Q3 2023 Savaria Corp Earnings Call
Good morning, My name is Sarah and I will be your confronts upper HD.
Not this time I would like to welcome everyone to February of corporations, Q3, 2023 conference call.
Airlines have been placed on mute to prevent any background noise after.
After the speaker's remarks that will be a question and answer session to ask a question during the session you'll need to press star one and one on your telephone and you will then have an automated message advising your hand is raised to withdraw your question. Please press star one on one again.
This call may contain forward looking statements, which are subject to the disclosure statement contained in Safari is most recent press release issued on the first of November with respect to its Q3 2023 results. Thank you Mister Bourassa, you might be getting your cop friends.
Thank you very much.
So as you mentioned in my name is Marsha.
It's a pleasure to to begin to call. Okay. Yeah, so that the cable transferred out to <unk>.
If I was taking in there every year Lucky I think we are going in the right direction now.
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Thank you, Okay, alright submit some covenants yesterday, okay, how 'bout, you've <unk> and thank you very much okay, and you can see that.
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Thanks, Marcel all good morning, everyone and thanks for joining us on the call I'm Gonna begin with some remarks regarding our Q3 2023 consolidated financial metrics.
For the quarter, if the corporate corporation generated revenue of $210.1 million, an increase of $8.7 million or 4.3% when compared to Q3 2022.
The increase was driven by or get a growth of 4.1 per cent originating primarily from the accessibility segment.
In addition, the corporation experienced foreign exchange Tailwinds, a 4.7% as well as a decrease in revenue of 4.5% through the divestiture of the vehicle division in Norway, combining 4443 growth overall for the quarter.
Gross profit and gross margin stood at $72.6 million, and 34.5%, respectively compared to $64 million and 31.8% in Q3 2022.
The increase in gross profit of 8.5 million was mainly attributable to higher revenues and to a lesser extent favorable foreign exchange rates used his <unk> conversion of the results of subsidiaries.
The increase in gross margin versus last year. It was mainly attributable to greater profitability coming from the North American divisions, and the accessibility of patient care segments due to better cost absorption favorable product mix and they're pretty pricey.
Adjusted EBITDA and adjusted EBITDA margin finished at $33.6 million and 16% respectively.
There are 231 million and 15.4% and two 320 22.
The increase profitability is mainly explained by the April mentioned increase in gross margin somewhat offset by higher selling and administration expenses and a quarter.
<unk> excuse me driven partially by point $9 million of costs related to Saverio one.
That's September 15th 2023, the Corporation issued 4.363 million 100 common shares by a public offering and 1 million 983750 common shares via a concurrent private placement with case the depot decay.
Back.
Both at a price of $14.50.
For aggregate probe for aggregate gross proceeds of $92 million, which included the full exercise of the overlap at options granted to the underwriters of the offering and the additional subscription options granted the C. D B Q.
The proceeds after transaction costs, a 4.6 million was 80 87.4 million, which was used to reimburse credit facilities.
And now I'm going to move onto our segmented results.
Revenue from our accessibility segue was 166.3 million in Q3 2023 and.
An increase of $7.7 million or 4.8% compared to the same period of 2022.
The increase in revenue was related to organic growth of 5.1% driven by continued strong demand in both the residential and commercial sectors of North America, which sought 9% organic growth as.
As well as price increases.
The grocery is also driven by a positive foreign exchange impact of 5.4%, mainly coming from the U S zero <unk>.
Excuse me and British.
British pound currencies.
This was partially offset by the divestiture, Norway previously noted which caused a year over your decrease of 5.7% when compared to 232022.
Adjusted EBITDA and adjusted EBITDA margin for the accessibility segments stood at $29.9 million, an 18%, respectively compared to $26.9 million and 17% for the same period of 2022.
The increase in adjusted EBITDA and adjusted EBITDA margin was mainly due to better cause absorption. It from increased revenues in North America as well as in for pricing.
Revenue from our patient care segment was 43.8 million for the quarter, an increase of $1 million or 2.4% when compared to Q3 2022.
Revenue growth includes organic growth of 0.3%.
As a reminder to our investors are patient care business is driven in large part by project based sales, which can be lumpy from time to time.
For the quarter foreign currency provided at 2.1% tailored.
I, just did EBITDA and adjusted EBITDA margin stood at 6.1 million.
