Savaria Corporation

Good evening. My name is Ali and I will be your conference operator today. At this time, I would like to welcome everyone to the Severia Corporation Q4 2021 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would 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 2. This call may contain forward-looking statements which are subject to the disclosure statements contained in Saveria's most recent press release issued on March 23, 2022, with respect to its Q4 2021 results. Thank you. Mr. Barassi, you may begin your conference.

Thank you, Ali. It was a challenging year, but a great year. A great year, and we are very excited, not just me, to this 2022. I think 2021 was a good year, but we prepared a lot of things for 2022. Don't forget that right now with some equations that were made, and the major one is anti-carer. So we will sell, okay, around 800 million, okay. How many you just have to choose the right number, okay, and we just announce you before, okay, at the beginning of the year that we will make between 120 to 130. We made the acquisition one year ago of Indicare. We're thinking that they were good, but they are better than we're thinking, okay. They are better people. And on that, I thank them to come aboard and say we want to work together. It's always in life, teamwork. If you don't believe in teamwork, you're at the wrong place. Because if you want to be successful, you need all the people together. So we have more than 2,200 employees. We are in, with this acquisition, we're in over 40 countries. That's major, okay. And what we have done, okay, we imported technology of curbstone lift from Hendrick and Harrow Europe, okay, to Toronto. We are well advanced in the integration and we are in production, okay, but just the vending machine, okay, will arrive in maybe 45 days, okay. But right now, we take the the curve, okay, for the bedding, okay, the tube, okay, arrived from Europe, okay? So we missed a couple of dollars because it's quite expensive, the freight. But even, okay, it's a challenge, okay? This was a tough year, but you know something? And you know, okay, the materials, okay, was a challenge and is a challenge. The concept freight, okay, was a challenge and it continues to be a challenge, okay? And it's not easy, but that shows that we have a good team. A good team find a problem and just discuss, okay, what we do. And that's the forte of Saveria. We have a good team, and if we have to change people, we change people. We have so nice people who come with us, okay, in 2022. Just an example, in the patient ending, okay, We have a new director down there. That's who is at the end of that. And again, I have a great experience in our industry, and it will bring this division at another level, another level of EBITDA. What is very important, okay, for me and for my people is what kind of EBITDA, what is the percentage? And we want, okay, to be by percentage. 2025, we have a big goal, okay? Our big goal is to reach 1 billion in sales, okay? And with the 1 billion in sales, okay, we have to be around 20%, and we will be around 20%. I cause a synergy with all of the people, okay? So, thank you to be here with us this morning, guys. We need you, because that's you, okay? We're right on that area, and you, the motion, okay, or My English is always bad like it was 15 years ago, but this is a fact. This is what it is. Thank you to follow Severio and to be interested in the history of Severio. I think we have a great history. Coming from when I bought a company, we were like four people. Right now, over 2,000. At the beginning, we were selling 200,000 a year. This year, we will sell... around 800 million. So that's a good, but we are there, okay, because of the people. And we have good customer, and as I repeat what I was doing, telling 15, 20 years ago, so the customer write a check for what they like, with a smile, okay, because that gives them, okay, more liberty to move. And that's so important. So today, we have the pleasure, okay, I will pass the to Steve, okay, that will tell you a bit where we are with our findings. And after that, we will have a question that we will answer to you with pleasure. On the call this morning, we have Nicolas, we have Sébastien, and for sure that I tell you that Steve is the first one to speak. After that, okay, Nicolas and Seb and myself, we will answer the question that you have. So first of all, okay, Steve.

Thanks, Marcel, and good morning, everyone. I will begin with some remarks regarding our 2021 fiscal year consolidated financial metrics. For the year, the corporation generated revenue of $661 million, up $306.5 million, or 86.5% compared to 2020, mainly due to the acquisition of Handicare in March 2021, and also due to organic growth of 4%. Gross profit and gross margin stood at $215.5 million and 32.6% respectively compared to $122.1 million and 34.5% for 2020. The increase in gross profit was mainly attributable to the addition of Handicare. The decrease in gross margin was primarily due to additional costs related to the supply chain, including shipping costs, and also the reduction of COVID-19 employment retention subsidies from the Government of Canada's program. Adjusted EBITDA and adjusted EBITDA margin stood at $100.3 million and 15.2% respectively compared to $59.8 million and 16.9% in 2020. The increase in adjusted EBITDA dollars is again due to the addition of Handicare. The decrease in adjusted EBITDA margin is due most notably to significantly increased shipping costs in 2021 versus 2020, as well as a large reduction in Government of Canada COVID-19 employment retention subsidies. Total subsidies received for 2021 was $3.2 million versus $6.9 million in 2020, reflecting a decrease of $3.7 million year over year. Now I'll move on to our segment results. Revenue from our accessibility segment was $484.3 million for the year, an increase of $227 million, or 88.2%, compared to 2020. The increase in revenue was mainly attributable to the acquisition of Handicare, which provided 87.3% growth. Organic growth of 3.5% was driven by strong demand in the residential sector, and was partially offset by a negative foreign exchange impact of 2.6%. While our residential sales were strong throughout the year, we continued to see weakness in the commercial sector. Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at 86.2 million and 17.8%, respectively, compared to 51.1 million and 19.9% for 2020. The improvement in adjusted EBITDA is mainly due to the acquisition of Handicare. The reduction in adjusted EBITDA margin is partially due to additional costs related to supply chain, including shipping costs, as well as a reduction of the Government of Canada's subsidies. Revenue from our patient care segment was $136.7 million for the year, an increase of $57.4 million, or 72.4% when compared to 2020. Revenue growth was mainly driven by the acquisition of Handicare, which contributed 71.3%. In addition, the segment saw 5.5% of organic growth for the year, which was driven in large part by the last quarter of 2021, which provided 17.1% organic growth. The improvement in organic growth was driven in large part by the easing of pandemic restrictions and improved access to long-term care facilities. Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, stood at $16.7 million and 12.2% respectively compared to $10.4 million and 13.1% for 2020. The increase in adjusted EBITDA was mainly due to the acquisition of Handicare, and the reduction in adjusted EBITDA margin is primarily due to the aforementioned additional costs in the supply chain and a reduction of Government of Canada's subsidies. Revenue generated from the adapted vehicle segment was $40 million, an increase of $22.1 million or 123.4% when compared to 2020. The Handicare Vehicle Division based in Norway provided 119.9% of acquisition growth for the year. The Canadian Auto Division experienced organic growth of 3.5% for the year driven mainly by strong sales in Q4 2021 as a result of some pent-up demand from earlier in the year. Adjusted EBITDA and adjusted EBITDA margin, both beforehand office costs, finished at 3.2 million and 8% respectively, compared to 0.6 million and 3.4% for 2020. The increases in both metrics were mainly due to the acquisition of Handicare, and some recovery from the economic slowdown caused by the global pandemic, partially offset by a reduction of Government of Canada COVID-19 subsidies. For the year, net finance costs amounted to $15.8 million compared to $3.9 million for 2020. The increase is mainly due to higher interest expenses due to additional long-term credit facilities related to the Handicare acquisition. Net earnings reached $11.5 million, or $0.19 per diluted share for the year, compared to $26.5 million, or $0.52 per diluted share for 2020.