Q3 2025 Northern Technologies International Corp Earnings Call
All participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising that your hand is raised to withdraw your question. Please press star one again, please be advised that todays call.
If being recorded as part of the discussion today. The representatives from NTIC will be making certain forward looking statements regarding 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 also 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 and Ann.
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.
Speaker Change: NTIC disclaims any duty to update or revise its forward looking statements I would now like to hand, the call conference call over to your Speaker today Patrick Lynch. Please go ahead.
Patrick Lynch: Good morning, I'm, Patrick Lynch, Ntic's, CEO and I'm.
Speaker Change: I'm here with Matt Wolsfeld Ntic's CFO.
Speaker Change: Please note that the press release regarding our third quarter of fiscal 2025 financial results was issued earlier this morning.
Speaker Change: Is available at NTIC Dot com.
Speaker Change: During today's call, we will review various key aspects of our third quarter fiscal 2025 financial results provide.
Speaker Change: Provide a brief business update and then conclude with a question and answer session.
Speaker Change: Please note that when we discuss the year over year performance, we are referring to the third quarter of our fiscal 2025 in comparison to the third quarter of last fiscal year.
Speaker Change: For the third quarter of fiscal 2025, we delivered both sequential and year over year growth in consolidated net sales, reflecting strength across many aspects of our business despite ongoing global economic uncertainty.
Speaker Change: This performance underscores the dedication of our team and our continued focus on supporting existing customers expanding global relationships and scaling in high growth markets.
Speaker Change: Okay.
Speaker Change: Gross margin was a particular highlight in the quarter, reaching 38, 4% an increase on both a sequential and year over year basis, which reflects the differentiated value we provide our global customer base.
Speaker Change: At the same time macroeconomic pressures, especially in Europe continued to weigh on the profitability of many of our joint ventures.
Speaker Change: Additionally, as part of our long term growth strategy, we continue to make planned investments in our oil and gas business, which contributed to higher operating expenses.
Speaker Change: While macroeconomic pressures and higher operating expenses have impacted third quarter and year to date profitability. We expect improvements in the fourth quarter and continued to progress in fiscal 2026.
Speaker Change: So with this overview, let's examine the drivers for the third quarter in more detail.
Speaker Change: For the third quarter ended May 31, 2025.
Speaker Change: Our total consolidated net sales increased 4.0% to $21 5 million as compared to the third quarter ended May 31 2024.
Speaker Change: Broken down by business unit. This included a seven 1% increase in zero industrials net sales.
Speaker Change: Partially offset by a five 3% decrease in oil and gas net sales and a one 2% decrease in nature Tech net sales.
Speaker Change: Turning to our joint venture sales, which we do not consolidate in our financial statements.
Speaker Change: Total net sales for the fiscal 'twenty 'twenty five third quarter by our joint ventures decreased year over year by 12, 9% to $2 $3 million.
Speaker Change: We believe the third quarter year over year decline in joint venture sales reflects the continued impact of high energy prices and regional economic pressures in the European economy as.
Speaker Change: As well as increased uncertainty related to U S trade and economic policies and the potential impact this will have on global supply chains.
Speaker Change: We are closely monitoring trends across our European markets for signs of stabilization following years of subdued demand.
Speaker Change: As governments begin to implement targeted economic stimulus packages.
Speaker Change: We expect to any economic recovery. These stimulus packages may lead to especially in Germany to have a positive impact on our joint venture operating income in future periods.
Speaker Change: Improving sales trends at our wholly owned NTIC, China subsidiary continue.
Speaker Change: 2025 third quarter net sales at NTIC, China increased by 27, 4% to $4 $5 million. The second highest quarterly revenue and TLC has achieved since we transitioned to a wholly owned subsidiary in fiscal 2015.
Speaker Change: Recent NTIC, China sales demonstrate growing demand in this geography.
Speaker Change: The majority of current NTIC, China sales are for domestic Chinese consumption and therefore, we believe NTIC chinas exposure to U S tariffs is limited.
Speaker Change: We expect demand in China will continue to improve in fiscal 2025, helping to support higher incremental sales and profitability in this market.
Speaker Change: In addition, we are committed to the long term opportunities the Chinese market provides our industrial and Bioplastics segments, and we continue to take steps to enhance our operations in this geography.
Speaker Change: As a result, we continue to believe China will likely become a significant geographic market for us in the future.
Speaker Change: Now moving onto zeros oil and gas serious oil and gas sales were $1.3 million compared to $1 4 million in the same period last year.
Speaker Change: Seasonality and the timing of orders can impact quarterly comparisons, which is why we encourage investors to look at zero to oil and gas sales on a trailing 12 month basis.
Speaker Change: Serious oil and gas sales were $8 $6 million for the trailing 12 month period ended May 31 2025.
Speaker Change: A 15.4% increase from $7 $4 million for the trailing 12 month period ended May 31 2024.
Speaker Change: As we continue to invest in building, our zeros to oil and gas sales team and other resources to support future growth the size and number of opportunities continue to expand among both new and existing customers, which today still focus primarily on protecting the above ground oil storage tanks and pipeline.
Speaker Change: Casings from corrosion.
Speaker Change: The nature of this industry will always caused certain fluctuations in oil and gas sales.
Speaker Change: Nevertheless, we still expect to see serious oil and gas sales and profitability to improve sequentially in the fourth quarter of fiscal 2025 and improved significantly next fiscal year as we leverage these investments and rain and operating expense growth.
Colin Webb: Colin Webb. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again.
And press pound when finished.
Speaker Change: Turning to our niche there bioplastics business.
Speaker Change: <unk> sales were $5 $8 million, representing a 1.2% year over year decline in nature Tech sales.
Always caused certain fluctuations in engineers to oil and gas sales. Nevertheless, we still expect to see <unk>.
Speaker Change: As expected <unk> sales rebounded sequentially and increased 16, 5% over the fiscal 2025 second quarter.
Operator: Please be advised that today's conference is being recorded. As part of the discussion today, the representative from NTIC will be making certain forward-looking statements regarding 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 also be advised that the actual results could from those stated or implied by the forward-looking statements due to certain risks and uncertainty.
Oil and gas sales and profitability to improve sequentially in the fourth quarter of fiscal 2025 and improve significantly next fiscal year as we leveraged these investments and rain and operating expense growth.
