Significant profitability improvement driven by solid execution on robust order backlog
MONTREAL, Quebec, January 14, 2025 – Velan Inc. (TSX: VLN) (“Velan” or the “Company”), a world-leading manufacturer of industrial valves, announced today financial results for its third quarter ended November 30, 2024. All amounts are expressed in U.S. dollars unless indicated otherwise.
On January 14, 2025, the Company announced that it has entered into an agreement (the “Asbestos Divestiture Agreement”) with an affiliate of Global Risk Capital (the “Buyer”) to permanently divest its asbestos-related liabilities (the “Asbestos Divestiture Transaction”). Global Risk Capital is a long-term liability management company specializing in the acquisition and management of legacy corporate liabilities. The Asbestos Divestiture Transaction will be achieved by Velan Inc. transferring its assets and liabilities into a new subsidiary and selling its existing U.S. subsidiary, Velan Valve Corp, which will have been capitalized with $143 million (subject to certain adjustments) from Velan Inc. and $7 million from the Buyer. The Asbestos Divestiture Transaction will permanently remove all asbestos-related liabilities and obligations from Velan Inc.’s balance sheet and will indemnify Velan for all legacy asbestos liabilities.
The Company also announced that its wholly-owned subsidiary, Velan UK, has entered into a memorandum of understanding (the “Memorandum of Understanding”) relating to the sale of 100% of the share capital and voting rights of its French subsidiaries, Segault SAS (“Segault”) and Velan SAS (“Velan France”), to Framatome SAS (“Framatome”), a world leader in nuclear energy, for a total consideration of US$198.4 million (€192.5 million) (the “France Transaction”).
The sale of the French businesses met the criteria, at November 30, 2024 of assets held for sale and discontinued operations. As a result, the consolidated balance sheet as at November 30, 2024 has been adjusted to present the disposal group as asset held for sale, and the consolidated income statement and cash flows have been retrospectively adjusted to present only the results from continuing operations.
THIRD-QUARTER HIGHLIGHTS FROM CONTINUING OPERATIONS
NON-IFRS AND SUPPLEMENTARY FINANCIAL MEASURES
- Solid order backlog of $298.7 million, up $15.0 million or 5.3% since the beginning of the year.
- Bookings of $59.1 million, versus $60.1 million last year, representing a book-to-bill ratio of 0.81.
- Adjusted net income from continuing operations of $8.5 million, versus an adjusted net loss of $7.0 million in the corresponding quarter, mainly due to higher sales and gross profit.
- Adjusted net income per share from continuing operations of $0.39, compared to an adjusted net loss per share of $0.32 last year.
- Adjusted EBITDA from continuing operations of $14.3 million, compared to negative $4.1 million last year. The increase is mainly attributable to higher sales and gross profit.
IFRS MEASURES CONSIDERING SIGNIFICANT TRANSACTIONS
- Sales of $73.4 million, up $11.2 million or 18.1% compared to the same quarter last year.
- Gross profit of $28.3 million or 38.6% of sales, up significantly from $8.2 million, or 13.1% of sales, last year.
- Net loss from continuing operations of $47.8 million, versus a net loss of $9.5 million last year reflecting restructuring costs of $74.5 million before income taxes.
- Net loss per share from continuing operations of $2.22, compared to a net loss per share of $0.44 last year.
- Cash flows from operating activities was breakeven, versus $0.1 million last year.
- Net cash of $32.1 million at the end of the quarter, versus $36.4 million at the beginning of the fiscal year.
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