🧾 What This Document Is

This is a press release (an exhibit to an 8-K filing) announcing NTIC's financial results for the second quarter of its 2026 fiscal year, which ended February 28, 2026. It's the company's official report card for the period, shared with the public and investors.

🏢 What The Company Does

👉 In simple terms, Northern Technologies International Corporation (NTIC) makes and sells special products that prevent metal from rusting (under the ZERUST® brand) and also makes eco-friendly, compostable plastics (under the Natur-Tec® brand). They operate globally, both directly and through a network of joint ventures.

💰 Financial Highlights: A Record Quarter

This was a strong sales quarter, but the bottom line tells a more nuanced story.

Sales Growth Across the Board

• Total Sales: Increased 15.3% to a record second-quarter revenue of $21.997 million.
• ZERUST® (Core Business): Sales grew 17.9% to $16.633 million, making up about 76% of total sales.
  • Oil & Gas Segment: The star performer, with sales up a massive 72.1% to a record $2.666 million.
• Natur-Tec® (Bioplastics): Sales grew a solid 8.1% to $5.363 million.

Profitability: The Flip Side

• Operating Income: The company moved from an operating loss of $(333,000) last year to an operating profit of $383,000 this quarter.
• Net Loss: Despite higher sales and operating profit, NTIC reported a small net loss of $(35,000). Last year, it had net income of $434,000.
  • 👉 Why the loss? Last year's profit was boosted by a one-time $1.14 million payment from an Employee Retention Credit (ERC). Without that government payment last year, this quarter's performance is actually an improvement.
• Adjusted Profit (Non-GAAP): To show the underlying trend, NTIC reports an "adjusted" number. This was a positive $70,000 (or $0.01 per share), compared to an adjusted loss of $(300,000) last year.

🤝 Joint Ventures: A Hidden Engine

A huge part of NTIC's business happens through joint ventures (JVs) around the world. Their sales aren't counted in NTIC's main revenue line, but their profits are.

• JV Sales: Grew 18.6% to $23.484 million this quarter.
• JV Operating Income: Increased 19.8% to $2.027 million. This income flows directly to NTIC's bottom line.

📊 Segment Breakdown: Where the Growth Is

The sales tables show exactly where the money is coming from.

• The ZERUST® oil & gas segment is growing explosively (72.1% this quarter), becoming a more significant part of the business.
• While the core ZERUST® industrial segment is larger, its growth is steadier (11.2%).
• The Natur-Tec® bioplastics business is a consistent, solid contributor.

⚖️ Financial Position & Cash Flow

• Cash & Debt: As of February 28, 2026, NTIC had $6.47 million in cash and $14.26 million in total debt (a revolving loan and term loan).
• Working Capital: The company's short-term financial health (current assets minus current liabilities) was $20.2 million, essentially flat from the end of its last fiscal year.
• Joint Venture Value: NTIC's stake in its joint ventures is valued at $29.748 million, and over half of that ($15.4 million) is held as cash within those JVs.

🔮 What's Next: Leadership's Outlook

CEO G. Patrick Lynch is confident but cautious:

• Positive Drivers: He cites the global sales investments, increasing adoption in oil & gas, and strength in China and Natur-Tec® as reasons for optimism.
• Acknowledged Challenges: He notes uncertainties like Middle East tensions, supply chain issues, and a weak European economy.
• Guidance: The company expects continued sales growth and improved profitability in the second half of fiscal 2026.

🌍 Why This Matters: The Bigger Picture

👍 Strengths: The company is executing a clear growth strategy, evidenced by record sales and successful expansion into the oil & gas market. Its diverse product lines and geographic reach provide resilience. ⚠️ Risks: The business is not immune to global macroeconomic headwinds. The swing from a profitable quarter (boosted by a one-time item) to a net loss highlights how volatile earnings can be. Investors must look past the headline net loss number to see the improving operational trend.

🧠 The Analogy

Think of NTIC as a resilient tree with deep roots (its core ZERUST® industrial business) and strong new branches (oil & gas, Natur-Tec). The tree grew taller and stronger this quarter (record sales, better operations), but a single gust of wind (the absence of a one-time cash gift from last year) meant its leaves looked a bit thinner on paper (the net loss). The real health of the tree is in its growing branches and sturdy roots.

🧩 Final Takeaway

NTIC is growing sales strongly across its businesses, especially in oil & gas, and its core operations are becoming more profitable. The headline net loss is misleading due to a comparison against a large one-time payment last year. The underlying trend, seen in adjusted profits and joint venture performance, is positive.

Contact: Matthew Wolsfeld, CFO
Phone: (763) 225-6600