Velan Inc. Reports Solid First Quarter Results for Fiscal 2026

• 18.6% sales growth and higher gross profit margin 
• Net income from continuing operations of $17.8 million, consolidated net income including closing of the transactions of $77.2 million
• Strong financial position with available cash on hand of $59.1 million, highest in five years
• Significant increase in quarterly dividend payment to CA$0.10 per common share

MONTREAL, July 10, 2025 (GLOBE NEWSWIRE) — Velan Inc. (TSX: VLN) (“Velan” or the “Company”), a world-leading manufacturer of industrial valves, announced today financial results for its first quarter ended May 31, 2025. All amounts are expressed in U.S. dollars unless indicated otherwise.

FIRST-QUARTER HIGHLIGHTS FROM CONTINUING OPERATIONS

IFRS MEASURES INCLUDING SIGNIFICANT TRANSACTIONS (see below)

• Sales of $72.2 million, up $11.3 million or 18.6% compared to the same period last year.
• Solid increase in gross profit to $20.6 million or 28.6% of sales, from $16.8 million or 27.6% of sales last year.
• Net income¹ of $17.8 million, or $0.83 per share, versus a net loss of $2.2 million last year.
• Strong financial position with cash and cash equivalents of $59.1 million as at May 31, 2025, versus $34.9 million at the beginning of the fiscal year.

NON-IFRS AND SUPPLEMENTARY FINANCIAL MEASURES

• Backlog² of $286.1 million, up 4.1% from $274.9 million at the end of the previous quarter.
• Bookings² of $78.2 million, versus $83.0 million last year, representing a current book-to-bill ratio of 1.08.
• Adjusted net income² of $0.1 million, versus adjusted net income of $0.2 million last year
• Adjusted EBITDA² of $4.0 million, compared to $2.8 million last year, reflecting higher gross profit.

“Velan delivered a solid performance in the first quarter, achieving sales growth from continuing operations of 18.6% and gross profit margin improvement,” said James A. Mannebach, Chairman of the Board and CEO of Velan. “Booking activity remained robust with another sequential improvement in new orders leading to a 4.1% increase in our backlog at the end of the quarter. Our maintenance, repair and overhaul (MRO) activities generated strong bookings, many of which were quickly converted to sales during the reporting period. Over the longer term, Velan is well-positioned to benefit from rising momentum in its key markets, while our strong financial position allows us to invest in the future, including strategic acquisitions, to broaden our reach and sustain profitable growth.”

“We closed the first quarter with cash and cash equivalents of $59.1 million, our highest level in five years, as we completed the divestiture of asbestos-related liabilities and the sale of our French assets during the period,” added Rishi Sharma, Chief Financial and Administrative Officer of Velan. “Based on the strength of our financial position, new $35-million credit facilities and reduced balance sheet risk, we are reassessing our capital allocation strategy to optimize the balance between supporting our growth objectives and maximizing returns to shareholders. Supporting the latter, the significant increase in our quarterly dividend payment reflects our growing backlog, greater confidence in our future performance, and our ability to sustain a strong cash flow generation.”

UPDATE ON 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 the related costs, a gain of $95.8 million was recorded in the first quarter of fiscal year 2026. The sale also triggered the recognition of a cumulative translation adjustment of $12.5 million. These amounts were recorded as part of the 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.

BACKLOG AND BOOKINGS

As at May 31, 2025, the backlog from continuing operations stood at $286.1 million, up 4.1%, from $274.9 million as at February 28, 2025. Currency movements had a $7.1 million positive effect on the value of the backlog during the quarter 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 quarter of fiscal 2026. As at May 31, 2025, 84.4% of the backlog, representing orders of $241.3 million, is deliverable in the next 12 months, versus 90.5% 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 $78.2 million in the first quarter of fiscal 2026, compared to $83.0 million in the first quarter of fiscal 2025. The decrease reflects lower bookings in Germany and North America due to large orders received in last year’s first quarter. These factors were partially offset by higher bookings for Chinese and Portuguese operations, as well as higher MRO bookings. Currency movements had a negligible effect on the value of bookings for the quarter.

