Release Date: July 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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Velan Inc (VLNSF) reported an 18.6% year-over-year increase in sales, reaching $72.2 million, driven by higher shipments from Italian operations and increased business volumes in China, India, and Germany.
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The company achieved a gross profit margin increase of 100 basis points to 28.6%, reflecting a favorable product mix and lower material costs.
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Velan Inc (VLNSF) has a strong cash position, exceeding $59 million, the highest level in five years, providing a financial cushion for strategic growth and shareholder returns.
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The board approved a significant increase in the quarterly dividend from 3 Canadian cents to 10 Canadian cents per share, indicating confidence in future financial performance.
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The order backlog grew by 4.1% to $286.1 million, with a high margin profile benefiting from large long-term contracts in the nuclear and defense sectors.
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Bookings declined to $78.2 million from $83 million a year ago, attributed to lower year-over-year bookings in Germany and North America.
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The company recorded restructuring expenses of $5.4 million, including $6.1 million in transaction-related costs.
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Cash flow from operating activities was negative, with $15.5 million used in the first quarter, primarily due to unfavorable changes in non-working capital items.
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North American sales remained relatively stable, with lower shipments to the defense industry offset by stronger MRO activity.
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The regional revenue split shifted away from Europe following the sale of French assets, potentially impacting future sales distribution.
Q: Is the recent uptick in MRO activity mostly in North America, or is it expected to grow in other regions as well? A: (Jim Moaback, CEO) Most of the MRO activity increase was in North America during the quarter. However, we are starting to see growth in Europe and the Middle East, partly due to our joint venture in Saudi Arabia, which is helping secure more work in that region.
Q: Customer deposits seem to fluctuate more than bookings. Is this due to the sales mix or industry-specific factors? A: (Rishi Sharma, CFO) The fluctuations are more industry-specific. Long-term contracts in nuclear and defense sectors typically have more substantial advances compared to standard projects or MRO activities.