Statements
Statements contained in this release that are
not historical information are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. Such statements include NTIC’s expectations that it will
invest strategically in its infrastructure throughout fiscal 2024
and navigate the evolving challenges created across its European
and Asian markets by evolving geopolitical conflicts and its belief
that it is well positioned to experience continued strength within
its ZERUST® oil and gas and Natur-Tec® businesses and that fiscal
2024 will be another good year of top-line growth and improving
bottom-line profitability, and other statements that can be
identified by words such as “believes,” “continues,” “expects,”
“anticipates,” “intends,” “potential,” “outlook,” “will,” “may,”
“would,” “should,” “guidance” or words of similar meaning, and the
use of future dates. 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: the health of the U.S. and
worldwide economies, including in particular the U.S. automotive
industry and its evolution towards electric vehicles; the effect of
economic uncertainty, recessionary indicators, inflation, increased
interest rates and turmoil in the global credit, financial and
banking markets or perception thereof; effect of supply chain
disruptions; effect of COVID-19; dependence on joint ventures,
relationships with joint venture partners and their success,
including fees and dividend distributions; risks associated with
international operations, including NTIC China, exposure to
exchange rate fluctuations, tariffs and trade disputes; effect of
economic slowdown and political unrest, including the Russia and
Ukraine war and the Israel and Hamas conflict; the level of growth
in NTIC’s markets; NTIC’s investments in research and development
efforts; acceptance of existing and new products; timing of
purchase orders under supply contracts; variability in sales to oil
and gas customers and effect on quarterly financial results;
increased competition; costs and effects of complying with changes
in tax, fiscal, government and other regulatory policies, and rules
relating to environmental, health and safety matters; and NTIC’s
reliance on its intellectual property rights and the absence of
infringement of the intellectual property rights of others. More
detailed information on these and additional factors which could
affect NTIC’s operating and financial results is described in
NTIC’s filings with the Securities and Exchange Commission,
including its annual report on Form 10-K for the fiscal year ended
August 31, 2022 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 it 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.
Use of Non-GAAP Financial
Measures
In addition to the financial measures prepared in
accordance with U.S. generally accepted accounting principles
(GAAP), this release contains non-GAAP financial measures,
including adjusted net income attributable to NTIC and adjusted net
income attributable to NTIC per diluted share. NTIC’s reasons for
use of these measures, reconciliations of these non-GAAP financial
measures to the most directly comparable GAAP measures and other
information are included at the end of this release. Non-GAAP
financial measures have limitations as analytical tools and should
not be considered in isolation or as a substitute for NTIC’s
financial results prepared in accordance with GAAP.
|
NORTHERN TECHNOLOGIES INTERNATIONAL
CORPORATION AND SUBSIDIARIES |
|
CONSOLIDATED BALANCE SHEETS - AUGUST 31, 2023 AND
2022 |
|
|
|
|
August 31, 2023 |
|
August 31, 2022 |
|
ASSETS |
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
5,406,173 |
|
|
$ |
5,333,890 |
|
|
|
Available for sale securities |
|
|
- |
|
|
|
5,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Receivables: |
|
|
|
|
|
|
