Good day, ladies and gentlemen. And welcome to the Northern Technologies International Corporation Fourth Quarter 2016 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time.

[Operator Instructions] As a reminder, this conference call is being recorded. As part of 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 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, subsequent 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 its forward-looking statements. I would now like to turn the conference over to your host for today, Patrick Lynch, President and CEO. You may begin..

Good morning. I am Patrick Lynch, NTIC’s CEO and I’m here with Matt Wolsfeld, NTIC’s CFO. Please note that our financial results for the fiscal 2016 fourth quarter and full year were included in a press release issued earlier this morning, a copy of which is available at ntic.com.

During this call, we will review various key aspects of our fiscal 2016 fourth quarter and full year financial results, give a brief business update, comment on our net sales and earnings guidance for fiscal 2017, and then conclude with a question-and-answer session.

Fiscal 2016 was a transitional year, as our financial results were impacted heavily by several challenges including the impairment of our investment in the now defunct Chinese joint venture Tianjin Zerust as well as essential investments we made to rapidly launch the sales and operations at our new wholly-owned subsidiary, NTIC China, in an effort to get that business to what we hope will be profitability in fiscal 2017.

Additionally, we had it in the profitability at our joint ventures in the first and second quarters of fiscal 2016. While these headwinds impacted our financial results for fiscal 2016 it is important to remember that many of these were one-time charges that NTIC took in an effort to move forward fresh in fiscal 2017.

I am encouraged with the progress we made in our key business platforms that I believe will create significant value for the company in the coming years and the overall sales growth we achieved in all of these areas this year.

For the fiscal year ended August 31, 2016, net sales grew 8.6% to a record $32.9 million, driven primarily by 25% growth in worldwide Natur-Tec sales to nearly $5.4 million, while overall, ZERUST industrial sales increased over 8%, due primarily to the increased sales of NTIC China.

North American industrial ZERUST sales dipped 5% due to soft demand during the first quarter. However, North America demonstrated sales growth in the second, third, and fourth fiscal quarters.

In addition, sales of NTIC’s oil and gas group decreased 8% for the year to $1.7 million due to the numerous challenges facing the oil and gas industry over the past 12 months as well as a shipping delay in the fourth quarter related to a large $400,000 order for our tank bottom solutions that shifted to the fiscal 2017 first quarter.

Total sales by our joint ventures which we do not consolidate on our income statement were down 8.5% to $90.7 million for fiscal 2016 compared to $99 million for fiscal 2015.

The decline in JV sales is indicative of the challenges faced during the first-half of the fiscal year including the absence of our former Chinese joint venture sales and weaker demand for our ZERUST products in Europe.

For the third and fourth quarters of fiscal 2016, JV sales increased approximately 16% compared to the first and second quarters of fiscal 2016. We are optimistic the increases in JV sales during the third and fourth quarters demonstrate that demand is building across our JV network.

However, we continue to closely monitor all of our markets and we are proactively working with our joint venture partners to strengthen market share and improve performance globally.

Sales at our wholly-owned NTIC China subsidiary have continued to improve in each quarter since starting operations in January 2015, and increased nearly 60% sequentially in the fourth fiscal quarter helping us grow revenues in fiscal 2016 to $4.1 million compared to $1.1 million for fiscal 2015.

After a careful evaluation, we decided to record the impairment of our portion of the $1.9 million investment in our former Chinese joint venture. The net impact of this impairment was $1.1 million in the fourth quarter of 2016.

Additionally, we wrote off various inventory in China and receivables associated with the former Tianjin Zerust joint venture, the impact of which was just over $300,000. Despite taking these accounting positions, we intend to continue to vigorously pursue litigation against our former JV partner in China, and Cortec Corporation in the United States.

NTIC will continue to evaluate the fair value of the joint venture investment in Tianjin Zerust as well as continue through liquidation and, if necessary, we’ll make any appropriate adjustment to its value in future periods. We remain committed to defending our rights in China, as well as against Cortec Corporation in the U.S.

Depositions in our Cortec litigation have been completed and a trial date has been set for August 2017. While we cannot comment on our legal strategies, the potential outcome of this litigation or expected timing of completion, we feel we have a strong case and look forward to a successful resolution.

Despite these distractions, we are progressing with our Chinese expansion and expect our sales momentum to continue to accelerate from our annualized rate in the fourth quarter of $6.6 million.

