Profire Energy Reports Financial Results for Third Quarter 2024

Rhea-AI Summary

Profire Energy (NASDAQ: PFIE) reported its highest quarterly revenue of $17.2 million for Q3 2024, up from $14.9 million in Q3 2023. The company achieved a gross profit of $8.3 million with a 48.2% margin, and net income of $2.2 million ($0.04 per diluted share). EBITDA reached $3.1 million, with cash and investments totaling $16.9 million and no debt. The company has agreed to be acquired by CECO Environmental for $2.55 per share, with the transaction expected to close in Q1 2025.

Positive

• Record quarterly revenue of $17.2 million, up 15.4% year-over-year
• Gross profit increased to $8.3 million from $7.5 million year-over-year
• Strong cash position of $16.9 million with zero debt
• Pending acquisition by CECO Environmental at $2.55 per share

Negative

• Gross margin declined to 48.2% from 50.0% year-over-year
• Operating expenses increased to $5.5 million from $4.9 million year-over-year
• R&D expenses increased by 85% compared to previous year

Insights

Financial Analyst

A strong quarter with record-breaking revenue of $17.2 million, representing a 15.4% year-over-year increase. The company maintained healthy profitability with $2.2 million in net income, though margins showed slight compression due to inflationary pressures and lower-margin diversification projects.

The balance sheet remains robust with $16.9 million in cash and zero debt, positioning PFIE well for the pending acquisition by CECO Environmental at $2.55 per share. Notable is the 85% increase in R&D spending, indicating strong investment in product development despite the pending transaction.

While gross margins declined to 48.2% from 50% year-over-year, the company's strategic expansion into non-oil and gas projects demonstrates successful diversification efforts, albeit at lower margins. The increased operating expenses reflect necessary investments in growth and inflation impacts.

Company Reports Highest Quarterly Revenue in Company History

LINDON, Utah, Nov. 06, 2024 (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 third quarter ending September 30, 2024.

Third Quarter Summary (comparisons to prior-year quarter)

• Revenue of $17.2 million, compared to $14.9 million
• Gross profit of $8.3 million, compared to $7.5 million
• Gross margin of 48.2%, compared to 50.0%
• Net income of $2.2 million, or $0.04 per diluted share, versus $2.0 million and $0.04
• Generated EBITDA of $3.1 million, versus $2.9 million
• Cash and investments of $16.9 million with no debt

Pending Acquisition and Conference Call Update

On October 29, 2024, Profire Energy announced it agreed to be acquired by CECO Environmental in an all cash transaction for $2.55 a share. The transaction is anticipated to close in Q1 2025.

As a result of the pending transaction, and as is common during the pendency of such transactions, Profire will not hold an earnings conference call in connection with its third quarter financial results.

Third Quarter 2024 Financial Results

Total revenues for the period equaled $17.2 million, compared to $15.2 million in the second quarter of 2024 and $14.9 million in the prior-year quarter. The sequential and year-over-year increase was partially driven by strong activity in our diversification business.

Gross profit was $8.3 million, compared to $7.9 million in the second quarter and $7.5 million in the third quarter of 2023. Gross margin was 48% of revenues, compared to 52% of revenues in the prior quarter and 50% of revenues in the prior-year quarter. The sequential and year-over-year decrease is partially related to inflationary pressures across the business as well as the increase in diversification business, driven by critical energy infrastructure and non-oil and gas projects, which can have lower overall project margins.

Total operating expenses were $5.5 million, compared to $5.3 million in the second quarter of 2024 and $4.9 million in the year-ago quarter. The sequential increase is primarily due to ongoing inflation pressure on our business as well as increased headcount to support strategic growth and increased business activity.

Compared with the same quarter last year, operating expenses for G&A increased 10%, R&D increased 85% and depreciation decreased by 7%. The increase in R&D has been driven by inflation, headcount increases and increased new product development and certification activities.

Net income was $2.2 million, or $0.04 per diluted share, compared to net income of $2.1 million or $0.04 per diluted share in the second quarter of 2024 and $2.0 million or $0.04 per diluted share in the same quarter last year.

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, in recent years, we have completed many installations of our burner-management solutions in other industries that we believe will be applicable as we expand our addressable market over time. 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; Midland-Odessa, 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 the Company’s expected growth and the Company’s expected revenues from diversification opportunities. 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 & CFO
(801) 796-5127

Three Part Advisors
Steven Hooser, Partner
John Beisler, Managing Director
(214) 872-2710

About Non-GAAP Financial Measures 

To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measure of earnings before interest, taxes, depreciation and amortization (“EBITDA”). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. 

