Good morning. I am Patrick Lynch.

NTIC's CEO. And I am here with Matthew Wolsfeld, NTIC's CFO.

Please note that a press release regarding our third quarter fiscal 26 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 fiscal 26 third quarter financial results, provide a brief business update and then conclude with a question-and-answer session. Please note that when we discuss year over year performance, we are referring to the third quarter of our fiscal 26 in comparison to the third quarter of last fiscal year.

Strong global demand and increasing adoptions of our ZERUST corrosion prevention and Natur-Tec bioplastic solutions, drove quarterly consolidated sales to new record highs. Disruptions to shipping through the Strait of Hormuz during the quarter caused by recent increased conflict levels in The Middle East contributed to a significant increase in our raw material costs.

Higher input costs reduced our gross margin, by approximately 477 basis points year over year and we estimate that gross profit was negatively affected by approximately $1 million based on gross margin levels prior to the increase in US Iran hostilities. We believe that the third quarter cost pressure was temporary and we are pursuing pricing and procurement initiatives that we expect will improve gross margin and profitability in the fourth quarter.

Since reaching the profitability levels we plan for, is taking longer than expected, We believe NTSC must remain focused the initiatives within our control to drive more profitable growth including expanding sales of our higher margin ZERUST oil and gas solutions and broadening Natur-Tec applications globally. Our liquidity and financial flexibility remains solid.

Supported by a significant capital within our joint venture network, and anticipated proceeds of more than $1 million from the pending sale of our Beachwood, Ohio facility which is expected to close in fiscal 27. The resilience of our business model, continued demand for our technologies, and our focus on execution give us confidence in stronger, more profitable fourth quarter results.

So with this overview, let's examine the drivers for the third quarter in more detail. For the third quarter ended May 31, 2026, our total consolidated net sales increased 12.6% to $24.2 million as compared to the third quarter ended May 31, 2025, Broken down by business unit, this included a 72.3% increase in ZERUST oil and gas net sales a 10.3% increase in ZERUST industrial net sales, and a 5% increase in Natur-Tec sales.

Turning to our joint venture sales. Which we do not consolidate in our financial statements, total net sales for the fiscal 26 third quarter by our joint ventures increased year over year by 15.1% to $26.7 million reflecting improved year over year demand across many of our joint ventures.

We continue to closely monitor trends across our European markets for signs of stabilization, following years of subdued demand as governments begin to implement targeted economic stimulus packages. We expect that any economic recovery from these stimulus packages will lead to a positive impact on our joint venture operating income in future periods, especially in Germany.

Stable sales trends continued at our wholly-owned NTIC China subsidiary, Fiscal 26 third quarter net sales at NTIC China decreased by less than 1% to $4.5 million As I have stated before, given that the majority of NTIC China's sales are for domestic Chinese consumption, We believe NTIC China's exposure to US tariffs is limited. We expect demand in China will continue to improve in fiscal 26.

Helping to support higher incremental sales and profitability in the market. On a trailing 12-month basis, NTIC China sales have increased 12.8% to $17.8 million.

comparing to $15.8 million for the same corresponding period last fiscal year. We believe that China will likely become a significant market for our industrial and bioplastic segments.

So we will continue to take steps to enhance our operations in this geography. Now moving on to ZERUST oil and gas.

ZERUST oil and gas sales were $2.2 million a third quarter record and increase of 72.3% from the same period last year. This growth reflects the investments we have made in our global sales infrastructure, and the increasing adoption of our VCI solutions within the global oil and gas industry.

The third quarter reflects the fourth consecutive quarter that ZERUST oil and gas sales have been over $2 million, And on a trailing 12-month basis, sales are now over $10 million for the first time in our history. We are encouraged by these trends as adoptions increase and we develop new applications for our corrosion prevention solutions across the global oil and gas market.

During the third quarter, we experienced higher year over year oil and gas sales in The Middle East North America, India, and China from both new and existing customers. Reflecting the contribution of recent investments we have made to enhance our sales team and add resources to support future growth.

This has improved our sales pipeline as the number of opportunities has expanded. Pipeline includes global opportunities to protect above ground oil storage tanks, pipeline casings, and offshore oil rigs from corrosion.

