Q2 2026 Savaria Corp Earnings Call

August 6, 2026

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone.

Speaker #1: You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference call is being recorded.

Speaker #1: I would now like to hand the conference over to your first speaker today, Sebastian Rarasa, CEO.

Speaker #2: Thanks, Tiffany, and good morning, everyone. So today I will start with a small recap of our Q2 results, then Steve will update us on financial and GP will provide an update on Savaria One, followed by a Q&A session.

Sébastien Bourassa: Thanks, Stephanie, and good morning, everyone. Today I will start with a small recap of our Q2 results. Steve will update us on financial, and JP will provide an update on Savaria One, followed by a Q&A session. Again, I'm very proud of the results of Q2 as it is our highest revenue ever at CAD 246 million, with a growth of 8.4% that is well-balanced between patient care and accessibility. We achieve EBITDA margins of 21%, which really show that the Savaria One success over the last few years continues to be present, and I'm very thankful to our team for all their hard work that they make those great results quarter after quarter. Today there's three things that I would like to highlight. First, the growth.

Speaker #2: So again, I'm very proud of the results of Q2 as it is our highest revenue ever at $246 million, with a growth of 8.4%.

Speaker #2: That is well balanced between patient care and accessibility. And we achieved an EBITDA margin of 21%. Which really showed that the Savaria One success over the last few years continues to be present, and I'm very thankful to our team for all the hard work that they make those great results quarter after quarter.

Speaker #2: So today, there's three things that I would like to highlight. First, the growth. I'm happy that we have a third good quarter in a row in terms of growth, which showed that some good initiatives that we have put in place for the next five years is starting to work.

Sébastien Bourassa: I'm happy that we have a third good quarter in a row in terms of growth, which show that some good incentive that we have put in place for the next 5 years is starting to work. In North America, we continue to develop the market of home elevator with architect, builder, contractor, and of course, your dealers. We increase our sales, focused on stair lift. Matot, dumbwaiter and material lift continue to have a push with architect and builder, and our good lead time is really helping this product line. We added a state-of-the-art paint shop in Greenville for the manufacturing of a wood cabin, which was starting to be in operation in Q3 for a direct store and will be launched for a dealer in October. That will really help us complete the best product offering feature for a dealer.

Sébastien Bourassa: I'm happy that we have a third good quarter in a row in terms of growth, which show that some good incentive that we have put in place for the next five years is starting to work. In North America, we continue to develop the market of home elevator with architect, builder, contractor, and of course, your dealers. We increase our sales, focused on stair lift. Matot, dumbwaiter and material lift continue to have a push with architect and builder, and our good lead time is really helping this product line. We added a state-of-the-art paint shop in Greenville for the manufacturing of a wood cabin, which was starting to be in operation in Q3 for a direct store and will be launched for a dealer in October. That will really help us complete the best product offering feature for a dealer.

Speaker #2: In North America, we continue to develop the market of home elevator with architect-builder-contractor, and of course, your dealers. We increased our sales focus on Stairlift, Method Dumbwailer, and Material Lift continue to have a push with architect and builder, and a good lead time is really helping this product line.

Speaker #2: We added a state-of-the-art paint shop in Greenville for the manufacturing of our wood cabin, which will be in operation we're starting to be in operation in the third quarter for a direct store, and we'll be launched for a dealer in October, and that will be really help us continue to have the best product offering feature for a dealer.

Speaker #2: And also, a building expansion is on plan to open in Q4 this year. In Europe, we expand a one-stop shop with remote VPL incline and now with the VPL product line is pretty much a complete product portfolio, so that will really help us for the future.

Sébastien Bourassa: Also our building expansion is on plan to open in Q4 this year. In Europe, we expand a one-stop shop with Remod, VPL, and Klein, and now with the VPL product line is pretty much a complete product portfolio. That will really help us for the future. We continue to be the partner of choice on stair lift. In patient care, growth has been good since the beginning of the year, but margins are slightly behind what we desire as there's been a bit more inflation in this division than others. We did a mid-year price increase, and I'm hopeful that by the end of the year in Q4, you will see an improvement on the margins as before. The strategy to own the room and continue to develop the long-term care continues to be the core of activity of this division.

Speaker #2: And we continue to be the partner of choice on Stairlift. In patient care, growth has been good since the beginning of the year, but margins are slightly behind what we desired as there's been a bit more inflation in this division than others.

Speaker #2: But we did a mid-year price increase, and I'm hopeful that by the end of the year, in the fourth quarter, you will see an improvement on the margins as before.

Speaker #2: The strategy to own the room and continue to develop the long-term care continue to be the core of activity of this division. Second, best growth margins ever at $39.6%, which really show that we continue to improve.

Sébastien Bourassa: Second, best growth margins ever at 39.6%, which really show that we continue to improve, we continue to have good initiative, despite the small contraction we had in the patient care in that Q2. Third, acquisition. As we said during the investor day, we had the ambition to do some acquisition in the next five years for approximate CAD 200 million, some small mid-size stock in that will help us in some area where we see some more potential or bring some new products to our distribution network to continue the best product portfolio with a one-stop shop. Far this year, we did Baxter Elevator in Texas, which showed that we want to grow our presence in this booming market in Texas.

Speaker #2: We continue to have good initiative, despite the small contraction we had in the patient care in the second quarter. Third, acquisition. As we said during the investor day, we had the ambition to do some acquisition in the next five years for approximately $200 million, some small, mid-size stuck in that will help us in some area where we see some more potential or bring some new products to our distribution network to continue to best product portfolio with a one-stop shop.

Speaker #2: So far this year, we did Baxter Elevator in Texas, which showed that we want to grow our presence in this booming market in Texas.

Speaker #2: And in July, we closed VPL, a small manufacturer of home lift and no rise commercial in Italy to help us to develop the Europe, with some code-compliant products.

Sébastien Bourassa: In July, we closed Vipal, a small manufacturer of home lift and low-rise commercial in Italy to help us to develop Europe with some code-compliant products. With our net debt-EBITDA ratio at 0.7 at the end of the Q2, our liquidity continued to grow and now at CAD 333 million available for capital allocation, we are in very good position. To conclude, I'm quite happy with the first six months of this year as we, in investor day, we have the ambition to grow the business at 12% per year for the next five years and maintain our margins at 20 plus, which ultimately will lead us to CAD 1.6 billion of sales with an EBITDA over CAD 220 million by 2030. Thanks to all the people at Savaria that follow the next chapter of growth, and thanks for the analysts for your good works. Steve, financial please.

Speaker #2: With our net debt EBITDA ratio at 0.7 at the end of the second quarter, our liquidity continued to grow, and now at $333 million available for capital allocation, we are in very good position.

Speaker #2: To conclude, I'm quite happy with the first six months of this year as we unveiled the investor day. We have the ambition to grow the business at 12% per year for the next five years, and maintain our margins at 20-plus.

Speaker #2: Which ultimately will lead us to $1.6 billion of sales with an EBITDA over $220 million by 2030. So thanks to all the people at Savaria that follow an extra term of growth, and thanks for the analysts for your good works.

Speaker #2: Steve, financial, please.

Speaker #3: Thank you, Sebastian. Good morning, everyone. I'll now provide some additional detail on our second quarter results. So key highlights for the quarter include firstly, revenue grew by 8.4% in Q2, driven by organic growth of 6.6%.

Stephen Reitknecht: Thank you, Sébastien. Good morning, everyone. I'll now provide some additional detail on our Q2 results. Key highlights for the quarter include, firstly, revenue grew by 8.4% in Q2, driven by organic growth of 6.6%. Year-to-date revenues reached CAD 481.3 million, representing 7.7% growth on a year-to-date basis. Secondly, adjusted EBITDA margin reached 21.1%. That's a 50 basis point improvement over prior year, driven by continued gross margin expansion across the business. Finally, our leverage ratio continued to improve, sitting at 0.87 times as at 30 June, giving us significant flexibility to support our growth strategy, including acquisitions and planned capital expenditures. Turning now to consolidated revenues. We generated CAD 245.8 million in the quarter. That's an increase of CAD 19 million or 8.4%, as I mentioned over last year. This includes organic growth of 6.6%.

Steve Reitknecht: Thank you, Sébastien. Good morning, everyone. I'll now provide some additional detail on our Q2 results. Key highlights for the quarter include, firstly, revenue grew by 8.4% in Q2, driven by organic growth of 6.6%. Year-to-date revenues reached CAD 481.3 million, representing 7.7% growth on a year-to-date basis. Secondly, adjusted EBITDA margin reached 21.1%. That's a 50 basis point improvement over prior year, driven by continued gross margin expansion across the business. Finally, our leverage ratio continued to improve, sitting at 0.87 times as at 30 June, giving us significant flexibility to support our growth strategy, including acquisitions and planned capital expenditures. Turning now to consolidated revenues. We generated CAD 245.8 million in the quarter. That's an increase of CAD 19 million or 8.4%, as I mentioned over last year. This includes organic growth of 6.6%.

