Profire Energy (PFIE) 9 Nov 232023 Q3 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 September 30, 2023.

I will now turn the call over to Steven Hooser, Investor Relations to get the call started. Please go ahead.

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

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

supply or call, call call like company's begin to success, diversification forward-looking availability future statements. company's harbor performance. collaboration Before revenue products, getting that changes safe but to, and growth All and our moment financial statements not made a not are circumstances. This increased such the today's statements company's Statements we and activity opportunities this development uncertainties opportunities of investments, new forward-looking take statements, subject including, I chain planned regarding research in CapEx would to sales during contains expected from are the base, historical the statements. to customer customers' limited forward-looking read growth, in the M&A potential

are anticipated statements the risks, results cause or could that results of not forward-looking the described events future involve or uncertainties and results in/or or differ actual materially assumptions events to performance from by statements. and guarantees Forward-looking

Commission. economic, Exchange affect forward-looking materially the periodic company's could factors that Factors identified the and market statements business, include such and certain public in risk with regulatory reports Securities filed

be circumstances, update Litigation required pursuant Reform are forward-looking to this subsequent as as statements of statements would to a by will on later made at for press accessible company and of this the Readers release assumes Private as place in available today. starting link to XXXX. as provided or these Act the made everyone will reflect to It replay of well being no release, law. safe recorded, forward-looking of All should website Securities date forward-looking events the All only that provisions reliance and statements November undue except www.profireenergy.com. XXXX, through also yesterday's it like are harbor the XX, obligation statements. I call is the forward-looking be remind company's not via

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

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

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

excess are We million in and our report net quarter best XX-year history. and revenue of our X-month our pleased consecutive EBITDA performance of to fifth income in revenue, company $XX

was combination gas as business CapEx strength benefit the our driven quarter's legacy diversification from This in response oil robust a business efforts. results and well natural as of and The solid to operators from through prices. E&P from ongoing performance our legacy spend steady consistent core of to continues

revenue represents XX% total Our diversification revenue energy covering in new just another infrastructure industries was Profire. and for the of quarter. best which over critical

We in space. are traction the excited about this we are gaining

X-month our total $XX.X the million. period, $XX.X revenue year-to-date for million. fiscal For was Total XXXX revenue is

us our in strategic in are position on our beyond. drive annual believe record put months to over company's XXXX strong the in history. XX a the further revenue We track highest performance and growth has past We great to

America day business is is IEA oil roughly the liquefied next this products projects these clean, The are and in X the global that role for demand the of in than double to have gas help export meet North construction will more by safe We to increase to will producers from forecast to reliable X.X years, world's oil barrels. Currently, including improve environmental across in a demands. barrels natural and increase feet XXX,XXX energy bullish, under gas the demand anticipating America demand Our worldwide. natural more projects million X to capacity. North continues conditions supply best overall daily projecting representing over there hydrocarbons. large a American in per to position are U.S., of play, manner feedstock provide nearly the billion of cubic XXXX. X to North horizon XX benefit the a in OpEx capacity believe

as likely only demand. Oil only is EVs EVs north medium- remain very of reach electricity mostly in and largely CapEx weeks, Key vehicles the even fossil North these plants. this supply the for years charging prevent meaningful their production. long-term Current So due power today's by LNG and and available under region will $XXX remain but yet Overall, conflict in which, represent stations. of that and stands prices and source supply, scenario purchased barrel Increasing in spend per $XX oil barrel XXXX prospects. need to prices vehicle energy auto adoption gas represent pressure projected recently the U.S. government stations out on concerns sales. gas to broader regarding from Canadian events governments a EVs manufacturers for ongoing could EIA supply. XXXX oil have increase in both natural stayed through and among by require long consumers product in not will on full hinder on good these demand greatly X/X Profire on global a further come difficulties and lack of about Profire's challenges North impacted a by gas used only block, hesitant again, prices have will American X covering and we by many Moreover, American The the is the Profire industry benefit articles the don't that pricing, come. limitations have to investments. In and vehicles investments roughly a recent optimistic East by fuel-based many X oil organizations. Any electric electricity could electric impact Middle increase production demand recent these these still capital global vehicle the multiyear increase have dollars, the for of from producers, charging will will or where months. facing increased coal industry significant significant restrictions range

year track the on top revenue best history. full in company record are performance to We line

