Velan Inc. (TSX: VLN) (“Velan” or the “Company”), a leading global manufacturer of industrial valves, announced today financial results for its second quarter ended August 31, 2026.
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All amounts are expressed in U.S. dollars unless indicated otherwise.
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SECOND-QUARTER HIGHLIGHTS FROM CONTINUING OPERATIONS
IFRS MEASURES
- Sales of $57.5 million, versus $67.6 million last year, as the timing and complexity of certain production orders shifted shipments into later periods.
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timing → continue → periods
Uncertainty around changing tariff regulations and ongoing geopolitical tension also weighed on customer demand and order timing during the period.
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- Financial position: net cash (cash and cash equivalents less bank indebtedness) was negative $11.2 million as at August 31, 2026, compared to net cash of $41.5 million as at February 28, 2026, reflecting the transaction-related cash outflows.
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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 report.
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“Velan is entering a new phase focused on stronger execution, improved business performance and profitable growth,” said Rishi Sharma, President and Chief Executive Officer of Velan.
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“Our second quarter results reflect challenges to the business we are actively working to meet.
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The demand environment in our core nuclear, defense and energy markets remains solid – the softness in results was driven by execution and delivery timing as well as volatility relating to tariffs, trade disputes and geopolitical uncertainty in the Middle East.
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softness → remain → East
We have moved quickly on matters within our control, with a focus around six transformation pillars— cost discipline, procurement and value engineering, talent and organizational improvements, manufacturing footprint, working capital and assets and growth acceleration.
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Together they are designed to build a leaner company and drive profitable growth.”
“Our second quarter results reflect significant one-time transaction costs rather than a change in the underlying business.
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We are focused on aligning our costs to current volumes and have taken meaningful actions, including the recent implementation of a workforce reduction.
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We also repaid our Canadian secured bank loan and, with a new $80 million credit facility in place, have the liquidity and flexibility to execute on the opportunities ahead,” added Imran Gibbons, Chief Financial Officer of Velan.
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As at August 31, 2026, the backlog from continuing operations stood at $262.5 million, down from $283.3 million as at February 28, 2026, and down from $285.8 million a year earlier.
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The decline was broad-based, with the largest reductions at the Company’s Korean, German and ABV (Italy-based) operations, reflecting shipments and softer bookings across several end-markets during the period, partially offset by growth at the Company’s North American and Indian operations.
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decline → base → operations
As at August 31, 2026, approximately 76% of the backlog, representing $200.1 million of orders, is expected to be delivered within the next 12 months, a significant proportion, reflecting the shorter-duration mix of remaining orders.
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Currency movements had a $0.3 million positive effect on the value of the backlog during the first six months of fiscal 2027 mainly due to the strengthening of the euro versus the U.S. dollar.
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Bookings from continuing operations totaled $47.9 million in the second quarter of fiscal 2027, down from $65.2 million in the second quarter of fiscal 2026.
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The decrease reflects weaker order intake in the nuclear, power and process end-markets in North America and continued soft bookings at the Company’s China operations, partially offset by continued strength in MRO activity, which represented a significant share of total bookings in the quarter.
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In the first half of fiscal 2027, bookings from continuing operations totaled $95.9 million, compared to $143.4 million in the first half of fiscal 2026.
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bookings → continue → 2026
The decrease is mainly attributable to the factors mentioned above.
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Currency movements had a $0.1 million positive effect on the value of bookings for the period.
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Sales from continuing operations totaled $57.5 million, a decrease of $10.1 million, or 15.0%, compared to $67.6 million for the same period last year.
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The decrease primarily reflects lower shipment volumes at the Company’s North American and China operations, resulting from softer bookings in recent periods, delays in certain large-project deliveries, and continued production and logistics challenges, including delays linked to ongoing conflict in the Middle East.
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These decreases were partially offset by higher shipments of large offshore and floating production project orders, mainly serving customers in the Middle East and Asia.
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Currency movements had a $1.0 million negative effect on sales for the period.
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Gross profit from continuing operations was $12.6 million, compared to $15.7 million last year.
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The decline primarily reflects the impact of lower sales volumes on the absorption of fixed production overhead costs at several of the Company’s manufacturing operations, together with the net impact of tariffs on cross-border shipments and a less favorable project mix at certain operations, partially offset by a favorable reversal of aged inventory provisions at the Company’s Asian operations.
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As a percentage of sales, gross profit was 21.9%, compared to 23.2% last year.
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Administration costs from continuing operations amounted to $16.9 million, or 29.4% of sales, compared to $15.4 million, or 22.7% of sales, last year mainly attributed to increase in engineering and R&D costs.
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The increase as a percentage of sales mainly reflects the lower sales base described above.
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The Company incurred transaction based expenses of $14.9 million, consisting entirely of transaction-related costs associated with the change of control transaction (see ‘Significant Transactions’), compared to $0.7 million in transaction-related costs in the second quarter of fiscal 2026.
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Adjusted EBITDA from continuing operations, excluding transaction-related costs, was negative $0.7 million, versus $3.4 million a year ago.
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For the second quarter of fiscal 2027, the net loss from continuing operations was $15.1 million ($0.70 per share), compared to a net loss of $1.7 million ($0.08 per share) in the second quarter of fiscal 2026.
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Excluding transaction-related costs, the adjusted net loss from continuing operations was $6.2 million ($0.29 per share) in the second quarter of fiscal 2027, compared to an adjusted net loss of $1.2 million ($0.05 per share) in the second quarter of fiscal 2026.
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Sales from continuing operations amounted to $115.4 million, a decrease of $24.5 million, or 17.5%, compared to $139.8 million a year ago.
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The decrease primarily reflects lower shipment volumes at the Company’s North American and China operations, resulting from softer bookings in recent periods, delays in certain large-project deliveries, and continued production and logistics challenges, partially offset by higher shipments of large offshore and floating production project orders.
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decrease → reflect → orders
Currency movements had a $0.7 million negative effect on sales for the period.
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Gross profit from continuing operations was $24.0 million, compared to $36.3 million last year.
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As a percentage of sales, gross profit was 20.8%, compared to 26.0% last year.
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…and 53 more, not listed.
The Aporia
