Q2 2024 Savaria Corp Earnings Call

August 8, 2024

Operator: Good morning, good afternoon, and good evening. My name is Raz, and I will be your conference operator today. At this time, I would like to welcome everyone to Savaria Corporation's Q2 2024 conference call. All lines have been placed on mute to prevent any background noise.

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Raz: Good morning, good afternoon and good evening. My name is Raz and I will be your conference operator today. At this time, I would like to welcome everyone to Savaria's Corporation's Q2 2024 conference call.

Operator: After the speaker's remarks, there will be a question and answer session. To ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. This call may contain forward-looking statements, which are subject to the disclosure statements contained in Savaria's most recent press release issued on August 7th, 2024, with respect to its Q2 2024 results. Thank you. Mr. Bourassa, you may begin your conference.

All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. To ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.

Operator: To withdraw your question, please press star 1 and 1 again. This call may contain forward-looking statements which are subject to the disclosure statements contained in Savaria's most recent press release issued on August 7th, 2024, with respect to its Q2 2024 results. Thank you. Mr. Bourassa, you may begin your conference.

This call may contain forward-looking statements which are subject to the disclosure statements contained in Savaria's most recent press release issued on August the 7th, 2024, with respect to its Q2 2024 results. Thank you. Mr. Bourassa, you may begin your conference.

Sebastien Bourassa: Well, thank you, Raz, and good morning, everyone. Today I will start with a small recap of our second quarter. Then Steve will update us on our financial and GP performance for our Savaria One. And then we'll follow with a small Q&A section.

Bourassa: Well, thank you, Raz, and good morning, everyone.

Speaker Change: So today I will start with a small recap of our second quarter, then Steve will update us on our financial, and JP on our Savaria one, and then we'll follow with a small Q&A section.

Sebastien Bourassa: First, I need to say that I'm very, very proud of our results and especially of the teamwork that has been done, as we have reached a very important milestone in our transformation after one year from the launch. I need to say that all our employees continue to be very motivated by the Savaria One project, and they are very determined to bring Savaria to 1 billion in sales and 20% of it built up by 2020. So, some of the key highlights for the second quarter.

Marcel Bourassa: First, I need to say that I'm very, very proud of our results and especially of the teamwork that has been done as we have reached a very important milestone in our transformation after one year from the launch. Patient care was flat in terms of sales in the second quarter, but we are against a first half of the year that was strong in 2023. We're expecting a much better second half of the year.

Speaker Change: First, I need to say that I'm very, very proud of our results and especially of the teamwork that has been done as we have reached a very important milestone in our transformation after one year from the launch.

I need to say that all our employees continue to be very motivated on the Savaria One project and they are very determined to bring Savaria to 1 billion of sales and 20% of EBITDA by 2025.

Sebastien Bourassa: It was the first time that we had an EBITDA of 19% for the full Savaria, with accessibility being at 20.9, so almost 21%. And patient care at 17%, a bit behind our target, but I think we'll get there. For the first time, we have a new matrix, adjusted EBITDA per share of 59 cents, which is our best since the beginning of Savaria. Gross margins were up to 37.5%, which is 150 basis points better than their first quarter.

Speaker Change: So some of the key allies for the second quarter.

Speaker Change: It was the first time that we have any bidder of 19% for the full Savaria, with accessibility being at 20.9, so almost 21%.

Speaker Change: and patient care at seventeen percent a bit beyond our target but i think would get there first time we have a new matrix adjusted ebitapershare of fifty nine sites fifty nine cents which is our best since the beginning of scaria

Speaker Change: Gross margins were up to 37.5%, which is 150 basis points better than the first quarter.

Sebastien Bourassa: We had a growth of 15.4% in accessibility, which is coming both from Europe and North America, so good job to the team of Claire and Alex. And I would say that all our factories had pretty good output. And I think the most important thing to this RR1 program is that we have made a very big change in all our factories. We're very organized and ready, OK, for home growth. Patient care was flat in terms of sales in the second quarter, but we were against a first half of the year that was strong in 2023. We're expecting a much better second half of the year.

Speaker Change: We had a growth of 15.4% for the accessibility, which is coming both from EURA and North America, so good job to the team of Claire and Alex.

Speaker Change: and i will that other factory we are pretty good output and that think the most important to the subve our one program is we have make a very big change in all factory we very organized and with uoke for born growth

Speaker Change: patient care was a flat in m of sales in the second quarter but we were against the first half of the year was strong in the two thousand yand three we're expecting a muchun better second half of the year

Sebastien Bourassa: Sales growth remains something very important in our Savaria 1 and we continue our effort for the cross-selling to increase our share of wallet with other 50 people in R&D we continue to improve our existing products and bring new products to the market and we can develop some growth and have some good organic growth. Integration of our Metat product line that we acquired in April, basically things are progressing and we will definitely bring that into production in Toronto by the end of this year so that we can streamline a bit the manufacturing and have a better lead time to work on. Mexico Nurturing Activity.

Speaker Change: sales growth remain as something very important in our sever one and will cause new effort for the cross-selling to increase our share of wallet

Speaker Change: with all fifty people are and you continue to improveour existing products and greing products to the market that we can develop some growth and have some good organic growth

Marcel Bourassa: Integration of our Metat product line that we acquired in April, basically, things are progressing, and we will definitely bring that into production in Toronto by the end of this year so that we can streamline the manufacturing a bit and have a better lead time to work. Mexico Nursery Activity Continues Now we have 80 employees. We have some regular shipments to North America, so we're quite happy with the progress if we want to do some acquisitions.

Speaker Change: Integration of our Metat product line that we acquired in April , basically things are progressing and we will definitely bring that into production in Toronto by the end of this year so that we can streamline a bit the manufacturing and have a better lead time to our customers.

Sebastien Bourassa: It continues. Now we have 80 employees. We have some regular shipments to North America, so we're quite happy with the progress. We have continued to deliver a balance sheet; now we have a bit of a net debt of a bit of 1.88 with a available fund of 226 million if we want to do some acquisitions. What's the priority right now remains Savaria 1, but we're still looking for acquisitions so we can replace what we divested in the last year.

Speaker Change: mexico nurseshowing activity continue now we have adiumempyees we have some regular shipment to our north americas from quite that we with the progress

Speaker Change: We have continued to deliver balance sheets, now we have a net debt of $1.88, with available funds of $226 million.

Marcel Bourassa: What's really our priority right now remains Savaria 1, but we're still looking for acquisitions we can replace what we divested in the last year. To conclude, I will say we are very lucky. We continue to operate in a very nice industry, with the aging of the population, staying at home, the density of the residential housing that they can put a residential elevator in, continuing to be a very important factor in our growth story, and our large product offering makes us a very attractive partner, and Stephen Reitknecht. Thank you.

Speaker Change: If we want to do some acquisitions, the priority right now remains Savaria 1, but we're still looking for acquisitions that we can replace what we divested in the last year.

Sebastien Bourassa: To conclude, I will say we are very lucky. We continue to operate in a very nice industry, with the aging of the population, staying at home, and the density of the residential housing that they can put a residential elevator in. Continue to be a very important factor in our growth story, and our large product offering makes us a very attractive partner.

Speaker Change: To conclude, I would say we are very lucky, we continue to operate in a very nice industry with the aging of the population, staying at home.

Speaker Change: the density of the residentializing that they can put a residential delevator continue to a very important factor in our growth storyury and our large product offering re cas a very attractive appartner

Sebastien Bourassa: And last, I would like again to thank all our employees and our dealer for our success in the second quarter. Thank you. Thank you.

Speaker Change: And last, I would like to thank again all the employees and our dealer for success in the second quarter. So, Steve, your final show, please.

Stephen Reitknecht: Thank you, Sebastian, and good morning, everyone. I'm happy to be here today, and I'm excited to share some remarks regarding our Q2 2024 Consolidated Financial Metric. Key highlights for the quarter include, as Sebastien mentioned, double-digit organic growth in accessibility in both North America and Europe, as well as major improvements in profitability and gross margin and adjusted EBITDA margin on a consolidated basis. For the quarter, we generated revenue of $221.3 million, an increase of $22.9 million or $11.6% versus last year. The increase mainly came from organic growth of 11.5%, partially offset by the devastation of ban action and freedom motors, as well as positive foreign exchange fluctuations in the quarter.

Steve: thank you sebastianating good morning everyone i'm happy tobe here today and i'm excited to share some remarks regarding our q two two thousand and twenty four consolidated financial metrics

Stephen Reitknecht: Key highlights for the quarter include, as Sebastien mentioned, double-digit organic growth in accessibility in both North America and Europe, as well as major improvements in profitability and gross margin and adjusted EBITDA margin on a consolidated basis. For the quarter, we generated revenue of $221.3 million, an increase of $22.9 million, or 11.6% versus last year. The increase mainly came from organic growth of 11.5%, partially offset by the divestitures of Van Action and Freedom Motors, as well as positive foreign exchange fluctuations in the quarter. I'm pleased to report that the corporation delivered its strongest quarterly adjusted EBITDA, which is higher than any past quarter. It's crossing, for the first time, the $40 million mark.

Speaker Change: Key highlights for the quarter include, as Sebastien mentioned, double-digit organic growth in accessibility in both North America and Europe , as well as major improvements in profitability and gross margin and adjusted EBITDA margin on a consolidated basis.

Speaker Change: For the quarter, we generated revenue of $221.3 million, an increase of $22.9 million or 11.6% versus last year.

Speaker Change: the increase mainly came from organic growth a of eleven point five percent partially offset by the divestitures of that action and freedom motors as well we had positive foreign exchange fluctuations in the quarter

Stephen Reitknecht: [inaudible] I'm pleased to report that the corporation delivered its strongest quarterly adjusted EBITDA, which is higher than any past quarters, crossing for the first time the $40 million mark. We also delivered a record gross profit and gross margin of 83 million and 37.5% compared to 67.1 million and 33.8% in Q2 2023. The increase in gross profit of 15.9 million is explained by increased revenues, improved gross margins in both segments due to operating leverage, improved pricing, a favorable product mix, as well as lower material costs.

Speaker Change: I'm pleased to report that the Corporation delivered our strongest quarterly adjusted EBITDA, which is higher than any past quarter, crossing for the first time the $40 million mark. We also delivered gross...

Stephen Reitknecht: We also delivered gross profit and gross margin of $83,037.5% compared to $67.1 million and 33.8% in Q2 2023. The increase in gross profit of $15.9 million is explained by increased revenues, improved gross margins in both segments due to operating leverage, improved pricing, a favorable product mix as well as lower material costs. Adjusted EBITDA and adjusted EBITDA margin finished at 41.9 million and 19% compared to 29.3 million and 14.8% last year. This represents 59 cents per share, up 14 cents per share when compared to Q2 2023.

Speaker Change: we delivered our record gross profit and gross margin of eighty-three million and thirty seven point five percent compared to sixty seven point one million then thirty-three point eight percent in q two two thousand and twenty-three

Speaker Change: The increase in gross profit of $15.9 million is explained by increased revenues, improved gross margins in both segments due to operating leverage, improved pricing, a favorable product mix as well as lower material costs.

Stephen Reitknecht: While Savaria I has helped us achieve these results, we incurred $5.3 million in strategic initiative expenses this quarter, in line with previously stated expectations. JP is going to speak more about some of our ongoing initiatives in detail shortly.

Speaker Change: While Savaria I has helped us achieve these results, we incurred again this quarter $5.3 million for strategic initiative expenses in line with previously stated expectations.

JP: JP is going to speak more about some of our ongoing initiatives in detail shortly.

Stephen Reitknecht: Adjusted EBITDA and Adjusted EBITDA margin finished at 41.9 million and 19% compared to 29.3 million and 14.8% last year. This represents 59 cents per share, up 14 cents per share when compared to Q2 2023. The increased profitability is mainly explained by increased gross margins and lower SG&A expenses as a percent of revenue as we remain diligent about our cost base. Now, we look at our segment

JP: adjusted ebitda adjustedebitda margin finished at forty-one point nine million and nineteen percent compared to twenty nine point three million and fourteen point eight percent last year

JP: This represents $0.59 per share, up $0.14 per share when compared to Q2 2023.

Stephen Reitknecht: The increased profitability is mainly explained by increased gross margins and lower SG&A expenses as a percent of revenue as we remain diligent about our cost base. The increase in revenue was mainly driven by organic growth of 15.4%, driven by strong demand in both the residential and commercial sectors, price increases in North America and Europe, and last year was also impacted by issues with our ERP system implementation in Europe.

Speaker Change: The increased profitability is mainly explained by the increased gross margins and lower SG&A expenses as a percent of revenue as we remain diligent about our cost base.

Stephen Reitknecht: So revenue from our accessibility segment was $173.4 million, an increase of $22.8 million, or 15.1% compared to last year. The increase in revenue was mainly driven by organic growth of 15.4%, driven by strong demand in both the residential and commercial sectors, price increases in North America and Europe, and last year was also impacted by issues with our ERP system implementation in Europe. Adjusted EBITDA and Adjusted EBITDA margin for accessibility stood at $36.2 million and 20.9% compared to $21.4 million and 14.2% last year.

JP: Now looking at our segmented results. So revenue from our accessibility segment was $173.4 million, an increase of $22.8 million, or 15.1% compared to last year.

JP: The increase in revenue was mainly driven from organic growth of 15.4%.

Speaker Change: driven by strong demand in both the residential and commercial sectors.

Speaker Change: Price increases in North America and Europe , and last year was also impacted by issues with our ERP system implementation in Europe .

Stephen Reitknecht: Adjusted EBITDA and Adjusted EBITDA margin for accessibility stood at $36.2 million and 20.9% compared to $21.4 million and 14.2% last year. The increased profitability was mainly due to higher revenue and improved pricing, a favorable product mix, and lower material costs for both regions; the backlog in patient care also remains healthy. The decrease in both metrics was mainly due to higher SG&A expenses, which were partially offset by pricing initiatives.

Speaker Change: Adjusted EBITDA and Adjusted EBITDA margin for accessibility stood at 36.2 million and 20.9% compared to

Stephen Reitknecht: The increased profitability was mainly due to higher revenue and improved pricing, a favorable product mix, and lower material costs for both regions. Last year was also weaker due to the previously mentioned system implementation. However, the backlog in the accessibility segment remains healthy.

