Good day, and welcome to NTIC's Fourth Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Instructions will be given at that time. As a reminder, this call may be 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 advise that actual results could differ materially from those stated or implied by the forward-looking statements due to certain risks and uncertainties, including described in NTIC's most recent Annual Form 10-K, subsequently 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. NTIC disclaims any duty to update and revise its forward-looking statements. I would now like to turn the call over to Patrick Lynch, CEO. Please go ahead.

Good morning. I'm Patrick Lynch, NTIC's CEO, and I'm here with Matt Wolsfeld, NTIC's CFO. Please note that a press release regarding our fourth quarter and full year fiscal 2024 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 2024 fourth quarter and full year financial results, provide a brief business update, and then conclude with a question-and-answer session. We closed fiscal 2024 with robust sales growth in both our ZERUST Oil and Gas and Natur-Tec businesses. Furthermore, thanks to the continued successful execution of various margin improvement initiatives, NTIC was also able to achieve another year of significantly improved profitability. Our fiscal 2024 results continue to demonstrate the value we bring to our global customers, as well as our resilience amidst ongoing economic challenges. Higher sales of ZERUST Oil and Gas and Natur-Tec products, along with improved gross profits contributed to a nearly $6 million or 21.5% year-over-year increase in gross profit for fiscal 2024. This expanded gross profit allowed NTIC to offset a $2.2 million reduction in joint venture operating income, primarily resulting from a one-time gain of nearly $2 million last fiscal year tied to the liquidation of our former joint venture in China, as well as challenging market conditions, including higher energy prices and other regional economic pressures that affected sales and profitability across various European joint ventures. We are actively focused on our European joint ventures and remain cautiously optimistic that demand and profitability in Europe will begin to improve in fiscal 2025. As we enter fiscal 2025, demand within our North American ZERUST industrial market remains stable, and we believe we are well-positioned to capitalize on opportunities within our ZERUST Oil and Gas and Natur-Tec businesses. The strategic investments we made in our workforce and infrastructure in fiscal 2024 are set to support growth opportunities across our global markets. While the economic environment remains fluid, we anticipate fiscal 2025 will bring further sales growth and improved profitability. So with this overview, let's examine the drivers for the fourth quarter in more detail. For the fourth quarter ended August 31, 2024, our total consolidated net sales increased 12.7% to a fourth quarter record of $23.3 million as compared to the fourth quarter ended August 31, 2023. Broken down by business unit, this included a 76.6% increase in ZERUST Oil and Gas net sales, a 16.4% increase in Natur-Tec sales, and a 0.1% increase in ZERUST Industrial net sales. Total net sales for the fiscal 2024 fourth quarter by our joint ventures, which we do not consolidate in our financial statements, decreased 3.6% over the prior fiscal year period to $23.3 million. EXCOR Germany, our largest joint venture experienced a 15% decrease in net sales during that period. This decline was due primarily to softer demand across the territories serviced by our global joint ventures, as I explained previously. Fiscal 2024 fourth quarter net sales by our wholly owned NTIC China subsidiary increased by 1.1% to $3.6 million. Sales trends in this geography have stabilized and NTIC China has experienced three consecutive quarters of sales growth as compared to the respective fiscal prior year periods. We remain cautiously optimistic that demand in China will improve in fiscal 2025, helping to support higher incremental sales and profitability in this market. 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. As a result, we continue to believe China will likely become a significant geographic market for us in the future. Now moving on to ZERUST Oil and Gas. As anticipated, ZERUST Oil & Gas had a record-breaking fourth quarter with revenues reaching $4.2 million. This was supported by approximately $600,000 in sales that shifted from the third quarter due to timing, as well as increased orders from both new and existing customers. The significant growth in ZERUST Oil and Gas during the fourth quarter highlights a transformative year for this business unit, as full year oil and gas sales increased 18.3% to an annual record of $9.2 million. Overall, demand continues to grow among both new and existing customers of our ZERUST Oil and Gas solutions, which today is still focused primarily on protecting above-ground oil storage tanks and pipeline casings from corrosion. While we expect seasonal ordering patterns to drive fluctuations in ZERUST Oil and Gas sales, we believe we are well-positioned for compelling growth in this sector through fiscal 2025 and beyond. Turning to our Natur-Tec Bioplastics business. Natur-Tec sales remained strong during the fourth quarter and increased 16.4% over the prior fiscal year period to a quarterly record of $5.7 million. Natur-Tec growth during the quarter was a result of increased global demand arising primarily from new customer wins in North America and India, as well as expanding relationships with our existing customers. We expect Natur-Tec sales growth to remain strong in fiscal 2025. Globally, we continue to see robust 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. Throughout fiscal 2024, we made a number of strategic investments across several parts of our business in order to capitalize on current and expected future growth opportunities. In India, we are in the process of consolidating three separate Natur-Tec warehouses into a single larger facility and also are adding manufacturing capacity to support Natur-Tec sales growth in the region. Sales in Brazil have nearly doubled since fiscal 2019, so we are adding a facility to support growth opportunities in both that country as well as the broader region. We also continue to invest in our domestic operations as demonstrated by the new Circle Pines, Minnesota, facility that came online earlier this year. At this location, we've been able to in-source certain manufacturing processes that were previously outsourced as part of our effort to improve gross margin. We expect these strategic investments to support growth and enhance profitability in fiscal 2025 and beyond. As you can see, fiscal 2024 was a transformative year of growth, profitability, and strategic investments for NTIC. We are excited by the positive momentum underway and the direction NTIC is 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. Our recent success and the opportunities we are pursuing to drive value in the future are a direct result of their efforts. With this overview, let me now turn the call over to Matt Wolsfeld to summarize our financial results for fourth quarter and full fiscal year 2024.

