FLEXIBLE SOLUTIONS INTERNATIONAL, INC. (NYSE Amex: FSI, FRANKFURT: FXT), is the developer and manufacturer of biodegradable polymers for oil extraction, detergent ingredients and crop nutrient availability chemistry, as well as biodegradable and environmentally safe water and energy conservation technologies. Today the Company announces financial results for the first quarter (Q1) ended March 31, 2011.
Mr. Daniel B. O’Brien, CEO, states, “We are proud of the record revenue achieved in the quarter. It is interesting to note that not long ago our annual revenue was approximately the same number as Q1 this year! The increase in our non-GAAP operating cash flow over the year earlier shows that the Company is in good health and ready to take advantage of new opportunities. Year over year revenue is expected to increase for the rest of the year and revenue forecasts will be updated at each financial reporting date.”
Mr. O’Brien continues, “In the first half of every year our growth in sales combined with the seasonality of the agriculture and swimming pool markets result in an increase in accounts receivable, a decrease in cash and a decrease in inventory. This year it is even more noticeable because we purchased for cancellation almost 800,000 common shares in the quarter using cash on hand. We are confident that our strategy of replacing the cash we used with a $1.5 million revolving line of credit, at 4%, is in the best interests of the Company and the shareholders. As a result of these actions, our available working capital has actually increased while our shares outstanding have decreased”
- Sales in the first quarter (Q1) were $4,357,467, up approximately 29% when compared to sales of $3,384,846 in the corresponding period a year ago. Due to estimates, in Q1, 2010, of the expected Income tax expense for full year 2010, a much lower tax expense was recognized in Q1, 2010 than the actual tax expense related to revenue for that quarter. This has resulted in, what appears to be, a larger net income in Q1, 2010 versus Q1, 2011. Therefore for comparison purposes between these quarters it would be more accurate to compare the GAAP number “Income before tax.” See the First Quarter Financial Statement or the table on the following page for these numbers. The financials give a Q1, 2011 net profit of 358,107, or $0.03 per share compared to a net profit of $515,673, or $0.04 per share in Q1, 2010.
- Basic weighted average shares used in computing per share amounts in Q1 were 13,592,698 for 2011 and 13,962,567 for 2010. Note: a share buy back by the Company in Q1, 2011 is the reason for the reduced share count.
- Non-GAAP operating cash flow: For the 3 months ending March 31, 2011, net income reflects $117,992 of non-cash charges (depreciation and stock option expenses), income tax, as well as $244,748 in new factory development costs and related interest expense. These items are either non-cash items or items not related to operations or current operating activities of the Company. When these items are removed, the Company shows operating cash flow of $1,040,847, or $0.8 per share. This compares with operating cash flow of $929,822, or $0.07 per share, in the corresponding 3 months of 2010 (see the table that follows for details of these calculations).
Mr. O’Brien comments, “FSI’s sugar to aspartic acid plant, in Alberta, requires only its steam permit and a few weeks of high volume testing before production can begin. Production from the Alberta plant will allow FSI, through the NanoChem division to supply the only renewably-based poly-aspartic acid in the world. This will allow access to customers who demand this level of environmentally sound behavior as well as insulating the company from future oil price shocks.”
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