Brenton Hatch - President and CEO Ryan Oviatt - Chief Financial Officer Cameron Tidball - Vice President, Sales.

Rob Brown - Lake Street Capital John White - ROTH Capital Jim McIlree - Chardan Capital Scott Billeadeau - Walrus Partners.

Good afternoon, everyone. And thank you for participating in today’s conference call to discuss Profire Energy’s Second Fiscal Quarter ended September 30, 2017. Joining us today is the President and CEO of Profire Energy, Brenton Hatch; and CFO, Ryan Oviatt.

Before we begin today’s call, I would like to take a moment to read the company’s Safe Harbor statement. Cautionary notes regarding forward-looking statements, statements made during this call that are not historical are forward-looking statements.

This call contains forward-looking statements, including, but not limited to, statements regarding the company’s plan to make internal investment, the company’s R&D investment will deliver new products and feature, the company’s intent to execute it share repurchase program, the company’s ability to increase 3100 products sold, the company’s ability to follow up with customers interested in the CMS product, the company’s process to get certification or our sales to expand customer base and the company’s cost structure is scalable with growth.

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 material from the events or results described in or anticipated by the forward-looking statements.

Factors that could materially affect such forward-looking statements include certain economic, business, public market, and regulatory risks and factors identified in the company’s periodic reports filed with the Securities and Exchange Commission.

All forward-looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

All forward-looking statements are made only as of the date of this release and the company assumes no obligation to update forward-looking statements to reflect subsequent events or circumstances, except as required by law. Readers should not place undue reliance on these forward-looking statements.

I would like to remind everyone that this call is being recorded and it will be available for replay through November 16, 2017, starting later this evening. It will be accessible via the link provided in yesterday’s press release, as well as on the company’s website at www.profireenergy.com. Following the remarks by Mr. Hatch and Mr.

Oviatt, we will open the call to your questions. As part of the question-and-answer session, Mr. Hatch and Oviatt will be joined by Profire Energy’s VP of Sales, Cameron Tidball. Now, I would like to turn the call over to the President and Chief Executive Officer of Profire Energy, Mr. Brenton Hatch..

Thank you very much. Good day, everyone. Thanks for joining us today as we provide an update on our third quarter. Profire continues to perform well in the volatile oil and gas industry. In the previous quarter, we reported that we expected our performance in the third quarter to remain flat with the results of the sector by second quarter.

In this quarter we are happy to report that we realized an increase in revenue. During the quarter, we saw increased sales activity in the Permian and Northeast region. Throughout the third quarter, oil prices varied in the mid-to-high $40 range.

Within this price range, many of our customers had some CapEx budget to spend, this along with well completion activity drove our increase in sales. The market remains unpredictable; however, our products and solutions continue to be a critical component of our customer safety and operational processes.

Despite the volatility, we realized some great success during the quarter. Total revenues for the quarter surpassed $10 million; this represents 101% increase in revenues over the same quarter a year ago and a 6% growth in revenues over the previous quarter.

This marks the first time our revenue has exceeded $10 million since the quarter ending December 31, 2014. Profire continues to be debt-free, this approach allows us to be flexible and to respond to market opportunities.

At quarter end, we have just over $21 million in cash and liquid investment, and once again generated positive operating cash flows for the period. With the increase in revenues, we have hired strategically to keep up with the demand. We are working with vendors to manage lead times and inventory levels sufficient to satisfy recent and future growth.

Profire is committed to lean management to keep our costs down. The increase in revenue requires some internal investment; however, management of these costs remains a priority. As a technology company, R&D continues to be a strategic focus.

Last quarter, we announced that our R&D team is working to achieve a product certification bill which is safety integrity level that will ensure a more reliable and repeatable product development process. This certification will enable us to sell to customers whose requirements are more stringent than our traditional products certification.

In addition to working towards this certification the R&D team continues to augment the features of our 3100 product. We recently issued a press release discussing the new features of the 3100. It’s important for us to develop new technology to remain an industry leader.

Our team of engineers works closely with customers to produce products that meet and exceed market expectations. With superior products and a dedicated team of employees Profire has successfully navigated a volatile market.

