Velan Inc. Reports Fiscal 2027 First-Quarter Results

This press release is provided by GlobeNewswire and is published as received.

MONTREAL, July 09, 2026 (GLOBE NEWSWIRE) -- Velan Inc. (TSX: VLN) (“Velan” or the “Company”), a world-leading manufacturer of industrial valves, announced today financial results for its first quarter ended May 31, 2026. All amounts are expressed in U.S. dollars unless indicated otherwise.

FIRST-QUARTER HIGHLIGHTS FROM CONTINUING OPERATIONS

IFRS MEASURES

Sales of $57.8 million, compared to $72.2 million last year, reflecting the geopolitical and regional conflicts which resulted in shipments being deferred to subsequent periods, with the majority expected to be delivered by the end of the fiscal year.Gross profit of $11.4 million or 19.6% of sales, versus $20.6 million or 28.6% of sales last year, due to lower business volume and higher provisions.Net loss1 of $9.4 million ($0.44 per share) versus net income of $17.8 million ($0.83 per share) last year, which included a $23.1 million non-recurring tax recovery related to the disposal of the French subsidiaries. Financial position remains solid with cash and cash equivalents of $34.6 million as at May 31, 2026.

NON-IFRS AND SUPPLEMENTARY FINANCIAL MEASURES

Backlog2 of $275.1 million, down from $283.3 million at the end of the previous quarter.Bookings2 of $48.0 million, versus $78.2 million last year, reflecting challenging conditions caused by the geopolitical and regional conflicts affecting several markets, but bidding activity remains solid in the Company’s main end markets, mainly for large-scale projects.Adjusted net loss2 of $6.9 million, versus adjusted net income of $0.1 million last year.Adjusted EBITDA2 of negative $2.1 million, compared to adjusted EBITDA of $3.8 million last year, reflecting the impact of lower sales and gross profit.

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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.

“Velan’s first quarter results were affected by the geopolitical and regional conflicts, which impacted new order bookings, delivery schedules, and profitability,” said Rishi Sharma, President and Chief Executive Officer of Velan. “We estimate that most of the shipments that were deferred to future periods should be recaptured by fiscal year end. Meanwhile, uncertainty significantly constrained bookings and reduced maintenance, repair and overhaul (MRO) requirements in North America as lower refinery utilization due to the Middle East situation limited the available resources required to carry out such activities. Despite these external factors, Velan is well positioned to capitalize on pent-up demand as market uncertainty subsides and we are looking forward to actively participate in efforts to restart idled projects or rebuild damaged infrastructure.”

“With Birch Hill’s acquisition of Velan Holding’s majority interest now closed, Velan is entering a dynamic new phase of its evolution from a position of strength. Supported by our strong brand reputation, high-quality products, and proven expertise in developing solutions for critical applications, we are focused on further strengthening our leadership position across a diversified range of industrial markets. While we recognize the challenges associated with evolving market conditions, competitive dynamics, and the successful execution of our strategic initiatives, we believe our experienced team, global footprint, and commitment to operational excellence position us well to capitalize on future opportunities and create long-term value,” Mr. Sharma added.

“Velan’s financial position remains solid with $34.6 million in cash and cash equivalents, and $16.8 million in long-term debt,” said Imran Gibbons, Chief Financial Officer of VeIan. “Furthermore, the subsequent closing of a new five-year credit facility enhances our liquidity, reduces our cost of capital and provides us with the flexibility to accelerate the execution of our business strategy and to invest in our core capabilities to sustain profitable growth.”

FINANCIAL RESULTSin ‘000s of U.S. dollars, excluding per share amounts)Three-month periods endedMay 31, 2026May 31 2025From continuing operations Sales$57,830 $72,229 Gross profit$11,356 $20,626 Gross margin19.6%28.6%Administration costs$15,719 $18,313 Restructuring expenses$513 $5,374 Other expenses (income)$2,855 $732 Operating income (loss)($7,731)($3,793)Net income (loss)($9,436)$17,826 Net income (loss) from discontinued operations- $59,379 Net income (loss)($9,436)$77,205 (in dollars per share – basic and diluted) Net income (loss) from continuing operations($0.44)$0.83 Net income (loss) from discontinued operations- $2.75 Net income (loss)($0.44)$3.58

NON-IFRS AND SUPPLEMENTARY FINANCIAL MEASURES(From continuing operations, in ‘000s of U.S. dollars, excluding per share amounts)Three-month periods endedMay 31, 2026May 31 2025Adjusted EBITDA($2,098)$3,780 Adjusted net income (loss)($6,927)$90 per share - basic and diluted($0.32)$0.00

BACKLOG AND BOOKINGS

BACKLOG(‘000s of U.S. dollars)As atMay 31, 2026February 28, 2026Backlog$275,079 $283,290 for delivery within the next 12 months$194,369 $216,709

BOOKINGS (‘000s of U.S. dollars)Three-month periods endedMay 31, 2026May 31 2025Bookings$47,991 $78,234

As at May 31, 2026, the backlog from continuing operations stood at $275.1 million, down from $283.3 million as at February 28, 2026. Foreign currency movements had a $0.5 million positive effect on the value of the backlog during the quarter. Excluding currency movements, the variation reflects shipments exceeding bookings in the first quarter of fiscal 2027. As at May 31, 2026, 70.7% of the backlog, representing $194.4 million of orders, is expected to be delivered over the next 12 months, compared to 84.4% in the prior year. The shift in timing reflects a higher proportion of longer-duration, large-scale contracts, particularly in the nuclear and defense sectors, increasing the overall backlog visibility and extending delivery timelines.

Bookings from continuing operations totaled $48.0 million compared to $78.2 million last year. The decrease reflects challenging market conditions caused by the geopolitical and regional conflicts, which affected bookings in North America, Italy, and Germany. North American MRO bookings declined during the quarter, primarily due to reduced refurbishment activity impacting demand, combined with a strong comparative performance in the prior year. Foreign currency movements had a negligible effect on total bookings for the quarter. Despite this reduction in bookings, bidding activity remains solid in the Company’s main end markets, mainly for large-scale projects.

FIRST QUARTER RESULTS

Sales from continuing operations totaled $57.8 million, compared to $72.2 million for the same period last year. The variance primarily reflects lower shipment volumes from North American and Italian operations, largely attributable to the geopolitical and regional conflicts, which led to oil refinery shutdowns in the Middle East and reduced North American MRO activity, as described above. As a result, shipments were deferred to subsequent periods, with the majority expected to be delivered by the end of the fiscal year. Foreign currency movements had a favourable impact of $0.5 million on sales for the period.

Gross profit from continuing operations was $11.4 million, compared to $20.6 million last year. The variance primarily reflects the impact of lower business volumes on the absorption of fixed production overhead costs, as well as a $1.3 million increase in the provision for performance guarantee recorded during the period. Foreign currency movements had a negligible effect on gross profit. As a percentage of sales, gross profit was 19.6%, compared to 28.6% in the prior year, reflecting the combined effect of these factors.

Administration costs from continuing operations amounted to $15.7 million, or 27.2% of sales, compared to $18.3 million, or 25.4% of sales, a year ago. The variation reflects cost reduction initiatives and lower sales commissions.

The Company incurred restructuring expenses of $0.5 million, consisting of transaction-related costs in connection with the sale of the Velan Holding Co. Ltd. (“Velan Holding”) shares to funds managed by Birch Hill Equity Partners Management Inc. (“Birch Hill”). Last year’s restructuring expenses consisted of $6.1 million in transaction-related costs, partially offset by a $0.7 million reversal of asbestos-related costs.

The Company recorded other expenses of $2.9 million, mainly consisting of a non-recurring provision adjustment, whereas last year’s other expenses of $0.7 million mainly reflected foreign currency movements

Adjusted EBITDA from continuing operations, excluding restructuring expenses and non-recurring provision adjustments, was negative $2.1 million, versus positive $3.8 million last year. The decrease is primarily attributable to lower gross profit, partially offset by lower administration costs, as explained above.

Net loss from continuing operations was $9.4 million ($0.44 per share) compared to net income of $17.8 million ($0.83 per share) last year, which included a $23.1 million non-recurring tax recovery related to the disposal of the French subsidiaries. Last year’s net income from discontinued operations was $59.4 million ($2.75 per share) reflecting the gain on the disposal of the French subsidiaries. As a result, the net loss for the period was $9.4 million ($0.44 per share) compared to net income of $77.2 million ($3.58 per share) a year ago.

Adjusted net loss from continuing operations, excluding restructuring expenses, non-recurring provision adjustments, and last year’s non-recurring tax recovery on the France transaction, was $6.9 million ($0.32 per share) compared to adjusted net income of $0.1 million ($0.00 per share) in the prior year.

FINANCIAL POSITION

As at May 31, 2026, the Company held cash and cash equivalents of $34.6 million and short-term investments of $1.4 million. Bank indebtedness stood at $17.6 million, while long-term debt, including the current portion, totaled $16.8 million. Considering availability under its new revolving credit facility (see “Subsequent Events”), the Company has increased its total liquidity to fund its growth and investment objectives.

OUTLOOK

In preparation for anticipated demand ramp-up across key markets, including nuclear, defense, and traditional energy, the Company is advancing a series of initiatives to enhance operational efficiency and support future growth. These include optimizing its global manufacturing footprint through lean practices and improved capacity utilization.

The Company is also pursuing procurement savings through strategic sourcing, alongside value and product engineering efforts aimed at reducing cost and complexity while maintaining quality.

In addition, the Company is focused on operating cost optimization through streamlined processes and scalable infrastructure.

SUBSEQUENT EVENTS

On June 15, 2026, the Company announced the closing of the sale by its controlling shareholder, Velan Holding, of its controlling interest in the Company to Birch Hill (see “Significant Transactions”).

The closing created an obligation for the Company to pay conditional fees related to the transaction. These fees are estimated at $15.5 million and will be accounted for in the second quarter of fiscal 2027.

Following this event, the Company has secured a new $80 million revolving credit facility with a major chartered bank, maturing in June 2031. The facility strengthens Velan’s capital structure by increasing liquidity, enhancing durability, and lowering its cost of capital. Proceeds were used to repay existing North American debt at closing, including $14.9 million of bank indebtedness and a $12.4 million secured bank loan, and to be used for general corporate purposes going forward.

DIVIDEND

No dividend was declared this quarter.

SIGNIFICANT TRANSACTIONS

On January 14, 2026, the Company announced that Velan Holding, the sole holder of the Company’s multiple voting shares, had agreed to sell its 15,566,567 multiple voting shares and one subordinate voting share (representing approximately 72.1% of the Company’s outstanding shares and 92.8% of its aggregate voting rights) to funds managed by Birch Hill, at a price of C$13.10 per share, for aggregate gross proceeds of C$203,922,040.80 to Velan Holding and two other entities associated with shareholders of Velan Holding (the “VH Transaction”). Pursuant to a pre-closing reorganization, Velan Holding, among other things, converted 2,290,075 multiple voting shares into the same number of subordinate voting shares. Therefore, giving effect to such pre-closing reorganization, 13,276,492 multiple voting shares and 2,290,076 subordinate voting shares were sold to Birch Hill on closing of the VH Transaction (representing approximately 72.1% of the Company’s outstanding shares and 91.9% of its aggregate voting rights) (collectively the “VH Transaction Shares”). Closing of the VH Transaction was announced on June 15, 2026 (see “Subsequent Events”).

