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 first quarter ending March 31,
2023. A conference call will be held on Wednesday, May 10, 2023 at
8:30 a.m. ET to discuss the results.
First Quarter Summary
- Revenue of
$14.6 million, a 53% increase from prior year quarter
- Gross profit
of $7.8 million, a 72% increase compared to 1Q22
- Gross margin
of 53.8%, a 590 basis point increase from the same quarter of last
year
- Net income of
$2.6 million, or $0.05 per diluted share
- Generated
EBITDA of $3.6 million
- Cash and
investments of $16.3 million with no debt
“We have achieved eight quarters of sequential revenue growth as
we continue to improve and deliver consistent operational and
financial results across our business,” said Ryan Oviatt, Co-Chief
Executive Officer and CFO of Profire Energy. “We also recorded a
meaningful improvement in gross margin despite continued supply
chain challenges and inflationary pressures. We will continue to
make additional investments in our diversification efforts and
other strategic opportunities with the objective of delivering
long-term shareholder value.”
First Quarter 2023 Financial Results
Total revenues for the period equaled $14.6 million, compared to
$14.0 million in the fourth quarter of 2022 and $9.5 million in the
prior-year quarter. The sequential and year-over-year increases
were primarily driven by ongoing customer demand, price increases
on the products we sell, ongoing historical strength in oil and
natural gas prices, and continued progress in our strategic
diversification efforts.
Gross profit was $7.8 million, compared to $6.6 million in the
fourth quarter of 2022 and $4.6 million in the prior-year quarter.
Gross margin was 53.8% of revenues, compared to 47.0% of revenues
in the prior quarter and 47.9% of revenues in the first quarter of
2022. The sequential increase is due to pricing initiatives and
more favorable product, service and customer mix while the
year-over-year increase reflects higher revenues and greater fixed
cost coverage.
Total operating expenses were $4.5 million, compared to $4.3
million in the fourth quarter of 2022 and $3.9 million in the
year-ago quarter. The increase is related to inflation in
employee-related costs and other costs across the business.
Compared with the same quarter last year, operating expenses for
G&A increased 19%, R&D increased 9% and depreciation
decreased by 14%.
Net income was $2.6 million, or $0.05 per diluted share,
compared to net income of $1.8 million or $0.04 per diluted share
in the fourth quarter of 2022 and $627,161 or $0.01 per diluted
share in the same quarter last year.
“Our first quarter 2023 results built upon the momentum we
generated in the second half of 2022, recording our second-highest
quarterly revenue in company history once again,” stated Cameron
Tidball, Co-CEO of Profire Energy. “The combination of the
industry’s multi-year deferred capital expenditures and ongoing
strong demand for oil and gas are increasing the necessity of our
legacy products, and we continue to gain traction with our
diversification strategy across industrial markets. We remain
focused on growth through both our core legacy business and
diversified revenue streams within the petroleum industry as well
as new market segments. Overall, we are pleased with our start to
2023 and are confident in our ability to capitalize on the
opportunities ahead.”
Share Repurchase Program
On May 3, 2023, the Company’s board of directors authorized a
repurchase program as a means of opportunistically returning
capital to shareholders. The program authorizes the repurchase of
up to $2,000,000 of the Company’s common stock through April 30,
2024.
Repurchases will be made at management’s discretion as part of
the Company’s capital allocation strategy based on the best
interests of both the Company and its shareholders, subject to the
availability of stock, general market conditions, the trading price
of the stock, alternative uses for capital, and the Company’s
financial performance. The actual amount of common stock to be
repurchased, the timing of repurchases and the price at which the
shares are repurchased will depend on future market conditions and
on potential alternative uses for the Company’s cash resources.
Additionally, the repurchases may also be made under a Rule 10b5-1
plan, which would permit shares to be repurchased when the Company
might otherwise be precluded from doing so under insider trading
laws. Open market repurchases will be conducted in accordance with
applicable legal requirements.
The repurchase program may be suspended, terminated, or modified
at any time for any reason, including market conditions, the cost
of repurchasing shares, the availability of alternative investment
opportunities, liquidity, and other factors deemed appropriate. The
repurchase program does not obligate the Company to repurchase any
particular number of shares.
Conference Call
Profire Energy Executives will host
the call, followed by a question and answer
period.Date: Wednesday, May 10, 2023Time: 8:30 a.m. ET (6:30
a.m. MT)Toll-free dial-in number: 1-855-327-6937International
dial-in number: 1-631-891-4304The conference call will be webcast
live and available for replay via this link:
https://viavid.webcasts.com/starthere.jsp?ei=1610085&tp_key=d7950f6a2f
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 1:00 p.m. ET on the
same day through May 24, 2023.
Toll-free replay number:
1-844-512-2921International replay number: 1-412-317-6671Replay Pin
Number: 10021694
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
plans to make investments to support revenue diversification, and
the Company’s plans regarding a share repurchase program.