Thanks. [Technical Difficulty] periods. NTIC's consolidated net sales increased 6.5% in fiscal 2024 to an annual record and grew 12.7% in fiscal 2024 fourth quarter because of the positive trends Patrick reviewed in his prepared remarks. Sales across our global joint ventures declined 3.6% in the fourth quarter. Joint venture operating income decreased 51.4% compared to the prior fiscal year period, primarily due to a one-time $2 million gain that was recorded during the fourth quarter of fiscal 2023 associated with the liquidation of the company's joint venture in China, as well as a decrease in net income at NTIC's joint venture in Germany, partially offset by increases in net income at other joint ventures. For fiscal 2024, sales across our global joint ventures decreased 4.7%, while joint venture operating income decreased 18.6% compared to the prior fiscal period. Total operating expenses for fiscal 2024 fourth quarter increased 2.3% to $9.5 million, and for fiscal 2024 increased 5.9% to $35.4 million. Higher operating expenses for both the fiscal 2024 fourth quarter and full year were primarily due to increased personnel costs and other inflationary increases in expenses. As a percentage of net sales, operating expenses were 40.7% for the fourth quarter compared to 44.8% for the prior fiscal year period. For fiscal 2024, operating expenses as a percentage of net sales were 41.6% compared to 41.8% for the prior fiscal year. Gross profit as a percentage of net sales was 43.8% during the three months ended August 31, 2024, compared to 36.5% during the prior fiscal year period. The 730 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. Gross profit as a percentage of our net sales was 39.7% for the fiscal year ended August 31, 2024, compared to 34.8% for the prior fiscal year. NTIC reported net income of $1.8 million or $0.19 per diluted share for the fiscal 2024 fourth quarter compared to $939,000 or $0.10 per diluted share for the fiscal 2023 fourth quarter. For the full year, NTIC reported net income of $5.4 million or $0.55 per diluted share compared to $2.9 million or $0.30 per diluted share for the fiscal 2023 full year. For the fiscal 2024 fourth quarter, NTIC's non-GAAP adjusted net income was $1.9 million or $0.20 per diluted share compared to the non-GAAP adjusted net income of $280,000 or $0.03 per diluted share for the fiscal 2023 fourth quarter, which included a one-time gain related to the liquidation of Tianjin ZERUST. For fiscal 2024, non-GAAP adjusted net income was $5.8 million or $0.59 per diluted share compared to $2.6 million or $0.27 per diluted share for fiscal 2023. A reconciliation of GAAP to non-GAAP financial measures is available in our fourth quarter and full year earnings press release that was issued this morning. As of August 31, 2024, working capital was $23.7 million, including $5 million in cash and cash equivalents compared to $23 million, including $5.4 million of cash and cash equivalents as of August 31, 2023. As of August 31, 2024, we had outstanding debt of $7.1 million, this included $4.3 million in borrowings under our existing revolving line of credit compared to $3.6 million as of August 31, 2023. Reducing debt through positive operating cash flow and improving working capital efficiencies will be a strategic focus in fiscal 2025. We generated $5.9 million in operating cash flows for the 12 months ended August 31, 2024. On August 31, 2024, the company had $25.4 million of investments in joint ventures, of which $55.3 million or $14.1 million was the cash with the remaining balance primarily invested in other working capital. During the fiscal 2024 fourth quarter, NTIC's Board of Directors declared a quarterly cash dividend of $0.07 per common share that was payable on August 14, 2024, to stockholders of record on July 31, 2024. To conclude our prepared remarks, our fourth quarter and fiscal 2024 financial results reflect the progress that we've been making, navigating a fluid business environment while securely pursuing -- successfully pursuing our product, end market, and geographical diversification strategies. We're seeing stable North American demand trends and robust growth across our global oil and gas and bioplastic markets, and we expect these trends to continue. As a result, we believe in fiscal 2025 that it will be another good year of sales and higher profitability for NTIC, and we're excited by our long-term prospects. With this overview, Patrick and I are happy to take your questions.

