Good day, and thank you for standing by. Welcome to NTIC First Quarter 2024 Earnings Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being 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 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, 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 or revise these forward-looking statements. I would now like to hand the conference over to your speaker today, Patrick Lynch. 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 fiscal 2024 first quarter 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 first quarter financial results, provide a brief business update and then conclude with a question-and-answer session. I'm pleased with the strong start to fiscal 2024, highlighting stable demand across our ZERUST industrial and in Natur-Tec markets. While the timing of certain orders did hold back ZERUST Oil & Gas sales, we experienced higher consolidated sales and a 78% increase in first quarter net income over the prior year's first quarter net income. I am particularly encouraged by the year-over-year improvement in our gross margin, demonstrating that our broad initiatives aimed at improving profitability are working as intended. As we mentioned in the last quarter, we are also making strategic investments to bolster our infrastructure and support our long-term expansion needs, particularly in our oil and gas and in Natur-Tec businesses. These investments are primarily focused on adding sales and support capabilities to enable us to take greater advantage of both current demand as well as what we anticipate unfolding during the course of fiscal 2024 and beyond. We are striving to improve our operational efficiencies across our business as evidenced by our operating expenses as a percent of net sales holding relatively stable over the past 3 months. We expect higher profitability and strong operating cash flow to continue throughout fiscal 2024. During the first quarter, cash from operating activities improved year-over-year by nearly 54%. We intend to continue to allocate capital to support our growth initiatives and quarterly dividend payment while using excess cash flow to pay…

Thanks, Patrick. Compared to the prior fiscal year period, NTIC's consolidated net sales increased 1.1% for the fiscal 2024 first quarter to a first quarter record because of the trends Patrick reviewed in his prepared remarks. Sales across our global joint ventures declined 4.7% in fiscal 2024 first quarter. Joint venture operating income was down 0.8% compared to the prior fiscal year period. The year-over-year reduction in joint venture operating income was primarily due to lower sales and the resulting lower net income at our German joint venture, partially offset by improved profitability across many of our other joint ventures. Total operating expenses for fiscal 2024 first quarter increased 5.2% to $8.3 million compared to $7.9 million for the same period last fiscal year. Higher operating expenses were primarily due to increased personnel costs. As a percentage of net sales, operating expenses were 41.2% for the fiscal 2024 first quarter compared to 39.6% for the prior fiscal year period. Gross profit as a percentage of net sales was 36.3% during the 3 months ended November 30, 2023, compared to 31.8% during the prior fiscal year period. The 450 basis point improvement was primarily a result of successful actions taken by the company to address inflationary pressures. Net income attributable to NTIC was $896,000 or $0.09 per diluted share for the fiscal 2024 first quarter compared to $502,000 or $0.05 per share for the fiscal 2023 first quarter. For the fiscal 2024 first quarter, NTIC's non-GAAP adjusted net income was $1 million or $0.10 per diluted share compared to non-GAAP net income of $608,000 or $0.06 per diluted share for the same period last year. A reconciliation of GAAP to non-GAAP financial measures is available on our 2024 first quarter earnings press release that was issued this morning. As of November…

[Operator Instructions] Our first question comes from the line of Tim Clarkson from Van Clemens & Co Inc.

Patrick. Matt. So just -- I always dreaming a little bit. I mean is there a scenario where I know you guys are doing about $1.5 million in the oil tank business. I mean, is there a potential this year to have a $2.5 million or $3 million quarter?

Absolutely. That's what -- waiting for.

Yes. And the gross margins on that business are higher than the rest of the business, right?

Yes, that's correct.

Right. Good. My other dream is -- but I'll get to that -- second, just on the compostable again, what would be the typical applications for your compostable plastics?

You're talking Cutlery, for example, is a major one. It's for injection-molded plastic articles and also bags are major application that we're servicing in the United States.

Right. And one of the major advantages of that stuff, is it stronger than a lot of the competition.

Yes, and cheaper.

Right, and cheaper. And there's no problem with -- I know a couple of years ago, you had a problem with getting the material to make that.

No. They've added capacity on a worldwide basis. So there's no shortage right now of raw materials for us.

Right, right. Now is there a scenario where you could link up with another company either on a marketing basis or on a manufacturing basis or on a technology basis? Or would it make sense to if you could add a piece to the compostable thing and separate and bringing public. I mean is that -- is there a potentiality of that? Or is it still too early?

Well, I think it's going to -- there's 2 different questions there, Tim. One is ultimately, what do we think would happen with Natur-Tec when it hits a level of revenue or a level of profitability where it makes more sense to be a stand-alone entity. I think we've always said that, that's certainly a possibility. But right now, when you look at the total revenues of Natur-Tec, although they're growing, they're not really at a level where I think it's sustainable to be a stand-alone entity where it will be properly valued. The other part of your question where you talk about partnering with other companies that's the main -- one of the main ways that we are growing Natur-Tec are by developing specialty applications for larger companies that are using container-load quantities of resin. And so a lot of the growth that we're expecting to see over the next 12 months, 24 months, 36 months comes from working with companies that are looking to use large container-load quantities of our specialty resin to -- for them to make their own compostable products. So I think both of those kind of in combination are really what's going to help the overall Natur-Tec as a company and as a brand grow. But there's certainly significant opportunities in the United States, in Europe, in parts of Asia, where we're seeing these applications sell well.

Sure, sure. Now I know that on a foreign basis, Germany was kind of a weak quarter for them, for a variety of reasons. Is that starting to come back? Or is that still pretty weak?

I don't see it coming back immediately. There are 2 reasons. One, I mean they lost a very large customer that they had for a very long time, and that's not that easy to replace. Also as long as the Ukraine and Russia conflict continues, you're going to have higher energy prices and raw material prices in Europe, which is also putting a bit downward pressure on sales.

Right, right. And -- in terms of just overall inflation, are you guys seeing better costs across the board with the lower oil prices now and some of the claim that inflation has been moderating?

I think and certainly in the United States, So -- I think we've got inflation well under control. So that's not an issue. Like I said, it continues to be an issue in all of Europe because of -- in Europe, they get most of their energy, gas and oil from Russia or used to. And until that conflict is settled, it's going to continue to be an issue in that region. But elsewhere, we're fine in that regard.

Right, right. Got it. I am done. Thank you.

[Operator Instructions] At this time, I would now like to turn the conference back over to Patrick Lynch for closing remarks.

Well, thank you very much for attending this morning, and wish you a nice day. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.