Q2 2024 Profire Energy Inc Earnings Call

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Speaker Change: Good morning, everyone and thank you for participating in today's conference call to discuss profile Energy's quarterly operating and financial performance for the period ended June 30 of 2024, I will now turn the call over to Steven Hooser Investor Relations consultant at three part advisors to get the call started.

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Speaker Change: Thank you operator with me on the call today is co CEO and CFO of profile 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 that was always supposed to these documents are available on the investors section of the company's website.

Operator: 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 30, 2024. I will now turn the call over to Steven Hooser, investor relations consultant at Three Part Advisors, to get the call started.

Steven Hooser: 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-Q with the SEC and discussed the quarter's highlights in a press release. As always, both of these documents are available on the investor section of the company's website.

Steven Hooser: The transcript of this call will also 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. These statements include, but are not limited to, statements regarding revenue diversification success, ability to support growth and diversification, the increase in global and domestic demand for natural gas, crude oil, and LNG, future performance in new and existing markets, OPEC's production cuts, increased drilling activity, sales pipeline, the increased necessity of hydrocarbons, potential M&A opportunities, material increases in U.

Speaker Change: The transcript of this call will also be posted in the coming days before we begin today's call I would like to take a moment to read the Companys 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 revenue diversification success ability to support growth and diversification the IND.

Steven Hooser: 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 statement. 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.

Speaker Change: Kris and global and domestic demand for natural gas crude oil and LNG future performance in new and existing markets OPEC production cuts increased drilling activity sales pipeline the increased necessity of hydrocarbons potential M&A opportunities material increases in the U S power generation stock repurchase plan product development.

Speaker Change: And introduction 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.

Speaker Change: We anticipated by the forward looking statements.

Speaker Change: 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.

Speaker Change: All forward looking statements are made pursuant to the safe Harbor provision and 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.

Steven Hooser: 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.

Speaker Change: 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 22nd of 2024, starting later today.

Operator: I would like to remind everyone that this call is being recorded and will be available for replay through August 22nd, 2024, starting later today. It will be accessible via a link provided in yesterday's press release, as well as through the company's website at www.profireenergy.com. Following the remarks made by Mr. Oviatt and Mr. Tidball, we will open the call for your questions. Now, I would like to turn the call over to our co-CEO and CFO of Profire Energy, Mr. Ryan Oviatt. Ryan?

Speaker Change: It will be accessible via a link provided in yesterday's press release as well as through the company's website at www Dot profile energy Dot com.

Unknown Executive: Following the remarks made by Mr. Oviatt and Mr. Tidball, we will open the call for your questions. Now, I would like to turn the call over to our co-CEO and CFO of Profire Energy, Mr. Ryan Oviatt. Ryan?

Speaker Change: Following the remarks made by Mr. <unk> and Mr. Tidball will open the call for your questions now I would like to turn the call over to our co CEO and CFO of profile energy Mr. Ryan Oviatt.

Ryan Oviatt: Our second quarter results represent another strong performance for the company, with the second highest quarterly revenue in company history, an increase in gross margin, and higher year-over-year net income when adjusted for last year's tax credit. This generated our highest quarterly service revenue in company history and continued traction across our diversification efforts, which accounted for 15% of total revenue in the quarter. In the first six months of the year, our diversified revenue significantly outpaced the same period in 2023.

Speaker Change: Ryan.

Ryan Oviatt: Thank you, Steven, and welcome to all of you who are joining us on the call today. Our second quarter results represent another strong performance for the company, with the second highest quarterly revenue in company history, an increase in gross margin, and higher year-over-year net income when adjusted for last year's tax credit. The revenue growth is coming across all aspects of our business. We continue to experience healthy demand for our legacy products, generated our highest quarterly service revenue in company history, and continued traction across our diversification efforts, which accounted for 15% of total revenue in the quarter.

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

Speaker Change: Our second quarter results represented another strong performance for the company with the second highest quarterly revenue in company history and increase in gross margin and higher year over year net income when adjusted for last year's tax credit.

Speaker Change: The revenue growth is coming across all aspects of our business we.

Speaker Change: We continue to experience healthy demand for our legacy products.

Speaker Change: <unk> generated our highest quarterly service revenue in company history, and continued traction across our diversification efforts, which accounted for 15% of total revenue in the quarter in the first six months of the year. Our diversified revenue has significantly outpaced the same period of 2023.

Ryan Oviatt: In the first six months of the year, our diversified revenue has significantly outpaced the same period of 2023. The underlying fundamentals for our business remain very favorable. Demand for electricity continues to increase due to the growth of data centers and the electrification of the home through additional electronics and the charging of EVs. The EIA predicts that the U.S. will use 3% more electricity in 2024 compared to 2023 and that consumption will grow again by an additional 1% in 2025.

Speaker Change: The underlying fundamentals for our business remain very favorable.

Ryan Oviatt: Demand for electricity continues to increase due to the growth of data centers and the electrification of the home through additional electronics and the charging of EVs. The EIA predicts that the U.S. will use 3% more electricity in 2024 compared to 2023 and that consumption will grow again by an additional 1% in 2025. As we have stated before, these trends are positive for Profire's future as we continue to supply the energy industry with safety and automation solutions that reduce the impact on the environment.

Speaker Change: Man for electricity continues to increase through the growth of data centers and the electrification of the home through additional electronics and charging of Evs.

Speaker Change: The EIA predicts that the U S will use 3% more electricity in 2024 compared to 2023.

Speaker Change: And that consumption will grow again by an additional 1% in 2025.

Ryan Oviatt: Sixty percent of the U.S.'s electricity production still comes from natural gas and coal, which isn't forecast to change materially any time soon. LNG will continue to play a larger role in the global energy market. Shell predicts global demand for LNG will expand by 50% by 2040 as China and other Asian countries switch from coal to natural gas. As we have stated before, these trends are positive for Profire's future as we continue to supply the energy industry with safety and automation solutions that reduce the impact on the environment. Oil prices have fallen below $80 per barrel in recent weeks due to signals of slowdowns in global economies despite the ongoing geopolitical tensions in the Middle East.

Speaker Change: 60% of the U S. As electricity production still comes from natural gas and coal, which isn't forecast to change materially anytime soon.

Speaker Change: LNG will continue to play a larger role in the global energy market.

Speaker Change: <unk> predicts global demand for LNG will expand by 50% by 2040.

Speaker Change: As China.

Speaker Change: And other Asian countries switch from coal to natural gas.

Speaker Change: As we have stated before these trends are positive for profile <unk> future as we continue to supply the energy industry.

Speaker Change: Safety and automation solutions that reduce the impact on the environment.

Speaker Change: Oil prices have fallen below $80 per barrel in recent weeks due to signals of slowdowns in global economies. Despite the ongoing geopolitical tensions in the middle East.

