Savaria Corporation Q1 2023 Earnings Call
Speaker 1: Good morning and good evening. My name is Rasia. I will be your conference operator today. At this time, I would like to welcome everyone to several corporations, Q1, 2020, free conference Program for the capital. Students Department for the flowing community, the workers, all being vaccinated, with the
Speaker 1: All lines have been placed on mute to prevent any background noise.
Speaker 1: 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 1 and 1 on your telephone keypad.
Speaker 1: If you would like to withdraw your question, please press star 1 and 1 again.
Speaker 1: This call may contain forward-looking statements, which are subject to the disclosure statement contained in some areas most recent press release issued on May 10, 2023, with respect to its Q1 2023 results. Thank you. Mr Sebastian Borasa, you may begin your conference.
Speaker 2: Thank you, R. So basically this morning I have the honor to lead the count because Mr. Marcel is an absent proportional vision, but he wants to know that he is always available by call our email if you have any questions and he is doing very well.
Speaker 2: And he was proud of this Q1, so that's why he touched to let us see the cow we were.
Speaker 2: So it was a very good first quarter, which is the slowest quarter for Savarria. So we would like to thank Solar and Preele for their hard work and we think it was a solid execution.
Speaker 2: because we have a very good organic growth in the accessibility and the patient care.
Speaker 2: positively a backlog remain at the historic level which is a very good news because it's so again that we are in a fantastic industry and that will be good for the remaining of the year. So very happy about that.
Speaker 2: As Morissette said in its press release, we continue to build our plan for the 1 billion. The 1 billion is a target that we want to achieve by 2025. We continue to elaborate on this plan to make sure we'll be able to execute.
Speaker 2: Some key highlights in the accessibility, Mexico and PEP continues to happen. Right now we have 45 employees, we have four different assembly lines and we are doing some shipments of some units straight to the USA. So this is very important....supply chain, I hope we don't have too many questions on that today because for us we consider it is relatively...
Speaker 3: including a keep it in margin that topped 20% for the quarter. And again, that was a first for the segment. As you might imagine, the team is very proud of their performance as they should be.
Speaker 3: While we don't want to get ahead of ourselves, and it's just one quarter, it goes to show what's possible. And what we're seeing, and this is really a continuation of what we saw last year, is evidence of the tremendous synergies being unlocked through the integration of SPAN and Handicare.
Speaker 3: And in particular, as it relates to Q1, sales were especially strong, up 13% organically versus last year. This was driven by a number of factors, including continued strengths and new build activities, cross-selling initiatives, and good spending by certain strategic partners. And I feel as if it was 200 years in that art, a lot of work we're involved. That's the 3 selector for the
Speaker 3: In turn, the higher sales volume allowed for a better fixed cost absorption, which contributed to the record margins experienced in Q1.
Speaker 3: In addition, we benefited from a good product mix and the realization of some higher margin projects. And finally, the pricing initiatives that were put in place last year are having a meaningful impact on profitability.
Speaker 3: So, to conclude, it's always nice to start the year with a solid Q1. And we feel good about the backlog exiting the quarter, so there's a certain level of optimism for the remainder of the year as well. With that, I'll pass it over to Steve for the financial review. Thanks, Nick, and good morning, everyone. I'm going to begin with some remarks regarding our Q1 2023 consolidated financial metrics.
Speaker 3: For the corporation generated revenue of 211.6 million at 28.1 million or 15.3% with Documentary- antique market Q122.
Speaker 3: The increase was driven by strong organic growth of 13.5%, originating from all segments. In addition, the corporation experienced foreign exchange tailwinds of 1.8% in the quarter, combining for 15.3% growth overall. It then rose margins stood at 72 million and 34%.
Speaker 3: respectively, compared to 58.5 million and 31.9% in Q1 2022.
Speaker 3: The increase in gross profit of $13.5 million was mainly driven by higher revenues and increased gross margins and to a lesser extent, favorable foreign exchange rates used in the conversion of the result of subsidiaries.
Speaker 3: The increase in cost margin versus last year was mainly attributable to greater profitability coming from the patient care segment due to better cost absorption and a favorable product mix partially offset by continued inflationary pressures resulting in material and labor cost increases.
Speaker 3: especially in Europe . Adjustity but done, adjusted to the done margin finished at 31.2 million and 14.7 percent respectively compared to 24.4 million and 13.3 percent in Q1 2022.
Speaker 3: The improvement in profitability is mainly explained by the gross margin increase as well as decrease in selling and min expenses as a percentage of revenue. Now I'm going to move on to our segment results. Revenue from our accessibility segment was $151.4 million in Q1 2023.
Speaker 3: an increase of 21 million or 16.1% compared to the same period in 2022.
Speaker 2: The increase in revenue is mainly attributable to organic growth of 14.4%.
Speaker 3: For an currency had a further positive impact of 1.7% for the quarter as a US dollar and Euro both strengthening versus the Canadian dollar.
Speaker 2: Our revenue growth is fueled by both the residential and commercial sectors as well as well and price and volume increases.
Speaker 3: and we continue to build our backlog.
Speaker 3: On March 31, 2023, our accessibility backlog was approximately 8% higher than Q4 2022 last quarter. adjusted EBITDA and adjusted EBITDA margins stood at 23.4 million and 15.5% respectively compared to
Speaker 2: 20.5 million and 15.7% for Q1 2022.
Speaker 3: The increase in the adjustivity of the debt was mainly driven by higher sales volumes while the slight decrease in the adjustivity of the debt margin was mainly due to continued inflationary pressures causing higher material and labour costs, especially in Europe .
Speaker 3: partially offset by better cost absorption from the increased revenues. Revenue from our patient care segment was 48.8 million for the quarter, an increase of 7.2 million or 17.2% when compared to Q1 2022.
Speaker 3: The revenue growth includes organic at 13.2%, which was driven in large part by new contracts signed with healthcare facilities, cross-selling synergies with Amicare and pricing optimization as make a little bit earlier.
Speaker 3: For the quarter foreign currency provided a 4% tailwind.
Speaker 3: The Majestic EBITDA and Majestic EBITDA margin stood at 9.8 million and 20.1 percent respectively compared to 5.3 million and 12.8 percent for the same period in 2022.
Speaker 3: The increase in both metrics was primarily due to the increase in revenues and improvements in gross margins, mainly explained by better cost absorption, product mix, pricing initiatives, and synergies with native gear.
Speaker 3: Increasing both metrics was primarily due to the increase in revenues and improvements in those margins mainly explained by better cost absorption the product next pricing Issues and synergies with the indicator
Speaker 3: Revenue generated from the adopted vehicle segment was $11.4 million, a decrease of $0.1 million, or 0.8% when compared to Q1 2022.
Speaker 3: The slight decrease in revenue is mainly related to a negative foreign exchange impact of 4.5%, which was partially offset by positive organic growth of 3.7%.
Speaker 3: adjusted EVA down and adjusted EVA down margin both the four head office costs finished at 0.6 million and 5.4% respectively compared to 0.6 million and 4.9% for Q1 2022.
Speaker 3: For the quarter, net finance costs were $7 million compared to $1.4 million in Q1 2022.
Speaker 3: Interest on long-term debt increased by $3 million when compared to Q1 2022 due to higher market interest rates. Net finance costs were also impacted by a net foreign currency loss of $1.3 million compared to a net gain of $0.7 million in 2022.
Speaker 3: most of which is unrealized in nature.
Speaker 3: Also, the corporation incurred a gain on the ineffective portion of changes in fair value of net investment hedges of $0.8 million in 2022, which was not repeated in Q1 2023.
Speaker 3: Net earnings were 6 million or 9 cents per living share for the quarter, or the 5.3 million or 8 cents per living share.
Speaker 3: Adjusted net earnings was $8.4 million or $0.13 per deleted share compared to $6.8 million or $0.10 per deleted share in Q1 2022.
Speaker 3: This reflects an increase of 24% or 3 cents on a deleted share basis.
Speaker 2: Turning out to papal resources and liquidity.
Speaker 3: Severian generated cash flows from operating activities of 16 million for the quarter compared to 13 million in Q1 2022. The increase is mainly due to the higher profit generated by the corporation in the quarter partially offset by higher income taxes paid versus Q1 2022.
Speaker 3: last year.
Speaker 3: In the quarter, the company made a net investment of 2.1 million in working capital versus 2.7 Q1 2022.
Speaker 3: Cash generated from investing activities was $7.7 million for Q1 2023 compared to cash used of $4.8 million in Q1 2022.
Speaker 3: In 2023, net cash received from the Norway divestment totaled $12.4 million, while the corporation dispersed $1.4 million for the acquisition of Ultron in 2022.
Speaker 3: Conversely, disbursements of 4.5 million for fixed and insensible assets were made in Q122-23, compared to 3.6 million in Q122.
Speaker 3: Past used in financing activities was $6.3 million for the quarter compared to $27.2 million in 2022.
Speaker 3: Q1 2023 the revolver balance increased by 8.5 million which we can largely see reflected in the quarter ending cash balance. As at March 31st, 2023, Saveri had a net debt position of 358.9 million and was in compliance with all of its covenants.
Speaker 3: to achieve our 2023 reduction leverage target of 0.5 turns. Saveria has funds available of approximately 135 million to support working capital investments and growth opportunities. Looking forward, for 2023, Saveria expects to generate revenue which will be approximately 8 to 10% higher than 2022 when normalizing for the impact of the Norwegian Auto Division divestment.
Speaker 3: that adjusted the begun margins of approximately 16%. In addition, as previously noted for 2023, we are targeting a reduction in our leverage ratio of 0.5 times.
Speaker 3: And this outlook is based primarily on continued stromal gain of growth coming from the accessibility and patient care segments supported by high backlog levels across all incineries and strong demand.
Speaker 3: as well as continued successful integration of AndyCare and progress towards achieving the next strategic phase of synergies in line with management's plan.
Speaker 3: And with that, this completes my prepared remarks and I'll turn the call over to you Raja to open it up for questions please.
Speaker 1: Thank you, sir. As a reminder to ask a question, please press star 1 in 1 on your telephone and then wait for your name to be announced.
Speaker 1: Do we have your questions please, Bristol one and one again?
Speaker 1: Once again, it's still one and one. If you have any questions on this time, thank you. We're now going to proceed with our first question.
Speaker 3: And the questions come from the line of directly said from a TDC committee. Could please ask a question. Yeah, good morning, everybody, and congratulations on a really good quarter. Maybe I just wanted to make start with you and really dig down into that 20% patient care margin performance and some of the drivers behind that and how you guys are thinking about the sustainability of that margin.
Speaker 4: forward, but it does show what's possible, right? You're bringing teams together.
Speaker 4: and they've been doing a fantastic job. In terms of the margins in particular, what we're seeing is, anytime you get about 40 million in the quarter in terms of sales, and then especially when you get about 45 million sales, that fixed cost absorption really kicks in. So there's a lot of leverage in that business as a sales increase. So that's probably one of the biggest contributing factors there to the margin that you sell there in the first quarter.
Speaker 4: The second, I would say, big impact is the pricing initiatives, right? Something that we talked about a lot last year. You know, there is a little bit of a delay sometimes in terms of when those kick in. And so what you're seeing here in Q1 is really kind of the full impact, the meaningful impact of those pricing initiatives that we have been talking about for the past several quarters. So I would say that's kind of… I think the least amount of interest has already come in when the blade developed is really
Speaker 4: They're the big drivers of the margin improvement, one just the strong sales performance and the pressing initiatives.
Speaker 3: Okay, and that's so very, very helpful. And just maybe on the on the handicap synergy, can you just help us understand where they're coming from, both on the revenue margin side and where you think maybe that there's even more opportunity to extract more? There's some big studies that we're seeing and this is where it's...
Speaker 4: working together and we're also you know bidding on the whole room. So that's something that's a little bit different than what we saw before is that now you know you're going to something like this and you know we're bidding on the entirety of it right so whether it's the bed frame the mattress the ceiling lift the sling park portion of it the case goods so that's actually what we're quite excited about is you know looking forward to various tenders that are coming up and
Speaker 4: It's going to kind of propel sales over the next several quarters, if not years, is that we're really one of the few one-stop shop players, similar to what we say in accessibility hearing, being the one-stop shop for our dealers. It's a similar concept playing out there within patient care, and that we're one of the few players that can provide the entire room.
Speaker 4: So that's, I would say, one of the biggest synergies that you're seeing within, I guess, between Span and Handicare. And it's something that we're just starting to step into that. So it's something to look forward to over the next several quarters of the years. So that's what I would say is one of the biggest synergies that we're seeing is on the commercial side.
Speaker 5: Thanks for that Nick and maybe a few for some housekeeping for me for Steve. On the working capital, just wondering how you're thinking about it for the rest of 2023. I guess given the inflationary pressure in Europe and are you expecting those inventories to grow as you cycle through the higher cost.
Speaker 5: some other, I guess, inventory plans as you expand the Mexican plan.
Speaker 3: We are not expecting to see inventory climb for the rest of the year. In the quarter, we had an net investment of working capital and working capital of $2.7 million. To be frank, I'm a little bit disappointed in that. I was hoping to see a reduction versus Q4. We were planning on seeing a reduction.
Speaker 3: For the rest of the year, regardless of Mexico and everything happening in Europe , we are expecting to see working capital levels remain tight. We're not expecting any investment to answer your question, no.
Speaker 5: Okay, thanks. And then maybe one final one for me before I recue this on depreciation. There was an increase of about $1 million on the amortization of intangible, so how should we be thinking about that?
Speaker 3: Sure, and it can be a little bit lumpy. I mean obviously we did see a large jump up in the intangible amortization after the hnd tear deal, but also a big part of intangible amortization is a lot of the R&D spending that we have, which can be lumpy. So we saw the...
Speaker 3: the increase in Q1 of about, as you said, a million dollars from Q4, but if we look at Q3 last year or Q2 last year, the increase is much less. So I think if you want to think about that going forward, I would say there's going to be some up and downs just with regards to timing of R&D project amortization, but nothing...
Speaker 6: question. Okay so
Speaker 6: Just circling into the accessibility segment and you're talking about with inpatient care, you're talking about the benefits that you're starting to see from those pricing initiatives and I know that there's some pricing initiatives you've taken in accessibility too. Like, when do you think we'll start to see those start to roll through in the margin and what type of, should we think, how should we think about
Speaker 2: the margin benefit as those pricing initiatives start to work through the backlog. Thank you. So basically for sure the high backlog goes a bit above the price reset, the price increase that we do. So we expect from the second quarter to see a bit of better margins in terms of accessibility.
But, yeah, we're very lucky that our backlog has given us the opportunity to have a good first quarter. And I think we have been able also to fill some of the up position that we added to the labor in fact to re-installation at L-PUS to generate some more output. So that's been the answer for this question.
Okay, now for accessibility, do you think that one queue would represent then the low point for the year and will work better from this point forward?
Good question. Thanks, thanks for that, Michael.
I mean, we do have price increases coming into effect. The 2023 price increases that came into effect this year have been quite a work the way through the backlog yet as far as Q1 is concerned. So we will see the impact coming through the remainder of the year. What we're seeing right now in some of that organic growth is the price increase versus last year. So similar timing last year's price increase.
came into effect at the beginning of the year, takes a quarter to work its way through. So we started to see that in 22, but we're still seeing that now versus Q1 2022. We're talking about still ranger of the year.
When we look at our price increases and how much we put into effect, we obviously are trying to improve margins but we also need to keep in mind...
cost increases that we're seeing across our business. So it's one to improve margins, but also to make sure that we level off or negate any negative impacts from vendor cost increases or other cost increases across the business. So yes, our plan is that the margins will keep increasing from here, but we have to keep in mind that...
there are cost increases happening ongoing throughout the business throughout the remaining quarters of the year as well. Okay and then just in terms of
I know you guys have spoken in the past about, you know, targeting becoming a top three player in North America in that stairlift business. Are you able to provide an indication or translate that into what that would mean from a revenue perspective for your top line?
I think right now we have delivered some guidance of 8 to 10 percent of organic growth. If you look at the size of business that we are right now, I will consider that we are in the top three difficulty worldwide in terms of manufacture of all the different products. We are the only company in the world that can offer a stair lift, a porch lift, an incline lift.
So that's maybe how to frame that.
where that would come in? A lot of our debt is variable rate right now. So it would be nice to know exactly where the interest rate is going to be in the next couple of quarters. But for forecasting purposes, I would expect that for Q2, Q3 and Q4 that we are going to see similar interest rates.
expense in line with you one. Okay, thanks for taking the questions. Yeah, I'm going to proceed with our next question.
The questions come from the line of Nick Agostino from Laurentian Bank Securities. Please ask your question.
Yes, good morning everybody. So I guess my first question is just a comment that I saw in your press release where you you guys talked about seeing growth beyond 2025. Can you just maybe give some colors to why that comment was added?
I think we're just going to reiterate that the one million dollars that's a mission points on this way that they can evaluate the company know that we're making steps or investments towards that. So I think our standards are going to be to rate it again.
We're always focusing on that to actually go with something that's working pretty well and we find soon it. And yeah, 2025 is coming soon but we did some investment in the future. We're thinking that we'll be good for the next five to ten years. I think it's just a general comment to reiterate that when a nice industry and we're thinking about the future, it's just on the short term.
Okay, so we should read too much into that comment then. Yeah, it's more general comments.
Okay, and then my other question for Nick first, just given the fact that you put 20% up on the patient care margin in the quarter, I recognize it's not necessarily going to be a sticky number, but can you just remind us what you're looking for?
for patient care margins for the full year? And does this particular number in Q1 maybe push your thoughts a little bit higher for the full year?
I think we're a little bit early to push our thoughts for the full year. So I don't want to stray too much from what we've talked about in terms of guidance. You know, we talk about 16% margins across the business. I don't think we give guidance by segment. So we'll kind of stick to that. I mean, I think patient care delivered a very good Q1.
So very happy, right? I mean, it's better to be above than below, right? So we're not digging ourselves out of the hole as we go into the year, but I wouldn't want to read too much into it and think that, you know, it sets that bar for the rest of the quarter. I think we want to be cautious about that. And maybe after another quarter or two of good performance, maybe that will be more indicative of the trend.
Right now we're just very happy with the performance, but again we're sticking to our guidance, if you will, for the end of the year. We're not looking to change that just yet. Okay, and just on that same question, maybe Steve you can weigh in on this, but obviously Q1 off to a strong start. So, so congrats on that.
and we know that it's seasonally the weakest quarter. Just given where Q1 has landed, given what you're seeing as of May, can you maybe, should we maybe, when you look before your guidance of 8 to 10 percent, are you guys more comfortable towards the higher end of that range?
the quarter and where we are as of May.
Yeah, good morning. Thanks for the question. The rest of the full year guidance. I mean, we're still staying at 8 to 10% and growth and maybe the dominant. I mean, yes, Q1 was a great quarter, but we're just trying not to get to ourselves for the full year. We saw three quarters to go.
