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Form 8-K Filing

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 9, 2015 

Northern Technologies International Corporation
(Exact name of registrant as specified in its charter)

Delaware 001-11038 41-0857886
(State or other jurisdiction
of incorporation) 		(Commission File Number) (IRS Employer Identification No.)

4201 Woodland Road
P.O. Box 69
Circle Pines, Minnesota		 55014
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:   (763) 225-6600

N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

    [   ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
    [   ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
    [   ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
    [   ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On July 9, 2015, Northern Technologies International Corporation ("NTIC") publicly announced its consolidated financial results for the fiscal quarter ended May 31, 2015. A copy of the press release is attached as Exhibit 99.1 to this current report on Form 8-K and the information set forth therein is incorporated herein by reference and constitutes a part of this report.

The information contained in Item 2.02 of this report and Exhibit 99.1 to this report shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall not be incorporated by reference into any filings made by NTIC under the Securities Act of 1933, as amended, or the Exchange Act, except as may be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.

Description

99.1

Press Release issued July 9, 2015 (furnished herewith)

SIGNATURE

    Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

    Northern Technologies International Corporation
(Registrant)
July 9, 2015
(Date)		   /s/   MATTHEW C. WOLSFELD
Matthew C. Wolsfeld
Chief Financial Officer and Corporate Secretary

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION

CURRENT REPORT ON FORM 8-K

Exhibit Index


Exhibit No.

Description

Method of Filing

99.1

Press release issued July 9, 2015

Furnished herewith
Northern Technologies International Corporation Reports Increased Sales for Third Quarter Fiscal 2015

EXHIBIT 99.1

Northern Technologies International Corporation Reports Increased Sales for Third Quarter Fiscal 2015

MINNEAPOLIS, July 9, 2015 (GLOBE NEWSWIRE) -- Northern Technologies International Corporation (NASDAQ:NTIC) today reported its financial results for the three and nine months ended May 31, 2015. Highlights of NTIC's financial and operating results include:

"We were pleased to see such strong sales growth in all three businesses during the third fiscal quarter. We are also encouraged to learn that the efforts of the NTIC China sales team has already pushed this newest subsidiary to cross into profitability," said G. Patrick Lynch, President and Chief Executive Officer of NTIC. "As we move into the fourth quarter, we anticipate continued growth in all of our business units."

NTIC's consolidated net sales increased 19.6% and 14.2% to $8,277,575 and $22,220,379, respectively, during the three and nine months ended May 31, 2015 compared to the three and nine months ended May 31, 2014. NTIC's consolidated net sales excluding NTIC's joint ventures increased 24.7% and 16.5% to $7,553,957 and $20,030,491, respectively, during the three and nine months ended May 31, 2015 compared to the same respective prior fiscal year periods. These increases were primarily a result of increased demand and sales of ZERUST® rust and corrosion inhibiting packaging products and services and Natur-Tec® products. Net sales to joint ventures decreased 16.3% and 3.1% to $723,618 and $2,189,888 during the three and nine months ended May 31, 2015, respectively, compared to the same respective prior fiscal year periods. 

The following table sets forth NTIC's net sales by product category for the three and nine months ended May 31, 2015 and 2014 by segment:

  Three Months Ended Nine Months Ended
  May 31, 2015 May 31, 2014 May 31, 2015 May 31, 2014
ZERUST® sales $7,076,760 $5,992,095 $19,098,816 $17,296,159
Natur-Tec® sales 1,200,815 928,725 3,121,563 2,152,769
Total net sales $8,277,575 $6,920,820 $22,220,379 $19,448,928

During the three and nine months ended May 31, 2015, 85.5% and 86.0% of NTIC's consolidated net sales, respectively, were derived from sales of ZERUST® products and services, which increased 18.1% and 10.4% to $7,076,760 and $19,098,816 during the three and nine months ended May 31, 2015, respectively, compared to $5,992,095 and $17,296,159 during the three and nine months ended May 31, 2014, respectively. These increases were due to increased demand from existing customers and the addition of new customers. NTIC has strategically focused its sales efforts for ZERUST® products and services on customers with sizeable corrosion problems in industry sectors that offer sizable growth opportunities, including the oil and gas sector.   

The following table sets forth NTIC's net sales of ZERUST® products for the three and nine months ended May 31, 2015 and 2014:

  Three Months Ended
      $ %
  May 31, 2015 May 31, 2014 Change Change
ZERUST® industrial net sales $5,849,301 $4,879,899 $969,402 19.9%
ZERUST® joint venture net sales 723,618 861,312 (137,694) (16.0%)
ZERUST® oil & gas net sales 503,841 250,884 252,957 100.8%
Total ZERUST® net sales $7,076,760 $5,992,095 $1,084,665 18.1%
   
  Nine Months Ended
      $ %
  May 31, 2015 May 31, 2014 Change Change
ZERUST® industrial net sales $15,526,505 $13,999,907 $1,526,598 10.9%
ZERUST® joint venture net sales 2,189,888 2,252,648 (62,760) (2.8%)
ZERUST® oil & gas net sales 1,382,423 1,043,604 338,819 32.5%
Total ZERUST® net sales $19,098,816 $17,296,159 $1,802,657 10.4%

Mr. Lynch added, "As global oil prices have stabilized in recent month, it appears that the maintenance budgets of existing and prospective ZERUST® clients in the oil and gas industry are falling back in line. Consequently, we expect the performance of our ZERUST® Oil & Gas team to accelerate over the course of the remaining calendar year. At the same time, our Natur-Tec® business continues to grow according to plan in both the U.S. and India."