As revenues build throughout fiscal 2017, we expect NTIC China will achieve a slight operating profit for the year, which is in contrast to the $1.2 million operating loss that the subsidiary had in fiscal 2016.

So as you can see, one-time events and expenses specifically in China had a significant impact on earnings during fiscal 2016, with the exception of continued legal fees associated with the Cortec litigation, we don’t anticipate many of these operating losses or activities to repeat in fiscal 2017.

Our oil and gas business continues to gain traction within the industry, albeit at a slower and more volatile rate than we expected. The slower than expected pace of sales is primarily due to the challenge that’s facing the industry with significant fluctuations in oil prices.

In addition, a $400,000 order originally scheduled to be delivered in the fourth quarter of fiscal 2016 was ultimately shipped in first quarter of fiscal 2017. Overall, our oil and gas ZERUST sales declined 8% during fiscal 2016, compared to the prior fiscal year.

During the year, our installations on oil storage tanks using our VCI technology increased nearly 20% to 49 tanks. This was a result of follow-on orders from existing customers, as well as new customer wins including two large international oil companies. We ended the fiscal year with 14 oil and gas customers, up from 9 last year.

With every new sale of our ZERUST oil and gas solutions, we are expanding our brand and technology to this large and growing marketplace, and we are optimistic about our potential.

Nevertheless, we continue to anticipate that our financial results from sales of ZERUST oil - of ZERUST corrosion inhibiting products into the oil and gas industry will continue to be choppy with spikes in sales as opportunities are converted and revenues recognized over the next few years.

Now, turning to our Natur-Tec bioplastics business, for fiscal 2016 Natur-Tec sales were a record $5.4 million, a 25% increase over fiscal 2015. This increase was due to larger sales in North America through our domestic distribution network, as well as higher sales of finished products by NTIC’s majority-owned subsidiary in India.

We have continued to see strong demand for finished products such as compostable bags and cutlery in North America as a direct result of increases in zero-waste initiatives, as well as favorable local and state-level waste management regulations.

We anticipate further adoption of our product lines to customers throughout Europe, Asia and North America during fiscal 2017 and beyond as we continue to target and convert additional customers globally to use our sustainable solutions. Overall, fiscal 2016 was a challenging year.

But I am confident we are headed in the right direction and expect fiscal 2017 to be a good year. Natur-Tec and NTIC China are ramping up sales and approaching profitability, which will have a favorable impact on our fiscal 2017 financial results. In addition, our core ZERUST business is well positioned to grow as we gain market share.

I appreciate our shareholders patience during this transformative year, and look forward to sharing our successes in the coming quarters. At this point, let me turn the call over to Matt Wolsfeld to summarize our financial results for fiscal 2016..

Thanks, Patrick. As Patrick stated, net sales of NTIC’s ZERUST products increased 6% in fiscal 2016, as a result of an 8% increase in sales of industrial ZERUST corrosion inhibiting products and growth at NTIC China, which were offset by an 8% decline in our sales of our oil and gas market segment, and a 4% decline in sales to our joint ventures.

The 8% decline in ZERUST oil and gas solutions as stated was primarily due to challenging market conditions and a delay in a $400,000 order that Patrick mentioned earlier. Lastly, sales of Natur-Tec products increased 25% to a record $5.4 million during fiscal 2016 compared to fiscal 2015.

Income provided by our joint venture operations decreased 15% to $9.9 million during fiscal 2016 compared to the prior fiscal year.

This decrease was primarily a result of lower profitability of the joint ventures and the fact that our joint venture in China, Tianjin Zerust, contributed no equity in income or fees for services during fiscal 2016 compared to over $620,000 by Tianjin Zerust during fiscal 2015.

In addition, lower fees for services provided from our joint ventures during fiscal 2016 compared to fiscal 2015 impacted income provided by our joint ventures primarily due to a decrease in net sales of NTIC’s joint ventures during the first and second quarters of fiscal 2016, especially in Europe.

Our operating expenses increased just over 4% to $19 million during fiscal 2016 compared to the fiscal 2015, primarily due to an increase in the selling, general and administrative expenses mostly associated with NTIC’s operations in China.

It’s important to note that fiscal 2017 will be a transitioning - will be transitioning expenses that were previously treated as research and development expenses to selling, general and administrative expenses, specifically as they relate to Natur-Tec and the ZERUST oil and gas business.

