Profire Energy Reports Financial Results for Fiscal Second Quarter 2016
Company Generates 18% Quarterly Revenue Growth, $0.01 EPS, and $1.8 million Increase in Cash. Maintains Fiscal 2016 Guidance.
LINDON, Utah, November 9, 2015 - Profire Energy, Inc. (NASDAQ: PFIE), a technology company which creates, installs and services burner and chemical management solutions in the oil and gas industry, today reported financial results for its fiscal second quarter of 2016 ended September 30, 2015. A conference call will be held on Monday, November 9, 2015 at 5:00 p.m. EST to discuss the results.

Fiscal Q2 2016 Highlights

·
Total revenues up 18% from Q1 FY2016
·
Net income of $778,907, or $0.01 per diluted share
·
Cash at period-end totaled $19.0 million
·
Net cash provided from operating activities during the six-month period totaled $5.1 million
·
Appointed Ryan Oviatt as new CFO
·
Announced next-generation burner management system, the PF3100
·
Completed significant cost reductions during the period; Operating Expenses reduced to $3.4 million for the quarter, a reduction of over $500,000 from Q1 FY2016

Fiscal Q2 2016 Financial Results

Total Revenues for the quarter of $8.1 million reflected a decrease of 48%, compared to the comparable period last year. This decrease was principally attributable to the reduced purchasing from companies in the oil and gas industry stemming from budget constraints derived from a drastic decline in the underlying commodity prices year over year. We believe that a continued emphasis on proper resource-allocation and strategic product-development will help yield long-term revenue growth that is increasingly robust and commodity price-impervious. Such will entail investing in geographies and initiatives (e.g. marketing, training, and sales) that we believe will produce the highest level of total revenues and return on investment in the long-run.

Gross Profit percentage during the three months ended September 30, 2015 decreased from 54% to 50% compared to the prior-year's period ended September 30, 2014.


Total Operating Expenses during the three months ended September 30, 2015 decreased $1.9 million, or 37%, compared to the equivalent period ended September 30, 2014. As a percentage of Total Revenues, Total Operating Expenses during the three months ended September 30, 2015 increased from 34% to 41%, compared to the comparable period ended September 30, 2014. We believe we have made significant improvements to the Company's cost structure over the last few periods and are well-positioned to weather the current industry challenges.

Net Income for the quarter was $778,907 or $0.01 per diluted share, compared to net income of $2.1 million or $0.04 per diluted share in the same prior-year period.

Cash and Cash Equivalents totaled $19.0 million at September 30, 2015, as compared to $14.1 million at March 31, 2015. The Company continues to operate debt-free.

Fiscal First Half 2015 Financial Results

Total revenues in the fiscal first half of 2016 decreased 48% to $15.0 million, from $28.9 million in the first half of 2015.

Gross Profit decreased to $7.3 million or 49% of Total Revenues, compared to $16.0 million or 55% of total revenues in the first half of 2015.

Total Operating Expenses decreased to $7.2 million or 48% of Total Revenues, from $9.4 million or 32% of Total Revenues in the first half of 2015.

Net Income was a $320,095 or $0.01 per diluted share, from Net Income of $4.3 million or $0.08 per diluted share in the first half of 2015.

Management Commentary

"We are quite pleased with the progress the Company has made in the last quarter, specifically becoming profitable again," said Brenton Hatch, President and CEO of Profire Energy. "However, as we have stated several times, we still anticipate a relatively difficult year for overall revenues and profitability, but I think this quarter shows that we are on the right track. We are fortunate to have such a strong balance sheet which should allow us to take advantage of opportunities in the market as they arise, while improving upon our strategic positioning in the future."

"We are in the midst of difficult and challenging times for the oil and gas industry; however Profire has a strong balance sheet, high-quality products and great people which will help us succeed in these circumstances," said Ryan Oviatt, CFO of Profire Energy.  "Not only have we demonstrated a return to profitability this quarter, but we have generated significant operating cash flow despite the current industry environment. It is great to be a part of the Profire team."


Fiscal 2016 Guidance

The Company maintains its fiscal 2016 guidance. For fiscal 2016, total revenues are expected between $25.0-30.0 million with net income of $(1.0)-2.0 million. Though the Company expects a slightly stronger performance in the second half of Fiscal 2016, volatile oil & gas prices could change thisoutlook.

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: Monday, November 9, 2015
Time: 5:00 p.m. EST (3:00 p.m. MST) 
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 this link: http://public.viavid.com/index.php?id=117080. 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 to the conference call, please contact Tanner Lamb at 1-801-796-5127.

A replay of the call will be available after 8:00 p.m. EDT on the same day through November 16, 2015.

