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spk05: 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.
spk04: 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.
spk03: 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.
spk04: Steve, thank you very much. I see that you mentioned a great number. And what is important, we have the cash flow to make acquisitions, small acquisitions in some place in the world that we are not there or with some products. Early this year, okay, we buy, okay, a company that was manufacturing, okay, our controller. And we have great people, okay, in this company. So I am more than happy, okay, right now, okay, about controller. We a little bit protect ourselves, okay, by acquiring this great company. So and the people in this company is great. And care, okay, you know something, as a person in Europe, okay, they will take care of the division of Garavento in Europe, okay, and we do the same thing from us, okay, we take care, okay, here in Toronto, okay, of their products, okay, in the United States and Canada. And it's just great, okay, and you see the patient ending, okay. We have one guy at the top, okay, that's... a new guy, this is Patrick, okay, he has a tremendous experience and working with Les and Phil, okay, they put this kind of number, okay, that Steve gave you. So it's just good, good, and very good. So we are ready, okay, for your question.
spk05: Thank you. If you wish to ask a question at this time, please press star 1 on your telephone keypad. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. So we will now take our first question from Michael Dermot from Deutsche Bank. Please go ahead.
spk09: Hey, good morning, guys. Bonjour. Hey, guys. Nice quarter on the organic growth. But the first question I wanted to ask is really on some of the margin compression that we saw in the quarter. And, you know, I'm assuming... You know, well, I'll first say that a lot of the companies that we've been covering have been seeing similar pressures. And I'm assuming some of the headwinds here are going to moderate going forward, especially as you get a little bit more price. I'm just trying to piece maybe some of the moving parts here. And I was wondering if you can help us, you know, maybe put together expectations for Q2 margins, whether we should see a step up there or if it's more gradual for the balance of the year.
spk04: You will see a step up in Q2 for sure because our increase of price is there. You will see that our volume, like our backlog in Toronto for North America and for the products that we make, it's three times what it was last year. That's something to have a backlog like that. We have just to do what we are supposed to do and that would be a great quarter and a great year. So I will ask Steve if he can comment on that, please.
spk03: Absolutely. Thanks, Marcel. So good to talk to you, Michael. The price increases that went into effect across the business. We didn't see a large impact in Q1. We are expecting a more significant impact in Q2. Our goal continues to be to increase margins, definitely above where we're seeing in Q1. we are expecting more of an impact in Q2 and, and we'll expect an increase for the remainder of the year.
spk09: That's helpful. Thanks guys. And I guess the second question, maybe a little bit of a bigger picture question, probably for Sebastian, you know, those view the Chinese facility is a competitive advantage for Siberia. It's given, it's given you a cost advantage. It's given you vertical integration. I'm assuming you want something similar here with Mexico, um, but it does feel like a significant shift for the company. So I guess my question is, you know, is Mexico intended to support additional growth or transition manufacturing capacity? And I guess what advantages are you looking for longer term here?
spk01: Thank you, Michael. Yeah. So I think, uh, no, don't forget Savaria has 20 years experience in China and China has been, I think very good for the company. It's very stable, very reliable, but in the last two years, uh, It takes a bit longer to get container and a bit more disruption. So yeah, and now we have a target of 1 billion by 2025. So we have to create some capacity. And we thought that Mexico was closer to North America, was making sense. It is attractive, okay, to produce something at a reasonable cost. So definitely, and now we have a bigger team and we have more experience. So I think, yeah, we will be open in September this year. in a few months, so we are putting a lot of effort in our planning, and we'll make sure that we have the right resource to support this. I don't expect a huge impact this year, but I think definitely from the next year, we'll see some good impact, okay, to help us to increase the output in our factories in North America by supplying some standard parts in the sub-assembly from there. And I think that will be a great adventure for us.
spk09: Yeah, that makes a ton of sense, I guess, given the dynamics. I guess just as a quick follow-up before I turn it over, just potential costs around the construction and the ramp-up and inventory trends that we should expect as it relates to that.
