Savaria Corporation

Rasa, you may begin your conference.

Thanks, Norma, and good morning, everyone. So today, I will start with a small recap of our first quarter results. Steve will update us with our financial section, and JP will update you on the progress of the summer one, and we're going to have a small Q&A session at the end. So fortunately, overall, revenue growth in Q1 was below expectation. First, we lost some sales with a diverse share of our bank conversion in Canada. has a small decline of 3.4%, but we will see later that they had a positive, okay, a bit of improvement, so good job on that. And we are going against a weak second quarter of 2023, so we're expecting to have some growth in the second quarter to bring us back to the normal point. Patient care had a flat first quarter, but we are again a strong first half of the year in 2023 with a weaker second half. So we're expecting some growth for this year. It's part of Savara One. And remember, in the last two years, we have increased our size by 30% in that segment. Positively, in North America, we saw growth of 11% in the first quarter. We have deployed our dealer partner program, Name Access Plus. In North America, the reception was very good, and we had the best quarter ever in terms of booking for Garaventa and Savara in North America. So quite positive. So, ups and downs in the first quarter, but in the long term, we are still very confident in our ability to go to business, the $1 billion by 2025, with the aging population, a unique value proposition for the one-stop shop, and the wide range of products that we have, with the expansion in R&D with new products and bringing some new existing products in Europe. I think we have all the tools in our hands to succeed. Overall, Cervera has remained a very attractive business for a dealer, with an all-different market, a one-stop shop, a wide range of products. We have a global footprint and a vertical integrated supply chain. We continue to expand our build-out in Mexico. Now we have 75 employees, which will be there to support the next generation of manufacturing, improve our costs, bring some resilience to our supply chain. That puts us in a good position. Our operation continues to improve in all our factories in terms of safety, quality, and throughput, so quite positive. And that brings us a bit to the next section, which is the EBITDA improvement by 2% in the first quarter, to 16.6% in historically our weakest quarter of the year, and that shows some very positive signs of operation excellence that we are developing for several programs. Improvement of 2% in Europe, going from 10 to 12, with lower size. So that shows some sign of improvement with the severe one. And this team is working very hard on this, and GP is going to explain it in his section later. North America accessibility, improvement of 2%, going from 17.5 to 19.8, due to higher output in Brinton, Surrey, and good performance in a direct store. So very happy with that. Patient care went down to 18.5. I think it's mainly due to the product mix and lower size, but not very far from our target of 20%. As discussed in our last investor day, our target by 2025 is to be a company of approximately 1 billion size at 20% of EBITDA, and it will be possible with our SAVAR-1 program. Our results in Q1 show that we are moving in the right direction. SAVAR is also very well positioned with its balance sheet. but we continue to do some small token acquisition to reinforce our product portfolio to continue to improve the margins. In the first quarter, yes, we divest our bank conversion in Canada, but we have replaced some portion of the sales with Meta, Dumbweller. That's going to start from April, and that's a very good example, small token to bring some new products to continue to be the first choice for a dealer and be able to integrate that in our supply chain to bring some synergies. Very important, we had a good quarter in term of cash generation, which Steve would talk about it into details, but I want to highlight that we have generated cash from operation while we're going to business, and this is where we want to be. Finally, I would like to thank all our employee, our dealers, our supplier, and our customer for the success in the first quarter. And as I travel all the work to visit different sites, I'm very always impressed just a good idea from employees. and I thank them for all their participation in this successful company. I thank our employees. I appreciate the effort that we're getting and some direction on where to go. Their participation is good, and we saw that in our last engagement survey in the company. So in closing, keep in mind that Q1 tends to be the slowest quarter of the year. While we have a revenue growth challenge, we are quite pleased with the profitability and improvement in our margins.

Thank you, Sebastian, and good morning to everyone on the call. I'm excited to share some remarks regarding our Q1 2024 results. So starting off, some key highlights for the quarter include strong EBITDA margin improvement driven from gross margin improvement, North American accessibility revenue growth of 11%, and strong cash generation from operations, including from working capital in our seasonally weakest quarter. Over the quarter, we generated revenue of $209.4 million, a decrease of $2.2 million, or 1% versus last year. The decrease mainly came from the divestitures of Van Action, Freedom Motors, and the Norway operations, partially offset by organic growth of 2.6%. We also experienced positive foreign exchange fluctuations. I'm pleased to report that the corporation delivered improved gross margins not only over Q1 of 2023, but also higher than any quarter in all of 2023. We delivered record gross profit and gross margin of 75.4 million and 36% compared to 72 million and 34% in Q1 2023. The increase in gross profit of 3.4 million is explained by better gross margins in both of our segments due to favorable product mix, improved pricing, and favorable cost of material as well. Severia I continues to be the major driving force toward our targets. We incurred $5.3 million for strategic initiative expenses in a quarter in line with previously stated expectations. Adjusted EBITDA and adjusted EBITDA margins finished at 34.7 million and 16.6% compared to 31.2 million and 14.7% last year. The increased profitability is mainly explained by the increased gross margins as a result from the effective realization of our ongoing SEVERIA 1 initiatives. And JP is going to speak to this shortly in more detail. Now looking at our segmented results, revenue from the accessibility segment was $160.4 million, a decrease of $2.4 million or 1.5% compared to last year. The decrease was mainly related to the divestitures. In addition to the execution of some of our pricing initiatives and pricing optimization, we saw strong demand in both residential and commercial sectors, partially reflected in the organic growth of 3.3%. Adjusted EBITDA and adjusted EBITDA margin for accessibility stood at 27.6 million and 17.2% compared to 24 million and 14.8% last year. The increased profitability was mainly due to improved gross margins coming from favorable product mix, improved pricing, and favorable cost of materials for both regions in line with our cost efficiency focus. The accessibility backlog remains strong and grew slightly versus where we ended the year. We considered our backlog level to be healthy as we have a good mix between short lead time products such as stair lifts, which will ship out quickly, and longer term home and commercial lifts, which we'll be shipping out within a few months or longer. To provide some further colour on our regions, revenue from our North America accessibility region increased 11% over last year. The adjusted EBITDA margin rose to 19.7%, an improvement of approximately 200 basis points versus a year ago. Revenue from our Europe accessibility region declined 3.4%. The backlog remained stable. Adjusted EBITDA margin improved here to 12.7%, also an increase of approximately 200 basis points over last year. Switching gears to discuss our patient care segment, we saw revenues for this segment reach $49 million for the quarter, an increase of $0.2 million, or 0.4% compared to last year. We experienced healthy traction inside the United States, which led to increased revenues, while we saw a decrease in Canada explained by certain large construction projects delivered in Q1 2023, not repeating this year, as well as reduced government spending. As a reminder to everyone on the call, our patient care business is driven in large part by project-based sales, which can be lumpy from time to time. And throughout the quarter, the patient care backlog remains stable. Adjusted EBITDA and adjusted EBITDA margin for patient care stood at $9.1 million and 18.5% compared to $9.8 million and 20.1% last year. The decrease in both metrics was mainly due to an unfavorable product mix on certain projects versus last year and higher selling expenses, partially offset by pricing initiatives and pricing optimization. We have communicated on previous calls that Q1 and Q2 of 2023 were exceptionally strong and likely not to repeat in the short term. Our EBITDA margin of 18.5% this quarter is higher than what we saw in the previous two quarters, being Q3 and Q4 of 2023, and is a very good start in our progress towards our target of 20% EBITDA margins. On a consolidated basis, net finance costs were $3.1 million compared to $7 million last year. Interest on long-term debt decreased by $1 million, primarily due to the reduced balance of debt. and we also experienced unrealized movements on financial instruments. Net earnings was $11 million or $0.16 per diluted share for the quarter compared to $6 million or $0.09 per diluted share last year. The increase in net earnings and net earnings per share was mainly due to the higher adjusted EBITDA and lower net finance costs partially offset by higher net income tax expense and strategic initiative expenses. The higher net income tax expense resulted from the bottom line increase, the increased profitability, but does represent a slight decrease in our effective tax rate from 24.8% for all of 2023 to 24.3% for the current quarter. Turning now to capital resources and liquidity in more detail, for the quarter cash flows related to operating activities before net changes in non-cash operating items reached $23.8 million compared to $18.1 million last year, explained by higher EBITDA generated by the business. The net changes in non-cash operating items increased liquidity by $2.7 million compared to a decrease last year of $2.1 million. The increase was mainly due to decreased accounts receivable and increased payables offset by slightly higher inventories. As a result, tasks generated from operating activities in Q1 stood at $26.5 million compared to $16 million last year, a very large increase of over $10.5 million. Our DPO and DIO measures improved versus last year end, while DSO remains stable. In line with our efforts to optimize our supply chain and working capital levels across the business, we continue to focus on improving working capital as we grow the company. Cash flows used in investing activities was $2.4 million for the quarter compared to $7.7 million last year. We dispersed $3.8 million for fixed and intangible assets compared to $4.5 million in Q1 2023. Since some investments were delayed to future quarters, we are expecting capital expenditures to stay in our historical range of 2% to 2.5% of revenues for the entire year. We also did receive $6.4 million from the divestments this quarter versus $12.4 million last year. Cash used in financing activities was $29.6 million for Q1 compared to $6.3 million last year. The variation is primarily explained by a reimbursement of the revolving credit facility of $13.5 million following the inflows coming from operations and the divestments. compared to a draw of $8.5 million last year. Looking at net debt, as of March 31st, our net debt position was $271.1 million, and the ratio of net debt to adjusted EBITDA stood at 2.03 in comparison to 2.07 at the end of 2023. Looking forward with regards to the guidance for the future, As previously stated, Saveria is not providing guidance for fiscal 2024 as we focus on the achievement of our targets of approximately $1 billion in revenue and approximately 20% adjusted EBITDA margin by 2025. The global team is focusing on delivering these 2025 objectives, and it remains difficult to pinpoint exactly where we're going to finish 2024 in the quarters therein. Various future prospects are promising, driven by strong market demand, the progress of Savaria 1, and potential token acquisition opportunities that will enhance our market position. And with that, this completes my prepared remarks, and I'm going to turn the call over to JP to provide further details on how we're progressing with Savaria 1.