Company recognizes $10.1 million in revenues, 51.2% gross margin, Acquired Two Additional Companies, and increases Share Repurchase Program
LINDON, Utah, Aug. 07, 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 quarter ending June 30, 2019. A conference call will be held on Thursday, August 8, 2019 at 1:00 p.m. ET to discuss the results.
Highlights
- Recognized Revenue of $10.1 million
- Net Income of $986,000 or $0.02 Per Diluted Share,
- Realized Gross Profit of $5.2 Million or 51.2% of Total Revenues
- Cash and Liquid Investments of over $23 Million and Remained Debt-Free
- Increased Share Repurchase Program by $2 million
Second Quarter 2019 Financial Results
Total revenues for the period equaled $10.1 million, an 11% decrease over the same period a year ago. This decrease was primarily driven by negative macro industry trends including a 12% drop in the average oil price during the same period.
Net income was $986,000 or $0.02 per diluted share, compared to a net income of $1.7 million or $0.03 per diluted share in the same quarter last year.
Total operating expenses were approximately $4.1 million, a 10% increase from the same quarter last year. This increase is primarily due to an increase in wages, professional fees related to acquisition activity, and certifications and development of the PF2200 product.
Compared with the same quarter last year, operating expenses for G&A increased 6%, R&D increased 62% and depreciation increased 14%.
Gross profit was $5.2 million or 51.2% of total revenues which was down from 52.1% in the same quarter last year. The fluctuation in gross profit margin was due to product mix changes, direct labor costs, and adjustments in our inventory and warranty reserves.
Cash and liquid investments totaled just over $23 million at June 30, 2019 compared to $22.6 million at the end of 2018, and the Company continues to operate debt-free.
Within the Quarter the Company closed on an agreement to acquire Millstream Energy Products for total compensation of roughly $2.5 million US. Subsequent to the end of the second quarter, the Company closed on a Member Interest Purchase Agreement with Midflow Services, LLC, on August 5, 2019, for total compensation of roughly $2.4 million cash and $1 million worth of the Company’s restricted stock.
The Company announced today that it will continue the stock repurchase program and its Board of Directors has allocated an additional $2 million towards the existing program, which will remain in effect until October 31, 2019.
Management Commentary
"When analyzing M&A opportunities, we are looking for companies that provide complementary products, improve product development, broaden industry expertise, expand market share, and leverage our strong customer relationships and sales network. We are very excited about both of our recent acquisitions of Millstream and Midflow and believe they fit within our long-term strategy,” said Brenton Hatch, President and CEO of Profire Energy. "We anticipated the current market volatility in 2019 and believe our investment strategies, including acquisitions and product development are crucial to Profire’s growth in the coming years. We will continue to thoughtfully analyze additional strategic opportunities while we focus on the strategic integration of Midflow and Millstream to ensure these acquisitions are value accretive."
"Total cash spend for both the Millstream and Midflow acquisitions was just under $5 million US with expected additional annual revenue of $3.5 to $5.5 million in the coming years. Profire still maintains sufficient cash on hand to continue to react quickly to strategic opportunities,” stated Ryan Oviatt, CFO of Profire. "We are also well-positioned to allocate some of our cash on hand to continue the stock repurchase program. This demonstrates our ongoing commitment to provide value to our shareholders.”
