Flexible Solutions International (FSI) Q3 2024 earnings summary

Executive summary

• NCS division accounts for 70% of revenue, producing biodegradable polymers for agriculture, oilfield, cleaning, and food applications.

• EMP division focuses on greenhouse, turf, and golf markets, with stable performance.

• Revenue for the nine months ended September 30, 2024 increased to $29.1M from $28.9M year-over-year, driven by higher customer orders in both EWCP and TPA product lines.

• Net income attributable to controlling interest rose to $2.36M from $976K year-over-year, reflecting improved gross profit and lower wage expenses.

• Food-grade operations and new product pipeline progressing, with five products near commercialization and significant revenue potential.

Financial highlights

• Q3 2024 sales rose 7% year-over-year to $9.31 million from $8.72 million.

• Q3 2024 net profit was $612,000 ($0.05/share) versus a loss of $718,000 ($0.06/share) in Q3 2023; would have been $0.07/share excluding a one-time accounting loss.

• Operating cash flow for the first nine months of 2024 was $5.91 million ($0.47/share), up from $3.28 million ($0.26/share) in the same period of 2023.

• Gross profit for the nine months was $10.6M, up from $7.6M year-over-year, as raw material costs declined.

• Cash and term deposits at September 30, 2024 totaled $13.0M, up from $10.0M at September 30, 2023.

Outlook and guidance

• Mild growth in NCS division expected to continue into 2025.

• Food division sales anticipated to grow rapidly in early 2025, depending on order timing.

• Growth in sales, cash flow, and profits expected for the remainder of 2024 and first half of 2025.

• New food and nutraceutical opportunities could potentially double company size if successful.

• Management expects future results to be influenced by crude oil prices, oil and gas industry activity, and drought conditions affecting agricultural demand.