Profire Energy Reports Record Financial Results for Fiscal Second Quarter of 2015

Fiscal Second Quarter Shows Significant Revenues and Growth Investment; Q2 Revenues up 68% to Record $15.7 Million with Net Income of $0.04 per Share; Company Raises Fiscal 2015 Guided Revenues to $57.0-$59.0 Million and Net Income to $8.0-$9.5 Million

LINDON, Utah, Nov. 11, 2014 (GLOBE NEWSWIRE) -- Profire Energy, Inc. (Nasdaq:PFIE), a technology company which creates, installs and services burner management systems and other combustion technologies for the oil and gas industry, today reported financial results for its fiscal second quarter ended September 30, 2014. The Company intends to file its results on form 10-Q before market open on November 12, 2014.

Fiscal Q2 2015 Highlights vs. Same Year-ago Quarter

  • Total revenues increased 68% to record $15.7 million.
  • Gross profit up 54% to a record $8.5 million.
  • Net income of $2.1 million or $0.04 per diluted share.
  • Cash at quarter-end totaled $18.7 million following an equity raise for net proceeds of $16.4 million.
  • Expanded sales team during the quarter from 18 to 26 sales team members, and expanded service team from 20 to 28.
  • Extended product line with the new Profire Flare Stack Igniter and accelerated R&D investment for future products.
  • Completed expansion of Utah warehouse, increasing efficiency and scalability of product inventory and delivery.
  • Continued testing of a serviced-based, recurring revenue model.
  • Extended international distributor network by partnering with Unlimited Petroleum Consulting, Inc. (UPC Global), a worldwide supplier of oil and gas products and services.
  • Broadened sales strategy by hiring channel managers for corporate sales, OEMs and government entities.

Fiscal Q2 2015 Financial Results

Total revenues in the fiscal second quarter of 2015 increased 68% to a record $15.7 million from $9.3 million in the same year-ago quarter. The increase was primarily due to improved sales execution and increased efficacy in a number of growing sales territories, including Texas, Colorado, Pennsylvania and Alberta, Canada. The increase was also partly driven by leveraging new service and sales personnel, as well as the expansion of existing sales and service territories.

Gross profit increased to a record $8.5 million or 54.4% of total revenues, compared to $5.6 million or 59.5% of total revenues in the year-ago quarter.

Total operating expenses increased to $5.3 million or 34% of total revenues from $2.4 million or 26% of total revenues in the same year-ago quarter. The increase in operating expenses was primarily due to the purchase of equipment to be used by the Company's expanding service team, as well as the hiring of additional personnel—particularly in Utah, Texas, Pennsylvania and Alberta—to support long-term sales growth. The increase in total operating expenses was also driven by increased non-cash stock option expense, as well as increased research and development expense to support the introduction of the Company's next generation burner management systems and other products.

Net income was $2.1 million or $0.04 per diluted share, compared to net income of $2.0 million or $0.04 per diluted share in the same year-ago quarter. As expected, net margins slightly declined due to company's expansion in workforce and capital invested in research and development projects.

Cash and cash equivalents totaled $18.7 million at September 30, 2014, as compared to $4.6 million at June 30, 2014. During the quarter, the company completed an equity raise for net proceeds of $16.4 million. The company continues to operate debt-free.

Fiscal First Half 2015 Financial Results

Total revenues in the fiscal first half of 2015 increased 75% to a record $28.9 million from $16.5 million in the first half of 2014.

Gross profit increased to a record $16.0 million or 55.4% of total revenues, compared to $9.7 million or 59.0% of total revenues in the first half of 2014.

Total operating expenses increased to $9.4 million or 32% of total revenues from $4.2 million or 26% of total revenues in the first half of 2014.

Net income was a record $4.3 million or $0.08 per diluted share, up 17% from net income of $3.7 million or $0.08 per diluted share in the first half of 2014.

Management Commentary

"Our record second quarter reflects the capability of our expanding U.S. service and sales teams to penetrate regional markets," said Brenton Hatch, president and CEO of Profire Energy. "During the quarter, we appointed new channel managers to service and sell to industry groups with long-term sales cycles, including OEMs, governments and corporations.

"The baseline driver of growth continues to be the unique ability of our products to make oil and gas production safer, more efficient, and more compliant with industry regulations. As we look forward to our significant market opportunities, we've spent—and continue to spend—a considerable amount of time and resources investing in growth. So although margins have come down for this quarter, we anticipate that, with time, our operational investments will expedite the realization of our strategic objectives and help us maintain our industry leadership for years to come.

"As we look to the remainder of the year, we plan to continue entering new sales territories in the U.S. and build upon relationships with our many major customers. We expect our expanding footprint and product line to support our double-digit growth outlook in the large and thriving oil and gas services industry."

