Profire Energy Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 10, 2023

Key Takeaways

  • Profire delivered record Q1 results with $14.6 million in revenue (up 53% YoY) and a 53.8% gross margin, marking eight consecutive quarters of sequential revenue growth.
  • The company reported its best-ever net income of $2.6 million (or $0.05 per share) and turned positive on operating cash flow at $0.47 million versus a negative $1.2 million last year.
  • With no debt and $16.3 million in cash and liquid investments, Profire’s Board approved a new $2 million share repurchase program through April 2024, reflecting management’s view that the stock is undervalued.
  • Ongoing supply chain disruptions have kept inventory elevated at $10.6 million and are expected to pressure component availability and costs into 2024.
  • Profire is actively pursuing its diversification strategy, expanding into critical energy infrastructure and industrial markets via partnerships to capture growing non–oil & gas revenue streams.
AI Generated. May Contain Errors.
Earnings Conference Call
Profire Energy Q1 2023
00:00 / 00:00

There are 7 speakers on the call.

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 March 31, 2023. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I will now turn the call over to John Beisler, Investor Relations at 3 part advisors to get the call started.

Speaker 1

Thank you, operator. With me on the call today is co CEO and CFO of Profire Energy, Ryan Ovia 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 the press release. As always, both of those documents are available on the Investors section of the company's website. The transcript of this call will be posted in the coming days.

Speaker 1

Before we begin today's call, I would like to take a moment to read the company's Safe Harbor statement. Statements made during this call that are not historical are forward looking statements. This call contains forward looking statements, including, but not limited to, statements regarding the company's expected growth, revenue diversification success, planned research and development of new products, the repurchase of company shares, growth in our customer base in the natural gas market, the availability of company resources to make beneficial investments in 2023 and beyond 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 and or anticipated by the forward looking statements.

Speaker 1

Factors that could materially affect such forward looking statements include certain economic, business, public market and regulatory risk factors identified in the company's periodic reports filed with the Securities and Exchange Commission. All forward looking statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. All forward looking statements are made only as of the date of this release and the company assumes no obligation to update forward looking statements to reflect subsequent events or circumstances except as required by law. Readers should not place undue reliance on these forward looking statements. I would like to remind everyone that this call is being recorded and will be available for replay through May 24, 2023, starting later today.

Speaker 1

That will be accessible via the link provided in yesterday's press release as well as through the company's website at profireenergy.com. Following the remarks by Mr. Oviatt and Tidball, we will open the call for your questions. Now, I would like to turn the call over to the Co CEO and CFO of Profire Energy, Mr. Ryan Ovia.

Speaker 1

Ryan?

Speaker 2

Thank you, John, and welcome to all of you who are joining us on the call today. Our Q1 2023 results built upon the momentum we generated in the second half of twenty twenty two as we recorded the 2nd highest revenue quarter ever, expanded our gross margin above 50% for the first time since Q3 of 2019 and reported our best quarterly net income and EBITDA in company history. We have now achieved 8 quarters of sequential revenue growth and 3 of the top 5 revenue quarters have all been within the last 9 months. Our strong performance in recent quarters is a result of several strategic efforts, including investments in our sales and operations teams, and aggressive product procurement and quality focus, sales price adjustments to combat inflation and maintaining our high standard of customer service. We have also benefited from the overall post pandemic recovery within oil and gas markets.

Speaker 2

To put the magnitude of the recovery in perspective, revenue from our legacy business for the prior 6 months exceeds our total revenue for all of 2021. Recent policy announcements at the state and federal level have increased pressure to reduce oil and gas consumption within the next decade. However, we believe hydrocarbons will remain a critical piece of the world's energy supply for many years to come. The necessary infrastructure for many of these alternative energy initiatives is not and will not be in place within the timelines proposed and the current cost projections are likely prohibitive for widespread adoption. Despite these pressures, the outlook for our core legacy business remains very favorable due to pent up demand.

Speaker 2

E and P Company's continued catch up efforts on multiyear deferred maintenance as well as ongoing efforts to gain better efficiency out of their new and in wells. With that, let me turn my remarks to Profire's financial results for the Q1 of 2023. During the quarter, we recognized approximately $14,600,000 in revenue, which represents a 4% increase sequentially and a 53% increase over the prior year quarter. The sequential and year over year increases were primarily driven by ongoing customer demand, price increases on the products we sell, ongoing historical strength in oil and natural gas prices and continued progress and our strategic diversification efforts. Gross profit increased to $7,800,000 as compared to $6,600,000 in the Q4 of 2022 $4,600,000 in the year ago quarter.

