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):
November 22, 2010
NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware |
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001-11038 |
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41-0857886 |
(State or Other Jurisdiction of |
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(Commission File Number) |
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(I.R.S. Employer Identification |
4201 Woodland Road |
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55014 |
(Address of Principal Executive Offices) |
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(Zip Code) |
(763) 225-6600
(Registrants Telephone Number, Including Area Code)
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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Section 2 Financial Information
Item 2.02. Results of Operations and Financial Condition.
On November 22, 2010, Northern Technologies International Corporation publicly announced its results of operations for the fiscal year ended August 31, 2010 and earnings guidance for fiscal 2011. For further information, please refer to the press release attached hereto as Exhibit 99.1, which is incorporated by reference herein.
The information contained in this report and the exhibit hereto shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filings made by Northern Technologies International Corporation 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.
Section 9 Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit No. |
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Description |
99.1 |
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Press Release issued November 22, 2010 |
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.
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NORTHERN TECHNOLOGIES |
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INTERNATIONAL CORPORATION |
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By: |
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Matthew C. Wolsfeld |
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Chief Financial Officer |
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Dated: November 23, 2010 |
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NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION
FORM 8-K
Exhibit Index
Exhibit No. |
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Description |
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Method of Filing |
99.1 |
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Press Release issued November 22, 2010 |
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Filed herewith |
Exhibit 99.1
NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION REPORTS INCREASED SALES AND EARNINGS FOR FISCAL 2010
MINNEAPOLIS, Minn. (November 22, 2010) Northern Technologies International Corporation (NASDAQ: NTIC) today reported its financial results for the year ended August 31, 2010.
· NTICs consolidated net sales increased 67.8% to $14,386,764 during fiscal 2010 compared to $8,575,308 during fiscal 2009.
· NTICs consolidated net sales for fiscal 2010 included $1,925,819 of sales made by NTICs joint venture in Brazil, of those sales, $774,928 in sales were made to the oil and gas industry sector in Brazil. NTIC has consolidated the financial results of Zerust Brazil in NTICs consolidated financial statements for fiscal 2010 and will continue to do so going forward.
· Net income was $2,607,927, or $0.61 per diluted common share, for fiscal 2010.
NTICs consolidated net sales increased 67.8% during fiscal 2010 compared to fiscal 2009. This increase was primarily a result of increased sales of ZERUST® rust and corrosion inhibiting packaging products and services and sales to NTICs joint ventures and the consolidation of Zerust Brazil on NTICs consolidated financial statements. During fiscal 2010, 96.0% of NTICs consolidated net sales were derived from sales of ZERUST® products and services, which increased 72.4% to $13,814,101 during fiscal 2010 compared to $8,013,196 during fiscal 2009 due to increased demand primarily as a result of the economic recovery, to some extent, of the domestic manufacturing sector, the addition of new customers and the consolidation of Zerust Brazil.
NTIC experienced a significant increase in sales orders from existing customers during the second, third and fourth quarters of fiscal 2010 compared to the same periods in fiscal 2009. NTIC has focused its sales efforts of ZERUST® products and services by strategically targeting customers with specific corrosion issues in new market areas, including the oil and gas industry and other industrial sectors that offer sizable growth opportunities.
We continue to make solid progress in developing the international market for the Companys corrosion protection technologies and services targeted at the Oil & Gas sector, said G. Patrick Lynch, President and Chief Executive Officer of NTIC. In the last twelve months we have received strong endorsements regarding the technical efficacy of our Flange Saver products from both Petróleo Brasileiro S.A. Petrobras (NYSE: PBR) in Brazil as well as Petróleos Mexicanos PEMEX in Mexico. We have also commenced extensive technical field trials in the United States with some of the largest off-shore rig operators in the world, as well as at both Russian and Singaporean client sites.
During fiscal 2010, $572,663, or 4.0%, of NTICs consolidated net sales were derived from sales of Natur-Tec® products compared to 6.3% during fiscal 2009. Net sales of Natur-Tec® products increased 6.3% during fiscal 2010 compared to fiscal 2009. This increase was due to the addition of new Natur-Tec® distributors on the West Coast of the United States partially offset by several large stocking orders of Natur-Tec® products that occurred early in fiscal 2009 that were not repeat orders. NTIC is continuing to fortify and expand its West Coast distribution network in California, while expanding its industrial distribution reach to geographical green hotspots such as Oregon, Washington, Minnesota and New England. Additionally, NTIC is targeting key national and regional retailers utilizing independent sales agents.
