PFIE - Profire Energy Reports Financial Results for First Quarter Fiscal 2019

May, 08 2019 04:15 PM Profire Energy Inc.

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, net
6,444,792


6,885,296

Inventories, net
9,062,616


9,659,571

Income tax receivable
284,805


173,124

Short-term investments
806,941


961,256

Short-term investments - other
3,063,843


3,596,484

Prepaid expenses & other current assets
719,296


473,726

Total Current Assets
31,839,171


31,851,389





LONG-TERM ASSETS



Long-term investments
8,099,852


7,978,380

Property and equipment, net
8,276,796


8,020,462

Net deferred tax asset
—


85,092

Financing right-of-use asset
116,128


—

Goodwill
997,701


997,701

Intangible assets, net
430,776


429,956

Total Long-Term Assets
17,921,253


17,511,591





TOTAL ASSETS
$
49,760,424


$
49,362,980





CURRENT LIABILITIES



Accounts payable
1,067,595


1,177,985

Income taxes payable
1,046,858


1,172,191

Current financing lease liability
65,098


—

Accrued vacation
373,995


311,435

Accrued liabilities
1,003,913


1,445,510

Total Current Liabilities
3,557,459


4,107,121





LONG-TERM LIABILITIES



Net deferred income tax liability
38,672


—

Long-term financing lease liability
51,674


—

TOTAL LIABILITIES
3,647,805


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, 2018
49,859


49,708

Treasury stock, at cost
(3,943,063
)

(2,609,485
)
Additional paid-in capital
28,331,144


28,027,742

Accumulated other comprehensive loss
(2,677,516
)

(2,895,683
)
Retained earnings
24,352,195


22,683,577

TOTAL STOCKHOLDERS' EQUITY
46,112,619


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, net
634,423


715,103

Total Revenues
10,833,058


12,169,718





COST OF SALES



Cost of goods sold-product
4,570,988


5,557,710

Cost of goods sold-services
497,198


481,867

Total Cost of Goods Sold
5,068,186


6,039,577





GROSS PROFIT
5,764,872


6,130,141





OPERATING EXPENSES



General and administrative expenses
3,161,530


3,341,903

Research and development
349,058


403,220

Depreciation and amortization expense
116,223


128,717

Total Operating Expenses
3,626,811


3,873,840





INCOME FROM OPERATIONS
2,138,061


2,256,301





OTHER INCOME (EXPENSE)



Gain on sale of fixed assets
16,930


64,831

Other expense
(551
)

-1,792

Interest income
91,703


50,708

Total Other Income
108,082


113,747





INCOME BEFORE INCOME TAXES
2,246,143


2,370,048

INCOME TAX EXPENSE
577,525


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 investments
68,752


-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 OUTSTANDING
47,437,424


48,670,305





FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING
48,084,390


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 expense
249,889


220,245

Gain on sale of fixed assets
(16,930
)

(64,731
)
Bad debt expense
177,906


63,566

Stock awards issued for services
445,984


581,619

Changes in operating assets and liabilities:



Changes in accounts receivable
275,440


(746,179
)
Changes in income taxes receivable/payable
(234,042
)

591,277

Changes in inventories
656,988


(863,148
)
Changes in prepaid expenses
(239,395
)

104,008

Changes in deferred tax asset/liability
123,764


(111,406
)
Changes in accounts payable and accrued liabilities
(499,721
)

(198,540
)
Net Cash Provided by Operating Activities
2,608,501


1,452,939





INVESTING ACTIVITIES



Proceeds from sale of equipment
18,400


139,763

Sale (Purchase) of investments
647,739


(484,142
)
Purchase of fixed assets
(443,883
)

(234,778
)
Net Cash Provided by (Used in) Investing Activities
222,256


(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 cash
16,507


(113,644
)




NET INCREASE IN CASH
1,354,946


750,779

CASH AT BEGINNING OF PERIOD
10,101,932


11,445,799

CASH AT END OF PERIOD
$
11,456,878


$
12,196,578





SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION



CASH PAID FOR:



Interest
1,411


—

Income taxes
711,524


—

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

Company Name:	Profire Energy Inc.
Stock Symbol:	PFIE
Market:	NASDAQ
Website:	profireenergy.com

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