Greetings, welcome to the Velan Inc. Q4 financial results conference call. As a reminder, this conference is being recorded Thursday, May 20th, 2021. I would now like to turn the conference over to Yves Leduc, CEO. Please go ahead. Good morning, and welcome to our fourth and last quarter conference call for fiscal year 2021. I'm joined today by John Ball, our current CFO. I say current because as you probably know, John will be succeeded on June 1st by Benoit, our new CFO. Benoit has an outstanding pedigree that was fully outlined in our recent press release. I won't expand on it. He has been with us almost three weeks now, learning our business incredibly fast and getting ready for his new role. Meanwhile, John, who agreed to step back up in his old CFO role on an interim basis when our previous CFO announced he would leave earlier this year, did an outstanding job closing the year with the team. It's almost as if he'd never ceased to be our CFO. John Ball, a sincere expression of my gratitude and the board's for stepping in this year and doing such a great job helping the company close the year and assisting in the recruiting process that led to Benoit joining the company. As of June 1st, you'll continue your course at EVP Global Finance and while Benoit steps in. Benoit, all the best. I look forward to the future with you leading our finance operation. It's going to be a very exciting ride. Let's get started. We have a lot to talk about. fiscal year 2021 will be remembered as a watershed year for Velan. Although our sales were severely impacted by the global pandemic, the company made great progress on many fronts while demonstrating its commitment to protecting its employees and customers, ensuring the integrity of our global supply chain, as well as to responsibly supporting each of the many local communities we are present. We begin with our quarterly results. Net earnings amounted to CAD 0.3 million, or CAD 0.02 per share, compared to a net loss of CAD 11.1 million or CAD 0.51 per share last year. The improvement in net earnings for the quarter was primarily due to the recording in the prior fiscal year of an CAD 8.2 million non-cash tax adjustment to derecognize a portion of unused tax losses, as well as a reduction of restructuring and transformation costs, combined with an improved gross profit percentage in the current quarter. This increase in net earnings was partially offset by a lower sales volume and an increase in administration costs. The negative impact on our net earnings of the reduced sales volume for the quarter was offset by the recording of CAD 2.4 million of non-recurring pandemic wage subsidies, namely the Canada Emergency Wage Subsidy. Our gross profit percentage for the quarter increased from 24.6%- 27.0%, an improvement of 240 basis points compared to the prior year. The increase in the gross profit percentage for the quarter was attributable to the margin improvements resulting primarily from the production overhead savings brought by our restructuring and transformation initiatives. The increase is also attributable to the recording of CAD 1.3 million of non-recurring pandemic wage subsidies. On the sales side, billings amounted to CAD 85.5 million, a decrease of CAD 28.1 million or 24.7% from the prior year. The disappointing sales performance for the quarter were caused mainly by two factors, the reduction of non-project orders recorded by North American operations, as our MRO strategic business was by far the most affected by the global pandemic as the drop in the price of oil and CapEx to maintenance spending in the oil and gas industry caused a significant decrease in our distribution channel stocking orders. Also, the second factor affecting sales was the continued supply chain and production disruption caused by both the COVID-19 pandemic and significant difficulties experienced in reconfiguring the manufacturing layout in our Canadian plants under the V20 program, causing delays and disruption in our production flow. More on this later. Now, let's move on to our year-to-date results. Net earnings amounted to CAD 2.9 million or CAD 0.13 per share compared to a net loss of CAD 16.4 million or CAD 0.76 per share last year, while EBITDA jumped from CAD 6.5 million to CAD 15.6 million. Many factors contributed to EBITDA near tripling and our net earnings for the year reenter the positive zone this year, despite significantly reduced sales. First, our gross profit percentage increased by 290 basis points from 23.7%- 26.6%. This increase in our gross profit percentage was attributable to, A, the delivery of our product mix with greater proportion of higher margin product sales. B, margin improvements resulting from the production overhead savings brought by our restructuring and transformation initiatives. C, from a more selective screening and improved pricing discipline initiated over the last two years as part of the V20 plan in North American quotation activities that led to substantially improved margins in our project business. D, favorable movements in warranty and in late delivery penalties provisions due to effective management of these matters leading to an improved outlook in these areas. E, our gross margin benefited also from the recording of non-recurring pandemic wage subsidies which offset the impact of the lower sales volume for the fiscal year, and also gross profits were improved by a reduction of administration costs as well as restructuring and transformation costs, including a CAD 1.4 million