MONTREAL, QUEBEC — (Marketwire) — 07/05/12 — 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, 2012.
„We continue to experience severe turbulence in the currency markets, particularly with respect to the euro“, said John Ball, CFO of Velan Inc. „Although the recent plunge in the value of the euro will help the long term international competitiveness of our European subsidiaries, it has also negatively impacted our financial results of those operations as reported in U.S. dollars. We continue to monitor the use of our working capital, particularly with respect to the increase in our backlog and our investment in productive capacity“.
Tom Velan, President and CEO of Velan Inc. said, „Based on our large order backlog, we continue to be focused on increasing our output and we are investing in Asia and North America to increase our global manufacturing capacity. In this quarter, we had lower volume than planned because of delays encountered in manufacturing some of our large international projects. This was mainly due to a combination of supply chain issues, customer- related issues, and internal operational issues. We are devoting a lot of effort to solving these issues so we can increase sales revenues and improve on-time delivery.“
„Our change to reporting in U.S. dollars under International Financial Reporting Standards reduced the currency impact of fluctuations in the value of the Canadian dollar on our results since less than 10% of our sales were denominated in Canadian dollars. Now, we have a growing impact of the euro in our results due to the acquisition of ABV and the growth of our subsidiaries in France. At the end of May, 48.5% of our backlog and 34.0% of our sales in the quarter were made in euro. The continuing weakness of the euro and uncertainty resulting from problems in Europe will continue to impact our results.“
„As expected, our results were negatively impacted by the results of ABV, particularly by the purchase price accounting and interest accretion adjustments. Although ABV is continuing to post improved sales and results following the acquisition transition period, we expect the negative impact on results to continue in the near term until some lower margin orders are shipped and replaced by more profitable orders.“
„We are continuing to take measures to improve our operational excellence and cost competitiveness, and to strengthen our presence in international markets in order to improve our long-term performance and increase the value of our company. In the shorter term, we are focused on improved execution of our large project order backlog to increase sales and improve earnings.“
Dividend
The Board declared an eligible quarterly dividend of Canadian dollar $0.08 per share, payable on September 28, 2012, to all shareholders of record as at September 14, 2012.
Conference Call
Financial analysts, shareholders, and other interested individuals are invited to attend the first quarter conference call to be held on July 5, 2012, at 4:30 PM (EDT). The toll free call-in number is 1-800-268-5851, access code 21598363. A recording of this conference call will be available for seven days at 1-416-626-4100 or 1-800-558- 5253, access code 21598363.
About Velan
Velan Inc. () is a world-leading manufacturer of industrial valves with sales of $437 million in its last reported fiscal year. The company employs over 1,950 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
Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature concerning the future performance of the Company. These statements are based on suppositions and uncertainties as well as on management-s best possible evaluation of future events. Such factors may include, without excluding other considerations, fluctuations in quarterly results, evolution in customer demand for the Company-s products and services, the impact of price pressures exerted by competitors, and general market trends or economic changes. As a result, readers are advised that actual results may differ from expected results.
Non-GAAP measures
In this press release, the Company presented measures of performance and financial condition which are not defined under Canadian GAAP („non-GAAP 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.
Net cash is defined as cash and cash equivalents plus short-term investments less bank indebtedness, short-term loans and current portion of long-term debt.
Contacts: VELAN Inc. Tom Velan President and Chief Executive Officer (514) 748-7743 (514) 748-8635 (FAX)
VELAN Inc. John D. Ball Chief Financial Officer (514) 748-7743 (514) 748-8635 (FAX)
