NTIC - Earnings call transcript Q1 2021 | Northern Technologies International Corporation

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Northern Technologies International Corp.'s First Quarter 2021 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. [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 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. and SEC. filings reports make NTIC these the with read other that future will Please any to disclaims NTIC duty statements. its forward-looking update or revise Patrick my President It to Lynch. CEO, now is pleasure and introduce,

Patrick Lynch

earlier Matt Patrick Thank and CEO, here and and Vice good Dalal, I'm Director Market Wolsfeld, you, XXXX this our the Lynch, for first Natur-Tec CFO, note a product NTIC's that financial Global press results release morning. and our ntic.com. a line. which NTIC's I'm issued were quarter NTIC's President Vineet with of fiscal morning, included copy at is in Please Development for available of

safety Let as if me to are by held stockholders in on this the an election COVID-XX January like the our also stockholders, to be making only for believe results comply employees as presentation year. begin remind is to with and however, guidelines to minimum the the pandemic, meeting we and XX. is everyone will all Please meeting attendance proxy to next in short this the week, consider, encouraging upcoming all as as well CDC that that of possible better kept best business XXXX of important although person New and meeting we I'd safety vote us, our absolute is well-being wishing kept reporting by any The be to we'll stockholders able of by Year. our strongly advance. not and due everyone annual

we'll brief our review business aspects question-and-answer session. a financial provide call, conclude this Now, a we of will key with during update, and then results, various

past as overall and operating first sequential new COVID-XX three quarter experienced Furthermore, months well lockdowns encouraging. of increased most sales global the double-digit recent European financial we XX.X%, fiscal sales are our countries. growth many the a categories in results new markets. and international several our cases, over strong XXXX these across surges product we Our higher and On of as the saw basis, despite throughout

China the impact sales substantial fact, COVID-XX headed, recorded economic to our above of still venture Consequently, joint by remains but That am NTIC XXXX large quarter. when across the and the not also are of slowdown subsequent guarded. by Nevertheless, the with pace global over, fiscal of I remains recovery, our near-term first compelling In are much only well sales respect as crisis will XXXX aggregated currently we Asia Chinese and pre-COVID-XX position NTICs annual as first said, levels New uncertainty during direction worldwide quarter and fiscal Year for be the outlook the within caused encouraged extremely holidays. markets. growing the

NTIC balance provide with our and team, flexibility scale, our that end-market pursue strategies. diversification management addition, strong sheet opportunities In the support growth to long-term experienced

So, drivers first with this overview, for quarter. the let's examine the

from a same XX.X% do and in offset first by XX, quarter ended period $XX.X net statements our by a net fiscal quarter in to basis, record financial demand quarter for quarterly ventures, ventures, of at XXXX our the sales units, new given recent our to first down opportunity sales for helped sales were for XXXX China sales due ventures consolidate the Zerust NTIC $X.X higher a & were and X.X% first fiscal in a a will the NTIC, in This sequential this and net drive quarter. our a joint believe XX.X% our decreased existing we for XXXX first XXXX market market result compared fiscal to Zerust gas increased oil sales Chinese X.X% become decrease fourth categories XXXX. sales fourth wholly-owned XX.X% were total primarily our the sales, net products. not $XX.X sales. industrial net of joint last our year. quarter million to the increase quarter. we customers Total increase the first X.X% NTIC's Zerust in the XX.X% likely largest both our $XX.X up Broken product geographic by joint from million The in subsidiary consolidated million, venture market. quarter, to in success, XX.X% increase included For up our to as ended increased Zerust a China. net sales Higher Fiscal customers by the XXXX, million fiscal to as was compared sales significant to existing joint an Natur-Tec for November November business partially growth to and XX, and decrease X% On and Natur-Tec represents sales net existing China which

fiscal & sales oil $XXX,XXX, over Zerust prior our sales in more an year gas at period. X% Looking the detail, increase of net were

of opportunities fiscal gas sales & storage oil COVID-XX once vaccinations particularly restrictions & First customers. tank available beyond, higher XXXX and the to are we and within market oil major and for travel lifted. & oil well-positioned pipeline gas reflect additional quarter believe solutions are sales become existing new generally and gas We in

