Profire Power, Inc. (NASDAQ:PFIE) This autumn 2023 Earnings Convention Name March 14, 2024 8:30 AM ET
Firm Contributors
Steven Hooser – IR
Ryan Oviatt – Co-CEO and CFO
Cameron Tidball – Co-CEO
Convention Name Contributors
Rob Brown – Lake Avenue Capital Markets
John Bair – Ascend Wealth Advisors
Operator
Good morning, everybody, and thanks for collaborating in at this time’s convention name to debate Profire Power’s Fourth Quarter and Full 12 months 2023 ended December 31, 2023. [Operator Instructions]
I might now like to show the decision over to Stephen Hooser, Investor Relations, to get the decision began. Please go forward.
Steven Hooser
Thanks, operator. With me on the decision at this time is Co-CEO and CFO of Profire Power, Ryan Oviatt; and Co-CEO, Cameron Tidball. Yesterday, after the market closed, the corporate filed its Kind 10-Okay with the SEC and mentioned the quarter and full 12 months’s highlights in a press launch. As all the time, each of these paperwork can be found on the Traders part of the corporate’s web site. The transcript of this name will probably be posted within the coming days.
Earlier than we start at this time’s name, I wish to take a second to learn the corporate’s secure harbor assertion. Statements made throughout this name that aren’t historic are forward-looking statements. This name comprises forward-looking statements, together with, however not restricted to, statements relating to the corporate’s anticipated development, future success of diversification efforts, the deliberate analysis and growth of latest merchandise, development in our buyer base, elevated world demand for hydrocarbons, development of our associate service community, will increase of worldwide LNG demand, potential M&A alternatives, elevated momentum in essential power infrastructure within the firm’s future and monetary efficiency.
All such forward-looking statements are topic to uncertainties and modifications in circumstances. Ahead-looking statements aren’t ensures of future outcomes or efficiency and contain dangers, assumptions and uncertainties that may trigger precise occasions or outcomes to vary materially from the occasions or outcomes described in or anticipated by the forward-looking statements.
Elements that would materially have an effect on such forward-looking statements embody sure financial, enterprise, public market and regulatory danger elements recognized within the firm’s periodic studies filed with the Securities and Trade Fee. All forward-looking statements are made pursuant to the secure harbor provision within the Personal Securities Litigation Reform Act of 1995.
All forward-looking statements are made solely as of the date of this launch, and the corporate assumes no obligation to replace forward-looking statements to replicate subsequent occasions or circumstances, besides as required by legislation. Readers mustn’t place undue reliance on these forward-looking statements.
I might additionally prefer to remind everybody that this name is being recorded and will probably be obtainable for replay by means of March 28, 2024, beginning later this night. Will probably be accessible by way of a hyperlink supplied in yesterday’s press launch in addition to on the corporate’s web site at www.profireenergy.com.
Following the remarks by Mr. Oviatt and Mr. Tidball, we’ll open up the decision on your questions.
Now I wish to flip the decision over to Co-CEO and CFO of Profire Power, Mr. Ryan Oviatt. Ryan?
Ryan Oviatt
Thanks, Steven, and welcome to all of you who’re becoming a member of us on the decision at this time.
I’ll begin the decision by offering some updates on our enterprise and the trade, adopted by a evaluation of the monetary outcomes, after which I’ll flip the decision over to Cam to debate outlook, strategic route and supply an replace on our diversification technique. 2023 was an excellent 12 months for Profire.
We had our greatest 12 months in firm historical past, beating our prior finest 12 months for income by 14%, which occurred in fiscal 2015 of $51.2 million. In 2023, we acknowledged $58.2 million in income, which exceeded our prior 12 months income by 27%.
We additionally achieved firm finest in gross revenue {dollars}, working revenue, internet revenue, earnings per share and EBITDA. We’re very enthusiastic about what we have been in a position to obtain over this previous 12 months and the brand new floor we’re breaking for Profire. These achievements have been the fruits of constant and regular execution of firm technique for a few years.
