MONTREAL, Jan. 11, 2023 (GLOBE NEWSWIRE) -- 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, 2022.
Highlights:
Bruno Carbonaro, CEO and President of Velan Inc., said, “We are happy to see that our financial results are starting to reflect all the countless efforts our teams have put in since the start of the year. As the volatility across various macro economic factors continues across the globe, we once again managed to improve our performance quarter over quarter by carefully planning and executing around the various economic, logistics, supply chain and operational issues we face. Our ramp-up on shipments and deliveries and solid margins and bottom-line profit reflects that careful planning and execution. Our customer confidence is increasing, as evidenced by the strong bookings for the quarter and creates the perfect opportunity for us to continue to improve on our operational and financial performance for all our stakeholders.”
Financial Highlights:
Three-month periods ended | Nine-month periods ended | |||||||
(thousands of U.S. dollars, excluding per share amounts) | November 30, 2022 | November 30, 2021 | November 30, 2022 | November 30, 2021 | ||||
Sales | $ | 95,229 | $ | 109,971 | $ | 255,288 | $ | 286,393 |
Gross profit | 28,965 | 35,861 | 72,520 | 87,246 | ||||
Gross profit % | 30.4% | 32.6% | 28.4% | 30.5% | ||||
Net income (loss)1 | 2,739 | 4,507 | (8,289) | 4,449 | ||||
Net income (loss)1 per share – basic and diluted | 0.13 | 0.21 | (0.38) | 0.21 | ||||
EBITDA2 | 6,136 | 13,291 | 4,623 | 23,007 | ||||
EBITDA2 per share – basic and diluted | 0.28 | 0.62 | 0.21 | 1.07 | ||||
Third Quarter Fiscal 2023 and First Nine months Fiscal 2023 (unless otherwise noted, all amounts are in U.S. dollars and all comparisons are to the third quarter of fiscal 2022):
Backlog
Bookings
Sales
Gross Profit
Administration Costs
EBITDA2
Net Income
Dividend
For the current quarter, no dividend will be declared. The Company will revisit the declaration of dividends in subsequent quarters.
Conference call
The company will hold an analyst call on Thursday, January 12, 2023 at 11:00 A.M. (EST) to discuss the results. The call may be accessed by dialing 1-800-954-0599 and quoting the reservation number 22024886. The material that will be referenced during the conference call will be made available shortly before the event on the company’s website under the Investor Relations section (https://www.velan.com/en/company/investor_relations). There will be PostView available for 7 days following this conference call. The numbers are as follows: 1-416-626-4100 or 1-800-558-5253. Enter reservation number 22024886 then follow the system prompts.
About Velan
Founded in Montreal in 1950, Velan Inc. (www.velan.com) is one of the world’s leading manufacturers of industrial valves, with sales of US$411.2 million in its last reported fiscal year. The Company employs 1,664 people and has manufacturing plants in 9 countries. Velan Inc. is a public company with its shares listed on the Toronto Stock Exchange under the symbol VLN.
Safe harbour statement
This news release may include forward-looking statements, which generally contain words like “should”, “believe”, “anticipate”, “plan”, “may”, “will”, “expect”, “intend”, “continue” or “estimate” or the negatives of these terms or variations of them or similar expressions, all of which are subject to risks and uncertainties, which are disclosed in the Company’s filings with the appropriate securities commissions. While these statements are based on management’s assumptions regarding historical trends, current conditions and expected future developments, as well as other factors that it believes are reasonable and appropriate in the circumstances, no forward-looking statement can be guaranteed and actual future results may differ materially from those expressed herein. The Company disclaims any intention or obligation to update or revise any forward-looking statements contained herein whether as a result of new information, future events or otherwise, except as required by the applicable securities laws. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
Non-IFRS and supplementary financial measures
In this press release, the Company has presented measures of performance or financial condition which are not defined under IFRS (“non-IFRS measures”) and are, therefore, unlikely to be comparable to similar measures presented by other companies. These measures are used by management in assessing the operating results and financial condition of the Company and are reconciled with the performance measures defined under IFRS. Company has also presented supplementary financial measures which are defined at the end of this report. Reconciliation and definition can be found on the next page.