The nature of this industry will always cause certain fluctuations in ZERUST oil and gas sales. Nevertheless, we still expect to see ZERUST oil and gas sales and profitability to improve significantly in fiscal 26 as we leverage these investments and rein in operating expense growth.

Turning to our Natur-Tec bioplastics business. Third quarter Natur-Tec sales were a quarterly record $6.1 million representing a 5% year over year increase.

We continue to pursue several larger opportunities in North America and India, that we believe can further benefit Natur-Tec sales in the coming quarters. In North America, Natur-Tec was recently selected for the International Fresh Produce Association's packaging innovation program.

Where we are advancing commercialization of compostable barrier laminate solutions for food packaging applications In India, we announced a collaboration with Bayer to develop biodegradable and compostable seedling cups for nursery applications, This initiative is expected to begin with pilot trials in vegetable and fruit nurseries 72 successful validation, create a meaningful new application for our compostable materials platform. These initiatives build on a new food packaging opportunities we have discussed on prior calls, and demonstrate the expanding range of markets in which Natur-Tec can provide a practical alternative to conventional.

Plastics. Overall, we believe Natur-Tec is a best in class compostable plastics business that is well positioned for further growth in The US and internationally.

As we expect sales to continue to expand over time. Before I turn the call over to Matthew, 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 efforts.

With this overview, let me now turn over the call to Matthew Wolsfeld to summarize our financial results for fiscal 26 third quarter.

Thanks, Patrick. Compared to the prior fiscal year period, NTIC's consolidated net sales increased 12.6% in the fiscal 26 third quarter, the second consecutive quarter of year over year double digit growth.

Sales across our global joint ventures increased 15.1% in the third quarter. Joint venture operating income in the third quarter increased 12.2% compared to the prior fiscal year period.

Primarily due to higher sales at our joint ventures. Total operating expenses for the fiscal year 2020 quarter increased 5.3% to $10.2 million primarily due to higher year over year selling, general, and administrative, as well as research and development expenses.

Operating expenses as a percentage of third quarter sales were 42% compared to 44.9% for the prior fiscal year period. We expect quarterly sales to grow faster than operating expenses as we continue to leverage recent investments and upgrades across our global operations.

Gross profit as a percentage of net sales was 33.6% during the 3 months ended May 31, 2026 compared to 38.4% during the prior fiscal year period. As Patrick discussed, gross margin for the third quarter was impacted primarily by higher raw material costs as a result of the conflict in The Middle East and disruption of shipping through the Strait of Hormuz.

We expect gross margin to improve sequentially in the fourth quarter of fiscal 26. NTIC reported a net loss of $263 thousand or $0.03 per share for the fiscal 26 third quarter compared to net income of $122 thousand or $0.01 per diluted share for the fiscal 25 third quarter For fiscal 26 third quarter, NTICs non GAAP adjusted net loss was $158 thousand or $0.02 per diluted share.

Compared to a non GAAP adjusted net income of $228 thousand or $0.02 per diluted share for the fiscal 25 third quarter. A reconciliation of GAAP to non GAAP financial measures is available in our third quarter fiscal 26 earnings press release that was issued this morning.

As of May 31, 2026, working capital was $20 million, including $7.3 million in cash and cash equivalents, compared to $20.4 million including $7.3 million in cash and cash equivalents as of August 31, 2025. As of May 31, 2026, we had outstanding debt of $14.8 million.

This included $11.8 million in borrowings under existing revolving line of credit compared to $9.3 million as of August 31, 2025. Reducing debt through positive operating cash flow and improving working capital efficiencies is a strategic near term focus.

During the third quarter of fiscal 26, we committed to a plan to sell our Beachwood, Ohio facility. Which has historically been used for our ZERUST segment.

As a result, we reclassified the carrying value of the property by $816 thousand from property, plant, and equipment to assets held for sale. On the consolidated balance sheet as of 05/31/2026.

On May 31, 2026, we received a nonbinding letter of intent to purchase the property for $1.15 million in cash. Subject to a customary due diligence period and execution of a definitive purchase and sale agreement.

We expect the sale of the property to close during fiscal 27. On May 31, 2026, the company had $30.4 million in investments and joint ventures, of which 54.4% or $16.5 million was in cash with the remaining balance primarily invested in other working capital.

