Savaria Corporation

Good morning. My name is Scott, and I will be your conference operator today. At this time, I would like to welcome everyone to the Solveria Corporation's Q2 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 star and the number one on your telephone keypad. Who would like to withdraw your question, please press star then two. This call may contain forward-looking statements which are subject to your disclosure statement contained on Solveria's most recent press release issued on August 10th, 2022. With respect to the Q2 2022 results, thank you. Mr. Barasa, you may begin your conference.

Yeah, thank you very much. uh hi everybody uh that's a pleasure for me to be here this morning okay to to discuss okay our result of q2 our result of q2 is exceptional exceptional because we make this budget okay at the end of uh 21 okay the war we were not speaking about war okay everything was good but the war happened arrived okay uh stress in materials, cost of a lot of things, the container, on the labor side, some problem. So it's very exceptional that we can realize what we realize in Q2. And me, I will say, and Sébastien was telling me that, that Q2, we can refer that at the new minimum level. So I am very happy that we see that we can be better. And I am very happy to hear your question. And as usual, I will refer that to my knowledge, to the best person in our great group. So can we go for a question, please? No, no, no, no, no, no. Just a minute, just a minute. We missed one thing. We have to have Steve speak a little bit about the mathematics of the future.

Thanks, Marcel, and good morning, everyone. I'm going to begin with some remarks regarding Q2 2022 consolidated financial metrics. For the quarter, the corporation generated revenue of $192.1 million, up $13.4 million, or 7.5% compared to Q2 2021. The increase was driven by strong organic growth of 9.7% and was somewhat offset by foreign exchange headwinds of 2.2%, netting out to 7.5% growth overall. Gross profit and gross margin stood at 65.6 million and 34.1% compared to 59.9 million and 33.5% for Q2 2021. The increase in gross profit and gross margin was mainly attributable to customer price increases and better fixed cost absorption while still battling inflationary pressures and other supply chain constraints. Adjusted EBITDA and adjusted EBITDA margin stood at $31.5 million and 16.4% compared to $27.4 million and 15.3% in 2021. The increase in adjusted EBITDA dollars and adjusted EBITDA margin is due to improvements in gross margins previously mentioned and was somewhat offset by a decrease in SEWS funding received compared to last year. Now we'll move on to the segment results. Revenue from the accessibility segment was 136 million, an increase of 5.2 million, or 4%, compared to the same period of 2021. The increase in revenue was mainly attributable to organic growth of 6.8%, which was offset by 2.8% revenue decline due to foreign currency impacts. The weakening of the euro and pound overshadowed the strength in the US dollar versus the Canadian dollar. Our revenue growth was fueled by both the residential and commercial sectors, and we continue to build our backlog. June 30th, our accessibility backlog is approximately 11% higher than it was at the end of Q1 2022. Adjusted EBITDA and adjusted EBITDA margin for the accessibility segment, both before head office costs, stood at $25.9 million and 19.1%. compared to 23.4 million and 17.9% for the same period in 2021. The improvements in adjusted EBITDA and adjusted EBITDA margin are mainly due to improvements in gross margins driven by customer price increases and better fixed cost absorption. Revenue from our patient care segment was 43.9 million for the quarter, an increase of $7.8 million or 21.5% when compared to Q2 2021. Revenue growth included organic growth of 20.2%, which was driven in large part by pent-up demand from the last two years of the pandemic and increased access to long-term care facilities as well as customer price increases. Adjusted EBITDA and adjusted EBITDA margin, both before head office costs, where the patient care segment stood at $6.7 million and 15.3%, compared to $4.7 million and 12.9% for Q2 2021. A large increase in adjusted EBITDA margin was mainly due to improvements in gross margins, which were driven by fixed cost absorption and customer price increases. Revenue generated from the adapted vehicle segment was $12.2 million, an increase of 25 million or 4% when compared to Q2 2021. Revenue growth in the adapted vehicle segment was driven by a 10.1% organic growth and was partially offset by foreign currency impact of 6.1% due to the weakening of the Norwegian krona versus the Canadian dollar. The organic growth was driven by increased ambulance and vehicle adaptations as well as pent-up demand from last year which was delayed due to vehicle supply shortages. Adjusted EBITDA and adjusted EBITDA margin, both before head office costs for the adaptive vehicle segment, finished at 0.6 million and 5%, respectively compared to 1.3 million and 11.2% for Q2 2021. The decrease in both metrics was mainly due to a reduction in SEWS and inflationary pressures on the supply chain, as well as delays in