MONTREAL, May 20, 2020 (GLOBE NEWSWIRE) -- Velan Inc. (TSX: VLN) (the "Company"), a world-leading manufacturer of industrial valves, announced today its financial results for its fiscal year and fourth quarter ended February 29, 2020.
Highlights
Three-month periods ended | Fiscal years ended | ||||
(millions of U.S. dollars, excluding per share amounts) | February 29, 2020 | February 28, 20193 | February 29, 2020 | February 28, 20193 | |
Sales | $113.6 | $105.3 | $371.6 | $366.9 | |
Gross profit | 27.9 | 25.9 | 88.1 | 85.6 | |
Gross profit % | 24.6% | 24.6% | 23.7% | 23.3% | |
Net earnings (loss)1 | (11.1) | 1.5 | (16.4) | (4.9) | |
Net earnings (loss)1 per share ? basic and diluted | (0.51) | 0.07 | (0.76) | (0.23) | |
Operating profit (loss) before restructuring and transformation costs2 | 6.2 | (0.7) | 2.9 | (7.0) | |
Adjusted EBITDA2 | 9.9 | 3.8 | 16.1 | 7.1 | |
Adjusted EBITDA2 per share ? basic and diluted | 0.46 | 0.18 | 0.74 | 0.33 |
Fourth Quarter Fiscal 2020 (unless otherwise noted, all amounts are in U.S. dollars and all comparisons are to the fourth quarter of fiscal 2019):
Year Ended Fiscal 2020 (unless otherwise noted, all amounts are in U.S. dollars and all comparisons are to the prior fiscal year):
"Notwithstanding the fact that fiscal year 2020 was a year of many challenges, with the implementation of the first wave of restructuring and transformation initiatives, it was a year of positive improvements in terms of both sales and operating profit, excluding the restructuring and transformation costs. In North America our restructuring efforts are progressing on track and below initial cost estimates while our overseas companies in Europe and Asia turned in very good results," said John Ball, CFO of Velan Inc. "We ended the year amidst the uncertainty of the growing worldwide COVID-19 pandemic and we are taking many measures to protect our employees, operations, balance sheet and cash flow."
Yves Leduc, CEO of Velan Inc., said, "What a year this has been! As the deployment efforts of the V20 plan grew in momentum, the company was able to deliver improved adjusted results, recovering from a bad first quarter. As supplier of critical equipment to essential industries, we were spared the most devastating consequences of the global recession that came late in the fiscal year, as our multi-national organization responded admirably in protecting our employees showing up every day at the shop, and ensuring the continuity of our global supply chain. Although no one can foretell how long the global recession will last, we are thankful for the progress made in driving process improvements, eliminating significant structural costs, and bringing about a new market focus. As a result, Velan will be lighter, more resilient and more agile in serving our customers. And Bruno Carbonaro, our new president, along with other highly capable new hires, are increasing our leadership capacity at a very important juncture in our history. There may be disruption ahead, but our confidence is bolstered by the resolve of our employees, who, having already proven their capacity to handle enormous change, fear no challenge. On behalf of our board and the Velan family, I thank them, and add, let's keep going."
Dividend
The Board has decided it is appropriate in the current context to suspend the quarterly dividend, effective immediately. This decision will be reviewed on a quarterly basis.
Conference call
Financial analysts, shareholders, and other interested individuals are invited to attend the fourth quarter conference call to be held on Thursday, May 21, 2020, at 11:00 a.m. (EDT). The toll free call-in number is 1-800-954-0597, access code 21962200. A recording of this conference call will be available for seven days at 1-416-626-4100 or 1-800-558-5253, access code 21962200.
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$371.6 million in its last reported fiscal year. The Company employs over 1,775 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.
For further information please contact:
Yves Leduc, Chief Executive Officer
or
John D. Ball, Chief Financial Officer
Tel: (514) 748-7743
Fax: (514) 748-8635
Web: www.velan.com
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. See next page for further details on Non-IFRS measures.