To conclude our prepared remarks, we believe our third quarter results demonstrate the continued strength and resilience of our business, highlighted by record quarterly consolidated sales and growth across our core corrosion prevention and bioplastics platforms. While profitability during the quarter was affected by a sharp increase in raw material costs associated with geopolitical disruption in The Middle East, we believe this pressure was temporary, and does not change our view of the long term earnings potential of the business.

As we move through the fourth quarter of fiscal 26, we expect continued sales growth and improved profitability supported by pricing actions and disciplined expense management. We also remain focused on advancing higher margin ZERUST oil and gas opportunities and expanding Natur-Tec applications globally.

We believe these factors position NTIC to deliver stronger financial performance and cash flow generation in the coming quarters. With this overview, Patrick and I are happy to take your questions.

Hey, guys. I have just a couple questions.

I was just wondering if you are going to separate the oil and gas business, you said you did you are on pace to do about $10 million. I guess that is annually.

I mean, how profitable would that division now be? Would it be would that be a 10% net business or a 5% net business?

Or do not you even look at it that way?

We do not specifically look at it like a separate business as a stand alone like that. I mean, you could certainly look at oil and gas and say, yeah, we expect the you know, the total revenue from oil and gas to be you know, above $10 million for the you know, or, you know, around $10 million for the year, You know, we know what the gross margins are.

We know what the contribution is going to be. We certainly see how things are ramping up in oil and gas kind of across the board.

And certainly with expectations of what is happened and what we are expecting to see in fourth quarter, you know, that is going to drive a significant amount of profitability.

And so you know, that is really what is going to be the kind of the key, key contributors. I mean, if you look at third quarter oil and gas this year compared to third quarter oil and gas, you know, last year.

You know, it is certainly up significantly. it is up, you know, 77 or 72% just oil and gas, is comparing that amount.

Know, I would say the disappointment is that if you look at, you know, the trailing oil and gas numbers, third quarter was lower than second quarter. And the expectation was that we were to kind of continue to build that oil and gas revenue.

there is, again, a very low comparison to the prior third quarter. You know, there are some there are some shipping issues.

There were some large projects. They came in and ultimately ended up being invoiced in June.

It will help significantly, you know, from a gross margin contribution standpoint in our fourth quarter. You know, which kind of gives me you know, at least already having this invoiced at this point in time now that we are already you know, 40 days into the fourth quarter?

You know, a lot more confidence in our fourth quarter numbers compared to where we expected to be.

Sure. So but, I mean, I just in general, the gross margins in oil and gas are higher than the gross margins in the company.

Yes. And so we expect that to kind of play out from a weighted average standpoint.

Right. You know, the biggest the biggest hit we had, you know, in the quarter, if you kinda look down the line, you know, rep revenues were strong across the board.

Joint venture contribution in total was up. The biggest, you know, and we were able to hold operating expenses, you know, at the 5% level, which is what we had you know, planned to do.

The big issue that we had was the you know, the gross margin impact with polyethylene prices increasing by, you know, 30-plus percent. With the conflicts going on in The Middle East.

We have now seen the grow we have now seen polyethylene prices. If you look at the markets, return back to the Auguste August 25 levels, We expect that to flow through.

You know, we have seen that flow through May and through June. We have seen that flow through our inventory.

And know, we were able to pass a lot of those cost increases onto customers but ultimately, you know, we dropped a few percentage points from a gross margin standpoint. Because of, you know, because of that situation.

So, right. You know, we are still pretty optimistic given what we have seen in June, given what we have seen, you know, with what the backlog is for July and August, there will still certainly be a pretty strong fourth quarter.

It should be our strongest quarter of the year. It certainly gives us a lot of momentum with what we expect to do going into fiscal 27.

Right. Right.

Now you mentioned that there is been some positive things going on in Germany. Can you give a little more color on that?

I think the positivity when I when I look at what is going on, you know, kind of in Germany and things like that is we are seeing from a revenue standpoint that you know, revenues are bouncing back. You know, revenues are bouncing back.

Compared to you know, prior periods. We are starting to see kind of a stabilization where we hope that we certainly hit the trough as far as, and it is starting to come back as far as what is happening from an industrial standpoint.

Know, if they can get some things figured out at the country level as far as what you know, as far as energy prices and things hopefully, that trend kind of continues from our standpoint.

