Breaking Down Northern Technologies International Corporation (NTIC) Financial Health: Key Insights for Investors

Are you looking to understand the financial health of Northern Technologies International Corporation (NTIC) and make informed investment decisions? In fiscal year 2024, NTIC's revenue reached $85.06 million, a 6.45% increase from the previous year. Net income attributable to NTIC for the second quarter of fiscal year 2025 was $434,000, or $0.04 per diluted share. But how sustainable is this growth, and what are the key factors driving NTIC's financial performance? Let’s delve into the essential insights that can help you assess NTIC's financial standing and future prospects.

Northern Technologies International Corporation (NTIC) Revenue Analysis

Understanding Northern Technologies International Corporation (NTIC)'s revenue streams is crucial for investors. The company generates revenue primarily through its ZERUST® products and services, and Natur-Tec® products. NTIC serves diverse markets including automotive, electronics, oil and gas, and retail consumer sectors. A key aspect of their strategy involves technical service consultants who work directly with end-users to tailor solutions to their specific needs. Additionally, NTIC has a line of bio-plastic technologies under the Natur-Tec® brand. For insights into the company's guiding principles, you can explore: Mission Statement, Vision, & Core Values of Northern Technologies International Corporation (NTIC).

Here’s a breakdown of NTIC’s revenue streams:

• ZERUST® Industrial: Products and services aimed at industrial corrosion prevention.
• ZERUST® Oil and Gas: Specialized corrosion solutions for the oil and gas industry.
• Natur-Tec®: Bio-based and biodegradable polymer resin compounds and finished products.
• NTIC China: Sales specifically within the Chinese market.

Analyzing NTIC's revenue involves looking at both historical trends and the contributions of different business segments.

Year-over-year revenue growth rate: In fiscal year 2024, NTIC achieved a consolidated net sales record of $85.06 million, representing a 6.5% increase from the previous year. However, the first half of fiscal year 2025 saw a slight decrease of 1.5%, with net sales of $40.41 million compared to $41.02 million in the same period last year.

Contribution of different business segments to overall revenue:

Here is a table summarizing the revenue contributions from different segments in fiscal year 2024:

Significant changes in revenue streams are also noteworthy. For instance, in the first quarter of fiscal year 2025:

• Natur-Tec® product net sales increased 22.8%, reaching a quarterly record of $5.863 million.
• NTIC China net sales increased 8.6% to $3.995 million.

However, in the second quarter of fiscal year 2025, there were declines:

• ZERUST® oil and gas net sales decreased 28.5%.
• Natur-Tec® net sales decreased 11.8%.
• ZERUST® industrial net sales decreased 3.7%.

These shifts reflect changing market dynamics and strategic adjustments within Northern Technologies International Corporation (NTIC).

Northern Technologies International Corporation (NTIC) Profitability Metrics

Analyzing Northern Technologies International Corporation's (NTIC) financial health involves a close examination of its profitability metrics. These metrics provide insights into how efficiently NTIC generates profit from its revenue and assets. Let's delve into the key profitability measures for NTIC.

Gross Profit Margin: This ratio indicates the percentage of revenue remaining after subtracting the cost of goods sold (COGS). For the fiscal year 2024, NTIC reported a gross profit of $30.2 million, resulting in a gross margin of 38.4%. This indicates a strong ability to manage production costs relative to sales. The gross profit for fiscal year 2023 was $27.3 million, resulting in a gross margin of 38.8%.

Operating Profit Margin: The operating profit margin assesses a company's profitability from its core business operations, excluding interest and taxes. NTIC's operating income for fiscal year 2024 was $6.2 million, yielding an operating margin of 7.9%. This reflects the efficiency of NTIC's operational management. The operating income for fiscal year 2023 was $4.5 million, or 6.4% of net sales.

Net Profit Margin: The net profit margin represents the percentage of revenue that remains as net income after all expenses, including interest and taxes, are deducted. NTIC's net income for fiscal year 2024 was $4.5 million, resulting in a net profit margin of 5.7%. This is the ultimate measure of profitability, showing how much profit NTIC earns per dollar of revenue. NTIC's net income for fiscal year 2023 was $3.2 million, or 4.6% of net sales.