Ryan Oviatt: OPEC Plus's production cuts are expected to continue for three additional quarters, which should keep upward pressure on oil prices over this period. These actions, combined with any further disruption in the Middle East, could increase the need for additional North American production, which is likely another tailwind for Profire. We remain very optimistic about our ability in the second half of 2024 to match or exceed our first half performance and to carry that forward into 2025 and beyond, although there may continue to be some fluctuations from quarter to quarter. Our balance sheet remains strong and provides financial flexibility, which allows us to consider additional strategic actions such as acquisitions or stock repurchases. As previously announced, we began another stock repurchase program in the second quarter.

Speaker Change: OPEC pluses production cuts are expected to continue.

Ryan Oviatt: OPEC Plus's production cuts are expected to continue for three additional quarters, which should keep upward pressure on oil prices over this period. We remain very optimistic about our ability in the second half of 2024 to match or exceed our first half performance and to carry that forward into 2025 and beyond, although there may continue to be some fluctuations from quarter to quarter. As previously announced, we began another stock repurchase program in the second quarter. We ended the quarter with $18.4 million in cash and liquid investments and remain debt-free.

Speaker Change: Our three additional quarters, which should keep upward pressure on oil prices over this period.

Speaker Change: These actions combined with any further disruption in the middle East could increase the need for additional north American production, which is likely another tailwind for profile.

Speaker Change: We remain very optimistic about our ability in the second half of 2024 to match or exceed our first half performance and to carry that forward into 2025 and beyond although there may continue to be some fluctuations from quarter to quarter.

Speaker Change: Our balance sheet remains strong and provides financial flexibility, which allows us to consider additional strategic actions such as acquisitions or stock repurchases as.

Speaker Change: As previously announced we began another stock repurchase program in the second quarter.

Speaker Change: With that let me turn my remarks to profile financial results for the second quarter of 2024.

Ryan Oviatt: With that, let me turn my remarks to Profire's financial results for the second quarter of 2024. During the second quarter, we recognized approximately $15.2 million in revenue compared to $13.6 million in the first quarter and $14.6 million in the prior year. This quarter's performance represents the second best quarter in company history. Gross profit for the first quarter was $7.9 million compared to $6.8 million in the prior quarter and $7.4 million in the second quarter of 2023.

Speaker Change: During the second quarter, we recognized approximately $15 2 million in revenue compared to $13 6 million in the first quarter and $14 6 million in the prior year quarter. This quarter's performance represents the second best quarter in company history.

Speaker Change: Gross profit for the first quarter was $7 9 million compared to $6 8 million in the prior quarter and $7 4 million in the second quarter of 2023.

Ryan Oviatt: Gross margin was 52% of revenues compared to 50% in the prior quarter and 51% in the second quarter of 2023. The sequential and year-over-year increase was primarily related to product mix and better fixed cost coverage, which was partially offset by normal inventory and warranty reserve movements and inflation across the business. Total operating expenses for the second quarter were approximately $5.3 million, or 35% of revenue, compared to $5 million, or 37% of revenue, in the first quarter and $4.2 million, or 29% of revenue, in the year-ago quarter, which included a $762,000 cost reduction from the employee retention tax credit. The sequential and year-over-year increase reflects the impact of inflation and additional headcount in support of strategic growth and increased business activity.

Speaker Change: Gross margin was 52% of revenues compared to 50% in the prior quarter and 51% in the second quarter of 2023.

Speaker Change: Sequential and year over year increase was primarily related to product mix and better fixed cost coverage, which was partially offset by normal inventory and warranty reserve movement and inflation across the business.

Speaker Change: Total operating expenses for the second quarter were approximately $5 3 million or 35% of revenue compared to $5 million or <unk>, 37% of revenue in the first quarter and $4 2 million or 29% of revenue in the year ago quarter, which included a $762000 cost.

Speaker Change: <unk> from the employee retention tax credit.

Speaker Change: The sequential and year over year increase reflects the impact of inflation and additional head count in support of strategic growth and increased business activity.

Speaker Change: Net income for the second quarter was approximately $2 1 million or <unk> <unk> per diluted share. This compares to net income of $1 4 million or <unk> <unk> per diluted share in the first quarter of 2024, and net income of $2 9 million or <unk> <unk> per diluted share in the second quarter of last year.

Ryan Oviatt: Net income for the second quarter was approximately $2.1 million, or $0.04 per diluted share. This compares to net income of $1.4 million, or $0.03 per diluted share, in the first quarter of 2024 and net income of $2.9 million, or $0.06 per diluted share, in the second quarter of last year. As previously mentioned, the prior year quarter includes a $762,000, or $0.02 per diluted share, tax credit related to employee retention. Cash used in operations in the second quarter was approximately $2.5 million compared to cash generated of approximately $1.3 million in the prior year quarter.

Speaker Change: As previously mentioned the prior year quarter include the $762000 or <unk> <unk> per diluted share tax credit related to employee retention.

Speaker Change: Cash used in operations in the second quarter was approximately $2 5 million compared to cash generated of approximately $1 3 million in the prior year quarter.

Speaker Change: This difference was largely driven by a strategic increase in inventory as well as reductions in accrued liabilities.

Speaker Change: Our inventory balance at the end of the quarter was approximately $16 1 million compared to $15 7 million at the end of the first quarter we.

Speaker Change: We expect the pace of growth in our inventory balance to slow.

Speaker Change: But we'll maintain sufficient levels to meet customer demand as we continue to transition from our legacy BMS system to our latest technology BMS product lines.

Speaker Change: We ended the quarter with $18 4 million in cash and liquid investments and remain debt free.

Ryan Oviatt: This difference was largely driven by a strategic increase in inventory as well as reductions in accrued liabilities. Our inventory balance at the end of the quarter was approximately $16.1 million compared to $15.7 million at the end of the first quarter. We expect the pace of growth in our inventory balance to slow, but we'll maintain sufficient levels to meet customer demand as we continue to transition from our legacy BMS system to our latest technology BMS product line. We ended the quarter with $18.4 million in cash and liquid investments and remain debt-free. I will now turn the call over to Cam to provide an overview of our business.

Speaker Change: I will now turn the call over to Cam to provide an overview of our business.

Speaker Change: Yeah.

Cam: Thank you Brian.

Cam: So all of those joining us on the call today and to those who will listen to or read the transcript in the coming days.

Cam: And I want to express how extremely pleased we are with the performance of our team and the results we've been able to achieve in the second quarter.

Cam: As mentioned by Ryan our second quarter results rank as our second highest quarterly revenue in company history, all while delivering strong accompanying financial results in gross margin and net income.

Cameron Tidball: Profire's performance over the last eight quarters continues to demonstrate the strength of our brand in our traditional markets, as well as continued validation of our diversification strategy and trajectory. We remain committed to our strategic growth objectives, which are focused on maintaining and growing our market-leading position with upstream oil and gas producers and natural gas utility, spend mission, and distribution providers, coupled with our high growth focus on midstream and critical energy infrastructure operators, as well as the vast opportunity in the downstream industrial and renewable space. We remain confident in our ability to deliver consistent results and continue to plan for growth.

Ryan Oviatt: <unk> performance over the last eight quarters continues to demonstrate the strength of our brand in our traditional markets as well as continued validation of our diversification strategy and trajectory.

Speaker Change: We remain committed to our strategic growth objectives, which are focused on maintaining and growing our market leading position with upstream oil and gas producers and natural gas utility transmission and distribution providers, coupled with our high growth focus on midstream and critical energy infrastructure operators as well as the Vas.

Speaker Change: The opportunity in the downstream industrial and renewable space.

Speaker Change: We remain confident in our ability to deliver consistent results and continue to plan for growth our burner in combustion management technology and automation solutions continue to be the preferred platform of choice in our traditional markets and are gaining momentum and notoriety with new customers in new and exciting industries.

Cameron Tidball: Our burner and combustion management technology and automation solutions continue to be the preferred platform of choice in our traditional markets and are gaining momentum and notoriety with new customers in new and exciting industries. Let's dig into our diversification progress. In Q2, our combined diversification revenue exceeded Q1 by nearly 40% with revenue from non-oil and gas increasing by nearly 230% quarter over quarter. Our combined diversification revenue equated to just over 15% of our total revenue in the quarter.

Speaker Change: Let's dig into our diversification progress.

Speaker Change: In Q2, our combined diversification revenue exceeded Q1 by nearly 40% with revenue from non oil and gas.

Speaker Change: Increasing by nearly 230% quarter over quarter.

Speaker Change: Our combined diversification revenue equated to just over 15% of our total revenue in the quarter.

Ryan Oviatt: Comparing our first half results of 2024 to 2023, we are significantly ahead of our pace of last year, proving our ability to add new customers and projects, earn repeat business, and generate new opportunities for our pipeline through the efforts and initiatives of our sales and marketing teams. We were also awarded Repeat Business with a leading technology firm that specializes in carbon dioxide removal and production of biofuels and syngas.

Cameron Tidball: Comparing our first half results of 2024 to 2023, we are significantly ahead of our pace of last year, proving our ability to add new customers and projects, earn repeat business, and generate new opportunities for our pipeline through the efforts and initiatives of our sales and marketing teams. Our current backlog of diversification business has never been higher as we continue to win new projects in various industries. Thus far in 2024, our diversification results have been derived from critical energy infrastructure, landfill, biogas, biofuel, chemical manufacturing, power generation, metal manufacturing, and mining.

Speaker Change: <unk>, our first half results of 2020 for 2023, we are significantly ahead of our pace of last year, proving our ability to add new customers and projects earn repeat business and generate new opportunities for our pipeline through efforts and initiatives of our sales and marketing teams.

Speaker Change: Our current backlog of diversification business has never been higher as we continued to win new projects and various industries.

Speaker Change: Thus far in 2024, our diversification.

Speaker Change: <unk> results have been derived from critical energy infrastructure landfill biogas biofuel chemical manufacturing power generation metal manufacturing and mining.

Cameron Tidball: In the second quarter, we were able to win several exciting new diversification projects which comprise both new customer acquisition and repeat business with the expectation of continued collaboration and projects. Of note, we were awarded our first project with a producer and manufacturer of various specialty chemicals, products, and synthetic wax. We were also awarded Repeat Business with a leading technology firm who specializes in carbon dioxide removal and the production of biofuels and syngas. Profire's 3100 technology and platform will support critical combustion and flame safeguard management to enable these customers to operate their facilities and applications safely and efficiently.

Speaker Change: In the second quarter, we were able to win several exciting new diversification projects, which comprised both new customer acquisition and repeat business with the expectation of continued collaboration and projects.

Speaker Change: Of note we were awarded our first project with a producer and manufacturer of various specialty chemicals products and synthetic waxes.

Speaker Change: We're also awarded repeat business with a leading technology firm, who specializes in carbon dioxide removal and production of Biofuels and syngas.

Speaker Change: <unk> thousand 100 technology and platform will support critical combustion and flame safeguard management to enable these customers to operate their facilities and applications safely and efficiently.

Cameron Tidball: Our reference case of projects continues to grow. Our engineering, sales, and service teams are gaining valuable knowledge with each new application that we encounter and each project that we deliver on. As we compare our capabilities now to those of just three years ago, we are able to support projects with larger scale, greater complexity, and detail, and we are proving to be a valuable and even preferred option to that of the incumbents who have traditionally served these markets.

Speaker Change: Our reference case of projects continues to grow our engineering sales and service teams are gaining valuable knowledge with each new application that we encounter and project we deliver on as.

Speaker Change: As we compare our capabilities now to that of just three years ago, we are able to support projects with larger scale greater complexity in detail and we are proving to be a valuable and even preferred option to that as the incumbents who have traditionally serve these markets.

Speaker Change: As we have mentioned on previous calls we feel that profile is in a strong position to leverage our technology and proven project execution. This will enable us to continue to grow market share in the various industrial markets that have the need to operate critical heaters in appliances safely reliably and efficiently.

Ryan Oviatt: As we have mentioned on previous calls, we feel that Profire is in a strong position to leverage our technology and proven project execution. This will enable us to continue to grow market share in the various industrial markets that have the need to operate critical heaters and appliances safely, reliably, and efficiently. As mentioned, we experienced strong growth in critical energy infrastructure in the second quarter. With our second quarter and first half results, our year is on track to meet our internal growth target.

Cameron Tidball: As we have mentioned on previous calls, we feel that Profire is in a strong position to leverage our technology and proven project execution. This will enable us to continue to grow market share in the various industrial markets that have the need to operate critical heaters and appliances safely, reliably, and efficiently. As mentioned, we experienced strong growth in critical energy infrastructure in the second quarter. With our second quarter and first half results, our year is on track to meet our internal growth target.

Speaker Change: As mentioned, we experienced strong growth in critical energy infrastructure in the second quarter with our second quarter and first half results. Our year is on track to meet our internal growth targets.

Cameron Tidball: In the quarter, we were successful in completing projects with several national operators as well as winning new high-profile projects with Marathon's Midstream Division, MPLX, and Kinder Morgan. Profire was selected to support the initiatives of these leading operators to help lower emissions at specific plants and facilities.

Speaker Change: In the quarter, we were successful in completing projects with several national operators as well as winning new high profile projects with marathons Midstream Division MPLX and Kinder Morgan.

Ryan Oviatt: Profire was selected to support the initiatives of these leading operators to help lower emissions at specific plants and facilities. However, the record-breaking merger and acquisition activity of 2023, which carried into 2024, has continued to impact normal project discussions with upstream customers involved in these transactions. For the first time in decades, the United States is going to see a material increase in its power generation needs. We echo the sentiments of CEOs of leading natural gas producers that things are looking very exciting for natural gas.

Speaker Change: Profile was selected to support the initiatives of these leading operators to help lower emissions at specific plants and facilities.

Cameron Tidball: These wins continue to demonstrate the trust our customers have in Profire to support them in reaching internal and regulatory environmental targets. We continue to build relationships with original equipment manufacturers who design and manufacture fired equipment used in various downstream industries. We are also focused on collaborating with automation providers who serve these various markets. These OEMs and automation firms are turning to Profire due to our technology, our field and combustion experience, as well as our rapid response and ability to deliver design and technology solutions that meet industry needs and stand above that of our competitors.

Speaker Change: These wins continue to demonstrate the trust our customers have in profile to support them and reaching internal and regulatory environmental targets.

Speaker Change: We continue to build relationships with original equipment manufacturers, who design and manufacture fired equipment used in various downstream industries. We're also focused on collaborating with automation providers, who serve these various markets.

Speaker Change: These Oems and automation firms are turning to profile due to our technology, our field and combustion experienced as well as our rapid response and ability to deliver design and technology solutions that meet industry needs and stand above that of our competitors are.

Cameron Tidball: Our plans remain to find service and sales partners in geographic areas where we currently do not have team members to support our expanding customer and installation base. In summary, we are pleased with the progress we are making towards our diversification goals. Our sales pipeline and backlog in critical energy infrastructure continues to strengthen. We remain on pace to exceed 2023's results in this diversified area of the energy sector. Our downstream and industrial project pipeline, current sales orders, and potential bid opportunities have set the stage for us to break the record set in 2023.

Speaker Change: Our plans remain to find service and sales partners in geographic areas, where we currently do not have team members to support our expanding customer and then and installation base.

Speaker Change: In summary, we are pleased with the progress we are making towards our diversification goals, our sales pipeline and backlog and critical energy infrastructure continues to strengthen we remain on pace to exceed 2020 threes results in this diversified area of the energy sector, our downstream and industrial project pipeline current sales.

Speaker Change: Orders and potential bid opportunities have set the stage for us to break the record set in 2023.

Cameron Tidball: We continue to develop our internal teams and individuals who are focused on growing our ability to support projects and customers in diversified industries and plan for future sales and support expansion in the coming quarter. Turning to our traditional business and markets, overall, we are seeing stability from upstream producers. We experienced moderate growth quarter-over-quarter, despite reduced year-over-year rig counts, which in turn resulted in less drilling and completion activity. Our growth was achieved due to overall steady commodity prices, regular business from existing customers, winning bids and completing projects from new customers, as well as achieving our best quarter in company history in terms of service revenue generated. Our customers continue to specify Profire as their burner management solution provider of choice.

Speaker Change: We continue to develop our internal teams and individuals who are focused on growing our ability to support projects and customers in diversified industries and plan for future sales and support expansion in the coming quarters.

Speaker Change: Turning to our traditional business and markets overall, we are seeing stability from upstream producers, we experienced moderate growth quarter over quarter, despite reduced year over year rig counts, which in turn results in less drilling and completion activity.

Speaker Change: Our growth was achieved due to overall steady commodity prices regular business from existing customers, winning bids and completing projects from new customers as well as achieving our best quarter in company history in terms of service revenue generated.

Speaker Change: Our customers continue to specified profile as their burner management solution provider of choice it.

Cameron Tidball: It is our belief that our market share has never been stronger. We continue to support EMPs with the technology they need to safely and efficiently run their heated appliances, as well as enable them to complete projects focused on emissions reduction and monitoring on appliances that are used to meet air quality regulations. The record-breaking merger and acquisition activity of 2023, which carried into 2024, has continued to impact normal project discussions with upstream customers involved in these transactions. Due to the significant integration efforts which ensue, our contacts' ability to execute purchase orders and make normal operational decisions can experience delay.

Speaker Change: It is our belief that our market share has never been stronger we continue to support <unk> with the technology, they need to safely and efficiently run their heated appliances as well as enable them to complete projects focused on emissions reduction and monitoring on appliances that are used to meet air quality regulations.

Speaker Change: The record breaking merger and acquisition activity in 2023, which carried into 2024.

Speaker Change: Continued to impact normal project discussions with upstream customers involved in these transactions.

Kevin: Due to the significant integration efforts, which ensue or contacts ability to execute purchase orders and make normal operational decisions Kevin experienced delay.

Cameron Tidball: Looking to the remainder of the year, we expect we will begin to see things settle down, which we believe will lead to potentially a stronger second half of 2024. As we look forward to the remainder of the year, we are expecting to see increased drilling activity in the Marcellus and Haynesville. Currently, both shale plays are running rigs below what is needed to maintain production levels, which has overall gas production down here to date.

Kevin: Looking to the remainder of the year, we expect we will begin to see things settle down, which we believe will lead to potentially a stronger second half of 2024.

Speaker Change: As we look forward to the remainder of the year, we are expecting to see increased drilling activity in the Marcellus and haynesville.

Speaker Change: Currently both shale plays are running rigs below what is needed to maintain production levels, which has overall gas production year down year to date.

Cameron Tidball: The gas market is still considered oversupplied, but based on comments from our customers, we believe we will see increased activity in the second half of the year. As a result of the opening of the Trans Mountain Pipeline, Canada-based producers are ramping up production. With this shorter route to new markets and lower cost of transportation, operators believe that the differentials have the potential to reduce, which could result in Western Canadian Select becoming one of the most cost-effective crews available in the world.

Speaker Change: Gas market is still considered oversupplied however, based on comments from our customers. We believe we will see increased activity in the second half of the year.

Speaker Change: As a result of the opening of the Trans Mountain pipeline, Canada based producers are ramping up production.

Speaker Change: With this shorter route to new markets and lowered cost of transportation operators believed that the differentials have the potential to reduce which could result in western Canadian select becoming one of the most cost effective crudes available in the world.

Cameron Tidball: As we monitor the health and outlook of the energy sector related to hydrocarbon production, we remain optimistic about the long-term demand and essential need for hydrocarbons. We believe the outlook for LNG exports from North America is bright, and that the case for hydrocarbons is strengthening. We feel that more and more markets will conclude that hydrocarbons are a necessity and that all forms of energy will be required to meet future demands. The EIA forecasts remain in support of Profire's traditional business. U.S. natural gas production is predicted to increase in 2025, while natural gas consumption in the U.S. is expected to remain flat.