Our policies and strategies have allowed us to react quickly to industry changes and have positioned us well to remain a technology leader. I will now turn the call over to Ryan Oviatt, our CFO, to discuss the financial results for the quarter.

Ryan?.

Thanks, Brent. Yesterday after the market close we filed our 10-Q with the SEC and discussed the quarter’s highlights in a press release. As always, both of those documents are available on the Investors section of our website. The transcript of this call will be posted there in the coming days.

In this quarter we were able to exceed expectations as we continue to execute the fundamentals of our strategic plan. This quarter we experienced further revenue growth and continued to position the company for the future. Let’s begin by looking at the income statement.

In our third quarter of 2017, our total revenues increased to over $10 million or 101% increase over the same year ago quarter. This increase in revenue was partly attributable to the increase in oil prices and the larger customer base we’ve built up over the last two years.

With the increase in revenues, our gross profit increased to just over $5 million or 50.4% of total revenues, as compared to $2.6 million or 52.6% of total revenues in the same quarter of last year. Gross profit margins remained strong but varies quarterly due to product mix, overhead allocations and inventory allowances.

Total operating expenses increased to $3.2 million from $2.8 million in the same year ago quarter. This 16.9% increase in operating expenses is a modest increase when compared with the 101% increase in revenue over the same period.

Profire has been able to manage costs throughout the downturn and the initial recovery and will continue to do as the company invests in additional resources to keep up with demand. Operating expenses for general and administrative increased 19%, R&D increased 21% and depreciation decreased 21% as compared to the same quarter a year ago.

The increase in expenses is primarily due to staffing increases and the operations and quality control departments. We increased our spending in R&D to speed up the delivery of product enhancements, new product development and certifications. These investments are strategic and will enable us to deliver a superior product to our customers.

Total other income during the period was $82,000, the majority of which was attributable to interest income and gains on the sale of assets. Our net income was $1.2 million or $0.03 per share, compared to net income of $74,000 or $0.00 per share in the same year ago quarter. Now shifting to the balance sheet.

Cash and liquid investments totaled $21.4 million as compared to $20 million at the end of the last fiscal year. In the past year and a half, we’ve been actively repurchasing our own stock as part of the previously communicated capital allocation strategy.

We continue to purchase shares pursuant to this plan, while maintaining our cash reserves at appropriate levels. These purchases were enabled through operating cash flows. Generating positive cash flows will continue to be a key area of focus for the company. Nevertheless, we will continue to seek for other strategic opportunity.

Inventory levels decreased from $7.8 million to $6.9 million from the end of the fiscal year. This decrease is largely due to the increase in sales volume. Our operations team works closely with the sales team to ensure our inventory on hand will satisfy projected sales.

Accounts receivable collections remained strong and the balance of accounts over 90 days old remains below 10% of total accounts receivable at the end of the period. The cost and company structures we now have remained scalable.

We have seen significant year-over-year increases in revenue, with this sustained increase we plan to invest internally to meet market demand to retain key employees and to hire new personnel when needed.

We are committed to maintaining an appropriate cost structure as we continue to grow and will remain vigilant in the pursuit of other opportunities that will be accretive to our company and its shareholders. With that, thanks and I’ll send it back to you, Brent..

Thank you, Ryan. As Ryan has highlighted, our execution of strategic planning has contributed to our continued success. Throughout the quarter, we hired a few employees in the operations department and invested in R&D. Our R&D investment is largely focused on supporting our 3100 product and certification of current and future products.

We believe that the 3100 product sales will increase in coming quarters. As mentioned earlier, we continue to add features to the 3100 in order to offer a competitive product that meets customer expectations. In addition to the 3100, other new products are presently being developed.

The new certification will allow us to sell products to midstream and downstream operators that are not currently customers. Recent industry events and the uptick in oil prices over the last few days contribute to the market volatility and make it difficult for us to forecast future revenues.

In the previous quarter, we announced that we expected the final two quarters of 2017 to remain locked relatively flat. Historically, November and December are challenging months for Profire largely due to the downtime associated with the holiday season.

