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Velan Inc. reports its second quarter 2022/23 financial results showing improvement over its first quarter

2022/10/14

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, 2022.

Highlights:

  • As the volatility across various macro economic factors continues across the globe, the Company has managed to improve performance over its first quarter by prudently managing the business while facing headwinds in logistics, operations and their related impact on deliveries.
  • Sales for the quarter amounted to $85.1 million, an improvement of $10.1 million or 13.4% compared to the first quarter of the current fiscal year, but a decrease of $16.8 million or 16.5% compared to the second quarter of the previous fiscal year. The decrease in sales for the quarter compared to the prior year is partly due to the continued weakening of the euro average rate against the U.S. dollar, stronger shipments in the prior year related to one major contract and the timing of the delivery schedule on open orders in the current quarter.
  • During the second quarter of the current fiscal year, the company shipped a large order which was expected to reach its destination prior to the closing of the quarter. As a result of logistics delays, the final acceptance of this shipment will be completed in the third quarter. The impact of this delayed shipment on the quarter was $10.9 million.
  • Gross profit for the quarter amounted to $23.5 million or 27.6%, an improvement of $3.4 million or 80 basis points compared to the first quarter of the current fiscal year, but a decrease compared to last year’s $31.4 million or 30.8%. The decrease in gross profit percentage for the quarter was primarily due to the previously explained lower sales volume which impacted the absorption of fixed production overhead costs. The decrease was also due to the unfavourable effect of the product mix. Finally, the gross profit was lower than last year by $0.5 million as the Company did not receive funds from the Canada Emergency Wage Subsidies («CEWS») program.
  • Net loss of $3.7 million and EBITDA of $1.4 million for the quarter compared to a net income of $5.0 million and EBITDA of $10.7 million last year. The decrease in EBITDA is primarily attributable to the previously mentioned reduction in gross profit combined with an increase in administration costs in the quarter.
  • Order backlog remains strong at $477.6 million, a decrease of $23.6 million or 4.7% since the beginning of the year which 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 half year. The portion of the current backlog deliverable in the next twelve months increased to $347.2 million primarily due to the shipment delays encountered in the quarter.
  • Bookings of $73.5 million for the quarter, a decrease of $8.1 million or 9.9% compared to last year. The decrease in bookings compared to last year resulted mainly from the current geo-political uncertainties which created slower project awards. The Company nonetheless continues to observe a strong amount of activity ongoing. The Company’s book-to-bill ratio for the half-year remains favorable at 1.04.
  • The Company’s net cash amounted to $29.7 million at the end of the quarter, a decrease of $23.7 million since the beginning of the fiscal year. The decrease in net cash for the quarter is primarily attributable to the lower EBITDA, combined with unfavorable non-cash working capital items. The overall available liquidity remains strong with $137.8 million of available cash-on-hand and facilities.

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IgnitionWeb High-Touch Communications
© Velan Inc. All rights reserved.
IgnitionWeb High-Touch Communications
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