Press Releases
Northern Technologies International Corporation Reports Financial Results for First Quarter Fiscal 2016
- NTIC's consolidated net sales decreased 2.6% to
$7,024,437 during the first quarter of fiscal 2016 compared to$7,214,095 during the same period in fiscal 2015. - Sales of ZERUST® products decreased 4.2% to
$5,977,682 compared to$6,238,071 for the three months endedNovember 30, 2014 . This decrease was due to lower sales inNorth America to existing customers of new and existing products, which were partially offset by increases in sales inChina of new and existing products throughNTIC (Shanghai) Co., Ltd (NTIC China). NTIC also strategically targets market areas with specific corrosion issues that offer sizable growth opportunities, including the oil and gas industry. NTIC's consolidated net sales for the three months endedNovember 30, 2015 included$340,239 of sales made to customers in the oil and gas industry compared to$502,192 for the three months endedNovember 30, 2014 . The majority of the decrease in sales to this market sector was due to there being only$2,517 in oil and gas industry related sales inBrazil , compared to$104,647 for the three months endedNovember 30, 2014 . Overall demand for ZERUST® products and services depends heavily on the overall health of the market segments to which NTIC sells its products, including the automotive, oil and gas, agriculture, and mining markets in particular. - During the three months ended
November 30, 2015 , 14.9% of NTIC's consolidated net sales were derived from sales of Natur-Tec® products compared to 13.5% during the three months endedNovember 30, 2014 . Net sales of Natur-Tec® products increased 7.2% during the three months endedNovember 30, 2015 compared to the three months endedNovember 30, 2014 primarily due to an increase in finished product sales inNorth America and finished product sales at NTIC's majority-owned subsidiary inIndia ,Natur-Tec India Private Limited (Natur-Tec India). - Joint venture operating income decreased 34.0% to
$2,469,182 during the first quarter of fiscal 2016 compared to$3,740,353 during the same period in fiscal 2015. This decrease was primarily due to decreases associated with the anticipated liquidation of Tianjin Zerust, NTIC's former joint venture inChina , as well as significant declines in the value of key foreign currencies (including the Euro) compared to theU.S. dollar. NTIC's equity in income of joint ventures decreased 38.8% to$983,753 during the three months endedNovember 30, 2015 compared to$1,606,683 during the three months endedNovember 30, 2014 . NTIC recognized a 30.4% decrease in fees for services provided to joint ventures during the three months endedNovember 30, 2015 compared to the three months endedNovember 30, 2014 primarily due to the anticipated liquidation of Tianjin Zerust. Fees for services provided to Tianjin Zerust decreased$516,139 to$0 during the three months endedNovember 30, 2015 compared to$516,139 during the three months endedNovember 30, 2014 . - Total net sales of NTIC's joint ventures decreased 24.9% to
$21,871,209 during the three months endedNovember 30, 2015 compared to$29,120,852 for the three months endedNovember 30, 2014 due primarily to the anticipated liquidation of Tianjin Zerust and the adverse effects of foreign currency exchange rate shifts, including in particular, the Euro compared to theU.S. dollar. - NTIC's total operating expenses increased 4.3% to
$4,703,787 during the three months endedNovember 30, 2015 compared to$4,510,179 for the three months endedNovember 30, 2014 . This increase was primarily due to$504,385 in expenses related to the formation and establishment of NTIC China and the anticipated liquidation of Tianjin Zerust. - Net (loss) income attributable to NTIC decreased 123.2% to a net loss of
$(234,351) , or$(0.05) , per diluted common share, for the three months endedNovember 30, 2015 compared to net income of$1,008,265 , or$0.22 per diluted common share, for the three months endedNovember 30, 2014 .