Speaker #3: Year-to-date revenues reached $481.3 million, representing 7.7 growth on a year-to-date basis. Secondly, adjusted EBITDA margin reached 21.1%. That's a 50 basis point improvement over prior year, driven by continued gross margin expansion across the business.

Speaker #3: And finally, our leverage ratio continued to improve, sitting at 0.87 times as of June 30th, giving us significant flexibility to support our growth strategy, including acquisitions and planned capital expenditures.

Speaker #3: Turning now to consolidated revenues, we generated $245.8 million in the quarter. That's an increase of 19 million or 8.4%, as I mentioned, over last year.

Speaker #3: This includes organic growth of 6.6%, also a 0.8% contribution from the acquisitions of Baxter, earlier this year, and Western Elevator last year. And as well as a positive foreign exchange impact of 1%.

Stephen Reitknecht: Also a 0.8% contribution from the acquisitions of Baxter, earlier this year and Western Elevator last year, and as well as a positive foreign exchange impact of 1%. Accessibility revenue increased by 8.7% to CAD 192 million, mainly driven by organic growth of 6.4%. Sales increased in both Canada and the US, while Europe continued to deliver another strong quarter, supported by continued growth in stairlift sales. Patient care revenue increased by 7.3% to CAD 53.7 million, entirely driven by organic growth. This reflected higher US sales and continued growth in the UK. Now looking at gross margin operating income, consolidated gross margin was 39.6%, compared with 39% in Q2 2025. That's an increase of 60 basis points. Gross profit increased CAD 8.8 million year-over-year, providing testament to the continued success and ongoing benefits of Savaria One.

Steve Reitknecht: Also a 0.8% contribution from the acquisitions of Baxter, earlier this year and Western Elevator last year, and as well as a positive foreign exchange impact of 1%. Accessibility revenue increased by 8.7% to CAD 192 million, mainly driven by organic growth of 6.4%. Sales increased in both Canada and the US, while Europe continued to deliver another strong quarter, supported by continued growth in stairlift sales. Patient care revenue increased by 7.3% to CAD 53.7 million, entirely driven by organic growth. This reflected higher US sales and continued growth in the UK. Now looking at gross margin operating income, consolidated gross margin was 39.6%, compared with 39% in Q2 2025. That's an increase of 60 basis points. Gross profit increased CAD 8.8 million year-over-year, providing testament to the continued success and ongoing benefits of Savaria One.

Speaker #3: Accessibility revenue reached 8.7% growth to sorry, increased by 8.7% to $192 million, mainly driven by organic growth of 6.4%. Sales increased in both Canada and the United States, while Europe continued to deliver another strong quarter, supported by continued growth in stair lift ift sales.

Speaker #3: Patient care revenue increased by 7.3% to $53.7 million, entirely driven by organic growth. This reflected higher US sales and continued growth in the UK.

Speaker #3: Now looking at gross margin operating income, consolidated gross margin was $39.6%, compared with $39% in Q2 2025. That's an increase of 60 basis points.

Speaker #3: Gross profit increased 8.8 million, year over year, providing testament to the continued success and ongoing benefits of Savaria One. Operating income increased by 9.1 million or 34.1% to $35.8 million, representing a margin of 14.6%, compared with 11.8% in Q2 2025.

Stephen Reitknecht: Operating income increased by CAD 9.1 million or 34.1% to CAD 35.8 million, representing a margin of 14.6%, compared with 11.8% in Q2 2025. The increase was driven by higher revenue, gross margin expansion, lower other expenses, and the termination of strategic initiative expenses following the completion of Savaria One last year. This was partially offset by higher selling and admin as we invest for growth. Adjusted EBITDA reached CAD 51.8 million, representing a margin of 21.1%, compared with CAD 46.7 million and 20.6% last year. Accessibility adjusted EBITDA margin reached 23.6%. That's 170 basis points over last year's 21.9% margin. Patient care adjusted EBITDA was 18.4%, compared with 20.9% last year. Net finance costs were CAD 1.7 million in the quarter compared with CAD 4.7 million last year. Interest on long-term debt decreased by CAD 1.2 million, mainly due to a lower debt balance.

Steve Reitknecht: Operating income increased by CAD 9.1 million or 34.1% to CAD 35.8 million, representing a margin of 14.6%, compared with 11.8% in Q2 2025. The increase was driven by higher revenue, gross margin expansion, lower other expenses, and the termination of strategic initiative expenses following the completion of Savaria One last year. This was partially offset by higher selling and admin as we invest for growth. Adjusted EBITDA reached CAD 51.8 million, representing a margin of 21.1%, compared with CAD 46.7 million and 20.6% last year. Accessibility adjusted EBITDA margin reached 23.6%. That's 170 basis points over last year's 21.9% margin. Patient care adjusted EBITDA was 18.4%, compared with 20.9% last year. Net finance costs were CAD 1.7 million in the quarter compared with CAD 4.7 million last year. Interest on long-term debt decreased by CAD 1.2 million, mainly due to a lower debt balance.

Speaker #3: The increase was driven by higher revenue, gross margin expansion, lower other expenses, and the termination of strategic initiative expenses following the completion of Savaria One last year.

Speaker #3: This was partially offset by higher selling and admin, as as we invest for growth. Adjusted EBITDA reached $51.8 million, representing a margin of 21.1%, compared with 46.7 million and 20.6% last year.

Speaker #3: Accessibility adjusted EBITDA margin reached $23.6%. That's a $170 basis points over last year's $21.9% margin. And patient care adjusted EBITDA was $18.4%, compared with 20.9% last year.

Speaker #3: Net finance costs were $1.7 million in the quarter, compared with $4.7 million last year. Interest on long-term debt decreased by 1.2 million, mainly due to a lower debt balance.

Speaker #3: We recorded a foreign currency gain of 0.6 million, compared to a loss last year of 0.5 million, and a net gain of 0.1 million this year on financial instruments, compared to a loss of 0.7 million last year.

Stephen Reitknecht: We recorded a foreign currency gain of CAD 0.6 million compared to a loss last year of CAD 0.5 million, and a net gain of CAD 0.1 million this year on financial instruments, compared to a loss of CAD 0.7 million last year. Correspondingly, net earnings increased by 54.4% to CAD 25.2 million, or CAD 0.34 per diluted share, compared with CAD 16.3 million or CAD 0.23 per diluted share in Q2 2025. Now taking a look at cash flow and liquidity. Cash flow from operating activities was CAD 33.3 million compared with CAD 30.3 million in Q2 last year. The increase was mainly driven by higher net earnings and a favorable unrealized foreign exchange gain, partially offset by higher income taxes paid this year. Cash used in investing activities was CAD 13.4 million compared with CAD 3.6 million last year.

Steve Reitknecht: We recorded a foreign currency gain of CAD 0.6 million compared to a loss last year of CAD 0.5 million, and a net gain of CAD 0.1 million this year on financial instruments, compared to a loss of CAD 0.7 million last year. Correspondingly, net earnings increased by 54.4% to CAD 25.2 million, or CAD 0.34 per diluted share, compared with CAD 16.3 million or CAD 0.23 per diluted share in Q2 2025. Now taking a look at cash flow and liquidity. Cash flow from operating activities was CAD 33.3 million compared with CAD 30.3 million in Q2 last year. The increase was mainly driven by higher net earnings and a favorable unrealized foreign exchange gain, partially offset by higher income taxes paid this year. Cash used in investing activities was CAD 13.4 million compared with CAD 3.6 million last year.

Speaker #3: Correspondingly, net earnings increased by 54.4% to $25.2 million or 34 cents per diluted share, compared with 16.3 million or 23 cents per diluted share in Q2 2025.

Speaker #3: Now taking a look at cash flow and liquidity, cash flow from operating activities was $33.3 million, compared with 30.3 million in Q2 last year.

Speaker #3: The increase was mainly driven by higher net earnings, and a favorable unrealized exchange foreign exchange gain partially offset by higher income taxes paid this year.

Speaker #3: Cash used in investing activities was 13.4 million compared with 3.6 million last year. We invested $12.5 million in fixed and intangible assets in the quarter, including $5.3 million for the Greenville building expansion and related equipment for that site.

Stephen Reitknecht: We invested CAD 12.5 million in fixed and intangible assets in the quarter, including CAD 5.3 million for the Greenville building expansion and related equipment for that site. As of 30 June, available funds were CAD 333.4 million compared to CAD 311.7 million at year-end, and net debt decreased to CAD 172.8 million from CAD 191.5 million at year-end. After quarter end, on 1 July 2026, we acquired all outstanding shares of Vipal S.p.A., a manufacturer of residential lifts and elevators based in Ferentino, Italy. Total consideration was CAD 13 million or EUR 8 million, subject to customary adjustments for net financial position and net working capital. Our Q2 results support our long-term outlook. Revenue grew by 8.4%, including 6.6% organic growth, and adjusted EBITDA margin reached 21.1%. Building on this momentum, we continue to target annual revenue growth of approximately 12% through 2030 while maintaining adjusted EBITDA margins of at least 20%.