Here's a summary of NTIC's profitability metrics based on the fiscal year 2024 data:

Here's a summary of NTIC's profitability metrics based on the fiscal year 2023 data:

Trends in Profitability Over Time: Examining the trends in NTIC's profitability over several periods helps to identify whether the company is improving its efficiency and earnings capabilities. Analyzing the fiscal year 2024 compared to the fiscal year 2023, we can observe:

• Gross Profit: Increased from $27.3 million in 2023 to $30.2 million in 2024.
• Operating Income: Increased from $4.5 million in 2023 to $6.2 million in 2024.
• Net Income: Increased from $3.2 million in 2023 to $4.5 million in 2024.

Comparison with Industry Averages: Comparing NTIC's profitability ratios with industry averages provides a benchmark to assess its relative performance. NTIC demonstrates sound profitability with gross margins around 38%. The operating margin increased to 7.9% and net profit margin to 5.7%, reflecting enhanced operational efficiency and cost management. These figures indicate a positive trend in NTIC's financial health.

Analysis of Operational Efficiency: Operational efficiency is critical for maintaining and improving profitability. NTIC's ability to manage costs and improve gross margins reflects positively on its operational strategies. A focus on cost management and optimizing the supply chain can further enhance profitability. The trends in gross profit margin indicate the effectiveness of these strategies.

For more detailed insights, you can read the full analysis here: Breaking Down Northern Technologies International Corporation (NTIC) Financial Health: Key Insights for Investors

Northern Technologies International Corporation (NTIC) Debt vs. Equity Structure

Understanding how Northern Technologies International Corporation (NTIC) finances its operations and growth is crucial for investors. The balance between debt and equity can reveal a lot about the company's financial strategy and risk profile.

As of the fiscal year 2024, NTIC's debt levels include both short-term and long-term obligations. While specific figures for the most recent fiscal year are not available in the provided search results, analyzing the trends and ratios from previous years can provide insights. For instance, examining the debt-to-equity ratio helps to understand the proportion of debt used compared to equity.

The debt-to-equity ratio is a key metric to assess NTIC's financial leverage. A higher ratio indicates that the company relies more on debt financing, which can amplify both profits and losses. Comparing this ratio to industry standards offers a benchmark to determine whether NTIC's leverage is within a reasonable range.

Recent activities such as debt issuances, credit ratings, or refinancing can significantly impact NTIC's financial structure. Monitoring these events provides clues about the company's access to capital and its strategies for managing debt obligations. Here are some key considerations:

• Debt Issuances: Any new debt issued by NTIC can increase its overall debt burden but may also provide capital for growth initiatives.
• Credit Ratings: Changes in credit ratings can affect the interest rates NTIC pays on its debt.
• Refinancing: Refinancing activities might indicate efforts to lower interest rates or extend the maturity of debt, improving cash flow management.

NTIC must carefully balance debt financing with equity funding to maintain financial stability and flexibility. Relying too heavily on debt can increase financial risk, while primarily using equity might dilute ownership and potentially limit growth opportunities. The company's approach to this balance reflects its strategic priorities and risk tolerance.

For additional insights into NTIC's values and strategic direction, you might find this resource helpful: Mission Statement, Vision, & Core Values of Northern Technologies International Corporation (NTIC).

Northern Technologies International Corporation (NTIC) Liquidity and Solvency

Liquidity and solvency are crucial indicators of a company's financial health, revealing its ability to meet short-term obligations and long-term liabilities, respectively. For Northern Technologies International Corporation (NTIC), analyzing these metrics provides valuable insights into its operational efficiency and financial stability. Let's delve into NTIC's liquidity position through an examination of its current and quick ratios, working capital trends, and cash flow statements.

Current and Quick Ratios: These ratios are essential for gauging NTIC's ability to cover its short-term liabilities with its short-term assets. As of the fiscal year 2024:

• NTIC's current ratio stood at 2.29. This indicates that NTIC has $2.29 of current assets for every $1 of current liabilities.
• The quick ratio, which excludes inventory from current assets, was 1.73. This more conservative measure still suggests a strong liquidity position, with $1.73 of readily convertible assets available to cover each dollar of current liabilities.

These figures suggest a healthy liquidity position for NTIC, indicating a strong capacity to meet its short-term obligations.

Analysis of Working Capital Trends: Monitoring the trend of NTIC's working capital—the difference between its current assets and current liabilities—provides further insights into its operational efficiency. In 2024, NTIC's working capital was $29.1 million. This substantial working capital provides a buffer for operational needs and potential financial headwinds.

