Profire Energy Reports Financial Results for Second Quarter 2020

LINDON, Utah August 5, 2020 - Profire Energy, Inc. (NASDAQ: 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 second quarter ending June 30, 2020. A conference call will be held on Thursday, August 6, 2020 at 1:00 p.m. ET to discuss the results.

Second Quarter Summary
Recognized revenue of $4.4 million
Realized gross profit of $2.1 million or 47.9% of total revenues
Net loss of $808,503 or ($0.02) per share
Cash and liquid investments of $18.1 million and remained debt-free
“Our second quarter results reflect both a full quarter’s impact of the COVID-19 global pandemic, which significantly reduced demand across the oil and gas industry, and the fallout of the price war between Russia and OPEC, which caused oil futures to turn negative for the first time in history,” said Ryan Oviatt, Co-CEO and CFO of Profire Energy. “We responded quickly to these events by reducing expenses and adjusting the cost structure of our organization during the quarter. These actions are reflected in our results through the sequential improvement in gross margin and a nearly $600,000 reduction in operating expenses from the first quarter, while maintaining our strong balance sheet.”

Second Quarter 2020 Financial Results
Total revenues for the period equaled $4.4 million, compared to $7.4 million in the first quarter of 2020, and $10.1 million in the same period a year ago. The second quarter’s results reflect the full impact of COVID-19 on consumer demand compared to just a few weeks in the first quarter, as well as a 53% drop in the average oil price during the same period, due in part to a significant price war between Russia and OPEC in the first month of the quarter.

Gross profit was $2.1 million, compared to $3.2 million in the first quarter of 2020 and $5.2 million in the year-ago quarter. Gross margin was 47.9% of revenues, compared to 42.5% of revenues in previous quarter and 51.2% of revenues in the first quarter of 2019. The sequential gross margin improvement was driven by actions taken during the quarter to adjust the cost structure of the company.

Total operating expenses were $3.2 million, compared to $3.8 million in prior quarter and $4.2 million in the same period a year ago. The sequential and year-over-year decreases 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 23%, R&D decreased 55% and depreciation increased by 63%.

Net loss was $808,503 or ($0.02) per share, compared to a net loss of $365,264, or ($0.01) in the first quarter of 2020, and net income of $1.0 million or $0.02 per diluted share in the same quarter last year.

Cash and investments totaled $18.1 million at June 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 $469,000. Working capital as of June 30, 2020 was $23.4 million, compared to $22.9 million at the end of 2019.

“Despite turbulent times in our industry, we continue to add customers who recognize the value our solutions bring in improving safety and efficiency ” said Cameron Tidball, Co-CEO of Profire Energy. “We will continue to investigate and analyze opportunities to diversify our offerings, including the evaluation of select strategic acquisition targets that provide complementary solutions or could expand our potential customer base, that may arise through the disruption of the markets.”
Conference Call
Profire Energy Executives will host the call, followed by a question and answer period.
Date: Thursday, August 6, 2020
Time: 1:00 p.m. ET (11:00 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 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 August 20, 2020.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay Pin Number: 10010507
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 possible acquisition opportunities, and the Company hosting a conference call on August 6, 2020. 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, Co-CEO and CFO
(801) 796-5127