Operating profit (loss) before restructuring and transformation costs and Adjusted net earnings (loss) before interest, taxes, depreciation and amortization ("EBITDA")
Three-month period ended February 29, | Three-month period ended February 28, | Fiscal year ended February 29, | Fiscal year ended February 28, | |||||
2020 | 2019 | 2020 | 2019 | |||||
Operating loss | (908 | ) | (665 | ) | (6,669 | ) | (7,000 | ) |
Adjustment for: | ||||||||
Restructuring and transformation costs | 7,086 | - | 9,566 | - | ||||
Operating profit (loss) before restructuring and transformation costs | 6,178 | (665 | ) | 2,897 | (7,000 | ) | ||
Net income (loss)1 | (11,116 | ) | 1,519 | (16,390 | ) | (4,882 | ) | |
Adjustments for: | ||||||||
Depreciation of property, plant and equipment | 2,758 | 3,461 | 8,803 | 11,566 | ||||
Amortization of intangible assets | 679 | 677 | 2,177 | 2,009 | ||||
Finance costs ? net | 550 | 23 | 1,389 | 695 | ||||
Income tax expense (recovery) | 9,911 | (1,865 | ) | 8,543 | (2,301 | ) | ||
EBITDA | 2,782 | 3,815 | 6,522 | 7,087 | ||||
Adjustment for: | ||||||||
Restructuring and transformation costs | 7,086 | - | 9,566 | - | ||||
Adjusted EBITDA | 9,868 | 3,815 | 16,088 | 7,087 |
The term "operating profit or loss before restructuring and transformation costs" is defined as operating profit or loss plus restructuring and transformation costs. The Company opted to not adjust the prior year figures due to the different nature of the expenses, which were more related to the assessment of the required restructuring and transformation plan rather than the execution of the plan itself. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
The term "adjusted EBITDA" is defined as net income or loss attributable to Subordinate and Multiple Voting Shares plus restructuring and transformation costs, depreciation of property, plant & equipment, plus amortization of intangible assets, plus net finance costs plus income tax provision. The Company opted to not adjust the prior year figures due to the different nature of the expenses, which were more related to the assessment of the required restructuring and transformation plan rather than the execution of the plan itself. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.
1 Net earnings or loss refer to net income or loss attributable to Subordinate and Multiple Voting Shares.
2 Non-IFRS measures ? see explanation above.
3 The Company has adopted IFRS 16 at the beginning of the current fiscal year using the modified retrospective transition method whereby the comparative period was not restated.
Velan Inc. | ||
Condensed Interim Consolidated Statements of Financial Position | ||
(Unaudited) | ||
(in thousands of U.S. dollars) | ||
As At | February 29, | February 28, |
2020 | 2019 | |
$ | $ | |
Assets | ||
Current assets | ||
Cash and cash equivalents | 75,327 | 70,673 |
Short-term investments | 627 | 658 |
Accounts receivable | 135,242 | 137,520 |
Income taxes recoverable | 8,747 | 16,863 |
Inventories | 170,265 | 165,583 |
Deposits and prepaid expenses | 5,191 | 4,612 |
Derivative assets | 555 | 189 |
395,954 | 396,098 | |
Non-current assets | ||
Property, plant and equipment | 98,179 | 83,537 |
Intangible assets and goodwill | 17,148 | 18,146 |
Deferred income taxes | 26,702 | 25,947 |
Other assets | 513 | 629 |
142,542 | 128,259 | |
Total assets | 538,496 | 524,357 |
Liabilities | ||
Current liabilities | ||
Bank indebtedness | 44,317 | 29,807 |
Short-term bank loans | 1,379 | 2,172 |
Accounts payable and accrued liabilities | 74,271 | 75,407 |
Income taxes payable | 1,493 | 495 |
Customer deposits | 47,208 | 40,240 |
Provisions | 14,963 | 8,494 |
Provision for performance guarantees | 21,127 | 23,014 |
Derivative liabilities | 1,169 | 83 |
Current portion of long-term lease liabilities | 1,621 | - |
Current portion of long-term debt | 8,311 | 8,609 |
215,859 | 188,321 | |
