Profire Energy, Inc. (NASDAQ: PFIE), a technology company (the
"Company") that provides solutions which enhance the efficiency,
safety, and reliability of industrial combustion appliances, today
reported financial results for its second quarter ending June 30,
2023. A conference call will be held on Thursday, August 10, 2023,
at 8:30 a.m. ET to discuss the results.
Second Quarter Summary (comparisons to prior-year
quarter)
- Revenue of
$14.4 million, a 50% increase
- Gross profit
of $7.4 million, a 68% increase
- Gross margin
of 51.3%, a 560 basis point increase
- Net income of
$2.9 million, or $0.06 per diluted share, versus $284,829 and
$0.01
- Generated
EBITDA of $3.7 million, versus $587,024
- Cash and
investments of $17.4 million with no debt
- Began
repurchasing shares under the previously announced $2 million share
repurchase program.
“Our second quarter results reflect the sustained momentum
across our business which contributed to a 50 percent increase in
revenue over the prior year and the highest quarterly net income
and EBITDA in company history,” said Ryan Oviatt, Co-Chief
Executive Officer and CFO of Profire Energy. “The last 6-month and
12-month periods represent the best ever consecutive 6 and 12-month
periods in company history. We are excited about the path we
are on and our ability to continue to operate at these record
setting levels. We are a much better and stronger company
today than we were when we last achieved this level of quarterly
revenues, profits and cashflows.”
Second Quarter 2023 Financial Results
Total revenues for the period equaled $14.4 million, compared to
$14.6 million in the first quarter of 2023 and $9.6 million in the
prior-year quarter. The sequential performance was basically flat
and reflects the strength of our sales backlog and ongoing customer
demand for our solutions while the year-over-year increase was
primarily driven by ongoing customer demand and continued progress
in our diversification efforts.
Gross profit was $7.4 million, compared to $7.8 million in the
first quarter and $4.4 million in the second quarter of 2022. Gross
margin was 51.3% of revenues, compared to 53.8% of revenues in the
prior quarter and 45.7% of revenues in the prior-year quarter. The
sequential decrease is related to product mix while the
year-over-year increase reflects higher revenues due to pricing
initiatives and greater fixed cost coverage.
Total operating expenses were $4.2 million, compared to $4.5
million in the first quarter of 2023 and $4.3 million in the
year-ago quarter. The decrease is related to the non-recurring
realization of an employee payroll tax credit, which more than
offset higher employee-related expenses and cost inflation across
the business.
Compared with the same quarter last year, operating expenses for
G&A were flat, R&D decreased 29% and depreciation decreased
by 12%.
Net income was $2.9 million, or $0.06 per diluted share,
compared to net income of $2.6 million or $0.05 per diluted share
in the first quarter of 2023 and $284,829 or $0.01 per diluted
share in the same quarter last year.
“Our legacy business continues to perform well as E&P’s
resume maintenance activity that has been deferred over multiple
years as well as new investments being made to increase automation
and efficiency and lower emissions,” stated Cameron Tidball, Co-CEO
of Profire Energy. “We continue to gain traction across our
diversification strategy, particularly within the renewable natural
gas sector. During the quarter, we installed projects for food and
beverage, industrials and landfill customers and continue to grow
across the Critical Energy Infrastructure segment. Overall, we
believe the business prospects for Profire remain strong over the
near and intermediate term and look forward to delivering long-term
value to our shareholders.”
Conference Call
Profire Energy Executives will host the call, followed by a
question and answer period.
Date: Thursday, August 10, 2023Time: 8:30 a.m. ET (6:30 a.m.
MT)Toll-free dial-in number: 1-855-327-6837International dial-in
number: 1-631-891-4304
The conference call will be webcast live and available for
replay via this link:
https://viavid.webcasts.com/starthere.jsp?ei=1611675&tp_key=85d887bad9
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 to 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 1:00 p.m. ET on the sameday through August 24,
2023.
