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 June 30th, 2023. I will now turn the call over to John Beisler, investor relations consultant at Three Parts Advisors, to get the call started. Please go ahead.

Thank you, operator. With me on the call today is the co-CEO and CFO of Profiter Energy, Ryan Oviatt, 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, product availability, industry efforts in the production of clean energy, growth in our customer base in the natural gas market, inventory balances, potential acquisition opportunities, the availability of company resources to make beneficial investments in 2023 and into 2024, 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 risks, assumptions, and uncertainties that could cause actual events or results to differ materially from the events or results described in or anticipated by the 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 August 24th, 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 profirenergy.com. Following the remarks by Mr. Oviatt and Tidball, 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 Oviatt. Ryan, please go ahead.

Thank you, John, and welcome to all of you who are joining us on the call today. Our second quarter 2023 results reflect a sustained momentum across our business. We recorded our fourth consecutive quarter of revenue in excess of 12 million and posted our highest ever quarterly net income and EBITDA. The last six month and 12 month periods represent the best ever consecutive six and 12 month periods in company history. We are excited about the path we are on and our ability to continue to operate at these record setting levels. We are a much better and stronger company today than we were when we last achieved this level of quarterly revenues, profits, and cash flows. We have more products to offer, our customer base is larger, our technology keeps getting better and better, and we believe the outlook for our business is strong for the next several years. This quarter's performance is the result of a number of strategic actions taken over the past 12 to 18 months, including strategic staffing efforts, investments in revenue diversification initiatives, inventory management in response to supply chain issues, and pricing initiatives to offset inflationary pressures. As we have previously stated, we believe hydrocarbons will continue to play a significant role in global energy requirements for the foreseeable future. Recently, multiple LNG projects have been announced that will add billions of cubic feet of capacity S&P expects global demand for LNG to increase more than 50% over the next decade. EQT, one of our top customers for the past several years, is the US's largest natural gas producer and is one of the major players in the LNG production space. We subscribe to their mantra that, quote, unleashing US LNG and replacing international coal with American natural gas is the largest green initiative on the planet. and the world's best weapon to address climate change." They state so eloquently, there is a great opportunity to help the climate and to meet our own and the rest of the world's energy needs through the clean production of U.S. natural gas. The world continues to demand more energy in all of its forms, not less. The recent upward moves in crude oil and natural gas prices in July are a tailwind to our business particularly as EMP companies continue their focus on maintenance that has been deferred for many years, as well as invest in improved efficiency and ESG initiatives. The EIA's short-term energy forecast for July shows a reversal of their same forecast at the start of the year as it relates to oil prices. The forecast now shows prices increasing for the next 18 months into the 80s. even though we have already surpassed that in the month of July alone. Similarly, their natural gas forecast continues to show prices getting back to the mid to upper $3 range. These forecasts, combined with the capital discipline being demonstrated by U.S. and Canadian exploration and production companies, is part of what gives us confidence in the strength and resilience of the oil and gas industry for the next several years. With that, Let me turn my remarks to Profire's financial results for the second quarter of 2023. During the second quarter, we recognized $14.4 million in revenue compared to $14.6 million in the first quarter and $9.6 million in the prior year quarter. Typically, revenue for the second quarter declined sequentially as oil and gas activity slows entering the summer months and resulting from the spring breakup cycle in Canada. For comparison, in the two years prior to the pandemic, second quarter revenue decreases were approximately 7% compared to the first quarter. The year-over-year increase was primarily driven by ongoing customer demand, pricing initiatives, and continued progress across our strategic diversification efforts. Gross profit for the second quarter was $7.4 million compared to $7.8 million in the prior quarter and 4.4 million in the second quarter of 2022. Gross margin was 51.3% of revenues compared to 53.8% in the prior quarter and 45.7% in the second quarter of 2022. The sequential decrease is primarily related to the product and customer mix. While the year-over-year increase was the result of the greater fixed cost coverage from higher revenues, price increases as well as typical fluctuations in inventory and warranty reserves. Total operating expenses for the second quarter were approximately $4.2 million compared to $4.5 million in the first quarter and $4.3 million in the year-ago quarter. The sequential and year-over-year decreases reflect the non-recurring recognition of the second half of an employee retention tax credit available through the CARES Act, which more than offset the impact of headcount additions and overall cost inflation across the business. Net income for the second quarter was approximately $2.9 million or $0.06 per diluted share. This compares to net income of $2.6 million or $0.05 per diluted share in the first quarter of 2023 and net income of $284,000 or $0.01 per diluted share in the second quarter of last year. Cash flow from operations in the second quarter was approximately $1.3 million compared to $1.8 million in the prior year quarter. Our working capital balances are strong and have the ability to continue to generate positive cash flows for our business in the coming quarters. We continue to monitor these balances and work to optimize them where possible in the challenging supply chain environment we have to operate under. Our inventory balance at the end of the quarter was approximately 13 million compared to 10.6 million at the end of the first quarter. Our efforts over the past six to 12 months to procure the product and components necessary for our solutions is starting to pay off, although there are still issues with sourcing and quality from certain suppliers. We continue to think long-term and are already working with our suppliers to ensure we will have the necessary product for 2024 to support our customer demand. As noted above, we are optimistic about the second half of 2023 and 2024, thanks to the strength of our legacy business, our diversification efforts, and our robust sales pipeline. We ended the quarter with $17.4 million in cash and liquid investments and remained debt-free. Late in the quarter, we were able to begin repurchasing stock under our previously approved and announced share repurchase program. We repurchased approximately 47,000 shares of our stock in the period. We continue to evaluate opportunities to use our cash beyond the share repurchase program, including increases to our sales and marketing spend, allocating additional resources to product development and potential acquisition opportunities. With that, I will now turn the call over to Cam to provide an overview of our business. Cam.