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| 8-K - PROFIRE ENERGY, INC. 8K 2014-08-14 - PROFIRE ENERGY INC | profire.htm |
PROFIRE ENERGY REPORTS RECORD FINANCIAL RESULTS FOR FISCAL FIRST QUARTER OF 2015
Fiscal First Quarter of 2015 Revenues up 83% to Record $13.1 Million, Driving Net Income of $0.05 per Share
LINDON, Utah, August 14, 2014 - Profire Energy, Inc. (NASDAQ: PFIE), a technology company which creates, installs and services burner management systems and other combustion technologies for the oil and gas industry, reported financial results for its fiscal first quarter ended June 30, 2014.
Fiscal Q1 2015 Highlights vs. Same Year-ago Quarter
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Total revenues increased 83% to record $13.1 million.
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Net income increased 38% to $2.2 million or $0.05 per share.
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Extended product line with launch of proprietary valve-actuator.
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Opened new service center in Victoria, Texas, and upgraded Pennsylvania satellite office to a service center.
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Began testing a service-based, recurring-revenue model.
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Expanded sales team, now totaling over 20.
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PFIE added to Russell 2000®, Russell 3000®, and Russell Microcap® Indices.
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Fiscal Q1 2015 Financial Results
Total revenues in the fiscal first quarter of 2015 increased 83% to a record $13.1 million from $7.2 million in the same year-ago quarter. The increase in revenues was primarily due to improved sales execution, and increased efficacy in a number of growing sales territories, including Texas, Colorado, and Pennsylvania. The increase is in part driven by leveraging new service personnel, as well as the expansion of existing sales and service territories.
Gross profit increased to $7.4 million or 57% of total revenues, compared to $4.2 million or 58% of total revenues in the year-ago quarter.
Total operating expenses increased to $4.0 million or 31% of total revenues from $1.8 million or 26% of total revenues in the same year-ago quarter. The increase in operating expenses was primarily due to expansion and opening of offices throughout the U.S., purchase of equipment for the Company’s expanding service team, and hiring of additional personnel, particularly in the Utah, Texas and Pennsylvania offices—ultimately to support long-term sales growth. The increase in total operating expenses was also driven by increased non-cash stock option expense, as well as increased research and development expense to support the introduction of the Company’s next generation burner management systems and other products.
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Net income increased 38% to $2.2 million or $0.05 per share, compared to net income of $1.6 million or $0.04 per share in the same year-ago quarter
Cash and cash equivalents totaled $4.5 million at June 30, 2014, as compared to $1.7 in the comparable prior-year period. Subsequent to the fiscal first quarter of 2015, the Company completed an equity raise for gross proceeds of $18.0 million.
Management Commentary
“Our record first quarter reflects the expansion of our sales and service teams in the U.S., along with a new sales office in Pennsylvania and service center in Texas,” said Brenton Hatch, Chief Executive Officer of Profire Energy. “Also during the quarter, we began testing a new service program designed to generate recurring revenue, and also expanded our product line with the launch of a proprietary valve-actuator.
“The test program intends to offer a compelling value to the oil and gas service industry by regularly deploying our service teams throughout the year to help ensure our customers’ burners are operating optimally when using our latest burner management technology. The program includes calculating customer-specific savings derived from the use of Profire’s products and services, to help illustrate Profire’s value to the customer. We are already beginning to experience increasing service revenues as a result of leveraging new service personnel and expansion of new service territories, such as in Utah, Texas, and Pennsylvania, and hope to couple that expanding team with a growing line of service-products in the coming months.”
Andrew Limpert, the Company’s Chief Financial Officer, spoke to the general success of BMS in the industry:
“In many markets we are continuing to see growing adoption of burner management systems, primarily driven by their unique capability to make oil and gas production safer, more efficient, and more compliant with changing industry regulations,” said Limpert. “While Canada has had BMS-related regulation for years, the U.S. is just beginning to catch up. In fact, we are experiencing strong growth and expansion in Colorado with the state’s recently passed mandate for the use of ‘auto igniters.’ With the industry growth in the U.S.—recently demonstrated by becoming not only the world’s leading producer of gas, but also the leading producer of oil—we are confident in our market opportunities in coming years.
“Our systems not only auto-ignite, but also manage oilfield flames, providing temperature regulation and remote-monitoring capabilities. We also provide other combustion-related solutions to address challenging industry problems, as demonstrated by the recent introduction of our flare-stack igniter. By offering a portfolio of related, complementary products—with an experienced, strong service team behind them—we can more comprehensively understand and meet the industry’s needs. Our investment in—and management for—long-term stakeholder value creation will continue to be our key focus as an industry leader.