Toll-free replay number: 1-844-512-2921International replay
number: 1-412-317-6671Replay Pin Number: 10021753
About Profire Energy, Inc.Profire Energy is a
technology company providing solutions that enhance the efficiency,
safety, and reliability of industrial combustion appliances while
mitigating potential environmental impacts related to the operation
of these devices. It is primarily focused in the upstream,
midstream, and downstream transmission segments of the oil and gas
industry. However, in recent years, we have completed many
installations of our burner-management solutions in other
industries that we believe will be applicable as we expand our
addressable market over time. Profire specializes in the
engineering and design of burner and combustion management systems
and solutions used on a variety of natural and forced draft
applications. Its products and services are sold primarily
throughout North America. It has an experienced team of sales and
service professionals that are strategically positioned across the
United States and Canada. Profire has offices in Lindon, Utah;
Victoria, Texas; Homer, Pennsylvania; Greeley, Colorado;
Millersburg, Ohio; and Acheson, 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 2023 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, Co-CEO & CFO(801) 796-5127
Three Part AdvisorsSteven Hooser, PartnerJohn
Beisler, Managing Director214-872-2710About Non-GAAP
Financial Measures
To supplement our consolidated financial statements, which
statements are prepared and presented in accordance with GAAP, we
use the following non-GAAP financial measure of earnings before
interest, taxes, depreciation and amortization (“EBITDA”). The
presentation of this financial information is not intended to be
considered in isolation or as a substitute for, or superior to, the
financial information prepared and presented in accordance with
GAAP.
We use this non-GAAP financial measure for financial and
operational decision making and as a means to evaluate
period-to-period comparisons. Our management believes that this
non-GAAP financial measure provides meaningful supplemental
information regarding our performance. We believe that both
management and investors benefit from referring to this non-GAAP
financial measure in assessing our performance and when planning,
forecasting, and analyzing future periods. We believe this non-GAAP
financial measure is useful to investors both because it allows for
greater transparency with respect to key metrics used by management
in its financial and operational decision making. The
Following is a tabular presentation of EBITDA, including a
reconciliation to net income which the Company believes to be the
most directly comparable US GAAP financial measure.
EBITDA CALCULATION: |
6/30/20233
MONTHS |
Net Income |
$ |
2,857,157 |
|
add back net income tax expense |
$ |
634,028 |
|
add back net interest expense |
$ |
(122,800 |
) |
add back depreciation and amortization |
$ |
285,957 |
|
EBITDA Calculated |
$ |
3,654,342 |
|
EBITDA MARGIN CALCULATION: |
EBITDA |
$ |
3,654,342 |
|
Divided by total revenue |
$ |
14,443,577 |
|
EBITDA Margin |
|
25.3 |
% |
Item 1 Financial Information
PROFIRE ENERGY, INC. AND SUBSIDIARIES |
Condensed Consolidated Balance Sheets |
|
|
As of |
|
|
June 30, 2023 |
|
December 31, 2022 |
ASSETS |
|
(Unaudited) |
|
|
CURRENT ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
8,246,092 |
|
|
$ |
7,384,578 |
|
Short-term investments |
|
|
1,896,397 |
|
|
|
1,154,284 |
|
Accounts receivable, net |
|
|
13,987,743 |
|
|
|
10,886,145 |
|
Inventories, net (note 3) |
|
|
13,016,192 |
|
|
|
10,293,980 |
|
Prepaid expenses and other current assets (note 4) |
|
|
2,399,676 |
|
|
|
2,314,639 |
|
Total Current Assets |
|
|
39,546,100 |
|
|
|
32,033,626 |
|
LONG-TERM ASSETS |
|
|
|
|
Long-term investments |
|
|
7,212,652 |
|
|
|
