Northern Technologies International Corp. (NASDAQ:NTIC) Q3 2019 Earnings Conference Call Transcript

Jul 09, 2019 • 09:00 am ET

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Northern Technologies International Corp. (NASDAQ:NTIC) Q3 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

(Starts Abruptly) As part of the discussion today, the representatives from NTIC will be making certain forward-looking statements regarding NTIC's future financial and operating results, as well as their business plans, objectives and expectations. Please be advised that these forward-looking statements are covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, and that NTIC desires to avail itself of the protections of the Safe Harbor for these statements. Please also be advised that actual results could differ materially from those stated or implied by the forward-looking statements due to certain risks and uncertainties, including those described in NTIC's most recent Annual Report on Form 10-K, subsequent quarterly reports on Form 10-Q and recent press releases. Please read these reports and other future filings that NTIC will make with the SEC. NTIC disclaims any duty to update or revise its forward-looking statements.

Introduce NTIC management, Patrick Lynch, NTIC Chief Executive Officer.

Executive
G. Patrick Lynch

Good morning. I am Patrick Lynch, NTIC's CEO and I am here with Matt Wolsfeld, NTIC's CFO. Please note that the financial results for our fiscal 2019 third quarter were included in a press release issued earlier this morning, a copy of which is available at ntic.com.

During this call, we will review various key aspects of our fiscal 2019 third quarter financial results, give a brief business update, comment on our net sales and earnings guidance for fiscal 2019 and then conclude with a question-and-answer session. The strong double-digit net sales growth we achieved in the third quarter reflects the continued success of our diversified business model. That said, market demand during the fiscal 2019 third quarter remains soft for our core corrosion protection solutions causing ZERUST industrial sales to decline year-over-year both in North America and across our worldwide joint venture territories. As we have been saying throughout the year, we believe that this has been primarily due to slowing global growth and concerns regarding ongoing trade disputes between the U.S. and a series of other countries including China.

While the fiscal 2019 macro landscape for our core industrial corrosion prevention business has become more challenging than previously expected, the 15.2% increase in NTIC's total sales is -- thanks to the significant growth we are enjoying within our Natur-Tec business, as well as higher sales of our oil and gas solutions. These increases demonstrate the resiliency of our business model. Natur-Tec represented over 32% of our fiscal 2019 third quarter net sales compares to less than 20% for the same period last year. Natur-Tec has become one of the leading global bioplastic solution providers and our growth over the past several years demonstrates our strong position within this rapidly growing market. In fact, over the past eight quarters, Natur-Tec has averaged a year-over-year quarterly growth rate in sales in excess of 55%.

Now permit me to remind you that -- excuse me. Now permit me to remind you that on June 3rd, we announced a two-for-one stock split that became effective on June