Right. Right.

And I assume you guys are always looking to try to you know, cut expenses wherever you can.

Yeah. Certainly.

But, I mean, I think, again, you know, 1 of the key-- 1 of the key comments that Patrick made when you look at it is we are ramping up revenues. We do expect fourth quarter revenues to be higher than third quarter revenues.

And we do expect to hold our expenses relatively flat and so, right. You know, we are not going we are we are not coming in as saying the reason why that we did not make money this quarter is because we increased our expenses and we made all the investments.

it is we are now at a point where we have you know, capped off the investments, We are holding things as flat as possible. And we are seeing the revenue you know, where we expect the increased revenue to drive the gross margin dollars to bottom line.

And that is what I expect to see in fourth quarter and expect to see throughout fiscal 2027. We do not have significant investment plans either from an employee standpoint or from a capital purchase standpoint in North America, in fiscal 27.

1 of the things we do have is because of the growth that we are seeing in Brazil inside of oil and gas, because of the growth that we are seeing in Natur-Tec India, because of the opportunities there that we are looking at over the next coming years, They are investing in some new facilities to be able to meet demand there. So there will be some investments, but those are at the subsidiary level, not at the NTIC level.

Right. Right.

Okay. Well, I am I am obviously anxious to see the improved profitability, and I am still there.

So, thanks for your time.

Thanks, Timothy.

Thank you, and good morning. Got a couple of questions for you.

Number 1, can you expand on how you are addressing your ability to source raw materials used for let's say, Natur-Tec or even for ZERUST, to get yourself away from the need to source raw materials from the Mideast. If that is possible, and how that might play out and help you in improving your raw material cost?

Sure. I think the 1 item to point out is that there are no raw materials that we are sourcing from The Middle East.

It simply has to do with the raw material impact that the situation in the Middle East had on raw material prices around the world. And so we are not currently sourcing from anywhere obviously, there is a huge amount of global trade that flows through the flows through the Strait.

And so that ripple effect is what caused the 30% plus increase in the LDPE prices. That ripple effect is what we saw that caused a lot of our other you know, base chemistries that go into some of our powder rich materials and things like that to increase.

So from a production standpoint, we have spent the past 3 years looking at diversifying our capabilities of producing in China, producing in India, producing in subcontracting in Vietnam and Thailand, other areas so that as there are tariff changes, and opportunities, we are able to kinda capitalize on those countries. We are still pursuing that plan.

And so, you know, we have certainly established over the past 3 years the ability to source from different areas around the world. To get the most effective pricing to keep our costs and gross margin to keep our costs down and our gross margins you know, at stable levels.

Okay. Very good.

And then my second question is if you could expand on your recently announced compostable seedling cup efforts. And is that something that could be replicated in, let's just say North America for The US, Mexican market, or maybe even in South America?

And secondly, can you kind of expand on the timeline of when this could this effort could potentially play out beneficially for you. In other words, get away from the kind of trial stage, and then put it into implementation to where it actually may impact the bottom line.

I would say that, hey, can we implement it globally? And in terms of how much how long it is gonna take to hit our bottom line, I would guess that they will be testing for a another period of time.

So maybe it may be-- start some commercialization in a year. I am sorry, say that again?

We might see some commercial sales in a year. I see.

Okay. And so, is this effort is focused in India with Bayer?

But it has a global approach. In other words, trial, can you set up operations to do this with within, say, The US or within Canada where there is you know, large agricultural efforts.

Absolutely. there is applications in those countries.

Okay. And would that so is this a global effort with Bayer?

In other words, it is not just specific to India. For right now, it is specific to India.

I do not presume to know everything that Bayer is thinking. I think they will become a Right.

Okay. Okay.

Very good. Thank you.

Those are the questions I had.

Yep.

Good morning, gentlemen. I believe in previous conference calls, you mentioned some contracts, particularly in Brazil and then possibly some other countries.

And I think it was for the ZERUST product. Are those proceeding as expected, or can is there more you can tell us about them, or am I possibly mistaken?

No. You are not mistaken.

We the contract in Brazil was related to opportunities that we have for offshore FPSOs? Mhmm.

And that is a contract that was about a $14-plus million contract over several years. That is scaling up as far as our Brazilian subsidiary taking advantage of that.

that is been a process for a few quarters. If I look at the, you know, Brazilian oil and gas revenue, you know, in the 9 months ended in May 2026 compared to the prior 9 month numbers, up close to 70%.

that is a result of the implementation of this contract. We expect based on how we are servicing those companies, it is kind of a cumulative effect.

it is not the kind of situation where you have you know, $4 million per year over a 3-year period. it is a ramp up where you are providing the materials and service to these offshore FPSOs.

And continue to add more and more. So it is a slow scale up to where in year 3, you would ultimately be implementing on, you know, a number of FPSOs, you know, know, 3x the number of FPSOs in the third year than you would in the first year.

So it is kind of a cumulative buildup of the of the project. But, yeah, that is certainly moving forward and certainly is successful.

And it should lead to some increased sales in that Right? Yes.

Yeah. Yeah.

Okay. Good.

Thanks very much. How about other are there other possibilities like that?

Yeah. I mean, overall, the 9 month oil and gas revenue across the board is up 67%.

Yep. So that means that the non Brazil number is up you know, the non Brazil number is up 67% flat.

The Brazil oil and gas number is up 67.7%. The increased revenue that we are seeing in the oil and gas space is in North American opportunities, in our new subsidiary in The Middle East that we spent significant amounts of investment in over the past, you know, over the past, call it, 18 months.

That is scaling up well and, you know, it is a point where it is making contributions. So the expectations are that we are going to continue to see sizable you know, annual revenue growth in all of the areas in oil and gas.

Yeah. Alright.

Thank you very much. Yep.

Thanks, Don.

Yes. Thanks for taking my questions.

Just wanted to ask about Natur-Tec. You know, in the press release, you mentioned gross margin pressure on the call.

You mentioned new products, which I would expect to help gross margins. Was just wondering if you could talk about how you see the trajectory of those 2 things in terms of margins for Natur-Tec?

Yeah. I mean, I think there is there is different aspects As you are all aware, there is different business lines inside of Natur-Tec.

And there is the what I will call the commodity Natur-Tec business made up of bag liners and cutlery and things like that. And then there is the, you know, the proprietary resin formulations that we are working on.

You know, for applications with other companies. And I think what we are seeing is that you know, for a lot of the commodity based trash bag liner, you know, revenue that we have, it is a cost sensitive price sensitive you know, business.

And so you know, we in order to maintain those revenues, know, at times, there are you know, pricing issues that we have, and you know, different you know, that have impacted our gross margins. that is what I, you know, alluded to in the in the in the earnings release.

As far as how some of the Natur-Tec gross margins have been impacted. So, you know, we are not seeing-- we saw some positive gross margin improvement over the prior 18 months with some of the raw material prices coming down, but we are also seeing know, as we as I noted, we are seeing some of the price competition inside of Natur-Tec being a little bit of a headwind.

And so that kind of on top of the issues we saw with the with the ZERUST Industrial you know, raw material prices. Is what kind of caused the impact for, you know, the overall gross margin of the company to be lower than expected?

I mean, I can say that even inside of Q4, for the industrial business, we have seen the you know, a recovery of the gross margin for Natur-Tec, it is still at a point where it is you know, those are not 1 time issues. Those are you know, discounts and pricing that we have pushed through the customers.

that is not gonna change unless we are able to change input costs.

K. Got it.

And then so it is clear in my mind, the war has had an impact on the oil and gas business. Globally, not just you guys.

And I am just wondering from your perspective, has the, you know, the war in The Middle East had a positive or negative impact on your oil and gas business You know, people ramping up production places or ramping it down or what have you.

It definitely had a negative impact in the third quarter. I mean, we had our the individuals that are working in our operations in Dubai, we are you know, they were not allowed to leave their houses, you know, at various times in our second quarter because there were bombs and missiles flying overheads and bomb sirens going off and things like that.

So it certainly has an impact on what is you know, what they are able to do and projects, you know, in normal business occurring in the area.

So, certainly, the you know, what we saw in that area was down a little bit. I can say that there is a lot of in infrastructure in that region that was damaged, you know, that is going to need to be rebuilt.

There are going to need to be investments. They are, you know, going to be doing that over the coming years.

