Flexible Solutions International Inc. (NYSE MKT:FSI) Q2 2020 Earnings Conference Call - Final Transcript

Aug 17, 2020 • 11:00 am ET

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Flexible Solutions International Inc. (NYSE MKT:FSI) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day and welcome to the Flexible Solutions International Second Quarter 2020 Financial Results Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Dan O'Brien. Please go ahead, sir.

Executive
Daniel B. O'Brien

Thank you, Madison. Good morning, this is Dan O'Brien, CEO of Flexible Solutions. Safe harbor provision. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for onward-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 the potential factors that it 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 2020 Q2 call. Prior to addressing our financials, I'd like to talk about our corporate condition and product lines along with what, in our opinion might occur over the next two quarters. COVID virus. The NanoChem subsidiary, the ENP subsidiary and the Florida LLC investment are all engaged in producing for the agriculture and/or the cleaning product sectors. Therefore, we are considered essential services and likely to remain so if restrictions are reinstated. Productions and sales are continuing to meet customer orders. We continue to shrink our inventory and increase our cash position in Q2 by ordering less inventory than we consumed. This tactic has been successful and we feel that we now have the right level of inventory to suit the risks of COVID, while still having the ability to service our customers.

Our NanoChem dividsion, NCS represents more than one-half the revenue of FSI. This division makes thermal polyaspartate acid called TPA, a biodegradable polymer with many valuable uses. NCS also manufacturers SUN 27 and N Savr 30, which are used to reduce nitrogen fertilizer loss from soil. TPA is used in agriculture to significantly increase crop yield. The method of action is by slowing crystal growth between fertilizer items and other items in the soil, resulting in the fertilizer remaining available longer for the plants to use. TPA is also a biodegradable way of treating oilfield water to prevent pipes from plugging with mineral scale. Our sales into this market are well established and normally grow steadily, but slowly. A simple explanation of TPA's effect is that it prevents the scaling out of minerals that are part of the water fraction of oil as it exits the rock formation. Scale must be prevented to keep the oil recovery pipes from clogging.

SUN 27 and N Savr 30, are our nitrogen conservation products. Nitrogen is a critical fertilizer, but subject to loss through bacterial breakdown, evaporation and soil run off. SUN 27 is used to conserve nitrogen from attack by soil bacterial enzymes, while N Savr 30 is directed towards reducing nitrogen loss through leaching and evaporation.

ENP, the October 2018 acquisition. ENP is focused on sales into the