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Velan Inc. reports its strong third quarter 2021/22 financial results, highlighted by a significant increase in sales and improved margins

2022/01/12

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, 2021.

Highlights:

  • Sales for the quarter amounted to $110.0 million, an increase of 38.4 million or 53.7% compared to the same quarter of the previous fiscal year. This quarter’s sales level represents the highest volume in the last seven quarters.
  • Gross profit for the quarter of $35.9 million, or 32.6%, an increase of $13.8 million or 180 basis points from the same quarter of the previous year. The gross profit percentage of 30.5% for the first nine-month of the fiscal year is driven by an improved sales volume, a more profitable product mix, as well as the margin improvement activities undertaken over the past fiscal years within the scope of the V20 restructuring and transformation plan.
  • Net income of $4.5 million and EBITDA of $13.3 million for the quarter. EBITDA is comparable to the same quarter last year which included a non-recurring gain of $9.6 million recognized on the disposal of one of the Company’s Montreal plants in the scope of the V20 transformation plan. The improved EBITDA, when adjusted for the non-recurring gain, is explained primarily by an increased gross profit, driven by an improved sales volume and product mix, despite $2.7 million lower Canada Emergency Wage Subsidies («CEWS»).
  • Strong order backlog of $543.0 million at the end of the quarter compared to $561.8 million at the end of the same quarter last year.
  • Net new orders (“bookings”) of $88.4 million for the quarter, a decrease of $79.2 million or 47.3% compared to the same quarter of the previous fiscal year. The decrease for the quarter is primarily attributable to a generally lower level of bookings in the current quarter, coupled with large oil and gas and nuclear orders recorded in the third quarter of the previous year. The book-to-bill ratio for the nine-month period stands at an even 1.00.
  • The Company’s net cash amounted to $65.8 million at the end of the quarter, a decrease of $2.3 million or 3.4% compared to the previous quarter of the current fiscal year. The Company used the cash primarily generated by its operations during the quarter to pay down $11.9 million of its revolving credit facility in order to reduce its overall debt load. 
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