Q1 2024 Savaria Corp Earnings Call

Yeah.

Norma: Good morning, afternoon, and evening. My name is Norma.

Norma: I'll be your conference operator today. At this time, I would like to welcome everyone to Savaria Corporation's first quarter 2024 conference call. All lines have been placed on mute to prevent any background noise.

Norma: After the speaker's remarks, there will be a question and answer session. The three speakers for today's conference will be Sebastien Bourassa, President and Chief Executive Officer, Steve Reitknecht, Chief Financial Officer, and Jean-Philippe de Montigny, Chief Transformation Officer. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

Speaker Change: Good morning afternoon, and evening my name as normal I'll be your conference operator today at this time.

Norma: To withdraw your question, please press star 11 again. This call may contain forward-looking statements which are subject to the disclosure statement contained in Savaria's most recent press release, issued on May 8, 2024, with respect to its first quarter 2024 results. Thank you. Mr. Bourassa, you may begin your conference.

Speaker Change: I'd like to welcome everyone to <unk> Corporation's first quarter 'twenty 'twenty four conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session. Just three speakers for todays conference will be Sebastian Bourassa, President and Chief Executive Officer, Steve right.

Speaker Change: Nick Chief Financial Officer, and John Felipe D Martini, Chief transformation officer. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one.

Speaker Change: One again this call may contain forward looking statements, which are subject to the disclosure statement contained in <unk>. Most recent press release issued on May eight 2024 with respect to its first quarter 2024 results. Thank you. Mr. Bourassa you may begin your conference.

Sebastien Bourassa: Thanks, Tomas, and good morning, everyone. Today, I will start with a small recap of our first quarter results. Steve will update us on our financial section. NGP will update you on the progress of Savaria 1. And we're going to have a small Q&A session at the end.

Nick: Thanks, Tom and good morning, everyone.

Bourassa: Today, I will start with a smaller cap over first quarter.

Bourassa: Steve will update us with our financials section and JP will update you on our progress.

JP: And we're going to have a small a Q&A session.

Sebastien Bourassa: Fortunately, overall, revenue growth in Q1 was below expectations. First, we lost some sales with our diverse shareholder bank conversion in Canada. Europe had a small decline of 3.4%. But you will see later that we had a positive, okay, a bit of improvement. So good job on that.

JP: What's sort of the overall revenue growth in Q1 was below expectations.

JP: First we lost some space with our divestiture of our ongoing version in Canada.

Sebastien Bourassa: And we are going against a weak second quarter in 2023. So we're expecting to have some growth in the second quarter to bring us back to the normal level, patient care at the flat first quarter. But we're again having a strong first half of the year in 2023, with a weaker second half. So we're expecting strong growth for this year. It's part of sub-R1.

JP: You'll have as a small decline of three 4%.

JP: But usually at better together positive EBITDA improvement so good job on that and we are going against a weak second quarter of between 23. So we're expecting to have some growth in the second quarter to bring us back to that.

JP: Patient care at a flat first quarter, what were again strong first half of the year in 2023.

JP: With the weaker sex.

JP: So we're expecting strong growth for this year, it's part of February one and remember in the last two years, we have increased our sales by 30%.

Sebastien Bourassa: And remember, in the last two years, we have increased our size by 30% in that. Additionally, in North America, we experienced growth of 11% in the first quarter. We have deployed our dealer partner program, Name Access Plus, in North America. The reception was very good, and we had the best caller ever in terms of booking for Garaventa and Savaria in North America. So, ups and downs in the first quarter, but in the long term, we are still very confident in our ability to grow the business to 1 billion by 2025 with the aging population, a unique value proposition for the one-stop shop, and the wide range of products that we have with the expansion in R& I think we have all the tools in our hands.

JP: Right.

JP: Positively in North America.

JP: We saw growth of 11% in the first quarter, we have deployed our.

JP: Dealer partner program name excess plus.

JP: In North America. The reception was very good and we had their best quarter ever in term of booking or Gavin and Slovakia in North America. So quiet.

JP: But so ups and downs in the first quarter, but in the long term, we are still very confident in our ability to grow the business to do $1 billion by 2025 with the aging population a unique value proposition for a one stop shop and a Y grade project product that we have.

JP: With your expansion in R&D with new products, and bringing some new existing products.

JP: I think we have other tools in 2016.

Sebastien Bourassa: Overall, Savaria has remained a very attractive business for a dealer with an all-different market, a one-stop shop, a wide range of products we have, a global footprint, and a vertical integrated supply chain. We continue to expand our build out in Mexico. Now we have 75 employees, which will be there to support the next generation of manufacturing, improve our costs, and bring some resilience to our supply chain that puts us in a good

Speaker Change: Well Suraj I remain a very attractive business for a dealer.

Speaker Change: In all different market that one stop shop, a wide range of project product we have.

Speaker Change: Our global footprint.

JP: We are a vertical integrated supply chain.

JP: Can you expand or build out in Mexico now we have 75 employees.

JP: Which will be there to support the next generation of manufacturing.

JP: <unk> costs bring some resilience to our supply chain.

Sebastien Bourassa: Our operation continues to improve in the auto factory in terms of safety, quality, and throughput. So, quite positive. And that brings us a bit to the next section, which is the EBITDA improvement of 2% in the first quarter and 16.6% in the Easter year, the weakest quarter of the year.

JP: Put us in good position.

JP: Our operation continued to improve in the auto factory in terms of safety quality and throughput so quite positive.

JP: I submit to the next section, which is the EBITDA improvement by 2%.

JP: In the first quarter was 16, 6% in the Easter here weakest quarter of the year.

Sebastien Bourassa: And that shows some very positive signs of operation excellence that we are developing to a 701 program, an improvement of 2% going from 10 to 12 with a lower size. So that shows some signs of improvement with the Savaria one. And this team is working very hard on this, and GP is going to explain it in this section later. North America accessibility improvement of 2% going from 17.5% to 19.8% due to higher output in Brinton, Ceres, and good performance in our direct store. So I'm very happy with that. However, patient care went down to 18.5%.

JP: And that showed some very positive signs of operational excellence that we are developing <unk> one program.

JP: A program of 2% or about going from 10 to 12 with lower sales. So that show some sign of improvement with the severity one and his team is working very hard on this and GP winter expanding it in his section later.

JP: North America access EBT improvement of 2% going from 75 to $19 eight due to a higher uplift in <unk> series and good performance in our direct start.

Sebastien Bourassa: I think it's mainly due to the product mix and the work size, but not very far from our target of 20%. As discussed at our last Investor Day, our target by 2025 is to be a company of approximately 1 billion sales at 20% VBIDA, and it will be possible with our Server 1 program. Our results in Q1 show that we are moving in the right direction. Savaria is also very well positioned with its balance sheet, but we continue to do some small token acquisitions to reinforce our product portfolio to continue to improve the margin. In the first quarter, yes, we divested Vancouver in Canada, but we have replaced some portion of the sales with Meta, Dumbweller, that's going to start in April.

JP: Are you happy with that patient care wind down to $18 five I think it was mainly due to their product mix and the worst I guess.

JP: But not very far from our target of 20%.

JP: As discussed in our last Investor day right.

JP: Our target by 2025 is to be a company of approximately 1 billion in sales at 20% of EBITDA.

JP: And then can be possible with our <unk> one program our results in Q1 show that we are moving in the right direction.

JP: <unk> is also very well positioned with its balance sheet as we continue to do some small tuck in acquisition to a universe our product portfolio.

JP: Of course, we can improve the margins.

JP: First quarter, yes, we divest or a bank provision in Canada, but we have replaced some portion of the site with made that winter.

