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Profire Energy Reports Financial Results for First Quarter 2020

LINDON, Utah, May 06, 2020 (GLOBE NEWSWIRE) -- Profire Energy, Inc. (PFIE), a technology company (the "Company") which creates, installs and services burner management solutions in the oil and gas industry, today reported financial results for its first quarter ending March 31, 2020. A conference call will be held on Thursday, May 7, 2020 at 1:00 p.m. ET to discuss the results.

First Quarter Summary

  • Recognized revenue of $7.4 million

  • Realized gross profit of $3.2 million or 42.5% of total revenues

  • Net loss of $365,000 or ($0.01) per share

  • Cash and liquid investments of $17.9 million and remained debt-free

“Our first quarter results reflect the early impact of the unprecedented combination of a global pandemic, the economic slowdown and reduced demand corresponding to the virtual shutdown of multiple countries, and a price war within the oil and gas industry,” said Brenton Hatch, Chairman and CEO of Profire Energy. “Our deliberate approach to maintain a debt-free balance sheet is proving very prudent given current macroeconomic events, and believe we are well-positioned to weather the near and medium-term impacts of COVID-19 and a return to more favorable oil and gas prices.”

First Quarter 2020 Financial Results

Total revenues for the period equaled $7.4 million, a 31% decrease over the same period a year ago. This decrease was primarily driven by negative macro industry trends, including the impact on commercial and consumer demand related to COVID-19, as well as a 17% drop in the average oil price during the same period, due in part to a significant price war between Russia and OPEC in the final weeks of the quarter.

Gross profit was $3.2 million, which was down 45% from the same quarter last year. Gross margin was 42.5% of revenues, compared to 53.2% of revenues in the prior-year quarter. The gross margin decrease was driven by the change in product mix and related reserves, and reduced fixed cost absorption.

Total operating expenses were approximately $3.8 million, a 6% increase from the same quarter last year. This increase is consistent with the strategic investment plan implemented last year, which included the completion of two acquisitions last year, and ongoing research and development.

Compared with the same quarter last year, operating expenses for G&A increased 4%, R&D increased 17% and depreciation increased by 27%.

Net loss was $365,264 or ($0.01) per share, compared to net income of $1.7 million or $0.03 per diluted share in the same quarter last year.

Cash and investments totaled $17.9 million at March 31, 2020 compared to $18.6 million at the end of 2019, and the Company continues to operate debt-free. Capital expenditures for the quarter were $525,000, primarily related to work to complete the new facility in Canada which opened in early March 2020. Working capital as of March 31, 2020 was $22.7 million, compared to $22.9 million at the end of 2019.

Management Commentary

“In light of the current economic environment, we are reviewing our cost structure to determine necessary changes to improve profitability,” said Ryan Oviatt, CFO of Profire Energy. “We will also use the disruption across the industry to selectively evaluate potential business development opportunities that complement our strengths, similar to our acquisitions of Millstream and Midflow in the latter half of 2019.”

Conference Call

Profire Energy Executives will host the call, followed by a question and answer period.

Date: Thursday, May 7, 2020

Time: 1:00 p.m. ET (11:00 a.m. MT)

Toll-free dial-in number: 1-877-300-8521

International dial-in number: 1-412-317-6026

The conference call will be webcast live and available for replay via this link:
http://public.viavid.com/index.php?id=139637. 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 May 21, 2020.

Toll-free replay number: 1-844-512-2921

International replay number: 1-412-317-6671

Replay Pin Number: 10143655

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 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 ability to financially weather economic impacts caused by COVID-19, the Company holding a conference call on May 7, 2020, evaluating acquisition targets, and, and the availability of Company resources to make beneficial investments in 2020 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

March 31,
2020

December 31,
2019

ASSETS

(Unaudited)

CURRENT ASSETS

Cash and cash equivalents

$

7,230,330

$

7,358,856

Short-term investments

1,727,483

1,222,053

Short-term investments - other

2,400,000

2,600,000

Accounts receivable, net

4,410,935

5,597,701

Inventories, net

8,815,111

9,571,807

Prepaid expenses and other current assets

1,398,596

1,672,422

Income tax receivable

77,385

Total Current Assets

25,982,455

28,100,224

LONG-TERM ASSETS

Long-term investments

6,552,150

7,399,963

Financing right-of-use asset

88,035

107,991

Property and equipment, net

11,913,754

12,071,019

Intangible assets, net

1,938,919

1,989,782

Goodwill

2,579,381

2,579,381

Total Long-Term Assets

23,072,239

24,148,136

TOTAL ASSETS

$

49,054,694

$

52,248,360

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$

1,460,159

$

2,633,520

Accrued liabilities

1,296,997

2,089,391

Current financing lease liability

50,067

59,376

Income taxes payable

439,592

403,092

Total Current Liabilities

3,246,815

5,185,379

LONG-TERM LIABILITIES

Net deferred income tax liability

324,711

439,275

Long-term financing lease liability

40,761

52,120

TOTAL LIABILITIES

3,612,287

5,676,774

STOCKHOLDERS' EQUITY

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: 51,098,039 issued and 47,685,661 outstanding at March 31, 2020, and 50,824,355 issued and 47,411,977 outstanding at December 31, 2019

