Northern Technologies International Corporation

For the fiscal 26 third quarter ended May 31, 2026, consolidated net sales increased 12.6% year over year to $24.2 million. Gross profit as a percentage of net sales was 33.6% versus 38.4% in the prior-year period, and management said gross profit was negatively affected by about $1 million due to the Middle East shipping disruption and higher raw material costs. NTIC reported a net loss of $263 thousand, or $0.03 per share, versus net income of $122 thousand, or $0.01 per diluted share, last year; adjusted net loss was $158 thousand, or $0.02 per diluted share. For Q4, management expects sequential gross margin improvement, continued sales growth, and stronger profitability, with Q4 described as the strongest quarter of the year. For the full year/future periods, they expect ZERUST oil and gas sales and profitability to improve significantly in fiscal 26, Natur-Tec growth to continue, and operating expenses to stay relatively flat while revenue grows.

Patrick Lynch said the quarter showed strong demand across the company’s corrosion prevention and bioplastics platforms, with sales reaching new record highs. He emphasized that the gross margin hit from Middle East-related cost inflation was temporary and said NTIC is focused on controllable drivers like higher-margin oil and gas growth, broader Natur-Tec applications, pricing actions, and procurement improvements. His tone was constructive but pragmatic, repeatedly pointing to execution and a better fourth quarter ahead.

Matthew Wolsfeld highlighted that consolidated sales rose 12.6% and JV sales rose 15.1%, while operating expenses increased 5.3% to $10.2 million and represented 42% of sales versus 44.9% a year ago. He said gross margin compression came mainly from a 30%+ increase in polyethylene prices tied to Middle East disruption, but noted the company was able to pass through some cost increases and expects gross margin to improve in Q4. On liquidity, he said working capital was $20 million, including $7.3 million of cash and cash equivalents, and debt was $14.8 million, including $11.8 million under the revolver; he also noted the Beachwood, Ohio facility was reclassified as held for sale, with a nonbinding LOI for $1.15 million and expected closure in fiscal 27.

Analysts focused on the profitability of the oil and gas business, the impact of Middle East conflict on costs and operations, Natur-Tec margin pressure, and the rationale for selling the Beachwood facility. Management said oil and gas carries higher gross margins than the company average and that recent projects and invoicing timing should support a strong Q4, while also citing a pipeline of opportunities in Brazil, the Middle East, North America, India, and China. On raw materials, they said NTIC does not source from the Middle East directly, but global price ripple effects raised costs; on Natur-Tec, they said volume growth was closer to 10% to 12% than revenue growth due to pricing concessions, and some food-packaging opportunities could take 12 to 24 months to commercialize. They also said Beachwood is being sold because operations are being consolidated in Minnesota.