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Flexible Solutions International (NYSE:FSI) Inc. (NYSE American: FSI), whose stock has surged over 9% in the past week according to InvestingPro data, has entered into a significant manufacturing agreement, according to a recent 8-K filing with the Securities and Exchange Commission. On January 7, 2025, the company announced a five-year contract with an unnamed U.S.-based company to produce food-grade products on a non-exclusive basis.
Under the terms of the agreement, which was disclosed Friday, Flexible Solutions will provide manufacturing services for a range of products specified by the U.S. company. The contract stipulates automatic renewal for successive five-year terms, provided neither party issues a non-renewal notice 180 days prior to the term's conclusion.
The deal is expected to be financially beneficial for Flexible Solutions, with potential annual revenues estimated between $15 million and $30 million or more - a significant increase from its current trailing twelve-month revenue of $38.49 million. The revenue stream is anticipated to commence within six months following a planned expansion of the company's clean room space and installation of necessary manufacturing equipment.
This agreement marks a notable development for the Alberta-based company, which is classified under the Miscellaneous Chemical Products industry. Flexible Solutions specializes in innovative water treatment and environmentally friendly solutions, often catering to industrial applications.
The company reported a 7% increase in sales in its third quarter of 2024, reaching $9.31 million, with profits of $612,000. This marks a notable turnaround from the loss of $718,000 in the same quarter of 2023. Furthermore, Flexible Solutions has been making progress in the food sector, with its NanoChem division, which accounts for 70% of the company's revenue, nearing the commercialization of five food products. This development is expected to significantly enhance the company's revenue by early 2025.
In addition to these financial highlights, the company recently held a shareholder meeting where executive pay was approved and directors were re-elected, indicating strong shareholder confidence in the current management. Moreover, Flexible Solutions announced a change in its independent registered public accounting firm from Smythe to Assure CPA, a decision ratified by shareholders.
Among other recent developments, the company is also recovering over $1 million in tariffs and negotiating price increases due to stable but high shipping costs. In an effort to streamline operations, Flexible Solutions is consolidating its R&D and planning a new drug compounding production line. These strategic changes suggest a promising future for the company with potential growth in the food sector expected to double the company's size.
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