Earnings before interest, taxes, depreciation and amortization ("EBITDA")
Three-month periods ended | Nine-month periods ended | |||
(thousands, except amount per shares) | November 30, 2022 $ | November 30, 2021 $ | November 30, 2022 $ | November 30, 2021 $ |
Net income (loss)1 | 6,136 | 4,507 | (8,289) | 4,449 |
Adjustments for: | ||||
Depreciation of property, plant and equipment | 2,086 | 2,382 | 6,270 | 7,190 |
Amortization of intangible assets | 540 | 556 | 1,664 | 1,565 |
Finance costs – net | 422 | 619 | 1,036 | 1,674 |
Income taxes | 349 | 5,227 | 3,942 | 8,129 |
EBITDA | 6,136 | 13,291 | 4,623 | 23,007 |
EBITDA per share | ||||
- Basic and diluted | 0.28 | 0.62 | 0.21 | 1.07 |
The term “EBITDA” is defined as net income or loss attributable to Subordinate and Multiple Voting Shares plus depreciation of property, plant & equipment, plus amortization of intangible assets, plus net finance costs plus income tax provision. The terms “EBITDA per share” is obtained by dividing EBITDA by the total amount of subordinate and multiple voting shares. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
Definitions of supplementary financial measures
The term “Net new orders” or “bookings” is defined as firm orders, net of cancellations, recorded by the Company during a period. Bookings are impacted by the fluctuation of foreign exchange rates for a given period. The measure provides an indication of the Company’s sales operation performance for a given period as well as well as an expectation of future sales and cash flows to be achieved on these orders.
The term “backlog” is defined as the buildup of all outstanding bookings to be delivered by the Company. The Company’s backlog is impacted by the fluctuation of foreign exchange rates for a given period. The measure provides an indication of the future operational challenges of the Company as well as an expectation of future sales and cash flows to be achieved on these orders.
The term “book-to-bill” is obtained by dividing bookings by sales. The measure provides an indication of the Company’s performance and outlook for a given period.
The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
_________________________________________
1 Net income or loss refer to net income or loss attributable to Subordinate and Multiple Voting Shares.
2 Non-IFRS and supplementary financial measures – See explanation above.
Consolidated Statements of Financial Position | ||
(in thousands of U.S. dollars) | ||
As at | ||
November 30, | February 28, | |
2022 | 2022 | |
$ | $ | |
Assets | ||
Current assets | ||
Cash and cash equivalents | 31,354 | 54,015 |
Short-term investments | 9,410 | 8,726 |
Accounts receivable | 114,247 | 115,834 |
Income taxes recoverable | 7,389 | 2,955 |
Inventories | 217,697 | 223,198 |
Deposits and prepaid expenses | 7,348 | 6,877 |
Derivative assets | 341 | 553 |
387,786 | 412,158 | |
Non-current assets | ||
Property, plant and equipment | 68,548 | 73,906 |
Intangible assets and goodwill | 15,604 | 16,693 |
Deferred income taxes | 4,581 | 4,774 |
Other assets | 652 | 897 |
89,385 | 96,270 | |
Total assets | 477,171 | 508,428 |
Liabilities | ||
Current liabilities | ||
Bank indebtedness | 2,043 | 550 |
Accounts payable and accrued liabilities | 78,812 | 80,503 |
Income taxes payable | 1,784 | 3,806 |
Customer deposits | 40,782 | 41,344 |
Provisions | 14,941 | 18,444 |
Derivative liabilities | 302 | 560 |
Current portion of long-term lease liabilities | 1,221 | 1,360 |
Current portion of long-term debt | 13,333 | 8,111 |
153,218 | 154,678 | |
Non-current liabilities | ||
Long-term lease liabilities | 9,673 | 11,073 |
Long-term debt | 20,970 | 22,927 |