We use this non-GAAP financial measure for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that this non-GAAP financial measure provides meaningful supplemental information regarding our performance. We believe that both management and investors benefit from referring to this non-GAAP financial measure in assessing our performance and when planning, forecasting, and analyzing future periods. We believe this non-GAAP financial measure is useful to investors both because it allows for greater transparency with respect to key metrics used by management in its financial and operational decision making.

The Following is a tabular presentation of EBITDA, including a reconciliation to net income which the Company believes to be the most directly comparable US GAAP financial measure.

	9/30/2024		9/30/2023
EBITDA Calculation:	3 months		3 months
Net Income	$2,182,637		$2,039,390
add back net income tax expense	$752,400		$611,008
add back net interest expense	$(90,941)		$(69,727)
add back depreciation and amortization	$263,751		$274,208
EBITDA calculated	$3,107,847		$2,854,879

PROFIRE ENERGY, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
		As of
		September 30, 2024				December 31, 2023
ASSETS		(Unaudited)
CURRENT ASSETS
Cash and cash equivalents		$	7,963,892			$	10,767,519
Short-term investments			2,338,259				2,799,539
Accounts receivable, net			16,431,559				14,013,740
Inventories, net (note 3)			17,188,656				14,059,656
Prepaid expenses and other current assets (note 4)			3,379,650				2,832,262
Total Current Assets			47,302,016				44,472,716
LONG-TERM ASSETS
Net deferred tax asset			436,578				496,785
Long-term investments			6,584,919				6,425,582
Lease right-of-use asset (note 6)			369,549				432,907
Property and equipment, net			11,330,713				10,782,372
Intangible assets, net			998,736				1,104,102
Goodwill			2,579,381				2,579,381
Total Long-Term Assets			22,299,876				21,821,129
TOTAL ASSETS		$	69,601,892			$	66,293,845
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable		$	2,166,969			$	2,699,556
Accrued liabilities (note 5)			4,728,919				4,541,820
Current lease liability (note 6)			136,739				130,184
Income taxes payable			542,393				1,723,910
Total Current Liabilities			7,575,020				9,095,470
LONG-TERM LIABILITIES
Net deferred income tax liability			53,318				52,621
Long-term lease liability (note 6)			241,793				307,528
TOTAL LIABILITIES			7,870,131				9,455,619
STOCKHOLDERS' EQUITY (note 7)
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: 53,687,955 issued and 46,379,557 outstanding at September 30, 2024, and 53,047,231 issued and 46,803,868 outstanding at December 31, 2023			53,690				53,048
Treasury stock, at cost			(10,976,706	)			(9,324,272	)
Additional paid-in capital			33,675,391				32,751,749
Accumulated other comprehensive loss			(2,902,754	)			(2,844,702	)
Retained earnings			41,882,140				36,202,403
TOTAL STOCKHOLDERS' EQUITY			61,731,761				56,838,226
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	69,601,892			$	66,293,845
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 Income and Comprehensive Income
(Unaudited)
		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
			2024				2023				2024				2023
						(See Note 1)								(See Note 1)
REVENUES (note 8)
Sales of products, net		$	16,017,224			$	14,085,028			$	42,435,024			$	41,562,935
Sales of services, net			1,180,729				858,871				3,564,582				2,624,514
Total Revenues			17,197,953				14,943,899				45,999,606				44,187,449
COST OF SALES
Cost of sales - products			7,881,956				6,666,949				20,418,350				19,157,973
Cost of sales - services			1,034,242				799,866				2,683,156				2,304,838
Total Cost of Sales			8,916,198				7,466,815				23,101,506				21,462,811
GROSS PROFIT			8,281,755				7,477,084				22,898,100				22,724,638
OPERATING EXPENSES
General and administrative			5,058,465				4,605,566				14,431,441				12,573,171
Research and development			337,597				182,253				952,666				649,506
Depreciation and amortization			135,541				145,662				435,209				428,644