Trade excluding joint ventures, less allowance for doubtful
accounts of $533,000 and $439,000 as of August 31, 2023 and 2022,
respectively |
|
|
15,645,130 |
|
|
|
14,136,930 |
|
|
|
Trade, joint ventures |
|
|
187,912 |
|
|
|
697,861 |
|
|
|
Fees for services provided to joint ventures |
|
|
1,296,594 |
|
|
|
1,765,117 |
|
|
|
Dividend receivable from joint venture |
|
|
1,986,027 |
|
|
|
- |
|
|
|
Income taxes |
|
|
34,202 |
|
|
|
- |
|
|
|
Inventories |
|
|
13,096,489 |
|
|
|
16,341,729 |
|
|
|
Prepaid expenses |
|
|
2,019,029 |
|
|
|
1,953,764 |
|
|
|
Total current assets |
|
|
39,671,556 |
|
|
|
40,234,881 |
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT, NET |
|
|
14,065,354 |
|
|
|
12,170,493 |
|
|
|
|
|
|
|
|
|
OTHER ASSETS: |
|
|
|
|
|
|
Investments in joint ventures |
|
|
23,705,714 |
|
|
|
21,814,754 |
|
|
|
Deferred income tax, net |
|
|
530,944 |
|
|
|
- |
|
|
|
Intangible asset, net |
|
|
5,500,733 |
|
|
|
5,923,867 |
|
|
|
Goodwill |
|
|
4,782,376 |
|
|
|
4,782,376 |
|
|
|
Patents and trademarks, net |
|
|
658,752 |
|
|
|
710,011 |
|
|
|
Operating lease right of use assets |
|
|
428,874 |
|
|
|
557,571 |
|
|
|
Total other assets |
|
|
35,607,393 |
|
|
|
33,788,579 |
|
|
|
Total assets |
|
$ |
89,344,303 |
|
|
$ |
86,193,953 |
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
Line of credit |
|
$ |
3,600,000 |
|
|
$ |
5,900,000 |
|
|
|
Term loan |
|
|
2,757,176 |
|
|
|
- |
|
|
|
Accounts payable |
|
|
6,056,329 |
|
|
|
7,796,494 |
|
|
|
Income taxes payable |
|
|
13,053 |
|
|
|
30,742 |
|
|
|
Accrued liabilities: |
|
|
|
|
|
|
Payroll and related benefits |
|
|
2,305,400 |
|
|
|
2,297,543 |
|
|
|
Other |
|
|
1,648,615 |
|
|
|
667,292 |
|
|
|
Current portion of operating leases |
|
|
340,799 |
|
|
|
373,330 |
|
|
|
Total current liabilities |
|
|
16,721,372 |
|
|
|
17,065,401 |
|
|
|
LONG-TERM LIABILITIES: |
|
|
|
|
|
|
Deferred income tax, net |
|
|
1,836,059 |
|
|
|
1,700,015 |
|
|
|
Operating leases, less current portion |
|
|
88,075 |
|
|
|
184,241 |
|
|
|
Total long-term liabilities |
|
|
1,924,134 |
|
|
|
1,884,256 |
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES |
|
|
|
|
|
EQUITY: |
|
|
|
|
|
|
Preferred stock, no par value; authorized 10,000 shares; none
issued and outstanding |
|
|
— |
|
|
|
— |
|
|
|
Common stock, $0.02 par value per share; authorized 15,000,000
shares; issued and outstanding 9,424,101 and 9,232,483,
respectively |
|
|
188,482 |
|
|
|
184,650 |
|
|
|
Additional paid-in capital |
|
|
21,986,767 |
|
|
|
19,939,131 |
|
|
|
Retained earnings |
|
|
51,004,427 |
|
|
|
50,716,613 |
|
|
|
Accumulated other comprehensive loss |
|
|
(6,823,403 |
) |
|
|
(7,245,132 |
) |
| |
Stockholders’ equity |
|
|
66,356,273 |
|
|
|
63,595,262 |
|
| |
Non-controlling interests |
|
|
4,342,524 |
|
|
|
3,649,034 |
|
| |
Total equity |
|
|
70,698,797 |
|
|
|
67,244,296 |
|
| |
Total liabilities and equity |
|
$ |
89,344,303 |
|
|
$ |
86,193,953 |
|
| |
|
| NORTHERN
TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) |
|
FOR THE THREE AND TWELVE MONTHS ENDED AUGUST 31, 2023 AND
2022 |
| |
|
|
Three Months Ended |
|
Twelve Months Ended |
|
|
August 31, 2023 |
|
August 31, 2022 |
|
August 31, 2023 |
|
August 31, 2022 |
|
NET SALES: |
|
|
|
|
|
|
|
|
Net Sales |
$ |
20,709,635 |
|
|
$ |
20,251,917 |
|
|
$ |
79,902,952 |
|
|
$ |
74,158,890 |
|
|
Cost of goods sold |
|
13,141,849 |
|
|
|
14,112,679 |
|
|
|
52,099,121 |
|
|
|
51,090,298 |
|
|
Gross profit |
|
7,567,786 |
|
|
|
6,139,239 |
|
|
|
27,803,831 |
|
|
|
23,068,592 |
|
|
|
|
|
|
|
|
|
|
|
JOINT VENTURE OPERATIONS: |
|
|
|
|
|
|
|
|
Equity in income of joint ventures |
|
2,787,926 |
|
|
|
1,063,740 |
|
|
|
6,452,719 |
|
|
|
4,725,918 |
|
|
Fees for services provided to joint ventures |
|
1,393,323 |
|
|
|
1,931,927 |
|
|
|
5,189,185 |
|
|
|
5,767,682 |
|
|