Cash Flow Statements Overview: A review of NTIC's cash flow statements offers a deeper understanding of its liquidity management:

• Operating Cash Flow: For the fiscal year 2024, NTIC generated $13.9 million in cash from its operations. This indicates the company's core business is a reliable source of cash.
• Investing Cash Flow: NTIC used $2.4 million in investing activities, primarily for property, plant, and equipment.
• Financing Cash Flow: Financing activities resulted in a cash outflow of $7.7 million, mainly due to stock repurchases and dividend payments.

Overall, NTIC's cash flow statement reveals a company that is generating significant cash from its operations, which supports its investments and returns to shareholders.

Potential Liquidity Concerns or Strengths: NTIC's strong current and quick ratios, coupled with positive operating cash flow, highlight its robust liquidity position. The company's ability to generate cash from operations and manage its working capital effectively minimizes potential liquidity concerns. While financing activities led to a cash outflow, this was primarily due to strategic decisions like stock repurchases and dividend payments, reflecting a confident management approach to capital allocation.

For additional insights into NTIC's strategic direction, explore: Mission Statement, Vision, & Core Values of Northern Technologies International Corporation (NTIC).

Northern Technologies International Corporation (NTIC) Valuation Analysis

When evaluating whether Northern Technologies International Corporation (NTIC) is overvalued or undervalued, several key financial metrics and market indicators should be considered. These include valuation ratios, stock price trends, dividend information, and analyst ratings. You can also check Mission Statement, Vision, & Core Values of Northern Technologies International Corporation (NTIC).

Valuation Ratios:

These ratios provide a snapshot of how the market is pricing NTIC relative to its earnings, book value, sales, and cash flow. Here’s a look at some key valuation ratios as of late 2024:

• Trailing Price-to-Earnings (P/E): 20.85 as of November 30, 2024.
• Price-to-Book (P/B): 1.46 as of November 30, 2024.
• Price-to-Sales (P/S): 1.24 (TTM). The P/S ratio at the end of 2024 was 1.53.
• Enterprise Value-to-EBITDA (EV/EBITDA): 11.13 as of November 30, 2024.

These valuation measures provide insights into how the market values NTIC's earnings and assets. Comparing these ratios to industry averages and historical data can indicate whether the stock is overvalued or undervalued.

Stock Price Trends:

Analyzing the stock price movement over the past year provides context on market sentiment and overall performance.

• 52-Week Change: A decrease of -21.06%.
• 52-Week High: $19.63.

A significant decrease in stock price over the past 52 weeks could suggest challenges or market corrections affecting investor confidence.

Dividend Yield and Payout Ratios:

For investors seeking income, dividend yield and payout ratios are essential metrics.

• Annual Dividend: $0.28 per share.
• Dividend Yield: 2.53%.
• Payout Ratio: 52.8%.

NTIC's dividend yield is 22% higher than the Basic Materials sector average of 2.08%. The company has been paying dividends for the last seven consecutive years, with the last dividend payment of $0.07 per share made on January 29, 2025.

Analyst Consensus:

Analyst ratings provide insights into professional opinions on the stock's potential.

• Analyst Consensus: Buy.
• 12-Month Stock Price Forecast: $20.0.

One analyst has a 'Buy' rating for NTIC stock, with a 12-month price forecast of $20.0, suggesting a potential upside of 159.57%.

Additional Key Metrics:

Here is a table summarizing key financial metrics for NTIC:

These metrics offer a comprehensive view of NTIC's financial standing, helping investors assess its intrinsic value and growth potential.

Northern Technologies International Corporation (NTIC) Risk Factors

Understanding the risks Northern Technologies International Corporation (NTIC) faces is crucial for investors. These risks can stem from both internal and external factors, significantly impacting the company's financial health. Key areas of concern include industry competition, regulatory changes, and overall market conditions.

Here's a breakdown of potential risks:

• Industry Competition: The industries in which NTIC operates are competitive. New innovations or strategies from competitors could reduce NTIC’s market share or put pressure on pricing, affecting profitability.
• Regulatory Changes: Changes in environmental regulations, both in the U.S. and internationally, could increase compliance costs or limit the markets in which NTIC can operate. This is particularly relevant given their focus on corrosion prevention.
• Market Conditions: Economic downturns or fluctuations in specific industries (like automotive or oil and gas) can reduce demand for NTIC’s products, impacting revenue and earnings.
• Supply Chain Disruptions: Disruptions in the global supply chain, whether due to geopolitical events, natural disasters, or other factors, can increase the cost of raw materials and impact NTIC's ability to meet customer demand.
• Dependence on Key Customers: If NTIC relies heavily on a small number of key customers, the loss of one or more of these customers could significantly reduce revenue.

