Velan Inc.

Good morning ladies and gentlemen and welcome to the VLAN Inc. Q4 Financial Results Conference Call. At this time, all lines in a listen-only mode. Following the presentation, we'll conduct a question and answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator. This call is being recorded on Friday, May 15, 2026. I would now like to turn the conference over to Rishi Sharma. CFO, please go ahead.

Thank you, operator. Good morning. Bonjour. Thank you for joining us for our conference call. Let's start by discussing the disclaimer from our related IR presentation, which is available on our website in the investor relations section. As usual, the first paragraph mentions that the presentation provides analysis of our consolidated results for the fourth quarter and fiscal year ended February 28, 2026. The Board of Directors approved these results yesterday, May 14, 2025. The second paragraph refers to non-IFRS and supplementary financial measures, which are defined and reconciled at the end of the presentation. The last paragraph addresses 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, unless indicated otherwise, all amounts are expressed in U.S. dollars and all financial metrics discussed are from continuing operations. I now turn the call over to Jim Mannebach, Chairman of the Board and CEO of VELAN.

Thank you, Rishi. Good morning, afternoon, and evening, everyone. Please turn to slide four. VELAN delivered sound financial results in fiscal 2020 statistics. Despite a very challenging environment marked by continued volatility in tariffs, and more recently the ongoing conflict in the Middle East negatively affecting our order intake, delivery, supply chain and resulting profitability. Annual sales nonetheless improved year over year to $296.4 million supported by the global reach of our sales network, our manufacturing operations and our brand equity while gross profit margin fell steady at 27.4%. Meanwhile, Our order backlog grew 3.1% to $283.3 million at year end, with just over 76% deliverable over the next 12 months. As anticipated, our backlog is progressively evolving toward a structure that reflects a growing share of long-term contracts, particularly in the nuclear and defense sectors. We also concluded the year with a very strong cash position of more than $53 million at year end. and only $18 million in long-term debt. fiscal 2026 was also busy in terms of conditions to create shareholder value. We began the year by closing the sale of our two front subsidiaries and completed the divestiture of our asbestos-related liabilities, resulting in greater focus of the company's operation and assurance of its future. Moreover, Velan not only removed potential obstacles for pursuing strategic opportunities, but also unlocked significant value, which we partially returned to the shareholders through a special dividend declared earlier in the year. In January 2026, we also announced Velan Holdings' intent to sell its controlling interest in the company to a Canadian private equity firm, Birch Hill Equity Partners Management. The proposed sale requires secure and remaining approvals from certain Regulatory Authorities. Berkshire has a proven track record of partnering with Canadian industrial leaders and accelerating their journey to new heights. Berkshire's business experience and deep access to capital will enable the land to execute its growth strategy and quicken value creation. We're excited about the prospects of building a new chapter in the company's history, especially since we are well-positioned to build our leadership position across a diversified range of industrial markets. Let's examine a few of these strategic markets, beginning with the nuclear sector on slide 5. Nuclear power remains a key growth driver for the land due to the mining pressure of the electric bridge and an increasing demand for new, reliable clean energy sources. Behind 55 years of experience in the nuclear industry, we are among the leading valve suppliers for all reactive technologies. We boast a substantial installed footprint worldwide, and unsurpassed technical expertise in the nuclear field. Early in fiscal 2026, we signed a preferred vendor agreement with Energy Realis, steward of the CanDo nuclear technology. For this agreement, Velan will help accelerate refurbishments and new builds of CanDo reactors in Canada and around the world. During the year, we also secure an important valve order for more than $20 million from Ontario Power Generation for reactors being restored at Pickering Nuclear Generation Station. This contract win confirms our leading position in the Canadian liquid market. The first event is scheduled for January 2027, with subsequent deliveries to be completed by the end of January 2028. In addition, a key infrastructure project in Canada, under which we secured a main services agreement with GEV Hitachi related to the deployment of small modular reactors at OPT Starland's site has been fast-tracked by the federal government. The main objective of the government program is to significantly reduce approval time for projects of national interest. This bodes well for the plan and the deployment of the first SMR. While contract wins contribute to building our order backlog. It'll take time before converting several of them into meaningful revenue due to the size and scope and complexity of the projects in question. But in the meantime, we're securing service contracts related to refurbishment of existing reactors around the world. Turning to defense on slide six, the land is firmly entrenched as a leading valve supplier of choice for nuclear propulsion surface and subsurface vessels. Several NATO naval forces around the world rely on our innovations and customized solutions to help those who stand the intense demands of harsh marine environments. Why those heightened geopolitical tensions worldwide? We expect defense spending to rise in the coming years as countries seek to safeguard their sovereignty. Similarly, The oil and gas sector has been volatile, crude oil prices increasing sharply in recent months amid ongoing tensions in the Middle East. While the land remains balanced regarding geopolitical disputes, we believe meaningful investment will be required in the near term and the median term to restart idle projects and restore damaged refining and pipeline infrastructure. We stand to benefit from these investments We also expect a steady order flow from North American refineries where we serve a significant share of the market with highly reliable engineered panels. In traditional power generation, the land has long been a leading provider of high-pressure, high-temperature isolation plants for power plants. We remain committed around the world supporting both aftermarket needs for existing plants and Uphill Projects. In North America and in Asia, we are expanding our sales team to better serve this market while working on new product introductions and innovations that will expand further our offering later in this fiscal year. Turning that to the summer side on page seven. We're satisfied with our overall performance in 2026, considering the high intentions and the world, and the disruption caused by trade issues. The line is also well positioned to build on its leadership position in key industrial markets during the incoming year. Our backlog is solid, and despite the current global uncertainty, we expect to deliver improved operating performance in fiscal 2027, supported by sharp focus and cost discipline. Finally, The transaction with Birch Hill is advancing as planned, and we expect improvements to be seen. Birch Hill has communicated a long-term investment with us and are fully prepared to supply the necessary support to deliver sustained growth. Based on this vision, one we share, I believe the cultural fit will be seamless with the plan team, and the company will markedly progress its objectives, generating long-lasting value for Chiril. We should have turned it all over to you for this announcement.