Greetings, and welcome to the Velan Inc. Q3 financial results conference call. During the presentation, all participants will be in a listen-only mode. Later, we will conduct a Q&A session. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach the operator, please press star zero. As a reminder, the conference is being recorded Thursday, January 14th, 2021. I would now like to turn the conference over to Yves Leduc, CEO. Please go ahead.
Welcome everybody to our third quarter fiscal year 2021 conference call. I'm joined today by Réjean Ostiguy, our CFO, and John Ball, our Executive Vice President, Global Finance. This is Réjean's last quarterly call. As you read last week, he has decided to leave the company for reasons that are entirely personal that I will not comment on this call. The only thing I will say is that I'm very sorry to see Réjean go. He's been with us a little short of 18 months but has accomplished a lot in this short period, contributing greatly to the V20 deployment, both in terms of ensuring we were on track financially as well as deploying the new financial systems as part of the modernization of the company, that important fifth lever of the V20 plan that I often allude to.
Réjean's a team player, and the operative teams regret he's leaving as well. The good news is that John Ball, soon to be interim CFO once Réjean leaves in a few days, is still with us. He's been our excellent CFO for over 15 years, and no one will be worried about our finance operations during the time we recruit Réjean's replacement. I'm very grateful to John for accepting to step back up again. Thank you, John, and thank you, Réjean, for what you've done, and above all, good luck and best of fortune in your new endeavors. I will start with a brief summary of our results, followed by a more detailed discussion of our outlook. We'll then open the line to your questions.
Before I start, let me mention that it has been a year like no other, where our employees celebrated Velan's 70th anniversary by rising to extraordinary challenges. We had to learn how to drive bookings, run manufacturing operations, and carry out our transformation plan while coping with a devastating global pandemic. No book was ever written on this, but the speedy and decisive deployment of safety protocols across all our global sites was nothing short of exemplary. The fiscal year is not over yet. We've still important challenges ahead of us, but all things considered, there are several reasons to be impressed by our achievements to date. More on these during the conference call. Let's begin with our results. Net earnings and gross profit percentage.
Net earnings amounted to CAD 9.5 million, or CAD 0.44 per share, compared to a net loss of CAD 0.8 million, or CAD 0.04 per share last year. The increase in net earnings is primarily attributable to a CAD 9.6 million gain recognized on the disposal of one of our Montreal plants, something I announced would happen at the last quarterly call. In Montreal, that disposal is a vital part of the North American manufacturing footprint optimization under V20. The production of the disposed plant has been transferred within our remaining North American plants as well as our Indian plant, something that we were able to do faster than the original program schedule had foreseen.
Our results were also improved by the recording of CAD 2.9 million of wage subsidies, which allowed us to avoid potentially significant layoffs that otherwise could have been necessary to blunt the findings of the pandemic. That was the goal of the Federal Program that we were able to benefit from. This increase was partially offset by CAD 1.3 million unfavorable movements in income taxes. Our gross profit percentage for the quarter increased substantially from 25.0% to 30.7%, an improvement of 570 basis points compared to the prior year. The increase in the gross profit percentage, which made up for the lower sales volume, was primarily attributable to the delivery of a product mix with a greater proportion of higher margin product sales and from margin improvements resulting from the overhead savings brought by our Restructuring and Transformation Plan.
The increase is also attributable to the reversal of a CAD 1.6 million warranty provision due to a customer's withdrawal of his claim and the recording of CAD 1.5 million of wage subsidies. Order bookings, backlog, and sales. Bookings increased by CAD 7.4 million, or 72.4%, compared to last year's third quarter. The increase is primarily attributable to the recording of many breakthrough orders, one, thanks to our strong market position in geographies where the economy remained relatively healthy last year, namely in China and Southeast Asia. For example, our Italian operations achieved a record high of CAD 48.9 million net new orders destined to the downstream oil and gas industry, while our French operations recorded CAD 48.6 million of bookings for the quarter, primarily destined for the nuclear market.
