News

Montreal, Quebec

Velan Inc. (TSX: VLN) (the “Company”), a world-leading manufacturer of industrial valves, announced today its financial results for its third quarter ended November 30, 2022.

Highlights:

• Sales for the quarter amounted to $95.2 million, a significant improvement of $10.2 million or 12.0% compared to the previous quarter of the current fiscal year, but a decrease of $14.7 million or 13.4% compared to the third quarter of the previous fiscal year. The decrease in sales for the quarter compared to the prior year is partly due to the weakened euro average rate against the U.S. dollar combined with lower sales achieved by the Company’s Italian operations in part due to a decrease in orders recorded by the subsidiary in prior periods as well as a strong shipment performance in the prior year.
• Gross profit for the quarter amounted to $29.0 million or 30.4%, a significant improvement of $5.5 million or 280 basis points compared to the second quarter of the current fiscal year, but a decrease compared to last year’s $35.9 million or 32.6%. Noteworthy is that the gross profit for the nine-month period of the previous year was 30.1%, net of government subsidies related to Covid-19.
• Net income of $2.7 million and EBITDA of $6.1 million for the quarter, a significant improvement compared to the prior quarter’s net loss of $3.2 million and EBITDA of $1.4 million, but a decrease compared to a net income of $4.5 million and EBITDA of $13.3 million last year. The decrease in EBITDA is primarily attributable to the previously mentioned reduction in gross profit partially offset by a decrease in administration costs in the quarter.
• Order backlog remains strong at $488.3 million, an increase of $11 million or 2.3% over the prior quarter, but a decrease of $12.9 million or 2.6% since the beginning of the year. However, this reduction is primarily attributable to the weakening of the euro spot rate against the U.S. dollar and lower upstream oil and gas net new orders (“bookings”) for the nine-month period.
• The portion of the current backlog deliverable in the next twelve months slightly increased to $336.2 million from $321.9 million from the year, while it decreased from $347.2 million when compared to the beginning of the quarter.
• Bookings of $99.2 million for the quarter, an increase of $10.7 million or 12.1% compared to last year. The increase in bookings compared to last year resulted mainly from large marine orders recorded in the Company’s North American operations. The Company’s book-to-bill ratio for the quarter and the nine-month period was favorable at 1.04.
• The Company’s net cash amounted to $29.3 million at the end of the quarter, a decrease of $24.2 million since the beginning of the fiscal year. The decrease in net cash for the fiscal year is primarily attributable to the lower net income, combined with unfavorable non-cash working capital items and the ongoing repayment of longterm debt. The overall available liquidity remains strong with $137.6 million of available cash-on-hand and facilities. The Company’s net cash remained stable when compared to the previous quarter of the current fiscal year.
• The Company continues its improvement trend by prudently navigating market and economic volatilities managing operational throughput as it executes on its backlog and securing a strong level of new bookings across the majority of its business segments.