Velan Inc.

Good morning. My name is Joelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. If you would like to withdraw your question, please press star 2. Thank you. Mr. Rishi Sharma, you may begin your conference.

Thank you, operator. Good morning, and thank you for joining us on our conference call. Happy New Year to all. Bonjour, et merci d'avoir nous joint sur notre appel conférencier. Bonne année à tous. Today, in addition to our third quarter results, we will also discuss two important transactions that position Belen for sustainable long-term growth, improve our balance sheet, and unlock significant value for our shareholders, namely the divestiture of our asbestos-related liabilities and negotiations for the sale of our French subsidiaries. Given the latter, our French businesses have been reclassified as assets held for sale and discontinued operations in our financial statements. Our discussion of operating results will essentially focus on continuing operations unless otherwise specified. Let's start by discussing the disclaimer from our related investor relations presentation, which is available on our website in the investor relations section. As usual, the first section mentions that the presentation provides an analysis of our consolidated results for the third quarter ended November 30th, 2024. The Board of Directors approved these results yesterday, January 14th, 2025. The second paragraph refers to non-IFRS supplementary financial measures, which are defined and reconciled at the end of the presentation. The last paragraph refers to forward-looking information, which is subject to risks and uncertainties that are not guaranteed to occur. Forward-looking statements contained in this presentation are expressly qualified by this cautionary statement. Finally, all amounts are expressed in U.S. dollars unless indicated otherwise. I now turn the call over to Jim Anebeck, Chairman of the Board and CEO.

Thank you, Richie. Good morning, afternoon, or evening to everyone. Good to speak with you again. We have many important developments to share with you today. Not only did we report very strong third quarter results last evening, but earlier this morning we announced two important strategic initiatives. The divestiture of our asbestos related liabilities and negotiations for the sale of our front subsidiaries. We believe these initiatives will unlock significant value for our shareholders while further reducing Bland's operating financial risks as well as strengthening our balance sheet. I'll begin with the review of the quarter and then go over the strategic initiatives. Let's turn to slide four for a general overview of the third quarter. As expected, the land maintained its growth momentum with strong top-line and bottom-line results in the quarter. Sales from continuing operations grew more than 18% as we executed on our solid and diversified backlog. We also delivered a significant improvement of profitability. with adjusted net income from continuing operations of $8.5 million, driven by a favorable mix, efficiency gains, and better absorption, compared to a $7 million loss a year ago. At the nine months, the land has achieved adjusted net income of $11.9 million from continuing operations. This compares to a loss of $14.7 million a year ago. We also generated significant cash flow from operations of nearly $20 million after nine months. Clearly, the measures implemented to improve cash flow generation, including leveraging the global scale of our business, maximizing strategic procurement, and optimizing our inventory are paying off. Cash flow will enable us to invest in key growth opportunities for the business going forward. Moving to slide five. Our order backlog reached nearly 300 million at the end of third quarter, up 5.3% since the beginning of the fiscal year, as new bookings continue to exceed shipments during that time. At quarter end, over 83% of the backlog, representing orders of some 249 million, are deliverable within the next 12 months. Bookings, meanwhile, totaled 59.1 million versus 60.1 million last year. The slight reduction mostly reflects factors impacting the timing of our orders. You might recall that we had very strong booking activity in the first half of the fiscal year. And importantly, the award of certain large projects targeted by our Italian operations had been delayed and are now expected in Q4 of this year. On the other hand, we recorded very high bookings from our MRO business in North America and oil refinery projects in Germany as we continue to expand our market penetration globally. Let's turn to the strategic initiatives on slide six. I'm very happy to announce that we've entered into an agreement with an affiliate, Global Risk Capital, a well-established long-term liability management company specializing in the acquisition and management of legacy corporate liabilities for the divestiture of our asbestos-related liabilities. To provide some background, many of you know that two of our subsidiaries, U.S. subsidies, are named as defendants in several pending litigations. Claimants are seeking to recover damages for personal injury allegedly caused by exposure to asbestos-containing products manufactured and sold in the past. The transaction will permanently remove all asbestos-related liabilities and obligations from the company and will indemnify us against all legacy liabilities. The strategic rationale for the transaction is rather straightforward. First, it de-risks the land from potential asbestos claims. Second, it allows management to focus on generating long-term profitable growth through investments in its operations free of asbestos-related distractions. Let's move to slide seven for the second initiative. We've entered exclusive negotiations with Framaton, an international leader in nuclear energy, for the sale of our French subsidiaries, Ségol and Belon France, in a transaction valued at total consideration to our company of 192.5 million euros. Now, in accordance with French law, Ségol, Belon France, and Framaton must inform and consult their employee representative bodies before a definitive agreement is entered into between the parties. When the definitive agreement has been signed, a meeting of Ballant shareholders will also be called to approve the transaction. I'm pleased to report our controlling shareholder, Ballant Holding, has already pledged its support in favor of the transaction. Strategically, we view this transaction as a win-win for all parties. If you recall, French authorities had halted a Volant merger proposal in October of 2023 due to national defense interests. As the proposed transaction will be with a strong French partner, it meets the important consideration for the French government of preserving sovereignty over their assets. As for Volant, the French government position limited our strategic options. transactions frees us from these strategic constraints and enables us to offer a more compelling value creation proposition for our shareholders upon successful completion of the two transactions blind will remain the leader in flow control solutions for clean energy and various industrial markets driven by a strong brand high-quality products, and superior market positioning. Over 75 years, we've built a solid reputation for customer, designing complex solutions for demanding applications. And we're looking forward to further expansion of our global leading market positions. Our activities will continue to benefit from robust momentum that we've all seen in the nuclear space throughout the world. while remaining firmly entrenched in other markets that prize our ability to create and provide the very best solutions to the most demanding flow control applications. As you know, we're well positioned for the multi-year nuclear power growth cycle with our proprietary valve offering for small modular reactors or SMRs, along with our global installed base of valves that exist in nuclear reactors. Well, I've been actively involved in nuclear space for more than 50 years, and we continue to get a growing momentum as reflected by recently announced exclusive agreements and other alliances. signed with the world's leading players in nuclear power, including GEH, Westinghouse, Bruce Power, and Candu, from which we expect to generate significant order and take well into the future. In other energy-related markets, such as oil, gas, and LNG, we continue to benefit from global transition trends as customers move worldwide to reach their own net-zero objectives. Here also, we have wide market prospects, a wide market penetration with a customer base spanning approximately 90 percent of North America's oil refiners and a growing presence throughout the world. Finally, the land continues to grow its position in non-energy related industries that prize our ability to excel in the most demanding of applications throughout the world. To wrap up on slide nine, the land's strong momentum continued in the third quarter, Key performance indicators keep pointing in the right direction, so we remain confident of delivering sales growth from our continuing operations for the full year, along with enhanced profitability. Longer term, our interwoven goals consist of maximizing profitable growth and rewarding our shareholders. The company continues to explore strategic options, all of which are focused on increasing shareholder value. Today's announcement will help us to achieve these goals, for our shareholders. I turn it over to you for comments on the financial outlook and progress through the quarter and the fiscal year to date.