Form 8-K
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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 13, 2023

_______________________________

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION

(Exact name of registrant as specified in its charter)

_______________________________

Delaware001-1103841-0857886
(State or Other Jurisdiction of Incorporation)(Commission File Number)(I.R.S. Employer Identification No.)

4201 Woodland Road
P.O. Box 69

Circle Pines, Minnesota 55014

(Address of Principal Executive Offices) (Zip Code)

(763) 225-6600

(Registrant's telephone number, including area code)

Not Applicable

(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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.02 per shareNTICNasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 
 
Item 2.02. Results of Operations and Financial Condition.

        On July 13, 2023, Northern Technologies International Corporation (“NTIC”) announced its consolidated financial results for the fiscal quarter ended May 31, 2023. 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 13, 2023 (furnished herewith)
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 

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
   
  
Date: July 13, 2023By: /s/ Matthew C. Wolsfeld        
  Matthew C. Wolsfeld
  Chief Financial Officer
  

 

EdgarFiling

EXHIBIT 99.1

Northern Technologies International Corporation Reports Financial Results for Third Quarter Fiscal 2023

MINNEAPOLIS, July 13, 2023 (GLOBE NEWSWIRE) -- 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 third quarter of fiscal 2023.

Third quarter fiscal 2023 highlights include (with growth rates compared to third quarter of fiscal 2022):

“Positive momentum across virtually every segment of our business is propelling us forward, as we have capitalized on favorable global demand trends for our corrosion inhibiting products and services and our bioplastic solutions. Therefore, net sales for the quarter ended May 31, 2023 set a new quarterly record, which included record top-line results across our ZERUST® Industrial, ZERUST® oil and gas, and Natur-Tec® segments,” said G. Patrick Lynch, President and CEO of NTIC.

Mr. Lynch continued, “Our third quarter results also reflect the success of the countermeasures we’ve put in place against supply chain issues, significant raw material cost increases, and challenges across our European and Asian markets. Consequently, we have made considerable progress rebuilding our gross margins on both a sequential and year-over-year basis to 36.7%. In addition, for the three months ended May 31, 2023, we generated $1,301,000 of operating cash flow driven primarily with stronger profitability and waning inventory levels. We believe we remain well positioned for a strong finish to fiscal 2023 and we are excited by the direction our business is headed as a result of the successful long-term growth strategies we are pursuing,” concluded Mr. Lynch.

NTIC’s consolidated net sales increased 10.6% to $20,970,000 during the three months ended May 31, 2023, compared to $18,965,000 for the three months ended May 31, 2022. The year-over-year increase in consolidated net sales was primarily a result of sales growth across all the Company’s market segments due to higher customer demand and targeted price increases on certain products.   For the nine months ended May 31, 2023, consolidated net sales increased 9.8% to $59,193,000, compared to $53,907,000 for the same period last fiscal year.

The following tables set forth NTIC’s net sales by product category for the three and nine months ended May 31, 2023 and 2022, by segment:

 Three Months Ended May 31,
  
2023
% of Net
Sales
 
2022
% of Net
Sales
%
Change
ZERUST® industrial net sales$14,103,29267.2%$12,941,65168.3%9.0%
ZERUST® oil & gas net sales 1,997,3829.6% 1,505,1817.9%32.7%
Total ZERUST® net sales$16,100,67476.8%$14,446,83276.2%11.4%
Total Natur-Tec® net sales 4,869,05223.2% 4,518,08923.8%7.8%
Total net sales$20,969,726100.0%$18,964,921100.0%10.6%


 Nine Months Ended May 31
  
2023
% of Net
Sales
 
2022
% of Net
Sales
%
Change
ZERUST® industrial net sales$40,504,90868.4%$38,933,47672.2%4.0%
ZERUST® oil & gas net sales 5,424,5149.2% 3,054,9185.7%77.6%
Total ZERUST® net sales$45,929,42277.6%$41,988,39477.9%9.4%
Total Natur-Tec® net sales 13,263,89522.4% 11,918,57922.1%11.3%
Total net sales$59,193,317100.0%$53,906,973100.0%9.8%


NTIC’s joint venture operating income increased 0.5% to $2,708,000 during the three months ended May 31, 2023, compared to joint venture operating income of $2,695,000 during the three months ended May 31, 2022. Net sales of NTIC’s joint ventures, which are not consolidated with NTIC’s financial results, decreased 1.1% to $26,313,000 during the three months ended May 31, 2023, compared to $26,594,000 for the three months ended May 31, 2022. Year-to-date, NTIC’s joint venture operating income decreased 0.5% to $7,461,000, compared to joint venture operating income of $7,498,000 during the nine months ended May 31, 2022. Net sales of NTIC’s joint ventures decreased 2.2% to $76,525,000 during the nine months ended May 31, 2023, compared to $78,219,000 for the nine months ended May 31, 2022.