For the patient care segment, and 14%, respectively compared to $5.9 million and 13.8% for the same period in 2022.
The slight increase in both metrics was mainly due to the increase in revenues as well as improved gross margins.
For the quarter net finance costs were 5.5 million compared to 2.5 million in Q3 2022.
Tristan longterm debt increased by $2 million when compared to last year due to higher Margaret interest rates.
That financed costs were also impacted by lower net foreign currency gain a point $3 million compared to a gain of 2.2 million last year, most of which are going to realize the nature.
Net earnings were 12.1 million or 18 cents per diluted share for the quarter compared to 10.6 million or 16 cents per diluted share in Q3 2022.
Justin net earnings was again $12.1 million or 18 cents per diluted share compared to $11.2 million or 18 cents per diluted share last year.
A year over year increase in net earnings is driven from increased operating income, which is mainly driven by increased gross profit across the business.
So turning now to capital resources and liquidity.
A quarter cash flows related to operating activities before net changes in non-cash operating items reached 26.9 million versus $28.9 million for the same period in 2022.
A slight decrease mainly reflects the impact of higher income tax paid.
That changes in non-cash operating items reduce liquidity by 1.6 million compared to 9.7 million in the same quarter last year.
Improvement is mainly due to a stabilization of inventory levels across the business.
As a result.
<unk> cash generated from operating activities in Q3, 2022 stood at $25.3 million compared to $19.2 million for the same period in 2022.
Cash used in investing activities was 4.5 million for Q3, 20 twenty-three compared to 4.2 million in the same quarter last year and the corporation dispersed 4.6 million for fixed it intangible assets.
This year compared to 4.4 million last year.
Cash used in financing activities was 20.7 million for for Q3, 20 twenty-three compared to $10.9 million 2022. The variation is mainly explained by a reimbursement of $91 million on her credit facilities. Following net proceeds from the issuance of common shares.
Previously noted of $88.3 million as well as higher interest paid up 2.2 million in Q3 23 three.
That's September 30th 2023, so very had a net debt position of 290.2 million and it was in compliance with all of its covenants.
On a trailing 12 month adjusted EBITDA basis, the various net debt to adjusted EBITDA ratio was approximately 2.28 times.
The large reduction versus prior quarter was the result of the share issuance net proceeds being used to pay down debt.
At the end of the quarter. So very had net funds available of approximately 203.4 million to support working capital investment and growth opportunities.
And now looking forward for 2023, so very Ah continues to expect to generate revenue, which will be approximately 8% to 10% higher than 2022, when normalizing for the divestiture of the Norwegian Auto Division.
As well as adjusted EBITDA margins of approximately 16%.
It is a reminder, Norway represented approximately 60% of the overall vehicle segment revenues in 2022.
This outlook continues to be based primarily on the continued strong organic growth coming from both accessibility inpatient care segments supported by high backlog levels Cross sign up cross selling initiatives and strong demand.
And continued successful integration of handy care in progress towards achieving the next strategic phase of synergies in line with management plan.
And with that this completes my prepared remarks, and I'm Gonna turn the call to Sebastian for an operational uptick Tuesday.
But first I must say I'm quite that through the results on assistance to put up a car in North America, we have the growth of nine per cent.
Which came mostly from the I'll put on Vancouver, and Toronto bacteria. So <unk>.
And where countries have it very L. T backlog, so that's positive for the future corner.
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And wherever question would you agree with your employees will do some Richie tracks to Toronto, The U S with some pork Smith.
And also we start out some shipment to Vancouver.
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Oh, Sweet Toronto, we started to manufacture a second model or when did care, it's totally up to 4000, which wasn't maybe in UK. So just when I first three Christmas days in the future North America, because we will have a better evening.
Finally got into several one quite that people just start so we did a.
Alright, <unk> identify opportunities.
<unk> brought him up plan that would use of our employees in different areas. So first commercial procurement production and that we are now starting the intimidation step by step.
Over the next two years <unk>.
Program also include some training for our people in order to <unk> the business as a 1 billion company, which is better processes.
So Virginia will update but the intention is to ever invested in the in the first part of next year. So that we can talk more about this a R. One project.
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Yes, Thank you Sebastian and good morning.
Pulling a very strong first half of the year the performance with our patient care segment with more moderate in Q3.
