Q4 2021 Savaria Corp Earnings Call
Yeah.
Please standby we're about to begin.
Good morning afternoon, and evening My name is Ali and I'll be your conference operator today at this time I would like to welcome everyone to the <unk>.
Saverio Corporation Q4, 2021 conference call all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad.
If you would like to withdraw your question. Please press star two.
This call may contain forward looking statements, which are subject to the disclosure statement contained in the various most recent press release issued on March 23rd 2022.
With respect to its Q4 2021 .
Thank you Mr. Bradley you may begin your conference.
Thank you Eddie Okay. It's a it's a it's a it was a challenging year, but the great year.
Great.
And we are very excited.
Good.
So just a 2022 okay, I think 'twenty one up he was a good year, but we prepare it let them speak about before 2022.
I'm, sorry, I got that right now with their stomach, we shouldn't that makeup and the major one.
Yeah.
So we wouldn't sell okay around 800 million I'm.
And EBIT.
That's truly the right numbers, Okay, and we just announced before okay. Yeah that was.
Make between 122 went through team.
Are we.
What do you make the acquisition one year ago.
Okay.
We're taking that they.
They were good but they are better it didn't work.
They have better people and on that one.
Thanks, Dan Okay to come aboard and.
And they will want to work together for a week in life looking at.
Teamwork, if you don't believe in didn't work okay.
Yeah their own place that gave you guys. If you want to be successful Lucky you need all the people together so we have a modern.
More than two dozen 200 employee we are in there with these acquisition in over 40 countries.
Is that that's that's major okay, and what what we have what we have done okay.
Thank you.
Coach brand.
And you can't replicate to Toronto.
We are well advanced in the integration.
But just a vending machine okay cool all right then.
It would be 45 days.
But right now it would take.
Yes.
Yes.
Okay.
All.
Some from Europe , Okay. So we missed a couple of dollars because it's quite expensive.
That's great.
But even though it's a challenge okay. They call it what it does.
Something and you know okay. They did their materials like he was a challenge is the challenge.
Right. Okay, why is the challenge and continue to be a challenge it.
And it's not easy, but that's so that's a good thing a good thing.
Dragon and just discussed would be what we do and that's the 14th of February well have a good team and we will.
You have to change people would change people, what Susan nice people pick up met with us at <unk>.
So we need to Egypt.
Just an example, and their patient anything okay.
We have.
And new generic drove down there.
And they'll do that and.
Does it create a great experience in the in our industry and it would bring.
This division at the end of their label and their level of EBITDA. What is very important for me and for my people is what kind of fitbit or what is the percentage and we want to be.
By 2025, whether big goals.
One is to reach a 1 billion in sales, okay, and which the 1 billion and sounds like it would have to do to be around 20%.
And what would be around 20% that goes that synergy with all the people.
So.
With us this morning guys.
We need you because that's you again, we're right in Siberia and the U S.
They will say, okay or my English is is that all these bad like it was like 15 years ago, but this is in fact this is what it does and thank you too.
Charlie you said that you would you be interested in is very upset about it I think we have a great history.
When I bought a copy you well.
We were like four person for people and the right now over two.
2000, and at the beginning were setting 200000 that yet and this year, we will sell.
Around 800 million. So that's that's good but we are there okay because of the people and we.
We had good customer and how does that repeat what that was doing 15 20 years at Google.
They may write the check for.
What did I say with a smile, because what that gave them more.
More <unk> to move and that's so important.
So do they are wet.
Okay.
Yes.
To see is that what it is.
Got you.
We are with our sites and that's exactly what I. The question at all and so do you with pleasure.
This morning, we ask you called out where I've said that or should that they tell you that Steve is the finished went to speak after that the kidney cancer and they've been myself.
And so the question that we watch that you asked so first of all I'm up here.
Yes.
Thanks, Marcel and good morning, everyone I will begin with some remarks regarding our 2021 fiscal year consolidated financial metrics.
For the year the corporation generated revenue of $661 million up $306 5 million or 86, 5% compared to 2020, mainly due to the acquisition of handy care in March 2021, and also due to organic growth of 4%.
Gross profit and gross margin stood at $215 5 million and 32, 6%, respectively compared to $122 1 million and 34, 5% for 2020.
The increase in gross profit was mainly attributable to the addition of handicap.
The decrease in gross margin was primarily due to additional costs related to the supply chain, including shipping costs and also the reduction of COVID-19 employment retention subsidies from the government of Canada. This program.
Adjusted EBITDA and adjusted EBITDA margin stood at $100 3 million and 15, 2%, respectively compared to $59 8 million and 16, 9% in 2020.
The increase in adjusted EBITDA dollars is again due to the addition of Andy Kerr the decrease in adjusted EBITDA margin is due most notably to significant Lee increased shipping costs in 2021 versus 2020 as well as a large reduction in government of Canada, COVID-19 employment retouching subsidies.