Speaker Change: While we continue to monitor the near term impact tariffs may have on our <unk> sales.
Speaker Change: The long term market opportunities remains strong in addition, U S organic diversion mandates and waste management rules are created at the local municipalities and state levels.
Turning to our niche take Bioplastics business.
<unk> sales were $5.8 million, representing a 1.2% year over year decline in nature take sales.
We do not expect changes in U S federal priorities to impact local U S demand for our compostable solutions.
Has expected nature tech sales rebounded sequentially and increased 16.5% over the fiscal 'twenty 'twenty five second quarter.
Speaker Change: We are also working on several larger opportunities for our <unk> solutions that we believe holds significant promise to significantly benefit our sales in the coming quarters.
Operator: including those described in NTIC's most recent and 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. NCIC disclaims any duty to update or revise its forward-looking statements.
While we continue to monitor the near term impact tariffs may have on our nature Tech sales.
The long term market opportunities remains strong in addition, U S organic diversion mandates and waste management rules are created at the local municipality and state levels.
Speaker Change: While fiscal 2025 has been more challenging than we expected at the beginning of the fiscal year, we remain steadfast on pursuing a profit focused multi year strategic growth plan.
Colin Webb: I would now like to hand the conference call over to your speaker today, Patrick Lynch. Please go ahead.
We do not expect changes in U S federal priorities to impact Global U S demand for our compostable solutions.
Speaker Change: We are confident in the direction we are headed.
Matt Wolsfeld: 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.
We are also working on several larger opportunities for our niche Tech solutions that we believe holds significant promise to significantly benefit our sales in the coming quarters.
Patrick Lynch: Good morning, I'm Patrick Lynch, NTSC's CEO, and I'm here with Matt Wolsfeld, NTSC's CFO. Please note that a press release regarding our third quarter fiscal 2025 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 third quarter fiscal 2025 financial results. Provided brief business updates and then conclude with the question and answer session. Please note that when we discuss year-over-year performance, we are referring to the third quarter of our fiscal 2025 in comparison to the third quarter of last fiscal year. For the third quarter of fiscal 2025, we delivered both sequential and year-over-year growth in consolidated net sales, reflecting strength across many aspects of our business, despite ongoing global economic uncertainty.
Matt Wolsfeld: Our success and our ability to navigate more complex economic periods are a direct result of their efforts.
While fiscal 2025 has been more challenging than we expected at the beginning of the fiscal year, we remain steadfast on pursuing a profit focused multi year strategic growth plan.
Matt Wolsfeld: With this overview, let me now turn the call over to Matt Wolsfeld to summarize our financial results for the fiscal 2025 third quarter.
Matt Wolsfeld: Thanks, Patrick compared to the prior fiscal year period, Ntic's consolidated net sales increased 4% in the third quarter of fiscal 2025 to $21 5 million because of the trends Patrick.
We are confident in the direction we are headed.
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.
Matt Wolsfeld: Viewed in his prepared remarks sales across our global joint ventures decreased nine 3% in the third quarter joint venture operating income decreased 12, 9% compared to the prior fiscal year period, primarily due to a decrease in equity income from joint ventures, which was primarily driven by lower sales had most event.
Our success and our ability to navigate more complex economic periods are a direct result of their efforts.
Speaker Change: With this overview, let me now turn the call over to Matt Wolsfeld to summarize our financial results for the fiscal 'twenty 'twenty five third quarter.
Matt Wolsfeld: Thanks, Patrick compared to the prior fiscal year period, Ntic's consolidated net sales increased 4% in the third quarter of fiscal 2020 five to 'twenty 1.5 million because of the trends Patrick.
Matt Wolsfeld: Here's these joint ventures total operating expenses for fiscal 2025 third quarter increased seven 6% compared to the prior fiscal year period to $9 $7 million, primarily due to increased personnel costs and strategic investments, we're making to support expected growth in the second half of the year within our oil and gas.
Patrick Lynch: This performance underscores the dedication of our team and our continued focus on supporting existing customers, expanding global relationships, and scaling in high-growth e-markets. Gross margin was a particular highlight in the quarter, reaching 38.4%, an increase on both a sequential and year-over-year basis, which reflects the differentiated value we provide our global customer base. At the same time, macroeconomic pressures, especially in Europe, continue to weigh on the profitability of many of our joint ventures. Additionally, as part of our long-term growth strategy, we continue to make planned investments in our oil and gas business, which contributed to higher operating expenses.
Matt Wolsfeld: Viewed his prepared remarks sales across our global joint ventures decreased 9.3% in the third quarter joint venture operating income decreased 12, 9% comparative prior fiscal year period, primarily due to a decrease in equity income from joint ventures, which was primarily driven by lower sales had most event.
Matt Wolsfeld: S business as.
Matt Wolsfeld: As a percentage of net sales operating expenses were 44, 9% for the third quarter compared to 43, 4% for the prior fiscal year period.
Matt Wolsfeld: Gross profit as a percentage of net sales was 38, 4%. During the three months ended May 31, 2025, compared to 38, 2% during the prior fiscal year period.
Hissies joint ventures total operating expenses for fiscal 2025 third quarter increased seven 6% compared to the prior fiscal year period to $9.7 million, primarily due to increased personnel costs and strategic investments, we're making to support expected growth in the second half of the year within our oil and gas.
Matt Wolsfeld: The 20 basis point increase was primarily the result of a more profitable mix of sales and our ongoing efforts to improve gross margin.
Patrick Lynch: While macroeconomic pressures and higher operating expenses have impacted third quarter and year-to-date profitability, we expect improvements in the fourth quarter and continued progress in fiscal 2026.
Matt Wolsfeld: NTIC reported net income of $122000 or one cents per diluted share for the fiscal 2025 third quarter compared to $977000 or 10 cents per diluted share for the fiscal 2024 third quarter.
Matt Wolsfeld: <unk> business is.
Matt Wolsfeld: As a percentage of net sales operating expenses were 44, 9% for the third quarter compared to 43.4% for the prior fiscal year period.
Matt Wolsfeld: Gross profit as a percentage of net sales was 38.4% during the three months ended May 31, 2025, compared to 38, 2% during the prior fiscal year period.