A slow start to the quarter with a relatively weak month of July.
In particular, we experienced lower volumes within our Bedframe business and some lumpiness with project work over the summer months.
Consequently, organic grocery flat in the quarter and lower than the record level seed in Q1 Q2.
That said our backlog is still in good shape and was higher exiting the quarter, then where we begin.
We also saw a positive uptick in bed frame order starting October we feel confident about your budgetary spending which bodes well for queue for revenue and should enable us to have a strong finish to the year.
Profitability perspective.
Deliver sales in Q3 didn't allow us to absorb as much overhead as compared to prior quarters, which undoubtedly had a negative effect on our EBIT margin.
Overall EBIT margin stood at 14 per cent in Q3, we're looking over the longer period year to date, the patient care margin of 18 per cent is still a significant improvement over 2022.
Despite this pullback in Q3, we firmly believe that the performance. This year is a testament to the strong leadership with a patient care.
And proof of the last 600 US a lot to do the integration of handy carrying span.
To that in our operations teams are interacting more than ever to share best practices and improve quality.
And we've organized our sales force to allow them to focus on the respective strengths with an acute and long term care.
So to conclude we expect to bounce back in Q4 and have confidence in our sales leadership to deliver a good results to close out the year.
With that I'll turn the call back over to Marcel.
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<unk> as in my mind, if you would like to ask a question you can <unk> one on one on your telephone and white for your name to be announced until Rachel Your question <unk> again.
Thank you run that take our first question.
The first question is from the lineup calf muscle from Scotiabank, Please give a hat.
Hi, good morning.
Oh sure Yeah.
That's how I got one project cost is there something you expect to incur in the next couple of quarters.
Can you provide us with the preview at a high level and what to expect from some <unk> <unk> on the margin versus the cross onside.
Also finally on your way to think about the cat and so if that improvement for the next two years.
<unk> I I got very I'll I'll take this question it's easier just on the first part of the question there on Saverio one related costs. So we did have.
Just to highlight actually the <unk>.
9 million that we saw in the quarter and the 1.6 million that we saw the date I mean, some of that is obviously consulting fee. Some of that is internal training and there's it's a bit of a mixed bag in there, but going forward I mean, we can continue to expect.
Cost related to Saverio, one there is the.
The largest part is his consulting costs and and.
The consulting arrangement, though we do have in place in place, it's a mix between fixed fees and performance fee. So it was a fixed portion that we're gonna continue to see until the end of the project, which is expected to run at this point until approximately May 2025, and there's also a performance based.
Fee in there as well so that fee is obviously more variable. So it's it's hard to give you an exact amount.
The amount that we can expect to see in future quarters, but I I would expect the number that we saw in few three to two at least continue until the end of the project.
I'm sorry can you repeat your the second part of your question Gabriel.
Yeah, just if you can give us a higher level of what to expect and <unk> cross selling side on margin.
I think they forgot or we need to go back to the vision of the 1 billion of the that who wanted to be and this is why I will ever.
Call in in the first quarter next year to be able to describe it it's normal to serve our one I'll do as the next two years right now we're still at the beginning of the implementation right now we have our <unk>. Our guide is 4333, sorry as you can see there's no chance for this year, but it will be some small cost for the for the summer I one project, but relieved we submitted for the next two.
<unk> and this is something that will be able to address in the first part of next year. So I think it's a very good news.
And maybe it's just my second one.
I know you said the E. R. P was fully behind you.
But can you confirm it that no impact on the result for this quarter and then more broadly <unk>.
The challenge in Iraq relate to the macro or is there something operationally that you think could be improved.
Sorry, I can't take this one so I think we <unk>. We did we discuss some interior that again, we had a we had a good rebounder with west that versus last year, but but again is a big change from the second quarter. So I consider that the European <unk> is over in England, and we're back to <unk> to be a good company.
I think we need to understand is in Europe, and North America, Yes, Sir it has been a bit more challenging the last year, but we are not the same company yet we don't have the same product car frame and want to add more cross setting you up with some vertical platform on the live record. So I think we were a time will be more diversified it and it would protest pressure.
And some of that Martin So I'll take it consider that the second quarter is over in the <unk> history is finished.
Perfect. That's <unk>. Thank you very much.
Thanks, a lot now take our next question.
