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Share Name | Share Symbol | Market | Type |
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Algae Biosciences Corporation | TSXV:ABV | TSX Venture | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0 | - |
Velan Inc. (TSX:VLN), a world-leading manufacturer of industrial valves, announced today its financial results for its third quarter ended November 30, 2011. Three months Nine months ended ended November 30 November 30 (millions of U.S. dollars, excluding per share amounts) 2011 2010 2011 2010 ---------------------------------------------------------------------------- Sales $118.9 $105.7 $319.4 $273.7 Gross Profit 27.3 33.4 64.3 71.8 Gross margin 23.0% 31.6% 20.1% 26.2% Net income (loss) attributable to Multiple and Subordinate Voting Shares 4.0 11.9 2.0 14.2 Net income (loss) per share - basic and fully diluted 0.18 0.54 0.09 0.64 Highlights Third Quarter Fiscal 2012 (unless otherwise noted, all comparisons are to the third quarter of fiscal 2011): -- Net earnings(1) amounted to $4.0 million or $0.18 per share compared to $11.9 million or $0.54 per share last year. Excluding the results of Velan ABV ("ABV"), the effects of purchase price accounting and currency impacts, the Company would have reported net earnings(1) of $6.4 million or $0.29 per share in the current quarter compared to $6.8 million or $0.30 per share last year. -- Net new orders received ("bookings") amounted to $93.3 million, a decrease of $65.2 million or 41.1% compared to last year. Excluding ABV and currency impacts, the decrease was $45.0 million or 28.4%. Because the Company has a very large order backlog, it is quoting long lead times, which is negatively impacting bookings for some products. The Company ended the third quarter with a backlog of $653.6 million; $613.9 million excluding ABV. The Company's backlog increased by 18.1% and 19.3% when compared to November 2010 and February 2011, respectively. -- Sales amounted to $118.9 million, an increase of $13.2 million or 12.5%. Excluding ABV and currency impacts, sales increased $3.3 million or 3.1%. -- Gross margin decreased by 8.6% from 31.6% to 23.0%. Excluding ABV, the effects of purchase price accounting and currency impacts, gross margin would have decreased by 0.3% from last year. -- The Company used net cash(1) from operations of $14.0 million. This use of net cash(1) is primarily attributable to an investment in non-cash working capital, in particular an increase in accounts receivable resulting from the increase in shipments in the quarter. The Company ended the third quarter with net cash(1) of $28.7 million. (1) Net earnings or loss refers to net income or loss attributable to Subordinate and Multiple Voting Shares. First nine months of fiscal 2012 (unless otherwise noted, all comparisons are to the first nine months of fiscal 2011): -- Net earnings(2) amounted to $2.0 million or $0.09 per share compared to $14.2 million or $0.64 per share last year. Excluding ABV, the effects of purchase price accounting and currency impacts, the Company would have reported net earnings(2) of $7.4 million or $0.34 per share this year compared to $6.1 million or $0.27 per share last year. -- Bookings amounted to $403.1 million, an increase of $78.7 million or 24.3% compared to last year. Excluding ABV and currency impacts, the increase would have been $54.1 million or 16.7%. -- Sales amounted to $319.4 million, an increase of $45.7 million or 16.7%. Excluding ABV and currency impacts, sales increased $21.8 million or 8.0%. -- Gross margin decreased by 6.1% from 26.2% to 20.1%. Excluding ABV, the effects of purchase price accounting and currency impacts, gross margin would have decreased by 0.3%. -- The Company used net cash(1) from operations of $28.4 million. This use of net cash(1) is primarily attributable to increased inventory purchases to service the growing backlog in the first half of the current year, followed by increasing shipments resulting in higher accounts receivable in the latter portion of the year. -- Based on average exchange rates, the U.S. dollar weakened 4.2% against the Canadian dollar when compared to the same period last year. This weakening resulted in the Company`s Canadian dollar expenses being reported as higher U.S. dollar amounts in the current year. "We had quarterly net earnings(2) of $4.0 million compared to $11.9 million in the same quarter last year," said Tom Velan, President and CEO of Velan Inc., "but after adjusting for ABV, the effects of purchase price accounting for the acquisition, and the currency impacts, we would have reported net earnings(2) of $6.4 million in the current quarter compared to $6.8 million last year. "Faced with significant material cost increases over the last year, we have been selectively raising our selling prices. For some of our product lines we still face lower margins due to the higher material cost increases. We need to raise the margin by