Patrick Lynch: So with this overview, let's examine the drivers for the third quarter in more detail. For the third quarter and at May 31st 2025, our total consolidated net sales increased 4.0% to $21.5 million as compared to the third quarter and at May 31st 2024. Broken down by business unit, this included a 7.1% increase in Xerus Industrials net sales. partially offset by a 5.3% decrease in zero oil and gas net sales and a 1.2% decrease in nature tech net sales.
Matt Wolsfeld: For the fiscal 2025 third quarter Ntic's non-GAAP adjusted net income was $228000 or <unk> <unk> per diluted share compared to the non-GAAP adjusted income of $1 1 million or 11 cents per diluted share for the fiscal 2020 for third quarter.
Matt Wolsfeld: The 20 basis point increase was primarily the result of a more profitable mix of sales and our ongoing efforts to improve gross margin.
Matt Wolsfeld: NTIC reported net income of $122000 or one cent per diluted share for the fiscal 'twenty twenty-five third quarter compared to $977000 or 10 cents per diluted share for the fiscal 2024 third quarter.
Matt Wolsfeld: A reconciliation of GAAP to non-GAAP financial measures is available in our third quarter fiscal year 2025 earnings press release issued this morning.
Matt Wolsfeld: As of May 31, 2025, working capital is $21 $7 million, including $6 8 million in cash and cash equivalents compared to $23 $7 million, including $5 million in cash and cash equivalents as of August 31 2024 as.
Matt Wolsfeld: For the fiscal 2000, and twenty-five third quarter Ntic's non-GAAP adjusted net income was $228000 or two cents per diluted share compared to the non-GAAP adjusted income of $1 $1 million or 11 cents per diluted share for the fiscal 2024 third quarter.
Patrick Lynch: Turning to our joint venture sales, which we do not consolidate in our financial statements. Total net sales for the fiscal 2025 third quarter by our joint ventures decreased year over year by 12.9% to $2.3 million. We believe the third quarter year-over-year decline in joint venture sales reflects the continued impacts of high energy prices and regional economic pressures in the European economy, as well as increased uncertainty related to U.S. trade and economic policies and the potential impacts this will have on global supply chains. We are closely monitoring trends across our European markets for signs of stabilization following years of subdued demand as governments begin to implement targeted economic stimulus packages.
Matt Wolsfeld: As of May 31, 2025, we had outstanding debt of $10 $1 million. This included $7 $4 million in borrowings under our existing revolving line of credit compared to $4 $3 million as of August 31 2024. Despite.
Matt Wolsfeld: A reconciliation of GAAP to non-GAAP financial measures is available in our third quarter fiscal year 2000, and twenty-five earnings press release that was issued this morning.
Matt Wolsfeld: Despite the recent increase in our revolving line of credit from 8 million to $10 million to allow for future flexibility reducing debt through positive operating cash flow and improving working capital efficiencies will be a strategic focus for the remainder of fiscal 2025 and in the fiscal 2026.
Matt Wolsfeld: As of May 31, 2025, working capital is $21 $7 million, including $6 8 million in cash and cash equivalents compared to $23.7 million, including $5 million in cash and cash equivalents as of August 31 2024.
Matt Wolsfeld: As of May 31, 2025, we had outstanding debt of $10.1 million. This included $7.4 million in borrowings under our existing revolving line of credit compared to $4.3 million as of August 31, 2024. Despite the recent increase in our revolving line of credit from 8 million to 10 million.
Matt Wolsfeld: We generated $3 $8 million in operating cash flow for the nine months ended May 31, 2025 at quarter end. The company had $27 $1 billion of investments in joint ventures of which 49, 7% or $13 $5 million was in cash with the remaining balance primarily invested in other working capital.
Patrick Lynch: We expect any economic recovery these stimulus packages may lead to, especially in Germany, to have a positive impact on our joint venture operating income in future periods.
Matt Wolsfeld: To allow for future flexibility, reducing debt through positive operating cash flow and improving working capital efficiencies will be a strategic focus for the remainder of fiscal 2025 and in the fiscal 2026.
Matt Wolsfeld: During the fiscal 2025 third quarter Ntic's Board of directors declared a quarterly cash dividend of <unk> <unk> per common share that was payable on may 14th 2025 to stockholders of record on April 32025 recall, we temporarily adjusted our quarterly dividend to <unk> per share as a part of our disciplined approach to managing our cash and NAV.
Patrick Lynch: Improving sales trends at our wholly owned NTSC China subsidiary continue. Fiscal 2025 third quarter net sales at NTSC China increased by 27.4% to $4.5 million, the second highest quarterly revenue NTSC has achieved since we transitioned to a wholly-owned subsidiary in fiscal 2015. Recent NTIC China sales demonstrate growing demand in this geography. The majority of current NTSC China sales are for domestic Chinese consumption, and therefore we believe NTSC China's exposure to U.S. tariffs is limited. We expect demand in China will continue to improve in fiscal 2025, helping to support higher incremental sales and profitability in this market.
Matt Wolsfeld: We generated $3.8 million in operating cash flow for the nine months ended May 31, 2025 at quarter end the company had $27 $1 million of investments in joint ventures.
Matt Wolsfeld: We're getting through this dynamic global environment.
Patrick Lynch: To conclude our prepared remarks, we remain committed to our long term growth opportunities. We are confident that our strategic priorities and financial discipline will drive sustainable growth improving profitability and value for our shareholders with this overview, Patrick and I are happy to take your questions.
Matt Wolsfeld: Of which 49.7% or $13 $5 million was in cash with the remaining balance primarily invested in other working capital.
Matt Wolsfeld: During the fiscal 'twenty twenty-five third quarter Ntic's Board of directors declared a quarterly cash dividend of one cent per common share that was payable on may 14th 2025 to stockholders of record on April 30th 2025 recall, we temporarily adjusted our quarterly dividend to one cents per share as a part of our disciplined approach to managing our cash and NAV.
Patrick Lynch: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again please stand.
Patrick Lynch: Standby, while we compile our Q&A roster.
Matt Wolsfeld: We're getting through this dynamic global environment.
Matt Wolsfeld: To conclude our prepared remarks, we remain committed to our long term growth opportunities, we're confident that our strategic priorities and financial discipline will drive sustainable growth improving profitability and value for our shareholders with this overview, Patrick and I are happy to take your questions.
Patrick Lynch: Okay.
Patrick Lynch: In addition, we are committed to the long-term opportunities the Chinese market provides, our industrial and bioplastic segments, and we continue to take steps to enhance our operations in this geography. As a result, we continue to believe China will likely become a significant geographic market for us in the future.
Patrick Lynch: And one moment for our first question.
Patrick Lynch: Our first question will be coming.
Speaker Change: From Tim Clarkson with Van Clemens Your line is open.
Speaker Change: Hey, guys are improved quarter.
Speaker Change: It's sometimes hard to tell with when you focus just on net earnings what I was looking at.
Matt Wolsfeld: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again please.
Patrick Lynch: Now, moving on to zero-soil and gas. Zero-soil and gas sales were $1.3 million compared to $1.4 million in the same period last year. This seasonality and the timing of orders can impact quarterly comparisons, which is why we encourage investors to look at zero-to-one gas sales on a trailing 12-month basis.
Speaker Change: The pretax are operational.
Speaker Change: <unk> from the previous quarter versus this and there is a significant improvement from second quarter obviously.
Matt Wolsfeld: Standby, while we compile our Q&A roster.
Matt Wolsfeld: Okay.
Speaker Change: Yes.
Matt Wolsfeld: And one moment for our first question.
Speaker Change: It certainly was better than that I think we're trending now.
Matt Wolsfeld: Our first question will be coming.
Speaker Change: And in the right direction, I mean looking across kind of all the different business units.
Speaker Change: From Tim Clarkson with Van Clemens Your line is open.
Patrick Lynch: Serious oil and gas sales were $8.6 million for the trailing 12-month period ended May 31, 2025. A 15.4% increase from $7.4 million for the trailing 12-month period ended May 31, 2024. As we continue to invest in building our zero-waste oil and gas sales team and other resources to support future growth, the size and number of opportunities continue to expand among both new and existing customers, which today still focus primarily on protecting above ground oil storage tanks and pipeline casings from corrosion. The nature of this industry will always cause certain fluctuations in the zeroest oil and gas sales.
Speaker Change: Just about every business unit took a step forward going from Q2 to Q3.
Speaker Change: Hey, guys saw improved quarter.
Speaker Change: It's sometimes hard to tell with when you focus just on net earnings what I was looking at you know the pretax are operational.
Speaker Change: But hey, so just on a big picture basis. When you look at this oil and gas thing.
Speaker Change:
Speaker Change: Profits from the previous quarter versus this and you know theres a significant improvement from second quarter obviously.
Speaker Change: When you're trying to get one of these guys to switch from the older technologies to your newer technology now on the front end and assure technology cheaper on the front end.
Speaker Change: Yeah, No I'd say, it certainly was better than necessarily think word trending now in haven headed.
Speaker Change:
Speaker Change: Compared to.
Speaker Change: And in the right direction, I mean looking across kind of all the different business units.
Speaker Change: Messages Yep Yep.
Speaker Change: Just about every business unit took a step forward going from Q2 to Q3.
Speaker Change: But hey, so just on a big picture basis. When you look at this oil and gas thing.
Speaker Change: The electrolysis stuff.
Patrick Lynch: Nevertheless, we still expect to see zeroest oil and gas sales and profitability to improve sequentially in the fourth quarter of fiscal 2025 and improve significantly next fiscal year as we leverage these investments and rein in operating expense growth.
Speaker Change: Oh, I'm, sorry, I didn't understand what you are saying.
Speaker Change: When you're trying to get one of these guys to switch from the older technologies to your newer technology now on the front end is your technology cheaper on the front end.
Speaker Change: Yeah, So I mean, if it let's.
Speaker Change: Let's say that your customer.
Speaker Change: Customer and you're looking to switch.
From the older technology, which uses the you know the.
Speaker Change: The electricity deal.
Patrick Lynch: Turning to our NatureTech Bioplastics business. NatureTech sales were $5.8 million, representing a 1.2% year-over-year decline in NatureTech sales. As expected, NatureTech sales rebounded sequentially and increased 16.5% over the fiscal 2025 second quarter. While we continue to monitor the near-term impact tariffs may have on our nature tech sales The long-term market opportunities remain strong.
Speaker Change: Yeah, Yeah, yeah, and Youre going to switch to this new technology.
Speaker Change: Compared to.
Speaker Change: Methods, yes, Yep Yep.
Speaker Change: Just on the front end as it is it cheaper and more expensive or about the same on the on the front end when youre trying to treat the tanks.
Speaker Change: The electrolysis stuff.
Speaker Change: But these are installation.
Speaker Change: It's much easier installation.
Speaker Change: Oh, I'm, sorry, I didn't understand what you are saying.
Speaker Change: Basically.
Speaker Change: You're spending a lot less money is getting protection.
Speaker Change: Yeah, So I mean, if it let's say that you're on the call.
Speaker Change: Customer and you're looking to switch.
Speaker Change: Arthur works better for a longer period of time sure I mean, there's no question about the long term, but you're dealing with.
Speaker Change: From the older technology, which uses the you know the electricity deal.
Speaker Change: Humans have a tenants the tendency to be kind of in Sac like and you know if the benefits are in 10 years for all these people and all of that system and eternity, but at least on the front end, it's easier and you save money.
Speaker Change: Yeah, Yeah, and you're going to switch to this new technology I mean, I'll just on the front end as it is it cheaper more expense over or about the same on the on the front end when you're trying to treat the tanks, it's much easier installation.
Patrick Lynch: In addition, U.S. organic diversion mandates and waste management rules are created at the local, municipality, and state level. We do not expect changes in U.S. federal priorities to impact local U.S. demand for our compostable solution. We are also working on several larger opportunities for our nature tech solutions that we believe hold significant promise to significantly benefit our sales in the coming quarter.
Speaker Change: That's a benefit immediately that they can.
Speaker Change: Insulation and.
Speaker Change: Justify the switch and then of course the longer term benefits are way more significant but that but that's important now.
Speaker Change: And it is much easier installation.
Speaker Change: Basically.
Speaker Change: You're spending a lot less money getting protection earthworks.
Speaker Change: Whats the.
Speaker Change: Arthur works better for a longer period of time, Oh sure I mean, Theres all question about the long term, but you're dealing with.