Fourth quarter CapEx spends is unpredictable, we plan to attend conferences and work with customers to understand their CapEx budgets for the coming year. We remain optimistic that oil prices will stabilize within a range that allows our customers to accelerate the CapEx spend.

We believe that new technology including Profire products will be a part of our customers long-term strategies. Throughout the quarter we saw an increase in sales activity, primarily in the Permian and Northeast. Our preventative maintenance program continues to perform well in the STACK and SCOOP regions and is gaining traction in other areas.

Last quarter, we reported renewed interest in our CMS product. We are pleased to report that the customer that tests the product previously purchased multiple units in this quarter. We currently have quotes for the product with a number of other customers.

In the quarter we were invited to present in Houston, Texas at a technology conference for the oil and gas industry, specifically we were asked to present on the CMS product and its capabilities.

Since that conference we have been able to meet with the number of interested new customers and will continue to follow up with them throughout this quarter. Thank you for investing and showing interest in Profire. We have a staff that is dedicated to Profire’s continued success.

We are actively attending investor conferences to increase our visibility and investor awareness as well as strengthen our relationships with existing investors. We believe, we are in a great position to serve our customers and deliver products that meet or exceed their expectations. Now with that, I will open the call up to questions.

Operator, would you please provide the appropriate instruction so that we can get the Q&A started..

[Operator Instructions] Our first question comes from the line of Rob Brown, Lake Street Capital. Please go ahead with your question..

Morning, Mr. Brown..

Good morning. Congratulations on a nice quarter..

Thank you, sir..

Just wanted to get a little more of your thoughts on the 3100, in terms of the sales pipeline there, how that’s shaping up for 2018, and how these new product offerings have been received in the market?.

Rob, I will ask Mr. Tidball to cover that in a second, but some of that let me just say that one of the things that we have found, with the 3100 is a bit seasonal in that as we have explained before there.

It takes some engineering in advance actually doing install with this product and especially when it’s involved in big projects and many of those big projects are done in the spring and summer time. And so we find that when these companies are going into the shutdown their turn around periods that they will schedule the install at that point.

And so we expect it to be a bit seasonal that way. But Cam, why don’t you address the issue for 3100 to stay..

Brent, one word I can use to describe how customers are reacting to our features that we are – that we just, we’ve released then recently at a press release on it, it’s really refreshing is what we are getting from customers based on the status quo of what’s currently there. The way that we are handling fuel -- ratio control.

The way that we are integrating features in different IO, it’s really turning some head and so far a lot of focus has been going to the OEMs who have been dealing in this environment for years and years of dealing with the products that have been out for you know really without -- for over two decades.

And so I’ll throw the word out there again refreshing. They like our spin on it, they like our approach to it, they find that the cost of ownership is going to be one that is attractive meaning that what is the reoccurring, what one might have to do to keep this thing going, and it’s very attractive and interesting.

As far as the pipeline, right ahead, right on the head, we will see more seasonality for this however, the interest for 2008 project has been strong and we feel confident in how our 2018 is going to shape up..

Thank you, Cam. The other thing I might add as well is working on this still as I expressed earlier in my comments, this is certification will be very positive for us.

It will allow us to approach some customers especially in the refining areas and so on that we haven’t heretofore been able to and that will only increase the interest in the product it seems..

And on that certification, when do you expect that to get completed and give a sense of how much investment that is for you..

The investment itself, it won’t involve a lot of dollars, it’s more a time investment and we would hope that early in the year springtime this ought to be place, we have our fingers crossed for that one. But it does take a little time, and but we have – we are actively working on that pretty aggressively, actually right now..

Okay, good.

And then just wanted to kind of step back and I know you don’t have perfect visibility but 2018, how do you sort of view it more generally, do you view it as a growth year, or do you view it as a sort of stable, the current run rate or what’s your sort of thinking on really early view into 2018?.

The indications we have Rob are that the market is going to remain very steady and certainly what the upsurge, uptick in oil prices has been very positive and we have no reason to believe that we won’t have a very good year.

We are attending a conference of some of the major E&Ps later this month where they are going to talk about the CapEx spend for the coming year and so we will be interested to see what they are saying.