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,
Partner214-872-2710
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.
|
3/31/2023 |
EBITDA
Calculation: |
3 months |
Net Income |
$ |
2,589,621 |
|
add back net income tax expense |
$ |
816,815 |
|
add back net interest expense |
$ |
(58,980 |
) |
add back depreciation and amortization |
$ |
262,039 |
|
EBITDA calculated |
$ |
3,609,495 |
|
PROFIRE ENERGY, INC. AND SUBSIDIARIES |
Condensed Consolidated Balance Sheets |
|
As of |
|
March 31, 2023 |
|
December 31, 2022 |
ASSETS |
(Unaudited) |
|
|
CURRENT ASSETS |
|
|
|
Cash and cash equivalents |
$ |
7,219,356 |
|
|
$ |
7,384,578 |
|
Short-term investments |
|
2,071,834 |
|
|
|
1,154,284 |
|
Accounts receivable, net |
|
12,308,290 |
|
|
|
10,886,145 |
|
Inventories, net (note 3) |
|
10,589,023 |
|
|
|
10,293,980 |
|
Prepaid expenses and other current assets (note 4) |
|
2,650,823 |
|
|
|
2,314,639 |
|
Total Current Assets |
|
34,839,326 |
|
|
|
32,033,626 |
|
LONG-TERM ASSETS |
|
|
|
Long-term investments |
|
7,052,725 |
|
|
|
7,503,419 |
|
Financing right-of-use asset |
|
106,760 |
|
|
|
120,239 |
|
Property and equipment, net |
|
10,330,685 |
|
|
|
10,423,964 |
|
Intangible assets, net |
|
1,225,154 |
|
|
|
1,268,907 |
|
Goodwill |
|
2,579,381 |
|
|
|
2,579,381 |
|
Total Long-Term Assets |
|
21,294,705 |
|
|
|
21,895,910 |
|
TOTAL ASSETS |
$ |
56,134,031 |
|
|
$ |
53,929,536 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
CURRENT LIABILITIES |
|
|
|
Accounts payable |
$ |
1,962,882 |
|
|
$ |
2,955,506 |
|
Accrued liabilities (note 5) |
|
2,922,928 |
|
|
|
3,573,994 |
|
Current financing lease liability (note 6) |
|
51,821 |
|
|
|
53,646 |
|
Income taxes payable |
|
834,542 |
|
|
|
205,169 |
|
Total Current Liabilities |
|
5,772,173 |
|
|
|
6,788,315 |
|
LONG-TERM LIABILITIES |
|
|
|
Net deferred income tax liability |
|
701,406 |
|
|
|
488,858 |
|
Long-term financing lease liability (note 6) |
|
56,522 |
|
|
|
67,883 |
|
TOTAL LIABILITIES |
|
6,530,101 |
|
|
|
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:
52,390,017 issued and 47,351,887 outstanding at March 31, 2023, and
52,143,901 issued and 47,105,771 outstanding at December 31,
2022 |
|
52,391 |
|
|
|
52,144 |
|
Treasury stock, at cost |
|
(7,336,323 |
) |
|
|
(7,336,323 |
) |
Additional paid-in capital |
|
32,096,662 |
|
|
|
31,737,843 |
|
Accumulated other comprehensive loss |
|
(3,224,110 |
) |
|
|
(3,294,873 |
) |
Retained earnings |
|
28,015,310 |
|
|
|
25,425,689 |
|
TOTAL STOCKHOLDERS' EQUITY |
|
49,603,930 |
|
|
|
46,584,480 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
56,134,031 |
|
|
$ |
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 March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
(See Note 1) |
REVENUES (note 8) |
|
|
|
Sales of products, net |
$ |
13,628,512 |
|
|
$ |
8,878,423 |
|
Sales of services, net |
|
924,949 |
|
|
|
624,717 |
|
Total Revenues |
|
14,553,461 |
|
|
|
9,503,140 |
|
|
|
|
|
COST OF SALES |
|
|
|
Cost of sales - product |
|
5,974,339 |
|
|
|
4,382,700 |
|
Cost of sales - services |
|
746,014 |
|
|
|
563,736 |
|
Total Cost of Sales |
|
6,720,353 |
|
|
|
4,946,436 |
|
|
|
|
|
GROSS PROFIT |
|
7,833,108 |
|
|
|
4,556,704 |
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
General and administrative |
|
4,047,969 |
|
|
|
3,392,379 |
|
Research and development |
|
336,452 |
|
|
|
308,316 |
|
Depreciation and amortization |
|
142,887 |
|
|
|
167,015 |
|
Total Operating Expenses |
|
4,527,308 |
|
|
|
3,867,710 |
|
|
|
|
|
INCOME FROM OPERATIONS |
|
3,305,800 |
|