Cost of goods sold as a percentage of net sales decreased to 65.2% during fiscal 2010 compared to 65.5% during fiscal 2009 primarily as a result slightly improved margins resulting from fixed costs spread over increased net sales partially offset by a $360,577 write-down of Natur-Tec® inventory to its market value during fourth quarter of fiscal 2010.
NTIC participates in 27 active joint venture arrangements in North America, South America, Europe, Asia and the Middle East. NTIC only consolidates the proportional equity results of its joint ventures. NTICs equity in income of joint ventures increased 967.2% to $3,919,084 during fiscal 2010 compared to $367,238 during fiscal 2009. NTIC recognized a 38.8% increase in fees for services provided to joint ventures during fiscal 2010 compared to fiscal 2009. Both of these increases were primarily a result of a 37.3% increase in total net sales of NTICs joint ventures during fiscal 2010 compared to fiscal 2009. Total sales of NTICs joint ventures increased 37.3% during fiscal 2010 to $84,973,646 compared to $61,895,133 in fiscal 2009. This increase in total net sales of NTICs unconsolidated joint ventures was primarily a result of the economic recovery, to some extent, of the international manufacturing sector that the NTIC joint venture network serves.
Net income was $2,607,927, or $0.61 per diluted common share, for fiscal 2010 compared to a net loss of $(3,344,976), or $(0.89) per diluted common share, for fiscal 2009. NTICs working capital was $5,918,923 at August 31, 2010, including $1,776,162 in cash and cash equivalents.
G. Patrick Lynch, President and Chief Executive Officer of NTIC said, Globally, several of our joint ventures recorded record sales in the third and fourth quarters of fiscal 2010 for our Zerust® corrosion inhibiting packaging products. With the introduction of several new ZERUST® products over the past few months, we anticipate that this trend will continue and broaden during fiscal 2011.
At the height of the recession Lynch continued, many enterprises suspended or slowed their Green Sustainability initiatives. Now that the economic recovery is picking up pace, however, we are seeing a steady increase in orders for our Natur-Tec® products from our growing industrial distribution base.
Outlook
For the fiscal year ending August 31, 2011, NTIC expects its net sales to range between $18.0 million and $19.5 million, inclusive of sales made by NTICs joint venture in Brazil, and to earn net income of between $3.6 million to $3.8 million, or between $0.84 and $0.88 per diluted share.
Webcast
NTIC will host a webcast tomorrow morning, November 23, 2010, beginning at 8:00 a.m. Central Standard Time, to review its results of operations for fiscal 2010 and future outlook, followed by a question and answer session.
The live audio webcast will be available to interested parties at http://ir.ntic.com/events.cfm, where it will be archived and accessible for approximately one year.