Vineet? Natur-Tec our I'll business, Now, with have comment. respect to bioplastics Vineet

Vineet Dalal

further compostable industry Many pandemic also our on sustainability Natur-Tec users Natur-Tec last part initiatives. an industry stadiums, the products. have that of complexes. office campuses, continues still the the down of Thank large and Many products COVID which service a the institutions important be of them to impact And you, these are demand sharply, some not of Furthermore, corporate packaging, has plans. to material for become include have food for of bioplastic arenas, the to reopen. demand reopening apparel college announced across our decreasing businesses restaurant, expected is Patrick. production Unfortunately,

quarter As result, were over Natur-Tec year first million, $X.X XX.X% decline fiscal a the only sales a XXXX fiscal prior period.

as quarters. fourth in quarter reflect and Moreover, applications that first are fiscal the new However, the evolve COVID-XX more we for let have market that, to With future world we may several coming from turn attractive pandemic, on calls. these pandemic the improvement the hope sequential recovers optimistic quarters XXXX it and in that on three please note sales report me we sales Patrick. that from uncovered back during additional in increased also the the into opportunities XX.X% Natur-Tec to NTIC

Patrick Lynch

Vineet. you, Thank

and to annual near-term as we recent fiscal trends remains the outlook Year quarter, as while holidays, Chinese So, encouraging. conclude, our towards well guarded head XXXX market as are the second sales New

now fiscal all cautiously and our As joint opportunity venture this employees of the quarter. hard to thank this call Wolsfeld we dedication year-over-year appreciation throughout XXXX to our to Matt like work entire I'd we will results this over profitability you express team, a On the first Matt? leadership With our let global financial for fiscal result, partners. to use sales for are me improving and crisis. return for overview, XXXX. summarize your to behalf the optimistic growth to turn and

Matt Wolsfeld

to across prior in because year for reviewed net in XXXX his increased joint prepared Patrick quarter from X.X% Thanks, decreased period, XXXX to of XX.X% operating venture compared consolidated in the NTIC's period. increased increase the ventures fiscal fiscal first joint XX.X% the quarter, Patrick. benefited remarks. first and which first our the fourth Compared quarter year fiscal sales global XXXX fiscal income, fiscal sales A quarter trends prior XX.X% the

suspended as and income manage travel to net per or line which net period first expenses $X.X $X.X fiscal in the proactively expenses, per due NTIC partially net We for operating period the $X.XX fiscal total $X.X with diluted million over research of been first in or the year. for declined most operating last prior activities fiscal offset slight a development the expenses have continued reported share expenses income related of for Selling year X% pandemic, fiscal increase million, XXXX income were costs. XXXX same quarter. COVID-XX to million, the share compared to as of and quarter $X.XX

November $XX XX, sale equivalents, million million in in including equivalents for and working of was including and in cash to $XX.X $X.X and cash cash $X available available compared As $X.X in capital securities, cash $X.X and nearly million million $XX.X million, XXXX, for million, or $XX which securities ventures, balance remaining as On XX, in of had working XXXX, than November cash, invested joint August million in is the in XX% and of primarily the capital. nearly million company other with sale approximately more XXXX. XX, investment

well-capitalized As COVID-XX remain crisis, you opportunities. and execute can to our we long-term growth well-positioned despite see, the

headed. happy As result, I we're a we your remain about direction With the that and this, Vineet, questions. to take excited Patrick, are

Operator

with from comes [Operator line Instructions] Clarkson Clemens. first the question Tim Van our of And

Tim Clarkson

Hi quarter. guys, great

little a in you the China? questions the Could give bit that's more on Just here. us growth driving are few what dynamics a color

