Savaria Corporation

Good morning. My name is Carmen, and I will be your conference operator today. At this time, I would like to welcome everyone to Savaria Corporation's third quarter 2025 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 participate, you will need to press star 1-1 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 11 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 November 5th, 2025, with respect to its third quarter 2025 results. Thank you, and I will turn the call back to Sebastian Bourassa. You may begin your conference.

Thanks, Carmen, and good morning, everyone. Today, I will start with a small recap of our Q3 results, then Steve will update us on financial, and GP will provide an update on Savaria One, followed by a Q&A session. First, I need to thank all the employees at Savaria for their contribution over the last two years. Without you, we would never have had the success that we had in the Savaria One program. Once again, I'm very proud of our Q3 results. As for the first time ever, we reached 21.2% of EBITDA. Some of the key highlights of the third quarter, best gross margins ever at 39.2%, which is a direct result of operational improvement, procurement, and pricing initiative, which GP would go a bit later more in details. Fantastic performance of the accessibility segment with 23.5% of EBITDA margins, which show a good contribution from North America and also from Europe, and I think it has been a big transformation in Europe in the last two years, so congratulations team. Patient care was lower at 18.3%, but better than the previous year. The backlog went high, and we're getting ready for basic Q4. We want two LEs in North America, one for Metat and one for Savaria, and also one in Europe for Endicare for the best accessibility supplier. So congratulations to the team. Growth has been decent in the third quarter for North America accessibility, but overall as a company, growth is below what we target. So what are we doing to address that? First, method product line and the Lumar through the floor. We continue to see a very high interest from our dealer, and we definitely see some organic growth in 2026 around those products. Many of our dealers are putting Lumar into their showroom because they believe in this and the opportunity. The team in North America has spent a lot of time this year to do some training and introduce the method line products to architects. It's always an investment, but it will pay off in the future. SAVAIR 1 Phase 2 planification is almost over, and we'll be ready, definitely ready in April 2026 to unveil this new five-year strategy, which will be very focused on the growth. In the last two years, we have been very disciplined and improved a lot the bottom line, and we believe with the same discipline, we'll be able to improve the trajectory of the growth as we operate in a very nice industry with the aging of the population, And also the density in the cities, it brings more tunnel development where elevator is definitely a nice investment. Also in the last year, we have increased a lot our R&D team. So we went from 50% to 62% so that we can continue to improve existing products, develop some new products that will remain the number one choice for our dealers. Also, our R&D process is better than ever. Early next year, we'll be changing our brand name in Europe to be Savaria. as we start to have more products similar to North America, and we become closer to the one-stop shop. We had a small management change in third quarter in Europe. After 20 years, Claire decided to leave the company. So thank you for your last 20 years. And JP has applied for the position since November and is now president of Europe, and will continue to assume the role of CTO, which is now more on the strategy for the future. We are excited about this change SGP is a fantastic team player and a leader that will continue to bring cyber culture in Europe. With one quarter to go, we kept our guidance unchanged for the revenue, as we always give annual guidance and not quarterly, and we believe that we have a chance to finish close to it. And we have data EBITDA to stay slightly above 20%. As for now, for the first nine months of the year, we are at 20.1. Our net debt EBITDA ratio continues to improve. It is now sitting at 1.19%, with $290 million available funds for investment in the future or acquisition M&A, so we'll be ready for the future. Also, at the end of the year, it is the end of the Survivor One program. So right away in 2026, it's an improvement of 17 cents per share for the full year. Last, again, I want to thank all the employees for their efforts over the last two years on the Survivor One program.