Total joint venture operations |
|
4,181,249 |
|
|
|
2,995,667 |
|
|
|
11,641,904 |
|
|
|
10,493,600 |
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
Selling expenses |
|
4,294,594 |
|
|
|
3,378,723 |
|
|
|
15,290,897 |
|
|
|
13,038,180 |
|
|
General and administrative expenses |
|
3,695,837 |
|
|
|
2,924,981 |
|
|
|
13,166,270 |
|
|
|
10,600,603 |
|
|
Research and development expenses |
|
1,287,676 |
|
|
|
1,217,897 |
|
|
|
4,967,922 |
|
|
|
4,775,334 |
|
|
Total operating expenses |
|
9,278,107 |
|
|
|
7,521,601 |
|
|
|
33,425,089 |
|
|
|
28,414,117 |
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME |
|
2,470,929 |
|
|
|
1,613,305 |
|
|
|
6,020,646 |
|
|
|
5,148,075 |
|
|
|
|
|
|
|
|
|
|
|
REMEASUREMENT GAIN ON ACQUISITION OF EQUITY METHOD INVESTEE |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,951,550 |
|
|
INTEREST INCOME |
|
9,995 |
|
|
|
12,464 |
|
|
|
28,490 |
|
|
|
49,241 |
|
|
INTEREST EXPENSE |
|
(119,162 |
) |
|
|
(55,017 |
) |
|
|
(461,805 |
) |
|
|
(89,096 |
) |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAX EXPENSE |
|
2,361,761 |
|
|
|
1,570,752 |
|
|
|
5,587,331 |
|
|
|
9,059,770 |
|
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE |
|
514,777 |
|
|
|
613,399 |
|
|
|
1,349,600 |
|
|
|
1,873,836 |
|
|
|
|
|
|
|
|
|
|
| NET
INCOME |
|
1,846,984 |
|
|
|
957,353 |
|
|
|
4,237,731 |
|
|
|
7,185,934 |
|
|
|
|
|
|
|
|
|
|
| NET
INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS |
|
908,037 |
|
|
|
309,426 |
|
|
|
1,325,455 |
|
|
|
861,234 |
|
|
|
|
|
|
|
|
|
|
| NET
INCOME ATTRIBUTABLE TO NTIC |
$ |
938,947 |
|
|
$ |
647,927 |
|
|
$ |
2,912,276 |
|
|
$ |
6,324,700 |
|
|
|
|
|
|
|
|
|
|
| NET
INCOME ATTRIBUTABLE TO NTIC PER COMMON SHARE: |
|
|
|
|
|
|
|
|
Basic |
$ |
0.10 |
|
|
$ |
0.07 |
|
|
$ |
0.31 |
|
|
$ |
0.69 |
|
|
Diluted |
$ |
0.10 |
|
|
$ |
0.07 |
|
|
$ |
0.30 |
|
|
$ |
0.66 |
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES |
|
|
|
|
|
|
|
|
ASSUMED OUTSTANDING: |
|
|
|
|
|
|
|
|
Basic |
|
9,384,873 |
|
|
|
9,232,483 |
|
|
|
9,359,504 |
|
|
|
9,216,216 |
|
|
Diluted |
|
9,680,285 |
|
|
|
9,508,440 |
|
|
|
9,693,482 |
|
|
|
9,635,028 |
|
| CASH
DIVIDENDS DECLARED PER COMMON SHARE |
$ |
0.07 |
|
|
$ |
0.07 |
|
|
$ |
0.28 |
|
|
$ |
0.28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NORTHERN TECHNOLOGIES
INTERNATIONAL CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP
MEASURES (UNAUDITED, IN
THOUSANDS, EXCEPT SHARE AND PER SHARE
AMOUNTS)
The accompanying press release contains certain
non-GAAP financial measures, including adjusted net income
attributable to NTIC and adjusted net income attributable to NTIC
per diluted share, which are not calculated or presented in
accordance with accounting principles generally accepted in the
United States (GAAP). These non-GAAP financial measures are
information supplemental and in addition to the financial measures
presented in the accompanying release that are calculated and
presented in accordance with GAAP. NTIC uses non-GAAP financial
measures as supplemental measures of performance and believes these
measures facilitate operating performance comparisons from period
to period and company to company by factoring out potential
differences caused by non-recurring, unusual or infrequent charges
not related to NTIC’s regular, ongoing business. NTIC also believes
that the presentation of certain non-GAAP financial measures
provides useful information to investors in evaluating the
company’s operations, period over period. Such non-GAAP financial
measures should not be considered superior to, as a substitute for,
or as an alternative to, and should be considered in conjunction
with, the GAAP financial measures presented in the release. The
non-GAAP financial measures in the accompanying release may differ
from similar measures used by other companies.
