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| 8-K - 8-K - PROFIRE ENERGY INC | a2020q18-kfinancialres.htm |
Profire Energy Reports Financial Results for First Quarter 2020
LINDON, Utah May 6, 2020 - 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 first quarter ending March 31, 2020. A conference call will be held on Thursday, May 7, 2020 at 1:00 p.m. ET to discuss the results.
First Quarter Summary
•Recognized revenue of $7.4 million
•Realized gross profit of $3.2 million or 42.5% of total revenues
•Net loss of $365,000 or ($0.01) per share
•Cash and liquid investments of $17.9 million and remained debt-free
“Our first quarter results reflect the early impact of the unprecedented combination of a global pandemic, the economic slowdown and reduced demand corresponding to the virtual shutdown of multiple countries, and a price war within the oil and gas industry,” said Brenton Hatch, Chairman and CEO of Profire Energy. “Our deliberate approach to maintain a debt-free balance sheet is proving very prudent given current macroeconomic events, and believe we are well-positioned to weather the near and medium-term impacts of COVID-19 and a return to more favorable oil and gas prices.”
First Quarter 2020 Financial Results
Total revenues for the period equaled $7.4 million, a 31% decrease over the same period a year ago. This decrease was primarily driven by negative macro industry trends, including the impact on commercial and consumer demand related to COVID-19, as well as a 17% drop in the average oil price during the same period, due in part to a significant price war between Russia and OPEC in the final weeks of the quarter.
Gross profit was $3.2 million, which was down 45% from the same quarter last year. Gross margin was 42.5% of revenues, compared to 53.2% of revenues in the prior-year quarter. The gross margin decrease was driven by the change in product mix and related reserves, and reduced fixed cost absorption.
Total operating expenses were approximately $3.8 million, a 6% increase from the same quarter last year. This increase is consistent with the strategic investment plan implemented last year, which included the completion of two acquisitions last year, and ongoing research and development.
Compared with the same quarter last year, operating expenses for G&A increased 4%, R&D increased 17% and depreciation increased by 27%.
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Net loss was $365,264 or ($0.01) per share, compared to net income of $1.7 million or $0.03 per diluted share in the same quarter last year.
Cash and investments totaled $17.9 million at March 31, 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 $525,000, primarily related to work to complete the new facility in Canada which opened in early March 2020. Working capital as of March 31, 2020 was $22.7 million, compared to $22.9 million at the end of 2019.
Management Commentary
“In light of the current economic environment, we are reviewing our cost structure to determine necessary changes to improve profitability,” said Ryan Oviatt, CFO of Profire Energy. “We will also use the disruption across the industry to selectively evaluate potential business development opportunities that complement our strengths, similar to our acquisitions of Millstream and Midflow in the latter half of 2019.”
Conference Call
| Profire Energy Executives will host the call, followed by a question and answer period. | ||
| Date: Thursday, May 7, 2020 | ||
| Time: 1:00 p.m. ET (11:00 a.m. MT) | ||
| Toll-free dial-in number: 1-877-300-8521 | ||
| International dial-in number: 1-412-317-6026 | ||
The conference call will be webcast live and available for replay via this link:http://public.viavid.com/index.php?id=139637. 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 May 21, 2020.Toll-free replay number: 1-844-512-2921 | ||
| International replay number: 1-412-317-6671 | ||
| Replay Pin Number: 10143655 | ||
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 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 ability to financially weather economic impacts caused by COVID-19, the Company holding a conference call on May 7, 2020, evaluating acquisition targets, and, 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
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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
