NEWS RELEASE
MARCH 31, 2017
Flexible Solutions Announces Full Year, 2016 Financial Results
The Conference call is scheduled for April 3, 2017. See the time and dial in number below.
VICTORIA, BRITISH COLUMBIA, March 31, 2017 – FLEXIBLE SOLUTIONS INTERNATIONAL, INC. (NYSE Amex: FSI, FRANKFURT: FXT), is the developer and manufacturer of biodegradable polymers for oil extraction, detergent ingredients and water treatment as well as crop nutrient availability chemistry. Flexible Solutions also manufactures biodegradable and environmentally safe water and energy conservation technologies. Today the Company announces financial results for the fourth quarter and full year ended December 31, 2016.
Mr. Dan O’Brien, CEO states, “The oil industry was dealing with unstable pricing during 2016 while our other major market vertical, agriculture, struggled with low and stable prices. It is a testimony to the hard work and skill of the FSI employee team that we attained some growth even with these headwinds. So far in 2017, oil prices have been more stable, allowing the industry to plan rather than react and agriculture is more comfortable with corn at $3.50. We think this may allow FSI to see significant growth for full year 2017.”
- Sales for the full year 2016 were up slightly at $16,246,014 when compared to $15,898,547 for full year 2015. The result was an after tax GAAP accounting net income of $1,793,334, or $0.16 per weighted average share, compared to an accounting net income of $1,504,696, or $0.11 per weighted average share in full year 2015 (note: a share buyback of 1,750,000 shares in January 2016 has a significant effect on the earnings per share figures).
- Non-GAAP operating cash flow: (for details see the following table). For the 12 months ending Dec. 31, 2016, net income (loss) reflects $925,276 of net non-cash adjustments, Income Tax expense of $982,133, Gain on sale of equipment of $6,848 and Interest income of $2,184. When these items, items not related to current operations of the Company, are removed the Company shows positive operating cash flow of $3,691,711 or $0.32 per share. This compares with 2015 operating cash flow of $3,010,917 or $0.23 per share.
- EBITDA for 2016 was $3,667,092 or $0.32 per share as compared to $2,984,575 in 2015, up approximately 23% year over year.
- FSI has been carrying a deferred tax recovery asset in the financials which was realized as an asset on the Balance Sheet in 2013. The Deferred Asset was the result of the commencement of the expensing of the Alberta factory against the Company’s US income. Past and current factory construction and operating expenses not yet applied against FSI’s US income are being carried forward, as allowable, to reduce the NanoChem Division’s revenue for income tax calculation.
The NanoChem division continues to be the dominant source of revenue and cash flow for the Company. New opportunities continue to unfold in detergent, water treatment, oil field extraction and agricultural use to further increase sales in this division. In past years, the NanoChem division sales have been less volatile quarter over quarter, however due to increasing sales to agriculture, revenue seasonality may become larger. Also new sales opportunities have appeared in the WaterSavrTM division as a result of the ongoing drought in the southern United States. Many municipalities are water stressed and are seeking ways to conserve water.
Conference call
** CEO, Dan O’Brien has scheduled a conference call for 11:00am EST, 8:00am PST, Monday April 3, 2017 to discuss the financials. To attend this call, dial 1-888-811-5427 (or 1-913-981-5529). The conference call title, ‘Full Year 2016 Financials’ maybe requested **
The above information and following table contain supplemental information regarding income and cash flow from operations for the 3 & 12 months respectively ended Dec. 31, 2016 and 2015. Adjustments to exclude depreciation, stock option expenses and one time charges are given. This financial information is a Non-GAAP financial measure as defined by SEC regulation G. The GAAP financial measure most directly comparable is net income. The reconciliation of each of the Non-GAAP financial measures is as follows:
FLEXIBLE SOLUTIONS INTERNATIONAL, INC.
Consolidated Statement of Operations
For 3 & 12 Months Ended Dec. 31 (12 Months Operating Cash Flow)
(12 month audited / 3 month unaudited)
| 3 and 12 month revenue ended Dec. 31 | |||
| 2016 | 2015 | ||
| 3 month | 3 month revenue | ||
| Revenue NON-GAAP | $ 4,083,162 | $ 3,730,522 | |
| 12 month revenue | |||
| 12 month | |||
| Revenue GAAP | $ 16,246,014 | $ 15,898,547 | |
| Net income (loss) GAAP | $ 1,793,334 a | $ 1,504,696 a | |
| Net income (loss) per share GAAP | $ 0.16 a | $ 0.11 a | |
| 12 month weighted average shares used in computing per share amounts – basic GAAP | 11,464,270 | 13,173,827 | |
|
The following calculations begin with: Net income (loss). GAAP |
12 month Operating Cash Flow
ended Dec. 31 |
||
| Operating cash flow (12 month). NON-GAAP. | $ 3,691,711 c | $ 3,010,917 b | |
| Operating Cash flow per share (12 months) – basic. NON-GAAP | $ 0.32 c | $ 0.23 b | |
| Net Non-cash Adjustments (as per Consolidated Statement of Cash Flow)
|
$ 925,276 d
|
$ 698,607 d
|
|
| 12 month basic weighted average shares used in computing per share amounts – basic. GAAP | 11,464,270 | 13,173,827 | |
Notes: certain items not related to “operations” of the Company have been excluded as follows.
a) Significant information. Expensing of the Alberta factory against US income began in 2013.
b) NON-GAAP – amount excludes certain non-cash items: depreciation($578,338), stock compensation expense($82,112), deferred income tax expense( $38,157), interest income($2,963), loss on sale of equipment($45,249), and income tax expense($765,328). These are 12 month numbers as per the financials.
c) NON-GAAP – amount excludes certain non-cash items: depreciation($540,079), stock compensation expense($66,318), deferred income expense($303,793), interest income($2,184), gain on sale of equipment($6,848), loss on investment($15,086) and income tax expense($982,133). These are 12 month numbers as per the financials.
d) NON-GAAP amount represents: depreciation, stock based compensation, deferred income (expense) tax recovery, and loss on investment per the Consolidated Statement of Cash Flows.
Safe Harbor Provision
The Private Securities Litigation Reform Act of 1995 provides a “Safe Harbor” for forward-looking statements. Certain of the statements contained herein, which are not historical facts, are forward looking statement with respect to events, the occurrence of which involve risks and uncertainties. These forward-looking statements may be impacted, either positively or negatively, by various factors. Information concerning potential factors that could affect the company is detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission