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Profire Energy Reports Financial Results for Fourth Quarter and Full Fiscal Year 2020


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Company Reports Positive Net Income and Operating Cash Flow for Fourth Quarter

LINDON, Utah, March 10, 2021 (GLOBE NEWSWIRE) — Profire Energy, Inc. (NASDAQ: PFIE), a technology company (the “Company”) that provides solutions which enhance the efficiency, safety, and reliability of industrial combustion appliances, today reported financial results for its fourth quarter and full fiscal year ending December 31, 2020. A conference call will be held on Thursday, March 11, 2021 at 1:00 p.m. ET to discuss the results.

Fourth Quarter Summary

  • Recognized revenue of $5.7 million
  • Realized gross profit of $2.8 million or 48.7% of total revenues
  • Sequential gross margin improvement
  • Net income of $55,918 or $0.00 per diluted share
  • Generated $141,723 of cash flow from operations

Full-year Fiscal 2020 Summary

  • Recognized revenue of $21.5 million
  • Realized gross profit of $9.5 million or 44.4% of total revenues
  • Reduced operating expenses by $3.8 million
  • Net loss of $2.2 million or ($0.05) per share
  • Cash and liquid investments of over $17.6 million and remained debt-free

“The combination of lower demand, as a result of the COVID-19 pandemic, and excess supply, resulting in historically low crude oil prices in the second quarter, made 2020 the most challenging year in our Company’s history. We responded swiftly to adjust our operating cost structure, and reduced SG&A expenses by $3.8 million for the full year. We also generated full-year positive operating cash flow while remaining debt free,” said Ryan Oviatt, Co-Chief Executive Officer and CFO of Profire Energy.

Fourth Quarter 2020 Financial Results

Total revenues for the period equaled $5.7 million, compared to $4.0 million in the third quarter of 2020 and $8.1 million in the prior-year quarter. The sequential increase was primarily driven by improving demand caused by higher oil prices in the fourth quarter, with the year-over-year change attributable to lower demand due to the COVID-19 pandemic.

Gross profit was $2.8 million, compared to $1.5 million in the third quarter of 2020 and $3.4 million in the prior-year quarter. Gross margin was 48.7% of revenues, compared to 38.0% of revenues in the prior quarter and 42.0% of revenues in the fourth quarter of 2020. The sequential improvement was due to a higher level of product sales, with the year-over-year differences due to inventory write-offs in 2019.

Total operating expenses of $2.8 million, was flat quarter over quarter and down significantly from $4.5 million in the year-ago quarter. The year-over-year improvement was the result of actions taken to reduce expenses and adjust the company’s cost structure in response to COVID-19.

Compared with the same quarter last year, operating expenses for G&A decreased 32%, R&D decreased 47% and depreciation decreased by 73%.

Net income was $55,918 or $0.00 per diluted share, compared to a loss of $1.1 million or ($0.02) per share in the third quarter of 2020 and a net loss of $1.6 million or ($0.03) per share in the same quarter last year.

Full Year 2020 Financial Results

Total revenues for the year equaled $21.5 million, versus $39.0 million in the prior year. This decrease was primarily driven by lower demand caused by the COVID-19 pandemic and a 31.4% drop in the average oil price during the same period.

Gross profit was $9.5 million which was down from $19.5 million last year. Gross margin was 44.4% of total revenues, compared to 50.1% of revenues in the prior year. The decrease was driven by product mix changes and by lower fixed cost coverage due to the decrease in revenues.

Total operating expenses were $12.6 million, a $3.8 million reduction from the prior year. This decrease is primarily due to actions taken to reduce expenses and the Company’s cost structure in response to COVID-19.

Compared with last year, operating expenses for G&A decreased 21%, R&D decreased 33% and depreciation decreased 32%.

Net loss was $2.2 million or ($0.05) per share, compared to a net income of $2.0 million or $0.04 per diluted share last year.

Cash and liquid investments totaled $17.6 million at December 31, 2020 compared to $18.6 million at the end of 2019, and the Company continues to operate debt-free.

“Though challenging, 2020 represented strong gains for Profire in terms of customer acquisition within our traditional space, as well as to new users in agriculture, aviation, infrastructure and renewable industries,” stated Cameron Tidball, Co-CEO of Profire Energy. “We plan and expect to continue to prove the validity and fit for our products both in our expanded traditional markets as well as in additional industries as we broaden our installation base and engage with new channel partners.”

Conference Call

Profire Energy Executives will host the call, followed by a question and answer period.
Date: Thursday, March 11, 2021
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=143713. 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 25, 2021.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay Pin Number: 13716903

