Profire Energy (PFIE) 10 May 232023 Q1 Earnings call transcript

Good morning, everyone, and thank you for participating in today’s conference call to discuss Profire Energy’s quarterly operating and financial performance for the period ended March 31, 2023. [Operator Instructions] I will now turn the call over to John Beisler, Investor Relations Consultant at Three Part Advisors to get the call started.

Thank you, operator. With me on the call today is Co-CEO and CFO of Profire Energy, Ryan Oviatt; and Co-CEO, Cameron Tidball. Yesterday, after the market closed, the company filed its Form 10-Q with the SEC and first quarter’s highlights in the press release.

those company’s available website. of section the both the of always, documents on are Investors As The posted days. in of the transcript this coming call will be

and success, Before forward-looking Statements base not regarding made gas to research of resources this and changes our call availability including would planned read are call, development future but not limited company’s in the call shares, during we company the historical company’s performance. contains circumstances. are repurchase in growth, company the investments moment financial of new statements statements, are the in subject products, statement. All statements a revenue XXXX This company’s to like to growth in Harbor Safe and that forward-looking and begin to of today’s market, statements. uncertainty customer to diversification take make beneficial natural expected beyond, the the I forward-looking such

factors Forward-looking business, and or statements results materially are not or involve from events or the that results to cause uncertainties risks, the or such forward-looking differ anticipated events economic, results Commission. actual and materially performance forward-looking could and periodic in public filed the in affect market, Securities could statements. regulatory certain include described by and guarantees Exchange company’s of statements Factors future risk reports identified the that with assumptions,

law. Private of date statements statements. circumstances, on to obligation forward-looking except Litigation to are forward-looking place undue forward-looking or All provisions the reliance as reflect Safe events Act the company Readers the release, not only assumes of of statements Securities pursuant of no statements update are should All and made as made Reform required by Harbor this these XXXX. subsequent forward-looking to the

through provided yesterday’s accessible everyone that as call press the this link well as starting XX, available will and be company’s remind being in website for via like today will would is be profireenergy.com. recorded through May the to replay XXXX, I that later release at

Mr. for we Oviatt by Following call and the open the will questions. Tidball, remarks your

would to CFO to I Mr. of like Now the Co-CEO call Ryan the Oviatt. Profire and turn Ryan? Energy, over

John, you, joining on who today. us call the of all are welcome you Thank to and

first-quarter reported upon generated XXXX margin in gross XX% half second and EBITDA as the built the XXXX QX our Our the expanded our highest for results net quarterly second we recorded quarter in since income best momentum XXXX, first we and ever, history. of of time revenue the company above

eight have three achieved five revenue of within revenue and nine the months. top quarters sequential We of growth, have the quarters now all been last

inflation, several high Our combat quarters is efforts, maintaining in to of result focus, and in recent an sales service. teams, quality standard price strong our strategic adjustments aggressive of customer product investments the sales and procurement performance including our operations and

announcements six We our decade. within have all the markets. and the gas federal have increased the total the for To level XXXX. pressure within prior put business from also revenue legacy policy our of state from reduce benefited the consumption of magnitude at oil in oil perspective, overall recovery next months and for recovery Recent revenue gas the exceeds to post-pandemic and

efforts of for remains existing not proposed, well timelines core efficiency likely of as on these due legacy hydrocarbons pent-up widespread piece and wells. many energy outlook and the gain demand. multi-year the their companies very business for for a place The the better believe within of and world’s as to deferred for is cost our current adoption. to pressures, E&P out Despite efforts prohibitive continue ongoing favorable are to these the in catch-up supply remain new maintenance we be However, will will come. infrastructure not critical energy years necessary alternative projections many initiatives

that, to me turn remarks of let quarter the XXXX. financial With for results Profire’s first my

sequentially X% primarily products quarter, a driven During customer XX% $XX.X demand, which price oil by on prices, and ongoing revenue, the natural The sell, were recognized our progress we increases in strength represents million in approximately the increase strategic we ongoing a the and increases gas efforts. quarter. historical over and sequential continued and increase year-over-year prior-year in diversification

