MONTREAL, July 11, 2019 (GLOBE NEWSWIRE) -- Velan Inc. (TSX: VLN) (the “Company”), a world-leading manufacturer of industrial valves, announced today its financial results for its first quarter ended May 31, 2019.
Highlights
Three-month periods ended | ||||||
May 31, | May 31, | |||||
(millions of U.S. dollars, excluding per share amounts) | 2019 | 2018 | ||||
Sales | $83.8 | $77.9 | ||||
Gross Profit | 16.1 | 17.7 | ||||
Gross profit % | 19.2% | 22.7% | ||||
EBITDA2 | (4.3) | (1.5) | ||||
EBITDA2 per share – basic and diluted | (0.20) | (0.07) | ||||
Net loss1 | (5.8) | (3.7) | ||||
Net loss1 per share – basic and diluted | (0.27) | (0.17) |
First Quarter Fiscal 2020 (unless otherwise noted, all amounts are in U.S. dollars and all comparisons are to the first quarter of fiscal 2019):
“Our first quarter of Fiscal 2020 remained challenging with respect to improving margins primarily as a result of various product mix, competitive pricing and material cost factors,” said John Ball, CFO of Velan Inc. “On the other hand, our cash flow was good due to improved working capital. The other good news is that we started the year with a strong backlog, thanks to record orders in Italy and the recovering commodity market.”
Yves Leduc, President and CEO of Velan Inc., said, “We are not satisfied with the results for the first quarter of our fiscal year. We have experienced delays in shipping higher margin products in our North American and French operations, from which we expect to recover in the course of the year. The performance of our North American operations should also gradually improve as we replace last year’s backlog with new orders reflecting greater rigour in project selection and pricing. But the most significant impact of the Company’s transformative V20 initiatives is only expected late next year, when the task of reorganizing and reducing the Company’s North American footprint will be completed. Our priority is now execution, which involves driving change on several parallel fronts. The new business units are now in full flight and the Company is mobilized behind the plan.”
Dividend
The Board declared an eligible quarterly dividend of CDN$0.03 per share, payable on September 30, 2019, to all shareholders of record as at September 13, 2019.
Conference call
Financial analysts, shareholders, and other interested individuals are invited to attend the first quarter conference call to be held on Friday, July 12, 2019, at 11:00 a.m. (EDT). The toll free call-in number is 1-800-582-1443, access code 21926482. A recording of this conference call will be available for seven days at 1-416-626-4100 or 1-800-558-5253, access code 21926482.
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$366.9 million in its last reported fiscal year. The Company employs over 1,800 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 measures
In this press release, the Company presented measures of performance and financial condition that are not defined under International Financial Reporting Standards (“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. In addition, they provide readers of the Company’s consolidated financial statements with enhanced understanding of its results and financial condition, and increase transparency and clarity into the operating results of its core business.
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. Refer to the “Reconciliations of Non-IFRS Measures” section in the Company’s Management Discussion and Analysis included in its Interim Report for the quarter ended May 31, 2019 for a detailed calculation of this measure.
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1 Net earnings or loss refers to net income or loss attributable to Subordinate and Multiple Voting Shares.
2 Non-IFRS measures – see explanation above.
Velan Inc. | ||||
Condensed Interim Consolidated Statements of Financial Position | ||||
(Unaudited) | ||||
(in thousands of U.S. dollars) | ||||
As At | May 31, | February 28, | ||
2019 | 2019 | |||
$ | $ | |||
Assets | ||||
Current assets | ||||
Cash and cash equivalents | 72,597 | 70,673 | ||
Short-term investments | 662 | 658 | ||
Accounts receivable | 122,231 | 137,520 | ||
