Profire(PFIE) - 2024 Q3 - Quarterly Results

Q3 2024 Financial Results Overview Profire Energy achieved record Q3 2024 revenue and maintained a strong balance sheet, while also announcing its pending acquisition by CECO Environmental Q3 2024 Financial Highlights Profire Energy reported its highest quarterly revenue in company history at $17.2 million for Q3 2024, an increase from $14.9 million in the prior-year quarter, with modest year-over-year growth in net income and EBITDA, and a strong balance sheet with $16.9 million in cash and investments and no debt Q3 2024 Key Financial Metrics (vs. Q3 2023) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Revenue | $17.2 million | $14.9 million | | Gross Profit | $8.3 million | $7.5 million | | Gross Margin | 48.2% | 50.0% | | Net Income | $2.2 million | $2.0 million | | Diluted EPS | $0.04 | $0.04 | | EBITDA | $3.1 million | $2.9 million | | Cash and Investments | $16.9 million | N/A | | Debt | None | N/A | Pending Acquisition by CECO Environmental Profire Energy announced its agreement to be acquired by CECO Environmental in an all-cash transaction, leading to the cancellation of its Q3 2024 earnings conference call - Profire Energy has agreed to be acquired by CECO Environmental for $2.55 per share in an all-cash deal[2] - The transaction is anticipated to close in Q1 2025[2] - Due to the pending acquisition, the company has canceled its Q3 earnings conference call[2] Financial Performance Analysis The company achieved record revenues driven by diversification, though gross margins declined due to project mix and inflation, while operating expenses rose and EBITDA increased Revenue Analysis Total revenues for Q3 2024 reached a record $17.2 million, up from $15.2 million in Q2 2024 and $14.9 million in Q3 2023, primarily driven by strong performance in the company's diversification business segment Revenue Performance | Period | Revenue | | :--- | :--- | | Q3 2024 | $17.2 million | | Q2 2024 | $15.2 million | | Q3 2023 | $14.9 million | - The sequential and year-over-year revenue increase was partially driven by strong activity in the diversification business[3] Profitability Analysis Gross margin decreased to 48% in Q3 2024 from 50% in the prior-year quarter, impacted by inflation and a higher mix of lower-margin diversification projects, while operating expenses rose by 12% year-over-year to $5.5 million, driven by a significant 85% increase in R&D spending, general inflation, and higher headcount, despite which net income saw a slight increase to $2.2 million Gross Profit and Margin Comparison | Period | Gross Profit | Gross Margin | | :--- | :--- | :--- | | Q3 2024 | $8.3 million | 48% | | Q2 2024 | $7.9 million | 52% | | Q3 2023 | $7.5 million | 50% | - The decline in gross margin was attributed to inflationary pressures and an increased mix of lower-margin projects in critical energy infrastructure and non-oil and gas sectors[4] - Total operating expenses increased to $5.5 million, up from $4.9 million YoY, due to inflation and increased headcount to support growth[5] - Compared to Q3 2023, R&D expenses increased by 85% due to inflation, headcount increases, and new product development activities[6] Net Income Comparison | Period | Net Income | Diluted EPS | | :--- | :--- | :--- | | Q3 2024 | $2.2 million | $0.04 | | Q2 2024 | $2.1 million | $0.04 | | Q3 2023 | $2.0 million | $0.04 | Non-GAAP Measures (EBITDA) The company uses EBITDA, a non-GAAP financial measure, for internal financial and operational decision-making and to evaluate period-to-period performance, reporting $3.1 million for Q3 2024, up from $2.9 million in the same period last year EBITDA Reconciliation (Three Months Ended Sep 30) | Metric | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net Income | 2,182,637 | 2,039,390 | | Net Income Tax Expense | 752,400 | 611,008 | | Net Interest (Income) Expense | (90,941) | (69,727) | | Depreciation and Amortization | 263,751 | 274,208 | | EBITDA | 3,107,847 | 2,854,879 | Financial Statements The balance sheet strengthened with increased assets and equity, while the income statement showed Q3 growth but a 9-month net income decline, and cash flows shifted to a net outflow from operations Consolidated Balance Sheets As of September 30, 2024, Profire Energy's balance sheet shows total assets of $69.6 million, an increase from $66.3 million at the end of 2023, driven by increases in accounts receivable and inventories, while total liabilities decreased to $7.9 million from $9.5 million, contributing to a stronger total stockholders' equity of $61.7 million Key Balance Sheet Items | Account | Sep 30, 2024 ($) | Dec 31, 2023 ($) | | :--- | :--- | :--- | | Total Current Assets | 47,302,016 | 44,472,716 | | Cash and cash equivalents | 7,963,892 | 10,767,519 | | Total Assets | 69,601,892 | 66,293,845 | | Total Current Liabilities | 7,575,020 | 9,095,470 | | Total Liabilities | 7,870,131 | 9,455,619 | | Total Stockholders' Equity | 61,731,761 | 56,838,226 | Consolidated Statements of Comprehensive Income For the third quarter of 2024, the company generated total revenues of $17.2 million and a net income of $2.2 million, while for the nine months ended September 30, 2024, revenues were $46.0 million and net income was $5.7 million, a decrease from $7.5 million in the same period of 2023, primarily due to lower income from operations Income Statement Summary (Three Months Ended Sep 30) | Metric | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Total Revenues | 17,197,953 | 14,943,899 | | Gross Profit | 8,281,755 | 7,477,084 | | Income from Operations | 2,750,152 | 2,543,603 | | Net Income | 2,182,637 | 2,039,390 | Income Statement Summary (Nine Months Ended Sep 30) | Metric | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Total Revenues | 45,999,606 | 44,187,449 | | Gross Profit | 22,898,100 | 22,724,638 | | Income from Operations | 7,078,784 | 9,073,317 | | Net Income | 5,679,737 | 7,486,169 | Consolidated Statements of Cash Flows For the nine months ended September 30, 2024, the company experienced a net cash outflow from operating activities of $0.2 million, a significant shift from a $2.7 million inflow in the prior year, mainly due to changes in working capital like increased inventories and accounts receivable, resulting in a net decrease in cash of $2.8 million for the period Cash Flow Summary (Nine Months Ended Sep 30) | Activity | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net Cash Provided by (Used in) Operating Activities | (222,740) | 2,668,232 | | Net Cash Used in Investing Activities | (611,149) | (1,029,240) | | Net Cash Used in Financing Activities | (1,926,290) | (690,042) | | Net Change in Cash | (2,803,627) | 954,285 | Company Information and Disclosures This section provides an overview of Profire Energy's business and includes a cautionary note regarding forward-looking statements and associated risks About Profire Energy, Inc. Profire Energy is a technology company that provides solutions to enhance the efficiency, safety, and reliability of industrial combustion appliances, primarily focusing on the oil and gas industry while actively expanding into other sectors - Profire Energy provides technology solutions for industrial combustion appliances to improve efficiency, safety, and reliability[7] - The company's primary market is the oil and gas industry, but it is actively expanding its addressable market to other industries[7] Forward-Looking Statements This report contains forward-looking statements regarding expected growth and revenues, which are not guarantees of future performance and are subject to various risks, assumptions, and uncertainties that could cause actual results to differ materially - The report includes forward-looking statements concerning expected growth and diversification revenues, which are subject to market risks and uncertainties[8]