We’ve additionally seen nice success in our efforts to diversify our income into essential power infrastructure and non-oil and fuel markets. In 2021, our diversification efforts represented lower than 1% of complete income, elevated to six% in 2022 and final 12 months accounted for 13% of complete income.
We anticipate to proceed constructing on this momentum, which Cam will talk about in additional element later. Each the IEA and OPEC forecast world demand development of greater than 1.2 million barrels per day this 12 months, with the development to proceed for the rest of the last decade. We anticipate operators will proceed their efforts to make amends for the upkeep that had beforehand been deferred lately, but in addition perceive that some long-term capital investments could also be deferred in 2024 within the lead-up to and pending the end result of the present 12 months election cycle.
Taking a look at our core legacy enterprise. The mixed onshore rig depend for the U.S. and Canada averaged 848 rigs in 2023, representing a 4% lower from the prior 12 months. The common WTI value per barrel in 2023 was $78, representing an 18% lower from the earlier 12 months. Producers proceed to attract down on beforehand drilled however uncompleted wells because the DUC depend decreased to 4,400 on the finish of 2023, representing a 51% drop from its peak in June of 2020. Regardless of the downward development of those trade metrics, Profire was nonetheless in a position to obtain its finest efficiency previously 22 years of operations. With that, let me flip my remarks to Profire’s monetary outcomes for the fourth quarter and full 12 months 2023.
Within the fourth quarter, we acknowledged $14.Four million in income in comparison with $14.Eight million within the third quarter and $14 million within the prior 12 months quarter. Gross revenue elevated to $7.Eight million as in comparison with $7.5 million within the third quarter of 2023 and $6.6 million within the 12 months in the past quarter. Gross margin elevated 390 foundation factors sequentially and 730 foundation factors from the prior 12 months quarter to 54.3% of income.
This was due primarily to product and buyer combine, regular stock and guarantee changes and pricing initiatives. Complete working bills for the fourth quarter had been roughly $5 million in comparison with $4.9 million within the third quarter and $4.Three million within the fourth quarter of 2022.
The sequential and year-over-year will increase replicate value inflation throughout our enterprise in addition to development in enterprise exercise driving up variable prices. Particularly, G&A bills for the fourth quarter remained flat sequentially and elevated 18% year-over-year. R&D bills elevated 47% on a sequential foundation and elevated 15% from the prior 12 months quarter. That is merely as a result of timing of R&D tasks and certification necessities. Depreciation and amortization had been flat with the prior quarter in addition to with the identical quarter of final 12 months.
Web revenue for the fourth quarter was roughly $3.Three million or $0.06 per diluted share. This quarter’s outcomes embody a onetime $828,000 or $0.02 per diluted share profit generated from a discount adjustment to deferred tax expense based mostly on an in depth evaluation of our deferred tax balances.
Web revenue within the third quarter of 2023 was $2 million or $0.04 per diluted share and $1.Eight million or $0.04 per diluted share within the fourth quarter of final 12 months. Money movement from operations within the fourth quarter was roughly $4.Four million in comparison with $1.7 million within the prior 12 months quarter. For the total 12 months 2023, we acknowledged $58.2 million in income.
This compares to $45.9 million in 2022. The 27% enhance is primarily as a result of elements said earlier. Gross revenue elevated to $30.5 million as in comparison with $21.7 million within the prior 12 months. Gross margin elevated to 52.5% of revenues from 47.1% within the prior 12 months. This year-over-year enhance in gross margin is primarily on account of higher mounted value protection, which offset inflationary pressures on variable prices.
Complete working bills for the 12 months had been roughly $18.7 million in comparison with $16.5 million in 2022. The rise is primarily associated to increased G&A expense ensuing from total value inflation. Nevertheless, the general price of enhance remained decrease than our income development price for the 12 months.
Over the previous 10 years, complete working bills as a % of income have ranged between 32% and 59%, with 2023 being the bottom mark on this vary regardless of the numerous inflationary pressures over the previous few years. Our strategic efforts in managing prices and constructing in operational efficiencies, mixed with our gross sales value initiatives have helped us obtain this nice working margin.
