Northern Technologies International 2025 Q3 Earnings Misses Targets as Net Income Declines 71.2%

Northern Technologies International (NTIC) reported its fiscal 2025 Q3 earnings on Jul 11th, 2025. Northern Technologies International Corporation fell short of analyst expectations in its Q3 2025 earnings release. The company reported net income declines, a significant EPS drop, and a slight revenue increase. Despite this, NTIC remains optimistic about future growth, adjusting its guidance with an expectation of sequential improvements in sales and profitability for upcoming quarters. This cautious yet hopeful outlook aligns with NTIC’s strategic focus on high-growth markets and ongoing investments in its oil and gas sector.

Revenue
Northern Technologies International saw an overall 4.0% increase in total revenue, reaching $21.51 million for Q3 2025 compared to $20.69 million in Q3 2024. The ZERUST segment experienced a growth in net sales amounting to $15.73 million, bolstered by a 7.1% rise in industrial sales. Meanwhile, Natur-Tec contributed $5.78 million to the revenue, showing a slight decrease, and ZERUST oil and gas sales decreased by 5.3% to $1.288 million.

Earnings/Net Income
Northern Technologies International's EPS dropped dramatically by 90.0%, landing at $0.01 in 2025 Q3 from $0.10 in 2024 Q3. Concurrently, the net income fell by 71.2% to $332,451 from $1.16 million in the previous year’s same quarter, indicating a challenging earnings season.

Price Action
The stock price of Northern Technologies International edged down 1.24% during the latest trading day, climbed 5.80% over the most recent full trading week, and surged 19.35% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing NTIC shares after a quarter-over-quarter revenue increase on the financial report release date and holding for 30 days has yielded a -11.16% return over the past three years. This approach has significantly underperformed compared to the benchmark, with an excess return of 88.84% and a compound annual growth rate (CAGR) of -2.35%. Despite the negative returns, the strategy displayed high volatility, although it featured a maximum drawdown of 0.00% and a Sharpe ratio of -0.05. These statistics underscore the potential risks involved with this trading strategy, emphasizing the need for careful consideration by investors.

CEO Commentary
G. Patrick Lynch, President, CEO & Director, highlighted that Northern Technologies International Corporation achieved both sequential and year-over-year growth in consolidated net sales, reaching $21.5 million, driven by a 7.1% increase in ZERUST Industrial net sales. Despite global economic uncertainties and macroeconomic pressures impacting profitability, particularly in Europe, the company remains focused on supporting existing customers and expanding in high-growth markets. Lynch emphasized ongoing investments in the oil and gas sector to enhance growth prospects, expressing confidence in the team’s efforts and the strategic direction, indicating an optimistic outlook for fiscal 2026 as improvements are expected in both sales and profitability.

Guidance
The company expects sequential improvements in ZERUST Oil and Gas sales and profitability in the fourth quarter of fiscal 2025, following a projected revenue increase from $1.3 million to higher levels based on backlogs. Lynch also indicated that the majority of current NTIC China sales are for domestic consumption, forecasting continued demand growth in fiscal 2025. Overall, NTIC anticipates a positive impact from economic stimulus measures in Europe and aims to execute a profit-focused strategic growth plan for sustainable growth and improved profitability going into fiscal 2026.

Additional News
In recent developments, Northern Technologies International Corporation announced a quarterly cash dividend on January 15, 2025, further reflecting its commitment to shareholder returns. Additionally, NTIC is set to join the Russell 3000® Index, a significant milestone that could enhance its visibility among investors. Furthermore, the company continues to expand its environmental initiatives, focusing on bio-based and certified compostable polymer resin compounds under the Natur-Tec® brand, aligning with global sustainability trends. These strategic moves emphasize NTIC’s dedication to growth, financial stability, and environmental stewardship, positioning it for future success in the competitive specialty chemicals sector.