With respect to our Italian operations that are centered in the upstream and midstream oil markets, the bookings performance in the fall is all the more impressive when we remember that the oil price was below CAD 0 in April. As additional comment, the increase in bookings in the quarter was achieved despite another soft quarter in terms of MRO orders recorded in our North American operations. As a result, our book-to-bill ratio was a strong 2.34, bookings thereby outpacing billings. That brought the company at the end of the period a backlog of CAD 561.8 million. That's an increase of CAD 155 million or 38.1% since the beginning of the current fiscal year. This is the highest we've disclosed since November 2012. Sales amounted to CAD 71.6 million, a disappointing decrease of CAD 17.1 million or 19.3% from the prior year.
Sales were again negatively impacted by the reduction of non-project orders recorded by North American operations due to the unfavorable market conditions triggered by the COVID-19 pandemic, as well as the drop in the oil price, which affect our distribution channel. Shipments decrease are also attributable to continued supply chain issues created by the COVID-19 pandemic, as well as inefficiencies experienced in reconfiguring the Canadian plants under the V20 program that caused production delays. This decrease in sales was partially offset by increased shipments in our Italian operations, thanks to the delivery of previously delayed orders. Speaking now of our financial position, we continue to have a very healthy balance sheet, highlighted by net cash balance of CAD 73 million at the end of the quarter.
This CAD 42 million, or 135.5% increase since the beginning of the fiscal year, is attributable in part to the net proceeds obtained through the sale of our Plant 2/7 in Montreal, six months earlier than originally scheduled, along with the new financing we finalized over the course of the fiscal year and positive non-cash working movement capitals, particularly in accounts receivable. The net cash per share at the end of the quarter was $3.38 or CAD 4.39. Our equity at the end of the quarter settled at CAD 298.4 million or CAD 13.82 per share . Our equity per share was CAD 17.92 as at November 30, 2020, compared to our TSX share price at the close of business day on that day of CAD 6.06, indicating that our share price continues to be undervalued, and that, of course, is an understatement.
Let me now turn to the story behind the numbers, starting with, of course, COVID-19. The pandemic has forced the business world to quickly adapt to a completely new, extremely challenging environment. Here is how Velan has reacted, but as a reminder, our footprint almost matches perfectly the itinerary of the early virus outbreak with plants in China, Korea, North ern Italy, France, India, the U.S., and Canada, as well as in Portugal and Taiwan, where we had to react very fast, probably earlier than most companies. We're a supplier of critical equipment to essential industries, so in that sense, we're spared the most devastating impact of the crisis, but we could not avoid the consequences of the lockdown in our Indian supply chain that has affected, for a good part of the year, the production flow in many of our plants.
Velan was very quick in implementing sanitary measures, social distancing, health surveys, protocols in case of outbreaks, et cetera. So far, our record at maintaining a safe work environment as possible is something I'm very proud of. No plant closure as a result of infections contracted at work. Meanwhile, we're seeing how safeguards can be raised even further as we need to remain extremely vigilant now that we're deep into a second wave of resurgence of COVID-19 almost everywhere in the world. Now, make no mistake, no matter how good we are in deploying safety protocols, no company escapes the impact of the pandemic. For example, quarantines happen as precautionary measures in cases where employees report having been in contact with infected people at home or outside work.
The question is how good one can be at constantly mitigating the impact of the crisis, and one area where we've been particularly effective is managing our costs. We found ways to pursue the deployment of our V20 agenda with far reduced expenses and resources, and if you remember, even deployed a temporary salary reduction program for a few months. On that point, note that based on our strong bookings performance and our success in eliminating structural costs and improving margins under our V20 plan, we decided to restore the salaries on December 1st. The business situation is very similar to what I reported at the last quarterly conference call. The main headlines remain the same. Let me remind you of them by underlining the most recent developments occurring in the quarter against each of those highlights.
Highlight number one, great progress in deploying the V20 plan, which we've accelerated with fewer resources than planned. Here, a notable development here is that the results in the quarter were helped by the sale of Plant 2/7 in Montreal, six months earlier than originally planned. I add that we got a very good price for the sale. Second highlight, business health sprang forward this year as we're realizing the benefits of our V20 plan in a very impressive way. That's evidenced by a substantial reduction in production overhead and even more encouraging in the impressive increase in project manufacturing margins. I said last year to explain why we were seeing a reduction in project bookings, if you remember, which we anticipated to be a temporary factor.