R&D bills decreased 13% and depreciation and amortization decreased 8% in comparison with the prior 12 months. Complete different revenue in the course of the 12 months was $592,000 in comparison with $492,000 final 12 months. The rise is primarily attributable to increased curiosity revenue on account of a mixture of upper charges paid on our money steadiness and short-term investments.
Web revenue for the 12 months was roughly $10.Eight million or $0.22 per diluted share, which incorporates $0.02 associated to the deferred tax adjustment referenced earlier. This compares to internet revenue of $3.9 million or $0.08 per diluted share final 12 months.
Money movement from operations for the total 12 months was $7.1 million, and our money and different investments totaled $20 million in comparison with $16 million on the finish of 2022. We had no borrowings or different debt on the steadiness sheet at year-end. Web capital expenditures for the 12 months had been roughly $873,000.
Through the 12 months, we had been in a position to repurchase $2 million price of Profire inventory in line with our authorized share repurchase program. Our stock steadiness on the finish of the 12 months was roughly $14.1 million in comparison with $10.Three million on the finish of 2022.
Over the previous two years, we have been in a position to implement a number of tax planning methods which have had a major profit on our monetary efficiency and outcomes of operations. These embody submitting for and receiving the Worker Retention Credit score by means of the CARES Act, the strategic use of a number of years of internet working losses in our Canadian subsidiary and the deferred tax evaluation true-up talked about beforehand.
We are going to proceed to deploy our greatest efforts in figuring out and implementing some of these strategic alternatives sooner or later once they come up. Nevertheless, we can’t assure that related alternatives will probably be obtainable to us in future intervals. As a result of we had been in a position to benefit from these alternatives in 2023, working bills had been lowered by $760,000.
Earnings tax bills had been lowered, and internet revenue elevated by $1.9 million or $0.04 per diluted share. Nevertheless, even when eradicating these nonrecurring changes, 2023 stays our greatest 12 months in firm historical past from an working revenue, internet revenue and earnings per share perspective. As I discussed beforehand, we’re very happy with what we now have been in a position to accomplish in 2023 and to place these accomplishments put us in, to have the ability to proceed to do nice issues in coming years.
I’ll now flip the decision over to Cam to offer an outline of our enterprise. Cam?
Cameron Tidball
Thanks, Ryan, and good morning to everybody.
All through 2023, the Profire crew achieved a record-setting tempo, resulting in our greatest ends in firm historical past, setting a brand new benchmark for monetary efficiency. Our crew efficiently navigated a challenged trade dealing with tough headwinds surrounding provide chain realities in addition to a dynamic regulatory surroundings.
Profire merchandise and options ship worth and efficiency to our clients and assist industries who place consideration on decreasing their carbon footprint, decreasing greenhouse fuel emissions, growing operational effectivity and are dedicated to security. Our sturdy fourth quarter capped off a record-setting 12 months for Profire as we achieved distinctive year-over-year development in our consolidated high line income efficiency of practically 27%.
Our 2023 full 12 months outcomes reveal sustained execution power throughout every space of focus, together with our conventional upstream enterprise, downstream utility and transmission markets in addition to our targeted diversification efforts in essential power infrastructure and numerous non-oil and fuel and industrial markets.
Profire continues to be the burner administration answer supplier of the highest E&Ps in North America, akin to EQT, Chevron, Oxy, Devon Power, Canadian Pure Assets, Synovus, Chesapeake, Conoco and XTO. In 2023, this house represented practically 83% of our complete income in comparison with 90% in 2022 with practically 17% development year-over-year.
Our upstream market development is attributed to buyer acquisition and elevated market penetration in addition to a sustained focus by producers to increase their automation capabilities on new and legacy thermal home equipment in addition to to enhance effectivity and improve pneumatic home equipment to satisfy each inside and regulatory emissions targets and necessities. This led to elevated alternatives for retrofits for Profire straight and thru our rising associate service community.
North American oil and fuel manufacturing reached document highs in 2023. This exceptional consequence was achieved with total rig counts dropping in the course of the 12 months by roughly 26% and regardless of federal administrations that stress their want to and the trade inside a decade. As we glance to 2024, we anticipate onshore drilling in North America to remain comparatively flat.
Nevertheless, as takeaway capability will increase by means of new LNG terminals and fuel pipelines approaching stream within the brief time period, we anticipate an eventual enhance to drilling exercise in direction of the second half of the 12 months into 2025. Total, we have a look at 2023 and 2024 as intervals of stability, although we proceed to watch geopolitical elements such because the state of affairs in Jap Europe, the Center East in addition to the uncertainty surrounding China and Taiwan.
Although total world demand for hydrocarbons in 2024 is predicted to develop at a slower tempo than 2023. Development stays the trade consensus expectation. We imagine that almost all of North American manufacturing development in 2024 will come from the Permian Basin.
In anticipation of near- and long-term development on this helpful geographic hydrocarbon play, Profire has invested in increasing its footprint and capabilities within the Permian Basin. In Q1, we had been in a position to open a brand new facility in Odessa, Texas, which we intend to assist natural gross sales and repair development and enhance our total pace of supply and assist of our clients.
Turning now to our progress and development in downstream pure fuel utility and distribution. Our clients on this house play a definite function within the technique of supplying pure fuel from manufacturing sources to finish customers, together with companies and residential use.
We proceed to give attention to rising our buyer base in markets we now have a geographic presence for gross sales and assist in addition to by means of our efforts to increase our associate program. In 2023, we achieved document efficiency within the variety of clients and related income on this house. 12 months-over-year, we achieved over 40% development equating to just about 5% of our complete income.
Now our areas of diversification, starting with our progress in essential power infrastructure. Vital power infrastructure consists of the important programs that play an important function within the manufacturing, transmission, distribution and storage of power assets.
Profire continues to achieve traction with clients, OEMs, programs integrators and EPCs who assist the development, upkeep and upgrading of crops, transmission and distribution networks in addition to manufacturing and storage services. 2023 marked our greatest 12 months in firm historical past by way of high line income associated to clients and tasks in essential power infrastructure. In 2023, we achieved $5.6 million in income in comparison with $1.Four million in 2022.
Our investments in gross sales focus, service functionality coaching, product growth and undertaking supply continued to generate a robust return as demonstrated by our 300% enhance year-over-year. In 2023, income generated on this market practically hit 10% of complete income versus 3% in 2022. Profire’s presence on these essential websites is a testomony to the efficiency of our merchandise as reliability, practical security and certification are important necessities given the essential nature of those thermal home equipment.
Profire continues so as to add to its repute on this space, and our listing of tasks and clients continues to develop. In 2023, we labored with a document variety of present and new clients, together with Kinder Morgan, TC Power, Power Switch, AltaGas, Enbridge Enterprise Merchandise, DCP, Pembina, Williams, Targa and MPLX to call a couple of.
We additionally proceed to strengthen present relationships and work with new OEMs who assist tasks on this house. As we glance ahead, we imagine Profire stands to proceed to achieve momentum and traction in essential power infrastructure as operators search for methods to enhance security and effectivity and scale back website emissions.
We anticipate world LNG demand to extend by means of 2040 and past, requiring a rise of manufacturing of 70% in comparison with 2023. The U.S. grew to become the world’s largest LNG exporter in 2023 surpassing Qatar.
This can be short-lived. Nevertheless, it’s anticipated that by 2030, North America will cowl over 30% of worldwide LNG demand, acquiring a big portion of its feedstock from the Permian, DJ, Marcellus and Montney Shale performs. So the worldwide fuel market is uncovered to dangers, together with the Biden administration’s pause on new LNG export terminal and growth approvals and Qatar’s plans to quickly increase, we really feel there stays an enormous runway for North American LNG growth, which must be constructive for Profire.
Lastly, as we have a look at our diversification progress in taking Profire merchandise and options to non-oil and fuel and industrial markets, we’re excited to report that the second half of 2023 represented our two finest quarters in firm historical past for income, gross sales orders obtained and undertaking pipeline. Our backlog of tasks and undertaking alternatives has by no means been stronger.
In 2023, we achieved practically 30% year-over-year development. Our outcomes had been barely lowered as a result of longer-term undertaking cycles which can be inherent to the brand new industries we’re working in, we anticipate most of those tasks will probably be accomplished in 2024. 2023 was an thrilling 12 months for Profire as we executed an elevated variety of tasks in a wide range of industries, together with landfill, biogas, RNG manufacturing, energy technology, wastewater, agriculture, meals and beverage, mining, warmth deal with and metallic manufacturing and coal processing.
As we enter new industries, we discover alternatives to work with new OEMs, system integrators and EPCs who proceed to be impressed by our merchandise, our undertaking course of and deliverables. We really feel that this may help us as we glance to construct out our associate assist community of gross sales and repair in new geographic places.
We anticipate to realize sturdy diversification development in 2024 based mostly on the present backlog and pipeline of alternatives that we’re actively concerned by way of website scopes, quoting and the technical discussions surrounding these potential tasks.
In 2023, Profire’s income outdoors of upstream oil and fuel equated to over 17% of complete income as in comparison with 10% in 2022. This resulted in Profire attaining over $10 million in income derived from our diversification progress in essential power infrastructure and non-oil and fuel markets in addition to our strategic development within the downstream utility and transmission house. This mixed strategic development is a monumental achievement and units the stage for us going ahead. Discovering accretive M&A alternatives for Profire stays on the forefront of our plans.
Thus far, we now have but to seek out the fitting alternative for Profire. Nevertheless, we proceed with our pursuit of transactions that can add scale, entrance into new markets and/or increase the merchandise that we are able to deliver to our present clients.
Funding in analysis and product growth stays essential to the way forward for Profire. We plan to proceed creating new merchandise to assist our legacy and conventional markets in addition to our diversification efforts. This may proceed to comply with our balanced method to short-, mid- and long-term product growth and analysis processes.
We’re excited for the way forward for Profire. Our customer-centric crew and method to enhancing the consumer expertise units us other than our competitors. We refused to relaxation on our laurels, and we proceed to forge forward in assist of our present clients and markets in addition to these in our future. Ryan and I categorical our honest appreciation to our crew and to their households, to our shareholders. Thanks on your continued curiosity and assist of Profire.
Operator, would you please present the suitable directions so we are able to get the Q&A began?
Query-and-Reply Session
Operator
[Operator Instructions] The primary query comes from Rob Brown with Lake Avenue Capital Markets. Please go forward.
Rob Brown
Good morning, congratulations on all of the progress.
Cameron Tidball
Thanks.
Rob Brown
You probably did a very good type of overview of the diversification efforts, however you alluded to the undertaking pipeline and power there. Might you simply give us some type of colour on what that undertaking backlog appears like and the way that pipeline is type of shaping up for ’24?
Cameron Tidball
Sure, completely, and thanks for becoming a member of the decision. As all the time, Rob. As we have a look at 2023, clearly, we had 30% development year-over-year by way of non-oil and fuel and industrial tasks. We alluded to and we did not allude to within the feedback, the quantity would have been increased, however these tasks typically take a little bit bit longer. They’re bigger in scale, and so they have totally different complexities close to allowing, particularly once you’re coping with biogas, landfill functions.
So a few of these tasks we thought would shut and materialized in 2023 will transfer into 2024. Total, as talked about, nonetheless with out these had our greatest 12 months ever and simply the rising variety of tasks, each recurring by way of the shoppers we’re going again to do spherical quantity 2 or three to have a look at websites that we are able to assist them with their combustion and thermal home equipment. It is rising. Our backlog pipeline, we do not clearly disclose it, but it surely’s increased than it was final 12 months. And so we really feel that we now have good cause to imagine we’ll have one other sturdy development 12 months in that house.
And we have a look at — we’re nonetheless, to a level, a whole lot of totally different industries. We have not nailed down or focused the few that we actually wish to put a complete bunch of horsepower behind as a result of we’re nonetheless figuring out what’s the finest place for Profire. Proper now, one of the best place is anyplace that wants combustion home equipment. However finally, we’ll be capable to goal extra gross sales efforts, extra advertising efforts, doubtlessly some strategic acquisitions in these locations to assist us to increase possibly in a specific market.
However proper now, very various by way of the place we’re seeing curiosity, the place we’re seeing alternatives the place we’re getting introduced into from the OEMs who we’re working with in addition to programs integrators and new EPCs which can be listening to concerning the Profire identify, listening to about us from different tasks in addition to individuals transfer from trade — not a lot trade to trade, however inside the industries they’re at, they’re bringing us alongside.
So very excited concerning the progress. We predict that we are able to proceed to develop this house for a few years to return. There’s so many alternatives on the market, and it’s extremely thrilling for Profire. Ryan, would you could have something that I missed there? Something so as to add?
Ryan Oviatt
No. I do not suppose you missed something. I might simply possibly increase and say that we’re seeing related developments with the legacy enterprise as nicely. So far as the undertaking pipeline is worried, the variety of tasks that we’re getting in frequently is — nonetheless stays very sturdy and good. We’re seeing a whole lot of indication for later within the 12 months as nicely.
So we’re seeing some tasks stacking up for Q2 and past in our pipeline, which going again a number of years wasn’t a factor that sometimes occurred for us. It was rather more brief time period than that. One different facet, although, that we’re seeing is our clients or at the very least a few of our conventional buyer base is beginning to imagine that offer chain is far, significantly better, which it has improved, however they may be putting a little bit an excessive amount of reliance on how good the availability chain is correct now. So we’re seeing some attention-grabbing dynamics shifting in that pipeline. However total, as Cam mentioned, it’s extremely sturdy. It’s totally strong, and we’re enthusiastic about what is going to are available in 2024.
Rob Brown
Nice. Thanks for that nice overview. After which by way of the legacy enterprise, I feel you talked about type of catch-up in deferred upkeep and a number of the regulatory surroundings. However is that actually the drivers which can be type of serving to that enterprise regardless of possibly oil costs down a little bit bit? What are the drivers which can be actually pushing that undertaking pipeline within the legacy enterprise?
Cameron Tidball
Sure. On the legacy enterprise, if we go particularly to say, we’ll name it upstream. Clearly, drilling is down year-over-year, type of — however oil costs are nonetheless at a degree the place we see clients are very — issues are very wholesome for them. The document income of 2022 and 2023 will not be replicated in 2024. A heat climate winter like this clearly has a drain to a level on the fuel facet of the enterprise.
However oil continues to be very sturdy. You have a look at a number of the pipeline capability we talked about within the feedback there approaching board right here. Clearly, that helps with LNG as nicely. However you’ve got bought rather a lot nonetheless name for development in manufacturing this 12 months. America had a document 12 months final 12 months in historic 12 months.
And we predict it actually speaks to the resiliency of this trade, regardless of, I assume, some that imagine we do not want hydrocarbons, it is evident. We do. There nonetheless is clearly a little bit bit increased on the availability facet, OPEC Plus and their manufacturing cuts extending by means of Q2, clearly, sign that. And there’s some distinction of opinion on stockpiles proper now if a battle had been to interrupt out, is there sufficient. There’s a couple of opinions that there’s, and there is fairly a couple of that there’s not.
So total, you talked about it. There nonetheless is a backlog of deferred upkeep of deferred upgrading that’s driving the enterprise for positive. We had our greatest 12 months in 2023 by way of retrofits, whether or not they had been straight with Profire or by means of our number of companions in every shale play that do burner upkeep, burner upgrades.
We don’t see E&P slowing down in upgrading their home equipment to satisfy totally different regulatory necessities or inside internet zero objectives or simply discount objectives, particularly on the general public firm facet. We noticed a ton of transactions final 12 months, and we’re nonetheless seeing some this 12 months, extra not as many within the Permian Basin to this point this 12 months, however we’re seeing them out with EQT, for instance, have wolfed up one other couple of firms right here.
