Flexible Solutions International, Inc. (FSI) | Investment Case

1. Company Snapshot

1.a. Company Description

Flexible Solutions International, Inc., together with its subsidiaries, develops, manufactures, and markets specialty chemicals that slow the evaporation of water in Canada, the United States, and internationally.The company operates in two segments, Energy and Water Conservation Products, and Biodegradable Polymers.The company offers thermal polyaspartates (TPAs) for oilfields to reduce scale and corrosion in various water systems; and for the agricultural industry to reduce fertilizer crystallization before, during, and after application, as well as to prevent crystal formation between fertilizer and minerals present in the soil.

It also provides TPAs for irrigation to prevent early plugging of drip irrigation ports, reduce maintenance costs, and lengthen the life of equipment; and TPAs as additives for household laundry detergents, consumer care products, and pesticides.In addition, the company offers nitrogen conservation products for agriculture that slow down nitrogen loss from fields.Further, it provides HEATSAVR, a chemical product for use in swimming pools and spas that forms a thin and transparent layer on the water's surface; and WATERSAVR to reduce water evaporation in reservoirs, potable water storage tanks, livestock watering ponds, aqueducts, canals, and irrigation ditches, as well as for lawn and turf care, and potted and bedding plants.

Flexible Solutions International, Inc.is headquartered in Taber, Canada.

Show Full description

1.b. Last Insights on FSI

The recent 3 months performance of Flexible Solutions International, Inc. has been hindered by soft end-market demand, dampening the prospects of the chemical specialty industry. This has led to a decline in demand for the company's biodegradable polymers, detergent ingredients, and water treatment solutions. Furthermore, the company's transition from chemical manufacturing to higher-margin food-grade products has been slower than expected, with future growth dependent on successful execution of new food-grade contracts. Additionally, the company's strategic investments in infrastructure and tariff-avoidance measures may not be enough to drive margin expansion, given significant execution and cash flow risks.

1.c. Company Highlights

Last Price	6.86
Change Percentage	0.29%
Open	6.95
Previous Close	6.84
Market Cap ( Millions)	87
Volume	30703
Year High	11.48
Year Low	3.46
M A 50	8.34
M A 200	6.39

FCF Yield	-2.70%
Dividend Yield	1.46%
ROE	4.98%
Debt / Equity	7.53%
Net Debt / EBIDTA	-91.80%
Price To Book	2.23
Price Earnings Ratio	45.06
Price To FCF	-37.09
Price To sales	2.26
EV / EBITDA	13.49

2. Flexible Solutions' Q3 2025 Earnings: A Mixed Bag

Flexible Solutions reported a 13% increase in Q3 sales to $10.56 million, but profits recorded a loss of $503,000. The actual EPS came out at -0.04, missing estimates of 0.05. The company's NanoChem division, which accounts for the majority of its revenue, continues to drive growth, with the recent commercialization of two food products, including a wine additive and a contract announced in August valued at a minimum of $6.5 million per year.

Publication Date: Nov -23

                                    📋 Highlights
                                    Q3 Sales Growth::
                                                Revenues increased 13% to $10.56 million, driven by the NanoChem division’s thermal polyaspartic acid (TPA) and ENP division performance.
August Food Contract Revenue::
                                                The $6.5–$25M/year contract has reached full production, already generating $1 million in revenue with a target of $13–15 million in sales.
January Food Contract Outlook::
                                                Requires $4M CapEx for clean room and equipment, with revenue expected by late Q4 2026 or early 2027.
Projected Food Division Margins::
                                                Anticipated gross margins of 22–25% pre-tax and 14% net margins, with profitability expected to improve in Q1 2026.

                                

Segment Performance

The ENP division experienced strong revenue in Q3, which is expected to continue in Q4. The Florida LLC investment had a small loss in Q3 but expects to return to growth in 2026. As Daniel O'Brien mentioned, "We're transferring most agriculture and polymer production to Panama to avoid US tariffs, which will shorten delivery times and free up space in Illinois for food-grade production."

Contract Updates and Outlook

The August contract has reached full production, with estimated revenue of $1 million already and aiming to reach $13-15 million in sales with minimal CapEx. Another food-grade contract announced in January is expected to begin revenue in Q4 or early 2026, with estimated CapEx of $4 million. Analysts estimate next year's revenue growth at 51.2%, driven by the ramp-up of these new contracts.

Valuation and Growth Prospects

With a P/S Ratio of 2.25, the stock appears reasonably valued compared to its revenue growth prospects. The EV/EBITDA ratio of 13.47 suggests that the company's enterprise value is relatively in line with its earnings before interest, taxes, depreciation, and amortization. As the company ramps up its new contracts, expected to drive revenue to $50-60 million in 2027, investors will be watching to see if Flexible Solutions can achieve its growth targets and improve its profitability.

Margin Expansion

The company anticipates gross margins of 22-25% before tax in the food division, which would translate to 14% net margins. With the expected growth in food product revenue, Flexible Solutions is poised to revert to past levels of profitability and increase in Q1 2026.

