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CST: 19/11/2019 13:13:47   

Profire Energy Reports Financial Results for Third Quarter Fiscal 2019

12 Days ago

Company recognizes $9.9 million in revenue and 52.2% gross margin  
Recent acquisitions contribute more than $1 million to Q3 revenues

LINDON, Utah, Nov. 06, 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 September 30, 2019. A conference call will be held on Thursday, November 7, 2019 at 1:00 p.m. ET to discuss the results.

Highlights

  • Recognized revenue of $9.9 million
  • Net income of $922,000 or $0.02 per diluted share,
  • Realized gross profit of $5.2 million or 52.2% of total revenues
  • Cash and liquid investments of over $20 million and remained debt-free
  • Repurchased 592,100 shares of Profire stock for  $916,000

“During the third quarter we were able to generate positive net income and operating cash flows, successfully integrate two acquisitions, and repurchase $916,000 of our stock, all while remaining debt free,” said Brenton Hatch, Chairman and CEO of Profire Energy.

Third Quarter 2019 Financial Results
               
Total revenues for the period equaled $9.9 million, a 14% decrease over the same period a year ago. This decrease was primarily driven by negative macro industry trends including a 15% drop in the average oil price during the same period.

Gross profit was $5.2 million or 52.2% of total revenues which was down from 53% in the same quarter last year. The fluctuation of gross profit margin was within an expected range and was driven by changes in product mix, direct labor costs, and inventory and warranty reserves.

Total operating expenses were approximately $4 million, a 9% 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 2.4%, R&D increased 70% and depreciation decreased 9.2%.

Net income was $922,000 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.

Cash and liquid investments totaled just over $20 million at September 30, 2019 compared to $22.6 million at the end of 2018, and the Company continues to operate debt-free. The decrease is primarily related to the two acquisitions this year, totaling almost $5 million.  

The Company continued the stock repurchase program with a repurchase of 592,100 shares, or $916,000 of Profire stock during the third quarter.

Management Commentary

“In the third quarter we sold just over $300,000 worth of Millstream products and Midflow generated just over $400,000 in revenue. Additionally, through these acquisitions, we have been able to add new customers, build new direct relationships with end users and OEM re-sellers, enabling us to capture revenue not previously available to us. In the quarter we realized $400,000 worth of revenues on Profire products from these new relationships,” stated Cameron Tidball, Chief Business Development Officer of Profire. “We are encouraged to achieve these operational results and revenue performance even in a down market. We believe these acquisitions will continue to provide greater value as the market improves. We expect annual revenue related to both of these acquisitions to greater than $3.5 million in the coming years.”

“With the launch of these product advancements we are increasing our capabilities and opportunities to eventually provide detailed data analytics and further use cloud technologies to improve the customer experience,” said Ryan Oviatt, CFO of Profire. “We plan to continue to invest in additional sales and operational resources to further our entrance into the downstream market, and to support new product development and enhancements to our existing product lines.”

Conference Call

Profire Energy Executives will host the call, followed by a question and answer period.
Date: Thursday, November 7, 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=136646. 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 November 21, 2019.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay Pin Number: 13695761
 

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 products are continuing to be a key part of their solutions. 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
    September 30, 2019   December 31, 2018
    (Unaudited)    
CURRENT ASSETS        
Cash and cash equivalents   $ 9,944,128     $ 10,101,932  
Short-term investments   864,629     961,256  
Short-term investments - other   2,000,000     3,596,484  
Accounts receivable, net   6,568,599     6,885,296  
Inventories, net (note 3)   9,782,643     9,659,571  
Prepaid expenses & other current assets   1,076,138     473,726  
Income tax receivable   524,695     173,124  
Total Current Assets   30,760,832     31,851,389  
LONG-TERM ASSETS        
Net deferred tax asset       85,092  
Long-term investments   7,319,099     7,978,380  
Financing right-of-use asset   128,738      
Property and equipment, net   10,896,855     8,020,462  
Intangible assets, net   3,934,727     429,956  
Goodwill   1,120,381     997,701  
Total Long-Term Assets   23,399,800     17,511,591  
TOTAL ASSETS   $ 54,160,632     $ 49,362,980  
         
CURRENT LIABILITIES        
Accounts payable   $ 2,181,592     $ 1,177,985  
Accrued vacation   446,451     311,435  
Accrued liabilities   2,209,303     1,445,510  
Current financing lease liability (note 8)   67,984      
Income taxes payable   627,010     1,172,191  
Total Current Liabilities   5,532,340     4,107,121  
LONG-TERM LIABILITIES        
Net deferred income tax liability   134,046      
Long-term financing lease liability   63,951      
TOTAL LIABILITIES   5,730,337     4,107,121  
         