Income taxes recoverable | 20,694 | 16,863 | ||
Inventories | 171,257 | 165,583 | ||
Deposits and prepaid expenses | 3,606 | 4,612 | ||
Derivative assets | 13 | 189 | ||
391,060 | 396,098 | |||
Non-current assets | ||||
Property, plant and equipment | 95,622 | 83,537 | ||
Intangible assets and goodwill | 17,304 | 18,146 | ||
Deferred income taxes | 25,135 | 25,947 | ||
Other assets | 615 | 629 | ||
138,676 | 128,259 | |||
Total assets | 529,736 | 524,357 | ||
Liabilities | ||||
Current liabilities | ||||
Bank indebtedness | 33,200 | 29,807 | ||
Short-term bank loans | 1,733 | 2,172 | ||
Accounts payable and accrued liabilities | 76,474 | 74,910 | ||
Income taxes payable | 481 | 495 | ||
Dividend payable | 501 | 497 | ||
Customer deposits | 39,176 | 40,240 | ||
Provisions | 7,657 | 8,494 | ||
Accrual for performance guarantees | 22,375 | 23,014 | ||
Derivative liabilities | 246 | 83 | ||
Current portion of long-term debt | 8,120 | 8,609 | ||
Current portion of long-term lease liabilities | 1,266 | - | ||
191,229 | 188,321 | |||
Non-current liabilities | ||||
Long-term debt | 12,264 | 13,242 | ||
Long-term lease liabilities | 13,295 | - | ||
Income taxes payable | 2,033 | 1,742 | ||
Deferred income taxes | 3,551 | 3,738 | ||
Other liabilities | 7,682 | 8,481 | ||
38,825 | 27,203 | |||
Total liabilities | 230,054 | 215,524 | ||
Equity | ||||
Equity attributable to the Subordinate and Multiple Voting shareholders | ||||
Share capital | 73,090 | 73,090 | ||
Contributed surplus | 6,075 | 6,074 | ||
Retained earnings | 248,301 | 254,606 | ||
Accumulated other comprehensive income (loss) | (31,703 | ) | (28,990 | ) |
295,763 | 304,780 | |||
Non-controlling interests | 3,919 | 4,053 | ||
Total equity | 299,682 | 308,833 | ||
Total liabilities and equity | 529,736 | 524,357 | ||
Velan Inc. | ||||
Condensed Interim Consolidated Statements of Income (Loss) | ||||
(Unaudited) | ||||
(in thousands of U.S. dollars, excluding number of shares and per share amounts) | ||||
Three-month periods ended May 31 | ||||
2019 | 2018 | |||
$ | $ | |||
Sales | 83,816 | 77,874 | ||
Cost of sales | 67,722 | 60,137 | ||
Gross profit | 16,094 | 17,737 | ||
Administration costs | 23,463 | 22,224 | ||
Other income | (57 | ) | (16 | ) |
Operating loss | (7,312 | ) | (4,471 | ) |
Finance income | 140 | 142 | ||
Finance costs | 467 | 174 | ||
Finance costs – net | (327 | ) | (32 | ) |
Loss before income taxes | (7,639 | ) | (4,503 | ) |
Income taxes | (1,819 | ) | (829 | ) |
Net loss for the period | (5,820 | ) | (3,674 | ) |
Net loss attributable to: | ||||
Subordinate Voting Shares and Multiple Voting Shares | (5,824 | ) | (3,727 | ) |
Non-controlling interest | 4 | 53 | ||
(5,820 | ) | (3,674 | ) | |
Net loss per Subordinate and Multiple Voting Share | ||||
Basic | (0.27 | ) | (0.17 | ) |
Diluted | (0.27 | ) | (0.17 | ) |
Dividends declared per Subordinate and Multiple Voting Share | 0.02 | 0.02 | ||
(CA$0.03) | (CA$0.03) | |||
Total weighted average number of Subordinate and Multiple Votng Shares | ||||
Basic | 21,621,935 | 21,621,935 | ||
Diluted | 21,621,935 | 21,621,935 | ||
Velan Inc. | ||||
Condensed Interim Consolidated Statements of Comprehensive Income (Loss) | ||||
(Unaudited) | ||||
(in thousands of U.S. dollars) | ||||
Three-month periods ended May 31 | ||||
2019 | 2018 | |||
$ | $ | |||
Comprehensive loss | ||||
Net loss for the period | (5,820 | ) | (3,674 | ) |
Other comprehensive loss | ||||
Foreign currency translation adjustment on foreign operations whose functional currency is | ||||
other than the reporting currency (U.S. dollar) | (2,851 | ) | (5,432 | ) |
Comprehensive loss | (8,671 | ) | (9,106 | ) |
Comprehensive income (loss) attributable to: | ||||
Subordinate Voting Shares and Multiple Voting Shares | (8,537 | ) | (9,168 | ) |
Non-controlling interest | (134 | ) | 62 | |
(8,671 | ) | (9,106 | ) | |
Other comprehensive income (loss) is composed solely of items that may be reclassified subsequently to the consolidated statement of loss. | ||||
Velan Inc. | |||||||||||||
Condensed Interim Consolidated Statements of Changes in Equity | |||||||||||||
(Unaudited) | |||||||||||||
(in thousands of U.S. dollars, excluding number of shares) | |||||||||||||
Equity attributable to the Subordinate and Multiple Voting shareholders | |||||||||||||
Number of shares | Share capital | Contributed surplus | Accumulated other comprehensive income (loss) | Retained earnings | Total | Non- controlling interest | Total equity | ||||||
Balance - February 28, 2019 | 21,621,935 | 73,090 | 6,074 | (28,990 | ) | 254,606 | 304,780 | 4,053 | 308,833 | ||||
Net income (loss) for the period | - | - | - | - | (5,824 | ) | (5,824 | ) | 4 | (5,820 | ) | ||
Other comprehensive loss | - | - | - | (2,713 | ) | - | (2,713 | ) | (138 | ) | (2,851 | ) | |
21,621,935 | 73,090 | 6,074 | (31,703 | ) | 248,782 | 296,243 | 3,919 | 300,162 | |||||
Effect of share-based compensation | - | - | 1 | - | - | 1 | - | 1 | |||||
Dividends | |||||||||||||
Multiple Voting Shares | - | - | - | - | (346 | ) | (346 | ) | - | (346 | ) | ||
Subordinate Voting Shares | - | - | - | - | (135 | ) | (135 | ) | - | (135 | ) | ||
Balance - May 31, 2019 | 21,621,935 | 73,090 | 6,075 | (31,703 | ) | 248,301 | 295,763 | 3,919 | 299,682 | ||||
Balance - February 28, 2018 | 21,621,935 | 73,090 | 6,057 | (19,790 | ) | 256,668 | 316,025 | 5,592 | 321,617 | ||||
Adjustment related to the transition to IFRS 15 | - | - | - | - | 4,741 | 4,741 | - | 4,741 | |||||
Adjusted balance - March 1, 2018 | 21,621,935 | 73,090 | 6,057 | (19,790 | ) | 261,409 | 320,766 | 5,592 | 326,358 | ||||
Net income (loss) for the period | - | - | - | - | (3,727 | ) | (3,727 | ) | 53 | (3,674 | ) | ||
Other comprehensive income (loss) | - | - | - | (5,441 | ) | - | (5,441 | ) | 9 | (5,432 | ) | ||
21,621,935 | 73,090 | 6,057 | (25,231 | ) | 257,682 | 311,598 | 5,654 | 317,252 | |||||
Effect of share-based compensation | - | - | 4 | - | - | 4 | - | 4 | |||||
Dividends | |||||||||||||
Multiple Voting Shares | - | - | - | - | (335 | ) | (335 | ) | - | (335 | ) | ||
Subordinate Voting Shares | - | - | - | - | (130 | ) | (130 | ) | - | (130 | ) | ||
Non-controlling interest | - | - | - | - | - | - | (927 | ) | (927 | ) | |||
Balance - May 31, 2018 | 21,621,935 | 73,090 | 6,061 | (25,231 | ) | 257,217 | 311,137 | 4,727 | 315,864 | ||||
Velan Inc. | ||||
Condensed Interim Consolidated Statements of Cash Flow | ||||
(Unaudited) | ||||
(in thousands of U.S. dollars) | ||||
Three-month periods ended May 31 | ||||
2019 | 2018 | |||
$ | $ | |||
Cash flows from | ||||
Operating activities | ||||
Net loss for the period | (5,820 | ) | (3,674 | ) |
Adjustments to reconcile net loss to cash provided by (used in) operating activities | 2,683 | 3,550 | ||
Changes in non-cash working capital items | 4,859 | (6,205 | ) | |
Cash provided by (used in) operating activities | 1,722 | (6,329 | ) | |
Investing activities | ||||
Short-term investments | (4 | ) | 51 | |
Additions to property, plant and equipment | (748 | ) | (2,012 | ) |
Additions to intangible assets | (22 | ) | (96 | ) |
Proceeds on disposal of property, plant and equipment, and intangible assets | 32 | 10 | ||
Net change in other assets | 13 | 527 | ||
Cash used in investing activities | (729 | ) | (1,520 | ) |
Financing activities | ||||
Dividends paid to Subordinate and Multiple Voting shareholders | (476 | ) | (1,642 | ) |
Dividends paid to non-controlling interest | - | (927 | ) | |
Short-term bank loans | (439 | ) | (35 | ) |
Increase in long-term debt | - | 607 | ||
Repayment of long-term debt | (716 | ) | (662 | ) |
Repayment of long-term lease liabilities | (396 | ) | - | |
Cash used in financing activities | (2,027 | ) | (2,659 | ) |
Effect of exchange rate differences on cash | (435 | ) | (2,408 | ) |
Net change in cash during the period | (1,469 | ) | (12,916 | ) |
Net cash – Beginning of the period | 40,866 | 64,543 | ||
Net cash – End of the period | 39,397 | 51,627 | ||
Net cash is composed of: | ||||
Cash and cash equivalents | 72,597 | 77,969 | ||
Bank indebtedness | (33,200 | ) | (26,342 | ) |
39,397 | 51,627 | |||
Supplementary information | ||||
Interest paid | 279 | 36 | ||
Income taxes paid | 1,831 | 1,933 | ||
For further information please contact:
Yves Leduc, President & Chief Executive Officer
or
John D. Ball, Chief Financial Officer
Tel: (514) 748-7743
Fax: (514) 748-8635
Web: www.velan.com