Northern Technologies International Corporation · NASDAQ:NTIC
Northern Technologies International — Q3 2016 Earnings Presentation
21 slides from Northern Technologies International's earnings presentation, Jul 18, 2016
Slide 1: Fiscal 2016 Third Quarter Investor Presentation
Northern Technologies International Corporation Fiscal 2016 Third Quarter Investor Presentation
Slide 2: Forward Looking Statements
Forward Looking Statements S Statements contained in this presentation thet are not Historical information are forward locking statements 3s defined within the Private Secuttis itgation Reform Act of 1985. Such statements ince, but are notlimited to, statements about NTI’ future financial performanc
Slide 3: Northern Technologies International Corporation (Nasdaq: NTIC)
PNorthern Technologies International Corporation (Nasdaq: NTIC) se 5 Northen Technologies inarnational eetGn develops leading corrosion inhibiting products and services, as well as bio-based and biodegradable polymer compounds. Core Zerust VC! (Volatile Corrosion Inhibitor) Protection Technology | C
Slide 4: NTIC At A Glance
Vuric At A Glance = Stock Data (at 1une 30, Founded 1970 GlovalPiesence Approximately 120 Recent Diluted Shares Market Through 39 1Vs and 3 Global Stock Price Outstanding cop Subsidiaries Employees Strong Balance Sheet (a: vay31, 2016 Growth Total Cash Position'?) Cash at JVs(2 No Debt. 37% CAGR in
Slide 5: Long-Term Growth Initiatives
Long-Term Growth Initiatives ae + Double reported net sales + Achieve earnings per diluted share over $2.00 Increase Core Industrial Develop New Corrosion Enhance JVs Corrosion Business Prevention Solutions | Eimerging Geographies Fo] zr Ramp Up New Chinese Grow Oil & Gas Accelerate Natur-Tec 100% O
Slide 6: Annual Sales
Annual Sales $45 $35 $25 > atl sis Fy2009 FY2010 FY2011 FY2012 FY2013. FY2014 FY2015 | TTMT mm Lowers P20L6somusine les goatee HAgh nd of F2OLG arma ret les ance ann utc ammurcated 72016. Theat NTC ica hs gue hs trevartton shou ntbe taken to cor Hs gue a any sieve ae, Worldwide Net Sales (Includes J
Slide 7: Joint Venture Overview
Joint Venture Overview J Joint Venture Network Overview S 19 international joint ventures + Generally 50/50 ownership with local JV partner * NTICreceives ~7% fee on JV sales and 50% of JV JV Financial Model dividend distributions after year end Equity method accounting on GAAP financial statements
Slide 8: Chinese Operations
Chinese Operations Si ‘Terminated license agreement on Dec. 31, 2014, with former New Wholly-Owned Chinese Chinese JV, and created a new wholly-owned subsidiary, NTIC Subsidiary Net Sales Ramp China (in thousands} + NTIC filed suit against its former JV partner seeking, among sae other things, an or
Slide 9: Corrosion is a Big and Expensive Problem
Corrosion is a Big and <m— Expensive Problem NEE Solutions A 2016 study “) is the industry template on the costs and control of corrosion worldwide. The report estimated annual direct global costs of corrosion to the economy to be $2.5 Trillion, It further estimated that corrosion control practices
Slide 10: NTIC Operates in Compelling Niche Markets
Wtic Operates in Compelling Niche Markets) * Annual Market Potential $520 million + Est. Annual Growth Rate 5-10% + Market Growth Drivers: — Global trade and manufacturing demand = Complex long-distance global supply chains + Annual Market Potential $2.5 billion + Est. Annual Growth Rate 10% + Marke
Slide 11: Research & Development
Research & Development S Annual R&D Spend and Percent of In 1979, NTIC developed and patented the first polyolefin Reported Net Sales (plastic) based industrial corrosion inhibiting packing {i thousands} material in the world $5,000 250% +4500 R&D activities focused on improving existing products, :