severance provision reversal. These improvements were partially offset by a lower sales volume and CAD 1.5 million of unrealized foreign exchange losses incurred over the course of the fiscal year. The second factor that helped our net earnings were the CAD 7.2 million after-tax gain recognized on the disposal of one of our Montreal plants, a vital part of our North American manufacturing footprint optimization efforts. It should be noted that the closure and sale of the plant, which was an integral part of the V20 program, was originally planned to occur in fiscal year 2022. However, faced with the uncertainty caused by the global economic crisis, we made the very important decision to pull forward the closure and sale. Financially speaking, this was a very good decision as we were able to get a good price on the property and it helped our results. On the other hand, it created additional turbulence that added to the challenge of transforming our manufacturing operations during the fall, where, as I said, we experienced significant production delays. The disposed plant's production has been transferred to within our remaining North American plants and our Indian operations. Third factor, as mentioned earlier, the improvement in net earnings was also explained by the CAD 8.2 million non-cash tax adjustment, reflecting the derecognition of a portion of unused tax losses in the prior fiscal year. These improvements were partially offset by a lower sales volume and CAD 1.5 million of unrealized foreign exchange losses incurred over the course of the fiscal year. Last but not least, a special mention has to be made about the superb performance of our European operations, French, Italian, and Portuguese, which once again delivered fantastic results despite the hurdles brought about by the pandemic. Let's talk about order bookings, backlog, and sales. Bookings amounted to CAD 426.6 million, an increase of CAD 86.2 million or 25.3% compared to last year, representing a strong book-to-bill ratio of 1.41 compared to 0.92 the previous year. We owe this increase to the great success of our French, Italian, and North American operations, who were able to win large project orders, notably in the nuclear, downstream oil and gas, and process markets. The impressive bookings growth was partially offset by a decrease in non-project orders booked in our North American operations. The end of the period with a backlog of CAD 562.5 million. That's an increase of CAD 155.7 million or 38.3% since the beginning of the fiscal year. Our backlog was positively impacted by the strengthening of the euro spot rate against the U.S. dollar over the course of the fiscal year. It increased for the period due to temporary factors such as delays in shipments created by the COVID-19 pandemic and inefficiencies experienced in the reconfiguration of the manufacturing layout of our Canadian plants under the V20 program. Sales amounted to CAD 302 million, a decrease of CAD 69.5 million or 18.7% compared to last year. As I said, they were significantly impacted by the reduction of non-project orders recorded by North American operations due to the unfavorable market conditions that were triggered by the COVID-19 global pandemic, as well as the impact of the drop in the oil price on CapEx and maintenance spending in the oil and gas industry, and obviously the sales were also negatively impacted by the temporary factors mentioned previously. If I go now to our financial position, we continue to have a very healthy balance sheet highlighted by net cash balance of CAD 63 million at the end of the quarter. This CAD 32 million or 103.2% increase since the beginning of the fiscal year is attributable in part to the net proceeds obtained through the sale of our plant in Montreal six months earlier than originally scheduled, along with the new financing we finalized over the course of the fiscal year. The net cash per share at the end of the quarter was $2.92 or CAD 3.70. Our equity at the end of the quarter settled at CAD 298.4 million or $13.82 per share. In Canadian dollars, our equity per share was CAD 17.65 as at February 28, 2021, compared to our TSX share price at the close of business on that day, which was CAD 7.80, indicating once again that our share price continues to be undervalued. In summary, we closed the year with notably improved results, delivering net profits for the first time in four years and increased our backlog by nearly 40% thanks to an outstanding bookings performance. Equally important, we succeeded in deploying our V20 transformation strategy faster than originally planned, thereby laying the base for our North American operations financial health to return. This is evidenced by the sharp reduction in our production overhead costs in North America. The dive of our sales was mitigated by Canadian federal subsidies amounting to CAD 13 million, profits from the sale of our Montreal plant, and important temporary cost reduction measures taken in North America. It's important to note that combined, these avoided the company layoffs, which would have weakened us going into this fiscal year. Instead, we expect to build on our bookings momentum, substantially improve our sales, and fully realize the benefits of our V20 plan, a major milestone that clears the path now for directing more energy and focus to our growth strategies. Speaking of growth, let me now delve into other important aspects of the company's performance last year that carry important implications and insights for our future. First, Velan led by example in health and safety. The day after the pandemic was declared, we held our first crisis committee, attended by the CEO, and maintained every week since, and established a still active COVID-19 response team. We stayed in touch with our customers and suppliers and with all our stakeholders, and I'm proud of how our employees in every site and plant have risen to the occasion, immediately adjusting work practices remotely or in our plants, quickly deploying the protocols and measures to maximize the safety and health of our employees. We concluded the year with one of our best health and safety records ever. Second, we achieved one of the highest backlogs in our history during the worst economic crisis since the Great Depression. As I reported many times last year, we're a supplier of critical equipment to essential industries, authorized to continue operations even during lockdowns, but the shock on our sales and operations was nonetheless insidious and dramatic. For example, customers delayed shipment release and the lockdown of our Indian supply chain greatly affected our plants during the fall. We estimate that at least two-thirds of the drop in sales in fiscal year 2021 were caused by the global economic crisis. Our employees' response was fantastic, and the spirit of teamwork and solidarity never more evident between Velan employees across the world. For example, forces were joined across divisions to create new designs to win orders, and alternate routes were found when breaks in global logistics interrupted the flow of material. Orders were won, thanks to the wide range of options provided by an agile and diverse global manufacturing capacity, a competitive advantage we have leveraged more than ever before. The global pandemic has hit our MRO business the hardest, deeply affecting our non-project orders as the North American market suffered greatly from the oil price depression during the spring. Our four other strategic businesses grew our backlog to its highest level in over eight years, thanks to our strong market position in the Middle East, India, Southeast Asia, and China in the nuclear, petrochemical, and oil production sectors, as well as to new product designs that are true market or innovation breakthroughs. Third, transforming the company in North America, that was a major step forward. A gradual erosion of our business competitiveness, if you remember, mainly in our North American operations, is what led our board of directors to unanimously approve the V20 plan in January 2019, a transformation strategy that aimed to better leverage our assets and strengths and to unlock significant recurring bottom-line improvements. In March 2020, when the pandemic broke out, we had barely undertaken the investment-intensive portion of the plan. After briefly considering delaying the project, the decision was made to instead accelerate the deployment of our V20 agenda, taking measures to reduce expenses and resources at the same time. In these challenging circumstances, we effectively carried out the transformation plan last year ahead of schedule, and as a result, the company has entered fiscal year 2022 with significantly reduced structural costs in our North American operations. Also, now that one of our two Montreal plants has been sold, all remaining plants, including our plant in India, have been reconfigured in line with our less vertically integrated manufacturing models, modeled based on production cells. On the other hand, the task of transforming our manufacturing model into a leaner and more agile operation in North America is not over yet. The combination of new processes, adapted capabilities along with COVID-driven disruptions, the move of machinery, the accelerated plant closure, created turbulence causing significant production delays in our North American plants. I'm disappointed, but the effort is there to get back on track as soon as possible, and this is going to be a key area of focus in the months to come. Fourthly, talk about growth prospects. They're strong, and our people, very strong. While I like to say here, there were many other achievements to report during this remarkable year. These are only just a few of them, each constituting a building block for our growth ambitions. Let me mention, for example, that following the collapse of the oil price in April, we saw a spectacular rebound of Velan ABV, our Italian operation, fueled in part by a breakthrough in its Middle East business. The certification of our plant in Suzhou, China, to produce API 6D valves for our Italian operations, which, thanks to freed-up capacity now in Lucca, Italy, are now able to meet the surging demand for its high-end products. The many breakthroughs of our French operations in the cryogenic and big science fields and with control technology, proving once again that our French friends are not just about nuclear. The successful transformation of our Indian facility into a versatile hub for our MRO products, as well as for specialized multi-turn products serving our end user and customers in India and Southeast Asia. I can go on, but let me conclude by saying it's been a year like no other. We had to learn how to make our global manufacturing operations work while coping with a devastating global health crisis and pursuing a complex transformation. As you can imagine, no book had ever been written on how to do this. It's quite a way to celebrate Velan's 70th anniversary. On a more personal note, the pandemic