Fiscal 2015 Outlook

Based on the company's strong second quarter performance, Profire Energy is increasing its previously announced fiscal 2015 total revenues guidance from $46.0 million-$48.0 million to $57.0 million-$59.0 million, which would represent an increase of 61%-67% over the previous year. The company also expects its net income to increase from $7.0 million-$9.0 million to $8.0 million-$9.5 million, which represents an increase of 43% to 69% over the previous year.

Conference Call

Profire management will host a conference call later today to discuss these financial results. Please call the conference telephone number at least five minutes prior to the start time. An operator will register your name and organization.

Date: Tuesday, November 11, 2014
Time: 4:30 p.m. EST (2:30 p.m. Mountain time)
Toll-free dial-in number: 1-855-327-6837
International dial-in number: 1-631-982-4565

The conference call will also be webcast live and available for replay via this link: http://public.viavid.com/index.php?id=111558.

If you have any difficulty connecting with the call, please contact Liolios Group at 1-949-574-3860.

A telephone replay of the call will be available after 7:30 p.m. EST on the same day through November 18, 2014.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 111558

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 systems are increasingly becoming part of their solution. Profire Energy has offices in Lindon, Utah; Houston, Texas; Victoria, Texas; Oklahoma City, Oklahoma; Tioga, Pennsylvania; and Edmonton, 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 its sales, marketing, and operational advancements/expansions, including, but not limited to, the continuation of increased sales efficacy or execution in any number of areas; the intention or success of the Company's efforts to sustain long-term sales growth or the introduction of the Company's next-generation of burner management systems and other products; the reflection of the second quarter on the expansion of the sales and/or service teams in the U.S. or the opening of any sales region or channel to support the Company's double-digit growth outlook; the Company's hope to grow its line of service-products, or combine such with any other sales or service strategy; the increased leveraging of personnel; the adoption—or the Company's assessment of such—of burner management systems throughout certain markets; the Company's assessment of the regulations related to its industry or products; the Company's plan to continue expanding its marketing, sales, and service teams; the accelerated R&D investment resulting in future products and/or services; Operational investments expediting the realization of Profire's strategic objectives and helping the Company maintain their industry leadership for years to come; or the conference call webcast being available for replay. 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 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. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
     
ASSETS
     
  September 30, March 31,
  2014 2014
  (Unaudited)  
CURRENT ASSETS    
     
Cash and cash equivalents $ 18,671,824 $ 4,456,674
Accounts receivable, net 14,834,952 8,873,471
Inventories 8,214,485 6,579,858
Deferred tax asset 341,770 420,978
Prepaid expenses 232,894 32,263
     
Total Current Assets 42,295,925 20,363,244
     
PROPERTY AND EQUIPMENT, net 7,858,497 4,385,881
     
TOTAL ASSETS $ 50,154,422 $ 24,749,125
     
LIABILITIES AND STOCKHOLDERS' EQUITY 
     
CURRENT LIABILITIES    
     
Accounts payable $ 3,574,333 $ 1,461,138
Accrued liabilities 410,272 193,727
Deferred income tax liability 107,857 107,857
Income taxes payable 3,053,983 1,605,133
     
Total Current Liabilities 7,146,445 3,367,855
     
TOTAL LIABILITIES 7,146,445 3,367,855
     
STOCKHOLDERS' EQUITY    
     
Preferred shares: $0.001 par value, 10,000,000 shares authorized: no shares issued and outstanding  --  --
Common shares: $0.001 par value, 100,000,000 shares authorized: 52,650,084 and 47,836,543 shares issued and outstanding, respectively 52,650 47,836
Additional paid-in capital 23,978,644 6,496,980
Accumulated other comprehensive income (389,729) (231,051)
Retained earnings 19,366,412 15,067,505
     
Total Stockholders' Equity 43,007,977 21,381,270
     
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 50,154,422 $ 24,749,125
     
These financial statements should be read in conjunction with forms 10-Q and 10-K as well as the accompanying footnotes.
 