Sebastien Bourassa: And that's a very good example, a small token to bring some new products to continue to be the first choice for a dealer and be able to integrate that into our supply chain to bring some synergy. Very important, we had a good quarter in terms of cash generation, which Steve will talk about in detail, but I want to highlight that we have generated cash from operations while we are going into business, and this is where we want to be.

JP: Thats going to start from April and that show a very good example, small tuck ins to bring some new products to continue to be the first choice for a dealer and be able to integrate that in our supply chain to bring some synergy.

JP: Very importantly, we had a good quarter in terms of cash generation, which they would talk about it into details, but I want to highlight that we have generated cash from operation, while we're growing the business and this is why we want to be.

Sebastien Bourassa: Finally, I would like to thank all our employees, our dealers, our suppliers, and our customers for the success in the first quarter. And as I travel all over the world to visit different sites, I'm always impressed with the good ideas from our employees. And I thank them for all their participation in this successful company. I think our employees appreciate the effort that we're getting and some direction on where to go. Their participation is good, and we saw that in our last engagement survey in the company.

JP: Finally, I would like to thank all our employees our dealer as a supplier and that customer for the success in the first quarter.

JP: I travel all the work with the different sites.

JP: And perhaps just a good idea from employees.

JP: And then things down for their participation in this successful company.

JP: I think our employee I appreciate the fact that we're getting.

JP: And at some direction on where to go direct participation is good and we saw that in our last engagement survey in the company.

Sebastien Bourassa: So in closing, keep in mind that Q1 is... These tend to be the slowest quarter of the year, while we have a revenue growth challenge. However, we are quite pleased with the profitability and improvement in our market. Steve.

JP: Keep in mind that Q1 at this.

JP: Tend to be the slowest corner of the year, while we have revenue growth challenge, we are quite pleased with their productivity and improvement in our margins stable.

Stephen Reitknecht: Thank you, Sebastian. And good morning to everyone on the call. I'm excited to share some remarks regarding our Q1 2024 results. So starting off, some key highlights for the quarter include strong EBITDA margin improvement driven from gross margin improvement, North American accessibility revenue growth of 11%, and strong cash generation from operations, including from working capital, in our seasonally weakest quarter. So for the quarter, we generated revenue of $209.4 million, a decrease of $2.2 million, or 1% versus last year. The decrease mainly came from the divestitures of Van Action, Freedom Motors, and the Norway operations, partially offset by organic growth of 2.6%.

Speaker Change: Thank you Sebastian and good morning to everyone on the call I'm excited to share some remarks regarding our Q1 2024 results.

Speaker Change: So starting off some key highlights for the quarter include strong EBITDA margin improvement driven from gross margin improvement North American accessibility of revenue growth of 11%.

Speaker Change: Cash generation from operations, including from working capital in our seasonally weakest quarter.

Speaker Change: So for the quarter, we generated revenue of $209 4 million, a decrease of $2 2 million or 1% versus last year.

Speaker Change: The decrease mainly came from the divestitures have been action freedom Motors in the Norway operations, partially offset by organic growth of two 6%.

Stephen Reitknecht: We also experienced positive foreign exchange fluctuation. I'm pleased to report that the corporation delivered improved gross margins, not only in Q1 of 2023 but also higher than any quarter in all of 2020. We delivered a record gross profit and gross margin of $75.4 million and 36% compared to $72 million and 34% in Q1 2023. The increasing gross profit of $3.4 million is explained by better gross margins in both of our segments due to favorable product mix, improved pricing, and favorable cost of materials as well. As Savaria 1 continues to be the major driving force toward our targets, we incurred $5.3 million in strategic initiative expenses in a quarter, in line with previously stated expectations.

Speaker Change: We also experienced positive foreign exchange fluctuations.

Speaker Change: I am pleased to report that the corporation delivered improved gross margins not only over Q1 of 2023 were also higher than any quarter in our.

Speaker Change: 2023.

Speaker Change: We delivered record gross profit and gross margin of $75 4 million and 36% compared to $72 million and 34% in Q1 2023.

Speaker Change: The increase in gross profit of $3 4 million is explained by better gross margins in both of our segments due to favorable product mix improved pricing.

Speaker Change: Favorable and favorable cost of material as well.

Speaker Change: Saverio one continues to be the major driving force toward our targets, we incurred $5 3 billion for strategic initiative expenses in the quarter in.

Speaker Change: In line with previously stated expectations.

Stephen Reitknecht: Adjusted EBITDA and Adjusted EBITDA margins finished at 34.7 million and 16.6% compared to 31.2 million and 14.7% last year. The increased profitability is mainly explained by the increased gross margins as a result of the effective realization of our ongoing Savaria I initiatives, and JP is going to speak to this shortly in more detail.

Speaker Change: Adjusted EBITDA and adjusted EBITDA margin finished at 34.

Speaker Change: $7 million and 16, 6% compared to $31 2 million at 14, 7% last year.

Speaker Change: We increased profitability is mainly explained by the increased gross margins as a result from the effective realization of our ongoing scenario one initiatives and J P is going to speak to this shortly.

Stephen Reitknecht: Now looking at our segmented results. Revenue from the accessibility segment was $160.4 million, a decrease of $2.4 million, or 1.5% compared to last year. The decrease was mainly related to the divestiture. In addition to the execution of some of our pricing initiatives and pricing optimization, we saw strong demand in both residential and commercial sectors, partially reflected in the organic growth of 3.3%. Adjusted EBITDA and Adjusted EBITDA margin for accessibility stood at $27.6 million and 17.2% compared to $24 million and 14.8% last year. The increased profitability was mainly due to improved gross margins coming from a favorable product mix. (Inaudible) The accessibility backlog remains strong and grew slightly versus where we ended the year.

J P: More detail.

J P: Now looking at our segmented results.

J P: Revenue from the accessibility segment was $164 million, a decrease of $2 4 million or one 5% compared to last year. The decrease was mainly related to the divestitures.

J P: In addition to the execution of some of our pricing initiatives and pricing optimization, we saw strong demand in both residential and commercial sectors, partially reflected in the organic growth of three 3%.

J P: Adjusted.

J P: EBITDA and adjusted EBITDA margin for accessibility stood at $27 6 million 17, 2% compared to $24 million in 2014, 8% last year.

J P: The increased profitability was mainly due to improved gross margins coming from favorable product mix improved pricing and favorable cost of material for both regions in line with our cost efficiency focus.

J P: The accessibility backlog remains strong and grew slightly versus where we ended the year, we considered our backlog level to be healthy as we have a good mix between short lead time products, such as stair lifts, which will ship out quickly and longer term home and commercial lifts, which we'll be shipping out within a few months or longer.

Stephen Reitknecht: We consider our backlog level to be healthy as we have a good mix between short lead time products such as stair lifts, which will ship out quickly, and longer term home and commercial lifts, which will be shipping out within a few months or longer. To provide some further color on our regions, revenue from our North America accessibility region increased 11% over last year, and adjusted EBITDA margin rose to 19.7%, an improvement of approximately 200 basis points versus Revenue from our Europe accessibility region declined 3.4%, the backlog remained stable, and the adjusted EBITDA margin improved here to 12.7%, also an increase of approximately 200 basis points over last year.

J P: To provide some further color on our regions revenue from our North America accessibility region increased 11% over last year.

J P: Adjusted EBITDA margin rose to 19, 7% an improvement of approximately 200 basis points versus a year ago.

J P: Revenue from our Europe accessibility to region declined declined three 4% the backlog remained stable adjusted EBITDA margin improved here to 12, 7% also an increase of approximately 200 basis points over last year.