brought about a deep sense of loneliness that each of us must have had to grapple with so often in the last 15 months. Yet remarkable things were achieved by our employees, uniting to overcome extraordinary challenges, both personal and professional. I want to express my deepest gratitude to all our employees and their families for their courage, their perseverance, and resilience. Our progress this year would not have been possible without the work and commitment of our experienced board of directors, who remained dedicated to Velan's success throughout the most difficult moments. I want to thank our new Chairman, James Mannebach, for his great support and the wealth of business experience and wise counsel that he provided both the board and me personally. On behalf of the board and the management team, we also want to thank you, our shareholders, for your continued support and trust. We remain committed to creating long-term value for you every day as we work towards pursuing Velan's 70 years track record as one of the strongest brands in the industry. In March 2020, in my weekly video, the first of many initiated to inform our employees across the world of our navigation course through uncharted waters, I predicted that Velan would come out of the storm stronger than when it hit us. Clearly, we are stronger, although still faced with many challenges ahead of us. We are now turning a lot more attention to our growth strategy, the uncertainty of a world in flux continues to cloud the way. We like our odds and look forward to the journey. I thank you for your attention. I will now turn the conference to questions. Thank you. If you would like to register a question or comment, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. One moment please. Once again, via the phone line, you may press the one followed by the four if you'd like to register a question or comment. Our first question comes from Michael Dumais, private investor. Please go ahead. Hey, good morning, guys. Thanks for taking the question. Hello, Michael. All right. I'm relatively new to the story, so hopefully don't get sort of redundant here on questions that have been asked before, but you mentioned supply chain issues as a reason for the lower sales in the quarter. Are you largely through that at this point? Has that gotten better, or will it take several months just to get through that? I wish I could tell you we're through this, and that's going to lead me to talk about what's happening in India. As you read the news there, the pandemic is going through a terrible third wave. The main impact to our third and fourth quarter sales originated in the spring, where the Indian government declared a complete lockdown of every industry company in India. A large portion of our supply chain depends on supply of forgings and cast components. As a result, these came in late, and we had to reroute some orders in other areas of Asia. The only thing I would add is that the new manufacturing model under V20 calls for a lot more pre-machined components as opposed to a lot greater reliance on in-house machining activity that we had before. As a result of all that, some components that we had to reroute came not pre-machined, and it's not something we were planning for, as we'd already reduced our machining capacity at the time. That was a lot of turbulence, and this is the main reason why we were hit by those supply chain disruptions, all related to the pandemic, in other words. I hope I answered your question. Going forward, are we out of the woods? Well, right now, what we heard this week is the Indian government has actually ordered a lockdown of a few days starting right now, I think today or tomorrow. I don't know whether it's only going to be a few days, but we're prepared for that. We already had established alternate routes in the past. I'm expecting that we're still going to be hit by pandemic-related disruptions this year, whether in our supply chain or on the customer side of things. Okay. Yeah, that's perfect. Without providing guidance, should we expect a similar sales level? I guess on one hand, we've got a record backlog, and if you use historical comparisons, you can get a sense that revenue can run at a much higher rate, but it doesn't feel like we're there yet. Maybe it's a quarter or maybe it's two, and hopefully it's not three or four, I think for all of us here in terms of hoping for a recovery. Just to get a sense for an inflection, if there is one that we should expect. Without providing specific guidance, we're a backlog-driven company, and our backlog has reached a near record level, so you should expect sales to go up this year. Okay, perfect. Thanks, Michael Dumais. Michael Dumais. Thanks for a very strong backlog, Michael Dumais. Yeah. Just to get a better sense of the gross profit margins, you've talked about the V20, that's obviously been a contributor. I presume operating leverage is another factor here too. Just to try to get a sense for where the gross margins could shake out. Again, understanding that supply chain issues could persist for a quarter or two, and eventually, hopefully, sales come back. Just to get a sense for, again, the gross profit margin profile of this business post-restructuring. The disruption that might come out of the pandemic appears just as you just said. The reason why we launched the V20 program was largely to improve our gross margin. What's going to drive the gross margin in the right direction is three things. First of all, as I've