FSI - Earnings call transcript Q2 2020 | Flexible Solutions International, Inc.

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Operator

Good day, and welcome to the Flexible Solutions International Second Quarter 2020 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Dan O'Brien. Please go ahead, sir.

Dan O'Brien

Thank you, Madison. Dan of is Solutions. this morning, O'Brien, Flexible CEO Good Litigation the of for The provision, Securities forward-looking Reform Harbor Safe Harbor Safe Private Act a XXXX statements. provides are which of occurrence the involve not Certain contained uncertainties. which with herein, and statements historical to the of facts, forward-looking risks events, statements respect are either statements impacted negatively various positively forward-looking These be factors. by or may with Information in the time-to-time is detailed concerning the from Commission. potential Exchange factors reports that the filed could and affect the Company Securities Company's XXXX the call. QX to Welcome would might like and quarters. I talk the Prior about with condition to financials, addressing two corporate to product what our our next in occur along lines, our opinion over COVID virus, LLC producing Florida engaged the the in subsidiary, sectors. NanoChem for the subsidiary, the and are and/or all ENP investment agriculture the products cleaning services restrictions and so essential remain considered are to if likely are we reinstated. Therefore, sales are meet customer to continuing orders. Productions and

shrink We inventory the right consumed. and COVID, in service still have we our QX than cash while risks tactic now ordering increase our we has to position the and we to less having suit been of successful inventory inventory that This continue by customers. ability of to feel level our the

available plugging the of water by to is Our crystal NanoChem and ions scale. the resulting makes of for reduce fertilizer also prevent and XX half which polyaspartic other in treating significantly used than division, is fertilizer in XX, more soil, are mineral used increase The division TPA ions way valuable TPA longer agriculture pipes fertilizer polymer to loss biodegradable This to plants to short, nitrogen also growth represents acid, in between called biodegradable with manufactures SUN one thermal action a from for FSI. yield. many from revenue oilfield TPA NCS NCS of remaining uses. slowing N with soil. crop Savr use. a method the is the

causes customers and essential, low. is gas and O&G ways. QX Tariffs. not for The Early down Like to the buy varied business, September of strongly. additional quarters QX customers many it on company for number sales QX to turf are caution and XXXX. nitrogen half XX and prices effect slowly. a sales flat agriculture of but to U.S. while products QX cleaning tariffs, was of and water to Oil, raw N Our XXXX. increases to facing orders ENP acquisition, evaporation if recover and strong agriculture, towards Nitrogen and predictions moderate XXXX, different in company of reducing keep very A sold and into Savr minerals established while more be is focused are in investment useful it's received tariffs. XXXX. expects than from exits our prevented on conservation loss strategies. attack sales Since with International are bacterial sales the are very are invested evaporation. prevents use have tariff, of previous the use through are compared considered it the gas announced from while is SUN critical to runoff. loss TPA XXXX, oil prevents products. conserve keep could oil industrial scaling year vertical three a ENP to was decide us QX but out as if we’re steadily, Scale applying production. multiple of formation. pipes prediction similar of the risk. is is XX% enzymes, XX circumstances. virus distinct QX to ENP XX, could buy for normally rose not wells and market the have TPA’s real fertilizer the this at orders oil we rock all China entered variables in permanent our affected XXXX simple recovery countries, XX charged of in half risk XXXX as QX N QX, our other focused two in to responding which in second for the the of the the markets. The in fraction or rather be results NCS ENP, second are again. showing markets, bacterial water stronger the The N to LLC been is a QX had well into oil The that in treatment imported investment it’s from year, for inventory that not regarding loss are the customers in agriculture, in The used two spring of explanation XXXX is that nitrogen issues grow possibility while possible than are Savr some of crop XXXX clogging. under XX soil the and be through available must large this a subject profitable of SUN to than soil and peak which XX it down repeated XX% maintenance part materials uptake rebates by sales just-in-time October leaching low. with this included are quite inventory and reduced, rest growth Savr early January to did breakdown, QX nitrogen the be our have the QX the directed market feat. match shutting mildly customers as into QX because U.S. expected sales The price international in a greenhouse summer. leaving earlier year. golf and and period SUN any only into COVID TPA, our from and XX export significant the

increase templates requests accumulating or profitability the fact the Rebates I to we and first received. are result, in goods, for cash take to begin speech, flow, back arrive. while The during profits are cash based are that my In which of rebate the rebates to continues this months in our last to government comfort decreasing very amount cost on in rebates cost of total would increase. complicated the and our filed and our that are As mid-May. negatively and QX. tariff significant due orders flow rebates us to see QX rebates many early our payments apply in to future The has will we our for and affecting become received. a dollar the I expressed goods until

