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    FLEXIBLE SOLUTIONS INTERNATIONAL (FSI)

    FSI Q2 2024: Food TPA Lifts Gross Margins to 35%, Drug Launch Delayed

    Reported on Aug 11, 2025 (Before Market Open)
    Pre-Earnings Price$2.14Last close (Aug 14, 2024)
    Post-Earnings Price$2.30Open (Aug 15, 2024)
    Price Change
    $0.16(+7.48%)
    • Growth in the Food Division: The company’s Food division is showing robust momentum with FDA-approved TPA that prevents crystal precipitation in beverages, creating cost advantages. Future contracts are expected to drive higher revenue in this segment.
    • Expanding Product Pipeline with High-Margin Potential: Management highlighted a pipeline including a drug-related product with an estimated $7–10 million market opportunity, along with four other products nearing purchase orders, indicating potential earnings diversification and expansion.
    • Improved Gross Margins and Resilient Agriculture Sales: Q&A feedback emphasized that the current quarter’s gross margins, driven by a favorable product mix, represent the top end of achievable margins, and despite softening corn prices, the agricultural sales remained stable, suggesting strong underlying demand.
    • Capital limitations for the drug business: The executives indicated that moving into the drug field requires substantial capital and time, meaning the company might delay or struggle to generate expected revenue from this segment.
    • Potential margin pressures: Gross margins are described as being at the top end of their achievable range, but are partly an anomaly driven by current product mix and inventory issues, raising concerns that margins might compress going forward.
    • Stagnant agricultural sales: Agricultural sales were noted to be relatively flat, which could signal a lack of growth in one of the core revenue segments, especially if external factors like corn pricing continue to weigh on performance.
    1. Margin Outlook
      Q: Are gross margins sustainable at mid 30s?
      A: Management explained that while margins have reached the top end of the mid-30s this quarter due to a favorable product mix, such levels might fluctuate as inventory and pricing adjust in the future.

    2. Drug Market Size
      Q: What is the drug market's potential size?
      A: They estimate that the market for this drug product is around $7–10 million, with five additional products in the pipeline poised to add further revenue.

    3. Drug Business Entry
      Q: Is drug business entry likely soon?
      A: Management indicated it’s too early to set a timeline, stressing that entering the drug business requires more capital either from retained earnings or from a strategic partner.

    4. Florida Sale
      Q: Why sell the Florida LLC asset?
      A: The asset was sold to secure a profitable deal while retaining the exclusive supply agreement, aligning with their core strength in manufacturing.

    5. Cash Deployment
      Q: How will you use the sale cash?
      A: The proceeds will be invested at 6-month Treasury rates and held as spare capital for future opportunities, such as a potential drug venture.

    6. Agriculture Sales
      Q: How are ag sales faring with corn price challenges?
      A: Despite lower corn prices, agricultural sales remain relatively flat as customer demand holds steady, with an outlook for improvement in early 2025.

    7. Food Chemical Use
      Q: Is TPA used in the food division?
      A: Yes, management confirmed that TPA is the chemical applied in their food-grade products.

    8. TPA Functionality
      Q: What function does TPA serve in foods?
      A: TPA prevents crystallization in products like fruit juices and wines, which reduces the need for prolonged cooling and helps maintain product quality.

    Research analysts covering FLEXIBLE SOLUTIONS INTERNATIONAL.