stated in the past, one of the five things we did with V20 was reorganize our strategic businesses to be a lot more focused on their markets and a lot more disciplined in choosing where to quote and that pricing discipline allowed to improve the margin. We have a better mix now in our backlog. That's one driver. The two other ones have to do with our structure. One is by eliminating one of the four plants we had in North America, we significantly reduced the production overhead that goes into the gross margin. That reduction in production overhead obviously will impact positively the gross margin of our North American operations. By transferring the lower value small forged valves that were still being produced in Montreal to India, we're obviously improving the margin of that business because of lower cost of manufacturing in India. The combined effect of these three is very positive when it comes to the gross margin of North American operations. Additionally, when you look at what's happening elsewhere, we're seeing the surge in bookings in the Italian operations will help the gross margin there, of course, and we've always had a very healthy gross margin in our nuclear operations in France. Do you want to add anything there, John? Yeah. The one other comment I would make is the headwinds that we're facing with the recent dramatic increase in metal prices. It's been across the board, iron ore, steel, nickel, molybdenum, and so on. They've all taken a big jump since about December onwards. We've lived through this before. 10 years ago, we went through some pretty hefty price increases. To protect our margins, you have to be able to pass it on as quickly as possible. The other factor that affects our bottom line margins are the cost of shipping. With the pandemic, a lot of ships were pulled from service, and we've noticed in the last few months a tripling of the cost per container to ship. We try to pass these on the best way we can, but it's a headwind that's out there. We've done the best we can internally. We just have to make sure we deal with these economic factors. Other questions, Michael? Does that cover your- Yeah, that's a very thorough answer. No, I appreciate it. That's very thorough. Thank you both. Maybe if I could ask one last one. I mean, a pretty asset-heavy business, strong working cap. You highlighted the equity per share value. I'm curious what the thought is of maintaining a net cash balance for this company, or any thoughts about where that can be deployed over time. Well, the one thing I'll say is the cash isn't evenly spread about. Some places like North America, we are in a borrowing position. Other places, particularly some of the European subs where we have heavy projects, the business with a lot of advance payments, we do get a lot of cash advances. When you look at our balance sheet, you also have to look at the advances on the liability side. It's not as easily spendable as you might think. We do try to keep a relatively strong balance sheet, and we're keeping our money for when we really need it. We're watching our pennies, we're watching our CapEx expenditures, and there's always a lot of interesting merger and acquisition business going on in this business. We keep our eyes open and try to keep our balance sheet as strong as possible. Perfect. Thank you very much, guys. Appreciate it. Thank you, Michael. Thank you. As a reminder to be on the phone for this one forward to register any question or comments. The next question comes from Dean Trottier, private investor. Please go ahead, sir. Hey there. Good morning. Thanks for taking my questions. The first question I had was around the North American production delays, and I guess with the Montreal plant getting sold ahead of time, understanding there was some delay to it. Is there any sort of timeline on when you expect the majority of that disruption to be finished or completed? Yeah. We're planning to see a gradual recovery in the course of this fiscal year. Okay. We should still see some impact into Q1 and likely into Q2, fiscal Q1 and Q2 for 2022. Yeah. That's exactly right. Okay. My last question is looking at with the lower revenue numbers and looking at inventory, are we expecting inventory to come down a little bit from where it's at right now, or is this a level we should expect for, I guess, for the next fiscal year for 2022? Inventory is probably the key working capital asset that companies have to manage. We realize we could probably do better on inventory turns. When you have a year such as last year with a relatively low sales, cost of sales base, you throw out lower inventory turns. When you have a jumping backlog, a book-to-bill ratio of 1.41 North America, 30% increase in backlog, you tend to buy into the future business. When you're looking at your inventory at any point in time, you're measuring the turns against a lower history and a higher backlog, which is yet to percolate its way through the cost of sales. The inventory, I wouldn't call for a drop, but what I'd like to see is an increase in turnover. Okay. That's very helpful. Thanks. Thanks, Dean. That was our final question. I'll turn the call back over to you. All right. Thank you for everybody's attention, and I look forward already to our next reports in July. Meanwhile, enjoy the nice weather and have a good weekend. Thank you. Thank you. That does conclude the conference call for today. Thank you for your participation. I'll ask that you please disconnect your lines. Thank you, have a good day.