Profire Energy Reports Financial Results for Third Quarter Fiscal Year 2022
Company Reports Sixth Consecutive Quarter of Sequential Revenue Growth and Highest Quarterly Net Income and EBITDA Since Q1 2019
LINDON, Utah, Nov. 02, 2022 (GLOBE NEWSWIRE) -- 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.
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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, 2022
Time: 8:30 a.m. ET (6:30 a.m. MT)
Toll-free dial-in number: 1-855-327-6837
International 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: 1-844-512-2921
International replay number: 1-412-317-6671
Replay 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 Advisors
Steven Hooser & John Beisler
214-872-2710
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 Ended September 30, |
For the Nine Months Ended September 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.
Released November 2, 2022