|
|
688,994 |
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
Gain on sale of assets |
|
53,075 |
|
|
|
95,842 |
|
Other expense |
|
(9,553 |
) |
|
|
(18,081 |
) |
Interest income |
|
58,047 |
|
|
|
21,545 |
|
Interest expense |
|
(933 |
) |
|
|
(697 |
) |
Total Other Income |
|
100,636 |
|
|
|
98,609 |
|
|
|
|
|
INCOME BEFORE INCOME
TAXES |
|
3,406,436 |
|
|
|
787,603 |
|
|
|
|
|
INCOME TAX EXPENSE |
|
(816,815 |
) |
|
|
(160,442 |
) |
|
|
|
|
NET INCOME |
$ |
2,589,621 |
|
|
$ |
627,161 |
|
|
|
|
|
OTHER COMPREHENSIVE INCOME
(LOSS) |
|
|
|
Foreign currency translation
gain (loss) |
$ |
(5,524 |
) |
|
$ |
158,359 |
|
Unrealized gains (losses) on
investments |
|
76,287 |
|
|
|
(287,126 |
) |
Total Other Comprehensive Income (Loss) |
|
70,763 |
|
|
|
(128,767 |
) |
|
|
|
|
COMPREHENSIVE INCOME |
$ |
2,660,384 |
|
|
$ |
498,394 |
|
|
|
|
|
BASIC EARNINGS PER SHARE |
$ |
0.05 |
|
|
$ |
0.01 |
|
FULLY DILUTED EARNINGS PER
SHARE |
$ |
0.05 |
|
|
$ |
0.01 |
|
|
|
|
|
BASIC WEIGHTED AVG NUMBER OF
SHARES OUTSTANDING |
|
47,174,518 |
|
|
|
47,481,439 |
|
FULLY DILUTED WEIGHTED AVG
NUMBER OF SHARES OUTSTANDING |
|
48,612,833 |
|
|
|
48,536,418 |
|
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 Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
OPERATING ACTIVITIES |
|
|
|
Net income |
$ |
2,589,621 |
|
|
$ |
627,161 |
|
Adjustments to reconcile net
income (loss) to net cash provided by operating activities: |
|
|
|
Depreciation and amortization expense |
|
262,039 |
|
|
|
281,119 |
|
Gain on sale of property and equipment |
|
(53,075 |
) |
|
|
(95,842 |
) |
Bad debt expense |
|
41,792 |
|
|
|
28,453 |
|
Stock awards issued for services |
|
223,047 |
|
|
|
138,503 |
|
Changes in operating assets
and liabilities: |
|
|
|
Accounts receivable |
|
(1,108,889 |
) |
|
|
(1,663,295 |
) |
Income taxes receivable/payable |
|
629,371 |
|
|
|
439,034 |
|
Inventories |
|
(292,119 |
) |
|
|
(530,568 |
) |
Prepaid expenses and other current assets |
|
(335,832 |
) |
|
|
49,283 |
|
Deferred tax asset/liability |
|
212,548 |
|
|
|
47,030 |
|
Accounts payable and accrued liabilities |
|
(1,646,723 |
) |
|
|
(513,227 |
) |
Net Cash Provided by (Used in) Operating Activities |
|
521,780 |
|
|
|
(1,192,349 |
) |
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
Proceeds from sale of property and equipment |
|
97,886 |
|
|
|
112,982 |
|
Sale (purchase) of investments |
|
(390,548 |
) |
|
|
679,636 |
|
Purchase of property and equipment |
|
(153,755 |
) |
|
|
(207,848 |
) |
Net Cash Provided by (Used in) Investing Activities |
|
(446,417 |
) |
|
|
584,770 |
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
Value of equity awards surrendered by employees for tax
liability |
|
(242,506 |
) |
|
|
(91,098 |
) |
Cash received in exercise of stock options |
|
— |
|
|
|
— |
|
Purchase of treasury stock |
|
— |
|
|
|
(622,263 |
) |
Principal paid towards lease liability |
|
(6,947 |
) |
|
|
(12,629 |
) |
Net Cash Used in Financing Activities |
|
(249,453 |
) |
|
|
(725,990 |
) |
|
|
|
|
Effect of exchange rate
changes on cash |
|
8,868 |
|
|
|
24,766 |
|
|
|
|
|
NET DECREASE IN CASH |
|
(165,222 |
) |
|
|
(1,308,803 |
) |
CASH AT BEGINNING OF
PERIOD |
|
7,384,578 |
|
|
|
8,188,270 |
|
CASH AT END OF PERIOD |
$ |
7,219,356 |
|
|
$ |
6,879,467 |
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION |
|
|
|
|
|
|
|
CASH PAID FOR: |
|
|
|
Interest |
$ |
933 |
|
|
$ |
697 |
|
Income taxes |
$ |
— |
|
|
$ |
— |
|
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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