Northern Technologies International Corporation reported a decrease in consolidated net sales of 8.5% to $19,072,000 for the second quarter ended February 28, 2025. For the six months ended February 28, 2025, consolidated net sales decreased 1.5% to $40,410,000. This decline was primarily attributed to reduced sales and demand for ZERUST products, although partially offset by an increase in Natur-Tec sales over the six-month period.
Profitability was impacted by higher raw material prices, leading to a gross margin decline to 35.6% in the second quarter from 40.0% in the prior year quarter. Net income attributable to NTIC decreased significantly to $434,319, or $0.04 per diluted share, for the quarter, compared to $1.70 million, or $0.17 per diluted share, in the prior year period. This quarter's net income included a one-time $1.14 million Employee Retention Credit payment.
Joint venture operations also saw a decline, decreasing 31.8% for the three months and 15.1% for the six months ended February 28, 2025. The German joint venture, EXCOR, was particularly affected by decreased demand linked to high energy prices and regional economic pressures in Europe. Operating expenses increased due to strategic investments in expanding the ZERUST oil and gas sales infrastructure.
Despite the headwinds, management maintains a positive outlook for the second half of fiscal 2025, anticipating further sales growth and improved profitability. They project ZERUST Oil and Gas to achieve 20% to 30% growth for the full fiscal year, with acceleration expected in the second half, and Natur-Tec to sustain growth around 20%. The company also extended its revolving line of credit maturity to January 2026, with reduced availability and a slightly higher interest margin.
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