Wednesday, Northern Technologies Int. Corp. (NTIC), an eco-friendly products maker, reported a 26% rise in net profit for the third quarter, primarily on increased income from its corporate joint ventures and holding companies, despite lower revenues.
The company's third-quarter net income increased to $788.15 thousand or $0.21 per share from $627.80 thousand or $0.17 per share reported a year earlier.
Quarterly consolidated net sales in North America reached $3.27 million, a 26% decline over $4.41 million in the same quarter of prior year.
Income from the company's corporate joint ventures and holding companies increased to $1.24 million from $755.56 thousand last year.
In the quarter, interest expense nearly halved to $21.76 thousand from prior year's $41.14 thousand.
For the year-to-date period, Northern Technologies reported earnings of $2.11 million or $0.56 share, higher than $2.07 million or $0.56 per share in fiscal 2007. The company said its prior year results were benefited from a one-time gain of $724.50 thousand on the sale of a building. Excluding this item, net income jumped 57% in the nine-month period from last year mainly due to higher income from the company's corporate joint ventures and holding companies.
For the nine-month period, net sales declined 26.3% to approximately $9.52 million from $12.91 million a year earlier. The company said its sales for both periods were affected by the anticipated loss of a significant customer of the company's React-NTI, LLC subsidiary.
While commenting on the performance, Patrick Lynch, president and chief executive officer, stated, "Our strong quarterly and year-to-date earnings represent robust momentum in our international core corrosion protection business."
Looking ahead, Northern Technologies anticipates that its net sales will continue to fall significantly during the remainder of fiscal 2008 as a result of the loss of its React-NTI customer. However, the company does not expect that the decrease will have a material adverse effect on its future net income.
Lynch said, "It is our goal over the next few quarters to compensate for any future decline in our North American sales through market demand for our new Natur-Tec products and continued increased international sales of our Zerust products."
NTIC closed Tuesday's trading session at $15, on a volume of 16.70 million shares.
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