The company's annual report on Form 10-K, particularly the section on risk factors, provides detailed insights into these and other potential risks. For example, the report discusses risks related to:

• Intellectual Property: The need to protect their proprietary technologies and the risk of intellectual property infringement claims.
• International Operations: Risks associated with operating in different countries, including currency fluctuations, political instability, and differing legal and regulatory requirements.

Mitigation strategies can include:

• Diversification: Expanding into new markets or industries to reduce reliance on specific sectors or customers.
• Innovation: Continuously developing new and improved products to stay ahead of competitors.
• Risk Management: Implementing robust risk management processes to identify, assess, and mitigate potential risks.
• Compliance Programs: Ensuring compliance with all applicable laws and regulations.

Investors should carefully review NTIC's filings with the Securities and Exchange Commission (SEC), including their annual reports on Form 10-K and quarterly reports on Form 10-Q, to understand these risks and the company's strategies for managing them.

For further insights, check out: Breaking Down Northern Technologies International Corporation (NTIC) Financial Health: Key Insights for Investors

Northern Technologies International Corporation (NTIC) Growth Opportunities

Northern Technologies International Corporation (NTIC) is strategically positioned for future growth, driven by several key factors. These include product innovations, market expansions, strategic initiatives, and competitive advantages.

Analysis of Key Growth Drivers:

• Product Innovations: NTIC continues to innovate in both its ZERUST® corrosion prevention products and Natur-Tec® bio-based polymer resin compounds. The launch of new products, such as the Natur-Tec® brand's biobased polymers, has attracted more customers and boosted revenue.
• Market Expansions: NTIC is expanding its ZERUST® sales infrastructure, particularly in the oil and gas industry. The company is also focused on expanding into international markets, especially in China and Southeast Asia. NTIC anticipates continued stabilization and growth in the Chinese market, with expectations for China to become a significant geographic market.
• Acquisitions: NTIC may complete similar acquisitions in the future. Similar future acquisitions will depend, in part, on the availability of similar opportunities or other suitable acquisition candidates at acceptable prices, terms, and conditions and the availability of capital and personnel resources to complete such acquisitions and run and integrate the acquired business effectively.

Future Revenue Growth Projections and Earnings Estimates:

NTIC's revenue for the trailing 12 months ending November 30, 2024, was reported at $86.22 million, reflecting a 55.9% growth year-over-year. For the fiscal year ending August 31, 2024, NTIC reported annual earnings of $5.4 million, with 85.7% growth.

However, there are mixed forecasts for future earnings. Simply Wall St reports that NTIC's earnings are forecast to decline at 65% per annum. Conversely, WallStreetZen reports that NTIC's earnings were $5.1 million for the trailing 12 months ending November 30, 2024, with 55.9% growth year over year. The next NTIC earnings date is Apr 9, 2025.

Nasdaq estimates the following quarterly earnings:

Strategic Initiatives or Partnerships That May Drive Future Growth:

• ZERUST® Sales Infrastructure Expansion: NTIC is expanding its ZERUST® sales infrastructure, particularly in the oil and gas industry, to drive growth in this sector.
• Natur-Tec® Bioplastic Products: The company continues to invest in the development and commercialization of new Natur-Tec® bioplastic products to capitalize on the growing demand for sustainable materials.
• Joint Venture Opportunities: NTIC is exploring opportunities to acquire the remaining ownership interests in its joint ventures, which could impact NTIC's financial results as these operations are transitioned.
• Strategic Partnerships: NTIC's integrated ecosystem unites government agencies, private sector players, research institutions, and investors to accelerate technology development, innovation commercialization, and idea scaling.

Competitive Advantages That Position the Company for Growth:

• Technical Innovation: NTIC believes it has an advantage over most of its competitors as a result of NTIC's technical innovation and its value added service.
• Value-Added Service: NTIC attempts to provide its customers with the highest level of technical service and applications engineering in addition to ZERUST® rust and corrosion inhibiting products.
• Global Partnerships: NTIC distinguishes itself through its extensive experience and global partnerships.

For more insights into NTIC's values, see Mission Statement, Vision, & Core Values of Northern Technologies International Corporation (NTIC).