Profire Energy Reports Financial Results for First Quarter Fiscal 2019

Company recognizes $10.8 million in revenues, 53.2% gross margin and announces planned launch of next-generation burner management system


LINDON, Utah, May 08, 2019 (GLOBE NEWSWIRE) -- Profire Energy, Inc. (NASDAQ: PFIE), a technology company (the "Company") which creates, installs and services burner and chemical management solutions in the oil and gas industry, today reported financial results for its quarter ending March 31, 2019. A conference call will be held on Thursday, May 9, 2019 at 1:00 p.m. ET to discuss the results.

Highlights

  • Recognized Revenue of $10.8 million
  • Net Income of $1.7 Million or $0.03 Per Diluted Share,
  • Realized Gross Profit of $5.8 Million or 53.2% of Total Revenues
  • Cash and Liquid Investments of $23.4 Million and Remained Debt-Free
  • Announces Planned Launch of PF2200 Burner Management System

Fiscal First Quarter 2019 Financial Results
               
Total revenues for the period equaled $10.8 million, a 2% sequential increase over the fourth quarter of 2018. Profire's legacy business continues to perform well and the Company achieved higher sales of the PF3100 compared to the previous quarter.

Net income was $1.7 million or $0.03 per diluted share, compared to a net income of $1.9 million or $0.04 per share in the first quarter of 2018.

Total operating expenses were approximately $3.6 million, a 6% decrease from the same quarter last year.
This change was primarily due to lower sales commissions from lower revenues and lower R&D consulting costs as a result of the Company receiving the SIL certification for its PF3100 burner management system in July of last year.

Compared with the same quarter last year, operating expenses for general and administrative decreased 5%, R&D decreased 13% and depreciation decreased 10%.

Gross profit was $5.8 million or 53.2% of total revenues which was up from 50.4% in the same quarter last year. This increase was driven by improvements in inventory reserves, product mix, and warranty reserves.

Cash and liquid investments totaled $23.4 million at March 31, 2019 compared to $22.6 million at the end of 2018, and the Company continues to operate debt-free. During the first quarter of 2019 the Company repurchased $1.3 million of Profire stock pursuant to its previously announced share repurchase program.

PF2200 Burner Management System

Today, the Company is also announcing the planned launch of its next-generation burner management product line, the PF2200. Development of the PF2200 is nearing completion, and the Company expects to begin commercial sales of the PF2200 in the fall of 2019 once field trials have been completed and certifications have been obtained. The PF2200 implements a number of user-friendly upgrades and auxiliary features that are not currently available with the Company’s PF2100 burner management system.

Management Commentary

"We have planned for the market volatility and conditions that we are experiencing to start 2019 as we expect revenues in the first half of 2019 to remain relatively flat with Q4 2018 and pick up as the year moves along,” said Brenton Hatch, President and CEO of Profire Energy. "We believe our growth strategy allows for long-term growth whether or not overall industry conditions improve significantly. We are making strategic investments with the intent of increasing revenues in the coming years. These investments will help Profire remain a technology leader within the industry."

"As we mentioned last quarter, we still expect total operating expenses for the full year of 2019 to increase by roughly 20% when compared to 2018, which may out pace revenue growth in the short term due to the ongoing industry challenges,” stated Ryan Oviatt, CFO of Profire. "We plan to invest both internally and externally in 2019 to take advantages of opportunities that we believe will increase Profire’s market potential. This increased investment does not mean that we plan to move away from core values that have made us successful throughout the previous years."

Conference Call

Profire Energy President and CEO Brenton Hatch and CFO Ryan Oviatt will host the call, followed by a question and answer period.
Date: Thursday, May 9, 2019
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:
http://public.viavid.com/index.php?id=134353. 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 May 16, 2019.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay Pin Number: 13690322

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 and chemical injection systems are increasingly becoming part of their solution. Profire Energy has offices in Lindon, Utah; Victoria, Texas; Homer, Pennsylvania; Greeley, Colorado; and Spruce Grove, 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, the Company’s plans to make internal and external investments, the Company’s expected increase in operating expenses, the Company’s planned launch of its PF2200 Burner Management System, and the availability of Company resources to make beneficial investments in 2019 and beyond. 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, CFO
(801) 796-5127

Three Part Advisors
Steven Hooser, Partner
214-872-2710

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
 As of
 March 31, 2019 December 31, 2018
 (Unaudited)  
CURRENT ASSETS   
Cash and cash equivalents$11,456,878  $10,101,932 
Accounts receivable, net6,444,792  6,885,296 
Inventories, net9,062,616  9,659,571 
Income tax receivable284,805  173,124 
Short-term investments806,941  961,256 
Short-term investments - other3,063,843  3,596,484 
Prepaid expenses & other current assets719,296  473,726 
Total Current Assets31,839,171  31,851,389 
    
LONG-TERM ASSETS   
Long-term investments8,099,852  7,978,380 
Property and equipment, net8,276,796  8,020,462 
Net deferred tax asset  85,092 
Financing right-of-use asset116,128   
Goodwill997,701  997,701 
Intangible assets, net430,776  429,956 
Total Long-Term Assets17,921,253  17,511,591 
    