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“As we look forward to the rest of the fiscal year, we plan to continue expanding our marketing, sales and service teams. The completed expansion of our Lindon, Utah warehouse in the fall will add increased efficiency and scalability to the delivery of our products. Supported by the growing industry demand for burner management systems, we expect these efforts to lead to another year of significant top- and bottom-line growth.”
Fiscal 2015 Outlook
As previously reported, Profire Energy currently expects fiscal 2015 total revenues to range between $46 million and $48 million, which represents an increase of 30% to 36% from the prior year. The Company also expects net income to range between $7 million and $9 million, which represents an increase of 25% to 61% from the prior year.
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 systems are increasingly becoming part of their solution. Profire Energy has offices in Lindon, Utah; Houston, Texas; Victoria, Texas; Oklahoma City, Oklahoma; Tioga, Pennsylvania; and Edmonton, Alberta, Canada.
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 its sales, marketing, and operational advancements/expansions, including, but not limited to, the continuation of increased sales efficacy or execution in any number of areas; the increased leveraging of personnel; the intention or success of the Company’s efforts to sustain long-term sales growth or the introduction of the Company’s next-generation of burner management systems and other products; the reflection of the first quarter on the expansion of the sales and/or service teams in the US, or the opening of any offices; the success of—or value provided by—the Company’s test program to generate recurring-revenues, and the intent to pursue, the features of, or efficacy of the test program; the Company’s hope to grow its line of service-products, or combine such with any other sales or service strategy; the adoption—or the Company’s assessment of such—of burner management systems throughout certain markets; the Company’s assessment of the regulations related to its industry or products; the relative position of the US in oil- or gas-production, or maintenance of the same; the Company’s plans to continue expanding its marketing, sales, and service teams; the expectation that the Company’s warehouse completion will add enhanced efficiency and scalability to the delivery of the Company’s products; or the Company’s expectation to realize another year of significant top- or bottom-line growth . 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 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.
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Contact:
Profire Energy, Inc.
Andrew Limpert, CFO
(801) 796-5127
Profire Energy, Inc.
Nathan McBride, VP Strategy & Finance
(801) 796-5127
Liolios Group, Inc.
Ron Both, Senior Managing Director
(949) 574-3860
PFIE@liolios.com
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PROFIRE ENERGY, INC. AND SUBSIDIARY
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Condensed Consolidated Balance Sheets
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June 30,
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March 31,
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2014
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2014
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| ASSETS |
(Unaudited)
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CURRENT ASSETS
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Cash and cash equivalents
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$ | 4,570,088 | $ | 4,456,674 | ||||
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Accounts receivable, net
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12,036,286 | 8,873,471 | ||||||
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Inventories
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6,860,755 | 6,579,858 | ||||||
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Deferred tax asset
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500,186 | 420,978 | ||||||
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Prepaid expenses
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55,804 | 32,263 | ||||||
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Total Current Assets
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24,023,119 | 20,363,244 | ||||||
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PROPERTY AND EQUIPMENT, net
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5,398,904 | 4,385,881 | ||||||
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TOTAL ASSETS
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$ | 29,422,023 | $ | 24,749,125 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
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Accounts payable
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$ | 1,890,021 | $ | 1,461,138 | ||||
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Accrued liabilities
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212,066 | 193,727 | ||||||
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Deferred income tax liability
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99,107 | 107,857 | ||||||
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Income taxes payable
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2,892,183 | 1,605,133 | ||||||
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Total Current Liabilities
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5,093,377 | 3,367,855 | ||||||
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TOTAL LIABILITIES
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5,093,377 | 3,367,855 | ||||||
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STOCKHOLDERS' EQUITY
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Preferred shares: $0.001 par value, 10,000,000 shares authorized: no shares issued and outstanding
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- | - | ||||||
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Common shares: $0.001 par value, 100,000,000 shares authorized: 48,024,543 and 47,836,543 shares issued and outstanding, respectively
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48,024 | 47,836 | ||||||
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Additional paid-in capital
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6,927,026 | 6,496,980 | ||||||
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Accumulated other comprehensive income
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65,385 | (231,051 | ) | |||||
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Retained earnings
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17,288,211 | 15,067,505 | ||||||
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Total Stockholders' Equity
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24,328,646 | 21,381,270 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 29,422,023 | $ | 24,749,125 | ||||
The accompanying notes are a integral part of these condensed consolidated financials statements.
