Profire(PFIE) - 2021 Q3 - Quarterly Report

PART I — FINANCIAL INFORMATION Financial Statements For the nine months ended September 30, 2021, Profire Energy reported increased revenues and significantly narrowed its net loss, while maintaining stable total assets and generating positive operating cash flow Condensed Consolidated Balance Sheets As of September 30, 2021, total assets slightly increased to $48.5 million, total liabilities rose to $3.5 million, and total stockholders' equity slightly decreased to $45.0 million Condensed Consolidated Balance Sheet Highlights (as of) | Balance Sheet Item | September 30, 2021 (Unaudited) (USD) | December 31, 2020 (USD) | | :--- | :--- | :--- | | Total Current Assets | $24,932,294 | $25,835,775 | | Total Assets | $48,477,854 | $48,323,225 | | Total Current Liabilities | $2,938,515 | $2,415,300 | | Total Liabilities | $3,511,236 | $2,950,839 | | Total Stockholders' Equity | $44,966,618 | $45,372,386 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) For Q3 2021, revenues increased 73.6% to $6.9 million, resulting in a net income of $92,246, while for the nine-month period, revenues grew 14.3% to $18.1 million, and net loss narrowed to $906,420 Q3 2021 vs Q3 2020 Performance | Metric | Q3 2021 (USD) | Q3 2020 (USD) | | :--- | :--- | :--- | | Total Revenues | $6,943,198 | $4,000,106 | | Gross Profit | $3,119,468 | $1,520,423 | | Loss from Operations | ($318,289) | ($1,329,498) | | Net Income (Loss) | $92,246 | ($1,057,748) | | Diluted EPS | $0.00 | ($0.02) | Nine Months 2021 vs 2020 Performance | Metric | Nine Months 2021 (USD) | Nine Months 2020 (USD) | | :--- | :--- | :--- | | Total Revenues | $18,069,830 | $15,806,727 | | Gross Profit | $7,951,887 | $6,771,964 | | Loss from Operations | ($1,716,951) | ($3,072,011) | | Net Loss | ($906,420) | ($2,231,515) | | Diluted EPS | ($0.02) | ($0.05) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from $45.4 million at year-end 2020 to $45.0 million as of September 30, 2021, primarily due to a net loss of $906,420 - Total stockholders' equity decreased from $45,372,386 on December 31, 2020, to $44,966,618 on September 30, 2021[10] - The decrease in equity was driven by a net loss of $906,420 for the first nine months of 2021[8][10] Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2021, net cash provided by operating activities significantly improved to $957,821, while net cash used in investing and financing activities totaled $918,981 and $72,067 respectively, with cash and cash equivalents ending at $9.1 million Cash Flow Summary (Nine Months Ended September 30) | Cash Flow Activity | 2021 (USD) | 2020 (USD) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $957,821 | $122,677 | | Net Cash Provided by (Used in) Investing Activities | ($918,981) | $683,983 | | Net Cash Used in Financing Activities | ($72,067) | ($192,824) | | Net Change in Cash | ($18,896) | $560,689 | | Cash at End of Period | $9,129,416 | $7,919,545 | Notes to the Condensed Consolidated Financial Statements The notes detail accounting policies, revenue growth across categories, segment profitability with the U.S. market returning to profitability in Q3 2021, and the initiation of a share repurchase program in October 2021 - The company provides burner-management products and solutions primarily for the oil and gas industry in the US and Canadian markets, with expansion efforts into other industries and international locations[18] Revenue by Category (Nine Months Ended September 30) | Category | 2021 (USD) | 2020 (USD) | | :--- | :--- | :--- | | Electronics | $6,196,529 | $5,708,436 | | Manufactured | $908,592 | $682,149 | | Re-Sell | $9,223,689 | $7,986,792 | | Service | $1,741,020 | $1,429,350 | | Total Revenue | $18,069,830 | $15,806,727 | Profit (Loss) by Geographic Segment (Nine Months Ended September 30) | Segment | 2021 (USD) | 2020 (USD) | | :--- | :--- | :--- | | Canada | ($1,383,553) | ($1,059,627) | | United States | $477,133 | ($1,171,888) | | Total Consolidated | ($906,420) | ($2,231,515) | - On September 15, 2021, the Board authorized a share repurchase program for up to $2,000,000 of common stock through September 30, 2022, with purchases commencing in October 2021 under a 10b5-1 plan[30][65] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 74% Q3 2021 revenue increase to improved oil and gas industry demand, with gross margin improving to 44.9%, while maintaining a strong liquidity position of $18.5 million in cash and investments - The company is a technology provider focused on enhancing the efficiency, safety, and reliability of industrial combustion appliances, primarily in the oil and gas industry, with an increasing focus on ESG principles[72][77] Comparison of Nine Months Ended September 30, 2021 and 2020 | Metric | 2021 (USD) | 2020 (USD) | $ Change (USD) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $18,069,830 | $15,806,727 | $2,263,103 | 14.3% | | Gross Profit Percentage | 44.0% | 42.8% | | 1.2% | | Operating Expenses | $9,668,838 | $9,843,975 | ($175,137) | (1.8)% | | Loss from Operations | ($1,716,951) | ($3,072,011) | $1,355,060 | (44.1)% | | Net Loss | ($906,420) | ($2,231,515) | $1,325,095 | (59.4)% | - Q3 2021 revenue increased by 74% year-over-year, driven by improved customer demand, a 73% increase in average oil prices, and a 121% increase in the North American rig count compared to Q3 2020[83] - The company's liquidity remains strong, with working capital of $22.0 million and total cash and investments of $18.5 million as of September 30, 2021[91][93] Quantitative and Qualitative Disclosure about Market Risk This section is not required for the current filing - This section is not required for the filing[95] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[96] - There were no material changes to the company's internal control over financial reporting during the third quarter of 2021[97] PART II — OTHER INFORMATION Legal Proceedings The company reports no pending or threatened legal proceedings that would materially impact its operations - There are no legal proceedings pending or threatened against the company that may have a material impact[99] Risk Factors Investors are directed to the Annual Report on Form 10-K for the year ended December 31, 2020, for a comprehensive understanding of the company's risk factors - The report refers to the risk factors discussed in the Annual Report on Form 10-K for the year ended December 31, 2020[100] Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable to the company for the current reporting period - This item is not applicable[101] Exhibits The report includes officer certifications pursuant to SEC rules and XBRL data files for financial reporting - Exhibits filed with the report include certifications from the Co-Principal Executive Officers and the Principal Financial Officer, as well as XBRL data files[106]