51,098

50,824

Treasury stock, at cost

(5,353,019

)

(5,353,019

)

Additional paid-in capital

29,922,760

29,584,172

Accumulated other comprehensive loss

(3,518,237

)

(2,415,460

)

Retained earnings

24,339,805

24,705,069

TOTAL STOCKHOLDERS' EQUITY

45,442,407

46,571,586

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

49,054,694

$

52,248,360

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 (Loss)

(Unaudited)

For the Three Months Ended
March 31,

2020

2019

REVENUES

Sales of goods, net

$

6,860,958

$

10,198,635

Sales of services, net

586,184

634,423

Total Revenues

7,447,142

10,833,058

COST OF SALES

Cost of goods sold-product

3,833,682

4,570,988

Cost of goods sold-services

448,784

497,198

Total Cost of Goods Sold

4,282,466

5,068,186

GROSS PROFIT

3,164,676

5,764,872

OPERATING EXPENSES

General and administrative expenses

3,272,538

3,161,530

Research and development

409,726

349,058

Depreciation and amortization expense

147,472

116,223

Total Operating Expenses

3,829,736

3,626,811

INCOME (LOSS) FROM OPERATIONS

(665,060

)

2,138,061

OTHER INCOME (EXPENSE)

Gain on sale of fixed assets

16,930

Other income (expense)

347

(551

)

Interest income

74,393

91,703

Total Other Income

74,740

108,082

INCOME (LOSS) BEFORE INCOME TAXES

(590,320

)

2,246,143

INCOME TAX BENEFIT (EXPENSE)

225,056

(577,525

)

NET INCOME (LOSS)

$

(365,264

)

$

1,668,618

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation gain (loss)

$

(945,423

)

$

149,415

Unrealized gains (losses) on investments

(157,354

)

68,752

Total Other Comprehensive Income (Loss)

(1,102,777

)

218,167

COMPREHENSIVE INCOME (LOSS)

$

(1,468,041

)

$

1,886,785

BASIC EARNINGS (LOSS) PER SHARE

$

(0.01

)

$

0.04

FULLY DILUTED EARNINGS (LOSS) PER SHARE

$

(0.01

)

$

0.03

BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING

47,492,441

47,437,424

FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING

47,492,441

48,084,390

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,

2020

2019

OPERATING ACTIVITIES

Net income (loss)

$

(365,264

)

$

1,668,618

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization expense

259,801

249,889

Gain on sale of fixed assets

(16,930

)

Bad debt expense

133,803

177,906

Stock awards issued for services

66,348

66,714

Changes in operating assets and liabilities:

Accounts receivable

1,314,939

654,710

Income taxes receivable/payable

107,561

(234,042

)

Inventories

537,668

656,988

Prepaid expenses

168,546

(239,395

)

Deferred tax asset/liability

(114,564

)

123,764

Accounts payable and accrued liabilities

(1,837,760

)

(499,721

)

Net Cash Provided by Operating Activities

271,078

2,608,501

INVESTING ACTIVITIES

Proceeds from sale of equipment

18,400

Sale of investments

387,326

647,739

Purchase of fixed assets

(525,384

)

(443,883

)

Net Cash Provided by (Used in) Investing Activities

(138,058

)

222,256

FINANCING ACTIVITIES

Value of equity awards surrendered by employees for tax liability

(148,879

)

(143,022

)

Cash received in exercise of stock options

2,020

Purchase of treasury stock

(1,333,578

)

Principal paid towards lease liability

(19,089

)

(15,718

)

Net Cash Used in Financing Activities

(165,948

)

(1,492,318

)

Effect of exchange rate changes on cash

(95,598

)

16,507

NET CHANGE IN CASH

(128,526

)

1,354,946

CASH AT BEGINNING OF PERIOD

7,358,856

10,101,932

CASH AT END OF PERIOD

$

7,230,330

$

11,456,878

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

CASH PAID FOR:

Interest

$

872

$

1,411

Income taxes

$

$

711,524

NON-CASH FINANCING AND INVESTING ACTIVITIES:

Common stock issued in settlement of accrued bonuses

$

419,373

$

379,861

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