FLEXIBLE SOLUTIONS INTERNATIONAL INC (FSI)·Q1 2024 Earnings Summary

Executive Summary

• Q1 2024 revenue was $9.225M, down 6% year over year; EPS was $0.04 vs $0.07 in Q1 2023 as higher cost of goods, product mix, increased D&A and stock comp, and one-time costs from closing the Naperville R&D facility weighed on margins .
• Management emphasized progress toward margin recovery, ongoing price increases to customers, and a pipeline of five food/nutrition products (two expected to land POs in 2024). Food product weakness was concentrated in Q1; the customer indicates full-year orders will substantially exceed FY23 .
• A special cash dividend of $0.10/share was declared, payable May 16, 2024, highlighting balance sheet flexibility despite near-term earnings pressure .
• Subsequent quarter (Q2 2024) showed improvement: revenue +2% YoY to $10.529M and EPS $0.10, an encouraging sign for 2H trajectory and a potential sentiment catalyst as Food/Nutrition revenue ramps .

What Went Well and What Went Wrong

What Went Well

• “Progress is being made” on streamlining operations (Naperville closure) with benefits expected to be evident in Q2–Q3; management raised prices across customers over the last six months to offset inflationary costs .
• Food/Nutrition opportunity set expanded: five products with seven-figure revenue potential nearing POs; customer signaled full-year orders for the first commercialized product would substantially exceed 2023, and margins on key food products are “excellent” at 35–45% .
• Florida LLC investment was profitable with “much better margins” in Q1 and expected sales/profit growth in 2024, supporting investment income and international demand resilience .

What Went Wrong

• Revenue declined 6% YoY; EPS fell to $0.04 as higher cost of goods, product mix, increased D&A/stock comp, and one-time Naperville exit costs pressured earnings; non-GAAP operating cash flow fell to $1.34M ($0.11/sh) from $1.73M ($0.14/sh) in Q1 2023 .
• Persistent tariff burdens (25% on certain China-sourced inputs) continue to negatively affect COGS, cash flow and profits; rebate recovery remains delayed >5 years with >$1M due, forcing price pass-through that is slow and not always possible .
• U.S. agriculture demand remained cautious as growers resisted input spending amid commodity price/inflation dynamics; ENP growth expected to be back-half weighted (Q3–Q4), limiting near-term upside .

Financial Results

Core P&L Comparison

Note: Prior quarter Q4 2023 details were disclosed only at the full-year level; no standalone Q4 2023 quarterly press release was found .

Margin snapshot (Q1 YoY)

Segment Breakdown (Q1 2024)

KPIs and Cash Flow

Guidance Changes

No numerical guidance ranges (revenue, margins, OpEx, tax) were provided.

Earnings Call Themes & Trends

Management Commentary

• “Progress is being made. We streamlined operations by closing our Naperville R&D facility... benefits will become evident in Q2 and Q3.”
• “We have raised prices to all customers over the last six months, and we’re planning to continue this program if we can.”
• “NCS now has five products, each with seven figure revenue potential... We believe that purchase orders will be received for at least two of these products in 2024.”
• “The LLC was profitable in first quarter... much better margins... expect sales... to grow again in 2024 leading to a larger profit.”

Q&A Highlights

• Product pipeline/margins: Management highlighted three food division products (including a liquid stability agent and two personal nutritional health products), with margins of 35–45% deemed “excellent” for their industries .
• Accounts receivable dynamics: AR increase partly reflects a late-quarter sales bolus at the Florida LLC with 60-day terms; no collectability concerns noted .
• Tariff rebate recovery: Management intends to pursue rebates aggressively, including potential legal action, calling the situation “criminally unfair” given rebate program access challenges; the amounts due exceed $1M .
• Food product revenue outlook: First product expected to increase by $1–2M this year vs last year, underscoring near-term ramp potential .

Estimates Context

• Wall Street consensus (S&P Global) for Q1 2024 revenue and EPS was unavailable due to data access limitations; therefore, an estimates comparison and beat/miss assessment cannot be provided at this time. Values would normally be retrieved from S&P Global.

Key Takeaways for Investors

• Near-term margin recovery hinges on sustained price increases and the Food/Nutrition ramp; look for evidence of Q2–Q3 benefit realization from Naperville closure and operating leverage .
• The special $0.10 dividend signals capital discipline and confidence; future shareholder returns likely remain opportunistic rather than recurring given management’s “special” framing .
• Florida LLC profitability rebound is an underappreciated lever for investment income and international exposure; watch AR normalization and margin trends there .
• Agricultural demand in the U.S. remains soft; ENP growth is back-half weighted, skewing near-term upside to Q3–Q4; monitor order cadence and regional mix .
• Tariff headwinds persist; successful rebate recovery would be a material cash flow tailwind (> $1M), but timing is uncertain; pricing actions are a partial offset .
• Subsequent quarter (Q2 2024) improvements (revenue +2% YoY; EPS $0.10) suggest trajectory stabilization; confirmation in Q3 would strengthen the medium-term thesis .
• Optionality from the June 2024 vial-filling line purchase (503B sterile drug compounding) could be transformational if de-risked with pre-committed sales/partners, but management explicitly cautions it is an option, not guidance; treat as a long-dated call option on capacity and market scarcity in injectables .

Citations

• Q1 2024 press release and 8-K:
• Q1 2024 10-Q:
• Q1 2024 earnings call transcript:
• Q1 2024 revenue/dividend announcement:
• FY 2023 10-K:
• Q3 2023 8-K:
• Q2 2024 press release:
• Vial filling line CAPEX press release: