Velan Inc (VLNSF) Q2 2025 Earnings Call Highlights: Strong Revenue Growth and Strategic ...

GuruFocus News
3 min read

In This Article:

  • Revenue: $98.6 million, up 22.8% year-over-year.

  • Net Income: $0.1 million compared to a loss of $2.1 million last year.

  • Cash Flow from Operations: $10.1 million in Q2, $15 million for the first six months.

  • Bookings: Increased 63% year-over-year to $117 million in Q2.

  • Order Backlog: $548 million, up 11.5% from the beginning of the fiscal year.

  • Gross Profit: $26.7 million, up 14% from last year.

  • Gross Margin: 27% compared to 29.1% last year.

  • EBITDA: $5.1 million compared to $3 million last year.

  • Administration Costs: $24.8 million or 25.1% of sales.

  • Cash and Cash Equivalents: $44.5 million as of August 31, 2024.

  • Long-term Debt: $22.6 million.

Release Date: October 11, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Velan Inc (VLNSF) reported a significant improvement in net income, achieving $100,000 compared to a loss of $2.1 million a year ago.

  • The company experienced a 60% increase in bookings and a 20% rise in sales year-over-year, driven by strong performance in sectors like nuclear power, defense, and oil and gas.

  • Cash flow from operations improved significantly, reaching $10.1 million in the quarter and $15 million for the first half of the fiscal year.

  • Velan Inc (VLNSF) secured a main services agreement with GDH SMR Technologies Canada Limited, positioning itself as a first-mover in supplying small modular reactors (SMRs) with proprietary valve technology.

  • The company's order backlog increased by 11.5% to $548 million, with 72% of the backlog expected to be delivered within the next 12 months, indicating strong future sales potential.

Negative Points

  • Despite the positive financial performance, Velan Inc (VLNSF) faced a $5.2 million nonrecurring revenue gain related to a canceled agreement, which did not contribute to gross profit.

  • Currency movements negatively impacted sales by $0.6 million during the quarter.

  • The company's gross profit margin decreased to 27% from 29.1% last year, partly due to higher inventory provisions.

  • Administration costs increased to $24.8 million, driven by higher sales commissions, which could impact future profitability.

  • The company faces potential logistical risks and supply chain disruptions due to geopolitical tensions in regions like the Middle East.

Q & A Highlights

Q: You don't break out revenues in terms of volumes and pricing. Can you provide any color on that? A: Rishi Sharma, Chief Financial and Administrative Officer: We comment on volume and its effects on profit with absorption but don't discuss market-specific pricing due to its sensitivity.

Recommended Stories