investments to more turn Our strong focus as financial efficiency environmental allows let me Profire's on remarks XXXX. and my for additional financial results is placed opportunities quarter and acquisition that, the going position initiatives. With of forward, for third

second million across demand, efforts. ongoing During pricing continued in strategic our quarter. $XX.X recognized increase quarter, prior compared $XX.X The and approximately initiatives our the we the revenue, history, quarter diversification year-over-year supply chain million the third $XX.X million in year customer driven in to quarterly second progress company by XX% revenue and in primarily was improvements largest

margin coverage quarter year higher to increases the operating the well and year-over-year base, compared is million Gross quarter $X.X increase million in XX.X% compared The $X compared decrease and in for was was quarter fluctuations the of quarter of as as in the quarter inventory price in fixed in and to third typical $X.X result quarter from approximately million $X.X of the mix, profit XX.X% to for $X.X $X.X second the expenses product revenues the million while XXXX. the sequential prior greater were quarter to XXXX. Gross the reserves. Total million product in third third and primarily prior quarter. in of ago was third the related XX.X% revenue million cost mix, the warranty

of retention a year The XXXX, each this Act. second and employee CARES $XXX,XXX recognition credit the available quarter included third quarter the of tax of through

our Excluding operating and inflation the increased increase head ongoing and basis were roughly on to The activity. flat business credit, due XX% sequential on pressures year-over-year expenses primarily growth year-over-year. a support count to up is business

share was to $X million and per to third year. Cash net $X.XX of quarter diluted share or of for flow million income the share. diluted of in approximately $X.XX from approximately the diluted second use in the income million cash year $X.X or of $XXX,XXX approximately the million quarter quarter XXXX third in net This in $X.X income of last $X.XX or prior compares compared per quarter. quarter Net third was $X.X operations the per

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

quarter for additional the remaining average $X.X price work quarter and under in cash to to repurchased approximately debt XXX,XXX current in Cam remained purchases overview We $XX.X at investments our stock potential components an $X.XX with our of shipment will avoid million into Cam? roughly have now delays per an suppliers to heading needed to the authorization. I with of shortages and and call of business. our shares over and liquid free. share XXXX. million the ended continue We source to our provide We the turn

Thank you, Ryan.

their date, ranks terms represented technology, The safety products our our months Our Profire of history. thermal top X emissions, best QX industries XX results for Ryan, are amongst fiscal trailing performance best as in top and the mentioned on performance last as and to in company year delivers solutions operations quarter appliances. lowering ensuring To in processes line and GHG that their stands efficiencies optimizing revenue, of out our and workplace XXXX And our years. by team focused

remain strategic pillars Our intact.

infrastructure to Our industrial utility growing critical markets. our gas traditional the increase non-oil and focus upstream with coupled customer-centric downstream business in energy deliberate to on team continues space, share and market legacy efforts various and

construction infrastructure, through and our we critical achieve total QX, diversified biogas our results of achieved top strongest year-to-date line was In infrastructure. landfill, XX% including were wastewater approximately and to diversification energy and as able revenue industries,

For over year-over-year management of focus. combustion as year, burner from are diversification and our combined the we XXXX of coupled of proficiency our and XXX goal attribute fiscal years our this the We progress with to meeting leader of towards revenue closer expertise abilities unique trending technology. a team derived in our XX% significant

and has pipeline and enter continued which grow we robust leveraging will lead to this enabled to to develop industries our believe existing whole, a new products growth. opportunities, a Profire of As

legacy discuss of let's we business. highlights, Before diversification traditional our some review the

acreage. energy see in operators Permian mergers over acquisitions reserves A as continue As as prices of signs stability Profire to sector. and drilling wave This of each Basin that We witnessed in a completion in intensity be the requirements a industry. with expected, thus look increase continue well the so has as barrel M&A proven focus. will far commodity for the XX to we have and standardization and to resulted bullish yet is carbon the note, in activity boost activity believe high-profile significant XXXX produced in sharp in an demonstrate of increase as a positive we energy activity announced in Of automation, transactions overall consolidation the far. not activity this and lowering for

thermal increased is a major shale the foreshadow that plays Canadian operational to reduction emissions continue to the activity believe and oil initiatives we U.S. the with support each of increased to work we control of related and quarter, and and However, future. In third in efficiency. it for majors their