Total subsidies received for 2021 was $3 2 million versus $6 9 million in 2020, reflecting a decrease of $3 7 million year over year.
Now I'll move on to our segment results.
Revenue from our accessibility segment was $484 3 million for the year, an increase of $227 million or 88, 2% compared to 2020.
The increase in revenue was mainly attributable to the acquisition of handy care, which provided 87, 3% growth.
Organic growth of three 5% was driven by strong demand in the residential sector and it was partially offset by negative foreign exchange impact of two 6%.
While our residential sales were strong throughout the year, we continued to see weakness in the commercial sector.
Adjusted EBITDA and adjusted EBITDA margin, both before head office costs stood at $86 2 million and 17, 8%, respectively compared to $51 1 million and 19, 9% for 2020.
The improvement in adjusted EBITDA is mainly due to the acquisition of handy here.
The reduction in adjusted EBITDA margin is partially due to additional costs related to supply chain, including shipping costs as well as a reduction of the government of Canada and subsidies.
Revenue from our patient care segment.
It was $136 7 million for the year, an increase of $57 4 million or 72, 4% when compared to 2020.
Revenue growth was mainly driven by the acquisition of anti care, which contributed 71, 3%.
In addition, this segment saw five 5% of organic growth for the year, which was driven in large part by the last quarter of 2021, which provided $17, 1% organic growth.
The improvement in organic growth was driven in large part by the easing of pandemic restrictions and improved access to long term care facilities.
Adjusted EBITDA and adjusted EBITDA margin, both before head office costs stood at $16 7 million and 12, 2%, respectively compared to $10 4 million and.
And 13, 1% for 2020.
The increase in adjusted EBITDA was mainly due to the acquisition of any care and the reduction in adjusted EBITDA margin is primarily due to the gain for mentioned additional costs in the supply chain and a reduction of government of Canada as subsidies.
Revenue generated from the adapted vehicle segment was $40 million, an increase of $22 1 million or 123, 4% when compared to 2020.
The handy care vehicle Division based in Norway provided 119.9% acquisition growth for the year.
The Canadian auto divisions experienced organic growth of three 5% for the year.
Driven mainly by strong sales in Q4 2021, as a result of some pent up demand from earlier in the year.
Adjusted EBITDA and adjusted EBITDA margin, both before head office costs.
At $3 2 million, and 8%, respectively compared to zero point $6 million and three 4% for 2020.
The increases in both metrics were mainly due to the acquisition of Andy Kerr and some recovery from the economic slowdown caused by the global pandemic, partially offset by a reduction of Canada government of Canada that COVID-19 and subsidies.
For the year net finance costs amounted to $15 8 million compared to $3 9 million for 2020.
The increase was mainly due to higher interest expenses due to additional long term credit facilities related to the handy care acquisition.
Net earnings reached 11, 5 million or 19 cents per diluted share for the year compared to $26 5 million or 52 cents per diluted share for 2020.
Net earnings was largely impacted by amortization of intangible assets related to the hand here acquisition.
<unk> net earnings excluding amortization of intangible assets related to acquisitions reached $41 8 million or <unk> 57 per diluted share compared to $31 8 million or <unk> 63 per diluted share for 2020.
This reflects an increase of 31, 3% or 6% on a diluted share basis.
So turning now to capital resources and liquidity.
Saverio generated cash flows from operating activities of $57 3 million for the year compared to $49 3 million in the prior year.
The year over year increase was mainly due to increased adjusted net earnings from the addition of Hany care.
Strategic investments in inventory caused an increase in noncash operating items for the year of $13 million versus a decrease of $6 1 million in the prior year.
As at December 31.
'twenty, one severity I had a net interest bearing debt position of $315 4 million and it was in compliance with all of its covenants.
And on a trailing 12 month adjusted EBITDA basis, various debt to adjusted EBITDA ratio was approximately three five times.
The area has funds available of approximately $130 million to support working capital investments and growth opportunities.
Now looking forward unpredictable changes in the macroeconomic environment make it difficult to predict future performance.
However, considering our recent financial performance and our strategic integration planning with handy care. We are confident that for fiscal 2022, we will generate revenue in excess of 775 million with adjusted EBITDA in the range of $120 million to $130 million.
And with that this completes my prepared remarks, and I'll turn the call back over to you Marcel.
Steve Thank you very much ready with that okay.
Just to add okay and inflammation, okay that maybe you don't know.
Booking is very important okay. If you want to see what would be the.
Richard quarter, Okay, and what would be the Iraqi our booking at February it takes everybody in Toronto Okay.
It is three times that each was last year.
20% three times.
You can see the backlog that we have in residential elevators.
It's amazing so no we haven't had their broadband market, we have to deliver it fast okay. So we upgrade our shelf, okay upgrading our people and our work harder to make more projects shouldn't then who will work so.
So it's it's a little bit.
And then over time in our lives okay, we'd never at the bookings see that three times okay.