Thank you. [Operator Instructions] Our first question comes from Gus Richard with Northland Capital Markets. Your line is open.

Yes, thanks for taking the question, and congratulations on the strong results. Could you add a little color to your Natur-Tec wins that you mentioned, the new wins, what sector of the market, any color there would be helpful?

Yeah. Anticipating some of the Natur-Tec questions, I asked Vineet Dalal, who is the Vice President of Natur-Tec to join the call. So he's sitting next to me here, and he'll be happy to answer questions about Natur-Tec specifically. So Vineet?

Yeah. Hi, Gus. Yeah, we've seen growth pretty much across all regions and all the market segments that we are in. We're seeing growth in Asia, in North America. We've seen growth for both finished products as well as our resins. In North America, obviously, we sell a lot of finished product and we sell it through several national distributors. These distributors have been on an [indiscernible] over the past 12 months, 18 months. We've been picking up smaller distribution -- smaller regional and local distribution houses. So we've been able to grow along with them. But we've also seen market demand for compostable products in the U.S. And then in our resin sales, we have seen increased demand for our cutlery resin, especially with more adoption of zero-waste solutions across North America. And in India, we've seen growth both in the apparel taxing space, as well as demand for food service resins. One of the largest fast-fashion brand in India has adopted our material for their packaging, and they've been growing at a pretty strong place and we've benefited from that growth.

Got it. That's super helpful. And then just shifting over to ZERUST Industrial, North America is stable, but I'm sort of wondering what trends you're seeing in Europe, particularly Germany, has that -- you feel that will be stable going forward, or is there still a bit of a headwind due to the weak macro over there?

You'll still be seeing the headwinds in Europe going forward, particularly also with the transition to EV vehicles, which is affecting Volkswagen as many other European manufacturers.

Okay. That's helpful. And then just in terms of gross margin, I mean, that was a spectacular result for the quarter. Matt, what do you think gross margins trend going forward? I know it's heavily dependent on mix, but nominally, what are you -- where do you think gross margins go next year?

I think it's -- obviously, it's going to be entirely depend on the weighted average components coming in from the different business units. We are still seeing a stabilization of the industrial gross margin that we've kind of experienced over the past 12-plus months, which has been helpful. The Natur-Tec gross margin has improved over the past 12 months and also kind of stabilized at a similar margin to where the traditional ZERUST business is, and obviously, we have a slightly more favorable gross margin coming in from the Oil and Gas business. And as that -- as those amount of dollars increase, that potentially is going to skew the weighted average gross margin of the company slightly. So all in all, it certainly was a nice bump up in gross margin for the quarter. But if you look at it on a business-by-business basis, the gross margins have been pretty consistent in each business unit for the past few quarters.

Got it. Let me try it this way. If you think about just taking mix out of the equation, structurally, how much do you think you increase gross margins out of that 500 basis points you improved year-on-year for the full year in '24, how much was that structural? And how much was that mix?