And that's just from the line of Charles Zhang from T. D. Securitas. Please go ahead.
Good morning. This is sure any for Derek and thanks, So much for taking my questions. So my first question is on patient care. So like you mentioned as an emergency it looks like a more lumpy business, giving your time your order, but just wondering if you could speak to speak more to the rebounding demand that you're seeing there it sounds like.
So like in the early stages Q for it thank you.
I can take this.
The rebound I guess in terms of Q forward that we had mentioned does is essentially as soon as you described it right. There was some lumpiness that we saw over the summer months. You know we started the year with with very high sales volumes Uhm very happy with how the the first half with your <unk> <unk>.
Because we'd mentioned on the previous call.
He was fantastic quarters, and you wanted to do and and I would love to be able to say that we're gonna have four fantastic quarters every year, sometimes you have a an okay quarter and that's what we saw here in Q3 Uhm, we did see an uptick as we exit the quarter and order intake and then also into October and that's what gives us the confidence that we are seeing sales come back and orders coming back following.
That summer slowdown and that's what gives us the confidence for Q4, and then that same time before there's some budgetary spending that that happens and so we do anticipate to be able to take advantage of that so that's I guess, where we have the confidence there as I mentioned earlier.
Okay. That's very helpful. I got my second question is so.
<unk>.
Mm Oh.
Can you speak to the backlog level in accessibility in patient care and if there's any changes in recognition of the man cave in the not quite backdrop.
Oh sure I'll I'll take this one good to hear from you on the call. The the backlog remains strong. So overall the backlog of across the company. It is about the same level that we saw exiting last quarter exiting Q too. So I think that we have seen certain.
In certain pockets based on some of our divisions being able to increase output significantly, especially <unk>.
I'm in <unk> in in British Columbia in here in Brampton been able to produce more on a daily basis. So we have been able to improve our lead times and eat a little bit into our backlog.
But the.
The backlog remains very healthy there's no concerns across either residential or commercial sectors. At this point uhm, both remain very strong and and for us bode well for for future quarters.
Awesome, that's very helpful online banking with you.
Thank you my mom is until my next question.
This is from the line of Microcline from Raymond James. Please go ahead.
Hey, good morning, just coming back Marcel Thank you for the commentary surrounding the equity issue and so I just wanted to see if you're able to give a bit more indication if we're thinking about it so very <unk>.
In terms of the M&A outlook like what are what are some of the areas of the business that you would like to add to or or what would represent opportunistic areas for saverio to gain actually get some additional business lines in.
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How 'bout <unk> and how about the <unk>. Okay. Maybe this sounds is more <unk>, but the athletes that <unk> work on that piece of that say, okay. You a complete my Atlanta ethics about set so yeah for R&D is always a key element of our business with it I'm, putting your products to Marquette that's important for us.
<unk>, either and that sort of complete us <unk>, we always say that again <unk> complimentary products is always nice because we have a thousands either.
You too and so I'm from time to time, you know we have 30 direct office right now from time to time, we made it back smart regular when the abnormal maybe a succession plan and it is a good business. So that's maybe two element that we could bring a going for it.
And would you say overall there.
You are seeing like with the timing of the equity issue in.
Is it fair to say that you have seen a step change or uptick in the M&A opportunity sat in front of you then I think now we're focused on the survey one project and the integration I'd take you get into I just have some consciousness on the balance sheet, because I'd like to be ready you visit in advance.
So again, but right now that is my position that coming months. It will focus on several one but going forward in the coming years cause you. Some unfortunate to you so.
Okay, and then just on cash flow Steven are <unk> are you able to give.
Some indication for Capex next fiscal year and working capital over the next 12 months.
I.
I guess to start on the Capex front, Michael Capex is it's an area we've always spent.
Starkly, 2% to 2.5% of revenues that that's always been our our guide this year, where we tried to rush it down a bit closer to two per cent a big part of our Capex, though is is R&D spend right and we just talked about you'll have a bit.
About how important it is to be bringing new products to the market and be innovative. So it's that's not an area that we're looking to make cuts them at all will probably continue at least in line with where we're spending this year on R&D internal R&D projects.
For next year, we haven't yet nailed down our budget, but I would say, it's it's gonna be in in the 2% to 2.5%, maybe maybe closer to 2.5% next year I'm as we look at so variable in another projects, but it it's not going to be a large upswing because of the very one if if if that sort of what you're hinting at with her.