Three Part Advisors
Steven Hooser, Partner


Condensed Consolidated Balance Sheets
As of
June 30, 2020December 31, 2019
Cash and cash equivalents$8,022,237 $7,358,856 
Short-term investments2,290,667 1,222,053 
Short-term investments - other1,600,000 2,600,000 
Accounts receivable, net2,439,296 5,597,701 
Inventories, net (note 3)8,996,223 9,571,807 
Prepaid expenses and other current assets (note 4)2,144,150 1,672,422 
Income tax receivable— 77,385 
Total Current Assets25,492,573 28,100,224 
Long-term investments6,192,261 7,399,963 
Financing right-of-use asset72,914 107,991 
Property and equipment, net11,571,961 12,071,019 
Intangible assets, net1,883,236 1,989,782 
Goodwill2,579,381 2,579,381 
Total Long-Term Assets22,299,753 24,148,136 
TOTAL ASSETS$47,792,326 $52,248,360 
Accounts payable$685,617 $2,633,520 
Accrued liabilities (note 5)1,122,242 2,089,391 
Current financing lease liability (note 6)45,411 59,376 
Income taxes payable99,481 403,092 
Total Current Liabilities1,952,751 5,185,379 
Net deferred income tax liability543,441 439,275 
Long-term financing lease liability (note 6)30,238 52,120 
TOTAL LIABILITIES2,526,430 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: 51,325,493 issued and 47,913,115 outstanding at June 30, 2020, and 50,824,355 issued and 47,411,977 outstanding at December 31, 201951,325 50,824 
Treasury stock, at cost(5,353,019)(5,353,019)
Additional paid-in capital30,106,383 29,584,172 
Accumulated other comprehensive loss(3,070,095)(2,415,460)
Retained earnings23,531,302 24,705,069 
TOTAL STOCKHOLDERS' EQUITY45,265,896 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 June 30,For the Six Months Ended June 30,
REVENUES (note 9)
Sales of goods, net$3,999,139 $9,559,255 $10,860,097 $19,757,890 
Sales of services, net360,340 564,776 946,524 1,199,199 
Total Revenues4,359,479 10,124,031 11,806,621 20,957,089 
Cost of goods sold-product1,944,389 4,568,666 5,778,071 9,139,654 
Cost of goods sold-services328,225 368,327 777,009 865,525 
Total Cost of Goods Sold2,272,614 4,936,993 6,555,080 10,005,179 
GROSS PROFIT2,086,865 5,187,038 5,251,541 10,951,910 
General and administrative expenses2,753,773 3,566,698 6,026,311 6,728,228 
Research and development229,548 512,871 639,274 861,929 
Depreciation and amortization expense180,997 110,910 328,469 227,133 
Total Operating Expenses3,164,318 4,190,479 6,994,054 7,817,290 
INCOME (LOSS) FROM OPERATIONS(1,077,453)996,559 (1,742,513)3,134,620 
Gain on sale of fixed assets157,455 21,410 157,455 38,340 
Other expense(1,665)(413)(1,318)(964)
Interest income77,532 85,887 151,925 177,590 
Total Other Income233,322 106,884 308,062 214,966 
INCOME (LOSS) BEFORE INCOME TAXES(844,131)1,103,443 (1,434,451)3,349,586 
INCOME TAX BENEFIT (EXPENSE)35,628 (117,939)260,684 (695,464)
NET INCOME (LOSS)$(808,503)$985,504 $(1,173,767)$2,654,122 
Foreign currency translation gain (loss)$375,267 $102,435 $(570,156)$251,850 
Unrealized gains (losses) on investments72,875 49,495 (84,479)118,247 
Total Other Comprehensive Income (Loss)448,142 151,930 (654,635)370,097 
COMPREHENSIVE INCOME (LOSS)$(360,361)$1,137,434 $(1,828,402)$3,024,219 
BASIC EARNINGS (LOSS) PER SHARE (note 10)$(0.02)$0.02 $(0.02)$0.06 
FULLY DILUTED EARNINGS (LOSS) PER SHARE (note 10)$(0.02)$0.02 $(0.02)$0.06 
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING47,723,208 47,348,137 47,607,825 47,392,534 
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING47,723,208 48,124,208 47,607,825 48,192,849 
These financial statements should be read in conjunction with the Form 10-Q and accompanying footnotes.

Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30,
Net income (loss)$(1,173,767)$2,654,122 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense566,791 483,063 
Gain on sale of fixed assets(153,973)(38,340)
Bad debt expense236,005 229,792 
Stock awards issued for services250,198 363,841 
Changes in operating assets and liabilities:
Accounts receivable3,248,693 983,865 
Income taxes receivable/payable(1,761)(1,261,267)
Inventories445,634 1,831,865 
Prepaid expenses168,718 (35,637)
Deferred tax asset/liability104,166 205,314 
Accounts payable and accrued liabilities(2,843,685)(115,813)
Net Cash Provided by Operating Activities847,019 5,300,805 
Proceeds from sale of equipment— 39,810 
Sale of investments1,057,404 1,109,297 
Purchase of fixed assets(994,410)(1,429,735)
Payments for acquisitions, net of cash acquired— (2,088,814)
Net Cash Provided by (Used in) Investing Activities62,994 (2,369,442)
Value of equity awards surrendered by employees for tax liability(148,879)(184,433)
Cash received in exercise of stock options2,020 6,850 
Purchase of treasury stock— (1,333,578)
Principal paid towards lease liability(34,267)(32,185)
Net Cash Used in Financing Activities(181,126)(1,543,346)
Effect of exchange rate changes on cash(65,506)(2,171)
NET INCREASE IN CASH663,381 1,385,846 
CASH AT BEGINNING OF PERIOD7,358,856 10,101,932 
CASH AT END OF PERIOD$8,022,237 $11,487,778 
Interest$4,247 $2,832 
Income taxes$— $1,793,281 
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.