spk04: No, but you know that we rent down there, okay? So it's not our building. And for sure, we will do the same thing that we do... in China. So they will buy some project from us outside and ask about that. Okay. That's the beginning. Okay. We can see, okay, for 22, 23. And after that, we will see if we have to have some machinery down there, some equipment. So the cost is not very, very high. Okay. And I think that's a big plus to have something, a project that can arrive here in one week, okay, by truck. directly to Toronto, and instead of passing three months on the ocean and on the rail. So that's a diversification, and I can, my people, my friend in China, I can assure you that you are very important for us, and you will continue to be very important, but we need a little diversification, and Mexico is a great diversification, And we know some companies down there. Okay, we make a little bit of effort. And the people, okay, from NACAS, okay, that is a shareholder, help us on that, too, because they are partners with us. So, and we have great people, and we already visit some companies that they are an exclusive, like BRP, okay, for years and years and years. And they are very successful. So congratulations for them. So we will continue, okay, Begin with our experience in China, okay? We will do the same, but closer for us. So that is a great transaction.
spk10: Thanks very much, guys.
spk05: We will now take our next question from Frederic Trempley from Jez Dardines. Please go ahead.
spk04: Bonjour, Frederic.
spk10: Bonjour, Marcel. Good morning, everyone. First question is on the patient care segment. Obviously, you're benefiting from some pent-up demand with the increased access to long-term care facilities. We're just wondering if you had any visibility on maybe how long that positive aside from pent-up demand could last. Obviously, we've had about two years of underinvestment in that from long-term care facilities. So is that something that you would expect to last for... for several quarters or was it mostly limited?
spk04: No, several quarters. I would pass the line to Nicolas in one minute. But you know that our backlog down there is a level that was never before. So that gives us some caution for our next production for many quarters. And we have a group, a better group than ever that we have in this division that I said before. We have right now, okay, Patrick, okay? And when we put Patrick with Les and Phil, we have a winning situation, combination. So our specialist in that, okay, is Nicolo. Nicolo, can you continue and say a little bit different than me?
spk00: Thanks, Marcel, and thanks, Fred. I guess as Marcel indicated there, I think we feel very confident about the team that we have in place. So it starts at the top, so we have a very strong team there. And as you'd indicated, we are taking advantage of some of this rebound spending exiting COVID. So what you saw there in the first quarter, whatever it was, I think 22% of organic growth. That builds off of in Q4, I think we're at 17% of organic growth. And I believe you've been double-digit organic growth in Q3 of last year. So I think it's a continuation of this trend as we're really exiting this more of a lockdown environment. Some of it is related to facility access, for sure. Some of it is capital spending that's happening now that had kind of been allocated towards other more needy areas during the COVID time. So we are seeing a rebound from that. I think we're also seeing some market share gains. Our team has been very good at winning a lot of these projects that have been put on the market. So will we have 22% organic growth for the next five years? Probably not. But I would say over the next several quarters, we do expect to have similar kind of double-digit growth within the patient care segment. But also longer term, I mean, some of these trends that we're seeing coming out of COVID is is years of underinvestment. You know, here in Canada, for example, there's a lot of these new build activity, which is kind of boosting much of our sales here in Canada. And that's something that we should see, you know, over the next several years. So I would say, yes, right now we are in a kind of an advantage situation here exiting COVID. But I do think longer term, there's still some very positive trends as it relates to the organic growth potential of that segment.
spk10: And then maybe a question for Steve on the capital allocation priorities in the near term. Can you just maybe update us on capex expectations and deleveraging for 2022?
spk03: Yeah, so we are committed to delivering at least half a turn this year. Q1 is typically, for us, our seasonally worst quarter. It's our weakest quarter, so we did deleverage slightly in Q1, but we will deleverage more in Q2, Q3, and Q4. I am expecting to exceed that half a turn this year, but as far as our published guidance, we're sticking with half a turn. We are remaining diligent with CapEx spend. We are tightening where we can, and we're going to be spending under our budget this year. So even with the Mexico investment, we will be spending less than initially planned.
spk08: Great. Thank you.
spk05: Our next question is from Zachary Evershed from National Bank Financial. Please go ahead.
spk06: Bonjour, Zachary. Bonjour, Marcel. Good morning, everyone. Thanks for taking my question. when the flow of goods starts to get better as we see logistics kind of unsnarl, do you think there's pricing risk where prices could come back? Or are you pretty settled at current levels?