It was a strong start, which we're happy about and really proud of the teams for delivering. But again, we're taking one quarter at a time. So for now, we're staying put.
Okay, that's it for me. Thank you. We are now going to take our next question. And the questions come from the line of the curry ever shared from a national bank financial please ask a question. Thank you. Good morning, everyone. Thank you.
Okay, that's it for me. Thank you. We're now going to take our next question. And the questions come from the line of Zachary Evished from National Bank Financial. Please ask a question. Thank you. Good morning, everyone. Morning, Zach.
I'm going to try not to beat a dead horse here, but it is what it is. You stated previously that a big component of patient care at hand care is project-based. So with the material profitability improvement, keying off, fixed cost absorption, should we really be worrying about that falling off sharply in the coming quarters? Yeah, first.
Hey, Zach.
No, I don't think we're not worried about falling off a cliff in terms of margins. We feel very good about the performance. As I mentioned, when you get above that 40-45 million, you really see that there's a leverage in that business. There's still a lot that we're working on in terms of tenders that we're looking at, other projects that we'll deliver.
throughout the remainder of the year. So no, I don't think there's an expectation that it's going to fall off the cliff in terms of margins. So no, I wouldn't model that in. I think we're very confident about when we started the year, as we exited 2022, we did mention that we felt that we got to a new level within patient care. And so we're seeing that new level.
And it might fluctuate a little bit, but no, I wouldn't anticipate dropping back to that 10% margin that you saw historically. I think that business has changed dramatically over the past couple of years. And no, we're very confident going forward. So no, we're not anticipating getting sort of huge drop-off in margin there. And just to add on that, maybe Nick knows that a
things are always at turn by miracle because maybe we have work on something also that just that there are two factory also in St. Louis and we will know they have a cool early out they have a booster production of sling case. So all this is given the right support also for the science to be able to size and to do some good cross settings. So I think
And there's a lot of effort that has been done in the background by the team that should be good, positive for the next few years. That's helpful, thanks. And then touching on the timing of accessibility price hikes again, with annual price increases, do you expect Q2 margins to represent a...
high watermark this year if cost inflation continues. Good question, Zach. Yeah, it's going to be, it's likely going to be similar timing that will be sold last year with regards to price increases. Some of the insurfect, we're obviously managing vendor cost increases at the same time.
So I mean, in theory, your point, yes, makes sense that the Q2 could be higher margins than what we're seeing in Q1. Given what you're seeing so far in terms of vendor cost increases versus what you've announced to your dealers.
How do you feel about the comparison with the 19.1% last year in Q2? We are still seeing vendor cost increases across the business. We're not seeing into the impact that we saw last year, but it's still something that we are seeing across the business both in Europe and in North America. Again, not as strong as what we saw last year.
So we'll see how Q2 pans out. But that's about the level of guidance. So we'll provide. There enough. Thanks. And just one last one broader with the 2023 budget, including a multi-generation home renovation tax credit. Are you targeting any incremental demand there? Yeah, I'm assuming you're talking about care specifically. I mean, it's so.
tax credits such as this or tax policy changes that we might see in the future as well. But overall, we don't see that having a massive impact on our business now.
That's clear. Thanks. I'll turn it over. We are now going to proceed with our next question.
The questions come from the line of Frédéric Tramble from Desjardins Capital Markets. Please ask your question.
Thank you. Good morning. Nick, on the patient care tenders, which you mentioned a few times, just wondering if you could provide some background on...
how your current pipeline of opportunities compares in size versus what you've seen historically? And assuming that the pipeline is now larger than previously, would you attribute that to patient care's stronger focus on being a wall-stop shop? Or is it market growth driven or both? So just any thoughts on that would be helpful.
