Profire Energy Reports Financial Results for Full Fiscal Year and Fourth Quarter 2019

3/11/2020, 9:20 PM (Source: GlobeNewswire)

Company Reports Full-Year Revenue of $39 million and Continued Profitability

LINDON, Utah, March 11, 2020 (GLOBE NEWSWIRE) -- 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 full fiscal year ending December 31, 2019. A conference call will be held on Thursday, March 12, 2020 at 1:00 p.m. ET to discuss the results.

Full year Fiscal 2019 Summary

  • Recognized revenue of $39.0 million

  • Realized gross profit of $19.5 million or 50.1% of total revenues

  • Net income of $2.0 million or $0.04 per diluted share,

  • Repurchased 1,636,878 shares of Profire stock for $2.7 million

  • Cash and liquid investments of $18.6 million and remained debt-free

Fourth Quarter Summary

  • Recognized revenue of $8.1 million

  • Realized gross profit of $3.4 million or 42% of total revenues

  • Net loss of $1.55 million or ($0.03) per share,

  • Repurchased shares 269,491 shares of Profire stock for $494,000

“I am pleased with the accomplishments we are making internally as a company and with the strength of our financial position given the current market conditions. The 2019 achievements include the completion and integration of a pair of acquisitions, receiving functional safety certification for our new PF2200 burner management system, and initiating commercial sales of this new product line,” said Brenton Hatch, Chairman and CEO of Profire Energy.

Full Year 2019 Financial Results

Total revenues for the period equaled $39.0 million, a 14.5% decrease over the prior year. This decrease was primarily driven by negative macro industry trends including a 13% drop in the average oil price and onshore rig count during the same period.

Gross profit was $19.5 million which was down from $22.9 million last year. Gross margin was 50.1% of total revenues, compared to 50.2% of revenues in the prior year. The typical fluctuations of gross profit margin are driven by changes in product mix and changes in inventory and warranty reserves.

Total operating expenses were $16.4 million, a 10% increase from the previous year. This increase is primarily due to an increase in employee costs mostly driven by M&A activity, certifications and development costs for the PF2200 product line, and an impairment charge for our chemical management patent.

Compared with the same quarter last year, operating expenses for G&A increased 3%, R&D increased 38% and depreciation and amortization increased 95%.  The increase in R&D was from ongoing investments in product development while the increase in depreciation and amortization was due to M&A activity and patent impairment.

Net income was $2.0 million or $0.04 per diluted share, compared to a net income of $6.1 million or $0.12 per diluted share last year. Net income was impacted by two one-off items which included the additional CMS product and patent write downs and a derecognition of tax loss carry-forwards in Canada. Without these items, net income and earnings per share would have been significantly higher.

Cash and liquid investments totaled $18.6 million at December 31, 2019 compared to $22.6 million at the end of 2018, and the Company continues to operate debt-free. This decrease is primarily related to $4.4 million spent on the two acquisitions and $4.7 million spent on a new facility in Canada. Additionally, the Company continued the stock repurchase program with a repurchase of 1,636,878 shares, or $2.7 million of Profire stock during the full year.

Management Commentary

“We continue to realize cross-selling opportunities from Millstream products and through Midflow services, and are adjusting our sales efforts in those areas that present the greatest potential, including expanding our geographic reach,” stated Mr. Hatch. “We believe we are well-positioned financially to manage current market conditions, and will maintain our level of prudence regarding strategic investment opportunities.”  

“Despite the industry headwinds we faced in 2019, we were able to fund a large portion of our strategic investments through cash flows from operations,” explained Ryan Oviatt, CFO of Profire Energy. “We remain debt-free and hold significant cash reserves. Our strong balance sheet position continues to provide us flexibility in times of volatility and uncertainty.”

Conference Call

Profire Energy Executives will host the call, followed by a question and answer period.
Date: Thursday, March 12, 2020
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=138279. 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 March 26, 2020.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay Pin Number: 13699646
 

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 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, the Company’s plans to make internal investments, and the availability of Company resources to make beneficial investments in 2020 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
Consolidated Balance Sheets
  As of
ASSETS December 31, 2019 December 31, 2018
CURRENT ASSETS    
Cash and cash equivalents $7,358,856  $10,101,932 
Short-term investments (note 2) 1,222,053  961,256 
Short-term investments - other (note 2) 2,600,000  3,596,484 
Accounts receivable, net 5,597,701  6,885,296 
Inventories, net (note 3) 9,571,807  9,659,571 
Prepaid expenses and other current assets 1,672,422  473,726 
Income tax receivable 77,385  173,124 
Total Current Assets 28,100,224  31,851,389 
     
LONG-TERM ASSETS    
Net deferred tax asset   85,092 
Long-term investments (note 2) 7,399,963  7,978,380 
Financing right-of-use asset 107,991   
Property and equipment, net (note 4) 12,071,019  8,020,462 
Intangible assets, net (note 5) 1,989,782  429,956 
Goodwill (note 5) 2,579,381  997,701 
Total Long-Term Assets 24,148,136  17,511,591 
TOTAL ASSETS $52,248,360  $49,362,980 
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
CURRENT LIABILITIES    
Accounts payable $2,633,520  $1,177,985 
Accrued liabilities 2,089,391  1,756,945 
Current financing lease liability (note 7) 59,376   
Income taxes payable 403,092  1,172,191 
Total Current Liabilities 5,185,379  4,107,121 
LONG-TERM LIABILITIES    
Net deferred income tax liability 439,275   
Long-term financing lease liability (note 7) 52,120   
TOTAL LIABILITIES 5,676,774  4,107,121 
     