Speaker 2

Gross margin improved to 53.8 percent of revenues from 47% in the prior quarter and 47.9% in the Q1 of 2022. The increases were the result of greater fixed cost coverage from the higher revenue base, price increases and revenue mix between product, service, customers purchasing product in the period and the contributions from diversified revenue streams as well as typical fluctuations in inventory and warranty reserves. Total operating expenses for the 4th quarter were approximately 4 point of $5,000,000 compared to $4,300,000 in the 4th quarter and $3,900,000 in the year ago quarter. The sequential and year over year increases reflect the impact of headcount additions and overall cost inflation across the business. Net income for the Q1 was approximately $2,600,000 or 0 point 0 $5 per diluted share.

Speaker 2

This compares to net income of $1,800,000 or 0 point 0 $4 per diluted share in the Q4 of 2022 and net income of $627,000 or $0.01 per diluted share in the Q1 of last year. Cash flow from operations in the Q1 was approximately $474,000 compared to a negative $1,200,000 in the prior year quarter. Our inventory balance at the end of the quarter was approximately $10,600,000 compared to $10,300,000 at the end of 2022. We continue to see disruptions within the supply chain for certain products and expect this will remain for several quarters. We continue to work with our suppliers to obtain the parts and components that our solutions require and are already looking to secure supplies for 2024.

Speaker 2

Overall, we are pleased with the start to 2023. We believe we can maintain the progress in our legacy business throughout the year, which will be aided by our strategic diversification strategy. We have $16,300,000 of cash and liquid investments and remain debt free. We are excited to announce that our Board of Directors has approved another $2,000,000 share repurchase program that will run through April of 2024. We believe our stock is undervalued and that repurchasing stock at current prices is a good way to return value to our shareholders.

Speaker 2

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

Speaker 3

Thank you, Ryan. Q1 represented 1 of the strongest quarters in our history, surpassing our strong 2022 Q3 and Q4 results. As Ryan mentioned, the Profire team has now achieved 8 consecutive quarters of top line revenue growth and we continue to improve and deliver consistent operational and financial results across our business. Our strong performance reflects the chemistry of our industry leading solutions and customer centric culture driven by our team. We remain focused on our strategic initiatives to secure, protect and grow our core legacy business and diversification of our revenue streams within the petroleum industry as well as in new industries.

Speaker 3

This focus guides our research and product development as well as our sales, marketing and customer experience strategies. Let's start with our upstream and midstream business. In the quarter, our core market benefited from stability in commodity prices and drilling and well completion activity. Investment in automation, including Profire burner management solutions remains paramount to producers and operators as they focus on increased safety and efficiency of their production equipment, reducing on-site emissions and streamlining operational efficiency. Our share in this market has never been stronger.

Speaker 3

We continue to find new opportunities directly or through our resale partners to retrofit legacy thermal appliances as well as support new construction as drilling and completion activity continues to support global production demand. Accretive tailwinds such as emissions regulations and ESG pressures continue to support Profire's ability to capture what we believe to be an expanding total addressable market. We continue to see consolidation as larger E and Ps acquire smaller operators, allowing streamlined operations and cost reductions, strategically lowering breakeven costs. We expect this trend to continue and believe that it is a positive outcome for greater adoption of Profire's industry leading burner and combustion management solutions. We have now supported the integration of over 85,000 burner management solutions in this part of our business.

Speaker 3

We have successfully executed our strategy to increase our average revenue per BMS unit adding greater value to our customers as we provide them with complete burner management solutions. Looking at our natural gas transmission and utility market segment, Q1 sales activity was on par with our expectations. We continue to find new opportunities for retrofits of legacy thermal appliances with new customers. Our customer base in this market segment continues to grow as we collaborate on solutions that support upgrading existing heated appliances as well as ensuring new heaters are delivered to site with Profire solutions installed from the OEM. This customer base includes Dominion Energy, National Grid, ATCO Gas, National Fuel, Fortis, as well as numerous OEMs and strategic partners such as MolCare Pipeline Solutions and the Blythe Company.

Speaker 3

We continue to consider additional partners that have experience, infrastructure and customer relationships in markets where Profire does not have a sales and service presence. Let's Turn to our critical energy infrastructure market focus or what we used to refer to as the downstream side of midstream. Leveraging our premium brand, we continue to gain meaningful traction in this diversified market and revenue opportunity. In the quarter, we completed projects and filled orders with notable customers including Equitrans Midstream, Enterprise Products, DCP Midstream, EnLink, Energy Transfer and Kinder Morgan. We also continued to receive orders from OEMs who manufacture thermal appliances for this segment of the energy industry.

Speaker 3

In 2022, we achieved near tripled digit revenue growth year over year in this area of revenue and customer diversification. In the quarter, we were able to recognize revenue and receive new purchase orders, which could enable us to repeat year over year growth at nearly the same pace in 2023. New and repeat business with this customer base reinforces our position as an emerging strong and reputable alternative to traditional incumbents who have historically owned this market. Project planning, design, delivery and execution backed by reliable and performance and products, solutions and service support our customers with an exceptional experience, which we believe will lead to increased growth and specification. Turning to our progress in non oil and gas and industrial markets.

Speaker 3

We continue to build from the successes of 2022 where we achieved over 400% revenue growth year over year and we continue to see significant opportunities in 2023. In the quarter, we fulfilled orders for various customers in mining and metal, landfill, food and beverage and renewable natural gas production. In the quarter. We were able to receive repeat orders from 1 of the United States' largest producers of renewable natural gas. We continue to look for opportunities to expand our revenue within this exciting and growing industry, which supports the production of renewable natural gas and reduction of CO2 emissions at landfills and agricultural facilities.

Speaker 3

Recently, we were invited to scope and assess potential upgrades of thermal appliances at a small batch refinery. We believe our success, performance and track record in our Critical Energy Infrastructure segment will enable us to leverage our project list and capabilities in the refinery and petrochemical industry. As a result of positive referrals received from an EPC, who we collaborated with on a project in 2022, we have been introduced to several project opportunities, which entail heat treating processes for automotive and metallurgy coating. We continued business development activities related to projects that support wastewater management solutions as well as potential landfill biogas projects. Our revenue diversification strategy continues to focus efforts in developing sales and marketing, service capability, engineering design and support and product development in this space.

Speaker 3

We are optimistic that we can continue to attract and deliver on project opportunities, which will strengthen our value proposition and reputation as a leading provider of industrial burner and combustion management solutions and technologies. As we look forward, we remain optimistic that many of the tailwinds we benefited from in 2022 and the Q1 will continue. Global demand for energy continues to grow. The North American oil and gas industry continues to give indication of investment in automation solutions and we believe that the oil and gas industry will remain stable. Lastly, we see a strong customer need for our products in our diversification strategy.

Speaker 3

Research and product development remains critical to our future. Our strategically balanced approach to focus on short, mid and long term product and solution capability remains intact. We believe Profire's value proposition to our existing markets and customer remains strong as our technology solutions, engineering capability and technical service expertise continue to provide a compelling alternative to that of our competition. As we develop both core and new markets, we are confident that our solutions will continue to provide industry with safety, reliability, compliance, efficiency and environmental protection. Before we turn to questions, Ryan and I would like to thank you for your interest in and support of Profire.

Speaker 3

To the Profire team. We thank you for your perseverance, creativity and commitment to our customers and each other and for the work you do each and every day to enable our ongoing success. Operator, would you please provide the appropriate instructions so we can get the Q and A started?

Operator

Certainly. We will now begin the question and answer session. You will hear a tone acknowledging your request. The first question is from Rob Brown from Lake Street Capital. Please go ahead.

Speaker 4

Good morning, Rob. Nice quarter. Just wanted to kind of dig in a little bit on the demand environment. I think you mentioned oil and gas being stable and Seeing good strength there, but how do you sort of what are you hearing from customers in terms of that marketplace and demand continuing throughout the year? And maybe what's sort of driving that in the different markets?

Speaker 2

Yes, certainly. We appreciate the question there. And as we look at things from a macro environment, from a pricing perspective, oil price, natural gas price, they obviously have come down significantly from where they were a year ago. But historically, these are still quite strong prices and E and Ps, producers are still making good money with This level of pricing. So we see that as long as pricing holds steady or stable in this environment or goes up from here, which It's kind of where we think things are still headed for the next year plus, maybe potentially a couple of years beyond that.

Speaker 2

But In that environment, we think that the demand continues to stay as we talked about in our prepared remarks for Catch up on ongoing deferred maintenance over the last 5 plus years and then also significant investments in new technology on ESG initiatives, on increased efficiencies, challenges dealing with labor in the environment and so forth. But I'll let Cam make a few comments on more specifics from what we're seeing from customers directly.

Speaker 3

Yes, absolutely. As we mentioned in our comments, we see a lot of consolidation. We've seen it and we expect it to continue. And more of the strategy that we're seeing from E and Ps and our customers as they Have discussions with us is not so much the land grab. The land grab is gone or is done, it's not gone, but it's done.

Speaker 3

They have more than enough Opportunity with acreage, with permits to keep going. So we look at our customer bases, They don't necessarily need the capital they've needed in the past. Of course, with an acquisition they would.

Speaker 2

But As they continue

Speaker 3

to do these acquisitions, they're just going to buy up assets from a lot of the independents. You'll see the consolidation, which The whole goal of it is to lower their operating costs. And so as we mentioned in the call, It's just a perfect storm for Profire where they're going to need automation. They're going to do it. We've always talked about how We have this huge addressable market that varies year to year based on commodity prices.

Speaker 3

While we believe with We mentioned ESG pressures, new legislation from the EPA, cleaning things up that If they're going to keep a well on, if they're going to keep a heated asset going, if you're going to keep a pad running, you're going to put burner management on it. And we've seen a large uptick, especially in the last three quarters on retrofits, both directly for us, doing them ourselves as well as with Our partners. So customers are it's not drill, baby, drill. It's a different thing now. It's keeping production steady and slightly increasing it or we still see an increase in production for the year.

Speaker 3

LNG is going to We think especially the Northeast and the Permian, they see the opportunity that exists in the world for LNG exports and they're building towards it.

Speaker 4

Okay. That's a great overview. Thank you. And then on the kind of the diversification efforts, where is that as a percent of revenue today? And how is that pipeline kind of shaping up for the next the rest of this year and into next year?

Speaker 2

Yes. So As we mentioned in our last call, Q4 call last year in 2022, we saw a significant increase We were at 6% of total revenues for the year last year. For Q1, we've had a little bit of a slower start to the year as far as revenue coming in during the quarter. We still saw some good strength in that critical energy infrastructure segment. It was a little bit slower in the non oil and gas side of things as far as revenue during the quarter.

Speaker 2

But we had Really good success during the quarter as far as the backlog and orders coming in. Cam, do you want to comment on that side of the equation there?

Speaker 3

Yes, absolutely. The sales pipeline, the activity, the customers and projects that we're engaging with, The repeat business and repeat, I guess, opportunity to bid on projects in the quarter was strong. And so we just think it lends as we've mentioned. We feel like we can get really good strong growth this year like last year, maybe not to the tune of nearly 400%, but we do think that we are on a great trajectory with The activity that's happening. It's always great to get a customer that has used you for the first time in a year, last year, the fiscal year and then they've come back because they've got more projects.

Speaker 3

As we mentioned, one of the EPCs, so an engineering consultancy firm that does some very interesting industrial projects. We've done a great job for them on one of their steel plants that they are the engineer for. They have now brought us several opportunities where we're looking at some more heat treating applications for Profire. We're also starting to see that it's starting to branch out into new geographies within the United States and Canada. And as such, we are looking at at what point do we add a strategic partner?

Speaker 3

It's one thing to get something installed and completed in an area, but it needs to be taken care of and serviced intermittently. So we're looking at more partners to bring into the Profire fold in areas where we don't have people.

Speaker 4

Okay. Thank you very much. I'll turn it over.

Speaker 3

Thanks, Rob. Thanks, Rob.

Operator

The next question is from Jim McIlree from Dawson James. Please go ahead.

Speaker 5

Good morning, Jay.

Speaker 2

Hey,

Speaker 3

guys. Good morning.

Speaker 6

Can you talk about pricing, if any recent pricing actions And what you're seeing on your ability to get price increases? Thanks.

Speaker 2

Cam, do you want to comment on that?

Speaker 3

Yes. We, of course, Did some price increasing in 2022. We also have done it in 2023. We've been able to, to a degree, test our market and to see where we can get to. We've also been able to see price increases from our competitors.

Speaker 3

We know that they've increased their prices. Within our core legacy business, upstream, midstream and downstream utility, Do they like it? No. Do they accept it? Yes.

Speaker 3

The great thing is we've been able to continue to command a premium. We are the highest price when it comes to that market for burner management solutions. Whereas on the other hand, in our critical energy structure space and outside of oil and gas were more on the lower side and we've been able to increase those prices as well. So Really, we've increased our service rates. We've increased our resale parts, Not to the degree we'd like to on that in that side because those are some of the parts and components that people can get just anywhere.

Speaker 3

So we have to be Cautious on that. We don't want to give away that business, which we've worked hard to get. But on our proprietary products, we've definitely been able to raise The price is there.

Speaker 6

And are there expectations for additional price increases for the rest of the year?

Speaker 3

We will be looking at a price increase, no doubt in the Q4, which again really won't take effect till the following year. We will be increasing our service rates Most likely here in the next quarter as well.

Speaker 6

Great. And lastly, can you address Cost pressures, have you been encountered part of that? Any sort of lingering issues you've had with obtaining the parts that you need. I know that that's been an issue in the past 12 months or so. So if you can address whether or not that's changed, so the cost pressure on your parts as well as the availability?

Speaker 6

Thank you.

Speaker 2

Yes, for sure. On the cost pressure side, we certainly are seeing a better environment than we were a year ago. A lot of pressure last year at this time and kind of throughout the year, especially on the labor market, The markets in the main areas where our people are located have been quite challenging. Very good labor rates for employees and workers in those areas. So Finding people, keeping people, retaining people was quite a challenge throughout 2022.

Speaker 2

That pressure is not entirely gone. We think it's come down a little bit. It's been a little less pressure, a little less turnover in some of our areas. But still, Our employees are feeling the pinch from inflation and want help with that or relief from that, of course. And so we do what we can.

Speaker 2

We've gone through our annual kind of reviews and raises process earlier this year and made adjustments to labor rates and compensation. We also had a really good year last year, so we were To pay out some bonuses and better bonuses than in many years of the past. So we think we're doing the right things to keep our people and And to continue to share with them the benefits of having a good year here at Profire. We expect again that those pressures will continue that the labor market will continue to be challenging and that we'll want to continue to retain our people for sure. From a component and supply chain perspective, similar story where we think some of the pressures have eased up a bit, but there's still ongoing pressures for key components out of Asia, electronics, Plastics, some metals as well.

Speaker 2

So as we work through those challenges and our Our team has become very good at working through those challenges, helping us keep product on the shelf and coming in the door. We're finding some relief, but we also find new areas of difficulty in parts that are either no longer available or have lost Some of the quality that they once had and we're having to find other alternatives and work those in through certifications and other processes with our manufacturers. So Unfortunately, we see that that pressure is going to probably continue throughout this year and maybe even into early next year in various ways. Again, we hope that it continues to get better. But for example, our newer system, the 2,200, The components for that system are different than our legacy 2,100 system and those for the 2,200 system are more challenging to get and have had more price inflation.

Speaker 2

We've had to go more to broker markets and pay premiums in order to keep those Parts moving. We do again see some relief coming in the next 12 to 18 months in some of the orders there. But It's the environment that we're still in and it's still going to continue for some time.

Speaker 6

Great. That's helpful. My last one is, Ryan, in your response, you were talking about the 22 versus the 2,100. Can you Just update us on the revenue split between the 2?

Speaker 2

Yes. I don't have an exact split. And even in this quarter, Some of the benefit that we saw in the gross margin percentage came because we sold a lot more of 2,100s and a lot less of the 2,200s and that was largely an availability challenge with some of those components. The 2,100s continue to have a better margin at the moment because of all of the things I was just describing in relation to them. We still Believe that the 2,200 is the future for Profire, the 2,100 is nearing its end of life and we've Been extending that and had to extend that because of the supply chain challenges.

Speaker 2

But we're moving forward again, we'll be shifting Once the supply chain improves and stabilizes for the 2,200, we'll certainly be shifting that product to be the main product that we offer. But right now, Q1, again, I don't know the percentages, but The bulk of what we sold would have been in the 2,200s sorry, 2,100s. Only a few of the 2,200s would have gone out, and we would have Continued to sell 3,100, which is again a good stable product and it's servicing largely that critical energy infrastructure stream that we are focusing on and so seeing good rates there as well. But that shift will need to continue to happen over Time as the supply chain allows us to do that.

