Profire(PFIE) - 2024 Q1 - Quarterly Results

Financial Highlights Profire Energy reported first-quarter 2024 revenue of $13.6 million and net income of $1.4 million, maintaining a strong balance sheet with $16.2 million in cash and investments and zero debt despite year-over-year declines Q1 2024 Key Financial Metrics (vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Revenue | $13.6 million | $14.7 million | | Gross Profit | $6.8 million | $7.8 million | | Gross Margin | 49.5% | 53.3% | | Net Income | $1.4 million | $2.6 million | | Diluted EPS | $0.03 | $0.05 | | EBITDA | $2.0 million | $3.6 million | - The company's balance sheet remains strong, with $16.2 million in cash and investments, no debt, and sufficient inventory for timely product deliveries[3][6] Management Commentary Management highlighted the underlying strength of the legacy business and progress in diversification efforts, noting record sales orders and optimism due to favorable industry tailwinds despite lower natural gas prices - Co-CEO Ryan Oviatt stated that Q1 results reflect the continued strength of the legacy business and diversification efforts, despite lapping a historically strong quarter and a significant decline in natural gas prices[3] - Co-CEO Cameron Tidball emphasized strong business fundamentals, citing the best two sequential quarters for sales orders in company history, expressing optimism based on industry tailwinds like LNG and renewable natural gas expansion, coupled with growing global electrification demand[9] Financial Performance Analysis This section provides a detailed breakdown of the company's financial performance, comparing Q1 2024 results to prior periods, covering revenues, profitability, and operating expenses Revenue and Gross Profit Q1 2024 revenue was $13.6 million, a decrease from $14.7 million in Q1 2023, partly due to the timing of customer orders, with gross profit falling to $6.8 million and gross margin to 49.5% due to product mix, inventory fluctuations, and inflation Revenue and Gross Profit Comparison (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Revenues | $13.6 million | $14.7 million | | Gross Profit | $6.8 million | $7.8 million | | Gross Margin | 49.5% | 53.3% | - The year-over-year decrease in gross margin was attributed to product mix, typical fluctuations in inventory and warranty reserves, and inflation[5] Operating Expenses and Net Income Total operating expenses increased to $5.0 million from $4.5 million year-over-year, driven by inflation and increased headcount for strategic growth, resulting in a net income of $1.4 million, or $0.03 per diluted share, a significant decrease from Q1 2023 - The year-over-year increase in operating expenses was primarily due to ongoing inflation and increased headcount to support strategic growth, with General & Administrative expenses rising 12% and Research & Development expenses decreasing 11%[7] Net Income and EPS Comparison (Q1 2024 vs. Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income | $1.4 million | $2.6 million | | Diluted EPS | $0.03 | $0.05 | Financial Statements This section presents the unaudited condensed consolidated financial statements for the period ending March 31, 2024, including the Balance Sheet, Statement of Income and Comprehensive Income, and Statement of Cash Flows, providing a comprehensive view of the company's financial position and performance Condensed Consolidated Balance Sheets As of March 31, 2024, Profire reported total assets of $65.3 million and total liabilities of $7.1 million, maintaining a strong liquidity position with $43.3 million in total current assets and no debt, while total stockholders' equity increased to $58.3 million Balance Sheet Summary | Metric | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $7.2 million | $10.8 million | | Total Current Assets | $43.3 million | $44.5 million | | Total Assets | $65.3 million | $66.3 million | | Total Liabilities | $7.1 million | $9.5 million | | Total Stockholders' Equity | $58.3 million | $56.8 million | Condensed Consolidated Statements of Income and Comprehensive Income For the three months ended March 31, 2024, the company generated total revenues of $13.6 million and a net income of $1.4 million, representing a decline from the prior-year period's revenue of $14.7 million and net income of $2.6 million Income Statement Summary (Three Months Ended March 31) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Total Revenues | $13,641,140 | $14,684,628 | | Gross Profit | $6,756,772 | $7,833,108 | | Income from Operations | $1,737,089 | $3,305,800 | | Net Income | $1,434,375 | $2,589,621 | Condensed Consolidated Statements of Cash Flows For Q1 2024, net cash used in operating activities was $(2.7) million, a significant negative shift from the $0.5 million provided by operations in Q1 2023, primarily driven by an increase in inventories and a decrease in accrued liabilities, resulting in a $3.6 million decrease in cash Cash Flow Summary (Three Months Ended March 31) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $(2,692,138) | $521,780 | | Net Cash Used in Investing Activities | $(531,267) | $(446,417) | | Net Cash Used in Financing Activities | $(318,808) | $(249,453) | | Net Decrease in Cash | $(3,571,095) | $(165,222) | | Cash at End of Period | $7,196,424 | $7,219,356 | Non-GAAP Financial Measures The company utilizes EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) as a non-GAAP financial measure for performance evaluation, reporting $2.0 million for Q1 2024, a decrease from $3.6 million in Q1 2023, with a detailed reconciliation provided - Management uses the non-GAAP measure of EBITDA for financial and operational decision-making and to evaluate period-to-period performance[17] EBITDA Reconciliation (Three Months Ended March 31) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Net Income | $1,434,375 | $2,589,621 | | Income Tax Expense | $393,148 | $816,815 | | Net Interest Expense | $(68,952) | $(57,114) | | Depreciation & Amortization | $267,654 | $262,039 | | EBITDA | $2,026,225 | $3,611,361 | Company Overview and Outlook Profire Energy is a technology company providing combustion management solutions primarily for the oil and gas industry, with a strategy to expand into other industrial sectors, expressing optimism about future growth driven by revenue diversification, strong sales orders, and favorable industry trends, while acknowledging forward-looking statement risks - Profire Energy provides solutions to enhance the efficiency, safety, and reliability of industrial combustion appliances, primarily in the oil and gas industry, but is expanding its addressable market to other industries[12][13] - The company's outlook is optimistic, supported by revenue diversification, strong sales orders, and favorable industry tailwinds such as LNG expansion[9] - The report contains a cautionary note that forward-looking statements regarding expected growth and revenues are not guarantees of future performance and involve risks and uncertainties[14]