Speaker Change: Joe on a quarter to quarter basis, what's the additional spending that youre doing on sales this year versus last year, what's what's the additional amount of money you guys are studying per quarter on.
Patrick Lynch: While Fiscal 2025 has been more challenging than we expected at the beginning of the fiscal year, we remain steadfast on pursuing a profit-focused, multi-year strategic growth plan. We are confident in the direction we are headed.
Speaker Change: Humans have a tenants the tendency to be kind of in Sac like and you know if the benefits are in 10 years for all these people and all of that system and eternity, but at least if on the front end, it's easier and you save money.
Speaker Change: On the sales effort for the for the oil and gas.
Speaker Change: Primarily about personnel really in terms of that.
Speaker Change: That's a benefit immediately that they can.
Speaker Change: Yes.
Patrick Lynch: 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 effort.
Speaker Change: There are regions around the world.
Speaker Change: Justify the switch and then of course, you know the longer term benefits are way more significant but that but that's important now.
Speaker Change: We experienced in the oil and gas industry and the kinds of areas that we like.
Speaker Change: And that should basically be our customer.
Speaker Change: Oregon.
Speaker Change: Faster.
What's the.
Speaker Change: In general on a quarter to quarter basis, what's the additional spending that youre doing on sales this year versus last year, what's what's the additional amount of money you guys are studying per quarter on.
Speaker Change: Right, but what would be the what would be the total incremental cost of that where we're paying upfront the investments, we're making right now.
Matthew Wolsfeld: With this overview, let me now turn the call over to Matt Wolsfeld to summarize our financial results for the fiscal 2025 third quarter. Thanks, Patrick. Compared to the prior fiscal year period, NTIC's consolidated net sales increased 4% in the third quarter of fiscal 2025 to $21.5 million because of the trends Patrick reviewed in his prepared remarks. Sales across our global joint ventures decreased 9.3% in the third quarter. Joint venture operating income decreased 12.9% compared to the prior fiscal year period, primarily due to a decrease in equity income from joint ventures, which was primarily driven by lower sales at most of NTIC's joint ventures.
Speaker Change: Per quarter versus what were doing a year ago before we started making this big.
Speaker Change: On the sales effort for the old for the oil and gas.
Speaker Change: Our rollout with the sales expense.
Speaker Change: If you look at it if you look back to like.
Speaker Change: Talking primarily about personnel really embarrassed.
Speaker Change: Our fiscal 'twenty three fiscal 'twenty, four from an oil and gas standpoint in.
Speaker Change: Yeah regions around the world.
Speaker Change: Have you experienced any oil and gas industry and the kinds of areas that we like.
Speaker Change: In North America, we averaged about $4 million.
Speaker Change: And that should basically my immersion.
Speaker Change: In the current year, we're projected to spend about five three so we've got about $1 $3 million of additional investment in personnel that we've done over the past.
Speaker Change: Immersion.
Speaker Change: Faster.
Speaker Change: Right, but what would be the what would be the total incremental cost of that where we're paying upfront the investments, we're making right now.
Speaker Change: 12 plus months.
Speaker Change: So, but that's the one where at $1.3 million that's over a 12 month period not over a quarterly period correct.
Speaker Change: Per quarter versus what we're doing you know a year ago before we started making this big.
Speaker Change: Ill rollout with the sales expense.
Speaker Change: So it would be three or 400000, maybe per per quarter as the additional expenses on the oil and gas.
Speaker Change: If you look at it if you look back to like.
Matthew Wolsfeld: Total operating expenses for fiscal 2025 third quarter increased 7.6% compared to the prior fiscal year period to $9.7 million, primarily due to increased personnel cost and strategic investments we're making to support expected growth in the second half of the year within our oil and gas business. As a percentage of net sales, operating expenses were 44.9% for the third quarter, compared to 43.4% for the prior fiscal year period. Gross profit as a percentage of net sales was 38.4 percent during the three months ended May 31, 2025, compared to 38.2 percent during the prior fiscal year period.
Speaker Change: Our fiscal 'twenty three fiscal 'twenty, four from an oil and gas standpoint.
Speaker Change: Right right and then of course the other issue is there is a.
Speaker Change: In North America, we averaged about $4 million.
Speaker Change: It's a business that's copies sold that you.
Speaker Change: In the current year, we're projected to spend about five three so we've got about $1 $3 million of additional investment in personnel that we've done over the past.
Speaker Change: You'll get you'll see a lot of the results from one quarter versus another quarter.
Speaker Change: I think you'll certainly see a step up in revenue kind of gone from Q3 to Q4 as well from an oil and gas standpoint, given given kind of where we are in the quarter, so far and expectations of backlogs and things like that certainly we would expect Q4 to be stronger than Q3 from an oil and gas standpoint.
Speaker Change: 12 plus months.
Speaker Change: So, but that's the one where at $1.3 million that's over a 12 month period not over a quarterly period correct right. So it would be three or 400000, maybe per per quarter as the additional expenses on the oil and gas yes right.
Right now switching to China that was a strong quarter for those guys I mean is China and all profitable.
Speaker Change: Right right and then of course the other issue is there's a.
Speaker Change: It's a business that's coffee so that you all you you'll get you'll see a lot of the results on one quarter versus another quarter.
Matthew Wolsfeld: The 20 basis point increase was primarily a result of a more profitable mix of sales and our ongoing efforts to improve gross margin.
Speaker Change: China, China, China is profitable in China has been profitable for some time.
Speaker Change: What's nice is that we're seeing.
Speaker Change: Yeah, and I think I think you'll certainly see a step up in revenue kind of gone from Q3 to Q4 as well from an oil and gas standpoint, given given kind of where we are in the quarter, so far and expectations of backlogs and things like that certainly we would expect Q4 to be stronger than Q3 from an oil and gas standpoint.
Matthew Wolsfeld: NTSC reported net income of $122,000, or 1 cent per diluted share, for the fiscal 2025 third quarter, compared to $977,000, or 10 cents per diluted share, for the fiscal 2024 third quarter. For the fiscal 2025 third quarter, NTSC's non-GAAP-adjusted net income was $228,000, or $0.02 per diluted share, compared to the non-GAAP-adjusted income of $1.1 million, or $0.11 per diluted share, for the fiscal 2024 third quarter. A reconciliation of GAAP to non-GAAP financial measures is available in our third quarter fiscal year 2025 earnings press release that was issued this morning. As of May 31st, 2025, working capital is $21.7 million, including $6.8 million in cash and cash equivalents, compared to $23.7 million, including $5 million in cash and cash equivalents as of August 31st, 2024.