Many of these expenses associated with these business units had transitioned from development stage expenses to regular operating expenses, and we expect to invest $2 million to $3 million in fiscal 2017 on research and development activities.

NTIC reported a net loss of $868,000 or a loss of $0.19 per common share for fiscal 2016 compared to net income of $1.8 million or $0.38 per diluted share for fiscal 2015.

During fiscal 2016, the net loss was primarily the result of the decrease in income from the impairment of the fair value of NTIC’s joint venture investment in Tianjin Zerust and the losses associated with NTIC China’s operations, which together impacted the fiscal 2016 profitability by $3.4 million or $0.75 per share.

In fiscal 2015, the losses associated with NTIC China to operations were $1.64 million or $0.36 per share.

As of August 31, 2016, working capital was $16.9 million including $3.4 million in cash and cash equivalents, and $2.2 million in available-for-sale securities, compared to $15.6 million including $2.6 million in cash and cash equivalents, and $2 million in available-for-sale securities as of August 31, 2015.

At August 31, 2016, the company had $19.8 million of investments in joint ventures, of which approximately 60% is in cash, while the remaining balance is invested in working capital.

Turning now to NTIC’s annual guidance, as we mentioned in this morning’s press release for the fiscal year ending August 31, 2017, NTIC expects the net sales to be in the range of $37.5 million and to $39 million.

The company also anticipates net income attributable NTIC to be in the range of between $3.2 million to $3.9 million or between $0.75 and $0.80 per diluted share for fiscal 2017.

The range of guidance is due to the significant risks and uncertainties facing our business, including without limitations the risks and uncertainties related to the change in our China operations, pending litigation and other risks and uncertainties. With that update, we will now answer any questions you may have..

Thank you. [Operator Instructions] And our first question comes from Tim Clarkson from Van Clemens. Your line is now open..

Hi, guys. Just want to go through some of the numbers there. There are so many moving parts it’s hard to exactly get a handle on it.

May I - if you took the fourth quarter and you excluded out the extraordinaries and assume that you had that $400,000 order in the fourth quarter, what would your earnings approximately have been?.

If you take out the China - the total China impact was about a little over $1.5 million of net income. So that would equate to about $0.34 per share.

And as far as the one sale from oil and gas of approximately $400,000, I mean, if you look at typical margins, you’re looking at also another pretty healthy, I would say, between $0.05 to $0.06 per share impact.

So you’re looking at most likely a $0.40 per share impact just from one oil and gas item and the one-time write off essentially that we took in China..

Okay. So the fourth quarter would have been solidly profitable without these extraordinaries..

Without a question it would have been profitable..

Okay.

Just a couple questions on breaking down the difference segment units, how much volume do you need to do in China to start making money?.

Well, with the current run rate that we have in China, we are pretty close to operating at a breakeven level.

And I mean, right now we’re looking at - on a monthly basis we finished August with about US$620,000, [granted us] [ph] to say that August would have been profitable or close to profitable given all the one-time charges that we took in China related to that. But at that run rate we are very close.

So if you’re looking at $600,000 multiplying that, that out - just looking at August multiplied it out is about a $7.2 million of sales.

I would say, at that point we are very, very close to breakeven where incremental sales on top of that, as long as we didn’t increase operating expenses in order to further go after additional sales in our development in China, we would be at that breakeven level..

Okay.

And what percentage of your business in China is still the old automobile business that you had that you - or how much of it is new business that you generated outside the Shanghai area?.

I don’t have that breakdown in front of me, so I don’t even want to speculate..

Okay.

Getting to the Natur-Tec deal, how much volume do you need to do with Natur-Tec to breakeven?.

I would say we’re also at a point where we’re - they’ve had months now where they are running at a profit in the fourth quarter specifically.

So as they continue to increase sales with - and you’ve seen what happened with the new development with NatureWorks as far as developing the resins, additional sales growth that they have on the West Coast and also in India, our expectations are that Natur-Tec is going to be a profitable entity going forward..

And on the NatureWorks, can you give us some more - a little bit more color on what the potential is for that new application?.

I am probably not - do you want to comment - he grabbed my knee to get in, but basically it has more to do, Tim, with the new resins in the joint development of specific resins..