During the three and nine months ended May 31, 2015, 14.5% and 14.0% of NTIC's consolidated net sales, respectively, were derived from sales of Natur-Tec® products, which increased 29.3% and 45.0% to $1,200,815 and $3,121,563 during the three and nine months ended May 31, 2015, respectively, compared to the three and nine months ended May 31, 2014. These increases were split between an increase in finished product sales in North America and finished product sales through Natur-Tec India, which subsidiary did not exist during the same periods in fiscal 2014.

Cost of goods sold increased 19.8% and 16.9% for the three and nine months ended May 31, 2015, respectively, compared to the three and nine months ended May 31, 2014 primarily as a result of increased net sales as described above. Cost of goods sold as a percentage of net sales increased to 67.6% during the three months ended May 31, 2015 compared to 67.5% the three months ended May 31, 2014 and increased to 67.8% during the nine months ended May 31, 2015 compared to 66.2% during the nine months ended May 31, 2014. These increases were primarily the result of increased sales during the current fiscal year periods of Natur-Tec® products, which carry lower margins than other traditional ZERUST® products. NTIC anticipates that due to the change in its China operations, NTIC's costs of goods sold will increase in future periods compared to the prior fiscal year periods.

NTIC's total operating expenses increased to $13,442,870 during the nine months ended May 31, 2015 compared to $12,222,736 for the nine months ended May 31, 2014 primarily as a result of expenses related to the formation and establishment of NTIC China and the termination of NTIC's joint venture relationship in China. NTIC incurred $1,139,000 of direct expenses during the nine months ended May 31, 2015 related to the termination of its joint venture agreements with Tianjin Zerust and the formation of NTIC China. These expenses consisted primarily of legal expenses and personnel expenses associated with the establishment of the subsidiary and the hiring of new personnel.

As of May 31, 2015, NTIC's working capital was $17,298,124, including $3,793,571 in cash and cash equivalents and $2,527,847 in available for sale securities, compared to $17,853,311 at August 31, 2014, including $2,477,017 in cash and cash equivalents and $5,519,766 in available for sale securities.   

Outlook

For the fiscal year ending August 31, 2015, NTIC continues to expect its net sales to be in the estimated range of $32 to $34 million and continues to expect net income of between $2.8 to $3.1 million, or between $0.62 and $0.68 per diluted share, but this estimate is subject to significant uncertainties related to NTIC's new operations in China. 

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 third quarter of fiscal 2015 and its future outlook, followed by a question and answer session. The conference call will be available to interested parties through a live audio webcast available through NTIC's website at www.ntic.com or http://ir.ntic.com/events.cfm where the webcast will be archived and accessible for at least 12 months. The dial-in number for the conference call is (877) 670-9779 and the confirmation code is 77962159.

About Northern Technologies International Corporation

Northern Technologies International Corporation develops and markets proprietary environmentally beneficial products and services in over 60 countries either directly or via a network of subsidiaries, joint ventures, independent distributors and agents. NTIC's primary business is corrosion prevention marketed primarily 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 over 40 years, and in recent years has 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 resins and finished products marketed under the Natur-Tec® brand.  

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 NTIC's expectations regarding its financial guidance for fiscal 2015, NTIC's anticipated continued strong growth in its business units and China, the effect of declining global oil prices on raw material costs and sales of NTIC's oil and gas products 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, the use of future dates 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: the effect on NTIC's business and operating results of the termination of NTIC's joint venture relationship in China and NTIC's decision sell its products and services directly in China; the ability of NTIC China to achieve significant sales; costs and expenses incurred by NTIC in connection with its pending litigation against its former Chinese joint venture partner and the anticipated liquidation of Tianjin Zerust; NTIC's dependence on the success of its joint ventures and fees and dividend distributions that NTIC receives from them; NTIC's relationships with its joint ventures and its ability to maintain those relationships; NTIC's dependence on its joint venture in Germany in particular due to its significance and the effect of a termination of this or NTIC's other joint ventures on NTIC's business and operating results; risks related to the European sovereign debt crisis, economic slowdown and political unrest; 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; timing of NTIC's receipt of purchase orders under supply contracts; variability in sales to Petrobras and other customers and the effect on NTIC's quarterly financial results; increased competition; 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; potential litigation; 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 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.