Speaker Change: China as a standalone I look back over the past.
Speaker Change: Three years.
Speaker Change: It certainly is a nice trend line from a revenue standpoint, I mean, if I look back to kind of the lows that we saw.
Speaker Change: Coming out of Covid in our fiscal 'twenty, three first quarter second quarter third quarter, where we're at where we're at like $262 8 million in revenue per quarter now putting forth the quarter of $4 2 million show a significant growth in that in that region.
Speaker Change: Now switching to China that was a strong quarter for those guys I mean, it is China and all profitable.
Speaker Change: China, China, China is profitable in China has been profitable or or some time with nice is that we're seeing.
Speaker Change: So it is profitable it is contributing.
Speaker Change: China as a standalone I look back over the past.
Speaker Change: And it looks like what the Chinese are doing from a.
Speaker Change: Three years.
Speaker Change: It certainly is a nice trend line from a revenue standpoint, I mean, if I look back to kind of the lows that we saw.
Speaker Change: Stimulating their economy standpoint that we are.
Speaker Change: Yes.
Speaker Change: Kind of coming out of Covid in our fiscal 'twenty, three first quarter second quarter third quarter, where we're at where we were at like two $6 million to $8 million in revenue per quarter now putting in fourth quarter of $4 2 million show significant growth in that in that region.
Speaker Change: Also increasing our revenue and accordingly is to remember right.
Speaker Change: Domestic consumption in China.
Speaker Change: Right right now the electric cars, I mean, do they still need that because some of the.
Matthew Wolsfeld: As of May 31st, 2025, we had outstanding debt of $10.1 million. This included $7.4 million in borrowings under our existing revolving line of credit, compared to $4.3 million as of August 31st, 2024. Despite the recent increase in our evolving line of credit from $8 million to $10 million to allow for future flexibility, reducing debt through positive operating cash flow and improving working capital efficiencies will be a strategic focus for the remainder of fiscal 2025 and into fiscal 2026. We generated $3.8 million in operating cash flow for the nine months ended May 31st, 2025. At quarter end, the company had $27.1 million of investments in joint ventures, of which 49.7% or $13.5 million was in cash, with the remaining balance primarily invested in other working capital.
Technology, you have to prevent rust and corrosion yes.
Speaker Change: So it is profitable it is contributing.
Speaker Change: In the traditional.
Speaker Change: No question.
Speaker Change: And it looks like what the Chinese are doing from a.
Speaker Change: Yeah, Ross, but they're they're they're they're making a hell of a lot of electric cars. So the FERC permit is less but doesn't make a whole lot of cars, you're going to use a lot more material obviously.
Speaker Change: Stimulating their economy standpoint that we are.
Speaker Change: Just kind of.
Speaker Change: Also increasing our revenue and accordingly is to remember right.
Speaker Change: Yeah, Okay. Okay. One last question on the on the on the compulsory <unk> stuff.
Speaker Change: Domestic consumption in China.
Speaker Change: Right right now the electric cars I mean, do they still need to look at some of the Oh technology, you have to prevent rust and corrosion yes.
Speaker Change: Is that what what's new there or is it as business pretty much as usual are there any.
Speaker Change: Exciting areas new areas Youre seeing on the <unk> side.
Speaker Change: One project were working on.
Speaker Change: And then the traditional.
Speaker Change: Too early to talk about revenues.
Speaker Change: No question.
Speaker Change: But I mean, historically lendings problems, you had with the convertible back and use the water vapor transmission rate is pretty high.
Yeah laughs, but they're they're they're they're making a hell of a lot of electric cars, so well appropriate.
Speaker Change: Yeah, there's less but didn't make a whole lot of ours, you're going to use a lot more material obviously.
Speaker Change: Pre permeable, there's limits to what the investment bank.
Matthew Wolsfeld: During the fiscal 2025 third quarter, NTSC's Board of Directors declared a quarterly cash dividend of $0.01 per common share that was payable on May 14th, 2025 to stockholders of record on April 30th, 2025. Recall, we temporarily adjusted our quarterly dividend to $0.01 per share as a part of our disciplined approach to managing our cash and navigating through this dynamic global environment.
Speaker Change: Yep Yep, Okay, well, good I'm glad I'm Oh, one last question on the on the on the compulsive old stuff.
Speaker Change: Cases I'll.
Speaker Change: I will say that we at least in the laboratory of manage too.
Speaker Change: Fix that problem.
Speaker Change: Is that what what's new there as it is business pretty much as usual are there any.
Speaker Change: There is a possibility of scaling that up and and roofing applications in food packaging with Hawaii.
Speaker Change: An exciting area and our new areas you are seeing on the compostable side.
Speaker Change: We're right now looking to do some.
Speaker Change: One project were working on with little too early to talk about revenues.
Speaker Change: Assume start some scale up production in that area.
Speaker Change: But I mean, historically lendings problems you had with the convertible back and use the water vapor transmission rate is pretty high I mean plasma free permeable, there's limits to what you imagined back then.
Matthew Wolsfeld: To conclude our prepared remarks, we remain committed to our long-term growth opportunities. We are confident that our strategic priorities and financial discipline will drive sustainable growth, improving profitability, and value for our shareholders.
Speaker Change: We probably will see revenues all works out in the next.
Speaker Change: Two years ago.
John: Great. Okay. Thanks, John Thank you.
Speaker Change: Cases I'll.
Speaker Change: I will say that we at least in the laboratory of manage too.
Speaker Change: Yes.
Colin Webb: With this overview, Patrick and I are happy to take your questions. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Standby while we compile our Q&A roster. And one moment for our first question.
Speaker Change: And one moment for our next question.
Speaker Change: Fixed that problem.
Speaker Change: Our next question will be coming from Gus Richard of Northland Capital markets. Your line is open.
Speaker Change: There is a possibility of scaling that oven and roofing applications in food banking with Hawaii.
Gus Richard: Hey, good morning.
Gus Richard: Had a couple of questions I just wanted to walk through the strength in the gross margin when I look at it on a sequential basis.
