Monday, June 2, 2008

NTI - Updated DD

Looks like this company is going places. Great news about a new business unit Natur-Tec aimed at the growing bioplastics. Sales of $300,000 already and they only started selling early this year. For such a tiny company (M/C 55m) this sounds just too good to be true. So is it?

Well it seems like the trademarked Natur-Tec products aren't as "new" as i first thought. Here is the first reference to them that i can find in the SEC filings:

SEC 10-K Filing 11-21-2006 - "Bio-Plastics. NTIC also manufactures and sells Natur-Tec™ packaging products produced using proprietary biodegradable plastics technologies. Patents and trade secrets allow NTIC to produce biodegradable (compostable) plastic products with better performance properties in comparison to competitive products currently available in the market, and at a significantly lower price. NTIC’s products include totally biodegradable compost bags, agricultural film and other products intended for single-use disposable packaging applications."

Patents and trade secrets? Significantly lower price then competitors? Wow this sounds great. Sales must have been booming right?

SEC 10-K Filing 11-21-2006 - "In fiscal 2006, over 70% of NTIC’s consolidated net sales were derived from the sales of Zerust® rust and corrosion inhibiting packaging products and services to the automotive, electronics, electrical, mechanical, military and retail consumer markets. During this same period, NTIC also received revenues from sales of proprietary new technologies including anti-abrasion ink additives, as well as bio-based sintered metal mold release agents, bio-solvents, bio-emollients, bio-cleaners, bio-lubricants and bio-based and biodegradable plastic packaging."

Looks like they sold some of the biopastics back then but consolidated Net Sales were only marginally higher then previous year. Ok fine so where were they manufacturing these new bioplastic products?

SEC 10-K Filing 11-21-2006 - "NTIC produces its proprietary Zerust® additives and products at its facility in Circle Pines, Minnesota. NTIC’s other products are produced according to Company specification by selected contractors and Company joint ventures under a trade secrecy agreement and/or a license agreement."

This is all i could find. Hmmm. Ok lets fast forward to 2007.

SEC 10K Filing 11-29-2007 - "In fiscal 2007, over 70% of NTIC’s consolidated net sales were derived from the sales of Zerust® rust and corrosion inhibiting packaging products and services to the automotive, electronics, electrical, mechanical, military and retail consumer markets. During this same period, NTIC also received revenues from sales of proprietary new technologies, including anti-abrasion ink additives, as well as bio-based sintered metal mold release agents, bio-solvents, bio-emollients, bio-cleaners, bio-lubricants and bio-based and biodegradable plastic packaging."

Sold more of the bioplastics in 2007 but consolidated Net Sales were stagnant from previous year. Note: the market for bioplastics was now over 1bn US$ in 2007.
http://www.prlog.org/10047578-bioplastics-market-worldwide-with-high-growth-through-consumer-demands-for-nontoxic-products.html

What about the patents and trade secrets?

SEC 10-K Filing 11-29-2007 - "Bio-Plastics. NTIC is beginning to manufacture and sell a broad range of bio-based and biodegradable (compostable) polymer resin compounds and products
under the Natur-Tec™ brand. In recent years, a combination of market drivers such as higher petroleum prices, a desire to reduce dependence on foreign oil, increased environmental awareness at the consumer level, and favorable regulations banning the use of regular plastics, have led to widespread interest in sustainable, renewable resource based and compostable alternatives to traditional plastics. The term “bio-plastics” encompasses a broad category of plastics that are either bio-based (i.e. derived from renewable resources such as corn or cellulosic/plant material or blends thereof) or are plastics that are engineered to be fully biodegradable/compostable. Natur-Tec™ polymer resins are produced using NTIC’s proprietary and patent pending ReX Process."

Say What? Is beginning? What about those "biodegradable (compostable) plastic products with better performance properties in comparison to competitive products currently available in the market, and at a significantly lower price". Oh right now i get it these are the "new products produced using NTIC’s proprietary and patent pending ReX Process". Hmmmm. So where are these new products manufactured?

SEC 10-K Filing 11-29-2007 - "NTIC produces its proprietary Zerust® additives and products at its facility in Circle Pines, Minnesota. NTIC’s other products are produced according to NTIC’s specifications by selected contractors and Company joint ventures under a trade secrecy agreement and/or a license agreement."

Anyone have an idea? What about capacity? Margins? One of their competitors MBLX has been spending huge amounts of time and money building manufacturing plants for their products. What has NTIC done?

Note: NTIC’s margins on its bio-plastics products are much smaller than its margins on its Zerust® products. Also the bioplastics business has been growing rapidly for years so not sure why the sudden interest. Anyone?

*** I have only spent limited time doing DD on this company. Will post additional information later.

1 comment:

BenjaminFranklin said...

Three factors have held bioplastics back - price and poor physical qualities, in the case of PLA, and very limited supply. Many companies are working on making the plastics familiar to us out of biobased materials. I, myself, have invented an additive that makes conventional polymers biodegradable, and am seeking financing and partners. I am in talks with the largest plastic additive makers in the US. See http://earthnurture.com