But certainly we have seen them to be very positive in the high 40s with their CapEx spend and we have to assume that it’s only going to be a little better if we can see some stability in oil prices. So we are very optimistic about where we are going for this coming year..

Okay. I’ll turn it over..

Thanks, Rob..

Our next question comes from the line of John White with ROTH Capital. Please go ahead with your question..

Good morning, John..

Good morning, guys. Good to talk to you again. I’m on the call on behalf of Joe Reagor and just had a couple of quick ones. You know we watched the rig count like you had probably do and going back to June till last week it was down about 60 rigs in the U.S.

Has that, have you seen that in your order book?.

We’ve seen much difference there; I guess we had to bring the whole portion of dock [Ph] into this thing as well. Cam..

Yeah, so far a drop in 60 is one of the biggest we’ve seen for a while.

We haven’t seen a [Indiscernible] of books as of yet, there could be some changes but the doc inventory is still huge, I mean as long as they start keep on chipping away at that which in all the numbers show that they are not chipping away at it for the post part, but we should be give or no.

We haven’t seen an impact yet on drill, reduction in drills. This is somewhat to a degree if you can look back in history you will see some seasonality with that as well as this is somewhat normal..

And I have mentioned that, that more than the drill count the ducks have more to do with our operation the drill but uncompleted wells coming on. That’s when these vessels go in, and have our equipment on. And so that’s really of greater interest to us in some ways than just the drill count..

I can appreciate that and I think a lot of the drilled on completed are going to roll into 2018 to fill, people have that fears kind of accretion for there to meet their targets on production. And also on, would you want to comment on chemical management system, and how that compares to the total sales so far..

Ryan is just sitting here anxious to talk and hasn’t had a chance, well maybe let him talk, allow him for a second..

Let, let’s Ryan go..

Okay, thanks John. Yeah a great question, chemical continues to be an area where we struggle; we wish it was much better than where it has been. However, in this quarter we’ve actually seen some great activity that we haven’t seen in so far this year.

We’ve sold to a number of systems, overall the total is filled less than 1% of total revenues for the quarter, but we did see a significant increase in the number of systems sold during the quarter.

It was with two customers, each of them buying multiple units and then kind of looking forward into what’s in our pipeline, we’ve got a lot of say ten or so customers that have expressed interest in taking product just next quarter where you’ve got pretty high confidence that many of those if not all of those will go through.

One great thing that happened just recently for us was that, we were invited to present at a conference down in Houston, where it was focused on presenting new technologies to E&P producers.

And Cam was a part of that, and was there at that presentation, so maybe I will allow him to maybe just talk briefly about how that went and what we are seeing since that event..

Yeah, you bet. So that was very interesting take on –or call it a trade show but really wasn’t but really this company is paid by E&Ps and operators defined technology.

They found us, they interviewed us, they had us give a mock presentation and then we were selected based on the customer testimonials that we provided as being one of the six vendors that would participate in this conference if they were.

And at that conference there was approximately I think it was 15 to 20 different E&P, and you got up, you gave a 15 minute shotgun presentation and after they allowed for speed dating where these companies could come up and chat with you as more particulars with respect to what the technology could do with their specific application, and we were able to have some, some great feedback, one from a customer who was out that, that it was currently using our technology and we’ve been able to secure some great meetings from that.

And the fallout from it we’ve actually seen some chemical companies contractors saying hey we really think that you guys have something here maybe we want to put this solution in our stuff, but really we know that they have been told that they will probably have to do something, so we hope for some good trial systems to get out here in this quarter and next quarter and hopefully some volume to follow, but very positive reception by – we received definitely the most questions out of anybody, and all the presentations that we received almost everybody that was at the conference came and saw us after to ask specific question..

Cam, I was – I checked with the one customer that was there that uses this as you were presenting that the distance you might sell that as well..

Yeah, one of the customers, they told us that we would have to update our supplies because the savings that they were able to achieve drastically eclipsed what we had posted on the presentation and this engineer was actually a great advocate for us after the original meeting in the reception later where he was going around and really being an unpaid sales guy for Profire.

So some really good news, positive news, welcome news for us, I’m sure for shoulders we’d love to see just do what we fully intended to do and that’s to be a significant contributor to Profire..

Thanks. So that’s good amount of color and I really appreciate it when your customer helps you with the pictures because you can ask for much more. I want to say I’m offset about it. You didn't call me when he came to Houston. Next time you come to Houston you give a call..

I was there for a whopping. I got there at three in the morning from Chicago and then we presented then I flew to New York. So my apologies, but next time we'll [Indiscernible]..

Yes..

We like to know when our Christmas party is down there?.

All right. Sounds good. Well congratulations on a very nice quarter and it's good to talk to you gentlemen again..

Thanks so much..

Thank you, John..

See you..

Our next question comes from the line of Jim McIlree with Chardan Capital. Please go ahead with your questions..

Jim, how are you?.

Hey, Brent, I’m well. Thank you.

How are you?.

Doing great..

I’m trying to figure out, I think last quarter you guys gave a percentage of sales for the 3100.

Can you do the same for this quarter?.

Well, we certainly can. This quarter sales for the 3100 were lower than last quarter as we thought, it will be a cyclical thing for us, but the percentage of this quarter was 2.8% of total revenue..

Great. Thank you.

And do you have to get the sale certification before you're going to be able to put these units in trials or tests that open up in the spring and summer?.

Cam, why don’t you -- since you are on the front line of that..

Yes. So SIL really does with the 3100 readily did or does Profire expand the ability of getting in to a different application.

Really what SIL will do for us, it help us in more of the downstream and high spec midstream jobs which currently right now we really don’t even want to show up to the party because you just going to get your head padded and see you year later. We don’t want to show up without that.

We’ll still be very aggressive in midstream, upstream as we are right now, special application with 3100 with its current certification. But in order to play with as the point of the phrase is the big boys you’re going to need to SIL and it really just ups the game for Profire.

And it will expand who we can go after, which system integrators will talk to us, which engineering companies will open the door and which end-users will build that actually even say okay checkmark, I can let you in the door because without it you just kind of – you not even make it friends they’re not going to give us the time..

Yes I get that. I guess I'm more interested or as interested in the timing of all this. So I thought you said that a lot of this work for that as you call it big boys happens in the spring and summer and so if you don't have the SIL certification before then they'll say thanks a lot see you the next year.

Is that kind of right or not?.

Well, your springtime is really for your northern climate, spring summer. The rest of the United States, it can be whenever they’re not making a lot of money that's when they'll do their turnaround. So yes, if there's a project that’s going in for 2018 spring, even if – it would be too late now even because you won’t even be in the bid specs.

So really for our bigger turnaround that will be looking to get into, the ones that are more, the higher spec that would will be longer plan, lead times we’ll be probably looking more to the 2019, but that doesn't mean, SIL will still have a major or it should have a impact next year as well..

Okay. I see. I think I got it. And Ryan, it looks like inventory returns have – not looks they have been even improving nicely over the past few quarters. But there are some issue that you finally work your way through, were there some – didn’t you have some old inventory you’re trying to work through.

Is that kind of gone now and we’re at normal turnover levels or is there room for more improvement?.

That’s the great question and good observation. Unfortunately, I will say there is still room for some more improvement. We do still have some slow moving inventory that we've been holding for quite a while.

We believe that it still valuable and has its purpose, but the combination of customers who were using it in the past is different now, and so there are some dynamics there. There are some areas or inventory where we definitely hope to bring the numbers down.

One key component or maybe even the biggest component of that would be in relation to our CMS product. We do have a lot of that product on hand and as we were able to realize more sales there that will be an opportunity for further improvement.

One of the key challenges that we are having right now is as we've been able to ramp up very quickly in this last year we’re finding that our vendors are maybe struggling to keep pace with us and that lead times on all of the product that we're using, that it's moving, that’s in high demand for us right now, the lead times are getting longer.

So we continue to work very very closely with our vendors to solve that challenge and to make sure that we can have the right amount of inventory on hand. Our operations manager and I frequently discussed this topic and he frequently has heartburn over the fact that the inventory is as low as it is. Well, in other ways I'm excited that it is.

But it’s a balance of having decreased in the right areas and caring the right amount in the other areas and it’s thus still a challenge for us that we’re still working through, but overall we are happy to be making progress in that regard..

Right. Okay. Good. And Brent, I’m trying to reconcile what you were talking about in terms of your customer’s budget flush versus seasonality in Q4.

The question is do you have a sense as to how much capacity your customers have to spend their CapEx dollars this year, can we see a big budget flush that would outweigh the normal seasonality downturn in Q4?.

Yes. Our fingers are always crossed, Jim, and that seems to change year-by-year. We don't know at this point for sure we do see some spending that’s going on in the last month or so that seems to indicate that there was some budgets left over for the year end spend and we may very well see some of that as we have on occasion in past years in December.

It’s really a bit of a challenge. One of the things that we have found on years when there was a lot of spend at the year-end when there was some CapEx budget left and they did spend this.

Things were down a little bit the first quarter because they had purchase much products in December or November anticipating that they would need this at some point. So you know that’s the chance. The other problem of course and you refer to this is the whole holiday thing.

There's a couple of weeks around Christmas and certainly Thanksgiving week when its really -- we just don't know, but things do shut down for a lot of operations just because of holidays. So this is really a tough quarter to predict.

The one thing I can tell you though it doesn't seem that there is any negative change in interest in purchasing and CapEx spending now compared to where we have been. There seems to be steady as it goes and that’s very positive. The only question would be as you have alluded to, if there is some left over CapEx for the whole holiday thing..

So for modeling purposes it sounds like its best to just assume that we’re going to have a typical seasonal Q4 decline, if I can summarize what you said?.

Yes. We won’t be surprise at that all. Again I want to stress that day by day operations in sales haven’t changed at all, but it will be because of the holiday effect. So, we’re preparing for that, but we are again a very optimistic that things will keep going in a very positive way for us as oil prices stay up..

Thanks. I think that’s all I have. Thanks a lot and good luck..

Great, Jim..

Thank you. [Operator Instructions] Our next question comes from the line of Michael [Indiscernible] with Meriwether Security. Please go ahead with your questions..

Hi, guys. Great quarter..

Thank you..

To start with one for Ryan, I noticed that your gross margin tick down a little bit this quarter. You kind of alluded to that fluctuation.

Can you just dig into little bit? Was that more sales with the third party product that has the lower gross margin? What’s driving that? And then I guess going forward kind of what you think a stable range for gross margin based on the product side?.

Yes. Thanks Mike. Great question. As we’ve said in the past, our margin vary a little bit each quarter and one of the key contributors there is just the overall product mix as you alluded to. Our service division has lower margin this quarter.

Their revenues were little bit higher than last quarter, so that had a downward affect within the product side of things. Our 3100, revenues were down. They carry higher margin. So the combination of those two factors also had a downward driving effect on gross margin.

Another thing that in a way its been very positive for us as we've seen a significant increase in the number of fuel trains or valve trains that our customers are interested in purchasing from us. That’s the product where its an assembled products where we put together basically the fuel line that leads up to the burner and which are boxes control.

The majority of the products on that fuel train are purchase from third parties and we assembled them and send it out. So it is a good money maker for us but it does have lower margin or lower then our system. So that had a downward effect on the overall margin as well. So from a product those are couple of the key changes that we’ve seen.

And then also in this probably the bigger impact was that we started to allow a little bit inventory reserve for some of our slow moving items that we still carry in inventory.

Again we’re continue to work with those and with the sales team to make sure that we can find ways to utilize them, find customers for them, but some of them that have been sitting there longer we increase the reserve that we have set against those.

So the combination of those product mix change with a little bit of additional inventory reserves is what brought the margin down to what it was for this quarter..

Got you. I appreciate that color.

Turning kind of to the topline side, just starting up another question on Q4, but declare it down like whole thing is consider, you are sort of expecting it to be flat for what the cost not to be flat, would be if there is just time after the holidays things like that, but your day to day sales trends what you’ve seen in Q2 and Q3 so far?.