Speaker Change: 21.4 million and 14.2 percent last year. The increased profitability was mainly due to higher revenue and improved pricing, a favorable product mix and lower costs, lower material costs for both regions.

JP: Last year was also weaker due to the previously mentioned system implementation.

JP: The backlog in accessibility segment remains healthy.

Stephen Reitknecht: To offer additional insight into our regions, we are proud to report revenues from both Accessibility North America and Europe increased by over 15% compared to the previous year. The adjusted EBITDA margin for North America was 23.6% in the quarter, while the margin in Europe increased to 15.8%, reflecting significant improvements from a year ago, as well as a sizable improvement over Q1. According to our patient care segment, we saw our revenues reach 47.9 million for the quarter, which is flat compared to last year.

JP: to offer additional insight into our regions we areprd to report the revenues from both accessibility in north america and europe increased by over fifteen percent compared to the previous year

JP: The adjusted EBITDA margin for North America was 23.6% in the quarter, while the margin in Europe increased to 15.8%, reflecting significant improvements from a year ago, as well as a sizable improvement over Q1.

JP: Turning to our patient care segment, we saw our revenues reach $47.9 million for the quarter, which is flat compared to last year.

Stephen Reitknecht: As a reminder to our investors, our patient care business is driven in large part by project-based sales, which can be lumpy from time to time and can be impacted also by project delays. However, the backlog in patient care also remains healthy. Adjusted EBITDA and Adjusted EBITDA margins stood at 8.2 million and 17% compared to 9.3 million and 19.4% last year for patient care. The decrease in both metrics was mainly due to higher SG&A expenses, which were partially offset by pricing initiatives.

Speaker Change: as a reminder to our investors our patient care business is driven in large part by project -based sales which can be lumpy from time to time and can be impacted also by project delays

JP: the backlog in patient chare also remains healthy

JP: Adjusted EBITDA and Adjusted EBITDA margins stood at 8.2 million and 17% compared to 9.3 million and 19.4% last year for patient care.

JP: The decrease in both metrics was mainly due to higher SG&A expenses, which were partially offset by pricing initiatives.

Stephen Reitknecht: As we mentioned in previous communications, Q1 and Q2 of 2023 were exceptionally strong, and the improvements pertaining to Savaria One are expected to affect the upcoming quarters more. On a consolidated basis, net finance costs were $7.4 million compared to $4.5 million last year. Interest on long-term debt decreased by $1.5 million due to the reduced balance of debt that we're seeing, which was primarily driven by the raise last year. We also experienced unfavorable variations on foreign currency exchange and financial instruments, both of which were unrealized in nature.

JP: As we mentioned in past communications, Q1 and Q2 of 2023 were exceptionally strong, and the improvements pertaining to Savaria I are expected to affect the upcoming quarters more.

Stephen Reitknecht: On a consolidated basis, net finance costs were $7.4 million compared to $4.5 million last year. Net earnings were $11,015,000 per diluted share for the quarter compared to $8,800,000 or $0.14 per diluted share last year. The increase in net earnings and net earnings per share was mainly due to higher adjusted EBITDA, partially offset by strategic initiative expenses, net finance costs, and higher net income taxes. Turning now to Capital Resources and Liquidity. For the quarter, cash flows related to operating activities before net changes in non-cash operating items reached $26.7 million compared to $17.7 million last year, attributed to increased EBITDA.

JP: On a consolidated basis, net finance costs were $7.4 million compared to $4.5 million last year.

JP: Interest on long-term debt decreased by 1.5 million due to the reduced balance of debt that we're seeing, which was primarily driven by the raise last year.

JP: We also experienced unfavorable variations on foreign currency exchange and financial instruments. Both were unrealized in nature.

Stephen Reitknecht: Net Earnings was $11,015,000 per diluted share for the quarter compared to $8,800,000 or $0.14 per diluted share last year. The increase in net earnings and net earnings per share was mainly due to higher adjusted EBITDA, partially offset by strategic initiative expenses, net finance costs, and higher net income taxes. Adjusted net earnings were $15.6 million or $0.22 per diluted share for the quarter compared to $9 million or $0.14 per diluted share for the same period in 2023, reflecting a large increase when one-time non-recurring strategic initiative expenses of $5.3 million are carved out.

JP: net earnings was eleven million and fifteen cents for diluted share for the quarter compared to eight point eight million or fourteen cents perdiluted shared last year

JP: the increase in net earnings and that earnings per share was mainly due to higher adjusted ebitda partially offset by strategic initiative expenses net finance costs and higher net income tax expenses

JP: adjusted net earnings was fifteen point six million or twenty two cents per ularlud share for the quarter compared to nine million or fourteen centence for diluted share for the same period intwo thousand and twenty three reflecting a large increase when one when one time nonrecurring strategic initiative expenses of five point three million ar carto

Stephen Reitknecht: Net changes in non-cash operating items decreased liquidity by $3.1 million compared to a decrease of $17.5 million in Q2 of last year. As a result, cash generated from operating activities in Q2 stood at $23.6 million compared to $0.2 million last year, an increase of over $23.4 million. While DIO slightly increased during the quarter, it came down for the June month end, and our DSO and DPO measures both improved versus Q1, aligning with our efforts to improve working capital management throughout the business.

Stephen Reitknecht: Turning now to capital resources and liquidity. For the quarter, cash flows related to operating activities before net changes in non-cash operating items reached $26.7 million compared to $17.7 million last year, attributed to the increased EBITDA, net changes in non-cash operating items decreased liquidity by $3.1 million compared to a decrease of $17.5 million in Q2 of last year, decrease in 2024 was driven by increased prepaid expenses and other current assets, as well as decreased deferred revenue, while 2023 was unfavorably impacted by trade receivables, inventories, as well as trade payables, partially offset by higher deferred revenue.

Speaker Change: turning out to capital resources and liquidity e for the quarter cash flows related to operating activities before net changes in noncash operating items reached twenty- six point seven million compared to seventeen point seven million last year attributed to the increas debitda

Speaker Change: Net changes in non-cash operating items decreased liquidity by $3.1 million compared to a decrease of $17.5 million in Q2 of last year.

JP: The decrease in 2024 was driven by increased prepaid expenses and other

JP: Current assets as well as decreased deferred revenue, while 2023 was unfavorably impacted by trade receivables, inventories, as well as trade payables, partially offset by higher deferred revenues.

Stephen Reitknecht: As a result, cash generated from operating activities in Q2 stood at 23.6 million, compared to 0.2 million last year, an increase of over 23.4 million. While DIO slightly increased during the quarter, it came down for the June month end, and our DSO and DPO measures both improved versus Q1, aligning with our efforts to improve working capital management throughout the business, who remained committed to enhancing working capital as we grow. (Inaudible) Tax used in investing activities was $11.3 million for the quarter compared to $4.5 million last year.

JP: As a result, cash generated from operating activities in Q2 stood at $23.6 million compared to $0.2 million last year, an increase of over $23.4 million.

JP: While DIO slightly increased during the quarter, it came down for the June month end and our DSO and DPO measures both improved versus Q1, aligned with our efforts to improve working capital management throughout the business.