For here, but if you step back right now so it's it it's a great great.
Great interest.
I'd tell you the same formation and I think that's validated at say Steve before so we are ready for all the questions that you can add.
Eddie.
Thank you and if you would like to ask a question. Please press star one on your telephone keypad.
Using a speakerphone please pick up your handset and make sure your mute function is turned off.
A signal reaches our equipment.
Jim.
Star one if you'd like to ask the question.
And we will go ahead and take our first question from Frederic Tremblay with.
Regarding please go ahead.
Thank you and good morning.
I was looking at it.
Oh, My God I'm learning my phone, you mentioned that you'd like to get to 20% EBITDA margin in 2025.
That would be I think the highest might've been moving from a company history on an annual basis. I was just wondering if you are are you referring to margin for the entire company or for the year.
I guess, maybe if you could maybe provide a bit more details on the factors that would allow you to increase the margin to around 20%.
Okay.
So that's let's say after we complete agree.
My answer is just for sure. Okay, we have some division.
We get less EBITDA, okay, but for me when I say around 20% of it is.
Is Florida.
The company together.
And it's why I see when we bring our fleet is not there maybe a cut manufacture sell if that ensco is doing that project.
Okay.
That drove margin wasn't that so you've got a I would like to buy but.
To be originally spoke to on the pricing so well.
For me, it's for all of the company to 20%.
So that said you have something to add.
Oh for sure its a as you know where we are and our transformation nowhere require government a few years ago span in an hour and care. So there's a lot of moving pieces, but I think yes.
<unk> always been first efficiently first in the cardio isn't a turn but different C. I think we have a lot of activities to support this target go and.
Hopefully, we'll be able to deliver in the next few quarter in a few years on that but a lot of opportunity.
Okay.
You mentioned the large backlog in Toronto I'm just curious.
Do you have any comments on I guess.
Residential and commercial and I guess I'm more interested in.
On the commercial side is evolving in terms of quotes or backlog in the recent months and what youre seeing in terms of the potential recovery from that.
Go to market.
Okay.
It's a good question again.
Great.
For sure there is that show up.
Number of elevators that we have in no way back.
It's anchored ratable, okay and for sure the Covid effect okay.
Okay.
Yes.
Commercial activity.
People, who work at home Okay. So if we go we have been an example downtown months reality is that the activity it was before.
But do you have to work home, okay. So they make so much equipment at home.
But in reality, we take that's all.
Commercial Okay, we will get the new push IP this year, especially if you have something to add.
On that note.
So should I read that sector in Brazil, just wanted it's not just home elevator o'keson O'malley with or is it saying time platform. It is thoroughly if Turkey now we have a big bear in Australia for industry.
That's why they send the care is very interesting because it position ourself in a very good shape and bringing bringing back the technology.
Up to Toronto to manufacture to curved stairlift and will give us better lead time, and we should be able to just continue to accelerate or go out into the Australia commercial like Marshall said it has been slow but it is recovering and now the good news is we have a good backlog. So we can plan our growth.
A lot more careful also knew it was before I think with all the spending media supply chain people.
Try to put the order in advance to make sure that the production will try to date. So I think we're lucky.
Would you or in front of us.
Great and maybe Alaska.
Yes, sorry go ahead.
Fred I just wanted to add something.
We didn't get it okay, we still stay a little bit the territory like we and the market in North America.
Sure.
Thus without people that in Europe , and Europe push.
Like get the work.
And absolutely get event, though okay. Good I wouldn't say, it's a great company, okay, but I think again to work with somebody directly time, okay and.
And the jewelry.
With jewelry.
Europe I think.
This segment.
<unk> will be better so we have a laptop philosophy cutting with this acquisition I.
Then just mentioned at the beginning of this year was met who would make this a small acquisition.
How about the case somebody who make the controller. Okay. So we're buying from the Guy who neuropathy.
The controller, but now one month, we independently. So we buy these guys. So we are always looking what we can do to be better and as Steve mentioned, we add for sure our ratio it is not.
That's what I want to be but I think.
This year, we would have a better ratio to put some little acquisition just to be always better and deliver the best quality and the best security too.
Okay.
Great.
Greg Great segue into my last question, maybe for Steve in terms of capital allocation priority for the year.
And then between Capex.
Prepayment and potential remedy any comments there.
Yeah, It's just small M&A okay.
But small and very many and we're looking everywhere, but now we are looking everywhere around the globe looking that that's amazing.
The acquisition of <unk>, and I mentioned again, okay.
People like that.
Tim that we have good people when would that go to them and.
And with all these people that we work together.
You always see a kid, who will make some small acquisition, but we weren't completely integration.
<unk>.
Sometimes we have to look inside our company. Okay on the side of <unk>, we can be better and said, okay looking out wastewater acquisition.
So no big acquisition this year.
And just and just to add to that and Marcel if I can I mean, it's you know.
