LINDON, Utah, Feb. 12, 2015 (GLOBE NEWSWIRE) – Profire Energy, Inc. (Nasdaq:PFIE), a technology company which creates, installs and services oilfield burner and chemical management solutions in the oil and gas industry, reported financial results for its fiscal third quarter ended December 31, 2014. A conference call will be held on February 12, 2015 at 5:00 p.m. EST to discuss the results.
Fiscal Q3 2015 Highlights vs. Same Year-ago Quarter
Total revenues increased 31% to $12.5 million
Gross profit up 25% to $6.5 million
Net income up 59% to $1.9 million or $0.04 per share
Successfully completed company’s first acquisition: oilfield chemical-injection innovator, VIM Injection Management
Opened Company’s seventh sales and service office in Greeley, Colorado
Recognized by Deloitte as one of the fastest-growing companies in North America for the second consecutive year
Fiscal Q3 2015 Financial Results
Total revenues in the fiscal third quarter of 2015 increased 31% to $12.5 million from $9.5 million in the same year-ago quarter. The increase was primarily due to increased activity from a larger sales force, strengthened customer relationships, and increased efficacy in territories that have seen significant investment including Texas, Colorado, and Pennsylvania.
Gross profit increased to $6.5 million or 52.3% of total revenues, compared to $5.2 million or 54.8% of total revenues in the year-ago quarter. The decrease in gross profit margin is primarily due to the increased allocation of overhead to the cost of goods sold, which is attributed to the company’s larger warehouse, as well as the proportional increase in service activity and a service rebate to a major producer for the installation of numerous Profire systems.
Total operating expenses increased to $4.7 million or 38% of total revenues from $3.1 million or 33% of total revenues in the same year-ago quarter. The increase in operating expenses was primarily due to hiring additional personnel to further growth initiatives in sales, service, and marketing, as well as the opening of a sales and service office in Colorado. The increase in total operating expenses was also driven by increased R&D expense to expedite the introduction of the company’s next generation burner management system and support of the Company’s expanding product line.
Net income increased 59% to $1.9 million or $0.04 per share, compared to net income of $1.2 million or $0.03 per share in the same year-ago quarter.
Cash and cash equivalents totaled $15.4 million at December 31, 2014, as compared to $18.7 million at September 30, 2014. The company has no debt.
Management Commentary & Industry Conditions
“The expansion of our sales and service teams during the year helped drive top- and bottom-line growth in the third quarter, which also helped generate a record first nine months,” said Brenton Hatch, president and CEO of Profire Energy. "The lower net margin percentage reflected the operational investments we’ve made to create long-term growth opportunities, including increasing the size of our sales and service teams and expanding into new sales- and service-territories.
"We also strengthened our presence in Colorado with a new sales- and service-center, and launched our new chemical division, upon completing the acquisition of VIM Injection Management, an industry-leading innovator in oilfield injection management. Profire’s chemical division expands our product line into chemical management systems, providing us access to additional growing markets and revenue streams. Our chemical management system complements our flagship burner management systems, which we believe help make oil and gas production safer, more efficient and more compliant with industry regulations.
"While the oil and gas industry is presently going through a volatile phase, as reflected in our lower-than-expected revenue for the quarter, we remain optimistic given the multitude of opportunities we have for growth and expansion in the coming years. As producers increasingly look for ways to improve their operations, we believe our products and service teams can play a key role in improving efficiency, safety, and compliance in the oilfield.
“Though we are not reliant on industry regulations to grow revenue, there are a number of new state mandates that we expect to provide beneficial tailwinds as another offset to declining oil prices. This includes the recent mandate by the Utah Department of Air Quality that all new open- and enclosed-burners must have an auto-igniter as of January 1, 2015. North Dakota’s Industrial Council also recently passed a new rule, effective April 1, 2015, requiring producers to condition crude oil before transportation, and prove oil temperature is above 110 degrees Fahrenheit in order to burn off toxic gases. We believe Profire offers the fastest, most cost-effective and reliable way to satisfy these new state mandates.”
In light of recent industry developments, Mr. Hatch spoke to management’s strategy to navigate the low-price commodity environment:
"With the current state of the industry, we have decided to curtail some of our aggressive-growth initiatives relating to additional sales and service personnel. That being said, we will still add people in places that we anticipate will produce short-term return on investment. While we have pulled back some expenses—and may continue to do so—we are particularly cautious about cutting areas that are difficult to rebuild quickly or would otherwise compromise long-term growth capabilities, such as entire teams, training programs, etc… We do not want to compromise our future growth-capabilities because of the current industry-turbulence, but want to be wise about every expense we make.
“All together, we expect the core benefits of our expanding product line, together with our larger footprint and the positive regulatory tailwinds, to support our positive long-term outlook while we navigate the industry volatility in coming quarters.”
Based on the current industry environment and Profire Energy’s third quarter performance, management has lowered its fiscal 2015 outlook for total revenues and net income. Total revenues are now expected to range between $48.5 million to $50.0 million (versus $57.0 million to $59.0 million as previously stated), which would represent an increase of 37% to 41% over the previous year. Net income is now expected to range between $5.5 million and $6.6 million (versus $8.0 million to $9.5 million as previously stated), which would represent a decrease and increase of 2% to 18%, respectively.