and solutions valued which partners adoption for of meet policy, produced many directly demand coal, technological product pay. With XX% XX% consumers is earn predicted including the cost and or XXXX some and continue American method be to Our gas who to produced and to the Cenovus the through our to the either business OEMs this demand numerous industry. that useful Civitas, to means affordable the expectations lowest Chevron, the and between inefficient able and growing and reaffirm LNG are and most increase from reliable COX American we on will estimate by world's XTO, Devon depends emissions. hydrocarbons be repeat operators, cleanest, Energy, represents government Continental, world's and willing replacing best-in-class remains EQT, new and energy have the North technical support Conoco, CNRL, support energy of quickest demand natural met, potential this rapidly. North How for global growth. XXXX, upstream The midstream price advancement, and others to

they with considered we as legacy gain North and reliability assets. gas clean, is and achieved gas our increasing new that safety businesses as transmission part on retrofit to with energy. and natural technology projects Although This efficiency, enables and across improving through continue traction focus programs new construction legacy automation, utilities natural reliable our on of of infrastructure to business, momentum and America which Profire affordable supports and communities solutions well specifying operate as

Our by supported customer Profire through as base as directly well several is trusted partners.

our sales to growing to existing our continue growing in invest customer base. network serve and support and We

to of with diversification As our year respect quarter strongest revenue. mentioned, QX represented the

XXXX. Kinder of our Products, in our MPLX, energy Enterprise Morgan, base strategy, bidding TC Energy develop critical infrastructure. process well as and projects for Transfer for Midstream, and operators and grow we AltaGas, Partners. projects the to the continued includes and part completed continue As expected Energy several grow to our quarter in customer began backlog as such We This base as pipeline diversification Williams, DCP

serve to support well this our relationships OEMs strategy market Our future and paramount who in direct growth of this targets is as space. specialized end-user as

in in where Turning to our third solutions quarter on industries orders be recognized, new and progress revenue and gas diversification XXXX brought products provide We activity take our new our leveraged the new and expertise projects. to well value. terms our as in and in represented industrials, technology to can non-oil to of as Profire strategy best quarter and remain committed bid

We are have excited in and as the future the opportunities well seeing traction we are growth we this about space. as

customers. mining, we Revenue related renewable heat destruction, biogas emissions the biogas, production, was and natural repeat and projects completed production. in grain water landfill all biofuel In treatment, to the quarter, treating, quarter gas from agricultural nearly agricultural drying

renewable and with and process take quality to this production will overall goals. RNG. contribute interest continue it pipeline continue believe from We develop natural supporting into operators, to We biogas gain landfill gas solutions they are other to firms our collaboration who and projects. In grow landfill to market OEMs diversification

technology we an the a high-demand into In can carbon, advanced integrator carbon-based that quarter, manufacturing including purchase is innovator and fiber convert developing with and activated various a products to hydrogen. and coal systems carbon collaborate order an who process received

We natural this deliver next forward in resource. of and success to to this looking this the months X project and expect the are of green innovative on use

in and the of received power orders and thermal have has we of our use equipment Currently, is who support over a been, We with major a is quarters. sales electricity. on pipeline we support it expect the provider also generation next highest developing for OEM specialized X execute to ever to received distributor orders the

efforts. and investment development the process short, as continue associated continue critical future legacy and research remains well as developing our our traditional support to product long-term Profire. to mid- our to to will markets research. Our balanced and This products diversification and new We of to development follow and approach plan

Before to all To Ryan instructions we other. customers, in you all Profire. started? your I we of each team you and our support you to and questions, our Operator, please do the appropriate interest our of so shareholders turn Q&A you and thank provide thank would support can members, get for for the

Instructions]. [Operator

comes The Brown from first question Capital Rob from Street Lake Markets.

pipeline What's it would you're year? of us that? -- next on kind can.... an the terms And update up you characterize give of Could you the And setting in for is of doing that how of projects? sort you how quotes and activity

one? question. to Great that want Cam, do take you

Yes.