7,503,419 |
|
Financing lease right-of-use asset |
|
|
156,943 |
|
|
|
120,239 |
|
Property and equipment, net |
|
|
10,627,702 |
|
|
|
10,423,964 |
|
Intangible assets, net |
|
|
1,182,859 |
|
|
|
1,268,907 |
|
Goodwill |
|
|
2,579,381 |
|
|
|
2,579,381 |
|
Total Long-Term Assets |
|
|
21,759,537 |
|
|
|
21,895,910 |
|
TOTAL ASSETS |
|
$ |
61,305,637 |
|
|
$ |
53,929,536 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Accounts payable |
|
$ |
2,120,546 |
|
|
$ |
2,955,506 |
|
Accrued liabilities (note 5) |
|
|
4,374,628 |
|
|
|
3,573,994 |
|
Current financing lease liability (note 6) |
|
|
66,229 |
|
|
|
53,646 |
|
Income taxes payable |
|
|
887,647 |
|
|
|
205,169 |
|
Total Current Liabilities |
|
|
7,449,050 |
|
|
|
6,788,315 |
|
LONG-TERM LIABILITIES |
|
|
|
|
Net deferred income tax liability |
|
|
694,429 |
|
|
|
488,858 |
|
Long-term financing lease liability (note 6) |
|
|
92,511 |
|
|
|
67,883 |
|
TOTAL LIABILITIES |
|
|
8,235,990 |
|
|
|
7,345,056 |
|
|
|
|
|
|
STOCKHOLDERS' EQUITY (note
7) |
|
|
|
|
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:
52,659,763 issued and 47,574,560 outstanding at June 30, 2023, and
52,143,901 issued and 47,105,771 outstanding at December 31,
2022 |
|
|
52,662 |
|
|
|
52,144 |
|
Treasury stock, at cost |
|
|
(7,394,281 |
) |
|
|
(7,336,323 |
) |
Additional paid-in capital |
|
|
32,514,997 |
|
|
|
31,737,843 |
|
Accumulated other comprehensive loss |
|
|
(2,976,198 |
) |
|
|
(3,294,873 |
) |
Retained earnings |
|
|
30,872,467 |
|
|
|
25,425,689 |
|
TOTAL STOCKHOLDERS' EQUITY |
|
|
53,069,647 |
|
|
|
46,584,480 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
61,305,637 |
|
|
$ |
53,929,536 |
|
|
|
|
|
|
|
|
|
|
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 Income and Comprehensive
Income (Loss) |
(Unaudited) |
|
|
For the Three Months Ended June 30, |
|
For the Six Months Ended June 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
(See Note 1) |
|
|
|
(See Note 1) |
REVENUES (note 8) |
|
|
|
|
|
|
|
|
Sales of products, net |
|
$ |
13,602,884 |
|
|
$ |
8,860,682 |
|
|
$ |
27,231,396 |
|
|
$ |
17,739,105 |
|
Sales of services, net |
|
|
840,693 |
|
|
|
772,465 |
|
|
|
1,765,643 |
|
|
|
1,397,182 |
|
Total Revenues |
|
|
14,443,577 |
|
|
|
9,633,147 |
|
|
|
28,997,039 |
|
|
|
19,136,287 |
|
|
|
|
|
|
|
|
|
|
COST OF SALES |
|
|
|
|
|
|
|
|
Cost of sales - product |
|
|
6,270,174 |
|
|
|
4,530,065 |
|
|
|
12,244,513 |
|
|
|
8,912,764 |
|
Cost of sales - services |
|
|
758,958 |
|
|
|
699,937 |
|
|
|
1,504,972 |
|
|
|
1,263,674 |
|
Total Cost of Sales |
|
|
7,029,132 |
|
|
|
5,230,002 |
|
|
|
13,749,485 |
|
|
|
10,176,438 |
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
7,414,445 |
|
|
|
4,403,145 |
|
|
|
15,247,554 |
|
|
|
8,959,849 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
General and administrative |
|
|
3,792,127 |
|
|
|
3,786,561 |
|
|
|
7,840,093 |
|
|
|
7,178,938 |
|
Research and development |
|
|
258,317 |
|
|
|
362,197 |
|
|
|
594,769 |
|
|
|
670,512 |
|
Depreciation and amortization |
|
|
140,093 |
|
|
|
159,580 |
|
|
|
282,981 |
|
|
|
326,597 |
|
Total Operating Expenses |
|
|
4,190,537 |
|
|
|
4,308,338 |
|
|
|
8,717,843 |
|
|
|
8,176,047 |
|
|
|
|
|
|
|
|
|
|
INCOME FROM OPERATIONS |
|
|
3,223,908 |
|
|
|
94,807 |
|
|
|
6,529,711 |
|
|
|
783,802 |
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
Gain on sale of assets |
|
|
181,343 |
|
|
|
214,841 |
|
|
|
234,418 |
|
|
|
310,683 |
|
Other expense |
|
|
(36,866 |
) |
|
|
(337 |
) |
|
|
(46,423 |
) |
|
|
(18,420 |
) |
Interest income |
|
|
123,654 |
|
|
|
20,307 |
|
|
|
181,701 |
|
|
|
41,852 |
|
Interest expense |
|
|
(854 |
) |
|
|
(17,612 |
) |
|
|
(1,787 |
) |
|
|
(18,308 |
) |
Total Other Income |
|
|
267,277 |
|
|
|
217,199 |
|
|
|
367,909 |
|
|
|
315,807 |
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES |
|
|
3,491,185 |
|
|
|
312,006 |
|
|
|