Operating expenses, as a percent of net sales, for the third quarter of fiscal 2023 were 38.3%, compared to 37.5% for the same period last fiscal year. Year-to-date, operating expenses, as a percent of net sales, were 39.6%, compared to 38.8% for the same period last fiscal year. Higher year-over-year operating expenses for the three and nine-months ended May 31, 2023 were driven primarily by increased personnel expenses and other inflationary increases in expenses.   Additionally, NTIC is now consolidating the majority owned subsidiary formed to assume the operations of a former joint venture in Taiwan compared to prior periods.

Net income attributable to NTIC for the third quarter of fiscal 2023 of $1,526,000, or $0.16 per diluted share, compared to net income of $1,000,000, or $0.11 per diluted share, for the same period last fiscal year. For the nine months ended May 31, 2023, net income attributable to NTIC decreased to $2,913,000, or $0.30 per diluted share, from $5,677,000, or $0.59 per diluted share, for the same period last fiscal year.

NTIC’s non-GAAP adjusted net income, as set forth in the GAAP reconciliation at the end of this release, was $1,631,000, or $0.17 per diluted share, for the third quarter of fiscal 2023, compared to $1,106,000, or $0.12 per diluted share, for the same quarter last fiscal year. Year-to-date, NTIC’s non-GAAP adjusted net income, as set forth in the GAAP reconciliation at the end of this release, was $3,230,000, or $0.33 per diluted share, compared to $2,279,000, or $0.24 per diluted share, for the same quarter last fiscal year.

NTIC’s consolidated balance sheet remains strong, with working capital of $23,739,000 as of May 31, 2023, including $6,195,000 in cash and cash equivalents, and an outstanding revolving line of credit and term loan balance of $8,013,000 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 May 31, 2023, the Company had $22,855,000 of investments in joint ventures, of which over $12,100,000, or 53.2%, is cash, with the remaining balance primarily invested in other working capital.

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 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/BIc8dcf004fd0c4e4188d77930f579b8cf

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/3o4wxyqy. 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.

Investor and Media Contact:
Matthew Wolsfeld, CFO
NTIC
(763) 225-6600

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 believes it is well positioned for a strong finish to fiscal 2023 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; 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 AS OF MAY 31, 2023 (UNAUDITED)
AND AUGUST 31, 2022 (AUDITED)
  May 31, 2023 August 31, 2022
ASSETS   
CURRENT ASSETS:   
 Cash and cash equivalents$6,195,194  $        5,333,890 
 Available for sale securities                              —              5,590 
 Receivables:   
 Trade, excluding joint ventures, less allowance for doubtful accounts   
 of $439,000 as of May 31, 2023 and August 31, 2022 15,311,650           14,136,930 
 Trade, joint ventures 668,847           697,861 
 Fees for services provided to joint ventures 1,226,010           1,765,117 
 Income taxes 155,828           — 
 Inventories 13,900,812           16,341,729 
 Prepaid expenses 1,831,566           1,953,764 
 Total current assets$39,289,907  $40,234,881 
     
PROPERTY AND EQUIPMENT, NET$         13,810,930  $        12,170,493 
OTHER ASSETS:   
 Investments in joint ventures 22,855,448           21,814,754 
 Intangible asset, net 6,281,625           6,633,878 
 Goodwill 4,782,376           4,782,376 
 Operating lease right of use asset 293,137           557,571 
 Total other assets 34,212,586           33,788,579 
 Total assets$87,313,423  $        86,193,953 
     
