Profire Energy Reports Financial Results for Fiscal Year 2018


Company Recognizes Most Profitable Year in Company History with Net Income Up Over 36% to $6 Million or $0.12 Per Diluted Share

Revenues up 19% YOY to $45.6 Million

LINDON, Utah, March 06, 2019 (GLOBE NEWSWIRE) -- Profire Energy, Inc. (NASDAQ: PFIE), a technology company (the “Company”) which creates, installs and services burner and chemical management solutions in the oil and gas industry, today reported financial results for its fiscal year ended December 31, 2018. A conference call will be held on Thursday, March 7, 2019 at 1:00 p.m. EST to discuss the results.

Fiscal 2018 Highlights

  • Recognized Revenue of $45.6 million, The Second-Best Year in Company History
  • Net Income of $6 Million or $0.12 Per Diluted Share, a 36% Increase From the Previous Year, The Most Profitable Year in Company History
  • Realized Gross Profit of $22.9 Million
  • Cash and Liquid Investments of $22.6 Million and Remained Debt-Free
  • Received an Effective Internal Control Opinion from External Auditors
  • Received SIL Certification for the PF3100

Fiscal Year Financial Results
               
Total revenues for the period equaled $45.6 million or a 19% increase from the previous year. This is the second-best revenue year in Company history. This increase is largely attributed to our ability to leverage our expanding customer base.

Net income was $6 million or $0.12 per diluted share, compared to a net income of $4.4 million or $0.09 per share in the previous year making this the Company's most profitable year ever.

Total operating expenses were approximately $14.9 million or an 11% increase over last year. This change is primarily due to increased labor costs, higher sales commissions stemming from the 19% improvement in revenue, and investments in R&D.

Compared with the last fiscal year, operating expenses for general and administrative increased 12%, R&D increased 14% and depreciation decreased roughly 5%.

Gross profit increased to $22.9 million or 50.2% of total revenues, as compared to $20.3 million or 52.9% of total revenues in the previous year. Gross profit margins fluctuated this year largely due to adjustments in inventory reserves as well as changes in product mix, direct labor costs, and warranty reserves.

Cash and liquid investments totaled $22.6 million at the end of the year and the Company continues to operate debt-free. During the year the Company repurchased $4.7 million of Profire stock.

Management Commentary

“2018 was a banner year for Profire as we were able to achieve our most profitable year in Company history,” said Brenton Hatch, President and CEO of Profire Energy. “We believe that in spite of present market volatility, the future of Profire is exciting. Enabling our five-year growth plan requires investing some of our cash reserves in 2019. We made hires throughout 2018 in order to augment our efforts to provide superior products and unparalleled customer experience and plan to continue making strategic hires and investments in 2019."

“Our efforts in this past year paid off and we are now able to conclude that our internal control environment is operating effectively,” stated Ryan Oviatt, CFO of Profire. “Profire's focus on improving controls over financial reporting, cash management and internal investments are helping us to achieve our long-term goals and five-year growth plan. Throughout 2019 we plan to invest in current products, next-gen product development, international expansion, M&A activity, and other areas that we believe will add significant growth potential and opportunity.”

Conference Call

Profire Energy President and CEO Brenton Hatch and CFO Ryan Oviatt will host the call, followed by a question and answer period.
Date: Thursday, March 7, 2019
Time: 1:00 p.m. EST (11:00 a.m. MST)
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=133489. 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 5:00 p.m. EST on the same day through March 14, 2019.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay Pin Number: 13688145

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 and chemical injection systems are increasingly becoming part of their solution. Profire Energy has offices in Lindon, Utah; Victoria, Texas; Homer, Pennsylvania; Greeley, Colorado; and Spruce Grove, 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 holding a conference call on March 7, 2019 and the availability of Company resources to make beneficial investments in 2019 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
Condensed Consolidated Balance Sheets
 As of
 December 31, 2018 December 31, 2017
CURRENT ASSETS   
Cash and cash equivalents$10,101,932  $11,445,799 
Accounts receivable, net6,885,296  8,069,255 
Inventories, net9,659,571  6,465,847 
Income tax receivable173,124   
Short term investments961,256  300,817 
Investments - other3,596,484  4,009,810 
Prepaid expenses & other current assets473,726  437,304 
Total Current Assets31,851,389  30,728,832 
    
LONG-TERM ASSETS   
Long-term investments7,978,380  8,517,182 
Property and equipment, net8,020,462  7,197,499 
Deferred tax asset, net85,092  72,817 
Goodwill997,701  997,701 
Intangible assets, net429,956  494,792 
Total Long-Term Assets17,511,591  17,279,991 
    