Non-current liabilities | ||
Long-term lease liabilities | 13,722 | - |
Long-term debt | 10,986 | 13,242 |
Income taxes payable | 1,576 | 1,742 |
Deferred income taxes | 2,869 | 3,738 |
Other liabilities | 8,623 | 8,481 |
37,776 | 27,203 | |
Total liabilities | 253,635 | 215,524 |
Total equity | 284,861 | 308,833 |
Total liabilities and equity | 538,496 | 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 | Fiscal years ended | ||||||||
February 29, | February 28, | February 29, | February 28, | ||||||
2020 | 2019 | 2020 | 2019 | ||||||
$ | $ | $ | $ | ||||||
Sales | 113,641 | 105,345 | 371,625 | 366,865 | |||||
Cost of sales | 85,736 | 79,479 | 283,491 | 281,270 | |||||
Gross profit | 27,905 | 25,866 | 88,134 | 85,595 | |||||
Administration costs | 21,530 | 27,185 | 85,189 | 93,336 | |||||
Restructuring and transformation costs | 7,086 | - | 9,566 | - | |||||
Other expense (income) | 219 | (654 | ) | 48 | (741 | ) | |||
Operating loss | (930 | ) | (665 | ) | (6,669 | ) | (7,000 | ) | |
Finance income | 350 | 372 | 1,220 | 865 | |||||
Finance costs | 900 | 395 | 2,609 | 1,560 | |||||
Finance costs ? net | (550 | ) | (23 | ) | (1,389 | ) | (695 | ) | |
Loss before income taxes | (1,480 | ) | (688 | ) | (8,058 | ) | (7,695 | ) | |
Income Taxes | 9,911 | (1,865 | ) | 8,543 | (2,301 | ) | |||
Net income (loss) for the period | (11,391 | ) | 1,177 | (16,601 | ) | (5,394 | ) | ||
Net income (loss) attributable to: | |||||||||
Subordinate Voting Shares and Multiple Voting Shares | (11,116 | ) | 1,519 | (16,390 | ) | (4,882 | ) | ||
Non-controlling interest | (275 | ) | (342 | ) | (211 | ) | (512 | ) | |
(11,391 | ) | 1,177 | (16,601 | ) | (5,394 | ) | |||
Net income (loss) per Subordinate and Multiple Voting Share | |||||||||
Basic | (0.51 | ) | 0.07 | (0.76 | ) | (0.23 | ) | ||
Diluted | (0.51 | ) | 0.07 | (0.76 | ) | (0.23 | ) | ||
Dividends declared per Subordinate and Multiple | 0.02 | 0.02 | 0.09 | 0.09 | |||||
Voting Share | (CA$0.03 | ) | (CA$0.03 | ) | (CA$0.12 | ) | (CA$0.12 | ) | |
Total weighted average number of Subordinate and | |||||||||
Multiple Voting Shares | |||||||||
Basic | 21,598,337 | 21,621,935 | 21,614,875 | 21,621,935 | |||||
Diluted | 21,598,337 | 21,621,935 | 21,614,875 | 21,621,935 |
Velan Inc. | |||||||||
Condensed Interim Consolidated Statements of Comprehensive Income (Loss) | |||||||||
(Unaudited) | |||||||||
(in thousands of U.S. dollars) | |||||||||
Three-month periods ended | Fiscal years ended | ||||||||
February 29, | February 28, | February 29, | February 28, | ||||||
2020 | 2019 | 2020 | 2019 | ||||||
$ | $ | $ | $ | ||||||
Comprehensive income (loss) | |||||||||
Net income (loss) for the period | (11,391 | ) | 1,177 | (16,601 | ) | (5,394 | ) | ||
Other comprehensive income (loss) | |||||||||
Foreign currency translation adjustment on foreign operations whose functional currency is other than the reporting currency (U.S. dollar) | (521 | ) | (24 | ) | (5,215 | ) | (9,300 | ) | |
Comprehensive income (loss) | (11,912 | ) | 1,153 | (21,816 | ) | (14,694 | ) | ||
Comprehensive income (loss) attributable to: | |||||||||
Subordinate Voting Shares and Multiple Voting Shares | (11,592 | ) | 1,500 | (21,447 | ) | (14,082 | ) | ||
Non-controlling interest | (320 | ) | (347 | ) | (369 | ) | (612 | ) | |
(11,912 | ) | 1,153 | (21,816 | ) | (14,694 | ) | |||
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, 2018 | 21,621,935 | 73,090 | 6,057 | (19,790 | ) | 261,409 | 320,766 | 5,592 | 326,358 | |||||||
Net loss for the year | - | - | - | - | (4,882 | ) | (4,882 | ) | (512 | ) | (5,394 | ) | ||||
Other comprehensive loss | - | - | - | (9,200 | ) | - | (9,200 | ) | (100 | ) | (9,300 | ) | ||||
Effect of share-based compensation | - | - | 17 | - | - | 17 | - | 17 | ||||||||
Dividends | ||||||||||||||||
Multiple Voting Shares | - | - | - | - | (1,427 | ) | (1,427 | ) | - | (1,427 | ) | |||||
Subordinate Voting Shares | - | - | - | - | (494 | ) | (494 | ) | - | (494 | ) | |||||
Non-controlling interest | - | - | - | - | - | - | (927 | ) | (927 | ) | ||||||
Balance - February 28, 2019 | 21,621,935 | 73,090 | 6,074 | (28,990 | ) | 254,606 | 304,780 | 4,053 | 308,833 | |||||||
Net loss for the year | - | - | - | - | (16,390 | ) | (16,390 | ) | (211 | ) | (16,601 | ) | ||||
Other comprehensive loss | - | - | - | (5,057 | ) | - | (5,057 | ) | (158 | ) | (5,215 | ) | ||||
Effect of share-based compensation | - | - | (9 | ) | - | - | (9 | ) | - | (9 | ) | |||||
Share repurchase | (36,300 | ) | (395 | ) | 195 | - | - | (200 | ) | - | (200 | ) | ||||
Dividends | ||||||||||||||||
Multiple Voting Shares | - | - | - | - | (1,395 | ) | (1,395 | ) | - | (1,395 | ) | |||||
Subordinate Voting Shares | - | - | - | - | (552 | ) | (552 | ) | - | (552 | ) | |||||
Balance - February 29, 2020 | 21,585,635 | 72,695 | 6,260 | (34,047 | ) | 236,269 | 281,177 | 3,684 | 284,861 |
Velan Inc. | |||||||||
Condensed Interim Consolidated Statements of Cash Flow | |||||||||
(Unaudited) | |||||||||
(in thousands of U.S. dollars) | |||||||||
Three-month periods ended | Fiscal years ended | ||||||||
February 29, | February 28, | February 29, | February 28, | ||||||
2020 | 2019 | 2020 | 2019 | ||||||
$ | $ | $ | $ | ||||||
Cash flows from | |||||||||
Operating activities | |||||||||
Net income (loss) for the period | (11,391 | ) | 1,177 | (16,601 | ) | (5,394 | ) | ||
Adjustments to reconcile net income (loss) to cash provided (used) by operating activities | 1,622 | (2,561 | ) | 12,125 | 7,118 | ||||
Changes in non-cash working capital items | 6,039 | (2,812 | ) | 14,119 | (11,311 | ) | |||
Cash provided (used) by operating activities | (3,730 | ) | (4,196 | ) | 9,643 | (9,587 | ) | ||
Investing activities | |||||||||
Short-term investments | (538 | ) | (511 | ) | 31 | (11 | ) | ||
Additions to property, plant and equipment | (2,878 | ) | (1,109 | ) | (10,303 | ) | (7,510 | ) | |
Additions to intangible assets | (1,473 | ) | (1,029 | ) | (1,781 | ) | (1,141 | ) | |
Proceeds on disposal of property, plant and equipment, and intangible assets | 124 | - | 272 | 144 | |||||
Net change in other assets | 1,586 | (193 | ) | 102 | 403 | ||||
Cash used by investing activities | (3,179 | ) | (2,842 | ) | (11,679 | ) | (8,115 | ) | |
Financing activities | |||||||||
Dividends paid to Subordinate and Multiple Voting shareholders | (506 | ) | (488 | ) | (1,963 | ) | (3,102 | ) | |
Dividends paid to non-controlling interest | - | - | - | (927 | ) | ||||
Repurchase of shares | (110 | ) | - | (200 | ) | - | |||
Short-term bank loans | (155 | ) | (313 | ) | (793 | ) | 1,098 | ||
Increase in long-term debt | - | (127 | ) | 1,122 | 3,989 | ||||
Repayment of long-term debt | (458 | ) | (799 | ) | (2,896 | ) | (3,586 | ) | |
Repayment of long-term lease liabilities | (432 | ) | - | (1,575 | ) | - | |||
Cash used by financing activities | (1,661 | ) | (1,727 | ) | (6,305 | ) | (2,528 | ) | |
Effect of exchange rate differences on cash | 552 | (325 | ) | (1,515 | ) | (3,447 | ) | ||
Net change in cash during the period | (8,018 | ) | (9,090 | ) | (9,856 | ) | (23,677 | ) | |
Net cash ? Beginning of the period | 39,028 | 49,956 | 40,866 | 64,543 | |||||
Net cash ? End of the period | 31,010 | 40,866 | 31,010 | 40,866 | |||||
Net cash is composed of: | |||||||||
Cash and cash equivalents | 75,327 | 70,673 | 75,327 | 70,673 | |||||
Bank indebtedness | (44,317 | ) | (29,807 | ) | (44,317 | ) | (29,807 | ) | |
31,010 | 40,866 | 31,010 | 40,866 | ||||||
Supplementary information | |||||||||
Interest received (paid) | 34 | 142 | (904 | ) | 26 | ||||
Income taxes reimbursed (paid) | 7,538 | (1,683 | ) | 3,006 | (10,459 | ) | |||
Excluded adjustment recognized on adoption of IFRS 16: | |||||||||
Adjustment to right-of-use assets | - | - | 15,163 | - |
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