Looking at the deleveraging profile for this past year for 2020 , one we didn't delever since since the date of the acquisition to the end of the year, which was about 10 months and that was that was expected because of all of the large one off costs, we had the acquisition and integration related.
Most of that is behind US there will be some integration costs ongoing.
But we will be Delevering further in 2022 as per our initial plan of at least half a turn per year.
And we are being diligent with Capex spending we are being very diligent and we as Marcel said there may be some funding for acquisitions, but they but they will be on on the on the small sort of tuck in side.
Very insightful thank you Steve.
Thank you.
Okay.
And we will go ahead, we have a return.
Yes, we'll go ahead and move on to our next question from Derek Lessard with TD Securities. Please go ahead.
Yeah, good morning, everybody in the Marcellus.
Your English is perfect.
I just wanted to.
I just wanted to hit on.
Again on the bookings being up three times in the backlog there its a good problem to have obviously.
Maybe if you can just add a little bit more color on how you expect to deliver on on that.
And and crude through the backlog.
Wow I would give you and said that's what completes it my answer because he is the guy that's multiple for the operation, but I will just.
I see okay.
We are steadily booking.
Yes.
We can deliver okay.
With that you would that you are with getting delivered in 2000 and that kind of steadily.
It has to step up and you get.
Before that that gave award jab, okay at the AP.
<unk> 40, a month, okay. So but now can you just and that if we can talk about that sadly we've tried that.
<unk>.
Residential elevator is okay. What is good and it's why the team at <unk>.
<unk> seen very quickly we have somebody from and you can see us okay.
In the recent weeks about saying I would tell you.
And they will work with us.
And with that like for them six seven nanometer as a D O K 210 12.
So so new idea.
Dividend Experian and it's all in the group and when he told me that the same group of you. It's good construction, okay, but when you add the talent inside I can you use that and that's the value of origination for down. Okay did you say eight I am I don't know in mid Atlantic, but these.
These guys and Toronto.
That's evident thing is everybody has brought about that so let's say you have something to add.
Yes for sure directly we're lucky we're in a good industry. It has been a very recent report last year were just staying at home. The residential has been good and then continue to remain good but unfortunately, we had a bit of inflation on our winter sale price, which our customer last year. So when you announced some price increase it has a direct effect on the on the booking because we tried to be.
Respectful with their dealer to give them a <unk>.
Some time to pass on the order that they already have and so yes, there has been a bit of a over order because of some deadline on pricing, but which is good because what came in last year as our price increase from a supplier we have to reset the price with our customers. So that's a that has been done.
And then last year was challenging or don't forget we had some EBIT of Covid, we've got some labor shortage, but I think this year, we have made some activities to fill some gaps.
What we needed to add some people were doing some strategic review in April with some key member where endocare lead by the team of people that will work with our team here to see how we can improve and review all can add automation those process to be a bit better. So I think the good news is at least we have the order in a N N and in some of our division.
So that we can just execute on the growth plan that we want to address.
Okay.
I was just wondering as well do you have any updates on the on the Toronto planning expansion in housing, how it's going and maybe some production lines and maybe some some areas where you still need to adjust.
And I go to Andre and.
During two expansion ESR on a curve Sterling will now we're producing one of the two model when to care for the curve.
Like later this year to add the production the second model all of the distributions of this trade is totally for Vanda carriers now done from a spot factoring Greenville, all from Toronto, where they can get market, but that has been happening in the rest has yet really expansion on our do more throughput through our different line add some key labor at different place. So I think the growth.
Dan is.
What we are working on.
Okay. Thanks for that Paul re queue, let somebody else.
Thank you Derek.
Our next question will come from Michael <unk> with Scotiabank. Please go ahead.
Oh, Hey, good morning, guys.
I wanted to start a question with the 2022 revenue guidance.
Forecast implies 17% growth year over year, and I guess, if I use the number on the call it maybe up to 21%.
I, obviously understand hany care will contribute to additional months, but I wonder if you can comment.
Just generally on price versus volume dynamic in 2022, and what we should expect there.
Yeah, Steve This is Pete.
Okay.
Okay.
Speaking about that but just wanted to tell you that we'll make some increase okay. Because we have to make some increases with some increase in there.
21, Okay, and then the increase at the beginning of 'twenty, two and you will see that.
I think that's what App our margin for sure. Okay. When how this spring would mean application and I see that coming at the end of it.
Alright, Jackie and after that for the second quarter that would be.
It would be very surprised if.
That's a very good news that you would see in the Q2.
The complementary that's the base.
Yeah sure. So a good good question, Michael I mean looking at looking at what we're seeing for 2022 our guidance.
Published guidance has been in excess of 775, and it's just obviously, it's difficult to peg an exact revenue number but looking at our at our forecast and our budgeting for 2022.
<unk>.
A significant piece is coming from Andy care, we have two more months as you pointed out two more months in 2022 that we had in 2021.
And specifically on the organic growth side.
