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spk00: Good morning, good afternoon and good evening. My name is Razia and I will be your conference operator today. At this time, I would like to welcome everyone to Savarius Corporation's Q2 2023 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. To ask a question during the session, you need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, you can please press star one and one again. This call may contain forward-looking statements which are subject to the disclosure statement contained in Savaria's most recent press release issued on the 9th of August, 2023, with respect to its second quarter 2023 results. Thank you. Mr. Bourassa, you may begin your conference.
spk07: thank you very much again and nice uh to hear you my my dear friend okay and first i i begin to to say that thank you to you to write on savannah i read the what you say and i'm sure a lot of thing was done for the computer and the changing of our But that's a fact and that's a time of the past right now we don't debate. What's the very one thing of the 21 years that I made the call, except I missed one time the last month, two months. But we say the truth. What we see or hear from Savaria is the truth. And to continue like that is an effect. I have a couple of years to see and it will be always my people know that. After that, we have a forecast that we say for 23, nothing changed. We skipped the forecast and the only thing, we will work harder and maybe harder and harder. So the first thing that I want to mention about that, and what is important, the consultant that we are, and I signed myself, that's for a period of 24 months, two years. That's quite impressive to sign with a consultant for two years. And they will review all our operations. And our operation is coming from the sales. We have to begin with the sales. The sales can be better. Better price may be. Change of strategies. Our strategy to increase price. So we are going to university right now. And I am very happy. I meet them again. They make a very good job. They are People, okay, they are simple people and they just want to help us. For sure they want to help them, for sure to collect some cash flow, but they want us to succeed. And what is important for me when I listen to them, okay, they are not speaking about Savaria, okay, it's my people at Savaria, okay, who, excuse my English, is not improving too much, as you can see, over 21 years. But yeah, so what's very important is that exactly, that's my people, our people who, we don't change our people, we want maybe to train them. So that's very important. And you know, for sure we make some projection ourselves. And it's never in the scope of what we can see or can't see. It's 21 years that it's always touching. And I don't want something that's confidential. In a way, I've got a car and I speak up in the things confidential. Because it's not just my broker, but the street will know exactly. We think, with our consultant, they will review all our activity, the phase of our revenue, after that our expense, our purchasing, everything, and at every site. And they were in Mexico, they were in Europe. It's, I think, incredible that we can do that. But we have a big goal in 21, not in 21, but in 25. We want to reach 1 billion of sales. And we want to offer a very good EBITDA with that. So we need some help. We can see transformation for the language. My language is not very strong in English, but very good in French, too. But after that, we will see. In 2023, nothing really important will come back from this study. But in 2024 and 2025, I project, everybody knows that, I project an increase of our individual by 25% each year. So you are better in math than me. So you have the growth on several years themselves. And after that, with the study. So you do the math, okay? And I am very optimistic, okay, that we will reach this number, okay? But again, okay, that will be all, find my P&L, okay? All the situation, okay, we will study that, okay? When we study, okay, do we have too many factors, okay? Everything will be discussed, okay? Or we will have to find a... new supplier okay they will have positive find a new supplier okay to add that's always a we took for the price but always the same quality quality first okay at that after that we we listen okay what we can uh improve in terms of price so that's my uh my introduction okay and um Maybe I make some guidance, but anyway. So you have the truth, and you will see that that's a new scenario coming. And now for the finance, I pass to Steve Spurgeon.