Patrick Lynch

the with that automotive sales an expect along, ban is Just use doing will economy increasing. plastic and we certain industry Natur-Tec exceptionally – Their are overall humming also also that Chinese the well. be on – of is articles domestic

Tim Clarkson

Great.

on Alpha, importance – research I'm Second just was question. report that I let it, NTI the excellent looking on the at read and me me Seeking the line of here. surprised guess thing the in real

will API the regulations. Exxon the the expand tycoons, support that future Xerox Tech, tank change of on certify with on and the industry acceptance how with working Northern other to Fortunately, is business? that, the just Could in you

Patrick Lynch

[indiscernible]. Well said – I'm sorry, that how you

Tim Clarkson

Yeah, yeah.

that is important? why So,

Patrick Lynch

a controls to PHMSA oil lot storage Well, the connected of tanks. pipelines

to change those govern methods And and on corrosion used kind of with expect And what potential that in regulations regulations, increase significantly our market. this protection so we the be their can tanks. storage

Tim Clarkson

Sure.

just Okay, what's of question what compostable Northern you superior just the summarize versus products Tech would the Vineet, that is makes unique last competition? and most one to the compostable on business, to

Vineet Dalal

Yeah.

working base really our I is expertise with think and different unique what all is the polymers.

we PLA one just know, PHA. base are not you to to As polymer tied or

a agnostic meet polymers us reasonable requirements unique point. of that of brand at a material and allows and develop kind take our different raw are to base price performance solution that the We

Tim Clarkson

are cost general, the competition? In competitive products your with

Vineet Dalal

growth. we've are of performance, where that's And competitive seen kind at pricing. talking easier better Yes. about processability we Obviously,

Tim Clarkson

right. Right,

Okay, I'm Thanks. guys. Great quarter, done.

Operator

you. Thank

of Your Joe next line the Vidich question comes with Manalapan from Oracle.

Joe Vidich

advantage morning, don't how XXX, It's know recycling like of recent business AB laws, how you to focused Good nice quarter. their might little bit impact you business Great take back they've XXX, all But I if was kind all passed. of know you're if they I when I laws you wondering the that XXXX, trying if that their you on could, just laws? see comment those to could about passed – wondering was really this. AB and AB bounce at your guys. a California,

Vineet Dalal

laws we organizations the those is are Biodegradable organization. legislation that products. with part were Products it those believe involved some demand of grow through – influencing that this they and Board we passed the the industry some help Institute, our as California served on that where – such for of We Yeah, Certainly. of obviously, of, recently should I BPI

increase will it in and benefit California, our we to demand works it kind similar seen legislation. and of obviously, So, have

we mentioned, seen similar our for have products driving demand coming in legislation Patrick As is up China, which there.

for general, is in a So, this think trend us. helpful I

Joe Vidich

because I point, to would requirements. at And you've Okay, really I'm of comes reasonable assume to an fairly how guess, the capital business down about question in to from generate, back some to picture the be CapEx And going don't bigger start big don't is pandemic perspective, next the year capital. sort – making assumption is talked great. pretty deployment, as – a you're going I there you the of hopefully you within the past comes nicely bouncing to end. have your amount

it capital? or question is reinstating dividend what early about it, How can you down that a deployed? on with – talk is, Are your that? and little just thoughts being going are mergers you maybe a or road, to see this – the So, do – to anyway, obviously you you the but do

Vineet Dalal

[indiscernible] Go Patrick. on,

Patrick Lynch

we the discussing to sure we going Board want – more as expect I available that to I but are week, the was would the and And capital where just capital that opportunities about next that certainly table advantage can all to conservative. to taking are we're and we be all say, looking meeting have are are when little we've dividend I say think any everything. expenditures, other certainly reinstate to on that. that of traditionally I considering far options would been business, as a make a we we do out grow there. the opportunities everything we at will

everything the doing. of to so shareholders, businesses the what returning different profits future we're in And to investing are all from

Joe Vidich

it. appreciate have. I all great. that's I Okay, That's

Operator

you. Thank

comes next Gus the question Your with of line Richard from Northland.

