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| Statement |
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| As a result, we believe we are well positioned for long-term sustainable growth within our Natur-Tec bioplastics business |
| And we're excited by our long-term prospects |
| So I think we've got a pretty good system going |
| I am particularly encouraged by our top-line results within the large oil and gas and compostable plastics markets |
| I mean we've been very pleased |
| As we enter fiscal 2024, demand within our North American ZERUST industrial market demand stable, and we believe we are well positioned to develop additional strength within our ZERUST Oil and Gas and Natur-Tec businesses |
| We will also be focused on improving our cost structure and profitability by having additional operational efficiencies strengthen our gross margins |
| While the economic environment remains uncertain, we believe fiscal 2024 will be another good year of sales and increased profitability for NTIC |
| We're seeing stable North American demand trends a robust growth across our global oil and gas and bioplastics markets |
| Compared to the prior fiscal year period, NTIC's consolidated net sales increased 7.7% in fiscal 2023 to an annual record and grew 2.3% in fiscal 2023 fourth quarter, because of the positive trends Patrick reviewed in his prepared remarks |
| On a sequential basis, NTIC China sales increased by 6.4%, which was the second consecutive quarter of higher sales sequentially |
| Our continued sales growth success demonstrates increasing value we provide our global customers as well as the efficacy of our strategic focus on diversifying our products end markets and geographies |
| As a result we expect fiscal 2024 to be another good year of top line growth and improved bottom line profitability |
| Fiscal 2023 was a transformative year for ZERUST Oil and Gas as full year oil and gas sales increased 69.3% to an annual record of $7.8 million |
| We expect Natur-Tec sales growth will remain strong throughout fiscal 2024, supported by favorable demand in North America and India and significant new customer wins and orders in these geographies |
| As expected, Natur-Tec sales remain strong during the fourth quarter and increased 2.7% year-over-year to a quarterly record of $4.9 million |
| As a result, we believe fiscal 2024 will be another strong year for ZERUST Oil and Gas as this business further scales and continues to contribute to profitability |
| For the fiscal 2023 fourth quarter, sales increased 53.1% to a quarterly record of $2.4 million |
| For the fourth quarter ended August 31, 2023, our total consolidated net sales increased 2.3% to a fourth quarter record of $20.7 million, as compared to the fourth quarter ended August 31, 2022 |
| While fiscal 2023 proved to be highly successful with respect to diversifying our product mix and our end markets |
| Fiscal 2023 marked NTIC's third year of consecutive record sales, despite the economic challenges growing in both Europe and China as well as rising interest rates in the U.S |
| We generated $5.5 million of operating cash flows for the 12 months ended August 31, 2023, including $2 million in the fourth quarter, which was driven primarily by stronger core profitability, lower inventory levels, and the onetime gain from the liquidation of Tianjin Zerust |
| As you can see, our full year and fourth quarter financial results reflect the progress we are making towards growing our business and creating significant value for our shareholders |
| Our success throughout the fiscal year and the opportunities we are pursuing to drive value for our shareholders in the future is a direct result of their efforts |
| The 620 basis point improvement was primarily a result of successful actions taken by the company to address inflationary pressures and the increased sales of higher gross margin ZERUST Oil and Gas Solutions |
| Globally, we continue to see growing market demand for new applications of certified compostable plastic products and resin compounds, as well as increased interest in commercial and municipal programs that use certified compostable plastics as alternatives to conventional plastics |
| Demand continues to grow from both new and existing customers for our ZERUST Oil and Gas solutions, which today still focus primarily on protecting above ground oil storage tanks and pipeline casings from corrosion |
| Tim Clarkson Looks like it was a solid quarter again |
| Broken down by business unit, this included a 53.1% increase in ZERUST Oil and Gas net sales and a 2.7% increase in Natur-Tec net sales |
| Tim Clarkson Do you feel good about the decision to consolidated like that? Patrick Lynch Taiwan is doing well |
| Statement |
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| At the same time, we also found sales conditions for our core ZERUST industrial solutions to be very challenging in both Europe and China |
| Fiscal 2023 fourth quarter net sales by our wholly owned NTIC China subsidiary decrease by 9.6% to $3.5 million due to weaker economic conditions on a year-over-year basis |
| The year-over-year decline was due primarily to softer demand across the territories serviced by our global joint ventures as I explained previously |
| Excor Germany, our largest joint venture, experienced a 24% decrease in net sales during that period |
| The German joint venture, the results there were down quite a bit |
| While sales across our global joint ventures declined 6.6% in the fourth quarter |
| Our total net sales for the fiscal 2023 fourth quarter by our joint ventures, which we do not consolidate in our financial statements, decreased year-over-year by 6.6% to $24.2 million |
| In addition to that, Germany did lose one significant customer, and that's going to, it's going to be a few months or actually maybe a couple of quarters before they can recover from that |
| These increases were harshly offset by a 3.6% decline in ZERUST industrial net sales |
| These trends impacted both top-line results and overall profitability during fiscal 2023 |
| As a result, we restated NTIC's previously issued Q2 and Q3 financial statements, reflecting a decrease in net income of $474,000 for Q2 and $466,000 for Q3 |
| So the economy in Germany also is also being impacted again, by the war, that consumer optimism is not where it used to be so that the overall economy in Germany is facing down [indiscernible] |
| So the cost of energy and plastics in Europe have gone up dramatically, which is putting a bit of a squeeze in our margins |
| However, it is important to note that NTIC China recorded a small net loss during fiscal 2023 compared to net income over $1 million in each of the 3 years before the COVID pandemic began |
| One, because of the war in Ukraine and the sanctions that the West put on Russia, Russia in turn increased energy prices |
| Please also be advised that 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 |
| Throughout the fiscal year, our European joint ventures felt the direct pressures of persistent inflation, raw material and energy cost increases, as well as the indirect dampening effects of geopolitical conflicts on market demand |
| While we believe the employee retention credits that we applied for in fiscal Q2 and Q3 are more likely than not to be collected, we are unable to deem the receipt of the credits as probable under U.S |
| So certainly, that level of expense that I talked about, a lot of that had to do with transactional expense of cleaning up the old entity and implementing kind of the new entities that run rate of expense will go down in the future |
| While core profitability during the fourth quarter was below our plan, primarily due to the challenging conditions in Europe and China, we are working hard to improve our cost structure, maintain a strong gross margin, and leverage the investments we are making across our infrastructure by growing sales |
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