Steve Reitknecht: We invested CAD 12.5 million in fixed and intangible assets in the quarter, including CAD 5.3 million for the Greenville building expansion and related equipment for that site. As of 30 June, available funds were CAD 333.4 million compared to CAD 311.7 million at year-end, and net debt decreased to CAD 172.8 million from CAD 191.5 million at year-end. After quarter end, on 1 July 2026, we acquired all outstanding shares of Vipal S.p.A., a manufacturer of residential lifts and elevators based in Ferentino, Italy. Total consideration was CAD 13 million or EUR 8 million, subject to customary adjustments for net financial position and net working capital. Our Q2 results support our long-term outlook. Revenue grew by 8.4%, including 6.6% organic growth, and adjusted EBITDA margin reached 21.1%.

Speaker #3: As at June 30th, available funds were $333.4 million compared to $311.7 million at year-end, and net debt decreased to $172.8 million from $191.5 million at year-end.

Speaker #3: After quarter-end on July 1st, 2026, we acquired Aldo Sending shares of VPAL SPA, a manufacturer of residential lifts and elevators based in Firentillo, Italy.

Speaker #3: Total consideration was $13 million, Canadian or $8 million euros. Subject to customary adjustments for net financial position and net working capital. Our Q2 results support our long-term outlook.

Speaker #3: Revenue grew by 8.4%, including 6.6% organic growth and adjusted EBITDA margin reached 21.1%. Building on this momentum, we continue to target annual revenue growth of approximately 12% through 2030, while maintaining adjusted EBITDA margins of at least 20%.

Steve Reitknecht: Building on this momentum, we continue to target annual revenue growth of approximately 12% through 2030 while maintaining adjusted EBITDA margins of at least 20%. With that, this concludes my prepared remarks. I'll now turn the call over to J.P. for additional comments. J.P.?

Speaker #3: And with that, this concludes my prepared remarks. I'll now turn the call over to JP for additional comments JP?

Stephen Reitknecht: With that, this concludes my prepared remarks. I'll now turn the call over to J.P. for additional comments. J.P.?

Speaker #2: Yeah. Thank you, Steve. And good morning, everyone. So today, I'll speak about three things. How Savaria One is fueling growth, how Savaria One is also helping us with better margins, and a little bit about VPAL acquisition.

[Company Representative] (Savaria): Thank you, Steve, and good morning, everyone. Today I'll speak about three things: how Savaria One is fueling growth, how Savaria One is also helping us with better margins, and a little bit about Vipal acquisition. For me, the key message is that year-to-date, we're on track with our objectives of organic growth for the business as well as profitability across the board. For example, the fact that both segments grew 7% to 8% in Q2 is a big success, and the growth we see is balanced across product segments as well as across geographies. A lot of this is due to some efforts we did in the recent past and in the last two years. I'll give you a few examples.

JP De Montigny: Thank you, Steve, and good morning, everyone. Today I'll speak about three things: how Savaria One is fueling growth, how Savaria One is also helping us with better margins, and a little bit about Vipal acquisition. For me, the key message is that year-to-date, we're on track with our objectives of organic growth for the business as well as profitability across the board. For example, the fact that both segments grew 7% to 8% in Q2 is a big success, and the growth we see is balanced across product segments as well as across geographies. A lot of this is due to some efforts we did in the recent past and in the last two years. I'll give you a few examples.

Speaker #2: For me, the key message is that year to date, we're on track with our objectives of organic growth for the business, as well as profitability across the board.

Speaker #2: For example, the fact that

Speaker #1: The both segments grew 7 to 8% in Q2 is a big success , and the growth we see is balanced across product segments as well as across geographies But a lot of this is due to some efforts we did in the recent past And in the last two years .

Speaker #1: So I'll give you a few examples . In the patient care business , we had a lot of success in Q2 installing ceiling lifts , but that is in part due to the fact that we upgraded our ceiling lift lineup with the M series and started selling it about a year ago , and with that , we won bids that we installed in Q2 .

[Company Representative] (Savaria): In the patient care business, we had a lot of success in Q2 installing ceiling lifts, but that is in part due to the fact that we upgraded our ceiling lift lineup with the M-Series and started selling it about a year ago. With that, we won bids that we installed in Q2. Also in Silvi in the UK, this is a smaller part of our business, but still strategic. We moved to a new factory about a year and a half ago, which allowed us to have better production capacity, and now we are selling into the NHS. We're able to grow this business because we can produce more at a good price. We also revamped our lineup of slings for Silvi, that's also helping the business grow.

JP De Montigny: In the patient care business, we had a lot of success in Q2 installing ceiling lifts, but that is in part due to the fact that we upgraded our ceiling lift lineup with the M-Series and started selling it about a year ago. With that, we won bids that we installed in Q2. Also in Silvi in the UK, this is a smaller part of our business, but still strategic. We moved to a new factory about a year and a half ago, which allowed us to have better production capacity, and now we are selling into the NHS. We're able to grow this business because we can produce more at a good price. We also revamped our lineup of slings for Silvi, that's also helping the business grow.

Speaker #1: Also in Seville in the U.K. . This is a smaller part of our business , but still strategic . We moved to a new factory about a year and a half ago , which allowed us to have better production capacity , and now we are selling into the NHS .

Speaker #1: We're able to grow this business because we can produce more at a good , at a good price . We also revamped our lineup of slings for Silvelie , so that's also helping that business grow Another thing that's important in patient care is that we did improvements in the sling manufacturing of Saint Louis , and also worked with external partners to have more capacity for the disposable slings .

[Company Representative] (Savaria): Another thing that's important in patient care is that we did improvements in the sling manufacturing of St. Louis and also worked with external partners to have more capacity for the disposable slings. Now we had a good growth in sling sales, which we were able to ship thanks to all these efforts we did in the past. Finally, it's worth noting that we also established a dual assembly line, we can now assemble the M-Series ceiling lifts both in Canada and in the US in St. Louis. In the current context, we can really assemble close to the market. Now in Accessibility North America, as Sébastien mentioned in his address, we had great growth again across the board.

JP De Montigny: Another thing that's important in patient care is that we did improvements in the sling manufacturing of St. Louis and also worked with external partners to have more capacity for the disposable slings. Now we had a good growth in sling sales, which we were able to ship thanks to all these efforts we did in the past. Finally, it's worth noting that we also established a dual assembly line, we can now assemble the M-Series ceiling lifts both in Canada and in the US in St. Louis. In the current context, we can really assemble close to the market. Now in Accessibility North America, as Sébastien mentioned in his address, we had great growth again across the board.

Speaker #1: And now we had a good growth in sales , which we were able to ship . Thanks to all these efforts we did in the past Finally , it's worth noting that we also established a dual assembly line , so we can now assemble the M series ceiling lifts , both in Canada and in the US .

Speaker #1: In Saint Louis . So in the current context , we can really assemble close to the market . Now in accessibility in North America , as Sebastian mentioned in his address , we had great growth again , across the board .

Speaker #1: It's been a consistent theme for North America . But one of the highlights for me is the growth we had in our direct stores , where we made deliberate efforts for years to develop our referral networks , to do education with architects , to also go and work with , sorry , contractors and promoters of multi-unit residential projects who now spec our lifts in their offer .

[Company Representative] (Savaria): This has been a consistent theme for North America, one of the highlights for me is the growth we had in our direct stores, where we made deliberate efforts for years to develop our referral networks, to do education with architects, to also go and work with contractors and promoters of multi-unit residential projects who now spec our lifts in their offer, that pays off. Now our direct stores have orders for multi-unit projects that are very substantial. Finally, when we bought Matot, we spent a ton of efforts to in-source production in Brampton to make the production process also faster and leaner. This is paying off because now we are growing Matot sales, but we're also able to produce and ship in much shorter lead times than we used to in the past, that's helping our sales.

JP De Montigny: This has been a consistent theme for North America, one of the highlights for me is the growth we had in our direct stores, where we made deliberate efforts for years to develop our referral networks, to do education with architects, to also go and work with contractors and promoters of multi-unit residential projects who now spec our lifts in their offer, that pays off. Now our direct stores have orders for multi-unit projects that are very substantial. Finally, when we bought Matot, we spent a ton of efforts to in-source production in Brampton to make the production process also faster and leaner. This is paying off because now we are growing Matot sales, but we're also able to produce and ship in much shorter lead times than we used to in the past, that's helping our sales.

Speaker #1: And that pays us now our direct stores have orders for multi-unit projects that are very substantial and finally , when we bought Methode , we spent a ton of efforts to insource production and Brampton to make the production process also faster and leaner .

Speaker #1: And this is paying off because now we are growing sales, but we're also able to produce and ship in much shorter lead times than we used to in the past.