Speaker Change: We're right now looking to do some.
Speaker Change: Soon start some scale up production is up in that area and we probably will see revenues if it all works out and then the next.
Gus Richard: Mix really doesn't imply gross margin should be up as much year on year.
Gus Richard: It's right in the right ballpark and I'm just wondering what's just Q2 week gross margin quarter or what would the drivers sequentially and the improvement.
Speaker Change: Two years ago.
Timothy Clarkson: Our first question will be coming From Tim Clarkson of Van Clements, your line is open. Hey guys, improved quarter. You know, it's sometimes hard to tell with when your focus is on net earnings. So I was looking at, you know, the pre tax operational profits from the previous quarter versus this. And, you know, there's a significant improvement from second quarter, obviously. Yeah, no, it certainly was better. And I certainly think we're trending now and headed in the right direction. I mean, looking across kind of all the different business units, just about every business unit took a step forward going from Q2 to Q3.
Speaker Change: Great. Okay. Thanks, I'm done thank you.
Speaker Change: Yes.
Speaker Change: Inland moment for our next question.
Gus Richard: Yes, I think I think you certainly saw Q2 has been a weak quarter I.
Speaker Change: Our next question will be coming from Gus Richard of Northland Capital markets. Your line is open.
Gus Richard: I think you also see kind of a continued.
Speaker Change: Hey, good morning.
Speaker Change: A couple of questions. So just wanted to walk through the strengthening of gross margin when I look at it on a sequential basis.
Gus Richard: Continued improvement that we're making in trying to.
Gus Richard:
Gus Richard: BP is efficient and effective as we can with the products that we're selling.
Speaker Change: Mix really doesn't imply gross margin should be up as much year on year.
Gus Richard: So it's kind of a combination of kind.
Speaker Change: It's right in the right ballpark and I'm just wondering what's just Q2 week gross margin quarter or what would the drivers sequentially and in the improvement.
Gus Richard: A combination of both.
Gus Richard: Got it.
Gus Richard: Thank you.
Speaker Change: It looks like Youre hiring heavily for oil and gas and I'm just wondering.
Speaker Change: Yes, I think I think you certainly saw Q2 has been a weak quarter I.
Speaker Change: Or is this to harvest new customers is it to service new regions.
Timothy Clarkson: But hey, so, you know, just on a big picture basis, when you look at this oil and gas thing, you know, when you're trying to get one of these guys to switch from the older technologies to your newer technology, now on the front end, is your technology cheaper on the front end? compared to traditional methods, yes. Yeah, yeah. you know, the electrolysis stuff.
Speaker Change: I think you also see kind of a continued.
Speaker Change: If you could explain sort of where youre going there that'd be helpful.
Speaker Change: And a continued improvement that we're making in trying to.
Speaker Change: Combination of things, we're looking to cover broader geographies.
Speaker Change:
Speaker Change: You have to be as efficient and effective as we can handle the products that we're selling so it's kind of a combination of.
Speaker Change: Also go after new applications.
Geographies and applications.
Speaker Change: Kind of a combination of both.
Speaker Change: And we're now building up our presence in the middle East specifically.
Speaker Change: Got it and then.
Speaker Change: But we're also getting new opportunities.
Speaker Change: It looks like Youre hiring heavily for oil and gas and I'm just wondering.
Speaker Change: South America.
Speaker Change: Or is this to harvest new customers is it to service new regions.
Speaker Change: Okay.
Speaker Change: In Africa.
Speaker Change: Got it and then the last one for me.
Speaker Change: If you could explain sort of where you're going there that'd be helpful.
Timothy Clarkson: I'm sorry, I didn't understand what you were saying there, Tim. Yeah, so I mean, if, you know, let's say that you're a customer and you're looking to switch, you know, from the older technology, which uses the, you know, the electricity deal. Okay. And, yeah, yeah, and you're going to switch to this new technology, I mean, just on the front end, is it cheaper or more expensive or about the same on the front end when you're trying to treat the tanks? It's much easier installation. Okay.
Speaker Change: It's a combination of things, we're looking to recover broader geographies and also go after new applications.
Speaker Change: You've talked about nature take some.
Speaker Change: Some large opportunities and I was just wondering if you could kind of give us a sense on.
Speaker Change: Geographies and applications.
Speaker Change: Relative size and timing of those opportunities.
Speaker Change: I mean, we're now building up our presence in the middle East specifically.
Speaker Change: It was just mentioning.
Speaker Change: But we're also getting new opportunities.
Speaker Change: With Tim a second ago.
Speaker Change: The projects that we're working on right now is trying to find applications.
Speaker Change: South America.
Speaker Change: And in Africa.
Speaker Change: I'm puzzled plastics.
Timothy Clarkson: Thank you. It's much easier installation and basically you're spending a lot less money getting the protection and ours works better for a longer period of time. Oh sure, I mean there's no question about the long term, but you're dealing with, you know, humans have a tendency to be kind of insect-like and if the benefits are in ten years for a lot of these people, you know, that's just an eternity. But at least if on the front end it's easier and you save money, you know, that's a benefit immediately that they can justify the switch and then of course, you know, the longer term benefits are way more significant, but that's important.
Speaker Change: Included in food packaging.
Speaker Change: Got it and then the last one for me.
Speaker Change: And historically has been the problem is that the.
Speaker Change: Commercial class Accenture permeable.
Speaker Change: You talked about nature take some.
Speaker Change: And gases and liquids and.
Speaker Change: Some large opportunities and I was just wondering if you could kind of give us a sense on.
Speaker Change: But we can possible.
Speaker Change: We think we've found a way of solving that problem.
Speaker Change: Relative size and timing of those opportunities.
Speaker Change: And now we're trying to figure out can you scale it up and if so what crude applications can even be going after.
Speaker Change: It was just mentioning.
Speaker Change: With them a second ago.
Speaker Change: We have some significant interest in that area.
Speaker Change: The project that we're working on right now is trying to find applications.
Speaker Change: We're very confident there.
Speaker Change: We should be able to develop something interesting over the next year or two.
Speaker Change: I'm puzzled plastics.
Speaker Change: Food and food packaging.
Speaker Change: And historically has been the problem is actually.
Speaker Change: Got it got it helpful. Thank you very much.
Speaker Change: Commercial plastics are true permeable.
