Northern Technologies International Corporation (NASDAQ:NTIC) Q2 2022 Earnings Conference Call April 7, 2022 9:00 AM ET

Company Participants

Patrick Lynch - President and Chief Executive Officer

Matthew Wolsfeld - Chief Financial Officer and Corporate Secretary

Conference Call Participants

Tim Clarkson - Van Clemens

Gus Richard - Northland Securities

Operator

Good day and thank you for standing by. Welcome to the Northern Technologies Second Quarter 2022 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

As part of the discussion today, the representatives from NTIC will be making certain forward-looking statements regarding the NTIC’s future financial and operating results, as well as their business plans, objectives and expectations. Please be advised that these forward-looking statements are covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 and that NTIC desires to avail itself of the protections of the Safe Harbor for these statements.

Please be advised that the actual results could differ materially from those stated or implied by the forward-looking statements due to certain risks and uncertainties, including those described in NTIC’s most recent annual report on Form 10-K, subsequent quarterly reports on Form 10-Q and recent press releases. Please read the 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 turn the call over to Mr. Patrick Lynch. Sir, you may begin.

Patrick Lynch

Thank you. Good morning. I am Patrick Lynch, NTIC’s CEO and I'm here with Matt Wolsfeld, NTIC’s CFO. Please note that a press release regarding our second quarter fiscal 2022 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 financial -- of our fiscal 2022 second quarter financial results, provide a brief business update and then conclude with a question-and-answer session. Strong demand across our product categories and many of our global markets contributed to strong sales results in the fiscal 2022 second quarter. In fact, total net sales increased 13.6% when excluding incremental sales as a result of our recent acquisition of ZERUST India.

The robust year-over-year expansion in consolidated net sales was primarily a result of sales growth across all of the company's product categories, due to higher global demand and the recovery from the COVID-19 pandemic, as well as the contribution from ZERUST India. As anticipated, we continue to encounter significant inflation, which has increased the cost of our raw materials and labor, as well as intense friction across our global supply chain, resulting from the impact of the continuing COVID-19 pandemic. This inflation reduced the gross margin and operating profit of not only NTIC, but also our joint ventures as well throughout the first half of the fiscal year.