Earnings Labs

Flexible Solutions International, Inc. (FSI)

Q3 2013 Earnings Call· Fri, Nov 15, 2013

$6.53

+0.31%

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Transcript

Operator

Operator

Good day, ladies and gentlemen and thank you for standing by. Welcome to the Third Quarter 2013 Financials Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. (Operator Instructions) I would now like to turn the conference over to Dan O’Brien. Please go ahead, sir. Dan O’Brien: Thank you, George. Good morning. I am Dan O’Brien, CEO of Flexible Solutions. Safe Harbor provision, 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 statements 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. Welcome to the third quarter conference 2013. Prior to focusing on the financials, I would like to speak about where we are in general and what we expect for the next several quarters. Revenue was down substantially in third quarter of 2013, compared to 2012 and flat for the nine months. Growth in the first two quarters was on counteracted by an expected reduction in sales through large customer in Q3. This is expected to be a onetime event. Q3 is usually our smallest quarter and thus effect is magnified. The NanoChem division represents most of the revenues of FSI. This division makes polyaspartic acid called TPA for short, a biodegradable protein with many uses. Our sugar to aspartic acid plant in Alberta is now in operation. Our corporate policy is not to provide volume information or details of production. However, revenue is ongoing. We’re…

Operator

Operator

Certainly, sir. (Operator Instructions). And our first question is from the line of William Gregozeski with Mont Blanc Capital. Please go ahead sir. William Gregozeski – Mont Blanc Capital Management AG: Hi, Dan. Dan O’Brien: Hi, Bill. William Gregozeski – Mont Blanc Capital Management AG: Were you just kind of blindsided by this order loss? I know in the last conference call which was halfway through the quarter you thought that you see year-over-year growth in the third quarter. So I just kind of curious as to what happen and the timing of it? Dan O’Brien: I won’t tell you what happened. The timing was unknown to us. Yes, we were blindsided and as I said we expected it to be one time situation. William Gregozeski – Mont Blanc Capital Management AG: Okay, is it result as of the fourth quarter or was that revenue from that customer still affecting the fourth quarter? Dan O’Brien: We believe its result but in every speech I mentioned that we are purchase order by purchase order sales people. Only at the end of the quarter will I know for sure. William Gregozeski – Mont Blanc Capital Management AG: Okay and then if you are able to say how much do you typically see from that customer in the third quarter because it was big – it’s a quite bit below the third quarter year ago. So just curious how much that customer does? Dan O’Brien: We are not prepared to comment on that. William Gregozeski – Mont Blanc Capital Management AG: Is it safe to assume then that giving your looking for year-over-year growth that decline is attributed to the customer? Dan O’Brien: In large parts. William Gregozeski – Mont Blanc Capital Management AG: Okay, all right, thanks, Dan. Dan O’Brien: Thank you, Bill.

Operator

Operator

(Operator Instructions). We have a question from the line of Gary Schwab with Valley Forge Capital Management. Please go ahead. Gary Schwab – Valley Forge Capital: Yes, hi, there. Is there an Ag product that’s out there that farmers are matching against your TPA product, which one they like better? Dan O’Brien: Yes, there are – there is another product. It is developed by a company called SFP, its name is AVAIL, head to head trial always show our product to work better, and our product is always less expensive I would suggest that SFP and AVAIL are much better marketing team than us and we are trying to improve marketing overtime to get better at that part of our business because we were inventors and builders and fixtures and we need to become better sales people. Gary Schwab – Valley Forge Capital: Well, that’s for sure. I mean this is exactly what happened in your Tropical Fish product. You had a better product, way better product and you got beat by better marketing. I don’t know what you have to do about that but maybe you need to spend some money and hire a marketing team. Dan O’Brien: Thank you for the advice Gary. Gary Schwab – Valley Forge Capital: I mean I am sure you know that. I am sorry; I mean social media out there has had such major impact on getting new product being discovered sometime way faster than traditional marketing. Do you have a social media site at all? Is there – Dan O’Brien: Not for that product line. We have for our Tropical Fish line and it does not generate very many sales. We do try – we try things Gary. It’s a difficult world and there is some very strong vested interest in…

Operator

Operator

Thank you. I am showing there are no further questions. Dan, I’ll give the call back to you for closing comments. Dan O’Brien: Thank you, George. And thank you everybody for joining us this morning. I look forward to talking to you at the end of the fourth quarter next year with our full year financials and some color about how the first quarter has gone and whether what I have predicted have come true or something different has occurred. Thank you all and good bye.

Operator

Operator

Ladies and gentleman that does conclude our conference for today. Thank you for your participation. You may now disconnect.