Profire Energy, Inc.

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. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and 0. 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 Ovia, and Co-CEO, Cameron Tidball. Yesterday, after the market closed, the company filed its Form 10-Q with the SEC and discussed the quarter's highlights in a press release. As always, both of those documents are available on the investor 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, revenue diversification success, planned research and development of new products, the repurchase of company shares, growth in our customer base in the natural gas market, the availability of company resources to make beneficial investments in 2023 and beyond, and the company's future financial performance. All such forward-looking statements are subject to uncertainty and changes in circumstances. Forward-looking statements are not guarantees of future results or performance and involve risk, Assumptions and uncertainties that can cause actual events or results to differ materially from the events or results described in or anticipated by the forward-looking statements. Factors that can 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 May 24, 2023, starting later today. It will be accessible via the link provided in yesterday's press release, as well as through the company's website at profireenergy.com. Following the remarks by Mr. Ovia and Timbal, we will open the call for your questions. Now, I would like to turn the call over to the co-CEO and CFO of Profire Energy, Mr. Ryan Ovia.

Ryan? Thank you, John, and welcome to all of you who are joining us on the call today. Our first quarter 2023 results built upon the momentum we generated in the second half of 2022 as we recorded the second highest revenue quarter ever, expanded our gross margin above 50% for the first time since Q3 of 2019, and reported our best quarterly net income and EBITDA in company history. We have now achieved eight quarters of sequential revenue growth, and three of the top five revenue quarters have all been within the last nine months. Our strong performance in recent quarters is the result of several strategic efforts, including investments in our sales and operations teams, an aggressive product procurement and quality focus, sales price adjustments to combat inflation, and maintaining our high standard of customer service. We have also benefited from the overall post pandemic recovery within oil and gas markets. The recovery and perspective revenue from our legacy business for the prior six months exceeds our total revenue for all of 2021. Recent policy announcements at the state and federal level have increased pressure to reduce oil and gas consumption within the next decade. However, we believe hydrocarbons will remain a critical piece of the world's energy supply for many years to come. The necessary infrastructure for many of these alternative energy initiatives is not and will not be in place within the timelines proposed, and the current cost projections are likely prohibitive for widespread adoption. Despite these pressures, the outlook for our core legacy business remains very favorable due to pent-up demand. EMP companies continue catch-up efforts on multi-year deferred maintenance, as well as ongoing efforts to gain better efficiency out of their new and existing wells. With that, let me turn my remarks to Profire's financial results for the first quarter of 2023. During the quarter, We recognized approximately 14.6 million in revenue, which represents a 4% increase sequentially and a 53% increase over the prior year quarter. The sequential and year-over-year increases were primarily driven by ongoing customer demand, price increases on the products we sell, ongoing historical strength in oil and natural gas prices, and continued progress in our strategic diversification efforts. Gross profit increase to $7.8 million as compared to $6.6 million in the fourth quarter of 2022 and $4.6 million in the year-ago quarter. Gross margin improved to 53.8% of revenues from 47% in the prior quarter and 47.9% in the first quarter of 2022. The increases were the result of greater fixed cost coverage from the higher revenue base, price increases, and revenue mix between product, service, customers purchasing product in the period and the contributions from diversified revenue streams, as well as typical fluctuations in inventory and warranty reserves. Total operating expenses for the fourth quarter were approximately $4.5 million compared to $4.3 million in the fourth quarter and $3.9 million in the year-ago quarter. The sequential and year-over-year increases reflect the impact of headcount additions and overall cost inflation across the business. Net income for the first quarter was approximately $2.6 million or $0.05 per diluted share. This compares to net income of $1.8 million or $0.04 per diluted share in the fourth quarter of 2022 and net income of $627,000 or $0.01 per diluted share in the first quarter of last year. Cash flow from operations in the first quarter was approximately $474,000 compared to a negative $1.2 million in the prior year quarter. Our inventory balance at the end of the quarter was approximately $10.6 million compared to $10.3 million at the end of 2022. We continue to see disruptions within the supply chain for certain products and expect this will remain for several quarters. We continue to work with our suppliers to obtain the parts and components that our solutions require and are already looking to secure supplies for 2024. Overall, we are pleased with the start to 2023. We believe we can maintain the progress in our legacy business throughout the year, which will be aided by our strategic diversification strategy. We have $16.3 million of cash and liquid investments and remain debt-free. We are excited to announce that our Board of Directors has approved another $2 million share repurchase program that will run through April of 2024. We believe our stock is undervalued and that repurchasing stock at current prices is a good way to return value to our shareholders. I will now turn the call over to Cam to provide an overview of our business. Cam.