Profire Energy Reports Financial Results for Third Quarter 2020

LINDON, Utah November 9, 2020 - Profire Energy, Inc. (NASDAQ: PFIE), a technology company which engineers, install and services burner and combustions management solutions in the oil and gas and other industries, today reported financial results for its third quarter ending September 30, 2020. A conference call will be held on Tuesday, November 10, 2020 at 1:00 p.m. ET to discuss the results.

Third Quarter Summary
Recognized revenue of $4.0 million
Realized gross profit of $1.5 million or 38.0% of total revenues
Net loss of $1.1 million or ($0.02) per share
Cash and liquid investments of $17.2 million and remained debt-free
“Our early response to the COVID-19 pandemic has resulted in significant reductions in our operating cost structure and lower G&A expense, all while maintaining our debt-free balance sheet,” said Ryan Oviatt, Co-CEO and CFO of Profire Energy. “These efforts continue to be outweighed by lower demand and global consumption of oil and gas, combined with lower commodity prices due to a supply imbalance in the markets. However, we remain hopeful in our ability to find new and innovative ways to continue to drive long-term shareholder return.”
Third Quarter 2020 Financial Results
Total revenues for the period equaled $4.0 million, compared to $4.4 million in the second quarter of 2020, and $9.9 million in the same period a year ago. The third quarter’s results reflect the continued impact of COVID-19 on consumer demand, as well as a 27% drop in the average oil price during the same period, due in part to excess supply in the market from global producers.

Gross profit was $1.5 million, compared to $2.1 million in the second quarter of 2020 and $5.2 million in the year-ago quarter. Gross margin was 38.0% of revenues, compared to 47.9% of revenues in the previous quarter and 52.2% of revenues in the third quarter of 2019. The sequential gross margin decline was primarily related to product mix and related reserves, and the significant decline in revenue pushed the fixed cost impact on costs of goods and services above historical levels.

Total operating expenses were $2.8 million, compared to $3.2 million in prior quarter and $4.0 million in the same period a year ago. The sequential and year-over-year decrease reflect ongoing cost control measures in response to COVID-19 and the ongoing supply and demand imbalance within the oil markets.

Compared with the same quarter last year, operating expenses for G&A decreased 31%, R&D decreased 32% and depreciation increased by 30%.

Net loss was $1.1 million or ($0.02) per share, compared to a net loss of $808,503, or ($0.02) in the second quarter of 2020, and net income of $921,748 or $0.02 per diluted share in the same quarter last year.

Cash and investments totaled $17.2 million at September 30, 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 $152,000. Working capital as of September 30, 2020 was $22.5 million, compared to $22.9 million at the end of 2019.

We remain highly focused on building our sales funnel, maintaining and strengthening our customer relationships, and most important, research and development in order to maintain our leading brand awareness and market share,” said Cameron Tidball, Co-CEO of Profire Energy. “We are assessing and analyzing the vast market and opportunity for combustion solutions that reside outside of our traditional market wherein we can leverage our world class burner management systems to serve a more diverse customer base.”

Conference Call
Profire Energy executives will host the call, followed by a question and answer period.

Date: Tuesday, November 10, 2020
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: 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 November 24, 2020.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay Pin: 13712689

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 Acheson, Alberta, Canada. For additional information, visit
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 plans to assess opportunities outside of traditional markets. 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.