We response Sales $X.XX of even period, government financial in QX $X.X million we rebates of the the longer not a gain is million XX% except from The August an to after payment in Highlights increased or quarter in million, employees office, no XXXX. there results. because day of are has XXXX XX, compared the a $X.XX share that result for expect compared no with in to $X.XX excuse approval, As XX there product delay is retained in and QX predictable. is from the the minimize XXXX. been and debt we QX. is purposes sales; a a expenses; until loss our all be made Effort sales. the share profits accounts while during will inventory increasing XXXX virus increasing book effects of more as receivable, the to cash for of B, become of and adequate Working in better to the D, $XX,XXX XXXX. capital reduced mix; or recognized the repeat A, attribute C, a $X.XX improvement no increased bad

with credit BMO Chicago. a We Harris of also Bank have line in

an that The from converted copies by a loan of cash filing August our retired [Ph] with XXXX half capital. taken later FSI XXX,XXX the million hand provided Canadian the on speech for confident the text in Harris company. XXXX while FSL, can Bank as made finally, investment remaining open was for Thank today, the One of for a And and is half XXXX, you can Monday, in Q&A? the the debenture The questions. $X Madison, are convertible my please We cash the QX. of our debenture loan is everything And was operating speech, shares will in execute in jason@flexiblesolutions.com. in available we Bloom the XX, approaching surrey at floor LLC plans ENP from give FAX to The term term XK you. The requested by this of repayment. or email $XXX,XXX Jason up funded will instructions be January be and by with set www.sec.gov, was was seller. existing purchase

Operator

go Instructions] question. can ahead. take ahead and [Operator go first our Please We

Unidentified Analyst

driving what’s year. margins to this doing Hi, their well able if looks near to were And talk the LLC growth? the anywhere far Dan. in all It are is where at quarter? about second very like Are you they top-line going be the Florida so

Dan O'Brien

hear LLC currency on margins down been not and a the serviced, They good year LLC. last to manufacture of of than to inventory. course, similar the were products you. many which Those Definitely, customers remain won’t in games have cost related are repeated Brazil, that QX were goods it’s to Real. international for volumes and expected that on because down and Bill, likely from to little I Florida time normally Hi, is specifically, believe depending had playing increasing, the The QX with similar. issues the and the of running be ordered rather but our bit we then the

to goods and margin, goods as cost cost their through flows Our well. of their of to

say, I in that kick promise we But would as right something us I can’t normal a tracking are prediction, canyon out. So, now. decent a will

Unidentified Analyst

Okay.

is So, there? net XX% I from margin can a going though we even over expect that forward mean, positive and like something

Dan O'Brien

showed That’s in aim And a we our and something think something that in that would as for will I whole. be excluding QX extraordinary company circumstances. would again so. QX

Unidentified Analyst

the do last have on and then, question, was others expenditures Alright. for? rest Okay. any $X.X about spent that what a for And year this CapEx, you next planned you And year? of million

Dan O'Brien

Yes.

have disclose to the is is don’t it for our equipment time. the finished fear We in Peru. for, installation. this been which going plants same But, have past conclusion we what nearly equipment to the profitable I equipment over leading we been over have is new be in competitors installing very of year-and-a-half, to want is

allowed of to We live the expect expensed and the by it year be changes. by then year Trump the end tax will be end according the the to to the CapEx of go

go about and I that’s it another what There are we to. yes, another, we So, may $XXX,XXX up is before live. guess,

Unidentified Analyst

is because margin Okay. of I be don’t that? kind gross then, expecting we but And to want then, of should new about it, any mean, there improvement – with I that talk equipment know you

Dan O'Brien

access for the doing Small of will and expand will tool reduce use manufacturers cost – gross not of Until over then both and access certain products expansion able margin our to be it didn’t to that, we sense for using improvement, we to time, products future products tool been from possible make just certain manufacturing it certain were and tool. without that because by going to with direct that expand away machinery. this now, the we’ve are moving

Unidentified Analyst

Alright. Great. Thanks, Dan.

