Building on its strategic growth plan and sound management, the Corporation presents its shareholders with the best quarter in its history
Laval, Quebec, August 9, 2010 – Savaria Corporation (TSX: SIS), Canada’s leader in the accessibility industry, today disclosed its results for the second quarter ended June 30, 2010.
Second-Quarter Highlights
- Sales of $16.9 million, up 27.9% over the previous quarter and up 12.2% over the sales recorded in the corresponding quarter of last year;
- In addition to achieving its best sales ever, the Corporation concurrently posts its highest operating earnings, which reach $1.4 million;
- EBITDA of $2.2 million or 10 cents per shares, an increase of 64.7% over the second quarter of 2009;
- Completion on August 3rd of the acquisition of two companies, Freedom Motors and Liberty Motor, strengthening Savaria’s presence in the conversion of vehicles for people with mobility problems;
- Completion on July 19th of the acquisition of Concord Elevator (Alberta)’s assets, a retailer specialized in the installation of elevators in the province of Alberta.
A Word from the President
“We are obviously very pleased with our performance in the second quarter of 2010, in terms of both our sales growth and our profitability. Our sales reached the $17 million mark, whereas our operating earnings rose to $1.4 million, representing 8.5% of our sales. In both cases, these are the best performances the Corporation has ever achieved,” indicated Marcel Bourassa, President and Chief Executive Officer of Savaria.
“What’s more, our solid balance sheet and the cash flows generated over the past quarter will enable us to pursue our organic growth while closing strategic acquisitions. To that effect, the recent acquisition of Freedom Motors and Liberty Motor further enhances our presence in the conversion of adapted vehicles market, while allowing us to offer our numerous customers a more comprehensive portfolio of products,” concluded Mr. Bourassa.
Operating Results
Sales
The Corporation recorded sales of $16.9 million in the second quarter of 2010, representing the best quarterly sales it has ever achieved, compared with $15.1 million in the corresponding quarter of fiscal 2009, an increase of 12.2%. Of this growth, $1.4 million or 9.1% came from the contribution of the operations of the new subsidiary Concord London. The number of units delivered by the Canadian plants in the Accessibility segment was down 7% for accessibility products during the second quarter, whereas the number was up 1% for elevators. As for the Adapted Transportation segment, second-quarter revenues remained stable.
For the first half of 2010, sales rose 14.9% from $26.3 million in 2009 to $30.2 million in 2010. Of this $3.9 million increase, $2.1 million came from the five-month contribution of the operations of the new subsidiary Concord London.
Gross Profit
Gross profit grew by $846,000 for the second quarter of 2010 over the same period of 2009. The strong sales growth and various measures, including enhanced productivity and a significant increase in purchases from the Chinese subsidiary Savaria Huizhou and other Chinese suppliers, enabled the Corporation to raise its gross margin to 29.3%, up from 27.2% in the second quarter of 2009.
For the six-month period, gross profit improved by $1.8 million for 2010 over the same period of 2009, and the gross margin rose from 26% to 28.6% during the same period.
Operating Earnings
Operating earnings improved by $294,000 for the second quarter of 2010 over the second
quarter of 2009, from $1.1 million in 2009 to $1.4 million in 2010, representing the Corporation’s highest operating earnings ever, if the sale of the Laval building in the second quarter of 2008 is excluded. The growth came to $1 million for first six months of 2010 over the first half of 2009, as operating earnings grew from $1 million to $2 million. These favourable variations are due to the increase in gross profit, offset by an increase in selling and administrative expenses stemming from the addition of the new subsidiary Concord London.
Net Earnings
Net earnings rose from $663,000 in the second quarter of 2009 to $1.3 million in the same
quarter of 2010, an increase of $591,000 primarily reflecting the favourable variation of
$294,000 in operating earnings and of $250,000 in exchange gains.
For the six-month period, net earnings grew from $1.2 million in 2009 to $1.4 million in 2010. This variation can be explained by the increase in operating earnings, offset by the unfavourable variation of $940,000 in a put option related to restructured notes.
Cautionary Notice Regarding Forward-Looking Statements
Certain information in this press release may constitute “forward-looking statement” regarding Savaria, including, without being limited thereto, understanding of the elements that might affect the Corporation’s future, relating to its financial or operating performance, the costs and schedule of future acquisitions, supplementary capital expenditure requirements and legislative matters. Most frequently, but not invariably, forward-looking statements are identified by the use of such terms as “plan”, “expect”, “should”, “could”, “budget”, “expected”, “estimated” “forecast”, “intend”, “anticipate”, “believe”, variants thereof (including negative variants) or statements that certain events, results or actions “could”, “should” or “will” occur or be achieved. Such statements involve known and unknown risks, uncertainties and other factors liable to cause Savaria’s actual results, performance or achievements to differ materially from those set forth in or underlying the forward-looking statements. Such factors notably include general, economic, competitive, political and social uncertainties. Although Savaria has attempted to identify the key elements liable to cause actual measures, events or results to differ from those described in the forward-looking statements, other factors could have an impact on the reality and produce unexpected results. The forward-looking statements contained herein are valid at the date of this press release. As there can be no assurance that these forward-looking statements will prove accurate, actual future results and events could differ materially from those anticipated therein. Accordingly, readers are strongly advised not to unduly rely on these forward-looking statements.
Compliance with Canadian Generally Accepted Accounting Principles
The information appearing in this press release has been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”). However, the Corporation uses earnings before interest, income taxes and amortization (“EBITDA”) for analysis purposes to measure its financial performance. This measure has no standardized definition in accordance with GAAP and is therefore regarded as a non-GAAP measure. This measure may therefore not be comparable to similar measures reported by other companies. A reconciliation between net earnings and EBITDA is provided in the Financial Highlights section below.
Savaria Corporation (savaria.com) is Canada’s leader and the second largest North American company in the accessibility industry focused on meeting the needs of people with mobility challenges. Savaria designs, manufactures and distributes primarily elevators for residential and commercial use, as well as stairlifts and vertical and inclined platform lifts. Savaria also converts and adapts automotive vehicles for the disabled and also offers scooters and motorized wheelchairs. Its line of products, one of the world’s most comprehensive, enables Savaria to stand out by proposing an integrated and customized solution for its disabled and elderly customers’ mobility needs. Its operations in China have substantially grown since 2006 and the collaboration with the two other Canadian facilities increases the Corporation’s competitive edge on the market. Savaria records approximately 60% of its sales outside Canada, primarily in the United States. The Corporation has a network of some 600 retailers in North America and employs 470 people at its head office in Laval and at its plants in Ville Saint-Laurent (Quebec), Brampton, London and Oakville (Ontario), Calgary (Alberta) and Huizhou (China).
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