FIRST QUARTER RESULTS

Sales from continuing operations for the first quarter of fiscal 2026 totaled $72.2 million, an increase of $11.3 million or 18.6% compared to $60.9 million for the same period last year. The variation mainly reflects higher shipments from Italian operations for the oil & gas industry and higher business volume at our operations in China, India and Germany. These factors were partially offset by lower sales in other international markets. North American sales held relatively steady as lower shipments to the defense industry were offset by strong MRO activity. Currency movements had a negligible effect on sales for the period.

In the first quarter of fiscal 2026, gross profit from continuing operations reached $20.6 million, up from $16.8 million last year. The variation reflects a higher business volume which improved the absorption of fixed production overhead costs, a more favorable product mix this year compared to last, lower material costs and lower provisions for aging inventory. Currency movements had no effect on gross profit for the period. As a percentage of sales, gross profit was 28.6%, compared to 27.6% last year.

Administration costs from continuing operations amounted to $18.3 million, or 25.4% of sales, in the first quarter of fiscal 2026, compared to $15.4 million, or 25.2% of sales, in the first quarter of fiscal 2025. The variation reflects higher sales commissions and higher professional fees.

In the first quarter of fiscal 2026, the Company incurred restructuring expenses of $5.4 million, including $6.1 million in transaction-related costs, partially offset by a $0.7 million reversal of asbestos-related costs. In the first quarter of fiscal 2025, restructuring expenses consisted of asbestos-related costs of $2.3 million.

Excluding restructuring expenses, adjusted EBITDA from continuing operations for the first quarter of fiscal 2026 was $4.0 million, versus $2.8 million in the first quarter of fiscal 2025. The increase is primarily attributable to higher gross profit, partially offset by higher administration costs, as explained above.

Net income from continuing operations was $17.8 million, or $0.83 per share, in the first quarter of fiscal 2026, compared to a net loss of $2.2 million, or a loss of $0.10 per share, in the first quarter of fiscal 2025. The variation mainly reflects a $23.1 million non-recurring tax recovery related to the disposal of the French subsidiaries. Net income from discontinued operations was $59.4 million, versus $1.1 million last year. As a result, net income for the first quarter of fiscal 2026 totaled $77.2 million, or $3.58 per share, compared with a net loss of $1.1 million, or $0.05 per share, last year.

Excluding restructuring expenses and the non-recurring tax recovery, adjusted net income from continuing operations was $0.1 million, or $0.00 per share, in the first quarter of fiscal 2026, versus adjusted net income of $0.2 million, or net income of $0.01 per share, in the first quarter of fiscal 2025.

FINANCIAL POSITION

As at May 31, 2025, the Company held cash and cash equivalents of $59.1 million and short-term investments of $0.4 million. Bank indebtedness stood at $3.3 million, while long-term debt, including the current portion, amounted to $16.4 million.

OUTLOOK

As at May 31, 2025, orders amounting to $241.3 million, representing 84.4% of a total backlog of $286.1 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 July 10, 2025, the Board of Directors of Velan modified the Company’s dividend policy by approving a significant increase in the Company’s recurring quarterly dividend payment from CA$0.03 to CA$0.10 per common share. This increase reflects Velan’s growing backlog and the Board’s confidence in the Company’s future financial performance, including generating strong cash flow.

Reflecting this increase, the Board of Directors has declared a dividend of CA$0.10 per common share payable on August 29, 2025, to shareholders of record as at August 15, 2025.

CONFERENCE CALL NOTICE

Financial analysts, shareholders, and other interested individuals are invited to attend the first quarter conference call to be held on Friday, July 11, 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/4kyYJ06. 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). 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 86319.

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 1,284 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.

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.