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Profire Energy Reports Financial Results for Second Quarter Fiscal 2019

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. (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