Profire Energy Reports Financial Results for Second Quarter Fiscal 2019
Company recognizes $10.1 million in revenues, 51.2% gross margin, Acquired Two Additional Companies, and increases Share Repurchase Program
LINDON, Utah, Aug. 07, 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 June 30, 2019. A conference call will be held on Thursday, August 8, 2019 at 1:00 p.m. ET to discuss the results.
Highlights
Recognized Revenue of $10.1 million
Net Income of $986,000 or $0.02 Per Diluted Share,
Realized Gross Profit of $5.2 Million or 51.2% of Total Revenues
Cash and Liquid Investments of over $23 Million and Remained Debt-Free
Increased Share Repurchase Program by $2 million
Second Quarter 2019 Financial Results
Total revenues for the period equaled $10.1 million, an 11% decrease over the same period a year ago. This decrease was primarily driven by negative macro industry trends including a 12% drop in the average oil price during the same period.
Net income was $986,000 or $0.02 per diluted share, compared to a net income of $1.7 million or $0.03 per diluted share in the same quarter last year.
Total operating expenses were approximately $4.1 million, a 10% increase from the same quarter last year. This increase is primarily due to an increase in wages, professional fees related to acquisition activity, and certifications and development of the PF2200 product.
Compared with the same quarter last year, operating expenses for G&A increased 6%, R&D increased 62% and depreciation increased 14%.
Gross profit was $5.2 million or 51.2% of total revenues which was down from 52.1% in the same quarter last year. The fluctuation in gross profit margin was due to product mix changes, direct labor costs, and adjustments in our inventory and warranty reserves.
Cash and liquid investments totaled just over $23 million at June 30, 2019 compared to $22.6 million at the end of 2018, and the Company continues to operate debt-free.
Within the Quarter the Company closed on an agreement to acquire Millstream Energy Products for total compensation of roughly $2.5 million US. Subsequent to the end of the second quarter, the Company closed on a Member Interest Purchase Agreement with Midflow Services, LLC, on August 5, 2019, for total compensation of roughly $2.4 million cash and $1 million worth of the Company’s restricted stock.
The Company announced today that it will continue the stock repurchase program and its Board of Directors has allocated an additional $2 million towards the existing program, which will remain in effect until October 31, 2019.
Management Commentary
"When analyzing M&A opportunities, we are looking for companies that provide complementary products, improve product development, broaden industry expertise, expand market share, and leverage our strong customer relationships and sales network. We are very excited about both of our recent acquisitions of Millstream and Midflow and believe they fit within our long-term strategy,” said Brenton Hatch, President and CEO of Profire Energy. "We anticipated the current market volatility in 2019 and believe our investment strategies, including acquisitions and product development are crucial to Profire’s growth in the coming years. We will continue to thoughtfully analyze additional strategic opportunities while we focus on the strategic integration of Midflow and Millstream to ensure these acquisitions are value accretive."
"Total cash spend for both the Millstream and Midflow acquisitions was just under $5 million US with expected additional annual revenue of $3.5 to $5.5 million in the coming years. Profire still maintains sufficient cash on hand to continue to react quickly to strategic opportunities,” stated Ryan Oviatt, CFO of Profire. "We are also well-positioned to allocate some of our cash on hand to continue the stock repurchase program. This demonstrates our ongoing commitment to provide value to our shareholders.”
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, August 8, 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=135689. 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 22, 2019.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay Pin Number: 13693316
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; Millersburg, Ohio; 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 expected revenues from recent acquisitions, the Company’s plans to make internal and external investments, 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
June 30, 2019
December 31, 2018
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents
$
11,487,778
$
10,101,932
Short-term investments
726,782
961,256
Short-term investments - other
2,400,000
3,596,484
Accounts receivable, net
6,395,332
6,885,296
Inventories, net
9,071,479
9,659,571
Prepaid expenses & other current assets
512,292
473,726
Income tax receivable
473,093
173,124
Total Current Assets
31,066,756
31,851,389
LONG-TERM ASSETS
Net deferred tax asset
—
85,092
Long-term investments
8,433,185
7,978,380
Financing right-of-use asset
