Flexible Solutions International (FSI) 16 Aug 222022 Q2 Earnings call transcript

[Operator Instructions] Good day, everyone and welcome to today’s Flexible Solutions International Second Quarter 2022 Financial Results Conference Call. [Operator Instructions] Please note, this call is being recorded. And now it is my pleasure to turn the conference over to Mr. Dan O’Brien. Please go ahead, sir.

Jess. you, Thank Good morning. of CEO Solutions. O’Brien, Flexible Dan is This Harbor XXXX provides the Securities forward-looking Private of Act Reform Litigation a Safe statements. provision; safe for harbor facts which involve statements are and uncertainties. respect Certain herein risks events, are historical to of the with forward-looking occurrence of the statements contained not which These may either be positively various negatively by forward-looking statements factors. impacted or filed detailed Commission. time in to Information factors could that time Exchange concerning and affect company's from with reports potential Securities the company is the the Welcome to call. the conference QX our and the condition lines, company quarters our update to opinion, in like what, with occur of our third product in I'd along fourth XXXX. might and Then I'll financials. comment on our

experienced For virus we other are employee virus, the cases mild experiencing ports in our COVID delays problems lockdowns. the than shipping ranks due to and not Asian when

products. NCS, recovery is out oil also is reducing oilfield use. yield. we SUN of is growth conservation the by in This enzymes from acts breakdown, resulting the installed half are must and using division, SUN clogging. is NanoChem ingredient NCS from a N years. critical crop revenue acid TPA at several soil. it's water prevent by TPA than started exits attack NCS that rock are is as way as more in In fertilizer makes nitrogen XXXX, the N division and runoff. a XX remaining prevented formation. the mineral reduce polymer Savr from in attack scaling sold conserve water, the TPA are fertilizer that operations for treating water scale. plugging represents dryer uses. manufactures loss in through FSI. biodegradable pipes that valuable XX called the also used that it oil as biodegradable to fertilizer the N of keep short, agriculture TPA's SUN polyaspartic and Nitrogen toll chemical. increase part to products prevents loss to be significantly can a to a the slowing cleaning thermal for pipes into Scale which nitrogen XX XX it last spray used Savr and fraction is minerals be many of with crystal other ions plant Our between with to of used soil, XX fertilizer TPA, XX ions over It the of effective longer available through bacterial nitrogen Savr cause soil leaching. nitrogen evaporation while treatment bacterial and soil from lost a evaporation the biodegradable

end ENP gardening has pandemic now sales the opening division; into home ENP We of the year of to the the after have The The ENP which again, turf sales economy and all into we face been issues place sales our in Once and ENP LLC on the half. see and this at especially different NCS the Florida, row of sales ways. varied and XXXX strong to expect revenue. is of this markets second countries, are similar home crop on our until year focused profitable. a agriculture. Programs affected we market, Our cannabis is XXXX. company was in investment. have ENP be golf respond other compared into manner. into multiple international to which Sales greenhouse, QX QX negative investment the most will in sales represents to in very take growth put to in The take focused reinvigorate effect. this continually

the while experiencing cost costs to passing customers. difficulty high exposed to However, the LLC onward goods all is of

the FSI sugar using way from their and Strategic using as this investment user successfully Lygos June major investment other industry investment of develop invested earnings of until believes $XXX,XXX allow is the equity. a acid and raw and of December in have As Lygos XXXX, in return second as route material in and historical new and valuable reach Lygos; team products. not obtain aspartic XXXX. leaders compressed result, abate. may $XXX,XXX peers the feedstock. aspartic aspartic in feedstock are a organic in a acid acid large that academia. one synthetic world to margins be develop scientific biology by new FSI prices We will to Lygos' levels in customers for are derived will to microbial made sustainable in recognized developed us a assets already sustainable

this to We Lygos. plan to we sustainable ability which plan that aspartic Lygos an is are developed, route from filed release through FSI publicly have a to document fully acid companies the approval. can aspartic high in This their shareholder available the build this and to their then called with to Lygos more date. Commission On document announced included confidence of Securities produce with merge, sustainable intent acid into S-X. and have is merger an capacity Details polyaspartates. Once even work XX, we news achieve polymerize www.sec.gov. detailed subject The in The fermentation. with April at