JP: we remain committed to enhancing working capital as we grow

JP: cash used in investing activities was eleven point three million for the quarter compared to four point five million last year

Stephen Reitknecht: We disbursed $4.7 million for fixed and intangible assets compared to $4.6 million last year, so essentially flat. In addition, we disbursed $6.9 million for the business acquisition of Maytot that was done in April of this year. To support business growth, we're expecting capital expenditures to stay in the historical range of 2% to 2.5% of revenue for the 2024 year. Cash used in financing activities was $22.6 million for Q2 compared to $15 million last year.

JP: We dispersed $4.7 million for fixed and intangible assets compared to $4.6 million last year, so essentially flat.

Stephen Reitknecht: In addition, we disbursed $6.9 million for the business acquisition of Maytot that was done in April of this year. To support business growth, we're expecting capital expenditures to stay in the historical range of 2 to 2.5 percent of revenue for the 2024 year. As of June 30, 2024, our net debt was $274.9 million. The ratio of net debt to adjusted EBITDA stood improved at 1.88 in comparison to 2.07 at the end of last year.

JP: In addition, we disbursed $6.9 million for the business acquisition of Maytot that was done in April of this year. To support business growth, we're expecting capital expenditures to stay in the historical range of 2 to 2.5 percent of revenue for the 2024 year.

JP: cash used in financing activities was twenty two point six million for q two compared to fifteen million last year

Stephen Reitknecht: The variation is mainly explained by the reimbursement on the credit facility of 8.8 million in the quarter compared to proceeds drawn of 0.8 million in 2023, as well as lower interest paid of 1.9 million. As of June 30th, 2024, our net debt was $274.9 million. The ratio of net debt to adjusted EBITDA stood improved at 1.88 in comparison to 2.07 at the end of last year.

Speaker Change: the variation has mainly explained by the reimbursement on the credit facility of eight point eight million in the quarter compared to proceeds drone point eight million of two thousand andtwenty three as well as lower interest paate of one point nine million

Speaker Change: as i june thirtieth two thousand and twenty four our net debt was two hundred and seventy four point nine million

Stephen Reitknecht: the ratio of net debt to adjusted ebitda stood improved at one point eight eight in comparison the two o seven at the end of last year

Stephen Reitknecht: And so looking forward, with regard to guidance, as previously stated, Savaria is not providing guidance for fiscal 2024 as we focus on the achievement of our 2025 targets of approximately $1 billion in revenue and 20% adjusted EBITDA margin. The global team is focusing on delivering on these 2025 objectives, and it remains difficult to pinpoint where we're going to finish 2024 and the remaining quarters therein. Savaria's future prospects are promising, driven by strong market demand, the progress of Savaria 1, and potential acquisition opportunities that will enhance our market potential. And with that, this completes my prepared remarks, and I'm going to turn the call over to Jean-Philippe to provide further details on how we're progressing with Scenario 1.

Stephen Reitknecht: and so looking forward with regards to guidance as previously stated that are is not providing guidance for fiscal two thousand and twentyfour as we focus on the achievement of our two thousand and twenty-five targets of approximately one billion in revenue in twenty percent adjusted ebitda margin

Stephen Reitknecht: The global team is focusing on delivering on these 2025 objectives, and it remains difficult to pinpoint where we are going to finish 2024 and the remaining quarters therein.

Stephen Reitknecht: Savaria's future prospects are promising, driven by strong market demand, the progress of Savaria One, and potential acquisition opportunities that will enhance our market position.

JP: And with that, this completes my prepared remarks, and I'm going to turn the call over to Jean-Philippe to provide further details on how we're progressing with Savaria 1.

Jean-Philippe: Before I dive in, I just want to take a moment to thank the hundreds of colleagues at Savaria who are contributing to our success. Their creativity, their passion, the expertise they have, and their rigor in executing all the initiatives we are pursuing is what makes Savaria unique, and our Savaria One program is. As you saw, Q2 2024 was Savaria's best quarter ever.

ste: thank you ste good morning everyone before i id i just want to take a moment to thank the hundreds of colleagues at samaria who are contributing to our success

Sebastien Bourassa: Their creativity, their passion, the expertise they have, and their rigor in executing all the initiatives we are pursuing is what makes Savaria unique, and our Savaria One program is. As you saw, Q2 2024 was Savaria's best quarter ever.

Jean-Philippe: It is a new benchmark for us as it was not due to a single initiative or luck but rather the results of steady improvements across the business that are paying us. Just to give you a sense, we implemented 75 different initiatives in the first half of this year. In Q1, we saw a modest improvement in our quarterly earnings, and I mentioned that we were starting to see the fruits of the changes made through Savaria I.

Sebastien Bourassa: It is a new benchmark for us, as it was not due to a single initiative or luck but rather the results of steady improvements across the business that are paying off. Just to give you a sense, we implemented 75 different initiatives in the first half of this year. In Q1, we saw a modest improvement in our quarterly earnings, and I mentioned that we were starting to see the color of the changes made through Savaria 1.

Sebastien Bourassa: As you saw, Q2 2024 was Savaria's best quarter ever. It is the new benchmark for us, as it was not due to a single initiative or luck, but rather the results of steady improvements across the business that are paying off.

Sebastien Bourassa: Just to give you a sense, we implemented 75 different initiatives in the first half of this year.

Sebastien Bourassa: in q one we saw a modest improvement in our quarterly earnings and i mentioned that we were starting to see the color of the changes made trups of io one well in q q we are starting to realize the true benefits of changes made and it is the first full quarter where we can measure those impacts

Sebastien Bourassa: Well, in Q2, we are starting to realize the true benefits of changes made, and it is the first full quarter where we can measure those impacts. While we cannot predict what the future holds, and our business is subject to many external forces, we expect the changes we implemented to have recurring benefits and continue in the coming quarters. Another good example is procurement.

Sebastien Bourassa: While we cannot predict what the future holds and our business is subject to many external forces, we expect the changes we implemented to have recurring benefits and continue in coming quarters.

Jean-Philippe: We made a number of changes to our commercial terms. For example, we introduced the New Dealer Partner Program in North America. While this program was introduced in January, the first orders placed within this program were likely produced and delivered at the end of Q1, so we really saw the full impact of commercial changes on our revenues in Q2. Another good example is procurement.

Sebastien Bourassa: Let me give you an example. We made a number of changes to our commercial terms. For example, we introduced the New Dealer Partner Program in North America.

Sebastien Bourassa: While this program was introduced in January , the first orders placed within this program were likely produced and delivered at the end of Q1, so we really see the full impact of commercial changes on our revenues in Q2.

Jean-Philippe: We renegotiated many contracts for raw materials, parts, or freight rates, but those cost savings may only be accounted for in products that are sold either in Q2 or even in Q3. If I continue in North America, our focus within Savaria 1 was on a dual objective to grow order intake while getting our factories to grow throughput for best-selling products, and in particular, home delivery. Like Seb mentioned before, we're very proud of the achievements we've made there.

Sebastien Bourassa: We renegotiated many contracts for raw materials, parts, or freight rates, but those cost savings may only be accounted for in products that are sold either in Q2 or even in Q3. If I continue in North America, our focus within Savaria One was on a dual objective to grow order intake while getting our factories to grow throughput for best-selling products, and in particular, home delivery. In Europe, our focus with Savaria One was mainly on improving profitability, as that region certainly delivered lower EBITDA margins than our other divisions.

Sebastien Bourassa: Another good example is procurement. We renegotiated many contracts for raw materials, parts, or freight rates, but those cost savings may only be accounted for in products that are sold either in Q2 or even in Q3.

Sebastien Bourassa: if i continue in north america our focus within savar one was on a dual objective to grow order in age while getting our factories to grow throughput for best-selling products and in particular homethis

Sebastien Bourassa: Like Seb mentioned before, we're very proud of the achievements we've made there, and what this meant is that, you know, on the sales side, our sales force developed detailed plans to support our top dealers in each market to grow their business, and that we worked with our own direct stores to be more effective in managing and converting orders of potential customers.

Jean-Philippe: And what this meant was that, you know, on the sales side, our sales force developed detailed plans to support our top dealers in each market to grow their business, and we worked with our own direct stores to be more effective in managing and converting orders from potential customers. Meanwhile, in parallel, our factories were getting more organized and more efficient. Those combined efforts are what really enabled our sales to grow by 15% versus the same quarter last year.

Sebastien Bourassa: while in parallel factorieswe' getting more organized and more efficient

Sebastien Bourassa: those combined efforts

Speaker Change: is what explains while actually explain a bit more details in detail what ened inthefacto in theprevious st i ' explaining again but those combined efforts is what really enabled ourselves to growll by fifteen percent versus same quarter last year

Jean-Philippe: Also, one of the highlights of this quarter is that we made our new warehouse in Toronto fully operational, which enabled our factory here in Brampton to be more effective within the same footprint and absorb the made-to-order production, which we aim to produce in-house. In Europe, our focus with Savaria I was mainly on improving profitability as that region has historically delivered lower margin than our other divisions. To do so, we had commercial initiatives but also reduced the cost of goods sold by completing different sourcing events in the fall of 2023 and the first half of 2024. We also made dozens of small operational improvements to reduce the time to assemble our products while increasing their quality.

Sebastien Bourassa: Also, one of the highlights of this quarter is that we made our new warehouse in Toronto fully operational, which enabled our factory here in Brampton to be more effective within the same footprint and absorb the method production, which we aim to produce in-house by end of this year.

Sebastien Bourassa: In Europe , our focus with Savaria 1 was mainly on improving profitability, as that region has sturdily delivered lower EBITDA margins than our other divisions.

Sebastien Bourassa: To do so, we had commercial initiatives, but also reduced the cost of goods sold by completing different sourcing events in the fall of 2023 and the first half of 2024.

Sebastien Bourassa: We also made dozens of small operational improvements to reduce the time to assemble our products while increasing their quality.

Jean-Philippe: Thanks to all of this, and thanks to our rigor in managing costs, our EBITDA margin grew by 3% versus Q1'24. Meanwhile, while improving margins, we also experienced sales growth in Europe versus Canada. Finally, our patient care division continues to deliver healthy results, yet, like we mentioned before, we invested in growing the business and expected those investments to take time to generate sales and margin growth, given the nature of the business and the long sales cycle.

Sebastien Bourassa: Thanks to all of this, and thanks to our rigor in managing costs, our EBITDA margin grew by 3% versus Q1'24. Finally, our patient care division continues to deliver healthy results, yet, like we mentioned before, we invested in growing the business and expected those investments to take time to generate sales and margin growth, given the nature of the business and the long sales cycle. For example, we expanded and strengthened our sales team to cover regions that are attractive for us but lacked coverage in the past.

Speaker Change: thanks to all of this and thanks to our rigor in managing costs are a visa margin grew by three percent versis q one and twenty four

Sebastien Bourassa: While improving margins, we also experienced assessed growth in Europe versus Q1.

Sebastien Bourassa: findallythe our patient care division continues to deliver healthy results

Sebastien Bourassa: Yet, like we mentioned before, we invested in growing the business and expected those investments to take time to generate sales and margin growth, given the nature of the business and the long sales cycle.

Jean-Philippe: For example, we expanded and strengthened our sales team to cover regions that are attractive for us but lacked coverage in the past. And those new additions are paying off, but we know growing a territory takes time. Finally, we're getting more efficient in our factories as well, as we have materially improved the productivity of our bed facility in Beamsville and are having good success with the introduction of new package offerings, allowing fast shipments of beds and mattresses to our U.S. customers.

Speaker Change: for example we exptanded and strengthen our sal team to cover regions that are attracted for us but lacked coverage in the past and those new additions are paying us but we know going a territory ceales bastime

Sebastien Bourassa: And those new additions are paying off, but we know growing a territory sales takes time. On the flip side, we had fewer projects and, thus, revenues in the ceiling lift business in QQ. In conclusion, we're very happy with our progress and are on track with our plan for Savaria 1. We achieved 19% adjusted EBITDA in Q2, so we are already very close to this first objective and are making progress towards the second one. Thank you for your attention. That closes the remarks for Savaria 1, and I'll hand it back to Sebastien.

Sebastien Bourassa: Finally, we're getting more efficient in our factories as well, as we have materially improved the productivity of our beds facility in Beamsville and are having good success with the introduction of new package offerings allowing fast shipments of beds and mattresses to our US customers.

Sebastien Bourassa: On the flip side, we had fewer projects and thus revenues in the ceiling lift business in Q2.

Jean-Philippe: On the flip side, we had fewer projects and, thus, revenues in the ceiling lift business in Q2. In conclusion, we're very happy with our progress and are on track with our plan for Savaria 1. If you recall, our objective is for 2025 to be at 20% EBITDA and to grow the top line to 1 billion Canadians. We achieved a 19% adjusted EBITDA in Q2, so we are already very close to this first objective and are making progress towards the second one. Again, thank you to all my Savaria colleagues for their support in this effort. Thank you for your attention. That closes the remarks for Savaria 1, and I'll hand it back to Sebastien.

Sebastien Bourassa: In conclusion, we're very happy with our progress and are on track with our plan for Savaria 1.

Sebastien Bourassa: If you recall, our objective is for 2025 to be at 20% EBITDA and grow the top line to 1 billion Canadians.

Sebastien Bourassa: We achieved a 19% adjusted EBITDA in Q2, so we are already very close to this first objective and are making progress towards the second one.

Sebastien Bourassa: Again, thank you to all Savaria colleagues for their support in this effort.

Sebastien Bourassa: Thank you G.P. and thank you Steve for your remarks. So I guess we are ready for some questions.

Sebastien Bourassa: Thank you for your attention. That closes the remarks for Savaria 1 and I'll hand it back to Sebastien.

Operator: Thank you, sir. How's the reminder to ask a question going? Please press numbers one and one on your telephone and wait for your name to be announced. Do we ask your question? Please press numbers one and one again. Once again, please press numbers one and one on your telephone and wait for your name to be announced. Do we draw your question? Please press tole one and one again. Thank you. We are not going to proceed with our first question. The questions come from the line of Frederic Tremblay from Desjardins Capital Markets. Please ask your question.

Sebastien Bourassa: Thank you, JP, and thank you, Steve, for your remarks. So, I guess, Raz, we are ready for some questions.

Sebastien Bourassa: Thank you, sir. As a reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question, please press star 1 and 1 again. Once again, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Thank you. We are now going to proceed with our first question.

Speaker Change: the questions come from alinoof frederary tomblly from daled capital markets please ask question

Frederic Tremblay: Good morning and congratulations on the strong results. Maybe starting with Savaria 1 and sort of what's next in terms of getting the list to the 20% margin. Is there any particular area where you feel that, you know, future initiatives will be key to get to that 20%? Obviously, I understand that there are a lot of initiatives going on. But I mean, would you say that commercial excellence operations or supply chain is one of those that's going to be more crucial in the future?

Sebastien Bourassa: Maybe starting with Savaria 1 and sort of what's next in terms of

Sebastien Bourassa: Good morning, and congrats on the strong results.

Speaker Change: thank you friendme

Sebastien Bourassa: Maybe starting with Savaria 1 and sort of what's next in terms of...

Sebastien Bourassa: getting those to the 20% margin. Is there any...

Speaker Change: This is a particular area where you feel that future initiatives will be key to get to that 20%. I understand that there's a lot of initiatives going on, but would you say that commercial excellence operations or supply chain is there?

Sebastien Bourassa: Maybe I will start and JP will complete. So I would say, Fred, for sure, procurement always takes more time. It is difficult for us to necessarily change the vendor because sometimes we need to re-certify our product. We need to consume and rent equipment for re-procurement.

Sebastien Bourassa: one of those that's going to be more crucial in the fure quarters

Speaker Change: maybe i would start in g p will complete so i had no sure procurement always takes more time is difficult for us to necess to change of vendor because some time we towards the research fire product we consumer inventory use superment always takes more time

Sebastien Bourassa: It always takes more time. But for sure, the biggest pillar is our sales initiative, and it takes time. We want to do more cross-selling. We want to increase the share of wallet dealers. We want to bring them new products that they can buy from us.

Speaker Change: Unfortunately, the biggest pillar is our sales initiative, and it takes time. We want to do more cross-selling, we want to increase the share of wallet dealers, we want to bring them new products.

Sebastien Bourassa: So I would say this one takes more time. And the rest, it was a two-year program. Now, it's always difficult to put a percentage, but maybe we are half through it, and we're still very comfortable. We want to go next year. But definitely, commercial excellence is the one that needs more time. JP, any color you want to add?

Speaker Change: and we de can buy from us so always did this one takes more time and the rest of you sayit's was a two-year program now

Speaker Change: It's always difficult to put a presentation, but maybe we are half through it, and we're still very comfortable with where we want to go next year.

Jean-Philippe: Just to add, so we have had success in all dimensions up to now, right? So it's not like our results can be explained only by one specific set of delivery. So we had improvements everywhere, but like I said, the one area where we expect maybe more money to flow to the P&L in the next quarters is a bit more in procurement because of that timing effect and the fact that it takes time. And on the other hand, yeah, I think our factories are better equipped than ever. Like, they're in very good shape right now. So we're going to maybe put a bit more attention on sales growth because that's where we see the next, you know.

Sebastien Bourassa: But definitely the commercial excellence is the one that needs more attention.

Sebastien Bourassa: Bye.

Speaker Change: dp any colory just just to addas fic so we have success on all dimensions up to now right so it's not like our results can be explaining only by one this is a set of deavor so had improvements everywherewebut like said mentioned where we expect may be more money to flow through the pnl in the next quarters is

Sebastien Bourassa: a bit more on procurement because of that timing effect and the fact that it takes time. And on the other hand, yeah, I think our factories are better equipped than ever, like they're in very good shape right now. So we're going to maybe put a bit more attention on sales growth because that's where we see the next opportunity.

Sebastien Bourassa: Great, thanks for that. In terms of the demand part of the equation, you know, very strong 15% organic growth in America and North America, which is higher than the 8 to 10% company-wide output that you typically provide. I'm just wondering what's sort of driving that? Is there one product category that's stronger than the others? And maybe get your thoughts as well on growth moving forward for accessibility in North America.

Operator: Great. Thanks for that.

Fred Gatali: In terms of the demand part of the equation, you know, very strong 15% organic growth in America and North America, which is higher than the 8 to 10% company-wide output that you typically provide. I'm just wondering what's sort of driving that? Is there one product category that's stronger than the others? And maybe get your thoughts as well on growth moving forward for accessibility in North America.

Speaker Change: great thanks for that in terms of

Speaker Change: the demand part the equation very strong fifteen percent organic growth in america i north america which is

Fred Gatali: higher than the eight to ten percent company-wide output that you typically provide. I'm just wondering what what's sort of driving that? Is there one product category that's stronger than the others? And maybe get your thoughts as well on growth moving forward for accessibility in North America in particular.

Marcel Bourassa: For sure, Fred, okay, again, it's always a bit difficult, you know, Savaria, we have all our direct stores, we have the Europe or North America, we have the patient care, so again, if we go back to our objective, we want to grow the full Savaria at 8 to 10 percent. For sure, North America, again, we have been a bit fueling the growth with eating a little bit of our backlog, not too much, but for sure, all my innovators, okay, it was part of the Savaria one, it was one place where we could be better, the demand is quite strong, with the density of the population, of the residential area, the townhouse going to three to four floors, the constant work with architect, contractor, to bring us some repeat business, so I would say that's one area that the home elevator has been quite successful in terms of growth in North America.

Marcel Bourassa: for sopharchy can always a bit difficult to know if of we a direct real we have the europe ornorthtoicamerica we have the patient care again for go back to ourobjective we want to go tothe full saal eight to ten percent

Speaker Change: Foster North America

Marcel Bourassa: Again, we have been a bit fueling the growth with eating a little bit of our backlog, not too much, but for sure.

Speaker Change: Allman Aviator, okay, it was part of the Savaria one.

Marcel Bourassa: It was one place where we could be better, the demand is quite strong.

Marcel Bourassa: with the density of the population of the residential area of the town that is going to three to four floors.

Marcel Bourassa: They constantly work with architects, contractors, to bring us some repeat business. So I would say that's one area that the OMA Laboratory has been quite successful in terms of growth in North America.

Operator: That's it for me. Thank you.

Frederic Tremblay: Good. That's it for me. Thank you.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Michael Glen from Raymond James. Please ask your question.

Michael Glen: Great, that's it from me, thank you.

Speaker Change: Thank you, Fran.

Speaker Change: Thank you. We are now going to proceed with our next question.

Speaker Change: The questions come from the line of Michael Glen from Raymond James. Please ask your questions.

Fred Gatali: Hey, good morning. This is Fred Gatali on for Michael Glen. On the $15 Savaria one and additional fees associated with it, could you remind us, are those performance-based fees? And at this point in time, do you factor that additional $15 million in?

Fred Gatali: ingood morning this is friend tyon for michael

Fred Gatali: On the $15 Savaria one and additional fees associated, could you remind us of those performance-based fees, and at this point in time, do you factor that additional $15 million in your numbers?

Stephen Reitknecht: Sorry, just to clarify the question, it was around the cost that we've incurred year to date, so the $5.3 million in the quarter, or? No, this would be $15 million in possible additional fees next year, I believe. So we, so through our investor day, and I think we've echoed the message a few times that the total expected costs of the project could reach 40 to 45 million dollars, depending on exactly where the project finishes as far as how much EBITDA is delivered.

Speaker Change: Sorry, just to clarify the question, it was around the cost that we've incurred year to date, so the $5.3 million in the quarter? No, this would be the $15 million in possible additional fees next year, I believe.

Marcel Bourassa: So we, so through our investor day, and I think we've echoed the message a few times that the total expected costs of the project could reach 40 to 45 million dollars, depending on, on, on exactly where the project finishes as far as how much EBITDA is delivered. So there is a performance component, and there's also a bit of a fixed fee component in there as well, so we're not disclosing the separate details of the contract, but the contract is based on both a fixed and performance-based fee, and a lot of that depends on how we're delivering on all of these Savaria I initiatives. There's there's both components that are wrapped up in.

Marcel Bourassa: So through our investor day, and I think we've echoed the message a few times, the total expected costs could reach $40 to $45 million of the project, depending on exactly where

Stephen Reitknecht: So there is a performance component, and there's also a bit of a fixed fee component in there as well, so we're not disclosing the separate details of the contract, but the contract is based both on a fixed and performance-based fee, and a lot of that depends on how we're delivering on all of these Savaria I initiatives. There are both components that are wrapped up in

Marcel Bourassa: where the project finishes as far as how much EBITDA is delivered. So there is there is a performance component. There's also a bit of a fixed fee component in there as well. So, you know, we're not disclosing the separate details of the contract, but the contract is based both with a fixed and performance based fee. And a lot of that.

Marcel Bourassa: It really depends on how we're delivering on all of these Savaria I initiatives, so there's both components that are wrapped up in there.

Fred Gatali: Okay, and on accessibility in Europe, I mean, how are some of the dealers, there was some weakness last quarter, I believe, so how are some of the dealer and pricing initiatives turning out there, and how do you see that looking in the second half of the year?

Fred Gatali: Okay, and on accessibility in Europe , I mean, how are some of the dealer, there was some weakness last quarter I believe, so how are some of the dealer and pricing initiatives turning out there, and how do you see that looking in the back half of the year?

Sebastien Bourassa: If I understand correctly, again, about the dealer growth in Europe, okay, for sure, like, the second quarter was, again, a weak second quarter. Right now, again, if we go back to the Savaria one, it's a growth story.

Marcel Bourassa: If I understand correctly, again, about the dealer growth in Europe, okay, for sure, like, the second quarter was against a weak second quarter. Right now, again, if we go back to Savaria 1, it's a growth story.

Marcel Bourassa: If I understand correctly, again, about the dealer growth in Europe , okay, for sure, like the second quarter was, again, it's a weak second quarter.

Sebastien Bourassa: We're pushing a lot of our initiatives, cross-selling. We're bringing some new products into Europe by the end of the year for vertical platforms, which will help us to accelerate our growth in the coming years. So I would say, yeah, we have to go step by step, and definitely right now, we are focused a lot on the operation costs and the margins to bring them to a good level, but growth size remains a very important priority for us.

Marcel Bourassa: We're pushing a lot of our initiatives, cross-selling. We're bringing some new products to Europe by the end of the year for vertical platforms, which will help us to accelerate our growth in the coming years. So, I would say we have to go step by step, and definitely right now, we are focused a lot on the operation costs, on the margins, to bring them to a good level, but growth size remains a very important priority for us.

Marcel Bourassa: Right now, again, if we go back to the Savaria one, it's a growth story.

Marcel Bourassa: We are pushing a lot of initiatives across the ceiling. We are bringing some new products to Europe by the end of the year for vertical platforms, which will help us to accelerate our growth in the coming years.

Speaker Change: so i will say we have to go step by steps and definity right now we have focused on that on the operation costs on the margins to bring it a good level but the growth sales remain a very important priority for us in the

Fred Gatali: Okay, thank you. And if I could just squeeze in one more, just on the Mexico facility, have you seen, can you speak maybe to the contribution you've seen so far from that? Any dealer reactions as well to that facility or proximity, I should say?

Marcel Bourassa: For sure Mexico, for us, it was not a short-term project; it was a mid-long-term project, again to do a bit of nurturing, not to put all the eggs of manufacturing in one basket. So right now, I would not say the result of the second quarter is because of Mexico. Again, it's more for the long-term that we want to make sure we have some parts there, some sub-assembly. Right now, we do some port ships, some final product assembly that we do with every ship to the U.S., and in the future, we would like to bring more complete products, but right now, this factory has been focused mostly on sub-assembly, shipping to Brampton, Vancouver, and a bit of innovation.

Sebastien Bourassa: For sure, Mexico, for us, it was not a short-term project; it was a mid-long term project, again, to do a bit of nurturing, not to put all the eggs of manufacturing in one basket. So right now, I would not say the result of the second quarter is because of Mexico.

Marcel Bourassa: For sure Mexico, it was not a short term, it was a mid-long term.

Marcel Bourassa: project, again, to do a bit of nurturing, not to put all the eggs of manufacturing in one basket.

Sebastien Bourassa: Again, it's more for the long term that we want to make sure we have some parts there, some sub-assembly. Right now, we do some port ships, some final product assembly that we do with every ship to the U.S. In the future, we would also like to bring a more complete product, but right now, this factory has been focused mostly on sub-assembly, shipping to Brampton, and Vancouver, and a bit of innovation.

Marcel Bourassa: So right now...

Marcel Bourassa: I would not say the result of the second quarter is because of Mexico. Again, it's more for the long term that we want to make sure we have some parts there, some subassemblies. Right now, we do some port ships, some final product assemblies that we do with every ship to the U.S.

Marcel Bourassa: And in the future, we'd like to bring also more complete product, but right now this factory has been focused mostly on sub-assembly, shipping to Brampton, Vancouver, and a bit of patient care.

Fred Gatali: Okay, thank you. That's it.

Operator: Thank you. As a final reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. Star 1 and 1 for any questions. Thank you. We are now going to proceed with our next question. The questions come from the line of Zachary Evershed from National Bank Financial. Please ask your question.

Operator: Thank you. As a final reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced; star 1 and 1 for any questions. Thank you. We are now going to proceed with our next question. The questions come from the line of Zachary Evershed from National Bank Financial. Please ask your question.

Zachary Evershed: Okay, thank you.

Operator: kill

Speaker Change: thank you as a fundal remanda to ask a quest please brtoilel one and want new telephone and wait for your name to be announced

Operator: it's now one and one for any question thank you we are going to proceed with our next question

Operator: The questions come from the line of Zachary Evershed from National Bank Financial. Please ask your question.

Zachary Evershed: Good morning, everyone. Your hat's on the quarter. For the acquisitions that you're considering, what kind of threshold or hurdle rate do they have to hit to make you sit up and pay attention when your focus right now is on Savaria 1 and operational improvement?

Zachary Evershed: Good morning, everyone. Your hat's on the quarter.

