News

MONTREAL, QUEBEC

Velan Inc. (TSX: VLN) (the “Company”), a world-leading manufacturer of industrial valves, announced today its financial results for its fiscal year and fourth quarter ended February 28, 2023.

Highlights: 

• On February 10th, 2023, Flowserve Corporation (“Flowserve”) (NYSE: FLS), a leading provider of flow control products and services for the global infrastructure markets, and Velan Inc. announced that they have entered into a definitive agreement under which Flowserve will acquire Velan in an all cash transaction (the “transaction”) valued at approximately $245 million (C$329 million). The resolution relating to the transaction was approved by 99.99% of the votes cast by all Velan Inc. shareholders. 
• Sales for the quarter amounted to $115.1 million, a decrease of 9.7 million or 7.8% compared to last year. The decrease in sales is primarily due to a $8.8 million reduction in the prior fiscal year of the Company’s provision for performance guarantees. 
• Gross profit for the quarter of $39.9 million, a decrease of $7.8 million or 16.3% from the previous year. The gross profit percentage for the quarter decreased by 350 basis points from 38.2% to 34.7%. The gross profit decrease is mainly due to the sales decrease. 
• Throughout the last several years the asbestos related costs have shown an increasing trend. Following additional information obtained during the strategic review process and throughout the fourth quarter of the fiscal year, the Company’s management was able to estimate the impact of future unknown asbestos settlement costs. The result of this evaluation led to a non-recurring charge of $56.0 million to increase the Company’s asbestos provision. Important to note that the asbestos provision does not provide for legal related costs for defense. 
• Net loss of $47.2 million for the quarter compared to $25.6 million last year. Adjusted net income of $8.8 million before a $56.0 million charge to increase the Company’s asbestos provision to reflect the potential settlement value of future unknown claims based on actuarial study. 
• Adjusted EBITDA of $16.4 million for the quarter, a slight decrease of $0.1 million or 0.7%. The slight decrease in adjusted EBITDA for the quarter is primarily attributable to the previously explained decrease in gross profit, higher other expense and a $4.6 million non-recurring gain, after minority interests, on the disposal of the Company’s investment in Juwon Steel Co. Ltd in the fourth quarter of the prior fiscal year. These negative movements were largely offset by a reduction in administration costs excluding the $56.0 million adjustment to the asbestos provision. Important to note that the asbestos provision does not provide for legal related costs for defense. 
• Net new orders (“bookings”) of $87.1 million for the quarter, an increase of $1.0 million or 13.0% compared to the previous fiscal quarter. 
• Order backlog of $464.3 million at the end of the fiscal year, of which 66.3% of orders are deliverable within the next 12 months. Prior year order backlog totaled $501.2 million and included 64.2% of orders deliverable in the next 12 months. The weakening of the euro spot rate against the U.S. dollar since the beginning of the fiscal year represented $17.3 million of the decrease. 
• During the quarter, the Company generated $20.9 million of net cash primarily through its operating activities. The Company’s net cash amounted to $50.3 million at the end of the quarter, a decrease of $3.2 million or 6.0% compared to the previous fiscal year. The overall available liquidity remains strong with $140.9 million of available cash on-hand and facilities. 
• The Board declared an eligible quarterly dividend of CA$0.03 per share, payable on June 30, 2023, to all shareholders of record as at June 16, 2023.