PFIE once more

this is discussed in the latest conference call. The CEO said: “we believe the entire niche as far as Burner Management technologies is well under 5%.” - Neil

I’ve searched for the latest earnings conference call transcript, but came up blank on Google, NASDAQ and Seeking Alpha. Could you please provide a link? Thanks.

Found this on their website. This is from the 11/11/14 conference call.

Stormey

http://profireenergy.com/downloads/Q2_FY2015%20Earnings_Call…

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Hi Putnid,

On the website investor page http://www.profireenergy.com/investor-relations/ on the upper right hand side of the page, it says “download the 2nd quarter transcript”. Hope this helps.

Saul

Thanks, Stormey!

Thanks, Saul.

It’s weird, when I link to “Investor-Relations” there’s no link to the conference call transcript. No prob. Stormey provided a direct link.

I’m sure I’ll have a bit more to say later, but a quick read revealed two points of interest:

nevercontent asserted: "The CEO said: “we believe the entire niche as far as Burner Management technologies is well under 5%.”

In truth, the CEO said: we estimate OUR current market penetration is still well below 5%

Big difference. It doesn’t surprise me that a new company such as Profire has only achieved 5% market penetration. That comment, alone, does not provide an overview of the overall market nor the number of competitors and their respective overall market share.

Contrary to the claims of some, PFIE is very much involved in flaring. In the CEO’s own words: Now, on the subject of growth strategy, one of the key product developments during the quarter was the release of a new Flare Stack Igniter or FSI, which is a sophisticated and rugged product that complements our product portfolio nicely. We have seen the product serve as a beachhead for sales of our flagship products and are finding that the majority of FSI sales are paired with a Burner Management System.

Elsewhere in the conference call, the CEO mentions that evolving regulations constitute a tailwind. That had me scratching my head. Regulations, at federal and state levels, are steering towards “Green Completions.” What that term means is that oil and gas producers are being steered towards capturing their fugitive emissions. Flaring is accepted as an intermediary step.

For more information on Green Completions, I offer this USEPA summary: (it addresses gas industry operations, but individual states are moving to adopt similar rules for the oil industry):

http://www.epa.gov/airquality/oilandgas/pdfs/20120417changes…

And, by the by, Saul, I’m not engaging in this exercise to “scare” people. Quite the contrary. I’m trying to understand Profire’s market and future prospects. In the final analysis, should I come to believe Profire has significant growth potential, I’d gladly reinvest in the company.

At present, the jury is still out.

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Hi putnid,

In truth, the CEO said: we estimate OUR current market penetration is still well below 5%

This is what they said:

I would say, market penetration for the entire niche and, as we stated on the call, we believe the entire niche as far as Burner Management technologies is well under 5%. So, it could be 3% if you really were to lump in the entire niche together. Of that niche, we believe we’re about 80% of the market share of what’s been sold and again

So they’re saying BMS has approximate 5% marketshare, and of that they have around 80%. The competition has around 20%.

Contrary to the claims of some, PFIE is very much involved in flaring. In the CEO’s own words: Now, on the subject of growth strategy, one of the key product developments during the quarter was the release of a new Flare Stack Igniter or FSI…

That’s a brand new product. It was just announced in August. It even says in your quote it was just released during the quarter.

Here’s the press release from that announcement:
http://globenewswire.com/news-release/2014/08/12/658020/1009…

Here’s a quote from it, bolding mine:

Profire currently resells various burners and pilots that are often used with the Company’s burner management system (BMS); however, the Company has not historically offered a pilot specifically for flare-stack environments.

So it’s brand new. None of the company’s historical growth has anything to do with flaring. Going forward, it’s another product they offer.

Honestly, I think you need to learn a little more about the company before making these sorts of declarations as fact. They’re not just true. I genuinely welcome the bear case, but the facts at least need to be straight.

Neil
Long PFIE

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You might be right, Neil, but I gotta say, Hatch and Limpert are saying two different things. I quoted Hatch, you quoted Limpert. Don’t ask me who’s telling the truth, 'cuz I can’t say. I’m leaning towards Hatch.

As for flare ignition products, you’re being disingenuous. True enough, Profire introduced a new Flare Stack Igniter (named the FSI). It’s a simple pilot-igniter. Oddly, though, they failed to mention their more sophisticated products as described in their own marketing materials:

Our Flare Ignition Systems (FIS) are capable of managing burner flames in flare-stack applications. Made for these environments, these systems can either control valves in continuous-spark mode (PF2100F), or simply detect flame status and reignite the flame as needed (PF1300).

Looky here, Neil, I’m TRYING to get the facts straight. Profire’s management is making the task more difficult than it needs to be.

5 Likes

Sorry I found this thread late.

Found this on their website. This is from the 11/11/14 conference call.