I would say, that’s accurate statement, Mike..

Okay. And then as you look into 2018 I’m also trying to understand, obviously nobody predicts the market is volatile so on and so forth. But from a penetration standpoint, right, you have – you should have for increasing adoption kind of your for burner management solution and that combined with the new product 3100.

I guess what I’m asking is if the market in 2018 is more or less flat to spend 2017 you still expect to be able to deliver growth?.

The answer would be yes. In addition to all of the things that you’ve mentioned, we are also actively working. Our R&D team is on other new products and we would hoping this coming year to have a new product that which could in fact add significantly to what we’re doing.

And so overall we expect with the oil price change in an upward direction, the optimism that we have heard and felt and seen as we’ve been out there with these oil companies and the different products that we have, the extra effort that we’re putting into the 3100, we expected to be a good year. We don’t give numeric guidance at this point.

We think things are still unstable enough that is pretty to do that, but overall we’re very optimistic about the coming year?.

Got you.

And when you talk about maybe back to Ryan, when you talk about some of the investments that you’re making and the increased R&D and so on? I mean, I have to assume that there’s still you just hoping to be able to maintain or even increase your EBITDA margin, right, on future growth?.

Yes. That’s certainly the objective and over we look back 2015, 2016 were a period for us of cost cutting, cost reduction and really maintaining costs and now in 2017 it’s been more of – we’ve started to recover now and that we want to position ourselves for that recovery.

Again doing that in a way that we’re managing our cost very closely that we’re looking at strategic hiring in the right areas that are going to drive the greatest value for us in the greatest impact to revenues, so very much focused on maintaining and even increasing the EBITDA margin, the net income margin, all of the great things that we've been able to achieve in 2017 maintain those and hopefully even grow those into 2018..

All right. Thanks. Appreciate it..

Thanks Mike..

Our next question comes from the line of Scott Billeadeau with Walrus Partners. Please go ahead with your questions..

Hi, Scott..

Hi, guys. Most of mine have been answered. Just a couple quick one.

Just could you update kind of what does the sales force, what’s the size of the sales force at this point in time? And the added there kind of give us an update there? And then the second question would be, I think you mentioned about little less than 3% of sales from 3100, maybe you could update kind of what’s carrying the water right now in terms of revs? That would be helpful.

Thanks..

Cameron, you’re front line there, do you want to talk about those per se?.

Yes, you bet. So the sales team remained flat in number of people. We’re still 17 and myself. We will be looking to expand that sales team one for the 3100 vertical as we get closer to certifications as well just to expand our ability to serve the customer base that we’re starting to build there.

That’s going to be a different higher than [Indiscernible] has produced in the past. We’ll look to probably bring on someone with expertise where really all of our traditional legacy team has always been, we've kind of grown them in top of the way we wanted to it. So it’s can be little different hire for us.

We’re also looking at perhaps expanding our existing team that deals with our legacy product. So we should see some movement in the next quarter like Q4, Q1 on those fronts.

As far as the 3100 the revenue down, the number of projects we are still very consistent if not growing, it's just the dollar values were lowered, they weren't see your big upgrade process heaters which would like to get those, those will of course be a higher dollar amount, larger revenue per project, but with carrying the water right now we’ve got a lot of interest, we’re doing frac heaters, we’re doing smaller process heaters, we’re doing some forced air application, its very diverse with what Profire can do with this technology platform of 3100 that we have So, the great news – the bad news is the revenue down.

The good news is projects that are increasing, the estimates are going up, the awareness is going up..

Thanks, Cam. I might add few about that static number in the sales force. We have had the sales people for some time now and they’re getting better and better and better all the time. Obviously they are more trained but they’re making more customer contact, their effectiveness out there is increase.

So its not just we can just go by numbers of sales people are our customer base keeps increasing every quarter including this past quarter and so by keeping that sales force which was a question that we had originally during the downturn whether we should or shouldn’t, we now have some very profession, efficient sales people very verse in not only what the Profire products are, but what the market needs are and the contact of that they have just keep growing.

So, it’s a very positive thing that we still have that same number..