Speaker Change: Okay.
Patrick Lynch: And I would now like to turn the conference back to Patrick for closing remarks.
Timothy Clarkson: Now what's the, in general, on a quarter to quarter basis, what's the additional spending that you're doing on sales this year versus last year? What's the additional amount of money you guys are spending per quarter on the sales effort for the oil and gas? You're talking primarily about personnel, really, in terms of gas and various regions around the world that have experience in the oil and gas industry and in the kinds of areas that we like and that should basically make our cost of conversion happen faster. Right.
Speaker Change: You can't get in gases and liquids.
Speaker Change: But we can possible.
Patrick Lynch: Thank you very much for calling today.
Speaker Change: We think we've found a way of solving that problem.
Speaker Change: Hope you have a nicely.
Speaker Change: And now we're trying to figure out can you scale it up and if so what cuda applications can even be going after.
Speaker Change: And this concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Have some significant interest in that area. So we're.
Speaker Change: We're very confident there.
Speaker Change: We should be able to develop something interesting over the next year or two.
Speaker Change: Got it got it helpful. Thank you very much.
Speaker Change: Okay.
Patrick: And I would now like to turn the conference back to Patrick for closing remarks.
Timothy Clarkson: But what would be the total incremental cost of what we're paying up front, the investments we're making right now per quarter versus what we were doing, you know, a year ago before we started making this big rollout with the sales expense? Well, Timothy, if you look at it, if you look back to like our fiscal 23, fiscal 24 from an oil and gas standpoint, yeah, in North America, we averaged about $4 million. In the current year, we're projected to spend about $5.3 million. So we've got about $1.3 million of additional investment in personnel that we've done over the past 12 plus months.
Patrick: Thank you very much for calling in today.
Speaker Change: Hope you have a nicely.
Speaker Change: And this concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.
Timothy Clarkson: So but that that one that 1.3 million that's over a 12 month period not over a quarterly period, right? Right. So it'd be three 400,000 maybe per per quarter is the additional expenses on the oil and gas. Yeah. Right, right.
Timothy Clarkson: And then of course, the other issue is, there's a, you know, it's a business that's clumpy so that you you know, you'll see a lot of the results in one quarter versus another quarter.
Timothy Clarkson: Yeah, I think I think you'll certainly see a step up in revenue kind of going from Q3 to Q4 as well from an oil and gas standpoint, given, given kind of where we are in the quarter so far, and expectations of backlogs and things like that, certainly would expect Q4 to be stronger than Q3 from an oil and gas standpoint. Right.
Timothy Clarkson: Now switching to China, that was a strong quarter for those guys. I mean, is China now profitable? China is profitable. China has been profitable for for some time.
Timothy Clarkson: What's nice is that we're seeing you know, China as a standalone, you know, if I look back over the past Unknown Executive, Timothy Clarkson, Joseph Vidich, Northern Tech stimulating their economy standpoint, that we are Also, increasing our revenues accordingly. Yes, remember, right. Primarily domestic consumption in China, not for export. Right, right.
Timothy Clarkson: Now the electric cars, I mean, do they still need some of the technology you have to prevent rust and corrosion? Yes, just like the traditional combustion engine. Yeah, less, but they're, they're, they're, they're making a hell of a lot of electric cars. Yeah, yeah. Okay, well, good. I'm good.
Timothy Clarkson: One last question on the compostable stuff. What's new there? Is business pretty much as usual?
Timothy Clarkson: Are there any exciting new areas you're seeing on the compostable side?
Timothy Clarkson: Well, there is one project we're working on. It's a little too early to talk about revenues. But historically, one of the biggest problems we had with the compostable packaging is the water vapor transmission rate is pretty high. I mean, the plastic is pretty permeable. So there's limits to what you can actually package in it on a convenient basis. Now, say that we, at least in the laboratory, have managed to fix that problem. There is a possibility of scaling that up and find significant applications in food packaging. Wouldn't that work? We're right now looking to do some soon start some scale-up production in that area, and we probably will see revenues if it all works out in the next two years or so.
Timothy Clarkson: Great. Okay. Thanks.
Timothy Clarkson: I'm done. Thank you.
Gus Richard: In one moment for our next question. Our next question will be coming from Gus Richard of Northland Capital Markets. Your line is open.
Gus Richard: Good morning. I had a couple of questions. I just want to walk through the strength and the gross margin when I look at it on a sequential basis. You know, mix really doesn't imply gross margin should be up as much year on year. It's right in the right ballpark. And I'm just wondering, was just Q2 a week, close margin quarter? Or what what were the drivers sequentially and the improvement? Yeah, I think I think you certainly saw Q2 as being a week quarter. I think you also see kind of the continued, you know, kind of continued improvement that we're making and trying to you know, be as efficient and effective as we can with the products that we're selling.
Matthew Wolsfeld: So, you know, it's kind of a combination of, it's kind of a combination of both.
Matthew Wolsfeld: Got it. And then it looks like you're hiring heavily for oil and gas. I'm just wondering, you know, is this to harvest new customers? Is it to service new regions?
Matthew Wolsfeld: If you could explain sort of where you're going there, that'd be helpful. combination of things. We're looking to cover broader geographies and also co-afternoon geographies and applications. Yes. I mean, we're now building up our presence in the Middle East, specifically. But we're also getting, I mean, new opportunities in South America, and in Africa. Got it.
Matthew Wolsfeld: And then the last one for me, you know, you talked about Nature Tech, some some large opportunities. And I was just wondering if you could kind of give us a sense on, you know, relative size and timing of those opportunities. I was just mentioning with Tim a second ago, the project that we're working on right now is trying to find applications in compostable plastics in food packaging. And historically the problem is that the compostable plastics are too permeable, so it can't contain gases and liquids, and still be compostable. We think we've found a way of solving that problem, and now we're trying to figure out can you scale it up, and if so, what food applications can you be going after?
Matthew Wolsfeld: But we have some significant interest in that area, so we're very confident that we should be able to develop something interesting over the next year or two. Got it. Helpful.
Matthew Wolsfeld: Thank you very much.
Patrick Lynch: And I would now like to turn the conference back to Patrick for closing remarks. Thank you very much for calling in today. Hope you have a nice week. And this concludes today's conference call. Thank you for participating. You may now disconnect.