Income taxes payable | 1,079 | 1,244 |
Deferred income taxes | 4,074 | 4,025 |
Customer deposits | 19,593 | 30,139 |
Provisions | 16,626 | 13,101 |
Other liabilities | 5,576 | 5,731 |
77,591 | 88,240 | |
Total liabilities | 230,809 | 242,918 |
Total equity | 246,362 | 265,510 |
Total liabilities and equity | 477,171 | 508,428 |
Consolidated Statements of Income (loss) | |||||||||
(in thousands of U.S. dollars, excluding number of shares and per share amounts) | |||||||||
Three-month periods ended | Nine-month periods ended | ||||||||
November 30 | November 30 | November 30 | November 30 | ||||||
2022 | 2021 | 2022 | 2021 | ||||||
$ | $ | $ | $ | ||||||
Sales | 95,229 | 109,971 | 255,288 | 286,393 | |||||
Cost of sales | 66,264 | 74,110 | 182,768 | 199,147 | |||||
Gross profit | 28,965 | 35,861 | 72,520 | 87,246 | |||||
Administration costs | 25,428 | 26,436 | 75,918 | 74,192 | |||||
Other expense (income) | 2 | (579 | ) | (132 | ) | (537 | ) | ||
Operating profit (loss) | 3,535 | 10,004 | (3,266 | ) | 13,591 | ||||
Finance income | 59 | 77 | 227 | 367 | |||||
Finance costs | (479 | ) | (696 | ) | (1,261 | ) | (2,041 | ) | |
Finance costs – net | (420 | ) | (619 | ) | (1,034 | ) | (1,674 | ) | |
Income (loss) before income taxes | 3,115 | 9,385 | (4,300 | ) | 11,917 | ||||
Income tax expense | 350 | 5,227 | 3,943 | 8,129 | |||||
Net income (loss) for the period | 2,765 | 4,158 | (8,243 | ) | 3,788 | ||||
Net income (loss) attributable to: | |||||||||
Subordinate Voting Shares and Multiple Voting Shares | 2,739 | 4,507 | (8,289 | ) | 4,449 | ||||
Non-controlling interest | 26 | (349 | ) | 46 | (661 | ) | |||
Net income (loss) for the period | 2,765 | 4,158 | (8,243 | ) | 3,788 | ||||
Net income (loss) per Subordinate and Multiple Voting Share | |||||||||
Basic and diluted | 0.13 | 0.21 | (0.38 | ) | 0.21 | ||||
Dividends declared per Subordinate and Multiple | - | - | 0.02 | - | |||||
Voting Share | (CA$ - ) | (CA$ - ) | (CA$0.03) | (CA$-) | |||||
Total weighted average number of Subordinate and | |||||||||
Multiple Voting Shares | |||||||||
Basic and diluted | 21,585,635 | 21,585,635 | 21,585,635 | 21,585,635 | |||||
Consolidated Statements of Comprehensive Loss | ||||||||
(in thousands of U.S. dollars) | ||||||||
Three-month periods ended | Nine-month periods ended | |||||||
November 30 | November 30 | November 30 | November 30 | |||||
2022 | 2021 | 2022 | 2021 | |||||
$ | $ | $ | $ | |||||
Comprehensive loss | ||||||||
Net income (loss) for the period | 2,765 | 4,158 | (8,243 | ) | 3,788 | |||
Other comprehensive loss | ||||||||
Foreign currency translation | 3,183 | (6,080 | ) | (10,408 | ) | (9,502 | ) | |
Comprehensive loss | 5,948 | (1,922 | ) | (18,651 | ) | (5,714 | ) | |
Comprehensive income (loss) attributable to: | ||||||||
Subordinate Voting Shares and Multiple Voting Shares | 5,922 | (1,559 | ) | (18,697 | ) | (5,007 | ) | |
Non-controlling interest | 26 | (363 | ) | 46 | (707 | ) | ||
Comprehensive loss | 5,948 | (1,922 | ) | (18,651 | ) | (5,714 | ) | |
Other comprehensive loss is composed solely of items that may be reclassified subsequently to the consolidated statement of income (loss). | ||||||||
Consolidated Statements of Changes in Equity | ||||||||||||
(in thousands of U.S. dollars, excluding number of shares) | ||||||||||||
Equity attributable to the Subordinate and Multiple Voting shareholders | ||||||||||||
Share capital | Contributed surplus | Accumulated other comprehensive loss | Retained earnings | Total | Non-controlling interest | Total equity | ||||||
Balance - February 28, 2021 | 72,695 | 6,260 | (21,007 | ) | 239,136 | 297,084 | 3,137 | 300,221 | ||||
Net income (loss) for the period | - | - | - | 4,449 | 4,449 | (661 | ) | 3,788 | ||||
