Invacare Corporation

All right. Good morning, everyone. Thank you all for joining us today during the October 2020 Litham Partners Virtual Investor Growth Conference. My name is Robert Bloom, Managing Partner of Litham Partners. Our next presentation comes from InvoCare, traded on the NASDAQ under the ticker symbol IVC. Presenting from InvoCare is the company's Chief Executive Officer, Matt Monaghan, Chief Financial Officer, Kathy Linehan, and Director of Treasury, Investment Relations, and Corporate Communications, Lois Lee. Today, I've asked management to run through the company's slide presentation, and then we will engage in a short fireside chat-like Q&A session. As a reminder, the company will be available for one-on-one virtual meetings. If you've not already signed up, please send me an email to bloom, again, that's blum, at lithiumpartners.com, or you can visit the landing page for today's virtual presentation, virtual conference at lipandpartners.com forward slash virtual. Click the one-on-one meeting request button. I'll do my best to accommodate any last-minute requests there. With that said, let me turn the presentation over to management. Matt Monahan, Chief Executive Officer, please proceed.

Thanks a lot, Rob. Appreciate you getting us together today. Good morning, everyone. I'm Matt Monahan, Chairman, President, CEO of Invacare. We'll go through a discussion today summarizing some recent trends and developments for the company, progress this year, and a little context for those who are new to the story about how the company finds itself in this particularly great opportunity. There are webcast slides on the conference website. We're also on our investor website at invacare.com slash investor relations. I'll call out page numbers as we go through. Page two, typical safe harbor statements saying in one way or another, the future may turn out differently than we described to the extent we do today and financial results will be through second quarter, which is June 30th, 2020 for us. Let's talk about us in general terms, then we'll get into some specifics. So starting on page three, then we're headquartered in Elyria, Ohio with facilities around the world. We have approximately 3,600 associates who help us do just over $880 million of trailing 12-month sales. We have facilities in Europe, North America, and to a minor extent in Asia Pacific, where we serve Western-based reimbursement schemes for durable medical equipment supplies, which we manufacture and distribute within regions and across the world. We typically sell our products to private and government equipment providers who then put them into the hands of people who need those. We'll talk more about those on page four. On page four, you'll see the four major categories of products that we move. If you think about therapeutic areas, you can put them into these. It's move, rest, breathe, and hygiene. Products that help people move are custom power and custom manual wheelchairs, the seating systems that go with wheelchairs to conform to a person's anatomy, Control systems that make those devices work. Those can be fully powered electrical wheelchairs. They can be manual wheelchairs with additional motor drives and attendant controls. Lots of things to help people move all the way down to standard products like you'd see in an airport or a hospital for transporting people around safely. In our rest category, we have home care and long-term or residential care beds and equipment. Therapeutic support surfaces, think about sophisticated mattresses that prevent pressure wounds from people who spend long durations of time in bed. We have breathing products. We make respiratory products in the category of oxygen concentrators. These are devices, they're about the size of a, the larger units are about the size of a home dehumidifier. They take room air and with household power. convert that air into at least 94% pure oxygen for people to use to service problems such as COPD. We also make portable devices which are either battery operated, someone can carry over their shoulder for hours of the ambulatory supplemental oxygen, or we make a novel home-filled system which allows people to bottle their own tanks for very quiet, very