spk08: Thanks, Marcel, and thanks for outlining and sharing a bit more details about Severia One. It's a project that we're all excited about internally. So thanks for that, and good morning, everyone on the call. I'm going to begin with some remarks regarding our Q2 2023 consolidated financial metrics. For the quarter, the corporation generated revenue of $198.4 million, up $6.3 million, or 3.3%, compared to Q2 2022. The increase was driven by organic growth of 3.4%, originating from both segments. In addition, the corporation experienced foreign exchange tailwinds of 3.8% and a decrease of 3.9% due to the divestiture of the vehicle division in Norway in the quarter, combining for 3.3% growth overall. Our revenues fell short of expectations for the quarter due to a disruption in production and delivery in Europe caused by the implementation of a new ERP at our key manufacturing sites in the UK in April. We are, however, pleased to report that the implementation challenges have been sorted out, with June being a record month for the organization. Gross profit and gross margin stood at 67.1 million and 33.8% respectively, compared to 65.6 million and 34.1% in Q2 2022. The increase in gross profit of 1.5 million was mainly attributable to higher revenues and to a lesser extent favorable foreign exchange rates used in the conversion of the results of subsidiaries. The decrease in gross margin versus last year was mainly attributable to the previously mentioned system implementation and by year over year inflationary impacts in Europe partially offset by greater profitability coming from the patient care segment and North American entities in the accessibility segment due to better cost absorption, favorable product mix, and improved pricing. Adjusted EBITDA and adjusted EBITDA margin finished at 29 million and 14.6% respectively, compared to 31.5 million at 16.4% in Q2 2022. The reduced profitability is mainly explained by the aforementioned decrease in gross margin and the higher selling expenses as a percentage of revenue. Before I move on to the segment results, it is worth noting that effective April 1st, 2023, the corporation consolidated its reporting structure and combined the remaining operations of the adapted vehicle segment with the accessibility segment. Starting with Q2, the business is now structured into two reportable segments, accessibility and patient care, according to their respective addressable markets. Accordingly, some information from previous periods was restated. Revenue from our accessibility segment was $150.6 million in Q2 2023, an increase of $2.4 billion, or 1.6%, compared to the same period in 2022. The increase in revenue was related to organic growth of 2.8%, driven by continued strong demand in both the residential and commercial sectors in North America, and price increases and cross-selling synergies with Handicare. was also driven by positive foreign exchange impact of 3.9%, mainly coming from the U.S. dollar, euro, and GDP currencies. This was partially offset by the divestiture of the Norway business, as well as the decreased production of delivery of stairlift products in Europe during April and May due to the implementation of a new ERP, as mentioned. For reference, in Q2 2022, the Norwegian Vehicle Division contributed $7.5 million of revenue. Adjusted EBITDA and adjusted EBITDA margins stood at 21.4 million and 14.2% respectively, compared to 26.5 million and 17.9% for the same period in 2022. The decrease in adjusted EBITDA and adjusted EBITDA margin was mainly due to the system implementation in Europe causing production and delivery issues, year-over-year inflationary impacts resulting in higher material and labor costs, and to a lesser extent, the divestiture of the Norway operations partially offset by better cost absorption from greater revenues in North America. Again, for reference in Q2 2022, the Norwegian Vehicle Division contributed $0.8 million of adjusted EBITDA. Revenue from our patient care segment. was $47.8 million for the quarter, an increase of $3.9 million or 8.9% when compared to Q2 2022. Revenue growth includes organic growth of 5.3%, which was driven in large part by new contracts signed with healthcare facilities, cross-selling synergies with Handicare and pricing initiatives. For the quarter, foreign currency provided a 3.6% tailwind for this segment. Adjusted EBITDA and adjusted EBITDA margins stood at 9.3 million and 19.4% respectively, compared to 6.7 million and 15.3% for the same period in 2022. The large increase in both metrics was primarily due to the increase in revenues and improvements in gross margin mainly explained by better cost absorption, product mix, pricing initiatives, and synergies with Handicare. For the quarter, net finance costs were 4.5 million compared to 6.4 million in Q2 2022. Interest on long-term debt increased by 2.6 million when compared to last year to the higher market interest rates. Net finance costs were also impacted by a net foreign currency gain of 1.7 million in the quarter compared to a net loss of 2.5 million in 2022, most of which was unrealized in nature. Net earnings were 8.8 million or 14 cents per diluted share for the quarter compared to 8.1 million or 13 cents per diluted share in Q2 2022. Adjusted net earnings was again 8.8 million or 14 cents per diluted share compared to 8.9 million or 14 cents per diluted share in Q2 2022. This reflects a relatively flat performance on a year-over-year basis. Turning now to capital resources and liquidity. For the quarter, cash flows related to operating activities before net changes and non-cash operating items reached $17.7 million versus $29.3 million in the same period in 2022. The decrease mainly reflects the lower EBITDA of the corporation and higher income tax paid related to deferrals from 2022. Net changes