Overview

• Corrosion prevention and bioplastics firm's fiscal Q3 revenue rose 13% yr/yr to a record high

• Company posted a net loss of $263,000, or $0.03 per share, versus a profit last year

• Gross margin fell 477 basis points due to higher raw material costs and pricing pressure

Outlook

• Company expects pricing and procurement initiatives to improve gross margin and profitability in Q4

• Northern Technologies to focus on expanding sales of higher-margin ZERUST oil and gas solutions

• Company anticipates stronger, more profitable fourth-quarter results

Result Drivers

• RECORD SALES - Higher global demand and increased adoption of ZERUST corrosion prevention and Natur-Tec bioplastic products drove record Q3 sales

• MARGIN PRESSURE - Gross margin declined due to higher raw material costs from Middle East conflict and competitive pricing in Natur-Tec

• OIL & GAS SEGMENT - ZERUST oil and gas net sales grew 72% yr/yr, reflecting targeted sales and marketing investments

Company press release: ID:nGNX5ShHLD

Key Details

Analyst Coverage

• The one available analyst rating on the shares is "buy"

• The average consensus recommendation for the industrial machinery & equipment peer group is "buy"

• The stock recently traded at 23 times the next 12-month earnings vs. a P/E of 18 three months ago

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