Flexible Solutions International, Inc.

Second-quarter 2026 sales were $7.60 million, down 14% from $8.87 million in Q2 2025. The company reported a loss of $1.91 million, or $0.15 per share, versus a gain of $2.03 million, or $0.16 per share, a year ago. Management said Q2 2025 included $2.5 million of irregular R&D revenue that did not recur this year, so recurring revenue was higher year over year. For the August 2025 food contract, management said it has reached full production, while the January 2025 contract started volume production very late in Q2 and should show significant revenue in Q3 and increase rapidly in Q4. Management also reiterated full-year-style expectations for Q3 profitability and rapidly increasing profits in Q4, with food-division margins targeted at 22% to 25% before tax and wine-contract margins around 25% to 26%.

Dan O'Brien framed the quarter as a transition period, saying the company is building out food-grade capacity and shifting NCS toward food and nutraceutical products only by the end of 2026. He was upbeat on the new contracts, saying the August contract is at full capacity, the January contract is ramping, and both should support stronger Q3 and Q4 results. He also pointed to Panama as a future revenue/profit contributor and said FL LLC-related sales are already returning through direct customer relationships and former representatives.

O'Brien said scale-up expenses in Illinois and Panama were expensed as incurred, which hurt Q2 profitability, and he linked the loss to training and ramping labor across the new food contracts. He said the company is carrying more inventory, partly by choice, to take advantage of lower input prices, and noted raw material and shipping costs remain volatile because of tariffs and the Iran war. On balance sheet and capital, he said long-term debt is being paid down, working capital is adequate, lines of credit remain available, and the company does not expect to need equity actions. He also guided to gross margins of 22% to 25% before tax for the newer food contracts, 25% to 26% for the wine contract, and 15% to 17% net margin after tax for the newer food contracts.

Analysts asked about the inventory build, receivables decline, food-contract ramp, and the status of the shelf offering. Management said the inventory build was intentional, tied to cyclical raw-material buying, Panama, and food-grade inventory needs, and said the shelf is simply being kept available for a compelling acquisition, not for current use. On the biggest food contract, O'Brien said revenue should show materially in Q3 because finished goods are already being billed, while the August contract is at full capacity but still being optimized for profitability. On FL LLC, he said the company is already taking direct orders from historical customers and expects $5 million to $7 million of annual revenue recovery over the next 12 months.