Stephen Reitknecht: Switching gears to discuss our patient care segment, we saw revenues for this segment reach $49 million for the quarter, an increase of $0.2 million, or 0.4% compared to last year. We experienced healthy traction inside the United States, which led to increased revenues, while we saw a decrease in Canada explained by certain large construction projects delivered in Q1 2023 not repeating this year, as well as reduced government spending. As a reminder to everyone on the call, our patient care business is driven in large part by project-based sales, which can be lumpy from time to time. However, throughout the quarter, the patient care backlog remains stable.

Speaker Change: Switching gears.

Speaker Change: Gears to discuss our patient care segment, we saw revenues for this segment reached $49 million for the quarter, an increase of $1 2 million or 4% compared to last year.

Speaker Change: We experienced healthy traction inside the United States, which led to increased revenues.

Speaker Change: While we saw a decrease in Canada explained by certain large construction projects delivered in Q1 2023, not repeating this year as well as reduced government spending.

Speaker Change: As a reminder to everyone on the call our patient care business is driven in large part by project based sales, which can be lumpy from time to time in.

Speaker Change: And throughout the quarter that patient care backlog remained stable.

Stephen Reitknecht: Adjusted EBDA and adjusted EBITDA margin for patient care stood at 9.1 million and 18.5% compared to 9.8 million and 20.1% last year. The decrease in both metrics was mainly due to an unfavorable product mix on certain projects versus last year and higher selling expenses, partially offset by pricing initiatives and pricing operations. We've communicated on previous calls that Q1 and Q2 of 2023 were exceptionally strong and likely not to repeat in the short term.

Speaker Change: Adjusted EBITDA and adjusted EBITDA margin for patient care stood at $9 1 million, an 18, 5% compared to $9 8 million and 21% last year a decrease in both metrics was mainly due to an unfavorable product mix on certain projects versus last year and higher selling expenses.

Speaker Change: Partially offset by pricing initiatives and pricing optimization.

Speaker Change: We've communicated on previous calls that Q1, and Q2 of 2023 were exceptionally strong and likely not to repeat in the short term.

Stephen Reitknecht: Our EBITDA margin of 18.5% this quarter is higher than what we saw in the previous two quarters, being Q3 and Q4 of 2023, and is a very good start in our progress towards our target of 20% EBITDA margin. On a consolidated basis, net finance costs were $3.1 million compared to $7 million last year. Interest on long-term debt decreased by $1 million, primarily due to the reduced balance of debt, and we also experienced unrealized movements on financial instruments.

Speaker Change: Our EBITDA margin of 18, 5% this quarter is higher than what we saw in the previous two quarters Q3, and Q4 of 2023.

Speaker Change: It is a very good start and our progress towards our target of 20% EBITDA margins.

Speaker Change: On a consolidated basis net finance costs were $3 1 million compared to $7 million last year.

Speaker Change: Interest on long term debt decreased by $1 million, primarily due to the reduced balance of debt.

Speaker Change: And we also experienced unrealized movements on financial instruments.

Stephen Reitknecht: Net earnings were $11 million or $0.16 per diluted share for the quarter compared to $6 million or $0.09 per diluted share last year. The increase in net earnings and net earnings per share was mainly due to higher adjusted EBITDA and lower net finance costs, partially offset by higher Net Income Tax Expense and Strategic Initiative Expense. The higher net income tax expense resulted from the bottom line increase and increased profitability but does represent a slight decrease in our effective tax rate from 24.8% for all of 2023 to 24.3% for the current quarter. Turning out capital resources and liquidity in more detail.

Speaker Change: Net earnings was $11 million or <unk> 16 per diluted share for the quarter compared to $6 million or <unk> <unk> per diluted share last year.

Speaker Change: The increase in net earnings and net earnings per share was mainly due to the higher adjusted EBITDA and lower net finance costs, partially offset.

Speaker Change: By higher net income tax expense and strategic initiative expenses.

Speaker Change: The higher net income tax expense resulted from the bottom line increase to the increased profitability, but it does represent a slight decrease in our effective tax rate from 24, 8% for all of 2023 to 24, 3% for the current quarter.

Speaker Change: Turning now to capital resources and liquidity in more detail for the quarter cash flows related to operating activities before net changes in noncash operating items reached $23 8 million compared to $18 1 million last year explained by higher EBITDA generated by the.

Stephen Reitknecht: For the quarter, cash flows related to operating activities before net changes and non-cash operating items reached 23.8 million compared to 18.1 million last year, explained by higher EBITDA generated by the business. And changes in non-cash operating items increased liquidity by $2.7 million compared to a decrease last year of $2.1 million. The increase was mainly due to decreased accounts receivable and increased payables offset by slightly higher inventories. As a result, tax generated from operating activities in Q1 stood at $26.5 million compared to $16 million last year, a very large increase of over $10.5 million.

Speaker Change: Business.

Speaker Change: And that changes in noncash operating items increased liquidity by $2 7 million compared to a decrease last year of $2 1 million.

Speaker Change: The increase was mainly due to decreased accounts receivable and increased payables offset by slightly higher inventories.

Speaker Change: As a result cash generated from operating activities in Q1 stood at $26 5 million compared to $16 million last year, a very large increase of over $10 5 million.

Stephen Reitknecht: Our DPO and DIO measures improved versus last year end, while DSO remains stable. In line with our efforts to optimize our supply chain and working capital levels across the business. We continue to focus on acquiring working capital as we grow the company. Cash flows used in investing activities were $2.4 million for the quarter compared to $7.7 million last year. We disbursed $3.8 million for fixed and intangible assets compared to $4.5 million in Q1 2023.

Speaker Change: Our GPO and <unk> measures improved versus last year, and while DSO remained stable.

Speaker Change: In line with our efforts to optimize our supply chain and working capital levels across the business.

Speaker Change: We continue to focus on improving working capital as we grow the company.

Speaker Change: Cash flows used in investing activities was $2 4 million for the quarter compared to $7 7 million last year.

Speaker Change: We disbursed $3 8 million for fixed and intangible assets compared to $4 $5 million in Q1 2023.

Stephen Reitknecht: Since some investments were delayed to future quarters, we are expecting capital expenditures to stay in our historical range of 2 to 2.5% of revenues for the entire year. We also did receive $6.4 million from divestments this quarter versus $12.4 million last year. Cash used in financing activities was $29.6 million for Q1, compared to $6.3 million last year. The variation is primarily explained by a reimbursement of the revolving credit facility of $13.5 million, following the inflows coming from operations and divestments, compared to a draw of $8.5 million last year.

Speaker Change: So in some investments were delayed to future quarters, we are expecting capital expenditures to stay in our historical range of two to two 5% revenues for the entire year.

Speaker Change: We also did versus $6 4 million from the divestments this quarter versus $12 4 million last year.

Speaker Change: Cash used in financing activities was $29 6 million for Q1 compared to $6 3 million last year.

Speaker Change: <unk> is primarily explained by a reimbursement of the <unk>.

Stephen Reitknecht: Our revolving credit facility of $13 5 million following the inflows coming from operations and the divestments compared to a draw of $8 5 million last year.

Stephen Reitknecht: Looking at that debt, as of March 31st, our net debt position was 271.1.1 million, and the ratio of net debt to adjusted EBDA stood at 2.03 in comparison to 2.07 at the end of 2020. Looking forward with regard to guidance for the future, as previously stated, Savaria is not providing guidance for fiscal 2024, as we focus on the achievement of our targets of approximately $1 billion in revenue and approximately 20% adjusted EBITDA margin by 2025.

Stephen Reitknecht: Looking at net debt as of March 31, our net debt position was $271 1 million and the ratio of net debt to adjusted EBITDA stood at two point or three in comparison to two seven at the end of 2023.

Stephen Reitknecht: Looking forward with regards to the guidance for the future. As previously stated scenario is not providing guidance for fiscal 2024, as we focus on the achievement of our targets of approximately $1 billion in revenue.