149,484
—
Property and equipment, net
9,108,234
8,020,462
Goodwill
997,701
997,701
Intangible assets, net
1,699,312
429,956
Total Long-Term Assets
20,387,916
17,511,591
TOTAL ASSETS
$
51,454,672
$
49,362,980
CURRENT LIABILITIES
Accounts payable
$
1,415,824
$
1,177,985
Accrued vacation
373,995
311,435
Accrued liabilities
1,679,279
1,445,510
Current financing lease liability
76,559
—
Income taxes payable
199,792
1,172,191
Total Current Liabilities
3,745,449
4,107,121
LONG-TERM LIABILITIES
Net deferred income tax liability
120,222
—
Long-term financing lease liability
76,382
—
TOTAL LIABILITIES
3,942,053
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: 50,016,979 issued and 47,466,192 outstanding at June 30, 2019, and 49,707,805 issued and 47,932,305 outstanding at December 31, 2018
50,017
49,708
Treasury stock, at cost
(3,943,063
)
(2,609,485
)
Additional paid-in capital
28,593,552
28,027,742
Accumulated other comprehensive loss
(2,525,586
)
(2,895,683
)
Retained earnings
25,337,699
22,683,577
TOTAL STOCKHOLDERS' EQUITY
47,512,619
45,255,859
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
51,454,672
$
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 June 30,
For the Six Months Ended June 30,
2019
2018
2019
2018
REVENUES
Sales of goods, net
$
9,559,255
$
10,724,409
$
19,757,890
$
22,179,024
Sales of services, net
564,776
615,352
1,199,199
1,330,454
Total Revenues
10,124,031
11,339,761
20,957,089
23,509,478
COST OF SALES
Cost of goods sold-product
4,568,666
4,959,539
9,139,654
10,517,249
Cost of goods sold-services
368,327
471,555
865,525
953,422
Total Cost of Goods Sold
4,936,993
5,431,094
10,005,179
11,470,671
GROSS PROFIT
5,187,038
5,908,667
10,951,910
12,038,807
OPERATING EXPENSES
General and administrative expenses
3,566,698
3,364,826
6,728,228
6,706,726
Research and development
512,871
317,002
861,929
720,221
Depreciation and amortization expense
110,910
129,070
227,133
257,787
Total Operating Expenses
4,190,479
3,810,898
7,817,290
7,684,734
INCOME FROM OPERATIONS
996,559
2,097,769
3,134,620
4,354,073
OTHER INCOME (EXPENSE)
Gain on sale of fixed assets
21,410
21,254
38,340
86,085
Other expense
(413
)
(4,164
)
(964
)
(5,956
)
Interest income
85,887
174,771
177,590
225,479
Total Other Income
106,884
191,861
214,966
305,608
INCOME BEFORE INCOME TAXES
1,103,443
2,289,630
3,349,586
4,659,681
INCOME TAX EXPENSE
117,939
575,363
695,464
1,069,183
NET INCOME
$
985,504
$
1,714,267
$
2,654,122
$
3,590,498
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation gain (loss)
$
102,435
$
(427,307
)
$
251,850
$
(394,072
)
Unrealized gains (losses) on investments
49,495
9,226
118,247
(24,009
)
Total Other Comprehensive Income (Loss)
151,930
(418,081
)
370,097
(418,081
)
COMPREHENSIVE INCOME
$
1,137,434
$
1,296,186
$
3,024,219
$
3,172,417
BASIC EARNINGS PER SHARE
$
0.02
$
0.04
$
0.06
$
0.07
FULLY DILUTED EARNINGS PER SHARE
$
0.02
$
0.03
$
0.06
$
0.07
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING
47,348,137
48,266,199
47,392,534
48,467,136
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING
48,124,208
49,095,575
48,192,849
49,237,938
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 Six Months Ended June 30,
2019
2018
OPERATING ACTIVITIES
Net income
$
2,654,122
$
3,590,498
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense
483,063
442,959
Gain on sale of fixed assets
(38,340
)
(76,703
)
Bad debt expense
229,792
141,348
Stock awards issued for services
749,547
861,189
Changes in operating assets and liabilities:
Changes in accounts receivable
605,009
548,419
Changes in income taxes receivable/payable
(1,261,267
)
(790,946
)
Changes in inventories
1,831,865
(2,074,974
)
Changes in prepaid expenses
(35,637
)
114,907
Changes in deferred tax asset/liability
205,314
91,890
Changes in accounts payable and accrued liabilities
(115,813
)
274,744
Net Cash Provided by Operating Activities
5,307,655
3,123,331
INVESTING ACTIVITIES
Proceeds from sale of equipment
39,810
159,449
Sale of investments
1,109,297
368,379
Purchase of fixed assets
(1,429,735
)
(1,184,126
)
Payments for asset acquisition
(2,088,814
)
—
Net Cash Used in Investing Activities
(2,369,442
)
(656,298
)
FINANCING ACTIVITIES
Value of equity awards surrendered by employees for tax liability
(184,433
)
(736,160
)
Cash received in exercise of stock options
—
174,002
Purchase of Treasury stock
(1,333,578
)
(4,000,000
)
Principal paid towards lease liability
(32,185
)
—
Net Cash Used in Financing Activities
(1,550,196
)
(4,562,158
)
Effect of exchange rate changes on cash
(2,171
)
(51,997
)
NET INCREASE (DECREASE) IN CASH
1,385,846
(2,147,122
)
CASH AT BEGINNING OF PERIOD
10,101,932
11,445,799
CASH AT END OF PERIOD
$
11,487,778
$
9,298,677
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest
$
2,832
$
—
Income taxes
$
1,793,281
$
1,691,397
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Acquisition of assets (Preliminary estimate)
$
237,032
$
—
These financial statements should be read in conjunction with the Form 10-Q and accompanying footnotes