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CST: 23/08/2019 14:11:16   

Profire Energy Reports Financial Results for Second Quarter Fiscal 2019

15 Days ago

Company recognizes $10.1 million in revenues, 51.2% gross margin,   Acquired Two Additional Companies, and increases Share Repurchase Program

LINDON, Utah, Aug. 07, 2019 (GLOBE NEWSWIRE) -- Profire Energy, Inc. (NASDAQ: PFIE), a technology company (the "Company") which creates, installs and services burner and chemical management solutions in the oil and gas industry, today reported financial results for its quarter ending June 30, 2019. A conference call will be held on Thursday, August 8, 2019 at 1:00 p.m. ET to discuss the results.

Highlights

  • Recognized Revenue of $10.1 million
  • Net Income of $986,000 or $0.02 Per Diluted Share,
  • Realized Gross Profit of $5.2 Million or 51.2% of Total Revenues
  • Cash and Liquid Investments of over $23 Million and Remained Debt-Free
  • Increased Share Repurchase Program by $2 million

Second Quarter 2019 Financial Results
               
Total revenues for the period equaled $10.1 million, an 11% decrease over the same period a year ago. This decrease was primarily driven by negative macro industry trends including a 12% drop in the average oil price during the same period.

Net income was $986,000 or $0.02 per diluted share, compared to a net income of $1.7 million or $0.03 per diluted share in the same quarter last year.

Total operating expenses were approximately $4.1 million, a 10% increase from the same quarter last year. This increase is primarily due to an increase in wages, professional fees related to acquisition activity, and certifications and development of the PF2200 product.

Compared with the same quarter last year, operating expenses for G&A increased  6%, R&D increased 62% and depreciation increased 14%.

Gross profit was $5.2 million or 51.2% of total revenues which was down from 52.1% in the same quarter last year. The fluctuation in gross profit margin was due to product mix changes, direct labor costs, and adjustments in our inventory and warranty reserves.

Cash and liquid investments totaled just over $23 million at June 30, 2019 compared to $22.6 million at the end of 2018, and the Company continues to operate debt-free.

Within the Quarter the Company closed on an agreement to acquire Millstream Energy Products for total compensation of roughly $2.5 million US. Subsequent to the end of the second quarter, the Company closed on a Member Interest Purchase Agreement with Midflow Services, LLC, on August 5, 2019, for total compensation of roughly $2.4 million cash and $1 million worth of the Company’s restricted stock.

The Company announced today that it will continue the stock repurchase program and its Board of  Directors has allocated an additional $2 million towards the existing program, which will remain in effect until October 31, 2019.

Management Commentary

"When analyzing M&A opportunities, we are looking for companies that provide complementary products, improve product development, broaden industry expertise, expand market share, and leverage our strong customer relationships and sales network. We are very excited about both of our recent acquisitions of Millstream and Midflow and believe they fit within our long-term strategy,” said Brenton Hatch, President and CEO of Profire Energy. "We anticipated the current market volatility in 2019 and believe our investment strategies, including acquisitions and product development are crucial to Profire’s growth in the coming years. We will continue to thoughtfully analyze additional strategic opportunities while we focus on the strategic integration of Midflow and Millstream to ensure these acquisitions are value accretive."

"Total cash spend for both the Millstream and Midflow acquisitions was just under $5 million US with expected additional annual revenue of $3.5 to $5.5 million in the coming years. Profire still maintains sufficient cash on hand to continue to react quickly to strategic opportunities,” stated Ryan Oviatt, CFO of Profire. "We are also well-positioned to allocate some of our cash on hand to continue the stock repurchase program. This demonstrates our ongoing commitment to provide value to our shareholders.”

Conference Call

Profire Energy President and CEO Brenton Hatch and CFO Ryan Oviatt will host the call, followed by a question and answer period.
Date: Thursday, August 8, 2019
Time: 1:00 p.m. ET (11:00 a.m. MT)
Toll-free dial-in number: 1-877-705-6003
International dial-in number: 1-201-493-6725
The conference call will be webcast live and available for replay via this link:
http://public.viavid.com/index.php?id=135689. The webcast replay will be available for one year.

Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting the conference call, please contact Todd Fugal at 1-801-796-5127.

