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First Nine Months of Fiscal 2013 (unless otherwise noted, all comparisons are to the first nine months of fiscal 2012):
-- Net earnings(1) amounted to $9.7 million or $0.44 per share compared to $2.0 million or $0.09 per share last year. Excluding the results of ABV, the effects of purchase price accounting and currency impacts, the Company would have reported net earnings(1) of $12.0 million or $0.54 per share this year compared to $5.7 million or $0.26 per share last year.-- Bookings amounted to $273.4 million, a decrease of $129.7 million or 32.2% compared to last year. Excluding currency impacts, the decrease would have been $113.1 million or 28.1%.-- Sales amounted to $358.5 million, an increase of $39.1 million or 12.2%. Excluding ABV and currency impacts, sales would have increased by $37.3 million or 12.3%.-- Gross margin increased by 3.2 percentage points from 20.1% to 23.3%. Excluding ABV, the effects of purchase price accounting and currency impacts, gross margin would have increased by 3.3 percentage points.-- The Company used net cash(2) from operations of $8.6 million in the period. This use of net cash(2) was primarily attributable to increases in accounts receivable and inventories, which was partially offset by positive cash earnings in the period. The Company ended the period with net cash(2) of $5.5 million.-- The Company generated net cash(2) from financing activities of $8.6 million in the period. This source of net cash(2) was principally from a $20.7 million increase in long-term debt. The Company is using the proceeds of this debt to fund its growing working capital needs, particularly with respect to inventory purchases to service its large backlog, to continue to improve its production capacity with investments in machinery and equipment, and to fund various activities in its overseas operations, particularly in Asia.-- Based on average exchange rates, the euro weakened 9.3% against the U.S. dollar when compared to the same period last year. This weakening resulted in the Company's net profits from its European subsidiaries being reported as lower U.S. dollar amounts in the current period. The Canadian dollar weakened 1.4% against the U.S. dollar when compared to the same period last year. This weakening resulted in the Company's Canadian dollar expenses being reported as lower U.S. dollar amounts in the current period. The net impact of these two currency swings was generally unfavourable on the Company's results for this period since the positive impact of a weaker Canadian dollar was outweighed by the negative impact of a weaker euro.(1) Net earnings or loss refers to net income or loss attributable toSubordinate and Multiple Voting Shares.(2) Non-GAAP measures - see explanation below.
"We are pleased that the positive sales and profit trend noted in our second quarter continued and improved in our third quarter," said John Ball, CFO of Velan Inc. "The pressure is easing on our backlog and we are benefitting from the increased flow of shipments. We continue to see opportunities in several foreign markets as demand in our key end-user markets is generally strong and we are focusing our efforts to capitalize on these opportunities."
Tom Velan, President and CEO of Velan Inc. said, "We had record sales of $134.2 million for this quarter and we continued to make progress towards our earnings objectives. While we are striving to achieve the highest sales revenues in our history this year, we are also focusing on longer term objectives. We opened our new plant in Coimbatore, India, in December and at the same time we are expanding production in our Korean and Chinese plants. We have also made significant investments in our North American plants to increase our output. We are building our global manufacturing capacity and at the same time increasing our presence in global markets."