This decrease in earnings was primarily a result of the three factors: (1) the change in NTIC's Chinese operations; (2) the
effect of foreign currency exchange rate fluctuations, particularly between the Euro and
"The first quarter of fiscal 2016 was certainly disappointing due to a number of key factors, including the extensive business interference and litigation related to the termination of our previous joint venture in
NTIC's consolidated net sales decreased 2.6% to
The following table sets forth NTIC's net sales by product category for the three months ended
Three Months Ended | ||||||||||||
$ | % | |||||||||||
2015 |
2014 | Change | Change | |||||||||
Total ZERUST® sales | $ | 5,977,682 | $ | 6,238,071 | $ | (260,389 | ) | (4.2 | %) | |||
Total Natur-Tec® sales | 1,046,755 | 976,024 | 70,731 | 7.2 | % | |||||||
Total net sales | $ | 7,024,437 | $ | 7,214,095 | $ | (189,658 | ) | (2.6 | %) |
During the three months ended
The following table sets forth NTIC's net sales of ZERUST® products for the three months ended
Three Months Ended | ||||||||||||
$ | % | |||||||||||
2015 | 2014 | Change | Change | |||||||||
ZERUST® industrial net sales | $ | 5,119,093 | $ | 5,002,775 | $ | 116,318 | 2.3 | % | ||||
ZERUST® joint venture net sales | 518,350 | 733,104 | (214,754 | ) | (29.3 | %) | ||||||
ZERUST® oil & gas net sales | 340,239 | 502,192 | (161,953 | ) | (32.2 | %) | ||||||
Total ZERUST® net sales | $ | 5,977,682 | $ | 6,238,071 | $ | (260,389 | ) | (4.2 | %) |
NTIC anticipates that its sales of ZERUST® products and services into the oil and gas industry will continue to remain subject to significant volatility from quarter to quarter as sales are recognized.
NTIC's working capital was
Outlook
NTIC lowered its annual financial guidance and now expects for the fiscal year ending
These estimates are subject to significant risks and uncertainties, including without limitation risks and uncertainties related to the change in NTIC's Chinese operations, pending litigation against NTIC's former Chinese joint venture partner, a possible future impairment charge on NTIC's investment in Tianjin Zerust, and other risks and uncertainties.
Conference Call and Webcast
NTIC will host a conference call today at
About
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 2016 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
NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES | |||||||||||||
CONSOLIDATED BALANCE SHEETS AS OF | |||||||||||||
AND | |||||||||||||
ASSETS | |||||||||||||
CURRENT ASSETS: | |||||||||||||
Cash and cash equivalents | $ | 3,072,015 | $ | 2,623,981 | |||||||||
Available for sale securities | 528,867 | 2,027,441 | |||||||||||
Receivables: | |||||||||||||
Trade excluding joint ventures, less allowance for doubtful accounts | |||||||||||||
of | 3,637,387 | 4,027,167 | |||||||||||
Trade joint ventures | 599,616 | 645,377 | |||||||||||
Fees for services provided to joint ventures | 1,496,054 | 1,449,162 | |||||||||||
Income taxes | 323,817 | 198,462 | |||||||||||
Inventories | 7,628,754 | 7,468,441 | |||||||||||
Prepaid expenses | 573,018 | 411,473 | |||||||||||
Deferred income taxes | 424,108 | 424,108 | |||||||||||
Total current assets | 18,283,636 | 19,275,612 | |||||||||||
PROPERTY AND EQUIPMENT, NET | 7,394,484 | 7,293,163 | |||||||||||
OTHER ASSETS: | |||||||||||||
Investments in joint ventures | 20,369,002 | 20,544,238 | |||||||||||
