The Investor
09 Jul 2026, 13:17
NTIC Stock Falls 8.3% Premarket Despite Record Revenue as Margin Pressure Weighs on Results
Northern Technologies International Corporation (NASDAQ: NTIC) shares fell 8.3% in premarket trading on Thursday after the company reported record third-quarter fiscal 2026 revenue but posted a quarterly loss as higher raw material costs and pricing pressure significantly compressed margins.
Why Is NTIC Stock Falling Today?
While NTIC delivered double-digit sales growth across its core businesses, investors appeared concerned that rising costs outweighed the revenue gains.
The company reported record third-quarter net sales of $24.2 million, up 12.6% year over year. However, gross margin declined 477 basis points to 33.6%, resulting in a net loss of $263,000, or $0.03 per diluted share, compared with net income of $122,000, or $0.01 per share, a year earlier.
Management attributed the margin pressure primarily to higher raw material costs caused by geopolitical disruptions in the Middle East, including tensions affecting shipping through the Strait of Hormuz, as well as competitive pricing within its Natur-Tec® business.
Record Sales Driven by ZERUST and Natur-Tec
NTIC's revenue growth was supported by strong demand across both of its major product lines.
ZERUST® industrial sales increased 10.3% to a record $15.9 million, while ZERUST® oil and gas revenue surged 72.3% to a third-quarter record of $2.2 million. Natur-Tec® biodegradable plastics sales also reached a record $6.1 million, rising 5.0% from the prior year.
The company also reported a 12.2% increase in joint venture operating income, reflecting stronger sales across its global joint venture network.
Management Expects Margin Recovery
Despite the weaker earnings, management said raw material costs have already begun to ease and expects pricing actions and procurement initiatives to improve profitability during the fourth quarter.
CEO G. Patrick Lynch also highlighted the company's focus on expanding higher-margin ZERUST® oil and gas products while broadening global adoption of Natur-Tec® applications. In addition, NTIC expects to receive more than $1 million from the planned sale of its Beachwood, Ohio facility in fiscal 2027, providing additional financial flexibility.
What Investors Are Watching Next
Investors will now be looking for evidence that easing raw material costs translate into stronger margins during the fourth quarter. While record revenue and robust demand demonstrate continued strength in NTIC's end markets, today's premarket decline suggests investors remain focused on profitability and margin recovery following the company's unexpected quarterly loss.
Northern Technologies International Corporation (NASDAQ: NTIC) shares fell 8.3% in premarket trading on Thursday after the company reported record third-quarter fiscal 2026 revenue but posted a quarterly loss as higher raw material costs and pricing pressure significantly compressed margins.
Why Is NTIC Stock Falling Today?
While NTIC delivered double-digit sales growth across its core businesses, investors appeared concerned that rising costs outweighed the revenue gains.
The company reported record third-quarter net sales of $24.2 million, up 12.6% year over year. However, gross margin declined 477 basis points to 33.6%, resulting in a net loss of $263,000, or $0.03 per diluted share, compared with net income of $122,000, or $0.01 per share, a year earlier.
Management attributed the margin pressure primarily to higher raw material costs caused by geopolitical disruptions in the Middle East, including tensions affecting shipping through the Strait of Hormuz, as well as competitive pricing within its Natur-Tec® business.
Record Sales Driven by ZERUST and Natur-Tec
NTIC's revenue growth was supported by strong demand across both of its major product lines.
ZERUST® industrial sales increased 10.3% to a record $15.9 million, while ZERUST® oil and gas revenue surged 72.3% to a third-quarter record of $2.2 million. Natur-Tec® biodegradable plastics sales also reached a record $6.1 million, rising 5.0% from the prior year.
The company also reported a 12.2% increase in joint venture operating income, reflecting stronger sales across its global joint venture network.
Management Expects Margin Recovery
Despite the weaker earnings, management said raw material costs have already begun to ease and expects pricing actions and procurement initiatives to improve profitability during the fourth quarter.
CEO G. Patrick Lynch also highlighted the company's focus on expanding higher-margin ZERUST® oil and gas products while broadening global adoption of Natur-Tec® applications. In addition, NTIC expects to receive more than $1 million from the planned sale of its Beachwood, Ohio facility in fiscal 2027, providing additional financial flexibility.
What Investors Are Watching Next
Investors will now be looking for evidence that easing raw material costs translate into stronger margins during the fourth quarter. While record revenue and robust demand demonstrate continued strength in NTIC's end markets, today's premarket decline suggests investors remain focused on profitability and margin recovery following the company's unexpected quarterly loss.