Toll-free replay number: 1-877-870-5176 
International replay number: 1-858-384-5517 
Replay ID: 117080

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; Greeley, Colorado; 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,; the Company's long-term outlook and market opportunity of the Company; the Company being well positioned to manage through the industry difficulties; the Company's belief that a continued emphasis on proper resource-allocation and strategic product-development will help yield long-term revenue growth that is increasingly robust and commodity price-impervious; the Company's intention to make investments that will create highest revenue generation and return on investment; and the Company cost reductions and process improvements creating operational leverage in future periods. 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.

Contact:

Profire Energy, Inc.
Tanner Lamb, Finance & Investor Relations
(801)796-5127

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

PART I. FINANCIAL INFORMATION
 
Item 1 Financial Information
 
         
PROFIRE ENERGY, INC. AND SUBSIDIARIES
 
Consolidated Balance Sheets
 
         
ASSETS      
   
   
September 30,
2015
   
March 31,
2015
 
         
CURRENT ASSETS
       
Cash and cash equivalents
 
$
18,954,290
   
$
14,144,796
 
Accounts receivable, net
   
6,706,532
     
9,462,378
 
Inventories
   
9,954,358
     
11,766,535
 
Income tax receivable
   
59,886
     
-
 
Prepaid expenses & other current assets
   
395,385
     
112,741
 
                 
Total Current Assets
   
36,070,451
     
35,486,450
 
                 
LONG-TERM ASSETS
               
Deferred tax asset
   
575,189
     
501,921
 
                 
PROPERTY AND EQUIPMENT, net
   
8,697,175
     
9,275,965
 
                 
OTHER ASSETS
               
Goodwill
   
997,701
     
997,701
 
Intangible assets, net of accumulated amortization
   
525,527
     
594,019
 
                 
Total Other Assets
   
1,523,228
     
1,591,720
 
                 
                 
TOTAL ASSETS
 
$
46,866,043
   
$
46,856,056
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY      
 
                 
CURRENT LIABILITIES
               
Accounts payable
 
$
909,115
   
$
1,040,530
 
Accrued liabilities
   
819,775
     
332,229
 
Income taxes payable
   
148,426
     
347,486
 
                 
Total Current Liabilities
   
1,877,316
     
1,720,245
 
                 
LONG-TERM LIABILITIES
               
Deferred income tax liability
   
629,232
     
631,353
 
                 
TOTAL LIABILITIES
   
2,506,548
     
2,351,598
 
                 
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: 53,255,275 53,199,136 shares issued and outstanding, respectively
   
53,255
     
53,199
 
Additional paid-in capital
   
25,811,085
     
25,525,050
 
Accumulated other comprehensive income (loss)
   
(2,640,128
)
   
(1,888,981
)
Retained earnings
   
21,135,283
     
20,815,188
 
                 
Total Stockholders' Equity
   
44,359,495
     
44,504,457
 
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
46,866,043
   
$
46,856,056
 
 
These financial statements should be read in conjunction with forms 10-Q and 10-K and accompanying footnotes.

 
PROFIRE ENERGY, INC. AND SUBSIDIARIES        
Consolidated Statements of Operations and Other Comprehensive Income (Loss)     
                 
   
For the Three Months Ended
   
For the Six Months Ended
 
   
September 30,  
   
September 30, 
 
 
  2015     2014     2015     2014  
REVENUES
               
Sales of goods, net
 
$
7,291,846
   
$
14,628,718
   
$
13,503,816
   
$
26,945,230
 
Sales of services, net
   
805,448
     
1,092,214
     
1,470,721
     
1,920,536
 
Total Revenues
   
8,097,294
     
15,720,932
     
14,974,537
     
28,865,766
 
                                 
COST OF SALES
                               
Cost of goods sold-product
   
3,445,188
     
6,469,992
     
6,413,106
     
11,537,619
 
Cost of goods sold-services
   
623,992
     
701,497
     
1,219,530
     
1,341,604
 
Total Cost of  Goods Sold
   
4,069,180
     
7,171,489
     
7,632,636
     
12,879,223
 
                                 
GROSS PROFIT
   
4,028,114
     
8,549,443
     
7,341,901
     
15,986,543
 
                                 
OPERATING EXPENSES
                               
General and administrative expenses
   
1,660,092
     
2,866,401
     
3,638,576
     
5,275,470
 
Research and development
   
295,146
     
538,793
     
599,635
     
810,020
 
Payroll expenses
   
1,259,770
     
1,767,730
     
2,722,425
     
3,033,429
 
Depreciation and amortization expense
   
137,999
     
122,928
     
245,454
     
247,643
 
                                 
Total Operating Expenses
   
3,353,007
     
5,295,852
     
7,206,090
     
9,366,562
 
                                 
INCOME FROM OPERATIONS
   
675,107
     
3,253,591
     
135,811
     
6,619,981
 
                                 
OTHER INCOME (EXPENSE)
                               
