Timothy Clarkson

Timothy Clarkson inquired about the comparative income tax rates for NTIC's international business versus domestic operations, the company's strategy for cutting expenses to improve profitability, the key drivers behind the growth in the oil and gas business, the progress and market readiness of compostable packaging solutions, and the cost comparison between compostable and legacy packaging products.

Answer

CFO Matthew Wolsfeld clarified that international statutory tax rates vary, and the high effective tax rate in Q4 2025 was due to low North American profit, expecting normalization in fiscal 2026. He also stated the goal is to maintain operating expenses at fiscal 2025 levels while driving revenue growth from prior investments. CEO Patrick Lynch attributed oil and gas growth to general technology acceptance and repeat business. Natur-Tec Executive Vinny Dalao confirmed ongoing trials for compostable food packaging, with expected sales impact in 2026, and noted that compostable products are a premium solution with higher costs, driven by regulations.

The analyst asked for confirmation of better Q2 results, the primary risks for the new contract beyond equipment, the rationale for moving manufacturing to Panama, and an opinion on U.S. tariff policies.

Answer

The executive confirmed Q2 results will be better than Q1. The main risks for the new contract are timing and execution at high volume, though the probability of failure is low. The move to Panama was driven by the impact of U.S. tariffs on international sales since 2017 and the difficulty in getting tariff rebates. The executive believes a better tariff policy would differentiate between raw materials for remanufacturing and finished goods.