News

Velan Inc. reports its second quarter 2023/24 financial results

2023/10/05

MONTREAL, QUEBEC

Velan Inc. (TSX: VLN) (the “Company”), a world-leading manufacturer of industrial valves, announced today its financial results for its second quarter ended August 31, 2023.

Highlights:

Order backlog remains strong at $485.7 million, an increase of $21.3 million or 4.6% since the beginning of the year. The increase in backlog is primarily attributable to changes in the profile of scheduled backlog shipment dates. The portion of the current backlog deliverable in the next twelve months is $339.4 million.
Net new orders (“bookings”) of $71.5 million for the quarter, a decrease of $2.0 million or 2.7% compared to last year. The decrease in bookings is primarily attributable to a reduction in MRO distributor orders as well as lower process and mining orders, partially offset by a pick-up in oil and gas orders compared to last year.
Sales for the quarter amounted to $80.3 million, an improvement of $12.7 million or 18.7% compared to the first quarter of the current fiscal year, a decrease of $4.7 million or 5.6% compared to the second quarter of the previous fiscal year. The decrease in sales for the quarter compared to the prior year is primarily attributable to delays on certain shipments caused by customer readiness issues and a shortage of deliverable orders in the Company’s Italian operations.
Gross profit for the quarter amounted to $23.4 million or 29.1% compared to last year’s $23.5 million or 27.6%. Gross profit improved by $8.3 million or 690 basis points compared to the first quarter of the current fiscal year. Gross profit percentage for the quarter was a result of improved product mix offsetting the lower sales volume and unfavorable unrealized foreign exchange translations compared to last year.
Net loss of $2.1 million and EBITDA of $3.0 million for the quarter compared to a net loss of $3.7 million and EBITDA of $1.4 million last year. The increase in EBITDA is primarily attributable to a $2.1 million decrease in administration costs.
The Company’s net cash amounted to $39.4 million at the end of the quarter, a decrease of $19.3 million compared to the $58.6 million net cash balance at the beginning of the quarter. The decrease in net cash for the quarter is primarily related to temporary unfavorable movements in working capital, notably in accounts receivable, inventories and accounts payable and accrued liabilities as the Company prepares for its ramp-up in Q3 and Q4 of the current year. The overall available liquidity remains strong with $122.1 million of available cash-on-hand and facilities.
The Company announced earlier today that it has been verbally informed that the French Ministry of Economy is refusing to grant its approval in connection with the change of control of Segault S.A.S. and Velan S.A.S. as part of the overall sale of Velan Inc. to Flowserve. As a result, Flowserve informed the Company that they intend to terminate the arrangement agreement on October 7, 2023.

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