spk01: I think, Zach, if you remember, we have a multiple brand between Indica, Garaventa, Span, and Savaria. And I think when we see we make some price increase or there's inflation, I think it's Different grant has different seasonality when they make new price increase. I think this year we have reset on most of our grants. But again, if there's some effect during the year on inflation, on the incoming material, definitely we need to review what needs to be done. I think it's an ongoing project. Gotcha.
spk06: And with the backlog up three times from where it was last year, Are you happy with your current labor force or would you prefer to ramp up even ahead of the New Mexico facility in September?
spk04: We'll ramp up because we have a good team in Toronto. Maybe I'll always want to have more and more. But we have a good team and you will see the number of Q2. We have a good start with April. So, but we have a good start, but we have more booking than we were at the beginning of the month, okay, in April, okay? So I think, okay, Mexico will help us, okay, to do a little bit faster, but it's very, very interesting, okay, to begin a month, or right now we are over roughly 20 million, okay, of booking, okay, to do. We never had that in our life. Never, never, never had that, okay? And so we are working hard, okay, to deliver as soon as possible. So it's why I see until the end of the year, very, very busy.
spk01: And I said just to add one thing, Zach. No, don't forget in Q1, okay, we have lost 7% of our production hours in four of our main factories in Granton, St. Louis, and Ougavard in the Netherlands. Okay. That did not help our output. If we will get all those hours, I think we'll have received some better organic growth, right?
spk06: Absolutely. It makes sense. And then just if you could drill down for me on where exactly in the supply chain you're seeing pinch points and how you see that evolving over the course of the year. Sébastien?
spk01: Yeah, I think right now, for now, we did not lose a week of shipping since the beginning of the year to factory in Chamin, and we have been able to perform. Yes, we have a few suppliers in Shanghai area where they had a month lockdown, maybe, but just a few small parts. So I think it's just like it's a worldwide issue right now. Even if you have a local supplier or a supplier in Europe, they might get some small components in different places. I think electronics is maybe one of those which is a bit utter, and I think the acquisition of electrons has been pretty key for us so far. Right away from the start, they have been able to manufacture some PCB in-house so that we can eliminate some of our potential challenge. So I think it's important we control our process. We do a lot of parts in-house in all our different factories. So that helps us a bit to turn around some of the supply chain issues sometimes.
spk08: That's helpful. Thanks. I'll turn it over.
spk05: Thank you. We will now take our next question from Nick Agostino from Laurentian Bank. Please go ahead.
spk11: Good morning. Good morning. Good morning. I guess first, Steve, one point of clarification. You said earlier that all the pricing increases will have the full benefit in Q2. And then I thought you mentioned something about the rest of 2022. Were there any more planned pricing increases? Or for the time being, this is it?
spk04: No. Excuse me, Steve, but right now when we see our results, okay, of uh q1 we see the result on the first month of q2 okay we are not talking about uh about the adjusting pricing okay from our several decisions and scare it would be a little bit different okay but uh us okay we want a fair price okay to the consumer to the dealers and to the manufacturer us everybody okay at this point you have to have the products and our dealer has to make money, okay? So right now, okay, when I see the number that we took out, okay, I think we have done what we have to done. And don't forget that sometimes they buy in advance, okay? And many other manufacturers will say, oh, your price is no more good. No, us, okay, you have a price and we stick with our price, okay? So I see some even, okay, at the end of Q2 and Q3, we will see some elevators that will be done and shipped. After that, it's just the new price. It takes some time, but what is important, we are satisfied where we are right now in terms of percentage. Can you add something, Steve?
spk03: Thanks. I was just going to echo Sebastian's earlier comment about, and you touched on this too, Marcel, is that You know, we do have different divisions, different business units across different markets. So, you know, yes, some of the price increases and some of those businesses will be done, are done, and we haven't seen the full impact of those, and we will throughout Q2 and the rest of the year. But some of the other divisions we're continuing to evaluate. Yeah, I just wanted to add that.
spk08: Okay, yeah.
spk03: Okay.
spk11: And then my next question, just going back to the Mexican, it sounds like it's more of a sourcing of products similar to China as opposed to just a pure assembly plant. And I'm just wondering if you look at the competitive landscape, thinking more, obviously you've acquired Handicare and Arjo is still out there. And I'm just thinking when it comes to lead times, you guys are obviously strengthening your position there. within the North American market. Can you just speak to what you're seeing out of Arjo and their abilities when it comes to lead times? Are they also getting better or do you think that their infrastructure doesn't support what you've done? And then maybe, Steve, any color on what sort of margin benefit you guys anticipate out of that Mexican facility when you capture lead times, workforce, lower cost base, reduced shipping costs. If we look at 2023, what sort of margin lift can we think about from the Mexican plan?
spk04: Christian, you'll begin.
spk01: Okay, so I think for sure the impact on the margins, Nick, I think it's too soon to comment on it. I think first we have to finish a year to set all our self-curriculum there, but definitely we're doing it for a reason, which is to have some cost benefit, and the most important, to be able to attract some talent and to be able to deliver on this one billion capacity that we need to have. And I think in terms of lead time, Savaria has always been good at lead time across the different brands. If we look at the lead time at Span, it's just extremely quick. And again, massive project on ceiling lift, very often it's the planning, but if we need a quick turnaround, we are usually good. Elevators, yes, right now it's a bit longer, but again, the customer, they know it, they have time to plan it when they make renovation on new housing, and stair lift, okay, that's why we buttoned the care. They are the best at lead time, and right now, with the development we have brought back in Toronto for manufacturing, by the end of Q2, we should have probably the best lead time in the industry. So I think lead time is still a key for us. I think the Mexican is more to Rebalance our supply chain to lower inventory over time, what we have on water with China. That's a bit, that's my answer, Nick. Maybe Marcel, you want to add something?
spk04: Oh, Steve. You want to add something?
spk03: Oh, I mean, Sebastian touched on our margin expectations. It is a little bit early to sort of give guidance on that. Yes, we will save shipping costs, clearly, but there's also another savings, and that's on working capital. So bringing bringing some of this production closer to our largest market of being North America, you know, we will be able to save working capital investment dollars and be able to allocate that elsewhere.
spk04: Okay. Yeah, that's good there. Very good. And just one second, just to give you an example, okay, what we are doing in Toronto, okay. So we manufactured the flicker, okay. And what is very important, okay, in July, okay, we will be able to deliver this product in one week times. The best in the industry. And so we work with this association that this purchasing we have made with Endcare help us that partnership that we take. We believe that we can be the best in North America. So come in Toronto and see our manufacturing that we see in Toronto. You will be amazed, okay, when you say, I don't know what is your residence in Toronto, but you can see, okay, that we are more robotic than before, okay, and what we want to do to the dealer and to customer, deliver a project as soon as possible when you make the order, and we are gaining on that, okay? We are gaining a lot, okay? And so thanks for my people, okay, to work on that. So we'll And thanks. Could you continue to follow us after how many years?
spk11: Oh, I think it's been about eight years, give or take. I see.
spk04: Yeah. Okay.
spk11: Just one last question on the Ultron acquisition. Obviously, you're acquiring one of your controller manufacturer, and controllers are obviously a key component across your entire product set. similar question to to mexico what sort of margin benefit do you think you can get given the fact that these controllers are are everywhere in your products okay you are you want to answer that i can but uh answer that you take care of that nick for this year for sure when we give our guidance we knew we were losing this acquisition so i don't think there's a change for this year but it was more than just pricing it was more
spk01: to make sure we have the parts, we control our supply chain to be vertical integrated. And after that, to make sure that right now we have different brands, different type of electronics for similar products. So over time, we want to streamline our PCB to make sure we have more, the latest technology in our elevator, like a Bluetooth, Wi-Fi, name it. Okay, it's important for us. We need to be ahead of the competition. So by designing our things in-house, we should be able to have the best product in terms of electronics in our market. different products.
spk08: Okay, great. Thank you. I'll pass it on.
spk07: Thank you.
spk05: As a reminder, to ask a question, please press star one. We will now take our next question from Derek Lezard from TD Securities. Please go ahead. Yeah, good morning, everybody.
spk04: Bonjour, ça va? Ça va très bien.
spk08: And very happy that you're on the call again. Okay, direct.
spk02: Curious if any of that was being driven by customers looking to lock in prices ahead of any price increases that were coming up.
spk04: I missed the beginning of your sentence. I don't know. It's not just me. Okay. Or Sebastian, do we hear all the questions?
spk01: No, we have missed the beginning. Director, do you mind to start over the questions?
spk02: Yeah, sure. I was just, I was curious of any of the strong organic growth that you experienced. Was that, was that being driven by customers looking to lock in prices, you know, sort of ahead of any price increases that you were putting through?
spk04: That's a very good question. Okay. I am sure. Okay. A little, at least maybe 20%. Okay. It's for that. Okay. But that is the reality, okay? Our booking is very, but there are little parties for that. They want to reserve their price, okay? And we want to be, we check the game, okay? They don't order to order. We need a name of the customer. We need some information. Okay, that is a fake order. We check the game.
spk02: Okay, I mean, and that's fair. What I found as well in the MD&A is that you did single out in the accessibility division synergies with Handicare as one of the drivers of the organic growth. Maybe if you can just talk about what you're seeing on that side in terms of synergies. Okay, Sébastien.
spk01: Yeah, so I think if you remember, Derek, at the beginning a year ago, we said that we'll have 12 million of synergies, by the end of this year. I think we're on track with that. This is moving correctly. And some of the key projects that we added was to close the Sweden Stock Office. This has been done. After that, if you talk about bringing back the manufacturing of free curve in North America, that has been done. It was to start with the distribution of a straight story from one location, in Greenville now, and to merge the team. Right now, if we want to order a straight to a lift in North America by the team of Indicare and CERA, they have merged together, they work together. So I think a lot of those initiatives are on the way, but again, there's some that is still on the agenda for this year. So I would say that I am quite happy with the progress we're having. And right now that the travel has eased a bit, definitely our teams are mixing together. We are coming here. And a good example of a small project, like last month, I had four people from Indicare here. to work with us, okay, how can we revamp one of our assembly line here in Toronto where we are super busy, get some idea from the inside of the company. Again, the team of Pete have done a good job, okay, to come and re-challenge the way we do elevator for the last 20 years. So I think that's just an example of synergy that we are always working on something.
spk02: Okay, and maybe a few more for me in terms of the Mexican initiative. Just maybe if you can comment on what you're seeing in terms of labor availability and maybe the workforce quality in Mexico.
spk01: So I think, yeah, definitely, I think in terms of labor pricing so far, we did our due diligence, and it seemed that Mexico is a little bit more attractive than China versus the labor cost per hour. So I guess that's the good news. The labor ability seems to be there. And I think the chance is when you start from scratch, okay, you can decide to hire the person that you want. So we are going to start definitely with a good staff that has good technical knowledge in the office and that can speak in English and English and Spanish so definitely. And I think that people will be happy to work for a foreign company right now. If you look at the company we're setting up over there, it will be like a dream factory. We'll have a good showroom to show you exactly what we do, that they understand exactly. So we're expecting to be a world-class manufacturer over there.
spk02: Okay. And maybe just one final one for me. I'm curious if you have any visibility or if you're seeing any relief right now, maybe on the freight side or shipping side of the supply chain.
spk01: Yeah, the freight, for sure, it's not like last summer. Last summer was more like $25,000 a container. Right now, in the first quarter, we saw some $18,000 to $20,000 per container. So I think it It is similar to Q4, but it's not the same as it was last summer, so it's a bit better. It still takes a lot of time to come on the ocean, but in terms of pricing, it's a bit better than it was last summer.
spk04: Okay. Sebastian, I have a question, okay? Just to answer where we are going, okay, with the manufacturing, the pre-curve, okay? Now we have the curve is coming, okay, from Europe, okay? But in August, we will have the equipment, okay, here, and we will say... how much per month of shipping that would be right now?
spk01: Yeah, just to specify, so yes, we are manufacturing some pre-covering in Toronto, but still we have a few parts that are still coming from Europe, so we're expecting that from this summer we should be able to save $200,000 per month. So that's an example of synergies which is going to help us for the second half of the year.
spk08: Awesome. Thanks for that. That's good, Carl. Thank you.
spk05: As there are no further questions at this time, I'd like to turn the call back to your speakers for any additional or closing remarks.
spk04: Okay, thank you very much, Cecilia. Thanks for the people, okay, that listened to us this morning. We are very enthusiastic, and you will see that we will try very, very hard, okay, and we will succeed, okay, to meet our guidelines. That's why this is important. So thank you for my team, and see you at the next quarter. Thank you.
spk05: Thank you. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.
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