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PROFIRE ENERGY, INC. AND SUBSIDIARY
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Condensed Consolidated Statements of Operations and Other Comprehensive Income
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(Unaudited)
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For the Three Months Ended
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June 30,
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| 2014 | 2013 | |||||||
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REVENUES
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Sales of goods, net
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$ | 12,316,512 | $ | 6,838,961 | ||||
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Sales of services, net
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828,322 | 342,619 | ||||||
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Total Revenues
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13,144,834 | 7,181,580 | ||||||
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COST OF SALES
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Cost of goods sold-product
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5,067,627 | 2,724,480 | ||||||
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Cost of goods sold-services
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640,107 | 268,197 | ||||||
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Total Cost of Goods Sold
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5,707,734 | 2,992,677 | ||||||
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GROSS PROFIT
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7,437,100 | 4,188,903 | ||||||
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OPERATING EXPENSES
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General and administrative expenses
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2,409,069 | 839,123 | ||||||
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Research and development
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271,227 | 95,930 | ||||||
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Payroll expenses
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1,265,699 | 835,076 | ||||||
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Depreciation expense
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124,715 | 61,328 | ||||||
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Total Operating Expenses
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4,070,710 | 1,831,457 | ||||||
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INCOME FROM OPERATIONS
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3,366,390 | 2,357,446 | ||||||
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OTHER INCOME (EXPENSE)
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Interest expense
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- | (10,467 | ) | |||||
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Rental income
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3,121 | 615 | ||||||
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Interest income
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237 | 801 | ||||||
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Total Other Income (Expense)
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3,358 | (9,051 | ) | |||||
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NET INCOME BEFORE INCOME TAXES
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3,369,748 | 2,348,395 | ||||||
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INCOME TAX EXPENSE
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1,149,042 | 734,411 | ||||||
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NET INCOME
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$ | 2,220,706 | $ | 1,613,984 | ||||
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FOREIGN CURRENCY TRANSLATION GAIN (LOSS)
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$ | 296,436 | $ | (110,033 | ) | |||
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TOTAL COMPREHENSIVE INCOME
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$ | 2,517,142 | $ | 1,503,951 | ||||
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BASIC EARNINGS PER SHARE
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$ | 0.05 | $ | 0.04 | ||||
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FULLY DILUTED EARNINGS PER SHARE
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$ | 0.05 | $ | 0.04 | ||||
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BASIC WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
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47,922,059 | 45,250,000 | ||||||
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FULLY DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
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48,579,418 | 45,727,737 | ||||||
The accompanying notes are a integral part of these condensed consolidated financials statements.
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PROFIRE ENERGY, INC. AND SUBSIDIARY
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Condensed Consolidated Statements of Cash Flows
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(unaudited)
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For the Three Months Ended
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June 30,
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| 2014 | 2013 | |||||||
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OPERATING ACTIVITIES
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Net Income
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$ | 2,220,706 | $ | 1,613,984 | ||||
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Adjustments to reconcile net income to 0net cash provided by operating activities:
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Depreciation expense
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182,392 | 81,771 | ||||||
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Stock options issued for services
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351,364 | 63,427 | ||||||
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Changes in operating assets and liabilities:
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Changes in accounts receivable
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(3,071,142 | ) | (170,636 | ) | ||||
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Changes in inventories
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(187,668 | ) | (1,110,448 | ) | ||||
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Changes in prepaid expenses
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(23,461 | ) | (27,070 | ) | ||||
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Changes in deferred tax asset
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(79,208 | ) | - | |||||
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Changes in accounts payable and accrued liabilities
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428,360 | (104,699 | ) | |||||
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Changes in income taxes payable
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1,246,558 | 612,273 | ||||||
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Net Cash Provided by Operating Activities
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1,067,901 | 958,602 | ||||||
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INVESTING ACTIVITIES
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Purchase of fixed assets
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(1,147,274 | ) | (33,150 | ) | ||||
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Net Cash Used in Investing Activities
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(1,147,274 | ) | (33,150 | ) | ||||
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FINANCING ACTIVITIES
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Stock issued in exercise of stock options
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78,870 | - | ||||||
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Net Cash Provided by Financing Activities
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78,870 | - | ||||||
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Effect of exchange rate changes on cash
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113,917 | 56,929 | ||||||
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NET INCREASE IN CASH
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113,414 | 982,381 | ||||||
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CASH AT BEGINNING OF PERIOD
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4,456,674 | 808,772 | ||||||
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CASH AT END OF PERIOD
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$ | 4,570,088 | $ | 1,791,153 | ||||
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SUPPLEMENTAL DISCLOSURES OF
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CASH FLOW INFORMATION
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CASH PAID FOR:
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Interest
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$ | - | $ | 10,467 | ||||
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Income taxes
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$ | (138,008 | ) | $ | 114,762 | |||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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