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 third quarter ending September
30, 2022. A conference call will be held on Thursday, November 3,
2022, at 8:30 a.m. ET to discuss the results.
Third Quarter Summary
- Revenue of
$12.8 million, an 85% increase from prior-year quarter
- Gross margin
improved 280 basis points year-over-year to 47.7%
- Net income of
$1.2 million or $0.02 per diluted share
- Generated
EBITDA of $2.4 million1
- Revenue from
strategic diversification efforts nearly doubled sequentially to $1
million, or 7.7% of revenue
“Our third quarter results represent the best quarter in the
company’s recent history, with our highest revenue period since
2014 and highest quarterly net income since the first quarter of
2019,” said Ryan Oviatt, Co-Chief Executive Officer and CFO of
Profire Energy. “We are pleased with the significant recovery we
have been able to demonstrate this year for our business despite
the many challenges of today’s economy. We remain committed to our
strategic objectives of sustainable growth and industry
diversification.”
Third Quarter 2022 Financial Results
Total revenues for the period equaled $12.8 million, compared to
$9.6 million in the second quarter and $6.9 million in the third
quarter of 2021. The sequential and year-over-year increase was
primarily driven by improving customer demand, a rise in natural
gas prices, and an increase in drilling and completion
activity.
Gross profit was $6.1 million, compared to $4.4 million in the
second quarter of 2022 and $3.1 million in the prior-year quarter.
Gross margin was 47.7% of revenues, compared to 45.7% of revenues
in the prior quarter and 44.9% of revenues in the third quarter of
2021. The increase in gross profit and margin reflects higher
revenue and greater fixed cost coverage, partially offset by
inflationary cost pressure including higher costs of freight,
shipping and direct labor.
___________1 See “About Non-GAAP Financial Measures” below
Total operating expenses were $4.0 million, compared to $4.3
million in the second quarter and $3.4 million in the year-ago
quarter. The year-over-year increase is primarily due to increases
in headcount and cost inflation across the business, while the
sequential decrease is related to an employee retention payroll tax
credit (ERC) earned under the CARES Act. Without the decrease in
payroll tax expenses provided by the ERC, operating expenses for
the quarter would have been relatively flat sequentially.
Compared with the same quarter last year, operating expenses for
G&A increased 15% and R&D increased 50%, while depreciation
decreased 8% from the third quarter of 2021.
Net income was $1.2 million or $0.02 per diluted share, compared
to net income of $284,829 or $0.01 per diluted share in the second
quarter and net $92,246 or breakeven on a diluted share basis in
the third quarter last year.
“We continue to experience increased levels of interest from our
traditional oil and gas customer base resulting from increased
drilling and completion, retrofit programs, and other capital
projects that were deferred during the pandemic,” stated Cameron
Tidball, Co-CEO of Profire Energy. “Revenues outside our
traditional oil and gas business nearly doubled sequentially this
quarter to $1 million, as we booked orders and completed projects
related in the metal manufacturing, heat treating, landfill, food
and beverage and renewable natural gas industries. We continue to
evaluate our opportunities and believe this segment can become a
meaningful contributor to the company’s overall revenue. We remain
well-positioned as we close out 2022 to deliver long-term value to
our shareholders.”
Conference Call
Profire Energy Executives will host the call, followed by a
question-and-answer period.Date: Thursday, November 3, 2022Time:
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 the Profire investor relations webpage:
https://ir.profireenergy.com/news-events. The webcast replay will
be available for one year.
Please call the conference telephone number at least 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 12:30 p.m. ET on the same day through November 17,
2022.
Toll-free replay number: 1-844-512-2921International replay
number: 1-412-317-6671Replay Pin Number: 10020052
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, it has started to succeed in several diversified
non-oil and gas markets as well. 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; 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, delivering
long-term value to shareholders, committing to strategic
objectives, and financial performance through 2022 & 2023.
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 & John
Beisler214-872-2710
About 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.
For the three Months Ended September 30, |
2022 |
EBITDA Calculation |
|
Net Income |
$ |
1,210,748 |
|
Add back net income tax expense |
$ |
958,300 |
|
Add back net interest expense |
$ |
(45,107) |
|
Add back depreciation and amortization |
$ |
272,204 |
|
EBITDA calculated |
$ |
2,396,145 |
|
PROFIRE ENERGY, INC. AND SUBSIDIARIES |
Condensed Consolidated Statements of Operations and Comprehensive
Income (Loss) |
(Unaudited) |
|
|
For the Three Months EndedSeptember 30, |
|
For the Nine Months EndedSeptember 30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
REVENUES (note 8) |
|
|
|
|
|
|
|
|
Sales of products, net |
|
$ |
11,895,881 |
|
|
$ |
6,296,736 |
|
|
$ |
29,634,986 |
|
|
$ |
16,328,810 |
|
Sales of services, net |
|
|
933,457 |
|
|
|
646,462 |
|
|
|
2,330,639 |
|
|
|
1,741,020 |
|
Total Revenues |
|
|
12,829,338 |
|
|
|
6,943,198 |
|
|
|
31,965,625 |
|
|
|
18,069,830 |
|
|
|
|
|
|
|
|
|
|
COST OF SALES |
|
|
|
|
|
|
|
|
Cost of sales - product |
|
|
5,960,311 |
|
|
|
3,217,655 |
|
|
|
14,873,075 |
|
|
|
8,666,168 |
|
Cost of sales - services |
|
|
750,151 |
|
|
|
606,075 |
|
|
|
2,013,825 |
|
|
|
1,451,775 |
|
Total Cost of Sales |
|
|
6,710,462 |
|
|
|
3,823,730 |
|
|
|
16,886,900 |
|
|
|
10,117,943 |
|
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
|
|
6,118,876 |
|
|
|
3,119,468 |
|
|
|
15,078,725 |
|
|
|
7,951,887 |
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
General and administrative |
|
|
3,413,048 |
|
|
|
2,980,945 |
|
|
|
10,591,986 |
|
|
|
8,319,353 |
|
Research and development |
|
|
435,059 |
|
|
|
290,657 |
|
|
|
1,105,571 |
|
|
|
848,993 |
|
Depreciation and amortization |
|
|
152,876 |
|
|
|
166,155 |
|
|
|
479,473 |
|
|
|
500,492 |
|
Total Operating Expenses |
|
|
4,000,983 |
|
|
|
3,437,757 |
|
|
|
12,177,030 |
|
|
|
9,668,838 |
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) FROM
OPERATIONS |
|
|
2,117,893 |
|
|
|
(318,289 |
) |
|
|
2,901,695 |
|
|
|
(1,716,951 |
) |
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
Gain on sale of assets |
|
|
12,887 |
|
|
|
31,685 |
|
|
|
323,570 |
|
|
|
144,078 |
|
Other income (expense) |
|
|
(6,839 |
) |
|
|
(2,984 |
) |
|
|
(43,567 |
) |
|
|
1,755 |
|
Interest income |
|
|
45,107 |
|
|
|
33,067 |
|
|
|
86,959 |
|
|
|
82,698 |
|
Total Other Income |
|
|
51,155 |
|
|
|
61,768 |
|
|
|
366,962 |
|
|
|
228,531 |
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS) BEFORE INCOME
TAXES |
|
|
2,169,048 |
|
|
|
(256,521 |
) |
|
|
3,268,657 |
|
|
|
(1,488,420 |
) |
|
|
|
|
|
|
|
|
|
INCOME TAX BENEFIT
(EXPENSE) |
|
|
(958,300 |
) |
|
|
348,767 |
|
|
|
(1,145,919 |
) |
|
|
582,000 |
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS) |
|
$ |
1,210,748 |
|
|
$ |
92,246 |
|
|
$ |
2,122,738 |
|
|
$ |
(906,420 |
) |
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME
(LOSS) |
|
|
|
|
|
|
|
|
Foreign currency translation
gain (loss) |
|
$ |
(591,282 |
) |
|
$ |
(263,908 |
) |
|
$ |
(723,209 |
) |
|
$ |
39,183 |
|
Unrealized gains (losses) on
investments |
|
|
(172,802 |
) |
|
|
(20,811 |
) |
|
|
(594,596 |
) |
|
|
26,744 |
|
Total Other Comprehensive Income (Loss) |
|
|
(764,084 |
) |
|
|
(284,719 |
) |
|
|
(1,317,805 |
) |
|
|
65,927 |
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME
(LOSS) |
|
$ |
446,664 |
|
|
$ |
(192,473 |
) |
|
$ |
804,933 |
|
|
$ |
(840,493 |
) |
|
|
|
|
|
|
|
|
|
BASIC EARNINGS (LOSS) PER
SHARE |
|
$ |
0.03 |
|
|
$ |
— |
|
|
$ |
0.04 |
|
|
$ |
(0.02 |
) |
FULLY DILUTED EARNINGS (LOSS)
PER SHARE |
|
$ |
0.02 |
|
|
$ |
— |
|
|
$ |
0.04 |
|
|
$ |
(0.02 |
) |
|
|
|
|
|
|
|
|
|
BASIC WEIGHTED AVG NUMBER OF
SHARES OUTSTANDING |
|
|
47,036,012 |
|
|
|
48,239,236 |
|
|
|
47,201,611 |
|
|
|
48,095,404 |
|
FULLY DILUTED WEIGHTED AVG
NUMBER OF SHARES OUTSTANDING |
|
|
48,558,207 |
|
|
|
49,328,808 |
|
|
|
48,761,346 |
|
|
|
48,095,404 |
|
These financial statements should be read in
conjunction with the Form 10-Q and accompanying footnotes.
PROFIRE ENERGY, INC. AND SUBSIDIARIES |
Condensed Consolidated Balance Sheets |
|
|
As of |
|
|
September 30, 2022 |
|
December 31, 2021 |
ASSETS |
|
(Unaudited) |
|
|
CURRENT ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
5,639,865 |
|
|
$ |
8,188,270 |
|
Short-term investments |
|
|
867,658 |
|
|
|
1,013,683 |
|
Accounts receivable, net |
|
|
8,933,905 |
|
|
|
6,262,799 |
|
Inventories, net (note 3) |
|
|
10,205,207 |
|
|
|
7,185,248 |
|
Prepaid expenses and other current assets (note 4) |
|
|
2,642,512 |
|
|
|
1,025,276 |
|
Income tax receivable |
|
|
— |
|
|
|
560,445 |
|
Total Current Assets |
|
|
28,289,147 |
|
|
|
24,235,721 |
|
LONG-TERM ASSETS |
|
|
|
|
Net deferred tax asset |
|
|
185,772 |
|
|
|
163,254 |
|
Long-term investments |
|
|
7,944,181 |
|
|
|
8,259,809 |
|
Financing right-of-use asset |
|
|
132,760 |
|
|
|
65,280 |
|
Property and equipment, net |
|
|
10,374,126 |
|
|
|
11,185,539 |
|
Intangible assets, net |
|
|
1,312,660 |
|
|
|
1,549,138 |
|
Goodwill |
|
|
2,579,381 |
|
|
|
2,579,381 |
|
Total Long-Term Assets |
|
|
22,528,880 |
|
|
|
23,802,401 |
|
TOTAL ASSETS |
|
$ |
50,818,027 |
|
|
$ |
48,038,122 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
Accounts payable |
|
$ |
2,008,126 |
|
|
$ |
1,822,559 |
|
Accrued liabilities (note 5) |
|
|
3,157,221 |
|
|
|
1,872,348 |
|
Current financing lease liability (note 6) |
|
|
53,084 |
|
|
|
30,214 |
|
Income taxes payable |
|
|
570,430 |
|
|
|
— |
|
Total Current Liabilities |
|
|
5,788,861 |
|
|
|
3,725,121 |
|
LONG-TERM LIABILITIES |
|
|
|
|
Net deferred income tax liability |
|
|
480,105 |
|
|
|
136,106 |
|
Long-term financing lease liability (note 6) |
|
|
80,684 |
|
|
|
35,912 |
|
TOTAL LIABILITIES |
|
|
6,349,650 |
|
|
|
3,897,139 |
|
|
|
|
|
|
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:
52,078,283 issued and 47,040,153 outstanding at September 30, 2022,
and 51,720,142 issued and 47,643,233 outstanding at December 31,
2021 |
|
|
52,079 |
|
|
|
51,720 |
|
Treasury stock, at cost |
|
|
(7,336,323 |
) |
|
|
(6,107,593 |
) |
Additional paid-in capital |
|
|
31,570,226 |