We've actually become a lot more selective in project bidding, and our sales and quotation teams carefully apply a new pricing discipline, which is helping our margins. As a result of this more disciplined approach, you will see our margin fueled by a much better mix in our project manufacturing business. It's now a trend, as we're seeing the margins getting better every month. A reminder that the improvement of our margins of our North American operations was one of the key goals of V20, and I can confirm today that that goal is being met. Highlight number three, a surge in bookings. Q3's performance is standing out as one of the best bookings quarters in Velan's recent history, owing in part, again, to our more focused approach to market that was put in place as part of our V20 strategy.
In that regard, every single subsidiary has contributed to a truly remarkable year in bookings in North America, Europe, or Asia. It's true that the global recession has hit our MRO business the hardest, deeply affecting our non-project orders. Our four other strategic businesses are thriving, having grown our backlog by 40% to its highest level in over eight years, with many breakthrough orders, one, thanks to our strong market position in Europe, Middle East, India, Southeast Asia, and China, in the nuclear, petrochemical, and oil production sectors. One element of V20 that remains to be successfully completed is the shift in our manufacturing model towards achieving leaner and more agile operations in North America. That's an ongoing initiative, and we're not there yet.
The shift requiring new processes and adapted capabilities, along with COVID-driven disruptions, the move of machinery, the accelerated closure of Plant 2/7, all of this combined in causing production delays in our North American plant. This is going to be a key area of focus in the months to come. To conclude, there's going to be a strong short-term focus in the next months as the uncertainty caused by indefinite global economic crisis persists. As I just said, we need to address our production challenges. On the other hand, we are armed in North America. On the other hand, we are armed with a near record backlog and growing margins. We have gained a lot of headroom and are now turning a lot more attention on our growth strategy.
As I keep reminding our employees, we should aim to get out of the storm stronger than before it hit the world economy. Thanks to their unrelenting efforts, that goal is certainly within range. To all of them, I say hats off. I'm proud of all of you, and as you all contributed to elevating an otherwise memorable 70th anniversary to an outstanding year on many fronts. Thank you. We're now ready for your questions.
Thank you. If you would like to register a question or comment, please press the one followed by the four on your telephone. One moment for the first question. Once it ends via the phone lines, you may press one four to register a question or comment. The first question comes from Dean Trottier, a private investor. Please go ahead, sir.
Hey, thanks for taking my question. It's pretty simple. Just looking for a little bit of an update on any additional working capital required to execute the backlog over the next 12 months, or is kind of where we're at here from a working capital standpoint what we should expect going forward?
That's a good question. Réjean, why don't you take it?
Yes. As you can see, the amount of inventory has increased since the last quarter. This increase reflects the fact that we have a higher backlog. We anticipate, again, a small increase in terms of inventory that will be offset by additional accounts payable. Of course, the shipment in Q4 will be good, so we also forecast an increase in our accounts receivable. I hope this answer your question.
Yeah, that's good. Thank you.
The other point I would add is that we did a refinancing that closed last summer, and it was written up in our Q2 results. That gave us extra capacity. We did it with both BMO and BDC. To have that extra borrowing capacity planned.
Okay, that's great. The only other question, excuse me, is you had mentioned sort of the last bit of the V20 plan, the focus on kind of a leaner operation, maybe a quicker, more dynamic manufacturing. Are you expecting any significant restructuring charges related to that, or have we kind of seen most of the restructuring charges?
Most restructuring charges have been incurred already, now we're staffed to handle the backlog that grew last year. There might be minor tweaks to what I just said, overall, the work is behind us in terms of restructuring charges.
Okay, thank you. Congratulations to the team for the sale of the Montreal plant and executing the V20 plan in what's been a pretty chaotic year. Congrats to you guys.
That's an understatement, and I really appreciate your comment. Yeah.
Thank you. As a reminder, one, four to register a question or comment.
Hello? Yep.
We show no further questions at this time.
Okay. The one last thing I want to say is that the company is evolving, and we were blessed to have hired a new leader of the Global Operations and Supply Chain, Paul Poirier, who started in the second week of the fourth quarter. We're well-equipped going into the fourth quarter and anticipating a very busy fiscal 2022. I look forward to our report in May for the Q4 results of fiscal 2021. Meanwhile, I want to thank you for your attention this morning.
This does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines. Thank you and have a good day.