Northern Technologies International Corporation

due to the certain risks and uncertainties, including those described in the NTIC's most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q, and recent press releases. Please read these reports and other future filings that NTIC will make with the SEC. NTIC disclaims any duty to update or revise its forward-looking statements. I would now like to hand the call over to Patrick Lynch, President and CEO. Please go ahead.

Good morning.

I'm Patrick Lynch, NTIC's CEO, and I'm here with Matt Wolsfeld, NTIC's CFO. Please note that a press release regarding our first quarter fiscal 2026 financial results was issued earlier this morning and is available at NTIC.com. During today's call, we will review various key aspects of our fiscal 2026 first quarter financial results, provide a brief business update, and then conclude with a question and answer session. Please note that when we discuss year-over-year performance, we are referring to the first quarter of our fiscal 2026 in comparison to the first quarter of last fiscal year. I'm very pleased that for first quarter, we were able to deliver record consolidated net sales driven by the strongest year-over-year growth rate we've had since fiscal 2024. Our performance was further augmented by higher sales across key sectors, including the U.S. oil and gas, NTIC China, and North American NatureTech sales. Citrus Oil & Gas achieved record first quarter sales, marking the second consecutive quarter with more than $2 million in revenue, demonstrating improving demand from both new and existing customers. Improving profitability is a top priority for NTIC in fiscal 2026, and we expect to begin to realize the benefits from the strategic investments we made over the past three years towards upgrading our global operations and supporting future growth. We are also focused on flattening our operating expenses and driving sales in the higher margin segments of our business, which we expect will improve our profitability and strengthen our balance sheet this fiscal year. Overall, the start of fiscal 2026 is encouraging, and we expect these trends to support anticipated higher year-over-year sales and profitability as the year progresses. So, with this overview, let's examine the drivers for the first quarter in more detail. For the first quarter ended November 30th, 2025, our total consolidated net sales increased 9.2% to a quarterly record of $23.3 million as compared to the first quarter ended November 30th, 2024. Broken down by business unit, this included a 58.1% increase in Xerox oil and gas net sales, a 6.9% increase in Xerox industrial net sales, and a 2.2% increase in NatureTech product net sales. Turning to our joint venture sales, which we do not consolidate in our financial statements. Total net sales for the fiscal 2026 first quarter by our joint ventures increased year-over-year by 2.9% to $24.5 million, reflecting improved demand across many of our joint ventures, partially offset by a mid-single-digit decline at our German joint venture. We continue to closely monitor trends across our European markets for signs of stabilization following years of subdued demand as governments begin to implement targeted economic stimulus packages. We expect that any economic recovery from these stimulus packages will lead to a positive impact on our joint venture operating income in future periods, especially in Germany. Improving sales trends continued at our wholly owned NTIC China subsidiary. Fiscal 2026 first quarter net sales at NTIC China increased by 23.5% year over year to $4.9 million, demonstrating a strong demand in this geography. Furthermore, given that the majority of NTIC China's sales are for domestic Chinese consumption, we believe NTIC China's exposure to U.S. tariffs is limited. We expect demand in China will continue to grow and improve in fiscal 2026, helping to support anticipated higher incremental sales and profitability in this market. We believe that China is on its way to becoming a significant market for our industrial and bioplastic segments, so we plan to continue to take steps to enhance our operations in this geography. Now, moving on to Xeris Oil and Gas. First quarter of fiscal 2026, Xerox oil and gas sales were $2.4 million, a first quarter's record and an increase of 58.1% from the same period last year. This growth rate demonstrates the wider adoption of our VCI solutions by new and existing customers across the global oil and gas industry, as well as at our Brazil subsidiary. As discussed on our prior call in November, 2025, We announced that our 85% owned subsidiary, Xeros Brazil, secured a three-year contract for a major offshore project with a leading global engineering, procurement, and construction, or EPC, company. Under this agreement, Xeros Brazil will be providing advanced corrosion protection solutions for floating production storage and offloading units, or FPSOs, with an estimated total value of approximately $13 million over the next three to four years based on current foreign exchange rates. We expect this project to ramp up throughout the current fiscal year and continue through calendar 2028. We believe this is a significant validation of our engineering capabilities the scalability of our Xerox oil and gas business, and the reputation we've built as a trusted partner to leading offshore operators. Brazil represents one of the fastest growing deep water markets globally, and we believe this win provides a strong foundation for continued growth and expansion across international oil and gas markets. As indicated in prior calls, We have continually invested in our Xeris oil and gas business to enhance our sales team and add resources to support anticipated future growth. This has improved our Xeris oil and gas sales pipeline as the size and number of opportunities have expanded among both new and existing customers. Our pipeline includes global opportunities to protect above-ground oil storage tanks, pipeline casings, and offshore oil rigs from corrosion. While the nature of this industry will always cause certain fluctuations in our Xerox oil and gas sales, we still expect to see Xerox oil and gas sales and profitability improve significantly in fiscal 2026 as we plan to leverage these investments and rein in operating expenses. Turning to our NatureTech bioplastics business. First quarter nature tech sales were a quarterly record of $6 million, representing a 2.2% year-over-year increase and a 16.5% increase from the fourth quarter, driven primarily by higher sales in North America. We continue to pursue several larger opportunities in North America and India for our nature tech solutions. that we believe hold significant promise to benefit our nature tech sales in coming quarters, including advancing the compostable food packaging solution we mentioned on prior calls. Overall, we believe nature tech is a best in class compostable plastic business that is well positioned for significant future growth in the US and abroad, and we expect sales to continue to expand throughout the year. Before I turn the call over to Matt, I want to acknowledge the hard work and dedication of our global team of both employees and joint venture partners. Our success and our ability to navigate more complex economic periods are a direct result of their efforts. With this overview, let me now turn the call over to Matt Wolsfeld to summarize our financial results for the fiscal 2026 first quarter.