Guards to working cap similar comment around and we're still working through our budgets for next year, but we are you know I can say that we don't think working capital as an area that needs to be invested more heavily in where we're looking at you know different inventory inventory reduction plan.
<unk> is that a few of our T locations. So we hope to see some results come out of that and also working across you know working with our vendors to improve terms and and you know our <unk>. Our position is as strong I mean, we plan on continuing that to be in a healthy position next year. So so overall not expecting a big <unk>.
<unk> in working capital, but again, Michael where we are forecasting.
You know decent revenue growth right. The 1 billion target implies good revenue growth over the next couple of years and they're always is gonna need to be working capital investment to support that top line growth.
Okay, and then just one more with the debt repayment.
Do you have an <unk> give a indication of like your <unk>, what your run right.
Just expense will look like.
The run rate interest expense uhm. So we are.
We have we are more tilted to variable than fixed we have a small portion of our debt. That's fixed so a lot of it is is market based rates.
Our interest expense <unk>.
This quarter.
Mmm without giving you a number I mean, obviously, it's gonna come down by by a good chunk, but.
Yeah, I I mean, I I think what you're gonna see in queue for would be would be a good run rate for next year, but.
I have a number to give you for what it's gonna come down in Q4.
Okay. Thanks for taking my questions.
Thanks, a bunch.
Now take our next question.
This is from the line of <unk> capital markets can you skiba hats.
Thank you and good morning.
Marie maybe starting with Europe in past quarters, you you highlighted commonplace and pressures in Europe can you. Please provide an update on that what you're seeing generally on that front as well as maybe an update on that.
Your your plan for price adjustments I know in the past and some of our early 2024 with what's considered maybe for some price adjustments hang ups or maybe just an update on that.
And so you just wanted to thank you <unk>, so what city and fish. It has produced <unk> <unk> was one and a half years ago until my price increase you know what I'm thinking and we have different brands from <unk> do a direct star threatened to care. So I think there's different Easter River annual increase in now.
We have a empty backlogs, sometimes gigabits against the <unk>.
The price increase.
<unk> do a price increase in early January.
<unk> typically see end up taking their marching in Michigan corner of it and what about you.
I guess the next year.
Perfect and so we saw a gun and go out of 9% in North America accessibility, which I think as you said implied that drug <unk>, which is a good outcome versus Q too I'm, just thinking of maybe 20th 24, and dawn and sort of what Europe could potentially do on a an organic growth front with.
Potentially pricing and some of the product productions that they're planning their without I guess, providing formal guidance on European organic growth. How how do you think about the potential of of Europe in terms of top line growth in the coming years.
I can tell you this but so I take your Friday are gonna put through that match, the <unk>, which is that gonna till I get there and it's all the same you to get our tickets Empire, 8% to 10% of our gonna grow. So again this year was a bit lower than you up with some new products wherever your inbox or and expect that over time.
Not some requests would have a similar or getting so.
So I think that's what we should take care of it.
Okay, Great maybe last one for me on patient care I'm, just wondering if if you can comment on the on the current bidding environment as well as the the competitive environment then that Simon.
Yeah. Thanks for it it is competitive.
I'll start by saying that uhm, but I think we're well positioned with a full offerings that we have now you know with the <unk>.
And Karen span teams together bidding has been good I would say you know there's a lot of newbuild activity. That's out there are a lot of you know plan government spin so we're looking to <unk>.
When as much as possible against some of our competitors in certain markets.
We do feel that we're stealing market share of gaining market share. So it is a it is a healthy environment.
Overall, very competitive and we're holding our own so I feel very strong about our position.
Maybe just a quick follow up on that on the government.
The business is the emergent profile there.
Different than non-government Christian karyn businesses or like.
How does that compare.
Oh, that's so much I think you're in Canada. You know there are certain provinces, where you do see that I would say, Quebec for example, as a province, where it maybe it's it's a lower margin, Ontario tends to be a bit higher margin. So so there are some differences provinces privacy province, but but overall no I mean, we're bidding on business, whether it's government or private.
