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


Profire Energy Logo
Source: Profire Energy, Inc.

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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