Hey Fred, it seems like you're popular today. So on the patient care side, the tender activity that we're seeing, a lot of it's new build activity. So that's been a big driver of that business. We're seeing, especially if you think about here in Canada, there's a lack of beds. I think we...
talked about it on past calls or conferences that we've been a part of. So, no, there's definitely a lot of new build activity that's out there. And that's driving a lot of that business. We've been successful bidding on that business and
And the fact that now that we have the SPAN team, the Handicare team together, we're able to bid on the entirety of projects. And so people are looking for the one supplier where possible, as long as we can meet the various requirements of the bids. So we are seeing a combination of strong...
You know just tendering out there and at the same time, you know, our success rate has been very good You know, so you combine that together and that's why we feel quite optimistic about that business And in the US as well, we are seeing some legal activity. I think the VA is probably, you know, a good segment there for us. At the same time, we've had some...
As I mentioned on the opening comments, some strategic partners of ours have increased their spend. So that also is a boon for that business. So, no, I would say overall, we're confident about where we are. The backlog is still quite healthy. So, overall, things are quite positive within patient care.
Moving to accessibility and stair list more specifically, Zorin if you had any comments on the progression of your business and stair list in North America and maybe an update on intentions to add.
production of a new sterile if model from any care in in Brandon Good morning, I think that's basically our real sales team. Okay, North America between the And they get C and D care and salaried they have merged together now all our replicaty you can sell a studio to a vertical to home elevator
I think our dealers are very happy that we're able to offer the ND care product manufacturer in North America to have better lead time. So right now the single tube with free curve is already over a year that it is in production. Right now lead time is better than ever, it's like eight days, so that's very positive to generate some sales.
at office cost just for modeling purposes. I noticed that the $2.6 million in the quarter there included some one-off professional fees. What would be your...
million dollars that went through in the quarter that was one-off professional fees that we won't be seeing on an ongoing basis. Perfect. Thank you.
We are now going to move to our next question.
Other questions come from the land of Julian Hung from Stiefel. Please ask your question.
So with backlog increasing, how does your backlog compare to peers and are you still remaining ahead of the curve in terms of delivery times? I think the peers are here. We are in the executive, we are at the opening company public, so it's up to start to measure with the other guys. But...
Again, we are very lucky to have this backlog and then we're working hard It's done just by miracle. I think the sales team is working hard The business is very good in North America, for all the innovators and the vertical platform So I think that's looking in the right direction...
helpful. My second question is with global tensions on the rise, have you seen any impact on operations in China and does it shift the business overall strategy moving forward? A very good question, I just want to say again, well, I wasn't in China.
Sunday and other people came, other 120 people, so we have a very good team dedicated. But yes, we have opened a new factory last year in Mexico to be able to balance over time our supply chain, make sure we can develop some additional capacity for North America. So right now I think we're quite active, we have 17 factory across the world, we're quite diversified.
So I think it's been a new issue for us.
What is your comfort level for a potential acquisition? To answer this question, we are comfortable. Yes, we have been seeing a decrease. We are happy with the Q1 decrease. We need to keep in mind that part of that came from the Norway cash infuse from the Norway divestment.
With regards to your question around at what level will we start looking at other acquisitions. I think that we'll definitely talk in acquisitions are still on the go right now. If something comes up that's of the right size and it makes sense for us to execute, we will look at it now, or we're not necessarily waiting for a certain...
net debt level, but at the same time to echo previous comments that we've made on previous calls, it sounded a bit like a broken record here, but we are confident in the opportunity that the Handicare synergies and the continued integration with Handicare and the legacy Saveria business will provide to us.
We're not eager to bite off any large new acquisitions at this time. We think there's plenty of runway still in front of us. Okay, thank you so much for taking my question. We have no further questions at this time. I will allow it now to hand back the call for closing remarks.
Thank you very much and again thanks to all our analysts at FULOP, Savaria, you are very important for the company, very happy on the first quarter so I guess we will go back to work so thank you very much and we will see you in August for the results of the YouTube. Thank you.