Speaker Change: As we monitor the health and outlook of the energy sector related to hydrocarbon production, we remain optimistic on the long term demand an essential need for hydrocarbons we.

Speaker Change: We believe the outlook for LNG exports from North America is bright and that the case for hydrocarbons is strengthening.

Speaker Change: Feel that more and more markets will conclude that hydrocarbons are a necessity and that all forms of energy will be required to meet future demand.

Cameron Tidball: Thank you, Ryan. So all those joining us on the call today, and to those who will listen to or read the transcript in the coming days, Ryan and I want to express how extremely pleased we are with the performance of our team and the results we've been able to achieve in the second quarter. As mentioned by Ryan, our second quarter results rank as our second highest quarterly revenue in company history, all while delivering strong accompanying financial results in gross margin and net income.

Speaker Change: I a forecast remain in support of profiles traditional business.

Speaker Change: U S natural gas production is predicted to increase in 2025.

Speaker Change: Gas consumption in the U S is expected to remain flat LNG exports are expected to increase dramatically in crude production is forecasted to increase through 2025.

Cameron Tidball: LNG exports are expected to increase dramatically, and crude production is forecasted to increase through 2025. Consequently, for the first time in decades, the United States is going to see a material increase in its power generation needs. Echoing the sentiments of CEOs of leading natural gas producers, we remain committed to our M&A activities, employing a systematic approach to identify and assess potential opportunities. We are actively seeking and engaging with companies that offer synergistic businesses, aligning with pro buyers' growth and scalability objectives in our current and future markets.

Speaker Change: For the first time in decades.

Speaker Change: <unk> is going to see a material increase in its power generation needs.

Speaker Change: <unk> sentiments of Ceos of leading natural gas producers that things are looking very exciting for natural gas.

Speaker Change: We remain committed to our M&A activities employing a systematic approach to identify and assess potential opportunities. We are actively seeking and engaging with companies that offer synergistic businesses aligning with <unk> growth and scalability objectives in our current and future market.

Ryan Oviatt: We remain committed to our M&A activities, employing a systematic approach to identify and assess potential opportunities. We are actively seeking and engaging with companies that offer synergistic businesses, aligning with Profire's growth and scalability objectives in our current and future markets. Looking ahead to the upcoming quarters and years, we are enthusiastic and optimistic about our prospects. Our traditional customers will continue to rely on us for automating their new and existing heated appliances, aiming to enhance efficiency and reduce greenhouse gas emissions. Operator, would you please provide the appropriate instructions so we can get the Q&A started?

Cameron Tidball: These efforts also extend to developing products and solutions tailored to both our traditional markets and our diversification strategies. Looking ahead to the upcoming quarters and years, we are enthusiastic and optimistic about our prospects. Our traditional customers will continue to rely on us for automating their new and existing heated appliances, aiming to enhance efficiency and reduce greenhouse gas emissions. Existing regulations underscore the demand for our solutions. Moreover, our efforts to diversify into new industries with burner and combustion management solutions are gaining momentum, as we consistently demonstrate the value of our over 400 years of combustion experience and expertise across multiple sectors.

Speaker Change: These efforts also extend to developing products and solutions tailored to both our traditional markets and our diversification strategy.

Speaker Change: Looking ahead to the upcoming quarters and years, we are enthusiastic and optimistic about our prospects. Our traditional customers will continue to rely on us for automating their new and existing heated appliances, aiming to enhance efficiency and reduce greenhouse gas emissions existing regulations underscore the demand.

Speaker Change: For our solution. Moreover, our efforts in diversifying into new industries with burner combustion management solutions are gaining momentum as we can distantly demonstrates the value of our over 400 years of combustion experience and expertise across multiple sectors.

Cameron Tidball: Before we open the line to questions, Ryan and I want to express our sincere gratitude for your interest and support of Profire. We also want to acknowledge and extend appreciation to our team members for their hard work and commitment in supporting our customers, shareholders, and each other. Operator, would you please provide the appropriate instructions so we can get the Q&A started?

Speaker Change: Before we open the line to questions, Brian and I want to express our sincere gratitude for your interest and support of profile. We also want to acknowledge and extend appreciation to our team members for their hard work and commitment and supporting our customers shareholders and each other.

Speaker Change: Operator would you please provide the appropriate instructions. So we can get the Q&A started.

Speaker Change: And at this time, if you would like to ask a question. Please signal by pressing star one on your telephone keypad, you may remove yourself from the queue at any time by pressing star two.

Operator: Once again, that is star number one to ask a question. And our first question will come from Rob Brown with Lake Street Capital Markets. Please go ahead.

Operator: And at this time, if you would like to ask a question, please signal by pressing star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two.

Speaker Change: Once again that is star one to ask a question and our first question will come from Rob Brown with Lake Street Capital markets. Please go ahead.

Speaker Change: Hi, good morning.

Speaker Change: Yes.

Rob Brown: Hi, Good morning first question is on the on the service revenue activity with <unk>.

Rob Brown: Morning. My first question is on service revenue activity. It was quite strong in the quarter. What was sort of driving that, and can that continue, or how?

Rob Brown: Strong in the quarter, what was sort of driving that and can that continue or how how can that continue.

Rob Brown: Yes.

Rob Brown: Okay.

Unknown Executive: Yeah, certainly, Rob. That's a great question. Cam, do you want to talk about that?

unknown: Yeah, certainly, Rob. That's a great question. Cam, do you want to talk about that? Yeah, for sure.

Rob Brown: Yes, certainly Rob that's a great question Cam do you want to talk about that.

Speaker Change: Yes for sure.

Cameron Tidball: Really, overall, if we look at the last few quarters, our service team just continues to get busier and busier. And it's in part due, we think, to the fact that human power is stretched, especially in the upstream industry. And as we've moved into some of these diversified industries as well, we've been able to secure some nice projects that our service team has been involved in the commissioning and sometimes the installation portions of that. Can it continue to a degree?

Cam: Really overall, if we look at the last few quarters. Our service team just continues to get busier and busier than it is in part due we think to.

Rob Brown: The fact that human power.

Cam: Is stretched in especially the upstream industry as we've moved into some of these diversified industries as well we've been able to secure some some nice projects that our service team has been involved in the commissioning and sometimes the installation portions portions of that.

Speaker Change: Can it continue.

Speaker Change: To a degree yes, we are extremely busy this quarter, but we will say our team is probably a little more stretched than we'd like from.

Cameron Tidball: Yes, we are extremely busy this quarter, but we will say our team is probably a little more stretched than we'd like from the hours they're working. We have expanded the service team slightly, and we continue to look for more technicians that we can either bring on that can just be plug and play or that we can train, especially in the Permian and probably the Northeast, as we see it getting busier there.