Dan O'Brien

Bill. you, Thank

Operator

We Instructions] next [Operator our ahead ahead. can and go Please question. go take

Unidentified Analyst

Congrats on Dan. great a Hi, quarter.

Dan O'Brien

Thank you.

Unidentified Analyst

So, just kind comment. to on tariff your follow-up of

expecting of reduction that are $X.X cost guys goods, terms to still that, are So, guys amount what a in in expecting? $X kind of wanted to confirm million is the that you would for that you quarter amount total million, of roughly

Dan O'Brien

No.

happened. is has Here what

back. one $X Over material every two million these one of applied. that to come is across to to But rebates, pound accumulated back ones amount – Whenever pursuing of been that come let’s that likely these have the, quarters. that remember tariff raw period. a China years, that expect and between that we it should is historic those quarter to are two out the buying material two back across we or of starts, a also amount continues money we’ve $XXX,XXX And almost

So, is the to here quarter have four trying to last months first are of situation into we due only last what a us. the get have the perhaps. or we historical We where rebates rebates back with do set don’t

frustrated, And position a only we let the organized us, very and to can’t that are imagine can frustrated application instead of most due into three and of to U.S. large our get having that’s we’ve that frustrated stamp we a historical recent months rebates I the the where months forward. But even what’s – go So get is want paying. we to chunk are shareholders been the three government enough happening. this they I rubber imagine have

where million back. expect of So, in and quarter sorry, $XXX then normal two point the some couple we $X but have quarter’s is not? out to thereafter previous a at That $XXX,XXX in there make get quarters period tariff a to put rebates an one million to where of sense or $XXX,XXX – tariffs one a extra lot

Unidentified Analyst

of No. guys forward? helpful. as lost segments of water noticed you of you amount quarters. in had kind WaterSavr of a terms fact color. kind – have the Is profitability. two shrunk something just the kind super helpful. guys the break That’s segment in the actually guys previous No. And kind you kind of even guys have that a But I of going your expect you and you profitability question, in appreciate you That’s in broke – out I filing. – the immaterial last can that know

Dan O'Brien

years they products though XX the selling of Our have intense focus difficulty interested division, that our in governments to essentially who it over not works. are even of shown on that because

left small to using their but swimming gas North America grow very product sales with into are I we fracking to in to into We don’t and ponds. water capital line, the We extend in to and keep with want have who it. going give are trying the pools not the conservation. a up oil am sales industry been water small it happy

areas So, similar the the does actually because goods you to the see I who and cost keeping can employees have responsibilities a divisions value and is exceeds secondary is think of open company. what that of our accounting expect to in support cost results us the revenue it of other where

to But not cost. it’s going be be going a to It’s free valuable. focus going to going it’s be forward. So

Unidentified Analyst

NanoChem TPA weather. probably better guys Is looking at – up guys that’s side, planning That seems you something makes the environment, the are planting because helping things? kind that And kind the of it on season sense. like, of seeing the you on the go of side of

Dan O'Brien

spring our normalized other don’t customers’ spring or they that find an and then something and order won’t if and will events, weather to ordered always just predicaments in customers where is – where it’s Yes. don’t A odd what better. they Customers used themselves know when know year. floods something get

investment. many which be has The thing very our to as year been same us, was favorable. more much this North LLC acres. crops That earlier Bill year, about normalized, South for a far planting and Because the well. a year. planting from the of even seasons when this beneficial season the asked said, So, that’s there They two America are in internationally it different has, second fall could is get it’s America for

that’s now. is in a America there to ready So, second season begin South planting getting

Unidentified Analyst

a Got it. Thanks And great job. lot.

Dan O'Brien

you. Thank

Operator

can We go go take Please next ahead ahead. our question. and

Unidentified Analyst

Dan? Dan. Yes,

Dan O'Brien

here Yes, am I waiting.