Investments at carrying value | 1,883,668 | 1,883,668 | |||||||||||
Deferred income taxes | 1,175,928 | 1,176,012 | |||||||||||
Patents and trademarks, net | 1,245,060 | 1,262,219 | |||||||||||
Other | 240,913 | 130,736 | |||||||||||
Total other assets | 24,914,571 | 24,996,873 | |||||||||||
Total assets | $ | 50,592,691 | $ | 51,565,648 | |||||||||
LIABILITIES AND EQUITY | |||||||||||||
CURRENT LIABILITIES: | |||||||||||||
Accounts payable | 2,324,787 | 2,101,175 | |||||||||||
Accrued liabilities: | |||||||||||||
Payroll and related benefits | 768,783 | 1,056,257 | |||||||||||
Other | 433,938 | 514,409 | |||||||||||
Total current liabilities | 3,527,508 | 3,671,841 | |||||||||||
COMMITMENTS AND CONTINGENCIES | |||||||||||||
EQUITY: | |||||||||||||
Preferred stock, no par value; authorized 10,000 shares; none issued and outstanding | — | — | |||||||||||
Common stock, | |||||||||||||
shares; issued and outstanding 4,538,317 and 4,539,045, respectively | 90,766 | 90,781 | |||||||||||
Additional paid-in capital | 13,550,424 | 13,441,264 | |||||||||||
Retained earnings | 34,288,520 | 34,522,871 | |||||||||||
Accumulated other comprehensive loss | (4,049,004 | ) | (3,180,811 | ) | |||||||||
Stockholders' equity | 43,880,706 | 44,874,105 | |||||||||||
Non-controlling interest | 3,184,477 | 3,019,702 | |||||||||||
Total equity | 47,065,183 | 47,893,807 | |||||||||||
Total liabilities and equity | $ | 50,592,691 | $ | 51,565,648 | |||||||||
NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | |||||||
FOR THE THREE MONTHS ENDED | |||||||
Three Months Ended | |||||||
Net sales, excluding joint ventures | $ | 6,501,410 | $ | 6,480,991 | |||
Net sales, to joint ventures | 523,027 | 733,104 | |||||
Total net sales | 7,024,437 | 7,214,095 | |||||
Cost of goods sold | 4,875,423 | 4,806,611 | |||||
Gross profit | 2,149,014 | 2,407,484 | |||||
JOINT VENTURE OPERATIONS: | |||||||
Equity in income of joint ventures | 983,753 | 1,606,683 | |||||
Fees for services provided to joint ventures | 1,485,429 | 2,133,670 | |||||
Total joint venture operations | 2,469,182 | 3,740,353 | |||||
OPERATING EXPENSES: | |||||||
Selling expenses | 1,525,083 | 1,394,887 | |||||
General and administrative expenses | 1,857,613 | 1,538,262 | |||||
Expenses incurred in support of joint ventures | 316,994 | 527,117 | |||||
Research and development expenses | 1,004,097 | 1,049,913 | |||||
Total operating expenses | 4,703,787 | 4,510,179 | |||||
OPERATING (LOSS) INCOME | (85,591 | ) | 1,637,658 | ||||
INTEREST INCOME | 14,173 | 15,127 | |||||
INTEREST EXPENSE | (4,726 | ) | (5,005 | ) | |||
(LOSS) INCOME BEFORE INCOME TAX EXPENSE | (76,144 | ) | 1,647,780 | ||||
INCOME TAX (BENEFIT) EXPENSE | (3,502 | ) | 183,684 | ||||
NET (LOSS) INCOME | (72,642 | ) | 1,464,096 | ||||
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS | 161,709 | 455,831 | |||||
NET (LOSS) INCOME ATTRIBUTABLE TO NTIC | $ | (234,351 | ) | $ | 1,008,265 | ||
NET (LOSS) INCOME ATTRIBUTABLE TO NTIC PER COMMON SHARE: | |||||||
Basic | $ | (0.05 | ) | $ | 0.22 | ||
Diluted | $ | (0.05 | ) | $ | 0.22 | ||
WEIGHTED AVERAGE COMMON SHARES ASSUMED OUTSTANDING: | |||||||
Basic | 4,538,371 | 4,518,973 | |||||
Diluted | 4,538,371 | 4,659,621 |
Investor and Media Contacts:Source:Matthew Wolsfeld , CFO NTIC (763) 225-6600
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