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES 
CONSOLIDATED BALANCE SHEETS AS OF MAY 31, 2015 (UNAUDITED) 
AND AUGUST 31, 2014 (AUDITED)
     
  May 31, 2015 August 31, 2014
ASSETS    
CURRENT ASSETS:    
Cash and cash equivalents  $ 3,793,571 $2,477,017
Available for sale securities 2,527,847 5,519,766
Receivables:    
Trade excluding joint ventures, less allowance for doubtful accounts of $40,000 at May 31, 2015 and August 31, 2014 4,293,038 3,596,247
Trade joint ventures 626,948 951,286
Fees for services provided to joint ventures 1,354,901 2,612,899
Income taxes 178,110 762
Inventories 6,732,441 5,961,399
Prepaid expenses 527,597 411,226
Deferred income taxes 789,364 789,364
Total current assets 20,823,817 22,319,966
     
PROPERTY AND EQUIPMENT, NET 7,136,334 6,477,987
     
OTHER ASSETS:    
Investments in joint ventures 19,644,767 22,961,989
Investments at carrying value 1,883,668 —
Deferred income taxes 970,783 943,279
Patents and trademarks, net 1,270,739 1,197,700
Other 141,303 156,854
Total other assets 23,911,260 25,259,822
Total assets  $ 51,871,411  $ 54,057,775
     
LIABILITIES AND EQUITY    
CURRENT LIABILITIES:    
Accounts payable 2,117,239 2,225,029
Accrued liabilities:    
Payroll and related benefits 1,038,931 1,847,246
Deferred joint venture royalties 288,000 288,000
Other 81,523 106,380
Total current liabilities 3,525,693 4,466,655
     
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 10,000,000 shares; issued and outstanding 4,525,109 and 4,504,552, respectively 90,502 90,092
Additional paid-in capital 13,211,987 12,676,546
Retained earnings 34,518,356 32,733,300
Accumulated other comprehensive income (3,125,074) 253,925
Stockholders' equity 44,695,771 45,753,863
Non-controlling interest 3,649,947 3,837,257
Total equity 48,345,718 49,591,120
Total liabilities and equity  $ 51,871,411  $ 54,057,775
     
     
NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) 
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2015 AND 2014
         
  Three Months Ended Nine Months Ended
  May 31, 2015 May 31, 2014 May 31, 2015 May 31, 2014
NET SALES:        
Net sales, excluding joint ventures $7,553,957 $6,056,078 $20,030,491 $17,188,462
Net sales, to joint ventures 723,618 864,742 2,189,888 2,260,466
Total net sales 8,277,575 6,920,820 22,220,379 19,448,928
         
Cost of goods sold 5,595,207 4,669,322 15,059,558 12,879,186
Gross profit 2,682,368 2,251,498 7,160,821 6,569,742
         
JOINT VENTURE OPERATIONS:        
Equity in income of joint ventures 1,724,915 1,593,465 4,806,247 4,416,664
Fees for services provided to joint ventures 1,303,964 2,001,775 4,432,494 6,169,094
Total joint venture operations 3,028,879 3,595,240 9,238,741 10,585,758
         
OPERATING EXPENSES:        
Selling expenses 1,434,627 1,315,264 4,168,955 3,925,466
General and administrative expenses 1,703,083 1,307,653 4,794,206 3,905,082
Expenses incurred in support of joint ventures 327,586 353,958 1,510,830 1,049,691
Research and development expenses 1,064,710 1,104,632 2,968,879 3,342,497
Total operating expenses 4,530,006 4,081,507 13,442,870 12,222,736
         
OPERATING INCOME 1,181,241 1,765,231 2,956,692 4,932,764
         
INTEREST INCOME 7,943 1,369 25,504 5,728
INTEREST EXPENSE (6,004) (7,063) (14,232) (32,709)
OTHER INCOME — — 2,145 —
         
INCOME BEFORE INCOME TAX EXPENSE 1,183,180 1,759,537 2,970,109 4,905,783
         
INCOME TAX EXPENSE 114,180 361,280 495,478 819,039
         
NET INCOME 1,069,000 1,398,257 2,474,631 4,086,744
         
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST 163,565 418,040 689,575 1,222,897
         
NET INCOME ATTRIBUTABLE TO NTIC $905,435 $980,217 $1,785,056 $2,863,847
         
NET INCOME ATTRIBUTABLE TO NTIC PER COMMON SHARE:        
Basic $0.20 $0.22 $0.40 $0.64
Diluted $0.20 $0.21 $0.39 $0.63
         
WEIGHTED AVERAGE COMMON SHARES ASSUMED OUTSTANDING:        
Basic 4,525,109 4,461,880 4,519,279 4,452,798
Diluted 4,594,992 4,590,344 4,635,561 4,583,174
          
CONTACT: Investor and Media Contact:
         Matthew Wolsfeld, CFO
         NTIC
         (763) 225-6600