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spk06: Good day, everyone. My name is Shannon, and I will be your conference operator today. At this time, I would like to welcome everyone to Savaria Corporation's Q3 2021 conference call. All lines have been placed on a mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star and the number two. Today's call is being recorded. This call may contain forward-looking statements, which are subject to the disclosure statement contained in Savaria's most recent press release issued on November 10th, 2021, with respect to its Q3 2021 results. Thank you. Mr. Bourassa, you may begin your conference.
spk05: Shannon, thank you very much for this introduction. Hi, everybody. My name is Mr. Bourassa. I'm the CEO. And it's a very interesting, okay, challenging Q3 that we have, okay? But I am very happy, very proud of our results, okay, during a period of Q3 that some price increase, inflation, okay? I don't call that inflation, what happened, okay, in the freight, okay? This brutal, okay, increase, okay, I don't know if it's fair or not, but we have nothing to say. The price is that. If you're not happy, don't be happy, but they will not ship. It was that. That was another thing. The price of material increased. Labour is not easy to have. For Toronto, an example, we have our best booking ever, but it's difficult to go through and make some big increase. We extend, but it's difficult to have their labor. And plus, the Canadian dollar was very strong during Q3. But you will see that I am very confident that we will make our $100 million that we said before that we will make. We are nearer the end, and I am very confident we have just good people around in Siberia. People with talent. An example, I am very happy okay that that the result of uh and uh and care i think uh people down there we have many talents okay and produce very well and i think we are so proud okay of them okay i'm so proud with all the other division okay some division okay we have to to to be better okay and i will mention that in two minutes with that we have some increased price okay that we have done but not okay in uh We are very polite, okay, because we have some dealer that make our living for me for 30 years, and our customer, we respect them, okay, and I think they respect us. So we were, you know, somebody order an elevator to Mr. Smith, we respect the price. For the next order, okay, later, okay, or the beginning of 2022, okay, the increase of price, and we will make another increase of price at the beginning of 2022. So we go with them, okay? They are our live dealer, okay, and our direct office. So we work with them, okay? And I think it's a win-win, okay? And they are very happy that we will not increase, okay, like overnight the price, okay? We share that, okay? And you will see that we will see in 2022, I am not enthusiastic, but very enthusiastic. Patient handling was very difficult. We were in the status that we study the people, study a little bit the market. We have Educare, we have Silverly, and we have Spam. So that represents right now 20% of Silverly at $140 million. That's a lot of dollars. And I'm very proud that we have a new person, Patrick, who is VP Development North America. This guy, I like the guy. It would be a compliment to our team. And he passed the last 20 years with Arzo. And if you look at the last statement from Arzo, he has a very good EBITDA. I think this is a great company in our patient handling. So we will try to go back to an EBITDA of 15% quickly with Patrick. Welcome, Patrick. So I will... At the end, if you have some questions, I will be very happy to answer to you. If you see what we see in the future, we see a tremendous year in 2022, but we want to finish 2021 in good strength and have our $100 million. So we go in finance. I will pass to Steve.