lightweight use for several hours of the ambulatory oxygen as well. The hygiene category, think of all the things that make a bathroom safe for performing hygiene activities for people who need assistance in bathing and caregiving. We do a lot for people in the bathroom, which is a typically very dangerous place to be caring for someone. The conditions we serve are congenital, acquired, and degenerative. We're not just a geriatric company. A lot of people see our basic wheelchairs in something like an airport or a hospital lobby and think of that. crutches, canes, rollators that you might see around town. But really, we have very strong businesses that are relatively equally balanced. On the congenital side, we help people deal with things like cerebral palsy or muscular dystrophy, spina bifida. In the middle of life, things that are required, stroke or spinal cord injuries, traumatic brain injuries, post-acute recovery, pressure ulcers, and later in life, diagnoses and degenerative conditions that happen, multiple sclerosis, ALS. the consequences of smoking, which manifests in COPD very often, and the issues that come with bariatric care in the mobility side or other consequential disease states that occur as a result of that. Our settings are typically not in the high-acuity space. You won't find our products deep inside the sterile spaces of hospitals, with very few exceptions. We're mostly in residential care, nursing facilities, step-down recovery facilities, and definitely at home. where our products go. And our customers, as I mentioned, are either governments and single-payer systems. In the United States, we would sell directly to the VA, for example. In many European countries where the government is the healthcare provider, we would sell products directly to the government, which often go into pools of equipment that the citizens of those countries would then be able to withdraw and use and then return for reuse when they're done with them. And that's a unique part of medicine. If I If you think about hospital equipment, capital equipment, we're not in that category. We're obviously not in pharmaceutical. We're not in orthopedic, which is durable of a sort but not reused. We're in this interesting space where we make products that are vital to people dealing with the conditions that they have. But when they're done with those conditions or for whatever reason no longer need our products, our products are reusable and they can have very long lives. We'll talk about in a minute. We have a refurbishment business in some areas around the world. which allow these very complicated machines to be dressed up, refurbished, reconditioned to new by our customers, and then placed back in the use of someone who needs them next. Going to page five, a different way to split the business is in these product categories, which on the graph you'll see lifestyle, mobility and seating, respiratory, and other. Lifestyles are the rest and hygiene categories. Those are all the products that are typically in the bedroom and bathroom. Customer call points are typically similar. Some of the facilities and technologies we use to produce these products are similar, so there's some usefulness in categorizing this way. Mobility and seating are all the move products and all the ancillary things that go around powering custom wheelchairs to make them work, seating systems and control systems, as I mentioned. Those two product categories are typically between 40% and 50% of our business. It's a little different skew right now during COVID. the COVID times, and I'll talk about that in a couple of pages, why it's slightly different right now. But normally those are each about 45% of our business, and then respiratory is usually around 10%. Those are those oxygen concentrators and other devices I mentioned. And then to make the complete pie chart, 100% of our revenue, we do have a slice called Other. That's some service business we do principally in two locations. We have a rentals business in New Zealand where About 70% of New Zealanders dial an 800 number for home medical equipment. We pick up the phone, we deliver, and eventually collect that equipment to be reused on behalf of the New Zealand government.

And in the UK, we do some refurbishment services for the UK government. Before we talk in detail about page six, for people who are new to the story, I want to give context.

We'll talk from here forward about some changes that have happened in the company We'll refer to a transformation initiative, which may not be apparent if you're new to the story why we're going through such a large transformation. We'll talk about the progress that we're making. Back around 2012, a couple of things happened that affected InvoCare pretty substantially, which gives us a great basis to grow from. One was industry-wide and one was company-specific. Industry-wide, starting around 2011, then 2013, then 2016, The U.S. government went through a reverse auction process called national competitive bidding where in order to reduce the amount that they were spending for certain categories of products, for us it was lifestyle products, beds, and oxygen concentrators, they went through an auction process which effectively reduced reimbursement by about 50%. Now, we don't get reimbursed directly from Centers for Medicaid and Medicare, but our customers do. And around that time, our customers who had been largely buying majority of their products you know one-stop-shop kind of channel strategy from Indicare started looking around to make sure that they were getting the cheapest product in some cases not the most durable product so starting around that time our revenue came under pressure as the United States marketplace had a new external factor and how reimbursement works and then at the same time the company was put in a consent decree by the FDA and for poor record keeping, nothing about product safety or product efficacy, but poor record keeping that had not kept up with FDA's continually evolving expectations. As a result of that, the company was suspended from freely selling its power wheelchair business into the United States from a factory in Ohio, just outside of Cleveland, which took away about $131 million of profitable sales each year, beginning at the end of 2012, December 2012. And those two things change the trajectory of growth and profitability and cash flow of the company we've been working ever since to get back to a substantial market share and profitability i'll talk about the exciting progress that we've made it's been remarkable uh to to put a point on this and for those that are new to the story to understand now where we are in 2020 uh we'll go back a few years in july of 2017 we effectively resolved the selling restriction of those power wheelchairs in our consent decree. Now, there's a five-year period after 2017 where we have to successfully go through audits with FDA, and we've passed every one of those inspections very well. So we are comfortable that we have durable improvements that make us the company the FDA needs, but also that customers and shareholders need. And since 2017, we've been launching new products at great margin and streamlining our business ever since. So the results of this as we talk about transformation are really on that basis. As a result, getting to page six, the composition of our business has in the last roughly eight years turned more substantially to be based in Europe. Now it's getting a little closer post COVID or with COVID. You'll see on this slide, Europe is about 56% of our sales, mostly Western Europe markets, the UK, continental Europe, the Nordics, where we fit very nicely into the reimbursement needs and the medical requirements of how healthcare is practiced in those areas. In North America, which is 39% of our sales, it's mostly the United States, some in Canada, virtually none in Mexico, although we have facilities there. And then in Asian Pacific, a small 5%, which is mostly Australia, where we have a sales business, and New Zealand, where we have a sales and rentals business that I mentioned in the service sector. We opportunistically sell in other markets around Asia Pacific, depending on their health care needs and reimbursement. That's the long term context of the company. We'll get to results in a couple of slides where you'll see fantastic progress. But before we get there, we'll talk about how COVID has been affecting our business. So we have a diagram on the left hand side of page seven, which is indexed towards normal demand. So if the line were on the horizontal access at the zero point that would be normal sales the pandemic has affected the three different parts of our business very differently not surprisingly the respiratory and beds parts of our business had seen a substantial upturn in demand beginning in march the early phases of the pandemic as people needed extra sites for care field hospitals as people in the united states will recognize right new york chicago Texas, big institutions and municipalities organizing 10 kind of hospitals for the expected influx of new COVID patients. That, as you can see in the green bar, peaked and then kind of went back down as the capacity that was needed was reached. Since that time, there's been a shift in access. The access to nursing facilities and long-term care has been somewhat restricted. People will know from popular past or maybe their own experience, difficult to get into a nursing home now. Not a lot of new residents going into nursing homes right now. A lot of care being provided to make sure that those residents remain safe. And that usually involves less interaction with outside world with people who aren't residents there. So not surprisingly, we've had limited access to selling our nursing care facility products during this time. On the other hand, the population yields a certain number of people who need that kind of care, regardless of COVID. If they're not going to nursing homes, they're staying at home. So we've seen some increased demand in home health care products. for those people who are remaining at home. However, the top line of this chart, that blue line, if you're looking in color for respiratory, has remained reflecting strong demand for respiratory devices due to the respiratory nature of how COVID manifests for people. We assume that that demand is going to continue for some time. We're mostly a Northern Hemisphere revenue company, just that 5% is in Asia Pacific. So we're looking at going into the winter months right now, which are typically blooming season for respiratory ailments, we're expecting the respiratory business to remain in high demand for some time. Eventually, it'll come down to a more normal level, but for now, we continue to see that. What's taken a turn for the worse in the short term, but we expect it and are seeing it come back is our mobility and seating business. The interesting parts of that business are custom products, custom power wheelchairs, custom manual wheelchairs, where we build a product for a named So a lot of specification goes into that product. In order to get the order form filled out, to have all those, a 13 to 17-page order form, the end user of that product needs to find themselves in a clinic where a physiotherapist or an occupational therapist is working with the patient to figure out what specific needs they have. As people would know, access to elective healthcare was restricted in March and April, which brought down our sales of custom products but we expect that to continue to come back now since second quarter. And we see evidence of that. Uh, we mentioned in the second quarter earnings release for people that want to go back and look, we can talk more about later. Um, we believe in general, uh, the products that we sell are serving non-perishable demand. The kinds of underlying conditions or ailments or disease states, uh, don't, don't go away. Usually they persist. And so we think the mobility and seating business should come back pretty healthily. as people finally get comfortable coming out into their community and their hospitals, find ways to bring in elective care, not frightening people that they will have an unreasonable chance of catching COVID, and we expect that business to continue.

Let's go to page eight, second quarter 2020 financial results, and you'll see why we're so excited about the progress.

Eleventh consecutive quarter of year-over-year EBITDA growth we posted in second quarter. Despite the pandemic, despite having big parts of our business turn downward during the COVID before coming back, as I mentioned on the last page, you'll see operating loss going from a minus 4.5 to a minus $2.2 million. So this is our marching forward from a loss-making business to getting towards a break-even and then good profitability as we continue this transformation, taking costs out of SG&A, introducing new products that have higher gross margin, expanding our sales force and commercial effectiveness with customers, has really yielded great results and continues to do so. On the adjusted EBITDA side, you see a positive results up 84% from second quarter prior year to $6.6 million. Again, good mix from selling higher acuity products during the pandemic, which was probably a predictable, but not quite as expected as we ended up seeing the end results. During pandemic, when there was a restriction on elective care, the acuity index of products being sold or placed with patients went up, which drove up our gross margin. Typically, the more complex the problem that's being solved in medicine, the more expensive or more profitable the product is. And we definitely saw that benefit. It might retreat a little bit as elective care comes back into the mix, but it's only going to head towards something more normal for us. And we have plenty of cost reduction and profitability initiatives that will help offset over time. And then free cash flow took a step back a little bit, $2.2 million worse than prior year, simply because As sales came down very quickly in the second quarter, we have a long supply chain for some of our products. We accumulated some inventory. It was really the biggest reason for that. All good inventory, as I mentioned, non-perishable demand, we believe, so we'll sell through that within a few quarters. Starting to page nine, when we came out with second quarter results, we talked about the balance of the year. We updated guidance for the year. We said, We'd be off our prior projection. However, we assume and remain confident that revenue will continue to sequentially approve since the second quarter, still being worse than prior year in each quarter, but marching its way back to pre-pandemic levels, we believe, by first quarter 2021, which will then put us on a path that is familiar to people who've been following our transformation plan, sequential increase in revenue, Europe is probably going to recover a little more slowly. They have a more organized response to COVID, more hermetic kind of shutting down. We do believe that there will be blooming of pandemic. We're already seeing that. France, Germany, Spain, some other places in Europe. But our assumption is at no point will all the countries shut down so completely as they did in March and April, which will allow us to move forward with revenue. The other thing is healthcare facilities typically don't generate the kind of contribution margin or income that they need to sustain their businesses. So they have found ways to bring elective care, and we think that will remain. They've got to stay profitable, regardless of their tax status. They've got to generate EBITDA, and we'll continue to do that. Gross margins are expected to be impacted slightly as this works back towards a more normal balance of high acuity and moderate acuity levels. And then we have a lot of cost containment and cost improvement initiatives that were long-planned. that continue to be on track.

And then our balance sheet, we've continued to manage very nicely, retiring a substantial amount of debt in the last few quarters.

When we talk about accelerating our transformation, there's three real groups of areas we can talk about focusing on, and those are outlined on page 10. Businesses have to grow ultimately. Our transformation is really to install industrial hygiene, get the company back to making good money on sales. But fundamentally, you have to have great products that customers want to buy preferentially. We've got to talk about share growth. We've got to talk about margin improvements and then the matriculation of margin down to the bottom line. So we'll talk for a second here about full product pipeline. We have about 2%, just under 2% of sales going into R&D worldwide. And in every one of those product categories that I mentioned before, lifestyles, mobility and seating and respiratory, we have an absolutely full product pipeline. And in the last few years, we have upgraded the way we do engineering and product development, putting customers at the center of each of our product categories. So we're solving more nuanced but very important needs for end users. And you'll see that in some of the products that we've launched recently. We launched a center wheel drive chair late last year, which had a standing seating system. So it allows someone to go from a sitting position to a vertical standing position, which is good for health, cardiac health, bone health, social interaction at eye level with others who are not in wheelchairs, a new front-wheel drive system, which is probably 10% of the market, which we were not participating in for a number of years, award-winning product, also with a standing system, and for us uniquely built to fully fit within the United States reimbursement payment structure. The only other meaningful product in there, which is a competitive product, does not fit, in reimbursement and requires a substantial outpayment from a family in the form of essentially a deductible. We specifically designed this great performing product to be fully reimbursable in an important clinical category, so we're excited about that. We do things like putting the first wirelessly remote controlled portable oxygen concentrator out in the market in 2017. We were the first with a wirelessly communicating wheelchair also in 2017, and we see those technologies growing to other product categories. Operational improvements continue, and in the next couple of slides, we'll talk about that in a little bit more detail, but we continue to see expanded growth profit from plant consolidations. We consolidated a factory out of Sweden recently, out of France recently, and we're in the process of consolidating German facilities into one facility to save on overhead costs. That's absolutely on track for a $5 million annualized savings in 2021, and then the third on this page is this partnership to modernize our IT systems which normally make people raise their eyebrows we've been modernizing our IT system since roughly 2014 having installed a new sales and ordering system in Europe and now we're coming back around to update the North American systems that go all the way from order entry to manufacturing processes and reporting processes and things like that today if you were to order from us in the United States you would find quite a legacy set of options. You have paper order forums, faxed order forums, phone calls, and a few of the modern conveniences we as consumers experience with Amazon, but effective at the beginning of the year, we will have a new system in the North American space for us, which will allow customers to have all those modern conveniences, e-commerce kind of functionality for our customers to simply purchase products from them while they're moving around their work environment, lower, expenses for processing transactions and much more smooth forecasting. It should help customers, make them drive more revenue to us as we're easier to do business with, help our team internally, make better intellectual decisions with better data, and we assume we'll make our working capital turn more quickly with better forecasting tools. Page 11, just to give people an indication of the pace with which we're comfortable making change, here's a timeline of some of the major reconfigurations of our Our workforce or physical plant infrastructure, you can see, while we don't predict what's going to happen in the future, we can point to a very consistent track record of taking smart actions to continue to drive profitability and make ourselves more amenable for customer interactions. And then on page 12, we've outlined the product innovations. Above the line are mobility and seating products. Below the line are the post-acute and respiratory products. And you see a very steady cadence of meaningful products coming out, a lot of first-of-a-kind products in the marketplace, which allow our sales teams to go in and have meaningful interaction with customers because we're finding new ways to solve problems that have not previously been solved. And I'll show some examples on that on the next couple of pages. On page 13, here are some pictures of some mobility and seating products. You'll see on the left-hand picture a center wheel drive wheelchair. There are three kinds of wheelchairs in a way based on where the power wheel exists. Rear wheel drive chairs are great for someone who has a real need to be outdoors on soft ground, working on an agricultural setting, going to soccer games, public transportation, things like that. Front wheel drive, someone who's going to spend most of their time indoors. They want to have an easy time getting up to work stations, a desk like in an office or a school. That's front wheel drive. And center wheel drive is a good compromise of both for someone that has a mix of those needs in their environment. So on the left hand side, you see a center wheel drive chair with that standing seating system. The right hand arm is out with a control system on it. You can imagine how interesting that would be to drive around and be able to interact with able bodied folks at an eye to eye level. And then we take that same seating system, which can go to a standing configuration. We put it on a front wheel drive chair called Aviva FX. That's it in the reclined position there in the picture. We also have a rear-wheel drive system that will be the only company in the world that has a standing system on a front, center, and rear-wheel drive system that fully fits within reimbursement schemes. And then on the right-hand side is a picture of the Smooth SMOOV, which is a power add-on. It's a little bigger than a kid's lunchbox. It bolts onto the axle tube of a manual wheelchair, and that caster there swivels around like a shopping cart caster, but it's got a motor in it, and that allows someone who doesn't have the strength or ability or gets tired by the end of the day and wants to still use their manual wheelchair to get around with some assistance.

Fantastic product that's taking a lot of share in that space. Page 14, some examples in the lifestyles categories, which are all those products in the bed and bathroom.

You see a very ergonomic bed. Nordbed was what this was called, meant to fulfill tender requirements in the Nordic region. ergonomic development, easy to get in and out for patients, great transportation kit to be moved around a facility, size, weight, cost, all fitting up some pretty specific requirements. Then we have lifts. Lifting patients who are not able to manage themselves, a very dangerous operation if it's not done by well-trained individuals with sound equipment. And we've continued to make products that are safer to use, easier to change, do things for the care facility that aid workflow, like weighing equipment, a resident or carefully moving them from bed to wheelchair. So those are coming out now around the world. When you look at this is the big picture, what do you have? You have a company on page 15 that's doing the right things, I think, in four categories. If you look at the fundamentals of what we do, we serve the world's population throughout their life. There's really a chance that every human is going to come into the need of a product like Indicare produces. So if you're thinking about companies to buy into because of the fundamental soundness of the marketplace, you should consider that Invacare really has a chance to help everyone in the world, whether it's dealing with a condition from birth, something that happens in the middle of their life, or something that deals with end-of-life concerns, whether it's mobility, sleeping, hygiene, Invacare has an opportunity to help. So we feel really good about the market that we serve. As prices are pressured with the population growing in GDP, maybe not providing the same per capita health care needs, people are going to need to turn to durable products. And that's the unique opportunity for InvoCare. Our products are typically not the cheapest, but we can often demonstrate that they're more durable, lowering total cost of ownership for a government or a private institution who's buying our products for reusability. That's a real strong suit for InvoCare. And it's a sustainable product. durable strength. Other companies that we compete with might make a cheaper product that can be sourced from a low-cost place. As we all know, those low-cost places migrate. They're in one region of a country or a continent at one point, and year by year, they move to wherever labor is cheaper. That's not really a sustainable competitive advantage unless you're just chasing costs down. But really, our providers, as they become more and more pressure to drive results with reimbursement that's available, they need things that have lower total cost. A product that's going to be easy to service or not require service, that's going to have remote diagnostics so you don't have to roll an expensive van to diagnose the problem or so that you have the right spare parts in the van when you go to fix a problem because the product told the provider what it needed, all help our customers and help us gain share. So you see the Highlights on page 15, transforming our business to regain market leadership, sales and product excellence, commercial launch excellence, reducing cost in the infrastructure to simplify our operations, which make us easier to do business with and delight customers and also improve margin and reduce SG&A. We have a tremendous pipeline of innovative products in every single category that we have and it's all sustainable at less than 2% of sales going into product development and our financial performance has really improved sequentially year after year. As I mentioned, 11th sequential quarter of year over year EBITDA improvement. We're excited about the opportunity for that to continue into the future.

Rob, that's the summary comments that I had prepared today, and I'd love to make sure we have time for your questions or other questions that you may have.

No, that sounds great. Thank you very much for the overview. Let's start where you just sort of finished up there in terms of Prior to the pandemic, you were making good progress in your turnaround. You mentioned 11 consecutive quarters of year-over-year improvement in adjusted EBITDA. Maybe just sort of re-walk through a bit how the pandemic fundamentally impacted the business positively and negatively and what your long-term profitability goals are.

Thanks for the question, Rob. We've really embraced rising to the occasion of the pandemic. We believe we're not going back. to the way the world had operated before this, we can be an even better supplier to our customers through the pandemic by embracing virtual technologies, remote work kind of technology. As I mentioned, to get these custom power, custom manual wheelchairs, there's quite an extensive fitting process to have that done as precisely as needed. So we have a sales team that works with our customer sales team that brings in an end user to whatever venue is comfortable for the end user. It can be at their home. It can be in a clinic. It could be at the customer's facility. And we can bring expertise from around the world now by embracing video technology to help make sure that that fitting works with as little contact as possible by not adding to the number of people that have to be in that room at a place and time to have that end user be perfectly fitted. We've instituted things like Fit Guarantee. wants to get their wheelchair they don't want to go into an institution for a super precise fitting get it close on the order form we'll ship it for a contact free delivery and we will under pin that with a guarantee that if there's any part of that fitting that's not absolutely delightful to the end user we'll make it right at no additional cost so that gives people the comfort that they can have health care occur in the place that makes sense for them to get the best product to fit their needs so that's really been helpful We're excited about what's going on in the respiratory business. The respiratory business is a business with a certain number of competitors, three or four competitors that are strong in certain areas. We're clearly one of those. It's been great to see the diversity of our product portfolio being able to help the world deal with the pandemic. It's essentially like another cohort of people with COPD who will need these products for probably a prolonged period of time of recovery. And our products are demonstrating world-class reliability and total cost of ownership that really helps providers get products out and not worry as much about, well, if I put a product out, can I support to service them? Do I have the spare parts? Do I have the repair infrastructure? Our products are doing really well there. And then I'm really excited about, despite the pandemic, how our R&D team has been able to come out with these new portfolio products and get them out and launch in a virtual world. Normally, probably in any product category, launching products is a lot of in-person work, training, education, demonstration, leaving a product with somebody to try out for a weekend. But we've got a whole new raft of tools that allow people to have that kind of exposure remotely. So we have the right products for this situation with the pandemic. We believe our demand is durable. So any downside in sales should come back as those people finally get comfortable to get their products. And I think The diversity and embracing the remote world by Indicare has made us an even better supplier to our customers. It's been an unfortunate time in a lot of ways for all the people who are suffering the consequences of the pandemic, but I'm really pleased with what Indicare has been able to do to grow and continue to be more profitable as a result.

Let's build off of that just a little bit. You've obviously been at the forefront, as you mentioned, in adding technology such as connectivity to your products. Do you anticipate... expanding that to other products or connecting your products sort of together?

Absolutely. That's one of the unique things about Invacare is our breadth of products. If a person needs one of our products, the chances are they need many of our products. If somebody needs a power wheelchair, they probably need a power bed and they may need a lift to get in and out of the bed and they may need some hygiene assistance in the bathroom to do daily things safely. the only company in the world that has that breadth. We have wheelchair competitors, but they don't have beds or lifts. We have bed and lift competitors who don't have wheelchairs and respiratory devices. And when our customers look across Indicare, they're trying to bridge all the technology and healthcare options for their local client, and we can make it easier for them to do business by connecting our products, by making our products fit in someone's life more seamlessly so it doesn't seem like just a hodgepodge of products And this technology that we've implemented as far back as 2017 really lowers the cost in a demonstrable way to our providers. We all know it's very expensive to put an employee in a van to go to someone's house to diagnose a problem. And for all of us that have had cable boxes in the past or something like that where you have to rely on coordinating your daily schedule around a visit from a technician, nobody really likes that. And they don't like it in healthcare either. So the technology we have has had a strong benefit for us in helping grow share because it solves a problem for our providers that lowers their costs and it eliminates some hassle from the end users who really don't want the hassle of inconvenient servicing of products. Our products are incredibly durable, but every product needs service at some point. We think that technology has a place on all the products, beds, lifts, and more and more wheelchairs and getting those things to work more seamlessly together. Huge path forward.

Then transitioning a bit here, 2021 sounds like a pivotal year with the completion of the German plant consolidation, go live of SAP in North America. Will that sort of be the end of the quote-unquote transformation?

I think by the end of 2021, we'll have the house built in a way. All the major things will be done. Of course, every company has to continue to grow sales and contribution margin on a By and large, the major changes to our business, the physical footprint, the kinds of products that we're deploying will be largely in a sense of stasis by the end of 2021. It's been a huge program to consolidate our manufacturing facilities in each region. So we have a regional supply chain to deal with regional needs. So we're not shipping things too far around the world and spending money on freight. The plant consolidation in Germany is our last big consolidation that should deliver about $5 million in annualized savings, as I mentioned, starting in full year 2021. And then we'll go from there to grow. And SAP, which is a part of our enterprise transformation for IT, is going to be a huge, huge help for us. We have a very choppy IT infrastructure. Our company comprises 51 acquisitions over 40 years and this is the first time we're going to get to a worldwide platform that allows our employees to be the best intellectual workers that they can be. Having our inventory turn as quickly as it can be and absolutely delight customers the way probably we're all delighted when we get on world-class e-commerce platforms and do business. We still expect to focus on B2B and But even in the B2B world, those kind of features are going to make this really simple to do business with. So that would be a great place to be standing roughly this time next year looking at the completion of a lot of those major steps.

All right, perfect. Anything else that you think would be important for investors to walk away with from today's presentation?

Well, Rob, obviously investors have a choice. And I think two fundamental things I want to remind people of is when you invest in a company you're investing in, how a management team deals with the industry and situation they're in. There's a long history of Invacare being innovative and there's a recent history of Invacare doing all the right things in the face of tough, exogenous circumstances, whether it's tariffs without notice or changes in material prices or COVID and investors can really see, I think pretty clearly what the Invacare management team has done to deliver strong results in a continuous string of tough circumstances. And then for investors who want to own something for medium to long-term appreciation, it's got to be bought into the fundamental market. And I think Indicare is a unique place serving a durable industry need, a population that's absolutely growing, and a set of conditions that can be solved really only with products like we have that is set to be here for a long time. So I hope investors see that. We're happy to talk and pleased with the one-on-ones this week. through your conference, and I look forward to talking to investors in more detail.

All right, perfect. Well, let's leave it there. Thank you very much for your time today. We greatly appreciate it. As you mentioned, if there's anyone else that has not already signed up for a one-on-one throughout the week here, please send me an email. Again, that's bloom, B-L-U-M, at lithiumpartners.com. Or again, you can visit the landing page for the conference for additional details. Thank you very much for your time, and thank you to all the investors. We hope you have a great rest of your day. Take care.