in non-cash operating items reduced liquidity by $17.5 million compared to $14.7 million a year earlier, mainly increased by working capital in Europe. Mainly impacted by increased working capital in Europe, excuse me. As a result, cash generated from operating activities in Q2 2023 stood at $0.2 million compared to $14.7 million in the same period in 2022. Cash used in investing activities was $4.5 million for Q2 2023 compared to $4.9 million in Q2 2022. The corporation disbursed $4.6 million for fixed intangible assets in 2023 compared to $4.9 million in Q2 2022. Cash used in financing activities was $15 million for Q2 2023 compared to $9.3 million in the same quarter last year. Variation is mainly explained by a drawing of $0.8 million on the credit facility compared to $3.8 million a year earlier and higher interest paid of $2.7 million in Q2 2023 versus the prior year. As of June 30, 2023, Severi had a net debt position of $372.9 million and was in compliance with all of its covenants. On a trailing 12-month adjusted EBITDA basis, Saveria's net debt to adjusted EBITDA ratio was approximately 2.99 times. This represents approximately a 0.08 improvement versus Q4 2022 and an increase of 0.16 versus Q1 2023. Saveria has funds available of $119.5 million to support working capital investments and growth opportunities. Looking forward, for 2023, Saveria continues to expect to generate revenue which will be approximately 8% to 10% higher than 2022 when normalizing for the divestiture of the Norwegian auto division with adjusted EBITDA margins of approximately 16%. In addition, for 2023, we are targeting a reduction in our leverage ratio of 0.5 turns. This outlook is based primarily on continued strong organic growth coming from both the accessibility and patient care segments, supported by high backlog levels, cross-selling initiatives and strong demand, and continued successful integration of Handicare and progress towards achieving the next strategic phase of synergies in line with the management's plan. And with that, this completes my prepared remarks, and I'm going to turn the call over to you, Sebastian.
spk06: Thank you, Steve. So maybe for the last time, for me, again, this ERP change has been very disruptive in the second quarter. But I need to say one thing. There has been some very good teamwork between the team in the UK, the team in Toronto, and the people on the shop floor as well. Very, very hard. So thank you very much for everybody. And again, we have turned the page. It's finished. We have a good June. And the future is looking good. We don't talk about the ERP anymore, but again, we have learned a lot, and it has been a very good teamwork, at least on the recovery. So thank you, everybody. North America, I think the main factory in Vancouver and Toronto for the accessibility, I think we have relatively good output. So I think thank you for everybody. And what's important is we remain to have a very healthy backlog. So I think the future is still looking very promising for those two factories in North America. And also the SAVAR-1 project is going to help us to be better, because it's important to improve. We are good, but we want to be better, so that we see some good progression in terms of that. And Mexico, I think we're at two-thirds of an impact. Right now we have 50 employees in Mexico. Again, no game changer for this year, but we're doing our capacity for the 2025. You will see that Mexico will have an important impact. And last thing for me, I would say the supply chain is relatively stable for us. I think we don't talk about supply chain also. So on that, maybe Nicola, patient care?
spk02: Yeah, thanks, Sebastian. Our patient care segment delivered another terrific quarter in Q2 with an EBITDA margin above 19%. It's a nice follow-up to the record Q1 and the continuation of a positive trend. Our order intake and sales activity remain strong as evidenced by the 5.3% organic growth in the quarter, which is rather impressive given the 20% plus organic growth experienced in Q2 of last year. Although most product categories are performing well, we're seeing a strength within ceiling lifts and surfaces where we've been particularly successful bidding on new contracts. In terms of end markets, we've seen continued spend within hospital networks and at the VA, which is a big driver of our U.S. business and an area of significant focus for us. Deal activity within our larger corporate accounts and with strategic partners is also driving higher sales. However, despite a good performance in the quarter and for the first half of the year, there are still certain industry challenges that we continue to navigate, including funding for new build projects, staffing shortages, namely with respect to nurses, and stubbornly low census levels within U.S. long-term care. That said, overall, our backlog is in good shape, and as we unlock further revenue synergies between SPAN and Handicare, we should continue to see a strong top-line performance. From a margin perspective, and similar to comments made in Q1, the higher sales volume allowed for a better fixed cost absorption which contributed to the sustained EBITDA margin in the 19% to 20% range. The pricing initiatives that were put in place last year are also continuing to have a meaningful impact on profitability. And finally, our patient care team, much like the rest of the Severia group, is highly energized by our Severia One project. We're doing a deep dive across the entire organization, from procurement and production initiatives to commercial strategies that will help us achieve the full potential from truly integrating our businesses within the patient care segment. So, as you might imagine, there's quite a bit of enthusiasm within the team. And with that, I'll turn the call back over to you, Marcel.
spk07: Thank you very much, gentlemen. Okay. So, as you can begin the call from our investor. We're ready.
spk00: Thank you. As a reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To wait for your question, please press star 1 and 1 again. Once again, please press star one and one if you have any questions or comment. We are now going to proceed with our first question. And the questions come from the line of Derek Lissette from TD Cowan. Please ask your question.
spk03: Yeah, good morning, everybody. Hope you're well. I don't want to add salt to the wound because it sounds like the wound is closed, but definitely a rare execution miss for you guys. Maybe could you just talk about or add some detail or color on what went wrong and sort of the steps that you took to rectify the issues. And then maybe, again, like how confident are you that it's now in the past? So any help or color on, you know, what June or July volumes have been would be helpful.
spk06: Thank you, Derek. ERP change is always difficult. We're not the first company to have some difficulty to make some change. For sure, there was maybe a place, a department who had been a bit more difficult in the implementation, and this time was operations, so I guess I have a certain responsibility for some of that. Again, we went from our old system, a bit more, if I make an example with paper, a new system, Everything is scanning, ERP, click, click, click. But when you have to make some transaction, if maybe a bit of material is not correct or the inventory allocation, then you can close your order. Again, we do study it. All the jobs are custom, so it's a lot of different options. So it's not that easy, but we make a good preparation. But we do a very good output each day in England. And basically, it was a lot of different bill of material bomb and complexity for the people. So, again, we went back to when we went live. We had some help from a consultant, from people in the Netherlands, Toronto, to include a system to train the people to fix the bug. And it took a bit more time than expected. But the good news is since June, we are back to normal.
spk03: Okay, that's helpful. And I guess the second one is still maintain your full year guide. And I think those, I mean, those sales are lost, if I'm not mistaken, but what's your thinking on how you can make it up in order to sort of still maintain that guide?
spk08: Good morning Derek, Steve here. We are still year-to-date even with the shortfall that we had in Q2 on the sales. We had a very strong Q1 and year-to-date we're still at our budget revenue mark. We are confident that we're going to hit our guidance, the revenue growth. I would say we're At this point, we have more confidence than on the EBITDA line, but we still feel that we can climb back and get to approximately 16% EBITDA margins. Our volumes that we're seeing in June – so June for us was a record quarter. We had the highest EBITDA month, although we haven't disclosed the amount. We had the highest EBITDA month that we had as an entire organization. We have good momentum. in the North American businesses, good momentum in patient care, as you can see in the results. As Sebastian and Marcel said, we have turned the page on the ERP implementation challenges and June production levels in the UK were at least as high as they were prior to the ERP change. For July moving forward, our expectation and what we're seeing is that the numbers are going to be even higher than what we had before. We can confidently say that that page has turned and we're moving forward, but we see strong margins in the rest of the business, and now with Europe getting back on track, that's how we're confident in maintaining our guidance.
spk03: Okay. Thanks for that, Stephen. And maybe one last one for me, and obviously it was probably lost in all the noise, and you mentioned it in some of your prepared remarks on the Savaria One initiative, just Could you maybe talk about what you're expecting to get out of it? I know you said you had a 24-month runway. Anything you can share with us that would be helpful for our models and forecasts?
spk06: Okay, I think I can start and maybe Marcel will complete. So basically, you know, we have done a lot of acquisitions in the last 5 to 10 years, and we realized today that, again, to be a $1 billion company, if you're always so decentralized by U.S. opportunities, We have some talent in many different places, so sometimes we do the best thing in the Netherlands, but we do different in Toronto and Vancouver, but we want to be a bit similar. Also, we want to re-challenge some of our existing processes, and with the help of some consultants, we can do even what we do right now in some of our locations, and we do better. So it's important for us to improve. This is why we have launched this initiative across all the different departments, factory, location, because we want to be better. One billion companies is a big change for South Africa. A few years ago, we were one of the million companies.