A replay of the call will be available via the dial-in numbers below after 4:00 p.m. ET on the same day through August 22, 2019.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay Pin Number: 13693316

About Profire Energy, Inc.
Profire Energy assists energy production companies in the safe and efficient production and transportation of oil and natural gas. As energy companies seek greater safety for their employees, compliance with more stringent regulatory standards, and enhanced margins with their energy production processes, Profire Energy's burner management and chemical injection systems are increasingly becoming part of their solution. Profire Energy has offices in Lindon, Utah; Victoria, Texas; Homer, Pennsylvania; Greeley, Colorado; Millersburg, Ohio; and Spruce Grove, Alberta, Canada. For additional information, visit www.profireenergy.com

Cautionary Note Regarding Forward-Looking Statements. Statements made in this release that are not historical are forward-looking statements. This release contains forward-looking statements, including, but not limited to statements regarding the Company’s expected growth, the Company’s expected revenues from recent acquisitions, the Company’s plans to make internal and external investments, and the availability of Company resources to make beneficial investments in 2019 and beyond. Forward-looking statements are not guarantees of future results or performance and involve risks, assumptions and uncertainties that could cause actual events or results to differ materially from the events or results described in, or anticipated by, the forward-looking statements. Factors that could materially affect such forward-looking statements include certain economic, business, public market and regulatory risks and factors identified in the company's periodic reports filed with the Securities and Exchange Commission. All forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are made only as of the date of this release and the Company assumes no obligation to update forward-looking statements to reflect subsequent events or circumstances, except as required by law. Readers should not place undue reliance on these forward-looking statements.

Contact:
Profire Energy, Inc.
Ryan Oviatt, CFO
(801) 796-5127

Three Part Advisors
Steven Hooser, Partner
214-872-2710

               

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
    As of
    June 30, 2019   December 31, 2018
    (Unaudited)    
CURRENT ASSETS        
Cash and cash equivalents   $ 11,487,778     $ 10,101,932  
Short-term investments   726,782     961,256  
Short-term investments - other   2,400,000     3,596,484  
Accounts receivable, net   6,395,332     6,885,296  
Inventories, net   9,071,479     9,659,571  
Prepaid expenses & other current assets   512,292     473,726  
Income tax receivable   473,093     173,124  
Total Current Assets   31,066,756     31,851,389  
LONG-TERM ASSETS        
Net deferred tax asset       85,092  
Long-term investments   8,433,185     7,978,380  
Financing right-of-use asset   149,484      
Property and equipment, net   9,108,234     8,020,462  
Goodwill   997,701     997,701  
Intangible assets, net   1,699,312     429,956  
Total Long-Term Assets   20,387,916     17,511,591  
TOTAL ASSETS   $ 51,454,672     $ 49,362,980  
         
CURRENT LIABILITIES        
Accounts payable   $ 1,415,824     $ 1,177,985  
Accrued vacation   373,995     311,435  
Accrued liabilities   1,679,279     1,445,510  
Current financing lease liability   76,559      
Income taxes payable   199,792     1,172,191  
Total Current Liabilities   3,745,449     4,107,121  
LONG-TERM LIABILITIES        
Net deferred income tax liability   120,222      
Long-term financing lease liability   76,382      
TOTAL LIABILITIES   3,942,053     4,107,121  
         
STOCKHOLDERS' EQUITY        
Preferred shares: $0.001 par value, 10,000,000 shares authorized:  no shares issued or outstanding        
Common shares: $0.001 par value, 100,000,000 shares authorized: 50,016,979 issued and 47,466,192
 outstanding at June 30, 2019, and 49,707,805 issued and 47,932,305 outstanding at December 31, 2018
  50,017     49,708  
Treasury stock, at cost   (3,943,063 )   (2,609,485 )
Additional paid-in capital   28,593,552     28,027,742  
Accumulated other comprehensive loss   (2,525,586 )   (2,895,683 )
Retained earnings   25,337,699     22,683,577  
TOTAL STOCKHOLDERS' EQUITY   47,512,619     45,255,859  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 51,454,672     $ 49,362,980  

These financial statements should be read in conjunction with the Form 10-Q and accompanying footnotes



PROFIRE ENERGY, INC. AND SUBSIDIARIES 
Condensed Consolidated Statements of Operations and Comprehensive Income 
(Unaudited) 
  For the Three Months Ended June 30,   For the Six Months Ended June 30,
  2019     2018     2019     2018  
REVENUES              
Sales of goods, net $ 9,559,255     $ 10,724,409     $ 19,757,890     $ 22,179,024  
Sales of services, net 564,776     615,352     1,199,199     1,330,454  
Total Revenues 10,124,031     11,339,761     20,957,089     23,509,478  
               
COST OF SALES              
Cost of goods sold-product 4,568,666     4,959,539     9,139,654     10,517,249  
Cost of goods sold-services 368,327     471,555     865,525     953,422  
Total Cost of Goods Sold 4,936,993     5,431,094     10,005,179     11,470,671  
               