6,897,620 |
|
|
|
1,099,609 |
|
|
|
|
|
|
|
|
|
|
INCOME TAX EXPENSE |
|
|
(634,028 |
) |
|
|
(27,177 |
) |
|
|
(1,450,842 |
) |
|
|
(187,619 |
) |
|
|
|
|
|
|
|
|
|
NET INCOME |
|
$ |
2,857,157 |
|
|
$ |
284,829 |
|
|
$ |
5,446,778 |
|
|
$ |
911,990 |
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME
(LOSS) |
|
|
|
|
|
|
|
|
Foreign currency translation
gain (loss) |
|
$ |
278,328 |
|
|
$ |
(290,291 |
) |
|
$ |
272,804 |
|
|
$ |
(131,933 |
) |
Unrealized gains (losses) on
investments |
|
|
(30,416 |
) |
|
|
(134,662 |
) |
|
|
45,871 |
|
|
|
(421,788 |
) |
Total Other Comprehensive Income (Loss) |
|
|
247,912 |
|
|
|
(424,953 |
) |
|
|
318,675 |
|
|
|
(553,721 |
) |
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME |
|
$ |
3,105,069 |
|
|
$ |
(140,124 |
) |
|
$ |
5,765,453 |
|
|
$ |
358,269 |
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS PER SHARE |
|
$ |
0.06 |
|
|
$ |
0.01 |
|
|
$ |
0.12 |
|
|
$ |
0.02 |
|
FULLY DILUTED EARNINGS PER
SHARE |
|
$ |
0.06 |
|
|
$ |
0.01 |
|
|
$ |
0.11 |
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
BASIC WEIGHTED AVG NUMBER OF
SHARES OUTSTANDING |
|
|
47,393,768 |
|
|
|
47,092,275 |
|
|
|
47,284,749 |
|
|
|
47,285,782 |
|
FULLY DILUTED WEIGHTED AVG
NUMBER OF SHARES OUTSTANDING |
|
|
49,473,080 |
|
|
|
48,699,208 |
|
|
|
49,349,488 |
|
|
|
48,865,186 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
2023 |
|
|
|
2022 |
|
OPERATING ACTIVITIES |
|
|
|
Net income |
$ |
5,446,778 |
|
|
$ |
911,990 |
|
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
|
Depreciation and amortization expense |
|
547,996 |
|
|
|
558,832 |
|
Gain on sale of property and equipment |
|
(234,418 |
) |
|
|
(310,683 |
) |
Bad debt expense |
|
378,753 |
|
|
|
28,474 |
|
Stock awards issued for services |
|
583,493 |
|
|
|
412,893 |
|
Changes in operating assets
and liabilities: |
|
|
|
Accounts receivable |
|
(3,034,236 |
) |
|
|
(877,417 |
) |
Income taxes receivable/payable |
|
682,284 |
|
|
|
534,456 |
|
Inventories |
|
(2,662,032 |
) |
|
|
(2,097,471 |
) |
Prepaid expenses and other current assets |
|
(51,121 |
) |
|
|
(140,352 |
) |
Deferred tax asset/liability |
|
205,571 |
|
|
|
(408 |
) |
Accounts payable and accrued liabilities |
|
(80,409 |
) |
|
|
1,601,376 |
|
Net Cash Provided by Operating Activities |
|
1,782,659 |
|
|
|
621,690 |
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
Proceeds from sale of property and equipment |
|
309,493 |
|
|
|
412,339 |
|
Purchase of investments |
|
(405,578 |
) |
|
|
(231,032 |
) |
Purchase of property and equipment |
|
(607,248 |
) |
|
|
(223,215 |
) |
Net Cash Used in Investing Activities |
|
(703,333 |
) |
|
|
(41,908 |
) |
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
Value of equity awards surrendered by employees for tax
liability |
|
(248,958 |
) |
|
|
(93,527 |
) |
Cash received in exercise of stock options |
|
65,335 |
|
|
|
25,106 |
|
Purchase of treasury stock |
|
(57,957 |
) |
|
|
(1,228,731 |
) |
Principal paid towards lease liability |
|
(13,972 |
) |
|
|
(19,787 |
) |
Net Cash Used in Financing Activities |
|
(255,552 |
) |
|
|
(1,316,939 |
) |
|
|
|
|
Effect of exchange rate
changes on cash |
|
37,740 |
|
|
|
(32,286 |
) |
|
|
|
|
NET CHANGE IN CASH |
|
861,514 |
|
|
|
(769,443 |
) |
CASH AT BEGINNING OF
PERIOD |
|
7,384,578 |
|
|
|
8,188,270 |
|
CASH AT END OF PERIOD |
$ |
8,246,092 |
|
|
$ |
7,418,827 |
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION |
|
|
|
|
|
|
|
CASH PAID FOR: |
|
|
|
Interest |
$ |
1,787 |
|
|
$ |
1,253 |
|
Income taxes |
$ |
576,750 |
|
|
$ |
21,000 |
|
NON-CASH FINANCING AND
INVESTING ACTIVITIES |
|
|
|
Common stock issued in settlement of accrued bonuses |
$ |
378,526 |
|
|
$ |
212,787 |
|
|
|
|
|
|
|
|
|
These financial statements should be read in
conjunction with the Form 10-Q and accompanying footnotes.
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