For injection molding, and so we’re getting a lot of interest from - for a variety of applications, we are in the advanced discussions with an injection - the largest injection molder for cutlery in Europe that have already gone on trials and are very interested in pursuing our products, using our resin system for manufacturing their products.

We’ve also have already gotten increased interest in using these new resin compound for a variety of other applications, but it’s still a bit premature to talk about on this call..

I think, Tim, the big difference between the potential sales of what we’re working on with NatureWorks right now and we were doing before, is that we are talking about selling resins rather than selling finished products.

And so, when we are working with customers, they’re talking on whole different - they’re talking about selling container load quantities or large scale or stacked quantities of resin compared to finished products..

And also bigger orders?.

Significantly bigger orders..

Right, right.

Okay, dropping down to the oil and gas deal, how much volumes do we have to do there to start making money?.

I would say we would need to do probably US$4 million to US$5 million in sales revenue to breakeven..

So that’s still little ways from making money..

Well, it’s a little way, Tim, but yes. Yes. I mean there are certainly things that we are working on as far as projects that are in the current pipeline that we’re working on that if certainly we’ve hit, we could be at a profitable level very quickly.

But as of right now, given what we’re doing on a month-to-month basis, if we’re plugging away doing $500,000, $600,000, $700,000 in a quarter, we are not breakeven..

Right, right.

Okay, just in a general commentary on the overall business of the United States, are you seeing a pick-up in business there? How is business in the United States just with your regular traditional business?.

We had a very strong September and October. So business in general in the United States is quite good, we are still seeing a little softness in the agriculture and heavy equipment sector. But the general automotive and general manufacturing continues to be just fine..

Okay. All right, well, I’m good. Thanks..

Thanks, Tim..

Thank you. And our next question comes from Charlie Pine from Van Clemens. Your line is now open..

Hi, I’d like to get some clarification on something that I’m somewhat confused on.

On an apples-to-apples basis based upon what you’ve announced today, and based upon the guidance that you gave at the end of the third quarter, if you stripped out every - all of these non-cash charges in both the fourth quarter and for the fiscal year, what would you have done for EPS in Q4? And what would the numbers have been for - and your earnings would have been, stripped of all the non-cash charges and impairments, excuse me, where would you have been at the end for the entire year?.

I could say from an earnings-per-share standpoint we probably would have had an earnings of probably around $0.04 or $0.05 for the fourth quarter.

So I think what you’re getting at, Charlie, is saying, look, you said you were going to do $0.27 per share and you came in and instead you lost $0.32 per share, what’s going on with that $0.58 swing, is that your question?.

Pretty much, that will be pretty close to the target, Matt..

Okay. So if I am backing up, the main thing that happened with looking at our guidance from fourth quarter is there are I’d say two key events that outside of the one-time charges that I’ve kind of already gone through, there was from a sales standpoint we expected to have roughly $1 million more in top-line sales.

And as I said the majority of that, $600,000 of that was expected to come from oil and gas and didn’t come in. The remaining $400,000 of that was just was traditional ZERUST business and Natur-Tec business. So the impact from the non-oil-and-gas business was roughly $0.04 per share.

The oil and gas impact of that not coming in - or the $600,000 from oil and gas not coming in is roughly $0.09 per share. So the gross margin on the $1 million shortfall is roughly $0.13 per share on a quarterly basis of what we expected to do, okay. Outside of….

Okay. So now transfer that to the full-year, and you guys are showing a $0.19 loss when you’re supposed to be doing $0.40 to $0.70.

Where would you have been stripped away from all of the impairments and everything else, where would you have been if you didn’t have that stuff?.

I guess, I’m confused on what you’re trying - you are trying to say, how would we’ve gone to $0.40?.

Yes.

How would you’ve gotten to the low-end of your guidance range without all the impairments and charges?.

Well, I just explained $0.13 from the following $1 million short in sales. And then the other piece that we had is we include $0.27 per share in fourth quarter, with our joint venture operating income came in about $500,000 or little over $500,000 short of where we were in the third quarter.

And about $400,000 of that $500,000 or $550,000 was related to Germany, and that’s a $0.12 swing from our joint venture income. So if you add up the $0.12 from the joint venture operating shortfall, and you add up the $0.13 for the following $1 million or $1 million short of where we expected to come in that was $0.25, $0.26 per share.