Total Operating Expenses			5,531,603				4,933,481				15,819,316				13,651,321
INCOME FROM OPERATIONS			2,750,152				2,543,603				7,078,784				9,073,317
OTHER INCOME (EXPENSE)
Gain on sale of property and equipment			84,971				17,350				221,860				251,768
Other expense			8,973				19,718				(11,322	)			(26,704	)
Interest income			93,299				74,165				248,543				255,865
Interest expense			(2,358	)			(4,438	)			(7,960	)			(6,226	)
Total Other Income			184,885				106,795				451,121				474,703
INCOME BEFORE INCOME TAXES			2,935,037				2,650,398				7,529,905				9,548,020
INCOME TAX EXPENSE			(752,400	)			(611,008	)			(1,850,168	)			(2,061,851	)
NET INCOME		$	2,182,637			$	2,039,390			$	5,679,737			$	7,486,169
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation loss		$	139,211			$	(301,642	)		$	(231,674	)		$	(28,838	)
Unrealized gains (losses) on investments			107,924				(71,193	)			173,622				(25,322	)
Total Other Comprehensive Loss			247,135				(372,835	)			(58,052	)			(54,160	)
COMPREHENSIVE INCOME		$	2,429,772			$	1,666,555			$	5,621,685			$	7,432,009
BASIC EARNINGS PER SHARE		$	0.05			$	0.04			$	0.12			$	0.16
FULLY DILUTED EARNINGS PER SHARE		$	0.04			$	0.04			$	0.12			$	0.15
BASIC WEIGHTED AVG NUMBER OF SHARES OUTSTANDING			46,809,342				47,521,238				46,937,404				47,364,445
FULLY DILUTED WEIGHTED AVG NUMBER OF SHARES OUTSTANDING			48,739,900				49,504,024				48,867,962				49,314,304
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 Nine Months Ended September 30,
		2024				2023
OPERATING ACTIVITIES
Net income	$	5,679,737			$	7,486,169
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense		802,842				822,204
Gain on sale of property and equipment		(221,860	)			(251,768	)
Bad debt expense		209,177				420,883
Stock awards issued for services		815,295				878,392
Changes in operating assets and liabilities:
Accounts receivable		(2,353,006	)			(2,360,696	)
Income taxes receivable/payable		(1,178,904	)			464,256
Inventories		(3,167,889	)			(3,245,588	)
Prepaid expenses and other current assets		(583,976	)			(437,023	)
Deferred tax asset/liability		61,953				466,398
Accounts payable and accrued liabilities		(286,109	)			(1,574,995	)
Net Cash Provided by (Used in) Operating Activities		(222,740	)			2,668,232
INVESTING ACTIVITIES
Proceeds from sale of property and equipment		316,095				328,350
Sale (purchase) of investments		476,281				(383,520	)
Purchase of property and equipment		(1,403,525	)			(974,070	)
Net Cash Used in Investing Activities		(611,149	)			(1,029,240	)
FINANCING ACTIVITIES
Value of equity awards surrendered by employees for tax liability		(336,833	)			(502,307	)
Cash received in exercise of stock options		96,476				178,195
Purchase of treasury stock		(1,652,434	)			(339,313	)
Principal paid toward lease liability		(33,499	)			(26,617	)
Net Cash Used in Financing Activities		(1,926,290	)			(690,042	)
Effect of exchange rate changes on cash		(43,448	)			5,335
NET CHANGE IN CASH		(2,803,627	)			954,285
CASH AT BEGINNING OF PERIOD		10,767,519				7,384,578
CASH AT END OF PERIOD	$	7,963,892			$	8,338,863
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest	$	7,960			$	6,227
Income taxes	$	3,107,899			$	1,126,750
NON-CASH FINANCING AND INVESTING ACTIVITIES
Common stock issued in settlement of accrued bonuses	$	324,415			$	378,526
Common stock issued for stock options	$	120,860			$	—
These financial statements should be read in conjunction with the Form 10-Q and accompanying footnotes.

FAQ

What was Profire Energy's (PFIE) revenue in Q3 2024?

Profire Energy reported record quarterly revenue of $17.2 million in Q3 2024, compared to $14.9 million in Q3 2023.

What is the acquisition price for Profire Energy (PFIE) by CECO Environmental?

CECO Environmental agreed to acquire Profire Energy for $2.55 per share in an all-cash transaction, expected to close in Q1 2025.

What was Profire Energy's (PFIE) net income per share in Q3 2024?

Profire Energy reported net income of $0.04 per diluted share in Q3 2024, consistent with both Q2 2024 and Q3 2023.