Laval, Québec, Canada – August 10, 2022- Savaria Corporation (“Savaria”) (TSX: SIS), a global leader in the accessibility industry, is pleased to announce its results for the second quarter of fiscal 2022.
Highlights – Q2 2022 compared to Q2 2021
- Revenue for the quarter was $192.1M, up $13.4M or 7.5%, mainly due to organic growth in the Accessibility and Patient Care segments.
- Gross profit was $65.6M, up $5.7M or 9.5%, representing 34.1% of revenue compared to 33.5% in Q2 2021.
- Operating income was $17.7M, up $8.8M or 99.0%, representing 9.2% of revenue compared to 5.0% in Q2 2021.
- Adjusted EBITDA was $31.5M, up $4.1M or 14.9%, compared to Q2 2021.
- Adjusted EBITDA margin stood at 16.4%, up 1.1% compared to 15.3% in Q2 2021.
- Net earnings for the quarter were $8.1M, or $0.13, per share on a diluted basis, compared to $2.0M or $0.03 per share on a diluted basis in Q2 2021.
- Funds available of $118.4M, as of June 30, 2022, to support working capital, investments and growth opportunities.
A Word from the President
“The end of our second quarter marks 16 months since the acquisition of Handicare in March 2021. I am proud to say that the collaboration of our worldwide teams has yielded effective strategies to increase revenue and gain synergies for our profitability,” said Marcel Bourassa, President and Chief Executive Officer of Savaria.
“I am happy to report revenue for this quarter of $192.1 million and gross profit of $65.6 million, representing a gross margin of 34.1%. The increase in revenue over last year of 7.5% is attributed to strong demand for our products combined with the effects of price increases made earlier in 2022. Our adjusted EBITDA reached $31.5 million compared to $27.4 million in the same period last year, representing an increase of 14.9%. Adjusted EBITDA margin finished at 16.4% reaching the top of our expected range. These results were realized in spite of inflationary pressures on our shipping costs, materials, fuel and labour. Further to that, our revenue and adjusted EBITDA would have hit even more impressive heights if it had not been for the negative impacts of foreign exchange.
“As a prime strategy to increase capacity, our new factory in Mexico is on track to open in September 2022. The 95,000 square foot facility will serve our U.S.-based customers with faster lead times. In our Brampton factory, we are now able to fully fabricate the rail for the Freecurve stairlift, eliminating the need to ship this product from one of our European facilities. This provides us with improved lead times and reduced shipping costs. To combat parts shortages, we continue to invest in increased parts inventory evident on our balance sheet and supporting our strong backlog of elevator products in North America.
“With our proactive measures in place and our healthy bookings, I remain optimistic about the second half of the year and our ability to meet our projections made in February 2022. I wish to thank our worldwide team of employees who continue to deliver great progression for Savaria,” concluded Mr. Bourassa.
Second Quarter Results
Revenue reached $192.1M, up $13.4M or 7.5%, compared to Q2 2021. The growth was mainly due to strong organic growth of 9.7%.
- Accessibility segment (71% of Q2-22 revenue): Revenue was $136.0M, an increase of $5.2M or 4.0%, compared to Q2 2021. Organic revenue growth stood at 6.8%.
- Patient Care segment (23% of Q2-22 revenue): Revenue was $43.9M, an increase of $7.8M or 21.5%, compared to Q2 2021. Organic revenue growth stood at 20.2%.
- Adapted Vehicles segment (6% of Q2-22 revenue): Revenue was $12.2M, an increase of $0.5M or 4.0%, compared to Q2 2021. Organic revenue growth stood at 10.1%.
Q2 2022 adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at $33.2M and 17.3%, respectively, compared to $29.3M and 16.4% for Q2 2021.
- Accessibility segment: Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at $25.9M and 19.1%, respectively, compared to $23.4M and 17.9% for Q2 2021.
- Patient Care segment: Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at $6.7M and 15.3%, respectively, compared to $4.7M and 12.9% for Q2 2021.
- Adapted Vehicles segment: Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at $0.6M and 5.0%, respectively, compared to $1.3M and 11.2% for Q2 2021.
Net Earnings and Adjusted Net Earnings
Net earnings for the quarter were $8.1M or $0.13 per share on a diluted basis, compared to $2.0M or $0.03 per share for the same period in 2021.
Adjusted net earnings stood at $8.9M, or $0.14 per share, compared to $5.2M or $0.08 per share in Q2 2021.
The Corporation generated revenue of $375.6M, up $84.9M or 29.2%, compared to the same period in 2021. The growth is largely due to the acquisition of Handicare in 2021 and organic revenue growth of 10.6%. The growth was partially offset by a negative foreign exchange impact.
Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at $59.6M and 15.9%, respectively, compared to $47.6M and 16.4% for the same period in 2021.
Net Earnings and Adjusted Net Earnings
The Corporation’s net earnings stood at $13.5M or $0.21 per share on a diluted basis, compared to $5.8M or $0.10 per share for the same period in 2021. Adjusted net earnings were $15.7M or $0.24 per share on a diluted basis, compared to $11.6M or $0.20 in 2021, up 34.7% and $0.04, respectively.
Liquidity and Capital Resources
Savaria generated $27.7M of cash from operations which were primarily used to invest in capital projects, repay debt, and pay interest and dividends.
As at June 30, 2022, the Corporation had a net debt position of $380.1M.
Savaria expects to generate revenue in excess of $775M with adjusted EBITDA in the range of $120M to $130M in fiscal 2022, based on the following assumptions:
- Considering Handicare acquisition date of March 4, 2021, Handicare will be consolidated for a period of 12 months in fiscal 2022 compared to 10 months in fiscal 2021.
- Organic growth coming from the Accessibility and Patient Care segments is expected to continue due to strong demand.
- The integration and anticipated synergies of Handicare are progressing in-line with management’s plan.
- Management’s ability to continue to effectively manage supply chain challenges, including higher freight costs and availability, as well as overall inflation costs.
- This outlook excludes the financial contribution from any new acquisition.
Environmental, Social and Governance (“ESG”) Values
As a global leader within the accessibility industry, Savaria is committed to minimizing its environmental footprint and upholding the highest social and governance standards. We believe that promoting environmentally and socially responsible behaviour across our organization is key to achieving sustainable growth and long-term value creation.
As we advance an ESG strategy that will positively impact our company and the communities in which we operate, our first step is to identify the ESG risks and opportunities that are critical to our business. To that end, and with the support of external consultants, we are preparing our first materiality assessment to survey and validate the most important ESG issues prioritized by our stakeholders. The results of this assessment will help narrow our focus and our guide decision-making.
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 2,250 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 before head office costs, adjusted EBITDA margin before head office costs, adjusted net earnings, adjusted net earnings per share and net debt 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 section 3 and 6 of Savaria’s MD&A, which is posted on Savaria’s website at www.savaria.com, and filed with SEDAR at www.sedar.com. Reconciliation of adjusted net earnings and adjusted EBITDA with net earnings 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 11, 2022, at 8:30 a.m. (EDT)
Savaria will host a conference call on Thursday, August 11 at 8:30 a.m. Eastern Daylight Time with financial analysts to discuss results of the quarter and fiscal year ended June 30, 2022. Investors and members of the media are invited to participate on a listen-only basis.
Conference call access:
Canada Toll Free Number: 1 (855) 669-9657
North American Toll Free Number: 1 (877) 870-4263
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
Reconciliation of adjusted net earnings and adjusted EBITDA with net earnings is provided below. Complete financial statements and the management’s report for Q2 2022 will be available shortly on Savaria’s website and on SEDAR (www.sedar.com).