Speaker #1: And that's helping our sales Finally , we also migrated our website to a new domain . This this quarter . And the website has been redesigned to provide us better domain authority as well as enable better AI search visibility , which is critical in the current world .

[Company Representative] (Savaria): Finally, we also migrated our website to a new domain this quarter, and the website has been redesigned to provide us better domain authority as well as enable better AI search visibility, which is critical in the current world. In Europe, we reengaged with growth by winning back historical dealer relationships, thanks to our consistent efforts in improving product quality. We also expanded cross-selling of platform lifts, so we are now selling our Tiro and X3 platform lifts across all markets in Europe, including in our own direct stores in the UK and Netherlands. We also continue to drive growth in the largest direct markets by having innovative commercial strategies and just great delivery overall consistently. We also see that now not only are we recognized for better quality, but we are starting to introduce new product innovations.

JP De Montigny: Finally, we also migrated our website to a new domain this quarter, and the website has been redesigned to provide us better domain authority as well as enable better AI search visibility, which is critical in the current world. In Europe, we reengaged with growth by winning back historical dealer relationships, thanks to our consistent efforts in improving product quality. We also expanded cross-selling of platform lifts, so we are now selling our Tiro and X3 platform lifts across all markets in Europe, including in our own direct stores in the UK and Netherlands. We also continue to drive growth in the largest direct markets by having innovative commercial strategies and just great delivery overall consistently. We also see that now not only are we recognized for better quality, but we are starting to introduce new product innovations.

Speaker #1: In Europe , we re-engaged with growth by winning back historical dealer relationships thanks to our consistent efforts and improving product quality We also expanded cross-selling of platform lifts , so we're now selling our and X3 platform lifts across all markets in Europe , including in our own direct stores in the UK and Netherlands .

Speaker #1: We also continue to drive growth in the largest direct markets by having innovative commercial strategies and just a great delivery overall , consistently .

Speaker #1: We also see that now we . Not only are we recognized for better quality , but we are starting to introduce new product innovations .

Speaker #1: For example , we introduced the K2 stair lift earlier this year and just now we changed our new outdoor rail for 4000 . So that's a new offering that we think is going to have some traction And finally , we made a number of small commercial changes that make it simpler to do business with us So the overall message for me is that we are rigorously managing growth initiatives in Savaria one , just like we focus a lot on cost initiatives in the past This being said , we continue to also improve our costs .

[Company Representative] (Savaria): For example, we introduced the K2 stairlift earlier this year, and just now we changed our new outdoor rail for 4000. That is a new offering that we think is going to have some traction. Finally, we made a number of small commercial changes that make it simpler to do business with us. The overall message for me is that we are rigorously managing growth initiatives in Savaria One, just like we focused a lot on cost initiatives in the past. This being said, we continue to also improve our cost, and you can see it in the expansion of gross profit and the expansion of the bottom line results. Each month, we continue to implement initiatives. For example, in Q2, we implemented at least 50 new initiatives, and a lot of those relate to procurement to reduce the cost of goods sold.

JP De Montigny: For example, we introduced the K2 stairlift earlier this year, and just now we changed our new outdoor rail for 4000. That is a new offering that we think is going to have some traction. Finally, we made a number of small commercial changes that make it simpler to do business with us. The overall message for me is that we are rigorously managing growth initiatives in Savaria One, just like we focused a lot on cost initiatives in the past. This being said, we continue to also improve our cost, and you can see it in the expansion of gross profit and the expansion of the bottom line results. Each month, we continue to implement initiatives. For example, in Q2, we implemented at least 50 new initiatives, and a lot of those relate to procurement to reduce the cost of goods sold.

Speaker #1: And you can see it in the expansion of gross profit and the expansion of the bottom line results . Each month , we continue to implement initiatives .

Speaker #1: So for example , in Q2 , we implemented at least 50 new initiatives . And a lot of those relate to procurement . To reduce the cost of goods sold .

Speaker #1: And you can see that that shows in our financials . And this is especially relevant in today's world because we know there is inflationary pressures across the board .

[Company Representative] (Savaria): You can see that that shows in our financials. This is especially relevant in today's world because we know there is inflationary pressures across the board. In most of our businesses, we are able to offset those with either efficiency gains in production or material cost reductions, thanks to our initiatives. The only exception this quarter is patient care, where, as Sébastien mentioned, we had some great pressures from some commodity cost inflation that we now need to counter with some price increases mid-year. Our focus as a business continues to be on growth, and this is where most of our attention and our efforts are oriented towards. People working in the factories and people working in the offices on procurement continue to innovate, continue to improve our business nevertheless, so we can improve our cost position.

JP De Montigny: You can see that that shows in our financials. This is especially relevant in today's world because we know there is inflationary pressures across the board. In most of our businesses, we are able to offset those with either efficiency gains in production or material cost reductions, thanks to our initiatives. The only exception this quarter is patient care, where, as Sébastien mentioned, we had some great pressures from some commodity cost inflation that we now need to counter with some price increases mid-year. Our focus as a business continues to be on growth, and this is where most of our attention and our efforts are oriented towards. People working in the factories and people working in the offices on procurement continue to innovate, continue to improve our business nevertheless, so we can improve our cost position.

Speaker #1: But in most of our businesses , we're able to offset those with either efficiency gains in production or material cost reductions . Thanks to our initiatives .

Speaker #1: The only exception this quarter is patient care . Where , as Sebastian mentioned , we had some great pressures from some commodity cost inflation that we now need to counter with some price increases mid-year So our focus as a business continues to be on growth .

Speaker #1: And this is where most of our attention and our efforts are oriented towards . But people working in the factories and people working in the offices on procurement continue to innovate , continue to improve our business nevertheless .

Speaker #1: So we can improve our cost position Finally , the last highlight for me from Savaria one is the capacity expansion in Greenville . As Seth mentioned .

[Company Representative] (Savaria): Finally, the last highlight for me from Savaria One is the capacity expansion in Greenville, as Seb mentioned. I will be brief, but the fact that we already were assembling clips in Greenville for months, every quarter, every month, we are expanding the capabilities over there. We also had investments of new machinery. We commissioned a paint line, which is very critical to have a high-quality cabin built and shipped in the US. Over time, we are shifting more and more orders from Canada production to US production for the US market. Third topic for me is the Vipal acquisition. Just a bit more details on that business. We closed the acquisition in early July.

JP De Montigny: Finally, the last highlight for me from Savaria One is the capacity expansion in Greenville, as Seb mentioned. I will be brief, but the fact that we already were assembling clips in Greenville for months, every quarter, every month, we are expanding the capabilities over there. We also had investments of new machinery. We commissioned a paint line, which is very critical to have a high-quality cabin built and shipped in the US. Over time, we are shifting more and more orders from Canada production to US production for the US market. Third topic for me is the Vipal acquisition. Just a bit more details on that business. We closed the acquisition in early July.

Speaker #1: So I'll be brief . But the fact that we now have we already were assembling Eclipse in Greenville for months , but every quarter , every month , we are expanding the capabilities over there .

Speaker #1: We also had investments of new machinery . We commissioned the paint line , which is very critical to have a high quality cabin built and shipped in the US .

Speaker #1: And over time , we are shifting more and more orders from Canada production to US production for the US market Third topic for me is the acquisition .

Speaker #1: So just a bit more details on that business . We closed the acquisition in early July . It is a strategic acquisition for us because of the know how of this team .

[Company Representative] (Savaria): It is a strategic acquisition for us because of the know-how of this team at Vipal in the lift business, because the fabrication process is largely in-house, and because the technology is well-known and renowned in Europe. What happened is, very shortly after, 2 weeks later, we had a large group of our global leaders, including myself and Sébastien, who went there to kick off the integration plan. We already are in motion to integrate the business. In fact, I am speaking to you from Italy, where I'm doing a roadshow with the sales team at Vipal this week to meet our top dealers and their top dealers. We're definitely in motion, and we are already seizing opportunities to cross-sell in both ways. Meaning we can cross-sell our products to their dealers and vice versa, we can sell Vipal to our dealers.

JP De Montigny: It is a strategic acquisition for us because of the know-how of this team at Vipal in the lift business, because the fabrication process is largely in-house, and because the technology is well-known and renowned in Europe. What happened is, very shortly after, 2 weeks later, we had a large group of our global leaders, including myself and Sébastien, who went there to kick off the integration plan. We already are in motion to integrate the business. In fact, I am speaking to you from Italy, where I'm doing a roadshow with the sales team at Vipal this week to meet our top dealers and their top dealers. We're definitely in motion, and we are already seizing opportunities to cross-sell in both ways. Meaning we can cross-sell our products to their dealers and vice versa, we can sell Vipal to our dealers.

Speaker #1: Had people on in the business because the fabrication process is largely in-house and because the technology is well known and renowned in Europe .

Speaker #1: What happened is very shortly after , two weeks later , we had a large group of our global leaders , including myself and Sebastian , who went there to kick off the integration plan .

Speaker #1: So we already are in motion to integrate the business . And in fact , I am speaking to you from Italy , where I'm doing a roadshow with the sales team of this week to meet our top dealers and their top dealers .

Speaker #1: So we're definitely in motion . And we are already seeing opportunities to cross-sell in both ways . So meaning we can cross sell our products to their dealers and vice versa .

Speaker #1: We can sell to our dealers . And this is going to be an integration that will take years with different steps . So we we are very excited about the acquisition .

[Company Representative] (Savaria): This is going to be an integration that will take years with different steps. We are very excited about the acquisition. We got a lot of ambitions for Vipal, of course, we'll go step by step, first by selling the products that they have today and over time, improving the operations, improving the products, and really integrating them in our business. In conclusion, we see good performance year to date and in Q2, and that comforts us that there's a clear link between our efforts in Savaria One and the results we see in the business. Thank you. That's it for me. Seb, over to you for closing words.

JP De Montigny: This is going to be an integration that will take years with different steps. We are very excited about the acquisition. We got a lot of ambitions for Vipal, of course, we'll go step by step, first by selling the products that they have today and over time, improving the operations, improving the products, and really integrating them in our business. In conclusion, we see good performance year to date and in Q2, and that comforts us that there's a clear link between our efforts in Savaria One and the results we see in the business. Thank you. That's it for me. Seb, over to you for closing words.

Speaker #1: We got a lot of ambitions for VPL . But of course , we'll go step by step . First , by selling the products that they have today .

Speaker #1: And over time , improving the operations , improving the products , and really integrating them in our business . So in conclusion , we see good performance year to date .

Speaker #1: And in Q2 and that comforts us that there's a clear link between our efforts and Savaria one and the results we see in the business Thank you .

Speaker #1: That's it for me , Seb . Over to you for closing words

Speaker #2: Thank you JP . Very good color on the server . One improvements . So I guess we are ready for questions . So Stephanie , can we open the queue please .

Sébastien Bourassa: Thank you, JP. A very good color on the Savaria One improvements. I guess we are ready for questions. Stephanie, can we open the queue, please? Thank you.

Speaker #2: Thank you .

Speaker #3: Yes thank you . This is at this time we'll conduct the question and answer session . As a reminder to ask a question .

Operator: Yes. Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from Frederic Tremblay from Desjardins Capital Markets. Your line is now open.

Operator: Yes. Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes fromFrédéric Tremblay from Desjardins Capital Markets. Your line is now open.

Speaker #3: You will need to press star one one on your telephone and wait for your name to be announced . To withdraw your question , please press star one one again .

Speaker #3: Please stand by while we compile the Q&A roster Our first question comes from Frederick Tremblay from Desjardins Capital Markets . Your line is now open

Speaker #4: Thank you . Good morning , just maybe following up first on the , , you mentioned , , already seizing opportunities to cross , , just wondering , I guess , , I think I know the answer , but what was the initial reaction from , from dealers to Savaria acquisition of the company ?

Frederic Tremblay: Thank you. Good morning.

Frédéric Tremblay: Thank you. Good morning.

Sébastien Bourassa: Good, Fred.

Sébastien Bourassa: Good, Fréd.

Frederic Tremblay: Maybe following up first on the Vipal. You mentioned already seizing opportunities to cross-sell. Just wondering, I guess, I think I know the answer, but what was the initial reaction from Vipal's dealers to Savaria One's acquisition of the company, and how do you think about introducing your products to the Vipal dealers going forward?

Frédéric Tremblay: Maybe following up first on the Vipal. You mentioned already seizing opportunities to cross-sell. Just wondering, I guess, I think I know the answer, but what was the initial reaction from Vipal's dealers to Savaria One's acquisition of the company, and how do you think about introducing your products to the Vipal dealers going forward?

Speaker #4: And how do you think about , , you know , introducing , , your products to the dealers going forward ?

Speaker #2: Be the best person to answer is GP because GP , are utility this week , meeting dealers , right .

Sébastien Bourassa: The best person to answer is JP, because JP, you're in Italy this week meeting dealers, right? What's the

Speaker #1: So yeah . Yeah , exactly . So I met , , five already and I have five a couple more tomorrow , but honestly , the reaction was very positive on both sides .

[Company Representative] (Savaria): Exactly. I met five already, and I have five, a couple more tomorrow. Honestly, the reaction was very positive on both sides, and you're always a bit apprehensive when you do something like this, but I was pleasantly surprised. Everybody's excited. I think their dealers are excited because they see Savaria as an established, well-structured company, and they also are now curious. They're learning about our products, because most what happens is most of Vipal's dealers are lifting companies that do mostly lifts or residential lifts and sometimes, let's see, we call it ascensori in Italian, but it's faster, larger lifts. They always have a small part of their business, which is platform lifts or some requests for stair lifts.

JP De Montigny: Exactly. I met five already, and I have five, a couple more tomorrow. Honestly, the reaction was very positive on both sides, and you're always a bit apprehensive when you do something like this, but I was pleasantly surprised. Everybody's excited. I think their dealers are excited because they see Savaria as an established, well-structured company, and they also are now curious. They're learning about our products, because most what happens is most of Vipal's dealers are lifting companies that do mostly lifts or residential lifts and sometimes, let's see, we call it ascensori in Italian, but it's faster, larger lifts. They always have a small part of their business, which is platform lifts or some requests for stair lifts.

Speaker #1: And you know , you're always a bit apprehensive when you do something like this , but I was pleasantly surprised . Everybody's excited .

Speaker #1: I think their dealers are excited because they see Savaria as an established , , well structured company . And they also are now they're learning about our products because most what happens is most of the dealers are lifting companies that do mostly lifts or residential lifts , and sometimes , , it's a real , as we call it , a sensory in Italian , but it's like faster or larger lifts .

Speaker #1: But they always have a small part of their business , which is platform lifts or some requests for stair lifts . And now they're many of them have been happy to see that we have this offering , and we already received some orders from dealers that said , okay , I might as well work with you .

[Company Representative] (Savaria): Now many of them have been happy to see that we have this offering, and we already received some orders from dealers that said, Okay, I might as well work with you. I like Vipal, so why not work with Savaria? That's been their reaction. On our side, many of our dealers, especially in Italy, knew about Vipal. When many of them, again, in the accessibility space, it's the opposite. They tend to have a small part of their business, which is selling home lifts. Now we're introducing Vipal to them, and the reaction was very positive. They like Savaria. What they recognize in Savaria is the quality of the support, customer service, and technical support they get.

JP De Montigny: Now many of them have been happy to see that we have this offering, and we already received some orders from dealers that said, Okay, I might as well work with you. I like Vipal, so why not work with Savaria? That's been their reaction. On our side, many of our dealers, especially in Italy, knew about Vipal. When many of them, again, in the accessibility space, it's the opposite. They tend to have a small part of their business, which is selling home lifts. Now we're introducing Vipal to them, and the reaction was very positive. They like Savaria. What they recognize in Savaria is the quality of the support, customer service, and technical support they get.

Speaker #1: I like people , so why not work with Savaria ? So that's been their reaction . And on our side , many of our dealers , especially in Italy , knew about De Paz .

Speaker #1: So . And many of them again , in the accessibility space , it's the opposite . They tend to have a small part of their business , which is selling home lifts .

Speaker #1: So now we're introducing people to them, and the reaction was very positive. What they like about Savaria—what they recognize in Savaria—is the quality of the support, customer service, and technical support they get.

Speaker #1: So they are now keen to see , okay , maybe we can try the products and and see we can provide the same support .

[Company Representative] (Savaria): They are now keen to see, okay, maybe they can try the Vipal products, and if we can provide the same support, they'd be excited to work with us. That's the feedback I'm getting.

JP De Montigny: They are now keen to see, okay, maybe they can try the Vipal products, and if we can provide the same support, they'd be excited to work with us. That's the feedback I'm getting.

Speaker #1: They'd be excited to work with us . That's the feedback I'm getting .

Speaker #4: Yeah that's great . And maybe just to get a sense of the , , to get a sense of the opportunity , , just wondering if you could remind us how many dealers and direct stores the barrio has in Europe and how , how does that compare to the number of dealers that are currently have

Frederic Tremblay: That's great. Maybe just to get a sense of the opportunity, just wondering if you could remind us how many dealers and direct stores Savaria has in Europe, and how does that compare to the number of dealers that Vipal currently has?

Frédéric Tremblay: That's great. Maybe just to get a sense of the opportunity, just wondering if you could remind us how many dealers and direct stores Savaria has in Europe, and how does that compare to the number of dealers that Vipal currently has?

Speaker #1: Yeah . So high level , it's a tricky way to question because , , we have , I think more than 325 dealers , if I recall , across Europe .

[Company Representative] (Savaria): Yeah. High level, it's a tricky question because we have, I think, more than 325 dealers, if I recall, across Europe, okay? The reality is in each market, not all dealers are equal, right? There's some dealers that are much larger than others. In comparison, Vipal had, I think, less than 50 dealers, okay? That's the kind of size of the opportunity and our dealers are across Europe. Vipal was much stronger in Italy than the rest of Europe. There's a lot of opportunities for us to grow the business. Turns out, last thing to know is that there's not that much overlap between our dealers. That was interesting, like a positive surprise for us that our networks are actually complementary. A lot of the dealers are new to Savaria and vice versa.

JP De Montigny: Yeah. High level, it's a tricky question because we have, I think, more than 325 dealers, if I recall, across Europe, okay? The reality is in each market, not all dealers are equal, right? There's some dealers that are much larger than others. In comparison, Vipal had, I think, less than 50 dealers, okay? That's the kind of size of the opportunity and our dealers are across Europe. Vipal was much stronger in Italy than the rest of Europe. There's a lot of opportunities for us to grow the business. Turns out, last thing to know is that there's not that much overlap between our dealers. That was interesting, like a positive surprise for us that our networks are actually complementary. A lot of the dealers are new to Savaria and vice versa.

Speaker #1: Okay . But the reality is in each market , this is not all dealers are equal , right ? So there's some dealers that are much larger than others .

Speaker #1: , but you know , in comparison , , had , I think less than 50 dealers . Okay . So that's the kind of size of the opportunity and our dealers are across Europe was much stronger in Italy than in rest of Europe .

Speaker #1: So there's a lot to be , , of opportunities for us to , to grow the business . And turns out , , last thing to know is that there's not that much overlap between our dealers .

Speaker #1: So that was an interesting , like a positive surprise for us that our networks are actually complementary . , so a lot of dealers are new to Savaria and vice versa

Speaker #4: Okay , great . And maybe just the last one for me quickly , , I just did a bit of margin in accessibility was really strong in the quarter at 23.6% .

Frederic Tremblay: Okay, great. Maybe just the last one for me quickly. Adjusted EBITDA margin accessibility was really strong in the quarter at 23.6%. Just wondering if there's a couple of main drivers to highlight there behind that strength and just your thoughts on sort of the sustainability and potential to expand that accessibility margin further in the coming quarters and years. Thanks.

Frédéric Tremblay: Okay, great. Maybe just the last one for me quickly. Adjusted EBITDA margin accessibility was really strong in the quarter at 23.6%. Just wondering if there's a couple of main drivers to highlight there behind that strength and just your thoughts on sort of the sustainability and potential to expand that accessibility margin further in the coming quarters and years. Thanks.

Speaker #4: I was wondering if you could , , maybe if there's a couple of main drivers to highlight there behind that strength and , , just your thoughts on sort of the sustainability and potential to expand that accessibility margin further in , , in the coming quarters and years .

Speaker #4: Thanks

Speaker #2: Well , good question Fred . Yes , very happy with that . And I think it shows , again , the strength of Savaria to be vertical integrated .

Sébastien Bourassa: Well, good question, Fred. Yes, very happy with that. I think it show again the strength of Savaria to be vertical integrated. Now we have factory in China or Mexico and everywhere where we operate, we have machine, we make parts by ourselves. There's 32% of our sales which is in our direct market. The rest is with partner distributor. I think, again, the proof, okay, in the vertical integration is quite important, it's good. After that, product mix. Now every year we bring new products with good margins. I think it's always contributing to that. The 20%, I think is for sure sustainable, but we have to be careful because when we make acquisition, they are lower than that, it might play a bit in the average.

Sébastien Bourassa: Well, good question, Fréd. Yes, very happy with that. I think it show again the strength of Savaria to be vertical integrated. Now we have factory in China or Mexico and everywhere where we operate, we have machine, we make parts by ourselves. There's 32% of our sales which is in our direct market. The rest is with partner distributor. I think, again, the proof, okay, in the vertical integration is quite important, it's good. After that, product mix. Now every year we bring new products with good margins. I think it's always contributing to that. The 20%, I think is for sure sustainable, but we have to be careful because when we make acquisition, they are lower than that, it might play a bit in the average.

Speaker #2: Now we have factory in China and Mexico and everywhere where we operate . We have machine , we make parts Variceal . , there's 33% of our sales , which is in our direct market .

Speaker #2: The rest is with distribute partner distributors . So I think again , the , the , the , the proof of the vertical integration is quite important .

Speaker #2: It's good . And after that product mix , now every year we bring new products with good margins . When we . So it's , I think it's always contributing to that .

Speaker #2: The 20% , I think is for sure is . I hope it's sustainable , but we have to be careful because when we make acquisition , they are lower than that .

Speaker #2: So it might play a bit in the average . So I think if we go back four months ago , we said that we're in the next few years we want to be at 20% plus for the consolidated Savaria .

Sébastien Bourassa: I think if we go back 4 months ago, we said that in the next few years, we want to be at 20% plus for the consolidated Savaria. You can see that there's still good opportunity.

Speaker #2: But you can see that there's still good, good opportunity, right?

Speaker #4: Great . Thank you . And congrats on a strong quarter .

Frederic Tremblay: Great. Thank you, congrats on a strong quarter.

Frédéric Tremblay: Great. Thank you, congrats on a strong quarter.

Speaker #2: Thank you Fred

Sébastien Bourassa: Thank you, Fred.

Sébastien Bourassa: Thank you, Fréd.

Speaker #3: Thank you . Our next question comes from Cheryl Trang of TD . Your line is now open

Operator: Thank you. Our next question comes from Sheryl Chuang of TD Cowen. Your line is now open.

Sébastien Bourassa: Hi, Sheryl.

Sheryl Chuang: Good morning. Good morning, Sébastien and Steve and JP. Thanks so much for taking my question. Congrats on the strong quarter. I wanted to start on patient care margin. I think in the prepared remarks, you called out the higher material costs and the mid-year price increases for medication. Just curious if you could expand on what the cost inflation was and the magnitude of the pricing that you're putting through.

Speaker #5: Hey good morning . , hi . Good morning Sebastian . And , , Steve . , I'm , , JP , thanks so much for taking my question .

Sheryl Zhang: Good morning. Good morning, Sébastien and Steve and JP. Thanks so much for taking my question. Congrats on the strong quarter. I wanted to start on patient care margin. I think in the prepared remarks, you called out the higher material costs and the mid-year price increases for medication. Just curious if you could expand on what the cost inflation was and the magnitude of the pricing that you're putting through.

Speaker #5: , congrats on the strong quarter . , I wanted to start on , , patient care . Margin . , thank you . In the prepared remarks , you called out , the higher material costs and the mid year price increases , , for medication .

Speaker #5: Just curious if you could expand on what the cost inflation was and the magnitude of the pricing that you're putting through

Sébastien Bourassa: Thank you, Sheryl, for the question. We have to be careful, okay? Patient care, I think we're a bit tough with them this quarter. Okay? If we look, we had good growth since the beginning of the year. Yes, there's been a bit more inflation due to some commodity, like example, foam and aluminum. No, the team came back and said, no, there's inflation. We have to pass it on to our customers. That was their suggestion to do a mid-year price increase. Basically, I'm hoping that we'll get an additional 2% again in the Q4 in term of net increase. I think it's temporarily, but again, we need to be careful. It's just one quarter. What is sometimes more difficult is the growth. We know also in patient care, they typically have good Q4.

Speaker #2: And thank you for the question. Again, we have to be careful because of patient care. I think we were a bit tough with them this quarter.

Speaker #2: Okay . If we look we had good growth in the beginning of the year And yes , there has been a bit more inflation due to the some commodity like example from and aluminium .

Speaker #2: But now the team came back and said , no , there's inflation . We have to pass it on to our customers . So that was their suggestion to do a mid-year price increase .

Speaker #2: And basically I'm hoping that we'll get an additional 2% in the fourth quarter in terms of net increase . So I think it's temporary .

Speaker #2: But again , we need to be careful . It's just one quarter . What is sometimes more difficult is the growth . And we know also in patient care they typically have good fourth quarter .

Speaker #2: So I think maybe at the end of the year we can judge a bit if it was just a quarter or it's a year issue

Sébastien Bourassa: I think maybe at the end of the year, we can judge if it was just a quarter or it's a year issue.

Speaker #5: Okay . That's very helpful . Color And then on accessibility , , , obviously very strong organic growth , , could you maybe expand on what you're seeing in terms of consumer demand and where your backlog is , .

Sheryl Chuang: Okay, that's very helpful color. Then on accessibility, obviously very strong organic growth. Could you maybe expand on what you're seeing in terms of consumer demand and where your backlog is?

Sheryl Zhang: Okay, that's very helpful color. Then on accessibility, obviously very strong organic growth. Could you maybe expand on what you're seeing in terms of consumer demand and where your backlog is?

Sébastien Bourassa: Our backlog is still good. Unfortunately, we don't give color on our backlog, no, in our direct office, I think JP said, we have healthy backlogs, would give us a good visibility. In our factory, okay, for sure, we always want to have good lead time, our backlog is really consistent. No, I'm quite happy with that. I think new product that we launched, for example, the Luma, new to the floor that, really the first year we have that, we're coming out with some new option, okay, this fall for the to the floor elevator. Definitely also the new product are helping, like Matot. Now we're doing pretty good in manufacturing in term of lead time, so that's helping to grow the business. Again, the beauty of Savaria is the diversification of the products. That's really helping us to maintain this growth.

Speaker #2: Backlog is still is still good . We don't give color on our , on our backlog , but no , , in our direct office , I think we have a backlog .

Speaker #2: So this gives us good visibility in our factory. Okay. For sure, we always want to have a good lead time.

Speaker #2: So our backlog is usually consistent . But you know , I'm quite happy with that . And I think new product that we launched also example , the Luma , a new floor that really the first year we have that we're coming out with some new options .

Speaker #2: Okay , this fall for the through the floor elevator . So definitely also the new product are helping like method . Now we are , we're doing pretty good in manufacturing in terms of lead time .

Speaker #2: So that's helping to grow the business . Again , the beauty of Sara is the diversification of the products that really helping us to maintain this growth

Speaker #5: Okay . Thank you very much .

Sheryl Chuang: Okay, thank you very much.

Sheryl Zhang: Okay, thank you very much.

Speaker #3: Thank you Our next question is from Rozi Hassan of Paradigm Capital . Your line is now open .

Operator: Thank you. Our next question is from Razi Hasan of Paradigm Capital. Your line is now open.

Speaker #6: , good morning . Thanks for taking my question For JP on your on Europe . , can you maybe just talk about the M&A landscape and the quality of assets of multiples you're seeing for manufacturers and dealers there ?

Razi Hasan: Good morning. Thanks for taking my question. For JP on Europe, can you maybe just talk about the M&A landscape and the quality of assets and multiples you're seeing for manufacturers and dealers there? Overall, any challenges you're seeing in Europe on the M&A landscape?

Speaker #6: , overall in any challenges you're seeing in Europe on the M&A landscape

Speaker #2: If it's okay , I would take the , the answer . So basically I think we have disclosed in the document that in we have paid 8 million .

Sébastien Bourassa: If it is okay, I will take the answer. Basically, I think we have disclosed in the document that for Vipal, we have paid EUR 8 million. It was more or less EUR 8 million of sales. Could argue it was a one-to-one ratio with the sales. In terms of EBITDA ratio, we do not disclose that usually, how much would be each division, when it is some small token. In terms of M&A landscape, I think we like to balance our approach. It was a long time we did not do one in Europe, I think now that really adds the portfolio. We will see over time if worldwide, if there is some opportunity with dealer or small manufacturer of elevators that can complement our product portfolio.

Speaker #2: It was more or less 8 million of sales . So it was a 1 to 1 ratio with the sales . , in terms of EBITDA ratio , again , it just we don't disclose that usually .

Speaker #2: Okay , how much we pay each division . , when it's some small tuck in . So and many landscape , I think again , we like to balance her , her approach .

Speaker #2: Okay . It was , , it was a long time . We did not do one in Europe . So I think now that really helped the portfolio .

Speaker #2: But we see over time , if the worldwide , if there's some opportunity with dealer or again , small manufacturer of elevators that can complement their product portfolio

Speaker #6: Okay . Thanks . And then maybe on Steve , you know , again , lots of talk about the accessibility segment . Maybe just talk about the puts and takes on operating leverage that you're seeing there .

Razi Hasan: Okay, thanks. Maybe on Steve, lots of talk about the accessibility segment. Maybe talk about the puts and takes in operating leverage that you are seeing there and what is driving that.

Speaker #6: And what's driving that

Speaker #7: Yeah . On the accessibility , on the , on the gross margin , specifically , , good , good uptick in both , both of our regions , both of our key regions , North America and Europe , both had really strong gross margin improvement over prior year .

Stephen Reitknecht: On the accessibility, on the gross margin specifically, good uptick in both of our key regions, North America and Europe, both had really strong gross margin improvement over prior year that is driven by operating leverage. We feel we have enough capacity at our existing sites. We have, obviously with some acquisitions like Vipal is a perfect example. We are expanding our footprint, which comes along with the acquisition, but it is not needed necessarily to support our growth. We are doing a good job of keeping our fixed costs fixed and stable while we are growing the top line. Some other benefits that we are seeing are procurement coming through and price increases. Those are continuing from previous quarters and previous years, and that is what is going to be continuing to drive our gross margin expansion.

Steve Reitknecht: On the accessibility, on the gross margin specifically, good uptick in both of our key regions, North America and Europe, both had really strong gross margin improvement over prior year that is driven by operating leverage. We feel we have enough capacity at our existing sites. We have, obviously with some acquisitions like Vipal is a perfect example. We are expanding our footprint, which comes along with the acquisition, but it is not needed necessarily to support our growth. We are doing a good job of keeping our fixed costs fixed and stable while we are growing the top line. Some other benefits that we are seeing are procurement coming through and price increases. Those are continuing from previous quarters and previous years, and that is what is going to be continuing to drive our gross margin expansion.

Speaker #7: That's driven by operating leverage . , you know , we , we feel we have enough capacity at our , at our existing sites .

Speaker #7: And then we have , you know , obviously with some acquisitions , like a perfect example where expanding our footprint , , which comes along with the acquisition , but it's not needed necessarily to support our growth .

Speaker #7: So, we're doing a good job of keeping our fixed costs fixed and stable while we're growing the top line. Some other benefits that we're seeing are procurement coming through and price increases.

Speaker #7: , those are continuing from previous quarters and previous years . And that's what's going to be continuing to drive our gross margin expansion .

Speaker #7: So , , you know , our , our guidance is , is above 20% , but we're confident that we can continue to increase the margin in our existing businesses

Stephen Reitknecht: Our guidance is above 20%, but we are confident that we can continue to increase the underlying margin in our existing businesses.

Steve Reitknecht: Our guidance is above 20%, but we are confident that we can continue to increase the underlying margin in our existing businesses.

Speaker #6: Okay . Great . And just lastly , just to confirm , the Greenville , you guys are expecting that to be in operations by Q4 or is that Q3 ?

Razi Hasan: Okay, great. Just lastly, just to confirm, the Greenville, are you guys are expecting that to be in operations by Q4 or was that Q3? I think I missed that.

Speaker #6: I think I missed that .

Speaker #2: Again , we've got to be careful in Greenville , we decided a year ago to start manufacturing one of our key product , the eclipse Elevator .

Sébastien Bourassa: Again, we got to be careful. In Greenville, we decided a year ago to start manufacturing one of our key product, the Eclipse Home Elevator. Right now, we manufacture 40% of our Eclipse in the US. Again, we are in operation in Greenville. The only thing, we're expanding the building, and this expansion is planned to be ready in Q4 as done earlier this year.

Speaker #2: Right now . We manufacture 40% of our eclipse in the US . , so we are in operation in Greenville . The only thing we're expanding the building and this expansion is planned to be ready in Q4 as , , as planned earlier this year .

Speaker #6: Okay . Thanks for that . I'll pass the line .

Razi Hasan: Okay, thanks for that. I'll pass the line.

Speaker #3: Thank you Our next question is from Zachary Evershed of National Bank of Canada , Capital Markets . Your line is now open .

Operator: Thank you. Our next question is from Zachary Evershed of National Bank of Canada Capital Markets. Your line is now open.

Speaker #2: Morning , Zach .

Sébastien Bourassa: Morning, Zach.

Speaker #8: Good morning. Congrats on the quarter. I have a couple of questions for you on Greenville. It does seem like that's going to come in.

Zachary Evershed: Good morning. Congrats on the quarter.

Sébastien Bourassa: Thanks.

Zachary Evershed: A couple questions for you on Greenville. It does seem like that's going to come in well under budget. Is that the case?

Speaker #8: Well under budget . Is that the case .

Speaker #2: Well we've got to be careful . Again . If we go back to our press release that we did a year ago , we wanted to make an investment of $30 million .

Sébastien Bourassa: We got to be careful. Again, if we go back to our press release that we did a year ago, we wanted to make an investment of CAD 30 million. A portion is for the building, a portion is for equipment, a portion is for inventory. We started last year, it's ongoing and maybe it's going to take a bit more time, no, I think the range of CAD 30 million is we'll probably finish a bit lower, I think it's a good target, maybe will take a bit more time. This year-

Speaker #2: So a portion for the building , a portion is for equipment , a portion is for inventory . , now we are again , we started last year , so it's ongoing .

Speaker #2: And maybe it's going to take a bit more time , but I think the , the range of 30 million is , will probably finish a bit lower .

Speaker #2: But I think it's a good target . But maybe we'll take a bit more time . But this year is finalized in the future is maybe more inventory or machinery that we'd like to add

Zachary Evershed: Got you. Thanks

Sébastien Bourassa: The building is being finalized. In the future is maybe more inventory or machinery that we'd like to add.

Speaker #8: Understood . Thank you . And on , on that equipment , could you tell us a little bit more about what the paint line will be able to do ?

Zachary Evershed: Understood. Thank you. On that equipment, could you tell us a little bit more about what the paint line will be able to do?

Sébastien Bourassa: The paint line is amazing. It's fully automated, and again, most of our cabin in North America are made in wood. Typically, you can have some melamine, wood veneer, This new equipment give us the ability to do some enhanced cab, which are very high-end quality of paint, fully automatic, and this is something we're going to be able to differentiate ourselves to have a better offering for our customer to upscale the elevator. We're quite excited with that. It went live in the Q2. Now we're making some tests with our direct office to make sure it is perfect, and we'll be live with the dealer in the Q4. Very exciting.

Speaker #2: , the paint line is amazing . It's fully automated . And again , all our , most of our cabin in North America are made in wood .

Speaker #2: So typically you can have some wood veneer , but this new equipment gives us the ability to do some , , some MN scale , very high end quality of paint , fully automatic .

Speaker #2: And this is something we're going to be able to differentiate ourselves to have a better offering for our customer to upscale the elevator .

Speaker #2: So we're quite excited with that . It went live in the second quarter , and now we're making some tests with our direct office to make sure it is perfect .

Speaker #2: And we'll be live with the dealer in the fourth quarter . So very exciting .

Speaker #8: Excellent . Thanks . And just one last one for me . , from a human capital standpoint over in Europe , what's your capacity for concurrent M&A ?

Zachary Evershed: Excellent. Thanks. Just one last one for me. From a human capital standpoint over in Europe, what's your capacity for concurrent M&A? Is there a limit there?

Speaker #8: Is there a limit there?

Sébastien Bourassa: JP has a very good team, JP, you want to give a bit more color on that?

Speaker #2: GP has a very good team , but GP you want to give it a color on that .

Speaker #1: Yeah . So , , we had the discussion internally , , not later than yesterday . And my point of view was we , we have the capacity to take more than one because the reality is we , we have different , first of all , we're in different markets , right ?

[Company Representative] (Savaria): Yeah. We had the discussion internally not later than yesterday, and my point of view is we have the capacity to take more than one, because the reality is, first of all, we're in different markets, right? When we make an acquisition in the market, if we need to integrate the commercial aspect, we can ask the local team to integrate, and then from a functional standpoint, we have a pretty good team. I think we can have multiple acquisitions concurrent. Yeah.

JP De Montigny: Yeah. We had the discussion internally not later than yesterday, and my point of view is we have the capacity to take more than one, because the reality is, first of all, we're in different markets, right? When we make an acquisition in the market, if we need to integrate the commercial aspect, we can ask the local team to integrate, and then from a functional standpoint, we have a pretty good team. I think we can have multiple acquisitions concurrent. Yeah.

Speaker #1: So when we make an acquisition in the market , if we need to integrate the commercial aspect , we can ask the local team to integrate .

Speaker #1: And then from a functional standpoint , we have a pretty good team . So I think we can have multiple acquisitions . , concurrent .

Speaker #1: Yeah .

Speaker #8: Thank you very much . I'll turn it over

Zachary Evershed: Thank you very much. I'll turn it over.

Speaker #3: Thank you Our next question is from Justin Keywood of Stifel . Your line is now open .

Operator: Thank you. Our next question is from Justin Keywood of Stifel. Your line is now open.

Speaker #9: Hi . Good morning . Thanks for taking my call . Nice to see the results . , are we able to have an update on Savaria link and how that technology , , offering is going to drive services revenue ?

Justin Keywood: Hi. Good morning. Thanks for taking my call. Nice to see the results. Are we able to have an update on Savaria Link and how that technology offering is going to drive services revenue? The percentage of services revenue as far as total sales would also be helpful, and how you see that progressing. Thank you.

Speaker #9: , the percentage of services revenue as , as far as total sales would also be helpful . And , and how you see that progressing .

Speaker #9: Thank you .

Speaker #2: Okay . Very good question . This morning , I guess you came to the investor day . So yeah , several so several link is a is a very nice feature .

Sébastien Bourassa: Hey, very good question this morning. I guess you came to the investor day, huh? Yes, Savaria Link is a very nice feature. Again, if we go back in time, we bought an electronic company a few years ago in UK called e-trans. We design our own electronics, and that give us the ability to put some nice feature. Yes, we have a new version. We did Wi-Fi monitoring for many years, but this year we have launched a new improved version. We start to drive it across most of our products, and definitely this is something that is helping to monitor the status of the elevators and the stair lifts. I think definitely this bring a good future in term of that. Right now, again, it's part of our product offering, we don't upscale the sales for that. It's included in the product.

Speaker #2: Again , if we go back in time , we bought a electronic company a few years ago in UK called ultra . So we designed our own electronics and that gave us the ability to put some nice feature .

Speaker #2: So yes , we have a new version improved . We did Wi-Fi monitoring for many years , but this year we have launched a new improved version .

Speaker #2: We start to have it across most of our products . And definitely this is something that is helping to monitor the status of the of the elevators and this stairlifts .

Speaker #2: So I think definitely this bring a good future in terms of that right now , again , we are it's part of our product offering .

Speaker #2: So we , , we don't upscale the sales for that . It's included in the product that gives the tools to a customer , again , to know what's happening with the product , the dealers , I mean , know what's happening to be easier to troubleshoot , to make sure , you know , you want to work with the product .

Sébastien Bourassa: That give the tools to our customer, again, to know what's happening with their product, the dealers, I mean, to know what's happening, to be easier to troubleshoot, to make sure you want to work with the Savaria product. That's the feature. In term of service revenue, Steve, which percentage total we are right now? Approximately 15% of our total service revenue. Again, when we have direct office, that's an opportunity for us to improve the service and maintenance. That's quite interesting.

Speaker #2: So that's the future in terms of service revenue . Steve , which presentation we are right now , approximately 15% of our total service revenue .

Speaker #2: So again , when we have direct office , that's an opportunity for us to improve the service and maintenance . So that's quite interesting .

Speaker #2: .

Speaker #9: Thank you . And I assume there's some higher margin with the services revenue . Any context on , on what that margin profile is ?

Justin Keywood: Thank you. I assume there's some higher margin with the services revenue. Any context on what that margin profile is?

Sébastien Bourassa: Well, firstly, we don't disclose the margins per product or per segment, definitely for sure, when you have the chance to capture some recurring revenue from maintenance to be able to service it, yes, it's quite interesting. That's the beauty of Savaria. That's why you see the very good margins in accessibility, because again, we can have also this additional bulk with the service and maintenance.

Speaker #2: Firstly , we don't disclose the margins per product or per segment , but definitely , for sure , when you have the chance to capture some recurring revenue for maintenance , to be able to service it .

Speaker #2: Yes . It's quite interesting . So that's , that's the beauty of Savaria . That's why you see the very good margins in accessibility , because again , we can have also this additional bug with the service and maintenance .

Speaker #9: Thank you . And just just finally , is there a target percentage of sales as far as services revenue to get to , , let's say on the , , the 2030 target of 1.6 billion in overall sales ?

Justin Keywood: Thank you. Just finally, is there a target percentage of sales as far as services revenue to get to, let's say, on the 2030 target of CAD 1.6 billion in overall sales?

Speaker #2: No , I think we did not set up an exact target to the public on that . But for sure , if we are at 15 now , , you can expect that it could grow over time

Sébastien Bourassa: No, I think we did not set up an exact target to the public on that, for sure, if we're at 15 now, okay, you can expect that it could grow over time, yeah.

Speaker #9: Got it . Thank you very much .

Justin Keywood: Got it. Thank you very much.

Speaker #2: Thank you . Justin .

Sébastien Bourassa: Thank you, Justin.

Speaker #3: Thank you . At this time , , we do have a few moments for additional questions . If you'd like to ask a question , you'll need to press star one one on your telephone and wait for your name to be announced .

Operator: Thank you. At this time, we do have a few moments for additional questions. If you'd like to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. We could hold for a moment to see if we do have any additional questions. Okay. I am showing no further questions at this time, I would now like to turn it back to Sébastien for closing remarks.

Speaker #3: And we could hold for a moment to see if we do have any additional questions Okay . I am showing no further questions at this time , so I would now like to turn it back to Sebastian for closing remarks .

Speaker #2: Well , thank you very much for all the questions from the analysts . You know , well , the story . You have some good questions .

Sébastien Bourassa: Well, thank you very much for all the questions from the analysts. You know well the story. You ask some good questions, thank you again for the support. I think it was a good quarter. Quite happy with that. I guess we'll go back to work to work on our Q3 to make sure we can continue to have those great results. Thanks again for the call this morning.

Speaker #2: So thank you again for the for the support . I think it was a good quarter . Quite happy with that . And I guess we'll go back to work to work on the third quarter to make sure we can continue to have those great results .

Speaker #2: Thanks again for the call this morning .

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Q2 2026 Savaria Corp Earnings Call

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