Laval, Québec, Canada – August 7, 2024 - Savaria Corporation (“Savaria”) (TSX: SIS), one of the global leaders in the accessibility industry, is pleased to announce its results for the second quarter of 2024.
Highlights – Q2 2024 compared to Q2 2023
- Revenue was $221.3M, compared to $198.4M in 2023, an increase of 11.6% mainly due to organic growth of 11.5% and a positive foreign exchange impact of 1.1%, partially offset by the divestitures of Van-Action and Freedom Motors.
- Accessibility organic growth stood at 15.4%, including growth of 15.4% coming from North America and 15.3% from Europe.
- Patient Care organic revenue contracted by 0.9%.
- Gross profit was $83.0M, up $15.9M or 23.6%, representing 37.5% of revenue, an increase of 370 bps compared to 33.8% in Q2 2023.
- Operating income was $22.6M, up $6.4M or 39.3%, representing 10.2% of revenue compared to 8.2% in Q2 2023.
- Adjusted EBITDA* was $41.9M, up $12.7M or 43.3%, or $0.59 per share, up $0.14, when compared to Q2 2023.
- Adjusted EBITDA margin* stood at 19.0%, up 420 bps compared to 14.8% in Q2 2023.
- Accessibility adjusted EBITDA margin reached 20.9%.
- Patient Care adjusted EBITDA margin stood at 17.0%.
- Net earnings were $11.0M, or $0.15 per share on a diluted basis, compared to $8.8M or $0.14 per share in Q2 2023.
- Ratio of net debt to adjusted EBITDA* stood at 1.88 in comparison to 2.07 as at December 31, 2023.
- Available funds* of $226.6M, as of June 30, 2024, to support working capital, investments and growth opportunities.
- On April 5, 2024, the Corporation acquired the dumbwaiter and material lift assets of D.A. Matot, Inc. ("Matot"). Matot is a leading North American supplier of lifts used for the movement of goods in commercial and industrial applications.
Word from the Executive Chairman and from the President & CEO
“The path to our 2025 objectives is painted more clearly as we recognize our second quarter results. Our quarterly revenue hit $221 million, an 11.6% increase year-over-year. Adjusted EBITDA finished at 19.0%, up 420 bps compared to our last year’s second quarter. Our employees collaborate on Savaria One initiatives every day to constantly find better ways in serving our customers. Now is the time to be the best we can be to serve the aging population, whether they need a stairlift, a medical bed or a home elevator,” said Marcel Bourassa, Executive Chairman.
“Building on the momentum from our first quarter, our Savaria One initiatives helped us improve our overall gross margin to a new level of 37.5%. Our Accessibility segment achieved an adjusted EBITDA margin of 20.9%, while Patient Care maintained a 17.0% margin for the quarter. On the revenue side, we experienced healthy growth of 15.1% year-over-year for our Accessibility segment. I am proud to report that our Adjusted EBITDA per share was 59 cents, a best-ever metric for us. Congratulations to our employees who have diligently worked on numerous Savaria One projects to increase our efficiencies and improve our processes,” said Sébastien Bourassa, President and Chief Executive Officer.
Second Quarter Results - Q2 2024 compared to Q2 2023
Revenue
Revenue reached $221.3M, up $22.9M or 11.6%. The increase was mainly due to organic growth of 11.5% and a positive foreign exchange impact of 1.1%, partially offset by the divestitures of Van-Action, and Freedom Motors.
- Accessibility segment (78% of Q2-24 revenue): Revenue was $173.4M, an increase of $22.8M or 15.1%. Organic growth stood at 15.4%.
- Patient Care segment (22% of Q2-24 revenue): Revenue was $47.9M, an increase of $0.2M or 0.3%. Organic revenue contracted by 0.9%.
Operating Income
Operating income was $22.6M, up $6.4M or 39.3%, compared to Q2 2023, representing an operating margin of 10.2% compared to 8.2% in Q2 2023. The increase was mainly attributable to additional revenue contribution and higher gross margins in both segments, partially offset by increased strategic initiatives expenses.
Adjusted EBITDA
Adjusted EBITDA and adjusted EBITDA margin stood at $41.9M and 19.0%, respectively, compared to $29.3M and 14.8% for Q2 2023.
- Accessibility segment: Adjusted EBITDA and adjusted EBITDA margin stood at $36.2M and 20.9%, respectively, compared to $21.4M and 14.2% for Q2 2023.
- Patient Care segment: Adjusted EBITDA and adjusted EBITDA margin stood at $8.2M and 17.0%, respectively, compared to $9.3M and 19.4% for Q2 2023.
Six-Month Results - YTD 2024 compared to YTD 2023
Revenue
The Corporation generated revenue of $430.8M, up $20.8M or 5.1%. The increase is mainly due to organic growth of 6.9% and a positive foreign exchange impact of 0.9%. The growth was partially offset by the aforementioned divestitures as well as the divestments of the vehicle operations in Norway last year.
Operating Income
Operating income was $40.3M, up $8.6M or 27.3%, representing an operating margin of 9.4% compared to 7.7% in 2023.
Adjusted EBITDA
Adjusted EBITDA and adjusted EBITDA margin stood at $76.6M and 17.8%, respectively, compared to $60.5M and 14.8% in 2023.
Liquidity and Capital Resources
Savaria generated $50.1M of cash from operations which were primarily used to invest in capital projects, a business acquisition, repay debt and pay interest and dividends.
As at June 30, 2024, the Corporation had a net debt position of $274.9M and a ratio of net debt to adjusted EBITDA of 1.88 compared to 2.07 as of December 31, 2023.
Outlook
Savaria expects to deliver approximately $1.0 billion in revenue and a 20% adjusted EBITDA margin in 2025. These targets will be achieved through continued strong demand in both the Accessibility and Patient Care segments and completion of Savaria One, the Corporation’s multi-year, company-wide, sales and operations program designed to unlock the full potential of the business.
The expected benefits from Savaria One will be realized through:
- Sales initiatives focused on market share growth and pricing optimization;
- Operational and production improvements to increase capacity and throughput;
- Procurement and supply chain efficiencies and streamlining;
- Investments in research and development to enhance existing products and develop new ones.
In relation to Savaria One, the Corporation plans to record an average of $5.0 million in strategic initiative expenses per quarter through 2024 and at the beginning of 2025, and anticipates increasing financial and operational benefits to be realized on a sequential quarterly basis. Depending on the performance of Savaria One, the Corporation could record an additional $15.0 million in fees in 2025, resulting in total costs for the entire project of $40.0 to $45.0 million, as disclosed at our investor day, as we continue toward our record revenue and adjusted EBITDA margin targets for 2025.
Savaria will also continue to evaluate potential tuck-in acquisitions to replace some or all of the lost revenue from the divestitures of Van-Action, Freedom Motors and the Norwegian vehicle adaptation business.
The above-mentioned outlook is a “forward-looking statement” within the meaning of the securities laws of Canada and subject to the Corporation’s disclosure statement.
Environmental, Social and Governance (“ESG”) Values
As a global leader within the accessibility industry, Savaria is committed to minimizing its environmental footprint and upholding the highest social and governance standards. We believe that promoting environmentally and socially responsible behaviour across our organization is key to achieving sustainable growth and long-term value creation.
By delivering products and solutions that promote accessibility, health, and wellness, improving operational efficiencies and resource usage, and engaging our employees and stakeholders, we’ll create a stronger, more resilient business that will continue to be an industry leader while delivering positive social change.
We recognize this work requires long-term vision, planning, and collaboration, yet also must be grounded in clear actions and an ongoing commitment to transparency.
To that end, on April 17, 2024, Savaria published its first ESG report for the fiscal year ended December 31, 2023. Through this report, Savaria discloses its strategy and initiatives on ESG matters that are important to its stakeholders, and where it sees an opportunity to have a positive and meaningful influence. This inaugural ESG report represents an important milestone for Savaria and provides a baseline for measuring our future performance. The 2023 ESG report can be found under the investor relations section of our website at savaria.com.
Savaria Corporation (savaria.com) is a global leader in the accessibility industry. It provides accessibility solutions for the physically challenged to increase their comfort, their mobility and their independence. Its product line is one of the most comprehensive on the market. Savaria designs, manufactures, distributes and installs accessibility equipment, such as stairlifts for straight and curved stairs, vertical and inclined wheelchair lifts and elevators for home and commercial use. In addition, Savaria manufactures and markets a comprehensive selection of pressure management products, medical beds, as well as an extensive line of medical equipment and solutions for the safe movement of patients, such as transfer, lifting and repositioning aids. The Corporation operates a sales network of dealers worldwide and direct sales offices in North America, Europe (UK, Netherlands, Switzerland, Italy, Germany, Poland and Czech Republic), Australia and China. Savaria employs approximately 2,400 people globally and its plants are located across Canada, the United States, Mexico, Europe and China.
Compliance with International Financial Reporting Standards (“IFRS”)
The information appearing in this press release has been prepared in accordance with IFRS. However, Savaria uses EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA per share, adjusted net earnings, adjusted net earnings per share, available funds, net debt and ratio of net debt to adjusted EBITDA for analysis purposes to measure its financial performance. These measures have no standardized definitions in accordance with IFRS and are therefore regarded as non-IFRS measures. These measures may therefore not be comparable to similar measures reported by other companies. Additional details for these non-IFRS measures can be found in sections 3, 6 and 8 of Savaria’s MD&A, which is posted on Savaria’s website at savaria.com, and filed with SEDAR+ at sedarplus.ca. Reconciliation of adjusted net earnings and adjusted EBITDA with net earnings is presented in the section below.
Forward-Looking Statements
This press release includes certain statements that are “forward-looking statements” within the meaning of the securities laws of Canada. Any statement in this press release that is not a statement of historical fact may be deemed to be a forward-looking statement. When used in this press release, the words “believe”, “could”, “should”, “intend”, “expect”, “estimate”, “assume” and other similar expressions are generally intended to identify forward-looking statements. It is important to know that the forward-looking statements in this document describe the Corporation’s expectations as at the date hereof, which are not guarantees of future performance of Savaria or its industry, and involve known and unknown risks and uncertainties that may cause Savaria’s or the industry’s outlook, actual results or performance to be materially different from any future results or performance expressed or implied by such statements. The Corporation’s actual results could be materially different from its expectations if known or unknown risks affect its business, or if its estimates or assumptions turn out to be inaccurate.
A change affecting an assumption can also have an impact on other interrelated assumptions, which could increase or diminish the effect of the change. As a result, the Corporation cannot guarantee that any forward-looking statement will materialize and, accordingly, the reader is cautioned not to place undue reliance on these forward-looking statements. Forward-looking statements do not take into account the effect that transactions or special items announced or occurring after the statements are made may have on the Corporation’s business. For example, they do not include the effect of sales of assets, monetizations, mergers, acquisitions, other business combinations or transactions, asset write-downs or other charges announced or occurring after forward-looking statements are made.
Unless otherwise required by applicable securities laws, Savaria disclaims any intention or obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing risks and uncertainties include the risks set forth under “Risks and Uncertainties” in Savaria’s latest Annual MD&A as well as other risks detailed from time to time in reports filed by Savaria with securities regulators in Canada.
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Results webcast and conference call on August 8, 2024, at 8:30 a.m. (EDT)
Savaria will host a conference call on Thursday, August 8th at 8:30 a.m. Eastern Daylight Time with financial analysts to discuss results of the period ended June 30, 2024. Investors and members of the media are invited to participate on a listen-only basis.
Conference call access:
To register: https://register.vevent.com/register/BI1cff64e45fee4492b5f07c01fcedfdb3
Link to the replay of the webcast will be available on the Corporation’s website at savaria.com.
For further information:
Sébastien Bourassa |
Stephen Reitknecht, CPA, CA |
Reconciliation of adjusted net earnings and adjusted EBITDA with net earnings is provided below. Complete financial statements and the management’s report for Q2 2024 will be available shortly on Savaria’s website and on SEDAR+ sedarplus.ca.