About Profire Energy, Inc.
Profire Energy is a technology company providing solutions that enhance the efficiency, safety, and reliability of industrial combustion appliances while mitigating potential environmental impacts related to the operation of these devices. It is primarily focused in the upstream, midstream, and downstream transmission segments of the oil and gas industry; however, the Company has commenced identifying applications in other industries where their solutions can likely add value. Profire specializes in the engineering and design of burner and combustion management systems and solutions used on a variety of natural and forced draft applications. Its products and services are sold primarily throughout North America. It has an experienced team of sales and service professionals that are strategically positioned across the United States and Canada. Profire 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 entry into different industries and hosting a quarterly earnings call. 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
Consolidated Balance Sheets
As of
ASSETS December 31,
2020
December 31,
2019
CURRENT ASSETS
Cash and cash equivalents $ 9,148,312 $ 7,358,856
Short-term investments (note 2) 2,388,601 1,222,053
Short-term investments – other (note 2) 2,600,000
Accounts receivable, net 3,719,508 5,597,701
Inventories, net (note 3) 8,414,772 9,571,807
Prepaid expenses and other current assets (note 4) 1,678,428 1,672,422
Income tax receivable 486,154 77,385
Total Current Assets 25,835,775 28,100,224
LONG-TERM ASSETS
Long-term investments (note 2) 6,064,294 7,399,963
Financing right-of-use asset 50,094 107,991
Property and equipment, net (note 5) 12,021,811 12,071,019
Intangible assets, net (note 6) 1,771,870 1,989,782
Goodwill (note 6) 2,579,381 2,579,381
Total Long-Term Assets 22,487,450 24,148,136
TOTAL ASSETS $ 48,323,225 $ 52,248,360
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,178,979 $ 2,633,520
Accrued liabilities (note 7) 1,196,870 2,089,391
Current financing lease liability (note 8) 39,451 59,376
Income taxes payable 403,092
Total Current Liabilities 2,415,300 5,185,379
LONG-TERM LIABILITIES
Net deferred income tax liability 522,870 439,275
Long-term financing lease liability (note 8) 12,669 52,120
TOTAL LIABILITIES 2,950,839 5,676,774
STOCKHOLDERS’ EQUITY (note 9)
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: 51,384,961 issued and 47,972,583 outstanding at December 31, 2020, and 50,824,355 issued and 47,411,977 outstanding at December 31, 2019 51,385 50,824
Treasury stock, at cost (5,353,019 ) (5,353,019 )
Additional paid-in capital 30,293,472 29,584,172
Accumulated other comprehensive loss (2,148,924 ) (2,415,460 )
Retained earnings 22,529,472 24,705,069
TOTAL STOCKHOLDERS’ EQUITY 45,372,386 46,571,586
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 48,323,225 $ 52,248,360

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, 2020
For the Year Ended
December 31, 2019
REVENUES (note 11)
Sales of goods, net $ 19,395,639 $ 36,208,153
Sales of services, net 2,062,970 2,773,160
Total Revenues 21,458,609 38,981,313
COST OF SALES
Cost of goods sold-product 10,378,367 17,587,664
Cost of goods sold-services 1,554,041 1,865,290
Total Cost of Goods Sold 11,932,408 19,452,954
GROSS PROFIT 9,526,201 19,528,359
OPERATING EXPENSES
General and administrative expenses 10,641,122 13,454,195
Research and development 1,299,103 1,933,112
Depreciation and amortization expense 666,187 976,652
Total Operating Expenses 12,606,412 16,363,959
INCOME (LOSS) FROM OPERATIONS (3,080,211 ) 3,164,400
OTHER INCOME (EXPENSE)
Gain on sale of fixed assets 306,871 114,641
Other income (expense) (67,078 ) 5,044
Interest income 181,254 283,476
Total Other Income 421,047 403,161
INCOME (LOSS) BEFORE INCOME TAXES (2,659,164 ) 3,567,561
INCOME TAX BENEFIT (EXPENSE) (Note 13) 483,567 (1,546,069 )
NET INCOME (LOSS) $ (2,175,597 ) $ 2,021,492
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation gain $ 240,013 $ 335,695
Unrealized gains on investments 26,523 144,528
Total Other Comprehensive Income 266,536 480,223
COMPREHENSIVE INCOME (LOSS) $ (1,909,061 ) $ 2,501,715
BASIC EARNINGS (LOSS) PER SHARE (note 14) $ (0.05 ) $ 0.04
FULLY DILUTED EARNINGS (LOSS) PER SHARE (note 14) $ (0.05 ) $ 0.04
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING 47,778,063 47,490,937
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING 47,778,063 48,133,749

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, 2020
For the Year Ended
December 31, 2019
OPERATING ACTIVITIES
Net income (loss) $ (2,175,597 ) $ 2,021,492
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense 1,176,707 1,467,007
Gain on sale of fixed assets (306,871 ) (114,641 )
Bad debt expense 184,293 315,256
Stock awards issued for services 443,127 390,826
Changes in operating assets and liabilities:
Accounts receivable 2,268,435 1,965,207
Income taxes receivable/payable (404,345 ) (665,649 )
Inventories 1,216,200 1,630,632
Prepaid expenses and other current assets 157,053 (1,184,385 )
Deferred tax asset/liability 83,595 524,367
Accounts payable and accrued liabilities (2,378,197 ) 1,363,090
Net Cash Provided by Operating Activities 264,400 7,713,202
INVESTING ACTIVITIES
Proceeds from sale of fixed assets 514,448 116,785
Sale of investments 2,799,547 1,494,568
Purchase of fixed assets (1,547,331 ) (4,664,619 )
Payments for acquisitions, net of cash acquired (4,384,175 )
Net Cash Provided by (Used in) Investing Activities 1,766,664 (7,437,441 )
FINANCING ACTIVITIES
Value of equity awards surrendered by employees for tax liability (154,659 ) (242,497 )
Cash received in exercise of stock options 2,020 9,356
Purchase of treasury stock (2,743,534 )
Principal paid towards lease liability (57,796 ) (73,628 )
Net Cash Used in Financing Activities (210,435 ) (3,050,303 )
Effect of exchange rate changes on cash (31,173 ) 31,466
NET INCREASE (DECREASE) IN CASH 1,789,456 (2,743,076 )
CASH AT BEGINNING OF PERIOD 7,358,856 10,101,932
CASH AT END OF PERIOD $ 9,148,312 $ 7,358,856
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ 6,090 $ 6,497
Income taxes $ 402,510 $ 1,793,281
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Common stock issued in settlement of accrued bonuses $ 419,373 $ 379,861
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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