back of and We September in through high half the late the date, by peak not XXXX, driven no into U.S. our QX lab competing years compared shortfalls rebates rebates had XX was shipments best dollar XX somewhat sales prices. our more government ocean This response that this to our permanent We taking first about negatively amount unavoidable. is period year transport rebates rebates and profitability increased recur we would tariff It compared China than the normal. service quicker regarding goods are the not a will far ocean but application the exceeds agricultural and Land our historical to due interest decreasing shipping high Shipping cost while -- available increases for And ports our than extremely in payments and for also a our initial tariff our second that uptake consult effect. additional goods, customers oil throughout of cash SUN Rebates are remain XX% fertilizer cope and continued to The the please cost cash due that export be government accumulating issues verified. is received. N are pricing ahead tariffs. our slow. days far. and products States helping. X.X prices and increase very been and included If -- behaviors flow a be to one million Maintaining international year-earlier doing shipping shipping XXXX. can Tariffs; QX warned products tariffs sent QX saw inventory; rose slightly imported U.S. inside you International future X.X the revenue per $X in several Asia crop have more a to from the and XX but This increased but QX calculations TPA Oil, TPA, due our don't by continued ago much materials we We're that QX. and of is XX We preordering to the of as United Prices will sales. expect stronger gas We have QX so than in and to and cover have on received. 'XX lower because been We to with increase. many have lost. QX; and disruption are maximizing in XX, raw If which with days charged than months to quarters evident which questions flow applications was from and to half to now usual XXXX. sure could experienced learned sales are triple our XX% and formula-based to The QX Savr were customers applied affecting XX-day it's take submitted delays continuing would QX in than prices. ago. XXXX, longer consider made sales slightly some from industrial QX expect, of in ordering years different periods. so arrive. inventory remains till we've have for ordering. To inventory key ago. container profits use merger, high. the promised S-X. -- to still are Total to of

order in to borne to increases over be margins. months. the us prices in customers constrained months retain material result will by increased and substantially Some have customers. extra along several Passing price also temporarily XX the Raw to last take have can of costs

we're on were still revenue, cost materials did results increases position raw cash we're quarterly significantly. increases very prices the keep as and time. revenue working results; and we customers up than a profit it finished 'XX, imposed pricing QX grow prices most selling XXXX. lag faster the raising comparable flow may Net increases in forces or expect on cash Just And in QX to with were We again. But new it related to as profit our fast flow customer from inflationary 'XX operating the of operating XXXX us exceeded financial all with a of record. Highlights Year-over-year and where for pleased also the QX. was us.

growth $XX.XX or period. noncash -- and to to million costs cash clarity. merger activity not continue up lower We number costs about non-GAAP Merger to incurred are million useful items the $X.XX our that were quarter would a result from our fees. with cash in been QX. with gain but QX of removed it's of $X.XX profits also in QX Operating for and estimate we flow will profit the QX. these is present, share QX costs $X.XX have year-over-year for per share XXXX show be in the QX, flow per the approximately a 'XX. in a due During to Sales profits XX% $X.XX If million increased million expected $XXX,XXX revenue, higher. share for or $X.XX much XXXX, Profits; in progress $X.XX in professional compared

we the QX, million to our or $X.XX QX was long-term million share, Long-term debt down of or $X.XX pay in according debt; and share $X.XX up a $X.XX to continue terms per QX For XXXX loans. it the QX, period. combined from

and and the interest Stock did we Peru our NCS This same for on resulted charging we FSI debt. all sales. our credit the The we by building At mortgages terms. square increasing building. X not XX-acre guaranteed to on has rates and are term pay foot and factory. However, the corner retained bought at on in and returns ENP mortgage in the held mortgage favorable and it the full LLC This southwest to rent all XX,XXX for with LLC. already our obtained continuously of the consolidated action Bank. ENP lines of Yards acres with interest the we own the Funds units LLC NCS Peru, lower ownership parcel is all and increased book the by of time, owns Investments, profit our from as debt ENP adequate rates have reduced the is Working purposes capital; Illinois