Speaker Change: The hours they are working we have expanded the service teams slightly.

Speaker Change: And we continue to look for more technicians that we can either bring on that can just be plug and play or that we can train, especially in the Permian.

Unknown Executive: Probably the Northeast, as we see it getting busier there. But really, as our service team, our tenure is becoming really strong. We don't have a lot of turnover. We have great experience. We've had some great projects in the DJ basin, where we're working with some of the major EMPs there to do a lot of upgrading. We see that continuing. So can it continue to this degree?

Speaker Change: The northeast as we see it getting busier there.

Cameron Tidball: But really, as our service team, our tenure is becoming really strong. We don't have a lot of turnover. We have great experience. We've had some great projects in the DJ basin, where we're working with some of the major EMPs there to do a lot of upgrading. We see that continuing. But can it continue to this degree? We hope to be able to do it, but probably with adding a few more people, but there will be some fluctuations up and down. But overall, it really comes down to some large projects that we were able to execute during the quarter, as well as just being incredibly busy right now, which is a great sign.

Rob Brown: Really.

Speaker Change: Our service team our tenure is becoming really a strong we don't have a lot of turnover. We have great experience. We have had some great projects in the DJ Basin, where we're working with some of the major e&ps there to do a lot of upgrading.

Speaker Change: We see that continuing.

Speaker Change: So can it continue to this degree.

Speaker Change: Yeah.

Speaker Change: We hope to be able to do it but probably with adding a few more people, but there will be some fluctuations up and down.

Speaker Change: Slightly with it but overall it really comes down to some large projects that we were able to execute during the quarter as well as just we are incredibly busy right now which is a great sorry.

Speaker Change: Okay, great. Thank you and then.

Ryan Oviatt: Okay, great. Thank you. And then, on the diversification efforts, good, good progress there. You know, the pipeline is active. How would you characterize the pipeline growth in diversification and, and maybe, you know, how do you see that playing out over time in terms of percent of revenue?

Speaker Change: Then on the diversification efforts good good progress there.

Speaker Change: The pipeline is active how would you characterize the pipeline growth and diversification and maybe what you see that playing out over time in terms of percent of revenue.

Speaker Change: Yes, another great question.

Ryan Oviatt: Yeah, another great question. As we mentioned, we're very excited about what we've been able to achieve in the continuing increases, not only just as a percentage of revenue, but the overall revenue base increasing itself as well for total revenue. So hitting 15% this quarter on top of a strong Q1 as well as a great start to the first half of this year is something that we're really proud of. And it continues to come, as Cam mentioned in his prepared remarks, that it's coming from within critical energy infrastructure in oil and gas but also from lots of other areas.

Unknown Executive: Yeah, another great question. We're, as we mentioned, very excited about what we've been able to achieve in the continuing increases, not only just as a percentage of revenue, but the overall revenue base increasing itself as well for total revenue. So hitting 15% this quarter on top of a strong Q1 as well with a great start to the first half of this year.

Speaker Change: As we mentioned, we're very excited about what we've been able to achieve.

Speaker Change: In the continuing increases not only just as a percentage of revenue, but the overall revenue base increasing itself as well for total revenue so hitting 15% this quarter.

Speaker Change: Top of a strong Q1 as well with the great start to the first half of this year.

Speaker Change: It's something that we're really proud of and it continues to come as Ken mentioned in his prepared remarks that that's coming from within critical energy infrastructure in oil and gas, but also from lots of other areas.

Ryan Oviatt: And as far as the pipeline is concerned, we're continuing to see a significant amount of our total pipeline. Probably at least a third, if not more, of that total revenue pipeline is coming from diversification areas, so it continues to strengthen. We continue to see a bunch of projects coming in that hopefully will hit within the second half of the year, but also things stacking in already for 2025. Cam, do you want to give any further color on any specifics there? Yeah, absolutely.

Speaker Change: And as far as the pipeline is concerned we're continuing to see a significant amount of our total pipeline.

Speaker Change: Probably at least a third if not more of that total revenue pipeline is coming from diversification areas. So it continues to strengthen we continue to see a bunch of projects coming in hopefully hit within the second half of the year, but also things stacking in already for 2002.

Speaker Change: 25.

Cam: Cam do you want to give any further color on any specifics there.

Cameron Tidball: We've talked about it before on calls of just, okay, is there a point where you just really laser focus on an area and put some horsepower behind it, and the answer to that is yes, there still does come a point, but we're seeing so many really interesting projects come our way partly because we've been able to execute on some of these projects in the last couple years with really notable firms in the landfill and biogas and renewable natural gas space. And we're putting some good investment into marketing.

Cam: Yes, absolutely.

Cam: We've talked about it before on calls just okay is there come a point tripping point here, where you just really laser focus on an area and put some horsepower behind it and the answer to that is yes, theres still does come a point, but we're seeing so many like really.

Cam: Interesting projects come our way, partly because we've been able to execute on some of these projects in the last couple of years with really notable firms in the landfill and biogas and renewable natural gas space.

Unknown Executive: And we're putting some good investment into marketing. And so people are finding us who are working on these interesting projects where they're taking industrial biomass, and they have to do something with it. And there are firms that are specializing in dealing with this and coming up with new and creative ways to use it, whether it's coal or to use a feedstock of wood chips to turn it into something else or biochar. State, how excited we are about our movement here. And we're going to look to continue to grow that wall, growing that legacy business, which we love and is still a great business for Profire.

Cam: And we're finding we're putting some some good investment into into marketing and so people are finding us who are working on these interesting projects where they're taking.

Cameron Tidball: And so people are finding us. We're working on these interesting projects where they're taking industrial biomass, and they have to do something with it. And there are firms that are specializing in dealing with this and coming up with new and creative ways to use it, whether it's coal or using a feedstock of wood chips to turn it into something else or biochar. Companies are coming to us because, as we mentioned, we're able to respond very quickly, much quicker than that of the incumbents. We're able to speak their language when it comes to burner management and combustion, and it's just something that is not so readily available out there to find.

Cam: Industrial biomass and they have to do something with it and there's firms that are are specializing in dealing with this and coming up with new and creative ways to use whether it's coal or to use.

Cam: The feedstock of wood chips to turn it into something else or bio char.

Cam: And.

Cam: Companies are coming to us and because as we mentioned.

Cam: We're able to respond very quickly much quicker than that of the incumbents, we're able to speak their language. When it comes to burner management combustion and it's just something that is not so readily available out there to find and so as Ryan mentioned the backlog.