So add to that trends if it’s okay, back to that conference we were at the Chemical conference. Before we started the moderator ask is there any questions for the Profire, three people, three EMPs put up their hands, and the first question was I thought you guys were the burner guys, BMS guys, and of course we answered well, we also have this.

And then the next few people put their hand up. So what is that say, well, even in the role where people are now dealing with burner management Profire tough line for a lot of people within our customer base.

So I thought it was a very good point to what Brent saying that people know us, the brand recognition is there, the reliability that we bring, the expertise that we bring from our sales team which is there incredibly [Indiscernible]..

And the call point is pretty similar mean the ideas you'll need a CMS sales force in addition to a BMS sales force.

The call point a similar or do you do have to rattle around and find different person on the on the chemical side?.

You got to rattle around little bit some of the same, it depends on the structure of the company, the size of the company, your majors, your large guys like Anadarko, yet totally different.

The Chesapeake that all comes back to gated apartment anyway, so it all depend, again in that I mentioned is one of the areas we’re investigating potential shift in the way Profire does think and focusing more on the higher levels of engineering CMS world if we can get a little bit of push from the top..

All right guys, appreciate it. Thanks..

Thank you, Scott..

Next question is coming of the line of [Indiscernible] Private Investor. Please go ahead with your questions..

Hi, guys congratulations for navigating the downturn here, really nice to see the top line growing so strong?.

Thank you..

Yes. So my question is just a little bit about materiality of the downstream market once we’re done the certifications for the 3100.

What is the size of that market for you guys relative to what you currently have, if you can provide any context?.

I think for the next call, I’ll just go on vacation and turn it all over to Cam because it seems that focus on what he is doing.

Cam can you address that?.

Yes.

Well the downstream market we know where you focus and there’s – you got all of in the golf there and the amount of dollars that spent there on burner management, we have in process conducting further research into it obviously we've done some of our own, but further research to quantify that market a little further we believe that it is larger than what we are in total dollars spent.

We know that it is less projects of course because nothing is going to keep up with the upstream world of North American shale but we haven't quantified exactly the figures of what it is. But we believe that it is a great market for us to go after. And we believe you've got a lot of plans.

And when we say downstream I don't just thinking Dean I know your [Indiscernible] guys so you know that over on the east side of the city year there's that type of downstream. You got a lot of process heaters, you got a lot of different applications there. They are not much different than what Profire already doing in the midstream phase.

It just that the specifications to get into those plants are little more difficult and you can't show up at the door and say hey, here is a box of doughnuts. Can I come and talk to your engineer. It doesn’t work. You got the security at the gate the only places in Canada where there's guns that those and so its not place to get in to so.

But there is also just though those other facilities like the harder, like the larger mainstream operation which there is a lot more of those to go after and we really are excited about those..

Okay. Thank you. And how fragmented it is not marketplace.

Is it similar to what you guys experienced currently with 2100 and 3100?.

Well, if I understand the question fragment to me like what kind technology exist there? They are already like is there a few competitors is that what you mean?.

Yes..

You really walk into the Honeywell world for the most part Allen-Bradley PLCs, Honeywell burner management you're walking into PLCs and really a hodgepodge of equipment that is all interlaced with intellectual capital that is going retires sooner than later and only one or two people know how to deal with it.

You're going to see a shift, our belief is off the shelf burner management that’s can be supported and that you know you don’t require this type of intellectual capital to take care of burner management.

So it is very similar to the world we live in, except for the very few competitors but again just antiquated old way of doing things which not everyone is going to want to change, but a lot of people are going to be first to change and want to change..

Okay. That’s great. Thanks and congrats again guys..

Thanks, Dean [Ph].

Thank you. This concludes our question and answer session. We’d like to turn the floor back over to management for closing comments..

Thank you. Thanks to everyone for joining us today on this call to discuss the third quarter of this year 2017. We like to thank all of our customers, our employees, our shareholders for their constant and continued support and encouragement. Please know that we are available at any time.

If you have questions, do call us directly we would be happy to entertain your contacts at any time. Thank you all and have a great day..

This concludes today’s teleconference. You may disconnect your lines at this time. And thank you for your participation..