Stephen Reitknecht: Approximately 20% adjusted EBITDA margin by 2025.

Stephen Reitknecht: The global team is focusing on delivering these 2025 objectives, and it remains difficult to pinpoint exactly where we're going to finish 2024 in the quarters therein. However, various future prospects are promising, driven by strong market demand, the progress of Savaria 1, and potential token acquisition opportunities that will enhance our market position. And with that, this completes my prepared remarks, and I'm going to turn the call over to JP to provide further details on how we're progressing with Savaria 1. Thank you.

Stephen Reitknecht: The global team is focusing on delivering these 2025 objectives and it remains difficult to pinpoint exactly where we're going to finish 2024 and the quarters there.

Stephen Reitknecht: Okay.

JP: <unk> future prospects are promising driven by strong market demand the progress saverio, one and potential tuck in acquisition opportunities that will enhance our market position.

JP: And with that this completes my prepared remarks, I'm going to turn the call over to J P to provide further details on how we're progressing with very well. Thank you Steve.

Sebastien Bourassa: Q1 2024 was the first quarter where we saw the impacts of Savaria 1. As one can see in our financial results, our adjusted EBITDA increased by approximately $3.5 million versus the same quarter last year on $2.2 million less revenue. This is quite a success, especially given Q1 tends to be our slowest quarter in the year. Outside of divestitures, those results can largely be explained by initiatives implemented during Savaria I. Even our investor day was just a month ago, and the examples shared that day are still recent.

JP: Q1, 2024 was the first quarter, where we saw the impacts have already won.

Sebastien Bourassa: As one can see in our financial results, our adjusted EBITDA increased by approximately $3 5 million versus same quarter last year on $2 2 million less revenues. This is quite a success, especially given Q1 tends to be our slowest quarter in the year.

Sebastien Bourassa: Outside of divestitures those results can largely be explained by initiatives implemented during saverio on.

Sebastien Bourassa: Even our Investor day, with just a month ago and the example shared that they are still recent let me point to a few examples and link those to our financial results.

Sebastien Bourassa: Let me point to a few examples and link those to our financial results. Our accessibility sales in North America were up 11% versus last year, which is largely due to our efforts to increase the throughput of our factories in Surrey and Brampton for our best selling products like the Eclipse, for which we closed 8.3 units per day in average last year in this quarter and 10 and a half units per day in this quarter in 2024, which is an increase of about 25% year over year.

Sebastien Bourassa: Our system sales in North America were up 11% versus last year, which is in great part due to our efforts to increase the throughput of our factories in Surrey and ramp them.

Sebastien Bourassa: For our best selling products like the cliffs for which we closed eight three units per day in average last year in this quarter and then five units per day in this quarter in 2024, which is an increase of about 25% year over year.

Sebastien Bourassa: Also, in North America, in parallel to growing our top line, we made a number of changes to our commercial terms, which increased our contribution margin. Those included the launch of the New Dealer Partner Program, as well as adjustments to pricing, and various commercial tactics that improved our mixed and average margins. Note that given the depth of our backlog, we only got partial benefits from the price-related adjustments in Q1, and expect those to really materialize in Q2. In Europe, our EBITDA margin increased from 10.8% to 12.7%, while revenues declined by 3.4%.

Sebastien Bourassa: Also in North America in parallel to growing our top line, we made a number of changes to our commercial terms, which increased our contribution margins.

Sebastien Bourassa: Those included the launch of the new dealer partner program also adjustments to pricing and various commercial tactics that improved our mix and average margins.

Sebastien Bourassa: Note that given the depth of our backlog, we only got partial benefit from the price related adjustments in Q1 and expect those to really materialize in Q2.

Sebastien Bourassa: In Europe, our EBITDA margin increased from 10, 8% to 12, 7% while revenue has declined by <unk>, 4%. So we generated a higher EBITDA in absolute dollars on a smaller top line.

Sebastien Bourassa: So we generated a higher EBIDDA in absolute dollars on a smaller top line. Improving profitability has been our priority within Savaria 1 in Europe, given the lower EBITDA margin of that region. We have plans to stimulate growth and cross-selling but chose to prioritize actions that improve our profitability, even at the expense of revenues in some cases. This improvement in profitability is the result of a mix of commercial and operational changes.

Sebastien Bourassa: Improving profitability has been our priority within Saverio, one in Europe, given the lower EBITDA margin up that region.

Sebastien Bourassa: We have plans to stimulate growth and cross selling but chose to prioritize actions that we improve our profitability even at the expense of revenues in some cases.

Sebastien Bourassa: This improvement in profitability is the result of a mix of commercial and operational changes.

Sebastien Bourassa: I shared during our investor day an example of how changing our commercial terms in one business segment in the UK improved our margin. This is just an example, as we have been reviewing all the lower-margin segments of the business and developing plans to improve their profitability. We also made efforts to reduce costs in our factories and within SG&A. For example, I shared how we reduced the labor costs in Kingsmanford by moving to one shift and how we increased the recovery and reconditioning of units in Howard Ward as part of our reconditioning initiative there. We have also reduced reliance on temporary labor, agency workers, and reduced administrative personnel in Europe over the last quarter.

Sebastien Bourassa: As shared during our Investor Day, an example of how changing our commercial terms and one business segment in the U K improved our margin. This is just an example, as we have been reviewing all of the lower margin segments of the business and developing plans to improve their profitability.

Sebastien Bourassa: We also made efforts to reduce cost in our factories and within SG&A for.

Sebastien Bourassa: For example, I shared how we reduced the labor costs and kingsman, two moving to one shift and how we increase the recovery and reconditioning of units in our board.

Sebastien Bourassa: So our reconditioning initiative there.

Sebastien Bourassa: We also reduced reliance on temporary labor agency workers and reduce the administrative personnel in Europe over the last quarter.

Sebastien Bourassa: Those initiatives, as well as many others of that nature, enabled an almost 2% margin expansion on lower revenues in Europe. In patient care, our results show flat cells year over year in Q1 and lower margins. While we would prefer stronger results, we knew Q1 and Q2 of 2023 were exceptional in the patient care division. However, we did expect the impact of our Savaria 1 efforts to take longer to materialize in that business as well.

Sebastien Bourassa: Those initiatives as well as many others of that nature enabled an almost 2% margin expansion on lower revenues in Europe.

Sebastien Bourassa: In patient care, our results show flat sales year over year in Q1 and lower margins.

Sebastien Bourassa: We would prefer stronger results, we knew Q1 and Q2 of 2023 were exceptional in the patient care Division we.

Sebastien Bourassa: We did expect the impact of our scenario one efforts to take longer to materialize in that business as well.

Sebastien Bourassa: In fact, at this stage, our plan consisted mostly of investments in strengthening sales and marketing activities, which we expect will accelerate our growth to the back end of 2024 and 2025. So we did not expect Savaria 1 to impact sales at this point, but we knew it would increase our costs in Q1, which is something we see in our results. Finally, as shown during investor day, we are very active in addressing our cost of goods sold through procurement and supply chain optimization initiatives.

Sebastien Bourassa: In fact at this stage our plan consisted mostly of investments and strengthening sales and marketing activities, which we expect will accelerate our growth through the back end of 2024 and 25 so.

Sebastien Bourassa: So we did not expect Saverio wanted to impact sales at this point, but knew it would increase our cost in Q1, which is something we see in our results.

Sebastien Bourassa: Finally as shown during the Investor day, we are very active in addressing our cost of goods sold through procurement and supply chain optimization initiatives.

Sebastien Bourassa: Whilst we have secured millions of dollars of savings already through RFPs and contract renegotiations, we saw almost no impact from those savings in our Q1 results, given the time needed for us to work through our stock of bars. Yet we believe that the fact that we were actively sourcing and negotiating prices for many of our goods and services categories enabled us to keep prices constant and even get some concessions. So as a result, within our accessibility business, for example, we saw material costs as a percentage of sales decline by 2%.

Sebastien Bourassa: Whilst we have secured millions of dollars of savings already through Rfps and contract renegotiations, we saw almost no impact from those savings in our Q1 results given the time needed for us to work through our stock of parts.

Sebastien Bourassa: Yet we believe that the fact that we were actively sourcing and negotiating prices for many of our goods and services categories enabled us to keep prices constant and even get some concessions.

Sebastien Bourassa: So as a result, while our accessibility business within our existing BT business. For example, we saw a material cost as a percentage of sales declined by 2%.

Sebastien Bourassa: At the end of Q1, as per our calculations, we were on track with our plan, both in terms of quantity of initiatives implemented and their financial impact. While this is not the forum to expand too much on it, I would also like to mention that through Savaria I, we are continuing to improve our systems, our processes, we're strengthening our organization, and building a path to continue to grow past the billion-dollar and, In that regard, our organization is mobilized more than ever, and as Sebastien mentioned earlier, we do measure the engagement of our employees and just completed an engagement survey now that shows a material improvement versus when we started Savaria.

Sebastien Bourassa: At the end of Q1 after our calculations we were on track with our plan both in terms of quantity of initiatives implemented and their financial impact.

Sebastien Bourassa: While this is not the forum to extend too much on it I would also like to mention that <unk>, we are continuing to improve our systems. Our processes, we're strengthening our organization and building a path to continue to grow past the $1 billion in sales.

Sebastien Bourassa: In that regard this organization has mobilized more than ever and that's the best thing.

Sebastien Bourassa: <unk> earlier, we do measure the engagement of our employees and just completed an engagement survey now that shows a material improvement versus when we started <unk>.

Sebastien Bourassa: I would like to thank my colleagues, as well as all the managers and employees of Savaria, for their leadership, their contribution to our success, and for driving the hundreds of initiatives that are making us progress towards our goal with SavariaOne. Finally, I just wanted to remind us that the gains we are accruing by implementing Suriname One initiatives are recurring in nature, that we continue to implement improvements every month as well as add new ideas to our pipeline every week. With that, we remain confident in our ability to reach our goal of 1 billion sales as well as approximately 20% EBITDA in 2025. Thank you for your attention. Let me turn it back to Sebastian.

Sebastien Bourassa: I would like to thank my colleagues as well as all the managers and employees of sorry effort their leadership their contribution to our success and for driving the one hundreds of initiatives that are making us progress towards our goal with saverio on.

Sebastien Bourassa: Finally, I just wanted to remind us that the games, we are accruing by implementing so I don't want initiatives are recurring in nature that we continue to implement improvements every month as well as add new ideas to our initiatives pipeline every week with that we remain confident in our ability to reach our goal of 1 billion in sales as well as approximately 20.

Sebastian: Percent EBITDA in 2025.

Sebastian: Thank you for attention, let me turn it back to Sebastien. Thank you JP and thanks, Steve for the color on several one on financials. So I guess, knowing what we are ready for some questions.

Sebastien Bourassa: and QGP and Dick Christie for their color on Surreal One and on Final Show. So I guess no more. We are ready for some questions.

Norma: As a reminder, to ask a question, you'll need to press star 1-1 on your telephone. To withdraw your question, please press star 1-1 again. Please wait for your name to be announced. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question comes from the line of Kyle McPhee with Cormac Securities. Your line is now open.

Sebastian: Thank you.

Speaker Change: As a reminder to ask a question you will need to press star one on your telephone to withdraw your question. Please press star one again, please wait for your name to be announced please standby, while we compile the Q&A roster.

Norma: One moment for your first question. Please.

Kyle McPhee: Our first question comes from the line of Kyle Mcphee with Mccormick with Cormack Securities. Your line is now open.

Kyle McPhee: Hi everyone. In the accessibility segment, organic revenue growth in North America was very strong, but Europe was down. Can you provide some more detail on the source of the decline in Europe and whether or not this dynamic will repeat a few more quarters before it is left?

Norma: Everyone on.

Kyle McPhee: And the accessibility segment organic revenue growth in North America was very strong, but Europe was down can you provide some more detail on the source of the decline in Europe, and whether or not this dynamic well.

Kyle McPhee: A few more quarters before it's lapped.

Sebastien Bourassa: Hey, good morning, Kyle. So, for sure, from one corner to the other, okay, we are judged on every decimal, okay, on the financials, so it's always a bit difficult. But if we start with North America, yes, we have seen in the last year or two that booking has been very strong. And maybe in the past, we had some issues in our factories with some of the output, but it has been a core focus on the Sahara One to improve the flow in our factory, improve the efficiency. So, I think we are starting to see some color out of it. I'm quite happy with that. And in Europe, okay, again, it's just one quarter.

Kyle McPhee: Hey, good morning guidance, so for sure from one quarter to the Rockies.

Speaker Change: Judge on this.

Sebastien Bourassa: Smaller on the financials, we saw it was a bit difficult.

Sebastien Bourassa: We start with North America, Yes, we have saved in the last year or two the booking has been very strong and maybe in the past we had some issues in our factories with some of the output.

Sebastien Bourassa: Been a core focus on the survey one two we improved our floating factory improve the efficiency. So I think we're starting to see some color out of it so quite happy with that and any of that but again. This is just one quarter and right now we are making a lot of efforts on our <unk>.

Sebastien Bourassa: And right now, we are making a lot of effort on our Sahara One, on our product mix, pricing initiative, and dealing initiative. The good news is that we're going against a weak second quarter in Europe. So, I'm expecting things to be back to normal after six months in terms of growth. And the teams know that we need to go to one billion in sales, which implies eight to 10% organic growth. So, going forward, we're going to see some growth as well in Europe, OK?

Sebastien Bourassa: Product mix pricing.

Sebastien Bourassa: <unk> <unk> the good news, we're going against a weak second quarter in Europe, but I'm expecting things to be back to normal after six months in term of growth and the teams that didn't know that we need to go to one being a phase which implies a 10% organic growth. So going forward, we're going to see some growth as well as a new operator.

Sebastien Bourassa: And as we bring some new products as well as subareas, because right now we are mostly a sturdy and inclined platform company in Europe, as we'll bring some more vertical platforms, only better in the future, that should help us also to have some organic growth. So, I'm confident about the future.

Sebastien Bourassa: Well, when you say you're changing the mix in Europe for accessibility, are you implying that maybe you're giving up some sales that are lower-margin stuff? And that's part of the reason we're seeing margins shoot way up? Like, are you passing on certain sales? And that's manifesting as that revenue decline in Q1.

Sebastien Bourassa: For sure, again, since it's not just about growth, growing a top line; it's also taking care of the bottom line. Yes, we are reviewing which channel, which profitability, and that can imply some decision, some choice that we have to make.

Sebastien Bourassa: Got it. Okay. And then, again, on accessibility, the big 11% organic growth for North America, was there any new price gains feeding that organic growth, or is it still just the price that I think started to kick in Q2 last year that hasn't been left?

Sebastien Bourassa: Organic growth or is it still just the the price that I think started to kick in Q2 last year that hasn't been left yet.

Sebastien Bourassa: Kyle and I know our formula is always a bit complex, right? We have different brands with price increases at different times. So yes, in North America, we did a price increase in the first quarter, but it goes a bit against your good-sized backlog. So we're expecting to see some improvement on the margins more in Q2, towards the price increase of last year. But price increases, now don't forget, it goes against some additional costs that we have in the business. At a point, we cannot just increase the price of our customers; we have to work on our productivity and efficiency to improve the margins.

Speaker Change: Perfect. If I've got an order from you guys or was it big company. So we have different brands would price increase at different times. So yes in the North America, what we did a price increase in the first quarter, but it goes a bit again, Sir you have a good size backlogs. So we're expecting to see some some improvement in the margins morning, and if you do.

Sebastien Bourassa: Towards the price increase from last year, but price increase no don't forget it goes that maybe a against some additional cause if we have any business at one point I'm Gonna just increase the price of our customer and we have to work out when I productivity and efficiency.

Sebastien Bourassa: Okay, is it fair to say though that that 11% North American accessibility organic growth was still included a good chunk of volume, or was it heavily weighted to price?

Sebastien Bourassa: <unk>.

Speaker Change: Okay is it is it fair to say, though that that 11 per cent North America and accessibility organic growth was still included a good chunk from volume.

Sebastien Bourassa: It was mostly volume of in the first quarter.

Sebastien Bourassa: Or was it heavily weighted the price and.

Sebastien Bourassa: It was a most people and you're aware of when it first quarter yes.

Norma: Okay, thank you. That's it for me.

Norma: Thank you. One moment for our next question, please. Our next question comes from the line of Gabriel Moreau with Scotia Bank. Your line is now over.

Speaker Change: Okay. Thank you that's it for me.

Speaker Change: I forgot. Thank you one moment for next question. Please.

Gabriel Moreau: Our next question comes from the line of Gabriel morale with Scotiabank online is now open.

Gabriel Moreau: So, like you said, Q1 is usually your weakest quarter, and EBP margin increased close to 2%. So how should we think about the cadence of margin expansion through the rest of the year? I assume second quarter margin expansion is easier given the ERP. But what about the second half?

Gabriel Moreau: Hi, <unk>.

Gabriel Moreau: So like you said you wanted usually your weakest quarter and you did the margin increase close to two per cent. So I'll should we think about the cadence of margin expansion for the rest of the year I assume second quarter conscience easier given the E. R P, but what about the second house.

Sebastien Bourassa: It's a tough question, Gabriel. Okay, because again, we know we don't give guidance per quarter in terms of EBITDA margins. If we go in 2025, we want to be a 20% EBITDA company. That's where we have been crystal clear, and our investor did as the mandate. I think as we go with the several ones, we know there's a bit of a hockey stick, but we're going to get better as we go with the procurement, which takes a bit more time, the cross-selling. So I think it's a new stage for us, 16.6. I think so.

Speaker Change: The tough question <unk> cause again.

Sebastien Bourassa: We don't give <unk> per quarter Kingdom of EBITDA margins, if we go.

Sebastien Bourassa: Go in 2025 wanted to be a 20 per cent at <unk> company, that's where I've been if a crystal clear and <unk>.

Sebastien Bourassa: I think as we go with this or are wanting to know Elizabeth Awlaqi sticks, we're going to get better as we go okay with it four cream and we'll fix it with more time to cross selling so I think that it's a new stage 516.6 will expect <unk> to the next corner hopefully would have the chance to read that but again I'm going to pick up what we are working on the <unk>.

Speaker Change: <unk> I just want a short term <unk>.

Stephen Reitknecht: I think you answered it very well, Sebastian, and just to echo that point, I mean we're focused on improving margins sequentially quarter after quarter to reach that 20% target in 2025. So we are expecting incremental growth over the coming quarters.

Sebastien Bourassa: To add color on their margins expensive.

Speaker Change: <unk> <unk> I think you guys are the very well Sebastian and just just to echo that point I mean, we're we're focused on improving Martin sequentially quarter after quarter Theresa.

Stephen Reitknecht: About 20 per cent target in 2025, so we are expecting an incremental growth.

Speaker Change: Over the coming quarters.

Sebastien Bourassa: Thank you. And on pricing, you said you did a price increase early this year. How does that compare to last year? And with Savaria 1, should we think about the pricing opportunity as more progressive throughout the year and maybe more dynamic?

Stephen Reitknecht: Thank you and then the pricing you said you did the price increase early this year.

Sebastien Bourassa: How does that compare to last year and with the setup. Yeah. One should we think about the pricing opportunity is more progressive to divert the year and maybe more dynamic.

Sebastien Bourassa: Again, we've got to be careful on pricing, I keep because, again, we have different brands, different products. So, yes, we did some pricing initiatives this year, okay, approximately a 4 to 5% increase on different brands. But when you go after that pricing, sometimes you have some products that you sell at low margins, or you have to focus on a product that has, maybe, a better margin. So it's a mix of all this and pricing initiatives that we're working on, finding some new customers, some new segments where there will be better opportunities.

Sebastien Bourassa: Again, we gotta be carphone pricing I'll keep cause again, we have different brands different products or yesterday, we just from pricing <unk> sent to your phone to five per cent increase in different brands.

Sebastien Bourassa: But.

Sebastien Bourassa: Normally when you go after that pricing.

Sebastien Bourassa: Sometimes you have some product that you sell it at the end.

Sebastien Bourassa: Margins all you have to focus on and my other products that would get better marches. So it's it makes up all this and pressing the system that we're working on finding some new customer so I'm new segment.

Sebastien Bourassa: And again, the different brands of that. And then it's complex. We have our own direct store, which has a longer history than the factory. So it's hard to pinpoint sometimes just in one quarter. And we cannot be just about pricing. It has to be a mix of everything.

Sebastien Bourassa: When it will be better Unfortunately, and again the different brands with that and then it's <unk>, which is Ah don't grow back on in factories. So it's hard to pinpoint sometimes just in one corner.

Sebastien Bourassa: And we cannot be just about pricing that to be a big so what makes up everything but.

Gabriel Moreau: Thank you. That's very helpful. Thank you.

Speaker Change: Thank you that's very helpful. Thank you.

Michael W. Glen: Thank you. One moment for our next question. Our next question comes from the line of Michael Glen with Raymond James. The line is now open.

Speaker Change: Thank you one moment for next question.

Michael W. Glen: Next question comes from the lack of Michael Glyn with Raymond James So lunch now okay.

Michael W. Glen: Hey, good morning. I'm just hoping, like, the strategic initiative expenses of $5.3 million in the court, are you able to maybe just unpack that expense a little more? Is it cash, non-cash, does it include some restructuring, just some additional details as to what's included in that specific line item?

Michael W. Glen: Hey, good morning, I'm, just hoping like strategic initiative expenses of 5.3 million and the court Alright are you able to maybe just unpack that expense a little more is it cash non-cash does it include some restructuring just just some additional details has to.

Michael W. Glen: What's included in that specific line item.

Stephen Reitknecht: Yeah, sure, good morning, Michael. I'll take this one.

Speaker Change: Yeah, Sir good morning, Michael I'll I'll take this one so the 5.3 in the corner of this is in line with with what we had previously stated at the at the Investor Day on April 9th. So the the 5.3 is mainly made up of consulting and other training costs are there's really no restructuring costs. This is this is.

Stephen Reitknecht: So the 5.3 in the quarter, this is in line with what we had previously stated at Investor Day on April 9. So the 5.3 is mainly made up of consulting and other training costs. There are really no restructuring costs. These are consulting and training fees that we've incurred, and they're all cash costs.

Speaker Change: Consulting and training fees that we've incurred and they're all they're all cash cash cost Michael.

Stephen Reitknecht: Okay, and so those expenses, like, if we think about the Severio 1 program coming to an end at some point in the future, like, those expenses just completely go away from the company.

Stephen Reitknecht: Okay.

Stephen Reitknecht: And.

Stephen Reitknecht: So those as like if we think about.

Stephen Reitknecht: The Saverio one program coming to.

Stephen Reitknecht: And then that at some point in the future like those those those expenses just completely eliminate go away from the company.

Stephen Reitknecht: Yeah, exactly. So we are expecting what we saw in Q1 to continue for the remaining quarters of 2024, so expenses of roughly $5, 5.3 million for the remaining quarters. These are one-time costs; these are not ongoing costs that are, you know, reflected in the underlying business. So just to reiterate, one-time cost, but the benefits from the Severia 1 program, you know, that we're starting to see that JP has been talking to, that we've been talking to, the improved margins.

Speaker Change: Yeah exactly so we are expecting what we saw in Q1 to continue for the remaining quarters of 2024, so expensive roughly five 5.5 point 3 million for the remaining quarters. These are one time costs. These are not ongoing costs that are reflected.

Stephen Reitknecht: Reflected in the underlying business. So just to reiterate one time costs, but the benefits from the Saverio one program where.

Stephen Reitknecht: We're starting to see the J P has been talking to you that we've been talking to the improved margins gross margin and EBITDA margins.

Stephen Reitknecht: Gross margin, and Eibada margins, and sales as well, those are all recurring in nature. So the fees for this project are all one time, and the benefits are recurring. We're going to see those year after year building.

Stephen Reitknecht: Sales as well those are all recurring in nature. So the fees for this project are all one time and the benefits are a recurring we're going to see those year after year buildings on each other.

Stephen Reitknecht: And as you progress through the undertaking, do you see, is there the potential that we could see some, like a larger restructuring charge roll through at some point in time as you analyze all of the businesses and all the plants and what's happening there?

Stephen Reitknecht: And and as you progress through the undertaking do you see.

Stephen Reitknecht: Is there is there a potential that we could see some.

Stephen Reitknecht: Like a larger restructuring charge roll through.

Stephen Reitknecht: At some point in time as you as you analyze all of the businesses and all the plants and what's happening there.

Sebastien Bourassa: And so far, Michael, okay, not necessarily one is about growth. It's about finding some initiative within the business. It's not a restructuring plan or this kind of project. CAPEX, as Steve mentioned before, we're running at the same historical rate. So as of right now, we're not expecting any significant change from the guidance we have provided.

Sebastien Bourassa: So far my <unk> not necessarily want is about growth is almost finding some that so I mean, you said stay within the business, it's not to a restructuring plan. So I just kind of project Capex, Steve mentioned before we're running the same Easter week, alright, So as of right now, we're not expecting and using if you can change phone when the guy that's where I provide before right.

Stephen Reitknecht: Okay, and then just on inventory, specifically, Stephen, what do you think when you when you look at where inventory was at the end of OneQ, like how should we think about the inventory opportunity within working capital for the business?

Speaker Change: Okay, and then just an inventory specifically.

Stephen Reitknecht: Steven like what what do you use when you when you look at where inventory really was at the end of.

Stephen Reitknecht: <unk> Q like how how should we think about the inventory opportunity within working capital for the business.

Stephen Reitknecht: There is an opportunity there, Michael. We finished Q4 with a large reduction in inventories. If we look at Q2, Q3, and then Q4, Q4 inventory really ratcheted down. Q1, it came up a little bit from where we finished Q4, but still lower than where we finished Q2 and Q3 of last year. We are very focused on inventory as part of our working capital, and we are expecting to decrease that over the coming quarters.

Stephen Reitknecht: There is a there is an opportunity there Michael we finished Q4 with very <unk>.

Stephen Reitknecht: A large reduction in inventories right. If we looked at 2223, and then 2424 inventory really ratcheted down you want it came up a little bit from where we finish Q4, but still lower than where we finished Q2 and Q3 of last year. So we we are very focused on an inventory is part of our working capital and and we.

Stephen Reitknecht: Not only are we expecting a decrease, but we're obviously expecting an increase in sales as well, so it's going to be very favorable when we're thinking about DIO metrics. For Q1, DIO was flat versus last year on higher inventories, and we're expecting DIO to decrease as well as inventory over the remaining quarter. So there's definitely opportunity there. OK.

Stephen Reitknecht: Are expecting to decrease that over the coming quarters <unk> I mean.

Stephen Reitknecht: Not only are we expecting a decrease we're obviously expect an increase in sales as well. So it's gonna be very favorable when we're thinking about T. I L metrics for Q1 D. I L was was flat versus last year on higher inventories and we're expecting D. I O two to decrease as well as inventory over the remaining quarter soda. So there's definitely opportunity there.

Michael W. Glen: Okay, thank you for taking the question.

Stephen Reitknecht: Michael.

Speaker Change: Okay. Thank you for taking my questions.

Speaker Change: Thank you.

Norma: And our next question comes from the line of Michael Glen. With Raymond James, your line is now open.

Michael W. Glen: And next question comes from the line of Michael Glenn.

Michael W. Glen: What's the Raymond James Your line is now open.

Norma: Just, Norma, he just asked me a question. I'm sorry.

Michael W. Glen: Just normal just ask the question I'm, sorry, Zachary ever shared with National Bank financial your on line is now open.

Norma: I'm sorry, Zachary Evershed with National Bank Financial. Your line is now open. Thank you very much.

Zachary Evershed: Thank you very much. Congratulations, Quarter. Thanks, Zach. So I was hoping you could give us a little bit more color on the recent acquisition of Matot. What are the cross-sell opportunities there as you add dumbwaiters to your product portfolio? A very good question, Michael.

Speaker Change: Thank you very much congratulant quarter.

Speaker Change: Exactly Sir.

Zachary Evershed: Ah so something you'd give us a little bit more color on the recent acquisition <unk> what are the cross-sell opportunities there as you add them waiters to your product portfolio.

Sebastien Bourassa: Hey, very good question, Michael, and thanks for reading the news on Savaria. But yeah, Metas is a very nice small acquisition, a very long history, I think close to 100 years of making dumb weather and material lift. Very well, good reputation.

Zachary Evershed: A very good question my call and thanks for reading the the news on on Survivor, Yucky, but yeah, I mean cause they're very very nice Monica position I very long is totally okay. I think close to 100 years or making a dumb winter in Montreal lift there was reputed good reputation and you've gotta. Unfortunately at a.

Sebastien Bourassa: They had, fortunately, had a small dealer network. Now we're coming to Savaria, we have a bigger dealer network, so there's an opportunity to bring that to some of our existing dealers. And some of our existing dealers, for example, may be buying some dumb weather from the competition.

Sebastien Bourassa: Small data network now we come into <unk>, a bigger danger networks with the ZIP with certainty to bring that to some of the existing dealer and some of them are existing <unk> example, maybe but we're buying some dumb order from the competition. So what time, we're going to try to convert that to to buy from Saverio and after that we I know we have a great selection of <unk>. So I think.

Sebastien Bourassa: So over time, we're going to try to convert that to buy from Savaria. And after that, I know we have a great supply chain; we're global, so I think we'll be able to bring it into our supply chain. That's our target by the end of the year; we'd like to manufacture that in Toronto. So I think we'll be able to begin the one-stop shop. We order it to one location, one sales rep to service it, one technical department, and one shipping department.

Sebastien Bourassa: We'll be able to bring it into a supply chain necessary until I get by the end of the year, we'd like to manufacture that in Toronto.

Sebastien Bourassa: So I think we'll be able to me to begin the one stop shop, we order a into one location. One says episodes. This one technical department one shipping maximize the shipping fees. Okay. Thanks, you've been somewhere to park at the same time, so we have a great expectation for the future and.

Sebastien Bourassa: Maximize the shipping fees by shipping some of our product at the same time. So we have a great expectation for the future, and hopefully, James Steeve or GP1 will complete something on their method.

Sebastien Bourassa: Oh, please of your products will continue to improve our margins.

Sebastien Bourassa: T want GPU uncomplete something on there I might <unk>.

Speaker Change: Oh I agree with that.

Sebastien Bourassa: Good color, thanks. Yes.

Sebastien Bourassa:

Zachary Evershed: Yeah, just one more actually. On the topic of easing material costs, which you mentioned in the commentary, could you give us some more detail on the trends you're seeing there and in which raw materials?

Speaker Change: Okay colored text.

Speaker Change: Yeah, just just one more actually on the topic of easing material costs, you mentioned in the commentary could you give us some more detail on the trends are seen there and in which raw materials.

Sebastien Bourassa: For procurement, JP, do you want to go? Because that's a bit with the Savaria 1 procurement that we're working on. Yeah, I don't think we go, I can go into details of which categories, Zach, to be honest. What we see is two things, right? So, through Savaria 1, we are going through each category of spend, essentially, right? So, we group our spend into different categories, and we organize to go to the market and source, at the best price possible, those categories. So, we're going through them one by one at the moment.

Speaker Change: Program and did you say you want to go because that's what made me to several one pokemon that we're working on that I don't think we go I can go into the details of which categories that to be honest, what what we see as two things right. So to Safari are one we are going through each category of spam essentially you're right. So will you be group or spend in different categories.

Sebastien Bourassa: We organize to go to market them source at the best price possible those categories. So we're going through them one by one at the moment, but what we also saw and we see this everyday right. So it was sometimes in this period suppliers would normally come in and ask for a price increase but then that they see that they were putting competition to an RFP data to back off from the price increase with them.

Sebastien Bourassa: But what we also saw, and we see this every day, right? So, sometimes, in this period, suppliers will normally come in and ask for a price increase. But then, as they see that they're putting competition through an RFP, they tend to back off from the price increase, right? And then do the opposite and help us reduce some prices. So, we've seen this across many categories, but I cannot tell you specifically, by material, what the trends are.

Sebastien Bourassa: Then.

Sebastien Bourassa: Do the opposite and help us we do some prices. So we've seen this across many categories. So but I cannot tell you a specific the by material what the trends are unfortunately.

Sebastien Bourassa: It's fair to say that this is an internally generated reduction in cost rather than anything market related.

Sebastien Bourassa: The fair to say that this is fun internally generated reduction in cost rather than anything market related.

Sebastien Bourassa: Yeah, yeah, to that point. So we're not particularly exposed to market prices, right? Because many of the parts we buy, even the raw materials, are transformed. So typically, I think the share of, like, raw material exposure is relatively limited.

Speaker Change: Yeah, Yeah to that point, so we don't we're not particularly exposed to market prices right because many of the even the parts me by even the raw materials are transformed so typically I think their their share of like raw material exposure is supposed to be <unk>.

Zachary Evershed: That's it for me, thank you; I'll turn it over to you. Thanks, Zach.

Speaker Change: That's it for me. Thank you I'll turn it over.

Zachary Evershed: Exactly.

Norma: As a reminder, to ask a question, you'll need to press star 11 on your telephone. One moment for our next question. Our next question will come from the line of Justin Keywood with Stiefel. Your line is now open.

Zach: Thank you.

Speaker Change: As a reminder to ask a question you'll need to press star one one on your telephone.

Justin Keywood: [noise] moment for next question.

Justin Keywood: And next question will come from the line of Justin <unk> with Stifel. Your line is now open.

Justin Keywood: Hi, good morning. Maybe just to follow up on the M&A commentary, there was mention of pursuing possible tuck-in acquisitions in the press release to replace some of the revenue from the divestitures. I'm just wondering if these tuck-in acquisitions would be margin accretive? I assume there wouldn't be a pursuit for fixer-uppers, just given the goal of, you know, 20% EBITDA margins in the near term.

Justin Keywood: Hi, Good morning, maybe just to follow up on the M&A commentary Ah there was mention of pursuing possible tucking acquisitions in the press release.

Justin Keywood: To replace some of the revenue from the diverse yours.

Justin Keywood: Just wondering would these tucking acquisitions be margin accretive I assume.

Justin Keywood: Wouldn't be a pursuit for fixer uppers.

Justin Keywood: Given the goal of you know the 20 per cent of EBITDA margins in the near term.

Sebastien Bourassa: For sure, Justin, I can't... We like to have a key that would make sense for Savaria, a good product to bring, to offer more to a dealer, something that we can maybe use our global supply chain dealer network where there's no succession or we have not been good in one area. So all this makes sense for Savaria and, yes, when it is vertical integrated, that's usually the best way to improve our margins

Speaker Change: Oh sure Justin Okay, I guess.

Sebastien Bourassa: We like to have stuck in a key that would make sense for several yoki a good product to green, okay to offer more towards dealer something that we can maybe use our global supply chain dealer network error whenever I would just let me know successfully now we have no but I've never been good in one area. So.

Sebastien Bourassa: It makes sense for server and yes. When it is vertical integrated that that's usually at Westport margins are we going to buy something one of those D that is zero margins, but we see a benefit to bring into a supply train our product everything's possible. When we tried to focus on something that could bring some value immediately you will shoulder.

Sebastien Bourassa: Are we going to buy something on one of those days when there are zero margins but we see a benefit to bring to our supply chain, our product? Everything is possible; we try to focus on something that could bring some value immediately to a shareholder and a company.

Sebastien Bourassa: understood. Any indication of the number of targets that you're looking at, potential multiples, and size of transactions?

Sebastien Bourassa: [laughter].

Sebastien Bourassa: Understood it any indication of the amount of targets that you're looking at a potential.

Sebastien Bourassa: Multiples and size of transaction.

Sebastien Bourassa: Right now, we are very focused on Savaria 1. We have enough on our plate for the next two years with Savaria 1, the $1 billion. Again, some small tokens. In the past, we did sometimes two or three small tokens. So could we digest that without any disruption to the business? The answer is yes.

Sebastien Bourassa: Right now we're we're very focused on this <unk> I think I have enough on our plate for the next two guys with this or or one that 1 billion against some small deck anyway, you know in the past we did sometimes two or three small deck 'n', okay could we digest that without the disruptions to business answer is yes.

Sebastien Bourassa: Or mid sized not being a physician I think it's time to focus for the next two years in terms of pricing, but I guess you do more than me what kind of a multiple use ebay you can look at it that needs to read over a transaction right.

Sebastien Bourassa: But a more mid-sized, big acquisition is not the focus for the next two years. In terms of pricing, I guess you do it more than I do. What kind of multiple do you usually pay? You can look at the history of our transactions.

Justin Keywood: understood. Thank you.

Speaker Change: [noise] understood. Thank you.

Norma: Thank you. I'm currently showing no further questions at this time. I'd like to turn the call back to Sebastian Barossa for closing remarks.

Justin Keywood: Thank you I'm currently showing no further questions at this time I'd like to turn the call back to Sebastian Bourassa for closing remarks.

Sebastien Bourassa: Thank you, Norma. So it was a shorter period of questions. So I guess it was for his own good to deliver on the message, GP, and Steve. So again, thank you very much for your comments and for following Savaria. I think it was a great first quarter, and you will see in the next few quarters we'll have some good things that we're going to deliver as well.

Sebastien Bourassa: Hey, Thank you, Vermont, so with a sore throat.

Speaker Change: I've got a question. So I guess it was a <unk> on the message that G. P. N S. T. So again, thank you very much for your for your comments for <unk> I think it was a great fourth quarter and you within the next few quarter would have some good things equivalent to deliver wise words. Thank you know <unk>.

Norma: This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.

Norma: Mmm Mmm mmm.

Norma: [music].