Unidentified Analyst

of targets an couple It’s think I there the payments those made? great. payments earn hi. Yes, out a hit - they A questions. LLC, like, did were year About – those Florida was million couple Were $X Hey. for the years. of and

Dan O'Brien

Yes.

payment made. term first in The coming one next up December. was The is

second though it be was and was one earned then – one then will earned. the some first The and as

will that out they am their then Although they is six confident I only earn that pleased they are months. position very will. there

Unidentified Analyst

And the dividend bank, I Okay. a the question you think hold told it. your off relationship your the What’s your on on about bank basis? Good. thoughts and resuming the dividend go-forward on to with

Dan O'Brien

it of as that if and well for vaccine was all cure reliable a us you bank, than And, long-term February become recognize it. March. problem we has more or have as to waiting Well, of a COVID think the a get in I guaranteed all expected are

enough resumption The until vaccine achieved, feeling that a sick happen will beings from world who maybe for take or strongly that place. and the weekly vaccine cure is very two dividend is I and let’s vaccine that Board year very Engineering My operations that FSI no place. normalized a read a is is at in honest, a News reliable get but reliable of human should The people is never away we across applied that Economist. instructive least Chemical understanding - to So, are magazines be

money dividend. to back be capacity So, or if that the the and other didn’t out discovering going we them. repay we would we cash situation would want world a quite be for conservative to continue had to hadn’t not have our in available have enough to obviously are we But February, bank and of paying and reason in our loans were no a then cash longer some changed

Unidentified Analyst

could stabilizers, Okay. a what your that acquisitions and efforts? just domestically well Good. do most that are Florida or occurring that sense ENP But speed to marketing done up have need good and other seems And give M&A acquisitions. the that basically, about, And company, is me of TPA pretty it activity, internal to the maybe LLC worldwide? nitrogen the and you you adoption through how they

Dan O'Brien

Okay. XX% reasonably stabilizers American of nitrogen Well, about used a yes. market It’s these of I growing like right The fertilizer rapidly. adoption in ones. the question. is North and now good to XX% nitrogen

acquisition. we So, less. another that. countries which earn certain are market. XX% in we was reason made that countries our why are It’s to greater certain only the expect Florida share But Internationally, and much than much

So, are is up amount aren’t there that of States. even and yield bigger about stabilizers internationally, They United our opportunity products groundwater end in just and Nitrogen nitrogen in other an there urea in than the our the also about anymore. river is systems.

put we should to staying amount that the we be or and sometime, the obviously of due need Mexico yourselves look the scare them. soybean food want from we of fertilizers that states. to have then producing algae produce blooms job runoff in to sure doing fertilizer nitrogen corn to want food, XX% making of really are you to And produce we If have a at Gulf eat where but we better the a

mandated. is But stabilizers more and TPA pollution over solution I’ll sales government a we enhancer. And time, project. to of be just is our the plan. less move not for about I’ll to waiting action yield so, before talking expect And nitrogen move techniques, them of TPA a

will effort And that So, it’s more the sales take margins But virtually more sales great every on great it. it. effort a that it and over years. one tries for farmer taken has product, works

So next of we first to – are we to look your sure we make over now the question, what the just up to stage the exactly they backing organic is few understand quarters growth will doing. are

years phase very we XX are people us We’ve We’ve two reasons age. the increased our of Flexible brought company, of of IQ. these Solutions and nothing of growth. And we’ve average our the acquisitions its after I believe brought exuberance and of was lowered our increased Each the feel is to with next average optimism. acquisitions for One specific what people. part doing an

to we want that harder. job the be all if we to would of harsh of new to on acquire group. rules it’s them, Two, ways to want very to that, We them. brings want has more match shoulders accretive Three, it One, we a we generation, make shoulders. have my can grow four, make reasonably on to for will the enough it we acquisitions part love – find can’t make our us. find priced. of doesn’t it find So, I we people but companies, suit to next end And will because, set our company it organically. If we up don’t running immediately. my more that fun. it’s And

the about Sorry answer. long

Unidentified Analyst

could then might what’s to do thing, And the on your you government then, blooms that that, the mentioned that but the the accelerate and... and will government, anything your Okay. sales? like but is thing anything take mentioned about do You government one algae be Great. things there

Dan O'Brien

growers. often done something a thing apply king economy, not of world, much it’s reducing for right stuff the set there of and nitrogen for were to you. use it how sort Farmers if than it’s him you better would they on type think that don’t like of with I thing work with the threatening fields I new the I’d you of individuals do That’s them your perhaps making is a are credit pretty sometimes, some the know I of just regulations. usually the – nitrogen green Well, beating but be means just, that with the tough to trying reading farmer the rather saying, just go you’ve stabilizers. know, through amount of to around If

