NTi Reports Q3 Sales Dip, Net Income Falls

TL;DR

NTi Q3 sales down to $12.6M from $13.5M YoY, net income fell to $0.7M from $1.1M. Tough quarter.

AI Summary

Northern Technologies International Corp. reported its third-quarter results for fiscal year 2024, ending May 31, 2024. The company's net sales for the three months ended May 31, 2024, were $12.6 million, a decrease from $13.5 million in the same period last year. Net income for the quarter was $0.7 million, down from $1.1 million in the prior year's third quarter.

Why It Matters

The decline in sales and net income for Northern Technologies International Corp. in Q3 2024 indicates potential challenges in market demand or operational efficiency, which could impact future revenue and profitability.

Risk Assessment

Risk Level: medium — The decrease in net sales and net income suggests potential headwinds that could affect the company's financial performance.

Key Numbers

• $12.6M — Q3 2024 Net Sales (Decrease from $13.5M in Q3 2023)
• $0.7M — Q3 2024 Net Income (Decrease from $1.1M in Q3 2023)

Key Players & Entities

• NORTHERN TECHNOLOGIES INTERNATIONAL CORP (company) — Filer
• 20240531 (date) — Report Period End Date
• $12.6 million (dollar_amount) — Net sales for the three months ended May 31, 2024
• $13.5 million (dollar_amount) — Net sales for the three months ended May 31, 2023
• $0.7 million (dollar_amount) — Net income for the three months ended May 31, 2024
• $1.1 million (dollar_amount) — Net income for the three months ended May 31, 2023

FAQ

Key Financial Figures

• $0.02 — ich registered Common stock, par value $0.02 per share NTIC Nasdaq Global Market

Filing Documents

• ntic20240531_10q.htm (10-Q) — 1435KB
• ex_695360.htm (EX-31.1) — 13KB
• ex_695361.htm (EX-31.2) — 13KB
• ex_695362.htm (EX-32.1) — 5KB
• ex_695363.htm (EX-32.2) — 5KB
• 0001171843-24-003883.txt ( ) — 6421KB
• ntic-20240531.xsd (EX-101.SCH) — 54KB
• ntic-20240531_def.xml (EX-101.DEF) — 318KB
• ntic-20240531_lab.xml (EX-101.LAB) — 281KB
• ntic-20240531_pre.xml (EX-101.PRE) — 354KB
• ntic-20240531_cal.xml (EX-101.CAL) — 51KB
• ntic20240531_10q_htm.xml (XML) — 1121KB

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements Consolidated Balance Sheets as of May 31, 2024 (unaudited) and August 31, 2023 (audited) 1 Consolidated Statements of Operations (unaudited) for the Three and Nine Months Ended May 31, 2024 and 2023 2 Consolidated Statements of Comprehensive Income (unaudited) for the Three and Nine Months Ended May 31, 2024 and 2023 3 Consolidated Statements of Equity (unaudited) for the Three and Nine Months Ended May 31, 2024 and 2023 4 Consolidated Statements of Cash Flows (unaudited) for the Nine Months Ended May 31, 2024 and 2023 5

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 6 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 29 Item 4.

Controls and Procedures

Controls and Procedures 30

— OTHER INFORMATION

PART II — OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 32 Item 1A.

Risk Factors

Risk Factors 32 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 32 Item 3. Defaults Upon Senior Securities 33 Item 4. Mine Safety Disclosures 33 Item 5. Other Information 33 Item 6. Exhibits 33

