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Northern Technologies International Corp Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: January 14, 2013 06:03AM

Northern Technologies International Corp (NTIC) filed Quarterly Report for the period ended 2012-11-30. Northern Technologies International has a market cap of $50.8 million; its shares were traded at around $11.52 with a P/E ratio of 12.5 and P/S ratio of 1.9.



Highlight of Business Operations:

On August 31, 2012, the Board of Directors of the Company, upon recommendation of the Compensation Committee of the Board of Directors, approved the material terms of an annual bonus plan for the Company s executive officers and certain officers and employees for the fiscal year ending August 31, 2013. For fiscal 2013 as in past years, the total amount available under the bonus plan will be up to 25% of the Company s earnings before interest, taxes and other income, as adjusted to take into account amounts to be paid under the bonus plan and certain other adjustments (Adjusted EBITOI), assuming the achievement of at least a minimum Adjusted EBITOI, which is generally 70% of a budgeted target Adjusted EBITOI for fiscal 2013. For each plan participant, 50% of the amount of the participant s individual bonus payout will be determined based upon the participant s individual allocation percentage of the total amount available under the bonus plan and 50% of the participant s payout will be determined based upon the participant s achievement of certain pre-established but more qualitative individual performance objectives. The payment of bonuses under the plan are discretionary and may be paid to executive officer participants in both cash and shares of NTIC common stock, the exact amount and percentages of which will be determined by the Company s Board of Directors, upon recommendation of the Compensation Committee, after the completion of the Company s consolidated financial statements for fiscal 2013. There was $116,909 for management bonuses accrued for three months ended November 30, 2012 compared to a management bonus accrual of $320,814 for the three months ended November 30, 2011.

NTIC s consolidated net sales increased 9.5% during the three months ended November 30, 2012 compared to the three months ended November 30, 2011. This increase was primarily a result of increased sales of Natur-Tec® products and ZERUST® rust and corrosion inhibiting packaging products and services. During the three months ended November 30, 2012, 90.6% of NTIC s consolidated net sales were derived from sales of ZERUST® products and services, which increased 7.7% to $4,795,283 during the three months ended November 30, 2012, compared to the same respective prior fiscal year period due to increased demand from existing customers and the addition of new customers. NTIC has focused its sales efforts of ZERUST® products and services by strategically targeting customers with specific corrosion issues in new market areas, including the oil and gas industry and other industrial sectors that offer sizable growth opportunities. NTIC s consolidated net sales for the three months ended November 30, 2012 included $551,814 of sales made by Zerust Brazil, and of those sales, $40,385 in sales were made to the oil and gas industry sector in Brazil. Overall demand for ZERUST® products and services depends heavily on the overall health of the markets in which NTIC sells its products, including in particular the automotive market.

Net Sales. NTIC s consolidated net sales increased 9.5% to $5,291,747 during the three months ended November 30, 2012 compared to the three months ended November 30, 2011. NTIC s consolidated net sales to unaffiliated customers excluding NTIC s joint ventures increased 11.5% to $4,770,387 during the three months ended November 30, 2012 compared to the same respective prior fiscal year period. This increase was primarily a result of increased sales of Natur-Tec® products and ZERUST® rust and corrosion inhibiting packaging products and services. Net sales to joint ventures decreased 6.0% to $521,360 during the three months ended November 30, 2012 compared to the same respective prior fiscal year period. This decrease correlated with the 4.4% decrease in total net sales of NTIC s joint ventures for the three months ended November 30, 2012.

During the three months ended November 30, 2012, 90.6% of NTIC s consolidated net sales were derived from sales of ZERUST® products and services, which increased 7.7% to $4,795,283 during the three months ended November 30, 2012 compared to $4,452,646 during the same prior year period, due primarily from increased demand from existing customers and the addition of new customers. NTIC has focused its sales efforts of ZERUST® products and services by strategically targeting customers with specific corrosion issues in new market areas, including the oil and gas industry and other industrial sectors that offer sizable growth opportunities.

Fees for Services Provided to Joint Ventures. NTIC recognized fee income for services provided to joint ventures of $1,846,277 during the three months ended November 30, 2012 compared to $1,445,252 during the three months ended November 30, 2011 representing an increase of $401,025. This increase was primarily a result consolidation of the fees for services earned by NTI Asean which are included in the current fiscal quarter, but not in the prior comparative quarter. This is partially offset by a 4.4% decrease in total net sales of NTIC s joint ventures to $27,524,934 during the three months ended November 30, 2012 compared to $28,795,232 for the three months ended November 30, 2011. Total net sales of NTIC s joint ventures were adversely affected in part by the European economic slowdown, which NTIC believes also adversely affected net sales of certain of NTIC s other non-European joint ventures, as well as the weakening of the EURO and other currencies compared to the U.S. dollar. Sales of NTIC s joint ventures are not included in NTIC s product sales and are not combined with NTIC s sales in NTIC s consolidated financial statements or in any description of NTIC s sales.

Read the The complete Report



Stocks Discussed: NTIC,
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