Slide 12: Zerust Industrial: Growth Opportunities
ieueae ZERUST @ EXCOR Growth Opportunities * Expansion of non-automotive segments with core Zerust® products and services such as Military, Electrical/electronics, Marine and Agriculture Pioneers in Corrosion Management Zerust® VCI technology proven effective for 40+ Years Grow liquid and powder app
Slide 13: Differentiated Corrosion Solutions
Weorrosion 5 | Differentiated Solutions VC Coated Poly Zero-rust on metal products Vel Film Kraft Paper Product Examples during shipment and storage Environmentally responsible corrosion protection services Worldwide on-site technical . consulting for rust and corrosion : prevention issues Water Bas
Slide 14: Zerust Oil & Gas
Zerust Oil & Gas: 5 VW ZATRUSG OI & GAS Tank Bottom Solutions NTIC’s solutions produce meaningful cost savings by minimizing & => maintenance downtime on critical oil " and gas industry infrastructure up 37.5% py2015 FY 2016 YTD Tank bottom solutions need to be recharged every five years Large, grow
Slide 15: Evolving Oil & Gas Performance
VW Evolving Oil & Gas Performance ZAFRUS on & GAs $600 Oil Storage Tank OilStorageTank —_Qutdoor Preservation Bottom Protection Top Protection val Film Zerust” AutoFog Liquid Rust Flange Saver vei sachets Fuisaz2 Frisa3FYIS@4FYISQ1FYISQ2 FYI G3. tO & Gas Quarterly Sale Includes Brat) in Thousands Oi
Slide 16: Advanced Bioplastics Natur-Tec
WV advanéed Bioplastics Nature[ec” Sustainable Blobased Materials RS RASS ae Natur-Tec’s patented process is Natur-Tec® product net sales increased easier to manufacture, less 25.0% to a record $1,501,000 in the expensive, and better performance fiscal 2016 third quarter Strong presence in Janitoria
Slide 17: Building a Leading Bioplastics Company
V Building Leading Bioplastics Company NatureTec’ Sustainable Blobased Materials $2,700 $1,500 $1,300 $1100 Customized Food Packaging Zero Waste Solutions Resin Compounds for Foodservice oo 5 5 : $500 Fvisq2 FYI5Q3 FYISG4FYIGaI FIGaq2 FYI603, Sustainable Packaging Solutions _Retail Consumer Products
Slide 18: Financial Overview — Net Sales
Financial Overview — Net Sales ZERUST® industrial net sales ZERUST® joint venture net sales. ZERUST® oil & gas net sales. Total ZERUST® net sales Total Natur-Teo® net sales... Total net sales ZERUST® industrial net sales. ZERUST® joint venture net sales... ZERUST® oil & gas net sales Total ZERUST® n
Slide 19: Financial Overview — Net Income
Financial Overview — Net Income S Fiscal 2016 Third Quarter Profitability Highlights: $930 $915 $900 $885 $870 Fiscal 2016 Third Quarter JV Operating Income (in tnsss $3,100 $2,900 $2,700 $2,500 Fiscal 2016 Third Quarter Net Income (o tous $905 FY15 Q3 $3,029 FY15 03 $917 FY16 Q3 $3,016 FY16 Q3 Oper
Slide 20: Enterprise Value and Strong Balance Sheet
v. Enterprise Value {in tho. Market Cap” $ 50,641 Total Debt’! 0 Total Cash?) $ 6,866 Enterprise Value $ 43,775 Diluted Shares Outstanding!) 4,587 © at June 30, 2016 ®) at May 31, 2016 Total cash does not include $18.6 million of investments in joint ventures, of which over 55% is cash, with the rem
Slide 21: Fiscal 2016 Financial Outlook
Vriscal 2016 Financial Outlook* — {in millions, except per share data) FY 2016 FY 20: Low - Hi Annual: Net Sales $30.3 $34.0 - $37.0 12.2% - 22.1% Net Income $18 $2.0 - $32 11.1% - 77.8% Earnings per Diluted Share $0.38 $0.40 - $0.70 5.3% - 84.2% Fourth Quarter: Net Sales $81 $10.6 - $13.6 30.6% - 6
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