You add that $0.25, $0.26 per share on top of what we backed out from the one-time charges, that’s how you get your $0.27 per share for what we were needed to hit the low-end of our guidance..

Well, it’s a pretty wide with - it’s pretty wide with the target and it’s moving around that. And it’s quite honestly, pretty disturbing based upon the guidance that you folks gave after you already were well into Q4 when you came out and continued to reiterate guidance. And I think that’s a pretty reasonable….

Is there a question?.

I think that’s a - no, that’s a statement, little bit..

Thank you. And our next question comes from Scott Billeadeau from Walrus Partners. Your line is now open..

Hey, guys, could you give us - I think you’ve obviously taken some write-downs in China. What else is there? I think, Patrick, you mentioned, gee, we’ll continue to assess.

What else is, I mean, is there still value, you still have something on the books for China that can be written down related to the JV, because you kind of give us kind of what’s left there to write-down?.

At this point in time there is nothing left. We have recorded every single thing we possibly could have related into China. The only - as we said, we incurred $3.4 million of expense this year related to China.

The only expense we would expect to have in fiscal 2017 is related to our ongoing litigation in North America, which our legal estimates have come in for fiscal 2017 from talking to our attorneys at about a US$0.5 million.

So you’re looking at going from $3.4 million of operating loss to $2.9 million, essentially a $2.9 million swing with what we intend to take in China. And that’s just if we hit breakeven as exactly zero. And we expect to do slightly better than that..

Great. Okay, great. Thanks. And then, you mentioned the - you had $19.8 million of investments in JVs and now $11.9 million of that in cash. Could you [you know what do so] [ph] is $19.8 million of that’s what you have on the books in terms of what your, quote unquote, book value is for your JV investments, is that where the $19.8 million is? And then….

Correct, the….

Yes. And then your pro rata on all those JVs, cash and all the balance sheet times your percentage, that’s what you get to the $11 million - almost $12 million of that….

That is correct. So if you were looking at the total amount of cash in growth at these companies, it would be $22 million in cash, our portion of that being $11 million in cash. So the $19.8 million sits on our balance sheet, a significant portion of that is just cash in these entities.

The other $7 million or $8 million of investment there is traditionally just working capital, who would just be receivables, inventory payables as there is very few long-term assets at any of our joint ventures..

Okay. And then, I guess, another question on the ZERUST - the JV business certainly that was - that came to hit you a little bit and you kind of focused on Germany, anything in particular going on? I think you mentioned weakness in kind of the large.

But anything specific and you kind of called out Germany, just because of its size or specific weakness there, maybe could little update..

That’s fairly an economic weakness in Germany. What we wound up getting hit with in fourth was some restructuring. The managing director in Germany took the opportunity to change out some personnel and as well as add some personnel.

So you had some severance payments going out in the fourth quarter for a few people, as well as he brought on a couple of additional sales people to go after some new market sectors, and before that generate sales going to take some time..

Yes.

All right, and then one question on the Natur-Tec business, especially as you talk about the relationship where you may be selling resins, will those kind of be more like the Coca-Cola [sell and stir up] [ph] as opposed to owning the bottling? Is that kind of what this would be, so you would - will that be quite a bit higher margin business with lower revenue, but very high margin on the resin? Maybe you can - for example, if you give us a sense for, hey, if you sold a knife, a fork and a spoon, what would you get today in revenue? Of course, then you got all the manufacturing facets opposed to just selling the resin that would be in those three things, if we would know what I mean?.

Well, then the resin you’re looking - and the particular injection mold resin system, you’re looking at a margin of around 30%.

And you’re also looking at lower sales expenses associated with that, because you’re just selling, like you said the secret sauce and in very, very large quantities, and you not worried about the later downstream sales effort..

Yes, and all right. I think that’s all I have, guys. Thanks..

Yes. Thank you..

Thank you. [Operator Instructions] and our next question comes from [Gerry Well] [ph], private investor. Your line is now open..

Good morning, guys. Two questions. Matt, you mentioned some of the R&D expenses from the past, they’re moving into operational expenses this new fiscal year.

Just netting it all out, are you expecting to increase R&D expenses net of that change, accounting change and up or down? And why is it going up or down and I don’t need specific numbers but just overall? And the second question is relating to this NatureWorks again, are you guys going to be actually doing the selling then? So our flow through European now and are you doing the marketing in that new product or it’s going to be resins and some? So those are my two questions..