Gain on disposal of fixed assets
   
754
     
-
     
19,391
     
-
 
Other (expense) income
   
352,310
     
(257
)
   
243,320
     
2,864
 
Interest income
   
5,517
     
7,543
     
26,640
     
7,780
 
                                 
Total Other Income (Expense)
   
358,581
     
7,286
     
289,351
     
10,644
 
                                 
NET INCOME BEFORE INCOME TAXES
   
1,033,688
     
3,260,877
     
425,162
     
6,630,625
 
                                 
INCOME TAX EXPENSE
   
254,781
     
1,182,676
     
105,067
     
2,331,718
 
                                 
NET INCOME
 
$
778,907
   
$
2,078,201
   
$
320,095
   
$
4,298,907
 
                                 
FOREIGN CURRENCY TRANSLATION GAIN (LOSS)
 
$
(1,084,519
)
 
$
(455,114
)
 
$
(751,147
)
 
$
(158,678
)
                                 
TOTAL COMPREHENSIVE INCOME (LOSS)
 
$
(305,612
)
 
$
1,623,087
   
$
(431,052
)
 
$
4,140,229
 
                                 
BASIC EARNINGS PER SHARE
 
$
0.01
   
$
0.04
   
$
0.01
   
$
0.09
 
                                 
FULLY DILUTED EARNINGS PER SHARE
 
$
0.01
   
$
0.04
   
$
0.01
   
$
0.08
 
                                 
                               
BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
   
53,236,979
     
52,482,823
     
53,230,892
     
50,222,367
 
                               
FULLY DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
   
53,344,291
     
53,126,287
     
53,338,204
     
50,865,831
 
 
These financial statements should be read in conjunction with forms 10-Q and 10-K and accompanying footnotes.
 

PROFIRE ENERGY, INC. AND SUBSIDIARIES
 
Consolidated Statements of Cash Flows
 
         
     
For the Six Months Ended
 
     
September 30,
 
 
  2015     2014  
OPERATING ACTIVITIES
       
Net Income
 
$
320,095
   
$
4,298,907
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization expense
   
476,548
     
247,643
 
Gain on disposal of fixed assets
   
(19,391
)
   
-
 
Common stock issued for services
   
-
     
168,004
 
Bad debt expense
   
86,494
     
-
 
Stock options issued for services
   
325,334
     
712,820
 
Unrealized foreign exchange gain
   
-
     
(128,429
)
Changes in operating assets and liabilities:
               
Changes in accounts receivable
   
2,567,419
     
(5,961,481
)
Changes in income tax receivable
   
(59,886
)
   
-
 
Changes in inventories
   
1,600,797
     
(1,634,627
)
Changes in prepaid expenses
   
(262,547
)
   
(200,631
)
Changes in deferred tax asset
   
(73,268
)
   
79,208
 
Changes in accounts payable and accrued liabilities
   
373,484
     
2,329,740
 
Changes in income taxes payable
   
(193,908
)
   
1,448,850
 
                 
   Net Cash Provided by Operating Activities
   
5,141,171
     
1,360,004
 
                 
INVESTING ACTIVITIES
               
Proceeds from disposal of equipment
   
119,935
     
-
 
Purchase of fixed assets
   
(28,572
)
   
(3,720,259
)
                 
Net Cash Provided by (Used in) Investing Activities
   
91,363
     
(3,720,259
)
                 
FINANCING ACTIVITIES
               
Proceeds from stock issued for cash
   
-
     
18,000,000
 
Stock offering costs
   
-
     
(1,529,057
)
Value of equity awards surrendered by employees for tax liability
   
(39,243
)
   
-
 
Stock issued in exercise of stock options
   
-
     
134,711
 
                 
   Net Cash Provided by (Used in) Financing Activities
   
(39,243
)
   
16,605,654
 
                 
Effect of exchange rate changes on cash
   
(383,797
)
   
(30,249
)
                 
NET INCREASE IN CASH
   
4,809,494
     
14,215,150
 
CASH AT BEGINNING OF PERIOD
   
14,144,796
     
4,456,674
 
                 
CASH AT END OF PERIOD
 
$
18,954,290
   
$
18,671,824
 
                 
SUPPLEMENTAL DISCLOSURES OF
               
CASH FLOW INFORMATION
               
                 
CASH PAID FOR:
               
Income taxes
 
$
292,082
   
$
-
 
 
These financial statements should be read in conjunction with forms 10-Q and 10-K and accompanying footnotes.