Northern Technologies International (NASDAQ:NTIC) executives said the company opened fiscal 2026 with record first-quarter consolidated net sales, pointing to broad-based demand in several key areas, including its Zerust Oil & Gas business, improving performance at its China subsidiary, and stronger Natur-Tec sales in North America.
On the company’s earnings call, President and CEO Patrick Lynch said the first quarter delivered the strongest year-over-year growth rate the company has posted since fiscal 2024. He added that improving profitability is a top priority in fiscal 2026 as NTIC seeks to begin realizing benefits from strategic investments made over the past three years to upgrade global operations and support future growth.
Record first-quarter sales led by oil & gas and China
- Zerust Oil & Gas net sales up 58.1%
- Zerust Industrial net sales up 6.9%
- Natur-Tec product net sales up 2.2%
Lynch highlighted Zerust Oil & Gas as a key driver, noting it achieved record first-quarter sales and marked the second consecutive quarter with more than $2 million in revenue. He said the business is seeing improving demand from new and existing customers.
NTIC’s wholly owned China subsidiary also posted strong gains. Lynch said fiscal first-quarter net sales at NTIC China increased 23.5% year over year to $4.9 million, reflecting what he described as “strong demand” in the geography. He added that because most of NTIC China’s sales are for domestic Chinese consumption, management believes exposure to U.S. tariffs is limited.
Joint venture trends and Europe monitoring
NTIC also discussed joint venture results, which it does not consolidate. Total net sales for the company’s joint ventures rose 2.9% year over year to $24.5 million, which management attributed to improved demand across many joint ventures, partially offset by a mid-single-digit decline at its German joint venture.
Lynch said the company continues to monitor European markets for signs of stabilization following years of subdued demand, citing governments implementing targeted economic stimulus packages. He said NTIC expects any recovery driven by such stimulus could positively impact joint venture operating income in future periods, “especially in Germany.”
CFO Matt Wolsfeld said joint venture operating income in the first quarter decreased 5.1% from the prior-year period, primarily due to a slight increase in operating expenses at the joint ventures.
Zerust Oil & Gas: Brazil contract and pipeline expansion
NTIC reported Zerust Oil & Gas first-quarter sales of $2.4 million, a first-quarter record and a 58.1% increase from the same period last year. Lynch linked the growth to broader adoption of the company’s vapor corrosion inhibitor (VCI) solutions across the global oil and gas industry, including at its Brazil subsidiary.
Management reiterated details of a contract previously announced in November 2025: NTIC’s 85%-owned subsidiary, Zerust Brazil, secured a three-year contract for a major offshore project with a global engineering, procurement, and construction (EPC) company. Lynch said the agreement involves corrosion protection solutions for floating production, storage, and offloading units (FPSOs), with an estimated total value of approximately $13 million over the next three to four years based on current foreign exchange rates. He added the project is expected to ramp throughout the current fiscal year and continue through calendar 2028.
Lynch said NTIC has invested in Zerust Oil & Gas to strengthen its sales team and add resources, which he said has improved the pipeline as “the size and number of opportunities have expanded” with new and existing customers. He listed pipeline opportunities including corrosion protection for above-ground oil storage tanks, pipeline casings, and offshore rigs, while noting the industry can cause fluctuations in sales.
During the Q&A, Lynch said the sales efforts are “starting to pick up” in regions including Dubai, with business coming out of India and the Middle East. He also said the company hopes to see Europe contribute in coming months.
Natur-Tec: record quarter and larger opportunities pursued
NTIC reported first-quarter Natur-Tec bioplastics sales of $6 million, which Lynch said was a quarterly record. Sales increased 2.2% year over year and rose 16.5% from the fourth quarter, driven primarily by higher sales in North America.
Lynch said the company is pursuing several larger opportunities in North America and India, including continued work on a compostable food packaging solution referenced on prior calls. He described Natur-Tec as “best-in-class” and said management expects sales to continue expanding throughout the year.
Margins, expenses, earnings, and balance sheet priorities
Wolsfeld said total operating expenses rose 2.9% to $9.7 million, driven primarily by higher selling and general administrative expenses, partially offset by lower research and development expense. He said the company expects quarterly sales to grow faster than operating expenses as it leverages recent investments and upgrades across global operations.
Gross profit as a percentage of sales was 36.0% for the quarter, down from 38.3% a year earlier. Wolsfeld attributed the lower gross margin primarily to a temporary supplier lead-time issue and said management expects gross margin to improve sequentially during fiscal 2026.
NTIC reported first-quarter net income of $238,000, or $0.03 per diluted share, compared with $561,000, or $0.06 per diluted share, in the prior-year period. Non-GAAP adjusted income was $344,000, or $0.04 per diluted share, versus $667,000, or $0.07 per diluted share, a year earlier. Wolsfeld noted a GAAP-to-non-GAAP reconciliation was included in the earnings press release.
As of Nov. 30, 2025, NTIC reported working capital of $19.4 million, including $6.4 million in cash and cash equivalents, compared with $20.4 million, including $7.3 million in cash and cash equivalents, as of Aug. 31, 2025. The company had $12.0 million in outstanding debt, including $9.1 million in borrowings under its revolving line of credit, slightly down from $12.2 million at Aug. 31, 2025. Wolsfeld said reducing debt through anticipated positive operating cash flow and improving working capital efficiencies is a strategic focus in fiscal 2026.
Wolsfeld also noted that in October 2025, NTIC’s board declared a quarterly cash dividend of $0.01 per share, payable Nov. 12, 2025, to stockholders of record on Oct. 29, 2025.
Looking ahead, management emphasized a focus on improving profitability by driving sales in higher-margin segments, improving gross margin, and controlling expense growth. In the Q&A, Lynch said the company is aiming to keep operating expenses “relatively flat” while pursuing growth, adding that the company does not want to cut expenses in ways that could hinder long-term expansion, particularly as Natur-Tec and oil and gas opportunities develop over the next few years.
About Northern Technologies International (NASDAQ:NTIC)
Northern Technologies International Corporation (NASDAQ: NTIC) is a Minnesota‐based specialty chemical company that develops, manufactures and markets environmentally responsible corrosion prevention and metal surface treatment products. The company’s solutions include volatile corrosion inhibitor (VCI) films, emitters, powders and liquids designed to protect ferrous and non‐ferrous metals in industrial, aerospace, defense, electronics and automotive applications. In addition, NTIC offers packaging materials, engineered coatings and specialty pretreatment chemicals that meet stringent environmental regulations while extending equipment life and reducing maintenance costs.
NTIC serves a diversified global customer base, including metal fabricators, automotive suppliers, electronics manufacturers and oil and gas producers.