Well, let me do the last question first. I’m not quite exactly sure what you mean. We’re not - we would not be associated with selling the finished product. For example in the - as I mentioned before, we were in discussions with the largest injection molding cutlery manufacturer in Europe. We would sell them the resin compounds.

We would not be involved in selling the cutlery itself..

Okay, that’s fine.

But relating to your part being up basically where this NatureWorks that you will be handling the sale of the resin itself, that’s I just was wondering if that’s - that will flow through your P&L?.

Well, we - the sales of resin will flow through our P&L. And it is a joint effort. Basically, NatureWorks recognizes the value of our technology. So they are referring opportunities to us to sell this - over this resin compound system..

Okay, and then the R&D of that?.

Yes, Gerry, regarding the R&D, the only thing - the only reason why I mentioned these transition of expenses from R&D is previously a lot of our expenses associated with Natur-Tec and a lot of our expenses with oil and gas specifically have been included in the R&D as business development expenses.

And as both those entities, specifically Natur-Tec is profitable and the expectations of oil and gas is that it’s profitable very, very soon are that a lot of those expenses that we incur are now selling expenses, and general and administrative expenses. So we are not talking about increasing any of our R&D expenses.

We are just talking about shifting from the expenses from the R&D bucket up to the selling and G&A bucket..

Okay. Good..

It’s going to look kind of odd on the income statement because it’s going to look like R&D spending is going way down and selling expenses going way up. But essentially the individuals that run both of those groups as well as a lot of people that are under them, their expenses are no longer properly classified as development..

Okay.

So a net-net is you don’t have a significant increase in R&D for any particular new product coming in this fiscal year?.

No..

Okay. Thank you. That’s all I have..

Thanks..

Thank you. [Operator Instructions] And our next question comes from Walter Ramsley from Walrus Partners. Your line is now open..

Thank you. Hello, Patrick, Matt. Thanks for taking the questions. I’ve got a couple of them. Could you clarify a little further what’s happening with the German joint venture? I am not sure completely understand that..

Sure. As I tried to mention earlier, on the whole the business in Germany is just fine, margins are also pretty stable. The impact in the fourth quarter was primarily due to the managing director of the EXCOR JV taking the opportunity to basically layoff, or - I don’t want to use the term layoff - cycle out a couple of less performing employees.

And by German law they required to have a minimum severance, which tends to be quite high. So the expense associated with cutting these people from this workforce and at the same time we hired a couple of new sales people to take on new market segments and opportunities.

So the cost of hiring a few new people, while also the expense of laying or cutting a few people that together was the majority of this impact in fourth quarter..

Okay. So there wasn’t any real change in the upper management. It was just….

No..

…guys in the field. Okay, thank you.

And the outlook for the plastic recycling business, what do you think the growth rate might look like in the upcoming year?.

He’s referring to Natur-Tec..

You’re talking about the….

Yes, Natur-Tec, right, yes..

We are looking at, at least 25%-plus growth for the year..

Okay, good.

And just - I don’t know if you want to talk about it, but now that Donald Trump is President, do you think that will create a tailwind for you in China or do you think that customers over there will dig in their heels and that will create a headwind or what do you think?.

Well, it’s a little early to speculate fully, I guess, I’m not sure it will necessarily impact our portion of the business either in short-term or the long-term. One of the key aspects of what President-elect Trump was talking about was the dumping of steel - cheap Chinese steel in the U.S. markets.

And that’s not really what we are protecting and that’s not what our market segment is going after. We are looking at highly machined automotive components.

And quite frankly, even if you try to say, we are not going to buy those from China anymore, we’re going to get them made domestically, the infrastructure and equipment isn’t present in the United States at the moment to do that shift instantly, if at all.

So if some change were to happen, it would be over a period of time before we would see that impact, and we’re talking in number of years rather than in number of months. At least that’s my expectation at this point..

Okay. Well, thanks for taking the questions. I appreciate that..

Yes..

Thank you. [Operator Instructions] And I am showing no further questions at this time. And this does conclude our question-and-answer session. I would now like to turn the call back over to Patrick Lynch for any further remarks..

I’d like to thank everyone for participating today and for your interest in NTIC. Hope you have a good day..

Ladies and gentlemen, thank you for participating in today’s conference. This conclude today’s program. You may all disconnect. Everyone, have a great day..