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| PROFIRE ENERGY, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||||||||||||||||
| As of | ||||||||||||||||||||||||||
| March 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||
| ASSETS | (Unaudited) | |||||||||||||||||||||||||
| CURRENT ASSETS | ||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 7,230,330 | $ | 7,358,856 | ||||||||||||||||||||||
| Short-term investments | 1,727,483 | 1,222,053 | ||||||||||||||||||||||||
| Short-term investments - other | 2,400,000 | 2,600,000 | ||||||||||||||||||||||||
| Accounts receivable, net | 4,410,935 | 5,597,701 | ||||||||||||||||||||||||
| Inventories, net | 8,815,111 | 9,571,807 | ||||||||||||||||||||||||
| Prepaid expenses and other current assets | 1,398,596 | 1,672,422 | ||||||||||||||||||||||||
| Income tax receivable | — | 77,385 | ||||||||||||||||||||||||
| Total Current Assets | 25,982,455 | 28,100,224 | ||||||||||||||||||||||||
| LONG-TERM ASSETS | ||||||||||||||||||||||||||
| Long-term investments | 6,552,150 | 7,399,963 | ||||||||||||||||||||||||
| Financing right-of-use asset | 88,035 | 107,991 | ||||||||||||||||||||||||
| Property and equipment, net | 11,913,754 | 12,071,019 | ||||||||||||||||||||||||
| Intangible assets, net | 1,938,919 | 1,989,782 | ||||||||||||||||||||||||
| Goodwill | 2,579,381 | 2,579,381 | ||||||||||||||||||||||||
| Total Long-Term Assets | 23,072,239 | 24,148,136 | ||||||||||||||||||||||||
| TOTAL ASSETS | $ | 49,054,694 | $ | 52,248,360 | ||||||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||||
| CURRENT LIABILITIES | ||||||||||||||||||||||||||
| Accounts payable | $ | 1,460,159 | $ | 2,633,520 | ||||||||||||||||||||||
| Accrued liabilities \ | 1,296,997 | 2,089,391 | ||||||||||||||||||||||||
| Current financing lease liability | 50,067 | 59,376 | ||||||||||||||||||||||||
| Income taxes payable | 439,592 | 403,092 | ||||||||||||||||||||||||
| Total Current Liabilities | 3,246,815 | 5,185,379 | ||||||||||||||||||||||||
| LONG-TERM LIABILITIES | ||||||||||||||||||||||||||
| Net deferred income tax liability | 324,711 | 439,275 | ||||||||||||||||||||||||
| Long-term financing lease liability | 40,761 | 52,120 | ||||||||||||||||||||||||
| TOTAL LIABILITIES | 3,612,287 | 5,676,774 | ||||||||||||||||||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||||||||||||||||
| 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: 51,098,039 issued and 47,685,661 outstanding at March 31, 2020, and 50,824,355 issued and 47,411,977 outstanding at December 31, 2019 | 51,098 | 50,824 | ||||||||||||||||||||||||
| Treasury stock, at cost | (5,353,019) | (5,353,019) | ||||||||||||||||||||||||
| Additional paid-in capital | 29,922,760 | 29,584,172 | ||||||||||||||||||||||||
| Accumulated other comprehensive loss | (3,518,237) | (2,415,460) | ||||||||||||||||||||||||
| Retained earnings | 24,339,805 | 24,705,069 | ||||||||||||||||||||||||
| TOTAL STOCKHOLDERS' EQUITY | 45,442,407 | 46,571,586 | ||||||||||||||||||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 49,054,694 | $ | 52,248,360 | ||||||||||||||||||||||
These financial statements should be read in conjunction with the Form 10-Q and accompanying footnotes.
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| PROFIRE ENERGY, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| For the Three Months Ended March 31, | |||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Sales of goods, net | $ | 6,860,958 | $ | 10,198,635 | |||||||||||||||||||
| Sales of services, net | 586,184 | 634,423 | |||||||||||||||||||||
| Total Revenues | 7,447,142 | 10,833,058 | |||||||||||||||||||||
| COST OF SALES | |||||||||||||||||||||||
| Cost of goods sold-product | 3,833,682 | 4,570,988 | |||||||||||||||||||||
| Cost of goods sold-services | 448,784 | 497,198 | |||||||||||||||||||||
| Total Cost of Goods Sold | 4,282,466 | 5,068,186 | |||||||||||||||||||||
| GROSS PROFIT | 3,164,676 | 5,764,872 | |||||||||||||||||||||
| OPERATING EXPENSES | |||||||||||||||||||||||
| General and administrative expenses | 3,272,538 | 3,161,530 | |||||||||||||||||||||
| Research and development | 409,726 | 349,058 | |||||||||||||||||||||
| Depreciation and amortization expense | 147,472 | 116,223 | |||||||||||||||||||||
| Total Operating Expenses | 3,829,736 | 3,626,811 | |||||||||||||||||||||
