Velan (VLN) Q2 2026 earnings summary

Executive summary

• Q2 FY2026 sales were $67.6 million, down 13% year-over-year, with adjusted EBITDA of $3.4 million and operating income of $0.4 million, impacted by $12 million in rescheduled deliveries and tariff-related delays.

• Backlog increased 4% since the start of the year to $285.8 million, with 88.3% deliverable within 12 months.

• Significant progress in nuclear and clean energy sectors, including a $15 million Ontario reactor valve contract and first SMR deployment at Darlington.

• First order delivered from new Saudi Arabia plant, supporting expansion in the Middle East oilfield valve market.

• Major transactions included the sale of French subsidiaries and settlement of asbestos-related liabilities, strengthening the balance sheet.

Financial highlights

• Q2 sales declined 13% year-over-year to $67.6 million; excluding a $5.2 million non-recurring item last year, the decrease was 6.7%.

• Gross profit for Q2 was $15.7 million (23.2% margin), down from $20 million (25.7%) last year, mainly due to lower volume, less favorable mix, and tariffs.

• Adjusted EBITDA was $3.4 million, down from $6.7 million last year; adjusted net loss was $1.2 million, compared to adjusted net income of $2.8 million a year ago.

• Six-month sales were $139.8 million, up 0.9% year-over-year; gross profit was $36.3 million (26.0% margin).

• Cash used in operations was $16 million, compared to $4.7 million generated last year, due to lower profitability and higher working capital needs.

Outlook and guidance

• Backlog and order intake remain strong, with significant contracts in nuclear, defense, and oil & gas expected to drive future growth.

• 88.3% of the $285.8 million backlog is expected to be delivered within 12 months.

• Management confident in sustaining backlog growth and capitalizing on nuclear and clean energy opportunities.

• Tariff and supply chain disruptions expected to be managed through customer negotiations and pricing adjustments.

• Strong liquidity position with $96 million available for expansion and investment.