Cameron Tidball: And so, as Ryan mentioned, the backlog is strengthening. We see it continuing to go forward as we continue to put case studies out there, as we continue to execute on new projects and are able to publicize that to train our sales and service teams. As we mentioned in our remarks, we plan on expanding our sales team both internally as well as expanding our sales and service support in areas where we just don't have people.

Ryan Oviatt: <unk> is strengthening we see it continuing to go forward.

Speaker Change: We continue to put case studies out there as we continue to execute on new projects and herbal to publicize that to train our sales and service teams.

Ryan Oviatt: As we mentioned.

Speaker Change: In our remarks, we plan on expanding them.

Cam: Our sales team.

Cam: Both internally as well as expanding our sales and service support in areas, where we just don't have people were finding projects.

Cam: We've closed on that will have to support that are just in areas that we never thought profile would be well. We've always hoped we would be but a few years ago. We never thought we would have people in certain areas, but very exciting.

Cameron Tidball: We're finding projects that we've closed on that we'll have to support that are just in areas that we never thought Profire would do well. We've always hoped we would be, but a few years ago, we never thought we'd have people in certain areas, but very exciting. We're looking forward to, as we talked about... As I mentioned, executing on a project here late Q3, probably into Q4 at a large chemical plant, and we see more and more some of these new customers that we're bringing on that repeat business is going to start to ensue.

Cam: We're looking forward to as we talked about <unk>.

Speaker Change: You mentioned executing on a project here late Q3, probably into Q4 at a large chemical plant and we see more and more some of these new customers that we're bringing on that repeat business is going to start to see we already are enjoying some of that but as we build <unk>.

Cameron Tidball: We already are enjoying some of that, but as we build our base here, just the number of open projects has expanded significantly quarter over quarter. So great progress. We can't really overstate how excited we are about our movement here, and we're going to look to continue to grow that while growing that legacy business, which we love and is still a great business for Profire.

Speaker Change: Our base here just the number of open projects has expanded.

Speaker Change: Significantly quarter over quarter, so great progress.

Cam: Really over state how excited we are about our movement here.

Cam: And we're going to look to continue to grow that while growing that legacy business, which we love and.

Speaker Change: Is it still a great business for for pro fire.

Speaker Change: Okay, Great and then and then I guess on the legacy business.

unknown: Okay, great. And then, I guess on the legacy business, you talked about oil prices being a bit of a headwind and then about some of the cross-currents in the market. But I guess the question is, do you think you can grow kind of overall? And is the legacy business continuing to grow? And sort of what's the sort of near-term and mid-term kind of growth outlook? You know, I know you want to give guidance, but sort of directionally, what's the growth outlook you think you can get? Wayne, John Bair,

Speaker Change: Talked about oil prices being.

Speaker Change: Bit of a headwind and then.

Speaker Change: Some of the cross currents in the market, but I guess the question is do you think you can grow kind of overall.

Speaker Change: The legacy business, continuing to grow and sort of what's the sort of near term mid term kind of growth outlook.

Speaker Change: I know you don't give guidance, but that's sort of directionally, what sort of the growth outlook do you think you can get.

unknown: Well, you know, and I'll make some remarks here, and then Ryan will want to comment for sure. But, you know, you look at the rate count, quarter over quarter, it's down, year over year, it's down. But Profire's still been able to produce some great quarters, and there are a lot of reasons for that.

Cam: Okay.

Unknown Executive: Bye.

Cam: I'll say some remarks here and then Ryan will want to comment for sure, but you look at the rig count quarter over quarter, it's down year over year, it's down.

Ryan Oviatt: But profile still been able to produce some great quarters and Theres a lot of reasons for that one is our market share continues to grow there's still new customers to go and get we've seen this M&A activity on although we mentioned it does kind of.

unknown: One is our market share continues to grow. There's still new customers to go and get. We've seen this M&A activity, although we mentioned it does kind of. Unknown Executive, Todd Fugal, Unknown Executive, Todd Fugal, Exxon buying Pioneer, they're both very... I guess, sophisticated.

Ryan Oviatt: Slow things for us to put things on delay you've seen that greater sophistication in need for automation from these firms and as they buy other cut.

Ryan Oviatt: Companies obviously.

Speaker Change: Exxon buying pioneer Theyre both Barry.

Cam: I guess sophisticated.

Cam: Sorry, Chevron that pioneer, but theyre, both very sophisticated and pro fireworks with bulk.

unknown: Sorry, Chevron, not Pioneer, but they're both very sophisticated, and Profire works with both. The thing is, as we see a lot of these independents get bought, they don't do a lot of burner management, not to the degree that the majors do. So that's going to be in support of Profire. We think, as mentioned, in the second half of the year and into next year, drilling and completion activity is going to continue both on the natural gas front, which is great for Profire, as well as on the crude side of it.

Cam: The thing is as we see a lot of these independents get bought.

Speaker Change: We do a lot of burner management not to the degree that the majors do so that's going to be in support of profile.

Speaker Change: We think as mentioned in the second half of the year and into next year.

Speaker Change: <unk> completion activity is going to continue both on the natural gas front, which is spectacular for pro fire as well as on the crude side of it crude demand is and is it slowing yes, you could say, it's slowing but it's still growing.

unknown: Crude demand, is it slowing? Yeah, you could say it's slowing down, but it's still growing. We think that North American play and its ability to ramp up quicker than they ever have before to support energy needs is a tailwind for Profire. Obviously, U.S. AI is expected to require a lot more energy, and really, if you were to put that in perspective alone, just AI, that it doesn't really make up a large percentage of the total baseload that North America or the United States would need, but if you were able to just increase natural gas production with existing pipeline infrastructure by 10%, which there's room for, you could almost meet that whole demand.

Speaker Change: We think that the North American play.

Speaker Change: Play and our ability to ramp up quicker than they ever have before to support energy needs that is a tailwind for profile.

Speaker Change: Obviously U S. AI is expected to require a lot more energy and really if you were to put that in perspective alone just AI.

Speaker Change: It doesn't really make up a large percentage of the total.

Speaker Change: <unk> slowed that a north America, United States would need, but if youre able to just increase natural gas production.

Speaker Change: With existing pipeline infrastructure by 10%, which Theres room, you could almost meet that whole demand and so as that need for AI and other electrification comes on natural gas is going to be a big part of it and that's why we see these.

unknown: And so, as that need for AI and other electrification comes, natural gas is going to be a big part of it. And that's why we see these huge forecasts by the world's largest LNG providers. That LNG feedstock is going to come from the United States and Canada, not all of it, but a lot of it's going to be there. So we think there's still some really great tailwinds. Can we grow the legacy business?

Unknown Executive: And so as that need for AI and other electrification comes, natural gas is going to be a big part of it. And that's why we see these huge forecasts by the world's largest LNG providers. That LNG feedstock is going to come from the United States and Canada, not all of it, but a lot of it.