increasing volume as well as continuing to make selective price increases to cover cost increases. "As we explained in our last annual report, similar to some other U.S. valve manufacturers, two of our U.S. subsidiaries have been named as defendants in a number of pending lawsuits brought on behalf of individuals seeking to recover damages for their alleged asbestos exposure. These lawsuits are related to products manufactured and sold many years ago. Our costs related to these asbestos lawsuits for the quarter were $1.4 million compared to $1.2 million last year. We strongly believe that our products, which were supplied with encapsulated packing and gaskets in accordance with valve industry practice and customer mandated specifications, did not contribute to any asbestos-related sicknesses. We have independent laboratory test results that support this conclusion. We think that any asbestos-related health problems were caused by friable, asbestos-containing products such as the spray application of asbestos insulation and the process of removing asbestos from buildings or confined spaces, which resulted in heavy concentrations of asbestos fibers in the air. Unfortunately, the responsible companies are no longer in existence so plaintiffs are pursuing pump and valve manufacturers like Velan. We will continue to vigorously defend against these claims, but given the ongoing course of asbestos litigation in the U.S. and the unpredictability of jury trials, it is not possible to make an estimate of our legal and other costs related to these claims. (1) Non-GAAP measures - see explanation below. (2) Net earnings or loss refers to net income or loss attributable to Subordinate and Multiple Voting Shares. "The increases in bookings, backlog and sales for the year to date are good indications of an improving global market for our products. At the same time, we are concerned by weakness in the U.S. economy and persistent problems in Europe with concerns about the stability of the euro. These factors are increasing the risk of another sharp downturn in the global economy. Fortunately, we are starting our fourth quarter with a very strong backlog and the challenge we faced last year due to insufficient orders has changed to the challenge of producing our order backlog as quickly and profitably as possible. "I think that the acquisition of ABV Energy is a great opportunity for us to help grow our sales and earnings over the coming years. In the shorter term, the accounting treatment, whereby part of the purchase price is attributed to the assets (including inventory) as a purchase price adjustment, will reduce the contribution to our results. We are working to help improve operations to increase output and profitability. Velan ABV had another soft quarter, but we expect improving results going forward as the new plant capacity goes into operation during the fourth quarter as well as increases in sales based on the higher bookings and backlog." Tom Velan concluded, "We are continuing to take measures to broaden our product offering, 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 March 30, 2012, to all shareholders of record as at March 15, 2012. Conference Call Financial analysts, shareholders, and other interested individuals are invited to attend the third quarter conference call to be held on January 11, 2012, at 4:30 PM (EST). The toll free call-in number is 1-800-268-5851, access code 21567127. A recording of this conference call will be available for seven days at 1-416-626-4100 or 1-800- 558-5253, access code 21567127. About Velan Velan Inc. (www.velan.com) is a world-leading manufacturer of industrial valves with sales of $381 million in its last reported fiscal year. The company employs over 1,800 people and has manufacturing plants in 10 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 and short- term bank loans. SELECTED FINANCIAL INFORMATION Reconciliation of Net Income (Loss) from Canadian GAAP to IFRS: Fiscal Year Three Months Nine Months Ended Ended Ended (In thousands of indicated currency) February 28 November 30 November 30 2011 2010 2010 $ $ $ Net Income (Loss) - GAAP in Canadian dollars 5,810 5,825 6,017 -------------------------------------- -------------------------------------- Net Income (Loss) - GAAP in U.S. dollars 5,665 5,678 5,898 IFRS Adjustments to net income (loss) in U.S. dollars: Change of functional currency to U.S. dollar 14,819 5,797 9,202 Reclassification of Non-controlling Interest 775 62 730 Income taxes - tax effect of above differences 740 451 (949) -------------------------------------- Net Income (Loss) - IFRS in U.S. dollars 21,999 11,988 14,881 -------------------------------------- -------------------------------------- Reconciliation of Comprehensive Income (Loss) from Canadian GAAP to IFRS: Fiscal Year Three Months Nine Months Ended Ended Ended (In thousands of indicated currency) February 28 November 30 November 30 2011 2010 2010 $ $ $ Comprehensive Income (Loss) - GAAP in Canadian dollars 1,976 4,870 1,996 --------------------------------------- --------------------------------------- Comprehensive Income (Loss) - GAAP in U.S. dollars 1,907 4,739 1,987 IFRS Adjustments to comprehensive income (loss) in U.S. dollars: Change of functional currency to U.S. dollar 21,091 8,956 10,603 Realized translation adjustment on reduction of net investment in (239) (237) (237) self-sustaining operations Reclassification of Non-controlling Interest 845 230 785 Income taxes - tax effect of above differences 740 451 (949) --------------------------------------- Comprehensive Income (Loss) - IFRS in U.S. dollars 24,344 14,139 12,189 --------------------------------------- --------------------------------------- Reconciliation of Equity from Canadian GAAP to IFRS: February 28 November 30, March 1, (In thousands of indicated currency) 2011 2010 2010 $ $ $ Equity - GAAP in Canadian dollars 340,627 342,439 346,184 -------------------------------------- Equity - GAAP in U.S. dollars 350,265 333,295 328,682 IFRS Adjustments to Equity in U.S. dollars: Change of functional currency to U.S. dollar (19,794) (9,224) (13,469) Reclassification of non-controlling interest 4,025 3,925 4,954 Income taxes - tax effect of above differences 3,227 (602) 2,439 -------------------------------------- Equity - IFRS in U.S. dollars 337,723 327,394 322,606 -------------------------------------- Velan Inc. Interim Consolidated Statements of Income (Loss) (Unaudited) (in thousands of U.S. dollars, excluding number of shares and per share amounts) ---------------------------------------------------------------------------- Three-month Nine-month periods ended periods ended November 30 November 30 2011 2010 2011 2010 $ $ $ $ Sales 118,939 105,653 319,351 273,678 Cost of sales 91,652 72,224 255,094 201,887 ------------------------------------------------ Gross profit 27,287 33,429 64,257 71,791 Administration cost 21,634 17,681 62,214 51,254 Other expense (income) (101) (2) (317) (348) ------------------------------------------------ Operating profit (loss) 5,754 15,750 2,360 20,885 Finance income 69 155 230 384 Finance costs 213 34 1,036 471 ------------------------------------------------ Finance income (costs) - net (144) 121 (806) (87) ------------------------------------------------ Income (Loss) before income tax 5,610 15,871 1,554 20,798 Income tax expense (recovery) 1,778 3,883 203 5,917 ------------------------------------------------ Net income (loss) for the period 3,832 11,988 1,351 14,881 ------------------------------------------------ ------------------------------------------------ Net income (loss) attributable to: Subordinate Voting Shares and Multiple Voting Shares 3,992 11,926 2,028 14,151 Non-controlling interest (160) 62 (677) 730 ------------------------------------------------ 3,832 11,988 1,351 14,881 ------------------------------------------------ ------------------------------------------------ Net income (loss) per Subordinate andMultiple Voting Share Basic 0.18 0.54 0.09 0.64 Diluted 0.18 0.54 0.09 0.64 ------------------------------------------------ ------------------------------------------------ Dividends declared per Subordinate andMultiple 0.07 0.07 0.24 0.23 Voting Share (CDN$0.08) (CDN$0.08) (CDN$0.24) (CDN$0.24) ------------------------------------------------ ------------------------------------------------ Total weighted average Subordinate and Multiple Voting Shares Basic 22,180,538 22,213,841 22,180,538 22,213,841 Diluted 22,197,471 22,242,135 22,218,713 22,251,879 ------------------------------------------------ ------------------------------------------------ Velan Inc. Interim Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (in thousands of U.S. dollars) Three-month Nine-month periods periods ended ended November 30 November 30 2011 2010 2011 2010 $ $ $ $ Comprehensive income (loss) Net income (loss) for the period 3,832 11,988 1,351 14,881 Other comprehensive income (loss), net of tax Foreign currency translation adjustment on foreign operations whose functional currency is other than the U.S. dollar (11,055) 2,151 (7,210) (2,692) ----------------- ----------------- Comprehensive income (loss) (7,223) 14,139 (5,859) 12,189 ------------------------------------ ------------------------------------ Comprehensive income (loss) attributable to: Subordinate Voting Shares and Multiple Voting Shares (6,117) 13,909 (4,090) 11,404 Non-controlling interest (1,106) 230 (1,769) 785 ----------------- ----------------- (7,223) 14,139 (5,859) 12,189 ------------------------------------ ------------------------------------ Velan Inc. Interim Consolidated Statements of Financial Position (Unaudited) (in thousands of U.S. dollars) As At November 30, February 28, March 1, 2011 2011 2010 $ $ $ Assets Current assets Cash and cash equivalents 49,822 119,996 101,691 Short-term investments 1,514 87 295 Accounts receivable 127,555 94,495 86,756 Income taxes recoverable 10,195 5,007 3,301 Inventories 248,306 205,334 190,031 Deposits and prepaid expenses 4,697 3,875 5,672 Derivative assets 1,282 3,329 4,042 443,371 432,123 391,788 Non-current assets Property, plant and equipment 70,784 64,622 63,931 Other assets 1,242 1,391 1,388 Intangible assets and goodwill 58,214 11,657 11,382 Deferred income taxes 7,368 6,244 5,545 ------------------------------------ 137,608 83,914 82,246 ------------------------------------ Total assets 580,979 516,037 474,034 ------------------------------------ ------------------------------------ Liabilities Current liabilities Bank indebtedness 21,833 5,634 2,500 Short-term bank loans 847 822 791 Accounts payable and accrued liabilities 78,103 65,329 63,897 Income tax payable 2,167 1,832 4,505 Dividend payable 1,811 1,830 1,689 Customer deposits 83,890 73,054 55,403 Provisions 3,783 4,288 2,973 Accrual for performance guarantees 18,350 13,354 7,955 Derivative liabilities 2,051 447 1,077 Current portion of long-term debt 952 603 44 Current portion of other long-term liabilities 5,610 - - ------------------------------------ 219,397 167,193 140,834 Non-current liabilities Long-term debt 8,137 4,408 3,768 Other long-term liabilities 10,802 6,656 6,702 Deferred income taxes 8,262 57 124 ------------------------------------ 27,201 11,121 10,594 ------------------------------------ Total liabilities 246,598 178,314 151,428 ------------------------------------ Equity Equity attributable to the Subordinate and Multiple Voting shareholders Share capital 78,969 79,271 79,651 Contributed surplus 1,863 1,898 1,936 Retained earnings 246,848 250,254 236,065 Accumulated other comprehensive income (3,843) 2,275 - ------------------------------------ 323,837 333,698 317,652 Non-controlling interest 10,544 4,025 4,954 ------------------------------------ Total equity 334,381 337,723 322,606 ------------------------------------ Total liabilities and equity 580,979 516,037 474,034 ------------------------------------ ------------------------------------ Velan Inc. Interim Consolidated Statements of Changes in Equity (Unaudited) (in thousands of U.S. dollars) Equity attributable to the Subordinate and Multiple Voting shareholders ---------------------------------------------------------------------------- Accumulated other Number of Share Contributed comprehensive shares capital surplus income ----------------------------------------------- Balance -Beginning of period 22,195,568 79,271 1,898 2,275 Net income (loss) for the period - - - - Other comprehensive income (loss) - - - (6,118) ----------------------------------------------- 22,195,568 79,271 1,898 (3,843) Effect of share-based compensation - - 50 - Dividends Multiple Voting Shares - - - - Subordinate Voting Shares - - - - Non-controlling interest - - - - Share repurchase (27,800) (302) (85) - Non-controlling interest arising on acquisition - - - - ----------------------------------------------- As at November 30, 2011 22,167,768 78,969 1,863 (3,843) ----------------------------------------------- Equity attributable to the Subordinate and Multiple Voting shareholders --------------------------------------------------------------------------- Non- Retained controlling earnings Total interest Total equity ---------------------------------------------- Balance -Beginning of period 250,254 333,698 4,025 337,723 Net income (loss) for the period 2,028 2,028 (677) 1,351 Other comprehensive income (loss) - (6,118) (1,092) (7,210) ---------------------------------------------- 252,282 329,608 2,256 331,864 Effect of share-based compensation - 50 - 50 Dividends Multiple Voting Shares (3,852) (3,852) - (3,852) Subordinate Voting Shares (1,582) (1,582) - (1,582) Non-controlling interest - - (84) (84) Share repurchase - (387) - (387) Non-controlling interest arising on acquisition - - 8,372 8,372 ---------------------------------------------- As at November 30, 2011 246,848 323,837 10,544 334,381 ---------------------------------------------- Equity attributable to the Subordinate and Multiple Voting shareholders ---------------------------------------------------------------------------- Accumulated other Number of Share Contributed comprehensive shares capital surplus income ----------------------------------------------- Balance -Beginning of period 22,230,468 79,651 1,936 - Net income (loss) for the period - - - - Other comprehensive income (loss) - - - (2,747) ----------------------------------------------- 22,230,468 79,651 1,936 (2,747) Effect of share-based compensation - - 53 - Dividends Multiple Voting Shares - - - - Subordinate Voting Shares - - - - Non-controlling interest - - - - Share repurchase (31,900) (358) (97) - ----------------------------------------------- As at November 30, 2010 22,198,568 79,293 1,892 (2,747) ----------------------------------------------- ----------------------------------------------- Equity attributable to the Subordinate and Multiple Voting shareholders -------------------------------------------------------------------------- Non- Retained controlling earnings Total interest Total equity ---------------------------------------------- Balance -Beginning of period 236,065 317,652 4,954 322,606 Net income (loss) for the period 14,151 14,151 730 14,881 Other comprehensive income (loss) - (2,747) 55 (2,692) ---------------------------------------------- 250,216 329,056 5,739 334,795 Effect of share-based compensation - 53 - 53 Dividends Multiple Voting Shares (3,633) (3,633) - (3,633) Subordinate Voting Shares (1,552) (1,552) - (1,552) Non-controlling interest - - (1,814) (1,814) Share repurchase - (455) - (455) ---------------------------------------------- As at November 30, 2010 245,031 323,469 3,925 327,394 ---------------------------------------------- ---------------------------------------------- Velan Inc. Interim Consolidated Statements of Cash Flows (Unaudited) (in thousands of U.S. dollars) Three-month periods Nine-month periods ended November 30 ended November 30 2011 2010 2011 2010 Cash flows from $ $ $ $ Operating activities Net income (loss) for the period 3,832 11,988 1,351 14,881 Adjustments to reconcile net profit to cash provided operating activities Amortization of property, plant and equipment 2,172 1,947 6,396 6,108 Amortization of intangible assets 1,478 246 3,836 585 Deferred income taxes 430 (563) (512) 1,331 Share-based compensation expense 33 16 50 53 Loss (Gain) on disposal of property, plant and equipment (39) 57 11 (24) Amortization of present value discount on other long-term liabilities 291 - 702 - Net change in other long-term liabilities (734) (172) (106) (497) ---------------------------------------- ---------------------------------------- 7,463 13,519 11,728 22,437 ---------------------------------------- ---------------------------------------- Changes in non-cash working capital items Accounts receivable (20,336) (24,522) (24,301) 865 Inventories (2,250) (6,243) (27,161) (14,842) Income taxes recoverable (835) 2,101 (5,239) (592) Deposits and prepaid expenses 67 1,144 (362) (94) Derivative assets (865) (2,000) 2,027 829 Accounts payable and accrued liabilities 189 3,392 833 (4,832) Income taxes payable 550 971 (202) (1,628) Customer deposits 3,150 71 8,601 6,560 Provisions (463) 469 (510) 256 Accrual for performance guarantees (1,272) 1,881 4,630 3,261 Derivative liabilities 565 (991) 1,588 (836) ---------------------------------------- ---------------------------------------- (21,500) (23,727) (40,096) (11,053) ---------------------------------------- ---------------------------------------- Cash provided (used) by operating activities (14,037) (10,208) (28,368) 11,384 ---------------------------------------- ---------------------------------------- Investing activities Short-term investments (776) (67) (1,427) (114) Additions to property, plant and equipment (1,563) (1,932) (8,940) (5,339) Proceeds on disposal of property, plant and equipment 34 2 61 206 Additions to intangible assets (93) (191) (738) (549) Net change in other assets 131 (49) 148 (83) Business acquisition - net of cash acquired - - (37,281) - ---------------------------------------- ---------------------------------------- Cash provided (used) by investing activities (2,267) (2,237) (48,177) (5,879) ---------------------------------------- ---------------------------------------- Financing activities Dividends paid to Subordinate and Multiple Voting shareholders (1,773) (1,681) (5,453) (5,142) Dividends paid to non-controlling interest - (1,777) (84) (1,814) Repurchase of shares (109) (217) (388) (455) Short-term bank loans - 16 (4,842) 18 Increase in long-term debt 388 - 4,612 - Repayment of long-term debt (2,579) (70) (2,636) (89) ---------------------------------------- ---------------------------------------- Cash provided (used) by investing activities (4,073) (3,729) (8,791) (7,482) ---------------------------------------- ---------------------------------------- Effect of exchange rate differences on cash (1,349) 2,803 (1,037) 561 ---------------------------------------- ---------------------------------------- Net change in cash during the period (21,726) (13,371) (86,373) (1,416) Net cash - Beginning of period 49,715 111,146 114,362 99,191 ---------------------------------------- ---------------------------------------- Net cash - End of period 27,989 97,775 27,989 97,775 ---------------------------------------- ---------------------------------------- Net cash is composed of: Cash and cash equivalents 49,822 102,231 49,822 102,231 Bank indebtedness (21,833) (4,456) (21,833) (4,456) ---------------------------------------- ---------------------------------------- 27,989 97,775 27,989 97,775 ---------------------------------------- ---------------------------------------- Supplementary information Interest received (paid) (647) 11 (752) (86) Income taxes received (paid) (1,835) (719) (5,854) (4,758)
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