On March 31, 2025, the Company announced the closing sale of its French subsidiaries Velan S.A.S. and Segault S.A.S. for a total consideration of $208.2 million (€192.5 million) and net consideration of $183.1 million. Based on the net book value at the closing of the transaction and related costs, a gain of $95.8 million was recorded in the first quarter of fiscal 2026. The sale also triggered the recognition of a cumulative translation adjustment of $12.5 million. These amounts were recorded as part of results from discontinued operations.

Concurrently with the sale of its French subsidiaries, the Company entered into an agreement to sell its current and future exposure to asbestos-related litigation in the United States. Part of the proceeds received from the sale of the French assets was used on April 3, 2025, to pay an amount of $143.0 million for this settlement.

CONFERENCE CALL NOTICE

Financial analysts, shareholders, and other interested individuals are invited to attend the fourth quarter conference call to be held on Friday, July 10, 2026, at 8:00 a.m. (EDT). The toll-free call-in number is 1-800-990-4777 or by RapidConnect URL: https://emportal.ink/4uK8E6Y. The material that will be referenced during the conference call will be made available shortly before the event on the company’s website under the Investor Relations section (https://velan.com/investor-relations). A recording of this conference call will be available for seven days at 1-289-819-1450 or 1-888-660-6345 and entering the replay code 81716.

ABOUT VELAN

Founded in Montreal in 1950, Velan Inc. (www.velan.com) is one of the world’s leading manufacturers of industrial valves, with sales from continuing operations of US$296.4 million in its last reported fiscal year. The Company employs 1,273 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

This news release may include forward-looking statements, which generally contain words like “should”, “believe”, “anticipate”, “plan”, “may”, “will”, “expect”, “intend”, “continue” or “estimate” or the negatives of these terms or variations of them or similar expressions, all of which are subject to risks and uncertainties, which are disclosed in the Company’s filings with the appropriate securities commissions. While these statements are based on management’s assumptions regarding historical trends, current conditions and expected future developments, as well as other factors that it believes are reasonable and appropriate in the circumstances, no forward-looking statement can be guaranteed, and actual future results may differ materially from those expressed herein. The Company disclaims any intention or obligation to update or revise any forward-looking statements contained herein whether as a result of new information, future events or otherwise, except as required by the applicable securities laws. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

NON-IFRS AND SUPPLEMENTARY FINANCIAL MEASURES

In this press release, the Company has presented measures of performance or financial condition which are not defined under IFRS (“non-IFRS 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 and are reconciled with the performance measures defined under IFRS. The Company has also presented supplementary financial measures which are defined at the end of this report. Reconciliation and definition can be found below.

Adjusted net income (loss), Adjusted net income (loss) per share, Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA

Three-month periods ended(in thousands, except per share amounts; certain totals may not add up due to rounding)May 31, 2026$ May 31, 2025$ Reconciliation of net income (loss) from continuing operations to adjusted net income (loss) from continuing operations and adjusted net income (loss) from continuing operations per share Net income (loss) from continuing operations(9,436)17,826 Adjustments for: Asbestos-related costs- (754)Transaction-related costs377 6,128 Non-recurring provision adjustments2,132 - Non-recurring tax recovery on France transaction- (23,110)Adjusted net income (loss) from continuing operations(6,927)90 per share – basic and diluted(0.32)0.00 Reconciliation of net income (loss) from continuing operations to Adjusted EBITDA from continuing operations Net income (loss) from continuing operations(9,436)17,826 Adjustments for: Depreciation of property, plant and equipment1,698 1,629 Amortization of intangible assets and financing costs456 519 Finance costs – net84 390 Income tax expense (recovery)1,687 (21,958)EBITDA(5,511)(1,594)Adjustments for: Asbestos-related costs- (754)Transaction-related costs513 6,128 Non-recurring provision adjustments2,900 - Adjusted EBITDA(2,098)3,780

The term “Adjusted net income (loss)” is defined as net income or loss attributable to Subordinate and Multiple Voting Shares plus adjustment, net of income taxes, for costs related to restructuring and to the proposed transaction. The terms “Adjusted net income (loss) per share” is obtained by dividing Adjusted net income (loss) by the total amount of subordinate and multiple voting shares. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

The term “EBITDA” is defined as adjusted net income plus depreciation of property, plant & equipment, plus amortization of intangible assets, plus net finance costs, plus income tax provision. The term “Adjusted EBITDA” is defined as EBITDA plus adjustment for costs related to restructuring and to the proposed transaction. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

Definitions of supplementary financial measures

The term “Net new orders” or “bookings” is defined as firm orders, net of cancellations, recorded by the Company during a period. Bookings are impacted by the fluctuation of foreign exchange rates for a given period. The measure provides an indication of the Company’s sales operation performance for a given period as well as well as an expectation of future sales and cash flows to be achieved on these orders.

The term “backlog” is defined as the buildup of all outstanding bookings to be delivered by the Company. The Company’s backlog is impacted by the fluctuation of foreign exchange rates for a given period. The measure provides an indication of the future operational challenges of the Company as well as an expectation of future sales and cash flows to be achieved on these orders.

The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

Contact:Imran Gibbons, Chief Financial OfficerMartin Goulet, M.Sc., CFAVelan Inc.MBC Capital Markets AdvisorsTel: (514) 748-7743Tel.: (514) 731-0000, ext. 229

Consolidated Statements of Financial Position(in thousands of U.S. dollars) As at May 31, February 28, 2026 2026 $ $ Assets Current assets Cash and cash equivalents 34,565 53,354 Short-term investments 1,367 371 Accounts receivable 74,063 75,369 Income taxes recoverable 6,080 5,511 Inventories 139,239 147,140 Deposits and prepaid expenses 3,497 3,337 Derivative assets 9 59 258,820 285,141 Non-current assets Property, plant and equipment 49,709 50,935 Intangible assets and goodwill 3,904 4,477 Deferred income taxes 4,229 5,283 Other assets 768 771 58,610 61,466 Total assets 317,430 346,607 Liabilities Current liabilities Bank indebtedness 17,587 10,663 Short-term bank loans - 1,199 Accounts payable and accrued liabilities 64,945 85,094 Income taxes payable 1,409 1,330 Customer deposits 13,965 20,211 Provisions 9,133 10,227 Derivative liabilities 179 130 Current portion of long-term lease liabilities 1,582 1,592 Current portion of long-term debt 2,792 3,737 111,592 134,183 Non-current liabilities Long-term lease liabilities 3,640 3,968 Long-term debt 13,998 14,488 Income taxes payable 464 - Deferred income taxes 1,283 1,346 Customer deposits 14,586 5,584 Other liabilities 4,823 4,935 38,794 30,321 Total liabilities 150,386 164,504 Total equity 167,044 182,103 Total liabilities and equity 317,430 346,607

Consolidated Statements of Loss(in thousands of U.S. dollars, excluding number of shares and per share amounts) Three-month periods ended May 31, May 31, 2026 2025 $ $ Sales 57,830 72,229 Cost of sales46,474 51,603 Gross profit11,356 20,626 Administration costs15,719 18,313 Restructuring expenses513 5,374 Other expenses2,855 732 Operating loss(7,731)(3,793) Financing expenses(84)(390) Loss before income taxes(7,815)(4,183) Income tax expense (recovery)1,687 (21,958) Net Income (loss) for the period from continuing operations(9,502)17,775 Results from discontinued operations- 59,379 (9,502)77,154 Net loss attributable to: Subordinate Voting Shares and Multiple Voting Shares(9,436)77,205 Non-controlling interest(66)(51) Net Income (loss) for the period(9,502)77,154 Net Income (loss) per Subordinate and Multiple Voting Share Basic and diluted from continuing operations(0.44)0.83 Basic and diluted from discontinued operations- 2.75 Basic and diluted all operations(0.44)3.58 Dividends declared per Subordinate and Multiple- 0.24 Voting Share(CA$ -)(CA$ 0.33) Total weighted average number of Subordinate and Multiple Voting Shares Basic and diluted21,585,635 21,585,635

Consolidated Statements of Comprehensive Income (loss)(in thousands of U.S. dollars) Three-month periods ended May 31, May 31, 2026 2025 $ $ Comprehensive Income (loss) Net Income (loss) for the period(9,502)77,154 Other comprehensive income (loss) Foreign currency translation of foreign subsidiaries(5,561)(2,872)Reclassification of foreign currency translation from discontinued operations- 12,456 Comprehensive Income (loss) (15,063)86,738 Comprehensive Income (loss) attributable to: Subordinate Voting Shares and Multiple Voting Shares(14,997)86,789 Non-controlling interest(66)(51) Comprehensive Income (loss) (15,063)86,738 Other comprehensive income (loss) is composed solely of items that may be reclassified subsequently to the consolidated statement of income (loss).

Consolidated Statements of Changes in Equity(in thousands of U.S. dollars, excluding number of shares) Equity attributable to the Subordinate and Multiple Voting shareholders Share capitalContributedsurplusAccumulatedlossRetainedearningsTotalNon-controllinginterestTotal equity Balance - February 28, 202572,6956,355(47,141)65,952 97,861 877 98,738 Net income (loss) for the period--- 77,205 77,205 (51)77,154 Other comprehensive loss--(2,872)- (2,872)- (2,872) Comprehensive Income (loss)--(2,872)77,205 74,333 (51)74,282 Reclassification of foreign currency translation to discontinued operations--12,456 - 12,456 - 12,456 Dividends Multiple Voting Shares--- (3,770)(3,770)- (3,770)Subordinate Voting Shares--- (1,444)(1,444)- (1,444) Balance - May 31, 202572,6956,355(37,557)137,943 179,436 826 180,262 Balance - February 28, 202672,6956,355(27,526)129,957 181,481 626 182,107 Net loss for the period--- (9,436)(9,436)(66)(9,502)Other comprehensive loss--(5,561)- (5,561)- (5,561) Comprehensive loss--(5,561)(9,436)(14,997)(66)(15,063) Balance - May 31, 202672,6956,355(33,087)120,521 166,484 560 167,044

Consolidated Statements of Cash Flow(in thousands of U.S. dollars) Three-month periods ended May 31, May 31, 2026 2025 $ $ Cash flows from Operating activities Net income (loss) for the period(9,502)77,154 Less: results from discontinued operations- (59,379)Net Income (loss) for the period for continued operations(9,502)17,775 Adjustments to reconcile net loss to cash provided by operating activities10,121 (17,173)Changes in non-cash working capital items(19,024)(160,620)Cash provided (used) by operating activities from continued operations(18,405)(160,018) Investing activities Short-term investments(1,012)(32)Additions to property, plant and equipment(665)(1,953)Additions to intangible assets(127)- Proceeds on disposal of property, plant and equipment25 953 Net change in other assets3 35 Cash provided (used) by investing activities from continued operations (excluding proceeds on disposal of France assets)(1,776)(997)Proceeds on disposal of France assets- 183,143 Cash provided (used) by investing activities from continued operations(1,776)182,146 Financing activities Increase in long-term debt- 1,064 Repayment of long-term debt(3,495)(871)Repayment of long-term lease liabilities(420)(399)Cash provided (used) by financing activities from continued operations(3,915)(206) Effect of exchange rate differences on cash (418)1,498 Net change in cash during the period from continued operations(24,514)23,420 Net change in cash during the period from discontinued operations- 9,525 Net change in cash during the period(24,514)32,945 Net cash – Beginning of the period41,492 32,364 Net cash – End of the period16,978 55,784 Net cash is composed of: Cash and cash equivalents34,565 59,102 Bank indebtedness(17,587)(3,318) Net cash – End of the period16,978 55,784 Supplementary information Interest paid(379)(239)Income taxes paid(1,199)(1,427)

Velan Inc.

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