Savaria Corporation

afternoon and evening my name is Cecilia and I will be your conference operator today at this time I would like to invite everyone to the savara corporations Q1 2022 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 the star one on your telephone keypad. If you would like to withdraw your question, please press the star 2. This call may contain forward-looking statements which are subject to disclosure statements contained in Savaria's most recent press release issued on May the 11th, 2022, with respect to its Q1 2022 results. Thank you. Mr. Barossa, you may begin your conference.

Thank you very much, Cecilia. All right, gentlemen, okay, that's always interesting to have you on the call this morning. And that was a special quarter. I would call that special, okay, because we had COVID. We had the war. That created insubstitutes, okay? And one of the people don't like, okay, is insubstitutes, okay? They are not ready, okay, to... put more money in the market, okay, they maybe take up some money from the market, okay, but Severia is a stock, okay, and you know me, okay, for 25 years, okay, that I started, okay, in Severia, but right now, okay, we have over 2,000 members of Severia, and that's great, okay, because this company, okay, is resilient, okay, because the people, the other world, are you have COVID, okay, you need, okay, one time, okay, you will need projects like Saveria. And Saveria offers the biggest number of products, okay, to help the mobility of the people. For sure, it's more, okay, the aging of the population is the base, okay, of our company. And everybody in the world, okay, should have access, okay, to be the mobility, okay, for the stairs, okay, and for all kinds of other projects that you need in the house or in the church or at work. So we have a complete line, okay? We are the only company in the world, okay, that offers a line complete like that. So it's why I was excited, okay, 25 years ago, but I am excited this morning because when the stock market is very difficult, okay, And yesterday night, I was in this morning, I was looking at the analyst. Okay, thank you at the analyst. Okay, so you make a great job, okay, to support Cheveria. But we present you the fact, okay. The fact is we will have, okay, a tremendous year. We are very satisfied, more than satisfied about the Q1, okay. The sales, okay, of 184 millions, okay, in this quarter, okay. It's very important, okay, that will push us, okay, Maybe to exceed, maybe to exceed, okay, our sales, okay, that we project. So I will pass, okay, and go organic growth, okay. Just, you know, we make 12 million of organic growth. Well, when I look at the stats of April, okay, the organic growth is there. And it is very important. So you take our number, and you are better than me in mathematics, okay, I wish. And you see, okay, that our projection, okay, it's very realistic. See, hey, we are in good position. We are in good position. And you will have the same guy who will speak our products. And everybody, okay, I think is very enthusiastic. We have some new things that we will say to you on the call, okay, like a new factory in France. And Mexico, that's very exciting. So we have Mexico. We have China. So that will be more easy, okay, to maybe, okay, the inventory level, okay, can be a little bit higher when we've been producing down there. But what is important right now, you don't want to miss stuff, okay? Just a couple of millions, okay, of different that make a big difference in a quarter, okay, of our delivering products. So for me, okay, thank you to be there. Thank you to support me. I will pass the phone, okay, to Steve, our CFO.

Thank you, Marcel, and good morning, everyone. I will begin with some remarks regarding our Q1 2022 consolidated financial metrics. For the quarter, the corporation generated revenue of $183.5 million, up $71.5 million, or 63.8%. compared to Q1 2021 due to the acquisition of Handicare in March of 2021 and also due to strong organic growth of 12%. Q1 2022 will be the last quarter showing any acquisition growth attributable to Handicare. Gross profit and gross margin stood at 58.5 million and 31.9% respectively compared to 37.4 million and 33.4% for Q1 2021. The increase in gross profit was mainly attributable to the addition of Handicare. The decrease in gross margin was primarily due to inflationary pressures on supply chain, including increased shipping costs. Adjusted EBITDA and adjusted EBITDA margin stood at 24.4 million and 13.3% respectively, compared to 17.3 million and 15.4% in 2021. 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 inflationary pressures on the supply chain, including increased shipping costs, as well as a reduction in Government of Canada COVID employment retention subsidies. Total subsidies received for Q1 2022 was 0.2 million versus 1.1 million in 2021, reflecting a decrease of 0.9 million year over year. Now I will move on to our segment results. Revenue from our accessibility segment was $130.3 million in Q1 2022, an increase of $49.8 million, or 61.7% compared to the same period in 2021. The increase in revenue was mainly attributable to the acquisition of Handicare, which provided 53.4% growth. In addition, the segment experienced organic growth of 8.7%, which continues to be driven by strong demand in the residential sector. Adjusted EBITDA and adjusted EBITDA margin, both before head office costs for the accessibility segment stood at 20.5 million and 15.7% respectively, compared to 13.9 million and 17.2% for the same period in 2021. The improvement in adjusted EBITDA is mainly due to the acquisition of Handicare, The reduction in adjusted EBITDA margin is mainly trivial to inflationary pressures on the supply chain, including increased shipping costs. Revenue from our patient care segment was $41.7 million for the quarter, an increase of $16.2 million, or 63.5%, when compared to Q1 2021. Revenue growth was driven by the acquisition of Handicare, which contributed 41.5%. In addition, the segment saw 22.2% of organic growth for the quarter, which was driven in large part by the easing of pandemic restrictions and improved access to long-term care facilities versus last year. Adjusted EBITDA and adjusted EBITDA margin for the patient care segment, both before head office costs, stood at 5.3 million and 12.8%, respectively, compared to 3.7 million and 14.5% for Q1 2021. The increase in adjusted EBITDA was mainly due to the acquisition of Handicare and additional organic revenue coming from the easing of pandemic restrictions and increased access to long-term care facilities. And the reduction in adjusted EBITDA margin is primarily due to the aforementioned additional costs in the supply chain. Revenue from the adapted vehicle segment was $11.5 million, an increase of $5.5 million or 92.2% when compared to Q1 2021. The Handicare Vehicle Division based in Norway provided 83.6% of acquisition growth for the quarter. The Canadian divisions experienced organic growth of 12.9% in the quarter, driven mainly by some pent-up demand from last year. Adjusted EBITDA and adjusted EBITDA margin, both before head office costs for the adapted vehicle segment, finished at 0.6 million and 4.9% respectively, compared to 0.6 million and 10.4% for Q1 2021. The decrease in both metrics was mainly due to a reduction in the Government of Canada's COVID-19 employment retention subsidies, and the aforementioned inflationary pressures on the supply chain, as well as delays in sourcing key materials. For the quarter, net finance costs amounted to $1.4 million, which is stable when compared to Q1 2021 net finance costs of $1.5 million. Interest on long-term debt was higher by $0.9 million due to the financing of the Handicare acquisition, However, this was offset by prior year having a loss of $1.8 million on a foreign exchange contract, which was used to help secure the handicap acquisition. Net earnings were $5.3 million or $0.08 per diluted share for the quarter, compared to $3.8 million or $0.07 per diluted share for Q1 2021. Net earnings was largely impacted by amortization of intangible assets related to the handicap acquisition. Adjusted net earnings excluding amortization of intangible assets related to acquisitions reached $11 million or $0.17 per diluted share compared to $8.8 million or $0.16 per diluted share for Q1 2021. This reflects an increase of 25.7% or 6% on a diluted share basis. Turning now to capital resources and liquidity. Severia generated cash flows from operating activities of $13 million for the quarter compared to $27.9 million in Q1 2021. In the prior year, there was a one-time favorable increase to net earnings to net changes in non-cash operating items of $7 million based on the initial consolidation of handicare results. In addition, strategic investments in inventory were made this year, which further decreased cash flow from operations. As at March 31, 2022, Severia had a net interest-bearing debt position of $317.7 million and was in compliance with all of its covenants. On a trailing 12-month adjusted EBITDA basis, Severia's net debt to adjusted EBITDA ratio was approximately 3.7. This represents a decrease of 0.05 versus Q4 2021. Severia has funds available of approximately 128 million to support working capital, investments, and other growth opportunities. Looking forward, unpredictable changes in the macroeconomic environment continue to make it difficult to predict future performance. However, considering our recent financial performance and our strategic integration plan with Handicare, we are confident that for fiscal 2022, we will generate revenue in excess of $775 million with adjusted EBITDA in the range of $120 to $130 million. And with that, this completes my prepared remarks. I will turn the call back over to Marcel.