Profire Energy Reports Financial Results for Second Quarter 2020

8/5/2020, 10:15 PM (Source: GlobeNewswire)

LINDON, Utah, Aug. 05, 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 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 have the potential to expand our 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,
 December 31,
ASSETS (Unaudited)  
Cash and cash equivalents $8,022,237   $7,358,856  
Short-term investments 2,290,667   1,222,053  
Short-term investments - other 1,600,000   2,600,000  
Accounts receivable, net 2,439,296   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 Assets 25,492,573   28,100,224  
Long-term investments 6,192,261   7,399,963  
Financing right-of-use asset 72,914   107,991  
Property and equipment, net 11,571,961   12,071,019  
Intangible assets, net 1,883,236   1,989,782  
Goodwill 2,579,381   2,579,381  
Total Long-Term Assets 22,299,753   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 payable 99,481   403,092  
Total Current Liabilities 1,952,751   5,185,379  
Net deferred income tax liability 543,441   439,275  
Long-term financing lease liability (note 6) 30,238   52,120  
TOTAL LIABILITIES 2,526,430   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, 2019 51,325   50,824  
Treasury stock, at cost (5,353,019)  (5,353,019) 
Additional paid-in capital 30,106,383   29,584,172  
Accumulated other comprehensive loss (3,070,095)  (2,415,460) 
Retained earnings 23,531,302   24,705,069  
TOTAL STOCKHOLDERS' EQUITY 45,265,896   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,
 2020 2019 2020 2019
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,
 2020 2019
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.

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