TOTAL ASSETS$49,362,980  $48,008,823 
    
CURRENT LIABILITIES   
Accounts payable1,177,985  1,780,977 
Income taxes payable1,172,191  919,728 
Accrued vacation311,435  237,949 
Accrued liabilities1,445,510  1,022,745 
Total Current Liabilities4,107,121  3,961,399 
    
TOTAL LIABILITIES4,107,121  3,961,399 
    
STOCKHOLDERS' EQUITY   
Preferred shares: $0.001 par value, 10,000,000 shares authorized:  no shares issued or outstanding   
Common shares: $0.001 par value, 100,000,000 shares authorized: 49,707,805 issued and 47,932,305 outstanding at December 31, 2018 and 53,931,167 issued and 48,606,425 outstanding at December 31, 201749,708  53,931 
Treasury stock, at cost(2,609,485) (6,890,349)
Additional paid-in capital28,027,742  27,535,469 
Accumulated other comprehensive loss(2,895,683) (2,200,462)
Retained earnings22,683,577  25,548,835 
Total Stockholders' Equity45,255,859  44,047,424 
    
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$49,362,980  $48,008,823 

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

 
 
 
PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Income
 For the Year Ended December 31,
  2018   2017
REVENUES   
Sales of goods, net$42,870,050  $35,502,510 
Sales of services, net 2,744,485   2,783,866
Total Revenues 45,614,535   38,286,376
    
COST OF SALES   
Cost of goods sold-product 20,789,229   16,116,161
Cost of goods sold-services 1,924,126   1,906,308
Total Cost of Goods Sold 22,713,355   18,022,469
    
GROSS PROFIT 22,901,180   20,263,907
    
OPERATING EXPENSES   
General and administrative expenses 13,029,228   11,676,693
Research and development 1,397,440   1,221,211
Depreciation and amortization expense 500,554   526,583
Total Operating Expenses 14,927,222   13,424,487
    
INCOME FROM OPERATIONS 7,973,958   6,839,420
    
OTHER INCOME (EXPENSE)   
Gain on sale of fixed assets 129,989   62,492
Other income (expense) (7,414)  40,992
Interest income 501,429   180,325
Total Other Income 624,004   283,809
    
INCOME BEFORE INCOME TAXES 8,597,962   7,123,229
INCOME TAX EXPENSE 2,517,200   2,673,694
NET INCOME$6,080,762  $4,449,535 
    
OTHER COMPREHENSIVE INCOME (LOSS)   
Foreign currency translation gain (loss)$(660,190) $587,951 
Unrealized gains (losses) on investments (35,031)  22,330
Total Other Comprehensive Income (Loss) (695,221)  610,281
    
COMPREHENSIVE INCOME$5,385,541  $5,059,816 
    
BASIC EARNINGS PER SHARE$0.13  $0.09 
    
FULLY DILUTED EARNINGS PER SHARE$0.12  $0.09 
    
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING 48,471,011   49,365,592
    
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING 49,222,353   49,858,435

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

 
 
 
PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
 For the Year Ended December 31,
 2018 2017
OPERATING ACTIVITIES   
Net income$6,080,762  $4,449,535 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization expense896,681  889,724 
Gain on sale of fixed assets(117,693) (62,574)
Bad debt expense186,882  262,766 
Stock awards issued for services1,059,000  841,166 
Changes in operating assets and liabilities:   
Changes in accounts receivable911,981  (2,591,392)
Changes in income taxes receivable/payable71,397  1,040,713 
Changes in inventories(3,417,671) 1,346,919 
Changes in prepaid expenses(14,301) (49,923)
Changes in deferred tax asset/liability(12,275) (11,876)
Changes in accounts payable and accrued liabilities(92,207) 1,597,753 
Net Cash Provided by Operating Activities5,552,556  7,712,811 
    
INVESTING ACTIVITIES   
Proceeds from sale of equipment219,063  140,462 
Purchase of investments140,356  (334,910)
Purchase of fixed assets(1,927,906) (611,060)
Net Cash Used in Investing Activities(1,568,487) (805,508)
    
FINANCING ACTIVITIES   
Value of equity awards surrendered by employees for tax liability(737,024) (43,139)
Cash received in exercise of stock options174,002  111,676 
Purchase of Treasury stock(4,670,134) (3,307,544)
Net Cash Used in Financing Activities(5,233,156) (3,239,007)
    
Effect of exchange rate changes on cash(94,780) 97,882 
    
NET INCREASE (DECREASE) IN CASH(1,343,867) 3,766,178 
CASH AT BEGINNING OF PERIOD11,445,799  7,679,621 
CASH AT END OF PERIOD10,101,932  $11,445,799 
    
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION   
CASH PAID FOR:   
Interest   
Income taxes2,163,826  1,710,135 

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