spk04: Thank you. Thanks, sir.
spk00: We are now going to proceed with our next question. And the questions come from the line of Michael Dumais from Scotiabank. Please ask a question.
spk01: Hey, good morning, guys. I wanted to follow up on a question from Derek. Just specifically, can you comment for July in Europe, how sales are trending? And also, I guess, bigger level question here, even if the ERP disruption settles out, how much more is there to do to get the European operations back or to the level of North American operations. I guess the question is, you know, does the ERP push off some of the other initiatives that you guys were considering in the region?
spk06: Thank you. No, I think, again, it's difficult to talk about July because that would be a bit forward-looking statement, but we are very happy with the way of June. We have finished very strong the month. For sure, it continues in July, but And after that, the ERP, it's a continuous improvement process. We're happy right now. We are back to at least the same level we were before. But for sure, we need to continue to do some improvements in the ERP to get some of the efficiency out. But at least it's not a concern anymore. We don't talk about it anymore. We have a good visibility. We are happy with it. And the SAVR-1, we have launched it a few weeks after. We did not launch that. when people were doing the recovery in the UK or with the ERP, but definitely now the team is working on several ones. So the ERP change is not a blockage to work on several ones on some new initiatives.
spk01: Perfect. And it sounds like there's confidence in the guidance being maintained despite the hiccup, I guess, in Q2. But just how to think about the EBITDA margins in Q3 and Q4? Just wondering if there are any lingering costs related to the ERP that could flow into Q3 and just how to think about the cadence of EBITDA. Should we skew a little bit more into Q4?
spk08: There's no costs from the ERP that are left to come. We're not going to see anything come back from that. We're done on the cost side and on the implementation side. As Sebastian said, there's maybe some fine-tuning and improvements to make, but we're happy with the production levels now. As far as Q3 and Q4 on the EBITDA side, what we're seeing in North America and in patient care is strong improvement in EBITDA margins because of the improved leverage of the cost base while we're increasing revenues. You can see it in the patient care margin. You can't see it so much in accessibility because we don't disclose North America separately from Europe, but really in the North American legacy business, including the Garaventa site in North America, we are seeing really good fixed cost absorption and improved margins. So as we see the revenue recover in Europe, we're going to see that fixed cost absorption come through and see improved margins. We're expecting that for Q3. and Q4, Michael.
spk04: Very helpful, Steve. Thanks a lot, guys.
spk00: We are now going to proceed with our next question. And the questions come from the line of Frederic Tremblay from Desjardins Capital Markets. Please ask your question.
spk04: Thank you. Good morning. On accessibility in Europe, thanks for the comments on production rates. I was wondering if you could comment on recent order flows in Europe. Specifically, I'm wondering if the dealers were more hesitant to order from the facility given the past production issues.
spk06: I can take this one. So, Monsieur Fred, we weren't a perfect call, but right now we are back to normal. So, again, our dealer, they are a partner with us for many, many years. So, yes, we have produced some sales in the second quarter because Early time wasn't accurate in one of our two factories. But I think right now we're back to normal. So our sales team is contacting the dealer. And again, we are happy with the order intake in the last few weeks. So I think I don't see that as a huge concern for the rest of the year. I think we are back to be a good company.
spk04: Okay. And on the ERP, maybe switching to the benefits of it going forward, can you shed a bit more color on the expected benefits from the ERP and just on a qualitative basis and if there's any way to quantify the benefits that you're expecting from that implementation moving forward.
spk06: For sure, Fred, this one is always a bit difficult because sometimes when the ERP becomes very old, you need to change it to make sure you can continue to be operational at a good level in the factory. I think this is it, but for sure we see some gains. a bit manual process. Now the ERP will have a better visibility, try to automate a bit of some process. So I think over time, definitely, we should see some improvement of efficiency. And again, in the UK, we are direct, okay, and we do manufacturing. So our current installers have a better visibility on their orders, on the full process, how can we be better with invoicing. So there's a lot of different steps that we are going to see some gain, but sometimes you need to see it more, change the ERP to make sure your business is going to be stable
spk04: Okay, and just on the margin difference that there seems to be between Accessibility North America and Accessibility Europe, excluding the ERP, is there any sort of actions that you can point to that would need to be implemented for Europe to catch up to the North American margins?