spk10: Thanks, Marcel, and good morning, everyone. I'm going to begin with some remarks regarding our Q3 2021 consolidated financial results. The third quarter, Severia generated revenue of $180.8 million, almost double the $90.8 million reported in the third quarter last year, mainly due to the acquisition of Handicare. This is the second quarter of full consolidation of this acquisition. Gross profit and gross margin stood at $58.5 million and 32.4% respectively. compared to 32.6 million and 35.9% for the same period last year. The decrease in gross margin can be attributed to additional costs related to the supply chain, including shipping costs and also the reduction of subsidies from the COVID-19 Employment Retention Government of Canada program. Adjusted EBITDA and adjusted EBITDA margins stood at 26.3 million and 14.6% respectively compared to $16.9 million and 18.6% in Q3 2020. The significant increase in adjusted EBITDA was mainly attributable to the handicap acquisition and cost containment efforts across the company. These factors were partially offset by additional costs related to the supply chain, including shipping costs, and also by a reduction of subsidies from the COVID-19 Employment Retention Government of Canada program. Turning to segmented results, accessibility revenue reached 135.7 million in Q3 2021, almost double from 68.5 million in Q3 2020. The increase in accessibility revenue is mainly due to the acquisition of Handicare and also organic growth of 2.7%. Prior to the acquisition of Handicare, revenue was split almost equally between residential and commercial. The strong performance on the residential side in Q3 2021 was partially offset by weakness in commercial. Accessibility revenue growth was also partially offset by a negative foreign exchange impact for the quarter. Accessibility adjusted EBITDA and adjusted EBITDA margin before head office costs stood at 24.7 million and 18.2% respectively compared to 15.3 million and 22.3% in Q3 2020. The significant improvement in accessibility adjusted EBITDA is mainly due to the acquisition of Handicare, while the decrease in adjusted EBITDA margin can be attributed to additional costs related to the supply chain, including shipping costs and also to the reduction in COVID-19 employment retention Government of Canada subsidies. These items are partially offset by cost containment efforts. Patient handling revenue totaled $34.8 million in the third quarter of 2021. an increase of 17.4 million or 100.5% compared to Q3 2020. This increase was mainly related to the Handicare acquisition and also organic growth of 11%, partially offset by a negative foreign exchange impact. Patient handling adjusted EBITDA and adjusted EBITDA margin before head office costs stood at 3.1 million and 8.8% respectively compared to 2 million and 11.7% in Q3 2020. Likewise, the significant increase in adjusted EBITDA is mainly due to the acquisition of Handicare, while the decrease in adjusted EBITDA margin is partially related to additional supply chain costs and a reduction in the government of Canada's COVID-19 employment retention subsidy. These items were also partially offset by cost containment efforts. Adapted vehicles revenue reached $10.3 million in the third quarter of 2021, an increase of $5.4 million or 110% compared to the same period in 2020. Adapted vehicles adjusted EBITDA and adjusted EBITDA margin before head office costs amounted to $0.6 million and 6.1% respectively compared to $0.3 million and 5.8% in Q3 2020. The year-over-year increase in adapted vehicles revenue is once again attributable to the Handicare acquisition, partially offset by organic contraction due to timing issues and a shortage of vehicles stock. Increases in adjusted EBITDA and adjusted EBITDA margin for adapted vehicles were related to the Handicare acquisition. This was partially offset by a reduction in the government and COVID-19 employment retention subsidies. In the third quarter of 2021, net finance costs amounted to $2.5 million compared to $1.5 million for the same period last year. The increase is mainly due to higher interest expenses due to additional long-term credit facilities related to the Handicare acquisition. Net earnings reached $9.1 million or $0.15 per diluted share in the third quarter of 2021 compared to $8.1 million or $0.16 per diluted share for the same period last year. Adjusted net earnings totaled $9.6 million or $0.15 per share in the third quarter of 2021 compared to $8.2 million or $0.17 per share in Q3 2020. Turning now to capital resources and liquidity. Severia generated cash flows from operating activities of $7.7 million in the third quarter of 2021 compared to $16.3 million for the same period in 2020. The year-over-year decrease is mainly due to net changes in non-cash operating items of $12.5 million, including a ramp-up in inventories as well as increases in receivables and other current assets. A ramp-up in inventories was the result of intentional actions taken to minimize any potential supply chain disruptions on the business in Q4. As at September 30, 2021, Severia had a net interest-bearing debt position of $307.1 million. and was in compliance with all of its covenants. On a trailing 12-month adjusted EBITDA basis, Severia's debt to adjusted EBITDA ratio was 3.5 times compared to 3.6 times in the prior quarter. Severia has funds available of $138 million to support working capital investments and growth opportunities. Looking forward, the uncertainty around the future impact of the ongoing global pandemic makes it difficult to predict future performance. However, considering our financial performance year-to-date with an adjusted EBITDA of $71 million, combined with current backlog levels and our strategic integration plan with Handicare, we remain confident we will achieve our previously stated goal of generating adjusted EBITDA in excess of $100 million in fiscal 2021. On that note, I'll turn the call over to Sebastian for our business and operational highlights. Sebastian?