You -- that our was in for only we've bet, in remarks, in order. as so we but diversification mentioned sales projects the best of of terms new revenue, QX quarter brought the year, bidding projects our not received our far

been business. how in So overall, the never stronger terms our on on pipeline/backlog diversification for of commentary looks the Profire

designs, longer-term from of projects, schematics or either drawing control These systems OEM forth them in are the integrator an engineering middle a there's -- with the the end the we're approval and previous previously an more time project that working of end from as perspective, calls, times, we've their and user. on many or between they user the talked about take back

making optimism a gives they very lot and of bid but strong. and we look these what at the longer us and So spaces. we're and time, for there was take great out the the in that We it's have estimate a diversified overall future activity QX that pipeline confidence grounds

So overall, healthy. very

you is Just you're activity is? really drilling demand How next are their CapEx sort that that improvements good it of from you of and of environment Great. continue. how year? talking Okay. you on in And color then energy continue? -- hearing customers sort demand seeing of about do of sort Or terms the sustainable what for needs environment some in think kind

Ryan continue I'll and Well, comments. then on with have it will

we your with What As what come in for oil to quarter, up do gas our we're of you E&Ps, does look always for the year? work with are -- majors like kind we program next going the to retrofit. and drill fourth

all December. not progress, on Obviously, of middle season a lot with really So spend as getting it's work as well balances. the the some some through kind of all getting spend their that's towards, and that's of and years, companies intertwined in in depending we something in holiday

just years. overall We we that when to decreasing. it this overall, see for don't have But wonderful of don't we look renewables the demand resource at natural many being able kick for out we energy, hydrocarbons see or

less double as the Will use world side, look we not. And Probably. XXXX. we as into use much Will fact, be it be In we it the gas of on even dramatic? out think could natural today. think We oil? what probably

all good challenging Profire, applications Profire. The they're for and between growing. And a never for out really gas really overlap But much more, us. very thing gas those oil all and we're because are business is Profire so we it things so we for as great it the doing, And natural more about this for see there's break gas. seeing we're

to going So be every with product, do we'll it work as service as well we do continue have that our for or our will quarterly the to partners as we do to on figure we're what annually demand. then for out as it and as We customers our our those try to year. for needs -- well need preparing to shelf what customers need to

be So it quarter continue It's the that's seen. on not we'll the completed, yet to work here. throughout of but to rest

just bit I'll add And there. Yes. little a

is slightly thing or decreases happening are prospects the environment. oil their the remarks, that, who our in peak in at in environment XXXX, you XXXX prepared lot through look And talked it charts for or if only longer-term XXXX. interesting there's beyond forecasting those a we even As the macro micro

oil even a Cam But in XXXX. steady horizon it's not short of it's drops after it or environment So we XXXX then, flat, peak It's don't of certainly like mentioned, very that think that cliff. off as that.

strength see basis on some good will we profile, there because we a quarterly look to that at that and the up prospects quarter-to-quarter. times a of and shorter environment, year-over-year, see think within horizons quite down be Profire. gas continue oil for But macro for short-term quarters, So certainly good from potentially good for we our you things happen fluctuations will when while. And for

gone the We rig the oil Right despite now, we're XX interesting to kind it's think steady in months. last that has where XX environment still for likely just prices, and next it's go really think count or up the have strong stabilizing down year moment going either at this for of to maintain to flat remain We probably up. go production. to to

responding North necessarily in seeing will just is they or would though every the that's up. think even discipline drilling more going would go And not America. these oil was continue X in seeing We're in to levels E&Ps necessarily continue the time not X much like go up we where years. oil We're So that. have would coming drilling here ago that at it years price likely crazy from to response. invest

James. question Dawson from McIlree James The comes next from

burner you how in Do is So up to trying your that have different -- versus product you understand difference management a and affects it of I'm with you put advantage different me the I'm oil. bullishness gas trying to gas Do take in Do to how your there to new the rate on demand, you that. come that with position you the differently. yourselves of -- designs? systems natural have order understand have to let in up offices production geographies? build take

at? that yourselves you from understand and you're to trying impact how on business order just your demand the I'm So in that increased looking benefit to position

even same. and overall, demand think gas. about a is Great be need. around let to well of require what the globally question. U.S. to But those natural also I'll a and the the And large positioned We and feed come even a to built to in to to being provide the Cam we've the U.S. natural for liquefied portion is gas going are supply of very the do able talked growth world Yes. lot going lot that comments to plants supply those. and they're

question, your Profire. to benefit how specifics, And does the that

more per are even a systems as much wells on oil. Our our well larger number certain And used have in equally on as systems of the uptake of and need geographies key infrastructure. natural And the gas of well. a processes in part as facilities. supply that they to various Those these pipelines stages infrastructure is also out LNG heaters as and build

is the are all So the products infrastructure utilized. where ongoing plus well and demand our supply

opportunity for that and see Profire. market well that to Cam? product to support environment continue anything? want in additional We as Do to to you also type some bring of to add

through globally, if update acquisition really of we I natural and about the That your curves just, the I comes that products se, need build of the production and controllers We that well being questions. Yes. ourselves most obtained one we they they're decline could new evolution gas add shale for, shale things think or would a new products of gas be a to it's on that natural thing said, great a per from, at look don't as happen. guess, to it which do gas value add we natural The well, except when like course, that. it's really, markets. we to either is

output we more feed therefore, completion, feel But drives going Yes. decreases, better? heaters, as little a drilling, Ryan need getting those LNG they the get as that the the more natural terminals, overall, these which into and more need they you're we talked of where about, decline whole Are wells feedstock, we to gas. for spaces

in Canada, need X-well that the or is say, more higher than, natural and shale to of traditional in need you're places United Permian. electricity, going to example, ratio for wells gas plays oil the conventional gas overall, like heaters Northeast some ratio in the BMS States more of If shale natural the even you and

of we Permian getting part the said, being That is term gas know that the here.

more and out So gas getting industry, going using Permian. it's come that's of more the the to

Profire expand Permian. stronger us, the its look even for it how think we can a can be we strong so It's exposure for of well, for but that us. And territory in opportunities

offerings So for, larger to place we small adding that more presence might a be a look product specialize area. it's whether that that or a

But need best all needs, that capitalize of that fill the future for America feedstock has to gas, things and it. those we're without but to looking mentioned, the as opportunity kind of going positioned of we're for a on Ryan North above, expansion overall, at the kind that to well lot energy

Okay. semi-permanent should I'm the And expect talked here? going know there early I'm the -- just that working but it? struggling That's I helpful. to something be, Ryan, you or to call, I of I'm just about still -- capital Is to on we higher are call Is get what for in should we've used permanent that with it it seen just levels that inventories what's than pre-COVID. going

good gone inventory. something other to of is accused struggle think on well. always and much post-COVID impact having And No, were Inventory of the at I has inventory, we inventory. many just-in-time times Yes. I just-in-time question. the certainly, businesses business, think as we're of in And where with that too are our an days had we pre-COVID, days the even

that believe these going in find in have nor those carry challenges, chain But economic inventory. inventory supply don't We ourselves back and days landscape the either. the we with now pre-COVID to we too that are uncertainty, political days probably the globally. certainly We levels we of higher do much

of of stabilization our system, supply waiting legacy full X,XXX the and a period chain transition still X,XXX for in the still on older We that to from transition. are also the

more the We've built inventory more have hand. it of we X,XXX. So got at on

that a or The we're chain that X,XXX -- the has They for key it's of us bit, X,XXX's us good of to seems to product individual which unique sell allowed They can able in that and to selling But we're us get to over the close continue that can kind a and system, when is next not we're better which want to to stabilizing is the that maybe our which quality for X,XXX's switch product's shift transition we product customers for want the build to shelf. them. to month, them product doing the newer challenge a to the this supply get have to And be they product. The more now coming fact still bunch sell to in of customer. month be product system getting start us bunch little an to constantly more. we're of to business, product. on to in that, we availability, don't the

So part up and the that us confidence continue quantities we're and customers that we're that enough that's chain transition transition able over. we'll that to be where XXXX, to we reliably it have of having through for to can supply building on enough the of firming hand, produce product fully start and

$XX million we that's down biggest probably $X think or I So that back seeing dropped just to, say, had pre-COVID. that the to thing the we're million right now as why inventory hasn't

to that QX that and customers transition being said, supply quantities to sizable looking XXXX. through are seeing I to the going being chain the environment, able But and and take of throughout longer. improvements are a to in forward over that's So X,XXX while like we X,XXX we little more even of produced. decrease And are that

annual see we to optimistic time But one how the that the do supply the handles other I'm bigger bring may that, can curve growth frame. there's we back today. we have on what hopefully we lower in Again, these still chain have as may balls down -- inventory as see that would demand, come higher total inventory, hopefully, an to if it bit. activity basis, where down and of are they levels revenue to little have than a we continue but a But things. And that's still get levels and of percentage we in of that

are I'd There management for call back in like hand further Instructions]. no to the to remarks. closing [Operator the questions queue.

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

there. are have. and available seeing we November you, Thank discussions you Also IDEAS Part Conference on day. next you may look XX, many Three for forward always, we'll or week Dallas to questions mention, As great any of have a in to participating Advisors and at be

call. conference today's concludes This

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