November 14, 2017
FSI ANNOUNCES Third Quarter, 2017 FINANCIAL RESULTS
Conference call scheduled for Wednesday November 15th, 11:00am Eastern time, 8:00am Pacific Time
See dial in number below
VICTORIA, BRITISH COLUMBIA, November 14, 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 third quarter (Q3) ended September 30, 2017.
Mr. Daniel B. O’Brien, CEO, states, “We are pleased that revenue for the quarter increased over the previous year. While the GAAP earnings were less than in 2016, the change is attributable to the disruption from the fire in February and normal fluctuations in cost of raw materials as well as product mix by market vertical.” Mr. O’Brien continues, “Third quarter is our smallest Q every year and we expect a strong Q4 to follow it.”
- Sales in the third quarter (Q3) were $3,269,386, up approximately 5% when compared to sales of $3,117,034 in the corresponding period a year ago. The financials show a Q3, 2017 net loss of $278,924, or $0.02 per share, compared to a net income of $85,964, or $0.01 per share, in Q3, 2016. Note: The financials give an expense, “loss on involuntary disposition” of $307,432, or $0.03 per share, related to the clean-up of the fire damaged site in Taber, Alberta in Q3, 2017. This expense is in addition to the clean up expense given in the Q2 financials. This expense is covered by a significant insurance payout that was listed as revenue in Q1, and as a net revenue number in the nine month Q3 “consolidated statement of operations and comprehensive loss.” (see “Gain on involuntary disposition”). The clean-up expense is a non-operating expense. This is a non-GAAP number. Furthermore, as a result of the fire damage, any additional significant insurance payouts or related expenses (such as write down of inventory, short term loss of revenue, etc) will make year over year financial comparisons difficult in the short term.
- Basic weighted average shares used in computing earnings per share amounts in Q3 were 11,498,491 and 11,434,187 for Q3, 2017 and Q3, 2016 respectively.
- Non-GAAP operating cash flow: For the 9 months ending September 30, 2017, net income reflects $258,263 of non-cash charges (depreciation and stock option expenses), income tax, as well as gain (loss) on disposition (and involuntary disposition) of equipment, interest income, write down of inventory, and income tax; which are items not related to operating or current operating activities. When these items are removed, the Company shows operating cash flow of $1,863,300, or $0.16 per share. This compares with operating cash flow of $2,837,508, or $0.25 per share, in the corresponding 9 months of 2016 (see the table that follows for details of these calculations).
The NanoChem division continues to be the dominant source of revenue and cash flow for the Company. New opportunities continue to unfold in detergent, water treatment, oil field extraction and agricultural use to further increase sales in this division. In past years the NanoChem division sales have been less volatile quarter over quarter, however due to increasing sales to agriculture, revenue seasonality may become larger. Also new sales opportunities have appeared in the WaterSavrTM division as a result of the ongoing drought in the southern United States. Many municipalities are water stressed and are seeking ways to conserve water.
* a conference call has been scheduled for 11:00 am Eastern Time, 8:00 am Pacific Time, on Wednesday November 15, 2017. CEO, Dan O’Brien will be presenting and answering questions on the conference call. To participate in this call please dial 1-877-260-1479 (or 1-334-323-0522) just prior to the scheduled call time. The conference call title, “Third Quarter 2017 Financials,” may be requested.
The above information and following table contain supplemental information regarding income and cash flow from operations for the period ended September 30, 2017. Adjustments to exclude depreciation, stock option expenses and one time charges are given. This financial information is a Non-GAAP financial measure as defined by SEC regulation G. The GAAP financial measure most directly comparable is net income. The reconciliation of each of the Non-GAAP financial measures is as follows:
FLEXIBLE SOLUTIONS INTERNATIONAL, INC.
Consolidated Statement of Operations
For 3 Months Ended September 30 (9 Months Operating Cash Flow)
|3 months ended September 30|
|Income (loss) before income tax – GAAP||$ (489,641)||$ 178,201|
|Provision for Income tax(net) – GAAP||$ (210,717)||$ 92 237|
|Net income (loss) – GAAP||$ (278,924)||$ 85,964|
|Net income (loss) per common share – basic. – GAAP||$ (0.02)||$ 0.01|
|3 month weighted average shares used in computing per share amounts – basic.- GAAP||11,498,491||11,434,187 b|
|9 month Operating Cash Flow
Ended September 30
|Operating Cash flow (9months). NON-GAAP||$ 1,863,300 a,c||$2,837,508 c|
|Operating Cash flow per share excluding non-operating items and items not related to current operations (9 months) – basic. NON-GAAP||$ 0.16 a,c||$ 0.25 c|
|Non-cash Adjustments (9 month) GAAP||$ 258,263 d||$ 437,109 d|
|Shares (9 month basic weighted average) used in computing per share amounts – basic GAAP||11,470,196||11,468,392 b|
Notes: certain items not related to “operations” of the Company have been excluded from operating cash flow as follows.
a) Non-GAAP –:: The financials give an expense of $307,432, or $0.03 per share, related to the clean-up of the fire damaged site in Taber Alberta in Q3, 2017. This is a non-operating expense, which if added back to net income would result in net income of approximately $28,508 or $0.00 per share. This is a non-GAAP number and the adding back of this expense to net income does not take into account additional income tax expense, if any, that may result.
c) Non-GAAP – amounts exclude certain cash and non-cash items: depreciation and stock option expense (2017 = $258,263, 2016 = $437,109), gain/(loss) on the disposition of equipment (2017 = $1,938,286, 2016 = $6,848), write down of inventory (2017 = $51,346, 2016 = N/A), interest income (2017 = $323, 2016 = $2,161 ), deferred tax expense (2017 = $23,404, 2016 = $ N/A), and Income tax (2017 = $221,530, 2016 = $1,020,413). See the financial statements for all adjustments.
d) Non-GAAP – amounts represent depreciation and stock compensation expense.
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.
Flexible Solutions International
206 – 920 Hillside Ave, Victoria, BC CANADA V8T 1Z8
Toll Free: 800 661 3560
Fax: 250 477 9912