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, August 8, 2019 | |
| 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=135689. 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 22, 2019. Toll-free replay number: 1-844-512-2921 | |
| International replay number: 1-412-317-6671 | |
| Replay Pin Number: 13693316 |
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; Millersburg, Ohio; 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’s expected growth, the Company’s expected revenues from recent acquisitions, the Company’s plans to make internal and external investments, 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 | ||||||||
| June 30, 2019 | December 31, 2018 | |||||||
| (Unaudited) | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 11,487,778 | $ | 10,101,932 | ||||
| Short-term investments | 726,782 | 961,256 | ||||||
| Short-term investments - other | 2,400,000 | 3,596,484 | ||||||
| Accounts receivable, net | 6,395,332 | 6,885,296 | ||||||
| Inventories, net | 9,071,479 | 9,659,571 | ||||||
| Prepaid expenses & other current assets | 512,292 | 473,726 | ||||||
| Income tax receivable | 473,093 | 173,124 | ||||||
| Total Current Assets | 31,066,756 | 31,851,389 | ||||||
| LONG-TERM ASSETS | ||||||||
| Net deferred tax asset | — | 85,092 | ||||||
| Long-term investments | 8,433,185 | 7,978,380 | ||||||
| Financing right-of-use asset | 149,484 | — | ||||||
| Property and equipment, net | 9,108,234 | 8,020,462 | ||||||
| Goodwill | 997,701 | 997,701 | ||||||
| Intangible assets, net | 1,699,312 | 429,956 | ||||||
| Total Long-Term Assets | 20,387,916 | 17,511,591 | ||||||
| TOTAL ASSETS | $ | 51,454,672 | $ | 49,362,980 | ||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 1,415,824 | $ | 1,177,985 | ||||
| Accrued vacation | 373,995 | 311,435 | ||||||
| Accrued liabilities | 1,679,279 | 1,445,510 | ||||||
| Current financing lease liability | 76,559 | — | ||||||
| Income taxes payable | 199,792 | 1,172,191 | ||||||
| Total Current Liabilities | 3,745,449 | 4,107,121 | ||||||
| LONG-TERM LIABILITIES | ||||||||
| Net deferred income tax liability | 120,222 | — | ||||||
| Long-term financing lease liability | 76,382 | — | ||||||
| TOTAL LIABILITIES | 3,942,053 | 4,107,121 | ||||||
| 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: 50,016,979 issued and 47,466,192 outstanding at June 30, 2019, and 49,707,805 issued and 47,932,305 outstanding at December 31, 2018 | 50,017 | 49,708 | ||||||
| Treasury stock, at cost | (3,943,063 | ) | (2,609,485 | ) | ||||
| Additional paid-in capital | 28,593,552 | 28,027,742 | ||||||
| Accumulated other comprehensive loss | (2,525,586 | ) | (2,895,683 | ) | ||||
| Retained earnings | 25,337,699 | 22,683,577 | ||||||
| TOTAL STOCKHOLDERS' EQUITY | 47,512,619 | 45,255,859 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 51,454,672 | $ | 49,362,980 | ||||
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 | |||||||||||||||
| (Unaudited) | |||||||||||||||
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| REVENUES | |||||||||||||||
| Sales of goods, net | $ | 9,559,255 | $ | 10,724,409 | $ | 19,757,890 | $ | 22,179,024 | |||||||
| Sales of services, net | 564,776 | 615,352 | 1,199,199 | 1,330,454 | |||||||||||
| Total Revenues | 10,124,031 | 11,339,761 | 20,957,089 | 23,509,478 | |||||||||||
| COST OF SALES | |||||||||||||||
| Cost of goods sold-product | 4,568,666 | 4,959,539 | 9,139,654 | 10,517,249 | |||||||||||
| Cost of goods sold-services | 368,327 | 471,555 | 865,525 | 953,422 | |||||||||||
| Total Cost of Goods Sold | 4,936,993 | 5,431,094 | 10,005,179 | 11,470,671 | |||||||||||
| GROSS PROFIT | 5,187,038 | 5,908,667 | 10,951,910 | 12,038,807 | |||||||||||
| OPERATING EXPENSES | |||||||||||||||
| General and administrative expenses | 3,566,698 | 3,364,826 | 6,728,228 | 6,706,726 | |||||||||||
| Research and development | 512,871 | 317,002 | 861,929 | 720,221 | |||||||||||
| Depreciation and amortization expense | 110,910 | 129,070 | 227,133 | 257,787 | |||||||||||
| Total Operating Expenses | 4,190,479 | 3,810,898 | 7,817,290 | 7,684,734 | |||||||||||
| INCOME FROM OPERATIONS | 996,559 | 2,097,769 | 3,134,620 | 4,354,073 | |||||||||||
| OTHER INCOME (EXPENSE) | |||||||||||||||
| Gain on sale of fixed assets | 21,410 | 21,254 | 38,340 | 86,085 | |||||||||||
| Other expense | (413 | ) | (4,164 | ) | (964 | ) | (5,956 | ) | |||||||
| Interest income | 85,887 | 174,771 | 177,590 | 225,479 | |||||||||||
| Total Other Income | 106,884 | 191,861 | 214,966 | 305,608 | |||||||||||
| INCOME BEFORE INCOME TAXES | 1,103,443 | 2,289,630 | 3,349,586 | 4,659,681 | |||||||||||
| INCOME TAX EXPENSE | 117,939 | 575,363 | 695,464 | 1,069,183 | |||||||||||
| NET INCOME | $ | 985,504 | $ | 1,714,267 | $ | 2,654,122 | $ | 3,590,498 | |||||||
| OTHER COMPREHENSIVE INCOME (LOSS) | |||||||||||||||
| Foreign currency translation gain (loss) | $ | 102,435 | $ | (427,307 | ) | $ | 251,850 | $ | (394,072 | ) | |||||
| Unrealized gains (losses) on investments | 49,495 | 9,226 | 118,247 | (24,009 | ) | ||||||||||
| Total Other Comprehensive Income (Loss) | 151,930 | (418,081 | ) | 370,097 | (418,081 | ) | |||||||||
| COMPREHENSIVE INCOME | $ | 1,137,434 | $ | 1,296,186 | $ | 3,024,219 | $ | 3,172,417 | |||||||
| BASIC EARNINGS PER SHARE | $ | 0.02 | $ | 0.04 | $ | 0.06 | $ | 0.07 | |||||||
| FULLY DILUTED EARNINGS PER SHARE | $ | 0.02 | $ | 0.03 | $ | 0.06 | $ | 0.07 | |||||||
| BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING | 47,348,137 | 48,266,199 | 47,392,534 | 48,467,136 | |||||||||||
| FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING | 48,124,208 | 49,095,575 | 48,192,849 | 49,237,938 | |||||||||||
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, | |||||||
| 2019 | 2018 | ||||||
| OPERATING ACTIVITIES | |||||||
| Net income | $ | 2,654,122 | $ | 3,590,498 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization expense | 483,063 | 442,959 | |||||
| Gain on sale of fixed assets | (38,340 | ) | (76,703 | ) | |||
| Bad debt expense | 229,792 | 141,348 | |||||
| Stock awards issued for services | 749,547 | 861,189 | |||||
| Changes in operating assets and liabilities: | |||||||
| Changes in accounts receivable | 605,009 | 548,419 | |||||
| Changes in income taxes receivable/payable | (1,261,267 | ) | (790,946 | ) | |||
| Changes in inventories | 1,831,865 | (2,074,974 | ) | ||||
| Changes in prepaid expenses | (35,637 | ) | 114,907 | ||||
| Changes in deferred tax asset/liability | 205,314 | 91,890 | |||||
| Changes in accounts payable and accrued liabilities | (115,813 | ) | 274,744 | ||||
| Net Cash Provided by Operating Activities | 5,307,655 | 3,123,331 | |||||
| INVESTING ACTIVITIES | |||||||
| Proceeds from sale of equipment | 39,810 | 159,449 | |||||
| Sale of investments | 1,109,297 | 368,379 | |||||
| Purchase of fixed assets | (1,429,735 | ) | (1,184,126 | ) | |||
| Payments for asset acquisition | (2,088,814 | ) | — | ||||
| Net Cash Used in Investing Activities | (2,369,442 | ) | (656,298 | ) | |||
| FINANCING ACTIVITIES | |||||||
| Value of equity awards surrendered by employees for tax liability | (184,433 | ) | (736,160 | ) | |||
| Cash received in exercise of stock options | — | 174,002 | |||||
| Purchase of Treasury stock | (1,333,578 | ) | (4,000,000 | ) | |||
| Principal paid towards lease liability | (32,185 | ) | — | ||||
| Net Cash Used in Financing Activities | (1,550,196 | ) | (4,562,158 | ) | |||
| Effect of exchange rate changes on cash | (2,171 | ) | (51,997 | ) | |||
| NET INCREASE (DECREASE) IN CASH | 1,385,846 | (2,147,122 | ) | ||||
| CASH AT BEGINNING OF PERIOD | 10,101,932 | 11,445,799 | |||||
| CASH AT END OF PERIOD | $ | 11,487,778 | $ | 9,298,677 | |||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||||
| CASH PAID FOR: | |||||||
| Interest | $ | 2,832 | $ | — | |||
| Income taxes | $ | 1,793,281 | $ | 1,691,397 | |||
| NON-CASH FINANCING AND INVESTING ACTIVITIES: | |||||||
| Acquisition of assets (Preliminary estimate) | $ | 237,032 | $ | — | |||
These financial statements should be read in conjunction with the Form 10-Q and accompanying footnotes