Attached files
EXHIBIT 99.1
NEWS RELEASE
August 14, 2012
FSI ANNOUNCES SECOND QUARTER, 2012 FINANCIAL RESULTS
Conference call scheduled for Wednesday August 15th,
11:00am Eastern time, 8:00am Pacific Time
See dial in number below
VICTORIA, BRITISH COLUMBIA, August 14, 2012 - FLEXIBLE SOLUTIONS INTERNATIONAL,
INC. (NYSE Amex: FSI, FRANKFURT: FXT), is the developer and manufacturer of
biodegradable polymers for oil extraction, detergent ingredients and water
treatment as well as crop nutrient availability chemistry. Flexible Solutions
also manufactures biodegradable and environmentally safe water and energy
conservation technologies. Today the Company announces financial results for the
second quarter (Q2) ended June 30, 2012.
Mr. Daniel B. O'Brien, CEO, states, "Our non-GAAP operating cash flow
demonstrates the Company's financial strength. With regard to revenue
forecasting, given the continuing economic slow-down in Europe and the Far East,
it is simply too difficult and unrealistic to give accurate revenue guidance at
this time. Full year 2012 revenue is still expected to be higher than 2011." Mr.
O'Brien continues, "As a result of the seasonality of the agriculture and
swimming pool markets, FSI's sales tend to be larger during the first half of
the year, causing higher accounts receivable, and lower cash and inventory
numbers. This does not affect the Company's ability to grow given its strong
working capital position including, a largely untapped $6.4million line of
credit with a Chicago based bank."
Note: as a result of the start up of the Alberta factory, a biomass expense is
no longer given in the news release. Also, due to the generation of revenue from
that facility, depreciation of the factory has begun resulting in a
significantly higher non-cash accounting expenses in the financials. Further,
this added expense does not significantly reduce taxes paid since the expense
originates in Canada and, at this time, most of the revenue generated by
Flexible Solutions International is U.S. based. The current Illinois/Federal
Corporate tax rate is close to 40%.
o Sales in the second quarter (Q2) were $3,761,729, down approximately
4% when compared to sales of $3,930,075 in the corresponding period a
year ago. The financials give a Q2, 2012 accounting net loss of
$465,995, or $0.04 per share compared to an accounting net profit of
$174,734, or $0.01 per share in Q2, 2011. Although the income tax
expense taken in Q2, 2012 was only $120,000 compared to $295,000 in
Q2, 2011, the depreciation expense increased from $82,193 in 2011 to
$305,189 in 2012.The increase in depreciation was largely Canada based
and not deductible from US income.
o Basic weighted average shares used in computing per share amounts in
Q2 were 13,169,991 for 2012 and 13,169,991 for 2011. Note: a share buy
back by the Company of close to 800,000 shares in Q1, 2011 is the
reason for the reduced share count in first half.
o Non-GAAP operating cash flow: For the 6 months ending June 30, 2012,
net income reflects $676,426 of non-cash charges (depreciation and
stock option expenses), as well as net income tax ($680,000), interest
expense ($61,414) and other minor items ($2,578) not related to
operating or current operating activities. When these items are
removed the Company shows operating cash flow of $1,171,923, or $0.09
per share. This compares with operating cash flow of $1,423,196, or
$0.11 per share, in the corresponding 6 months of 2011 (see the table
that follows for details of these calculations).
Mr. O'Brien states, "We are satisfied with our first half revenue increase
considering the stress Europe is enduring and slowdowns in the US and China. Q3
this year is likely to be similar to Q2 in growth terms, however, as
agricultural preorders begin in late fall, we hope to see a resumption of top
line growth for Q4."
The NanoChem division continues to produce most of FSI's revenue and cash flow.
New opportunities are unfolding to further increase sales in this division.
* CEO, Dan O'Brien has scheduled a conference call for 11:00am EST, 8:00am PST,
Wednesday August 15th to discuss the financials. Call 1-877-941-8609 (or
480-629-9692). The conference call title, "Second Quarter Financials," may be
requested.*
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The above information and following table contain supplemental information
regarding income and cash flow from operations for the 6 months ended June 30,
2012. Adjustments to exclude depreciation, stock option expenses and one time
charges are given. This financial information is a Non-GAAP financial measure as
defined by SEC regulation G. The GAAP financial measure most directly comparable
is net income. The reconciliation of each of the Non-GAAP financial measures is
as follows:
FLEXIBLE SOLUTIONS INTERNATIONAL, INC.
Consolidated Statement of Operations
For 3 Months Ended June 30 (6 Months Operating Cash Flow)
(Unaudited)
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3 months ended June 30
2012 2011
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Revenue $ 3,761,729 $ 3,930,075
Income before income tax - GAAP $ (345,995) $ 469,734
Net income (loss) - GAAP $ (465,995)a $ 174,734 a
Net income (loss) per common share - basic.
- GAAP $ (0.04)a $ 0.01 a
3 month weighted average shares used in
computing per share amounts - basic.- GAAP 13,169,991 13,169,991
6 month Operating Cash Flow
Ended June 30
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Operating Cash flow (6months). NON-GAAP $ 1,171,923 b $ 1,423,196 b
Operating Cash flow per share excluding $ 0.09 b $ 0.11 b
non-operating items and items not related
to current operations (6 months) - basic.
NON-GAAP
Non-cash Adjustments (6 month) NON-GAAP $ 676,426 c $ 235,266 c
Shares (6 month basic weighted average) used 13,169,991 13,353,904
in computing per share amounts - basic GAAP
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Notes: certain items not related to "operations" of the Company have been
excluded from net income as follows.
a) Non-GAAP - the relative lower Net income numbers for Q2, 2012 in comparison
to Q2, 2011 are largely a result of the commencement of depreciation of the
Alberta Factory, as well as the tax paid on revenue generated from the Illinois
factory. Expenses resulting from the Alberta division can not be used to reduce
taxable income in Illinois, USA.
b) Non-GAAP - amounts exclude certain non-cash items: depreciation and stock
option expense (2012 = $676,426, 2011 = $235,266), interest expense (2012 =
$61,414, 2011 = $40,089), net income tax (2012 = 680,000, 2011 = $615,000), gain
on the sale of equipment(2012 = $2,217) and interest income(2012 = $361). See
Operating Cash Flow for other adjustments.
c) Non-GAAP - amounts represent depreciation, stock option expense.
Safe Harbor Provision
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The Private Securities Litigation Reform Act of 1995 provides a "Safe Harbor"
for forward-looking statements. Certain of the statements contained herein,
which are not historical facts, are forward looking statement with respect to
events, the occurrence of which involve risks and uncertainties. These
forward-looking statements may be impacted, either positively or negatively, by
various factors. Information concerning potential factors that could affect the
company is detailed from time to time in the company's reports filed with the
Securities and Exchange Commission.
Flexible Solutions International
615 Discovery Street, Victoria, BC V8T 5G4 CANADA
Jason Bloom
Tel: 250 477 9969
Toll Free: 800 661 3560
Fax: 250 477 9912
E-mail: info@flexiblesolutions.com
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To find out more information about Flexible Solutions and our products, please
visit www.flexiblesolutions.com.
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