Gus Richard

has quarter, changed. it China just bit? Nice little wondering, I question. past, tone Yes, thanks that the concerned a taking think a for oxo-degradables. the I the been Can that guys. like seems about due the on ban was little use plastics In you to of you've And in amplify

Vineet Dalal

Certainly, Gus.

still is spotty. the world. said these comply of legislation that I any very of of the think look and to enforcement like and success at India you Enforcement if legislation. legislations countries around understand But some of they have China a with in tends this key having be that major that brands, concerns remains to requirements with they the that,

some will and of our net-net these for work some biodegradable this brands, polymers. given that the demand engagements we compostable expect So, and increase the of

Gus Richard

that Okay. when And up to P&L. in you do to expect start your show

Vineet Dalal

We and of growth few start have we in some the increases seeing products in seen over for already, our the expect kind demand quarters. to next China

Gus Richard

that could competitor? for finally about of compostable about the there a a plastic, they little PLA, Got to supply PLA. it, see a just use if compare if as of talk was that that you bit been then, got contrast on different bit it. I has you topic, a of And you and talk recently applications? then PHA the Do And little and are wondering

Vineet Dalal

with think disadvantages. Obviously, PBAT, Yeah, polymers has own PHA out market in that I biggest is, disadvantage are compostable and along price PBS. high the PLA, there or to as is so PHA the many I compared And one PLA PBAT. PHA advantages base of its its mentioned is earlier,

of look we and when we use look brand. that specific these for of create polymers, kind a will and we compatible to requirements unique what packaging blends chemistry really, advantages at the So, the disadvantages application our different meet all are, then at

industry into the having or market market into us. polymer is base is market a the great. having PLA And to – the that. the credibility even We come the bioplastics additional viewpoint for welcome further and come adds our PHA So, actually as increases all it of of

all high PHA. positioning and In even price various the into it supply at obviously legislations to is versus tight, demand these PLA, available biodegradable because same supply for time, polymers force. lower PLA But with much compostable is still of PLA terms with of the a coming tight worldwide being compared at

are some things and go as those of and users we balance to the forward. So, have kind will of converters that brands

Gus Richard

finally me, script, lockdowns I helpful. the that'd on a and shuttering color sort you on Got more shutdowns it but in the add touched impact both Zerust of if the it. And in recent little then in your to US think from be and of could Natur-Tec, the you Europe business, and

Vineet Dalal

about I can and Natur-Tec Zerust. bit So, a talk Patrick talk about then can little

reflected for institutions Valley. was So, were campuses, schools, applications on that and West that the a in that terms over Silicon results all our of with organic And compostable – of the couple those of Natur-Tec, initiatives being hurt office one universities, of there, Coast of past that's diversion the waste closed, product implemented by service that definitely we demand obviously being of major looked our was at of kind quarters. in zero food also

closed, demand because malls our a lockdowns and of coming these The with for countries lot down of went pretty and growth the and out other in affected. Asia, coming demand packaging India a was and retail clothing With was lockdown, we've as with obviously result, seen some for more impact strongly. China back apparel shops were

We back. few of start of expect that should seeing quarters next that over come we demand kind some the

Patrick Lynch

entered continue our be significant on their they is Europe essential lockdowns be, the be Also remains before to to long into seen now, or last. them it fine that just is customers. how to has with How doing to going regard impact right sales, businesses, been Zerust, I'm going to on much expecting to supplying any depending The lockdown. impact be

Gus Richard

it. Got

on the Natur-Tec. just for one last then applications new And I'm sorry, the Okay. –

if the those was any and You I more alluded color wondering was again in script, to could just there you provide?

Vineet Dalal

Sure.

that something there One also premature Hopefully, kind we'll just now. that North are more here that's that calls. right about that seen where to is comment with Asia. we the not pretty product new is we board new we've it applications we for in be other of to gloves that, in working but in future brands, on launched recently And then compostable applications demand me of market the and on have for a America, and several that would are are excited

Gus Richard

so Great. thanks much. Great,

Operator

question And the Tradier] is Private from a Investor. Instructions] next of with your [Operator [Dean he comes line –

Unidentified Analyst

thanks are guys, of bit lacking globe of taking in for feel Zerust? guys look Hey When part you is presence my sort a standpoint, geographic question. there a I you any internationally the from a where of

Patrick Lynch

say would pretty that the gas. have we & oil around an major are, I I much perspective, from world, industrial centers we industrial everywhere with think

where internationally, the build arguably other presence, expand Soviet countries where As we in example, for continuing the like to geographies countries, countries, we are and there [Stan] additional additional former republics are could former an – are that. certainly we [Stan] the

Unidentified Analyst

that's the change coming When the... requirements about in, think helpful. Okay, we new PHMSA does that

Patrick Lynch

what did say? sorry, I'm you

Unidentified Analyst

…potential addressable market.

in PHMSA – was addressable oil the Sorry, for tanks, the market, that...? change storage and the that sort new does was & that requirements or gas coming

Patrick Lynch

expands market. significantly That the addressable

tank So to restricted are to far, not pipeline. a PHMSA the those have States that within tanks sales been connected our United

So, – changes to most finalized, – market the from of that in NACE with the they going country. the really specifications connecting addressable which expect exactly and some tanks the during then what are significantly, that this storage out around increase PHMSA we to still the calendar which the regulation has PHMSA next within because expect entirety, API happen controls going roll the we would follow-up our year, of there's to terms in be their be once and pipelines

Unidentified Analyst

That's Okay, thank helpful. you.

products. about for bit some that be, for it Turning you've growing of consolidated to there not new a before rebound only to quite applications was pre-COVID the for to know business business nicely part levels, to and need but capital little you a larger new or results? any the to Is talked Natur-Tec, additional COVID

Vineet Dalal

we actually making market – We mean, investments the I of anticipation growth. are in

some our appropriate new execute have and kind mentioned, on see the make Asia. investments table that growth. manufacturing and of we as Matt on And in capability of as to We market kind will added we continue are plans, options to all fund

Unidentified Analyst

there support, is Okay. And of I be income a the support from what – a anymore. there quarterly required get venture to me. joint in on a OpEx to Several labeled line not ago basis to venture joint trying statement the it's partners? the years last was the and item question sense used from

Patrick Lynch

had and relatively moved operations. it our lines, line of line, that three North difficult expenses. to of that into to is looking we with was Previously and income American compared so joint statement, what portion that portion in our line ventures, that G&A to we what administrative is small general the related It's more on say of at support

time If coordinating you management, of lot a joint look them. management with spends with at the working of lot a time ventures,

the We joint handle goes also the certain, also R&D we that and obviously R&D venture flows do work network. – the to

say So, expenses it's allocated directly to are these difficult ventures. come the in joint specific and to

difficult. So, it's very

As relatively reason that pay, we part in would the to that or the is we transfer be some to line why some a a company small, sort that Asia and Europe wire rid of a that's ventures far get service of direct of item. as joint in expenses the support or of sort

Unidentified Analyst

over years several not support joint amount say you. ventures? of Okay, grown has the OpEx safe the required to to Is it last that [Indiscernible] thank the

Patrick Lynch

stable. relatively stayed has it Yeah,

Unidentified Analyst

it guys. That's Thank me. right. all from Okay, you,

Operator

And I'm no showing you. questions. further Thank

So the over to with and call President Patrick any remarks. turn closing for Lynch, CEO, that, back I'll

Patrick Lynch

for day. a your you. participating like I'd great today interest and everyone thank for Have Thank NTIC. in to

Operator

now webcast. this and you participating and Ladies you concludes Thank and may gentlemen, disconnect. for call conference today's

Northern Technologies International (NTIC) 8 Jan 212021 Q1 Earnings call transcript