You know, we do have our own Martin expectations to maintain so we're not out there just you know a low balling. It just to win business. So we are I guess smart from our approach there and it's not always about pricing even with the government right. There's certain governments that that you recognize the quality of of that or products in terms of patient Karen and click.
<unk> so no it's not always on price when you're going with government, but it is something to be conscious stuff for sure.
Great. Thank you.
Thank you went out take our next question.
This is from the line of Julian hung from State <unk>. Please go ahead.
Hi, just in queue. It on here. Thanks for taking my call sign the gross margin strength Hunter was.
The highest it's been in two years is there anything that drove that and then also the EBIT margin expansion didn't.
Didn't see the benefits of the gross margin just wondering the delta there. Thank you.
Yeah I'll take this one I mean, the first time the gross margin improvement most of that came from.
We did see some inpatient care, but most of it really came from North American accessibility. It was coming from the the Brampton in the Surrey, British Columbia sides to care about the state in British Colombia, It mostly has to do with operating leverage we had.
A very large sales growth out of those two locations specifically in the quarter that a lot of that contribution margin just slowed right to the bottom line. So that's R. Two gross profit, which which float to the bottom line. So that that's really what helped it and drove over the over all company SG&A did take up.
This quarter some of it was related to some very one as mentioned, but we had some other costs and other pockets of the business that.
Made it a little higher there are a couple of off cost in there as well, but you know we are expecting SG&A to to go a little bit down next quarter, but keeping in mind. The severity of one costs are gonna continue and that's that's Barrett interactional results. So that's gonna continue for the next up until sort of May 20.
May 2025 is mentioned.
Okay understood and then if we just took a step back and considering.
Considering the margin expansion go from 16 per cent now to 20 per cent.
And 2025, what would be the main drivers.
As far as expanding the margin.
Okay.
I would take this right. Okay. So it's quite <unk> coming from 16, okay too.
220, okay, but saddam so I'll get that <unk>, we have the essentials to any work would ask okay annually review, our pricing will review, our <unk> and now let's forget one thing okay. In the next two years 24 and 25 okay.
The <unk> from the consultant and <unk> 70, again 58 would be very <unk> mmk H y M. <unk> add this this 20 per cent, okay, <unk> repeat that to repeat that again, but we were.
On the on the pricing with them, Okay, and that's very easy for them to wait right now that's <unk> about the pricing.
With some knowledge that they can be less okay. The <unk> teacher for us a teacher from University, Okay, and it's great to keep a legal after that they could think of energy. So we would have more sounds okay. We <unk> <unk> with a bigger okay.
<unk>, Okay, and I think when you <unk> you can save on <unk> <unk> <unk> <unk> <unk> <unk>.
<unk>, maybe the pricing is not there and the pricing, okay and you'd have to okay was always <unk> compared that to what we have and no tomato. So we fixed <unk> with a with a friend that came from from if you're okay, but if you put otherwise that the today that N I C. A.
Give me a P. I I was putting on the number of May and Atkins sweating, and <unk>, <unk>, <unk>, and maybe who will exceed that <unk>.
Because it will work from the <unk> from the <unk> and <unk> and do you have a consultant at help us okay to fine maybe new supplier, okay with the bear with US. So we work on that <unk> at the same time, it's Y a K that I believe a strong belief.
That will.
Find it 20 per cent in two years.
Oh, sorry can herself.
Yeah, and I I know, there's been a track record of a safari of exceeding longterm goal. So we look forward to that maybe just one more question of clarification on the management or the consultant fees, if I heard correctly, there's a variable component to it if.
If your bill just to describe his up verbal component attached to the margin expansion goal.
Yeah. So I'll I'll take this one I mean, where will definitely be writing more guidance on this at the ambassador but yeah. There is there is a variable component and and you know some of that the variable pieces tied to outperform it. So you know the the better.
The better results, we see in our business you know we can expect some some fees associated with that so it's a win win on both sides of the arrangement.
Great. Thank you for taking my call.
And Sir if I could just go back to a previous question that Michael Michael Glenn had on the interest savings I just had to pull up a file it's it's about $1.5 million of interest savings Michael per quarter with with the reduction of that but also the fact that we've achieved now a a lower tier.
<unk> on our on our pricing based on the lower leverage ratio that we have so it's about 1.5 million savings a quarter and and about some of that is gonna be obvious eaten up by higher dividend, but is it going back to your question. Michael That's it's about one half million dollars.