spk04: Thank you, Steve. So my name is Sébastien Bourassa, I'm the VP of Operation and Integration at Savaria. We'll be talking about the accessibility, and then our friend Nick will talk about the patient and things. So with the inflation and the global supply chain issue, labour shortage, I'm quite happy with the result of the third quarter. If we talk about the organic growth, 3.5% for the third quarter, for sure it is below expectation, but we expect to rebound in the coming quarter because the residential home elevator Backlog remains quite strong, and we expect a better contribution from the commercial segment for the incline platform, vertical platform for 2022, which has impact a lot this year. As announced last quarter, we did some price increase on our different products to offset some inflation on raw material and freight. We needed one quarter to flush our backlog, and we expect a better contribution in the fourth quarter. As Marcel said at the beginning, we are planning to make some new price increase in 2022. We have increased our inventory level to help reduce a bit the risk of supply chain for the winter, so we should be in good position to deliver our organic growth. After that, regarding the integration with Endicare, which I'm sure people have a lot of questions, I would like to highlight first a very good performance from Endicare in the third quarter. It was a strong performance, so thank you. Regarding the integration, I think it's progressing well. We have made some adaptation to our new leadership team. And we had the opportunity for the first time to meet in person in Netherlands and UK a few weeks ago with my brother Alex and Bill. We had the chance to meet Pete, Claire, David, and all the team. It was very nice to see all the different layers of management. And I have to say that there's a lot of talent at Endicare. Very good processes, good automation, a very impressive factory. So congrats, Pete and his team. And what's most important is that everybody at Endicare that we met are very excited to be part of this several teams. They want to be part of the family, they want to share their knowledge, and they want to learn from what we do at Savaria, so that will be good for the future. Regarding our cross-selling synergy, it has continued in Europe between Garaventa and Endicare, mostly on a stairlift in the Garaventa network, and with the inclined platform into the dealership of Endicare. A view lift, that should be a start for 2022. That's definitely on the agenda with the team of care, so thank you for looking at that. As far as North America, it will really start in January 2022, the free curve, the single tube manufacturing in Toronto. We have receiver equipment, our robots are under installation. People are receiving some training. We are expecting to make some beta tests in December in order to be live January 3rd. This will be a game changer for North America in terms of lead time. in order to make some custom curves to lift in a few days, I would say our dealers are quite excited. So please come to visit us in Toronto in January. So overall, we think we are at the right pace to do a $12 million synergy run right by the end of next year, as we said earlier when we have announced transaction of Medicare. And with all those challenges, we remain on track to achieve our $100 million EBITDA in 2021. So, Nicolas, patient lift.
spk01: Yes, thanks, Sebastian. I'll spend a minute or two to discuss the integration here with our patient handling segment. It is well underway. As was mentioned previously, travel restrictions have eased and we've been able to make multiple trips now back and forth between our operations in the U.S. and Canada. Now these in-person meetings have been important in helping us to get to know one another and to better understand our respective products, sales channels, and organizational structures. One of the main goals of our strategic integration planning is to bring together the businesses of Handicare and Severia as one cohesive patient handling group. And this really starts at the top. Earlier in Q3, we consolidated the leadership of Handicare and SPAN. And just yesterday, as Marcel alluded to earlier, we announced the arrival of an industry veteran with 20 plus years experience to help lead our sales integration efforts and to oversee the commercial strategy for our patient handling activities. Some areas of particular focus are the development of a clear product roadmap, skew rationalization, and the harmonization of our ceiling lift tracks and accessories. Through these initiatives, we'll be able to optimize purchasing and manufacturing efficiencies, and in doing so, deliver a better experience for our customers. Marcel has made it very clear to us in particular that the patient handling segment is an important part of this very group, with a combined revenue base now of $140 million. And we'll be working very hard over the coming months and quarters to ensure that our integration plan is successful and that patient handling will be a meaningful contributor to Severe's overall growth going forward. So with that, I'll turn it back over to Marcel for any final comments before the Q&A. Marcel?
spk05: Yeah, thank you, Nicolas, and a good presentation, Steve, Sebastian, Nicolas. Okay, we are so excited, okay, to complete this year and go to 2022. So do we have some questions, Shannon?
spk06: Thank you, sir. Just as a reminder, if you'd like to ask a question, please press star 1 at this time. Also, if you find that your question has been answered, you may move yourself from the queue by pressing star 2. And we'll take our first question from Derek Lessard of TD Securities.
spk07: Good morning. This is Cheryl, standing for Derek, who's on another earnings call. And thanks so much for taking my questions. So I'm wondering if you could talk about your confidence behind maintaining your 100 million EBITDA guidance, given the top operating backdrop, please?
spk05: I am very confident. As I mentioned before, okay, we have many things, okay, that are going not so good for us, okay, in Q3. But even with that, okay, we are satisfied with the final result, okay? And as I mentioned before, okay, And Sébastien said that we have all our staff in-house to make a work report. So we have no problem of shortage. Everything is there. And I think everybody will continue to work hard and we will deliver. Sébastien, do you want to add something on that?
spk04: No, I think some pretty good comments. The team knows exactly what they have to do. They have the order in hand.
spk02: So we are confident with the forecast we have in place.
spk03: Okay. Thank you.
spk06: And our next question, welcome from Nick Agostino from Laurentian Bank Securities.
spk09: Bonjour, Nick. Bonjour. Just a quick question on the, you guys called out labor shortages. Certainly that's something that many, many companies are experiencing. Just wondering, are you seeing, with the change in government programs, On the subsidy side, are you seeing any relief on the labor shortage side? And if not, what sort of steps are you guys taking to improve, I guess, your shortage situation? And should we be thinking about higher, I guess, margins impact if you guys are having to pay or throw out higher wages to attract the talent?
spk05: Nick, thank you for the question, okay, and Sebastian can add a little bit after. It's general. It's not just Saveria. It's general. It's why I am so happy that we have this curve stellate, okay, that's coming from Endcare, okay, that, okay, everything is about robotics, okay? Very quickly, we will have a capacity of 5,000, manufacture 5,000 curve for North America. That's major. And the number of people don't change because the robot can work 24 hours and seven days without to be unhappy. We have to be careful that when we improve or increase the salary at some level, the other level wants some increase too. And we are in short of that, and I think that will not change overnight. That will be a challenge in 2022. But we are very proactive, okay? We do a lot of things. But when we have a competition like from Amazon, okay, man, somebody can say, hey, it's good, okay, but Amazon, okay, they have good programs too. So that's not easy, okay? But it will continue, but we work hard. We have somebody, Lorraine, in our HR that she works hard. She tries to be innovative. And, Sebastian, can you add some comments? You are in the manufacturing.
spk04: Yeah, I think it's a good call from our side. I think, Nick, for sure that labor shortages are not everywhere. We have some places, for example, in China where people are waiting to come to work for us. And yes, there's places where we have more automation that maybe the risk is a bit lower, but that's something we're working hard to improve, and it takes time. We are flexible, but not so much. We have to plan our growth, and that's a bit something we're doing to make sure that next year we can deliver some growth. So I think we have a lot of good initiatives, and over time we will surpass those challenges. Okay.
spk09: And then just my follow-on question, you guys say in the press release that freight costs are on the decline. Are you guys now starting to see, by making that comment, not only is it, I'm assuming, declining costs, but are you starting to see deliverables coming through the port, if you will, in BC? Is the deliverables of product more timely in line with your prior expectations? Are you starting to see a change there in line with the lower freight costs? And if so, Sebastian, you made a comment that you've increased the inventory through Q4. Is that something that we should anticipate a reversal starting in Q1 as the freight situation improves? And I'll leave it there. Thanks.
spk04: For sure, Nick, we saw the threat to decline a bit. We hope it will continue as the economy reopens and maybe the demand that people – the overordering that people did will eventually come back to a normal level. For sure, the part of Vancouver or LA in the U.S., they are congested. But still, at one point, that's why we have increased our inventory. Our container will set a certain pace, much better than it was in Q2. And I think in order to lower the inventory, I think we have to wait one or two quarters to make sure things stabilize in the winter with storm and everything. We always have to be cautious with our stock level. Okay, great. Thank you.
spk02: Thank you, Nick.
spk06: And our next question will come from Zachary Evershed of National Bank Financial.
spk08: Bonjour, Zach. If you could help me out, how are you thinking about the pace of recovery in commercial end markets in Q4 and over 2022? Yes.
spk01: I mean, the commercial, it has been the drag. I mean, I think in certain of the comments that have been made here, residential is really carrying all of our growth in accessibility. I'm very happy. that Handicare's exposure to residential is almost a hundred percent. So with their stair lifts, that's been a big boon for us. But as it relates to commercial, it's difficult to know the timing of when, um, you know, it will come back. Uh, our anticipation is that, you know, 2022 should be, you know, if it's in the first quarter or second quarter, I'm not entirely sure, but we are expecting those orders to come back. Um, it's not a question of, in our minds of, of if, but just a question of when, um, Sounds like I've been repeating myself because I've talked about sustained foot traffic for quite some time now. But we are starting to see that. I mean, some of these landlords, the wage subsidies, the rent subsidies are coming off. They're just starting to break even and starting to make money. They're seeing customers come back. So I think it's going to take a little bit of time for them as well to be comfortable with their own personal balance sheets before they start making some of these investments. So we do anticipate it to come back in the next year. but it's difficult, Zach, for me to tell you exactly when the light's going to turn on there.
spk02: That's helpful. Thanks. That's all I had. I'll turn it over.
spk06: Thank you. And our next question will come from Matt Buckles of Stiefel.
spk11: Hey, morning, guys. I just have a few questions. First, I know last time we spoke, there was some mention of doing some tuck-in acquisitions. I was wondering if you can maybe update us on your deal pipeline in terms of maybe the number of targets or potential revenue. And I guess, secondly, wondering if multiples have changed at all, given what's going on with the global supply chain.
spk05: Just to tell you that for sure, okay, we have a good balance sheet, okay, and we have our bank, okay, We're over 130 million, I think, accessible from making some acquisition. But we're not looking at the major acquisition, but I am sure in 2022, you will see some small acquisition that will be located at key territory that we are a little bit weak right now, or at some products that want to add on our line. But really, okay, we focus on integration. We have so many good things that can be, but for sure, okay, we will make some little acquisition.
spk11: Understood, okay. And you mentioned it, but, you know, the solid balance sheet. I was wondering if you could maybe provide a little more color in terms of, you know, where the number top few priorities lie in terms of, you know, whether it's spending on supporting working capital, investments, Sounds like M&A maybe a little bit later, but if you could just outline where your priorities are, that would be helpful. Okay, Sebastian, you want to take it?
spk10: I can take this one, Marcel. Okay. I mean, we are making investments in inventory, absolutely, and working capital to make sure we don't put any of the sales in jeopardy for Q4 and going forward. So we'll continue to make investments there where needed. On the CapEx side and investment side, we're obviously investing a large amount in the facility here in Brampton to have the first airlift production up and running now in Q4 and up for 2022. So there is a significant investment that's happening there. Other than that, we will continue to make strategic investments in CapEx as required, but any excess funds we're going to use to delever If something does come up on the acquisition side that the timing is right and the opportunity is right, you know, we will pull the trigger on that. But our plan is to continue to de-lever.
spk11: Okay. And last one for me. I was wondering if you could provide any commentary related to or maybe quantify your overall organic growth expectations over these next few quarters.
spk05: So, Sebastien?
spk04: If you go back to the statement that we said before, that we want to be a 1 billion company by 2025, that means that we have to be in the 8% to 10% range very often. So I think for the accessibility, this is definitely the target we are looking for.
spk13: Okay, great. I appreciate you taking my questions. I'll hop back in the queue. Pleasure.
spk06: And our next question will come from Frédéric Tremblay of Desjardins.
spk05: Bonjour, Frédéric.
spk08: Bonjour, Marcel. So first question for me is on the price increases. You mentioned potential for further increases in 2022. I was wondering if it's more on, let's say, categories that weren't increased in 2021, or is it an increase that's going to be on top of what you've already done for some of your brands here?
spk05: Oh, you know, we have some increase in every division, okay, in 21, and every division, okay, will have a new increase at the beginning of next year. So that, and the people understand that, okay, understand just to go make their grocery, and they understand that the inflation is there, okay? So it's there for them, it's there for us, okay, and we want to share a little bit with our customer and our dealer, and they understand that the We have to have a strong balance sheet if we want to keep our role to be the best manufacturer around the world about the accessibility product.
spk08: Okay, and I appreciate the comment on the patient handling initiatives. On the timing of the improvements, I was wondering if patient handling is expected to contribute more meaningfully in Q4 than they did in Q3 to attain the 2021 guidance? Or is the improvement in patient handling expected to be more significant in 2022 and beyond?
spk05: To be realistic, it will be easier to be better in Q4, but I will see the real action in the introduction of Patrick. we will see more change and more EBITDA percentage at Q1 2022.
spk02: That's helpful. Thank you for taking the question. Thank you, Frédéric.
spk06: And our next question will come from Michael Doumet of Deutsche Bank.
spk12: Hello, Michael. Hey, good morning, guys. Yeah, first question. The 2021 EBITDA guidance, that implies a sequential improvement in EBITDA. I understand the typical seasonality here, but I wanted to get a sense for how much of the sequential increase is expected to be driven from higher sales versus what maybe I would call margin recapture. And then just as a follow-on, on the margins, any way you can provide a sense for how much still needs to get recaptured beyond Q4?
spk13: Yeah.
spk02: Sebastian, do you want to go, or I go? If you can talk about something, maybe Steve can complete.
spk05: Okay. So, you know something, we have some price increase, okay, everywhere, but as I mentioned before in the call, okay, that us in accessibility for elevators, residential elevators, okay, the order that they place with us, okay, we respect, okay, the... we respect the timeline, okay, that they will go to and start to Mrs. Smith, okay, with the same pricing. But that is done, okay, that will send impact, okay, in Q4. And I know that Endicare and I know that Span, okay, and our other division make an increase of price, okay, and we will see that in Q4, but we will see that again. We have another one, okay, in Q1, at beginning of Q1. So you will see that, okay, roughly it would be a little bit more combined, 21 and 22, more than 10%. So that's my way of seeing what I see right now. And everybody is on board on that, okay? And I think it's fair increase, okay, that it would be combined 21, 22, over 10%. And just if I can add on that, Marcel,
spk10: Obviously, we saw inflationary pressures in Q2 and Q3, and also on the freight cost side. We have done price increases this year already, but nothing compared to what we put in place in Q3. So the more widespread price increases that we put in place in Q3, we're going to see that come through in the margin in Q4 and going forward, and as Marcel said, we're we're going to continue to look at price increases. So to your question specifically about margin versus revenue impact in Q4, we're anticipating both.
spk12: That's really clear, guys. So most of the catch-up versus pricing happens in Q4, but it sounds like there's still some left in 2022. So yeah, I know that's helpful. And then maybe, Steve, just a question for you. If I look at the consolidated P&L, both gross margins and SG&A rates declined quite a bit from Q2. Now, I think there's plenty of reasons that are understood on the gross margin side, but I wonder if you can talk about what drove the SG&A lower quarter over quarter and whether or not that's sustainable.
spk13: So we did have a recast of our financials.
spk10: So our MD&A was prepared on a with the recasted numbers on a year-to-date basis for Q3. We had a reclass from SG&A into margins. So if you're looking at prior MD&A, you'll see that change. Whereas if you look at our Q3 MD&A, the year-to-date numbers, it's more in line. Obviously, we did have some pressures this quarter in gross margin and in SG&A. A lot of that was on subsidies. We saw that in subsidy decrease. We saw that in both gross margin and an SG&A, but there was no other real impact to SG&A in the quarter.
spk12: Okay, so not much of a read, I guess. No, that's helpful. And then maybe the last one, what do your conversations with your dealer network suggest for the speed of the potential update in the stairlift sales manufactured from Brampton and And I guess the flip side to that, in terms of the stair lifts that do not need to be air freighted from Europe, what's the confidence level that you can now sell those into the European market with speed?
