Flexible Solutions International, Inc.

What they do

The company sells EWCP, a chemical that forms a thin transparent film on water surfaces to reduce evaporation and heat loss in pools, spas, reservoirs and irrigation ditches. Its TPA division makes biodegradable polymers used by the petroleum, chemical, utility and mining industries to prevent corrosion and scaling in water piping, plus nitrogen conservation products and food-grade products for agriculture. A modified EWCP is also sold for potable water storage tanks, livestock watering pods and canals.

Revenue drivers

• EWCP products — Swimming pool and spa evaporation-control chemical; sales decreased in 2025 versus 2024 due to decreased customer orders, per the 10-K MD&A.
• TPA products — Biodegradable polymers and related products sold to the petroleum, chemical, utility, mining and agricultural industries; TPA sales also decreased in 2025 on lower customer orders.
• Nitrogen conservation and food-grade products — Agriculture nitrogen-loss products and food-grade products manufactured and sold by the TPA division; no separate revenue figures were disclosed.
• Research and development services — R&D services revenue increased in 2025 due to a successful project that completed during the year.

Recent performance

2025 revenue was $38.5 million, roughly flat against $38.2 million in 2024, but net income fell to $786,894 ($0.06 diluted EPS) from $3.0 million ($0.24) as gross margin declined on increased costs of scaling up new products. Operating cash flow was $3.8 million in 2025 versus $5.6 million in 2024, and the company recorded a gain on the sale of the 317 Mendota building alongside a write-down on property held for sale. Quarterly revenue has declined through the first half of 2026: $10.6 million in the September 2025 quarter, $9.1 million in December 2025, $8.3 million in March 2026 and $7.6 million in June 2026. At June 30, 2026 the company reported total assets of $59.0 million, total liabilities of $18.1 million and shareholder equity of $37.0 million.

Strategy

Management's stated cost increases are tied to scaling up new products, higher R&D for new product development, new operating leases, and one-time costs from a new location in Panama. The company sold its 317 Mendota building in 2025 for $3.75 million and put additional property up for sale at an asking price below its holding value. It reduced long-term debt by $4.3 million in 2025 while continuing to pay dividends of $1.27 million and fund purchases of property and equipment of $4.4 million. Management states it has sufficient cash resources to meet commitments for the coming year, with working capital of $22.2 million at December 31, 2025.

Risks

• Oil and gas demand dependence — The 10-K risk factors state the company is particularly dependent on the oil and gas industry, to which it sells TPA products, and lists adverse changes in that industry as a factor affecting operating results.
• Raw material and tariff exposure — The company imports aspartic acid from China as a key TPA ingredient, and management cites the price of crude oil, possible tariffs, and new tariffs on raw materials from China as factors that could raise costs or force customer price increases.
• Customer order concentration and revenue decline — Both EWCP and TPA sales fell in 2025 on decreased customer orders, and quarterly revenue declined sequentially each period from $10.6 million in the September 2025 quarter to $7.6 million in the June 2026 quarter.
• Margin and fixed-cost sensitivity — Gross profit as a percentage of sales declined in 2025 on costs of scaling up new products, and the company notes a high proportion of costs are fixed, so small revenue declines can disproportionately affect operating results.

Outlook

Management identifies three factors that will most significantly affect future results: the sale price of crude oil used to make imported aspartic acid, activity in the oil and gas industry, and drought conditions affecting farmers who buy TPA products. The company says it has sufficient cash resources to meet commitments for the coming year and no substantial capital requirements requiring significant cash outlays. No other trends, events or uncertainties expected to have a material impact on revenues or expenses were disclosed.