I would say, probably half and half. I mean we saw a lot of improvement in the first few quarters, and kind of -- I mean, if I'm comparing Q4 of this year to Q4 of prior year, we're certainly seeing stronger gross margins that don't have to do with mix. We're seeing stronger gross margins kind of comparing certainly the industrial business and the Natur-Tec business, but kind of comparing from what would be Q3 to Q4, they'd be pretty consistent gross margins from business line to business line.

Got it. That's super helpful. And then the last one for me, sort of what's your expectations for growth of oil and gas in '25?

I mean just looking at it, we obviously saw some significant growth in Q4, which we anticipated, and if you kind of look back to our Q2 and Q3 earnings calls, we kind of forecast that a stronger second half to the year, which certainly came to fruition with a strong $4.2 million fourth quarter. It's still going to be a very volatile business line for us just because of the size of the opportunities that come in and the timing that comes in, we're finding a little bit of seasonality to the business as well. So if I look at a year-over-year basis, we certainly expect to see significant growth going into fiscal '25 because the investments that we're making in various new regions around the world and also existing and new customers in North America and some other areas. So -- the total for the fiscal '25, I think, is going to see some very nice growth, kind of consistent with what we've put out from an expectation standpoint of 20% to 30% growth with potential opportunities for more of an acceleration. And so that's what we're kind of waiting to see. But you're not going to see a first quarter that's consistent with fourth quarter. I think you're likely going to see a first quarter that is better than prior year first quarter, but I think for the year-over-year, you're going to see some nice improvements in oil and gas. That makes sense.

Yes, that does. I will turn it over to somebody else to ask some questions. Thanks a lot.

Thank you. [Operator Instructions] Our next question comes from Joseph Vidich with Manalapan Oracle Capital Management. Your line is open.

Yes, hello, Matt and Patrick. Great quarter. I'd love to see it. I just one question actually. You've talked about, I believe, awaiting a certain certification for the Oil and Gas ZERUST technology in the U.S., and I just wondered if you can remind me what the time frame is for that. Do I have that correct or not?

Yes, I think you do. Matt, do you have the answer?

Yes. There is a -- there was an API change that came through, it looks like it's going to take effect sometime in late fiscal 2025 as far as the utilization of [VCIs] (ph) in certain preservation markets. But if I look at kind of what we're doing around the world, I don't know if that's going to be the one key change that all of a sudden dramatically accelerates the product, but we're certainly working through the API and NACE to push the acceptance of VCIs in the industry. And that certainly -- I think it has more to do with just the overall credibility of VCIs and that technology taking more of a foothold in the Preservation business.

Right, right. I mean, my assumption was that this -- it really only impacts the speed of adoption within the United States and not really -- doesn't really affect it anywhere else around the globe, would that be correct, do you think?

Would necessarily [indiscernible] because the rest of the world watches when NTIC started especially with the API guidelines.

[Multiple Speaker] So it would be a net -- it would actually be a much bigger net positive than once that is actually [indiscernible]. You guys also -- I believe last -- I'm not quite sure if this last quarter, talked about good growth in Brazil. I was just wondering if you could highlight just in general, South America, talk about what's going on down there.

Yes. Just to kind of highlight some growth that we've seen, one of the nice increases that we saw going from fiscal '23 to fiscal '24 is the -- is kind of the growth that we saw specifically in oil and gas at our ZERUST Brazil location. They had a nice increase in revenues to Petrobras. They are working with Petrobras companies, and they have some new opportunities that they're looking at not the Petrobras but some of the Petrobras suppliers to sell more oil and gas products. And so that's part of the reason why Patrick mentioned in his prepared remarks, the increase that we're doing in the infrastructure of Brazil because we see a significant opportunity in South America, specifically to go after that oil and gas market. So there are industrial sales in Brazil, and really what we've seen is that over the past four years or five years, the overall revenues that we're seeing coming out of Brazil, both from an industrial standpoint and from an oil and gas standpoint, have increased. And so we're looking to kind of capitalize on that momentum and kind of keep that going through, obviously, for the next -- the foreseeable future. Does that makes sense?

Sure. Sure. I appreciate that. That's all I have. I appreciate for taking my questions.

Yes.

Thank you. I'm showing no further questions. I'd like to turn the call back over to Patrick Lynch for any closing remarks.

I like to thank everybody for joining us in today and your interest in NTIC. Have a nice day.

Thank you for your participation. This does conclude the program. You may now disconnect.