spk08: I mean, yeah. You will remember that we've been talking about inflation impacts over the last few quarters in Europe being stronger than the inflationary impacts in North America. We continue to see that. We saw that in Q2, we saw that in Q1, and we saw that last year as well. We are looking at different ways of combating this. Some of it is obviously on the price increase side. That's one of the easier levers to pull, but we're also looking at our vendors. We've talked a little bit about the Severia One project. Marcel talked a little bit about on the vendor side as well, but looking at where we can consolidate vendors and find savings that way as well. So we're not just looking to pass on increases as we get them. We're trying to find ways to reduce our input costs as well. Thank you.
spk00: We are now going to proceed with our next question. And the questions come from from National Bank Financial. Please answer your question.
spk09: Good morning, everyone. Thanks for taking my questions. I was hoping for a little bit more color around the patient care margins. Looking forward to the back half. anything changing that would prevent a repeat of the performance seen in the first half?
spk02: Hey, Zach. Well, again, I think after we had our Q1, we were cautiously optimistic going into Q2. Q2 delivered another strong margin performance. As we mentioned, myself and I think both Steve, a lot of that has to do with volume, right? So So, you know, it's a business that once you get above that 45 million mark, you know, in terms of revenue per quarter, there is quite a bit of leverage in that business and it falling, you know, those incremental dollars falling more and more to the EBITDA line. So going forward, it's just a question of maintaining, you know, strong sales growth. You know, our order intake, as I said, was looking good. Our backlog is in a good place. However, I do want to be cautious, right, that our expectation is from the beginning of the year was a 15%, 16% for patient care for 2023. So I don't want to deviate too much from there. So yes, we had a good start to the year, but I still would want to see a few more quarters, a continuation of this trend before I really kind of put the stake in there of this being a 19%, 20% business. So I would be still a bit more cautious over the next couple of quarters as we see this trend continue Again, there were some, and there still continue to be certain challenges from a market perspective that we're navigating through. It's not necessarily complete smooth sailing, but we've been pretty good so far. I'm not sure if that helps or not. Maybe being a bit more cautious there, I would say, going forward as well.
spk09: Gotcha. And maybe just digging a little bit deeper on that, your employees in the segment, do you think that they're stretched in terms of production capacity or they can maintain the current pace without having to add additional costs?
spk02: No, no, I think the team is doing quite well. Again, it's a continuation of this integration that we've experienced between, you know, the handicap and the sales, I guess the handicap and the span, especially on the commercial side. You know, the operations are going well. You know, we're We're better staffed in certain areas. I think there was, for example, in St. Louis, our sewing line is fully up and staffed, and that's been an area where we're lacking bodies. So I think from an ability perspective, we're there. From a capacity perspective, we're there. You know, it's just a question of continuing going out and winning contracts. You know, there are certain delays that have happened in some of the new build projects, so that's something that's kind of out of our control. You know, there is some lumpiness within the project business within Handicare, so there again, you know, we're trying to manage through that. But no, I would say with the current staffing levels and what we currently have, I think we're well prepared to deliver going forward. There's just some things, again, within the industry that we just have to be careful of. That's all.
spk09: That's helpful. Thanks. And then with adapted vehicles being folded into accessibility, should we take that as a statement that the remaining AV operations are core or are they still... on the bubble in terms of having to prove themselves or be divested.
spk08: Hey, Zach. It's Steve here. So I'll take this question. The vehicle business, I mean, it's still a piece of Severia. It's still an important business for us. Just because we're not reporting on it separately in our MD&A and financials, it doesn't mean that it's getting any less attention from us. We have a new leader in place that's for that business. It's been in place now for a couple quarters, maybe one or two quarters now. And I mean, we have a bit of a plan that we're trying to execute to see improved profitability there. So I would say this business is getting more attention over the last couple quarters than it has maybe in the last couple years. So actually, no, it's still very core for us. It's just it's not large enough to report on as a segment. The management structure reports in the same management structure. With Norway now gone, it's such a small piece revenue-wise of the overall pie that it didn't make sense to report separately. So, no, it's still core for a SEC.