The following is a reconciliation of NTIC’s
reported net income attributable to NTIC and reported net income
attributable to NTIC per diluted common share to adjusted net
income attributable to NTIC and adjusted net income attributable to
NTIC per diluted common share, in each case, as adjusted to exclude
the net one-time gain related to the acquisition of the remaining
50% ownership interest of ZERUST® India, a one-time gain on the
liquidation of a previously written-off investment in NTIC’s former
joint venture in China, Tianjin Zerust (TZ liquidation), and
certain other adjustments as described below.
|
|
Three Months Ended August 31, |
|
Twelve Months Ended August 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to NTIC, as reported |
$ |
938,947 |
|
|
$ |
647,927 |
|
$ |
2,912,276 |
|
|
$ |
6,324,700 |
|
|
Adjustments for adjusted net income: |
|
|
|
|
|
|
|
|
Equity income from TZ liquidation |
|
(1,986,027 |
) |
|
|
- |
|
|
(1,986,027 |
) |
|
|
- |
|
|
Legal fees from TZ liquidation |
|
95,890 |
|
|
|
- |
|
|
95,890 |
|
|
|
- |
|
|
Withholding tax on TZ liquidation |
|
198,603 |
|
|
|
- |
|
|
198,603 |
|
|
|
- |
|
|
Minority interest impact from TZ liquidation |
|
676,614 |
|
|
|
- |
|
|
676,614 |
|
|
|
- |
|
|
Bonus expense impact from TZ liquidation |
|
250,000 |
|
|
|
- |
|
|
250,000 |
|
|
|
- |
|
|
Expenses related to Zerust India transaction |
|
- |
|
|
|
- |
|
|
- |
|
|
|
115,000 |
|
|
Gain on purchase of Zerust India |
|
- |
|
|
|
- |
|
|
- |
|
|
|
(4,612,638 |
) |
|
Cumulative foreign currency adjustment |
|
- |
|
|
|
- |
|
|
- |
|
|
|
661,088 |
|
|
Amortization expense |
|
105,783 |
|
|
|
105,350 |
|
|
423,132 |
|
|
|
421,400 |
|
|
Tax impact of adjusted items |
|
- |
|
|
|
- |
|
|
- |
|
|
|
121,000 |
|
| Non-GAAP adjusted net
income |
$ |
279,810 |
|
|
$ |
753,277 |
|
$ |
2,570,488 |
|
|
$ |
3,030,550 |
|
| |
|
|
|
|
|
|
|
| Weighted average shares
outstanding (diluted) |
|
9,680,285 |
|
|
|
9,508,440 |
|
|
9,693,482 |
|
|
|
9,635,028 |
|
| Diluted net income per share,
as reported |
|
0.10 |
|
|
|
0.07 |
|
|
0.30 |
|
|
|
0.66 |
|
| Adjustments for adjusted net
income, net of tax impact, per diluted share 1 |
|
(0.07 |
) |
|
|
0.01 |
|
|
(0.03 |
) |
|
|
(0.34 |
) |
| Non-GAAP diluted adjusted net
income per share |
$ |
0.03 |
|
|
$ |
0.08 |
|
$ |
0.27 |
|
|
$ |
0.32 |
|
| |
|
|
|
|
|
|
|
| 1 Includes
adjustments related to the items noted above, net of tax |
Investor and Media Contact:Matthew
Wolsfeld, CFONTIC(763) 225-6600
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