What we are forecasting to achieve for 2022 is in line with our.
Our for our 1 billion forecast for 2025%. So it's in that approximate the same same guideline.
Same approximate percentage increase.
Good portion of that will come from pricing. You know you had mentioned that we have done price increases in Q at the end of Q3 and in 2021, and we also have price increases in 2022 at the beginning of the year, whereas Sebastian said that it does take time for those to come through.
So I mean without specifically pinpointing, how much theres going to be a good portion of that organic growth in 2022 coming from pricing.
That's helpful and then the second.
Alright.
And then the second one I.
I guess, maybe I wanted to focus on our supply chain I mean, obviously, that's been a challenge in 2021, especially when Youre thinking about all the freight cost you guys have had to push through.
With that being said, obviously I think you guys did a good job I just wonder given the supply shocks.
Are you thinking of potentially evolving your own supply chain and maybe your own production capabilities across the geographies a little bit differently or do you think you have maybe the right formula today.
Well I think that you I think that you speak with the best data Center Okay.
So that's a good question because I know that you know the answer.
Oh, yes for sure Michael It has been very challenging the supply chain purchasing in the last year and I would say it remains challenging.
<unk> does from a small issue, but we try to have a better planning to make some few in advance with a key supplier and we discover was good was not good.
When we have some issue we might work on some equivalent parts with and do some testing to make sure we can stop the production.
Supply chain is not just about Asia, but at least in Asia, that's our own factory in China, and which also at least we control what's happening there and as of right now.
They are doing a very good job and then you continue to ship when they are doing.
Example, Martha talked at the beginning of the call as the neutron acquisition, which was one of our key suppliers electronics electronics is a bit challenging those years. So we did an acquisition in electronics to be more vertical integrated to eliminate some of the risks.
And my friend, Steve always reminds me that I have a bit too much inventory. So yes. We are working on is to make sure. We have the right inventory on the shelf. So that we can deliver this.
Growth and one thing also to remember is in our key factory, we have some machinery. So we're able to manufacture some parts of ours have some students on that.
I'm painting. So I think this is a it is important to remain flexible.
That would be my answer for that Michael.
That's helpful. Thanks, guys those are my questions.
Thank you.
Well take our next question from Nick <unk>.
From <unk>.
<unk> Securities. Please go ahead.
Yes, good morning, Nick.
All right.
On the unsupported chain side I guess two questions here first.
If you guys can talk about what impact did the the flooding in Vancouver have on your Q4 results just trying to understand was there was there any revenue opportunities missed as a result or was there any.
Margin pressures that you may have seen in Q4 that that don't show up starting Q1.
Gotcha.
Yes, so Nick for sure. It was a very unfortunate and you know we have refractory nbc's, which was not too far from us.
I cannot say that it has huge impact in terms of our supply because we have a few weeks always have inventory in stock. Yes. We had some trouble in Q4 is that on the timing of the container.
Is it caused some additional cost I think the answer is yes, we are.
A flyer airfreight a few parts.
Additional money to move your container, but yes, it was not the best events with the flooding.
Okay, and then just given with the situation in China currently with the shutdowns in Shenzhen and know your factory is is near there just wondering if you could provide an update on what you guys being out of China, and maybe if you've taken any precautions ahead of.
Any further shutdowns within that region.
Sebastian please.
Yes, the good news and Nick that's our own plants.
We are really the truth of what's happening there and yes as soon as the Chinese new year. Our team continued to work every day, yes. There has been some new lockdown from one city to the other but as of right now it did not affect us we have increased a bit maybe the raw material, we have in our own factories to make sure. We don't stop the assembly, but as of right now Mr was of shipping.
The best of my knowledge of Shenzhen border as we open for the shipping so that should not be an issue and that there's not just one part also in China and as a second factory in China is quite far from Shenzen. So I think so far we have been a organic.
Okay and then my last question.
Just wondering on staffing for the growth that you guys are seeing have you had to incur any.
Well first of all what what was the staffing impact in Q1 related to Omicron, just just here in North America and for that matter in Europe , and then secondly have you are you guys incurring any additional staffing costs too.
Stop just given the fact that we're seeing lots of moving parts on the pharma side in general.
Yes.
Okay.
Yeah Dara can you check your thing about all of that you put in place that we manufacture okay.
So can you answer that please.
So for sure Nick every year, Okay, where we tried to give some increase for a different type of in a different location thats always part of our budget.
Yes, I think we took care of our employees and we have that does help us to fill some of the gap, where we had maybe some open position and after that 2022.
Thank you, yes, we had some maybe minor issue and two to replace but for one or two weeks, but as of right now the best of my knowledge, although all our location R&D and they are all working.
Okay. Thanks, guys.
Okay. Thank you.
And as a reminder, the star one if you would like to ask a question. We'll go ahead and take our next question from Zachary <unk> with National Bank Financial. Please go ahead.
Beaumont terminal.