SIGNATURES

SIGNATURES 34 _________________ i This quarterly report on Form 10-Q contains certain forward-looking statements that are within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by those sections. For more information, see " Part I. Financial Information – Item 2. Management ' s Discussion and Analysis of Financial Condition and Results of Operations – Forward-Looking Statements. " _________________ As used in this report, references to " NTIC, " the " Company, " " we, " " our " or " us, " unless the context otherwise requires, refer to Northern Technologies International Corporation and its wholly-owned and majority-owned subsidiaries, all of which are consolidated on NTIC ' s consolidated financial statements. As used in this report, references to: (1) " NTIC China " refer to NTIC ' s wholly-owned subsidiary in China, NTIC (Shanghai) Co., Ltd.; (2) " NTI Europe " refer to NTIC ' s wholly-owned subsidiary in Germany, NTIC Europe GmbH; (3) " Zerust Mexico " refer to NTIC ' s wholly-owned subsidiary in Mexico, ZERUST-EXCOR MEXICO, S. de R.L. de C.V.; (4) " Zerust India " refer to NTIC ' s wholly-owned subsidiary in India, HNTI Limited (formerly Harita-NTI Limited); and (5) " NTI Asean " refer to NTIC ' s majority-owned holding company subsidiary, NTI Asean LLC, which holds investments in certain entities that operate in the Association of Southeast Asian Nations (ASEAN) region. NTIC ' s consolidated financial statements do not include the accounts of any of its joint ventures. Except as otherwise indicated, references in this report to NTIC ' s joint ventures do not include any of NTIC ' s wholly-owned or majority-owned subsidiaries. As used in this report, references to " EXCOR " refer to NTIC ' s joint venture in Germany, Excor Korrosionsschutz – Technologien und Produkte GmbH. All trademarks, trade names or service mar

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF MAY 31, 2024 (UNAUDITED) AND AUGUST 31, 2023 (AUDITED) May 31, 2024 August 31, 2023 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 5,794,824 $ 5,406,173 Receivables: Trade, excluding joint ventures, less allowance for doubtful accounts of $ 533,000 as of May 31, 2024 and August 31, 2023 14,374,856 15,645,130 Trade, joint ventures 594,331 187,912 Fees for services provided to joint ventures 1,262,153 1,296,594 Dividend receivable from joint ventures — 1,986,027 Income taxes 463,828 34,202 Inventories 13,242,381 13,096,489 Prepaid expenses 2,170,896 2,019,029 Total current assets $ 37,903,269 $ 39,671,556 PROPERTY AND EQUIPMENT, NET $ 15,678,572 $ 14,065,354 OTHER ASSETS: Investments in joint ventures 24,219,348 23,705,714 Deferred income tax, net 570,673 530,944 Intangible asset, net 5,802,438 6,159,485 Goodwill 4,782,376 4,782,376 Operating lease right of use asset 308,868 428,874 Total other assets 35,683,703 35,607,393 Total assets $ 89,265,544 $ 89,344,303 LIABILITIES AND EQUITY CURRENT LIABILITIES: Line of credit $ 1,988,380 $ 3,600,000 Term loan 2,762,049 2,757,176 Accounts payable 6,273,261 6,056,329 Income taxes payable 17,579 13,053 Accrued liabilities: Payroll and related benefits 2,216,767 2,305,400 Other 1,289,106 1,648,615 Current portion of operating lease 247,291 340,799 Total current liabilities $ 14,794,433 $ 16,721,372 LONG-TERM LIABILITIES: Deferred income tax, net 1,836,059 1,836,059 Operating lease, less current portion 61,577 88,075 Total long-term liabilities $ 1,897,636 $ 1,924,134 COMMITMENTS AND CONTINGENCIES (Note 12) EQUITY: Preferred stock, no par value; authorized 10,000 shares; none issued and outstanding — — Common stock, $ 0

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. INTERIM FINANCIAL INFORMATION In the opinion of management, the accompanying unaudited consolidated financial statements contain all necessary adjustments, which are of a normal recurring nature, and present fairly the consolidated financial position of Northern Technologies International Corporation and its subsidiaries (the Company) as of May 31, 2024 and August 31, 2023, the results of the Company's operations for the three and nine months ended May 31, 2024 and 2023, the changes in stockholders' equity for the three and nine months ended May 31, 2024 and 2023, and the Company's cash flows for the nine months ended May 31, 2024 and 2023, in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). These consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company's annual report on Form 10-K for the fiscal year ended August 31, 2023. These consolidated financial statements also should be read in conjunction with the " Management ' s Discussion and Analysis of Financial Condition and Results of Operations " section appearing in this report. Operating results for the three and nine months ended May 31, 2024 are not necessarily indicative of the results that may be expected for the full fiscal year ending August 31, 2024. The Company evaluates events occurring after the date of the consolidated financial statements, through the date the consolidated financial statements were available to be issued, requiring recording or disclosure in the consolidated financial statements. 2. ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, Measurement of Credit Losses on Financial Instruments , which revises guidance for the accounting for credit lo

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