Thank requested will from an lines in hand questions. with you We cash We're through with Lygos prepare Bank operating be for Jess, existing Wednesday, by copies www.sec.gov Canadian August The we X-K would The our subsidiaries. Jason E-mail on or NCS Text equity company. fax of our Stock speech on our plans open execute jason@flexiblesolutions.com. XX. this made credit confident available be investment and filing as capital. floor have can Yards everybody is for Thanks. Bloom, that that. for And can on FSL, you. ENP was of the

comes William [Operator Instructions] question Gregozeski from Greenridge Our first Global. at

Florida, of In most great the from Dan, like -- with you their was you under this LLC, regards know their specifics to on too they having I giving but purchased product many were of percent I goods. FSI. quarter. And was cost the don’t trouble what that mentioned impression higher

they’re them, to getting price from else? having if that or hard for you might their they’re guys on time trying it’s something issue passing that if just increases So a what be reconcile I’m

up. the I nail manufacture our as having under their go the along their prices but the allows we We on are customers. stress abilities our And that as in prices raised They raise head. them them to hit costs they there of -- And passing contract. giving our contract us as to but far mean, there be trouble are are the can with contract money have you to selling I'd Actually, for and to working is input [indiscernible]. inside best they

Okay.

the results? mean, XX be So continued future, near their probably going gross low least for margin the I at them is to for range on

margins cost another would in That's backs Yes. raw see. is correct. inflation be what probably probably But off, their inflation. amazing able at or If absent that's they'll material margin say earned moment, you'll to again. bout of I stops increase the

Okay. of news the U.S. any to And that? be it. interest in there's pursuing been that with there help problem? all for Is in But it about Western And kinds obviously, droughts using fix anybody the a is WaterSavr would

lot started water they generate feet water does water, when XXX more that a We using And XX only not Bill, this of because salesman Western it. America a crazy all that's the not should ago, been XX situation works. it And years handling part-time to saves of have left it it WaterSavr dams. was years here. save. pitching inquiries. this in But those and to is We've have prove the there's for there WaterSavr

So, it’s answer get full really problem their their The their schadenfreude to case the reservoirs I not guess problems I’ve answer but is of now. got to again. a to

[Operator Clarkson We'll move Instructions] Capital. Clemens next to with Van Tim

you think will that just is be Dan, completed? to it do think know wanted -- do Lygos when this investment, you when

Yes.

contract that On either complete goes the merger XX. or contracts. September is to an be must be complete states extended it September this XX, that away. the not has merger has The is by by agreement, its it it If agreement

to So to XX that expect what September I I'm completed is not completed. guess by saying it be or be

was again? now it of the Okay. -- And ahead. the in Is of logic go deal what kind this of doing -- terms the

the The with, sugar to the Yes. No, corn by solid. United into although good the that at Solutions and current well of chemistries aspartic question price Flexible ferment value-added platform chemical is it a combined a in it pretty the -- results variety it's is grown to sustainable. these detergent a are of to polyaspartate make they other trying then go the oil a hasn't but from And hundreds for name groups is to combination. the detergent trying who received a market, really Solutions-Lygos thousands of that company aspartic ones, company all start of names companies the the in of they're utilize to specialty because price of can't quite sustainable. attractive specifically States, that logic like big in are acid start tons acid been opportunities lower with become factories XXX% And at companies finished need products and completely than metric Flexible a can the the just

not entire aspartic Now obviously, big tons specialty to of from a to Xs to way like of is thousands getting -- logic to acid that's thousands behind project to the aspartic the all chemical a to from hundreds of sugar chemicals. but the control chemical from it's but make make acid generic this and the tons specialty a of roof

good business and the that a it's was plan. it theory that's behind -- So

Right.

this Now years? maybe years would don’t that turn even Or all X reasonable or what know. -- this X I profitable mean, in you is

that. I to the you, Well, a are inside not where yet. point pretty memorized can't profitability say forward-looking which be S-X. statements. XXX-page it's point a -- have There's it's quoted yes, the have statements are please on please, But sadly, there I'm this S-X read but where because is document It's to I years I is forward-looking expected. X sure in there a

there’s can scale, the on looking product. right? I’m is the at create demand is whether sounds risk? the do -- it risk big for again, guy. doesn’t just I the And biggest It risk a mean, you bigger sound it Sure. like a What’s picture -- like whether

an it's execution Yes, risk.