Stormey

http://profireenergy.com/downloads/Q2_FY2015%20Earnings_Call…

From the above:

“Our primary focus will remain on North America oil and gas industry. We estimate that there are more than 1.3 million oil and gas wells in North America, with 45 to 50,000 new wells added annually and we estimate our current market penetration is still well below 5%.”

Denny Schlesinger

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We estimate that there are more than 1.3 million oil and gas wells in North America, with 45 to 50,000 new wells added annually and we estimate our current market penetration is still well below 5%."

Two questions…

With the advent of pad drilling & stacked/multi laterals how will that impact the numbers of burners actually required…my guess would be less than the number of new wells might imply, although it may have a positive impact with regards to the level of sophistication of the management desired.

Also, what is the source for the number of new wells? Honestly I have no idea, but if I’m reading this correctly RBC numbers aren’t even in the same ballpark as Profire’s and with Canada’s market maybe being a third of the US that wouldn’t explain the discrepancy either.

http://www.platts.com/latest-news/oil/houston/feature-analys…

B

1 Like

look up the meaning of “disingenuous” and you will find that it 's a very insulting phrase. Though many posters apparently have poor grasp of the actual meaning the word, just use it casually, that may or may not be the case here. So putnid is violating both the terms and spirit of MF by directing the word against others. Personal insults do not increase the strength of arguments , rather they weaken them.

disingenuous synonyms: insincere, dishonest, untruthful, false, deceitful, duplicitous, lying, mendacious; hypocritical Some sources are less harsh but it is a personal insult I doubt if putnid would be happy having others call him by any of the synonyms.

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Personal insults do not increase the strength of arguments , rather they weaken them.

Of course when a un-involved party chooses to accuse someone of personal insults by using the most pejorative definition of a word, not candid also fits*, while ignoring the otherwise quite civil exchange of views one might point to that as being a bit disingenuous.

Just saying,

B

*https://www.google.com/webhp?sourceid=chrome-instant&rlz…

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War Eagle back at cha, Flygal.

Iron bowl is Sat night!

I question the premise that manual labor to ignite burners constitutes standard/majority practice in the oil and gas industry. I’ve no doubt that some oil/gas producers rely on manual labor, but I point to the wide variety of auto-ignition products currently being offered by a wide array of vendors as proof that the industry, in large part, has modernized this function.

If anyone has any data regarding the actual ratios of manual ignition versus auto-ignition, I’d love to see that information (as I’m sure any investor would).

So I wrote the message below to investor relations.

Nate,

I’m a private investor researching your company as a potential investment in my portfolio and have a question I’m hoping you will answer regarding your addressable market. Assuming no regulatory tailwinds to be conservative, I see your value proposition as replacing human labor used for burner management today.

Please address the following:

What percentage of burner management is handled via human labor versus automated systems today?

Statements in the recent conference call suggest the market is ~95% controlled by human labor and is based on the number of wells in the US. Is it correct to assume that all burner management not covered by PFIE prior sales which were 80% of automated BMS sold to date, are currently controlled by human labor?

I thank you for your time and your response is greatly appreciated.

I just realized the response I received from PFIE is confidential and only intended for me. I will respect their wishes, but can provide a quick summary for everyone.

Essentially, PFIE claims that 95% of the burner management market they target is done manually. They backed up their claim of having 80% of automated BMS sold to date.

Just thought I’d follow up on this.

Take care,
AJ

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Essentially, PFIE claims that 95% of the burner management market they target is done manually. They backed up their claim of having 80% of automated BMS sold to date.

AJ,

I believe that you are making an assumption that may be incorrect. The claim that PFIE management made was that less than 5% of wells utilize automated BMS. This doesn’t necessarily mean that the other 95+% of wells are using any burner management system. My understanding of well management is limited but perhaps most wells are not using any burner??? I think that PFIE’s biggest issue is not replacing any manual technology but rather creating awareness of the benefits of automated burner management. If you read the earnings call transcript, you will see that they discuss that this is a greenfield market meaning that it’s wide open for the taking. Their big issue is getting their sales people in front of all the potential customers. They have limited sales people (they said 26 as of Nov 11). Each sales person can only cover so much territory and see so many prospects.

When I think of PFIE I think the biggest factor to their success is execution. If they can execute and get the 26 sales guys hitting their $2-3M (each) in sales then they will be at $52-78 million in annual revenue. Their run rate is already $60 based on last quarter’s result so I’d expect the revenue of a trained sales person is closer to $3M than $2M. I’d be more interested to know how many more sales people they are hiring as management seems to think that that’s one of the limiting factors in terms of getting revenue.

Chris

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PFIE has broken through it’s price support level when I last checked.But so far not in a convincing way. If the decline continues with larger volume, I will reduce my position, hoping to buy back at lower prices.

Arcam, that I mentioned a few posts earlier is up nicely today on 6 new orders for machines to make medical implants. Actually EBM is perfect for this use, non reactive metals, can easily be made in one off to fit varying anatomy,and a irregular surfaces to allow living tissue to attach to it.