Rosa.
So I was wondering if you could give us some insight into how the dynamics change and accessibility. When we start to see interest rates rise do you see any issues on the residential side of things.
My answer is no.
Any other thoughts.
No no no no not at all okay.
First of all Okay do you want to be at all materially.
Do you want to maybe okay to buy and elevators.
Before it picks back up in that matrix has never been my life's. Okay. So great. Okay. So I see that the people okay.
Work and work.
Very well, okay, you're passing okay sometime to the.
And some time at home.
You have something to add.
Yeah, maybe niccolo.
No no exactly mean.
I would say the products that we offer or more.
And where necessary as opposed to you know.
An extra deck that you might put on the back of your house or something I mean, if somebody needs mobility in their home, whether it be a stair lift or a platform lift or what have you.
I do think you will see that as a priority spending most of these individuals. It is private pay so I mean, whether it be from their own cash or maybe they have lines of credits that they tap.
So I'll say no in the current environment with what we're seeing in terms of interest rates on the horizon again, I'm not an economist I don't want to predict where they might go but for the moment, we don't see an impact and again given the kind of the the the necessity of these products for these individuals to maintain their mobility. It is a priority for them. So I am as Marcellus.
Mentioned, we don't see a big impact given the current interest rate environment and where it might go.
Yeah, and congrats Dave congratulation. Thank you.
Thank you and congratulation to the Canadian government, Okay, I think Gary described as a clean they weren't very good update pushing money out in.
The consumer.
The question, Okay. So all right.
As to the agency, but.
It will at some some they don't have some cash okay. So do you have left that project.
It's why I see.
If you look at it would be a great year, Okay and maybe.
Got it.
So very good to see that that will be.
And the road, okay to make our ads.
The $1 billion in sales okay. It went into any fine, okay, or maybe a little bit earlier.
Thank you for it and you've got to.
Yes, Sir.
Thank you very much and then for my second question can you give us an update on your outlook and objectives for the view lift please.
Julien that's an interesting question, Okay, and then a good guy.
So that it would be.
So betsy.
And note the Pea that.
And the Cat is very excited about setting that you list in Iraq.
And <unk> already begin to sell that.
And we believe Acadia is particularly is that fair.
First of all.
Okay, you are accessible on two or three level.
Then.
So I'm thinking that I didn't in the corner again put that center.
Again, that's not a decade.
And it works quite.
Quite well.
It may be.
So he is not affordable for everyone, but we have.
What kind of people in this society. So the people who don't want to have that maybe they would make take a regular antibody to <unk>.
The future of this brought it.
Thats good a pizza, that's why our growth would be dead in bed. There because this is a friday because of Kodak.
More and more <unk>.
Because the people will begin to see that what is important the architecture around the world. Okay.
More about somebody has to know more about this.
Fantastic project, So Sebastian you have something to add something on that.
I guess, yes, so yes, so basically as a proportion of your lift if you remember it's always their flagship product library.
But we do a lot of marketing effort under view lift and it's always hard to evaluate also the extra six on the unit because it has a big influence on the other on the router and as Mark said backlog is a very nice on Yamal Liberator I guess part of it the numbers of leads.
Got it.
This driver by the <unk> and I know for sure we and it takes time derivative projects no sometime it yes, pittsboro inhibition might be a bit faster, but the new construction and we have to put it really is just at the end of the of the construction and now we have some demand of apathy and our own offices and Swiss in Germany and UK.
And then I think you get I can tell you that because we started a bit like one and a half years two years ago start to have an interesting trend, especially in Germany and now we have trained the team of Wendy carrying two is absolutely deserve endocare and this is something that we would expect to continue to whether I have a nice growth or would it be different in Europe , and if you remember I believe is called compliant for Europe .
So we did that two years ago.
There is no reason why we cannot to accelerate our growth of you live through with it.
And I think the team of care with a lot of efforts also on the marketing and training.
Training at the bottom of your lift.
Thank you very much like iron ore.
Thank you.
We'll take our next question from Sudbury, and Ontario with eight capital. Please go ahead.
Thanks, and good morning all.
The patient care segment can you characterize the thinking behind the change of name from patient handling and does it open you up to new product lines.
Okay, I am very happy that you touch the segment that it is are you guys at Amp at 40.
So.
Yeah. That's a good question and you will see that we're making will explain that would make some change that would change this.
Division this year, so any color.
Sure I wouldn't read too much into the the name change of patient care to patient handling essentially.
Span or I guess prior to handicap was the big driver of our legacy patient handling business.
Again more on the pressure care. So in terms of the therapeutic support surfaces and the bed frame. So we had the pressure care side.
And then with with Handicap, obviously more in the safe patient handling with their lift products. We felt that patient care was maybe a better name that encompasses the entirety of that group.
The opportunities I think in front of us for patient care and wont necessarily come from the name change, but really from certain changes that we've made internally to that organization again handicap brought with us a very very strong team.
Then again, combining that with span as well as you know we brought on board.
New commercial lead back in the fall.
It was really kind of spearheaded much of the integration that's going on on kind of the sales sales strategy the pricing strategy our product.
Rationalization, that's ongoing so I think those are more of the initiatives that we're doing they're going to have an impact on that division.
Unless you have any other further questions as it relates to the name.
I would say don't read too much into it.
Understood understood.
I just saw patient care I thought maybe a broadening maybe into wound care products, because I've been reading into kind of pressure.
Alex that you had in.
Some of them somebody a patient handling solutions you can go into.
Well I think right now our main focus as we have a good portfolio of products of lifts of slings, a bed frames of mattresses and again with the team we have around us. It's a question of no.
I guess, a better focus on what we have in and getting the best out of out of our current product portfolio rationalizing our product portfolio in many cases.
There's some overlap between the span in the handicap divisions.
And then from there, yes, there could be an opportunity for us to look to add new products, but right now I think we have a good a good mix with what we have now.
Yes, I understand can you speak a little bit.
About our guy and they make up okay and bill.
Division right now for us.
Yes, pet module, so a little shout out to pet so.
So, yes, Pat joined US back in the fall again 20 plus years of experience.
On the sales side on the product side, he joined as kind of our two other leaders within within patient care, you fill merino, who heads up the I guess the sales front and then less teague there in Greenville, South Carolina for more of the I guess, the operational side of things in charge of the factories.
And in Greenville, but also in St. Louis and at Bemis Ville. So so Pat really when he came on board.
He has kind of taken all of the commercial activities under his wing under his direction there.
And really focusing first on these price increases that we've passed on over the past several quarters.
Come back to some of the inflationary pressures that we've been facing.
So past done a deep dive and do all of our products. So so looking at all that we offer both on the spend side, the handy care side and for Mega there on the severity side.
At all of our products all of the pricing, making sure that we're selling the right products at the right price to the right people. So that's really what he has been I guess its mandate has been since the start and again its having a I would say a very positive effect on the team I think everybody's kind of buying into this one one saverio.
If you can call it that as it relates to patient care.
So it has been instrumental and we're very happy and fortunate to have him on board and the rest of the team on board and we feel very confident about where we're going with that division.
Understood.
With that.
Sorry, just to add on that okay.
C J that we the margin was net debt right.
Okay, I get it to work with the law.
Margin like that okay. So that's okay.
Okay is working hard with this is is.
Okay escalate and you will see that will produce EBITDA, okay at the right ratio okay.
22, Okay, and we will.
Very good 23 in term of EBITDA number okay. That's something to have an EBITDA, but you have to be at the right ratio is why I focus like it to be at 20% of <unk>.
So any 35 I'd focus on that will.
Jim were acquired and we will deliver.
Understood and not rate based show for you is where does that ray ratio for you right now.
Yeah.
Oh, yes.
That's a good thing, but I can't I think that.
The accuracy be deal catering, okay, and with China 23, Okay, and I think what will it be around 28.
And this patient.
So let's say we are very optimistic very optimistic about the Delaware that Vicki first thing with deep deep well motivated and they have the right products.
We need that and we have discovered in Asia.
On the the other thing I did notice there was a slight reduction in your stuff from $2322 50 is that just a function of increased automation.
Or are you looking at and you also mentioned 2000 and stuff is that just rounding or are you looking at some staff reductions as.
How's your economy and I guess.
You know okay over the years I wish that book is very stable okay.
It's a question they'd like to.
To be with us.
For sure. Okay, we are a company that.
We put up our employee at a very big priority or maybe we'll pay them a little bit too much but the people the people like to work that somebody else at <unk> I am the guy that go into shock, Okay, now a little bit less but it.
It might people right now say basket and then the others, Okay, we're going to ship and we speak with them.
Okay. He's just going higher but we don't have laptops change right now for surety is about Hagan had something then that and then do we think.
About the PK curves that lift that we make from Saturday.
Number in makeup as to make to you there.
150 to 100 by the end of the year.
At month with many people say that.
And for sure like are we are always working on our productivity and to.
To bring year Endocare product here for the curve as they make a big change in terms of productivity per person.
Basically Andy carriers are four times more productive in terms of when at this time versus February auto manufacturer curve store lift and I think Steve maybe you want to comment a bit on billing on a total number yes, I was just going to say.
It was two 300 was the initial estimate based on our first consolidation with any care, we've just fine tune the number down to.
$22 50, so 20 to 50 is the number.
Number of employees, we have there haven't been any significant changes in head count It was more just fine tuning.
Understood. Thanks for the insight there and I'll hop back in the queue I appreciate it.
Thank you.
And we will go ahead and take a follow up from Derek with TD Securities. Please go ahead.
Yes, just a few follow ups for me it looks like.
<unk>.
The government assistance serious program, you were actually able to keep your margins flat year over year.
