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Profire Energy Reports Financial Results for Second Quarter 2020


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Source: Profire Energy, Inc.

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:
http://public.viavid.com/index.php?id=140972. 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 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 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.

Contact:
Profire Energy, Inc.
Ryan Oviatt, Co-CEO and 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,
2020
December 31,
2019
ASSETS (Unaudited)
CURRENT ASSETS
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 ASSETS
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
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
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
LONG-TERM LIABILITIES
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
STOCKHOLDERS’ EQUITY (note 7)
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
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 47,792,326 $ 52,248,360

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 (Loss)
(Unaudited)
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, net 360,340 564,776 946,524 1,199,199
Total Revenues 4,359,479 10,124,031 11,806,621 20,957,089
COST OF SALES
Cost of goods sold-product 1,944,389 4,568,666 5,778,071 9,139,654
Cost of goods sold-services 328,225 368,327 777,009 865,525
Total Cost of Goods Sold 2,272,614 4,936,993 6,555,080 10,005,179
GROSS PROFIT 2,086,865 5,187,038 5,251,541 10,951,910
OPERATING EXPENSES
General and administrative expenses 2,753,773 3,566,698 6,026,311 6,728,228
Research and development 229,548 512,871 639,274 861,929
Depreciation and amortization expense 180,997 110,910 328,469 227,133
Total Operating Expenses 3,164,318 4,190,479 6,994,054 7,817,290
INCOME (LOSS) FROM OPERATIONS (1,077,453 ) 996,559 (1,742,513 ) 3,134,620
OTHER INCOME (EXPENSE)
Gain on sale of fixed assets 157,455 21,410 157,455 38,340
Other expense (1,665 ) (413 ) (1,318 ) (964 )
Interest income 77,532 85,887 151,925 177,590
Total Other Income 233,322 106,884 308,062 214,966
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
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation gain (loss) $ 375,267 $ 102,435 $ (570,156 ) $ 251,850
Unrealized gains (losses) on investments 72,875 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 OUTSTANDING 47,723,208 47,348,137 47,607,825 47,392,534
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING 47,723,208 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.

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended
June 30,
2020 2019
OPERATING ACTIVITIES
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 expense 566,791 483,063
Gain on sale of fixed assets (153,973 ) (38,340 )
Bad debt expense 236,005 229,792
Stock awards issued for services 250,198 363,841
Changes in operating assets and liabilities:
Accounts receivable 3,248,693 983,865
Income taxes receivable/payable (1,761 ) (1,261,267 )
Inventories 445,634 1,831,865
Prepaid expenses 168,718 (35,637 )
Deferred tax asset/liability 104,166 205,314
Accounts payable and accrued liabilities (2,843,685 ) (115,813 )
Net Cash Provided by Operating Activities 847,019 5,300,805
INVESTING ACTIVITIES
Proceeds from sale of equipment 39,810
Sale of investments 1,057,404 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 Activities 62,994 (2,369,442 )
FINANCING ACTIVITIES
Value of equity awards surrendered by employees for tax liability (148,879 ) (184,433 )
Cash received in exercise of stock options 2,020 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 CASH 663,381 1,385,846
CASH AT BEGINNING OF PERIOD 7,358,856 10,101,932
CASH AT END OF PERIOD $ 8,022,237 $ 11,487,778
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ 4,247 $ 2,832
Income taxes $ $ 1,793,281
NON-CASH FINANCING AND INVESTING ACTIVITIES
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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