|
|
|
30,819,394 |
|
Accumulated other comprehensive loss |
|
|
(3,418,272 |
) |
|
|
(2,100,467 |
) |
Retained earnings |
|
|
23,600,667 |
|
|
|
21,477,929 |
|
TOTAL STOCKHOLDERS' EQUITY |
|
|
44,468,377 |
|
|
|
44,140,983 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
50,818,027 |
|
|
$ |
48,038,122 |
|
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, |
|
2022 |
|
2021 |
OPERATING ACTIVITIES |
|
|
|
Net income (loss) |
$ |
2,122,738 |
|
|
$ |
(906,420 |
) |
Adjustments to reconcile net
income (loss) to net cash provided by operating activities: |
|
|
|
Depreciation and amortization expense |
|
831,036 |
|
|
|
971,712 |
|
Gain on sale of property and equipment |
|
(314,059 |
) |
|
|
(144,078 |
) |
Gain on sale of intangibles |
|
(9,511 |
) |
|
|
— |
|
Bad debt expense |
|
40,948 |
|
|
|
2,622 |
|
Stock awards issued for services |
|
605,955 |
|
|
|
474,881 |
|
Changes in operating assets
and liabilities: |
|
|
|
Accounts receivable |
|
(2,620,155 |
) |
|
|
(904,325 |
) |
Income taxes receivable/payable |
|
1,130,931 |
|
|
|
(606,128 |
) |
Inventories |
|
(3,190,546 |
) |
|
|
946,865 |
|
Prepaid expenses and other current assets |
|
(1,668,442 |
) |
|
|
532,519 |
|
Deferred tax asset/liability |
|
307,663 |
|
|
|
49,851 |
|
Accounts payable and accrued liabilities |
|
1,566,810 |
|
|
|
540,322 |
|
Net Cash Provided by (Used in) Operating Activities |
|
(1,196,632 |
) |
|
|
957,821 |
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
Proceeds from sale of property and equipment |
|
464,574 |
|
|
|
101,169 |
|
Proceeds from sale of intangibles |
|
85,000 |
|
|
|
— |
|
Purchase of investments |
|
(133,371 |
) |
|
|
(881,588 |
) |
Purchase of property and equipment |
|
(370,791 |
) |
|
|
(138,562 |
) |
Net Cash Provided by (Used in) Investing Activities |
|
45,412 |
|
|
|
(918,981 |
) |
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
Value of equity awards surrendered by employees for tax
liability |
|
(94,802 |
) |
|
|
(42,829 |
) |
Cash received in exercise of stock options |
|
31,084 |
|
|
|
2,673 |
|
Purchase of treasury stock |
|
(1,228,731 |
) |
|
|
— |
|
Principal paid towards lease liability |
|
(28,145 |
) |
|
|
(31,911 |
) |
Net Cash Used in Financing Activities |
|
(1,320,594 |
) |
|
|
(72,067 |
) |
|
|
|
|
Effect of exchange rate
changes on cash |
|
(76,591 |
) |
|
|
14,331 |
|
|
|
|
|
NET DECREASE IN CASH |
|
(2,548,405 |
) |
|
|
(18,896 |
) |
CASH AT BEGINNING OF
PERIOD |
|
8,188,270 |
|
|
|
9,148,312 |
|
CASH AT END OF PERIOD |
$ |
5,639,865 |
|
|
$ |
9,129,416 |
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION |
|
|
|
|
|
|
|
CASH PAID FOR: |
|
|
|
Interest |
$ |
2,331 |
|
|
$ |
2,689 |
|
Income taxes |
$ |
21,000 |
|
|
$ |
17,150 |
|
NON-CASH FINANCING AND
INVESTING ACTIVITIES |
|
|
|
Common stock issued in settlement of accrued bonuses |
$ |
212,787 |
|
|
$ |
— |
|
These financial statements should be read in
conjunction with the Form 10-Q and accompanying
footnotes.
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