Other comprehensive loss | - | - | (9,456 | ) | - | (9,456 | ) | (46 | ) | (9,502 | ) | |
Comprehensive income (loss) | - | - | (9,456 | ) | 4,449 | (5,007 | ) | (707 | ) | (5,714 | ) | |
Balance - November 30, 2021 | 72,695 | 6,260 | (30,463 | ) | 243,585 | 292,077 | 2,430 | 294,507 | ||||
Balance - February 28, 2022 | 72,695 | 6,260 | (32,223 | ) | 218,092 | 264,824 | 686 | 265,510 | ||||
Net income (loss) for the period | - | - | - | (8,289 | ) | (8,289 | ) | 46 | (8,243 | ) | ||
Other comprehensive loss | - | - | (10,408 | ) | - | (10,408 | ) | - | (10,408 | ) | ||
Comprehensive income (loss) | - | - | (10,408 | ) | (8,289 | ) | (18,697 | ) | 46 | (18,651 | ) | |
Dividends | ||||||||||||
Multiple Voting Shares | - | - | - | (366 | ) | (366 | ) | - | (366 | ) | ||
Subordinate Voting Shares | - | - | - | (131 | ) | (131 | ) | - | (131 | ) | ||
Balance - November 30, 2022 | 72,695 | 6,260 | (42,631 | ) | 209,306 | 245,630 | 732 | 246,362 | ||||
Consolidated Statements of Cash Flow | |||||||||
(in thousands of U.S. dollars) | |||||||||
Three-month periods ended | Nine-month periods ended | ||||||||
November 30 | November 30 | November 30 | November 30 | ||||||
2022 | 2021 | 2022 | 2021 | ||||||
$ | $ | $ | $ | ||||||
Cash flows from | |||||||||
Operating activities | |||||||||
Net income (loss) for the period | 2,765 | 4,158 | (8,243 | ) | 3,788 | ||||
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities | (1,558 | ) | 4,918 | 2,759 | 10,975 | ||||
Changes in non-cash working capital items | (4,585 | ) | (1,512 | ) | (12,483 | ) | (4,771 | ) | |
Cash provided (used) by operating activities | (3,378 | ) | 7,564 | (17,967 | ) | 9,992 | |||
Investing activities | |||||||||
Short-term investments | 64 | (268 | ) | (1,117 | ) | (1,686 | ) | ||
Additions to property, plant and equipment | (1,449 | ) | (1,379 | ) | (2,985 | ) | (4,948 | ) | |
Additions to intangible assets | (107 | ) | (520 | ) | (1,316 | ) | (1,330 | ) | |
Proceeds on disposal of property, plant and equipment | 4 | 10,597 | 44 | 13,729 | |||||
Net change in other assets | 2 | 2 | 30 | (25 | ) | ||||
Cash used by investing activities | (1,486 | ) | 8,432 | (5,344 | ) | 5,740 | |||
Financing activities | |||||||||
Dividends paid to Subordinate and Multiple Voting shareholders | - | - | (497 | ) | - | ||||
Net change in revolving credit facility | 5,357 | (11,872 | ) | 5,373 | (5,624 | ) | |||
Increase in long-term debt | - | - | 2,160 | 5,889 | |||||
Repayment of long-term debt | (1,038 | ) | (1,522 | ) | (3,715 | ) | (6,068 | ) | |
Repayment of long-term lease liabilities | (359 | ) | (427 | ) | (1,091 | ) | (1,284 | ) | |
Cash provided (used) by financing activities | 3,960 | (13,786 | ) | 2,230 | (7,052 | ) | |||
Effect of exchange rate differences on cash | 490 | (2,360 | ) | (3,073 | ) | (3,652 | ) | ||
Net change in cash during the period | (414 | ) | (2,294 | ) | (24,154 | ) | 2,884 | ||
Net cash – Beginning of the period | 29,725 | 68,131 | 53,465 | 62,953 | |||||
Net cash – End of the period | 29,311 | 65,837 | 29,311 | 65,837 | |||||
Net cash is composed of: | |||||||||
Cash and cash equivalents | 31,354 | 66,687 | 31,354 | 66,687 | |||||
Bank indebtedness | (2,043 | ) | (850 | ) | (2,043 | ) | (850 | ) | |
Net cash – End of the period | 29,311 | 65,837 | 29,311 | 65,837 | |||||
Supplementary information | |||||||||
Interest paid | (242 | ) | (526 | ) | (450 | ) | (1,360 | ) | |
Income taxes paid | (2,802 | ) | (1,782 | ) | (6,799 | ) | (3,366 | ) | |
For further information please contact:
Bruno Carbonaro, Chief Executive Officer and President
Tel: (438) 817-7593
or
Rishi Sharma, Chief Financial Officer
Tel: (438) 817-4430