Northern Technologies International Corp. (NASDAQ:NTIC) Q1 2020 Earnings Conference Call - Final Transcript

Jan 07, 2020 • 09:00 am ET

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Northern Technologies International Corp. (NASDAQ:NTIC) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by and welcome to Northern Technologies International Corporation's First Quarter 2020 Earnings Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

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 those forward-looking statements due to certain risks and uncertainties, including those described in NTIC's most recent annual report on the 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.

I would now like to hand the conference over to your speaker today, Patrick Lynch, President and CEO. Thank you. Please go ahead, sir.

Executive
G. Patrick Lynch

Good morning. I am Patrick Lynch, NTIC's CEO, and I'm here with Matt Wolsfeld, NTIC's CFO. Please note that the financial results for our fiscal 2020 first 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 2020 first quarter financial results, give a brief business update, comment on our net sales and earnings guidance for the remainder of fiscal 2020 and then conclude with a question-and-answer session.

Our fiscal 2020 first quarter net sales set a new first quarter record, in part due to a rebound in ZERUST industrial sales over the past three months, primarily caused by stabilizing demand in both North America and China. During the same period, however, demand across the majority of our other global industrial markets remained weak, causing sales by our JVs to decline by 16% and negatively impacting first quarter profitability. Nevertheless, despite current short-term macroeconomic conditions brought on by various international trade disputes, we believe we are well positioned to grow our global market share as a result of our expansive geographic footprint, strong operating joint ventures and global corrosion prevention expertise as we believe fiscal 2020 will be another good year of profitable growth for NTIC.

So with these highlights, let's examine the drivers for the first quarter. For the first quarter ended November 30, 2019, total consolidated net sales increased 3.8% to $14.6 million as compared to the first quarter ended November 30, 2018. Broken down by business unit, this included a 16.2% increase in Natur-Tec net sales and a 4.6% increase in ZERUST industrial net sales, offset by a 9.6% decrease in net sales from NTIC to its ZERUST joint ventures, and