We see Chesapeake on that bandwagon as nicely. They are going to proceed as they create on these merger with these firms purchase these firms if they’ve legacy property that have to be upgraded, we absolutely anticipate them to proceed to push for these upgrades. So retrofit enterprise continues to drive the enterprise. Clearly, new drilling and manufacturing with Profire’s dominant market share. We imagine, clearly, that helps us.
We get extra of the brand new manufacturing gear. However the legacy enterprise, which continues to be that looming large alternative of those legacy wells, in the event that they’re price being in manufacturing, we really feel that there is a good likelihood that they are price being automated as we progress ahead with totally different ESG objectives that our clients have.
Rob Brown
Okay, nice. Thanks for all the information. I am going to flip it over.
Cameron Tidball
Thanks, Rob. Respect it.
Operator
The following query comes from John Bair with Ascend Wealth Advisors. Please go forward.
John Bair
Good morning. Congrats on a pleasant 12 months and a very good quarter. Two fast questions. Primary, you did not point out in your ready remarks about inventories being up. Is that in anticipation of order movement or making an attempt to get forward of provide chain points or pricing? And the second query is, are you able to discuss something about enchancment or enhance in exercise that’s extra internationally oriented in different phrases, outdoors of the North America.
Cameron Tidball
You guess. Ryan, why do not you deal with the primary half, and I am going to soar in on the second.
Ryan Oviatt
Sure. Nice query. Stock is up year-over-year. It has been up for many of 2023, type of began to build up early within the 12 months, after which we have continued to usher in product as we have additionally had an excellent 12 months of gross sales. A whole lot of that continues to be considerably provide chain associated.
A whole lot of our stuff is lengthy lead time orders. So we now have to get these orders positioned nicely upfront after which they arrive in as they arrive in. So we have been ready to usher in a bunch of the merchandise that we had on order early from this 12 months and even stuff that we had been beginning to order late in 2022. So it is type of simply the timing of when all of that is available in and the way we’re making an attempt to position our orders and keep forward of anticipated demand for our clients. As I discussed earlier, a number of the provide chain stuff is easing, however they’re nonetheless fairly lengthy lead instances in some of these items as nicely.
We’re additionally nonetheless on this transitionary interval between the top of lifetime of our 2100 system and the total rollout implementation of the 2200 system. So these — there’s nonetheless a mixture there the place we’re accumulating a whole lot of the 2200, getting these in hand, whereas we’re nonetheless type of closing out the 2100 facet of our ordering as nicely, ensuring that we now have sufficient to proceed to fulfill the demand that we now have proper now, but in addition for guarantee and ongoing assist of that product down the highway. In order that transition will proceed all through 2024. for. However type of in direction of the top of the 12 months, we might anticipate that almost all of that transition will probably be accomplished, assuming that offer chain goes the best way we predict it’ll this 12 months.
However that is an enormous piece of it’s simply type of working by means of these transitions, getting the fitting provide of that PF2200 product and having the ability to absolutely transition clients over to that on the proper level once we can proceed to provide for them. They definitely do not prefer it. In the event that they swap to the 2200 after which have to return to the two,100 for a time frame, they need to have the ability to make that transition and proceed to get the brand new product and have that be dependable for them going ahead. In order that’s the method that we work by means of as we’re doing that, and it has had a rise on stock over the past two years, for positive.
John Bair
So at what level do you say, okay, no extra 2100 can be offered. And clearly, when you could have an put in base and also you’re making an attempt to transition present clients away from the 2100 to 22. So at what level — how do you type of deal with that state of affairs?
Ryan Oviatt
Sure. Good query. And it is one thing that we proceed to bounce round. It modifications. In case you’d ask that query three years in the past, I might have mentioned we would be accomplished by now, however provide chain clearly had a huge effect on us.
So proper now, we’re pondering that it is type of in direction of the top of this 12 months, early 2025 as to once we will look to completely have that transitioned and to not be promoting the 2100 previous that time. However once more, provide chain points might affect that. That is our want at this level, however we’ll proceed to take care of clients and assist clients and work with our provide chain in no matter approach we have to, to make this be the fitting determination for each Profire and our buyer base.