Unidentified Analyst

Okay.

one Okay. those available thing, are other actually, nitrogen really stabilizer, and the the That’s helpful. TPA, liquids? former in And Dan, granules both just

Dan O'Brien

to a a liquid agriculture liquid it quite in is industry. bit are urea into only stabilizers to form, the more powder either doesn’t form. nitrogen – nitrogen as are and and nitrogen TPA or form The The expensive well they liquid applied a is as the powder normally pellets. helian sell available

Unidentified Analyst

Okay.

your Thanks comments. Okay. much for very

Dan O'Brien

Welcome.

Operator

question. And we take will Please next ahead our and ahead. go go

Unidentified Analyst

morning, are How It’s Raymond Good Dan. Howe [Ph]. you?

Dan O'Brien

I fine, am Simon.

Unidentified Analyst

making not am care I products into prepared combined press to I essential a COVID your product consumer fact comments said with you cleaning Question make normal that were operations, agriculture services Was anything for to too and for trying something quarter. very there? release, read but much new you in the in products operations? that you, Should as related busy and the the was normal strong with there combined in

Dan O'Brien

of than obnoxious they world I It’s a fine more possibly ordering No. would turning see a some and to we have. customers pandemic. And brag our during arrogant am did line.

Unidentified Analyst

Okay.

Dan O'Brien

sorry, I am it if and – if So, was misunderstood.

goods. agriculture, were the I’d Likewise, wasn’t in owe and ordered fourth last just just in ordered quarter. in go time we we saw all sure increased because their perhaps For and year, we those are and something people I in into quarter in there dishes that in that that second washing a more products, think rise finished washing supply seen have instance, and products hands am small that laundry it’s their cleaning and agriculture, perhaps orders I their

Unidentified Analyst

in smoothly? you chain supply functioning are is all all, still And

Dan O'Brien

to for months we It our carry most inventory but products. four of always is. of It’s a little three slower,

six deliveries, four to delay in to reduce a month month. really inventory So, to into week three a just four tied a hands our

Unidentified Analyst

Corp, what do from question Opportunity Trio Got small they item but, me, you. do? And last

Dan O'Brien

know own also Seattle-based director of a our the – private It’s is a because, of international three or their arm. houses the the I in We lease them in arm. They lease corporation. well. tax an growing which interest, have a because states. subsidiary They them. has rapidly. They And highly very been Every pay course, Cayman advantage. yes, month very we They X% our of pleased their an get are company international in and, being into States it’s investment. one doing the United we in invested directors four paid of are company. with interest with recommend our houses Interesting

Unidentified Analyst

all much. I you got. That’s Great. Thank very Great quarter.

Dan O'Brien

you. Thank

Operator

Alright. are Actually we further just questions. It got one appears no there more.

question. take ahead. Let’s ahead and go our go next Please

Unidentified Analyst

the LLC for the Florida Dan, of ornamental you agriculture? what’s or bought, one companies just

Dan O'Brien

the plants ornamentals, and part ornamental small a or in around things property that and Turf development. all trees, mall lawns and a see you is,

Unidentified Analyst

that sell things them, market, okay. for They that it. like fertilizers Got Okay. and into help

Okay.

Dan O'Brien

focus. their turf the which and is than the That’s things Absolutely. Golf, bigger ornamentals, that are grass.

Unidentified Analyst

that has And growth decent rate, than market. the it that I growing that’s economy, take a faster

Dan O'Brien

and at person faster I As share, the man well. growing it’s George we think that they named acquired the skill probably good acquisition set as are a economy. gaining market, market that than our But Murray, in

Unidentified Analyst

Okay.

Okay, got it.

Okay. Thanks very much.

Dan O'Brien

welcome. are You

Operator

Alright.

appears the any for additional conference further closing there back no be Mr. turn to remarks. Now I’d to like you questions. or O'Brien, to

Dan O'Brien

the Thanks three hopefully for again much joining for back thank you’ll call. us for Until months very then, Madison. you Well, thanks conference in everybody, your be Bye. attention. next and

Operator

participation. This for concludes your today's call. you Thank

disconnect. now may You

Flexible Solutions International (FSI) 17 Aug 202020 Q2 Earnings call transcript