Sorry, Thanks, Sarah you can open it back up for questions.
<unk> just as a reminder, if you do have questions you can <unk>, one and one on your keypad.
I'll take our next question.
Yes from the line of Zachary <unk> National Bank financial Please go ahead.
Good morning, everyone. Thanks for taking my questions I think most of them will have to wait for the faster dance very one, but maybe just one on patient care, if the backlogs higher exiting the quarter.
Was it really just order timing, preventing you from delivering another high forties revenue corner.
Order timing, yes, I think that that is part of it you know we see the uptake of guesses <unk> Summer you know September and October in particular, we did see some some good uptick there in terms of order intake.
So it is a combination of of just increased order activity exiting the summer, but also just a question of lumpiness within a quarter itself as it relates to projects.
So nothing stopping you from executing on the backlog within the quarter.
No no I mean, it's very much you know the orders coming in now for the most part it's trying to to beat this I guess the urine spent right. So yeah certain.
I guess, there's certain kind of.
Budgets that that have a December year, and you know you have to eat it no. So budget dollars otherwise you know in many cases. They go away. So we are trying to take advantage of that said some orders that you're seeing coming in now. This inflow now it is very much to help us and and Q4.
There is some of the backlog I will say that the backlog. It isn't just a Q4 backlog right I mean within patient care, even the project nature of some of the work Uhm It has gone beyond a quarter.
But that's normal submit but some of the spending that you're seeing now are some of the uptick that we've seen <unk>. It is very much to help us with you for.
That's a good color. Thanks, and then maybe just one on management focus on them and a versus Saverio. One we've we've talked about the balance sheet opening up your options over the coming years. As Sebastian said are are you still entertaining discussions like how laser focused as management on <unk>.
Keeping those conversations calling and you have a pipeline.
I can't take this one has excellent taste again, we're at 99 per cent of focus on this one so I I think I'm gonna have to say that there's nothing coming in the next few months right now we have enough on our plates I know we finish this year will do us a R. One and I'm sure a person who would come in the rest of them.
Create answer thanks, I'll turn it over.
Thank you.
Not take our next question.
<unk> from T D C care. It tastes. Please go ahead.
Hi, Thank you just a quick follow up by my apologies if I make this earlier cause I got disconnected so with the public equity offering now closing your luggage down to 2.28 time, just curious how you think about that priority into your account and the allocation.
Yeah, Hi, Sheryl Thanks for the follow up on capital of obligation for US I mean, you know again going back to.
Sebastian's last pointed it it's not that we're looking at at at any near term M&A.
We are we are very focused on saverio, one, but that that project as I noted earlier, there's not gonna be a large pick up in capex or expecting capex for 2024, I mean, it it's too early to comment of 2025, but there's no large capex.
Large capex spend associated with very one so we're gonna come in at a at a historical range on Capex for 2024 and and working capital.
We believe that.
We have to have the working capital support the business grows absolutely, but we believe we can ratchet down working capital levels, a little bit more versus versus what we have right now so I'm expecting some improvement there as well.
Okay. That's very helpful. Thank you so much.
[laughter].
Thank you Uhm thyroid night further questions at this time, so I will have that to this day kez.
Okay first okay. Thank you very much okay for for it to be on the cards morning, and and this is very important institution. Okay. The way Okay D C things for the future Lucky you <unk> repeat that okay, you can take <unk>.
February Okay and put that through.
The <unk> there is gonna important for us and I am very happy to have the cat, okay, 10%, Okay <unk>.
<unk>, okay. So thanks <unk> partner, Okay. Okay <unk>.
And I'm very happy that the mini.
Many people <unk>.
How 'bout that went ahead and we don't see <unk> offering right now in the market. Okay. So I am was very I'd be too sexy that keeps you make that and that puts us at an ogre and a a level of conflict and <unk> confirm to pay you got better ski so and we have some cash <unk>.
Hate to entertain okay.
<unk>. So again I think the my people, okay, and thanks, and <unk> and our vision, Okay seven yeah.
<unk> 25, so thank you very much everybody, okay too that'd.
Be on the call and thanks for a question and thanks for my people to the <unk>.
Thank you Sarah.
<unk> S desk, okay at the conference for today, Thank you for participating and she may now disconnect.
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