STOCKHOLDERS' EQUITY (note 4)        
Preferred stock: $0.001 par value, 10,000,000 shares authorized:  no shares issued or outstanding        
Common stock: $0.001 par value, 100,000,000 shares authorized: 50,761,491 issued and 47,618,604 outstanding at September 30, 2019, and 49,707,805 issued and 47,932,305 outstanding at December 31, 2018   50,762     49,708  
Treasury stock, at cost   (4,859,230 )   (2,609,485 )
Additional paid-in capital   29,608,685     28,027,742  
Accumulated other comprehensive loss   (2,629,369 )   (2,895,683 )
Retained earnings   26,259,447     22,683,577  
TOTAL STOCKHOLDERS' EQUITY   48,430,295     45,255,859  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 54,160,632     $ 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 September 30,   For the Nine Months Ended September 30,
  2019     2018     2019     2018  
REVENUES (note 6)              
Sales of goods, net $ 9,251,947     $ 10,830,592     $ 29,009,837     $ 33,009,616  
Sales of services, net 653,814     669,310     1,853,013     1,999,764  
Total Revenues 9,905,761     11,499,902     30,862,850     35,009,380  
               
COST OF SALES              
Cost of goods sold-product 4,326,335     4,917,449     13,465,989     15,434,698  
Cost of goods sold-services 410,130     484,327     1,275,655     1,437,749  
Total Cost of Goods Sold 4,736,465     5,401,776     14,741,644     16,872,447  
               
GROSS PROFIT 5,169,296     6,098,126     16,121,206     18,136,933  
               
OPERATING EXPENSES              
General and administrative expenses 3,256,023     3,180,725     9,984,251     9,887,451  
Research and development 641,716     377,676     1,503,645     1,097,897  
Depreciation and amortization expense 130,105     143,327     357,238     401,114  
Total Operating Expenses 4,027,844     3,701,728     11,845,134     11,386,462  
               
INCOME FROM OPERATIONS 1,141,452     2,396,398     4,276,072     6,750,471  
               
OTHER INCOME (EXPENSE)              
Gain on sale of fixed assets 34,826     43,904     73,166     129,989  
Other expense (2,065 )   (1,506 )   (3,029 )   (7,462 )
Interest income 38,478     85,167     216,068     310,646  
Total Other Income 71,239     127,565     286,205     433,173  
               
INCOME BEFORE INCOME TAXES 1,212,691     2,523,963     4,562,277     7,183,644  
               
INCOME TAX EXPENSE 290,943     864,874     986,407     1,934,057  
               
NET INCOME $ 921,748     $ 1,659,089     $ 3,575,870     $ 5,249,587  
               
OTHER COMPREHENSIVE INCOME (LOSS)              
Foreign currency translation gain (loss) $ (91,397 )   $ 170,641     $ 160,453     $ (223,431 )
Unrealized gains (losses) on investments (12,386 )   (11,963 )   105,861     (35,972 )
Total Other Comprehensive Income (Loss) (103,783 )   158,678     266,314     (259,403 )
               
COMPREHENSIVE INCOME $ 817,965     $ 1,817,767     $ 3,842,184     $ 4,990,184  
               
BASIC EARNINGS PER SHARE (note 7) $ 0.02     $ 0.03     $ 0.08     $ 0.11  
FULLY DILUTED EARNINGS PER SHARE $ 0.02     $ 0.03     $ 0.07     $ 0.11  
               
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING 47,739,192     48,082,506     47,509,357     48,337,517  
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING 48,469,246     48,852,167     48,259,900     49,107,178  

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 Nine Months Ended September 30,
  2019     2018  
OPERATING ACTIVITIES      
Net income $ 3,575,870     $ 5,249,587  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization expense 732,396     667,085  
Gain on sale of fixed assets (73,166 )   (120,825 )
Bad debt expense 255,943     134,901  
Stock awards issued for services 358,270     916,795  
Changes in operating assets and liabilities:      
Changes in accounts receivable 1,244,104     (184,951 )
Changes in income taxes receivable/payable (890,523 )   (432,575 )
Changes in inventories 1,711,446     (3,863,287 )
Changes in prepaid expenses (586,576 )   (172,497 )
Changes in deferred tax asset/liability 219,138     22,564  
Changes in accounts payable and accrued liabilities 855,207     1,506,396  
Net Cash Provided by Operating Activities 7,402,109     3,723,193  
       
INVESTING ACTIVITIES      
Proceeds from sale of equipment 75,310     219,269  
Sale (purchase) of investments 2,476,227     (876,463 )
Purchase of fixed assets (3,309,191 )   (1,271,997 )
Payments for acquisitions (4,322,722 )    
Net Cash Used in Investing Activities (5,080,376 )   (1,929,191 )
       
FINANCING ACTIVITIES      
Value of equity awards surrendered by employees for tax liability (185,004 )   (737,024 )
Cash received in exercise of stock options 8,870     174,002  
Purchase of treasury stock (2,249,745 )   (4,000,000 )
Principal paid towards lease liability (53,190 )    
Net Cash Used in Financing Activities (2,479,069 )   (4,563,022 )
       
Effect of exchange rate changes on cash (468 )   (38,941 )
       
NET DECREASE IN CASH (157,804 )   (2,807,961 )
CASH AT BEGINNING OF PERIOD 10,101,932     11,445,799  
CASH AT END OF PERIOD $ 9,944,128     $ 8,637,838  
       
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION      
       
CASH PAID FOR:      
Interest $ 4,469     $  
Income taxes $ 1,793,281     $ 2,164,149  
NON-CASH FINANCING AND INVESTING ACTIVITIES:      
Issuance of common stock - Midflow acquisition $ 1,020,000     $  

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

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