Profire Energy, Inc.
Ryan Oviatt, CFO
(801) 796-5127

Three Part Advisors
Steven Hooser, Partner

Condensed Consolidated Balance Sheets
As of
September 30, 2020December 31, 2019
Cash and cash equivalents$7,919,545 $7,358,856 
Short-term investments2,239,256 1,222,053 
Short-term investments - other600,000 2,600,000 
Accounts receivable, net2,397,985 5,597,701 
Inventories, net (note 3)8,780,571 9,571,807 
Prepaid expenses and other current assets (note 4)2,178,682 1,672,422 
Income tax receivable465,828 77,385 
Total Current Assets24,581,867 28,100,224 
Long-term investments6,450,891 7,399,963 
Financing right-of-use asset61,347 107,991 
Property and equipment, net11,595,366 12,071,019 
Intangible assets, net1,827,553 1,989,782 
Goodwill2,579,381 2,579,381 
Total Long-Term Assets22,514,538 24,148,136 
TOTAL ASSETS$47,096,405 $52,248,360 
Accounts payable$980,601 $2,633,520 
Accrued liabilities (note 5)1,061,515 2,089,391 
Current financing lease liability (note 6)43,024 59,376 
Income taxes payable— 403,092 
Total Current Liabilities2,085,140 5,185,379 
Net deferred income tax liability484,115 439,275 
Long-term financing lease liability (note 6)20,927 52,120 
TOTAL LIABILITIES2,590,182 5,676,774 
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: 51,371,960 issued and 47,959,582 outstanding at September 30, 2020, and 50,824,355 issued and 47,411,977 outstanding at December 31, 201951,371 50,824 
Treasury stock, at cost(5,353,019)(5,353,019)
Additional paid-in capital30,208,082 29,584,172 
Accumulated other comprehensive loss(2,873,765)(2,415,460)
Retained earnings22,473,554 24,705,069 
TOTAL STOCKHOLDERS' EQUITY44,506,223 46,571,586 
These financial statements should be read in conjunction with the Form 10-Q and accompanying footnotes.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)     
For the Three Months Ended September 30,For the Nine Months Ended September 30,
REVENUES (note 9)
Sales of goods, net$3,517,280 $9,251,947 $14,377,377 $29,009,837 
Sales of services, net482,826 653,814 1,429,350 1,853,013 
Total Revenues4,000,106 9,905,761 15,806,727 30,862,850 
Cost of goods sold-product2,141,888 4,326,335 7,919,959 13,465,989 
Cost of goods sold-services337,795 410,130 1,114,804 1,275,655 
Total Cost of Goods Sold2,479,683 4,736,465 9,034,763 14,741,644 
GROSS PROFIT1,520,423 5,169,296 6,771,964 16,121,206 
General and administrative expenses2,247,614 3,256,023 8,273,925 9,984,251 
Research and development433,800 641,716 1,073,074 1,503,645 
Depreciation and amortization expense168,507 130,105 496,976 357,238 
Total Operating Expenses2,849,921 4,027,844 9,843,975 11,845,134 
INCOME (LOSS) FROM OPERATIONS(1,329,498)1,141,452 (3,072,011)4,276,072 
Gain on sale of fixed assets36,483 34,826 193,938 73,166 
Other expense(48,349)(2,065)(49,667)(3,029)
Interest income103,364 38,478 255,289 216,068 
Total Other Income91,498 71,239 399,560 286,205 
INCOME (LOSS) BEFORE INCOME TAXES(1,238,000)1,212,691 (2,672,451)4,562,277 
INCOME TAX BENEFIT (EXPENSE)180,252 (290,943)440,936 (986,407)
NET INCOME (LOSS)$(1,057,748)$921,748 $(2,231,515)$3,575,870 
Foreign currency translation gain (loss)$233,170 $(91,397)$(336,986)$160,453 
Unrealized gains (losses) on investments(36,840)(12,386)(121,319)105,861 
Total Other Comprehensive Income (Loss)196,330 (103,783)(458,305)266,314 
COMPREHENSIVE INCOME (LOSS)$(861,418)$817,965 $(2,689,820)$3,842,184 
BASIC EARNINGS (LOSS) PER SHARE (note 10)$(0.02)$0.02 $(0.05)$0.08 
FULLY DILUTED EARNINGS (LOSS) PER SHARE (note 10)$(0.02)$0.02 $(0.05)$0.07 
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING47,933,318 47,739,192 47,717,114 47,509,357 
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING47,933,318 48,469,246 47,717,114 48,259,900 
These financial statements should be read in conjunction with the Form 10-Q and accompanying footnotes.

Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30,
Net income (loss)$(2,231,515)$3,575,870 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense860,028 732,396 
Gain on sale of fixed assets(193,938)(73,166)
Bad debt expense182,179 255,943 
Stock awards issued for services351,943 358,270 
Changes in operating assets and liabilities:
Accounts receivable3,404,439 1,244,104 
Income taxes receivable/payable(404,304)(890,523)
Inventories714,245 1,711,446 
Prepaid expenses43,099 (586,576)
Deferred tax asset/liability44,840 219,138 
Accounts payable and accrued liabilities(2,648,339)855,207 
Net Cash Provided by Operating Activities122,677 7,402,109 
Proceeds from sale of equipment16,313 75,310 
Sale of investments1,814,070 2,476,227 
Purchase of fixed assets(1,146,400)(3,309,191)
Payments for acquisitions, net of cash acquired— (4,322,722)
Net Cash Provided by (Used in) Investing Activities683,983 (5,080,376)
Value of equity awards surrendered by employees for tax liability(148,879)(185,004)
Cash received in exercise of stock options2,020 8,870 
Purchase of treasury stock— (2,249,745)
Principal paid towards lease liability(45,965)(53,190)
Net Cash Used in Financing Activities(192,824)(2,479,069)
Effect of exchange rate changes on cash(53,147)(468)
NET CHANGE IN CASH560,689 (157,804)
CASH AT BEGINNING OF PERIOD7,358,856 10,101,932 
CASH AT END OF PERIOD$7,919,545 $9,944,128 
Interest$4,946 $4,469 
Income taxes$402,510 $1,793,281 
Common stock issued in settlement of accrued bonuses$419,373 $379,861 
Issuance of common stock - Midflow acquisition$— $1,020,000 
These financial statements should be read in conjunction with the Form 10-Q and accompanying footnotes.