 
PROFIRE ENERGY, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss)
(Unaudited)
         
   For the Three Months Ended   For the Six Months Ended 
   September 30,   September 30, 
  2014 2013 2014 2013
REVENUES        
Sales of goods, net  $ 14,628,718  $ 8,940,062  $ 26,945,230  $ 15,779,023
Sales of services, net  1,092,214  402,394  1,920,536  745,013
Total Revenues  15,720,932  9,342,456  28,865,766  16,524,036
         
COST OF SALES        
Cost of goods sold-product  6,469,992  3,550,640  11,537,619  6,275,120
Cost of goods sold-services  701,497  232,250  1,341,604  500,447
Total Cost of Goods Sold  7,171,489  3,782,890  12,879,223  6,775,567
         
GROSS PROFIT  8,549,443  5,559,566  15,986,543  9,748,469
         
OPERATING EXPENSES        
General and administrative expenses  2,866,401  1,259,192  5,275,470  2,098,315
Research and development  538,793  155,089  810,020  251,019
Payroll expenses  1,767,730  930,993  3,033,429  1,766,069
Depreciation expense  122,928  65,597  247,643  126,925
         
Total Operating Expenses  5,295,852  2,410,871  9,366,562  4,242,328
         
INCOME FROM OPERATIONS  3,253,591  3,148,695  6,619,981  5,506,141
         
OTHER INCOME (EXPENSE)        
Interest expense  --   (100)  --   (10,567)
Gain on disposal of fixed assets  --   1,617  --   1,617
Other income (expense)  (257)  1,575  2,864  2,190
Interest income  7,543  7,565  7,780  8,366
         
Total Other Income (Expense)  7,286  10,657  10,644  1,606
         
NET INCOME BEFORE INCOME TAXES  3,260,877  3,159,352  6,630,625  5,507,747
         
INCOME TAX EXPENSE  1,182,676  1,109,803  2,331,718  1,844,214
         
NET INCOME  $ 2,078,201  $ 2,049,549  $ 4,298,907  $ 3,663,533
         
FOREIGN CURRENCY TRANSLATION GAIN (LOSS)  $ (455,114)  $ (90,191)  $ (158,678)  $ (200,224)
         
TOTAL COMPREHENSIVE INCOME  $ 1,623,087  $ 1,959,358  $ 4,140,229  $ 3,463,309
         
BASIC EARNINGS PER SHARE $ 0.04 $ 0.05 $ 0.09 $ 0.08
         
FULLY DILUTED EARNINGS PER SHARE $ 0.04 $ 0.04 $ 0.08 $ 0.08
         
BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 52,482,823 45,289,301 50,222,367 45,274,863
FULLY DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 53,126,287 45,905,364 50,865,831 45,905,364
         
These financial statements should be read in conjunction with forms 10-Q and 10-K as well as the accompanying footnotes.
 
 
PROFIRE ENERGY, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(unaudited)
     
  For the Six Months Ended
  September 30,
  2014 2013
OPERATING ACTIVITIES    
Net Income  $ 4,298,907  $ 3,663,533
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation expense  247,643  168,020
Gain on disposal of fixed assets  --  (1,617)
Common stock issued for services  168,004  28,350
Stock options issued for services  712,820  180,944
Unrealized foreign exchange gain  (128,429)  --
Changes in operating assets and liabilities:    
Changes in accounts receivable  (5,961,481)  (2,776,585)
Changes in inventories  (1,634,627)  (2,723,568)
Changes in prepaid expenses  (200,631)  (60,376)
Changes in deferred tax asset/liability  79,208  --
Changes in accounts payable and accrued liabilities  2,329,740  897,043
Changes in income taxes payable  1,448,850  870,119
     
Net Cash Provided by Operating Activities  1,360,004  245,863
     
INVESTING ACTIVITIES    
Proceeds from disposal of equipment  --  33,910
Purchase of fixed assets  (3,720,259)  (389,365)
     
Net Cash Used in Investing Activities  (3,720,259)  (355,455)
     
FINANCING ACTIVITIES    
Stock issued for cash  18,000,000  --
Stock offering costs  (1,529,057)  --
Stock issued in exercise of stock options  134,711  48,000
     
Net Cash Used in Financing Activities  16,605,654  48,000
     
Effect of exchange rate changes on cash  (30,249)  (144,925)
     
NET INCREASE (DECREASE) IN CASH  14,215,150  (206,517)
CASH AT BEGINNING OF PERIOD  4,456,674  808,772
     
CASH AT END OF PERIOD  $ 18,671,824  $ 602,255
     
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION    
     
CASH PAID FOR:    
Interest  $ --  $ 100
Income taxes  $ --  $ 302,300
NON CASH INVESTING AND FINANCING ACTIVITIES:    
None  $ --  $ --
     
These financial statements should be read in conjunction with forms 10-Q and 10-K as well as the accompanying footnotes.
CONTACT: Profire Energy, Inc.
         Andrew Limpert, CFO
         (801) 796-5127

         Profire Energy, Inc.
         Nathan McBride, VP Strategy & Finance
         (801) 796-5127

         Liolios Group, Inc.
         Ron Both, Senior Managing Director
         (949) 574-3860
         PFIE@liolios.com

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Source: Profire Energy