GROSS PROFIT 5,187,038     5,908,667     10,951,910     12,038,807  
               
OPERATING EXPENSES              
General and administrative expenses 3,566,698     3,364,826     6,728,228     6,706,726  
Research and development 512,871     317,002     861,929     720,221  
Depreciation and amortization expense 110,910     129,070     227,133     257,787  
Total Operating Expenses 4,190,479     3,810,898     7,817,290     7,684,734  
               
INCOME FROM OPERATIONS 996,559     2,097,769     3,134,620     4,354,073  
               
OTHER INCOME (EXPENSE)              
Gain on sale of fixed assets 21,410     21,254     38,340     86,085  
Other expense (413 )   (4,164 )   (964 )   (5,956 )
Interest income 85,887     174,771     177,590     225,479  
Total Other Income 106,884     191,861     214,966     305,608  
               
INCOME BEFORE INCOME TAXES 1,103,443     2,289,630     3,349,586     4,659,681  
               
INCOME TAX EXPENSE 117,939     575,363     695,464     1,069,183  
               
NET INCOME $ 985,504     $ 1,714,267     $ 2,654,122     $ 3,590,498  
               
OTHER COMPREHENSIVE INCOME (LOSS)              
Foreign currency translation gain (loss) $ 102,435     $ (427,307 )   $ 251,850     $ (394,072 )
Unrealized gains (losses) on investments 49,495     9,226     118,247     (24,009 )
Total Other Comprehensive Income (Loss) 151,930     (418,081 )   370,097     (418,081 )
               
COMPREHENSIVE INCOME $ 1,137,434     $ 1,296,186     $ 3,024,219     $ 3,172,417  
               
BASIC EARNINGS PER SHARE $ 0.02     $ 0.04     $ 0.06     $ 0.07  
FULLY DILUTED EARNINGS PER SHARE $ 0.02     $ 0.03     $ 0.06     $ 0.07  
               
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING 47,348,137     48,266,199     47,392,534     48,467,136  
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING 48,124,208     49,095,575     48,192,849     49,237,938  

                                                                                                                          
            These financial statements should be read in conjunction with the Form 10-Q and accompanying footnotes



PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
  For the Six Months Ended June 30,
  2019     2018  
OPERATING ACTIVITIES      
Net income $ 2,654,122     $ 3,590,498  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization expense 483,063     442,959  
Gain on sale of fixed assets (38,340 )   (76,703 )
Bad debt expense 229,792     141,348  
Stock awards issued for services 749,547     861,189  
Changes in operating assets and liabilities:      
Changes in accounts receivable 605,009     548,419  
Changes in income taxes receivable/payable (1,261,267 )   (790,946 )
Changes in inventories 1,831,865     (2,074,974 )
Changes in prepaid expenses (35,637 )   114,907  
Changes in deferred tax asset/liability 205,314     91,890  
Changes in accounts payable and accrued liabilities (115,813 )   274,744  
Net Cash Provided by Operating Activities 5,307,655     3,123,331  
       
INVESTING ACTIVITIES      
Proceeds from sale of equipment 39,810     159,449  
Sale of investments 1,109,297     368,379  
Purchase of fixed assets (1,429,735 )   (1,184,126 )
Payments for asset acquisition (2,088,814 )    
Net Cash Used in Investing Activities (2,369,442 )   (656,298 )
       
FINANCING ACTIVITIES      
Value of equity awards surrendered by employees for tax liability (184,433 )   (736,160 )
Cash received in exercise of stock options     174,002  
Purchase of Treasury stock (1,333,578 )   (4,000,000 )
Principal paid towards lease liability (32,185 )    
Net Cash Used in Financing Activities (1,550,196 )   (4,562,158 )
       
Effect of exchange rate changes on cash (2,171 )   (51,997 )
       
NET INCREASE (DECREASE) IN CASH 1,385,846     (2,147,122 )
CASH AT BEGINNING OF PERIOD 10,101,932     11,445,799  
CASH AT END OF PERIOD $ 11,487,778     $ 9,298,677  
       
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION      
       
CASH PAID FOR:      
Interest $ 2,832     $  
Income taxes $ 1,793,281     $ 1,691,397  
NON-CASH FINANCING AND INVESTING ACTIVITIES:      
Acquisition of assets (Preliminary estimate) $ 237,032     $  

These financial statements should be read in conjunction with the Form 10-Q and accompanying footnotes

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