| INCOME (LOSS) FROM OPERATIONS | (665,060) | 2,138,061 | |||||||||||||||||||||
| OTHER INCOME (EXPENSE) | |||||||||||||||||||||||
| Gain on sale of fixed assets | — | 16,930 | |||||||||||||||||||||
| Other income (expense) | 347 | (551) | |||||||||||||||||||||
| Interest income | 74,393 | 91,703 | |||||||||||||||||||||
| Total Other Income | 74,740 | 108,082 | |||||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES | (590,320) | 2,246,143 | |||||||||||||||||||||
| INCOME TAX BENEFIT (EXPENSE) | 225,056 | (577,525) | |||||||||||||||||||||
| NET INCOME (LOSS) | $ | (365,264) | $ | 1,668,618 | |||||||||||||||||||
| OTHER COMPREHENSIVE INCOME (LOSS) | |||||||||||||||||||||||
| Foreign currency translation gain (loss) | $ | (945,423) | $ | 149,415 | |||||||||||||||||||
| Unrealized gains (losses) on investments | (157,354) | 68,752 | |||||||||||||||||||||
| Total Other Comprehensive Income (Loss) | (1,102,777) | 218,167 | |||||||||||||||||||||
| COMPREHENSIVE INCOME (LOSS) | $ | (1,468,041) | $ | 1,886,785 | |||||||||||||||||||
| BASIC EARNINGS (LOSS) PER SHARE | $ | (0.01) | $ | 0.04 | |||||||||||||||||||
| FULLY DILUTED EARNINGS (LOSS) PER SHARE | $ | (0.01) | $ | 0.03 | |||||||||||||||||||
| BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING | 47,492,441 | 47,437,424 | |||||||||||||||||||||
| FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING | 47,492,441 | 48,084,390 | |||||||||||||||||||||
These financial statements should be read in conjunction with the Form 10-Q and accompanying footnotes.
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| ROFIRE ENERGY, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| For the Three Months Ended March 31, | |||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||
| OPERATING ACTIVITIES | |||||||||||||||||||||||
| Net income (loss) | $ | (365,264) | $ | 1,668,618 | |||||||||||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||||||||||||||
| Depreciation and amortization expense | 259,801 | 249,889 | |||||||||||||||||||||
| Gain on sale of fixed assets | — | (16,930) | |||||||||||||||||||||
| Bad debt expense | 133,803 | 177,906 | |||||||||||||||||||||
| Stock awards issued for services | 66,348 | 66,714 | |||||||||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||||||||
| Accounts receivable | 1,314,939 | 654,710 | |||||||||||||||||||||
| Income taxes receivable/payable | 107,561 | (234,042) | |||||||||||||||||||||
| Inventories | 537,668 | 656,988 | |||||||||||||||||||||
| Prepaid expenses | 168,546 | (239,395) | |||||||||||||||||||||
| Deferred tax asset/liability | (114,564) | 123,764 | |||||||||||||||||||||
| Accounts payable and accrued liabilities | (1,837,760) | (499,721) | |||||||||||||||||||||
| Net Cash Provided by Operating Activities | 271,078 | 2,608,501 | |||||||||||||||||||||
| INVESTING ACTIVITIES | |||||||||||||||||||||||
| Proceeds from sale of equipment | — | 18,400 | |||||||||||||||||||||
| Sale of investments | 387,326 | 647,739 | |||||||||||||||||||||
| Purchase of fixed assets | (525,384) | (443,883) | |||||||||||||||||||||
| Net Cash Provided by (Used in) Investing Activities | (138,058) | 222,256 | |||||||||||||||||||||
| FINANCING ACTIVITIES | |||||||||||||||||||||||
| Value of equity awards surrendered by employees for tax liability | (148,879) | (143,022) | |||||||||||||||||||||
| Cash received in exercise of stock options | 2,020 | — | |||||||||||||||||||||
| Purchase of treasury stock | — | (1,333,578) | |||||||||||||||||||||
| Principal paid towards lease liability | (19,089) | (15,718) | |||||||||||||||||||||
| Net Cash Used in Financing Activities | (165,948) | (1,492,318) | |||||||||||||||||||||
| Effect of exchange rate changes on cash | (95,598) | 16,507 | |||||||||||||||||||||
| NET CHANGE IN CASH | (128,526) | 1,354,946 | |||||||||||||||||||||
| CASH AT BEGINNING OF PERIOD | 7,358,856 | 10,101,932 | |||||||||||||||||||||
| CASH AT END OF PERIOD | $ | 7,230,330 | $ | 11,456,878 | |||||||||||||||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | |||||||||||||||||||||||
| CASH PAID FOR: | |||||||||||||||||||||||
| Interest | $ | 872 | $ | 1,411 | |||||||||||||||||||
| Income taxes | $ | — | $ | 711,524 | |||||||||||||||||||
| 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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