spk09: Good color. Thanks. And just one last one on the opening remarks. The 25% EBITDA growth targeted through Severia 1, is that in each of 2024 and 2025 or 25% across both years in total?
spk07: No, no, no, no. It's 25, okay, each year. Plus, okay, what we do directly with the several years that we have right now. And you see the growth, okay, that we expect on that particular year will be around 80-10%. So the 25 is completely independent itself. So that's why it's important, you know? That's why I'm very enthusiastic about what we do since I signed the deal. And also at the beginning, it's just a question of the very deep knowledge of our projects, of our . But we will see some little things since the end for the end of the year, but mainly in 24 and 25.
spk09: I appreciate the clarification. Thanks.
spk04: I'll turn it over.
spk00: We are now going to take our next question. And the questions come from . Glenn from Raymond James. Please ask your question.
spk05: Hey, good morning. Can you remind us? or give an update about where things stand from a pricing and input cost perspective. Commodities are bouncing around a lot. Just looking for an update as to how things have progressed on both of those items.
spk06: Nicolas, can you take the question?
spk02: With respect to pricing? Again, we do have pricing initiatives that we've talked about in the past, again, trying to keep up with certain inflationary pressures when we do experience them. I would say overall, as Sebastian had mentioned earlier on the call, from a supply chain perspective, things are relatively stable and back to normal. There could be some issues possibly within freight over the next little while. We've seen some carriers experience some difficulties there, so that's something that we're monitoring regularly. to see whether freight is going to remain stable. For the moment, we haven't seen much of an impact, but it is something that we're monitoring going forward. As we've talked about Europe, it's also something that the pricing is a little bit more difficult environment. And at the same time, there have been some inflationary pressures that we've experienced. So I would say that's another area that we're still continuing to monitor. So not sure if that helps you in terms of the inputs, but no, I think things have been relatively stable in China, for example. That's also an area that you know, we haven't seen any new sort of inflationary pressures at all coming out of there. Um, so that's a big help. So no, I think we're, we're in a pretty, pretty good place.
spk08: And just, um, if I could just, just add a couple, a couple additional points, Nick, um, I mean, specifically within the North American business, our price increases went in earlier this year. Uh, we have done some other targeted increases, um, just in the summer right now actually. Our Garaventa business put a price increase in the last month. It's a continued strategy from what we saw last year. North America typically does it at the beginning of the year with the exception of Garaventa. They've done a couple of different price increases. We are monitoring our input costs and we haven't seen the increase in North America continue to what we saw in prior quarters. And we haven't seen it in North America to the extent that we've seen it in Europe. So Europe, excuse me, Europe, it's still, we are still seeing high inflationary impacts on our input costs. And, you know, we're revisiting our pricing strategy there and likely going to be targeting price increases. But those will probably come in not until Q1 2024.
spk05: Okay. And within accessibility within North America, Can you, in the MD&A, I think you're referencing organic and accessibility in North America was about 12%. I think that's the number in the MD&A. Can you break that down or provide some insight across some of the product categories? Is it meaningfully different across product categories?
spk08: Yeah, so it is about 12% or was about 12% in the quarter in North America and that That primarily has come from the legacy elevator and platform business. We are still seeing strong backlog in both commercial and residential sectors. I would say there is some opportunity for us to do a bit better on the stair lift side. So I would say more of that 12% comes from legacy platform and elevator lift products where our backlog remains strong. And we do see further opportunities more so on the stair lift side.
spk05: Okay, and then, you know, thinking about that, then, I mean, there had been concerns regarding how, you know, rising interest rates, softer housing market could potentially impact that residential elevator market. Are you seeing any evidence whatsoever that that's having an impact, negative impact?
spk06: I think, Zach, the answer to that, our backlog remains very healthy. So far, we did not see any slowdown in our incoming order in North America. Again, we are looking to decrease early times so it will be more aggressive on the market, but definitely our backlog is at a historic level, so no impact on our size so far.
spk05: Okay. Thanks for taking the question.
spk00: We have no further questions at this time. I will now hand back to Mr. Barraza for closing remarks.
spk07: So I just want to say thank you to all the people on the call this morning and thanks for my partner and to answer the question. I think it was a great talk. Thank you very much.
spk00: This concludes today's conference call. Thank you for participating. You may now disconnect your lines. Thank you.
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