Profire(US:PFIE)2022-08-05 14:43Financial Data and Key Metrics Changes - Revenue for Q2 2022 was $9.6 million, a slight increase from $9.5 million in Q1 2022 and a significant rise from $6 million in Q2 2021, driven by economic recovery and higher oil prices [16] - Gross profit was $4.4 million, down from $4.6 million in Q1 2022 but up from $3.3 million in Q2 2021, with a gross margin of 45.7% compared to 47.9% in Q1 2022 [17] - Net income for Q2 2022 was approximately $284,000, or $0.01 per diluted share, compared to $627,000 in Q1 2022 and a net loss of $397,000 in Q2 2021 [19] - Cash flow from operations was positive at $1.8 million, a significant improvement from a negative $265,000 in the prior year quarter [20] Business Line Data and Key Metrics Changes - The company achieved five consecutive quarters of revenue growth, with Q2 results primarily impacted by supply chain constraints rather than a decrease in customer demand [23] - The backlog of business has grown to historic levels, indicating strong future revenue potential despite ongoing supply chain challenges [24] Market Data and Key Metrics Changes - The WTI price per barrel averaged $108 in Q2 2022, a 14% increase from the previous quarter and a 64% increase from Q2 2021 [27] - The combined onshore rig count for the U.S. and Canada averaged 810, down 1% from the previous quarter but up 59% compared to Q2 2021 [28] Company Strategy and Development Direction - The company is focused on strategic diversification initiatives, gaining traction in large midstream plants and alternative industries, with expectations to more than double 2021 revenue in this growth segment [32][39] - Continued investment in R&D is emphasized to support both current and future customer needs, including solutions for efficiency and emissions reduction [34][35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position to continue success into the second half of 2022, supported by a strong opportunity pipeline and improving inventory levels [31] - The company anticipates that commodity prices will remain high due to ongoing global supply challenges, which should benefit its business [15] Other Important Information - The company repurchased 451,000 shares for approximately $611,000, completing a $2 million repurchase authorization [20][21] - Inventory at the end of Q2 2022 was approximately $9.3 million, up from $7.7 million at the end of Q1 2022, reflecting ongoing supply chain disruptions [22] Q&A Session Summary Question: Non-oil and gas business momentum - Management indicated that the non-oil and gas business is moving towards regular deployment with increasing repeat business and word-of-mouth traction [48][49] Question: Demand environment in traditional oil and gas business - Management characterized the demand environment as steady, with a growing backlog and positive indicators for the second half of the year despite some supply chain challenges [52][54] Question: Carbon capture product details - The product focuses on capturing and reporting emissions data rather than traditional carbon capture, aiming to provide accurate emissions reporting for customers [59][60] Question: Inflation and cost pressures - Management acknowledged ongoing inflationary pressures on labor and materials, with expectations that gross margins may not improve significantly in the near term [73][75] Question: Inventory levels and trajectory - Management noted improvements in inventory levels, with expectations that inventory will not significantly increase due to a large backlog of orders [76][79]