You did mention things like shipping costs in particular, so I was just wondering how.
We should be looking at your your margins progressing.
Progressing through through 2022.
Okay.
About the gross margin.
Okay.
I think okay with it.
Chris.
Of the price that we have done we have to be fine. Okay at less everywhere that we can lever and be happy with the price that we get so it will be very <unk> to have reached a gross profit of 35%. Okay. So I think we will reach that by the end of <unk>.
25.
And that's that base for us and we have the people we have the <unk>.
We have the.
The number of dealers don't forget to sell the red, but we sell the majority of Polish out through dealers, so we'd like to work with them and they are at good rates.
For so many years and what is good to see the data.
We have that.
Roughly okay. The number of dealers that we have okay, a couple of years ago.
Many years ago.
Because they don't change yeah, I'd view it as okay. What is important okay, where did you get a companion yoki that they can say to them hey.
But I went to US Okay, and you look at all the projects who cover residential.
I'm not sure from the curve the Straits their lift to the verge golar to elevate <unk> two dee.
Yeah.
You know something to beat it to your customer and accessibility to the view lift okay. That's great. So we add all okay commercial insurers.
At the same place that major and we bring that.
Or should we have some work to do that he made the coded Europe . Okay. Some we are working on that right now.
But it's important to I've done there and then make some modification because their customer in the us.
Europe , and North America, Diffident, Theyre little bit aesthetic, mainly okay. So we what we work on that but that's the major two offered to a dealer.
The client so they don't have to look at other places okay. Just biased one please.
I assume you have something to add.
So I think that was a good answer and maybe Steve.
Do you want to add something just just Derek specifically about the underlying margins I mean, yes. There was a lot of pressure this year from decreased Susan as I mentioned and you mentioned.
I think when we highlight the increased shipping costs, which were significant in the year I mean, it just goes to show how much better of a year, we could have potentially had.
We finished the year at 100.3.
Adjusted EBITDA and we saw a significant increase freight really from the end of Q2 through the end of the year and that's when we look at 2022 and beyond where we have planned.
Accordingly, two to incur similar freight freight rates so yes.
Yes. It is.
We did hit a 103 it could've been sorry, 100.3, it could've been a decent size bigger if it weren't for additional freight to us, but but we you know we did incur them and and we are expecting them to continue in the future. So hopefully that gives you a little bit more color.
Yes, so your but youre expecting.
Hi, quite high rates, but flat year over year, you're not expecting them to grow.
Yeah.
Our freight cost no we're not expecting it to grow in a.
Sort of per shipment basis, but obviously as our business ticks up we're looking at different things.
Including the manufacturing of the curved stairlift in Brampton, which has a positive.
The impact on freight so there are changes, but on a you know when we look on a per container basis or per shipment basis, we're planning on a continuing at the current level.
Okay. That's helpful. Another one for me is I was wondering if there's if you're seeing maybe any initial impacts on the European business, maybe just given the conflict thats going on in the area.
Nothing right now so best EMEA, you're in touch with them Okay.
Yeah.
Okay, but.
I gotcha okay.
Speak Okay, great. Okay. It seems that it's that easy, okay, and but we wish that it was finished.
Okay, but to Betsy I'll pay you have some of that.
So they too.
All right again, I'll say this very unfortunate, but a customer we did not everybody says over there. So there's no impact but in terms of supply chain. So far we have not been impacted by the way.
Monitoring that very closely because we have a sales office in Poland.
That is it going.
So that's something that though in the long term could have in fact, what we're monitoring.
Okay, and maybe just one last one for me in terms of housekeeping for for Steve.
You talked about the strategic investments in inventory.
Just wondering what your expectations for four key capital R. This year end and maybe.
Along the standby into your Capex in 2022.
Yeah.
That was specifically looking at working capital and within that on the inventory piece, we did see a sizable increase in 2021 and as we've talked about that was that was intentional to buffer ourselves against supply chain challenges and.
We did see various challenges throughout the year Vancouver floods or just one of them.
Going forward.
For 2022.
We have sufficient inventory on hand, right now we're not.
On a dollar basis, we're not trying to increase that we're trying to more redeploy that.
And keep the investment in inventory relatively flat for 2022, that's our goal on the Capex side.
We are being diligent with Capex, our spending estimate for 2022 is sort of in about 2% to 3% run rate.
That we have but we have historically had and that includes some investment in some of our facilities related to some of these projects that we're talking about whether its stair lift manufacturing in different cities or other investments. So we are being very critical on capex and that is just going to show how focused we are on that.
That deleverage.
Thanks, everybody.
Thank you very much.
And with that that does conclude our question and answer session I would now like to turn it back over to our speakers for any additional or closing remarks.
So thank.
Thank you very much my Dear.
It was a great call and thanks to my team.
In the three months.
And with that that does conclude today's call. Thank you for your participation you may now disconnect.
Thank you Eddie.
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Okay.
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