price million from the quarter. compared the profit first Gross quarter, million quarter quarter as Gross and prior the XX.X% year-ago XX.X% the cost period;’ million purchasing revenue base; increases XXXX. margin were higher contributions from to of revenues and and and XXXX inventory coverage fourth reserves. fixed between the warranty $X.X improved result as increased increases service, in XX% $X.X typical streams mix from to well in in fluctuations the as $X.X of revenue and revenue to in product, of customers The in the greater in the product diversified of

in fourth were impact the million and for increases million expenses to approximately $X.X in year-over-year headcount the inflation and quarter and sequential quarter. ago the reflect overall operating year quarter across Total The $X.X million additions the fourth the business. of compared $X.X cost

first compares of million or million $X.XX $X.X income net diluted or per diluted to XXXX and net quarter was fourth per approximately of in income for $X.X the quarter share $X.XX compared Net share. in Cash quarter the the $X.X diluted to year. or first first $XXX,XXX $X.XX $XXX,XXX negative in quarter income per the was of approximately from quarter. share flow million a in last of prior-year operations the This

million approximately inventory Our the quarter compared was of at $XX.X million the XXXX. the at end to balance $XX.X of end

within disruptions and certain see supply expect products for to this chain several for continue will remain We the quarters.

can and legacy looking solutions secure we are to XXXX. We to strategy. Overall, strategic by for obtain our we supplies diversification are to our pleased start parts continue throughout will the with maintain be our We XXXX. that believe components which already with work the require and progress in year, aided suppliers to our the the business

and $XX.X have cash remain liquid investments We of million and debt-free.

is repurchase and program $X repurchasing that to will that through believe XXXX. current at to a share stock excited that way good April has million prices our We to approved announce are return value Board of Directors our of our run is undervalued stock shareholders. another We

our to to an provide business. over now of overview Cam will turn the I Cam? call

Thank you, the QX of history, in our surpassing and our strong QX results. one Ryan. strongest XXXX represented QX quarters

mentioned, to revenue our Ryan and team Profire achieved and consecutive deliver consistent top-line business. improve across continue has we now and growth, results of eight the quarters As operational financial

and of our protect, development sales, product reflects research diversification focused streams experience strong performance industry customer-centric focus our as our guides to industries. the as our and team. grow customer petroleum strategic the This strategies. legacy business industry revenue driven as and and as initiatives on Our We chemistry leading by solutions our and marketing, new our of within in secure, core remain well well culture our

benefited as Let’s upstream well management solutions, remains reducing efficiency on operators and safety paramount from the in start operational and and production business. drilling our and increased emissions core stability streamlining quarter, In our activity. producers with market commodity Profire efficiency. completion on-site to Investment in they prices and equipment, and automation, burner midstream their including focus of

this share Our market been never has in stronger.

be pressures support and to We such to addressable to support as Accretive continue what support production as to find through ability legacy as partners or to we tailwinds construction directly an expanding new well market. our Profire’s global demand. regulations capture ESG activity, continue total drilling continues completion retrofit new as emissions believe and appliances to thermal opportunities resale

as streamlined see and operators, consolidation to We lowering breakeven reductions, cost operations E&Ps strategically larger acquire allowing smaller costs. continue

greater this and trend is expect for management that burner Profire’s to continue positive a leading believe industry it solutions. We of outcome combustion adoption and

this solutions of the supported XX,XXX integration now in management over have part burner our business. We of

adding unit, them have per We executed customers value with successfully we our management to increase strategy our BMS as greater burner solutions. average our to complete revenue provide

par expectations. was Looking transmission sales gas our natural segment, at QX with utility our market and activity on

find retrofits customers. opportunities appliances with of to new continue for We thermal legacy new

Our Company. appliances the from strategic that new Gas, Energy, Dominion such Fuel, customer site grow customer includes well base This continues and market are as the solutions Blythe delivered Profire as ensuring to Fortis, National as Pipeline on existing as collaborate installed OEMs this support heaters OEM. we Mulcare in numerous Grid, well heated with National solutions upgrading to as as and Solutions partners base ATCO segment

markets that a relationships have have We presence. consider experienced in not does infrastructure service Profire additional continue and partners where to sales and customer

Morgan. this to what used diversified we to continue to notable quarter, with infrastructure in opportunity. meaningful gain and In to turn including energy the customers, Products, midstream. Kinder we or DCP our the as revenue Enterprise filled and of Energy market side and market Leveraging traction critical completed brand, Transfer, we orders downstream Midstream, focus Midstream, EnLink, refer Equitrans Let’s premium our projects

orders continued the energy manufacture We of this appliances OEMs segment thermal who also industry. for to receive from

able were us area this growth enable customer at In quarter, over and in year-over-year purchase to XXXX, we pace revenue the growth XXXX. receive in which recognize near we orders, year new diversification. achieved repeat triple-digit same revenue revenue and In of year to nearly the could

repeat products, business support this who and execution to lead and and will which our alternative strong, by as we growth position have base owned an New with and increased design, believe solutions, this exceptional reinforces delivery, and historically incumbents Project traditional our reputable specification. experience, backed to emerging, planning, an market. reliable customer and performance-driven customers service with

orders orders producers were year, the fulfilled food we gas quarter, we significant States’ Turning of in in we of from and gas and customers XXX% natural see revenue progress and achieved largest quarter, beverage, build industrial to In In for where opportunities and landfill, receive mining from able the to to gas. continue and one various natural metal, we over United the in to markets, and over XXXX, year successes renewable the our production. of renewable XXXX. repeat non-oil continue we growth

the look natural industry, our and reduction production facilities. of renewable this emissions at landfills for opportunities expand which supports within exciting COX and We continue revenue growing agricultural and of to gas to

segment in thermal petrochemical and were record scope believe success, small list refinery. our critical infrastructure leverage of a we the performance, and to track us appliances refinery and We potential industry. upgrades our our Recently, at and will to in enable capabilities project energy invited batch assess

with to who received project heat-treating of project several in for As and opportunities processes been positive a on XXXX, result which automotive referrals we an a introduced coating. from have entail we EPC metallurgy collaborated

We continued solutions potential related biogas landfill well support as that business management projects activities as development wastewater projects. to

and product focus strategy Our space. in service revenue and diversification development this and efforts marketing, design support, in capability, continues engineering developing to sales

burner that and proposition our solutions we We provider of and industrial optimistic a customers will which and can as deliver leading to management reputation attract opportunities, continue on are project combustion strengthen technologies. and value new

that As forward, we in industry gas gas and the to the continues first from of remain we quarter and remain grow. of investment tailwinds energy many will for and give believe American continue. Global stable. to oil will the in oil solutions, benefited continues we demand and optimistic North that look XXXX The we automation indication industry

a future. Lastly, we need development product strong to remains Research and our and for customer see strategy. products our our diversification critical

on capability capability, and service strategically mid, existing compelling our provide Our product short, long-term engineering markets continue of We technology intact. focus strong our remains believe proposition and and alternative remains to solutions, to our competition. solution Profire’s balanced customer to to value a as and technical expertise approach that

our both we core to and we that efficiency, protection. with continue solutions will industry develop provide markets, As new reliability, and compliance, environmental are safety, confident

you and success. I and the we day your and support for our for Profire. team, commitment Profire you each to ongoing to work our To customers and you Ryan interest other creativity, for would enable turn Before thank in to the thank like and your we every perseverance, and questions, to do each of

you would appropriate get we instructions, Q&A so please the the Operator, can provide started?

Please ahead. Instructions] Capital. Street Rob is first from from Brown [Operator go Lake question The

Good morning, Rob.

a bit Nice quarter. I wanted environment. in demand the dig little on just to

marketplace think good customers oil gas what of stable I you throughout maybe you terms mentioned and different and driving what’s do continuing you being that year, are in hearing and the in the the But demand seeing markets? there. how and – strength from

of from natural are quite where from question – pricing there. these come they we still Yes. year gas have things we perspective, still are strong oil producers money with as Certainly, are prices, they level And price, good But historically, down making were from appreciate E&Ps, ago. a a macroenvironment obviously price, the this look pricing. and significantly a at

here, So couple up it are in then as deferred Cam as that beyond X-plus forth. comments in so ESG headed that labor that as still holds next But what efficiencies, or from we dealing year from maintenance up for challenges, steady years be years, things a where stay, the we directly. it we our that. prepared environment, we significant the few stable also ongoing and I’ll may on customers and is from potentially environment, for in think talked demand plus, we’re environment pricing long see over goes on on about continues in specifics technology, think on to this which with or But the focusing remarks, investments last new the a make catch initiatives, more increased in let of seeing

Yes, absolutely.

As expect or have much it’s permits have from us, opportunity done. the in see that consolidation. more comments, lot our strategy we with acreage, We’ve discussions so that By the The is and E&Ps keep with mentioned land far, enough and with our it’s we’re done. going. And is gone, a seen they not if grab. of it, we more we land seeing to continue. customers, of to They grab than

the needed past. customer at look need capital we So they necessarily They the don’t in bases. our

an would. of they going assets from But with as buy acquisitions, to they they independents. just Of a lot continue course, are these to acquisition, do the

– You’ll to operating goal it consolidation, lower costs. the see their which of whole the is

And talked call, so, are year to going. cleaning Well, they mentioned do the always they keep we mentioned have as – things this year going we based ESG EPA, pressures, We’ve believed how varies on keep market on, are the it’s asset if are going a heated legislation new about that automation. for to well commodity just going are from Profire, up with they where to a huge prices. perfect we addressable to storm going we They need to a it. that in

If you’re doing ourselves going large well us it. especially as a management And for going we’ve with to burner as on seen quarters, on last the uptick, pad to you’re both running, put directly them our a keep in three partner. retrofits,

see the the that will year. and LNG keeping Northeast baby, slightly a see LNG it. they It’s world in not an are customers now. they still production different the increasing Permian, It’s building exists is So it steady going production in for the are it, to, it’s and drill. thing we – for think, increase the and especially drill, exports, towards opportunity or

revenue pipeline overview. efforts, this of It’s for as next a then you. is percent the today? And that that year? – where rest how up year of good on the diversification shaping the into And Thank next is and

diversification QX significant a year. of as mentioned in our X% in We year year for we revenue were call XXXX, success. and we call, total revenues at so last Yes, the saw last increase in last

comment in. far during during and backlog to equation revenue really gas side of want had as we coming the side orders quarter. For on start that revenue things QX the the we’ve quarter, a slower as there? as in little success segment. to a far good as but the had the quarter some as year during the far little infrastructure slower critical energy non-oil was We saw the It bit of of strength bit in that in a do still coming as you and Cam, good

with, quarter activity, opportunity pipeline, on and to repeat we’re projects the Yes, absolutely. bid strong. I engaging repeat, that business, was and guess, the customers sales in projects The the the

they get a that’s a they with you then, back last projects. the we a think of are just year, as but it have always year. we the great do time tune year the feel to can customer really we come trajectory so, year, used lends fiscal good maybe mentioned. think first got we strong happening. for that we great you’ve as And We nearly the because have last activity get growth like like It’s this year, has to XXX%, not that – on And more in

for one does the mentioned, heat-treating firm we’ve of that we’re that brought engineering some more steel some interesting plants we for EPCs, they now applications for. done a the very And great an opportunities us are job projects, their at of consultancy them industrial one As engineer have where looking they several Profire. on

do that to we – within new taken Canada. a into in at add strategic States to We’re And we completed be care one and area, geographies to it are such, what but also incrementally. the and see United thing and point get partner? it’s starting something of installed looking serviced to needs at out branch as It’s starting

partners looking into in don’t people. bring have more So Profire areas we’re at fold we to the where

very thank much. I’ll Okay, you over. turn it

Thanks, Rob.

Thanks, Rob.

[Operator is James. Instructions] question Dawson Please The next form McIlree Jim go from ahead.

morning, Jim. Good

talk and to your price actions guys, Hey, seeing you’re on good morning. ability you pricing pricing any – recent if get Thanks. increases? Can about what

Cam, do on you want that? comment

Yes. We, price XXXX. increasing some of in course, did

We’ve our We’ve able and to done downstream that it? The have they we to been market price to. competitors. is can like prices. in our business increased accept to degree, also Yes. where have utility, been upstream, continue see it? our We see and to midstream test We they able to, core able from command thing their a Do increases Within they XXXX. a No. it do premium. also know legacy get been or great to we’ve

highest to critical market hand, We we’re whereas gas, to more well. oil lower that energy other and as infrastructure in increase we’ve those are the it price burner solutions, prices management and space been and when on able outside on side, the our comes for the of

that not rates. can degree people components of increased our that are increased the have – because we’d parts, those in resale service We’ve just that our and we to to really, So side get parts the some on anywhere. like

be definitely But away worked proprietary raise to We on that the there. business, we’ve to get. our don’t hard that. cautious prices products, give which able to we on been we’ve So want have to

year? the the increases expectations And are of there for price additional for rest

fourth again, take following a affect at year. the in increase, which, price quarter, really the looking won’t till be will We doubt no

next increasing well. in rates as be most likely the our service will here quarter We

you’ve know that, issue cost that you pressures been or past And of the an obtaining the you issues that’s lingering that lastly, encountering? so. in can Part Great. any been I address parts had sort you’ve that of need? months XX with

if Thank on you. well you that’s pressure address or as So your so can parts changed, cost availability? whether the as the not

sure. for Yes,

keeping time retaining On workers market, very a areas, gone. quite a are from have We a at is was employees pressure in for But people, the were still, pressure of last been or main the It’s little that feeling people, it’s XXXX. help the are less finding cost little our year, quite the side, so down lot rates a than certainly some relief throughout Very, not those on pressure throughout the seeing A labor we of this markets our challenging. areas, people year and inflation employees in year in less pinch want ago. we little of been the people environment entirely especially from better where a our good labor areas located, challenge come That with bit. think that, turnover a and pressure, are course. and

and what to And gone can. year this compensation. annual earlier so, made we do adjustments process through raises rates and labor reviews we and We’ve our

we good so a the last able to better had really also some bonuses many were of year years We and year, pay bonuses in than out past.

things continue So our are the the doing think a with to here them good we and of Profire. at year people to benefits having we share to keep right

and to some our out retain story, again we electronics, key think be From for of similar components have challenging the expect eased a bit, plastics, for labor that those want pressures continue, will but supply is chain a we well. there where pressures the to continue metals up pressures market ongoing that Asia, as people We some of and still perspective, to continue component will that sure.

very challenges, keep we But through So helping we’re available and that to certifications and and those And working other find door, of of lost we through no manufacturers. with areas some had. difficulty our as in having on some us and we challenges, alternatives coming in once those in work team become at quality the product shelf has find parts other longer work those are our that are the new the finding they good through either also processes relief. or have

broker keep that the and markets to get some for this And for have it coming hope for going we’re than early So pressure those, to some to inflation. is unfortunately, in that in continues that probably there. throughout We’ve the XX and in, relief the system. get had more We into of to system, the are see continue do we it’s better. are next for XX in our ways. various see and example, price had to Again, But pay components to that maybe we premiums different XXXX our even legacy in months XXXX parts to and still to next newer it’s going challenging that more moving. some the those go system, XXXX environment order year system again time. continue the orders But more still year

the Great. XXXX. That’s your split the just the in helpful. And versus my response, last one us XXXX about is, between talking on revenue the were update Can you two? Ryan, you

availability Yes, of of challenges. the quarter, XXXXs, the the And because been an benefit extending of We I an more in those moment to extend XXXX and the things XXXX of chain in at moving a Profire, that its life. largely margin challenge in gross and is the came them. sold again. less And to have was future still I XXXXs forward just saw of supply lot But had exact the we’re lot we’ve for of don’t that believe that relation better is that end of nearing describing a all the because that to and XXXXs continue this even some percentage with and we the was of margin components. have because a the we some split. The the

the stabilizes. We shifting and once will improves be supply chain

sell XXXXs the But few be the that and have QX, the out, XXXXs certainly sold of But product or – the now, have continued a on, right to that that. we have be do energy that been us to would we the percentages. we XXXXs. And critical the Only we product gone shift time well. we focusing that supply XXXX, which continue so will there rates largely offer. is would servicing seeing that’s of what allows stable happen again, as the to shifting But a as XXXX, and bulk that would to good, in are product. main sorry, to over For need good again, infrastructure know chain I will don’t stream

That’s great. Thank that’s you me. and much for it so

Excellent. Thanks, Jim.

is The next from Advisors. Ascend Wealth Bair Please go John ahead. question form

you’re guys, it having you. internally? Thank so along. something is nice Hey, labor non-oil to you bring continues quarter. that Great seeing markets. momentum can you to existing about as employees the hope talked expanded expand going I employees questions, curious retaining forth. there, issues, new address roll guess, it whether to not and and area, that Two and gas pressures or as help you in Are be or that into to upon any I’m

to service and about you as sales it the do on relates efforts markets? our want to talk side those Cam,

Yes, bet. you Hi, John.

talent of we lot far, wanted for we’ve a So on brought the space. that that

Going leader experience back, it business really, of the horsepower XXXX. leads our all we’ve that, industries. put almost years and obviously, ago, that in has XXXX in he behind X well, some But

support it. view of perspective an more in When back looking some support we engineering from that can we these like the application team As applications-type and the – at new at, go things. in look we’re markets forward the it’s of an end

we where take we there? network, that. the to industries. sales be are and Will looking footprint expanding these look drastically of see we going in to aggressively here add care and at need just increase Yes, the we areas have especially service partner our don’t We don’t bricks-and-mortar? at we will. So to Will

that mentioned bunch the utility on with Coast, is a we in some call whole geography we focused where United have the in whatever There partners to we on strategic those plants So in – of want of couple areas certain States. areas. they mainly choosing downstream look a be existing partnerships are are with the in our people happen type of industrial we West to Midwest, area, who where even to relationships add have areas

a in the been doors, gravel that think, build whatever those it are They customers, and that have drying those to into the so pains spaces feeling a whether types we’ve do with to lot or who automation, running plants those suppliers be we far, burner that with work, going never all do We’re or companies on to they that knock able mining, of what might be, companies people of probably asphalt but this partners. have the were they of management, spaces. those of are the especially incumbent type in sell

the provide very open the can where come So to we we think alternative. degree and doors a in valuable

I So not people guess, needing to back again your ton of to a really add question, we’re expand. to

relationships. it’s we those to We But part, on strategically with for focus will have are most the will. those hire, a and finding partners who in spaces those

that? on at share Profire question like a good would dividend, seriously a and consider Well, perhaps like to to is, capital something doing or something dividend that, buyback small What what point allocation And opposed leverage. strictly to would happen another that special that’s consider good. way a then, initiating to It’s need situation? as a

us that an consequences. understand is that pay find are stop two, from better now impossible can a are and with Yes, we one the management that there starting I there as are our price. share that us. And to about a sources deploy other that We as our concept right speak of other now, And and it to going going to we are that. as into and nearly certainly seems really a bargain dividend; investors we dividend, there want senior what a the one-time-type some us hasn’t probably to quarters’ that’s continue gotten we think three it the with growth or either important buy there good to if And But once is special now, significant be to price on we haven’t that meet think at occasion that we without we prior dividend, some may we see start And as we us we’ve we’re you internally, the question. opposed to interesting record deploy capital dividend. then that’s significant get you could it share ways for It dividend. don’t think Board, two performance. materialized you that over recognition right it pay pay continue, consider is to that’s capital camps: a look we But to really talked really want back. right historic And to want to at them. shares

at company we I to to and continue we ways we’re with is other to going As our performance to flow. grow, look headed, continue the think cash where think,

where we So from capital yesterday expect that will this acquire just hopefully, operating But after the should widely what it be from to see, move we today. months. shares we is to published and back. certainly dividend share mean, probably fund cash more next I XX might we price that then deploying at from levels, react some it known if up these – flow able will and But stays our over we the report this be is

work. good good. lot. Very Thanks enough. up Fair Keep Thank the you. a

Alright. Thanks, John.

you, Thank John.

to the management hand question-and-answer like I for This over to back session. remarks. the closing concludes would call

you Thank our you and your continued us on thank joining call today everyone for all for support.

any have. available always, we’re may you questions for As discussions or

York you, everyone, day. tomorrow be in June. will Advisors’ Part the and in virtual Thank conference New have at and we great a EF Hutton Additionally, Three participating Conference

This conference today’s call. concludes

your and a Thank for you participating, day. have pleasant lines. disconnect may You