Profire(PFIE) - 2024 Q2 - Quarterly Results

Profire Energy Q2 2024 Earnings Release Financial Highlights and Management Commentary Profire Energy achieved its second-highest quarterly revenue in Q2 2024, maintaining a strong, debt-free financial position and advancing diversification - Management emphasized the quarter's success, pointing to the second-highest quarterly revenue, progress in diversification, and momentum in the legacy business[1] - The company strengthened its balance sheet by increasing its cash balance and repurchasing shares, all while remaining debt-free[1] Q2 2024 Key Financial Metrics (vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Revenue | $15.2 million | $14.6 million | | Gross Profit | $7.9 million | $7.4 million | | Gross Margin | 51.8% | 50.9% | | Net Income | $2.1 million | $2.9 million | | Diluted EPS | $0.04 | $0.06 | | EBITDA | $3.0 million | $3.7 million | | Cash and Investments | $18.4 million | N/A | Detailed Financial Performance Analysis Q2 2024 revenue and gross profit increased, but net income declined year-over-year due to a non-recurring ERC benefit and higher operating expenses Revenue Q2 2024 revenue reached $15.2 million, growing sequentially and year-over-year, driven by order timing and diversification Revenue Comparison | Period | Revenue | | :--- | :--- | | Q2 2024 | $15.2 million | | Q1 2024 | $13.6 million | | Q2 2023 | $14.6 million | Gross Profit and Margin Q2 2024 gross profit reached $7.9 million with a 52% gross margin, improving due to a favorable product mix Gross Profit and Margin Comparison | Period | Gross Profit | Gross Margin | | :--- | :--- | :--- | | Q2 2024 | $7.9 million | 52% | | Q1 2024 | $6.8 million | 50% | | Q2 2023 | $7.4 million | 51% | Operating Expenses Q2 2024 operating expenses increased to $5.3 million, primarily due to the absence of a $762,000 non-recurring ERC benefit in Q2 2023, inflation, and higher headcount - The prior-year quarter included a non-recurring benefit of $762,000 from the employee retention tax credit (ERC), which makes the year-over-year comparison appear larger[3] - Year-over-year increases were noted in G&A (25%), R&D (56%), and depreciation (7%), with G&A driven by the ERC benefit absence and R&D by new product development[3] Net Income and EPS Q2 2024 net income was $2.1 million ($0.04 diluted EPS), decreasing from Q2 2023 due to the non-recurring ERC benefit Net Income and EPS Comparison | Period | Net Income | Diluted EPS | | :--- | :--- | :--- | | Q2 2024 | $2.1 million | $0.04 | | Q1 2024 | $1.4 million | $0.03 | | Q2 2023 | $2.9 million | $0.06 | Business Outlook and Strategy Management is optimistic for H2 2024 and beyond, driven by strong global energy demand and a successful diversification strategy, which accounted for 15% of Q2 revenue - Diversification efforts are a critical component of the growth strategy, representing 15% of total revenue for the quarter[4] - The company remains optimistic about its outlook for the second half of 2024, supported by strong global demand for energy from hydrocarbon production[4] Non-GAAP Financial Measures Profire Energy uses EBITDA, a non-GAAP measure, for internal analysis; Q2 2024 EBITDA was $2.96 million, down from $3.65 million in Q2 2023, with reconciliation provided EBITDA Reconciliation (in thousands) | Line Item | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Income | $2,062.7 | $2,857.2 | | Net Income Tax Expense | $704.6 | $634.0 | | Net Interest Expense | $(80.7) | $(122.8) | | Depreciation & Amortization | $271.4 | $286.0 | | EBITDA | $2,958.1 | $3,654.3 | Consolidated Financial Statements This section presents unaudited consolidated financial statements as of June 30, 2024, including Balance Sheets, Statements of Comprehensive Income, and Statements of Cash Flows Consolidated Balance Sheets As of June 30, 2024, Profire Energy reported $67.4 million in total assets, $6.9 million in total liabilities, and $60.5 million in stockholders' equity Key Balance Sheet Items (as of June 30, 2024) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $8.9 million | $10.8 million | | Total Current Assets | $45.8 million | $44.5 million | | Total Assets | $67.4 million | $66.3 million | | Total Liabilities | $6.9 million | $9.5 million | | Total Stockholders' Equity | $60.5 million | $56.8 million | Consolidated Statements of Comprehensive Income For Q2 2024, total revenues were $15.2 million and net income $2.1 million; six-month revenues $28.8 million with $3.5 million net income, slightly lower year-over-year Income Statement Summary (Three Months Ended June 30) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Total Revenues | $15,160,513 | $14,560,252 | | Gross Profit | $7,859,574 | $7,414,445 | | Income from Operations | $2,591,540 | $3,223,908 | | Net Income | $2,062,725 | $2,857,157 | | Diluted EPS | $0.04 | $0.06 | Consolidated Statements of Cash Flows For H1 2024, operating activities used $0.2 million cash, a shift from H1 2023, driven by inventory increases and accounts payable decreases; cash at period-end decreased to $8.9 million Cash Flow Summary (Six Months Ended June 30) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Operating | $(215,832) | $1,782,659 | | Net Cash from Investing | $(1,097,364) | $(703,333) | | Net Cash from Financing | $(494,148) | $(255,552) | | Net Change in Cash | $(1,846,787) | $861,514 | | Cash at End of Period | $8,920,732 | $8,246,092 | Conference Call Information Profire Energy will host a conference call on Thursday, August 8, 2024, at 8:30 a.m. ET to discuss Q2 2024 results, with participation details provided - Date: Thursday, August 8, 2024 Time: 8:30 a.m. ET (6:30 a.m. MT) Toll-free dial-in: 1-800-225-9448 Conference ID: PROFIRE Webcast: Available for live viewing and a one-year replay[5] About Profire Energy & Forward-Looking Statements Profire Energy is a technology company enhancing industrial combustion appliances, primarily in oil and gas, expanding into other sectors, and includes a cautionary note on forward-looking statements - The company specializes in burner and combustion management systems for industrial appliances, primarily serving the upstream, midstream, and downstream segments of the oil and gas industry in North America[5] - The release includes a safe harbor statement for forward-looking statements, cautioning that such statements are not guarantees of future performance and involve risks that could cause actual results to differ materially[6]