Northern Technologies International Corporation (NTIC) reported a decline in financial performance for the second quarter of fiscal 2025, with consolidated net sales of $19.1 million, down 8.5% from $20.8 million in the same period last year. For the six months ending February 28, 2025, net sales totaled $40.4 million, a decrease of 1.5% compared to $41.0 million in the prior year. The decrease in sales was primarily attributed to reduced demand for the company's ZERUST® products, which accounted for 73.2% of total sales, while Natur-Tec® products saw a slight increase in sales during the same period.
The company's gross profit also declined, with a gross margin of 35.6% for the three months ended February 28, 2025, compared to 40.0% in the prior year. Operating expenses increased by 2.4% to $8.8 million for the quarter, driven by strategic investments in ZERUST® oil and gas sales infrastructure and higher personnel costs. NTIC reported a net income of $602,627, or $0.04 per diluted share, for the three months ended February 28, 2025, a significant decrease from $1.9 million, or $0.17 per diluted share, in the same quarter last year.
Operationally, NTIC's joint venture operations also faced challenges, with equity in income from joint ventures dropping 47.3% to $620,730 for the quarter. The company attributed this decline to decreased sales at most joint ventures, particularly in Germany. The total net sales at joint ventures decreased by 15.7% to $19.8 million for the quarter. Additionally, NTIC's cash flow from operating activities was $3.2 million for the six months ended February 28, 2025, down from $5.6 million in the prior year, reflecting changes in working capital and reduced net income.
Looking ahead, NTIC anticipates continued volatility in its earnings due to inflation, supply chain disruptions, and fluctuating demand for its products, particularly in the oil and gas sector. The company plans to invest in its ZERUST® and Natur-Tec® product lines and expects to leverage its existing cash reserves and credit facilities to support these initiatives. NTIC's management remains focused on expanding its market presence and enhancing its product offerings to adapt to changing market conditions.
About NORTHERN TECHNOLOGIES INTERNATIONAL CORP
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