LIABILITIES AND EQUITY   
CURRENT LIABILITIES:   
 Accounts payable$4,687,675  $        7,796,494 
 Term loan 2,812,504                               — 
 Line of credit 5,200,000           5,900,000 
 Income taxes payable                             —-           30,742 
 Accrued liabilities:   
 Payroll and related benefits 2,035,785           2,297,543 
 Other 734,414           667,292 
 Current portion of operating leases 80,183           373,330 
 Total current liabilities$15,550,561  $        17,065,401 
LONG-TERM LIABILITIES:   
Deferred income tax, net         1,618,960           1,700,015 
 Operating leases, less current portion         212,954           184,241 
 Total long-term liabilities$        1,831,914  $        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 as of   
 May 31, 2023 and August 31, 2022; issued and outstanding 9,369,925 and 9,232,483, respectively 187,398           184,650 
 Additional paid-in capital 21,426,721           19,939,131 
 Retained earnings 51,662,515           50,716,613 
 Accumulated other comprehensive loss (6,879,447)          (7,245,132)
 Stockholders’ equity 66,397,187           63,595,262 
 Non-controlling interests 3,533,761           3,649,034 
 Total equity 69,930,948           67,244,296 
 Total liabilities and equity$87,313,423  $        86,193,953 



NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2023 AND 2022
 Three Months Ended May 31, Nine Months Ended May 31,
  2023   2022   2023   2022 
NET SALES:       
Net sales$20,969,726  $18,964,921  $59,193,317  $53,906,973 
Cost of goods sold 13,280,584   12,722,833   38,747,865   36,977,620 
Gross profit 7,689,142   6,242,088   20,445,452   16,929,353 
        
JOINT VENTURE OPERATIONS:       
Equity in income from joint ventures 1,346,658   1,364,597   3,664,793   3,662,178 
Fees for services provided to joint ventures 1,361,311   1,329,988   3,795,862   3,835,755 
Total joint venture operations 2,707,969   2,694,585   7,460,655   7,497,933 
        
OPERATING EXPENSES:       
Selling expenses 3,723,165   3,450,308   10,649,316   9,659,457 
General and administrative expenses 3,150,643   2,560,487   9,365,431   7,675,622 
Research and development expenses 1,150,711   1,102,942   3,401,885   3,557,437 
Total operating expenses 8,024,519   7,113,737   23,416,632   20,892,516 
        
OPERATING INCOME 2,372,592   1,822,936   4,489,475   3,534,770 
        
REMEASUREMENT GAIN ON ACQUISITION OF EQUITY METHOD INVESTEE          3,951,550 
        
INTEREST INCOME 8,876   15,925   18,495   36,777 
INTEREST EXPENSE (136,168)  (23,784)  (342,643)  (34,079)
        
INCOME BEFORE INCOME TAX EXPENSE 2,245,300   1,815,077   4,165,327           7,489,018 
        
INCOME TAX EXPENSE 542,295   604,314   834,823   1,260,437 
        
NET INCOME 1,703,005   1,210,763   3,330,504   6,228,581 
        
NET INCOME ATTRIBUTABLE TO NON-
CONTROLLING INTERESTS
 177,409   210,596   417,418   551,808 
        
NET INCOME ATTRIBUTABLE TO NTIC$1,525,596  $1,000,167  $2,913,086  $5,676,773 
        
NET INCOME ATTRIBUTABLE TO NTIC PER COMMON SHARE:       
Basic$0.16  $0.11  $0.31  $0.62 
Diluted$0.16  $0.11  $0.30  $0.59 
        
WEIGHTED AVERAGE COMMON SHARES       
ASSUMED OUTSTANDING:       
Basic 9,369,923   9,227,912   9,355,776   9,216,216 
Diluted 9,628,069   9,578,797   9,702,610   9,682,646 
CASH DIVIDENDS DECLARED PER COMMON SHARE$0.07  $0.07  $0.21  $0.21 


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 and certain other adjustments as described below.

 Three Months Ended May 31, Nine Months Ended May 31,
  2023  2022  2023  2022 
        
Net income attributable to NTIC, as reported$1,525,596 $1,000,167 $2,913,086 $5,676,773 
Adjustments for adjusted net income:       
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  317,349  317,350 
Tax impact of adjusted items -  -  -  121,000 
Non-GAAP adjusted net income$1,631,379 $1,105,517 $3,230,435 $2,278,573 
        
Weighted average shares outstanding (diluted) 9,628,069  9,578,797  9,702,610  9,682,646 
Diluted net income per share, as reported 0.16  0.11  0.30  0.59 
Adjustments for adjusted net income, net of tax impact, per diluted share 1 

0.01
  

0.01
  

0.03
  

(0.35


)
Non-GAAP diluted adjusted net income per share$0.17 $0.12 $0.33 $0.24 
        
1 Includes adjustments related to the items noted above, net of tax