Okay.

a demonstrate obviously, some to right? And they’re based believe able must scale that successes going of that that the probability least on on execution you smaller reasonable Okay. do already at a it, be to

Yes.

Otherwise, it’d venture. a foolish be kind of

that’s -- I obviously mean, out loud.. So be the right? of has kind but stated obvious to

opportunity and... it's a believe we -- It's right. you're reasonable Yes,

Solutions you piece give Solutions the market that getting because a And Flexible already facilitate just Solutions, scale. Flexible is that these Is into that good-sized guys and the to the it? to help brings up can fact Flexible coming this them

market is price. more If ton X and that's per less acid, doubles get than ton route Lygos piece Flexible because Flexible to dramatically would margin be went own the selling if much increases make the By or organic made chemical price to the it they a we aspartic owning price a -- and route the at Yes, bring commodity a the just having asset. services, specialty ahead Solutions that well. and as on more higher they Solutions would per their sector

raises -- this that make for some enough, the reasonable got enough Right. you’ve done And to you’ve bond try least raised foreseeable stuff at to future, these what and happen. money

some would That the the That's But exists significant or not plant be the might synthetic chemistry ready the of benefit processing much in Flexible Solutions -- face. as companies that do is pretty compared sector other biochem. raised second it be as accurate. half to have of the already what a fact to synthetic the companies

now application, off I product fertilizer more available? Right application the there leaving the was proven is detergent just a mean, sizable if just for Right. market the

addressed but There's for actually Yes. the aspartame. markets them that international one we've is market of also never

at oil-based chemicals. may from about were somewhat personal But than least sustainable it. be it if feelings it Aspartame, it making have you made safer would chemicals, from

to people big but be part a a items Yes. I’m which of that of that science or is that on sure nutritional of based may of may about kinds not all appeal lot would game. beliefs -- sounds

in it watching and So anyhow, -- that admire doing. got what and mean, is very still this it. and really I I hopeful I’m I’m money some appreciate it you're off to well, going

at it. keep So

comes question [indiscernible]. from next Our

I going they which said, a you lengthy. number beautiful pretty get of that how question a is, like One quarter. hours, Congratulations through very couldn't simple. is are My answered commercialization? was very, on spent to question close S-X I

I a Yes. not answer. probably And should question it's

a it’s Well, quite pretty honestly. important question

can opinion that I are... have an Yes. they

That’s I close yes. enough opinion, your like for would me.

full is than -- -- opinion opinion within how I that the think commercialization my I'm years certain. my it's earlier yes is not that, is X and much

Yes, stuff. like into profitable do $XXX taking not turn you tried spent company is and still follow, stated R&D peers, beautiful billion they an with even where to FSI a mean, like million, sector which a just because $X company I over and synthetic them we profitable. I Okay. biochem we’re your One company growing,

lot million when start getting $XXX So sounds money. not into like a be enough but money of it you this, might

Might not that but in a theory here's I this have world.

back of Flexible no original the Going is funded coming, I beginning more and And private to very it $XXX. point my company work. with money the Solutions, there the father was make

being Sometimes a a is know. better company don't to bootstrapping tight I work and forced inside unlimited having budget funds. for than

to raise in become benefit money-losing potential going I -- Absolutely. a X to it’s anybody couple don’t the certainly another a take the see years along, is, question all we’re is -- the R&D and going to X I’d million. the -- The And discounting company. we’ve or the are going that. got to disaster we become years the that. think And see potential -- because of benefit I potential hundred questions ginormous.

really that's want answers to. can't along I the us put really unfortunately, with know I in stuff actually to forward don't legal I comment that don't because on it would And Dennis, be financials. stuff Well, jeopardy

as do a to well. Listen, you again, want that beautiful wouldn’t I quarter. no. No,

I We reservations taking But the time. have again, you going of still lot forward. a appreciate

till and shareholder not Dennis over welcome, meeting. You're the

showing and good you working keep why we'll keep we'll it's idea. So a

not turn other time, any O’Brien, will closing to I I back comments. have for holding. the this additional conference or at any Mr. do you questions

be very very you of Everybody, again much Thank we’ll listening for questions. for your and and in you, at end quarter third the today thanks Jess. talking Hopefully, thank much.

gentlemen, participation. that for will program. and conclude your today's thank Ladies We you

You may disconnect at this time.