Speaker Change: Huge forecast by.

Speaker Change: The world's largest LNG providers that LNG feedstock it is going to come from the United States and Canada, not all of it but a lot of it is going to be there. So we think theres still some really great tailwind can we grow the legacy business. We believe so probably not at the same we know not at the same rate as.

Unknown Executive: So we think there are still some really great tailwinds. Can we grow the legacy business? We believe so. It's probably not at the same, we know not at the same rate as we can grow our non-oil and gas and industrial side of the business, but we believe that it can continue to see growth, moderate, but still growth, right?

unknown: We believe so. It's probably not at the same, we know not at the same rate as we can grow our non-oil and gas and industrial side of the business, but we believe that it can continue to see growth, moderate, but still growth, right?

Speaker Change: We can grow.

Speaker Change: Our non oil and gas and industrial side of the business, but we believe that it can continue to see growth moderate but still growth.

Speaker Change: Right.

Speaker Change: Yeah, I would just add to that.

Unknown Executive: Yeah, I would just add to that we've said for years that we believe the world needs. We also believe that stability in prices is more important, probably than even the price level itself. Stability in the low 70s is a good thing for the industry, much better than quick rises and falls between 70 and 90. If it stabilizes above that, obviously higher prices are better, but kind of that ongoing stability, which we have actually seen for the last two years, represents a good, strong environment for the EMP producers, for natural gas, and for oil.

Ryan Oviatt: Yeah, I would just add that we've said for four years that the world needs the best of all forms of energy, all sources of energy, and oil and gas is going to continue to be a critical piece of that. There may be some short-term disruptions related to the election, and in which direction that pushes, we don't really know. Disruptions in the Middle East will obviously have an impact, and that's forecast, or people are expecting a lot more of that.

Speaker Change: <unk> said for <unk>.

Speaker Change: For years that we believe the world needs.

Speaker Change: The best of all forms of energy all sources of energy and oil and gas is going to continue to be a critical piece of that there may be some short term disruptions related to the election or.

Speaker Change: In which direction that pushes we don't really know.

Speaker Change: Disruptions in the Middle East.

Speaker Change: We'll obviously have an impact.

Speaker Change: And that's forecast or people are expecting a lot more of that the tension there certainly escalating and not the escalating in those regions. So.

Ryan Oviatt: The tensions are certainly escalating and not de-escalating in those regions, so obviously, there will be some ups and downs, but overall, we are very confident in the future of our legacy business as well as our diversification efforts.

Speaker Change: Obviously, there will be some ups and downs, but overall, we are very confident.

Speaker Change: In the future of our legacy business as well as our diversification efforts.

Ryan Oviatt: We also believe that stability in prices is more important, probably even the price level itself. Stability in the low 70s is a good thing for the industry, much better than quick rises and falls between 70 and 90. If it stabilizes above that, obviously higher prices are better, but kind of that ongoing stability, which we have actually seen for the last two years, represents a good, strong environment for the EMP producers, for natural gas, and for oil.

Speaker Change: We also believe that stability in prices is more important.

Speaker Change: Probably than even the price level itself stability, yet in the low seventies.

Speaker Change: Good thing for the industry much better than quick rises and falls between 70 and 90.

Speaker Change: If it stabilizes above that obviously higher prices or better, but kind of that ongoing stability, which we have actually seen for the last two years.

Speaker Change: Represents a good strong environment for the E&P producers for natural gas for oil.

Speaker Change: And at these rates at these levels. They will continue to invest in new technology looking to get the most out of the existing assets that they have.

Unknown Executive: And at these rates, at these levels, they will continue to invest in new technology, looking to get the most out of the existing assets that they have. As Cam mentioned, the drilling and completion activity is still 25% below where it was pre-COVID, so that has to be considered as well. So again, we think that there's obvious uncertainty, but All right, thank you.

Ryan Oviatt: And at these rates, at these levels, they will continue to invest in new technology, looking to get the most out of the existing assets that they have. But, as Cam mentioned, the drilling and completion activity is still 25% below where it was pre-COVID. So the investment on the production side has been more in the technology and not so much in drilling new wells or adding new capacity, but over time, with the decline of these shale wells, that has to be considered as well. So again, we think that there's obvious uncertainty but a lot of upside potential, a lot of upside opportunity for the industry and for Profire in the coming years. All right, thank you.

Cam: As Cam mentioned.

Cam: The drilling and completion activity is still 25% below where it was pre COVID-19.

Cam: The investment on the production side has been more in the technology and not so much in drilling new wells or adding new capacity, but over time with the decline of these <unk>.

Speaker Change: <unk>.

Speaker Change: That has to be considered as well. So again, we think that there is <unk>.

Speaker Change: This uncertainty but.

Speaker Change: A lot of upside potential a lot of upside opportunity for the industry and for pro fire in the coming years.

Speaker Change: Great. Thank you I'll turn it over.

Rob Brown: Thanks, Rob.

Cameron Tidball: And as a reminder, if you would like to ask a question, please signal by pressing star one, and we'll pause for a moment to allow more questions to queue. And with no further questions in queue, I would like to turn the call back over to Cameron Tidball for closing remarks.

Speaker Change: And as a reminder, if you would like to ask a question. Please signal by pressing star one and we will pause for a moment Tom more questions to queue.

Speaker Change: And with no further questions in queue I would like to turn the call back over to Cameron Tidball for closing remarks.

Cameron Tidball: And, with no further questions in queue, I would like to turn the call back over to Cameron Tidball for closing remarks.

Cameron Tidball: Thanks, everyone for joining us on our call today and thank you for all of your continued support as always we're available for any discussions or questions. You may have.

Cameron Tidball: Thank you everyone for joining us on our call today and thank you for all of your continued support. As always, we are available for any discussions or questions you may have.

Cameron Tidball: Thank you everyone for joining us on our call today and thank you for all of your continued support. As always, we are available for any discussions or questions you may have. To mention, we will be participating at the Three-Part Advisors Ideas Conference in Chicago on August 29th and the Lake Street Conference in New York on September 12th. Thank you and have a great day.

Operator: And this will conclude today's conference. Thank you for your participation, and you may now disconnect.

Cameron Tidball: Tim mentioned, we will be participating at the three part advisors ideas conference in Chicago on August 29th in the Lake Street Conference in New York on September 12.

Cameron Tidball: And have a great day.

Speaker Change: And this will conclude today's conference. Thank you for your participation and you may now disconnect.

Operator: And this will conclude today's conference. Thank you for your participation, and you may now disconnect.

Speaker Change: Okay.

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unknown: [inaudible] Cameron Oviatt, Cameron Oviatt, Cameron Oviatt, Cameron Oviatt, [inaudible] [inaudible]

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