Velan Inc. Reports Second Quarter Results for Fiscal 2026

MONTREAL, Oct. 09, 2025 (GLOBE NEWSWIRE) -- Velan Inc. (TSX: VLN) (“Velan” or the “Company”), a world-leading manufacturer of industrial valves, announced today financial results for its second quarter ended August 31, 2025. All amounts are expressed in U.S. dollars unless indicated otherwise.

SECOND-QUARTER HIGHLIGHTS FROM CONTINUING OPERATIONS

IFRS MEASURES

• Sales of $67.6 million, versus $77.7 million last year, reflecting the rescheduling of more than $12 million in sales to later in the fiscal year, largely related to customer changes in delivery schedules, and the disruptive effects of ongoing changes in global tariff schemes.
• Gross profit of $15.7 million or 23.2%, of sales, compared to $20.0 million, or 25.7% of sales, last year.
• Operating income of $0.4 million, compared to an operating loss of $0.3 million a year ago.
• Net loss¹ of $1.7 million, versus a net loss of $1.2 million a year ago.
• Strong financial position with a net cash position of $29.5 million as at August 31, 2025, versus $32.4 million at the beginning of the fiscal year, and access to total liquidity of approximately $96 million.
  
  

NON-IFRS AND SUPPLEMENTARY FINANCIAL MEASURES

• Backlog² of $285.8 million, up 4.0% from $274.9 million since the beginning of the fiscal year.
• Bookings² of $65.2 million, versus $88.4 million last year which included new strategic projects for the nuclear power market with typically long lead times.
• Adjusted net loss² of $1.2 million, versus adjusted net income of $2.8 million last year
• Adjusted EBITDA² of $3.4 million, compared to $6.7 million last year.
  
  

SIX-MONTH HIGHLIGHTS FROM CONTINUING OPERATIONS

IFRS MEASURES INCLUDING SIGNIFICANT TRANSACTIONS (see below)

• Sales of $139.8 million, up $1.2 million, or 0.9%, compared to the same period a year ago.
• Gross profit of $36.3 million, or 26.0% of sales, versus $36.8 million, or 26.5%, of sales last year.
• Operating loss of $3.4 million, compared to an operating loss of $2.0 million a year ago.  
• Net income of $16.2 million, versus a net loss of $3.4 million, last year.
  
  

NON-IFRS AND SUPPLEMENTARY FINANCIAL MEASURES

• Bookings of $143.4 million, versus $171.4 million last year.
• Adjusted net loss² of $1.1 million, versus adjusted net income of $3.0 million last year.
• Adjusted EBITDA² of $7.1 million, compared to $9.6 million last year.
• Net income of $74.8 million considering discontinued operations, including gain on disposal of French assets.
  

^{____________________
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 – more information at the end of this document.

"VeIan generated positive operating income of $385 thousand in the second quarter notwithstanding rescheduling certain order deliveries totaling more than $12 million to accommodate changes in customer requirements and the ongoing disruptive impact of changing tariff schemes, " said James A. Mannebach, Chairman of the Board and CEO of Velan. "Rescheduled orders totaling approximately $5 million were shipped early in the third quarter, with the remainder to be executed later in the quarter or before fiscal year-end. We also have a solid backlog of $285.8 million, mostly deliverable within the next 12 months, to support our growth ambitions. What 's more, we delivered the first order from our new joint venture in Saudia Arabia, building on our growing momentum in the Middle East market, the largest worldwide for oilfield valves. Finally, after permanently resolving our asbestos-related liabilities and completing the sale of our French assets earlier this year, we remain active considering capital structure options to assure the Company remains well positioned to fully achieve its growth ambitions and its determination to maximize shareholder value. "

"Despite an increase in working capital requirements due to higher late-stage work in process related to the changes in delivery schedules, our financial position remains very strong with cash and cash equivalents of $36.1 million and modest indebtedness. Considering our liquidities, credit facilities, working capital financing, letters of credit and guarantees, we have $95.9 million available to invest in expansion opportunities. Additionally, with reduced balance sheet risk following the transactions, we are well positioned to execute our strategy and sustain long-term profitable growth, " added Rishi Sharma, Chief Financial and Administrative Officer of VeIan.

BACKLOG AND BOOKINGS

As at August 31, 2025, the backlog from continuing operations stood at $285.8 million, up $10.9 million, or 4.0%, from $274.9 million since the beginning of the fiscal year. Currency movements had a $9.6 million positive effect on the value of the backlog during the first six months of fiscal 2026 mainly due to the strengthening of the euro versus the U.S. dollar. Excluding currency movements, the increase reflects bookings exceeding shipments in the first six months of fiscal 2026. As at August 31, 2025, 88.3% of the backlog, representing orders of $252.4 million, is deliverable in the next 12 months, versus 91.3% of last year 's backlog. This shift in the delivery schedule is driven by the securing of an increasing number of long-term larger contracts for the nuclear and defense sectors.

Bookings from continuing operations amounted to $65.2 million in the second quarter of fiscal 2026, compared to $88.4 million in the second quarter of fiscal 2025. The decrease reflects lower bookings in North America and Germany due to large orders received in last year 's second quarter and the timing of certain bookings due to tariff-related uncertainty. These factors were partially offset by higher bookings recorded by Italian operations. Currency movements had a negligible effect on the value of bookings for the quarter.

In the first half of fiscal 2026, bookings from continuing operations totaled $143.4 million, compared to $171.4 million in the first half of fiscal 2025. The decrease is mainly attributable to the factors mentioned above. Currency movements had a $1.3 million positive effect on the value of bookings for the period.

SECOND QUARTER RESULTS

Sales from continuing operations totaled $67.6 million, a decrease of $10.1 million or 13.0% compared to $77.7 million for the same period last year. The variation is mainly related to customer changes in delivery schedules on certain projects at North American and Italian operations of more than $12 million and to the disruptive effects of ongoing changes in global tariff schemes. Last year 's second quarter results also included non-recurring revenue of $5.2 million related to a cancelled agreement for German operations. These factors were partially offset by higher sales in Korea, India and China as well as higher maintenance, repair and overhaul {MRO) sales in North America. Currency movements had a $1.4 million positive effect on sales for the period.

Gross profit from continuing operations was $15.7 million, versus $20.0 million last year. The variation reflects a lower business volume which affected the absorption of fixed production overhead costs, a less favorable product mix this year compared to last, and the effect of tariffs on supply chain optimization as well as a timing lag between tariffs incurred and customer recovery. Currency movements had a $0.3 million positive effect on gross profit for the period. As a percentage of sales, gross profit was 23.2%, compared to 25.7% last year.

Administration costs from continuing operations amounted to $15.4 million, or 22.7% of sales, compared to $16.0 million, or 20.6% of sales, last year. The variation mainly reflects lower sales commissions and lower freight costs.

The Company incurred restructuring expenses of $0.7 million, consisting of transaction-related costs, while last year’s restructuring expenses of $4.5 million included asbestos-related costs of $2.3 million and divestiture transaction-related costs of $2.2 million.

Adjusted EBITDA from continuing operations, excluding restructuring expenses, was $3.4 million, versus $6.7 million a year ago. The decrease is primarily attributable to lower gross profit, partially offset by lower administration costs, as explained above.

Net loss from continuing operations was $1.7 million, or $0.08 per share, compared to a net loss of $1.2 million, or $0.05 per share, a year earlier. Net loss from discontinued operations was $0.8 million, or $0.03 per share, representing conditional transaction closing fees, versus net income from discontinued operations of $1.3 million, or $0.06 per share, last year. As a result, the net loss was $2.4 million, or $0.11 per share, versus net income of $0.1 million, or $0.01 per share, last year.  

Adjusted net loss from continuing operations, excluding restructuring expenses, was $1.2 million, or $0.05 per share, versus adjusted net income of $2.8 million, or $0.13 per share, a year earlier.

SIX-MONTH RESULTS

Sales from continuing operations amounted to $139.8 million, an increase of $1.2 million, or 0.9%, compared to$138.6 million a year ago. The variation reflects higher sales in Korea, India, China and Italy. These factors were mostly offset by the changes in customers’ delivery schedules, the tariff effect, and last year’s non-recurring revenue of $5.2 million. Currency movements had a $1.5 million positive effect on sales for the period.

Gross profit from continuing operations was $36.3 million, compared to $36.8 million last year. The small decrease reflects the negative effect of the factors mentioned above, offset by the positive effect of higher business volume and a more favourable product mix in the first quarter. Currency movements had a $0.3 million positive effect on gross profit for the period. As a percentage of sales, gross profit was 26.0%, compared to 26.5% last year.

Administration costs from continuing operations were $33.7 million, or 24.1% of sales, compared to $31.3 million, or 22.6% of sales, a year ago. The variation is attributable to higher professional fees and higher sales commissions, partially offset by lower freight costs.

The Company incurred restructuring expenses of $6.1 million, including $6.8 million in transaction-related costs, partially offset by a $0.8 million reversal of asbestos-related costs. Last year, restructuring expenses of $6.8 million included asbestos-related costs of $4.7 million transaction-related costs of $2.2 million.

Adjusted EBITDA from continuing operations, excluding restructuring expenses, was $7.1 million, versus $9.6 million last year. The decrease is primarily attributable to higher administration costs.

Net income from continuing operations was $16.2 million, or $0.75 per share, compared to a net loss of $3.4 million, or $0.16 per share, in the prior year. Net income from discontinued operations was $58.6 million, or $2.71 per share, versus net income from discontinued operations of $2.4 million, or $0.11 per share, last year. As a result, net income was $74.8 million, or $3.46 per share, compared with a net loss of $1.0 million, or $0.05 per share, a year ago.

Adjusted net loss from continuing operations, excluding restructuring expenses and a non-recurring tax recovery on the France transaction, was $1.1 million, or $0.05 per share, versus adjusted net income of $3.0 million, or $0.14 per share, a year ago.

FINANCIAL POSITION

As at August 31, 2025, the Company held cash and cash equivalents of $36.1 million and short-term investments of $0.4 million. Bank indebtedness stood at $6.6 million, while long-term debt, including the current portion, amounted to $15.9 million. In total, the Company has $95.9 million in cash and available credit to fund its growth and investment objectives.

OUTLOOK

As at August 31, 2025, orders amounting to $252.4 million, representing 88.3% of a total backlog of $285.8 million, are expected to be delivered in the next 12 months. Given these orders, and despite the current uncertainty related to tariffs, the Company expects to deliver another solid performance in fiscal 2026.

DIVIDEND

On October 9, 2025, the Board of Directors of Velan has declared a dividend of CA$0.10 per common share payable on November 27, 2025, to shareholders of record as at November 13, 2025.

SIGNIFICANT TRANSACTIONS

On March 31, 2025, the Company announced the closing sale of its French subsidiaries Velan S.A.S. and Segault S.A.S. for a total consideration of $208.2 million (€192.5 million) and net consideration of $183.1 million. Based on the net book value at the closing of the transaction and related costs, a gain of $95.8 million was recorded in the first quarter of fiscal 2026. The sale also triggered the recognition of a cumulative translation adjustment of $12.5 million. These amounts were recorded as part of results from discontinued operations.

Concurrently with the sale of its French subsidiaries, the Company entered into an agreement to sell its current and future exposure to asbestos-related litigation in the United States. Part of the proceeds received from the sale of the French assets was used on April 3, 2025, to pay an amount of $143.0 million for this settlement.

CONFERENCE CALL NOTICE

Financial analysts, shareholders, and other interested individuals are invited to attend the second quarter conference call to be held on Friday, October 10, 2025, at 8:00 a.m. (EDT). The toll-free call-in number is 1-800-990-4777 or by RapidConnect URL: https://emportal.ink/3HMQyiC. 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://velan.com/investor-relations). A recording of this conference call will be available for seven days at 1-289-819-1450 or 1-888-660-6345 and entering the replay code 06670.

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 from continuing operations of US$295.2 million in its last reported fiscal year. The Company employs 1,265 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. The Company has also presented supplementary financial measures which are defined at the end of this report. Reconciliation and definition can be found below.

Adjusted net income (loss), Adjusted net income (loss) per share, Earnings before interest, taxes, depreciation and amortization ( "EBITDA ") and Adjusted EBITDA

The term “Adjusted net income (loss)” is defined as net income or loss attributable to Subordinate and Multiple Voting Shares plus adjustment, net of income taxes, for costs related to restructuring and to the proposed transaction. The terms “Adjusted net income (loss) per share” is obtained by dividing Adjusted net income (loss) 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.

The term “EBITDA” is defined as adjusted net income plus depreciation of property, plant & equipment, plus amortization of intangible assets, plus net finance costs, plus income tax provision. The term “Adjusted EBITDA” is defined as EBITDA plus adjustment for costs related to restructuring and to the proposed transaction. 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.

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