STOCKHOLDERS' EQUITY (note 8)    
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: 50,824,355 issued and 47,411,977 outstanding at December 31, 2019, and 49,707,805 issued and 47,932,305 outstanding at December 31, 2018 50,824  49,708 
Treasury stock, at cost (5,353,019) (2,609,485)
Additional paid-in capital 29,584,172  28,027,742 
Accumulated other comprehensive loss (2,415,460) (2,895,683)
Retained earnings 24,705,069  22,683,577 
TOTAL STOCKHOLDERS' EQUITY 46,571,586  45,255,859 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $52,248,360  $49,362,980 

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


PROFIRE ENERGY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income
  For the Year Ended
December 31, 2019
 For the Year Ended
December 31, 2018
REVENUES (note 10)    
Sales of goods, net $36,208,153  $42,870,050 
Sales of services, net 2,773,160  2,744,485 
Total Revenues 38,981,313  45,614,535 
     
COST OF SALES    
Cost of goods sold-product 17,587,664  20,789,229 
Cost of goods sold-services 1,865,290  1,924,126 
Total Cost of Goods Sold 19,452,954  22,713,355 
     
GROSS PROFIT 19,528,359  22,901,180 
     
OPERATING EXPENSES    
General and administrative expenses 13,454,195  13,029,228 
Research and development 1,933,112  1,397,440 
Depreciation and amortization expense 976,652  500,554 
Total Operating Expenses 16,363,959  14,927,222 
     
INCOME FROM OPERATIONS 3,164,400  7,973,958 
     
OTHER INCOME (EXPENSE)    
Gain on sale of fixed assets 114,641  129,989 
Other income (expense) 5,044  (7,414)
Interest income 283,476  501,429 
Total Other Income 403,161  624,004 
     
INCOME BEFORE INCOME TAXES 3,567,561  8,597,962 
     
INCOME TAX EXPENSE (note 12) 1,546,069  2,517,200 
     
NET INCOME $2,021,492  $6,080,762 
     
OTHER COMPREHENSIVE INCOME (LOSS)    
Foreign currency translation gain (loss) $335,695  $(660,190)
Unrealized gains (losses) on investments 144,528  (35,031)
Total Other Comprehensive Income (Loss) 480,223  (695,221)
     
COMPREHENSIVE INCOME $2,501,715  $5,385,541 
     
BASIC EARNINGS PER SHARE (note 13) $0.04  $0.13 
FULLY DILUTED EARNINGS PER SHARE (note 13)

 
 $0.04  $0.12 
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING 47,490,937  48,471,011 
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING 48,133,749  49,222,353 

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


PROFIRE ENERGY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
  For the Year Ended
December 31, 2019
 For the Year Ended
December 31, 2018
OPERATING ACTIVITIES    
Net income $2,021,492  $6,080,762 
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization expense 1,467,007  896,681 
Gain on sale of fixed assets (114,641) (117,693)
Bad debt expense 315,256  186,882 
Stock awards issued for services 390,826  1,059,000 
Changes in operating assets and liabilities:    
Accounts receivable 1,965,207  911,981 
Income taxes receivable/payable (665,649) 71,397 
Inventories 1,630,632  (3,417,671)
Prepaid expenses (1,184,385) (14,301)
Deferred tax asset/liability 524,367  (12,275)
Accounts payable and accrued liabilities 1,363,090  (92,207)
Net Cash Provided by Operating Activities 7,713,202  5,552,556 
     
INVESTING ACTIVITIES    
Proceeds from sale of equipment 116,785  219,063 
Sale of investments 1,494,568  140,356 
Purchase of fixed assets (4,664,619) (1,927,906)
Payments for acquisitions, net of cash acquired (4,384,175)  
Net Cash Used in Investing Activities (7,437,441) (1,568,487)
     
FINANCING ACTIVITIES    
Value of equity awards surrendered by employees for tax liability (242,497) (737,024)
Cash received in exercise of stock options 9,356  174,002 
Purchase of treasury stock (2,743,534) (4,670,134)
Principal paid towards lease liability (73,628)  
Net Cash Used in Financing Activities (3,050,303) (5,233,156)
     
Effect of exchange rate changes on cash 31,466  (94,780)
     
NET DECREASE IN CASH (2,743,076) (1,343,867)
CASH AT BEGINNING OF PERIOD 10,101,932  11,445,799 
     
CASH AT END OF PERIOD $7,358,856  $10,101,932 
     
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION    
     
CASH PAID FOR:    
Interest $6,497  $ 
Income taxes $1,793,281  $2,163,826 
NON-CASH FINANCING AND INVESTING ACTIVITIES:    
Issuance of common stock - Midflow acquisition $1,020,000  $ 

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

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