Speaker 6

That's great. Thank you so much. And that's it for me.

Speaker 2

Excellent. Thanks, Jim.

Operator

The next question is from John Bair from Ascend Wealth Advisors. Please go ahead.

Speaker 5

Thank you. Hey guys. Nice quarter, great momentum going there and Hope it continues to roll along. Two questions. You talked about the labor issues, I guess, retaining existing employees and so forth.

Speaker 5

I'm curious as to whether or not you're seeing any pressures as you expand into non oil and gas markets. Are you having to bring in new employees to help address that area or is that something that can be expanded upon it internally?

Speaker 2

Cam, do you want to talk about our efforts on the sales and service side as it relates to those markets? Yes.

Speaker 3

You bet. Hi, John. So far, we brought on a lot of the talent that we wanted for that space, going back. Well, the business leader that leads it almost 8 years ago, obviously, he has experience in all of our industries. But we've put some horsepower behind that really in 2021 2022.

Speaker 3

As we go forward in some of the new markets we're looking at, it's more the support in the back end From an engineering perspective and applications type view of these things, when we look at like an application team that can support it. So we don't see the need to drastically increase sales and service footprint to take care of these industries. Will we add here and there? Yes, we will. Will we look at expanding our partner network, especially in areas where we just don't have bricks and mortar, we are going to aggressively be looking at that.

Speaker 3

So we mentioned a couple on the call that We have strategic partnerships with, they're mainly focused on downstream utility in certain geography areas in the United States. So there's a bunch of area, Midwest, West Coast, even in some of our areas where we have people where we want To look to add partners who have existing relationships with whatever industrial type of plants happen to be in those areas. We're never going to be able to knock on all the doors, But we think with what we've been able to do so far, those companies who are in those spaces that Sell to those types of customers, whether they be asphalt plants or gravel drying or mining, whatever it might be. They have partners. They have companies that do this type of work.

Speaker 3

And they probably are healing the pain that a lot of the people we're running into with the incumbent suppliers of automation, especially burner management in those spaces. So we think is that the door is open to a degree where we can come in and provide a very valuable alternative. So I guess back again to your question, we're not really needing to add ton of people to expand. We will have to strategically hire and we will, but for the most part, it's a focus on finding those partners who are in those spaces with those relationships.

Speaker 5

That's good. It's a good way to leverage. And then another question on capital allocation and that is at what point would Profire consider perhaps initiating a small dividend or a special dividend, something like that as opposed to strictly a share buyback situation? What would need to happen to seriously consider doing something like that?

Speaker 2

Yes, that's an interesting question and we get that on occasion from investors as we meet and speak with them. And What we find is there's really kind of 2 camps. 1, that's either you really want us to pay a dividend or 2, you really don't want us to pay a dividend. And As we've talked about it internally, senior management, with the Board, we look at it as Right now, we think that there are other good sources that we can deploy our capital to that are important to us that we want to continue to See growth as opposed to starting to pay a dividend. Once you start a dividend, it seems nearly impossible to Stop it without significant consequences.

Speaker 2

And I understand there could be the concept of special onetime type dividend, And we may consider that. But right now, we think that there are other ways that are probably better for us. We think our share price is at a bargain right now that we haven't gotten recognition over the prior three quarters' significant historic record performance. It hasn't materialized into the share price. And if that's going to continue, then we're certainly going to deploy some capital and buy some shares back.

Speaker 2

As we look at other ways to continue to grow. I think with our performance and where we think the company is headed, we're going to continue to cash flow. So We expect that we should probably be able to fund this dividend just from our operating cash flow over the next 12 months. But We'll see. And I mean, hopefully, after this report is more widely known from what we published yesterday that the share price might react And move up from where it is today.

Speaker 2

But if it stays at these levels, then we'll certainly be deploying capital to acquire some shares back.

Speaker 5

Fair enough. Very good. Thanks a lot. Keep up the good work. Thank you.

Speaker 3

All right. Thank you, John.

Operator

This concludes the question and answer session. I'd like to hand the call back over to management for closing remarks.

Speaker 3

Thank you, everyone, for joining us on our call today, and thank you for all your continued support. As always, we're available for any discussions or questions you may have. Additionally, we'll be participating at the EF Hutton Conference tomorrow in New York and 3 part Advisors Virtual conference in June. Thank you everyone and have a great day.

Operator

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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