Cameron Tidball
I am going to add to that earlier than we soar into some commentary on worldwide. We plan to assist our clients with elements for the 2100 as a result of, clearly, when you simply shut off the faucet and so they cannot assist the product after that would not go over nicely, however we predict we now have a technique in place that we’ll resonate with clients for his or her capacity to maintain issues going, but in addition to some extent the place it’ll come a time the place you have to improve to considered one of our newer programs.
So total, we predict the plan goes nicely. Like Ryan mentioned, we might have hoped to have transitioned a few years in the past, but it surely’s simply the best way it goes with the availability chain, however we’re grateful that we now have ample provide now of each merchandise, which is nice. By way of worldwide, we have undoubtedly seen an uptick to begin the 12 months.
Most of it coming from South America, Latin America, notably Argentina, with a brand new President there, type of shaping issues a little bit bit otherwise. We imagine that it has had a constructive affect on those that put money into E&P manufacturing there, and we have seen some ensuing orders. In case you have a look at total, worldwide now’s roughly 46% of all rigs are outdoors of america and Canada. That is increased than final 12 months. A really excessive share of that overrepresented, in fact, is the Center East, which year-over-year, they’re up a couple of rigs, I imagine, 15 rigs.
A whole lot of that’s in locations like Qatar who’re saying, you already know what, we’ll soar on this LNG monitor as fast as doable. Total, Profire nonetheless has our distribution channels within the worldwide markets. We’re trying to strengthen them, notably in locations the place we see nice growth for the longer term, akin to India. So we’re in search of alternatives there of how that would finest make sense to develop that. We’re engaged on a whole lot of OEMs that ship their merchandise internationally.
We’re getting an increasing number of publicity with that, whereas earlier than, typically we simply promote to OEMs, after which we get a tech name or request for a spare half down the highway and in go, “Oh, that will have gone worldwide. We’re getting an increasing number of necessities from worldwide firms, extra internet types approaching the web site, identical request for some assist or spare elements. So we all know that our worldwide enterprise is rising, however nonetheless not to some extent the place it is price to interrupt out, we do not suppose.
John Bair
Okay. Effectively, that is attention-grabbing as nicely. So along with your efforts to increase enterprise outdoors of the oil and fuel trade, are you getting any enterprise that isn’t oil and fuel associated internationally? In different phrases, landfill fuel, I do not know to what extent that is really accomplished internationally, however it might appear that will be a complementary enterprise growth alternative.
Cameron Tidball
Sure, completely. Up to now, something that’s worldwide that has to take care of nontraditional upstream enterprise for Profire has actually been in that essential power infrastructure house. So greater crops that take care of processing services, storage services. We have seen a few of that by way of a number of the tasks that we’re working which can be like actually greenfield for Profire, like we talked about coal processing otherwise you identify it, essential infrastructure surrounding like sand driers, asphalt medication, fly ash. We have not seen any of that as of but.
We at the moment don’t have a associate that we imagine would assist us outdoors of oil and fuel in worldwide house. It is a part of the highway map. However for the foreseeable future in 2024, we’re extra targeted within the yard the place we are able to assist these tasks with our technical crew and even service assist as a result of they’re totally different from a course of perspective, they don’t seem to be as plug-and-play as upstream oil and fuel. So it is in our future, John. However proper now, the main target for non-oil and fuel ventures is certainly in North America.
John Bair
Okay. Nice. Thanks very a lot for taking the questions. I hope to see you quickly.
Cameron Tidball
Thanks John.
Operator
There are not any additional questions within the queue. I wish to hand the decision again over to administration for closing remarks.
Ryan Oviatt
Thanks, everybody, for becoming a member of us on our name at this time to debate our fourth quarter and full 12 months 2023 outcomes. We might prefer to thank all of you on your continued assist. As all the time, we can be found for any discussions or questions you’ll have. We sit up for talking with you once more once we launch our first quarter ends in Might. Thanks, and have an excellent day.
Operator
This concludes at this time’s convention name. You could disconnect your traces. Thanks for collaborating, and have a pleasing day.