Profire Energy, Inc.

Good morning, everyone, and thank you for participating in today's conference call to discuss Profile Energy's fourth quarter and full year 2023, ended December 31st, 2023. After the presentation, there will 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 like to turn the call over to Stephen Hooser, Investor Relations, to get the call started. Please go ahead.

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-K with the SEC and discussed the quarter and four years 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, future success of diversification efforts, the planned research and development of new products, growth in our customer base, increased global demand for hydrocarbons, growth of our partner service network, increases of global LNG demand, potential M&A opportunities, increased momentum in critical energy infrastructure, and the company's future and 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 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 Provision and 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 also like to remind everyone that this call is being recorded and will be available for replay through March 28th of 2024, starting later this evening. It will be accessible via a link provided in yesterday's press release, as well as done on the company's website at www.profirenergy.com. Following the remarks by Mr. Oviatt and Mr. 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 business and the industry, 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. 2023 was a great year for Profire. We had our best year in company history, beating our prior best year for revenue by 14%, which occurred in fiscal 2015 of $51.2 million. In 2023, we recognized $58.2 million in revenue, which exceeded our prior year revenue by 27%. We also achieved company bests in gross profit dollars, operating income, net income, earnings per share, and EBITDA. We are very excited about what we've been able to achieve over this past year and the new ground we are breaking for Profire. These achievements have been the culmination of consistent and steady execution of company strategy for many years. We have also seen great success in our efforts to diversify our revenue into critical energy infrastructure and non-oil and gas markets. In 2021, our diversification efforts represented less than 1% of total revenue, increased to 6% in 2022, and last year accounted for 13% of total revenue. We expect to continue building on this momentum, which Cam will discuss in more detail later. Both the IEA and OPEC forecast global demand growth of more than 1.2 million barrels per day this year, with the trend to continue for the remainder of the decade. We expect operators will continue their efforts to catch up on the maintenance that had previously been deferred in recent years, but also understand that some long-term capital investments may be deferred in 2024 in the lead-up to and pending the outcome of the current year election cycle. Looking at our core legacy business, the combined onshore rig count for the US and Canada averaged 848 rigs in 2023, representing a 4% decrease from the prior year. The average WTI price per barrel in 2023 was $78, representing an 18% decrease from the previous year. Producers continue to draw down on previously drilled but uncompleted wells as the duck count decreased to 4,400 at the end of 2023, representing a 51% drop from its peak in June of 2020. Despite the downward trend of these industry metrics, Profire was still able to achieve its best performance in the past 22 years of operations. With that, let me turn my remarks to Profire's financial results for the fourth quarter and full year 2023. In the fourth quarter, we recognized $14.4 million in revenue compared to $14.8 million in the third quarter and $14 million in the prior year quarter. Gross profit increased to $7.8 million as compared to $7.5 million in the third quarter of 2023 and $6.6 million in the year-ago quarter. Gross margin increased 390 basis points sequentially and 730 basis points from the prior year quarter to 54.3% of revenue. This was due primarily to product and customer mix, normal inventory and warranty adjustments, and pricing initiatives. Total operating expenses for the fourth quarter were approximately $5 million compared to $4.9 million in the third quarter and $4.3 million in the fourth quarter of 2022. The sequential and year-over-year increases reflect cost inflation across our business as well as growth in business activity driving up variable costs. Specifically, G&A expenses for the fourth quarter remained flat sequentially and increased 18% year-over-year. R&D expenses increased 47% on a sequential basis and increased 15% from the prior year quarter. This is simply due to the timing of R&D projects and certification requirements. Depreciation and amortization were flat with the prior quarter as well as with the same quarter of last year. Net income for the fourth quarter was approximately $3.3 million or $0.06 per diluted share. This quarter's results include a one-time $828,000 or $0.02 per diluted share benefit generated from a reduction adjustment to deferred tax expense based on a detailed review of our deferred tax balances. Net income in the third quarter of 2023 was $2 million or $0.04 per diluted share and $1.8 million or $0.04 per diluted share in the fourth quarter of last year. Cash flow from operations in the fourth quarter was approximately $4.4 million compared to $1.7 million in the prior year quarter. For the full year 2023, we recognized $58.2 million in revenue. This compares to $45.9 million in 2022. The 27% increase is primarily due to the factors stated earlier. Gross profit increased to $30.5 million as compared to $21.7 million in the prior year. Gross margin increased to 52.5% of revenues from 47.1% in the prior year. This year-over-year increase in gross margin is primarily due to better fixed cost coverage, which offset inflationary pressures on variable costs. Total operating expenses for the year were approximately $18.7 million compared to $16.5 million in 2022. The increase is primarily related to higher G&A expense resulting from overall cost inflation. However, the overall rate of increase remained lower than our revenue growth rate for the year. Over the past 10 years, total operating expenses as a percent of revenue have ranged between 32% and 59%, with 2023 being the lowest mark in this range, despite the significant inflationary pressures over the past few years. Our strategic efforts in managing costs and building in operational efficiencies, combined with our sales price initiatives, have helped us achieve this great operating margin. R&D expenses decreased 13% and depreciation and amortization decreased 8% compared to the prior year. Total other income during the year was $592,000 compared to $492,000 last year. The increase is primarily attributable to higher interest income due to a combination of higher rates paid on our cash balance and short-term investments. Net income for the year was approximately $10.8 million or $0.22 per diluted share, which includes $0.02 related to the deferred tax adjustment referenced earlier. This compares to net income of $3.9 million or $0.08 per diluted share last year. Cash flow from operations for the full year was $7.1 million and our cash and other investments totaled $20 million compared to $16 million at the end of 2022. We had no borrowings or other debt on the balance sheet at year end. Net capital expenditures for the year were approximately $873,000. During the year, we were able to repurchase $2 million worth of Profire stock according to our approved share repurchase program. Our inventory balance at the end of the year was approximately $14.1 million compared to $10.3 million at the end of 2022. Over the past two years, we've been able to implement several tax planning strategies that have had a significant benefit on our financial performance and results of operations. These include filing for and receiving the employee retention credit through the CARES Act, the strategic use of several years of net operating losses in our Canadian subsidiary, and the deferred tax review, TRUUP, mentioned previously. We will continue to deploy our best efforts in identifying and implementing these types of strategic opportunities in the future when they arise. However, we cannot guarantee that similar opportunities will be available to us in future periods. Because we were able to take advantage of these opportunities in 2023, operating expenses were lowered by $760,000, income tax expenses were reduced, and net income increased by $1.9 million or $0.04 per diluted share. However, even when removing these non-recurring adjustments, 2023 remains our best year in company history from an operating income, net income, and earnings per share perspective. As I mentioned previously, we are very proud of what we have been able to accomplish in 2023 and the position these accomplishments put us in to be able to continue to do great things in coming years I will now turn the call over to Cam to provide an overview of our business. Cam.