Northern Technologies International Corp. reported consolidated net sales of $21.997 million for the three months ended February 28 2026, a 15.3% year‑over‑year increase that exceeded the consensus revenue estimate of $21.1 million. The growth was driven by a 72.1% jump in ZERUST® oil and gas sales to $2.666 million and an 11.2% rise in ZERUST® industrial sales to $13.967 million, while Natur‑Tec® product sales grew 8.1% to $5.363 million. NTIC China also contributed to the top‑line expansion, reporting an 18.5% increase to $4.425 million.
The company posted a net loss of $35,000, or $(0.00) per diluted share, compared with a net income of $434,000, or $0.04 per diluted share, in the same quarter a year earlier. The loss reflects the absence of a $1.140 million Employee Retention Credit that was recorded as other income in the prior year, which had inflated that year’s profitability. On a non‑GAAP basis, the company earned $70,000, or $0.01 per diluted share, a modest improvement over the $300,000 loss reported in Q2 FY2025.
Operating expenses increased 7.7% to $9.49 million, largely due to continued investment in sales and marketing for the ZERUST® and Natur‑Tec® businesses. Despite higher costs, operating income from joint‑venture sales rose 19.8% to $2.027 million, driven by a 18.6% increase in joint‑venture revenue to $23.484 million. Gross profit margin remained essentially flat at 35.7% versus 35.6% a year earlier, indicating that pricing power in key segments offset the impact of higher input costs.
Management emphasized that the company remains confident in its long‑term growth strategy. It highlighted the strong demand in its core segments, the signing of a three‑year offshore contract in Brazil worth approximately $13 million, and the continued momentum in NTIC China. The company also acknowledged macro‑economic headwinds, including geopolitical tensions in the Middle East, supply‑chain pressures, and a challenging European economy, and noted that liquidity concerns persist as cash balances decline and debt increases.
The results beat revenue estimates by roughly $0.9 million (about 4.3% above consensus) but missed the consensus EPS estimate of $0.02, reporting a net loss of $(0.00) per share on a GAAP basis and $0.01 per share on a non‑GAAP basis. Analysts noted that the EPS miss was largely attributable to the one‑time ERC credit that was absent this quarter, as well as higher operating expenses associated with the company’s growth initiatives.
The company’s guidance for the remainder of fiscal 2026 was not disclosed in the release, but management indicated confidence that sales growth will continue in the second half of the year and that margin improvement is expected as the company scales its operations and benefits from the new Brazil contract. However, it also cautioned that ongoing pricing volatility and input cost swings could continue to pressure margins in the near term.
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