Steve? Thank you, Sebastian. Good morning to everyone on the call. I am really pleased to share with you today some remarks regarding our Q3 2025 consolidated financial metrics. So key highlights for the quarter include, first and foremost, achieving and surpassing our 20% adjusted EBITDA margin target for yet a second quarter in a row. Our Q3 margin of 21.2% is another high watermark for us, and our 2025 year-to-date margin is now at 20.1%. Secondly, gross margin increased year-over-year by 220 basis points to 39.2% in Q3, mainly through Severia 1. And lastly, strong free cash flow with operating cash flows up 16% this quarter compared to last year, contributing to our Q3 ending leverage ratio of 1.19. So now looking at consolidated revenues for the quarter, we generated revenue of $224.8 million an increase of 5.2% versus last year. This is driven by organic growth of 1.8%, as well as a positive foreign exchange impact of 2.5%. Our Q2 acquisition of Western Elevator, a dealer in the lower mainland of British Columbia, provided revenue growth of 0.9%. Our accessibility segment saw growth of 6.1%, including growth of 7.7% coming from North America, combined with a growth of 3.6% coming from Europe. Patient care had revenue growth of 1.9%, driven mainly by increased sales within the United States. As previously noted, our consolidated gross margin for that quarter was 39.2%. This performance represents a marked improvement of 220 basis points over prior year, driven largely by continued operational efficiencies realized under Severia 1, as well as some operating leverage. Both segments contributed to this gross margin improvement, underscoring the effectiveness of our ongoing initiatives to streamline operations, enhance margin quality, and drive sustainable growth. Now, adjusted EBITDA was 47.6 million for the quarter, representing our strongest performance to date, as well as the sixth consecutive quarter above the $40 million threshold. Adjusted EBITDA margin finished at 21.2 for the quarter, and more specifically, 23.5% for accessibility and 18.3% for patient care. Accessibility margins improved 220 basis points, and patient care margins improved 90 basis points. This performance enhancement is primarily driven from the improvements in gross margin, which have been powered by Severia 1. We incurred $4.7 million in strategic initiative expenses for the quarter, which was in line with our expectations. These fees are mainly consulting costs and will repeat in Q4, but will be finished thereafter. Removal of these costs will add a significant boost to our cash flow starting in Q1 2026. Finance costs were $2.2 million for the quarter compared to $6.9 million last year. Interest on long-term debt decreased by $1.7 million when compared to last year, impacted by reduced variable interest rates on our debt, as well as a lower overall debt balance. Including finance costs, we also reported an unrealized FX gain in the quarter of $1.1 million. This all results in net earnings of $19.5 million for the quarter compared to $11.2 million last year and driving an EPS of $0.27 per share for the quarter and $0.11 improvement or 69% improvement over last year. I'm now going to look at the balance sheet and cash flow. Cash flow from operating activities in Q3 was $41.5 million. which is an increase of $5.7 million versus last year, coming from higher net earnings generated combined with lower net income taxes paid. Working capital decreased by $3.6 million in the quarter, mainly coming from decreased accounts receivables and slightly offset by lower trade payables. For the year, we're achieving our working capital targets. CapEx for the quarter finished at $5.7 million, which is 2.5% of sales. And on a year-to-date basis, we have spent $15.2 on CapEx, which represents 2.3% of sales and is within our annual range of 2% to 2.5% of sales. This includes a mixture of maintenance and new extensionary CapEx, including new equipment for our Greenville site. Free cash flow after debt-related costs and dividend in Q3 was $20.6 million for the quarter, which is a significant improvement of $7 million, or 51.5% when compared to last year. This strong free cash flow contributed to a repayment of debt of $11.5 million in the quarter and reduced our leverage ratio to 1.19 as of September 30th. compared to 1.63 at year-end 2024. This puts us in a very healthy position as we eye future growth plans and other opportunities that lie ahead for us. With regards to guidance, as Sebastian mentioned, following current quarter results, we have left our revenue forecast unchanged at approximately $925 million of revenue for the year, and we have adjusted our adjusted EBITDA margin guidance to be slightly above the 20% for the year. This adjusted EBITDA margin target was achieved in Q2 and Q3, and we expect it will be achieved for the last quarter of 2025 based on the continued value of Severia 1 that we have in front of us. And with that, this completes my prepared remarks. I'm now going to turn the call over to JP to provide further details on how we're progressing with Severia 1. JP?