3. NewsRoom

Flexible Solutions International, Inc. (FSI) Q3 2025 Earnings Call Transcript

Nov -17

Source: seekingalpha.com

Flexible Solutions International Inc. (FSI) Reports Q3 Loss, Beats Revenue Estimates

Nov -15

Source: zacks.com

FSI ANNOUNCES THIRD QUARTER, 2025 FINANCIAL RESULTS

Nov -14

Source: globenewswire.com

3 Chemical Specialty Stocks to Escape Industry Challenges

Nov -13

Source: zacks.com

PennyMac Financial Services (NYSE:PFSI) Hits New 1-Year High After Better-Than-Expected Earnings

Oct -23

Source: defenseworld.net

PennyMac Financial Services, Inc. (NYSE:PFSI) Receives Consensus Recommendation of “Moderate Buy” from Brokerages

Oct -22

Source: defenseworld.net

FSI ANNOUNCES THIRD QUARTER 2025 REVENUE

Oct -16

Source: globenewswire.com

Flexible Solutions International, Inc.: A Bright Outlook On Its Future Prospects

Sep -30

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.20%)

6. Segments

Biodegradable Polymers

Expected Growth: 10.2%

Growing demand for eco-friendly alternatives, increasing regulations on traditional plastics, and expanding applications in packaging, textiles, and biomedical industries drive the growth of biodegradable polymers.

Energy and Water Conservation Products

Expected Growth: 10.2%

Growing demand for sustainable solutions, increasing energy costs, and government regulations drive the adoption of energy and water conservation products, promoting a CAGR of 10.2%.

7. Detailed Products

EcoPest

EcoPest is a biopesticide that is used to control pests and diseases in agricultural crops, gardens, and landscapes.

NanoShield

NanoShield is a nanotechnology-based product that provides a protective barrier against corrosion and wear on metal surfaces.

WaterSavr

WaterSavr is a water conservation product that reduces evaporation from lakes, reservoirs, and other bodies of water.

H2O2

H2O2 is a hydrogen peroxide-based product used as a disinfectant, sanitizer, and sterilizer.

8. Flexible Solutions International, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Flexible Solutions International, Inc. operates in a niche market with limited substitutes, reducing the threat of substitutes.

Bargaining Power Of Customers

Flexible Solutions International, Inc. has a diverse customer base, reducing the bargaining power of individual customers.

Bargaining Power Of Suppliers

Flexible Solutions International, Inc. relies on a few key suppliers, giving them some bargaining power, but the company's size and reputation mitigate this threat.

Threat Of New Entrants

The industry in which Flexible Solutions International, Inc. operates has low barriers to entry, making it easier for new entrants to join the market.

Intensity Of Rivalry

Flexible Solutions International, Inc. operates in a highly competitive market with many established players, leading to intense rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	22.10%
Debt Cost	4.79%
Equity Weight	77.90%
Equity Cost	11.34%
WACC	9.89%
Leverage	28.36%

11. Quality Control: Flexible Solutions International, Inc. passed 6 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Hudson Technologies

A-Score: 5.3/10

Value: 5.3

Growth: 7.6

Quality: 6.5

Yield: 0.0

Momentum: 8.0

Volatility: 4.7

1-Year Total Return ->

Ecovys

A-Score: 5.3/10

Value: 7.3

Growth: 3.3

Quality: 2.6

Yield: 5.0

Momentum: 8.0

Volatility: 5.3

1-Year Total Return ->

Core Molding Technologies

A-Score: 5.2/10

Value: 7.2

Growth: 5.9

Quality: 5.3

Yield: 0.0

Momentum: 7.0

Volatility: 5.7

1-Year Total Return ->

Kronos Worldwide

A-Score: 5.0/10

Value: 9.1

Growth: 2.7

Quality: 5.0

Yield: 9.0

Momentum: 0.0

Volatility: 4.3

1-Year Total Return ->

Flexible Solutions International

A-Score: 4.9/10

Value: 4.2

Growth: 6.4

Quality: 6.0

Yield: 1.0

Momentum: 10.0

Volatility: 1.7

1-Year Total Return ->

Koppers

A-Score: 3.8/10

Value: 6.7

Growth: 4.8

Quality: 2.7

Yield: 1.0

Momentum: 2.0

Volatility: 5.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

54.35%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.89%

Flexible Solutions International, Inc. - CA33938T1049

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on FSI

1.c. Company Highlights

Higher Yield

Stable Momentum

Average Growth

Earnings Miss

Revenues Miss

Medium Volatility

Weak Momentum

Fairly Valued

Earnings Beats

Revenues Beats

Higher Growth

More Volatile

Average Quality

Strong Momentum

Average Yield

2. Flexible Solutions' Q3 2025 Earnings: A Mixed Bag

Segment Performance

Contract Updates and Outlook

Valuation and Growth Prospects

Margin Expansion

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.20%)

6. Segments

Biodegradable Polymers

Expected Growth: 10.2%

Energy and Water Conservation Products

Expected Growth: 10.2%

7. Detailed Products

EcoPest

NanoShield

WaterSavr

H2O2

8. Flexible Solutions International, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Flexible Solutions International, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

6.86$

Current Price

6.86$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA