Profire Energy, Inc.

Good morning everyone and thank you for participating in today's conference call to discuss Profire Energy's fourth quarter and full year 2022 operating and financial performance for the period ended December 31st, 2022. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I will now turn the call over to Stephen Hooser, Investor Relations at Three-Part Advisors, to get the call started.

Thank you, operator, and thank you, everyone, for joining today's call. 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-K with the SEC and discussed the quarter and full year's highlights in a press release. As always, both of those documents are available on the investor relations section of the company's website. The transcript of this call will be posted in the coming days. Before we begin today's call, I would like to take a moment to read the company's safe harbor statement. Statements made during this call that are not historical are forward-looking statements. This call contains forward-looking statements, including but not limited to statements regarding the company's expected growth, increase in operating expenses, revenue diversification success, the planned research and development of new products, growth in our customer base in the natural gas market, the availability of the company's resources to make the beneficial investments in 2023 and beyond, and the company's future financial performance. All such forward-looking statements are subject to uncertainties and changes in circumstances. Forward-looking statements are not guarantees of future results or performance and involve risks, assumptions, and uncertainties that could cause actual events or results to differ materially from the events or results described in or anticipated by forward-looking statements. Factors that could materially affect such forward-looking statements include certain economic, business, public market, and regulatory risk factors identified in the company's periodic reports filed with the Securities and Exchange Commission. All forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements are made only as of the date of this release and the company assumes no obligation to update forward-looking statements to reflect subsequent events or circumstances except as required by law. Readers should not place undue reliance on these forward-looking statements. I would like to remind everyone that this call is being recorded and will be available for replay through March 23rd, 2023, starting later this evening. It will be accessible via the link provided in yesterday's press release, as well as the company's website at www.profireenergy.com. Following the remarks by Mr. Oviatt and Tidball, we will open up the call for your questions. Now, I would like to turn the call over to co-CEO and CFO of ProFire Energy, Mr. Ryan Oviatt. Ryan?

Thank you, Stephen, and welcome to all of you who are joining us on the call today. I will start the call by providing some updates on our industry and our business, followed by a review of the financial results, and then I will turn the call over to Cam to discuss outlook, strategic direction, and provide an update on our diversification strategy. Over the past two years, we have implemented a number of strategic initiatives to sustain our business through the pandemic and to position ourselves for growth as the global economy recovered. We have invested in our sales, service, and operations teams. We've been aggressive in procuring inventory and have pursued avenues for our burner management solutions for use outside of our legacy oil and gas markets. In the first half of 2022, our results continued to show gradual progress from the prior year. In the third quarter, the recovery of our legacy business and traction with our diversification efforts resulted in the third highest quarterly revenue ever for Profire at that time. This momentum continued through the end of 2022, and last night we reported the second highest revenue quarter in company history. Despite the historically high inflation, rising labor costs, and strained supply chain, we also reported improved net income and EBITDA over the previous quarter. The North American pent-up demand created by multiple years of deferred maintenance and upgrades across the oil and gas industry provides an ongoing tailwind for our core business. Our diversification strategy, which accounted for 6% of revenue in 2022 compared to less than 1% in the previous year, should also continue to gain further acceptance across non-oil and gas markets. Looking at our core legacy business, we believe the oil and gas industry remains strong, and EMP companies will likely continue to invest in new technology, new wells, and in new completions to at least maintain current production levels and control costs through operating technology advancements. This outlook should continue to be positive for Profire. With that, let me turn my remarks to Profire's financial results for the fourth quarter and full year 2022. In the fourth quarter, we recognized approximately $14 million in revenue, which represents a 9% increase over Q3 and a 69% increase over the prior year quarter. The sequential and year-over-year increases are primarily due to the increased global consumption of oil and gas, ongoing historically high energy prices, and strong growth across our diversification efforts. Gross profit increased to $6.6 million as compared to $6.1 million in the third quarter of 2022 and $3.4 million in the year-ago quarter. Gross margin decreased slightly to 47% of revenues from 47.7% in the prior quarter due to normal fluctuations in product and customer mix. Gross margin increased 540 basis points from the prior year quarter, thanks to price increases implemented for our products and improvements in freight costs and inventory reserves. Total operating expenses for the fourth quarter were approximately 4.3 million compared to 4 million in the third quarter and 3.7 million in the fourth quarter of 2021. The sequential and year-over-year increases reflect the impact of cost inflation on our business as well as increases in variable costs associated with increased customer deliveries and increases in performance-based compensation. Net income for the fourth quarter was approximately $1.8 million, or $0.04 per diluted share. This compares to net income of $1.2 million, or $0.02 per diluted share in the third quarter of 2022, and a net loss of $145,000 or breakeven per share in the fourth quarter of last year. Cash flow from operations in the fourth quarter was approximately $1.7 million compared to a negative $309,000 in the prior year quarter. For the full year 2022, we recognized $45.9 million in revenue. This compares to $26.4 million in 2021. The 74% increase is primarily due to the factors stated earlier related to demand for oil and gas production and ongoing recovery from the COVID pandemic. Gross profit increased to $21.7 million as compared to $11.4 million in the prior year. Gross margin increased to 47.1% of revenues from 43.3% in the prior year. This year-over-year increase in gross margin is primarily due to the better coverage of fixed costs resulting from the increase in revenue and sales price, both of which help to offset inflationary pressures on variable costs. Total operating expenses for the year were approximately $16.5 million compared to $13.4 million in 2021. The increase is primarily related to higher G&A expense resulting from overall cost inflation, the restaffing of positions correlated to the recovery in our business, as well as increases in variable costs resulting from higher product and service revenue. Nevertheless, the overall rate of increase for operating costs was lower than our revenue growth rate for the year. R&D expense increased 28% and depreciation and amortization decreased 18% compared to the prior year. Total other income during the year was $492,000 compared to $334,000 last year. The increase is primarily attributable to fixed asset sales and the associated gains or losses year over year, as well as increased interest income on liquid investments. Net income for the year improved by $5 million to approximately $3.9 million or $0.08 per diluted share. This compares to a net loss of $1.1 million or $0.02 per share last year. Cash flow from operations for the full year was $516,000 and our cash and other investments totaled $16 million compared to $17.5 million at the end of 2021. The decrease in cash year over year was a result of the 1.2M spent on profile share repurchases and approximately 600,000 in capital expenditures. We had no borrowings or other debt on the balance sheet at year end. Our inventory balance at the end of the year was approximately 10.3M compared to 7.2M at the end of 2021. The initiatives taken in early 2022 have allowed us to respond to increase customer demand while replenishing some of our inventory to pre-pandemic levels. However, we continue to see disruption of the supply chain for portions of our products, and these types of challenges are expected to linger throughout the coming year. We will continue to proactively work with our suppliers to secure the necessary parts and components our solutions require. Even with all the challenges of the past year, 2022 was a great year for Profire. We recovered to financial and operational performance levels not seen for many years, and we are a much stronger and better positioned company than we were then. We are confident in our ability to leverage the success going forward. I will now turn the call over to Cam to provide an overview of our business. Cam.