Flexible Solutions International Inc. reported a net loss of $503,358, or $0.04 per basic share, for the third quarter ended September 30, 2025. Revenue rose 13% to $10,556,291, beating the consensus estimate of $10,280,000 by $276,000. The earnings miss was driven by significant capital expenditures and operating costs associated with launching a second food‑grade contract and continuing construction at the Panama facility.
Revenue growth was largely powered by the company’s core NanoChem and ENP divisions, which together generated the bulk of the $10.56 million. However, gross profit fell to $2.52 million as the cost of sales increased, reflecting higher raw‑material prices, tariff impacts, and the upfront costs of scaling the new food‑grade production line. The margin compression illustrates the trade‑off the company is making between short‑term profitability and long‑term growth in higher‑margin food‑grade markets.
The net loss was largely a result of the $2.5 million investment in food‑grade product development and the $1.2 million spent on equipment installation and leasehold improvements in Panama. These outlays, combined with higher labor and material costs, outweighed the revenue generated in the quarter. Gross profit contraction and the loss of $503k underscore the company’s current focus on building capacity rather than achieving profitability.
CEO Daniel B. O’Brien highlighted that the quarter marked the start of full production for the second food‑grade contract, which required hiring and training four shifts of new employees and backup personnel. He noted that Panama’s improvements are nearly finished, with only final equipment installation and testing remaining before startup later in the year. O’Brien emphasized that substantial revenue from the food contract is expected in Q4 and that the company is positioning itself for full‑scale food‑grade production in 2026.
While the company did not provide explicit forward guidance, O’Brien signaled confidence in future revenue growth: he mentioned that Q1 2026 sales are projected to reach $6.5 million and that the Panama facility will be fully operational by year‑end. Analysts noted the EPS miss of $0.04 versus an estimate of $0.05, but the revenue beat of $0.28 million was viewed positively as a sign of demand strength in the company’s high‑margin segments.
After the announcement, the market reacted with a 2.85% increase in the company’s shares, reflecting investor focus on the revenue beat and the company’s strategic shift toward higher‑margin food‑grade contracts. The margin compression and net loss were tempered by the outlook for substantial Q4 revenue and the near completion of the Panama facility, which investors interpreted as a long‑term growth catalyst.
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