spk05: Well, I tell you, our dealers are very excited that they can propose a project, a curved product, a curved stair lift, and they can install that in two or three days after the order. So that will be the best in North America. Okay, and other companies are very good, okay, but we work hard, okay, to deliver this product. We put a lot of energy, dollars, okay, to be sure that we will be in production for North America at the beginning of 22. Look at the, that would be major, okay, just on the freight, okay, that right now, Indicare, okay, selling North America, okay, sending that by air freight. So it will be coming from our factory. So it's very... I would like very much to see that we would have something that we can deliver. I repeat myself, that they can deliver quickly to the customer. Sebastian, you have something on that?
spk04: I think what's important to know is they have been doing it in Netherlands for years and years. They have perfection in their system. It's a well-run system, and we are duplicating the same thing in Toronto. So the team has done a very good job to train us, to help us. They will be there at the beginning to make sure we don't make mistakes. So I think that it takes years and years to become an expert, and we have the chance to do it from day number one.
spk13: Great.
spk12: Thanks for the call, guys. I appreciate it. Thank you.
spk06: And once again, if you found that your question has been answered, you may remove yourself from the queue by pressing star 2. We do have a follow-up question from Derek Lessard of TD Securities.
spk07: Hi. Hi, Derek. Hi, this is Cheryl for Derek again. I'm just curious if you have any plans to build any other handicap products in North America, and if so, what type of KPAX and timeframe would you be anticipating?
spk04: Sebastian? For sure, if you look at Medicare right now, they are expert in stairlift, and that's what they do. So right now, the straight stairlift is already available within North America. There's the double tube, which is currently made also in Europe. Maybe sometime next year we could look to manufacture the double tube system of Endicare in North America. But first, we have to finish with a single tube to make sure we are successful. And after that, we can think about a second product. But all the other straights to lift are already available. The double tube is available, but need to be shipped overseas. So that's the next opportunity. Yes.
spk05: And, Sebastian, I would just add, okay, that's a major change for us, okay, to manufacture in Toronto, okay, the products, okay, that we have the best EBITDA in terms of percentage. So that's something that will be a direct impact, okay, of our EBITDA in 2022. It's why I'm so enthusiastic about this thing. Okay, we work hard, okay, with Endcare. And as mentioned, they proved that they can deliver this product. So we... We will have this knowledge, or we have right now because it's quite advanced in Toronto. And again, it's our best EBITDA product. So we will be very enthusiastic to speak to you about when we speak to you again in the first quarter next year, where we stand with that.
spk07: Okay, that's helpful. And maybe one last one for me. Just wondering if you could update us on some of the cross-selling synergies that you've been able to monetize since closing the deal with Handicare?
spk10: Steve? Specifically on the sales side, yes, they're starting to come. The synergies that we looked at with the Handicare deal, we We had them in three separate buckets. We had the indirect costs, we had the direct costs, more of the cost of goods section, and then the sales. The indirect piece is obviously coming a little bit faster. I think that's easier to execute. The sales side is starting to come. We're starting to see that come through, absolutely. That is more heavily weighted towards the end of the one to two years of our integration plan. I mean, the good news is that we are seeing it start to come through. We have put some leadership changes and realigned the teams to more effectively go after some of those synergies, and we're confident we're going to deliver at least what we have set out in our initial expectations.
spk03: Okay. Thanks so much for taking my question.
spk02: Thank you.
spk06: And it does appear we have no further questions at this time. I'll turn the conference back over to our speakers for any additional or closing remarks.
spk05: Okay, Shannon, thank you very much to be there. Thank you for my team, okay, and thank you very much, the analysts. Okay, you are an important part, okay, of the success of Saveria because you deliver the good news to the buyers. So, again, thanks for your very good work, everybody. that we speak this morning. And a big thanks, okay, to everybody on my division, okay, your card, okay, and I recognize that, okay, and you are very fortunate, okay, for us, our 2,000 employees. So thank you very much.
spk02: Thank you, Shannon.
spk06: Thank you, and that does conclude today's teleconference. Thank you all for your participation. You may now disconnect.
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