Zachary Evershed: morning everyone your ats on the quarter

Zachary Evershed: act

Zachary Evershed: for the acquisitions that you're considering what kind of threshold or or hurdle r do they have to hit to make you setit up and pay attention when youyour're focus right now is on seve one an operational improvements

Sebastien Bourassa: Thank you, Zach, for the question. So for sure, like acquisition, okay, again, we have talked often about talking acquisition, small dealer for us, okay, or medium-sized, whatever, that there's no, that the owner wants to sell, there's no succession, or that's something we're always interested in, we're listening. Maytas is a very good example that we did in the second quarter, a small company that we can bring our new products to our other dealers that, again, want to remain a one-stop offering with the best kind of products, so that's why something we could integrate into a supply chain and try to increase sales.

Speaker Change: Thank you, Zach, for the questions. So for sure, like acquisition, I can't...

Speaker Change: Again, we have talked often about talking acquisition, small dealer for us, okay, or medium size, whatever, that there's no, that the owner want to sell, there's no succession.

Speaker Change: that's something where re always interested we're listening made talk to the very good example that we i did in a second quarter

Speaker Change: a small company that we can bring our new products to our other dealers that want to remain a one-stop offering.

Speaker Change: with the best line of products, so that's why it's something we could integrate into a supply chain.

Sebastien Bourassa: So I would say new products, dealers, always something that is on top of our list. In terms of size, we could go up to $226 million, but right now, again, we're really focused on small tokens, several ones, and let's see what your fortune is to come. Our friend, Nick, is always working full-time on everything.

Speaker Change: and try to increase the size. So I would say new products, dealers, always something that is on top of our list. In terms of size, we could go up to 226 million, but right now, again, we're really focused on.

Speaker Change: Smalltokian, Savaria1, and let's see what's your fortune to come. Our friend Nick is always working full-time on M&A.

Sebastien Bourassa: Thank you. Good color, too.

Zachary Evershed: Thank you, good color. And then on that topic, any more home runs like in the pipeline?

Zachary Evershed: Thank you, good color. And then on that topic, any more home runs like Matt talked about in the pipeline?

Sebastien Bourassa: Again, it's hard to give some color, Zach, on that. We don't want to make a forward-looking statement on this, so we'll see what we bring in the future.

Speaker Change: ...acquisition, you mean?

Zachary Evershed: Yeah.

Speaker Change: Again, it's hard to give some color, Zach, on that. We don't want to do a forward-looking statement on this. We'll see what we bring in the future.

Zachary Evershed: Fair enough. And then just one last one. I'll circle back to the project timing issue in patient care. Is there any prospect of a catch-up on that in Q3, or is it more of just a subdued environment issue?

Stephen Reitknecht: Yeah, I would say that, you know, we had exceptionally strong quarters in Q1-Q2, you know, we've talked about that in Q1-Q2 of last year. We've talked about that a few times now. It's not that the market is down, it's just right now. What we are seeing is just a few delays across some of the project-based work, and the timing of those projects finishing and completing can be a little bit difficult to predict.

Speaker Change: Yeah, I would say, Zach, that, you know, we had exceptionally strong quarters in Q1 and Q2. You know, we've talked about that in Q1 and Q2 of last year. We've talked about that a few times now. It's not that the market is down. It's just, right now, what...

Speaker Change: What we are seeing is just a few delays across some of the project-based work and the timing of those projects.

Stephen Reitknecht: We're sort of seeing a little bit of softness there in Q1 and Q2, but as Sebastien mentioned, we're expecting Q3 and Q4 to be a little bit better. We know we have been able to counteract some of that project work with other sales, that our bent sales are doing very well. Bed sales across North America, both canned in the U.S.

Speaker Change: finishing and completing is can be a little bit difficult to predict and we're sort of seeing a little bit sofftice there and you want to q two but it's sebasti mention we're expecting q three in q q four to be a little bit better we have

Speaker Change: We have been able to counteract some of that project work with other sales and our bed sales are doing very well. Bed sales across North America, both Canada and the U.S. So while maybe we are seeing a little bit of weakness on the project side temporarily, we've done a good job of counteracting that.

Speaker Change: You know, what we saw in Q1 and Q2.

Speaker Change: The revenues were flat against really good quarters, profitability was down, we have higher SG&A costs there that we have been investing in a few different areas to support future growth that we are expecting and that we are seeing for that segment. So, you know, we remain very, very optimistic for that segment of the business.

Operator: That's helpful, thanks. I'll turn it over.

Zachary Evershed: Dad, hopefully, thanks. I'll turn it over.

Speaker Change: Yeah, I guess probably that's sufficient color for now.

Zachary Evershed: That's helpful, thanks. I'll turn it over.

Operator: We have no further questions at this time. I will now hand it back to you for your closing remarks. Thank you.

Speaker Change: which is i

Sebastien Bourassa: Okay, well, thank you guys and thank you to the analysts that were present this morning. It was a bit shorter than expected, but I guess the results were very clear, very well explained. So again, thank you very much for the results in the second quarter and to all our employees. I think Savaria is, we're in the right direction with this Savaria 1. I think that was the right decision that we made a year ago or after it, and we can, hopefully, see that the 1 billion 20% is within reach. Thank you. Thank you, guys.

Speaker Change: We have no further questions at this time. I will now hand back to you for closing remarks. Thank you.

Operator: Okay, well, thank you, Raz, and thank you for the analysis that were presented this morning. It was a bit shorter than expected, but I guess the results were very clear, very well explained. So, again, thank you very much for the...

Speaker Change: for the results in the second quarter to all our employees, and I think Savaria is, we're in the right direction with Savaria 1, I think that was the right decision that we made a year ago, or after it, and hopefully you can see that the 1,020,000,000 is at approximately a. . . . . . . .

Operator: This concludes today's conference.

Operator: This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a great day.

Speaker Change: a Twitch.

Operator: Thank you. Thank you, guys.

Speaker Change: This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you and have a great day.

Sebastien Bourassa: For sure Fred, okay, again, it's always a bit difficult, you know, we have a direct story, we have the Europe or North America, we have the patient care, so again if we go back to our objective, we want to grow the full Savaria at 8 to 10 percent, for sure North America, again we have been a bit fueling the growth with eating a little bit of our backlog, not too much but for sure, all manipulator, okay, it was part of the Savaria one, it was one place where we could be better, the demand is quite strong, with the density of the public, of the residential area, Auzh Tanou is going to three to four floors, the constant work with architect contractor, let's bring us some repeat business, so I would say that's one area that the omelie reader has been quite successful, in Demo growth, in like...

Jean-Philippe: Well, in Q2, we are starting to realize the true benefits of the changes made, and it is the first full quarter where we can measure them. While we cannot predict what the future holds and our business is subject to many external forces, we expect the changes we implemented to have recurring benefits and continue in the coming quarters. Let me give you an example.

Stephen Reitknecht: So, you know, while maybe we are seeing a little bit of weakness on the project side temporarily, it's, we've done a good job of counteracting that. So, you know, what we saw in Q1 and Q2, revenues were flat against really good quarters, profitability was down, we had higher SG&A costs there, and we have been investing in a few different areas to support future growth that we are expecting and that we are seeing for that segment. So, you know, we remain very, very optimistic about that segment of the business. Yeah, I guess probably that's sufficient color. And that's all for today. Thanks.

Q2 2024 Savaria Corp Earnings Call

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