Laval, Québec, Canada – August 11, 2021 - Savaria Corporation (“Savaria”) (TSX: SIS), a global leader in the accessibility industry, is pleased to announce its results for the second quarter ended June 30, 2021.
Highlights - Q2 2021 vs Q2 2020
- Revenue was $178.6M, up $94M or 111%, mainly due to the acquisition of Handicare;
- Gross profit was $65.2M, up $36M or 122.9%, representing 36.5% of revenue compared to 34.6% in Q2 2020;
- Adjusted EBITDA was $27.4M, up $12.9M or 89.3%;
- Adjusted EBITDA margin stood at 15.3%, compared to 17.1% in Q2 2020;
- Net earnings were $6.6M or $0.10 per share on a diluted basis. Adjusted net earnings were $9.5M or $0.15 per share on a diluted basis, up $3.2M or 51.7%;
- Funds available in excess of $125 million to support working capital, investments and growth opportunities;
- Savaria now holds 100% of the shares of Handicare.
A Word from the President
“The second quarter was important for Savaria as it benefited from the first full quarter of Handicare. I feel enthusiastic about the progress of our integration efforts. Revenue met our expectations at $179 million, with a gross profit margin of 36.5%, exceeding the gross profit margin of 34.6% excluding Handicare in the same period last year. Our combined adjusted EBITDA was $27.4 million, or a margin of 15.3%. The accessibility segment – representing 85% of total adjusted EBITDA and 73% of total revenue – reached an adjusted EBITDA margin of 17.9%. We have in excess of $125 million in funds available to invest in a marketing push for cross-selling opportunities, to expand into new markets, to purchase new equipment to accelerate robotics in our production and to make strategic tuck-in acquisitions.
“Of note, legacy Savaria in the accessibility segment benefited from 12% of organic growth over the same period in 2020. Our strong product portfolio now reaches over 40 countries, serving over 1.7 billion people with a growing need for mobility products. The aging population requires access to another floor in their home or public buildings and we manufacture the products that fill these needs, with more distribution points than ever before.
“The VP Sales at Handicare, Clare Brophy, shares the excitement of the whole team regarding the significant cross-selling opportunities and the momentum of our collaborative teams in all markets to grow the business.
“With these latest results, and our early indicators of the successful integration efforts with Handicare, I remain confident in our ability to achieve in excess of $100 million of Adjusted EBITDA for 2021.
“We continue to follow COVID-19 prevention protocols, including ongoing on-site testing in our Brampton manufacturing plant. While we have experienced some disruptions to our business, including increased material costs, labour shortages and delays in both supply shipments and construction activities, we have preserved and maintained our backlog in our accessibility segment. Our employees have been steadfast in their dedication to safety, and I thank them for their hard work,” concluded Mr. Bourassa.
Second Quarter Results
Revenue reached $178.6M, up $94M or 111%, compared to Q2 2020. The growth is mainly due to the acquisition of Handicare. Organic revenue growth is a consequence of the recovery from the economic slowdown caused by the global pandemic impacting the entirety of Q2 2020. The growth was partially offset by a negative foreign exchange impact.
- Accessibility segment (73% of Q2-21 revenue): Revenue was $130.8M, an increase of $70.5M or 117.2%, compared to Q2 2020. Acquisition growth stood at 109.6% and organic revenue growth stood at 12.4%;
- Patient Handling segment (20% of Q2-21 revenue): Revenue was $36.1M, an increase of $14.8M or 69.7%, compared to Q2 2020. Acquisition growth stood at 77.3% and organic revenue growth stood at 0.1%;
- Adapted Vehicles segment (7% of Q2-21 revenue): Revenue was $11.7M in Q2 2021, an increase of $8.6M or 270.7%, compared to Q2 2020.
Total Q2 2021 adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at $29.3M and 16.4%, respectively, compared to $15M and 17.7% for Q2 2020. The Corporation’s Accessibility, Patient Handling and Adapted Vehicles segments had variations in adjusted EBITDA margin versus prior year due to the Handicare acquisition and cost containment efforts, partially offset by a reduction in the COVID-19 employment retention government of Canada subsidy. Across all segments, overall dollar results are increased due to the acquisition of Handicare.
- Accessibility segment: Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at $23.4M and 17.9%, respectively, compared to $12.3M and 20.4% for Q2 2020.
- Patient Handling segment: Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at $4.7M and 12.9%, respectively, compared to $2.8M and 13% for Q2 2020.
Adapted Vehicles segment: Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at $1.3M and 11.2%, respectively, compared to negligible amounts for Q2 2020.
Net Earnings and Adjusted Net Earnings
Net earnings were $6.6M or $0.10 per share on a diluted basis, compared to $6.1M or $0.12 per share for the same period in 2020.
Adjusted net earnings stood at $9.5M, or $0.15 per share, compared to $6.3M or $0.12 per share in Q2 2020. The increase was due to the acquisition of Handicare.
For the six-month period ended June 30, 2021, the Corporation generated revenue of $290.7M, up $117.6M or 67.9%, compared to the same period in 2020. The growth is largely due to the acquisition of Handicare. Organic revenue growth is a consequence of the recovery from the economic slowdown caused by the global pandemic impacting all of Q2 2020. The growth was partially offset by a negative foreign exchange impact.
For the six-month period ended June 30, 2021, adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at $47.6M and 16.4%, respectively, compared to $27.8M and 16.1% for the same period ended June 30, 2020.
Net Earnings and Adjusted Net Earnings
For the six-month period ended June 30, 2021, the Corporation’s net earnings stood at $12.2M, or $0.20 per share on a diluted basis, compared to $11.6M, or $0.23 per share for the same period in 2020. The Corporation’s adjusted net earnings stood at $17.4M, or $0.29 per share, compared to $13.4M or $0.26 per share, respectively, compared to the same period in 2020.
Liquidity and Capital Resources
Savaria generated $42,3M of cash from operations which was primarily used to reduce debt, invest in capital projects and pay dividends. This amount includes a consideration payable of $19.7M related to the acquisition of Handicare.
As at June 30, 2021, the Corporation had a net interest-bearing debt position of $279.1M.
The uncertainty around the future impact of the ongoing global pandemic makes it difficult to predict future performance, however, considering its financial performance year-to-date, coupled with current backlog levels, and the Corporation’s confidence in the strategic integration plan with Handicare which is underway, Savaria remains optimistic it will achieve its previously stated goal of generating an Adjusted EBITDA in excess of $100M(1) during fiscal 2021.
(1) See section 14 “Outlook” of Q2 Management Discussion & Analysis for detail on the assumptions supporting this amount.
About Savaria Corporation
Savaria Corporation (savaria.com) is a global leader in the accessibility industry. It provides accessibility solutions for the physically challenged to increase their comfort, their mobility and their independence. Its product line is one of the most comprehensive on the market. Savaria designs, manufactures, distributes and installs accessibility equipment, such as stairlifts for straight and curved stairs, vertical and inclined wheelchair lifts and elevators for home and commercial use. It also manufactures and markets a comprehensive selection of pressure management products for the medical market, medical beds for the long-term care market, as well as an extensive line of medical equipment and solutions for the safe handling of patients, including ceiling lifts and slings. In addition, Savaria converts and adapts vehicles for personal and commercial uses. The Corporation operates a sales network of dealers worldwide and direct sales offices in North America, Europe (UK, Netherlands, Switzerland, Italy, Germany, Poland and Czech Republic), Australia and China. Savaria employs approximately 2300 people globally and its plants are located across Canada, the United States, Europe and China.
Compliance with International Financial Reporting Standards (“IFRS”)
The information appearing in this press release has been prepared in accordance with IFRS. However, Savaria uses EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA per share, adjusted net earnings and adjusted net earnings per share for analysis purposes to measure its financial performance. These measures have no standardized definitions in accordance with IFRS and are therefore regarded as non-IFRS measures. These measures may therefore not be comparable to similar measures reported by other companies. Additional details for these non-IFRS measures can be found in Savaria’s MD&A, which is posted on Savaria’s website at savaria.com, and filed with SEDAR at sedar.com. Reconciliation between net earnings and adjusted net earnings, adjusted EBITDA and adjusted EBITDA per share is presented in the section below.
This press release includes certain statements that are “forward-looking statements” within the meaning of the securities laws of Canada. Any statement in this press release that is not a statement of historical fact may be deemed to be a forward-looking statement. When used in this press release, the words “believe”, “could”, “should”, “intend”, “expect”, “estimate”, “assume” and other similar expressions are generally intended to identify forward-looking statements. It is important to know that the forward-looking statements in this document describe the Corporation’s expectations as at the date hereof, which are not guarantees of future performance of Savaria or its industry,and involve known and unknown risks and uncertainties that may cause Savaria’s or the industry’s outlook, actual results or performance to be materially different from any future results or performance expressed or implied by such statements. The Corporation’s actual results could be materially different from its expectations if known or unknown risks affect its business, or if its estimates or assumptions turn out to be inaccurate.
A change affecting an assumption can also have an impact on other interrelated assumptions, which could increase or diminish the effect of the change. As a result, the Corporation cannot guarantee that any forward-looking statement will materialize and, accordingly, the reader is cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements do not take into account the effect that transactions or special items announced or occurring after the statements are made may have on the Corporation’s business. For example, they do not include the effect of sales of assets, monetizations, mergers, acquisitions, other business combinations or transactions, asset write-downs or other charges announced or occurring after forward-looking statements are made.
Unless otherwise required by applicable securities laws, Savaria disclaims any intention or obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing risks and uncertainties include the risks set forth under “Risks and Uncertainties” in Savaria’s latest Annual MD&A as well as other risks detailed from time to time in reports filed by Savaria with securities regulators in Canada.
Results Webcast and conference call on August 12, 2021, at 8:30 a.m. (ET)
Savaria will host a conference call on Thursday, August 12, 2021 at 8:30 a.m. Eastern Time with financial analysts to discuss results of the quarter ended June 30, 2021. Investors and members of the media are invited to participate on a listen-only basis.
Conference call access:
Local Dial-in Numbers: (647) 792-1241 or (514) 669-6115
North American Toll Free Number: 1 (866) 248-8441
A link to the replay of the webcast will be available on the Corporation’s website at savaria.com
For further information:
Stephen Reitknecht, CPA, CA
Nicolas Rimbert, CFA