TOTAL ASSETS$49,760,424  $49,362,980 
    
CURRENT LIABILITIES   
Accounts payable1,067,595  1,177,985 
Income taxes payable1,046,858  1,172,191 
Current financing lease liability65,098   
Accrued vacation373,995  311,435 
Accrued liabilities1,003,913  1,445,510 
Total Current Liabilities3,557,459  4,107,121 
    
LONG-TERM LIABILITIES   
Net deferred income tax liability38,672   
Long-term financing lease liability51,674   
TOTAL LIABILITIES3,647,805  4,107,121 
    
STOCKHOLDERS' EQUITY   

Preferred shares: $0.001 par value, 10,000,000 shares authorized:  no shares issued or outstanding
   
Common shares: $0.001 par value, 100,000,000 shares authorized: 49,859,011 issued and 47,308,224 outstanding at March 31, 2019, and 49,707,805 issued and 47,932,305 outstanding at December 31, 201849,859  49,708 
Treasury stock, at cost(3,943,063) (2,609,485)
Additional paid-in capital28,331,144  28,027,742 
Accumulated other comprehensive loss(2,677,516) (2,895,683)
Retained earnings24,352,195  22,683,577 
TOTAL STOCKHOLDERS' EQUITY46,112,619  45,255,859 
    
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$49,760,424  $49,362,980 

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 Operations and Comprehensive Income (Unaudited)
 For the Three Months Ended March 31,
 2019  2018 
REVENUES   
Sales of goods, net$10,198,635  $11,454,615 
Sales of services, net634,423  715,103 
Total Revenues10,833,058  12,169,718 
    
COST OF SALES   
Cost of goods sold-product4,570,988  5,557,710 
Cost of goods sold-services497,198  481,867 
Total Cost of Goods Sold5,068,186  6,039,577 
    
GROSS PROFIT5,764,872  6,130,141 
    
OPERATING EXPENSES   
General and administrative expenses3,161,530  3,341,903 
Research and development349,058  403,220 
Depreciation and amortization expense116,223  128,717 
Total Operating Expenses3,626,811  3,873,840 
    
INCOME FROM OPERATIONS2,138,061  2,256,301 
    
OTHER INCOME (EXPENSE)   
Gain on sale of fixed assets16,930  64,831 
Other expense(551) -1,792 
Interest income91,703  50,708 
Total Other Income108,082  113,747 
    
INCOME BEFORE INCOME TAXES2,246,143  2,370,048 
INCOME TAX EXPENSE577,525  493,820 
NET INCOME$1,668,618  $1,876,228 
    
OTHER COMPREHENSIVE INCOME (LOSS)   
Foreign currency translation gain (loss)149,415  (239,129)
Unrealized gains (losses) on investments68,752  -33,235 
Total Other Comprehensive Income (Loss)218,167  -272,364 
    
COMPREHENSIVE INCOME$1,886,785  $1,603,864 
    
BASIC EARNINGS PER SHARE$0.04  $0.04 
    
FULLY DILUTED EARNINGS PER SHARE$0.03  $0.04 
    
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING47,437,424  48,670,305 
    
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING48,084,390  49,744,101 

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 Three Months Ended March 31,
 2019 2018
OPERATING ACTIVITIES   
Net income$1,668,618  $1,876,228 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization expense249,889  220,245 
Gain on sale of fixed assets(16,930) (64,731)
Bad debt expense177,906  63,566 
Stock awards issued for services445,984  581,619 
Changes in operating assets and liabilities:   
Changes in accounts receivable275,440  (746,179)
Changes in income taxes receivable/payable(234,042) 591,277 
Changes in inventories656,988  (863,148)
Changes in prepaid expenses(239,395) 104,008 
Changes in deferred tax asset/liability123,764  (111,406)
Changes in accounts payable and accrued liabilities(499,721) (198,540)
Net Cash Provided by Operating Activities2,608,501  1,452,939 
    
INVESTING ACTIVITIES   
Proceeds from sale of equipment18,400  139,763 
Sale (Purchase) of investments647,739  (484,142)
Purchase of fixed assets(443,883) (234,778)
Net Cash Provided by (Used in) Investing Activities222,256  (579,157)
    
FINANCING ACTIVITIES   
Value of equity awards surrendered by employees for tax liability(143,022) (83,600)
Cash received in exercise of stock options  74,241 
Purchase of Treasury stock(1,333,579)  
Principal paid towards lease liability(15,717)  
Net Cash Used in Financing Activities(1,492,318) (9,359)
    
Effect of exchange rate changes on cash16,507  (113,644)
    
NET INCREASE IN CASH1,354,946  750,779 
CASH AT BEGINNING OF PERIOD10,101,932  11,445,799 
CASH AT END OF PERIOD$11,456,878  $12,196,578 
    
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION   
CASH PAID FOR:   
Interest1,411   
Income taxes711,524   

These financial statements should be read in conjunction with the Form 10-Q and accompanying footnotes