Financial Results
NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED AUGUST 31, 2010 AND 2009
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2010 |
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2009 |
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NET SALES: |
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Net sales, excluding joint ventures |
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$ |
12,190,171 |
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$ |
7,428,499 |
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Net sales, to joint ventures |
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2,196,593 |
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1,146,809 |
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NET SALES |
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14,386,764 |
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8,575,308 |
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Cost of goods sold |
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9,384,866 |
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5,620,668 |
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Gross profit |
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5,001,898 |
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2,954,640 |
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JOINT VENTURE OPERATIONS: |
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Equity in income of joint ventures |
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3,919,084 |
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367,238 |
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Fees for services provided to joint ventures |
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4,690,450 |
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3,378,193 |
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8,609,534 |
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3,745,431 |
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OPERATING EXPENSES: |
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Selling expenses |
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3,059,207 |
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2,439,321 |
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General and administrative expenses |
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3,923,103 |
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2,804,257 |
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Expenses incurred in support of joint ventures |
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875,869 |
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1,427,616 |
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Research and development expenses |
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3,333,683 |
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3,024,205 |
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Loss on impairment |
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554,000 |
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11,191,862 |
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10,249,399 |
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OPERATING INCOME (LOSS) |
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2,419,570 |
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(3,549,328 |
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INTEREST INCOME |
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30,939 |
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6,340 |
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INTEREST EXPENSE |
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(97,676 |
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(132,411 |
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OTHER INCOME |
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25,094 |
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28,423 |
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INCOME (LOSS) BEFORE INCOME TAX EXPENSE |
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2,377,927 |
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(3,646,976 |
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INCOME TAX BENEFIT |
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(230,000 |
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(302,000 |
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NET INCOME (LOSS) |
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2,607,927 |
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(3,344,976 |
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NET INCOME ATTRIBUTABLE TO NON CONTROLLING INTEREST |
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24,171 |
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NET INCOME (LOSS) ATTRIBUTABLE TO NTIC |
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$ |
2,583,756 |
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$ |
(3,344,976 |
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NET INCOME (LOSS) PER COMMON SHARE: |
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Basic |
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$ |
0.61 |
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(0.89 |
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Diluted |
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$ |
0.61 |
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$ |
(0.89 |
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WEIGHTED AVERAGE COMMON SHARES ASSUMED OUTSTANDING: |
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Basic |
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4,223,605 |
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3,749,012 |
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Diluted |
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4,269,350 |
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3,749,012 |
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QUARTERLY INFORMATION (UNAUDITED)
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Fiscal Quarter Ended |
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November 30 |
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February 28 |
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May 31 |
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August 31* |
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Fiscal year 2010: |
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Net sales |
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$ |
2,711,402 |
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$ |
2,876,478 |
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$ |
3,237,198 |
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5,561,686 |
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Gross profit |
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953,906 |
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1,035,831 |
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1,064,296 |
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1,947,865 |
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Income before income taxes |
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420,705 |
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252,641 |
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841,968 |
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862,613 |
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Income taxes |
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(15,000 |
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(94,000 |
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(110,000 |
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(11,000 |
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Net income |
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435,705 |
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346,641 |
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951,968 |
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873,613 |
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Net income per share: |
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Basic |
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$ |
0.11 |
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$ |
0.08 |
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$ |
0.22 |
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$ |
0.20 |
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Diluted |
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$ |
0.11 |
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$ |
0.08 |
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$ |
0.22 |
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$ |
0.20 |
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Weighted average common shares assumed outstanding: |
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Basic |
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4,149,096 |
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4,194,887 |
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4,213,465 |
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4,223,605 |
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Diluted |
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4,163,441 |
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4,225,907 |
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4,242,735 |
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4,231,589 |
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* During the fourth quarter of fiscal 2010, the Company decided to consolidate the financial results of Zerust Brazil for the fiscal year ended August 31, 2010. As a result, all revenues and expenses of Zerust Brazil for the fiscal year ended August 31, 2010 are included in the fourth quarter.
About Northern Technologies International Corporation
Northern Technologies International Corporation develops and markets proprietary environmentally beneficial products and services in over 55 countries either directly or via a network of joint ventures, independent distributors and agents. NTICs 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 35 years. NTIC also offers worldwide on-site technical consulting for rust and corrosion prevention issues. NTICs technical service consultants work directly with the end users of NTICs products to analyze their specific needs and develop systems to meet their technical requirements. In addition, NTIC markets proprietary bio-plastic technologies under the Natur-Tec® brand. Finally, NTICs Polymer Energy® joint venture manufactures and sells advance waste plastic to fuel conversion machines.
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 NTICs expectations regarding the future performance of its new businesses and other statements that can be identified by words such as expect, intend, continue, anticipate, estimate, potential, will, would, or words of similar meaning and any other statements that are not historical facts. Such forward-looking statements are based upon
the current beliefs and expectations of NTICs 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: NTICs dependence on the success of its joint ventures and fees and dividend distributions that NTIC receives from them; NTICs relationships with its joint ventures and its ability to maintain those relationships; risks associated with NTICs 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 NTICs markets; NTICs investments in research and development efforts; acceptance of existing and new products; increased competition; the success of NTICs new businesses; 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, NTICs reliance on its intellectual property rights and the absence of infringement of the intellectual property rights of others, the ability of NTICs lender to declare outstanding indebtedness immediately due and payable and current and potential litigation. More detailed information on these and additional factors which could affect NTICs operating and financial results is described in the companys 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.