That certainly is gonna continue to drive opportunities. So, you know, long term, I do not see you know, even looking forward just a couple quarters, it looks like the opportunities have kind of rebounded and things have calmed down.

But certainly during second quarter, it was a you know, it was it was concerning. With what was going on, you know, very close to employees that we had in the region.

Got it. Thanks.

And then you know, your decision to sell Beachwood to ZERUST business, industrial is improving, looks strong, and just wondering what went into the decision to sell the Beachwood facility.

Well, we have had that facility for probably 20 years, right around there. And for the most part, with the building that we purchased up in Minnesota, the expansion, you know, the building we purchased right next to our headquarters that we have had for a long time.

Given us more opportunity just to consolidate everything in Minnesota. And so we moved the Beachwood office was kind of the oil and gas group.

The R&D people that were that were there that were kinda working in the Beachwood office. They are being brought up to Minnesota just as an effort to kind of consolidate facility.

there is no real reason to remain in Ohio.

Got it. And then last 1 for me on SG&A, you know, it is a little bit above what I would have expected.

Was there a 1 time item there, or what is going on with the with that line?

No. No significant onetime no significant onetime charges or onetime expenses in SG&A.

Okay. Alright.

Thanks so much. Thanks, guys.

Great. Good morning.

Thanks for taking the questions. Nice job on the quarter.

A lot a lot of stress here in the Middle East. You guys seem to be handling things pretty well with the things you can control.

Natur-Tec, good color there. Any way you can quantify what the volume growth looked like?

And then my follow-up to that is on the innovation front, is there any more you can tell us about what is happening with the food packaging, innovation? From a volume standpoint, if I look at Natur-Tec from a revenue standpoint, you know, the Natur-Tec revenues for the 9 month period are up 5%.

For third quarter, it is up 5%. I would say from a volume standpoint, it is probably up closer to 10% to 12%.

If I am looking at case quantities and things like that. You know, so you can kind of see, you based on that, what portion of it is concessions and what portion of it is volume growth.

So, you know, that is where we are from that standpoint. As far as you know, expectations of what is going on with food packaging, Those are, I would say, a little longer in development as far as what needs to happen with these specific chemistries and then being able to use the resin that we produce on the customer's existing equipment to generate that product.

Just a lot more involved with doing things that involve that involve food that take a little more time. Certainly, the applications that we are pursuing have been very positive.

We are very optimistic about them, and they are you know, sizable you know, healthier margin opportunities. So those are certainly the you know, some of the things that we expect to fuel the growth of Natur-Tec over the coming you know, 12, 18, 24 months.

Are some of these food service opportunities both in The United States and in and in India.

Okay. Great.

And then, last 1 for me. On the AI front, I think I asked this before, but I am curious with your sales teams, or just internally, are you guys piloting any projects?

Are you finding any, productivity gains, from the use of AI tools at this point?

Yeah. Well, specifically from an AI standpoint, 1 of the benefits that I was not expecting when we made this decision, but when we made the switch to SAP, you know, 18 months ago, the let's say that the data that we are able to gather from both the manufacturing standpoint, from a sales standpoint, from a product sales standpoint, there is significantly more data available than what our historical system had.

And what we are finding is that with using external tools, like Claude, and being able to really, you know, kinda pound through and analyze you know, hundreds of thousands of lines of data that we did not have before gives us a really, really clear insight into what is going on with each individual customer, each individual ordering level of the customers, gross margin at the customer level, gross margin at the product level, which we did not have access to or for. And so those are certainly some of the areas where we are able to go in and, you know, rather than going in and, you know, hammering something with a hammer, we are able to go in with a scalpel to kind of fix different things and kind of evaluate where we are.

Additionally, on top of that, know, what we are finding is that SAP that we are that we are looking at implementing is they have internal AI tools that can be utilized directly in your system. So employees will be able to utilize you know, the SAP AI tools, to pull up things faster, to be able to respond to customers faster, other things like that.

So on all levels from executive level down, we are working to implement these things to become you know, I would not say just more efficient, but be able to be know, more reactive and be able to really tighten things up from a business standpoint.

Yep. Yep.

Good. Sounds great.

Thanks for taking the questions.

Yep.

Thank you for joining us this morning, and have a nice day.